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DA
YA M
AT
ER
IALS
BE
RH
AD
(636357-W)
DAYA MATERIALS BERHAD (636357-W)
D5-1-10, Solaris DutamasNo. 1, Jalan Dutamas 1, 50480 Kuala LumpurTel: 03 6205 3170 Fax: 03 6205 3171
AN
NU
AL R
EPO
RT
20
12
w w w . d m b . c o m . m y
annual report
2012
Contents
we deliverwe C.A.R.E. At DMB, we work hand in hand with our clients to deliver the best solutions any where, any time.
CommittedAccountableResoluteEthical
Corporate Information
Corporate Structure
Financial Information
The Team
Pro�le of Directors
Chairman’s Statement
Corporate Social Responsibility
Corporate Governance Statement
Statement on Risk Management and Internal Control
Audit Committee Report
02
04
07
08
10
14
23
25
33
35
39
134
135
138
140
143
Financial Statements
Directors’ Responsibilities Statement on Financial Statements
Analysis of Shareholdings
Additional Compliance Information
List of Properties 2012
Notice of Tenth Annual General Meeting
Form of Proxy
2 DAYA MATERIALS BERHAD (636357-W)
Committed
CORPORATE INFORMATION
BOARD OF DIRECTORS
Dato’ Azmil Khalili Bin Dato’ KhalidChairman/Independent Non-Executive Director
Dato’ Mazlin Bin Md.JunidExecutive Vice Chairman,President & Group Chief Executive Offi cer
Nathan Tham Jooi LoonGroup Managing Director
Fazrin Azwar bin Md. NorSenior Independent Non-Executive Director
Dato’ Sri Koh Kin Lip JPIndependent Non-Executive Director
Lim Soon FooIndependent Non-Executive Director
Ronnie Lim Hai LiangAlternate Director to Mr Lim Soon Foo
AUDIT COMMITTEE
ChairmanFazrin Azwar bin Md. Nor(Independent Non-Executive Director)
Members
Dato’ Azmil Khalili Bin Dato’ Khalid (Independent Non-Executive Director)
Dato’ Sri Koh Kin Lip JP(Independent Non-Executive Director)
COMPANY SECRETARIES
Chin Ngeok Mui (MAICSA 7003178)Chen Bee Ling (MAICSA 7046517)
REGISTERED OFFICE
Level 8, Symphony House Pusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling Jaya Selangor Darul EhsanTel : 03-7841 8000Fax : 03-7841 8199
HEAD/MANAGEMENT OFFICE
D5-1-10, Solaris DutamasNo.1, Jalan Dutamas 1 50480 Kuala LumpurMalaysiaTel : 03-6205 3170Fax : 03-6205 3171 Email : [email protected] Website : www.dmb.com.my
PRINCIPAL BANKERS
Hong Leong Bank Berhad AmIslamic Bank BerhadAmBank (M) Berhad Malayan Banking Berhad
AUDITORS
Ernst & Young (AF 0039)Chartered AccountantsLevel 23A, Menara MileniumJalan DamanlelaPusat Damansara50490 Kuala LumpurTel : 03-7495 8000Fax : 03- 2095 5332
SHARE REGISTRAR
Symphony Share Registrars Sdn Bhd Level 6, Symphony HousePusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling Jaya Selangor Darul EhsanTel : 03-7841 8000Fax : 03-7841 8150/8151
STOCK EXCHANGE LISTING
Main Market of Bursa Malaysia Securities BerhadStock short name : DAYAStock Code : 0091
3ANNUAL REPORT 2012 3ANNUAL REPORT 2012
Committed
4 DAYA MATERIALS BERHAD (636357-W)
Daya Materials Berhad (“DMB”) was incorporated in Malaysia under the Companies Act, 1965 on 8 December 2003 as a public limited company. The principal activities of DMB are that of investment holding and provision of management services to its subsidiary companies. The particulars of the subsidiaries, are as follows:
Subsidiary Companies
Date and Place of
Incorporation
Issued and Paid-up
Share Capital
Effective Equity
Interest Principal Activities
1 Daya Polymer Sdn. Bhd. (324073-U) (“DPSB”)
21-11-1994/ Malaysia
RM6,000,000 100.00% Manufacturing of semi-conductive compounds and cross-linkable polyethylene compounds for cables and wires and trading of specialty chemicals, related polymer compounds and hardware.
2 DMB Marketing & Trading Sdn. Bhd. (724943-U) (“DMTSB”)
27-02-2006/ Malaysia
RM2.00 100.00% General trading, marketing and investment holding.
3 Meridian Orbit Sdn. Bhd. (780242-P) (“MOSB”)
09-07-2007/ Malaysia
RM100,000 100.00% Investment holding.
4 Daya Secadyme Sdn. Bhd. (188542-W) (“DSSB”)
25-10-1989/ Malaysia
RM1,008,000 67.00% Trading in petrochemicals products and investment holding.
5 Daya CMT Sdn. Bhd. (208646-U) (“DCMT”)
28-11-1990/ Malaysia
RM8,000,000 100.00% Providing industrial facilities management including builder works, facility operation and maintenance services, upgrade, retrofit, design and build plant facilities.
6 DMB International Limited (“DINL”)
13-8-2008/ Hong Kong
HKD 3,000,000 100.00% Center for regional procurement and trading as well as international investments.
7 Daya Proffscorp Sdn. Bhd. (173309-T) (“DPRO”)
24-8-1988/ Malaysia
RM1,650,000 67.00% Ownership and hiring of forklifts, cranes and heavy machineries and provision of related manpower services in the onshore and offshore oil & gas industry.
8 Daya Urusharta Sdn. Bhd. (863073-M) (“DUSB”)
3-7-2009/ Malaysia
RM100,000 100.00% Property investment holding.
9 Daya OCI Sdn. Bhd. (291138-U) (“DOCI”)
2-3-1994/ Malaysia
RM5,000,000 67.00% Supplying of equipment and specialty chemicals for oil & gas process plants, a provider of installation and maintenance services for air-conditioning and ventilation system, a provider for automatic welding services for offshore pipeline installation, a provider for maintenance services for both onshore plants and offshore facilities, a provider for warehousing and forwarding agency.
10 Seca Chemicals and Catalysts Sdn. Bhd. (710772-A) (“SCCSB”)
26-09-2005/ Malaysia
RM100,000 100.00% Dealing in petroleum, oil & gas products and consulting services.
11 Daya Offshore Construction Sdn Bhd (651398-P) (formerly known as SD Equipment Sdn. Bhd. ) (“DOCSB”)
05-05-2004/ Malaysia
RM10,000 100.00% Dealing in project management, installation and design engineering, fabrication, procurement and logistics, vessel operations, survey and diving operations.
12 Daya Petroleum Venture Sdn. Bhd. (736674-D) (formerly known as Metriwell Sdn. Bhd. ) (“DPV”)
06-06-2006/ Malaysia
RM350,000 51.00% Provision of drilling services, geological, petroleum engineering, subsea and deep -water support services and operations and maintenance services.
13 Daya Land & Development Sdn. Bhd. (524602-D) (“DLDSB”)
25-08-2000/ Malaysia
RM500,000 100.00% Trader of all kinds of building material, hardware equipment and other related products.
Held through subsidiaries
14 Daya Hightech Sdn. Bhd. (791561-V) (“DHSB”)
10-10-2007/ Malaysia
RM100,000 100.00% Manufacturing of polymer compounds for cables and wires.
CORPORATE STRUCTURE
5ANNUAL REPORT 2012
Subsidiary Companies
Date and Place of
Incorporation
Issued and Paid-up Share
Capital
Effective Equity
Interest Principal Activities
Held through subsidiaries
15 Seca Engineering and Manpower Services Sdn. Bhd. (704437-A) (“SEMSSB”)
28-07-2005/ Malaysia
RM100,000 67.00% Providing engineering and manpower services.
16 Daya Clarimax Sdn. Bhd. (597108-K) (“DCLX”)
28-10-2002/ Malaysia
RM2,000,000 100.00% Providing recycling of waste solvent and manufacturing of high purity electronics and technical solvents.
17 Daya FMM Sdn. Bhd. (418776-U) (“DFMM”)
27-01-1997/ Malaysia
RM350,004 100.00% General contractors and related services.
18 PT Daya Secadyme Indonesia (“PTDSI”)
14-01-2010/ Indonesia
USD100,000 67.00% Trading in petrochemicals products.
19 Daya Proffscorp (Sabah) Sdn. Bhd. (922055-P) (“DPROS”)
15-11-2010/ Malaysia
RM450,002 67.00% Ownership and hiring of forklifts, cranes and heavy machineries and provision of related manpower services in the onshore and offshore oil & gas industry.
20 Ultrafest Sdn. Bhd. (968989-X) (“USB”)
20-11-2011/ Malaysia
RM500,000 100.00% Property development.
21 Zen Projects Sdn. Bhd. (974746-K ) (“ZPSB”)
11-01-2012/ Malaysia
RM2.00 100.00% Investment holding.
22 Daya E&C Sdn. Bhd. (1024254-V ) (“DECSB”)
9-11-2012/ Malaysia
RM2.00 100.00% Provision of electrical, mechanical engineering and construction works.
23 Daya OCI (Labuan) Limited. (LL09292 ) (formerly Known As Daya OCI (Labuan) Berhad.) (“DOCIL”)
19-11-2012/ Malaysia
USD2.00 67.00% Shipping leasing business and other related services to the oil and gas industry.
24 Daya Maxflo Sdn Bhd (681714-M) (formerly known as Maxflo Energy Products Sdn Bhd)(“DMSB”)
21/02/2005/Malaysia
RM1,420,000 25.86% Providing instrumentation and pipelines products specifically for oil & gas, refining, petro-chemical and energy industry.
25 Terra Hill Development Sdn. Bhd. (971347-V) (“THDSB”)
12-12-2011/ Malaysia
RM2.00 100.00% Property development.
Joint Venture Company
26 Daya NCHO International Limited (formerly known as Daya Clarimax International Limited) (“DNIL”)
26-8-2010/ Hong Kong
HKD 100,000 60.00% Investment holding to invest in tank services regionally.
27 Daya Sheffield Sdn. Bhd. (919845-U) (“DSFSB”)
26-10-2010/ Malaysia
RM100,000 34.17% Recruiting and providing specialised, qualified and professional personnel for the onshore and offshore oil and gas industries.
28 Daya NCHO Sdn. Bhd (933292-U) (“DNSB”)
22-2-2011/ Malaysia
RM1,000,000 60.00% Providing ISO tank cleaning, repair and maintenance services.
29 Daya Campo (Sabah) Sdn. Bhd (956357-W) (“DCSB”)
9-8-2011/ Malaysia
RM10,000 40.20% Investment holding.
30 Semangat Global Sdn. Bhd. (802160-P) (“SGSB”)
8-1-2008/ Malaysia
RM200,000 51.00% Construction and development of industrial, commercial and housing project and other related industry.
CORPORATE STRUCTURE(cont’d)
6 DAYA MATERIALS BERHAD (636357-W)
SCCSB100%
DOCSB100%
DPV51%
DMSB50.7% DPRO
67%
DPROS100%
DSSB67%
SEMSSB100%
PTDSI100%
DOCIL100%
DCSB60%*
DSFSB51%*
DOCI67%
DMTSB100%
DUSB100%
DINL100%
DNIL60%*MOSB
100%
DCLX100%
DNSB60%*
DCMT100%
DECSB100%
DFMM100%
DLDSB100%
USB100%
ZPSB100%
THDSB100%
SGSB51%*
REVENUE(RM’000)
‘08 ‘09 ‘10 ‘11 ‘12
22
4,3
45
18
8,2
44
17
4,2
23
28
1,7
46
27
6,9
29
PAT(RM’000)
‘08 ‘09 ‘10 ‘11 ‘12
12
,14
8
13
,66
4 16
,96
6
17
,44
3
20
,11
6
SHAREHOLDERS' FUNDS(RM’000)
‘08 ‘09 ‘10 ‘11 ‘12
11
3,3
93
14
3,4
81
17
7,1
56
21
0,6
28
23
0,9
14
TOTAL ASSETS(RM’000)
‘08 ‘09 ‘10 ‘11 ‘12
20
4,2
73
22
1,9
20 2
92
,05
0
37
8,1
15
39
9,2
17
EBITDA(RM’000)
‘08 ‘09 ‘10 ‘11 ‘12
19
,88
3
24
,03
2 29
,20
6
30
,85
3 35
,70
4
PBT(RM’000)
‘08 ‘09 ‘10 ‘11 ‘12
18
,28
4
20
,37
7
22
,73
3
23
,76
0 28
,38
7
* Joint Venture Company
DPSB100%
MOSB100%
DCMT
DINL
MOSBDPRO67%
DSSB
DOCSB100%
DPV51%
DPRO
Polymer
Oil
& G
asTech
nical Services
DHSB100%
CORPORATE STRUCTUREcont’d
6 DAYA MATERIALS BERHAD (636357-W)
7ANNUAL REPORT 2012
SCCSB100%
DOCSB100%
DPV51%
DMSB50.7% DPRO
67%
DPROS100%
DSSB67%
SEMSSB100%
PTDSI100%
DOCIL100%
DCSB60%*
DSFSB51%*
DOCI67%
DMTSB100%
DUSB100%
DINL100%
DNIL60%*MOSB
100%
DCLX100%
DNSB60%*
DCMT100%
DECSB100%
DFMM100%
DLDSB100%
USB100%
ZPSB100%
THDSB100%
SGSB51%*
REVENUE(RM’000)
‘08 ‘09 ‘10 ‘11 ‘12
22
4,3
45
18
8,2
44
17
4,2
23
28
1,7
46
27
6,9
29
PAT(RM’000)
‘08 ‘09 ‘10 ‘11 ‘12
12
,14
8
13
,66
4 16
,96
6
17
,44
3
20
,11
6
SHAREHOLDERS' FUNDS(RM’000)
‘08 ‘09 ‘10 ‘11 ‘12
11
3,3
93
14
3,4
81
17
7,1
56
21
0,6
28
23
0,9
14
TOTAL ASSETS(RM’000)
‘08 ‘09 ‘10 ‘11 ‘12
20
4,2
73
22
1,9
20 2
92
,05
0
37
8,1
15
39
9,2
17
EBITDA(RM’000)
‘08 ‘09 ‘10 ‘11 ‘12
19
,88
3
24
,03
2 29
,20
6
30
,85
3 35
,70
4PBT(RM’000)
‘08 ‘09 ‘10 ‘11 ‘12
18
,28
4
20
,37
7
22
,73
3
23
,76
0 28
,38
7
* Joint Venture Company
DPSB100%
Polymer
Oil
& G
as
Techn
ical Services
DHSB100%
FINANCIAL INFORMATION
7ANNUAL REPORT 2012
2008 2009 2010 2011 2012
RM’000 RM’000 RM’000 RM’000 RM’000
Revenue 224,345 188,244 174,223 281,746 276,929
EBITDA 19,883 24,032 29,206 30,853 35,704
PBT 18,284 20,377 22,733 23,760 28,387
PAT 12,148 13,664 16,966 17,443 20,116
Total Equity 113,393 143,481 177,156 210,628 230,914
Total Assets 204,273 221,920 292,050 378,115 399,217
8 DAYA MATERIALS BERHAD (636357-W)
THE TEAM
From left to right:Dato’ Azmil Khalili Bin Dato’ Khalid, Ronnie Lim Hai Liang, Fazrin Azwar bin Md. Nor, Lim Soon Foo,
Dato’ Sri Koh Kin Lip JP, Dato’ Mazlin Bin Md.Junid, Nathan Tham Jooi Loon
8 DAYA MATERIALS BERHAD (636357-W)
9ANNUAL REPORT 2012
THE TEAM
From left to right:Dato’ Azmil Khalili Bin Dato’ Khalid, Ronnie Lim Hai Liang, Fazrin Azwar bin Md. Nor, Lim Soon Foo,
Dato’ Sri Koh Kin Lip JP, Dato’ Mazlin Bin Md.Junid, Nathan Tham Jooi Loon
9ANNUAL REPORT 2012
10 DAYA MATERIALS BERHAD (636357-W)
Dato’ Azmil Khalili bin Dato’ KhalidMalaysian, aged 52
He is an Independent Non-Executive Chairman of DMB. He was appointed to the Board on 19 September 2007.
Dato’ Azmil graduated with a Bachelors Degree in Civil Engineering and subsequently with a Masters in Business Administration. He began his career with a United Kingdom company, Tarmac National Construction and upon his return to Malaysia worked for Trust International Insurance and Citibank NA.
Dato’ Azmil is currently the President & Chief Executive O�cer of AlloyMtd, following the rationalisation exercise between MTD Capital Bhd and its holding company, Alloy Consolidated Sdn Bhd. He concurrently holds the same position in the listed subsidiary of MTD Capital Bhd namely MTD ACPI Engineering Berhad and is also the Chairman of MTD Walkers PLC, a foreign subsidiary of MTD Capital Bhd listed on the Colombo Stock Exchange in the Republic of Sri Lanka. Dato’ Azmil holds directorships in other public companies namely, MTD Infraperdana Berhad and Metacorp Berhad, both are subsidiaries of MTD Capital Bhd; and ANIH Berhad, a toll concession company. Dato’ Azmil is also a director of Environment Idaman Sdn. Bhd., a solid waste concession company; and a Trustee of the Perdana Leadership Foundation. Dato’ Azmil also sits on the board of several private limited companies.
Dato’ Azmil is the Chairman of the Nomination Committee and a member of the Audit Committee and Remuneration Committee of the Company.
Dato’ Azmil attended �ve out of seven Board meetings held during the �nancial year ended 31 December 2012.
Dato’ Mazlin bin Md JunidMalaysian, aged 51
He is DMB’s Executive Vice Chairman, President & Group Chief Executive O�cer. He was appointed to the Board on 16 August 2007.
Dato’ Mazlin holds a Bachelor of Science in Mechanical Engineering from Brighton Polytechnic, Sussex, England and a Master in Business Administration from Cran�eld University, England. He has extensive experience in corporate management, business and �nance after serving Sime Darby Berhad and Aspac Executive Search Sdn. Bhd. as the Group Manager and the Managing Director respectively.
Dato’ Mazlin was formerly an Independent, Non-Executive Director of Sapura Industrial Berhad and Sapura Technology Berhad. He was also formerly an Independent Non-Executive Director and Chairman of the Audit Committee of MTD Infraperdana Berhad. He is also a director of several private limited companies which he owns.
Dato’ Mazlin attended all seven Board meetings held during the �nancial year ended 31 December 2012.
Nathan Tham Jooi LoonMalaysian, aged 47
He is DMB’s Group Managing Director. He was appointed to the Board on 30 May 2005.
Mr. Tham joined DPSB in 2003 as a Director. He graduated from McGill University in Montreal, Canada in 1988 with a Master of Business Administration specialising in corporate �nance. He is also a quali�ed Chartered Financial Analyst. He started his career as a credit analyst with Chase Manhattan Bank in Kuala Lumpur in 1989. In 1995, he joined UBS and later became its Executive Director responsible for Malaysian investment banking and Asia-Paci�c Mergers and Acquisitions practices. In 2003, Mr. Tham was appointed as a Director of Tradewinds Corporation Berhad and PIHP (Selangor) Berhad, both posts he held until 2005. Presently, he is a Director of several private companies in Malaysia, Hong Kong and British Virgin Islands.
Mr. Tham is the Chairman of the Risk Management Committee and a member of the Executive Committee (”EXCO”) of the Company.
Mr. Tham attended all seven Board meetings held during the �nancial year ended 31 December 2012.
Fazrin Azwar Bin Md NorMalaysian, aged 46
He is the Senior Independent Non-Executive Director of DMB. He was appointed to the Board on 30 May 2005.
En. Fazrin graduated from the University of Malaya with a Bachelor of Law (LLB) Honors Degree. He is an Advocate and Solicitor and a member of the Malaysian BAR. He is currently the Managing Partner of Messrs. Azwar & Associates.
En. Fazrin is also currently an Independent Non-Executive Chairman of Mercury Industries Berhad, an Independent Non-Executive Director and Audit Committee member of both Poh Kong Holdings Berhad and Tong Herr Resources Berhad and an Independent Non-Executive Director of Ire-Tex Corporation Berhad, all listed on the Main Market of Bursa Securities.
En. Fazrin is also an Independent Non-Executive Director of Times O�set (M) Sdn. Bhd. and a Non-Independent Non-Executive Director of the Kuchinta Holdings Group of Companies.
En. Fazrin is also a chartered member of The Malaysian Institute of Directors and The Institute of Internal Auditors Malaysia.
En. Fazrin is the Chairman of the Audit Committee and a member of the Nomination and Remuneration Committees of the Company.
En. Fazrin attended all seven Board meetings held during the �nancial year ended 31 December 2012.
PROFILE OF DIRECTORS
11ANNUAL REPORT 2012
Dato’ Azmil Khalili bin Dato’ KhalidMalaysian, aged 52
He is an Independent Non-Executive Chairman of DMB. He was appointed to the Board on 19 September 2007.
Dato’ Azmil graduated with a Bachelors Degree in Civil Engineering and subsequently with a Masters in Business Administration. He began his career with a United Kingdom company, Tarmac National Construction and upon his return to Malaysia worked for Trust International Insurance and Citibank NA.
Dato’ Azmil is currently the President & Chief Executive O�cer of AlloyMtd, following the rationalisation exercise between MTD Capital Bhd and its holding company, Alloy Consolidated Sdn Bhd. He concurrently holds the same position in the listed subsidiary of MTD Capital Bhd namely MTD ACPI Engineering Berhad and is also the Chairman of MTD Walkers PLC, a foreign subsidiary of MTD Capital Bhd listed on the Colombo Stock Exchange in the Republic of Sri Lanka. Dato’ Azmil holds directorships in other public companies namely, MTD Infraperdana Berhad and Metacorp Berhad, both are subsidiaries of MTD Capital Bhd; and ANIH Berhad, a toll concession company. Dato’ Azmil is also a director of Environment Idaman Sdn. Bhd., a solid waste concession company; and a Trustee of the Perdana Leadership Foundation. Dato’ Azmil also sits on the board of several private limited companies.
Dato’ Azmil is the Chairman of the Nomination Committee and a member of the Audit Committee and Remuneration Committee of the Company.
Dato’ Azmil attended �ve out of seven Board meetings held during the �nancial year ended 31 December 2012.
Dato’ Mazlin bin Md JunidMalaysian, aged 51
He is DMB’s Executive Vice Chairman, President & Group Chief Executive O�cer. He was appointed to the Board on 16 August 2007.
Dato’ Mazlin holds a Bachelor of Science in Mechanical Engineering from Brighton Polytechnic, Sussex, England and a Master in Business Administration from Cran�eld University, England. He has extensive experience in corporate management, business and �nance after serving Sime Darby Berhad and Aspac Executive Search Sdn. Bhd. as the Group Manager and the Managing Director respectively.
Dato’ Mazlin was formerly an Independent, Non-Executive Director of Sapura Industrial Berhad and Sapura Technology Berhad. He was also formerly an Independent Non-Executive Director and Chairman of the Audit Committee of MTD Infraperdana Berhad. He is also a director of several private limited companies which he owns.
Dato’ Mazlin attended all seven Board meetings held during the �nancial year ended 31 December 2012.
Nathan Tham Jooi LoonMalaysian, aged 47
He is DMB’s Group Managing Director. He was appointed to the Board on 30 May 2005.
Mr. Tham joined DPSB in 2003 as a Director. He graduated from McGill University in Montreal, Canada in 1988 with a Master of Business Administration specialising in corporate �nance. He is also a quali�ed Chartered Financial Analyst. He started his career as a credit analyst with Chase Manhattan Bank in Kuala Lumpur in 1989. In 1995, he joined UBS and later became its Executive Director responsible for Malaysian investment banking and Asia-Paci�c Mergers and Acquisitions practices. In 2003, Mr. Tham was appointed as a Director of Tradewinds Corporation Berhad and PIHP (Selangor) Berhad, both posts he held until 2005. Presently, he is a Director of several private companies in Malaysia, Hong Kong and British Virgin Islands.
Mr. Tham is the Chairman of the Risk Management Committee and a member of the Executive Committee (”EXCO”) of the Company.
Mr. Tham attended all seven Board meetings held during the �nancial year ended 31 December 2012.
Fazrin Azwar Bin Md NorMalaysian, aged 46
He is the Senior Independent Non-Executive Director of DMB. He was appointed to the Board on 30 May 2005.
En. Fazrin graduated from the University of Malaya with a Bachelor of Law (LLB) Honors Degree. He is an Advocate and Solicitor and a member of the Malaysian BAR. He is currently the Managing Partner of Messrs. Azwar & Associates.
En. Fazrin is also currently an Independent Non-Executive Chairman of Mercury Industries Berhad, an Independent Non-Executive Director and Audit Committee member of both Poh Kong Holdings Berhad and Tong Herr Resources Berhad and an Independent Non-Executive Director of Ire-Tex Corporation Berhad, all listed on the Main Market of Bursa Securities.
En. Fazrin is also an Independent Non-Executive Director of Times O�set (M) Sdn. Bhd. and a Non-Independent Non-Executive Director of the Kuchinta Holdings Group of Companies.
En. Fazrin is also a chartered member of The Malaysian Institute of Directors and The Institute of Internal Auditors Malaysia.
En. Fazrin is the Chairman of the Audit Committee and a member of the Nomination and Remuneration Committees of the Company.
En. Fazrin attended all seven Board meetings held during the �nancial year ended 31 December 2012.
PROFILE OF DIRECTORS(cont’d)
12 DAYA MATERIALS BERHAD (636357-W)
Dato’ Sri Koh Kin Lip JPMalaysian, aged 64
He is an Independent Non-Executive Director of DMB. He was appointed to the Board on 22 December 2008.
Dato’ Sri Koh graduated from Plymouth Polytechnic, UK with a Higher National Diploma in Business Studies and a Council’s Diploma in Management Studies. He began his career in Standard Chartered Bank, Sandakan in 1977 as a trainee assistant. In 1978, he joined his family business and was principally involved in administrative and �nancial matters. In 1985, he assumed the role as a Chief Executive O�cer of the family business. In 1987, he was pivotal and instrumental in the formation of Rickoh Holdings Sdn. Bhd., the �agship company of the family business which involves in activities ranging from properties investments, properties letting and property development, securities investments, oil palm plantations, sea and land transportation for crude palm oil and palm kernel, IT, hotel business, trading in golf equipment and accessories, and quarry operations.
Presently, Dato’ Sri Koh is also a Director of NPC Resources Berhad and Cocoaland Holdings Berhad. Dato’ Sri Koh was formerly a Director of Malaysian AE Models Holdings Berhad. Dato’ Sri Koh is the Chairman of the Remuneration Committee and a member of the Audit Committee and Nomination Committee of the Company.
Dato’ Sri Koh attended six out of seven Board meetings held during the �nancial year ended 31 December 2012.
Lim Soon FooMalaysian, aged 57
He is an Independent Non-Executive Director of DMB. He was appointed to the Board on 15 August 2011.
Mr. Lim was admitted as member of The Chartered Institute of Shipbrokers, London since 1979 and currently serving as Chairman and Principal Advisor to Wajah Nichiei Sdn. Bhd., Optic Marine Services International Limited (Hongkong) and Optic Marine Engineering International Limited, providing highly specialized services in the optic �bre submarine cable industry which extend into many countries in Asia Paci�c region. The Companies also worked alongside many Global Partners in the optic �bre submarine industry. Mr. Lim also sits in the board of several other private companies involved in plantation, logging and real estates.
Mr. Lim is a member of the Remuneration Committee of the Company.
Mr. Lim is the father of Mr. Ronnie Lim Hai Liang, who acts as his Alternate and a shareholder of the Company.
Mr. Lim attended �ve out of seven Board meetings held during the �nancial year ended 31 December 2012.
Ronnie Lim Hai LiangMalaysian, aged 32
He is an Alternate Director to Mr. Lim Soon Foo. He was appointed to the Board on 15 August 2011 as Alternate Director to Mr. Lim Soon Foo.
Mr. Ronnie Lim graduated from the Flinders University of South Australia, Adelaide with a Bachelor of Commerce and Bachelor of Law. He began his career as Assistant Project Manager in small scale housing project developments in Adelaide. He later joined his family business as CEO of Wajah Nichiei Sdn. Bhd., Optic Marine Services International Limited (Hongkong) and Optic Marine Engineering International Limited in the optic �bre submarine cable industry. Mr. Ronnie Lim also sits in the board of a number of family owned companies.
Mr. Ronnie Lim is the son of Mr. Lim Soon Foo, an Independent Non-Executive Director and a substantial shareholder of the Company.
Mr. Ronnie Lim attended two out of seven Board meetings held during the �nancial year ended 31 December 2012.
Family Relationship and Major Shareholders
Save as disclosed, none of the Directors of the Company have any family relationship with any director and/or major shareholders of the Company.
Con�ict of Interest
None of the Directors of the Company has entered into any transaction, whether directly or indirectly, which has a con�ict of interest with the Company.
Conviction of O�ences
All the Directors have not been convicted of any o�ence within the past ten (10) years other than tra�c o�ences, if any.
PROFILE OF DIRECTORS(cont’d)
13ANNUAL REPORT 2012
Dato’ Sri Koh Kin Lip JPMalaysian, aged 64
He is an Independent Non-Executive Director of DMB. He was appointed to the Board on 22 December 2008.
Dato’ Sri Koh graduated from Plymouth Polytechnic, UK with a Higher National Diploma in Business Studies and a Council’s Diploma in Management Studies. He began his career in Standard Chartered Bank, Sandakan in 1977 as a trainee assistant. In 1978, he joined his family business and was principally involved in administrative and �nancial matters. In 1985, he assumed the role as a Chief Executive O�cer of the family business. In 1987, he was pivotal and instrumental in the formation of Rickoh Holdings Sdn. Bhd., the �agship company of the family business which involves in activities ranging from properties investments, properties letting and property development, securities investments, oil palm plantations, sea and land transportation for crude palm oil and palm kernel, IT, hotel business, trading in golf equipment and accessories, and quarry operations.
Presently, Dato’ Sri Koh is also a Director of NPC Resources Berhad and Cocoaland Holdings Berhad. Dato’ Sri Koh was formerly a Director of Malaysian AE Models Holdings Berhad. Dato’ Sri Koh is the Chairman of the Remuneration Committee and a member of the Audit Committee and Nomination Committee of the Company.
Dato’ Sri Koh attended six out of seven Board meetings held during the �nancial year ended 31 December 2012.
Lim Soon FooMalaysian, aged 57
He is an Independent Non-Executive Director of DMB. He was appointed to the Board on 15 August 2011.
Mr. Lim was admitted as member of The Chartered Institute of Shipbrokers, London since 1979 and currently serving as Chairman and Principal Advisor to Wajah Nichiei Sdn. Bhd., Optic Marine Services International Limited (Hongkong) and Optic Marine Engineering International Limited, providing highly specialized services in the optic �bre submarine cable industry which extend into many countries in Asia Paci�c region. The Companies also worked alongside many Global Partners in the optic �bre submarine industry. Mr. Lim also sits in the board of several other private companies involved in plantation, logging and real estates.
Mr. Lim is a member of the Remuneration Committee of the Company.
Mr. Lim is the father of Mr. Ronnie Lim Hai Liang, who acts as his Alternate and a shareholder of the Company.
Mr. Lim attended �ve out of seven Board meetings held during the �nancial year ended 31 December 2012.
Ronnie Lim Hai LiangMalaysian, aged 32
He is an Alternate Director to Mr. Lim Soon Foo. He was appointed to the Board on 15 August 2011 as Alternate Director to Mr. Lim Soon Foo.
Mr. Ronnie Lim graduated from the Flinders University of South Australia, Adelaide with a Bachelor of Commerce and Bachelor of Law. He began his career as Assistant Project Manager in small scale housing project developments in Adelaide. He later joined his family business as CEO of Wajah Nichiei Sdn. Bhd., Optic Marine Services International Limited (Hongkong) and Optic Marine Engineering International Limited in the optic �bre submarine cable industry. Mr. Ronnie Lim also sits in the board of a number of family owned companies.
Mr. Ronnie Lim is the son of Mr. Lim Soon Foo, an Independent Non-Executive Director and a substantial shareholder of the Company.
Mr. Ronnie Lim attended two out of seven Board meetings held during the �nancial year ended 31 December 2012.
Family Relationship and Major Shareholders
Save as disclosed, none of the Directors of the Company have any family relationship with any director and/or major shareholders of the Company.
Con�ict of Interest
None of the Directors of the Company has entered into any transaction, whether directly or indirectly, which has a con�ict of interest with the Company.
Conviction of O�ences
All the Directors have not been convicted of any o�ence within the past ten (10) years other than tra�c o�ences, if any.
PROFILE OF DIRECTORS(cont’d)
14 DAYA MATERIALS BERHAD (636357-W)
CHAIRMAN’S STATEMENT
14 DAYA MATERIALS BERHAD (636357-W)
Dear Shareholders,
2012 was a successful year for our Group. Despite various challenges in some of our businesses, our core operations collectively achieved a solid performance.
15ANNUAL REPORT 2012
CHAIRMAN’S STATEMENT
15ANNUAL REPORT 2012
CHAIRMAN’S STATEMENT(cont’d)
We generated record pretax profi ts of RM28.4 million, representing a 19% increase from 2011, on the back of RM276.9 million in sales. Oil & Gas (“O&G”) continued to be the main earnings driver, accounting for almost 63% of our group profi ts. As O&G takes on ever greater signifi cance,the strategy we set out a decade ago to venture into the business has been all but validated. Then, as the market leader in domestic specialised polymer sector, venturing into a new area such as O&G was neither easy nor clear-cut. As it turned out, that was the most epiphanous decision we had ever made.
Fast forward to now – and we have another milestone under our belt. 2012 was the seventh consecutive year in which we have posted unbroken earnings growth. Since our listing in 2005, we have achieved average compound growth rate of 38% in pretax earnings per annum.
Looking ahead, we are quietly confi dent of yet another year of solid growth. Intensive marketing eff orts have swelled our order book steadily over the past 12 months to almost RM1.5 billion. Barring any unforeseen circumstances, most of our order book will be completed within the next three years. If indeed all of these projects are executed smoothly and on schedule, 2013 will no doubt see the further crystallisation of our upstream strategy. To ensure that this happens, we have signifi cantly built up our senior management ranks as well as project execution teams. On behalf of the Board, I would like to take this opportunity to warmly welcome Shahul Hamid, Mark Midgley, Jay Dorfman, Gan Boon Cheong, James Klopper, Patrick Gossett, Alan Broxson and all of our new colleagues to the fast-expanding Daya family.
REVIEW OF RESULTS
For the fi nancial year ended December 2012, our Group achieved consolidated sales of RM276.9 million and profi ts before tax for FY2012 of RM28.4 million. Our fully diluted net earnings per share stood at 1.63 sen againts 1.45 sen in 2011, representing a growth of 12.4%.
SEGMENTAL ANALYSIS
Allow me to give you a more detailed evaluation of the operating performance of our three business divisions. To facilitate comparisons, all profi tability and cash fl ow fi gures provided in this section are before management fees and corporate guarantee fees paid by the Divisions to the holding company.
16 DAYA MATERIALS BERHAD (636357-W)
Accountable
16 DAYA MATERIALS BERHAD (636357-W)
CHAIRMAN’S STATEMENT(cont’d)
OIL & GAS DIVISION
After a robust 2011 in which our O&G sales expanded 97%, 2012 was another incrementally successful year for us. While our topline was fl at, O&G PBT and PAT grew comfortably by 22% and 15% respectively in 2012. We achieved a good balance of growth in both our downstream and upstream businesses. On the downstream side, sale of chemicals and services remained strong as we continued to cement our market positions. On the upstream sector, the successful fi nalisation of several off shore projects contributed to 88% and 51% increase in upstream revenue and profi tability respectively.
The success of our upstream business has fortifi ed our resolve to further invest and expand our capabilities, particularly in the areas of off shore construction, upstream production and well services. Since the middle of last year, we had set up two new entities to focus solely on such upstream opportunities. The fi rst was Daya Petroleum Ventures Sdn Bhd (“DPV”). DPV’s main aim is to secure and develop marginal fi elds under Petronas’ Risk Sharing Contract (“RSC”) framework and provide core upstream oilfi eld services. We partnered with Hydra Energy Private Limited of Australia in May 2012 to bid for a cluster of gas fi elds (a tender which was subsequently deferred) from Petronas. We have again been invited recently to jointly tender for new marginal fi elds in the latest round of RSC tenders. Through DPV, we also recently acquired a 50.7% stake in Daya Maxfl o Sdn. Bhd., a niche but fast expanding player involving in well intervention and related upstream services.
The second entity is Daya Off shore Construction Sdn Bhd (“DOC”). This unit is designed to carry out specialised subsea engineering, construction, installation, inspection, maintenance and repair activities. DOC operates a fl eet of vessels, remotely operated vehicles and modulated diving systems, complemented by a fully-integrated in-house engineering and project management capabilities. Already we have secured a sizeable subsea installation contract which forms an integral part of the Tapis Enhanced Oil Recovery & Rejuvenation project off the coast of Terengganu and is now in the midst of implementing it. This project is slated for completion by the 4th quarter of 2013.
Overall, our tender book in the off shore installation & construction business now stands at over RM800 million, and we have good reasons to believe that some of these tenders will be converted into actual order book and realisable revenue streams over the next few months.
Exciting prospects aside, I would also like to remind our shareholders that the road ahead in off shore construction business remains a daunting one. Subsea operations are invariably complex, with the risks involved typically several times larger than those in the downstream space which we have grown accustomed to. To manage these risks, we have beefed up our off shore resources considerably in scale, scope and headcount. We have also assembled a select group of proven international players to further strengthen our core engineering competencies. The additional of two new and technologically advance off shore subsea construction vessels, namely Siem Daya 1 and Bourbon Evolution 380on term charters has signifi cantly enhanced our marine capabilities. To drive growth over the next 3 years, more resources will no doubt be committed in this area to enable us to realize our regional and global upstream aspirations.
17ANNUAL REPORT 2012 17ANNUAL REPORT 2012
Accountable
17ANNUAL REPORT 2012
18 DAYA MATERIALS BERHAD (636357-W)
Resolute
18 DAYA MATERIALS BERHAD (636357-W)
CHAIRMAN’S STATEMENT(cont’d)
TECHNICAL SERVICES DIVISION
Our Technical Services (“TS”) Division, which consists of engineering & construction as well as recycling & tank cleaning business, had another stellar year in 2012. PBT and PAT increased 50% and 46% respectively in 2012 despite a marginal decline in sales. Our profi t margin expanded to a healthy 9% as compared to 6% during the previous fi nancial period. Another key performance metric is the build up in our order book which more than quadrupled to almost RM900 million.
As we take on larger and longer gestation projects, our ability to control costs, manage our subcontractors, hedge price risks, and select quality clients becomes even more important. Our strategy in this business has never been to grow sales alone. Our main focus is about choosing the right clients, maintaining comfortable project margins while minimizing our risk exposure.
While engineering & construction had performed strongly, our waste oil recycling unit, Daya Clarimax Sdn Bhd, had suff ered from an extended delay in licensing and implementation. In fact, it only came on stream towards the 4th quarter of 2012. We are now ramping up its operations and 2013 will see its fi rst full year of commercial operations. Ultimately, the key to the success of this business will be the amount of feedstock that we can secure to fully utilise our plant capacity.
There have been questions about our decision to retain TS, in particular construction & engineering, in our portfolio as our core business is emphatically O&G. The truth is we happen to like this business despite its relatively thin margin and cyclicality. Our rationale is a simple one. It is a business that we do not have to commit new capital even as we take on bigger and bigger projects. The scalability of this business and the inherent quality of most of our multinational clients enable us to earn proportionately larger income stream with practically the same level of resource base. So long as we are able to manage and mitigate most of the risks I highlighted earlier, the income earned from this business can be readily redeployed into our core O&G business.Having said that, when the time is right and the opportunity presents itself, we are certainly open to explore other strategic initiatives such as a spinoff via public listing or a trade sale.
19ANNUAL REPORT 2012 19ANNUAL REPORT 2012
Resolute
19ANNUAL REPORT 2012
20 DAYA MATERIALS BERHAD (636357-W)
Ethical
Segmental Revenue2011
Segmental EBITDA2011
Segmental PBT2011
Segmental PAT2011
Segmental Revenue2012
Segmental EBITDA2012
Segmental PBT2012
Segmental PAT2012
OG38%
SP7%
TS55%
OG62%
SP0%
TS38%
OG64%
SP5%
TS31%
OG64%
SP5%
TS31%
OG65%
SP1%
TS35%
OG63%
SP-1%
TS37%
OG36%
SP7%
TS57%
OG66%
SP6%
TS28%
20 DAYA MATERIALS BERHAD (636357-W)
CHAIRMAN’S STATEMENT(cont’d)
SPECIALIZED POLYMER DIVISION
If you have been following our business, you will probably notice that Specialized Polymer (“SP”) has underperformed over the past few years. Unfortunately 2012 was no diff erent. The reality is that the domestic cable polymer market in currently under a consolidation phase characterized by ultra thin margins and severe price competition. This diffi cult transformation is exacerbated by the infl ux of cheap imports. It is vital that we fi gure out a structural solution and explore ways where we can grow our structural position. The only consolation for us, if at all, is that SP is no longer our core business. Since our listing in 2005, our focus has largely shifted away from polymer into O&G. In 2012, SP accounted for only 7% of group sales (compared to over 30% some 3 years ago) and contributed virtually nothing to profi tability. Notwithstanding this, our aim is to continue to explore ways to restore this business into the cash cow that it once was and spin it off .
Segmental Contribution
Revenue EBITDA PBT PAT
2012 OG 104,519 38% 28,759 65% 24,463 63% 18,748 62%
TS 152,843 55% 15,496 35% 14,389 37% 11,658 38%
SP 19,561 7% 323 1% (245) -1% (53) 0%
276,923 100% 44,577 100% 38,606 100% 30,353 100%
2011 OG 101,615 36% 24,064 66% 20,090 64% 16,288 64%
TS 160,782 57% 10,369 28% 9,607 31% 7,983 31%
SP 19,310 7% 2,279 6% 1,673 5% 1,358 5%
281,707 100% 36,712 100% 31,370 100% 25,629 100%
21ANNUAL REPORT 2012 21ANNUAL REPORT 2012
Ethical
Segmental Revenue2011
Segmental EBITDA2011
Segmental PBT2011
Segmental PAT2011
Segmental Revenue2012
Segmental EBITDA2012
Segmental PBT2012
Segmental PAT2012
OG38%
SP7%
TS55%
OG62%
SP0%
TS38%
OG64%
SP5%
TS31%
OG64%
SP5%
TS31%
OG65%
SP1%
TS35%
OG63%
SP-1%
TS37%
OG36%
SP7%
TS57%
OG66%
SP6%
TS28%
21ANNUAL REPORT 2012
22 DAYA MATERIALS BERHAD (636357-W)
CHAIRMAN’S STATEMENT(cont’d)
LIQUIDITY & FINANCING
Strong fi nancial platform is the key to future growth. We monitor our fi nancial requirement on a short to medium term basis and seek refi nancing as and when appropriate. As at the end of 2012, the Group’s borrowings amounted to RM81.3 million, consisting of RM40.3 million short-term loans and trade lines, and RM40.9 million in long-term fi nancing. The Group’s net debt to total shareholders’ funds stood at 6.1% as compared to 1.8% in 2011. With cash and cash equivalent of RM66.4 million as well as signifi cant untapped debt capability, the Group’s liquidity position remains strong. We would like to caution however that in the coming years as the projects we take on grow in scale and size, the amount of borrowings, especially those of the short-term nature, will invariably increase. Our considerable and expanding order book necessitates a signifi cant ramp-up in working capital facilities, revolving credit and trade lines during the project execution phase. Barring unforeseen circumstances, these borrowings will be naturally and progressively extinguished during the completion phase.
SHARE BUYBACK
In line with our share buyback strategy announced in the last Annual Report, we bought back a total of 13,888,600 shares from the market at an average price of 19.7 sen in 2012. None of these treasury shares have been cancelled or resold. As at 31 December 2012, we held a total of 15,675,700 shares as treasury shares. Given our growth prospects, we will continue to execute selective share buybacks at attractive price levels, balancing our desire to enhance the Group’s long-term EPS and ongoing liquidity requirements.
DIVIDEND
In line with our Group’s dividend policy, the Board has proposed a single tier fi nal dividend of 2.5% for the fi nancial year ended 31 December 2012 of 0.25 sen per share. This dividend will be paid in August 2013.
FUTURE PROSPECTS
The global economic landscape will be ever-changing with new challenges abound in the coming year. Malaysia’s economic performance will inevitably be shaped by external factors. As a whole, while the European situation remains a big concern, we expect positive economic growth both domestically and globally as a whole.
Achieving a fi ne balance between operational growth and fi nancial stability is always central to our strategy. Signifi cant eff orts have been made in our O&G business to ensure that we are well-positioned to capitalize on the opportunities arising from market. Petronas’ 5-year capital expenditure program of RM300 billion presents exciting opportunities for us. Our strategic expansion in the off shore construction and well services, among others, is designed to leapfrog us into the forefront of this arena.
2013 is shaping up to be “a year of execution” for us. If all our projects were to be clinically executed, signifi cant growth in business volume and profi tability can be realized. We are indeed on the precipice of a cataclysmic transformation. Time will tell.
As always, we will be vigilant in our pursuit for growth.
22 DAYA MATERIALS BERHAD (636357-W)
23ANNUAL REPORT 2012 23ANNUAL REPORT 2012
CORPORATE SOCIAL RESPONSIBILITY
“Social responsibility is neither a fad nor an optional extra. The interest in it is refl ective of a deeper change in the relationship between companies and their stakeholders, including consumers. Faith in the benefi ts of profi ts to consumers has halved since the Seventies, as a viable basics of a relationship; that faith has been replace by a desire to see companies acting as active and responsible citizens. Healthy businesses require a healthy community and should be contributing to its creation and maintenance”
- Stewart Lewis, Measuring Corporate Reputation, 1999
In ensuring the company’s principle in delivering CARE, the DMB group of companies continued its eff orts towards enriching the local communities. The year in review saw the various CSR activities within the DMB group.
On 18 November 2012, the employees of DCMT led by their Chief Executive Offi cer participated in the Penang Bridge Marathon in an eff ort to raise funds for their CSR program. Together with the contributions from their business associates, they managed to raise RM24,480. Cash totaling to RM22,000 plus the balance of the which were utilized to purchase necessities and essential items, were thereafter channeled to four deserving homes. The team in DCMT together with the business associates spent over two days on the 30th& 31st January 2013, visiting these charitable organizations to send the donations and also to spend some time with them.
The four organizations which were recipients of their contributions are:
(i) Charis Hospice, a charitable organization which provides free medical support home care services to patients with terminal and advance illness, and also free loan of medical equipment.
(ii) Persatuan Kebajikan Kanak-Kanak Cacat Yee Ran Jing Sheh, a center which houses about more than 60 handicapped residents aged between 5 to 40 years of age.
23ANNUAL REPORT 2012
24 DAYA MATERIALS BERHAD (636357-W)
(iii) St. Joseph’s Orphanage, which has about 34 children aged between 5 to 17 years of age. This home provides children who reside in and also children who are non-residents who are of poor social economic background, with vocational training so that they can be independent in the future.
(iv) Persatuan Kebajikan Anak-Anak Islam, an orphanage that houses children aged between 4 to 17 years of age.
Circa December 2012, DPRO continued their CSR towards Pusat Pemulihan Dalam Komuniti (PDK) Kompleks Penyayang Kemaman for the second year. Activities carried out this time around were:
(i) renovation works in the classrooms (ii) repair works replacing the doors in the hall and to replace 2 signage signs(iii) contribution of sports equipments and a PA system
These contributions were channeled to ensure that the students are not confi ned to the classroom but are also active in out of classroom activities. It is hoped that with the betterment of facilities in the center, the occupants of the center feel a sense of belonging and are being appreciated.
CORPORATE SOCIAL RESPONSIBILITY(cont’d)
25ANNUAL REPORT 2012
CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Daya Materials Berhad (the “Board”) is committed towards achieving excellence in corporate governance and acknowledges that the prime responsibility for good corporate governance lies with the Board. The Board, in carrying out their roles and responsibilities, is fi rmly committed to ensuring that the highest standards of corporate governance and corporate conduct are adhered to, in order that the Group achieves strong fi nancial performance for each fi nancial year, and more importantly delivers long-term and sustainable value to shareholders.
The Malaysian Code on Corporate Governance 2012 (“the Code”) sets out principles and recommendations on structures and processes that companies should adopt in making good corporate governance an integral part of their business dealings and culture. The Board reaffi rms its support to the Code and believes that good corporate governance is fundamental in achieving the Group’s objectives. To ensure that the best interests of shareholders and other stakeholders are eff ectively served, the Board continues to play an active role in improving governance practice and constantly monitors the development in corporate governance including in the Code.
The Board is pleased to report to the shareholders, the manner in which the Group has applied and complied with the Principles and Recommendations of the Code for the fi nancial year ended 31 December 2012.
1. DIRECTORS
1.1 Board Composition and Balance
As at the date of this statement, the Board consists of six (6) members, comprising two (2) Executive Directors and four (4) Independent Non-Executive Directors with the appropriate mix of skills and experience. With this Board composition, the Company has thus complied with paragraph 15.02(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) which requires that at least two (2) Directors or one-third (1/3) of the Board of Directors, whichever is the higher, to be Independent Directors.
The Directors from diff erent backgrounds and specialisation collectively bring depth and diversity in experience to the Group’s operations. The Independent Non-Executive Directors are independent from management and have no family or business relationships with the Group that could interfere with the exercise of their independent judgment. They bring to bear objective and independent judgment to the decision making of the Board and provide an eff ective check and balance for the Executive Directors.
In maintaining the independence of the Independent Directors of the Company, annual assessment is performed in order to mitigate risks arising from any possible confl ict of interest situations or undue infl uence aff ecting their independence. In line with the recommendations of the Code, the tenure of an Independent Director of the Company should not exceed a cumulative term of nine (9) years. As at the date of this statement, none of the Independent Directors of the Company have exceeded their nine (9)-year term.
The roles of the Chairman, the Vice Chairman and the Managing Director are separate with clear distinction of responsibilities between them to ensure balance of power and authority. The Chairman, who is a Non-Executive Director, is primarily responsible for the orderly conduct and working of the Board whilst the Vice Chairman and the Managing Director are responsible for the running of the business and operations and implementation of the Board’s policies and decisions.
The brief profi les of each Board member are set out under Profi le of Directors on pages 10 to 13 of this Annual Report.
1.2 Duties and Responsibilities
The Board is overall responsible for the corporate governance structure of the Group. Its primary responsibilities pursuant to the recommendations of the Code include:
• review and adopt a strategic plan for the Group;• oversee the conduct of the Group’s business to evaluate whether the business is being properly
managed;• identify principal risk and ensure the implementation of appropriate systems to manage these risks;• implement succession planning, including appointing, training, fi xing the compensation of and where
appropriate, replacing senior management;• develop and implement an investor relations program or shareholders communications policy for the
Group; and• review the adequacy and the integrity of the Group’s internal control systems and management
information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines.
26 DAYA MATERIALS BERHAD (636357-W)
CORPORATE GOVERNANCE STATEMENTcont’d
1. DIRECTORS (cont’d)
1.2 Duties and Responsibilities (cont’d)
The Board has delegated certain responsibilities to the Board Committees, such as the Audit Committee, Nomination Committee and Remuneration Committee, which operate within clearly defined terms of reference. These Board Committees have the authority to examine specific issues and forward their recommendations to the Board. At each Board meeting, minutes of the Board Committees meetings are presented to the Board. The respective Chairman of the Board Committees will also report to the Board on key issues deliberated by the Board Committees. The final decisions on all matters, however, rest with the Board.
To ensure the effective discharge of its function and responsibilities, the Board also delegates some of the Board’s authorities to the Executive Committee (“EXCO”), which represents the Management. The EXCO is entrusted with the responsibility of carrying out tasks which are assigned by the Board. The EXCO acts on behalf of the Board on matters concerning administrations, operations, capital expenditure, debt approvals and investments. It meets at regular intervals to review and decide on administrative and operational matters, budgets and investment strategies of the Group.
The Board Charter is currently being drafted and will be posted on the Company’s website after the Board’s approval.
1.3 Supply of Information
The Board has unrestricted access to timely and accurate information necessary in the furtherance of their duties. All Directors are furnished with the meeting agenda and other documents on matters requiring their consideration prior to and in advance of each meeting. The documents are comprehensive and include qualitative and quantitative information to enable the Board members to make an informed decision. Senior Management may be invited to attend these meetings to explain and clarify to the Board on matters being tabled.
The Chairman, with the assistance of the Management, undertakes primary responsibility for organising information necessary for the Board to deal with the agenda and in ensuring all Directors have full and timely access to the information relevant to the matters that will be deliberated at the Board meeting. Certain reports, such as those relating to the Company’s financial results for statutory announcements, are submitted to the Audit Committee for their review and recommendation to the Board for approval thereafter.
All proceedings from the Board meetings are recorded by way of minutes. The minutes are then confirmed by the Board and signed as correct records of the proceedings thereat by the Chairman of the meeting.
All the Directors have access to the advice and services of the Company Secretary on procedural and regulatory requirements. If required, the Directors may seek independent external professional advice at the Group’s expense, in the furtherance of their duties.
During the financial year ended 31 December 2012, the Board met seven (7) times where it deliberated on and considered matters relating to the Group’s financial performance, significant investments, change to management and control structure of the Group, corporate development, strategic issues and business plan. The attendance of each Director at Board meetings held during the financial year ended 31 December 2012 is set out below.
Name of DirectorsNo. of Board meetings
attendedPercentage of
attendance (%)
Dato’ Azmil Khalili bin Dato’ Khalid 5/7 71
Dato’ Mazlin bin Md. Junid 7/7 100
Nathan Tham Jooi Loon 7/7 100
Fazrin Azwar bin Md. Nor 7/7 100
Dato’ Sri Koh Kin Lip JP 6/7 86
Lim Soon Foo (or Alternate, Ronnie Lim Hai Liang) 7/7 100
27ANNUAL REPORT 2012
CORPORATE GOVERNANCE STATEMENTcont’d
1. DIRECTORS (cont’d)
1.3 Supply of Information (cont’d)
None of the Directors was absent for more than 50% of the total Board meetings held under the financial year under review, hence complying with paragraph 15.05 of the Main Market Listing Requirements of Bursa Securities.
1.4 Board Committees
1.4.1 Audit Committee
The Board established the Audit Committee on 1 June 2005. The Audit Committee comprises of three (3) members, all of whom are Independent Non-Executive Directors. The composition, terms of reference and summary of activities of the Audit Committee during the financial year under review are disclosed in the Audit Committee Report as set out on pages 35 to 37 of this Annual Report.
1.4.2 Nomination Committee
The Nomination Committee comprises three (3) members, all of whom are Independent Non-Executive Directors:
Chairman : Dato’ Azmil Khalili bin Dato’ Khalid (Independent Non-Executive Director)Member : Fazrin Azwar bin Md. Nor (Senior Independent Non-Executive Director) Dato’ Sri Koh Kin Lip JP (Independent Non-Executive Director)
The Board was of the view that the Board Committees should be chaired by different Independent Non-Executive Directors. Hence, the Board agreed that Dato’ Azmil Khalili bin Dato’ Khalid to remain as Chairman of the Nomination Committee, while Encik Fazrin Azwar bin Md. Nor, who is the Senior Independent Non-Executive Director of the Company to continue to act as Chairman of the Audit Committee.
The functions of the Nomination Committee are as follows:
i) To review regularly the Board structure, size and composition and make recommendations to the Board with regards to any adjustments that are deemed necessary;
ii) To propose and identify new nominees for appointment to the Board;iii) To assess Directors on an on-going basis, the effectiveness of the Board as a whole, the Board
Committees and the contribution of each individual Director as well as the Chief Executive Officer;
iv) To recommend to the Board, Directors to fill the seats on Board Committees;v) To review annually the Board’s mix of skills and experience and other qualities including core
competencies which non-executive Directors should bring to the Board; vi) To develop the criteria to assess independence of the Independent Directors of the Company;vii) To determine annually whether or not a Director is Executive, Non-Executive or Independent;viii) To recommend to the Board for continuation (or not) in service of executive Director(s) and
Directors who are due for retirement by rotation;ix) To consider, in making its recommendations, candidates for directorships proposed by the Chief
Executive Officer and, within the bounds of practicability, by any other senior executive or any Director or shareholder; and
x) To orientate and educate new Directors on the nature of the business, current issues within the Group and the corporate strategy, the expectations of the Group concerning input from the Directors and the general responsibilities of Directors.
During the financial year ended 31 December 2012, the Nomination Committee met two (2) times and the attendance of each member are as follows:
Nomination CommitteeNo. of Nomination Committee
meetings attended
Dato’ Azmil Khalili bin Dato’ Khalid 2/2
Fazrin Azwar bin Md. Nor 2/2
Dato’ Sri Koh Kin Lip JP 2/2
28 DAYA MATERIALS BERHAD (636357-W)
CORPORATE GOVERNANCE STATEMENTcont’d
1. DIRECTORS (cont’d)
1.4 Board Committees (cont’d)
1.4.3 Remuneration Committee
The Remuneration Committee comprises of four (4) members, all of whom are Independent Non-Executive Directors:
Chairman : Dato’ Sri Koh Kin Lip JP (Independent Non-Executive Director)Member : Dato’ Azmil Khalili bin Dato’ Khalid (Independent Non-Executive Director) : Fazrin Azwar bin Md. Nor (Independent Non-Executive Director) : Lim Soon Foo (Independent Non-Executive Director)
The duties and functions of the Remuneration Committee are as follows:
i) To recommend to the Board the framework of Executive Directors’ remuneration and the remuneration package for each Executive Director, drawing from outside advise as necessary;
ii) To recommend to the Board, guidelines for determining remuneration/fees of Non-Executive Directors;
iii) To recommend to the Board any performance related pay schemes for Executive Directors;iv) To review Executive Directors’ scope of service contracts; andv) To consider the appointment of the service of such advisers or consultants as it deems necessary
to fulfill its functions.
During the financial year ended 31 December 2012, the Remuneration Committee met three (3) times and the attendance of each member are as follows:-
Remuneration CommitteeNo. of Remuneration Committee
meetings attended
Dato’ Azmil Khalili bin Dato’ Khalid 3/3
Fazrin Azwar bin Md. Nor 3/3
Dato’ Sri Koh Kin Lip JP 3/3
Lim Soon Foo (appointed on 20.11.2012) -
1.5 Appointments to the Board
The Board recognises its responsibility to carefully appraise and consider the appointment of new and existing Directors so as to continue functioning effectively. Thus, whilst the initial appraisal of new candidates is delegated to the Nomination Committee, the Board will assess and review the appointment or re-appointment of each Director to ensure a good balance of skills and experience in the Board composition. The decision on appointment of new Directors rests with the Board after considering the recommendations of the Nomination Committee.
As at the date of this statement, the Company has not established a policy formalising its approach to boardroom diversity. Hence, no gender diversity policies, targets and measures have been set. The Board, through the Nomination Committee will take the necessary steps to ensure that women candidates are sought as part of its recruitment exercise.
1.6 Re-election of Directors
In accordance with the Company’s Articles of Association, one-third (1/3) or the number nearest to one-third (1/3) of the Directors shall retire from office and be eligible for re-election at the Annual General Meeting. Furthermore, each Director shall retire from office at least once in every three (3) years but shall be eligible for re-election. The Directors to retire each year are the Directors who have been longest in office since their last election.
29ANNUAL REPORT 2012
CORPORATE GOVERNANCE STATEMENTcont’d
1. DIRECTORS (cont’d)
1.7 Directors’ Trainings
All members of the Board have completed the Mandatory Accreditation Programme (“MAP”) which was conducted by the Research Institute of Investment Analysts Malaysia as required by Bursa Securities. The Board will undertake an assessment of the training needs of each Directors annually and the Directors will continue to undergo further Continuous Education Program to keep themselves abreast with the latest developments in the market place and enhance their professionalism in the discharge of their duties and responsibilities.
Save for the under mentioned Directors who have attended the trainings as follows, the other Directors have not attended any training during the financial year ended 31 December 2012 due to their respective conflicting schedule and travel commitments:
Dato’ Mazlin Bin Md. Junid
5 January 2012 – “Balance Scorecards Development” – organised by Daya Materials Berhad
Nathan Tham Jooi Loon
5 January 2012 – “Balance Scorecards Development” – organised by Daya Materials Berhad
Fazrin Azwar bin Md. Nor
14 March 2012 – “The Case For Diversity In The Boardroom” – round panel talk organised by CSR Asia and Bursa Malaysia
05 April 2012 – “Latest Developments In Technologies On Biomass Utilisation” – Prof Dr Ing Volker Thole - talk organised by Malaysian Palm Oil Board
05 April 2012 – “Potential Threat To The Oil Palm Industry In South East Asia” – Prof Dr Richard Martin Cooper - talk organised by Malaysian Palm Oil Board
22 May 2012 – “Role of the Audit Committee in Assuring Audit Quality” – talk organised by Malaysian Institute of Accountants and Bursa Malaysia
18 June 2012 – “Corporate Governance Blueprint and Malaysian Code of Corporate Governance 2012” – talk organised by Institute of Internal Auditors Malaysia and Bursa Malaysia
04 July 2012 – “Making The Most of The Chief Financial Office Role: Everyone’s Responsibility?” – talk organised by ICAEW and Bursa Malaysia.
25 October 2012 – “Times Offset (M) Sdn Bhd Manufacturing Seminar”– organised by Times Publishing
23 November 2012 – “Prime Minister’s 1Malaysia Economic Transformation Programme” – organised by Archer Consulting Group Sdn Bhd
Dato’ Sri Koh Kin Lip JP
23 October 2012 – “2013 Budget Proposals and Recent Tax Development” – organised by Ernst & Young Tax Consultants Sdn. Bhd.
30 DAYA MATERIALS BERHAD (636357-W)
CORPORATE GOVERNANCE STATEMENTcont’d
1. DIRECTORS (cont’d)
1.8 Number of Directorship
Pursuant to the Main Market Listing Requirements of Bursa Securities, Directors of the Company shall not hold more than (5) directorship in public listed companies by 1 June 2013. Prior to acceptance to new directorship in other public listed companies, the Directors are required to first notify the Chairman, including the estimated time commitment required, to ensure that such appointment would not affect their commitments and focus for an effective input to the Board.
None of the Directors of the Company hold more than (5) directorship in public listed companies. The directorships of each Director are set out in the Profile of Directors on pages 10 to 13 of this Annual Report.
1.9 Qualified and Competent Company Secretary
The Board is satisfied with the performances and support rendered by the Company Secretary to the Board in the discharge of its functions. The Company Secretary plays an advisory role to the Board in relation to the Company’s constitution, Board’s policies and procedures and compliance with the relevant regulatory requirements, codes or guidance and legislations. The Company Secretary supports the Board in managing the Company’s governance model, ensuring it’s effective and relevant. The Company Secretary also ensures the deliberations and decisions made at the Board meetings are well captured and minuted.
1.10 Code of Ethics
The Board is currently looking at formalising ethical standards through a code of conduct.
The Group is committed in maintaining the highest standards of honesty, integrity and ethical conduct and is in the progress of establishing a code of conduct and Anti-Fraud and Whistle-Blower Protection Policy to ensure consistent and effective investigation, reporting and disclosure of fraud occurrence within the Group.
2. DIRECTORS’ REMUNERATION
The remuneration of Directors is determined at levels, which will enable the Company to attract and retain Directors with the relevant experience and expertise to run the Group successfully. The remuneration of Executive Directors is structured to link rewards to corporate and individual performance. The determination of the remuneration packages of non-executive directors, including non-executive chairman, is a matter for the Board as a whole.
The details of the remuneration for Directors during the financial year ended 31 December 2012 are as below:
Aggregate remuneration categorised into components:
Executive Directors
Non-Executive Directors Total
RM RM RM
Fees 58,000 108,000 166,000
Salaries & other emoluments 3,138,290 53,500 3,191,790
Total 3,196,290 161,500 3,357,790
The number of Directors whose total remuneration fall within the following bands:-
RangeExecutive Directors
Non-Executive Directors
Below RM50,000 - 4
RM1,100,001 – RM1,150,000 1 -
RM2,050,001 – RM2,100,000 1 -
31ANNUAL REPORT 2012
CORPORATE GOVERNANCE STATEMENTcont’d
3. INVESTORS RELATION AND SHAREHOLDERS COMMUNICATION
The Company recognises the value of transparent, consistent and coherent communications with investment community consistent with commercial confidentiality and regulatory considerations. The Company aims to build long-term relationships with shareholders and potential investors through appropriate channels for the management and disclosure of information. These investors are provided with sufficient business, operations and financial information on the Group to enable them to make informed investment decisions.
3.1 Dialogue with shareholders and investors
In maintaining the commitment to effective communication with the shareholders, the Company adopts the practice of comprehensive, timely and continuing disclosures of information to its shareholders as well as to the general investing public.
Where possible and applicable, the Company also provides additional disclosure of information on a voluntary basis. The Company believes that consistently maintaining a high level of disclosure and extensive communication with its shareholders is vital to shareholders and investors to make informed investment decisions.
The primary tools of communication with the shareholders of the Company are through the annual report, quarterly reports, announcements through Bursa Securities and circulars. The Company’s website at www.dmb.com.my contains vital information concerning the Group which is updated on a regular basis and shareholders are able put questions to the Company through the website.
The Board considers it is essential that investors are kept informed of all the latest financial results and developments of the Company and the Group and where appropriate, will provide disclosure that is in the best interest of the Company and also of the shareholders. All such reporting information can be obtained from the websites of the Company and Bursa Securities.
In addition to the above, the Board has identified En. Fazrin Azwar bin Md. Nor as the Senior Independent Non-Executive Director to whom all concerns from the shareholders or investors may be conveyed.
3.2 General Meetings
At the Annual General Meeting and Extraordinary General Meeting, the Chairman gives shareholders ample opportunity to participate through questions on the prospects, performance of the Group and other matters of concern addressed to the Board. Notice of the general meetings and the Group’s annual report are sent out to the shareholders within the period prescribed by the Company’s Articles of Association. The notice of the meetings will also be advertised in the newspaper.
The Company would conduct poll voting if demanded by shareholders at the general meetings.
4. ACCOUNTABILITY AND AUDIT
4.1 Financial Reporting
The Board is responsible for presenting a balanced and meaningful assessment of the Group’s financial performance and prospects primarily through the annual report, financial statements and quarterly announcements of the Group’s results. The Audit Committee assists the Board in ensuring accuracy, adequacy and completeness of information for disclosure. The Statement by Directors pursuant to Section 169 of the Companies Act, 1965 is set out on page 44 of this Annual Report and the Statement explaining the responsibility for preparing the annual audited financial statements is set out on page 134 of this Annual Report.
4.2 Internal Control and Risk Management
The Board is ultimately responsible for the overall system of internal controls, which includes not only financial controls but also controls relating to operations, compliance and risk management. The internal control system which is designed to meet the needs of the Company and to manage risks to which the Company is exposed can only provide reasonable and not absolute assurance against material misstatement, loss or fraud.
Further details relating to internal control are set out in the Statement on Risk Management and Internal Control on pages 33 and 34 and the Audit Committee Report on pages 35 to 37 of this Annual Report.
32 DAYA MATERIALS BERHAD (636357-W)
4. ACCOUNTABILITY AND AUDIT (cont’d)
4.3 Relationship with Auditors
The external auditors, Messrs Ernst & Young, have continued to report to members of the Company on theirs findings which are included as part of the Company’s financial reports with respect to each year’s audit on the statutory financial statements. In doing so, the Company has established a transparent arrangement with the auditors to meet their professional requirements.
Key features underlying the relationship of the Audit Committee with the external auditor and internal auditor are included in the Audit Committee Report on pages 35 to 37 of this Annual Report.
5. SUSTAINABILITY POLICY
The Board promotes good corporate governance in the application of sustainability practices throughout the Group, the benefits of which are believed to translate into better corporate performance.
A detailed report on sustainability activities, demonstrating the Company’s commitment to the global environmental, social, governance and sustainability agenda, appears in the Corporate Responsibility Statement on pages 23 and 24 of this Annual Report.
CORPORATE GOVERNANCE STATEMENTcont’d
33ANNUAL REPORT 2012
STATEMENT ON RISK MANAGEMENTAND INTERNAL CONTROL
INTRODUCTION
The Board of Directors of Daya Materials Berhad (the “Board”) is pleased to provide the following statement on the state of risk management and internal control of Daya Materials and its subsidiaries (“Group”), which have been prepared in accordance with the “Statement on Risk Management and Internal Control: Guidance for Directors of Public Listed Companies” as adopted by the Bursa Malaysia Securities Berhad (“Bursa Securities”).
BOARD RESPONSIBILITY
The Board acknowledges its responsibility to maintain a sound system of internal control in the Group and to review the adequacy and integrity of the system to safeguard the shareholders’ investments and the Group’s assets. As with the inherent limitations in any system of internal control, the Group’s system too is designed to manage rather than eliminate the risk of failure to achieve its business objectives. The system of internal control is designed to provide reasonable assurance against material misstatement or loss.
The Board confirms that there is an ongoing process for identifying, evaluating, monitoring and managing the significant risks faced by the Group. This process has been in place throughout the year. Such process is also applied consistently throughout the Group and is regularly reviewed by the Board.
THE GROUP’S SYSTEM OF INTERNAL CONTROL
The Board has established an internal audit function which is carried out in-house via the Group Internal Audit Department. This audit function covers all principal areas of operations and continuously offers assurances on the system of internal control. The internal audit function is independent of the activities it audits and audits are performed with impartiality, proficiently and with due professional care. The internal audit function reports to the Audit Committee whose members are all independent and non-executive members of the Board. All reports are presented to the Audit Committee whom shall ensure that all risks identified are satisfactorily dealt with. It is the practice of the Board to review the internal audit function’s scope of work, authority and resources as and when required.
The internal audit function has adopted a risk-based approach in its audit work. The audit focused on areas with high risk, which were identified in the risk management framework, to ensure that the controls were functioning and where necessary, action plans were developed to improve on controls to manage significant risks.
The Group has put in place the following key elements of internal control:-
i) There is a formal organization structure within the Group with delineated lines of responsibility, authority and accountability;
ii) Clearly documented internal policies, manuals, procedures and work instructions, and which are updated from time to time;
iii) Regular Board and management meetings are held where information is provided to the Board and management covering financial performances and operations;
iv) Major investments, acquisitions and disposals are appraised prior to approval by the EXCO or the Board;v) Regular training and development programs are being attended by employees with the objective of enhancing
their knowledge and competency; andvi) Management accounts and reports are prepared monthly for monitoring of actual performance versus budget. In
this instance, material variances are explained and corrective actions, where necessary, are taken.
The Audit Committee established by the Board performs an oversight role in maintaining the integrity of the Group’s system of internal control. The Audit Committee is assisted by the Group Internal Audit Department which performs regular audits to review the internal controls and risk management practices and also the external auditors which review the financial reporting controls. The internal control system will continue to be reviewed, added on or updated in line with the changes in the operating environment.
The internal audit expense costs incurred for the financial year ended 31 December 2012 was RM129,932.50.
34 DAYA MATERIALS BERHAD (636357-W)
STATEMENT ON RISK MANAGEMENTAND INTERNAL CONTROL (cont’d)
RISK MANAGEMENT
The Group has established a risk management framework, where a structured process to identify, evaluate, manage and communicate principal risks faced by the Group was formalized via the Risk Management Policy and Guidelines for adoption by all business units across the Group.
The management is responsible for identifying, analyzing, managing and reporting on significant risks on an ongoing basis. These functions were carried out continuously during the year and significant risk matters together with the relevant systems of controls to manage those risks are reported to the Board for discussion on quarterly basis.
The risk profile of the Group has been compiled to facilitate the Board and management to prioritize their focus on areas of high risks. Corresponding controls to manage the relevant identified risks have also been documented. Where there are deficiencies, action plans have been developed to improve the system of controls in order to effectively manage the risks.
CONTROL WEAKNESS
The management continues to take measures to strengthen the control environment. In the year under review, there was no material losses, incurred as a result of weakness in the internal control that would require disclosure in this annual report.
CONCLUSION
The Board is of the opinion that based on the current level of activities; the Group’s system of internal control is adequate and accords with the guidance provided by the Internal Control Guidance adopted by the Bursa Securities.
22 April 2013
35ANNUAL REPORT 2012
AUDIT COMMITTEE REPORT
COMPOSITION
Members of the Audit Committee, their respective designations and directorate are as follows:-
Chairman : FAZRIN AZWAR BIN MD. NOR Chairman, Independent Non-Executive Director
Members : DATO’ SRI KOH KIN LIP JP Independent Non-Executive Director
DATO’ AZMIL KHALILI BIN DATO’ KHALID Independent Non-Executive Director
MEMBERSHIP
The Audit Committee shall be appointed by the Board from amongst the Directors and shall consist of not less than three (3) members, where all members must be non-executive directors with a majority of whom shall be Independent Directors.
The Board shall, within three (3) months of a vacancy occurring in the Audit Committee which results in the number of members reduced to below three (3), appoint such number of new members as may be required to make up the minimum number of three (3) members.
The members of the Audit Committee shall elect a Chairman from among their members who shall be an Independent Director. An alternate Director must not be appointed as a member of the Audit Committee.
The Board shall review the terms of office and performance of the Audit Committee and each of its members at least once (1) in every three (3) years to determine whether the Audit Committee and the members have carried out their duties in accordance with their terms of reference.
AUTHORITY
The Committee shall, in accordance with the procedure determined by the Board and at the cost of the Company have authority to investigate any matter within its terms of reference, full and unrestricted access to any information pertaining to the Company and all the resources required to perform its duties. The Committee shall have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity and be able to convene meetings or to obtain independent external professional advice or other advice and to secure the attendance of outsiders with relevant experience and expertise if it considers necessary.
MEETINGS
The Committee shall meet at least four (4) times in a year subject to the quorum of at least two (2) independent directors or more frequently as circumstances required or upon the request of any member of the Committee with due notice of issues to be discussed and shall record its deliberations and conclusions in discharging its duties and responsibilities. The Committee may invite any Board member or any member of management or any employee of the Company who the Committee thinks fit to attend its meetings to assist and to provide pertinent information as necessary.
The Committee may regulate its own procedures, in particular:
a) The calling of meetings;b) The notice to be given of such meetings;c) The voting and proceedings of such meetings;d) The keeping of minutes; ande) The custody, production and inspection of such minutes.
The Company Secretary shall act as Secretary of the Audit Committee and shall, with the concurrence of the Chairman, draw up the agenda of meetings. The notice of meetings and the meeting papers or explanatory documentation will be circulated to the Audit Committee members prior to each meeting.
The Secretary shall also be responsible for recording the proceedings of the Audit Committee.
36 DAYA MATERIALS BERHAD (636357-W)
AUDIT COMMITTEE REPORT(cont’d)
DUTIES
The duties of the Audit Committee include the following:
i) To review the quarterly results and the year-end financial statements, prior approval by the Board, focusing particularly on:
Changes in or implementation of accounting policies and practices; Significant adjustments or unusual events; Going concern assumption; and Compliance with applicable approved financial reporting standards, regulatory and other legal requirements;
ii) To review with the external auditor, the audit scope and plan, including any changes to the planned scope of the audit plan, and to discuss to ensure co-ordination where more than one audit firm is involved;
iii) To review with the external auditor, the results of the interim and final audits and the Management’s response thereto, including the status of previous audit recommendations;
iv) To review the assistance given by the Company’s employees to the auditors, and any difficulties encountered in the course of audit work, including any restrictions on the scope of activities or access to required information (in the absence of management where necessary);
v) To review the appointment and performance of external auditor, the audit fee and any question of resignation or dismissal before making recommendations to the Board;
vi) To review with the external auditor, its evaluations of the system of internal controls;vii) To assess the suitability and independence of external auditors;viii) To review the adequacy of the internal audit scope, functions, authority, competency and resources of the internal
audit function and that it has necessary authority to carry out its work;ix) To review the internal audit programme, processes and reports to evaluate the findings of the internal audit and
to ensure that appropriate and prompt remedial action is taken by Management on the recommendations of the internal audit function;
x) To review any appraisal or assessment of the performance of the internal audit function;xi) To approve any appointment or termination of internal audit function;xii) Take cognisance of resignations of internal audit function and provide an opportunity to submits its reasons for
resigning; xiii) To consider any related party transaction and conflict of interest situation that may arise within the Group including
any transaction, procedure or course of conduct that raises questions of management integrity;xiv) To verify the allocation of Employees’ Share Option Scheme (“ESOS”) in compliance with criteria as stipulated in the
By laws of ESOS of the Company, if any;xv) To direct and, where appropriate, supervise any special projects or investigation considered necessary, and review
investigation reports on any major defalcations, frauds and thefts; and xvi) Such other responsibilities as may be agreed to by the Audit Committee and the Board.
SUMMARY OF ACTIVITIES
During the financial year ended 31 December 2012, the Audit Committee met five (5) times and the attendance of each member is as follows:
Name of Director No. of meetings attended
Fazrin Azwar bin Md. Nor 5/5
Dato’ Azmil Khalili bin Dato’ Khalid 4/5
Dato’ Sri Koh Kin Lip JP 5/5
37ANNUAL REPORT 2012
AUDIT COMMITTEE REPORT(cont’d)
SUMMARY OF ACTIVITIES (cont’d)
During the financial year ended 31 December 2012, the Audit Committee have considered, reviewed and discussed the following:
i) Reviewed the external auditor’s scope of work and audit plan for the financial year. Prior to the audit fieldwork, representatives from the external auditor presented their audit strategy and plan to the Audit Committee;
ii) Reviewed with the external auditor the results of the interim and final audits, the management letter, including management’s response and the evaluation of the system of internal controls;
iii) Considered and recommended to the Board the re-appointment of the external auditor and approval of audit fees payable to the external auditor;
iv) Met with external auditor twice (2) during the financial year without the presence of any Executive Directors, to discuss problems and reservations arising from the interim and final audits, if any, or any other matter the auditor may wish to discuss;
v) Reviewed the internal audit function’s resource requirements, adequacy of plan, functions and scope for the financial year under review;
vi) Reviewed the performance and competency of internal audit function;vii) Reviewed the internal audit plan, processes and reports which highlighted the audit issues, recommendations and
Management’s response. Discuss with Management and ensure appropriate actions were taken to improve the system of internal controls based on improvement opportunities identified in the internal audit reports;
viii) Reviewed the adequacy and effectiveness of the governance and risk management processes as well as the internal control system through risk assessment reports from the internal auditor. Significant risk issues were summarized and communicated to the Board for consideration and resolution;
ix) Reviewed the unaudited quarterly financial results of the Group and making relevant recommendations to the Board for approval. The review and discussions were conducted with the Group Chief Financial Officer;
x) Reviewed the audited financial statements of the Group prior to submission to the Board for its consideration and approval. The review was to ensure that the audited financial statements were drawn up in accordance with the provisions of the Companies Act, 1965 and the applicable approved Financial Reporting Standards for entities other than private entities issued by the MASB. Any significant issues resulting from the audit of the financial statements by the external auditors were deliberated;
xi) Reviewed related party transactions entered into by the Group, conflict of interest situations and report the same to the Board;
xii) Reviewed the Statement on Risk Management and Internal Control and its recommendation to the Board for inclusion in the Annual report; and
xiii) Pertinent issues of the Group which has significant impact on the results of the Group.
The Company has implemented an Employees’ Share Option Scheme (“ESOS”) of up to 10% of its issued and paid-up share capital for the eligible directors and employees of the DMB Group on 26 February 2009. However, to date, no ESOS options have been granted. Therefore, no verification by the Audit Committee on the allocation of options granted to employees pursuant to the ESOS.
SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT FUNCTION
During the financial year ended 31 December 2012, the internal audit function carried out two (2) risk-based audit engagements involving Daya Polymer Sdn Bhd and Daya CMT Sdn Bhd and three (3) follow-up audits involving Daya Proffscorp Sdn Bhd, Daya OCI Sdn Bhd and Daya Secadyme Sdn Bhd. In addition, the internal audit function also conducted special audit review on the business operation in Indonesia involving P.T. Daya Secadyame (Indonesia). The results of the review were presented in the forms of reports to the Audit Committee during the quarterly Audit Committee meetings. The reports set out audit findings and recommendations for improvements and status of prior audit findings. The internal auditors also presented the internal audit plan for the financial year ending 31 December 2013 during one of the meetings. The internal audit plan will be revised and amended during the year (if required) to accommodate with the environmental changes within the Group.
Financial Statements
Directors' Report
Statement by Directors
Statutory Declaration
Independent Auditors' Report
Income Statements
Statements of Comprehensive Income
Statements of Financial Position
Statements of Changes in Equity
Statements of Cash Flows
Notes to the Financial Statements
Supplementary Information
40
44
44
45
47
48
49
51
53
56
133
Financial Statements
Directors' Report
Statement by Directors
Statutory Declaration
Independent Auditors' Report
Income Statements
Statements of Comprehensive Income
Statements of Financial Position
Statements of Changes in Equity
Statements of Cash Flows
Notes to the Financial Statements
Supplementary Information
40
44
44
45
47
48
49
51
53
56
133
40 DAYA MATERIALS BERHAD (636357-W)
DIRECTORS’ REPORT
The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2012. PrinciPal activities The principal activities of the Company are investment holding and provision of management services to its subsidiaries. The principal activities of the subsidiaries are set out in Note 13 to the financial statements. There have been no significant changes in the nature of the principal activities during the financial year. results
Group company
rM rM
Profit for the year 20,116,201 2,010,046
Attributable to:
Equity holders of the Company 20,170,784 2,010,046
Non-controlling interests (54,583) -
20,116,201 2,010,046 There were no material transfers to or from reserves or provisions during the financial year. In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature. DiviDenDs The amount of dividends paid by the Company since 31 December 2011 in respect of the financial year ended 31 December 2011 as reported in the directors’ report of that year was as follows:
rM
Final tax exempt (single-tier) dividends of 2.5% 3,074,022 At the forthcoming Annual General Meeting, a single tier dividends of 2.5% in respect of the financial year ended 31 December 2012 will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividends. Such dividends, if approved by the shareholders, will be accounted for in equity as an appropriation of retained profits in the financial year ending 31 December 2013. Directors The names of the directors of the Company in office since the date of the last report and at the date of this report are: Dato’ Azmil Khalili Bin Dato’ Khalid Dato’ Mazlin Bin Md. Junid Nathan Tham Jooi Loon Fazrin Azwar Bin Md. Nor Dato’ Sri Koh Kin Lip J.P. Lim Soon Foo Ronnie Lim Hai Liang (Alternate director to Lim Soon Foo)
41ANNUAL REPORT 2012
DIRECTORS’ REPORT(cont’d)
Directors’ benefits Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement, to which the Company was a party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate. Since the end of the previous financial year, no director has received or become entitled to receive any benefits (other than benefits included in the aggregate amount of emoluments received or due and receivables by the directors as shown in the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest, except as disclosed in Note 27 to the financial statements. Directors’ interests According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares in the Company during the financial year were as follows:
number of ordinary shares of rM0.10 each
1.1.2012 acquired Disposed 31.12.2012
the company
Direct interest
Dato’ Mazlin Bin Md. Junid 198,859,386 7,500,000 (68,000,000) 138,359,386
Nathan Tham Jooi Loon 59,500,198 13,870,000 (4,000,000) 69,370,198
Fazrin Azwar Bin Md. Nor 2,099,998 - (1,700,000) 399,998
Dato’ Sri Koh Kin Lip J.P. 78,115,098 - - 78,115,098
Lim Soon Foo 60,829,098 500,000 - 61,329,098
Deemed interest
Dato’ Mazlin Bin Md. Junid (1) 18,000,720 2,000,000 - 20,000,720
Nathan Tham Jooi Loon (2) 4,709,998 - - 4,709,998
Lim Soon Foo (3) 279,000 - - 279,000 (1) Deemed interest through his son and daughter. (2) Deemed interest through his spouse. (3) Deemed interest through his son. None of the other directors in office at the end of the financial year had any interest in shares in the Company or its related corporations during the financial year. issue of shares During the financial year, the Company increased its issued and paid-up share capital from RM119,915,854 to RM123,400,175 by way of the issuance of 34,843,206 new ordinary shares of RM0.10 each in the Company pursuant to the conversion of RM6 million Redeemable Convertible Secured Loan Notes at a conversion price of RM0.172 per share. The new ordinary shares issued during the year ranked pari passu in all respects with the existing ordinary shares of the Company.
42 DAYA MATERIALS BERHAD (636357-W)
eMPloyee share oPtion scheMe At an Extraordinary General Meeting held on 26 February 2009, the shareholders of the Company approved the proposed establishment of an Employee Share Option Scheme (“ESOS”) for the eligible directors and employees of the Company and its subsidiaries. The ESOS will be administered by the ESOS Committee to be duly appointed and approved by the Board of Directors. The aggregate number of ESOS Options exercised and ESOS Options offered and to be offered under the scheme shall not exceed 10% of the issue and paid-up ordinary share capital of the Company at any point during the duration of the scheme. No options have been granted since the date of the establishment of the ESOS and at the date of reporting. other statutory inforMation (a) Before the income statements, statements of comprehensive income and statements of financial position of the Group and of the
Company were made out, the directors took reasonable steps:
(i) to ascertain that proper action has been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance for doubtful debts has been made; and
(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.
(b) At the date of this report, the directors are not aware of any circumstances which would render:
(i) the amount of the allowance for doubtful debts in the financial statements of the Group and of the Company or the amount
written off for bad debts inadequate to any substantial extent; and
(ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading.
(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.
(e) As at the date of this report, there does not exist:
(i) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or
(ii) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.
(f ) In the opinion of the directors:
(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group and of the Company to meet their obligations as and when they fall due; and
(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year
and the date of this report which is likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made.
siGnificant anD subsequent events Details of significant and subsequent events are disclosed in Note 32 and Note 34 to the financial statements.
DIRECTORS’ REPORT(cont’d)
43ANNUAL REPORT 2012
auDitors The auditors, Ernst & Young, have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the directors dated 22 April 2013.
Dato’ Mazlin bin MD. JuniD nathan thaM Jooi loon
DIRECTORS’ REPORT(cont’d)
44 DAYA MATERIALS BERHAD (636357-W)
STATEMENT BY DIRECTORSPursuant to Section 169(15) of the Companies Act, 1965
STATUTORY DECLARATIONPursuant to Section 169(16) of the Companies Act, 1965
We, Dato’ Mazlin Bin Md. Junid and Nathan Tham Jooi Loon, being two of the directors of Daya Materials Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 47 to 132 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2012 and of their financial performance and cash flows for the year then ended. The information set out in Note 36 to the financial statements on page 133 have been prepared in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad. Signed on behalf of the Board in accordance with a resolution of the directors dated 22 April 2013.
Dato’ Mazlin bin MD. JuniD nathan thaM Jooi loon
I, Nathan Tham Jooi Loon, being the director primarily responsible for the financial management of Daya Materials Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 47 to 133 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by the abovenamed Nathan Tham Jooi Loon at Kuala Lumpur in the Federal Territory on 22 April 2013. nathan thaM Jooi loon Before me,
45ANNUAL REPORT 2012
rePort on financial stateMents We have audited the financial statements of Daya Materials Berhad, which comprise the statements of financial position as at 31 December 2012 of the Group and of the Company, and the income statements, statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 47 to 132. Directors’ responsibility for the financial statements The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards, and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal controls as the directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. auditors’ responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2012 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. rePort on other leGal anD reGulatory requireMents
In accordance with the requirements of the Companies Act, 1965 (“Act”) in Malaysia, we also report the followings: (a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries
of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. (b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors,
which are indicated in Note 13 to the financial statements, being financial statements that have been included in the consolidated financial statements.
(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of
the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.
(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any
comment required to be made under Section 174(3) of the Act. other rePortinG resPonsibilities The supplementary information set out in Note 36 to the financial statements on page 133 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
INDEPENDENT AUDITORS’ REPORTto the members of Daya Materials Berhad (Incorporated in Malaysia)
46 DAYA MATERIALS BERHAD (636357-W)
other Matters
As stated in Note 2.2 to the financial statements, Daya Materials Berhad adopted Malaysian financial Reporting Standards on 1 January 2012 with a transition date of 1 January 2011. These standards were applied retrospectively by directors to the comparative information in these financial statements, including the statements of financial position as at 31 December 2011 and 1 January 2011, and the income statements, statements of comprehensive income, statements of changes in equity and statements of cash flows for the year ended 31 December 2011 and related disclosures. We were not engaged to report on the comparative information and it is unadited. Our responsibilities as part of our audit of the financial statements of the Group and of the Company for the year ended 31 December 2012 have, in these circumstances, included obtaining sufficient apporporiate audit evidence that the opening balances as at 1 January 2012 do not contain misstatements that materially affect the financial position as of 31 December 2012 and financial performance and cash flows for the year then ended. This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
ernst & younG Kua choh leanG AF : 0039 No. 2716/01/15(J) Chartered Accountants Chartered Accountant
Kuala Lumpur, Malaysia 22 April 2013
INDEPENDENT AUDITORS’ REPORTto the members of Daya Materials Berhad (Incorporated in Malaysia)(cont’d)
47ANNUAL REPORT 2012
INCOME STATEMENTSfor the financial year ended 31 December 2012
Group company
2012 2011 2012 2011
note rM rM rM rM
Revenue 3 276,929,368 281,745,931 11,644,887 23,492,181
Cost of sales 4 (221,486,285) (239,034,754) - -
Gross profit 55,443,083 42,711,177 11,644,887 23,492,181
Other income 5,723,257 6,432,415 1,498,729 1,307,891
Selling and distribution expenses (980,368) (626,169) - -
Administrative expenses (29,211,612) (22,178,763) (8,757,292) (5,591,249)
Operating profit 30,974,360 26,338,660 4,386,324 19,208,823
Finance costs 5 (4,067,968) (3,973,337) (1,448,136) (1,786,533)
Share of results of jointly controlled entities 14 1,480,297 1,394,943 - -
Profit before tax 6 28,386,689 23,760,266 2,938,188 17,422,290
Income tax expense 7 (8,270,488) (6,317,664) (928,142) (4,444,774)
Profit for the year 20,116,201 17,442,602 2,010,046 12,977,516
Attributable to:
Equity holders of the Company 20,170,784 17,381,905 2,010,046 12,977,516
Non-controlling interests (54,583) 60,697 - -
20,116,201 17,442,602 2,010,046 12,977,516
Earnings per share (sen)
- Basic 8 1.65 1.50
- Diluted 8 1.63 1.45
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
48 DAYA MATERIALS BERHAD (636357-W)
STATEMENTS OF COMPREHENSIVE INCOME for the financial year ended 31 December 2012
Group company
2012 2011 2012 2011
rM rM rM rM
Profit for the year 20,116,201 17,442,602 2,010,046 12,977,516
Other comprehensive income:
Foreign currency translation differences for foreign subsidiaries 106,714 (20,539) - -
Total comprehensive income for the year, net of tax 20,222,915 17,422,063 2,010,046 12,977,516
Total comprehensive income for the year attributable to:
Equity holders of the Company 20,277,498 17,361,366 2,010,046 12,977,516
Non-controlling interests (54,583) 60,697 - -
20,222,915 17,422,063 2,010,046 12,977,516
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
49ANNUAL REPORT 2012
STATEMENTS OF FINANCIAL POSITIONas at 31 December 2012
2012 2011 1.1.2011
note rM rM rM
Group
non-current assets
Property, plant and equipment 9 105,582,004 100,018,297 90,865,694
Land held for property development 10 10,474,825 - -
Investment properties 11 1,195,405 1,210,400 1,225,395
Intangible assets 12 83,896,892 83,885,182 83,490,527
Investment in jointly controlled entities 14 2,390,589 3,128,637 1,060,692
Other receivables 16 728,096 1,271,456 1,809,111
204,267,811 189,513,972 178,451,419
current assets
Inventories 17 14,097,906 14,181,536 13,428,106
Trade and other receivables 16 72,593,540 86,513,760 57,255,978
Other current assets 18 40,125,499 22,615,041 5,040,665
Tax recoverable 1,611,576 2,205,869 3,561,848
Marketable securities 19 108,188 243,728 158,600
Cash and cash equivalents 20 66,412,033 62,840,884 34,152,997
194,948,742 188,600,818 113,598,194
total assets 399,216,553 378,114,790 292,049,613
equity and liabilities
equity
Share capital 21 123,400,175 119,915,854 109,673,694
Reserves 22 107,568,235 90,711,850 66,923,155
230,968,410 210,627,704 176,596,849
Non-controlling interests (54,583) - 559,056
total equity 230,913,827 210,627,704 177,155,905
non-current liabilities
Deferred tax liabilities 15 199,570 951,306 1,085,732
Loans and borrowings 23 40,980,826 48,861,621 53,947,433
Other payables 24 - 3,000,000 5,000,000
41,180,396 52,812,927 60,033,165
current liabilities
Loans and borrowings 23 40,348,313 17,862,200 14,567,876
Trade and other payables 24 85,637,534 94,473,588 35,578,465
Provisions 25 324,694 1,709,277 2,320,733
Tax payable 811,789 629,094 2,393,469
127,122,330 114,674,159 54,860,543
total liabilities 168,302,726 167,487,086 114,893,708
total equity and liabilities 399,216,553 378,114,790 292,049,613
50 DAYA MATERIALS BERHAD (636357-W)
STATEMENTS OF FINANCIAL POSITIONas at 31 December 2012(cont’d)
2012 2011 1.1.2011
note rM rM rM
company
non-current assets
Property, plant and equipment 9 841,573 825,658 295,606
Intangible assets 12 44,549 55,923 -
Investment in subsidiaries 13 172,852,567 172,851,767 171,740,329
Deferred tax assets 15 44,313 - -
173,783,002 173,733,348 172,035,935
current assets
Trade and other receivables 16 32,323,788 24,995,827 13,662,428
Other current assets 18 124,249 174,000 136,014
Tax recoverable 1,086,077 633,112 1,900,530
Cash and cash equivalents 20 11,798,484 5,224,754 7,400,676
45,332,598 31,027,693 23,099,648
total assets 219,115,600 204,761,041 195,135,583
equity and liabilities
equity
Share capital 21 123,400,175 119,915,854 109,673,694
Reserves 22 51,892,003 53,303,070 33,966,405
total equity 175,292,178 173,218,924 143,640,099
non-current liabilities
Deferred tax liabilities 15 - 45,201 40,557
Loans and borrowings 23 9,475,945 19,036,841 29,983,153
Other payables 24 - 3,000,000 5,000,000
9,475,945 22,082,042 35,023,710
current liabilities
Loans and borrowings 23 15,931,440 6,034,001 6,407,067
Trade and other payables 24 18,416,037 3,426,074 10,064,707
34,347,477 9,460,075 16,471,774
total liabilities 43,823,422 31,542,117 51,495,484
total equity and liabilities 219,115,600 204,761,041 195,135,583
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
51ANNUAL REPORT 2012
STATEMENTS OF CHANGES IN EQUITYfor the financial year ended 31 December 2012
att
ribu
tabl
e to
equ
ity
hol
ders
of t
he c
ompa
ny
non
-dis
trib
utab
le
sha
re
cap
ital
s
hare
p
rem
ium
equ
ity
com
pone
nt
of r
csln
for
eign
tr
ansl
atio
n re
serv
e t
reas
ury
sha
res
Dis
trib
utab
le
reta
ined
p
rofit
s
tot
al
non
- c
ontr
ollin
g in
tere
sts
tot
al
equ
ity
Gro
upn
ote
rM
r
M
rM
r
M
rM
r
M
rM
r
M
rM
as
at 1
Janu
ary
2011
109
,673
,694
9
,997
,856
3
65,0
49
192
,289
-
56,
367,
961
176
,596
,849
5
59,0
56
177,
155,
905
Issu
ance
of o
rdin
ary
shar
es21
,22
8,5
00,0
00
10,
225,
000
- -
- -
18,
725,
000
- 1
8,72
5,00
0
Acqu
isiti
on o
f non
-con
trol
ling
inte
rest
s13
- -
- -
- 6
8,18
0 6
8,18
0 (5
38,1
80)
(470
,000
)
Dis
posa
l of s
ubsi
diar
ies
- -
- -
- -
- (8
1,57
3) (8
1,57
3)
Conv
ersi
on o
f Red
eem
able
Sec
ured
Loa
n N
otes
(“RC
SLN
”)21
,22
1,7
42,1
60
1,2
57,8
40
(78,
225)
- -
- 2
,921
,775
-
2,9
21,7
75
Tran
sact
ion
cost
22 -
(1,8
50,4
35)
- -
- -
(1,8
50,4
35)
- (1
,850
,435
)
Purc
hase
of t
reas
ury
shar
es -
- -
- (3
17,0
49)
- (3
17,0
49)
- (3
17,0
49)
Div
iden
ds p
aid
33 -
- -
- -
(2,8
77,9
82)
(2,8
77,9
82)
- (2
,877
,982
)
Tota
l com
preh
ensi
ve in
com
e fo
r the
yea
r -
- -
(20,
539)
- 1
7,38
1,90
5 1
7,36
1,36
6 6
0,69
7 1
7,42
2,06
3
as
at 3
1 D
ecem
ber 2
011
119
,915
,854
1
9,63
0,26
1 2
86,8
24
171
,750
(3
17,0
49)
70,
940,
064
210
,627
,704
-
210
,627
,704
as
at 1
Janu
ary
2012
119
,915
,854
1
9,63
0,26
1 2
86,8
24
171
,750
(3
17,0
49)
70,
940,
064
210
,627
,704
-
210
,627
,704
Conv
ersi
on o
f RCS
LN21
,22
3,4
84,3
21
2,5
15,6
79
(156
,450
) -
- -
5,8
43,5
50
- 5
,843
,550
Tran
sact
ion
cost
22 -
26,
000
- -
- -
26,
000
- 2
6,00
0
Purc
hase
of t
reas
ury
shar
es -
- -
- (2
,732
,320
) -
(2,7
32,3
20)
- (2
,732
,320
)
Div
iden
ds p
aid
33 -
- -
- -
(3,0
74,0
22)
(3,0
74,0
22)
- (3
,074
,022
)
Tota
l com
preh
ensi
ve in
com
e fo
r the
yea
r -
- -
106
,714
-
20,
170,
784
20,
277,
498
(54,
583)
20,
222,
915
as
at 3
1 D
ecem
ber 2
012
123
,400
,175
2
2,17
1,94
0 1
30,3
74
278
,464
(3
,049
,369
) 8
8,03
6,82
6 2
30,9
68,4
10
(54,
583)
230
,913
,827
52 DAYA MATERIALS BERHAD (636357-W)
STATEMENTS OF CHANGES IN EQUITYfor the financial year ended 31 December 2012(cont’d)
non
-dis
trib
utab
le
sha
re
cap
ital
s
hare
p
rem
ium
equ
ity
com
pone
nt
of r
csln
t
reas
ury
sha
res
cap
ital
re
serv
e
Dis
trib
utab
le
reta
ined
p
rofit
s t
otal
e
quit
y
not
e r
M
rM
r
M
rM
r
M
rM
r
M
com
pany
as
at 1
Janu
ary
2011
109
,673
,694
9
,997
,856
3
65,0
49
- 1
7,25
6,19
7 6
,347
,303
14
3,64
0,09
9
Issu
ance
of o
rdin
ary
shar
es21
, 22
8,5
00,0
00
10,
225,
000
- -
- -
18,
725,
000
Conv
ersi
on o
f RCS
LN21
, 22
1,7
42,1
60
1,2
57,8
40
(78,
225)
- -
- 2
,921
,775
Tran
sact
ion
cost
22 -
(1,8
50,4
35)
- -
- -
(1,8
50,4
35)
Purc
hase
of t
reas
ury
shar
es -
- -
(317
,049
) -
- (3
17,0
49)
Div
iden
ds p
aid
33 -
- -
- -
(2,8
77,9
82)
(2,8
77,9
82)
Tota
l com
preh
ensi
ve in
com
e fo
r the
yea
r -
- -
- -
12,
977,
516
12,
977,
516
as
at 3
1 D
ecem
ber 2
011
119
,915
,854
1
9,63
0,26
1 2
86,8
24
(317
,049
) 1
7,25
6,19
7 1
6,44
6,83
7 1
73,2
18,9
24
as
at 1
Janu
ary
2012
119
,915
,854
1
9,63
0,26
1 2
86,8
24
(317
,049
) 1
7,25
6,19
7 1
6,44
6,83
7 1
73,2
18,9
24
Conv
ersi
on o
f RCS
LN21
, 22
3,4
84,3
21
2,5
15,6
79
(156
,450
) -
- -
5,8
43,5
50
Tran
sact
ion
cost
22 -
26,
000
- -
- -
26,
000
Purc
hase
of t
reas
ury
shar
es -
- -
(2,7
32,3
20)
- -
(2,7
32,3
20)
Div
iden
ds p
aid
33 -
- -
- -
(3,0
74,0
22)
(3,0
74,0
22)
Tota
l com
preh
ensi
ve in
com
e fo
r the
yea
r -
- -
- -
2,0
10,0
46
2,0
10,0
46
as
at 3
1 D
ecem
ber 2
012
123
,400
,175
2
2,17
1,94
0 1
30,3
74
(3,0
49,3
69)
17,
256,
197
15,
382,
861
175
,292
,178
The
acco
mpa
nyin
g ac
coun
ting
polic
ies a
nd e
xpla
nato
ry n
otes
form
an
inte
gral
par
t of t
he fi
nanc
ial s
tate
men
ts.
53ANNUAL REPORT 2012
STATEMENTS OF CASH FLOWSfor the financial year ended 31 December 2012
Group company
2012 2011 2012 2011
note rM rM rM rM
cash flows from operating activities
Profit before tax 28,386,689 23,760,266 2,938,188 17,422,290
Adjustments for:
Depreciation of property, plant and equipment 6, 9 4,359,491 4,442,883 242,959 215,721
Depreciation of investment properties 6, 11 14,995 14,995 - -
Amortisation on intangible assets 6, 12 86,715 5,270 11,374 948
Allowance for impairment loss 6, 16 743,339 230,439 - -
Reversal of allowance for impairment loss 6, 16 (90,008) (1,140,470) - -
(Reversal of discount)/Discount on convertible loan notes 6 (30,178) 74,170 (30,178) 74,170
Finance cost 5 4,067,968 3,973,337 1,448,136 1,786,533
Gain on disposal of property, plant and equipment 6 (2,962,299) (3,408,144) - (118,000)
Fair value changes on marketable securities 6 11,540 (18,428) - -
Property, plant and equipment written off 6 7,854 17,731 - -
Dividends income 3, 6 (6,085) (5,400) (3,676,020) (15,447,271)
Gain on disposal of marketable securities 6 (7,034) (13,800) - -
Gain on disposal of subsidiaries 6, 13 - (496) - -
Share of results of jointly controlled entities 14 (1,480,297) (1,394,943) - -
Interest income 6 (1,211,827) (1,343,461) (1,498,763) (1,189,891)
Development expenditures incurred 10 (90,071) - - -
Unrealised foreign exchange loss/(gain) 90,624 (161,011) 87,029 (80,303)
Operating profit/(loss) before working capital changes 31,891,416 25,032,938 (477,275) 2,664,197
Changes in working capital:
Inventories 83,630 (932,421) - -
Trade and other receivables 13,719,631 (28,677,489) (7,414,990) (11,253,096)
Other current assets (17,510,458) (17,574,376) 49,751 (37,986)
Trade and other payables (11,836,054) 60,540,583 11,989,963 (8,638,633)
Provisions (1,384,583) (611,456) - -
Cash generated from/(used in) operations 14,963,582 37,777,779 4,147,449 (17,265,518)
Finance cost paid 5 (4,067,968) (3,973,337) (1,448,136) (1,786,533)
Tax (paid)/refund (8,221,745) (6,841,264) (1,447,130) 708,327
Net cash generated from/(used in) operating activities 2,673,869 26,963,178 1,252,183 (18,343,724)
cash flows from investing activities
Purchase of property, plant and equipment (a) (6,502,496) (16,725,054) (138,874) (288,473)
Proceeds from disposal of property, plant and equipment 3,483,443 4,600,314 - 280,000
Purchase of land held for property development 10 (10,384,754) - - -
Purchase of intangible assets 12 (98,425) (399,925) - (56,871)
Purchase of marketable securities 19 - (114,900) - -
Proceeds from disposal of marketable securities 131,034 62,000 - -
Net cash outflow from disposal of subsidiaries 13 - (66,581) - -
54 DAYA MATERIALS BERHAD (636357-W)
Group company
2012 2011 2012 2011
note rM rM rM rM
cash flows from investing activities cont’d
Decrease/(Increase) in pledged deposits placed with licensed banks 1,483,161 (7,129,498) (1,070,185) (64,098)
Decrease/(Increase) in deposits placed with licensed banks more than three months 1,807,500 (1,807,500) 1,807,500 (1,807,500)
Acquisition of subsidiaries 13 (6) - (800) -
Increase in investment in subsidiaries 13 - - - (1,111,438)
Acquisition of a joint venture company 14 - (2) - -
Increase in investment in a jointly controlled entity 14 - (5,998) - -
Incorporation of a joint venture company 14 - (51,000) - -
Distribution of profits from a jointly controlled entity 14 2,218,345 - - -
Acquisition of non-controlling interest 13 - (550,000) - -
Dividends received 3, 6 6,085 5,400 3,676,020 11,585,454
Interest received 6 1,211,827 1,343,461 1,498,763 1,189,891
Net cash (used in)/generated from investing activities (6,644,286) (20,839,283) 5,772,424 9,726,965
cash flows from financing activities
Repayment of loans and borrowings (9,808,911) (15,536,098) (5,907,220) (9,110,295)
Proceeds from loans and borrowings 27,274,411 13,706,195 12,000,000 -
Proceeds from issuance of shares - 18,725,000 - 18,725,000
Purchase of treasury shares (2,732,320) (317,049) (2,732,320) (317,049)
Capital distribution from an investment in a jointly controlled entity 14 - 250,000 - -
Transaction costs paid for issuance of shares 22 - (1,850,435) - (1,850,435)
Dividends paid to owners of the Company 33 (3,074,022) (2,877,982) (3,074,022) (2,877,982)
Net cash generated from financing activities 11,659,158 12,099,631 286,438 4,569,239
net changes in cash and cash equivalents 7,688,741 18,223,526 7,311,045 (4,047,520)
Effect of exchange rate fluctuations on cash held 106,714 (20,539) - -
cash and cash equivalents at the beginning of the year 32,561,386 14,358,399 1,154,529 5,202,049
cash and cash equivalents at the end of the year 40,356,841 32,561,386 8,465,574 1,154,529
the cash and cash equivalents comprise:
Short term investments 20 3,620,798 3,707,582 3,620,798 680,155
Fixed deposits with licensed banks 20 29,781,427 41,231,219 3,332,910 4,070,225
Cash and bank balances 20 33,009,808 17,902,083 4,844,776 474,374
Bank overdraft 23 (2,805,824) (3,739,469) - -
63,606,209 59,101,415 11,798,484 5,224,754
Less: Deposits pledged 20 (23,249,368) (24,732,529) (3,332,910) (2,262,725)
Fixed deposits with maturity more than three months 20 - (1,807,500) - (1,807,500)
40,356,841 32,561,386 8,465,574 1,154,529
STATEMENTS OF CASH FLOWSfor the financial year ended 31 December 2012(cont’d)
55ANNUAL REPORT 2012
(a) During the year, the Group and the Company acquired property, plant and equipment which were financed as follows:
Group company
2012 2011 2012 2011
note rM rM rM rM
Cash 6,502,496 16,725,054 138,874 288,473
Hire purchase 3,949,700 1,318,895 120,000 619,300
9 10,452,196 18,043,949 258,874 907,773
STATEMENTS OF CASH FLOWSfor the financial year ended 31 December 2012
(cont’d)
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
56 DAYA MATERIALS BERHAD (636357-W)
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
1. corPorate inforMation
The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad.
The registered office of the Company is located at Level 8, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301
Petaling Jaya, Selangor Darul Ehsan. The principal place of business of the Company is located at D5-1-10, Solaris Dutamas, No.1, Jalan Dutamas 1, 50480 Kuala Lumpur.
The consolidated financial statements of the Company as at and for the financial year ended 31 December 2012 comprise the
Company and its subsidiaries (together referred to as “the Group”) and the Group’s interest in joint ventures. The principal activities of the Company are investment holding and provision of management services to its subsidiaries. The principal activities of the subsidiaries are set out in Note 13. There have been no significant changes in the nature of the principal activities during the financial year.
2. siGnificant accountinG Policies
2.1 basis of preparation
(a) Statement of compliance
The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the Companies Act, 1965 in Malaysia. These are the Group’s and the Company’s first financial statements prepared in accordance with MFRSs and MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards has been applied.
In the previous financial years, the financial statements of the Group and of the Company were prepared in accordance with Financial Reporting Standards (“FRSs”) in Malaysia. The adoption of MFRSs has no impact on the income statements, statements of comprehensive income, statements of financial position, statements of changes in equity and statements of cash flows of the Group and of the Company.
The reclassification adjustments on the statements of financial position and statements of cash flows arising from the transition to MFRSs, are discussed in Note 2.2 (a).
(b) Basis of measurement
The financial statements have been prepared on the historical cost basis unless otherwise as disclosed below.
(c) Functional and presentation currency
The financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency.
(d) Use of estimates and judgements
The preparation of the financial statements in conformity with MFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
57ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
2. siGnificant accountinG Policies (cont’d)
2.1 basis of preparation (cont’d)
(d) Use of estimates and judgements (cont’d)
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:
(i) Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash-generating units (“CGUs”) to which goodwill is allocated. Estimating a value-in-use amount requires management to make an estimate of the expected future cash flows from the CGUs and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amounts of goodwill as at 31 December 2011 and 31 December 2012 were RM83,490,527. Further details are disclosed in Note 12(b).
(ii) Impairment of loans and receivables
The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.
Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s trade and other receivables at the reporting date is disclosed in Note 16.
(iii) Construction contract
The Group recognises construction contract revenue and expenses in the income statements by using the stage of completion method. The stage of completion is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs.
Significant judgement is required in determining the stage of completion, the extent of the construction contract costs incurred, the estimated total construction contract revenue and costs, as well as the recoverability of the construction contract costs. In making the judgement, the Group evaluates based on past experience and by relying on the work of specialists.
The carrying amounts of assets and liabilities of the Group arising from construction activities are disclosed in Note 18.
(iv) Provision for defect liability cost
The Group recognises provision for defect liability for future work expected to be carried out subsequent to the projects completion as part of their defect liability obligations. In making the judgement, the Group evaluates based on past experience and by relying on the work of specialists.
The carrying amount of the Group’s provision for defect liability cost at the reporting date and further details are disclosed in Note 25. If the actual defect liability cost differ by 10% from management estimates, the Group’s provision for defect liability cost will increase by RM32,469 (2011: RM170,928).
58 DAYA MATERIALS BERHAD (636357-W)
2. siGnificant accountinG Policies (cont’d)
2.2 first-time adoption of Malaysian financial reporting standards (“Mfrss”)
(a) Transition to MFRSs
As stated in Note 2.1(a), these are the first financial statements of the Group and of the Company prepared in accordance with MFRSs.
The accounting policies set out in Note 2.1 have been applied in preparing the financial statements of the Group and of the Company for the financial year ended 31 December 2012, the comparative information presented in these financial statements for the financial year ended 31 December 2011 and in the preparation of the opening MFRSs statement of financial position at 1 January 2011 (the Group’s date of transition to MFRSs).
MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards allows first-time adopters certain exemptions from the retrospective application of certain MFRSs and the Group and the Company have applied the following exemptions:
(a) MFRS 1 provides the option to apply MFRS 3 Business Combinations prospectively from the date of transition or from a specific date prior to the date of transition. This provides relief from full retrospective application of MFRS 3 which would require restatement of all business combinations prior to the date of transition. The Group has elected to apply MFRS 3 prospectively from the date of transition. In respect of acquisitions prior to the date of transition:
(i) The classification of former business combinations under FRSs is maintained;
(ii) There is no re-measurement of original fair values determined at the time of business combination (date of acquisition); and
(iii) The carrying amount of goodwill recognised under FRSs is not adjusted.
(b) The estimates at 1 January 2011 and at 31 December 2011 are consistent with those made for the same dates in accordance with FRSs and the estimates used by the Group and the Company to present these amounts in accordance with MFRSs reflect conditions at 1 January 2011, and as of 31 December 2011.
The adoption of MFRSs has no impact on the financial statements of the Group and of the Company. Accordingly, no notes related to the statements of financial position as at the date of transition to MFRSs are presented, except as discussed below:
(i) First-time adoption of MFRS 107: Statement of Cash Flows
In accordance with MFRS 107, cash and cash equivalents are held for the purpose of meeting short-term cash commitments (such as cash in hand, at banks and deposits with a maturity of three months or less) rather than investment. In the previous financial year, the Group designated its cash in hand and bank balances and all its deposits as cash and cash equivalents. The Group and the Company have applied this standard retrospectively. Consequently, certain comparatives have been restated. The following are reclassification effects to the notes to the statements of cash flows for the year ended 31 December 2012 arising from the change in accounting policy stated above.
The following comparatives have been restated:
frs as at adjustments Mfrs as at
rM rM rM
Group
31 December 2011
notes to the statements of financial position
Cash and cash equivalents 34,368,886 (1,807,500) 32,561,386
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
59ANNUAL REPORT 2012
2. siGnificant accountinG Policies (cont’d)
2.2 first-time adoption of Malaysian financial reporting standards (“Mfrss”) (cont’d)
(a) Transition to MFRSs (cont’d)
(i) First-time adoption of MFRS 107: Statement of Cash Flows (cont’d)
The following comparatives have been restated: (cont’d)
frs as at adjustments Mfrs as at
rM rM rM
Group
31 December 2011
statements of cash flows
Net, movement in fixed deposits with licensed banks - 1,807,500 1,807,500
Cash and cash equivalents at end of year 34,368,886 (1,807,500) 32,561,386
1 January 2011
notes to the statements of financial position
Cash and cash equivalents 14,358,399 - 14,358,399
statements of cash flows
Net, movement in fixed deposits with licensed banks - - -
Cash and cash equivalents at end of year 14,358,399 - 14,358,399
company
31 December 2011
notes to the statement of financial position
Cash and cash equivalents 2,962,029 (1,807,500) 1,154,529
statement of cash flows
Net, movement in fixed deposits with licensed banks - 1,807,500 1,807,500
Cash and cash equivalents at end of year 2,962,029 (1,807,500) 1,154,529
1 January 2011
notes to the statement of financial position
Cash and cash equivalents 5,202,049 - 5,202,049
statement of cash flows
Net, movement in fixed deposits with licensed banks - - -
Cash and cash equvalents at end of year 5,202,049 - 5,202,049
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
60 DAYA MATERIALS BERHAD (636357-W)
2. siGnificant accountinG Policies (cont’d)
2.2 first-time adoption of Malaysian financial reporting standards (“Mfrss”) (cont’d)
(b) MFRSs and Amendments to MFRSs issued but not yet effective
The standards and interpretations that are issued but not yet effective up to the date of issuance of the Group’s and the Company’s financial statements are disclosed below. The Group and the Company intend to adopt these standards, if applicable, when they become effective.
Description
effective for annual periods
beginning on or after
MFRS 101: Presentation of Items of Other Comprehensive Income (Amendments to MFRS 101) 1 July 2012
Amendments to MFRS 101: Presentation of Financial Statements (Annual Improvements 2009-2011 Cycle)
1 January 2013
MFRS 3: Business Combinations (IFRS 3 Business Combinations issued by IASB in March 2004) 1 January 2013
MFRS 10: Consolidated Financial Statements 1 January 2013
MFRS 11: Joint Arrangements 1 January 2013
MFRS 12: Disclosure of Interests in Other Entities 1 January 2013
MFRS 13: Fair Value Measurement 1 January 2013
MFRS 119: Employee Benefits 1 January 2013
MFRS 127: Separate Financial Statements 1 January 2013
MFRS 128: Investment in Associate and Joint Ventures 1 January 2013
MFRS 127: Consolidated and Separate Financial Statements (IAS 127 revised by IASB in December 2003)
1 January 2013
Amendments to IC Interpretation 2: Members’ Shares in Co-operative Entities and Similar Instruments (Annual Improvements 2009-2011 Cycle)
1 January 2013
IC Interpretation 20: Stripping Costs in the Production Phase of a Surface Mine 1 January 2013
Amendments to MFRS 7: Disclosures - Offsetting Financial Assets and Financial Liabilities 1 January 2013
Amendments to MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards - Government Loans
1 January 2013
Amendments to MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements 2009-2011 Cycle)
1 January 2013
Amendments to MFRS 116: Property, Plant and Equipment (Annual Improvements 2009-2011 Cycle)
1 January 2013
Amendments to MFRS 132: Financial Instruments: Presentation (Annual Improvements 2009-2011 Cycle)
1 January 2013
Amendments to MFRS 134: Interim Financial Reporting (Annual Improvements 2009-2011 Cycle) 1 January 2013
Amendments to MFRS 10: Consolidated Financial Statements: Transition Guidance 1 January 2013
Amendments to MFRS 11: Joint Arrangements: Transition Guidance 1 January 2013
Amendments to MFRS 12: Disclosure of Interests in Other Entities: Transition Guidance 1 January 2013
Amendments to MFRS 132: Offsetting Financial Assets and Financial Liabilities 1 January 2014
Amendments to MFRS 10, MFRS 12 and MFRS 127: Investment Entities 1 January 2014
MFRS 9: Financial Instruments 1 January 2015
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
61ANNUAL REPORT 2012
2. siGnificant accountinG Policies (cont’d)
2.2 first-time adoption of Malaysian financial reporting standards (“Mfrss”) (cont’d)
(b) MFRSs and Amendments to MFRSs issued but not yet effective (cont’d)
The initial application of the standards and interpretations is not expected to have any material financial impacts to the current and prior periods financial statements upon their first adoption, except as discussed below:
(i) MFRS 3 Business Combinations (IFRS 3 Business Combinations issued by IASB in March 2004) and MFRS 127 Consolidated and Separate Financial Statements (IAS 27 as revised by IASB in December 2003)
An entity shall apply these earlier versions of MFRS 3 and MFRS 127 only if the entity elected to do so as allowed in MFRS 10 Consolidated Financial Statements. The adoptions of these standards are not expected to have any significant impact to the Group and the Company.
(ii) MFRS 9 Financial Instruments
MFRS 9 reflects the first phase of the work on the replacement of MFRS 139 Financial Instruments: Recognition and Measurement and applies to classification and measurement of financial assets and financial liabilities as defined in MFRS 139 Financial Instruments: Recognition and Measurement. The adoption of the first phase of MFRS 9 will have an effect on the classification and measurement of the Group’s financial assets. The Group will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued.
(iii) MFRS 10 Consolidated Financial Statements
MFRS 10 replaces part of MFRS 127 Consolidated and Separate Financial Statements that deals with consolidated financial statements and IC Interpretation 112 Consolidation - Special Purpose Entities.
Under MFRS 10, an investor controls an investee when:
(i) the investor has power over an investee,
(ii) the investor has exposure, or rights, to variable returns from its involvement with the investee, and
(iii) the investor has ability to use its power over the investee to affect the amount of the investor’s returns.
Under MFRS 127 Consolidated and Separate Financial Statements, control was defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activites.
MFRS 10 includes detailed guidance to explain when an investor has control over the investee. MFRS 10 requires the investor to take into acocunt all relevant facts and circumstaces.
(iv) MFRS 11 Joint Arrangements
MFRS 11 replaces MFRS 131 Interests in Joint Ventures and IC Interpretation 113 Jointly-Controlled Entities – Non-monetary Contributions by Venturers.
The classification of joint arrangements under MFRS 11 is determined based on the rights and obligations of the parties to the joint arrangements by considering the structure, the legal form, the contractual terms agreed by the parties to the arrangement and when relevant, other facts and circumstances. Under MFRS 11, joint arrangements are classified as either joint operations or joint ventures.
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.
MFRS 11 removes the option to account for jointly controlled entities (“JCE”) using proportionate consolidation. Instead, JCE that meet the definition of a joint venture must be accounted for using the equity method.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
62 DAYA MATERIALS BERHAD (636357-W)
2. siGnificant accountinG Policies (cont’d)
2.2 first-time adoption of Malaysian financial reporting standards (“Mfrss”) (cont’d)
(b) MFRSs and Amendments to MFRSs issued but not yet effective (cont’d)
(v) MFRS 12 Disclosures of Interests in Other Entities
MFRS 12 includes all disclosure requirements for interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are required. This standard affects disclosures only and has no impact on the Group’s financial position or performance.
(vi) MFRS 13 Fair Value Measurement
MFRS 13 establishes a single source of guidance under MFRSs for all fair value measurements. MFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under MFRS when fair value is required or permitted.
Upon adoption of MFRS 13, the Group will take into consideration the highest and best use of certain properties in measuring the fair value of such properties. The adoption of MFRS 13 is expected to result in higher fair value of certain properties of the Group.
(vii) Amendments to MFRS 101 Presentation of Financial Statements (Annual Improvements 2009 - 2011 Cycle)
The amendments to MFRS 101 change the grouping of items presented in other comprehensive income. Items that could be reclassified (or recycled) to profit or loss at a future point in time (for example, exchange differences on translation of foreign operations and net loss or gain on available-for-sale financial assets) would be presented separately from items which will never be reclassified (for example, actuarial gains and losses on defined benefits plan and revaluation of land and buildings). The amendment affects presentation only and has no impact on the Group’s financial position and performance.
(viii) MFRS 127 Separate Financial Statements
As a consequence of the new MFRS 10 and MFRS 12, MFRS 127 is limited to accounting for subsidiaries, jointly controlled entities and associates in separate financial statements.
2.3 summary of significant accounting policies (a) Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.
Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition and up to the effective date of disposal, as appropriate. The total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.
Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtain control, and continue to be consolidated until the date that such control ceases.
Acquisition under Group re-organisation
One of the subsidiaries, Daya Polymer Sdn. Bhd., is consolidated using the merger method of accounting as the combination is an internal group reorganisation. Under the merger method of accounting, shares acquired, the cost of investment on the Company’s financial statements is recorded at the fair value of shares issued and the difference between the carrying value of the investment and the nominal value of shares acquired is treated as merger reserve or merger deficit. Where the carrying value of investment is less than the nominal value of shares acquired, the merger reserve should be treated as reserve on consolidation.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
63ANNUAL REPORT 2012
2. siGnificant accountinG Policies (cont’d)
2.3 summary of significant accounting policies (cont’d) (a) Basis of consolidation (cont’d)
(i) Business combinations
Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on which control is transferred to the Group.
Acquisitions on or after 1 January 2011 For acquisitions on or after 1 January 2011, the Group measures the cost of goodwill at the acquisition date as:
- the fair value of the consideration transferred; plus- the recognised amount of any non-controlling interests in the acquiree; plus- if the business combination is achieved in stages, the fair value of the existing equity interest in the
acquiree; less- the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities
assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.
Acquisitions before 1 January 2011
As part of its transition to MFRS, the Group elected not to restate those business combinations that occurred before the date of transition to MFRSs, which is 1 January 2011. Goodwill arising from acquisitions before 1 January 2011 has been carried forward from the previous FRS framework as at the date of transition.
Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in income statements. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost.
(b) Transaction with non-controlling interests
Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group and are presented separately in profit or loss of the Group and within equity in the consolidated statements of financial position, separately from parent shareholders’ equity. Transactions with non-controlling interests are accounted for using the entity concept method, whereby, transactions with non-controlling interests are accounted for as transactions with owners. On acquisition of non-controlling interests, the difference between the consideration and book value of the share of the net assets acquired is recognised directly in equity. Gain or loss on disposal to non-controlling interests is recognised directly in equity.
(c) Subsidiaries
Subsidiaries are entities over which the Group has the ability to control the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity.
In the Company’s separate financial statements, investments in subsidiaries are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in the income statements.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
64 DAYA MATERIALS BERHAD (636357-W)
2. siGnificant accountinG Policies (cont’d)
2.3 summary of significant accounting policies (cont’d)
(d) Joint venture
(i) Jointly-controlled entities
Jointly-controlled entities are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions.
Joint ventures are accounted for in the consolidated financial statements using the equity method unless it is classified as held for sale (or included in a disposal group that is classified as held for sale). The consolidated financial statements include the Group’s share of the profit or loss of the equity accounted joint ventures, after adjustments to align the accounting policies with those of the Group, from the date that joint control commences until the date that joint control ceases.
When the Group’s share of losses exceeds its interest in an equity accounted joint venture, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the joint venture.
In the Company’s separate financial statements, investments in jointly-controlled entities are stated at cost less impairment losses, unless the investment is classified as held for sale.
On disposal of such investment, the difference between net disposal proceeds and the carrying amount is included in profit or loss.
(ii) Jointly-controlled operations and assets
A jointly controlled operation is a joint venture carried on by each venturer using its own assets in pursuit of the joint operations. The consolidated financial statements include the assets that the Group controls and the liabilities that it incurs in the course of pursuing the joint operation, and the expenses that the Group incurs and its share of the income that it earns from the joint operation.
(e) Property, plant and equipment
All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statements during the financial year which they are incurred.
Subsequent to recognition, property, plant and equipment except for freehold land and capital-in-progress are stated at cost less accumulated depreciation and any accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.3(h).
Freehold land has an unlimited useful life and therefore is not depreciated. Capital-in-progress are not depreciated as these assets are not available for use. Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates:
Leasehold land Over lease period Building, renovation and electrical installation 2% - 20% Cranes, parts and forklifts 4% - 20% Plant and machinery 4% - 10% Factory equipment 10% - 30% Furniture, fittings, computer and office equipment 10% - 30% Motor vehicles 20%
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
65ANNUAL REPORT 2012
2. siGnificant accountinG Policies (cont’d)
2.3 summary of significant accounting policies (cont’d)
(e) Property, plant and equipment (cont’d)
The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future benefits embodied in the items of property, plant and equipment.
All item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount is recognised in the income statements.
(f) Investment properties
Investment properties are properties which are held either to earn rental income or for capital appreciation or for both. Such properties are measured initially at cost, including transaction costs. Following initial recognition, investment properties are carried at cost less any accumulated depreciation and accumulated impairment losses. Freehold land is not subject to depreciation while the building on the freehold land is depreciated at 2% per annum on a straight-line method.
Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or losses on the retirement or disposal of an investment property are recognised in income statements in the year in which they arise.
A property interest under an operating lease is classified and accounted for as an investment property on a property-by-property basis when the Group holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating lease classified as an investment property is carried at cost less accumulated depreciation and any accumulated impairment losses.
(g) Intangible assets
(i) Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following the initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
(ii) Software
Software is recognised on a cost model basis where the asset is to be carried at cost less any accumulated amortisation and accumulated impairment loss. The software is amortised over 5 years.
The carrying value is reviewed for impairment annually when the asset is not yet in use or more frequently when an indication of impairment arises during the reporting year.
(iii) Research and development costs
All research costs are recognised in the income statements as incurred.
Expenditure incurred on projects to develop new products is capitalised and deferred only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development. Product development expenditures which do not meet these criteria are expensed when incurred.
Development costs, considered to have finite useful lives, are stated at cost less any impairment losses and are amortised using the straight-line basis over five years. Impairment is assessed whenever there is an indication of impairment and the amortisation period and method are also reviewed at least at each reporting date.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
66 DAYA MATERIALS BERHAD (636357-W)
2. siGnificant accountinG Policies (cont’d)
2.3 summary of significant accounting policies (cont’d)
(h) Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (“CGU”)).
In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a Cash Generating Unit (“CGU”) or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis. Impairment losses are recognised in income statements.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously.
Such reversal is recognised in income statements unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.
(i) Financial assets
Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.
The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets.
(i) Financial assets at fair value through profit or loss
Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.
Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in income statements. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in income statements as part of administrative expenses or other income.
Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that is held primarily for trading purposes are presented as current whereas financial assets that is not held primarily for trading purposes are presented as current or non-current based on the settlement date.
The Group’s and the Company’s financial assets at fair value through profit or loss is disclosed in Note 19.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
67ANNUAL REPORT 2012
2. siGnificant accountinG Policies (cont’d)
2.3 summary of significant accounting policies (cont’d)
(i) Financial assets (cont’d)
(ii) Loans and receivables
Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.
Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.
Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.
(iii) Held-to-maturity investments
Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity.
Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process.
Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current.
The Group and the Company did not have any held-to-maturity investments during the year ended 31 December 2012.
(iv) Available-for-sale financial assets
Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories.
After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in income statements. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to income statements as a reclassification adjustment when the financial asset is derecognised.
Interest income calculated using the effective interest method is recognised in income statements. Dividends on an available-for-sale equity instrument are recognised in income statements when the Group’s and the Company’s right to receive payment is established.
Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.
Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date.
The Group and the Company did not have any available-for-sale financial assets during the year ended 31 December 2012.
A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in income statements.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
68 DAYA MATERIALS BERHAD (636357-W)
2. siGnificant accountinG Policies (cont’d)
2.3 summary of significant accounting policies (cont’d)
(i) Financial assets (cont’d)
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date, the date that the Group and the Company commit to purchase or sell the asset.
(j) Impairment of financial assets
The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.
(i) Trade and other receivables and other financial assets carried at amortised cost
To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, receivables that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.
If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in income statements.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in income statements.
(ii) Unquoted equity securities carried at cost
If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.
(iii) Available-for-sale financial assets
Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.
If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in income statements, is transferred from equity to income statements.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
69ANNUAL REPORT 2012
2. siGnificant accountinG Policies (cont’d)
2.3 summary of significant accounting policies (cont’d)
(j) Impairment of financial assets (cont’d)
(iii) Available-for-sale financial assets (cont’d)
Impairment losses on available-for-sale equity investments are not reversed in income statements in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in income statements if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in income statements.
(k) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, balances and deposits with banks and highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. For the purpose of the statements of cash flows, cash and cash equivalents are presented net of bank overdrafts, pledged deposits and deposits with maturity more than three months.
(l) Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost is determined using the first-in, first-out method. The cost of raw materials comprises costs of purchase. The cost of finished goods and work-in-progress comprises cost of raw materials, direct labour, other direct costs and appropriate proportion of production overheads.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs to completion and the estimated costs necessary to make the sale.
(m) Provisions
Provisions for liabilities are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
(n) Financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.
Financial liabilities, within the scope of MFRS 139, are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.
(i) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition at fair value through profit or loss.
Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in income statements. Net gains or losses on derivatives include exchange differences.
The Group and the Company did not have any financial liabilities at fair value through profit or loss during the year ended 31 December 2012.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
70 DAYA MATERIALS BERHAD (636357-W)
2. siGnificant accountinG Policies (cont’d)
2.3 summary of significant accounting policies (cont’d)
(n) Financial liabilities (cont’d)
(ii) Other financial liabilities
The Group’s and the Company’s other financial liabilities include trade payables, other payables and loans and borrowings.
Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.
Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Loans and borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
For other financial liabilities, gains and losses are recognised in income statements when the liabilities are derecognised, and through the amortisation process.
A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in income statements.
(o) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use are added to the cost of those assets, until such time as the assets are substantially ready for their intended use.
All other borrowing costs are recognised in income statements in the period in which they are incurred.
(p) Employee benefits
(i) Short term benefits
Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.
(ii) Defined contribution plans
Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in the income statements as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund (“EPF”).
(q) Leases
(i) Classification
A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to ownership. Leases of land and buildings are classified as operating or finance leases in the same way as leases of other assets and the land and buildings elements of a lease of land and buildings are considered separately for the purpose of lease classification. All leases that do not transfer substantially all the risks and rewards are classified as operating leases.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
71ANNUAL REPORT 2012
2. siGnificant accountinG Policies (cont’d)
2.3 summary of significant accounting policies (cont’d)
(q) Leases (cont’d)
(ii) Finance leases - the Group as Lessee
Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. The corresponding liability is included in the statements of financial position as loans and borrowings. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Group’s incremental borrowing rate is used. Any initial direct costs are also added to the carrying amount of such assets.
Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised in the income statements over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.
The depreciation policy for leased assets is in accordance with that for depreciable property, plant and equipment as described in Note 2.3(e).
(iii) Operating leases - the Group as Lessee
Operating lease payments are recognised as an expense on a straight-line basis over the term of the relevant lease. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.
In the case of a lease of land and buildings, the minimum lease payments or the up-front payments made are allocated, whenever necessary, between the land and the buildings elements in proportion to the relative fair values for leasehold interests in the land element and buildings element of the lease at the inception of the lease. The up-front payment represents prepaid lease payments and are amortised on a straight-line basis over the lease term.
(iv) Operating leases - the Group as Lessor
Assets leased out under operating lease are presented on the statements of financial position according to the nature of the assets. Contingent rent is recognised as income in the period in which they are earned as stated in Note 2.3(s).
Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased assets and recognised on a straight line basis over the lease term.
(r) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised.
(i) Sale of goods
Revenue is recognised net of discounts upon transfer of significant risks and rewards of ownership to the buyer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.
(ii) Management fees
Management fees are recognised when services are rendered.
(iii) Dividends income
Dividends income is recognised when the Group’s and the Company’s right to receive payment is established.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
72 DAYA MATERIALS BERHAD (636357-W)
2. siGnificant accountinG Policies (cont’d)
2.3 summary of significant accounting policies (cont’d) (r) Revenue recognition (cont’d)
(iv) Contract revenue
Where the outcome of a construction contract can be reliably estimated, contract revenue and contract costs are recognised as revenue and expenses respectively by using the stage of completion method. The stage of completion is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs.
Where the outcome of a construction contract cannot be reliably estimated, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
When the total of costs incurred on construction contracts plus, recognised profits (less recognised losses), exceeds progress billings, the balance is classified as amount due from customers on contracts. When progress billings exceed costs incurred plus, recognised profits (less recognised losses), the balance is classified as amount due to customers on contracts.
(v) Services
Revenue from services rendered is recognised net of service taxes and discounts as and when the services are performed.
(vi) Interest income
Interest income is recognised on an accrual basis using the effective interest method.
(s) Rental income
Rental income from investment property is recognised in the income statements on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.
(t) Income taxes
(i) Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date.
Current taxes are recognised in income statements except to the extent that the tax relates to items recognised outside income statements, either in other comprehensive income or directly in equity.
(ii) Deferred tax
Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all temporary differences, except:
- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
73ANNUAL REPORT 2012
2. siGnificant accountinG Policies (cont’d)
2.3 summary of significant accounting policies (cont’d)
(t) Income taxes (cont’d)
(ii) Deferred tax (cont’d)
Deferred tax liabilities are recognised for all temporary differences, except: (cont’d)
- in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:
- where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
- in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
(u) Share capital
An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the Company after deducting all of its liabilities. Ordinary shares are equity instruments.
Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.
(v) Treasury shares
When shares of the Company, that have not been cancelled, recognised as equity are reacquired, the amount of consideration paid is recognised directly in equity. Reacquired shares are classified as treasury shares and presented as a deduction from total equity. No gain or loss is recognised in income statements on the purchase, sale, issue or cancellation of treasury shares. When treasury shares are reissued by resale, the difference between the sales consideration and the carrying amount is recognised in equity.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
74 DAYA MATERIALS BERHAD (636357-W)
2. siGnificant accountinG Policies (cont’d)
2.3 summary of significant accounting policies (cont’d)
(w) Redeemable convertible secured loan notes
The redeemable convertible secured loan notes are regarded as compound instruments, consisting of a liability component and an equity component. The component of redeemable convertible secured loan notes that exhibits characteristics of a liability is recognised as a financial liability in the statements of financial position, net of transaction costs. On issuance of the redeemable convertible secured loan notes, the fair value of the liability component is determined using a market rate for an equivalent non-convertible debt and this amount is carried as a financial liability in accordance with the accounting policy for financial liabilities as set out in Note 2.3(n).
The residual amount, after deducting the fair value of the liability component, is recognised and included in shareholder’s equity, net of transaction costs.
Transaction costs are apportioned between the liability and equity components of the redeemable convertible secured loan notes based on the allocation of proceeds to the liability and equity components when the instruments were first recognised.
(x) Foreign currency transactions
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (“foreign currencies”) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are translated at the rates prevailing on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated.
Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in income statements for the period except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation. These are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in income statements. Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operation are recognised in income statements in the Company’s separate financial statements or the individual financial statements of the foreign operation, as appropriate.
Exchange differences arising on the translation of non-monetary items carried at fair value are included in income statements for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.
(y) Segment reporting
For management purposes, the Group is organised into operating segments according to the nature of the products and services provided which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the chief operating decision makers, which in this case is the Executive Committee of the Group who regularly review the segment results in order to allocate resources to the segments and to assess the segment performances.
(z) Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.
Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
75ANNUAL REPORT 2012
3. revenue
Group company
2012 2011 2012 2011
note rM rM rM rM
Sale of goods 86,141,013 71,519,086 - -
Management fees 27 - - 7,944,867 8,044,910
Dividends income 6,27 6,085 5,400 3,676,020 15,447,271
Contract revenue 153,378,871 149,060,365 - -
Service revenue 37,403,399 61,127,650 - -
Others - 33,430 24,000 -
276,929,368 281,745,931 11,644,887 23,492,181
4. cost of sales
Group
2012 2011
rM rM
Cost of inventories sold 53,000,160 53,828,950
Contract costs 149,162,526 145,938,674
Cost of services rendered 19,323,599 39,267,130
221,486,285 239,034,754
5. finance costs
Group company
2012 2011 2012 2011
note rM rM rM rM
Interest expense on advances from subsidiaries 27 - - 431,097 155,237
Interest expense on loans and borrowings 3,762,393 3,511,004 752,316 1,185,707
Coupon interest expense on RCSLN 220,671 445,589 220,671 445,589
Others 84,904 16,744 44,052 -
29 4,067,968 3,973,337 1,448,136 1,786,533
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
76 DAYA MATERIALS BERHAD (636357-W)
6. Profit before tax The following amounts have been included in arriving at profit before tax:
Group company
2012 2011 2012 2011
note rM rM rM rM
Amortisation of intangible assets 12 86,715 5,270 11,374 948
(Reversal of discount)/Discount on convertible loan notes (30,178) 74,170 (30,178) 74,170
Auditors’ remuneration:
- Statutory audit 242,402 252,147 38,000 38,000
- Other services 14,029 38,000 14,029 38,000
Allowance for impairment loss 16 743,339 230,439 - -
Fair value changes on marketable securities 19 11,540 - - -
Depreciation:
- Property, plant and equipment 9 4,359,491 4,442,883 242,959 215,721
- Investment properties 11 14,995 14,995 - -
Property, plant and equipment written off 7,854 17,731 - -
Remuneration for the Company’s directors 27 3,191,790 2,077,360 2,766,519 1,691,220
Remuneration for the Company’s past directors 27 - 534,505 - 334,505
Directors’ fees for the Company’s directors 27 166,000 165,000 156,000 141,000
Directors’ fees for the Company’s past directors 27 - 15,000 - 15,000
Directors’ benefits in kind 23,950 47,900 23,950 47,900
Employees benefit expense 28 22,190,428 17,652,506 5,249,197 3,411,084
Foreign exchange loss
- realised 709,048 - 100 -
- unrealised 92,485 - 87,029 -
Rental expense 2,154,056 2,099,682 177,000 81,600
and after crediting:
Gain on disposal of property, plant and equipment 2,962,299 3,408,144 - 118,000
Gain on disposal of subsidiaries 13 - 496 - -
Foreign exchange gain
- Realised - 34,619 - -
- Unrealised 1,861 161,011 - 80,303
Fair value changes on marketable securities 19 - 18,428 - -
Gain on disposal of marketable securities 7,034 13,800 - -
Interest income 1,211,827 1,343,461 1,498,763 1,189,891
Dividends income from subsidiaries 3,27 - - 3,676,020 15,447,271
Dividends income 3 6,085 5,400 - -
Reversal of allowance for impairment loss 16 90,008 1,140,470 - -
Rental income 11 348,118 329,063 24,000 -
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
77ANNUAL REPORT 2012
7. incoMe tax exPense The major components of income tax expense for the years ended 31 December 2012 and 2011 are:
Group company
2012 2011 2012 2011
note rM rM rM rM
Malaysian income tax
Current income tax 9,017,775 6,464,650 1,043,951 4,375,195
(Over)/Underprovision in prior years (19,042) (31,782) (49,786) 45,713
8,998,733 6,432,868 994,165 4,420,908
Deferred tax
Relating to origination and reversal of temporary differences (449,327) 760,149 (59,946) 101,218
Overprovision in prior years (278,918) (875,353) (6,077) (77,352)
15 (728,245) (115,204) (66,023) 23,866
8,270,488 6,317,664 928,142 4,444,774
Reconciliation between tax expense and accounting profit
The reconciliation between tax expense and the product of accounting profit multiplied by the appplicable corporate tax rate for years ended 31 December 2012 and 2011 is as follows:
Group company
2012 2011 2012 2011
rM rM rM rM
Profit before tax 28,386,689 23,760,266 2,938,188 17,422,290
Tax at Malaysian statutory tax rate of 25% (2011: 25%) 7,096,672 5,940,067 734,547 4,355,573
Different tax rates in other countries 62,788 70,948 - -
Income not subject to tax (122,371) (91,946) (74,282) (75,970)
Expenses not deductible for tax purposes 1,680,170 1,392,609 323,740 254,097
Deferred tax assets not recognised during the year 83,480 21,262 - -
Utilisation of current year’s capital allowances (7,873) (139) - -
Utilisation of previously unrecognised tax losses (224,418) (108,002) - (57,287)
Overprovision of deferred tax in prior years (278,918) (875,353) (6,077) (77,352)
(Over)/Underprovision of income tax in prior years (19,042) (31,782) (49,786) 45,713
8,270,488 6,317,664 928,142 4,444,774
Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2011: 25%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
78 DAYA MATERIALS BERHAD (636357-W)
7. incoMe tax exPense (cont’d)
Tax savings during the financial year arising from:
Group company
2012 2011 2012 2011
rM rM rM rM
Utilisation of current year tax losses 274,593 - 274,593 -
Utilisation of previously unrecognised tax losses 224,418 108,002 - 57,287
499,011 108,002 274,593 57,287
8. earninGs Per share (a) basic earnings per share
Basic earnings per share is calculated by dividing profit for the year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year.
Group
2012 2011
Profit attributable to ordinary equity holders of the Company (RM) 20,170,784 17,381,905
Weighted average number of ordinary shares in issue 1,220,349,464 1,161,920,542
Basic earnings per share (sen) 1.65 1.50
(b) Diluted earnings per share
Diluted earnings per share amounts are calculated by dividing profit for the year, net of tax, attributable to owners of the parent (after adjusting for interest expense on redeemable convertible secured loan notes) by the weighted average number of ordinary shares outstanding during the financial year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
Group
2012 2011
Profit attributable to ordinary equity holders of the Company (RM) 20,170,784 17,381,905
Effect of dilution (RM) 8,539 94,328
Adjusted net profit for the period attributable to ordinary equity holders of the Company (RM) 20,179,323 17,476,233
Weighted average number of ordinary shares in issue 1,220,349,464 1,161,920,542
Effect of dilution 14,994,003 40,507,215
Adjusted weighted average number of shares in issue 1,235,343,467 1,202,427,757
Diluted earnings per share (sen) 1.63 1.45
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
79ANNUAL REPORT 2012
9.
Pro
Pert
y, P
lan
t a
nD
eq
uiP
Men
t
fre
ehol
d la
nd
lea
seho
ld
land
bui
ldin
g,
reno
vati
on
and
e
lect
rica
l in
stal
lati
on
cra
nes,
p
arts
and
fo
rklif
ts
Pla
nt a
nd
mac
hine
ry
fac
tory
e
quip
men
t
fur
nitu
re,
fitt
ings
, c
ompu
ter
and
offi
ce
equ
ipm
ent
Mot
or
veh
icle
s c
apit
al in
p
rogr
ess
tot
al
Gro
upn
ote
rM
r
M
rM
r
M
rM
r
M
rM
r
M
rM
r
M
2012
cost
As
at 1
Janu
ary
1,6
00,9
74
8,3
45,8
33
34,
594,
334
57,
318,
672
6,7
19,0
50
2,1
42,9
90
2,2
59,7
27
6,3
70,8
92
10,
409,
790
129
,762
,262
Addi
tions
29 -
- 9
32,2
38
4,1
64,1
57
75,
212
808
,991
5
26,3
12
1,2
14,3
49
2,7
30,9
37
10,
452,
196
Dis
posa
ls -
- -
(3,9
16,7
66)
- -
- (6
72,6
58)
- (4
,589
,424
)
Recl
assi
ficat
ion
- -
1,4
92,4
63
- -
- -
- (1
,492
,463
) -
Writ
ten
off -
- -
(35,
961)
(12,
643)
(47,
067)
(10,
164)
- -
(105
,835
)
As
at 3
1 D
ecem
ber
1,6
00,9
74
8,3
45,8
33
37,
019,
035
57,
530,
102
6,7
81,6
19
2,9
04,9
14
2,7
75,8
75
6,9
12,5
83
11,
648,
264
135
,519
,199
acc
umul
ated
dep
reci
atio
n
As
at 1
Janu
ary
- 6
41,2
88
3,6
77,3
14
14,
183,
435
5,0
92,0
11
1,3
72,4
18
1,4
49,0
57
3,3
28,4
42
- 2
9,74
3,96
5
Char
ge fo
r the
yea
r6,
29
- 1
17,4
46
811
,738
1
,639
,762
2
87,5
53
199
,703
2
56,7
64
1,0
46,5
25
- 4
,359
,491
Dis
posa
ls -
- -
(3,4
11,6
29)
- -
- (6
56,6
51)
- (4
,068
,280
)
Recl
assi
ficat
ion
- -
- -
- -
- -
- -
Writ
ten
off -
- -
(30,
915)
(10,
325)
(47,
067)
(9,6
74)
- -
(97,
981)
As
at 3
1 D
ecem
ber
- 7
58,7
34
4,4
89,0
52
12,
380,
653
5,3
69,2
39
1,5
25,0
54
1,6
96,1
47
3,7
18,3
16
- 2
9,93
7,19
5
net
car
ryin
g am
ount
As
at 3
1 D
ecem
ber
1,6
00,9
74
7,5
87,0
99
32,
529,
983
45,
149,
449
1,4
12,3
80
1,3
79,8
60
1,0
79,7
28
3,1
94,2
67
11,
648,
264
105
,582
,004
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
80 DAYA MATERIALS BERHAD (636357-W)
9.
Pro
Pert
y, P
lan
t a
nD
eq
uiP
Men
t (
cont
’d)
fre
ehol
d la
nd
lea
seho
ld
land
bui
ldin
g,
reno
vati
on
and
e
lect
rica
l in
stal
lati
on
cra
nes,
p
arts
and
fo
rklif
ts
Pla
nt a
nd
mac
hine
ry
fac
tory
e
quip
men
t
fur
nitu
re,
fitt
ings
, c
ompu
ter
and
offi
ce
equ
ipm
ent
Mot
or
veh
icle
s c
apit
al in
p
rogr
ess
tot
al
Gro
upn
ote
rM
r
M
rM
r
M
rM
r
M
rM
r
M
rM
r
M
2011
cost
As
at 1
Janu
ary
1,6
00,9
74
8,3
45,8
33
32,
174,
153
56,
012,
890
9,6
11,4
17
1,7
73,2
91
2,1
95,0
86
7,2
36,0
92
3,4
14,9
22
122
,364
,658
Addi
tions
29 -
- 3
,401
,130
5
,003
,737
1
45,0
68
440
,167
1
35,9
86
1,9
22,9
93
6,9
94,8
68
18,
043,
949
Dis
posa
ls o
f sub
sidi
arie
s -
- (8
47,8
68)
- (2
,415
,681
) (6
6,21
2) (5
8,81
2) -
- (3
,388
,573
)
Dis
posa
ls -
- (1
33,0
81)
(3,5
64,5
93)
(621
,754
) (4
,256
) (1
2,41
5) (2
,788
,193
) -
(7,1
24,2
92)
Writ
ten
off -
- -
(133
,362
) -
- (1
18)
- -
(133
,480
)
As
at 3
1 D
ecem
ber
1,6
00,9
74
8,3
45,8
33
34,
594,
334
57,
318,
672
6,7
19,0
50
2,1
42,9
90
2,2
59,7
27
6,3
70,8
92
10,
409,
790
129,
762,
262
acc
umul
ated
dep
reci
atio
n
As
at 1
Janu
ary
- 5
32,5
97
2,9
17,7
53
16,
278,
787
5,0
11,6
42
1,0
73,0
86
1,3
20,7
90
4,3
64,3
09
- 3
1,49
8,96
4
Char
ge fo
r the
yea
r6,
29
- 1
08,6
91
782
,680
1
,464
,518
5
46,5
80
202
,653
2
63,2
35
1,0
74,5
26
- 4
,442
,883
Dis
posa
ls o
f sub
sidi
arie
s -
- (9
,274
) -
(130
,800
) (3
,959
) (5
,978
) -
- (1
50,0
11)
Dis
posa
ls -
- (1
3,84
5) (3
,444
,133
) (3
35,4
11)
(7,9
43)
(20,
397)
(2,1
10,3
93)
- (5
,932
,122
)
Recl
assi
ficat
ion
- -
- -
- 1
08,5
81
(108
,581
) -
- -
Writ
ten
off -
- -
(115
,737
) -
- (1
2) -
- (1
15,7
49)
As
at 3
1 D
ecem
ber
- 6
41,2
88
3,6
77,3
14
14,
183,
435
5,0
92,0
11
1,3
72,4
18
1,4
49,0
57
3,3
28,4
42
- 2
9,74
3,96
5
net
car
ryin
g am
ount
As
at 3
1 D
ecem
ber
1,6
00,9
74
7,7
04,5
45
30,
917,
020
43,
135,
237
1,6
27,0
39
770
,572
8
10,6
70
3,0
42,4
50
10,
409,
790
100
,018
,297
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
81ANNUAL REPORT 2012
9. ProPerty, Plant anD equiPMent (cont’d)
furniture, fittings,
computer and office
equipment Motor
vehicles total
company note rM rM rM
2012
cost
As at 1 January 49,919 1,078,323 1,128,242
Additions 113,600 145,274 258,874
As at 31 December 163,519 1,223,597 1,387,116
accumulated depreciation
As at 1 January 26,418 276,166 302,584
Charge for the year 6 24,873 218,086 242,959
As at 31 December 51,291 494,252 545,543
net carrying amount
As at 31 December 112,228 729,345 841,573
2011
cost
As at 1 January 58,530 827,594 886,124
Additions 9,044 898,729 907,773
Disposals (17,655) (648,000) (665,655)
As at 31 December 49,919 1,078,323 1,128,242
accumulated depreciation
As at 1 January 32,186 558,332 590,518
Charge for the year 6 11,887 203,834 215,721
Disposals (17,655) (486,000) (503,655)
As at 31 December 26,418 276,166 302,584
net carrying amount
As at 31 December 23,501 802,157 825,658
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
82 DAYA MATERIALS BERHAD (636357-W)
9. ProPerty, Plant anD equiPMent (cont’d)
(a) capitalisation of borrowing costs
Included in the Group’s property, plant and equipment is interest capitalised amounting to RM878,885 (2011: RM499,051).
(b) assets pledged as security
The net book value of the Group’s and of the Company’s property, plant and equipment pledged to financial institutions as securities for bank facilities as disclosed in Note 23 are as follows:
Group company
2012 2011 2012 2011
rM rM rM rM
Freehold land 1,549,010 1,549,010 - -
Leasehold land 6,478,931 5,081,691 - -
Building, renovation and electrical installation 27,313,440 21,966,211 - -
Cranes, parts and forklifts 22,862,036 24,984,389 - -
Plant and machinery 237,229 304,767 - -
Factory equipment 283,003 331,024 - -
Furniture, fittings, computer and office equipment 140,856 163,819 - -
Motor vehicles 3,010,679 2,719,917 693,921 730,814
Capital in progress 11,648,264 10,068,697 - -
73,523,448 67,169,525 693,921 730,814
(c) assets held under finance lease
The net book value of the Group’s and of the Company’s assets held under finance lease as at the reporting date is as follows:
Group company
2012 2011 2012 2011
rM rM rM rM
Cranes, parts and forklifts 4,309,853 840,533 - -
Motor vehicles 3,007,032 2,680,381 693,921 730,814
7,316,885 3,520,914 693,921 730,814
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
83ANNUAL REPORT 2012
10. lanD helD for ProPerty DeveloPMent
Group
2012 2011
note rM rM
cost
Freehold land, at cost 10,384,754 -
Development expenditures 90,071 -
10,474,825 -
As at 1 January - -
Acquisition of freehold lands 10,384,754 -
Development expenditure incurred 90,071 -
As at 31 December 29 10,474,825 -
11. investMent ProPerties
freehold land building total
Group note rM rM rM
2012
cost
As at 1 January/31 December 113,446 1,246,750 1,360,196
accumulated depreciation
As at 1 January - 149,796 149,796
Charge for the year 6, 29 - 14,995 14,995
As at 31 December - 164,791 164,791
net carrying amount
As at 31 December 113,446 1,081,959 1,195,405
investment properties, at fair value
As at 31 December 279,851 1,406,783 1,686,634
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
84 DAYA MATERIALS BERHAD (636357-W)
11. investMent ProPerties (cont’d)
freehold land building total
Group note rM rM rM
2011
cost
As at 1 January/31 December 113,446 1,246,750 1,360,196
accumulated depreciation
As at 1 January - 134,801 134,801
Charge for the year 6, 29 - 14,995 14,995
As at 31 December - 149,796 149,796
net carrying amount
As at 31 December 113,446 1,096,954 1,210,400
investment properties, at fair value
As at 31 December 279,851 1,406,783 1,686,634
Investment properties comprise commercial properties which are leased out for rental income. Each of the leases contains an initial non-cancellable leases of the period between 1 to 5 years. All leases include a clause to enable upward revision of the rental charge on an annual basis based on prevailing market conditions.
The following are recognised in income statements in respect of investment properties:
Group
2012 2011
note rM rM
Rental income 6 348,118 329,063
Depreciation on investment properties 6 14,995 14,995
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
85ANNUAL REPORT 2012
12. intanGible assets
Goodwill software Development
costs total
Group note rM rM rM rM
2012
cost
As at 1 January 83,490,527 399,925 360,022 84,250,474
Additions 29 - 98,425 - 98,425
As at 31 December 83,490,527 498,350 360,022 84,348,899
accumulated amortisation
As at 1 January - 5,270 360,022 365,292
Amortisation during the year 6, 29 - 86,715 - 86,715
As at 31 December - 91,985 360,022 452,007
net carrying amount
As at 31 December 83,490,527 406,365 - 83,896,892
2011
cost
As at 1 January 83,490,527 - 360,022 83,850,549
Additions 29 - 399,925 - 399,925
As at 31 December 83,490,527 399,925 360,022 84,250,474
accumulated amortisation
As at 1 January - - 360,022 360,022
Amortisation during the year 6, 29 - 5,270 - 5,270
As at 31 December - 5,270 360,022 365,292
net carrying amount
As at 31 December 83,490,527 394,655 - 83,885,182
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
86 DAYA MATERIALS BERHAD (636357-W)
12. intanGible assets (cont’d)
software total
company note rM rM
2012
cost
As at 1 January/31 December 56,871 56,871
accumulated amortisation
As at 1 January 948 948
Amortisation during the year 6 11,374 11,374
As at 31 December 12,322 12,322
net carrying amount
As at 31 December 44,549 44,549
2011
cost
As at 1 January - -
Additions 56,871 56,871
As at 31 December 56,871 56,871
accumulated amortisation
As at 1 January - -
Amortisation during the year 6 948 948
As at 31 December 948 948
net carrying amount
As at 31 December 55,923 55,923
(a) impairment loss recognised
The Group has not recognised any impairment loss on goodwill during the year.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
87ANNUAL REPORT 2012
12. intanGible assets (cont’d)
(b) impairment tests for goodwill
Allocation of goodwill
Goodwill has been allocated to the Group’s cash generating units (“CGUs”) identified according to the business segments as follows:
Group
2012 2011
rM rM
Oil & gas 72,850,883 72,850,883
Technical services 10,639,644 10,639,644
83,490,527 83,490,527
Key assumptions used in value-in-use calculations
The recoverable amount of the CGU is determined based on value-in-use calculations using cash flow projections approved by management covering a five years period. Cash flows beyond the five years period are extrapolated using a growth rate of 3.20% (2011: 3.38%) per annum.
The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill:
i. Budgeted gross margin
The basis used to determine the value assigned to the budgeted gross margin is the average gross margin achieved in the year immediately before the budgeted year increased for expected efficiency improvements.
ii. Selling price
The selling price used to calculate the cash inflows from operations was determined after taking into consideration of price trends in the industries which the CGU is exposed. Values assigned are consistent with the external sources of information.
iii. Discount rate and growth rate
The discount rate applied to the cash flow projections is based on the cost of borrowings of the Group throughout the calculation period. The growth rate used is consistent with the projected growth rate of the CGU’s industry and economy. Following are the rates for the calculations of the value-in-use for each of the business segments for the next five years.
business segments
oil & gas technical
services
Discount rate 10.12% 10.72%
Growth rate 5.00% 5.00% Sensitivity to changes in assumptions
Barring any unforeseen circumstances, the management believes that no reasonable change in the above assumptions would cause the net carrying amount of goodwill to materially exceed its recoverable amount.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
88 DAYA MATERIALS BERHAD (636357-W)
13. investMent in subsiDiaries
company
2012 2011
note rM rM
unquoted shares at cost
As at 1 January 172,851,767 171,740,329
Acquisition of subsidiaries a 800 -
Increase in investment in subsidiaries b - 1,111,438
At 31 December 172,852,567 172,851,767
Certain of the Company’s investment in subsidiaries with total carrying amounts of RM112,308,946 (2011: RM112,308,946) and RM28,488,131 (2011: RM28,488,131) have been pledged to a financial institution for banking facilities granted to the Company and for the issuance of the Redeemable Convertible Secured Loan Notes (“RCSLN”) respectively as disclosed in Note 23.
Details of subsidiaries as at 31 December 2012 and 2011 are as follows:
effectiveequity
interest country of2012 2011 incorporation Principal activities
held by the company
Daya Polymer Sdn. Bhd. 100% 100% Malaysia Manufacturer of semicon and XLPE compounds for cable and wire and trading in specialty chemicals, related polymer compounds and hardware.
DMB Marketing & Trading Sdn. Bhd. 100% 100% Malaysia General trading, marketing and investment holding.
Meridian Orbit Sdn. Bhd. 100% 100% Malaysia Investment holding.
Daya Secadyme Sdn. Bhd.*** 75.1% 100% Malaysia Trading in petrochemicals products and investment holding.
Daya CMT Sdn. Bhd. 100% 100% Malaysia Providing industrial facilities management including builder works, facility operation and maintenance services, upgrade, retrofit, design and build plant facilities.
Daya Proffscorp Sdn. Bhd. 100% 100% Malaysia Principally engaged in ownership and hiring of forklifts, cranes and heavy machinery and provision of related manpower services in the onshore and offshore oil and gas industry.
Daya Urusharta Sdn. Bhd. 100% 100% Malaysia Property investment holding.
DMB International Limited* 100% 100% Hong Kong Center for regional procurement and trading as well as international investments.
Daya OCI Sdn. Bhd.*** 75.1% 100% Malaysia Supplying of equipment and specialty chemicals for oil and gas process plants, a provider of installation and maintenance services for air-conditioning and ventilation system, a provider for automatic welding services for offshore pipeline installation, a provider for maintenance services for both onshore plants and offshore facilities, a provider for warehousing and forwarding agency.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
89ANNUAL REPORT 2012
13. investMent in subsiDiaries (cont’d)
Details of subsidiaries as at 31 December 2012 and 2011 are as follows: (cont’d)
effectiveequity
interest country of2012 2011 incorporation Principal activities
held by the company (cont’d)
Daya Petroleum Ventures Sdn. Bhd. (Formerly known as Metriwell Sdn. Bhd.)
80% - Malaysia Provision of drilling services, geological, petroleum engineering, subsea and deep-water support services, and operations and maintenance services.
held through subsidiaries
Daya Hightech Sdn. Bhd. 100% 100% Malaysia Manufacturer of compounds for cable and wire.
Seca Chemicals and Catalysts Sdn. Bhd.***
75.1% 100% Malaysia Dealing in petroleum, oil and gas products, and consulting services.
Daya Offshore Construction Sdn. Bhd. (Formerly known as SD Equipment Sdn. Bhd.)***
75.1% 100% Malaysia Dealing in project management, installation and design engineering, fabrication, procurement and logistics, vessel operations, survey and diving operations.
Seca Engineering and Manpower Services Sdn. Bhd.***
75.1% 100% Malaysia Providing engineering and manpower services.
Daya FMM Sdn. Bhd. 100% 100% Malaysia General contractors and related services.
Daya Land & Development Sdn. Bhd. 100% 100% Malaysia Trader of all kinds of building materials, hardware equipment and other related products.
Daya Clarimax Sdn. Bhd. 100% 100% Malaysia Providing recycling of waste solvent and manufacturing high purity electronics and technical solvent.
Daya Petroleum Ventures Sdn. Bhd. (Formerly known as Metriwell Sdn. Bhd.)
- 80% Malaysia Provision of drilling services, geological, petroleum engineering, subsea and deep-water support services, and operations and maintenance services.
Daya Proffscorp (Sabah) Sdn. Bhd. 100% 100% Malaysia Principally engaged in ownership and hiring of forklifts, cranes and heavy machinery and provision of related manpower services in the onshore and offshore oil and gas industry.
Ultrafest Sdn. Bhd. 100% 100% Malaysia Property development.
Zen Projects Sdn. Bhd. 100% - Malaysia Investment holding.
Terra Hill Development Sdn. Bhd. 100% - Malaysia Property development.
Daya E&C Sdn. Bhd.** 100% - Malaysia Provision of electrical, mechanical engineering and construction works.
Daya OCI (Labuan) Limited. (Formerly known as Daya OCI (Labuan) Berhad)**
100% - Malaysia Shipping leasing business and other related services to the oil and gas industry.
PT Daya Secadyme Indonesia* 75.1% 100% Indonesia Trading in petrochemicals products. * Audited by firms of auditors other than Ernst & Young.** These companies were incorporated on November 2012 and will prepare its first set of audited financial statements for the year ending on 31
December 2013.*** The interests in Daya OCI Sdn. Bhd. (“DOCI”) and Daya Secadyme Sdn. Bhd. (“DSSB”) were remained consolidated at 100%. Accordingly, the Group
has not recognized any share of non-controlling interest in the income statements and statements of financial position.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
90 DAYA MATERIALS BERHAD (636357-W)
13. investMent in subsiDiaries (cont’d)
(a) acquisition of subsidiaries
i. On 2 August 2012, through the Internal Group Re-Organisation Plan, the Company acquired 800 ordinary shares of RM1.00 each in Daya Petroleum Ventures Sdn. Bhd. (formerly known as Metriwell Sdn. Bhd.) (“DPV”), a sub-subsidiary of a subsidiary of the Company, Daya Secadyme Sdn. Bhd. representing 80% of the issued and paid-up share capital of DPV for a cash consideration of RM800 from a wholly-owned sub-subsidiary of the Company, Seca Engineering and Manpower Services Sdn. Bhd.
ii. On 14 February 2012, the Group, via its direct wholly owned subsidiary, Daya CMT Sdn. Bhd. acquired 2 ordinary shares of RM1 each in Zen Projects Sdn. Bhd. (“ZPSB”) and Terra Hill Development Sdn. Bhd. (“THDSB”) for a total consideration of RM2 each, representing 100% equity interest in ZPSB and THDSB.
iii. On 30 November 2012, the Group, via its direct wholly owned subsidiary, Daya CMT Sdn. Bhd. acquired 2 ordinary shares of RM1 each in Daya E&C Sdn. Bhd. (“DECSB”), for a total cash consideration of RM2 from Mr. Nathan Tham Jooi Loon and Mr. Tham Wooi Loon, representing 100% equity interest in DECSB.
iv. On 22 February 2011, the Group, via its sub-subsidiary, Daya Clarimax Sdn. Bhd. (“DCLX”), a wholly owned subsidiary of Meridian Orbit Sdn. Bhd., acquired one (1) ordinary share of RM1.00 in Daya NCHO Sdn. Bhd. (“DNSB”), for a total cash consideration of RM1 from Chai Churn Hwa. On 15 March 2011, DCLX has further subscribed 599,999 ordinary shares of RM1.00 each in DNSB through capitalisation of an amount of RM599,999 out of the total fixed assets transferred from DCLX.
v. On 15 December 2011, the Group via its sub-subsidiary, Daya Land & Development Sdn. Bhd. (formerly known as IHP Supply Sdn. Bhd.) (“DLD”), a wholly-owned subsidiary of Daya CMT Sdn. Bhd., acquired two (2) ordinary shares of RM1.00 in Ultrafest Sdn. Bhd (“USB”), representing 100% equity interest from Hasniza Binti Wazer and Fatimah Binti Sulaiman, for a total consideration of RM2 only.
(b) increase in investment in subsidiaries
i. On 27 January 2011, the Company increased investment in its wholly owned subsidiary, Daya Urusharta Sdn. Bhd. (“DUSB”) via the subscription of an additional 99,998 ordinary shares of RM1.00 each at par for working capital purposes. The new ordinary shares subscribed in DUSB ranked pari passu in all respects with the existing ordinary shares of DUSB.
ii. On 15 November 2011, the Company increased investment in its wholly owned subsidiary, DMB International Limited (“DINL”) via the subscription of an additional 2,500,000 ordinary shares of HKD1.00 each. The new ordinary shares subscribed in DINL ranked pari passu in all respects with the existing ordinary shares of DINL.
On the same date, an amount of HKD2,500,000 (equivalent to RM1,011,440) due from DINL was applied in paying up in full 2,500,000 ordinary shares of HKD1.00 each which were allotted and distributed as fully paid to the Company.
(c) acquisition of non-controlling interests
On 30 November 2011, the Group, via its direct wholly-owned subsidiary, Daya CMT Sdn. Bhd. (“DCMT”) acquired a total of 200,000 ordinary shares of RM1.00 each of Daya Land & Development Sdn. Bhd. (formerly known as IHP Supply Sdn. Bhd.) (“DLD”) representing 40% of the total issued and paid-up share capital of DLD, from Soon Kok Lum, Ruby A/P Gnanabaranamand and Hor Ching Siew, respectively for a total cash consideration of RM550,000. Subsequent to the acquisition, DLD had becomed a 100% wholly owned subsidiary of DCMT. The Group recognised a decrease in non-controlling interests of RM538,180.
(d) incorporation of subsidiaries
The Group had on 19 November 2012, via its subsidiary, Daya OCI Sdn. Bhd. incorporated a limited liability company known as Daya OCI (Labuan) Limited (formerly known as Daya OCI (Labuan) Berhad) (“DOCIL”). The principal activities of DOCIL is to involve in the shipping leasing business and other related services to the oil and gas industry.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
91ANNUAL REPORT 2012
13. investMent in subsiDiaries (cont’d)
(e) Partial disposal of shares in subsidiaries
The Company had on 21 September 2012 completed its disposal of 250,992 ordinary shares of RM1.00 each in Daya Secadyme Sdn. Bhd. (“DSSB”) and 1,245,000 ordinary shares of RM1.00 each in Daya OCI Sdn. Bhd. (“DOCI”) representing 24.9% of the issued and paid-up share capital of DSSB and DOCI respectively to Rancak Nikmat Sdn. Bhd. for a total cash consideration of RM19,000,000 and RM11,500,000 respectively.
The non-controlling interests in DOCI and DSSB by way of the Sales and Purchases Agreement dated 25 May 2012 has agreed to forgo its claim on the assets and profits of DOCI and DSSB. Accordingly, the Group has not recognized any share of non-controlling interest in the income statement and statement of financial position.
(f) Disposal of subsidiaries
i. On 15 September 2011, the Group via its direct wholly owned subsidiary, DMB International Limited disposed of 40,000 ordinary shares of HKD1.00 each in Daya NCHO International Limited (formerly known as Daya Clarimax International Limited) (“DNIL”) representing 40% of the issued and paid-up share capital of DNIL to NCHO Sdn. Bhd. for a total consideration of HKD40,000. Subsequent to the disposal, DNIL had ceased to be a subsidiary and become a jointly controlled entity.
ii. On 8 November 2011, Daya NCHO Sdn. Bhd. (“DNSB”) issued an additional 320,000 ordinary shares at RM1.00 each to NCHO Sdn. Bhd. (“NSB”) through capitalisation of an amount of RM320,000 out of advances owing to NSB (“Shares Issuance”). Upon the completion of Shares Issuance, the authorised share capital of DNSB is to increase to RM1,000,000 comprising 1,000,000 ordinary shares of RM1.00 each of which 1,000,000 ordinary shares of RM1.00 each have been issued and fully subscribed by its shareholders, Daya Clarimax Sdn. Bhd. (“DCLX”) (60%) and the joint venture partner, NSB (40%) in accordance with the provisions of the Joint Venture Agreement dated 27 January 2011 entered into between DCLX and NSB.
The assets and liabilities disposed are as follows:
Group
2011
note rM
Property, plant and equipment 3,238,562
Inventories 178,991
Trade and other receivables 1,028,404
Cash and bank balances 82,282
Trade and other payables (3,806,295)
721,944
Less : Transfer to investment in jointly controlled entities 14 (625,166)
Non-controlling interests (81,573)
15,205
Gain on disposal of subsidiaries 6 496
Consideration received, satisfied in cash 15,701
Cash disposed of (82,282)
Net cash outflows (66,581)
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
92 DAYA MATERIALS BERHAD (636357-W)
14. investMent in Jointly controlleD entities
Group
2012 2011
note rM rM
unquoted shares, at cost
At 1 January 1,182,166 750,000
Acquisition of a joint venture company a - 2
Increase in investment in a jointly controlled entity a - 5,998
Incorporation of a joint venture company b - 51,000
Capital distribution from an investment in a jointly controlled entity - (250,000)
Transfer from investment in subsidiaries 13 - 625,166
At 31 December 1,182,166 1,182,166
shares of post acquisition reserve
At 1 January 1,946,471 310,692
Share of results of jointly controlled entities 29 1,480,297 1,394,943
Reversal of provision on foreseeable losses - 240,836
Distribution of profits from a jointly controlled entity (2,218,345) -
As at 31 December 1,208,423 1,946,471
Share of net assets 29 2,390,589 3,128,637 The aggregate amounts of each of the current assets, non-current assets, current liabilities, non-current liabilities, income and
expenses related to the Group’s interests in the jointly-controlled entities are as follows:
Group
2012 2011
rM rM
assets and liabilities
Current assets 3,452,890 5,423,601
Non-current assets 2,111,241 2,185,787
Total assets 5,564,131 7,609,388
Current liabilities 1,966,891 3,019,337
Non-current liabilities 1,206,651 1,461,414
Total liabilities 3,173,542 4,480,751
income and expenses
Income 6,592,532 8,092,138
Expenses (5,112,235) (6,697,195)
Share of results of jointly controlled entities 1,480,297 1,394,943
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
93ANNUAL REPORT 2012
14. investMent in Jointly controlleD entities (cont’d)
Details of the jointly controlled entities as at 31 December 2012 and 2011 are as follows:
effective equity
interest country of2012 2011 incorporation Principal activities
held through subsidiaries
Daya-Sheffield Sdn. Bhd. 38.3%* 51% Malaysia Supplying of services and equipments to exploration and extraction companies in the oil and gas industry.
DOCI-KWH** - 50% Unincorporated Provision of repair for Sour Crude Tank and Slop Tank.
Terengganu Crude Oil Terminal** 25.5%* 34% Unincorporated Installation of pipeline from Angsi field, offshore Terengganu to Terengganu Crude Oil Terminal in Kerteh.
Daya NCHO International Limited** 60% 60% Hong Kong Investment holding to invest in tank services regionally.
Daya NCHO Sdn. Bhd.** 60% 60% Malaysia Provision of ISO tank cleaning, repair and maintenance services.
Daya Campo (Sabah) Sdn. Bhd. 45%* 60% Malaysia Investment holding. * The effective shareholdings of these jointly controlled entities reduced following the shares disposal in Daya OCI Sdn. Bhd. on 21 September 2012.** Audited by firms of auditors other than Ernst & Young
(a) acquisition of a joint venture company
(i) On 28 September 2011, the Group, via its direct wholly owned subsidiary, Daya OCI Sdn. Bhd. (“DOCI”) acquired two
(2) ordinary shares of RM1.00 in Daya Campo (Sabah) Sdn. Bhd. (“DCSB”) representing 100% of the issued and paid-up share capital of DCSB from Kamalukhair Abdullah and Dato’ Mazlin Bin Md. Junid, for a total consideration of RM2 only.
On 5 October 2011, DOCI entered into a Joint Venture Agreement with Campo Sdn. Bhd. (“Campo’) (“The Joint Venture”). The Joint Venture was undertaken through DCSB. On 3 February 2012, DCSB had further issued additional 5,998 and 4,000 ordinary shares of RM1.00 each in DCSB to DOCI and Campo.
(ii) On 22 February 2011, the Group, via its direct wholly owned subsidiary, Daya Clarimax Sdn. Bhd. (“DCLX”), acquired one (1) ordinary share of RM1.00 in Daya NCHO Sdn. Bhd. (“DNSB”), for a total cash consideration of RM1 from Chai Churn Hwa. On 15 March 2011, DCLX has further subscribed 599,999 ordinary shares of RM1.00 each in DNSB through capitalisation of an amount of RM599,999 out of the total fixed assets transferred from DCLX.
On 8 November 2011, DNSB issued an additional 320,000 ordinary shares at RM1.00 each to NCHO Sdn. Bhd. (“NSB”) through capitalisation of an amount of RM320,000 out of advances owing to NSB (“Shares Issuance”). Upon the completion of Shares Issuance, the authorised share capital of DNSB is RM1,000,000 comprising 1,000,000 ordinary shares of RM1.00 each of which 1,000,000 ordinary shares of RM1.00 each have been issued and fully subscribed by its shareholders, DCLX (60%) and the joint venture partner, NSB (40%) in accordance with the provisions of the Joint Venture Agreement dated 27 January 2011 entered into between DCLX and NSB.
(b) incorporation of a joint venture company
On 26 October 2010, the Group, via its subsidiary, Daya OCI Sdn. Bhd. (“DOCI”) incorporated a joint venture company under the name of Daya OCI-Ascent Sdn. Bhd (“DASB”) with Ascent Offshore (Singapore) Pte Ltd. DASB was incorporated on 26 October 2010 as a private limited liability company with an authorised and fully paid-up share capital of RM100,000 divided into 100,000 ordinary shares of RM1.00 each. DASB’s issued and fully paid-up share capital is 51% owned by DOCI and 49% owned by Ascent Offshore (Singapore) Pte. Ltd. The principal activities of DASB are in supplying of services and equipments to exploration and extraction companies in the oil and gas industry.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
94 DAYA MATERIALS BERHAD (636357-W)
14. investMent in Jointly controlleD entities (cont’d)
(b) incorporation of a joint venture company (cont’d)
On 10 November 2011, DOCI entered into a Supplemental Joint Venture Agreement to the Joint Venture Agreement (“JVA”) dated 25 August 2010 between DOCI, Sheffield Offshore Services Pte. Ltd. (“Sheffield”) and Ascent Offshore (Singapore) Pte. Ltd. (“Ascent”). Ascent shall cease to be a party and Sheffield shall take the place of Ascent as a party to the JVA. Sheffield shall pay to Ascent the sum of RM49,000 only in consideration of the transfer by Ascent to Sheffield of 49,000 ordinary shares of par value RM1.00 each in DASB. Daya OCI-Ascent Sdn. Bhd was subsequently changed to “Daya Sheffield Sdn. Bhd.” and all cost incidental to this change of name shall be borne by DASB.
(c) completion of a jointly controlled operation
On 26 April 2012, the Group via its subsidiary, Daya OCI Sdn. Bhd. (“DOCI”) concluded a mutual agreement with KWH Technologies Sdn. Bhd to close their jointly controlled operation known as DOCI-KWH. The assets of DOCI-KWH has been distributed by way of capital distribution in cash to DOCI amounted to RM250,000 in the prior year.
15. DeferreD tax
assets liabilities net
2012 2011 2012 2011 2012 2011
Group note rM rM rM rM rM rM
At 1 January 1,198,845 1,301,871 2,150,151 2,387,603 (951,306) (1,085,732)
Recognised in income statements 7 112,792 (103,026) (615,453) (218,230) 728,245 115,204
Recognised in equity - - (23,491) (19,222) 23,491 19,222
At 31 December 29 1,311,637 1,198,845 1,511,207 2,150,151 (199,570) (951,306)
assets liabilities net
2012 2011 2012 2011 2012 2011
company note rM rM rM rM rM rM
At 1 January 44,860 73,433 90,061 113,990 (45,201) (40,557)
Recognised in income statements 7 50,759 (28,573) (15,264) (4,707) 66,023 (23,866)
Recognised in equity - - (23,491) (19,222) 23,491 19,222
At 31 December 95,619 44,860 51,306 90,061 44,313 (45,201)
The components and movements of deferred tax liabilities and deferred tax assets during the financial year prior to offsetting are as follows:
Group
at1 January
2011recognised
in equity
recognisedin income
statements
at 31 December
2011/1 January
2012 recognised
in equity
recognisedin income
statements
at31 December
2012
rM rM rM rM rM rM rM
Deferred tax liabilities
Property, plant and equipment 2,307,502 - (205,532) 2,101,970 - (602,881) 1,499,089
RCSLN 93,716 (19,222) (26,313) 48,181 (23,491) (13,950) 10,740
Others (13,614) - 13,614 - - 1,378 1,378
2,387,604 (19,222) (218,231) 2,150,151 (23,491) (615,453) 1,511,207
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
95ANNUAL REPORT 2012
15. DeferreD tax (cont’d)
Group
at 1 January
2011
recognised in income
statements
December 2011/
1 January 2012
recognised in income
statements
at 31 December
2012
rM rM rM rM rM
Deferred tax assets
Deductible temporary differences 569,721 (236,562) 333,159 153,454 486,613
Tax losses 297,200 287,000 584,200 159,650 743,850
Provisions 434,950 (153,464) 281,486 (200,312) 81,174
1,301,871 (103,026) 1,198,845 112,792 1,311,637
company
at1 January
2011
recognisedin income
statementsrecognised
in equity
at 31 December
2011/1 January
2012
recognisedin income
statementsrecognised
in equity
at 31 December
2012
rM rM rM rM rM rM rM
Deferred tax liabilities
Property, plant and equipment 22,905 18,975 - 41,880 (1,314) - 40,566
RCSLN 91,085 (23,682) (19,222) 48,181 (13,950) (23,491) 10,740
113,990 (4,707) (19,222) 90,061 (15,264) (23,491) 51,306
Deferred tax assets
Deductible temporary differences (73,433) 28,573 - (44,860) (50,759) - (95,619)
Deferred tax assets have not been recognised in respect of the following items:
Group
2012 2011
rM rM
Unutilised tax losses 1,143,048 821,328
Unabsorbed capital allowances 36,200 24,000
Other temporary differences 7,000 7,000
1,186,248 852,328
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
96 DAYA MATERIALS BERHAD (636357-W)
16. traDe anD other receivables
Group company
2012 2011 2012 2011
note rM rM rM rM
non-current
non-trade
Staff loan a 728,096 1,271,456 - -
current
trade
Trade receivables 48,605,287 74,982,630 - -
Amount due from subsidiaries b - - 3,459,992 2,908,444
c 48,605,287 74,982,630 3,459,992 2,908,444
Less: Allowance for impairment loss (464,609) (386,217) - -
30 48,140,678 74,596,413 3,459,992 2,908,444
non-trade
Deposits d 7,312,717 2,529,969 57,490 182,350
Staff loans a 560,900 550,740 - -
Sundry receivables 16,929,245 9,186,638 510,296 716,953
Less: Allowance for impairment loss (350,000) (350,000) - -
e 16,579,245 8,836,638 510,296 716,953
Amount due from subsidiaries b - - 28,296,010 21,188,080
24,452,862 11,917,347 28,863,796 22,087,383
Total current trade and other receivables 72,593,540 86,513,760 32,323,788 24,995,827
total trade and other receivables 30 73,321,636 87,785,216 32,323,788 24,995,827
Add: Cash and cash equivalents 20 66,412,033 62,840,884 11,798,484 5,224,754
total loans and receivables 139,733,669 150,626,100 44,122,272 30,220,581
(a) staff loans
Staff loans are unsecured and non-interest bearing except for the amount of RM1,271,695 (2011: RM1,809,111) which is a housing loan to a director and subject to interest rate at 5.55% (2011: 5.55%) per annum.
(b) amount due from subsidiaries
The amount due from the subsidiaries is unsecured, repayable on demand and non-interest bearing except for the amount of RM27,492,209 (2011: RM20,806,947) which subject to interest rate at 8.60% (2011: 8.30-8.60%) per annum.
Further details on related party transactions are disclosed in Note 27.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
97ANNUAL REPORT 2012
16. traDe anD other receivables (cont’d) (c) aging analysis of trade receivables
The ageing analysis of the Group’s and of the Company’s trade receivables is as follows:
Group company
2012 2011 2012 2011
rM rM rM rM
Neither past due nor impaired 30,775,695 66,367,345 2,436,955 2,618,405
Past due not impaired:
- 1 to 30 days 8,505,580 3,499,941 - -
- 31 to 60 days 3,858,612 1,465,861 - -
- 61 to 90 days 2,548,121 1,876,821 - -
- 91 to 120 days 850,291 1,133,526 153,877 134,156
- More than 121 days 1,602,379 252,919 869,160 155,883
17,364,983 8,229,068 1,023,037 290,039
Impaired 464,609 386,217 - -
48,605,287 74,982,630 3,459,992 2,908,444
Receivables that are neither past due nor impaired
Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group and the Company.
None of the Group’s and of the Company’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.
Receivables that are past due but not impaired
The Group and the Company have trade receivables amounting to RM17,364,983 (2011: RM8,229,068) and RM1,023,037 (2011: RM290,039) respectively that are past due at the reporting date but not impaired.
No allowance for impairment is made as in the opinion of the management, significant portions of the outstanding debts is in line with the norm in the construction industry and would be collected in full within the next twelve months.
Receivables that are impaired
The Group’s trade and other receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:
Group
individually impaired
2012 2011
rM rM
Trade and other receivables - nominal amounts 814,609 736,217
Less: Allowance for impairment loss (814,609) (736,217)
- -
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
98 DAYA MATERIALS BERHAD (636357-W)
16. traDe anD other receivables (cont’d) (c) aging analysis of trade receivables (cont’d)
Receivables that are impaired (cont’d)
Movement in allowance accounts:
Group
2012 2011
note rM rM
At 1 January 736,217 1,646,248
Allowance for impairment loss 6 743,339 230,439
Reversal of allowance for impairment loss 6 (90,008) (1,140,470)
Bad debts written off (574,939) -
At 31 December 814,609 736,217
The Group’s allowance accounts arise from:
Group
2012 2011
rM rM
Trade receivables 464,609 386,217
Sundry receivables 350,000 350,000
814,609 736,217
There is no allowance for impairment made for the Company during the year and prior year.
Trade receivables that are impaired relate to individually determined debtors that are in significant financial difficulties and have defaulted on payment. These receivables are not secured by any collateral or credit enhancements.
(d) Deposits
Included in deposits of the Group is the deposit made for the purchase of commercial properties amounted to RM4,701,322 (2011: Nil).
(e) sundry receivables
Included in sundry receivables of the Group are amount due from a jointly controlled entity and receivables from legal suit against Mohd Akbar B Hj. Johari, AJ Premier Holdings Sdn. Bhd., Aims Mission Sdn. Bhd., Global Max Trading Sdn. Bhd. and Azrul Bin Mohd Nasir representative of Rasa Indah Trading amounted to RM2,454,533 (2011: RM3,538,459) and RM1,922,250 (2011: RM1,942,250) respectively.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
99ANNUAL REPORT 2012
16. traDe anD other receivables (cont’d) (f) receivables denominated in foreign currencies
Included in trade and other receivables are the following trade and other receivables amounts denominated in a currency other than the functional currency of the entity to which they relate:
Group company
2012 2011 2012 2011
note rM rM rM rM
Hong Kong Dollar 4,477 - 2,798,027 1,876,219
Indonesian Rupiah 1,694,861 280,095 - -
United States Dollar 915,410 32,273 - -
European Dollar - 25,479,628 - -
30(c) 2,614,748 25,791,996 2,798,027 1,876,219
17. inventories
Group
2012 2011
rM rM
At cost:
Raw materials 5,401,146 5,102,660
Work-in-progress 51,513 74,466
Finished goods 8,245,516 5,736,952
Goods in-transit - 116,152
Consumables 399,731 3,151,306
14,097,906 14,181,536 Assets pledged as security
The Group’s inventories amounted to RM5,674,929 (2011: RM6,835,341) have been pledged to a licensed bank as securities for the bank facilities as disclosed in Note 23.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
100 DAYA MATERIALS BERHAD (636357-W)
18. other current assets
Group company
2012 2011 2012 2011
note rM rM rM rM
Amount due from customers on contracts a 38,765,323 22,074,506 - -
Prepayments 1,360,176 540,535 124,249 174,000
40,125,499 22,615,041 124,249 174,000 (a) amount due from customers on contracts
Group company
2012 2011 2012 2011
rM rM rM rM
Aggregate costs incurred to date 267,751,020 305,500,193 - -
Add: Attributable profits 32,689,305 61,919,970 - -
300,440,325 367,420,163 - -
Less: Progress billings (261,675,002) (345,345,657) - -
38,765,323 22,074,506 - -
Included in the amount due from customers on contracts during the year is the hiring costs of plant and machinery amounting to RM2,183,536 (2011: RM2,249,736).
19. MarKetable securities
Group
2012 2011
note rM rM
financial assets at fair value through profit or loss
Shares quoted in Malaysia
At cost
As at 1 January 206,700 140,000
Additions - 114,900
Disposals (91,800) (48,200)
As at 31 December 114,900 206,700
Accumulated fair value changes
As at 1 January 37,028 18,600
Fair value changes on marketable securities 6 (11,540) 18,428
Disposals (32,200) -
As at 31 December (6,712) 37,028
Market value of quoted shares 108,188 243,728
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
101ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
19. Marketable securities (cont’d)
Fair value hierarchy
The Group uses the following hierarchy for determining the fair value of all financial instruments carried at fair value:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 - Inputs that are observable market data, either directly or indirectly Level 3 - Inputs that are not based on observable market data
As at the reporting date, the Group held the following financial assets that are measured at fair value:
level 1 level 2 level 3 total
rM rM rM rM
31 December 2012
Group
Financial assets
Financial assets at fair value through profit or loss Quoted shares 108,188 - - 108,188
31 December 2011
Group
Financial assets
Financial assets at fair value through profit or loss Quoted shares 243,728 - - 243,728
20. cash anD cash equivalents
2012 2011 1.1.2011
note rM rM rM
Group
Short term investments 30, a 3,620,798 3,707,582 2,422,352
Fixed deposits with licensed banks 30, b 29,781,427 41,231,219 21,115,259
Cash and bank balances 33,009,808 17,902,083 10,615,386
16, 31 66,412,033 62,840,884 34,152,997
2012 2011 1.1.2011
note rM rM rM
company
Short term investments 30, a 3,620,798 680,155 2,341,905
Fixed deposits with licensed banks 30, b 3,332,910 4,070,225 2,198,627
Cash and bank balances 4,844,776 474,374 2,860,144
16, 31 11,798,484 5,224,754 7,400,676
102 DAYA MATERIALS BERHAD (636357-W)
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
20. cash anD cash equivalents (cont’d)
For the purposes of the statements of cash flows, cash and cash equivalents comprise the following as at the reporting date:
2012 2011 1.1.2011
rM rM rM
Group
Cash and cash equivalents 66,412,033 62,840,884 34,152,997
Less: Fixed deposits pledged (23,249,368) (24,732,529) (17,603,031)
Fixed deposits with licensed banks with maturity more than three months - (1,807,500) -
Bank overdraft (2,805,824) (3,739,469) (2,191,567)
40,356,841 32,561,386 14,358,399
company
Cash and cash equivalents 11,798,484 5,224,754 7,400,676
Less: Fixed deposits pledged (3,332,910) (2,262,725) (2,198,627)
Fixed deposits with licensed banks with maturity more than three months - (1,807,500) -
8,465,574 1,154,529 5,202,049 (a) short term investments
The information on financial risks of short term investments are disclosed in Note 30.
(b) Fixed deposits with licensed banks
The Group and the Company’s fixed deposits amounted to RM23,249,368 (2011: RM24,732,529) and RM3,332,910 (2011: RM2,262,725) respectively have been pledged to licensed banks for banking facilities granted to the Company and its subsidiaries.
The interest rates of the fixed deposits are disclosed in Note 30.
(c) cash and cash equivalents denominated in foreign currencies
Included in cash and cash equivalents are the following cash and cash equivalents amounts denominated in a currency other than the functional currency of the entity to which they relate:
Group company
2012 2011 2012 2011
note rM rM rM rM
Hong Kong Dollar 34,931 59,660 - -
Indonesian Rupiah 18,163 429,786 - -
European Dollar 152,051 - - -
United States Dollar 598,657 96,230 1,893 -
30(c) 803,802 585,676 1,893 -
103ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
21. share capital
Group and company
number of ordinary shares of rM0.10 each amount
note 2012 2011 2012 2011
rM rM
Authorised:
At 1 January/31 December 2,000,000,000 2,000,000,000 200,000,000 200,000,000
Issued and fully paid:
At 1 January 1,199,158,544 1,096,736,941 119,915,854 109,673,694
Ordinary shares issued during the year:
Issued for cash a - 85,000,000 - 8,500,000
Conversion of RCSLN b 34,843,206 17,421,603 3,484,321 1,742,160
At 31 December 1,234,001,750 1,199,158,544 123,400,175 119,915,854
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.
On 26 February 2009, the shareholders of the Company had approved the proposed establishment of an Employee Share Option Scheme for the eligible directors and employees of the Company and its subsidiaries. However, no options have been awarded at the date of reporting.
(a) Ordinary shares issued for cash
The issuance of 85,000,000 new ordinary shares of RM0.10 each in the Company in the prior year is through a private placement to identified investors.
The shares premium of RM10,225,000 arising from the issuance of ordinary shares and the share issue costs of RM1,850,435 have been included in the share premium account. The new ordinary shares rank pari passu in all respects with the existing ordinary shares of the Company.
(b) conversion of redeemable convertible secured loan notes
On 20 January 2012, the Company announced that 17,421,603 new ordinary shares of RM0.10 each in the Company (“DMB Shares”) were issued pursuant to the conversion of RM3 million Redeemable Convertible Secured Loan Notes at a conversion price of RM0.1722 per DMB share were listed on Bursa Malaysia Securities Berhad on 25 January 2012.
Subsequently, on 14 May 2012, the Company announced that a further 17,421,603 of new DMB Shares were issued pursuant to the conversion of RM3 million Redeemable Convertible Secured Loan Notes at a conversion price of RM0.1722 per DMB share were listed on Bursa Malaysia Securities Berhad on 15 May 2012.
104 DAYA MATERIALS BERHAD (636357-W)
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
22. reserves
Group company
2012 2011 2012 2011
note rM rM rM rM
Distributable reserve:
Retained profits 36,a 88,036,826 70,940,064 15,382,861 16,446,837
Non-distributable reserves:
Capital reserve b - - 17,256,197 17,256,197
Foreign translation reserve c 278,464 171,750 - -
Treasury shares d (3,049,369) (317,049) (3,049,369) (317,049)
Equity component of Redeemable Convertible Secured Loan Notes e 130,374 286,824 130,374 286,824
Share premium f 22,171,940 19,630,261 22,171,940 19,630,261
107,568,235 90,711,850 51,892,003 53,303,070
(a) retained profits
Prior to the year of assessment 2008, Malaysian companies adopt the full imputation system. In accordance with the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividends paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders (”single tier system”). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard the 108 balance and opt to pay dividends under the single tier system. The change in the tax legislation also provides for the 108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007.
The Company may distribute dividends out of its entire retained profits as at 31 December 2012 under the single tier system.
The Company has, pending agreement with the tax authorities, tax-exempt income of approximately RM145,000 (2011: RM145,000) as at 31 December 2012 available for distribution by way of tax-exempt dividends.
(b) capital reserve
The capital reserve represents the fair value adjustments on previously held interest in subsidiaries.
(c) Foreign translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of the Group entities with functional currencies other than RM.
(d) treasury shares
The shareholders of the Company, by a special resolution passed in a general meeting held on 20 June 2011, approved the Company’s plan to repurchase its own shares. The Directors of the Company are committed to enhance the value of the Company to its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders.
For the year ended 31 December 2012, the Company repurchased 13,888,600 (2011: 1,787,100) of its issued share capital from the open market. The average price paid for the shares repurchased was RM0.20 (2011: RM0.18) per share. The repurchase transactions were financed by internally generated funds. The shares repurchased were retained as treasury shares.
As at 31 December 2012, the issued and paid up capital of the Company comprising 1,234,001,750 (2011: 1,199,158,544) ordinary shares of RM0.10 each of which 15,675,700 (2011: 1,787,100) ordinary shares of RM0.10 each are held as treasury shares.
105ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
22. reserves (cont’d)
(e) equity component of redeemable convertible secured loan notes
Group and company
2012 2011
note rM rM
At 1 January 286,824 365,049
Conversion to share capital (156,450) (78,225)
At 31 December 23 130,374 286,824
This reserve represents the fair value of the equity component of the Redeemable Convertible Secured Loan Notes, net of deferred tax, as determined on the date of issue.
(f) share premium
This amount arose from premium on the issue of ordinary shares above par value.
The movement in share premium account is as follows:
Group and company
2012 2011
rM rM
At 1 January 19,630,261 9,997,856
Ordinary shares issued during the year:
Issued for cash - 10,225,000
Pursuant to conversion of RCSLN 2,515,679 1,257,840
Transaction cost
Current year - (1,850,435)
Overprovision in prior year 26,000 -
26,000 (1,850,435)
At 31 December 22,171,940 19,630,261
106 DAYA MATERIALS BERHAD (636357-W)
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
23. lOans anD bOrrOwinGs
Group company
2012 2011 2012 2011
note rM rM rM rM
secured
non-current
Term loans a 36,535,857 36,142,404 9,000,000 7,757,500
Hire purchase payables b 4,444,969 1,911,947 475,945 472,071
Redeemable Convertible Secured Loan Notes 30, c - 10,807,270 - 10,807,270
40,980,826 48,861,621 9,475,945 19,036,841
current
Term loans a 20,118,085 10,099,036 10,858,282 5,950,348
Hire purchase payables b 1,181,371 753,695 116,125 83,653
Bankers’ acceptance 30 11,286,000 3,270,000 - -
Bank overdraft 30 2,805,824 3,739,469 - -
Redeemable Convertible Secured Loan Notes 30, c 4,957,033 - 4,957,033 -
40,348,313 17,862,200 15,931,440 6,034,001
total loans and borrowings24, 29 30, 31 81,329,139 66,723,821 25,407,385 25,070,842
(a) term loans
Included in the term loans is an amount of RM7,874,070 (2011: RM6,050,207) which is the term loan approved under the Green Technology Financing Scheme (“GTFS”). Under the GTFS’s approved term loan, the Government of Malaysia is to bear 2.00% of the total interest rate and a guarantee of 60% on the term loan via Credit Guarantee Corporation Malaysia Berhad.
The securities given for the term loans are disclosed in Note 23 (d).
107ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
23. lOans anD bOrrOwinGs (cont’d) (b) hire purchase payables
Group company
2012 2011 2012 2011
note rM rM rM rM
Minimum lease payment
Not later than 1 year 1,768,954 885,480 141,504 108,576
Later than 1 year and not later than 2 years 1,216,996 986,591 141,504 108,576
Later than 2 years and not later than 5 years 3,323,712 1,091,594 376,661 419,381
6,309,662 2,963,665 659,669 636,533
Future finance charges (683,322) (298,023) (67,599) (80,809)
Present value of hire purchase liabilities 5,626,340 2,665,642 592,070 555,724
present value of hire purchase liabilities
Not later than 1 year 1,181,371 753,963 116,125 83,653
Later than 1 year and not later than 2 years 1,144,834 896,239 122,182 88,276
Later than 2 years and not later than 5 years 3,300,135 1,015,440 353,763 383,795
5,626,340 2,665,642 592,070 555,724
analysed as
Due within 12 months 1,181,371 753,695 116,125 83,653
Due after 12 months 4,444,969 1,911,947 475,945 472,071
30 5,626,340 2,665,642 592,070 555,724
(c) redeemable convertible secured loan notes (“rcsln”)
On 3 December 2009, the Company issued RM20,000,000 of 4-year Redeemable Convertible Secured Loan Notes for the funding on future synergistic acquisitions of the Group to meet the working requirements of the Group, and to defray the expenses incidental to the RCSLN issue. The terms of the RCSLN are as follows:
(i) The registered holder(s) of the RCSLN will have the option to convert the nominal value of the RCSLN into new ordinary shares of RM0.10 each in the Company at any time during the conversion period, in the following manner:
- Within the first two (2) years from the issue date of the RCSLN, up to RM3 million nominal value of the RCSLN per month; and
- Thereafter, all or part of the outstanding RCSLN at the registered holder(s)’ discretion.
(ii) The RCSLN are convertible into new ordinary shares of RM0.10 each in the Company (“DMB Shares”) at a conversion price of RM0.31 per new DMB share. The conversion price of the RCSLN of RM0.31 was arrived at based on a premium of approximately 22% to the 30-day volume weighted average closing price of DMB Shares of RM0.2537 up to and including 16 April 2009 being the date the terms of the RCSLN were mutually agreed upon. On 25 June 2009, the conversion price of the RCSLN of RM0.31 was adjusted to RM0.2067 pursuant to the bonus issue of 270,595,514 DMB shares, credited as fully paid up, on the basis of 1 DMB Share for every 2 DMB Shares held on 24 June 2009.
(iii) Unless previously redeemed or converted, upon the close of business on the maturity date, all outstanding RCSLN (excluding the RCSLN to be converted on the maturity date) will be redeemed at par by cash and in one lump sum.
108 DAYA MATERIALS BERHAD (636357-W)
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
23. lOans anD bOrrOwinGs (cont’d)
(c) redeemable convertible secured loan notes (“rcsln”) (cont’d)
(iv) The Company shall have the option to either repurchase or nominate another party to purchase up to RM3 million nominal value of the RCSLN in each calendar month from the registered holder(s) at any time after the second anniversary of the issue date of the RCSLN at a price of 130% of the RCSLN’s nominal value.
(v) The RCSLN bear interest at 4% per annum payable quarterly in arrears during the tenure of the RCSLN applicable to those RCSLN which have not been converted prior to the maturity of the RCSLN.
(vi) The RCSLN constitute direct, unconditional, unsubordinated and secured obligations of the issuer ranking pari passu without discrimination, preference or priority with other secured obligations of the issuer, in priority to all present and future unsecured obligations of the issuer from time to time subject to those preferred by law.
(vii) The RCSLN is secured by way of a pledge of 100% unquoted shares over the entire issued and paid up capital of one of its subsidiaries with a carrying amount of RM28,488,131 (2011: RM28,488,131) as disclosed in Note 13.
(viii) On 3 July 2010, the conversion price of the RCSLN of RM0.2067 was adjusted to RM0.1722 pursuant to the bonus issue of 176,122,823 new DMB shares, credited as fully paid up, on the basis of 1 DMB Share for every 5 DMB Shares held on 2 July 2010.
The proceeds received from the issue of the RCSLN have been split between the liability component and the equity component, representing the fair value of the conversion option. The RCSLN are accounted for in the statements of financial position of the Group and of the Company as follows:
2012 2011
note rM rM
Nominal value
As at 1 January 11,000,000 14,000,000
Less: Conversion to new ordinary shares (6,000,000) (3,000,000)
As at 31 December 5,000,000 11,000,000
Less: Unamortised discount (42,967) (192,730)
30 4,957,033 10,807,270
Current 4,957,033 -
Non-current - 10,807,270
4,957,033 10,807,270
109ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
23. lOans anD bOrrOwinGs (cont’d)
(c) redeemable convertible secured loan notes (“rcsln”) (cont’d)
The carrying amount of the liability component of RCSLN at the reporting date is arrived at as follows:
Group and company
2012 2011
note rM rM
Face value of RCSLN 5,000,000 11,000,000
Equity component
- Equity component, net of deferred tax 22 (130,374) (286,824)
- Deferred tax liability (10,740) (48,181)
Liability component at initial recognition 4,858,886 10,664,995
Total interest expense recognised to date 1,522,692 1,302,021
Total interest paid to date (1,424,545) (1,159,746)
Liability component at 31 December 4,957,033 10,807,270
Interest expense on the convertible notes is calculated on the effective yield basis by applying the coupon interest rate of 4.00% (2011: 4.00%) per annum.
(d) security Group
The bank borrowings and other facilities are secured by way of:
(i) legal charges over subsidiaries freehold land and buildings;
(ii) corporate guarantee by the Company;
(iii) a debenture over all assets of certain subsidiaries;
(iv) a pledge on the Company and subsidiaries’ fixed deposits; and
(v) a pledge of 100% unquoted shares over the entire issued and paid-up share capital of certain subsidiaries with a carrying amount of RM112,308,946 (2011: RM112,308,946) as disclosed in Note 13.
company
The term loan are secured by way of:
(i) a facility agreement to be executed between the Company and the bank;
(ii) a pledge of 100% unquoted shares over the entire issued and paid-up capital of certain subsidiaries with a carrying amount of RM112,308,946 (2011: RM112,308,946) as disclosed in Note 13.
(iii) third party secured legal charge over a subsidiary’s freehold land and building; and
(iv) a pledge on the Company’s fixed deposits.
Other information on financial risks of loans and borrowings are disclosed in Note 30.
110 DAYA MATERIALS BERHAD (636357-W)
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
24. traDe anD Other payables
Group company
2012 2011 2012 2011
note rM rM rM rM
non-current
Other payables
Deposits a - 3,000,000 - 3,000,000
current
trade payables
Third parties b 25,121,106 51,728,769 - -
Other payables
Accruals 5,681,771 3,193,328 490,412 994,625
Deposits a 3,000,000 2,000,000 3,000,000 2,000,000
Other payables c 51,620,704 37,551,491 98,074 580
Amount due to directors 213,953 - 213,953 -
Amount due to subsidiaries d - - 14,613,598 430,869
60,516,428 42,744,819 18,416,037 3,426,074
Total current trade and other payables 85,637,534 94,473,588 18,416,037 3,426,074
total trade and other payables 30 85,637,534 97,473,588 18,416,037 6,426,074
Add: Loans and borrowings 23 81,329,139 66,723,821 25,407,385 25,070,842
total financial liabilities carried at amortised cost 166,966,673 164,197,409 43,823,422 31,496,916
(a) Deposits
Included in deposits are sums placed by vendors in lieu of the profit guarantees amounted to RM3,000,000 (2011: RM5,000,000) meant for the acquired subsidiary.
(b) trade payables
The normal trade credit terms granted to the Group from the trade payables are ranging from 14 to 90 days (2011: 30 to 90 days).
(c) Other payables
Included in other payables are advance payments received from customers amounted to RM11,614,600 (2011: RM23,000,000) and retention sum retained from subcontractors amounted to RM6,100,455 (2011: RM6,849,640).
(d) amount due to subsidiaries
Included in amounts due to subsidiaries are loan and advances amounting to RM14,263,921 (2011: RM222,511) that are subject to interest rate at 5.00% per annum (2011: 4.75% - 5.00%). The amounts are repayable on demand.
111ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
24. traDe anD Other payables (cont’d) (e) trade and other payables denominated in foreign currencies
Included in trade and other payables are the following trade and other payables amounts denominated in a currency other than the functional currencies of the entities to which they relate:
Group company
2012 2011 2012 2011
note rM rM rM rM
Hong Kong Dollar 59,824 - - -
Indonesian Rupiah 8,097 - - -
United States Dollar 612,402 410,599 - -
European Dollar 1,008,785 20,037,367 - -
Singaporean Dollar - 430,902 - -
30(c) 1,689,108 20,878,868 - -
25. prOvisiOns
Group
2012 2011
rM rM
Defect liability
At 1 January 1,709,277 2,320,733
Arose during the year 98,823 995,551
Utilised/Reversal (1,483,406) (1,607,007)
At 31 December 324,694 1,709,277 The provision for defect liability relates to the construction works done by the technical services segment. The provision is based on
estimates made from historical defect claims data from the past construction works.
26. cOMMitMents
(a) capital commitments
Capital expenditure as at the reporting date is as follows:
Group company
2012 2011 2012 2011
rM rM rM rM
Contracted and not provided for Property, plant and equipment 11,738,370 1,501,687 145,970 321,793
Approved but not contracted for Property, plant and equipment 1,209,100 1,606,902 - -
112 DAYA MATERIALS BERHAD (636357-W)
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
26. cOMMitMents (cont’d)
(b) Operating lease commitments - as lessee
As at 31 December, the Group and the Company had future minimum lease payments payable under non-cancellable operating leases in respect of its buildings which fall due as follows:
Group company
2012 2011 2012 2011
rM rM rM rM
Not later than 1 year 470,096 83,800 204,000 -
Later than 1 year but not later than 5 years 243,938 86,250 238,000 -
714,034 170,050 442,000 -
(c) Operating lease commitments - as lessor
The Group has entered into commercial property leases on its investment properties. These non-cancellable leases have remaining lease terms of between 1 to 5 years. All leases include a clause to enable upward revision of the rental charge on an annual basis based on prevailing market conditions.
Future minimum rentals receivable under non-cancellable operating leases at the reporting date are as follows:
Group
2012 2011
rM rM
Not later than 1 year 326,292 339,892
Later than 1 year but not later than 5 years 1,286,360 1,348,760
More than 5 years 570,378 819,270
2,183,030 2,507,922
(d) Finance lease commitments
The Group and the Company have finance lease for certain of its property, plant and equipment. The future minimum lease payments under finance leases together with the present value of the net minimum lease payments are disclose in Note 23.
27. relateD party DisclOsures
(a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company have the following transactions with related parties during the financial year:
2012 2011
rM rM
Group
Purchases of raw materials from a company in which a director of a subsidiary has an has an interest
- Oticom Corporation - 2,409,775
Purchases of commercial properties from a director 3,192,400 -
Interest income charged on housing loan to a director 86,872 99,344
113ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
27. relateD party DisclOsures (cont’d)
(a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company have the following transactions with related parties during the financial year: (cont’d)
2012 2011
note rM rM
company
Subsidiaries:
- Dividends received 3, 6 3,676,020 15,447,271
- Management fees received/receivable 3 7,944,867 8,044,910
- Interest received/receivable 1,333,700 996,631
- Interest paid/payable 5 431,097 155,237
- Advances received 17,000,000 -
- Advances given 5,578,641 4,738,168
- Rental received/receivable 24,000 -
- Rental paid/payable 177,000 42,000
The directors are of the opinion that these transactions have been entered into in the normal course of business and have been established under negotiated terms.
The information on outstanding balances in respect of the above transactions is disclosed in Note 16 and 24.
(b) Compensation of key management personnel
The remuneration of directors and other members of key management personnel during the year was as follow:
Group company
2012 2011 2012 2011
note rM rM rM rM
Short term employee benefits 9,189,027 6,397,232 4,120,560 2,775,370
Pension costs
- Defined contribution plan 841,208 554,939 461,646 300,733
10,030,235 6,952,171 4,582,206 3,076,103
Included in the total compensation of key management personnel are:
- Remuneration for the Company’s directors 6 3,191,790 2,077,360 2,766,519 1,691,220
- Remuneration for the Company’s past directors 6 - 534,505 - 334,505
- Directors’ fees for the Company’s directors 6 166,000 165,000 156,000 141,000
- Directors’ fees for the Company’s past directors 6 - 15,000 - 15,000
The key management personnel comprise persons having authority and responsibility for planning, directing and controlling the activities of the Group entities either directly or indirectly.
114 DAYA MATERIALS BERHAD (636357-W)
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
28. eMplOyee beneFit expense
Group company
2012 2011 2012 2011
note rM rM rM rM
Wages and salaries 18,877,302 14,955,988 4,484,951 2,945,119
Social security costs 120,749 134,376 8,657 6,395
Pension costs - defined contribution plans 1,881,751 1,498,437 542,572 344,531
Overtime and allowances 1,310,626 1,063,705 213,017 115,039
6 22,190,428 17,652,506 5,249,197 3,411,084 29. seGMental repOrtinG
(a) reporting format
For management purposes, the Group’s primary segment is organised into business units based on their business industry and products and services produced, and has three reportable segments as follow:
(i) The polymer segment is involved in manufacturing of advanced materials for the power cables and wires industry and the trading of various other related polymer compounds.
(ii) The oil & gas segment is involved in trading and distribution of specialty chemicals and catalysts, provision of heavy
machineries and related manpower services, maintenance services for air-conditioning and ventilation system, and automatic welding services for offshore pipeline installation to the oil and gas industry.
(iii) The technical services segment is involved in services in the construction, office maintenance and recycling services. This reporting segment has aggregated the construction and maintenance services segment, and recycling services segment, which are regarded by management to exhibit similar economic and business characteristics.
Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments.
Management monitors the operating results of its business units separately for the purpose of making decisions about
resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss.
115ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
29.
seG
Men
tal
repO
rtin
G (
cont
’d)
(b)
busi
ness
seg
men
ts
Th
e fo
llow
ing
tabl
e pr
ovid
es a
n an
alys
is o
f the
Gro
up’s
reve
nue,
resu
lts, a
sset
s an
d lia
bilit
ies
and
othe
r inf
orm
atio
n by
bus
ines
s se
gmen
ts:
p
olym
er
Oil
& G
as
tec
hnic
al s
ervi
ces
O
ther
s
Gro
up
201
2 2
011
201
2 2
011
201
2 2
011
201
2 2
011
201
2 2
011
not
e r
M
rM
r
M
rM
r
M
rM
r
M
rM
r
M
rM
reve
nue
Reve
nue
from
ex
tern
al
cust
omer
s 1
9,56
1,29
6 1
9,30
9,69
2 1
04,5
18,7
29
101,
615,
011
152
,843
,258
16
0,81
7,45
6 1
,362
,565
4
14,6
30
278,
285,
848
282
,156
,789
Inte
rseg
men
t re
venu
e -
- -
- -
(35,
058)
(1,3
56,4
80)
(381
,200
) (1
,356
,480
) (4
16,2
58)
19,
561,
296
19,
309,
692
104
,518
,729
10
1,61
5,01
1 1
52,8
43,2
58
160,
782,
398
6,0
85
33,
430
276
,929
,368
28
1,74
0,53
1
resu
lts
Segm
ent r
esul
ts (8
85,3
56)
1,1
30,4
25
21,
181,
136
16,
862,
250
11,
819,
959
6,2
32,6
85
(479
,806
) (6
40,3
82)
31,
635,
933
23,
584,
978
Una
lloca
ted
resu
lts (6
61,5
73)
2,7
53,6
82
Profi
t fro
m
oper
atio
ns 3
0,97
4,36
0 2
6,33
8,66
0
Fina
nce
cost
s5
(4,0
67,9
68)
(3,9
73,3
37)
Shar
e of
resu
lts
of jo
intly
co
ntro
lled
entit
ies
14 1
,480
,297
1
,394
,943
Profi
t bef
ore
tax
28,
386,
689
23,
760,
266
Inco
me
tax
expe
nse
7 (8
,270
,488
) (6
,317
,664
)
Profi
t for
the
year
20,
116,
201
17,
442,
602
116 DAYA MATERIALS BERHAD (636357-W)
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
29.
seG
Men
tal
repO
rtin
G (
cont
’d)
(b)
busi
ness
seg
men
ts (
cont
’d)
Th
e fo
llow
ing
tabl
e pr
ovid
es a
n an
alys
is o
f the
Gro
up’s
reve
nue,
resu
lts, a
sset
s an
d lia
bilit
ies
and
othe
r inf
orm
atio
n by
bus
ines
s se
gmen
ts: (
cont
’d)
p
olym
er
Oil
& G
as
tec
hnic
al s
ervi
ces
O
ther
s
Gro
up
201
2 2
011
201
2 2
011
201
2 2
011
201
2 2
011
201
2 2
011
not
e r
M
rM
r
M
rM
r
M
rM
r
M
rM
r
M
rM
ass
ets
and
liabi
litie
s
Segm
ent a
sset
s 2
0,97
9,18
1 2
1,58
1,99
3 1
20,0
03,4
72
128,
889,
346
148
,274
,733
12
6,90
6,18
4 9
,089
,835
4
,718
,635
29
8,34
7,22
1 2
82,0
96,1
58
Inve
stm
ent
in jo
intly
co
ntro
lled
entit
ies
14 2
,390
,589
3
,128
,637
Tax
reco
vera
ble
1,6
11,5
76
2,2
05,8
69
Una
lloca
ted
asse
ts 9
6,86
7,16
7 9
0,68
4,12
6
Tota
l ass
ets
399
,216
,553
37
8,11
4,79
0
Segm
ent l
iabi
litie
s 5
16,5
66
640
,756
1
1,12
8,89
9 2
6,99
2,79
4 7
0,41
7,23
8 6
5,39
0,02
0 1
23,8
24
387
,139
8
2,18
6,52
7 9
3,41
0,70
9
Corp
orat
e lia
bilit
ies
3,7
75,7
01
5,7
72,1
56
Loan
s an
d bo
rrow
ings
23 8
1,32
9,13
9 6
6,72
3,82
1
Tax
paya
ble
811
,789
6
29,0
94
Def
erre
d ta
x lia
bilit
ies
15 1
99,5
70
951
,306
Tota
l lia
bilit
ies
168
,302
,726
16
7,48
7,08
6
117ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
29.
seG
Men
tal
repO
rtin
G (
cont
’d)
(b)
busi
ness
seg
men
ts (
cont
’d)
Th
e fo
llow
ing
tabl
e pr
ovid
es a
n an
alys
is o
f the
Gro
up’s
reve
nue,
resu
lts, a
sset
s an
d lia
bilit
ies
and
othe
r inf
orm
atio
n by
bus
ines
s se
gmen
ts: (
cont
’d)
p
olym
er
Oil
& G
as
tec
hnic
al s
ervi
ces
O
ther
s
Gro
up
201
2 2
011
201
2 2
011
201
2 2
011
201
2 2
011
201
2 2
011
not
e r
M
rM
r
M
rM
r
M
rM
r
M
rM
r
M
rM
Oth
er in
form
atio
n
Capi
tal e
xpen
ditu
re
Prop
erty
, pl
ant a
nd
equi
pmen
t9
25,
869
250
,863
7
,495
,858
6
,744
,734
2
,290
,574
6
,951
,586
6
39,8
95
4,0
96,7
66
10,
452,
196
18,
043,
949
Land
hel
d fo
r pr
oper
ty
deve
lopm
ent
10 -
- -
- 1
0,47
4,82
5 -
- -
10,
474,
825
-
Inta
ngib
le a
sset
s12
- 8
6,84
2 -
- 9
8,42
5 2
56,2
13
- 5
6,87
0 9
8,42
5 3
99,9
25
25,
869
337
,705
7
,495
,858
6
,744
,734
1
2,86
3,82
4 7
,207
,799
6
39,8
95
4,1
53,6
36
21,
025,
446
18,
443,
874
Dep
reci
atio
n an
d am
ortis
atio
n
Prop
erty
, pl
ant a
nd
equi
pmen
t9
495
,289
5
28,6
96
2,9
09,7
91
2,7
13,8
72
642
,345
9
55,6
80
312
,066
2
44,6
35
4,3
59,4
91
4,4
42,8
83
Inve
stm
ent
prop
ertie
s11
- -
10,
457
10,
457
4,5
38
4,5
38
- -
14,
995
14,
995
Inta
ngib
le a
sset
s12
17,
368
1,4
47
- -
57,
973
2,8
75
11,
374
948
8
6,71
5 5
,270
512
,657
5
30,1
43
2,9
20,2
48
2,7
24,3
29
704
,856
9
63,0
93
323
,440
2
45,5
83
4,4
61,2
01
4,4
63,1
48
118 DAYA MATERIALS BERHAD (636357-W)
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
29. seGMental repOrtinG (cont’d)
(c) Geographical segments:
Revenue, segment assets and capital expenditures based on geographical location of customers and assets are as follows:
total revenue fromexternal customers segment assets capital expenditure
2012 2011 2012 2011 2012 2011
rM rM rM rM rM rM
Malaysia 276,218,426 280,961,616 295,390,060 282,029,260 21,025,446 18,376,976
Other Asian countries 710,942 784,315 2,957,161 66,898 - 66,898
Consolidated 276,929,368 281,745,931 298,347,221 282,096,158 21,025,446 18,443,874
The Group’s operations are mainly located in Malaysia.
30. Financial instruMents
(a) Financial risk management objectives and policies
The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include interest rate risk, foreign currency risk, liquidity risk and credit risk.
The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s business whilst managing its interest rate risk, foreign currency risk, liquidity risk and credit risk. The policies for managing each of these risks are summarised below. It is the Group’s policy that no trading in derivative financial instruments shall be undertaken.
The following sections provide details regarding the Group’s and the Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.
(b) interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s and of the Company’s financial instruments will fluctuate because of changes in market interest rates. The Group’s and the Company’s exposure to interest rate risk arises primarily from their loans and borrowings and advances at floating rates given to related companies as the Group and the Company had no substantial long-term interest-bearing assets as at 31 December 2012. The investments in financial assets are mainly short term in nature and they are not held for speculative purposes.
The Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating rate on its loans and borrowings. The Group reviews its debt portfolio, taking into account the investment holding period and nature of its assets. This strategy allows it to capitalise on cheaper funding in a low interest rate environment and achieve a certain level of protection against rate hikes.
At the reporting date, the Group and the Company do not have significant interest risk exposure except as disclosed below.
Sensitivity analysis for interest rate risk
At the reporting date, if interest rates had been 100 basis points lower/higher, with all other variables held constant, the Group’s and the Company’s profit before tax would have been RM652,106 (2011: RM473,484) and RM30,092 (2011: RM75,567) higher/lower, arising mainly as a result of lower/higher interest expense on floating rate loan and borrowings and higher/lower interest income from floating rate loans to related parties. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.
119ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
30.
Fin
an
cia
l in
stru
Men
ts (
cont
’d)
(b
) in
tere
st ra
te ri
sk (
cont
’d)
Th
e fo
llow
ing
tabl
es se
t out
the
carr
ying
am
ount
s, th
e in
tere
st ra
tes a
s at t
he re
port
ing
date
and
the
rem
aini
ng m
atur
ities
of t
he G
roup
’s an
d of
the
Com
pany
’s fin
anci
al
inst
rum
ents
that
are
exp
osed
to in
tere
st ra
te ri
sk:
inte
rest
ra
te
wit
hin
1 y
ear
1-2
yea
r 2
-3 y
ears
3
-4 y
ears
4
-5 y
ears
M
ore
than
5
yea
rs
tot
al
not
e %
r
M
rM
r
M
rM
r
M
rM
r
M
Gro
up
at 3
1 D
ecem
ber 2
012
Fixe
d ra
te
Fina
ncia
l ass
ets
Fixe
d de
posi
ts20
2.15
- 3.
29 2
9,78
1,42
7 -
- -
- -
29,
781,
427
Fina
ncia
l lia
bilit
ies
Term
loan
s 7.
60 3
02,6
19
326
,437
3
52,1
29
379
,843
4
09,7
38
143
,624
1
,914
,390
Hire
pur
chas
e23
2.34
- 4.
72 1
,181
,371
1
,144
,834
9
56,6
11
724
,559
6
32,7
52
986
,213
5
,626
,340
RCSL
N
234.
00 4
,957
,033
-
- -
- -
4,9
57,0
33
Floa
ting
rate
Fina
ncia
l ass
ets
Shor
t ter
m in
vest
men
ts20
1.83
- 2.
95 3
,620
,798
-
- -
- -
3,6
20,7
98
Hou
sing
loan
to a
dire
ctor
5.55
592
,427
6
00,3
52
78,
916
- -
- 1
,271
,695
Fina
ncia
l lia
bilit
ies
Term
loan
s4.
40 -
8.35
19,
815,
466
8,9
47,3
96
8,5
81,1
60
5,3
49,4
15
2,8
27,0
74
9,2
19,0
41
54,
739,
552
Bank
ove
rdra
ft23
7.00
- 7.
85 2
,805
,824
-
- -
- -
2,8
05,8
24
Bank
ers’
acce
ptan
ce23
3.21
- 4.
49 1
1,28
6,00
0 -
- -
- -
11,
286,
000
120 DAYA MATERIALS BERHAD (636357-W)
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
30.
Fin
an
cia
l in
stru
Men
ts (
cont
’d)
(b
) in
tere
st ra
te ri
sk (
cont
’d)
Th
e fo
llow
ing
tabl
es se
t out
the
carr
ying
am
ount
s, th
e in
tere
st ra
tes a
s at t
he re
port
ing
date
and
the
rem
aini
ng m
atur
ities
of t
he G
roup
’s an
d of
the
Com
pany
’s fin
anci
al
inst
rum
ents
that
are
exp
osed
to in
tere
st ra
te ri
sk: (
cont
’d)
inte
rest
ra
te
wit
hin
1 y
ear
1-2
yea
r 2
-3 y
ears
3
-4 y
ears
4
-5 y
ears
M
ore
than
5
yea
rs
tot
al
not
e %
r
M
rM
r
M
rM
r
M
rM
r
M
Gro
up
at 3
1 D
ecem
ber 2
011
Fixe
d ra
te
Fina
ncia
l ass
ets
Fixe
d de
posi
ts20
2.50
- 3.
29 4
1,23
1,21
9 -
- -
- -
41,
231,
219
Fina
ncia
l lia
bilit
ies
Term
loan
7.
60 2
80,5
40
302
,620
3
26,4
37
352
,129
3
79,8
43
553
,362
2
,194
,931
Hire
pur
chas
e23
2.34
- 4.
00 7
53,9
63
896
,239
6
55,5
01
156
,136
1
08,3
12
95,
491
2,6
65,6
42
RCSL
N
234.
00 -
10,
807,
270
- -
- -
10,
807,
270
Floa
ting
rate
Fina
ncia
l ass
ets
Shor
t ter
m in
vest
men
ts20
1.00
- 3.
10 3
,707
,582
-
- -
- -
3,7
07,5
82
Hou
sing
loan
to a
dire
ctor
5.55
537
,655
5
68,0
13
600
,352
1
03,0
91
- -
1,8
09,1
11
Fina
ncia
l lia
bilit
ies
Term
loan
s3.
15 -
7.60
9,8
18,4
96
14,
620,
684
3,7
30,6
49
3,4
09,0
75
3,3
97,4
86
9,0
70,1
19
44,
046,
509
Bank
ove
rdra
ft23
7.00
- 8.
00 3
,739
,469
-
- -
- -
3,7
39,4
69
Bank
ers’
acce
ptan
ce23
2.97
- 4.
47 3
,270
,000
-
- -
- -
3,2
70,0
00
121ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
30.
Fin
an
cia
l in
stru
Men
ts (
cont
’d)
(b
) in
tere
st ra
te ri
sk (
cont
’d)
Th
e fo
llow
ing
tabl
es se
t out
the
carr
ying
am
ount
s, th
e in
tere
st ra
tes a
s at t
he re
port
ing
date
and
the
rem
aini
ng m
atur
ities
of t
he G
roup
’s an
d of
the
Com
pany
’s fin
anci
al
inst
rum
ents
that
are
exp
osed
to in
tere
st ra
te ri
sk: (
cont
’d)
inte
rest
ra
te
wit
hin
1 y
ear
1-2
yea
r 2
-3 y
ears
3
-4 y
ears
4
-5 y
ears
M
ore
than
5
yea
rs
tot
al
not
e %
r
M
rM
r
M
rM
r
M
rM
r
M
com
pany
at 3
1 D
ecem
ber 2
012
Fixe
d ra
te
Fina
ncia
l ass
ets
Fixe
d de
posi
ts20
3.10
3,3
32,9
10
- -
- -
- 3
,332
,910
Fina
ncia
l lia
bilit
ies
Hire
pur
chas
e23
2.44
- 2.
60 1
16,1
25
122
,182
1
28,2
39
129
,767
8
8,26
6 7
,491
5
92,0
70
RCSL
N
234.
00 4
,957
,033
-
- -
- -
4,9
57,0
33
Floa
ting
rate
Fina
ncia
l ass
ets
Am
ount
due
from
su
bsid
iarie
s8.
60 2
7,49
2,20
9 -
- -
- -
27,
492,
209
Shor
t ter
m in
vest
men
ts20
2.01
- 2.
96 3
,620
,798
-
- -
- -
3,6
20,7
98
Fina
ncia
l lia
bilit
ies
Am
ount
due
to
subs
idia
ries
5.00
14,
263,
921
- -
- -
- 1
4,26
3,92
1
Term
loan
s5.
96 -
6.00
10,
858,
282
4,0
00,0
00
4,0
00,0
00
1,0
00,0
00
- -
19,
858,
282
122 DAYA MATERIALS BERHAD (636357-W)
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
30.
Fin
an
cia
l in
stru
Men
ts (
cont
’d)
(b
) in
tere
st ra
te ri
sk (
cont
’d)
Th
e fo
llow
ing
tabl
es se
t out
the
carr
ying
am
ount
s, th
e in
tere
st ra
tes a
s at t
he re
port
ing
date
and
the
rem
aini
ng m
atur
ities
of t
he G
roup
’s an
d of
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tere
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1-2
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,070
,225
-
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- -
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.
123ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
30. Financial instruMents (cont’d)
(c) Foreign exchange risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.
The Group has transactional currency exposures arising from sales and purchases that are denominated in a currency other than the respective functional currencies of Group entities, primarily RM, Hong Kong Dollar (”HKD”) and Indonesian Rupiah (”IDR”). The foreign currencies in which these transactions are denominated are mainly United States Dollar (“USD”), European Dollar (”EURO”) and Singapore Dollar (”SGD”).
Exposure to foreign currency risk
The Group’s and the Company’s exposure to foreign currency (a currency which is other than the currency of the Group and of the Company) risk, based on carrying amounts as at the end of the reporting period was:
2012
total rM denominated in
note rM usD eurO hkD sGD iDr
Group
Trade receivables 16(f ) 2,614,748 915,410 - 4,477 - 1,694,861
Cash and cash equivalents 20(c) 803,802 598,657 152,051 34,931 - 18,163
Trade and other payables 24(e) (1,689,108) (612,402) (1,008,785) (59,824) - (8,097)
Exposure in the statement of financial position 901,665 (856,734) (20,416) - 1,704,927
Approximate sales 113,000 231,140 - - 710,942
Approximate purchases 6,963,348 681,135 - 15,607 -
(6,850,348) (449,995) - (15,607) 710,942
2011
total rM denominated in
note rM usD eurO hkD sGD iDr
Group
Trade receivables 16(f ) 25,791,996 32,273 25,479,628 - - 280,095
Cash and cash equivalents 20(c) 585,676 96,230 - 59,660 - 429,786
Trade and other payables 24(e) (20,878,868) (410,599) (20,037,367) - (430,902) -
Exposure in the statement of financial position (282,096) 5,442,261 59,660 (430,902) 709,881
Approximate sales 450,599 27,856,135 - - 784,315
Approximate purchases 12,999,534 28,845,042 - 193,974 -
(12,548,935) (988,907) - (193,974) 784,315
124 DAYA MATERIALS BERHAD (636357-W)
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
30. Financial instruMents (cont’d)
(c) Foreign exchange risk (cont’d)
Exposure to foreign currency risk (cont’d)
The Group’s and the Company’s exposure to foreign currency (a currency which is other than the currency of the Group and of the Company) risk, based on carrying amounts as at the end of the reporting period was: (cont’d)
rM denominated in
usD hkD
note 2012 2011 2012 2011
company
Trade and other receivables 16(f ) - - 2,798,027 1,876,219
Cash and cash equivalents 20(c) 1,893 - - -
1,893 - 2,798,027 1,876,219
The Group is also exposed to currency translation risk arising from its net investments in foreign operations, including Hong Kong and Indonesia. The Group’s net investment in Hong Kong and Indonesia are not hedged as currency position in HKD and IDR are considered to be long term in nature.
At the reporting date, the Group and the Company do not have significant foreign currency risk exposure except as disclosed below.
Sensitivity analysis for foreign currency risk
The following table demonstrates the sensitivity of the Group’s and of the Company’s profit before tax to a reasonably possible change in the USD, EURO, SGD and IDR exchange rates against the respective functional currencies of the Group entities, with all other variables held constant.
Group
2012 2011
effect on profit before
tax
effect on profit before
tax
rM rM
USD/RM - strengthen 10% (2011: 10%) 90,167 (28,210)
USD/RM - weaken 10% (2011: 10%) (90,167) 28,210
EURO/RM - strengthen 10% (2011: 10%) (85,673) 544,226
EURO/RM - weaken 10% (2011: 10%) 85,673 (544,226)
SGD/RM - strengthen 10% (2011: 10%) - (43,090)
SGD/RM - weaken 10% (2011: 10%) - 43,090
IDR/RM - strengthen 10% (2011: 10%) 170,493 70,988
IDR/RM - weaken 10% (2011: 10%) (170,493) (70,988)
The financial impact on the changes of the other currencies other than the above is not disclosed as it is not significant to the Group.
125ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
30. Financial instruMents (cont’d)
(c) Foreign exchange risk (cont’d)
Sensitivity analysis for foreign currency risk (cont’d)
company
2012 2011
effect on profit before
tax
effect on profit before
tax
rM rM
HKD/RM - strengthen 10% (2011: 10%) 279,803 187,622
HKD/RM - weaken 10% (2011: 10%) (279,803) (187,622)
(d) liquidity risk
Liquidity risk is the risk that the Group and the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.
Analysis of financial instruments by remaining contractual maturities
The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations.
2012
contractual cash flows
carrying amount
On demand or within one year
One to five years
Overfive years total
note rM rM rM rM rM
Group
Financial liabilities:
Trade and other payables 24 85,637,534 85,637,534 - - 85,637,534
Loans and borrowings 23 81,329,139 41,893,480 39,157,422 4,162,015 85,212,917
166,966,673 127,531,014 39,157,422 4,162,015 170,850,451
company
Financial liabilities:
Trade and other payables 24 18,416,037 18,416,037 - - 18,416,037
Loans and borrowings 23 25,407,385 16,641,469 9,284,722 - 25,926,191
43,823,422 35,057,506 9,284,722 - 44,342,228
126 DAYA MATERIALS BERHAD (636357-W)
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
30. Financial instruMents (cont’d)
(d) liquidity risk (cont’d)
Analysis of financial instruments by remaining contractual maturities (cont’d)
The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations. (cont’d)
2011
contractual cash flows
carrying amount
On demand or within one year
One to five years
Overfive years total
note rM rM rM rM rM
Group
Financial liabilities:
Trade and other payables 24 97,473,588 94,473,588 3,000,000 - 97,473,588
Loans and borrowings 23 66,723,821 21,524,313 30,502,600 18,800,719 70,827,632
164,197,409 115,997,901 33,502,600 18,800,719 168,301,220
company
Financial liabilities:
Trade and other payables 24 6,426,074 3,426,074 3,000,000 - 6,426,074
Loans and borrowings 23 25,070,842 9,389,058 18,567,917 6,483 27,963,458
31,496,916 12,815,132 21,567,917 6,483 34,389,532
(e) credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including short term investments and cash and cash equivalents), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.
The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.
Exposure to credit risk
The carrying amount of each class of financial assets recognised in the statements of financial position.
Information regarding credit enhancements for trade and other receivables is disclosed in Note 16(c).
127ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
30. Financial instruMents (cont’d)
(e) credit risk (cont’d)
Credit risk concentration profile
The Group determines concentrations of credit risk by monitoring the country of its trade receivables on an ongoing basis. The credit risk concentration profile of the Group’s trade receivables at the reporting date are as follows:
2012 2011
note rM % of total rM % of total
by country:
Malaysia 46,445,817 96 74,284,045 100
Other countries 1,694,861 4 312,368 -
16 48,140,678 100 74,596,413 100
Financial assets that are neither past due nor impaired
Information regarding trade receivables that are neither past due nor impaired is disclosed in Note 16. Deposits with banks and short term investments that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.
Financial assets that are either past due or impaired
Information regarding financial assets that are either past due or impaired is disclosed in Note 16.
(f) Fair values of financial instruments
(i) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value
2012 2011
notecarrying amount
Fair value
carrying amount
Fair value
rM rM rM rM
Group
Financial
Redeemable Convertible Secured Loan Notes 23 4,957,033 4,913,155 10,807,270 10,617,869
company
Financial liabilities
Redeemable Convertible Secured Loan Notes 23 4,957,033 4,913,155 10,807,270 10,617,869
The fair value of redeemable convertible secured loan note (“RCSLN”) has been determined using a valuation technique through the discounting of expected future cash flows throughout the terms of RCSLN at the rate of 6.00% (2011: 5.97%).
128 DAYA MATERIALS BERHAD (636357-W)
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
30. Financial instruMents (cont’d)
(f) Fair values of financial instruments (cont’d) (ii) Determination of fair value
Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value
The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value:
Group company
2012 2011 2012 2011
note rM rM rM rM
Financial assets
Trade and other receivables 16 73,321,636 87,785,216 32,323,788 24,995,827
Cash and cash equivalents 20 66,412,033 62,840,884 11,798,484 5,224,754
Financial liabilities
Term loans 56,653,942 46,241,440 19,858,282 13,707,848
Hire purchase payables 23 5,626,340 2,665,642 592,070 555,724
Bankers’ acceptance 23 11,286,000 3,270,000 - -
Bank overdraft 23 2,805,824 3,739,469 - -
Trade and other payables 24 85,637,534 97,473,588 18,416,037 6,426,074
As the current interest rates do not differ significantly from the intrinsic value of these financial instruments, the fair values of these financial instruments therefore, closely approximate their carrying values as at the reporting date.
31. capital ManaGeMent
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholders value.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividends payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2012 and 31 December 2011.
129ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
31. capital ManaGeMent (cont’d)
The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. Under the requirement of Bursa Malaysia Securities Berhad’s Practice Note No. 17/2005, the Group is required to maintain a consolidated shareholders’ equity equal to or not less than the 25% of the issued and paid-up capital (excluding treasury shares) and such shareholders’ equity is not less than RM40 million. The Group includes within net debt, loans and borrowings less cash and cash equivalents. Capital includes equity attributable to the owners of the parent.
Group company
2012 2011 2012 2011
note rM rM rM rM
Loan and borrowings 23 81,329,139 66,723,821 25,407,385 25,070,842
Less: Cash and cash equivalents 20 (66,412,033) (62,840,884) (11,798,484) (5,224,754)
Net debt 14,917,106 3,882,937 13,608,901 19,846,088
Equity attributable to the owners of the parent 230,968,410 210,627,704 175,292,178 173,218,924
capital and net debt 245,885,516 214,510,641 188,901,079 193,065,012
Gearing ratio 6.07% 1.81% 7.20% 10.28%
32. siGniFicant events Group
(a) purchase of commercial properties
(i) On 15 August 2012, the Group, via its direct wholly owned subsidiary, Daya Urusharta Sdn. Bhd. entered into five conditional Sale and Purchase Agreements with Mr. Nathan Tham Jooi Loon, for the proposed acquisition of five office units of a stratified mixed commercial development in Dutamas, Daerah Kuala Lumpur with a total net area of approximately 5,016 square feets for a total consideration of RM3,192,400.
(ii) On 8 November 2012, the Group via its direct wholly owned subsidiary, Daya Urusharta Sdn. Bhd. entered into six Sale and Purchase Agreements with Delight 2000 Holdings Sdn. Bhd. for the acquisition of two units of three storey shop-office and four units of two storey shop office under the leasehold land of under P.N. 48236, Lot No. 42781 in Mukim of Petaling, Kuala Lumpur for a total consideration of RM8,400,000.
(b) purchase of land held for property development
On 9 January 2012, the Group via its sub-subsidiary, Ultrafest Sdn. Bhd. (“USB”) entered into Sale and Purchase Agreement to acquire a piece of land in the District of Paper, Sabah for total consideration of RM2,212,500.
USB has also entered into a Trust Deed on 15 March 2012 with Junior Koh Siew Hui (“Trustee”) whereby the Trustee has purchased four parcels of land in the District of Paper, Sabah on behalf of USB for a total consideration of RM7,272,500.
(c) Group re-organisation on investment in Daya petroleum ventures sdn. bhd.
On 2 August 2012, through the Internal Group Re-Organisation Plan, the Company acquired 800 ordinary shares of RM1.00 each in Daya Petroleum Ventures Sdn. Bhd. (formerly known as Metriwell Sdn. Bhd.) (“DPV”), a sub-subsidiary of a subsidiary of the Company, Daya Secadyme Sdn. Bhd. representing 80% of the issued and paid-up share capital of DPV for a cash consideration of RM800 from a wholly-owned sub-subsidiary of the Company, Seca Engineering and Manpower Services Sdn. Bhd.
130 DAYA MATERIALS BERHAD (636357-W)
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
32. siGniFicant events (cont’d)
Group (cont’d)
(d) incorporation of a sub-subsidiary
The Group had on 19 November 2012 via its subsidiary, Daya OCI Sdn. Bhd. incorporated a limited liability company known as Daya OCI (Labuan) Limited (formerly known as Daya OCI (Labuan) Berhad) (“DOCIL”). DOCIL is to principally engage in the shipping leasing business and other related services to the oil and gas industry.
(e) acquisition of a sub-subsidiaries
(i) On 14 February 2012, the Group, via its direct wholly owned sub-subsidiary, Daya Land & Development Sdn. Bhd. acquired 2 ordinary shares of RM1 each in Zen Projects Sdn. Bhd. (“ZPSB”) and Terra Hill Development Sdn. Bhd. (“THDSB”) for a total consideration of RM2 each, representing 100% equity interest in ZPSB and THDSB.
(ii) On 30 November 2012, the Group, via its direct wholly owned subsidiary, Daya CMT Sdn. Bhd. acquired 2 ordinary shares of RM1 each in Daya E&C Sdn. Bhd. (“DECSB”), for a total cash consideration of RM2 from Mr. Nathan Tham Jooi Loon and Mr. Tham Wooi Loon, representing 100% equity interest in DECSB. The principal activities of DECSB are provision of electrical, mechanical engineering and construction works. DECSB has yet to commence operation.
(f) Joint venture agreement
On 20 November 2012, the Group, via its direct wholly owned subsidiary, Daya Land & Development Sdn. Bhd. entered into a Shareholders Agreement with Chang Cheng Realty Sdn. Bhd. to jointly develop and construct one block of 28 storey retail/showroom/service suites, forty blocks of four storey shop office and eight blocks of three storey shops on four parcels of empty land held located at Jalan Pintas in the District of Penampang, Sabah, Malaysia to be undertaken by a single-purpose joint venture company, Semangat Global Sdn. Bhd.
company
(a) conversion of redeemable convertible secured loan notes
On 20 January 2012, the Company announced that 17,421,603 new ordinary shares of DMB Shares were issued pursuant to the conversion of RM3 million Redeemable Convertible Secured Loan Notes at a conversion price of RM0.1722 per DMB share and these shares were listed on Bursa Malaysia Securities Berhad on 25 January 2012.
Subsequently, on 14 May 2012, the Company announced that a further 17,421,603 new DMB Shares were issued pursuant to
the conversion of RM3 million Redeemable Convertible Secured Loan Notes at a conversion price of RM0.1722 per DMB share and these shares were listed on Bursa Malaysia Securities Berhad on 15 May 2012.
(b) private placement in 2011
On 11 May 2011, the Board announced that the Company proposes to issue up to 238,000,000 new ordinary shares of RM0.10 each in the Company (“DMB Shares”) representing up to 20.89% of the existing issued and paid-up share capital of the Company through a private placement exercise.
A total of 85,000,000 DMB Shares were placed out to identify investors in three (3) tranches, at an issue price of RM0.225 for the first tranche and RM0.22 per share for the second and third tranches.
On 23 November 2012, the Board announced that the Company does not intend to seek for any further extension of time for the implementation of the private placement which has lapsed on 24 November 2012.
(c) shares buy back
During the financial year, the Company acquired 13,888,600 (2011: 1,787,100) shares in the Company through purchases on the Bursa Malaysia Securities Berhad. The total amount paid to acquire the shares was RM2,732,320 (2011: RM317,049) and this was presented as a component within shareholders’ equity.
131ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
32. siGniFicant events (cont’d)
company (cont’d)
(d) partial disposal of shares in subsidiaries
The Company had on 21 September 2012 completed its disposal of 250,992 ordinary shares of RM1.00 each in Daya Secadyme Sdn. Bhd. (“DSSB”) and 1,245,000 ordinary shares of RM1.00 each in Daya OCI Sdn. Bhd. (“DOCI”) representing 24.9% of the issued and paid-up share capital of DSSB and DOCI respectively to Rancak Nikmat Sdn. Bhd. for a total cash consideration of RM19,000,000 and RM11,500,000 respectively.
33. DiviDenDs
Dividends in respect of year
Dividends recognised in year
2012 2011 2012 2011
rM rM rM rM
proposed:
Single tier dividends of 2.5% on 1,234,001,750 ordinary shares 3,085,004 - - -
Single tier dividends of 2.5% on 1,199,158,544 ordinary shares - 2,997,896 - -
recognised during the year:
Single tier dividends of 2.5% on 1,229,607,650 ordinary shares - - 3,074,022 -
Single tier dividends of 2.4% on 1,199,158,544 ordinary shares - - - 2,877,982
3,085,004 2,997,896 3,074,022 2,877,982
At the forthcoming Annual General Meeting, a single tier dividends of 2.5% in respect of the financial year ended 31 December 2012 will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividends. Such dividends, if approved by the shareholders, will be accounted for in equity as an appropriation of retained profits in the financial year ending 31 December 2013.
34. subsequent events
Group
(a) acquisition of a sub-subsidiary
The Group, via its subsidiary, Daya Petroleum Ventures Sdn. Bhd. (formerly known as Metriwell Sdn. Bhd.) had on 18 March 2013 entered into a Subscription Agreement with Daya Maxflo Sdn. Bhd. (formerly known as Maxflo Energy Products Sdn. Bhd.) (“Maxflo”), Sales and Purchase Agreement with Jay Dorfman, Shareholders Agreement and Call and Put Option Agreement with Jay Dorfman and Visual Well Solutions Sdn. Bhd. for the proposed acquisition of 50.70% of the issued and paid up share capital of Maxflo for a cash consideration of RM1,900,000.
The acquisition was completed on 5 April 2013.
132 DAYA MATERIALS BERHAD (636357-W)
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)
34. subsequent events (cont’d)
Group (cont’d)
b) acquisition of a joint venture company
On 20 November 2012, the Group, via its direct wholly owned sub-subsidiary, Daya Land & Development Sdn. Bhd. (“DLD”) entered into a Shareholders Agreement with Chang Cheng Realty Sdn. Bhd. to jointly develop and construct one block of 28 storey retail/showroom/service suites, forty blocks of four storey shop office and eight blocks of three storey shops on four parcels of empty land held located at Jalan Pintas in the District of Penampang, Sabah, Malaysia to be undertaken by a single-purpose joint venture company, Semangat Global Sdn. Bhd. (“SGSB”).
On 1 March 2013, the Group, via its direct wholly owned sub-subsidiary, DLD subscribed for 102,000 ordinary shares of RM1.00 each of SGSB for a cash consideration of RM102,000.
(c) Group re-organisation on investment in seca chemicals and catalysts sdn. bhd. and Daya Offshore construction sdn. bhd. (formerly known as sD equipment sdn. bhd.)
On 2 January 2013, through the Internal Group Re-organisation Plan, the Company acquired 100,000 and 10,000 ordinary shares of RM1.00 each in Seca Chemicals and Catalysts Sdn. Bhd. (“SCCSB”) and Daya Offshore Construction Sdn. Bhd. (formerly known as SD Equipment Sdn. Bhd.) (“DOCSB”), sub-subsidiaries of a subsidiary of the Company, Daya Secadyme Sdn. Bhd. (“DSSB”) representing 100% of the issued and paid-up share capital of SCCSB and DOCSB for a cash consideration of RM2,754,855 and RM10,000 respectively from DSSB.
company
(a) conversion of redeemable convertible secured loan notes
On 28 February 2013, the Company announced that 14,518,002 new ordinary shares of RM0.10 each in the Company (“DMB Shares”) were issued pursuant to the conversion of RM2.5 million Redeemable Convertible Secured Loan Notes at a conversion price of RM0.1722 per DMB share and these shares were listed on Bursa Malaysia Securities Berhad on 1 March 2013.
(b) partial disposal of shares in subsidiaries
The Company had on 8 March 2013 entered into four Share Sale Agreements with Wiramas Baiduri Sdn. Bhd. for the disposal of 81,648 ordinary shares of RM1.00 each in Daya Secadyme Sdn. Bhd. (“DSSB”) representing 8.10% of the issued and paid-up share capital of DSSB, 405,000 ordinary shares of RM1.00 each in Daya OCI Sdn. Bhd. (“DOCI”) representing 8.10% of the issued and paid-up share capital of DOCI, 544,500 ordinary shares of RM1.00 each in Daya Proffscorp Sdn. Bhd. (“DPRO”) representing 33% of the issued and paid-up share capital of DPRO and 101,500 ordinary shares of RM1.00 each in Daya Petroleum Ventures Sdn. Bhd. (formerly known as Metriwell Sdn. Bhd.) (“DPV”) representing 29% of the issued and paid-up share capital of DPV at the cash consideration of RM6,500,000, RM3,700,000, RM6,700,000 and RM101,500 respectively.
The disposal was completed on 5 April 2013.
35. authOrisatiOn OF Financial stateMents FOr issue
The financial statements for the year ended 31 December 2012 were authorised for issue in accordance with a resolution of the directors on 22 April 2013.
133ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012
(cont’d)
36. suppleMentary inFOrMatiOn - breakDOwn OF retaineD prOFits intO realiseD anD unrealiseD
The breakdown of the retained profits of the Group and of the Company as at 31 December 2012 and 2011 into realised and unrealised is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits and Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.
realised and unrealised profits/(losses)
Group company
2012 2011 2012 2011
note rM rM rM rM
Total retained profits:
- Realised 117,989,371 102,239,534 15,425,577 16,622,273
- Unrealised (290,195) (2,575,238) (42,716) (175,436)
117,699,176 99,664,296 15,382,861 16,446,837
Less: Consolidation adjustments (29,662,350) (28,724,232) - -
Total retained profits 22 88,036,826 70,940,064 15,382,861 16,446,837
134 DAYA MATERIALS BERHAD (636357-W)
DIRECTORS’ RESPONSIBILITIES STATEMENTon Financial Statements
In accordance with the Companies Act, 1965, the Directors of the Company are required to prepare financial statements for each financial year which shall give a true and fair view of the financial position of the Company and of the Group as at the end of the financial year and of their results and their cash flows of the Company and of the Group for the financial year.
The Directors are responsible to ensure that the Company and the Group keep proper accounting records to enable the Company to disclose, with reasonable accuracy and without any material misstatement in the financial statements, the financial position, the results and the cash flows of the Company and of the Group. The Directors are also responsible to ensure that the financial statements comply with the Companies Act, 1965 and the relevant accounting standards.
In preparing the financial statements for the financial year ended 31 December 2012, the Directors have:-
- adopted the appropriate accounting policies, which are consistently applied;- made judgements and estimates that are reasonable and prudent;- ensured applicable accounting standards have been followed, subject to any material departures which will be disclosed and
explained in the financial statements; and- prepared the financial statements on the assumption that the Company and the Group will operate as a going concern.
The Directors have provided the auditors with every opportunity to take all steps, undertake all inspections and seek all explanations they considered to be appropriate for the purpose of enabling them to give their audit report on the financial statements.
135ANNUAL REPORT 2012
ANALYSIS OF SHAREHOLDINGSas at 30 April 2013
Authorised share capital : 2,000,000,000 ordinary shares of RM0.10 eachIssued and fully paid-up share capital : 1,248,519,752 ordinary shares of RM0.10 each (including 15,720,700 ordinary shares of RM0.10 each retained as Treasury Shares)Class of Shares : Ordinary shares of RM0.10 eachVoting Rights : One vote per ordinary share held
DistributiOn OF sharehOlDinGs
size of shareholdingsno. of
shareholders % of
shareholders no. of shares% of issued
capital
1-99 145 2.71 8,069 0.00
100-1,000 135 2.52 59,820 0.00
1,001-10,000 1,225 22.91 9,231,840 0.75
10,001-100,000 3,016 56.41 122,433,695 9.93
100,001-61,639,951* 826 15.45 1,101,065,628 89.31
61,639,952 and above** 0 0 0 0
tOtal 5,347 100.00 1,232,799,052 100.00
Notes:
* - Less than 5% of issued shares** - 5% and above of issued shares
substantial sharehOlDers as at 30 april 2013
According to the Register of Substantial Shareholders required to be kept under Section 69L of the Companies Act, 1965, the following are the substantial shareholders of the Company:
name of substantial shareholders
number of shares held
Direct % indirect %
Dato’ Mazlin Bin Md Junid 134,359,386 10.90 20,000,720^ 1.62
Dato’ Sri Koh Kin Lip JP 78,115,098 6.34 - -
Nathan Tham Jooi Loon 69,370,198 5.63 4,709,998# 0.38
Lim Soon Foo 61,329,098 4.98 279,000* 0.02
^ Indirect Interest via the shareholdings of his children pursuant to Section 134 (12)(c) of the Companies Act, 1965# Indirect Interest via the shareholdings of his spouse pursuant to Section 134 (12)(c) of the Companies Act, 1965* Indirect Interest via the shareholdings of his son pursuant to Section 134 (12)(c) of the Companies Act, 1965
136 DAYA MATERIALS BERHAD (636357-W)
ANALYSIS OF SHAREHOLDINGSas at 30 April 2013cont’d
DirectOrs’ interest as at 30 april 2013
According to the Register of Directors’ Shareholding required to be kept under Section 134 of the Companies Act, 1965, the Directors’ interest in the ordinary share capital of the Company are as follows:
name of DirectorsDirect
interest %indirect interest %
Dato’ Azmil Khalili Bin Khalid - - - -
Dato’ Mazlin Bin Md Junid 134,359,386 10.90 20,000,720^ 1.62
Dato’ Sri Koh Kin Lip JP 78,115,098 6.34 - -
Nathan Tham Jooi Loon 69,370,198 5.63 4,709,998# 0.38
Fazrin Azwar Bin Md. Nor 199,998 0.02 - -
Lim Soon Foo 61,329,098 4.98 279,000* 0.02
Ronnie Lim Hai Liang (Alternate Director to Lim Soon Foo) 279,000 0.02 61,329,098** 4.98
^ Indirect Interest via the shareholdings of his children pursuant to Section 134 (12)(c) of the Companies Act, 1965# Indirect Interest via the shareholdings of his spouse pursuant to Section 134 (12)(c) of the Companies Act, 1965* Indirect Interest via the shareholdings of his son pursuant to Section 134 (12)(c) of the Companies Act, 1965** Indirect Interest via the shareholdings of his father pursuant to Section 134 (12)(c) of the Companies Act, 1965
thirty larGest sharehOlDers as at 30 april 2013
name of shareholdersno. of
shares% of issued
capital
1 RHB Capital Nominees (Asing) Sdn Bhd- Robert Yee Seng Lee
57,729,900 4.68
2 EB Nominees (Tempatan) Sendirian Berhad- Pledged Securities Account for Mazlin bin Md Junid (SFC)
53,500,000 4.34
3 CIMSEC Nominees (Tempatan) Sdn Bhd- CIMB Bank for Tham Jooi Loon (MM1102)
46,547,998 3.78
4 HSBC Nominees (Asing) Sdn Bhd- Exempt An for Credit Suisse (SG BR-TST-ASING)
41,767,598 3.39
5 Capital Nexus Sdn Bhd 41,028,200 3.33
6 Amsec Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Koh Kin Lip
31,461,438 2.55
7 Kenanga Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Mazlin bin Md Junid
29,359,386 2.38
8 RHB Capital Nominees (Asing) Sdn Bhd- Pledged Securities Account for Lim Chai Beng (CEB)
25,325,100 2.05
9 Kenanga Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Koh Siew Kong
24,680,000 2.00
10 Kenanga Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Tham Wooi Loon
24,239,998 1.97
11 Kenanga Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Koh Kin Lip
22,890,000 1.86
12 RHB Capital Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Tham Jooi Loon
21,252,200 1.72
13 RHB Capital Nominees (Tempatan) Sdn Bhd- Ng Chin San
20,562,200 1.67
137ANNUAL REPORT 2012
ANALYSIS OF SHAREHOLDINGSas at 30 April 2013
cont’d
thirty larGest sharehOlDers as at 30 april 2013 (cont’d)
name of shareholdersno. of
shares% of issued
capital
14 Maybank Securities Nominees (Asing) Sdn Bhd- Maybank Kim Eng Securities Pte Ltd for Firstlink Investments Corporation Limited
19,000,000 1.54
15 Citigroup Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Mazlin bin Md Junid (000190663)
18,000,000 1.46
16 Cartaban Nominees (Tempatan) Sdn Bhd- COPE-KPF Opportunities 1 Sdn Bhd
17,740,822 1.44
17 CIMSEC Nominees (Tempatan) Sdn Bhd- CIMB Bank for Koh Kin Lip (MY0502)
17,640,000 1.43
18 RHB Capital Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Mazlin bin Md Junid
14,500,000 1.18
19 RHB Capital Nominees (Tempatan) Sdn Bhd- Ganjaran Lebar Sdn Bhd
13,593,600 1.10
20 HLB Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Lim Chai Beng
13,000,000 1.05
21 Cartaban Nominees (Asing) Sdn Bhd- Exempt An for BOCI Securities Ltd (Clients A/C)
12,948,600 1.05
22 RHB Capital Nominees (Tempatan) Sdn Bhd- Tee Kiat Ann
12,283,200 1.00
23 Citigroup Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Tham Wooi Loon (010531334)
12,000,000 0.97
24 Alliancegroup Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Mazlin bin Md Junid (8079781)
11,000,000 0.89
25 RHB Capital Nominees (Tempatan) Sdn Bhd- Lim Soon Foo
10,951,500 0.89
26 Citigroup Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Mohd Zaidi bin Razali (005042294)
10,350,000 0.84
27 Lew Yuen Kee @ Lew Ah Kee 10,312,000 0.84
28 Koh Siew Kong 10,293,300 0.83
29 Lim Soon Foo 8,610,000 0.70
30 Song Tae Chin 8,479,198 0.69
tOtal 661,046,238 53.62
138 DAYA MATERIALS BERHAD (636357-W)
ADDITIONAL COMPLIANCE INFORMATION
share buy-back
The details of shares bought back/cancelled for the financial year ended 31 December 2012 are as follows:
purchase price per share (rM)
Monthly breakdown brought back
number of shares
purchased retained
in treasury (units) lowest highest
average cost per share
(rM)
total consideration
(rM)
number of treasury
shares cancelled
April 2012 355,000 0.200 0.200 0.201 71,518 -
May 2012 41,100 0.195 0.195 0.196 8,074 -
June 2012 541,500 0.195 0.195 0.196 106,364 -
July 2012 1,669,400 0.195 0.195 0.196 327,519 -
August 2012 3,296,000 0.195 0.200 0.199 657,019 -
September 2012 6,036,000 0.190 0.200 0.198 1,195,722 -
October 2012 77,900 0.190 0.190 0.191 14,909 -
November 2012 600,000 0.190 0.190 0.191 114,832 -
December 2012 1,271,700 0.180 0.190 0.186 236,363 -
total 13,888,600 0.197 2,732,320.46 - During the financial year under review, the Company purchased in the open market a total of 13,888,600 of its own issued shares and retained as treasury shares. None of the treasury shares has been resold or cancelled. As at 31 December 2012, the Company held a total of 15,675,700 ordinary shares as treasury shares.
OptiOns, warrants Or cOnvertible securities
The Company did not issue any options, warrant or convertible securities during the financial year ended 31 December 2012.
aMerican DepOsitOry receipt (aDr)/GlObal DepOsitOry receipt (GDr) prOGraMMe
The Company did not sponsor any ADR/GDR Programme during the financial year under review.
iMpOsitiOn OF sanctiOns anD/Or penalties
There were no sanctions and/or penalties imposed on the Company and its subsidiaries, directors or management by any relevant regulatory bodies during the financial year under review.
nOn-auDit Fees
Non-audit fees totaling RM55,000 was paid to the external auditors, Messrs Ernst & Young, by the Group for the financial year ended 31 December 2012 for review of internal control and financial due diligence relating to an acquisition of a private limited company.
prOFit estiMates, FOrecast Or prOJectiOn
The Company did not issue any profit estimate, forecast or projection for the financial year ended 31 December 2012.
139ANNUAL REPORT 2012
ADDITIONAL COMPLIANCE INFORMATIONcont’d
variatiOn in results
There was no material variation between the audited results for the financial year ended 31 December 2012 and the unaudited results of the Group as previously announced.
prOFit Guarantee
The Company did not issue any profit guarantee during the financial year under review.
Material cOntract invOlvinG DirectOrs anD MaJOr sharehOlDers
There are no material contracts entered into by the Company and its subsidiaries which involved the interests of the Directors and major shareholders, either still subsisting at the end of the financial year ended 31 December 2012, or which were entered into since the end of the previous financial year.
recurrent relateD party transactiOns OF a revenue Or traDinG nature
Details of the recurrent related party transactions of a revenue or trading nature entered into by the Group is disclosed in Note 27 to the financial statements on pages 112 and 113.
Material cOntract relatinG tO lOans
There are no material contracts relating to loan involving the interests of the Directors and major shareholders during the financial year under review.
utilisatiOn OF prOceeDs
Private Placement 2011
The Company raised approximately RM13.2 million from its private placement exercise proposed in year 2011. As at 31 December 2012, the Company has fully utilised the funds raised.
Private Placement 2010
The Company raised approximately RM22.461 million from its private placement exercise proposed in year 2010. As at 31 December 2012, the Company has fully utilised the funds raised.
140 DAYA MATERIALS BERHAD (636357-W)
LIST OF PROPERTIES 2012
registered Owner/location
Description and existing
use
land/built up
area(sq ft) tenure
approximate age of
building
net book value as at 31.12.2012
(rM)Date of last revaluation
Daya Polymer Sdn Bhd1744, Jalan Industri Dua, Taman Industri Bukit Panchor,14300 Nibong Tebal,Penang, Malaysia.
Industrial land with
factory, warehouse
and office
136,389/ 81,628
Freehold 15 years 8,607,041 13 October 2008
Daya Secadyme Sdn BhdLot No. 5410,Kawasan Perindustrian,Teluk Kalong,24007 Kemaman, Terengganu Darul Iman,Malaysia.
Industrialland with
warehouse and office
215,280/ 1,680
Leasehold60 years expiring
7 September 2064
5 years 8,206,481 27 November 2008
Daya Secadyme Sdn BhdSuite B-5-2, Setiawangsa Business Suites, Jalan Setiawangsa 11,Taman Setiawangsa, 54200 Kuala Lumpur,Malaysia.
Business/ Office
N/A/ 3,229
Freehold 6 years 539,730 4 October 2004
Daya Secadyme Sdn BhdLot PT 8052,Kawasan Perindustrian,Teluk Kalong,24007 Kemaman, Terengganu Darul Iman,Malaysia.
Industrial land
20,000/ N/A
Leasehold60 years expiring
5 November 2069
3 year 1,184,556 NIL
Daya CMT Sdn BhdPlot 81 Lebuhraya Kampung Jawa,Bayan Lepas,11900 Pulau Pinang,Malaysia.
Industrial land with
warehouseand office
46,478/20,748
Leasehold60 years expiring
2 November 2048
13 years 2,116,054 7 July 2008
Daya CMT Sdn Bhd72 Jalan Badlishah,09100 Baling,Kedah Darul Aman,Malaysia.
3 Storeyshophouse
N/A/ 2,314
Freehold 15 years 290,421 7 July 2008
Daya CMT Sdn Bhd16-1-10 Jalan Tun Dr. Awang MK 13,11900 Penang, Malaysia.
Apartment N/A/ 700
Freehold 18 years 55,355 7 July 2008
Daya CMT Sdn BhdLot No. 736 Mukim 1,Jalan Pulau Betong,Balik Pulau,Daerah Barat Daya Pulau Pinang, Malaysia.
Vacant Land 23,573/N/A
Freehold 17 years 51,964 7 July 2008
141ANNUAL REPORT 2012
registered Owner/location
Description and existing
use
land/built up
area(sq ft) tenure
approximate age of
building
net book value as at 31.12.2012
(rM)Date of last revaluation
Daya Clarimax Sdn BhdLot No. 38,Jalan Sungai Pinang 5/1,Seksyen 5,Phase 2A, Taman Perindustrian Pulau Indah,42920 Port Klang,Selangor Darul Ehsan,Malaysia.
Industrialland with
warehouse and office
113,053/28,364
Leasehold99 years
expiring on14 February
2104
7 years 8,941,962 2 June 2008
Daya Proffscorp Sdn BhdLot 3997,Kawasan Perindustrian,Teluk Kalong,24007 Kemaman, Terengganu Darul Iman,Malaysia.
Industrialland with
warehouse and office
107,600/ 18,725
Leasehold60 years expiring
26 March 2059
5 years 1,689,368 NIL
Daya Proffscorp Sdn BhdLot 4597,Kawasan Perindustrian,Teluk Kalong,24007 Kemaman, Terengganu Darul Iman,Malaysia.
Industrialland with
workshop
53,908/ 3,720
Leasehold60 years expiring
10 September
2060
11 years 291,253 NIL
Daya Proffscorp Sdn BhdLot 4835,Kawasan Perindustrian,Teluk Kalong,24007 Kemaman, Terengganu Darul Iman,Malaysia.
Industrialland
53,822/1,600
Leasehold60 years expiring
28 January 2063
4 years 301,264 NIL
Daya OCI Sdn BhdNo 9 & 11, Jalan P/8,Kawasan Perindustrian Bangi,Seksyen 13,43650 Bandar Baru Bangi,Selangor,Malaysia.
Industrialland with
warehouse and office
21,312/13,701
99 years lease
expiring on 29 Sept
2086
26 years 2,311,430 10 Aug 2010
Daya OCI Sdn BhdUnit No. B-3A-4, Block B, Level 3A,Unit 4, Megan Avenue II,No 12 Jalan Yap Kwan Seng,50450 Kuala Lumpur,Malaysia.
VacantBusiness/
Office
N/A/ 2,293
Grant-in-perpetuiti(freehold)
14 years 408,000 27 Aug 2010
Daya Urusharta Sdn BhdD5-1-6, D5-1-7,D5-1-8, D5-1-9, D5-1-10 Solaris Dutamas, No.1, Jalan Dutamas 1, 50480 Kuala Lumpur
Business/Office
N/A/ 5,178
Freehold 6 years 3,471,987 NIL
LIST OF PROPERTIES 2012(cont’d)
142 DAYA MATERIALS BERHAD (636357-W)
LIST OF PROPERTIES 2012(cont’d)
registered Owner/location
Description and existing
use
land/built up
area(sq ft) tenure
approximate age of
building
net book value as at 31.12.2012
(rM)Date of last revaluation
Ultrafest Sdn BhdCL 025134883,Kampong Gadong KimanisOff Jalan Kimanis-KeningauDistrict of Papar,Sabah
Proposed developmentof industrial/
factoryunits
385,506/NA
Leasehold NA 2,305,389 NIL
Ultrafest Sdn Bhd(Beneficially owner)NT 023097841NT 023097850NT 023097863NT 023097878Kampong Gadong KimanisOff Jalan Kimanis-KeningauDistrict of Papar, Sabah
Proposed developmentof industrial/
factoryunits
1,267,160/NA
Freehold NA 7,331,869 NIL
143ANNUAL REPORT 2012
NOTICE OF TENTH ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the Tenth Annual General Meeting of the Company will be held at MTD Group Building, Ground Floor, No. 1, Jalan Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan on Tuesday, 18 June 2013 at 10.30 a.m. for the following purposes:
aGenDa
as Ordinary business
1. To receive the Audited Financial Statements for the financial year ended 31 December 2012 together with the Directors’ and Auditor’s Reports thereon.
2. To approve the payment of a single tier final dividend of 2.5% for the financial year ended 31 December 2012.
3. To approve the payment of Directors’ fees of RM156,000.00 for the financial year ended 31 December 2012.
4. To re-elect the following directors retiring in accordance with Article 104 of the Company’s Articles of Association:
a) Dato’ Azmil Khalili bin Khalid
b) Mr. Nathan Tham Jooi Loon
5. To re-appoint Messrs Ernst & Young as the Company’s auditors for the ensuing year and to authorise the Board of Directors to fix their remuneration.
as special business To consider and, if thought fit, pass the following ordinary and special resolutions: 6. authority for Directors to issue and allot shares in the company pursuant to section 132D of
the companies act, 1965 “that pursuant to Section 132D of the Companies Act, 1965, and subject always to the approval
of the relevant authorities, the Directors be and are hereby empowered to issue and allot shares in the Company, from time to time to such persons and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares to be issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being.
anD that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares on Bursa Malaysia Securities Berhad (“Bursa Securities”) and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”
7. proposed renewal of authority for the purchase by the company of its own ordinary shares
of up to 10% of the issued and paid up share capital (“share buy-back”)
“that, subject to the Companies Act, 1965 (“the Act”), provisions of the Company’s Articles of Association (“M&A”) and the Listing Requirements of Bursa Securities, the Company be and is hereby authorised to purchase such number of ordinary shares of RM0.10 each in the Company subject to the following:-
(a) the aggregate number of the Company’s shares which may be purchased or held by the Company shall not exceed ten per centum (10%) of the issued and paid-up ordinary share capital of the Company, subject to the restriction that the Company continues to maintain a shareholding spread that is on compliance with the Listing Requirements of Bursa Securities;
(b) the maximum funds to be allocated by the Company for the purpose of purchasing the Company’s shares under the share Buy-Back shall not exceed the latest available audited retained profits and share premium of the Company;
(Please refer to Explanatory Notes to the Agenda)
Ordinary Resolution 1
Ordinary Resolution 2
Ordinary Resolution 3
Ordinary Resolution 4
Ordinary Resolution 5
Ordinary Resolution 6
Ordinary Resolution 7
144 DAYA MATERIALS BERHAD (636357-W)
NOTICE OF TENTH ANNUAL GENERAL MEETINGcont’d
(c) the authority conferred by this resolution to facilitate the Share Buy-Back will commence immediately upon the passing of this ordinary resolution and will continue to be in force until:
(i) the conclusion of the next annual general meeting (“AGM”) of the Company at which time the authority would lapse unless renewed by ordinary resolution, either unconditionally or conditionally; or
(ii) the expiration of the period within which the next AGM of the Company after that date is required by law to be held; or
(iii) the authority is revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting,
whichever occurs first; and
(d) upon completion of the purchase(s) of the Company’s shares by the Company, the Directors of the Company be and are empowered to cancel or retain as treasury shares, any or all of the Company’s shares so purchased, resell on Bursa Securities or distribute as dividends to the Company’s shareholders and/or in any manner as prescribed by the Act, rules, regulations and orders made pursuant to the Act and the Listing Requirements of Bursa Securities and any other relevant authorities for the time being in force,
anD that the Directors of the Company be and are hereby authorised to take all such steps as are necessary or expedient to implement, finalise, complete or to effect the Share Buy-Back with full powers to assent to any conditions, modifications, resolutions, variations and/or amendments (if any) as may be imposed by the relevant authorities and/or to do all such acts and things as the Directors may deem fit and expedient in the best interest of the Company to give effect to and to complete the purchase of the Company’s shares.”
8. To transact any other business of which due notice shall have been given in accordance with the Company’s Articles of Association and the Companies Act, 1965.
nOtice OF DiviDenDs entitleMent anD payMent Date
nOtice is alsO Given that a single tier final dividend of 2.5% for the financial year ended 31 December 2012, if approved, will be paid on 15 August 2013 to shareholders whose names appear in the Record of Depositors of the Company at the close of business on 31 July 2013.
A Depositor shall qualify for entitlement to dividend only in respect of:-
a) Shares deposited into the Depositor’s Securities Account before 4.00 p.m. on 31 July 2013 in respect of ordinary transfers; andb) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities
Berhad.
By Order of the Board
chin nGeOk Mui (MAICSA 7003178)chen bee linG (MAICSA 7046517)Secretaries
Selangor Darul Ehsan20 May 2013
145ANNUAL REPORT 2012
NOTICE OF TENTH ANNUAL GENERAL MEETINGcont’d
Notes:
i) In respect of deposited securities, only members/shareholders whose names appear in the Record of Depositors as at 12 June 2013 (“General Meeting Record of Depositors”) shall be eligible to attend, speak and vote at the Meeting.
ii) A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote at the Meeting on his/her behalf. In the case of a corporation, a duly authorised representative to attend and vote in its stead. The proxy may but need not be a member of the Company and a member may appoint any person to be his/her proxy without limitation. A proxy/representative appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting.
iii) Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy.
iv) The instrument appointing a proxy shall be in writing under the hand of the appointer or if such appointer is a corporation, either under its Common Seal or under the hand of an officer or attorney duly authorised.
v) The instrument appointing a proxy must be deposited at the Registered Office of the Company at Level 8, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time set for holding the Meeting or adjourned meeting.
vi) Where a member is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.
Explanatory Notes to the Agenda:
Item 1 of the Agenda
This item of the Agenda is meant for discussion only, as the provision of Section 169(1) of the Companies Act, 1965 does not require a formal approval of the shareholders for the Audited Financial Statements. Hence, this item of the Agenda is not put forward for voting.
Item 6 of the Agenda - Ordinary Resolution 6
Authority for Directors to issue and allot shares in the Company pursuant to Section 132D of the Companies Act, 1965
Ordinary Resolution 6 is a renewal of the previous year mandate and if passed, will empower the Directors of the Company to issue and allot shares up to an aggregate amount not exceeding 10% of the issued share capital of the Company for the time being for such purposes as the Directors consider would be in the best interest of the Company.
This authority unless revoked or varied by the Company at a general meeting will expire at the next Annual General Meeting.
The renewal of this mandate would provide flexibility to the Company for any possible fund raising exercise, including but not limited for further placing of shares, for purpose of funding future investment projects, working capital and/or acquisitions. This authority is to avoid any delay and cost involved in convening a general meeting to approve such issuance if shares.
The Company raised approximately RM13.2 million and RM22.461 million from its private placement exercise proposed in years 2011 and 2010 respectively. As at 31 December 2012, the Company has fully utilised the funds raised. Details of utilisation of proceeds are disclosed in Additional Compliance Information.
Item 7 of the Agenda - Ordinary Resolution 7
Proposed Renewal of Authority for Share Buy Back
Ordinary Resolution 7 if passed, will empower the Directors of the Company to buy-back and/or hold shares of the Company not exceeding ten percent (10%) of the issued and paid-up share capital of the Company from time to time being quoted on the Bursa Securities as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company.
Shareholders are advised to refer to the Statement to Shareholders dated 20 May 2013, which is circulated together with the 2012 Annual Report when considering Ordinary Resolution 7 on the Share Buy Back.
146 DAYA MATERIALS BERHAD (636357-W)
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Daya Materials berhaD(Company Number : 636357-W)(Incorporated in Malaysia under the Companies Act,1965)
I/We
of
being a member/members of the Daya Materials Berhad hereby appoint Mr/Mrs/Ms
NRIC No. of
or failing him/her, Mr/Mrs/Ms NRIC No.
of
or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us and on my/our behalf at the Tenth Annual General Meeting of the Company to be held at MTD Group Building, Ground Floor, No. 1, Jalan Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan on Tuesday, 18 June 2013 at 10.30 a.m. and at any adjournment.
In case of vote taken by a show of hands, my/our proxy shall vote on my/our behalf as indicated below :
resolution no. Ordinary business For against
Ordinary Resolution 1 Payment of a single tier final dividend of 2.5%
Ordinary Resolution 2 Payment of Directors’ Fees
Ordinary Resolution 3 Re-election of Dato’ Azmil Khalili bin Khalid as Director
Ordinary Resolution 4 Re-election of Mr. Nathan Tham Jooi Loon as Director
Ordinary Resolution 5 Re-appointment of Messrs Ernst & Young as the Company’s auditors
special business For against
Ordinary Resolution 6 Authority to Directors to issue and allot shares in the Company pursuant to Section 132D of the Companies Act, 1965
Ordinary Resolution 7 Proposed Renewal of Authority for the Share Buy-Back Please indicate with an (X) in the spaces provided above how you wish your vote to be cast. If no specific direction as to voting is given, the proxy will vote or abstain at his/her discretion.
Dated this day of 2013
Signature/Common Seal of Shareholder
NOTES:
i) In respect of deposited securities, only members/shareholders whose names appear in the Record of Depositors as at 12 June 2013 (“General Meeting Record of Depositors”) shall be eligible to attend, speak and vote at the Meeting.
ii) A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote at the Meeting on his/her behalf. In the case of a corporation, a duly authorised representative to attend and vote in its stead. The proxy may but need not be a member of the Company and a member may appoint any person to be his/her proxy without limitation. A proxy/representative appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting.
iii) Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy.
iv) The instrument appointing a proxy shall be in writing under the hand of the appointer or if such appointer is a corporation, either under its Common Seal or under the hand of an officer or attorney duly authorised.
v) The instrument appointing a proxy must be deposited at the Registered Office of the Company at Level 8, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time set for holding the Meeting or adjourned meeting.
vi) Where a member is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.
tenth annual General MeetinG
FOrM OF prOxy
cDs account no.
no. of shares held
AFFIXSTAMP
1st Fold Here
Fold This Flap For Sealing
Then Fold Here
The Secretary
DAYA MATERIALS BERHAD 636357-W
Level 8, Symphony HousePusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling JayaSelangor Darul Ehsan