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Directors Report
DIRECTORS REPORTFOR THE YEAR ENDED 31 DECEMBER 2003
The directors hereby submit their report together with the audited financial statements of the Group and
of the Company for the financial year ended 31 December 2003.
PRINCIPAL ACTIVITIES
The Company is principally engaged in investment holding. The principal activities of its subsidiary
companies are set out in Note 5 to the financial statements. There have been no significant changes in
the nature of these principal activities during the financial year.
RESULTS
DIVIDEND
No dividend was paid or declared by the Company since the end of the previous financial year.
The directors do not recommend the payment of any dividend in respect of the financial year ended
31 December 2003.
RESERVES AND PROVISIONS
All material transfers to and from reserves and provisions during the financial year have been disclosed
in the financial statements.
Profit after taxation
Minority interests
Profit after taxation and minority interests
Pre-acquisition porfit
Net profit from ordinary activities
Group
RM
14,665,924
424,255
15,090,179
(2,739,330)
12,350,849
Company
RM
32,020
-
32,020
-
32,020
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Directors Report
BAD AND DOUBTFUL DEBTSBefore the income statements and balance sheets of the Group and of the Company were made out,
the directors took reasonable steps to ascertain that action had been taken in relation to the writing off
of bad debts and the making of provision for doubtful debts, and satisfied themselves that all known bad
debts had been written off and that adequate provision had been made for doubtful debts.
At the date of this report, the directors are not aware of any circumstances that would render the
amount written off for bad debts, or the amount of the provision for doubtful debts, in the financial
statements of the Group and of the Company inadequate to any substantial extent.
CURRENT ASSETS
Before the income statements and balance sheets of the Group and of the Company were made out,
the directors took reasonable steps to ensure that any current assets, other than debts, which were
unlikely to realise in the ordinary course of business, their values as shown in the accounting records of the
Group and of the Company have been written down to an amount that they might be expected to realise.
At the date of this report, the directors are not aware of any circumstances that would render the values
attributed to the current assets in the financial statements of the Group and of the Company misleading.
VALUATION METHODS
At the date of this report, the directors are not aware of any circumstances which have arisen which
render adherence to the existing methods of valuation of assets or liabilities of the Group and of the
Company misleading or inappropriate.
CONTINGENT AND OTHER LIABILITIES
At the date of this report, there does not exist:-
(i) any charge on the assets of the Group and of the Company that has arisen since the end of the
financial year which secures the liabilities of any other person, or
(ii) any contingent liability in respect of the Group and of the Company that has arisen since the end
of the financial year.
No contingent liability or other liability of the Group and of the Company has become enforceable, or is likely
to become enforceable within the period of twelve months after the end of the financial year which, in the
opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet
their obligations as and when they fall due, other than as disclosed in Note 30 to the financial statements.
CHANGE OF CIRCUMSTANCES
At the date of this report, the directors are not aware of any circumstances, not otherwise dealt with inthis report or the financial statements of the Group and of the Company that would render any amount
stated in the financial statements misleading.
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Directors Report
ITEMS OF AN UNUSUAL NATUREThe results of the operations of the Group and of the Company for the financial year were not, in theopinion of the directors, substantially affected by any item, transaction or event of a material andunusual nature.
There has not arisen in the interval between the end of the financial year and the date of this report any
item, transaction or event of a material and unusual nature likely, in the opinion of the directors, 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.
ISSUE OF SHARES AND DEBENTURESDuring the financial year, the Company increased its authorised share capital from RM100,000/- to
RM200,000,000/- by the creation of 199,900,000 ordinary shares of RM1/-. The Company also increased
its issued and fully paid-up share capital from RM2/- to RM151,600,002/- credited as fully paid-up through
the following issues:-
(i) 35,000,000 new ordinary shares of RM1/- each for settlement of the creditors of Abrar Corporation
Berhad (ACB);
(ii) 1,600,000 new ordinary shares of RM1/- each in exchange for 32,000,000 ACB ordinary shares of
RM1/- each;
(iii) 95,000,000 new ordinary shares of RM1/- each for settlement of the purchase consideration for the
acquisition of Oil-Line Engineering & Associates Sdn. Bhd. and its subsidiaries;
(iv) 20,000,000 new ordinary shares of RM1/- each for the settlement of the purchase consideration for
the acquisition of Ascentland Sdn. Bhd.
The movements in the authorised and issued and fully paid-up share capital of the Company are
disclosed in Note 22 to the financial statements.
No debentures were issued by the Company during the financial year.
DIRECTORS
The directors in office since the date of the last report are:-
Dato Seri (Dr) Haji Abu Hassan Bin Haji Omar - appointed on 12.5.2003
Ng Huat Tian - appointed on 12.5.2003
Pua Yow Liang - appointed on 12.5.2003
Mohamed Hazali Bin Dato Seri (Dr) Haji Abu Hassan - appointed on 12.5.2003
Ang Choon Hug - appointed on 12.5.2003
Ng Huat Chai - appointed on 12.5.2003
Chng Kong San - appointed on 12.5.2003
Francis Ng - appointed on 12.5.2003
Cho Nam Sang
Cheah Seng Imm - resigned on 13.5.2003
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DIRECTORS INTERESTSAccording to the Register of Directors Shareholdings, the interests of those directors who held office at
the end of the financial year in shares in the Company and its subsidiary companies during the financial
year are as follows:-
Number of ordinary shares of RM1/ - each
Other than as stated above, none of the other directors in office at the end of the financial year had
any interest in shares in the Company and its related corporations during the financial year.
In accordance with Article 103 of the Articles of Association of the Company, Cho Nam Sang retires from
the Board at the forthcoming Annual General Meeting and being eligible, offers himself for re-election.
In accordance with Article 109 of the Articles of Association of the Company, Dato Seri (Dr) Haji Abu
Hassan bin Haji Omar, Ng Huat Tian, Pua Yow Liang, Mohamed Hazali Bin Dato Seri (Dr) Haji Abu Hassan,
Ang Choon Hug, Ng Huat Chai, Chng Kong San and Francis Ng retire from the Board at the forthcoming
Annual General Meeting and being eligible, offer themselves for re-election.
SIGNIFICANT EVENTS
Significant events during the financial year are disclosed in Note 34 to the financial statements.
43
Directors Report
The Company
Oilcorp Berhad
Dato Seri (Dr) Haji Abu
Hassan Bin Haji Omar
Ng Huat Tian
Pua Yow Liang
Mohamed Hazali Bin Dato
Seri (Dr) Haji Abu Hassan
Ang Choon Hug
Cho Nam Sang
The subsidiary company
Oil-Line Fabricators Sdn. Bhd.
Mohamed Hazali Bin Dato
Seri (Dr) Haji Abu Hassan
At 1 Jan 2003
or date of
appointment
3,835,500
40,702,320
4,000,000
3,835,500
1,911,223
1
490,000
Bought
-
22,500,000
-
269,800
-
-
1,960,000
Sold
-
23,687,000
2,000,000
455,500
-
-
-
At
31 December
2003
3,835,500
39,515,320
2,000,000
3,649,800
1,911,223
1
2,450,000
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Directors Report
DIRECTORS' BENEFITSSince the end of the previous financial year, no director of the Company has received or become
entitled to receive a benefit (other than as disclosed in the financial statements) by reason of a contract
made by the Company or a related corporation with the director or with a firm of which the director is
a member, or with a company in which the director has a substantial financial interest.
Neither during nor at the end of the financial year was the Company or any of its related corporations
a party to any arrangement whose object was to enable the directors to acquire benefits by means of
the acquisition of shares in, or debentures of, the Company or any other body corporate.
AUDITORS
The auditors, Messrs Monteiro & Heng, have expressed their willingness to continue in office.
On behalf of the Board,
........................................................................
NG HUAT TIAN
Director
........................................................................
PUA YOW LIANG
Director
Kuala Lumpur
Date: 28 April 2004
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Balance Sheets
BALANCE SHEETS AS AT 31 DECEMBER 2003
PROPERTY, PLANT AND EQUIPMENT
INVESTMENT PROPERTIES
INVESTMENT IN SUBSIDIARY COMPANIES
OTHER INVESTMENTS
GOODWILL ON CONSOLIDATION
CURRENT ASSETS
Property development expenditure
Amount due from customers for
contract works
Trade debtors
Other debtors, deposits and prepayments
Tax recoverable
Fixed deposits placed with licensed banks
Cash and bank balances
Less:
CURRENT LIABILITIES
Amount due to customers for
contract works
Trade creditors
Other creditors, deposits and accruals
Provision
Amount due to directors
Amount due to subsidiary companies
Bank overdrafts - secured
Hire purchase creditors
Short term borrowings
Provision for taxation
NET CURRENT ASSETS/(LIABILITIES)
Note
3
4
5
6
7
8
9
10
11
12
8
13
14
15
16
17
18
19
20
2003 2003 2002
RM RM RM
43,437,260 - -
14,177,394 - -
- 115,000,000 -
104,900 - -
63,545,935 - -
40,169,109 - -
9,366,545 - -
44,719,743 - -
3,935,545 - -
73,417 - -
6,444,101 - -
2,688,577 970 2
107,397,017 970 2
150,063 - -
17,584,376 - -
27,478,773 54,674 2,280
9,081,055 - -
1,760,830 27,197 9,624
- 1,190,331 -
4,335,992 - -
235,688 - -
19,069,388 - -
3,690,948 87,000 -
83,387,113 1,359,202 11,904
24,009,904 (1,358,232) (11,902)
145,275,393 113,641,768 (11,902)
Group Company
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Balance Sheets
BALANCE SHEETS AS AT 31 DECEMBER 2003 (Continued)
Group Company
2003 2003 2002
Note RM RM RM
Financed by:
SHARE CAPITAL 22 151,600,002 151,600,002 2
REVENUE RESERVE (25,639,405) (37,958,234) (11,904)
SHAREHOLDERS FUNDS/ (CAPITAL DEFICIENCY) 125,960,597 113,641,768 (11,902)
MINORITY INTERESTS 2,305,351 - -
HIRE PURCHASE CREDITORS 19 317,627 - -
LONG TERM LIABILITIES 21 12,731,723 - -
DEFERRED TAXATION 23 3,960,095 - -
145,275,393 113,641,768 (11,902)
The accompanying notes form an integral part of these financial statements.
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Income Statements
The accompanying notes form an integral part of these financial statements.
INCOME STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2003
REVENUE
Cost of sales
GROSS PROFIT
Other operating income
Other operating expenses
Administrative expenses
OPERATING PROFIT/(LOSS)
Finance costs (net)
PROFIT/(LOSS) BEFORE TAXATION
Taxation
PROFIT/(LOSS) AFTER TAXATION
Minority interests
PROFIT/(LOSS) AFTER TAXATION
AND MINORITY INTERESTS
Pre-acquisition profit
NET PROFIT/(LOSS) FROM ORDINARY ACTIVITIES
Extraordinary items
- one off corporate costs pursuant to
Corporate and Restucturing Scheme
for transfer of listing status written off
NET PROFIT FOR THE YEAR
Earnings/(loss) per share (sen)
Basic
- before extraordinary items
- after extraordinary items
Fully diluted
Note
24
25
26
27
28
29
2003 2003 2002
RM RM RM
119,896,595 350,000 -
(94,887,710) - -
25,008,885 350,000 -
1,200,436 - -
- - -
(5,269,468) (230,980) (4,412)
20,939,853 119,020 (4,412)
(602,715) - -
20,337,138 119,020 (4,412)
(5,671,214) (87,000) -
14,665,924 32,020 (4,412)
424,255 - -
15,090,179 32,020 (4,412)
(2,739,330) - -
12,350,849 32,020 (4,412)
(37,978,350) (37,978,350) -
(25,627,501) (37,946,330) (4,412)
13.01
(26.99)
-
Group Company
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Statements Of Changes In Equity
The accompanying notes form an integral part of these financial statements.
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2003
Group
Balance at 1 January 2003
Issued during the year
One off corporate costs written off
Net profit for the year
Balance at 31 December 2003
Company
Balance at 1 January 2002
Net loss for the year
Balance at 31 December 2002
Issued during the year
One off corporate costs written off
Net profit for the year
Balance at 31 December 2003
Note
22
28
22
28
One Off
Share Corporate Costs Retained
Capital Written Off Profit Total
RM RM RM RM
2 - (11,904) (11,902)
151,600,000 - - 151,600,000
- (37,978,350) - (37,978,350)
- - 12,350,849 12,350,849
151,600,002 (37,978,350) 12,338,945 125,960,597
One Off
Share Corporate Costs Retained
Capital Written Off Profit Total
RM RM RM RM
2 - (7,492) (7,490)
- - (4,412) (4,412)
2 - (11,904) (11,902)
151,600,000 - - 151,600,000
- (37,978,350) - (37,978,350)
- - 32,020 32,020
151,600,002 (37,978,350) 20,116 113,641,768
Revenue Reserve
Revenue Reserve
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Cash Flow Statements
CASH FLOW STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2003
CASH FLOW FROM OPERATING
ACTIVITIES:
Profit/(loss) before taxation after
extraordinary items
Less: Pre-acquisition profit
Adjustments for:
Bad debts written off
Depreciation
- charge for the year
- pre-acquisition profit
Provision for doubtful debts
- current year
- no longer required
Extraordinary items
Interest expenses
- charge for the year
- pre-acquisition profit
Interest income
- received for the year
- pre-acquisition profit
Gain on disposal of property, plant and equipment
Attributable profit to development work performed todate
- recognised for the year
- pre-acquisition profit
Plant and equipment written off
Sundry deposit writen off
Operating Profit/(loss) Before Working Capital Changes
2003 2003 2002
RM RM RM
(17,641,212) (37,859,330) (4,412)
(3,756,063) - -
(21,397,275) (37,859,330) (4,412)
23,141 - -
798,173 - -
(256,590) - -
541,583 - -
89,687 - -
(243,220) - -
37,978,350 37,978,350 -
1,858,178 - -
(441,044) - -
1,417,134 - -
(1,255,463) - -
44,783 - -
(1,210,680) - -
(791,165) - -
(8,396,077) - -
1,324,245 - -
(7,071,832) - -
4,063 - -
23,725 - -
9,363,511 119,020 (4,412)
Group Company
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Cash Flow Statements
CASH FLOW STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2003 (CONTINUED)
Increase in amount due from/to customers for
contract work
Increase debtors
Increase in creditors
Increase in provision
Increase progress billingsIncrease in development expenditure
Cash Generated From/(Used In) Operations
Interest paid
Interest received
Taxation paid
Net Cash From/(Used In) Operating Activities
CASH FLOW FROM
INVESTING ACTIVITIES:
Purchase of plant and equipment*
Proceeds from disposal of property,
plant and equipment
Proceeds from disposal of a subsidiary
company
Increase in development expenditure for
investment properties
Acquisition of subsidiary companies net of cash
acquired**
Net Cash (Used In)/From Investing Activities
2003 2003 2002
RM RM RM
1,390,963 - -
(12,990,142) - -
12,755,899 52,394 1,780
9,081,055 - -
14,254,305 - -(22,428,208) - -
11,427,383 171,414 (2,632)
(791,864) - -
1,210,680 - -
(3,741,244) - -
8,104,955 171,414 (2,632)
(19,550,744) - -
5,485,869 - -
1 1 -
(1,687,966) - -
(14,963,770) - -
(30,716,610) 1 -
Group Company
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Cash Flow Statements
CASH FLOW STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2003 (CONTINUED)
CASH FLOW FROM
FINANCING ACTIVITIES:
Fixed deposits held as security value
Corporate expenses paid
Increase in amount due to subsidiary companies
Increase in directors accountsInterest paid
Drawdown of term loan
Payments to hire purchase creditors
Repayment of term loan
Net Cash From/(Used In) Financing Activities
NET (DECREASE)/INCREASE IN
CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS
AT BEGINNING OF THE YEAR
CASH AND CASH EQUIVALENTS
AT END OF THE YEAR
ANALYSIS OF CASH AND CASH EQUIVALENTS:
Cash and bank balances
Fixed deposits
Bank overdrafts
Bankers' acceptance
Trust receipts
Less: Deposits held as security values
2003 2003 2002
RM RM RM
(1,653,936) - -
(1,378,351) (1,378,351) -
- 1,190,331 -
523,066 17,573 2,632(1,094,543) - -
16,462,604 - -
(203,551) - -
(5,057,521) - -
7,597,768 (170,447) 2,632
(15,013,887) 968 -
2 2 2
(15,013,885) 970 2
2,688,557 970 2
6,444,101 - -
(4,335,992) - -
(12,309,720) - -
(1,056,730) - -
(8,569,784) 970 2
(6,444,101) - -
(15,013,885) 970 2
Group Company
* During the year, the Group acquired plant and equipment amounting to RM20,023,172/- of which RM436,130/-were acquired under hire purchase instalment plans. Cash payments amounting to RM87,297/- were made towardsthe hire purchase.
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Cash Flow Statements
** SUMMARY OF EFFECTS ON ACQUISITION OF SUBSIDIARY COMPANIES
Assets
Property, plant and equipment
Investment properties
Other investments
Property, development expenditure
Amount due from customers for contract works
DebtorsFixed deposits placed with licensed bank
Cash and bank balances
Liabilities
Amount due to customers for contract works
Creditors
Amount due to directors
Borrowings
Deferred taxation
Provision for taxation
Minority interests
Net assets acquired
Goodwill on consolidation
Purchase consideration
Portion of consideration settled by issuance of Oilcorp Shares
Cash of subsidiary company acquired
Net cash outflow from acquisition of subsidiary company
2003
RM
28,654,438
12,489,428
104,900
24,577,696
11,227,236
35,558,4794,790,165
904,089
118,306,431
619,791
32,304,969
1,228,140
23,305,470
3,037,755
3,717,456
64,213,581
(2,638,785)
51,454,065
63,545,935
115,000,000
(115,000,000)
14,963,770
14,963,770
On 2 May 2003, the Company entered into share sale agreements for the acquisition of 100% equity interest in Oil-Line
Engineering & Associates Sdn. Bhd. ("Oil-Line") and Ascentland Sdn. Bhd. ("Ascentland") for considerations of
RM95,000,000/- and RM20,000,000/- respectively.
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Cash Flow Statements
The effects of the acquisitions of Oil-Line and Ascentland on the financial results of the Group from the
date of acquisition to 31 December 2003 were as follows:
Revenue
Cost of sales
Gross profit
Other operating income
Administrative expenses
Operating Profit
Finance costs
Profit before taxation
Taxation
Profit after taxation
Minority interests
Net profit after taxation and minority interests
Pre-acquisition profit
Net profit for the year
Financial year ended
31 December 2003
Oil-Line
RM
87,479,429
(70,866,621)
16,612,808
1,193,036
(4,564,041)
13,241,803
(381,190)
12,860,613
(3,592,674)
9,267,939
424,255
9,692,194
(1,881,619)
7,810,575
Ascentland
RM
32,417,166
(24,021,089)
8,396,077
7,400
(824,447)
7,579,030
(221,525)
7,357,505
(1,991,540)
5,365,965
-
5,365,965
(857,711)
4,508,254
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Cash Flow Statements
The effects of the acquisitions on the financial position of the Group at 31 December 2003 were as
follows:
Assets
Property,plant and equipment
Investment properties
Other investments
Land and development expenditureAmount due from customers for contract works
Debtors
Tax recoverable
Fixed deposits placed with licensed bank
Cash and bank balances
Liabilities
Amount due to customers for contract works
Creditors
Provision
Amount due to directors
Borrowings
Deferred taxation
Provision for taxation
Net assets
As 31 December 2003
Oil-Line
RM
43,409,655
-
104,900
-9,366,545
40,158,967
73,417
6,444,101
762,964
(150,063)
(38,134,075)
-
(997,171)
(33,661,090)
(43,700)
(2,666,548)
24,667,902
Ascentland
RM
27,605
14,177,394
-
40,169,109-
8,496,321
-
-
1,924,623
-
(6,874,400)
(9,081,055)
(736,462)
(3,029,328)
(3,916,395)
(937,400)
40,220,012
The accompanying notes form an integral part of these financial statements.
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Notes To The Financial Statements
NOTES TO THE FINANCIAL STATEMENTS1. PRINCIPAL ACTIVITIES AND GENERAL INFORMATION
The Company is principally engaged in investment holding. The principal activities of its subsidiary
companies are set out in Note 5 to the financial statements. There have been no significant
changes in the nature of these principal activities during the financial year.
The Company is a public limited liability company, incorporated and domiciled in Malaysia and
listed on the Main Board of Bursa Malaysia Securities Berhad (formerly known as Malaysia
Securities Exchange Berhad).
The registered office and the principal place of business of the Company is located at No. 2-2,Jalan SS 6/6, Kelana Jaya, 47301 Petaling Jaya, Selangor Darul Ehsan.
The number of employees of the Group and of the Company (including directors) at the end of
the financial year is 169 and 2 (2002 : Nil) respectively.
The financial statements are expressed in Ringgit Malaysia.
The financial statements were authorised for issue by the Board of Directors in accordance with a
resolution of the directors on 28 April 2004.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Accounting
The financial statements of the Group and of the Company comply with applicable
approved accounting standards issued by the Malaysian Accounting Standards Board and
have been prepared under the historical cost convention modified to include the revaluation
of certain assets, unless otherwise indicated in the accounting policies set out below.
(b) Basis of Consolidation
The consolidated financial statements include the financial statements of the Company andits subsidiary companies made up to the end of the financial year.
Subsidiary companies are those enterprises controlled by the Company. Control exists when
the Company has the power, directly or indirectly, to govern the financial and operating
policies of an enterprise so as to obtain benefits from its activities. The financial statements of
subsidiary companies are included in the consolidated financial statements from the date
that control effectively commences until the date that control effectively ceases.
Subsidiary companies are consolidated using the acquisition method of accounting. Under
the acquisition method of accounting, the results of subsidiary companies acquired or
disposed during the year are included in the Group financial statements from their respective
effective dates of acquisitions or up to their respective date of disposal.
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Notes To The Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(b) Basis of Consolidation (Continued)
The financial statements of the parent and its subsidiary companies are all drawn up to the same
reporting date.
Intra group transactions, balances and resulting unrealised gains are eliminated on consolidation
and the consolidated financial statements reflect external transactions only. Unrealised losses are
eliminated on consolidation unless costs cannot be recovered.
Minority interest represents the interest of outside members in the operating results and net assets
of subsidiary companies.
The gains or loss on disposal of a subsidiary company is the difference between net disposal
proceeds and the Groups share of its assets together with any unamortised balance of goodwill
or reserve on consolidation which was not previously recognised in the consolidated income
statement.
(c) Reserve/Goodwill on Consolidation
The difference between the purchase consideration and the fair value of the net assets of
subsidiary companies at the respective dates of the acquisition is included in the consolidated
balance sheet as reserve or goodwill arising on consolidation.
The carrying amount of goodwill arising on consolidation is reviewed annually and is written down
for impairment where it is considered necessary.
(d) Subsidiary Companies
Subsidiaries are those enterprises in which the Group has power to exercise control over the
financial and operating policies so as to obtain benefits from their activities.
Investments in subsidiary companies are stated at cost less impairment losses, if any. The policy for
the recognition and measurement of impairment losses is in accordance with Note 2(t).
(e) Property, Plant and Equipment and Depreciation
Property, plant and equipment are stated at cost or at valuation less accumulated depreciation
and impairment losses, if any. The policy for the recognition and measurement of impairment
losses is in accordance with Note 2(t).
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Notes To The Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(e) Property, Plant and Equipment and Depreciation (Continued)
Freehold lands are not depreciated. All other property, plant and equipment are depreciated on
a straight line basis over the estimated useful lives of the assets concerned. The annual rates used
for this purpose are as follows:-
Freehold buildings 2%
Long leasehold land 95 years
Motor vehicles 20%
Office equipment 10% - 20%
Furniture & fittings 10% - 15%
Renovation 10%
Building-in-progress will be depreciated when the property is ready for its intended use.
Fully depreciated assets are retained in the financial statements until the assets are no longer in use.
(f) Property Development Expenditure
Property development expenditure consists of land under development at cost or at valuation
and other related costs including financial expenses incurred during the period of development,
and portion of profit or loss attributable to development work performed todate, less progress
billings. Provision for foreseeable losses is made when estimated future revenue realisable is lower
than the carrying amount of the project.
The Group considers as current assets that portion of property development projects which are
currently under development on which significant development work has been undertaken and is
expected to be completed within the Groups normal operating cycle. The current portion of the
property development projects are stated at the lower of carrying amount and net realisable value.
(g) Investment Properties
Investment properties are held for their investment potential and rental income and are stated at
cost less provision for diminution in value. Investment properties will be depreciated when the
property is ready for its intended use.
On disposal of an investment property, the difference between the net disposal proceeds and the
carrying amount is charged or credited to the income statement; any amount in revaluation
reserve relating to that investment property is transferred to unappropriated profits account.
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Notes To The Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(h) Other Investments
Other investments are stated at cost less impairment losses, if any. The policy for the recognition
and measurement of impairment losses is in accordance with Note 2(t).
On disposal of an investment, the difference between net disposal proceeds and its carrying
amount is charged or credited to the income statement.
(i) Debtors
Known bad debts are written off and specific provision is made for any debts considered to be
doubtful of collection.
(j) Revaluation of Assets
Land and buildings at valuation are revalued at a regular interval of at least once in every five
years with additional valuations in the intervening years where market conditions indicate that the
carrying values of the revalued land and buildings materially differ from the market values.
Any surplus or deficit arising from the revaluations will be dealt with in the Revaluation Reserve
Account. Any deficit is set-off against the Revaluation Reserve Account only to the extent of
surplus credited from the previous revaluation of the land and buildings and the excess of the
deficit is charged to the income statement.
(k) Borrowing Costs
Borrowing costs incurred on property development projects are capitalised and included as part
of development expenditure. The capitalisation of borrowing costs commences when expenditure
for the property development projects and borrowing costs are being incurred and the activities
that are necessary to prepare the property development projects for its intended sale are in
progress. However, capitalisation of borrowing costs is suspended during extended periods in
which active development is interrupted.
Capitalisation of borrowing costs should cease when substantially all the activities necessary to
prepare the property development projects for its intended sale are completed.
Borrowing costs incurred in financing the construction-in-progress are capitalised as part of the
cost of the assets. Capitalisation will cease when the relevant assets are ready for their intended use.
All other borrowing costs are charged to the income statement as an expense in the period in
which they are incurred.
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Notes To The Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(l) Amount due from/to Customers for Contract Works
When costs incurred on construction contracts plus recognised profits (less recognised losses)
exceed progress billings, the balance is shown as amount due from customers for contract works.
When progress billings exceed costs incurred plus recognised profits (less recognised losses), the
balance is shown as amount due to customers for contract works.
Contract costs incurred to date include:-
(i) Costs directly related to the contract;
(ii) Costs attributable to contract activity in general and can be allocated to the contract; and
(iii) Other costs specifically chargeable to the customer under the terms of the contract.
(m) Creditors
Creditors are stated at cost which is the fair value of the consideration to be paid in the future,
whether or not billed to the Group.
(n) Provisions for Liabilities
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 balance sheet date and adjusted to reflect the current best estimate.
(o) Hire Purchase
Assets financed by hire purchase arrangements which transfer substantially all the risks and
rewards of ownership to the Group are capitalised as property, plant and equipment, and the
corresponding obligations are treated as liabilities. The assets so capitalised are depreciated in
accordance with the accounting policy on property, plant and equipment. Finance charges are
charged to the income statements over the periods of the respective agreements.
(p) Revenue Recognition
(i) Contract Works
Revenue from contract works are recognised on a percentage of completion method.
Percentage of completion is determined on the proportion of contract costs incurred to date
against total estimated costs where the outcome of the project can be reliably determined.
All foreseeable losses on projects are recognised as soon as they are anticipated. When the
outcome of a project cannot be estimated reliably, revenue should be recognised only to
the extent of contract costs incurred that it is probable will be recovered.
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Notes To The Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(p) Revenue Recognition (Continued)
(ii) Engineering and Technical Services
Engineering and technical services are recognised upon services rendered to customers.
(iii) Property Development
Revenue from sale of property development projects is recognised on the percentage of
completion method. No profit is recognised where development is in its initial stage or has not
reached a stage of completion where it is possible to determine the financial outcome of the
development with reasonable accuracy. Provision for foreseeable losses is made whenestimated future revenue realisable is lower than the carrying amount of the project.
Interest income from late payments by house buyers and forfeiture income are recognised on
receipt basis.
(iv) Interest Income
Interest income is recognised on an accrual basis unless collectibility is in doubt in which
recognition will be on receipt basis.
(q) Employee Benefits
(i) Short Term Employee Benefits
Wages, salaries, social security contribution, bonuses and non-monetary benefits are accrued
in the period in which the associated services are rendered by the employees.
(ii) Post-Employment Benefits
The Group contributes to the Employees Provident Fund (EPF), the national defined
contribution plan. The contributions are charged to the income statement in the period to
which they are related. Once the contributions have been paid, the Group has no further
payment obligations.
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Notes To The Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(r) Taxation
The tax expense in the income statement represents the aggregate amount of current tax and
deferred tax included in the determination of net profit or loss for the year.
Deferred tax is provided for, using the liability method, on temporary differences at the balance
sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial
statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences
and deferred tax assets are recognised for all deductible temporary differences, unused tax losses
and unused tax credits to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences, unused tax losses and unused tax credits can be
utilised.
Deferred tax is measured at the tax rates that are expected to apply in the period when the asset
is realised or the liability is settled, based on tax rates that have been enacted or substantively
enacted at the balance sheet date. Deferred tax is recognised in the income statement, except
when it arises from a transaction which is recognised directly in equity, in which case the deferred
tax is also charged or credited directly in equity.
Prior to the adoption of MASB 25 Income Taxes on 1 July 2002, deferred tax was provided for using
the liability method in respect of significant timing differences and deferred tax assets were not
recognised unless there was reasonable expectation of their realisation. There are no material
effects arising from this change in accounting policy.
(s) Financial Instruments
Financial instruments are recognised in the balance sheet when the Company has become a party
to the contractual provisions of the instruments. Financial instruments carried on the balance sheet
include cash and bank balances, investments, debtors, creditors and borrowings. The particular
recognition methods adopted are disclosed in the individual accounting policy statements
associated with each item.
Financial instruments are classified as liabilities or equity in accordance with the substance of the
contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument
classified as liability are reported as expense or income. Distributions to holders of financialinstruments classified as equity are charged directly to equity. Financial instruments are offset when
the Company has a legally enforceable right to set off the recognised amounts and intends either
to settle on a net basis, or to realise the asset and settle the liability simultaneously.
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Notes To The Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(t) Impairment of Assets
The carrying values of assets are reviewed for impairment when there is an indication that the assets
might be impaired. Impairment is measured by comparing the carrying values of the assets with
their recoverable amounts. The recoverable amount is the higher of an assets net selling price and
its value in use, which is measured by reference to discounted future cash flows. Recoverable
amounts are estimated for individual assets, or if it is not possible, for the cash-generating unit.
An impairment loss is charged to the income statement immediately, unless the asset is carried at
revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to
the extent of previously recognised revaluation surplus for the same asset.
Subsequent increase in the recoverable amount of an asset is treated as reversal of the previous
impairment loss and is recognised to the extent of the carrying amount of the asset that would have
determined (net of amortisation and depreciation) had no impairment loss been recognised. The
reversal is recognised in the income statement immediately, unless the asset is carried at revalued
amount. A reversal of an impairment loss on a revalued asset is credited directly to revaluation
surplus. However, to the extent that an impairment loss on the same revalued asset was previously
recognised as an expense in the income statement, a reversal of that impairment loss is recognised
as income in the income statement.
(u) Segmental Information
Segment revenues and expenses are those directly attributable to the segments and include any
joint revenue and expenses where a reasonable basis of allocation exists. Segments assets include
all assets used by a segment and consist principally of cash, receivables, inventories, intangibles and
property, plant and equipment, net of allowances and accumulated depreciation and
amortisation. Most segment assets can be directly attributed to the segments on a reasonable basis.
Segment assets and liabilities do not include income tax assets and liabilities respectively.
(v) Intersegment Transfers
Segment revenues, expenses and result include transfers between segments. The prices charged
on intersegment transactions are the same as those charged for similar goods to parties outside of
the economic entity at an arms length transactions. These transfers are eliminated onconsolidation.
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Notes To The Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(w) Foreign Currency Translation
Transactions in foreign currencies are converted into Ringgit Malaysia at the exchange rates ruling
at the transaction dates. Monetary assets and liabilities in foreign currencies at the balance sheet
date are converted into Ringgit Malaysia at the rate of exchange ruling on that date. Exchange
differences arising from the settlement of foreign currency transactions and from the translation of
foreign currency monetary assets and liabilities are included in the income statements.
The principal closing rate used in translation of foreign currency amounts is stated below:-
2003 2002
Foreign currency RM RM
1 US Dollar 3.825 3.825
(x) Cash and Cash Equivalents
Cash and cash equivalents consist of cash in hand, bank balances, demand deposits, bank
overdrafts, trust receipts, bankers acceptance and other short term, highly liquid investments that
are readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value.
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Notes To The Financial Statements
PROPERTY,PLANTANDEQUIPMENT
Long
Leasehold
Freehold
Landsand
Furniture
Landand
Buildings-
Motor
and
Office
Group
Buildings
In-Progress
Vehicles
Fittings
Equ
ipment
Renovation
Total
2003
RM
RM
RM
RM
RM
RM
RM
Cost/Valuation
At1Janua
ry2003
-
-
-
-
-
-
-
New
subsidiariesacquired
11,391,017
16,179,529
2,307,509
303,355
1,002,822
161,224
31,345,456
Additions
16,388
19,386,231
436,130
69,455
89,106
25,862
20,023,172
Disposals/writeoffs
(4,607,405)
-
(389,885)
(19,402)
(
96,811)
-
(5,113,503)
At31December2003
6,800,000
35,565,760
2,353,754
353,408
995,117
187,086
46,255,125
Accumula
tedDepreciation
At1Janua
ry2003
-
-
-
-
-
-
-
New
subsidiariesacquired
81,994
189,541
1,382,721
203,130
699,331
134,301
2,691,018
Chargefo
rtheyear
47,206
112,377
280,386
23,300
66,502
11,812
541,583
Disposals/writeoffs
-
-
(315,020)
(14,657)
(
85,059)
-
(414,736)
At31December2003
129,200
301,918
1,348,087
211,773
680,774
146,113
2,817,865
NetBookValueat
31Decem
ber2003
6,670,800
35,263,842
1,005,667
141,635
314,343
40,973
43,437,260
Cost/Valuationis
represente
dby:
Cost
-
19,565,760
2,353,754
353,408
995,117
187,086
23,455,125
Valuation
6,800,000
16,000,000
-
-
-
-
22,800,000
Total
6,800,000
35,565,760
2,353,754
353,408
995,117
187,086
46,255,125
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Notes To The Financial Statements
3. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)Group
Long leasehold lands comprise leasehold interest with an unexpired term in excess of 50 years.
The freehold land and buildings and the long leasehold land at valuation are stated at directors'
valuation based on the valuation conducted by a firm of professional valuers in May 2002 using the
open market value basis.
Had the revalued freehold land and buildings and long leasehold lands been carried at historical cost
less accumulated depreciation, the total net book values of the said freehold land and buildings and
long leasehold land that would have been included in the financial statements of the Group is
RM5,761,508/- and RM30,515,031/- respectively.
Freehold land and buildings and leasehold land and building-in-progress with net book values of
RM6,670,800/- and RM35,263,842/- respectively have been pledged to licensed banks to secure credit
facilities granted to subsidiary companies.
Motor vehicles of the Group with total net book values of RM1,003,368/- are acquired under hire
purchase instalment plans.
Included in the addition to the building-in-progress of the Group is interest expense of RM123,595/-.
The leasehold building-in-progress of the Group costing RM18,394,675/- represents progress billings on
the construction of a yard at the estimated cost of RM29,850,000/-. The balance of the construction
costs is disclosed as a capital commitment in Note 31 to the financial statements.
4. INVESTMENT PROPERTIES
Freehold lands - at valuation
Balance at the beginning
New subsidiaries acquired
Balance at the end
Development expenditure - at cost
Balance at the beginning
New subsidiaries acquired
Additions during the year
Balance at the end
Group
2003
RM
-
8,800,995
8,800,995
-
3,688,433
1,687,966
5,376,399
14,177,394
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Notes To The Financial Statements
4. INVESTMENT PROPERTIES (CONTINUED)Group
Investment properties consist of freehold land and properties under development, which comprise a
clubhouse, a water theme park and commercial space which a subsidiary company intends to hold for
rental income and investment purposes.
The freehold lands are stated at directors' valuation based on a valuation conducted by a firm of
professional valuers in May 2002 using the open market value basis.
The investment properties have been pledged to a licensed bank to secure term loan facility granted
to a subsidiary company.
The development expenditure represents progress billings on the construction of a club house and a
water theme park at the estimated cost of RM23,982,925/-. The balance of the construction costs is
disclosed as a capital commitment in Note 31 to the financial statements.
5. INVESTMENT IN SUBSIDIARY COMPANIES
Company
2003 2002
RM RM
Unquoted shares at cost 115,000,000 -
The following information relates to the subsidiary companies which are all incorporated in Malaysia:
Effective
Equity
Name of Company Interest Principal Activities
2003
%Direct subsidiary companies
Oil-Line Engineering & 100 Providing engineering,
Associates Sdn. Bhd. procurement, construction,
technical, contracts and
related services and
investment holding
Ascentland Sdn. Bhd. 100 Property investment, resort and
hotel operations and property
development
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Notes To The Financial Statements
5. INVESTMENT IN SUBSIDIARY COMPANIES (CONTINUED)Effective
Equity
Name of Company Interest Principal Activities
2003
%
Indirect subsidiary companies held
through Oil-Line Engineering &
Associates Sdn. Bhd.
Tenaga Nazar (M) Sdn. Bhd. 100 Providing engineering andtechnical services to the oil
and gas industries
Oil-Line Synergy Sdn. Bhd. 100 Providing engineering,
procurement, construction
and contract related services
Azdaman Engineering Sdn. Bhd. 90 Suppliers and contractors
of engineering and technical
services
Azdaman Sdn. Bhd. 100 Suppliers and contractors of
engineering and technical
services
Oil-Line Fabricators Sdn. Bhd. 51 Fabricators of off-shores modules
and on-shore modules in the
oil & gas and petrochemical
industries
6. OTHER INVESTMENTSGroup
2003
RM
Golf club membership at cost 104,900
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Notes To The Financial Statements
7. PROPERTY DEVELOPMENT EXPENDITURE
Freehold lands - at valuation
Balance at the beginning
New subsidiaries acquired
Balance at the end
Development expenditure - at cost
Balance at the beginning
New subsidiaries acquired
Additions during the year
Balance at the end
Total property development expenditure
Portion of profit attributable to development work performed to date
Balance at the beginning
New subsidiaries acquired
Additions during the year
Balance at the end
Progress billings
Balance at the beginning
New subsidiaries acquired
Additions during the year
Balance at the end
Current portion
Current charges to development expenditure includes:-
Term loan interest
Group
2003
RM
-
12,199,005
12,199,005
-
13,942,466
22,773,886
36,716,352
48,915,357
-
4,535,077
7,071,832
11,606,909
60,522,266
-
(6,098,852)
(14,254,305)
(20,353,157)
40,169,109
345,678
Group
The freehold lands are stated at directors' valuation based on a valuation conducted by a firm of
professional valuers in May 2002 using the open market value basis.
The freehold lands are pledged to a licensed bank to secure term loan facility granted to a subsidiary
company.
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Notes To The Financial Statements
7. PROPERTY DEVELOPMENT EXPENDITURE (CONTINUED)
8. AMOUNT DUE FROM/(TO) CUSTOMERS FOR CONTRACT WORKS
Aggregate costs incurred to date
Recognised profits less recognised losses
Progress billings
Amount due to customers for contract
works included in current liabilities
Amount due from customers for contract
works included in current assets
Construction contract costs recognised
as contract expenses during the year
Group
2003
RM
65,476,019
12,553,694
78,029,713
(68,813,231)
9,216,482
150,063
9,366,545
64,555,181
Group
A subsidiary company, Ascentland Sdn. Bhd., has entered into leaseback agreements with certain
owners of the development properties known as "PD Tiara Bay Resort". The subsidiary company has
offered to rent from the owners the said properties together with fittings for purposes of letting out the
same as rental accommodation for the Resort and the owners have agreed to let the said properties to
the said subsidiary company at a leaseback guaranteed returns of 8% per annum on selling price of the
said properties for a period of 2 years.
As at balance sheet date, the leaseback guaranteed returns is disclosed as lease commitments in Note31 to the financial statements.
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Notes To The Financial Statements
9. TRADE DEBTORS
10. OTHER DEBTORS, DEPOSITS AND PREPAYMENTS
Trade debtors
Less: Provision for doubtful debts
Group
2003
RM
45,396,555
(676,812)
44,719,743
Other debtors
DepositsPrepayments
Interest receivable
Group
2003
RM
3,753,460
77,63843,640
60,807
3,935,545
Group
Included in other debtors are the following:
(a) amounts totalling RM894,304/- which represent advances to third parties which are unsecured,
bear interest at the rate of 8% per annum and is repayable by four fixed quarterly instalments
commencing March 2003. The said amounts have been settled subsequent to the balance sheet
date; and
(b) an amount of RM1,864,376 which represents the balance of the purchase consideration from the
disposal of the freehold land and building by a subsidiary company. This amount has been settled
subsequent to the balance sheet date.
11. FIXED DEPOSITS PLACED WITH LICENSED BANKS
Group
The fixed deposits placed with licensed banks are pledged to the banks to secure credit facilities
granted to a subsidiary company.
Group
The Group's normal trade credit terms range from 30 to 90 days. Other credit terms are assessed and
approved on a case-by-case basis.
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Notes To The Financial Statements
12. CASH AND BANK BALANCES
Group Company
2003 2003 2002
RM RM RM
Cash and bank balances 2,139,865 970 2
Cash held under Housing Development Account 548,692 - -
2,688,557 970 2
Cash held under Housing Development Account represents receipts from purchasers of residential
properties less payments or withdrawals pursuant to Section 7A of the Housing Development (Control
and Licensing) Act, 1966 and therefore restricted from use in other operations.
13. TRADE CREDITORS
Group
Included in this account are amounts totalling RM3,062,282/- which represent retention sums for contract
works performed.
The normal trade credit term granted to the Group ranges from 30 to 60 days.
14. OTHER CREDITORS, DEPOSITS AND ACCRUALS
Group Company
2003 2003 2002
RM RM RM
Other creditors 11,720,893 26,774 -
Deposits 473,034 - -
Accruals 15,284,846 27,900 2,280
27,478,773 54,674 2,280
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Notes To The Financial Statements
14. OTHER CREDITORS AND ACCRUALS (CONTINUED)
Group
Included in other creditors are the following:-
(a) an amount of RM761,478/- being service tax payable to the Royal Custom and Excise Department.
The subsidiary company is appealing against the assessment raised by the Royal Custom and Excise
Department on the ground of the subsidiary company does not fall within the definition of taxable
person under Service Tax Act, 1975;
(b) an amount of RM358,256/- due to companies in which a director has substantial financial interest; and
(c) an amount of RM10,376,450/- which represents contractor fees payable in respect of the
construction of the leasehold building-in-progress.
Included in deposits are amounts totalling RM473,034/- represent deposits received/receivable from
house purchasers.
Included in accruals are the following:
(a) amounts totalling RM2,337,878/- which represent property development expenditure accrued inrespect of the development activities of a subsidiary company; and
(b) amounts totalling RM7,353,624/- which represents project costs accrued for the contracts work
undertaken by a subsidiary company.
15. PROVISION
Group
2003
RM
Property development expenditure
Balance at the beginning -
Additions during the financial year 9,081,055
Balance at the end 9,081,055
Current 9,081,055
Provision for property development expenditure is made in respect of probable outflow of resources
related to property development activities of a subsidiary company.
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Notes To The Financial Statements
16. AMOUNT DUE TO DIRECTORS
Group and Company
The amounts due to directors are unsecured, interest free and have no fixed terms of repayment.
17. AMOUNT DUE TO SUBSIDIARY COMPANIES
Company
The amounts due to subsidiary companies are unsecured, interest free and have no fixed terms of
repayment.
18. BANK OVERDRAFTS - SECURED
The bank overdrafts are secured by legal charges over the freehold land and buildings and fixed
deposits of a subsidiary company and are also jointly and severally guaranteed by certain directors of
the Company. The bank overdrafts bear interest at rates ranging from 7.50% to 7.75% per annum.
19. HIRE PURCHASE CREDITORS
Group2003
RM
Minimum hire-purchase payments:-
- not later than one year 287,183
- later than one year and not later than five years 363,049
- later than five years 4,092
654,324
Less: Future interest charges (101,009)
Present value of hire-purchase liabilities 553,315
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Notes To The Financial Statements
19. HIRE PURCHASE CREDITORS (CONTINUED)
Group
2003
RM
Represented by:
Current:-
- not later than one year 235,688
Non-current:
- later than one year and not later than five years 313,656
- later than five years 3,971
317,627
553,315
20. SHORT TERM BORROWINGS
Group
2003
RM
Bankers' acceptance 12,309,720
Trust receipts 1,056,730
Term loans due within one year (Note 21) 5,702,938
19,069,388
The bankers' acceptance and trust receipts are secured by legal charges over the freehold land and
buildings and fixed deposits of a subsidiary company and are also jointly and severally guaranteed bycertain directors of the Company. The said borrowings bear interest at rates ranging from 3.00% to 7.90%
per annum.
21. LONG TERM LIABILITIES
Group
2003
RM
Outstanding term loans principal 18,434,661
Portion due within one year (Note 20) (5,702,938)
Portion due after one year 12,731,723
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Notes To The Financial Statements
21. LONG TERM LIABILITIES (CONTINUED)
The term loans of the Group are secured by way of legal charges over the freehold land and buildings
and leasehold land and building-in-progress of subsidiary companies and are also jointly and severally
guaranteed by certain directors of the Company. The said loans bear interest at rates ranging from
1.50% to 1.75% per annum above the bank's base lending rate and are repayable by equal monthly
installments. The terms of repayment of the loans are as follows:-
Group
2003
RM
Within the next twelve months (Note 20) 5,702,938
After the next twelve months
- not later than two years 2,880,369
- later than two years but later than five years 6,771,927
- later than five years 3,079,427
12,731,723
18,434,661
22. SHARE CAPITAL
Group and Company
2003 2002
RM RM
Ordinary shares of RM1/- each
Authorised:
At 1 January 100,000 100,000
Created during the year 199,900,000 -
At 31 December 200,000,000 100,000
Issued and fully paid:
At 1 January 2 2
Issued during the year
- acquisition of subsidiary companies 115,000,000 -
- in exchange for shares in Abrar Corporation Berhad ("ACB") 1,600,000 -
- settlement of ACB's creditors 35,000,000 -At 31 December 151,600,002 2
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Notes To The Financial Statements
23. DEFERRED TAXATION
Group
2003
RM
At 1 January -
New subsidiaries acquired 3,037,755
Transfer from income statement 922,340
At 31 December 3,960,095
Representing the tax effects of:
Timing differences between depreciation
and corresponding capital allowances 43,700
Timing differences relating to the revaluation
of freehold lands held for development 1,538,995
Timing differences relating to the recognition
of property development income 2,377,400
3,960,095
Deferred taxation not provided for
in the financial statements:
Arising from revaluation of freehold lands held
for investment purpose 310,464
Arising from revaluation of long leasehold land
held for long term purpose 242,005
552,469
Further, the deferred tax assets have not been recognised for the following items:-
Group2003
RM
Deductible temporary differences 25,500
Unutilised tax losses 62,200
87,700
The unutilised tax losses and deductible temporary differences do not expire under current tax
legislation. Deferred tax assets have not been recognised in respect of these items because it is not
probable that future taxable profit will be available against which the subsidiary company can utilise the
benefits.
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Notes To The Financial Statements
24. REVENUE
Group Company
2003 2003 2002
RM RM RM
Contract revenue 76,400,656 - -
Engineering and technical services 11,078,773 - -
Sale of development properties 32,417,166 - -
Management fee - 350,000 -
119,896,595 350,000 -
25. OPERATING PROFIT/(LOSS)
Operating profit/(loss) has been arrived at:
Group Company
2003 2003 2002
RM RM RM
After charging:
Audit fee
- current year 88,000 3,000 1,000
- underprovision in previous year 6,450 - -
Bad debts written off 23,141 - -
Directors' remuneration
- fee 142,500 22,500 -
- salaries, bonus and allowances 813,727 65,000 -
- others 58,548 7,800 -
Depreciation 798,173 - -
Plant and equipment written off 4,063 - -
Provision for doubtful debts
- current year 89,687 - -
- no longer required (243,220) - -
Rental of premises 126,270 - -
Staff costs
- Employees' Provident Funds & SOCSO 324,712 - -
- salaries, bonuses, incentives and allowances 11,048,028 - -
- staff amenities 29,968 - -
- staff training 27,161 - -
Sundry deposit written off 23,725 - -
And crediting:
Bad debts recovered 109,102 - -
Gain on disposal of plant and equipment 791,165 - -
Rental income
companies in which a director has interest 286,000 - -
Directors' remuneration of the Group excludes estimated monetary value of benefits in kind of
RM60,100/-.
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Notes To The Financial Statements
26. FINANCE COSTS (NET)
Group
2003
RM
Interest income
- fixed deposits 161,492
- others 1,093,971
1,255,463
Interest expenses
- bank overdrafts (302,633)
- bills payable (629,550)
- hire purchase (77,744)
- term loans (608,322)
- others (239,929)
(1,858,178)
(602,715)
27. TAXATION
Group Company
2003 2003 2002
RM RM RM
Income tax
- current year's provision (4,929,300) (87,000) -
- overprovision in prior years 180,426 - -
Deferred taxation
- current year (998,240) - -- prior years 75,900 - -
(5,671,214) (87,000) -
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Notes To The Financial Statements
27. TAXATION (CONTINUED)
The provision for taxation differs from the amount of taxation determined by applying the applicable
statutory tax rate of the profit/(loss) before tax as a result of the following differences.
Group Company
2003 2003 2002
RM RM RM
Accounting profit/(loss) 20,337,138 119,020 (4,412)
Taxation at applicable tax rate of
28% (2002: 28%) (5,694.399) (33,326) 1,235
Tax effects arising from
- non-taxable income 368,579 - -
- non-deductible expenditure (609,320) (53,674) (1,235)
- reversal of deferred tax assets not
recognised in the financial statements 7,600 - -
- overprovision in prior years 256,326 - -
Tax expense for the year (5,671,214) (87,000) -
28. EXTRAORDINARY ITEMS
Group Company
2003 2003 2002
RM RM RM
Corporate costs incurred in respect of the
Corporate and Restructuring Scheme of the
Group as mentioned in Note 34 to the
financial statements
- professional fees, regulatory fees and
incidental expenses incurred (1,378,351) (1,378,351) -
- issuance of the Company's shares to the
creditors of ACB (35,000,000) (35.000.000) -
- issuance of the Company's shares to the
existing shareholders of ACB (1,600,000) (1,600,000) -
Gain on disposal of ACB to Primiavis
Jaya Sdn. Bhd., a company
established as special vehiclepursuant to the Corporate and
Restructuring Scheme 1 1 -
(37,978,350) (37,978,350) -
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Notes To The Financial Statements
29. EARNINGS/(LOSS) PER SHARE
Basic Earnings/(Loss) Per Share
a) Before Extraordinary Items
The earnings per share for the year has been calculated based on the Group's profit after taxation
and minority interests but before extraordinary items of RM12,350,849/- and on the weighted
average number of 94,966,669 ordinary shares in issue during the year.
b) After Extraordinary Items
The loss per share for the year has been calculated based on the Group's loss after taxation, minority
interests and extraordinary items of RM25,627,501/- and on the weighted average number of
94,966,669 ordinary shares in issue during the year.
Diluted Earnings Per Share
The diluted earnings per share is not shown as it is not applicable to the Group.
30. CONTINGENT LIABILITIES
(a) There is a claim by the Royal Customs and Excise Department ("RCED") against the Company for
alleged non-compliance of the Service Tax Act, 1975. The directors are of the opinion that the
likelihood of this claim being crystallised is remote and as such, no provision has been made in the
financial statements. As at the balance sheet date, the quantum of the service tax and penalty
claimable by RCED are not ascertainable.
(b) As at 31 December 2003, the Group is contingently liable for the following:-
Group
2003
RM
Secured
Bank guarantees issued in favour of various third parties 1,272,036
Unsecured
Potential tax penalty 13,102
1,285,138
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Notes To The Financial Statements
30. CONTINGENT LIABILITIES (CONTINUED)
(c) Subsequent to the balance sheet date, the Group is further contingently liable to the extent of
RM801,463/- in respect of the bank guarantees issued in favour of various third parties.
The bank guarantees of the Group is secured over freehold land and buildings, and fixed deposits of a
subsidiary company and are also jointly and severally guaranteed by a director of the Company.
31. COMMITMENTS
Group
2003
RM
Capital Commitments
Investment properties
- capital expenditure approved and contracted for but
not provided in the financiaI statements 10,627,562
- capital expenditure approved but not contracted for 7,993,369
Leasehold building-in-progress
- capital expenditure approved and contracted for but
not provided in the financial statements 10,915,325
29,536,256
Group
2003
RM
Lease Commitments
Lease back guaranteed returns
- Lease commitments not provided for in the
financial statements:-
expiring within one year -
expiring between two to five years 10,204,374
10,204,374
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Notes To The Financial Statements
32. SIGNIFICANT RELATED PARTY TRANSACTIONS
Group Company
2003 2003 2002
RM RM RM
Management fee received from subsidiary companies
- Oil-Line Engineering & Associates Sdn. Bhd. - 100,000 -
- Ascentland Sdn. Bhd. - 250,000 -
Contract revenue received/receivable from Town & Country
Properties Sdn. Bhd., a company in which a director,
Pua Yow Liang has substantial financial interest 8,548,334 - -
Rental expenses paid/payable to a director,
Ng Huat Tian 24,000 - -
Rental income received/receivable from
- Uniusaha Jaya Sdn. Bhd., a company in which certain
directors, Ng Huat Tian and Pua Yow Liang have
substantial financial interests 240,000 - -
- Crest Engineering Services Sdn. Bhd., a company in
which certain directors, Ng Huat Tian and Pua Yow
Liang have substantial financial interest 6,000 - -
Subcontractors' charges paid/payable to
- PP Phone Corporation Sdn. Bhd., a company in which
a director, Ng Huat Tian has substantial financial interest 355,080 - -
- Oil-Line Industries Sdn. Bhd., a company in which a director,
Ng Huat Tian has substantial financial interest 82,423 - -
The directors of the Company are of the opinion that the above transactions have been entered into in the
normal course of business and the terms are no less favourable than those arranged with third parties.
33. SEGMENTAL ANALYSIS
The Group's operating business are classified according to the nature of activities as follows:
Property : Comprise mainly property related activities.
Oil & Gas and Engineering : Comprise mainly engineering, procurement,
construction and contract related services
Investment : Comprise mainly investment holding.
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Notes To The Financial Statements
33. SEGMENTAL ANALYSIS (CONTINUED)
Primary Reporting - Business Segments
Oil & Gas
and Investment
2003 Property Engineering Holding Total
RM RM RM RM
REVENUE
External revenue 32,417,166 87,479,429 - 119,896,595
RESULTS
Segment results 7,571,630 12,048,767 119,020 19,739,417
Other operating income 7,400 1,193,036 - 1,200,436
Finance costs (net) (221,525) (381,190) - (602,715)
Profit from ordinary activities 7,357,505 12,860,613 119,020 20,337,138
Taxation (1,991,540) (3,592,674) (87,000) (5,671,214)
Profit after taxation 5,365,965 9,267,939 32,020 14,665,924
Minority interests - 424,255 - 424,255
Profit after taxation
and minority interests 5,365,965 9,692,194 32,020 15,090,179
Pre-acquisition profit (857,711) (1,881,619) - (2.739,330)
Net profit from
ordinary activities 4,508,254 7,810,575 32,020 12,350,849
Extraordinary items - - (37,978,350) (37,978,350)Net profit/(loss) for the year 4,508,254 7,810,575 (37,946,330) (25,627,501)
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Notes To The Financial Statements
33. SEGMENTAL ANALYSIS (CONTINUED)
Primary Reporting - Business Segments (Continued)
Oil & Gas
and Investment
2003 Property Engineering Holding Total
RM RM RM RM
OTHER INFORMATION
Segment assets 64,795,052 100,306,318 63,487,719 228,589,089
Total assets 64,795,052 100,306,318 63,487,719 228,589,089
Segment liabilities 19,721,245 72,942,400 81,870 92,745,515
Total liabilities 19,721,245 72,942,400 81,870 92,745,515
Capital expenditure 18,061 20,005,111 - 20,023,172
Depreciation 4,712 793,461 - 798,173
Secondary Reporting - Geographical Segments
2003 Malaysia Foreign Total
RM RM RM
Revenue 118,996,595 900,000 119,896,595
Results 14,846,844 243,335 15,090,179
Total assets 228,589,089 - 228,589,089
Total liabilities 92,745,515 - 92,745,515
Capital expenditure 20,023,172 - 20,023,172
Depreciation 798,173 - 798,173
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Notes To The Financial Statements
34. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
During the financial year, the Proposed Corporate and Restructuring Schemes as disclosed in the
financial statements of the Company in the previous financial year that involved the Company and its
subsidiary companies were approved by all the relevant regulatory authorities and have been
completed.
The Corporate and Restructuring Scheme of the Group involved the following:-
(i) the transfer of the listing status of ACB on the Main Board of Bursa Malaysia Securities Berhad
(formerly known as Malaysia Securities Exchange Berhad) to OilCorp, the consideration of which
was satisfied by new OilCorp Shares in accordance with the terms and conditions of the Facilitation
of Listing Agreement and the Workout Proposal as follows:
(a) OilCorp has issued 1,600,000 new OilCorp Shares to the existing shareholders of ACB in
exchange for 32,000,000 ACB ordinary shares on the basis of one (1) new OilCorp Share for
every twenty (20) ACB Shares held. The Share Exchange was completed on 27 June 2003; and
(b) OilCorp has issued to the creditors of ACB, through the Special Administrators (SA),
35,000,000 new OilCorp Shares at par, credited as fully paid in the manner and proportion
determined by the SA.
(ii) OilCorp acquired the entire issued and paid-up share capital of Oil-Line Engineering & Associates
Sdn. Bhd. (Oil-Line) comprising 10,591,540 ordinary shares of RM1/- each for a purchase
consideration of RM95,000,000, which was satisfied via an issuance of 95,000,000 new OilCorp Sharesat par. The acquisition was completed on 2 May 2003.
(iii) OilCorp acquired the entire issued and paid-up share capital of Ascentland Sdn. Bhd.
(Ascentland) comprising 5,000,000 ordinary shares of RM1/- each for a purchase consideration of
RM20,000,000, which was satisfied via an issuance of 20,000,000 new OilCorp Shares at par. The
acquisition was completed on 2 May 2003.
(iv) The offer for shares by the creditors of ACB and Oil-Line vendors and/or the Ascentland vendors, of
43,900,000 ordinary shares of RM1/- each in OilCorp at an offer price of RM1.10 per share payable
in full on application to the shareholders of ACB, directors and employees of the OilCorp Berhad,
potential investors and Bumiputra investors approved by the Ministry of International Trade and
Industry (MITI).
(v) The entire enlarged issued and paid-up share capital of the Company comprising 151,600,002
ordinary shares of RM1/- each was listed and quoted on the Main Board of Bursa Malaysia Securities
Berhad (formerly known as Malaysia Securities Exchange Berhad) on 5 August 2003.
(vi) Upon the completion of the Workout Proposal, Oilcorp disposed of its entire shareholding in ACB for
a nominal consideration of RM1/- to Primiavis Jaya Sdn. Bhd., a company established as special
vehicle for the purpose of facilitating the implementation of the Workout Proposal on 13 August
2003.
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Notes To The Financial Statements
35. FINANCIAL INSTRUMENTS
(a) Financial Risk Management and Objectives
The Group seeks to manage effectively various risks namely credit, foreign currency, market, liquidity
and interest rate risk, to which the Group is exposed to in its daily operation.
(b) Credit Risk
The management has a credit policy in place to monitor and minimise the exposure of default.
Trade debtors are monitored on an ongoing basis.
As at balance sheet date, there were no significant concentrations of credit risk in the Group.
(c) Foreign Currency Risk
The Group is not exposed to significant foreign currency risks as the majority of the Groups
transactions, assets and liabilities are denominated in Ringgit Malaysia. Foreign currency
denominated assets and liabilities together with expected future cash flows from highly probable
purchases and sales give rise to foreign exchange exposures.
(d) Liquidity Risk
The Group actively manages its debt maturity profile, operating cash flows and the availability of
funding so as to ensure that all financing, repayment and funding needs are met. As part of its
overall prudent liquidity management, the Group maintains sufficient levels of cash or cash
convertible investments to meet its working capital requirements.
(e) Interest Rate Risk
The Groups primary interest rate risk relates to interest-bearing debt as at 31st December 2003. The
investments in financial assets are mainly short term in nature and they are not held for speculative
purposes.
The Group actively reviews its debt portfolio, taking into account the 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.
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Notes To The Financial Statements
35. FINANCIAL INSTRUMENTS (CONTINUED)
(e) Interest Rate Risk (Continued)
Effective Interest Rates
Effective
Interest Within 1 - 5 After
Group Rate 1 Year Years 5 Years Total
As at 31 December 2003 % RM RM RM RM
Financial Assets
Other debtors, deposits
and prepayments 8.00 894,304 - - 894,304
Fixed deposits placed
with licensed banks 3.11 - 3.19 6,444,101 - - 6,444,101
Financial Liabilities
Bank overdrafts - secured 7.50 - 7.75 4,335,992 - - 4,335,992
Banker's acceptance 3.00- 3.26 12,309,720 - - 12,309,720
Trust receipts 7.90 1,056,730 - - 1,056,730
Hire purchase creditors 5.67 - 9.43 235,688 313,656 3,971 553,315
Term loans 7.50 - 7.90 5,702,938 9,652,296 3,079,427 18,434,661
(f) Fair Values
Recognised financial instruments
The fair value of financial assets and financial liabilities approximate their respective carrying values
on the balances sheets of the Group and of the Company.
Unrecognised financial instruments
There are no financial instruments not recognised in the balance sheets as at 31 December 2003
that are required to be disclosed.
36. COMPARATIVE FIGURES
There are no comparative figures for the Group as this is the first set of financial statements for the Group.
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Statement By Directors
STATEMENT BY DIRECTORS
We, SUNNY NG HUAT TIAN and PUA YOW LIANG, being two of the directors of OILCORP BERHAD, do
hereby state that in the opinion of the directors, the financial statements set out on pages 43 to 85, are
drawn up in accordance with applicable approved accounting standards in Malaysia so as to give a
true and fair view of the state o