Scomi Energy Services Bhd
(formerly known as Scomi Marine Bhd)
Scomi Energy Services Bhd (397979-A) Annual Report 2013
Scomi Energy Services Bhd (397979-A) (formerly known as Scomi Marine Bhd)
Level 17, 1 First Avenue
Bandar Utama
47800 Petaling Jaya
Selangor Darul Ehsan
Malaysia
Annual Report_Cover3
1533-03/13
23.08.13
REALISING POTENTIAL,
CREATING VALUE
Telephone +603 7717 3000
Facsimile +603 7725 9028
www.scomienergy.com.my
Scomi
Annual
Report
2013
1533_Scomi ARCover
22cm (w) x 28cm (h)
CMYK
R4
foon/jeann
CONTENTS
Key Financial Indicators P 0 2
Key Financial Highlights P 0 3
Scomi Energy Services Corporate Structure P 04
Corporate Statement P 0 8
Corporate Information P 0 9
Profile of Directors P 1 0
Management Team P 1 6
Chairman’s Statement P 1 8
Management Review of Operations P 24
Corporate Social Responsibility P 32
Human Capital Development P35
Statement on Corporate Governance P 39
Statement on Risk Management and Internal Control P 49
Audit and Risk Management Committee Report P 55
Additional Information P 6 0
Statement on Directors’ Responsibility P 62
Financial Statements P 6 6
Analysis of Shareholdings P 1 7 7
List of Properties P 1 8 0
Corporate Directory P 1 8 2
Notice of Annual General Meeting P 184
Notice of Nomination P 1 8 7
Form of Proxy P 1 8 9
Scomi is all about realising potential. In this annual report,
we seek to bring Scomi’s promise to life by using paper art,
where a simple sheet of paper is re-imagined into complex
three dimensional forms. Much like how Scomi leverages upon
the simplest opportunity to create value, this demonstrates
how creativity and vision can transform something as basic as
paper into an object of beauty.
P
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KEY FINANCIAL INDICATORS
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Key Financial
Indicators
15 months
2013
RM’000
Revenue
1,471,693 EBITDA
258,413 Depreciation
(89,055)
Finance Costs
(41,356)
Share of profit in associated companies
133 Share of profit from joint-ventures
6,568 Profit before tax (“PBT”)
134,703 Taxation
(37,611)
Profit after tax (PAT)
97,092 Non-controlling interest
(6,996)
PAT after non-controlling interest 90,096 Number of shares assumed in issue (‘000)#
2,341,630 Weighted average number of shares used to
compute diluted earnings per share (‘000)#
2,341,630 Basic and diluted - Net EPS (sen)
3.85 12 months
2011
RM’000
1,258,185
54,316
(97,236)
(42,892)
(2,978)
4,140
(84,650)
(35,383)
(120,033)
3,557
(116,476)
2,341,632
2,341,632
(4.97)
NOTE
#
As the Group applies predecessor
accounting, the number of shares
as of the merger date less any
treasury shares are to be reflected
throughout the current and previous
financial period for the purposes of
calculating the basic and diluted
earnings per share.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
KEY FINANCIAL HIGHLIGHTS
Key Financial
Highlights
Revenue (RM Million)
Total Assets
(RM Million) 15 months 2013 RM1,491.1
12 months 2011 : RM1,562.6
Earning per
Share (basic)
15 months 2013 15 months
2013
1,471.7
12 months
2011
1,258.2
Profit / (Loss) before Tax
(RM Million)
3.85sen
12 months 2011 : (4.97)sen
Net Tangible Assets
(RM Million)
15 months 2013 RM450.7
12 months 2011 : RM508.0
Shareholders’ Fund
(RM Million)
15 months 2013 15 months
2013
134.7
12 months
2011
(84.7)
Profit / (Loss) after Tax after
Minority Interests (RM Million)
15 months
2013
90.1
12 months
2011
(116.5)
RM564.7
12 months 2011 : RM616.7
Net Assets Per Share
(Attributable to equity
holders of the parent)
15 months 2013 24.1sen
12 months 2011 : 26.3sen
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SCOMI ENERGY SERVICES CORPORATE STRUCTURE AS AT 31 JULY 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Scomi Energy Services Bhd1*
L A BUA N
50%
Transenergy
Shipping Pte Ltd
Trans Advantage
Sdn Bhd
L A BUA N
51%
V I E TN A M
SIN GAP ORE
Scomi Marine
Services Pte Ltd
Scomi Oiltools
Sdn Bhd
Marineco
Limited
AU S T R AL IA
Scomi Oiltools Pty Ltd
48%
21.08%
Southern Petroleum
Transportation Joint
Stock Company
Scomi KMC
Sdn Bhd
4%
TEXA S, U SA
Scomi Equipment Inc
T H AIL AN D
Scomi Oiltools
(Thailand) Ltd4
Scomi Sosma
Sdn Bhd
SIN GAP ORE
Goldship Pte Ltd
IND ONESIA
80.54%
PT Rig Tenders
Indonesia Tbk2
SINGAP ORE
70%
50%
FRANCE
BRU N EI
Scomi Anticor
S.A.S3
Scomi (B)
Sdn Bhd
SI N G A P OR E
N E T H E R L AN DS
Scomi Oiltools (S)
Pte Ltd
KMC Oiltools BV
Rig Tenders Offshore
Pte Ltd
SINGAP ORE
Rig Tenders
Marine Pte Ltd
95%
SINGAP ORE
CH Ship Management
Pte Ltd
SINGAP ORE
I N D ON ESI A
Grundtvig
Marine Pte Ltd
PT Batuah
Abadi Lines
SINGAP ORE
SI N G A P OR E
CH Logistics Pte Ltd
Sea Master
Pte Ltd
King Bridge 49%
Enterprises
Limited (BVI)
95%
95%
INDIA
I N D ON ESI A
KMC Oiltools
India Pte Ltd5
PT Scomi
Oiltools
I N D ON ESI A
I N D ON ESI A
PT Multi Jaya
Persada
PT Inti Jatam Pura
95%
RU SSI A
Scomi Oiltools
(RUS) LLC
P
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
SCOMI ENERGY SERVICES CORPORATE STRUCTURE AS AT 31 JULY 2013
Emerald Logistics 49%
Sdn Bhd
Gemini 51%
Sprint
Sdn Bhd
B E R M U DA
Scomi Oilfield Limited
KMCOB Capital
Berhad
C AYMAN ISL AN D S
C AYMAN ISL AND S
Scomi Oiltools
Oman LLC
Scomi Oiltools
(Cayman) Ltd
C AYMAN ISL AND S
EN GL AN D & WALES
Scomi Oiltools
(Africa) Limited
Vibratherm Limited
NI GE R I A
60%
Wasco Oil Service
Company Nigeria
Limited
NOTES
Scomi Oiltools Ltd
O MAN
GABON
96%
Oiltools
Gabon SA
KEY
* Formerly known as Scomi Marine Bhd.
1 Listed on the Bursa Malaysia Securities Berhad (Kuala Lumpur Stock Exchange).
2 Listed on the Jakarta Stock Exchange.
3 Includes 1 preferential share
each held by 2 different individual.
4 Includes 1 Class A share
each held by Scomi Oiltools Ltd and Scomi Oiltools (Cayman) Ltd.
5 Includes 1 share held by Somi Oiltools Ltd.
•
•
50%
Except as otherwise expressly
stated, all companies in this
corporate structure are incorporated in Malaysia.
Except as otherwise expressly
stated, all companies in this
corporate structure are wholly
owned by their respective holding companies.
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Transforming a
simple commodity
into something
of global value.
A GLOBE
Using imagination, even a simple piece of paper has the
potential to become an object of greater value. In paper art,
Scomi sees its own credo to realise potential.
P
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CORPORATE STATEMENT
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
With a presence in 44 locations
across 23 countries, the Scomi
Energy Services group of
companies is a global technology
enterprise in the energy and
logistics industries.
We are a global technology enterprise.
Our global reach, capabilities and talent
provide us with the necessary resources
to develop and own new technology in
all areas of our business.
We focus on Energy & Logistics.
All of our businesses are focused on
the Energy and/or Logistics sectors with the
ability to compete globally. All of us in the
Scomi family should remember that any new
initiatives we undertake will focus on these
areas of business.
We provide innovative solutions.
We innovate to respond to an evolving
environment. Our products and operations
meet today’s needs while anticipating
tomorrow’s. We are committed to developing
competitive and innovative solutions to create
efficiency, add value and grow with our
customers to shape our future.
We aim to realise
potential for our
stakeholders.
Our customers:
We will develop and offer
customers innovative and
competitive products and
services that help them
grow their business.
Our shareholders:
We are committed to
providing long-term
superior returns to our
shareholders.
Our people:
We aim to provide
our employees with
developmental
opportunities so they can
succeed on personal and
professional levels.
Our suppliers:
We will treat our suppliers as
our partners in the mutual
interest of business growth.
Our society /
environment:
As a good corporate citizen,
we will give back to the
communities we operate
in worldwide.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
CORPORATE INFORMATION
Corporate
Information
Directors
Registered Office
Principal Bankers
Tan Sri Nik Mohamed bin Nik Yaacob
(Chairman)
Dato’ Meer Sadik bin Habib Mohamed
Mok Yuen Lok
Liew Willip
Lee Chun Fai
Shah Hakim @ Shahzanim bin Zain
Loong Chun Nee
(Alternate to Shah Hakim @ Shahzanim
bin Zain)
Level 17, 1 First Avenue
Bandar Utama
47800 Petaling Jaya
Selangor Darul Ehsan, Malaysia
CIMB Bank Berhad
Lot 27, 29, 31 Jalan 52/2
Seksyen 52
46200 Petaling Jaya
Selangor
Administrative and
Correspondence Address
Malayan Banking Berhad
Lot C.01, Concourse Level
8, First Avenue, Bandar Utama
47800 Petaling Jaya
Selangor
Audit and Risk Management
Committee
Mok Yuen Lok
(Chairman)
Dato’ Meer Sadik bin Habib Mohamed
Lee Chun Fai
Level 17, 1 First Avenue
Bandar Utama
47800 Petaling Jaya
Selangor Darul Ehsan, Malaysia
Tel:
+603 7717 3000
Fax:
+603 7725 9082
Email: [email protected]
Website:www.scomienergy.com.my
Registrar
Nomination and Remuneration
Committee
Tan Sri Nik Mohamed bin Nik Yaacob
(Chairman)
Mok Yuen Lok
Liew Willip
Symphony Share Registrars Sdn Bhd
Symphony House, Block D13
Pusat Dagangan Dana 1
Selangor Darul Ehsan, Malaysia
Tel: +603 7841 8000
Fax: +603 7841 8151/8152
PT Bank Mandiri (Persero) Tbk
Cabang Jakarta Tebet Supomo
Jl. Dr. Supomo SH No. 43 Tebet
Jakarta Selatan 12810
Indonesia
Standard Chartered Bank
8 Marina Boulevard
#24-00
Marina Bay Financial Centre Tower 1
Singapore 018981
Overseas-Chinese Banking
Corporation Ltd
65, Chulia Street, 10th Floor
OCBC Centre
Singapore 049513
Company Secretary
Chong Mei Yan (MAICSA 7047707)
Ong Wei Leng (MAICSA 7053539)
Auditors
PricewaterhouseCoopers (AF: 1146)
Chartered Accountants
Level 10, 1 Sentral
Jalan Travers, Kuala Lumpur Sentral
PO Box 10192, 50706 Kuala Lumpur
Malaysia
Stock Exchange Listing
Main Market of Bursa Malaysia
Securities Berhad
Stock Name: Scomies
Stock Code: 7045
Currency
Ringgit Malaysia (RM)
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
From left
Tan Sri Nik Mohamed bin Nik Yaacob
Tan Sri Asmat bin Kamaludin
Chairman,
Independent Non-Executive Director
(Appointed on 16 May 2013 & designated as
Chairman on 31 May 2013)
Chairman,
Non-Independent Non-Executive Director
(Resigned on 31 May 2013)
Shah Hakim bin Zain
Vice Admiral Dato’ Haron bin
Dato’ (Dr) Mohd Salleh (Rtd)
Chief Executive Officer,
Non-Independent Executive Director
Independent Non-Executive Director
(Vacation from office on 16 May 2013)
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
From left
Mok Yuen Lok
Dato’ Meer Sadik bin Habib Mohamed
Independent Non-Executive Director
Independent Non-Executive Director
Liew Willip
Lee Chun Fai
Independent Non-Executive Director
Non-Independent Non-Executive Director
(Appointed on 17 May 2013)
Loong Chun Nee
Alternate Director to En Shah Hakim Zain
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PROFILE OF DIRECTORS
Tan Sri Nik Mohamed bin Nik Yaacob
Chairman, Independent Non-Executive Director
Tan Sri Nik, 64, a Malaysian, is the Chairman and
Independent Non-Executive Director of the Company.
He was appointed as a member of the Board on 16 May 2013 and was designated as the Chairman of the Board
on 31 May 2013.
Tan Sri Nik holds a Diploma in Mechanical Engineering, a B.E.
(Hons) Degree from Monash University and a Masters in Business
Management from the Asian Institute of Management. He also
completed the Advanced Management Programme at Harvard
University in the United States.
He served as the Group Chief Executive of Sime Darby Berhad from
1993 until his retirement in June 2004. He was Sime Darby Berhad’s
Director of Operations in Malaysia prior to his appointment as
the Group Chief Executive in 1993. He also served on the Boards
of many of the Sime Darby group companies during this time.
He was also the Chairman of the Advisory Council of National
Science Centre and Chairman of the Board of UITM and served
as a member of the INSEAD East Asian Council, National Council
for Scientific Research and Development, Co-ordinating Council
for the Public-Private Sectors in the Agricultural Sector, National
Coordinating Committee on emerging Multilateral Trade Issues
and the Industrial Coordinating Council. He was a representative
for Malaysia in the Apec Business Advisory Council and the AsiaEurope Business Forum.
The other Malaysian public companies in which he is a Director are
Scomi Group Bhd, GuocoLand (Malaysia) Berhad, Bolton Berhad
and SapuraKencana Petroleum Berhad. Tan Sri Nik Mohamed
is also the Executive Director of Yayasan Kepimpinan Perdana
(Perdana Leadership Foundation).
Tan Sri Nik is the Chairman of the Nomination and Remuneration
Committee of the Board.
Shah Hakim @ Shahzanim bin Zain
Chief Executive Officer/
Non-Independent Executive Director
Encik Shah Hakim, 48, a Malaysian, is the
Chief Executive Officer/ Non-Independent Executive
Director of the Company. He was appointed to the Board
on 23 September 2005.
Encik Shah Hakim started his career as an auditor with Ernst &
Young and was subsequently promoted as Consulting Manager,
responsible for servicing large corporations. He went on to
be appointed as Executive Director of a regional packaging
manufacturer in 1992, with direct operational responsibility.
He currently sits on the Board of Scomi Group Bhd, Scomi
Engineering Bhd and KMCOB Capital Berhad.
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Encik Shah Hakim was a member of the Options Committee1 of
the Board. He attended 11 out of the 12 Board Meetings held in
the financial period ended 31 March 2013.
Tan Sri Asmat bin Kamaludin
Chairman, Non-Independent Non-Executive Director
(Resigned on 31 May 2013)
Tan Sri Asmat, 69, a Malaysian, was a Non-Independent
Non-Executive Director and the Chairman of the
Company. He was appointed to the Board on 1 January
2010 and resigned on 31 May 2013.
Tan Sri Asmat holds a Bachelor of Arts (Hons) degree in
Economics from the University of Malaya and a Diploma in
European Economic Integration from the University of Amsterdam.
Tan Sri Asmat has vast experience in various capacities in the
public service and his last position was as the Secretary-General
of the Ministry of International Trade and Industry, a position he
held from 1992 to 2001. He has served as Economic Counsellor
for Malaysia in Brussels and worked with several international
bodies such as ASEAN, the World Trade Organisation and the AsiaPacific Economic Corporation, representing Malaysia in relevant
negotiations and agreements. Tan Sri Asmat has also been actively
involved in several national organisations such as Permodalan
Nasional Bhd, Johor Corporation, the Small and Medium Scale
Industries Corporation (SMIDEC) and the Malaysia External Trade
Development Corporation (MATRADE) while in the Malaysian
Government service. Tan Sri Asmat also served as Governor
representing Malaysia on the governing Board of the Economic
Research Institute for Asean and East Asia (ERIA).
The other Malaysian public companies in which Tan Sri Asmat
is a Director are Scomi Group Bhd, UMW Holdings Berhad,
YTL Cement Berhad, Permodalan Nasional Bhd, Panasonic
Manufacturing Malaysia Berhad, Compugates Holdings Berhad,
The Royal Bank of Scotland Berhad (formerly known as ABN AMRO
Bank Berhad), UMW Oil & Gas Corporation Berhad and AirAsia X
Berhad. He also serves on the Board of JACTIM Foundation.
Tan Sri Asmat is the brother in-law of Dato’ Haron bin Siraj who
was an Independent Non-Executive Director of the Company and
vacated office on 16 May 2013 pursuant to the Article 96.1 of the
Articles of Association of the Company.
Tan Sri Asmat chaired the Nomination and Remuneration
Committee of the Board. He attended 9 out of the 12 Board
Meetings held in the financial period ended 31 March 2013.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Vice Admiral Dato’ Haron bin Dato’
(Dr) Mohd Salleh (Rtd)
Independent Non-Executive Director (Vacated office on
16 May 2013)
Vice Admiral Dato’ Haron bin Dato’ (Dr) Mohd Salleh
(Rtd), 70, a Malaysian, is an Independent Non-Executive
Director of the Company. He was appointed to the
Board on 23 September 2005 and vacated office on 16
May 2013 pursuant to the Article 96.1 of the Articles of
Association of the Company.
Vice Admiral Dato’ Haron bin Dato’ (Dr) Mohd Salleh (Rtd) began
his Basic Cadet Training at the Federation Military College Malaysia
and continued his training as Naval Officer at the Britannia Royal
Navy College, United Kingdom and the Royal Navy. He has held
various senior positions in the Royal Malaysian Navy including Fleet
Operations Commander in the rank of Rear Admiral, Deputy Chief
of Navy and Assistant Chief of Staff of the Malaysian Armed Forces
HQ and he was promoted to the rank of Vice Admiral Dato’ Haron
bin Dato’ (Dr) Mohd Salleh (Rtd) on assuming the appointment of
Chief of Staff, Malaysian Armed Forces HQ in 1994 before retiring
from the Royal Malaysian Navy in December 1995.
The other Malaysian public company in which Vice Admiral
Dato’ Haron bin Dato’ (Dr) Mohd Salleh (Rtd) is a Director is
Yayasan Scomi.
Vice Admiral Dato’ Haron bin Dato’ (Dr) Mohd Salleh (Rtd), is the
brother in-law to Tan Sri Asmat bin Kamaludin, who was the
Chairman and Non-Independent Non-Executive Director of the
Company during the financial period ended 31 March 2013.
Tan Sri Asmat resigned on 31 May 2013.
Vice Admiral Dato’ Haron bin Dato’ (Dr) Mohd Salleh (Rtd) chaired
the Options Committee1 of the Board and was also a member of
the Audit and Risk Management Committee and the Nomination
and Remuneration Committee. He attended all of the 12 Board
Meetings held in the financial period ended 31 March 2013.
PROFILE OF DIRECTORS
Mok Yuen Lok
Independent Non-Executive Director
Mr Mok, 52, a Malaysian, is an Independent NonExecutive Director of the Company. He was appointed to
the Board on 29 March 2002.
Mr Mok graduated in 1981 with a Bachelor of Science from Heriot
Watt University, Edinburgh, and joined Ernst & Whinney (now Ernst
& Young) in 1982, where he trained and qualified as a Chartered
Accountant. He co-founded Crowe Horwath in Malaysia in 1990
and is currently the Regional Executive Director of Crowe Horwath
International for the Asia Pacific region, overseeing 27 countries. He
is also Audit Committee Chairman of another public listed company.
Mr Mok is a member of the Young Presidents’ Organization,
Malaysian Chapter, where he has served various Board positions.
He has also been actively involved with Hospis Malaysia, a charitable
organization which renders free palliative care to residents in the
Klang Valley diagnosed with life-limiting conditions.
Other Malaysian public companies which he is a Director are
Goodway Integrated Industries Bhd and Yayasan Habib.
Mr Mok chairs the Audit and Risk Management Committee, and is
also a member of the Nomination and Remuneration Committee
of the Board. He attended 10 out of the 12 Board Meetings held in
the financial period ended 31 March 2013.
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PROFILE OF DIRECTORS
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Liew Willip
Loong Chun Nee
Independent Non-Executive Director
Alternate Director to En Shah Hakim @ Shahzanim bin Zain
Mr Liew, 45 a Malaysian, is an Independent NonExecutive Director of the Company. He was appointed to
the Board on 21 February 2011.
Madam Loong, 55, a Malaysian, was appointed as an
Alternate Director to Encik Shah Hakim @ Shahzanim bin
Zain on 27 February 2009.
Mr Liew is a commerce graduate of the University of
Melbourne and a Chartered Financial Analyst. Upon
graduation, Mr Liew worked with international accounting
firm KPMG as an auditor. Subsequently, he joined a local
stockbroking company as an investment analyst, and later,
moved to the Kuala Lumpur office of an international
investment bank, Barclays deZoete Wedd, where he was the
senior equity analyst. In 1996, Mr Liew was hired to set up the
Malaysian equity research operations of another international
investment bank, NatWest Markets, where he was the Director
and Head of Research.
She graduated with a Bachelor of Arts in Economics and Social
Studies from the University of Manchester, United Kingdom.
In 1998, Mr Liew joined the national asset management
company, Pengurusan Danaharta Nasional Berhad
(“Danaharta”), where he was among the pioneer staff
members. At Danaharta, Mr Liew was the Assistant General
Manager/Head of Research unit (Corporate Services Division).
After leaving Danaharta in 2000, Mr Liew co-founded
an independent investment advisory company, and a
consulting company that specializes in financial and investor
communications. Mr Liew is currently the Managing Director
of a company providing consulting services.
Mr Liew is a member of the Nomination and Remuneration
Committee and was a member of the Options Committee1 of
the Board. He attended all of the 12 Board Meetings held in
the financial period ended 31 March 2013.
Madam Loong was previously with the Renong Group of
companies for a total of 11 years covering companies including
Projek Lebuhraya Utara-Selatan Berhad (1988 – 1992) and
United Engineers (Malaysia) Berhad (1993 – 1996) and HBN
Management Sdn Bhd (Group Management Office) (1997 –
1999). She left the Renong Group in late 1999 to join Tan Sri
Dato’ (Dr) Rozali Ismail as Financial Advisorfor Puncak Group of
companies before being appointed as the Finance Director to
the Board of Puncak Niaga Holdings Bhd in January 2005 (2000 –
June 2005).
She then joined Scomi Group Bhd in July 2005 as Senior Vice
President of Corporate Finance Division/Chief Financial Officer
of Scomi Energy Services Bhd (formerly known as Scomi Marine
Bhd). Thereafter, she was transferred to Scomi Group Bhd as
Group Chief Financial Officer in August 2006. In early 2008, she
was re-designated as Chief Investment and Performance Officer.
She also serves on the Board of Scomi Group of Companies.
Madam Loong has vast experience in financial advisory matters
specialising in the areas of corporate debt restructuring,
corporate finance and project financing for privatisation projects.
Other Malaysian public companies in which she is a Director are
Scomi Engineering Bhd and KMCOB Capital Berhad.
Madam Loong attended 11 out of the 12 Board Meetings held in
the financial period ended 31 March 2013 by invitation.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
PROFILE OF DIRECTORS
Dato’ Meer Sadik bin Habib Mohamed
Lee Chun Fai
Independent Non-Executive Director
Non-Independent Non-Executive Director
Dato’ Meer Sadik, 50, a Malaysian, is an Independent
Non-Executive Director of the Company. He was
appointed to the Board on 19 November 1997.
Mr Lee, 42, a Malaysian, was appointed to the Board as
Non-Independent Non-Executive Director on 17 May 2013.
Dato’ Meer Sadik graduated from Wichita State University,
United States of America, with a Degree in Business
Administration, and later qualified as a gemmologist from
the Gemmological Institute of America. Dato’ Meer Sadik
is currently the Managing Director of the Habib Group of
Companies which today is involved in retailing, manufacturing
and microfinancing.
Dato’ Meer Sadik is a Past President of the Young Entrepreneurs
Organisation (YEO) and was the Governor of the Alice Smith
School. Dato’ Meer Sadik has been serving as the Honorary
Secretary of Malaysian Retailers Association in 2007.
The other Malaysian public company which he is a Director is
Yayasan Habib, which was established in 2008 to undertake
corporate social responsibility activities for the Habib Group.
Dato’ Meer Sadik is a member of the Audit and Risk
Management Committee. He attended 11 out of the 12 Board
Meetings held in the financial period ended 31 March 2013.
He graduated with a Bachelor of Accountancy (Hons) degree
from University Utara Malaysia in 1995. He obtained a Master
of Business Administration from Northwestern University and
The Hong Kong University of Science & Technology in 2012.
Mr Lee started his career with a public accounting firm. In
October 1995, he joined Road Builder (M) Holdings Bhd (“RBH
Group”) and was the Head of Corporate Services Division
of RBH Group prior to the acquisition of RBH Group by IJM
Corporation Berhad (“IJM”) in 2007. He was the Deputy Chief
Financial Officer for the IJM Group before being appointed as
the Head of Corporate Strategy & Investment on 1 July 2012.
His directorships in other public companies include Scomi
Engineering Bhd, Scomi Group Bhd (Alternate Director) and
Road Builder (M) Holdings Bhd (Alternate Director).
Mr Lee is a member of the Audit and Risk Management
Committee of the Board.
NOTES
(1) Options Committee was dissolved on 4 December 2012.
(2)Save as disclosed above, “the Directors” do not have:
(i)any family relationship with any Director and/or substantial shareholder of the
Company;
(ii)any conflict of interest with the Company; and
(iii) any conviction for offences within the past 10 years (other than traffic offences,
if any).
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MANAGEMENT TEAM
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Mukhnizam Mahmud
Chief Financial Officer,
President – Marine Services
Wan Ruzlan Iskandar
Wan Salaidin
President – Oilfield
Services, Market Units
Steve Bracker
President – Oilfield
Services, Product Line
Shah Hakim bin Zain
Chief Executive Officer
Sharifah Norizan Shahabudin
Chief Legal & Governance Officer
Zubaidi Harun
Vice President – Business
Development
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Vickneswaran Veloo
Head – Technical Services,
Drilling Fluids
MANAGEMENT TEAM
Dan Farrar
Vice President – Drilling
Waste Management,
Product Line
Awalludin Nasir
Business Unit Manager
– Malaysia & Singapore
Mike Walker
Senior Vice President
– Oilfield Services
Khairil Anwar
General Manager
– Production
Enhancement
Jessie Chan Yuen Ling
Head – Support Services
Ramesh Veetikat Ramachandran
Group Financial Controller
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CHAIRMAN’S STATEMENT
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Dear Stakeholders,
In line with Scomi Group Bhd (“SGB”), our
parent company, Scomi Energy Services
Bhd (formerly known as Scomi Marine Bhd)
(“SESB” or “the Company”) and its group of
companies (“the Group”) has changed its
financial year end from 31 December to 31
March. I am pleased to present the audited
results for the 15-month financial period
ended 31 March 2013. It has been a period
of intensely productive activity for Scomi
Energy Services Bhd. Our new name reflects
the merger of Scomi Group Bhd’s Energy
Logistics and Oilfield Services divisions,
resulting in an upstream drilling services
company with a vastly strengthened
financial standing.
Overview
The overall health of the global economy remained fragile in
2012, with Europe mired in its debt crisis and the United States
only marginally stronger. China, on the other hand, pulled out of
two years of decline and returned with an unexpected growth
rate of 7.8%.
With its rising energy needs, China is increasingly looking for
energy supplies to meet the demand.
Exploration and production activities of oil and gas industry are
up throughout the eastern hemisphere, which, as this is our
chosen marketplace, is excellent news for SESB.
Tan Sri Nik Mohamed
Nik Yaacob
Chairman
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CHAIRMAN’S STATEMENT
Consolidating the Oilfield Services and Marine Services divisions
under one umbrella as Energy Services has created a business
which offers a broad and coherent range of services to the
oil, gas and coal industries. Our research and development
assets include state-of-the art drilling waste management
equipment, high-performance drilling fluids, top of the range
production enhancement chemicals and extensive multi-drilling
services capability which cover every phase from exploration
to completion. We believe that within the next five years, the
Energy Services division will become a key global service
provider for the oil and gas sector.
In relation to the coal transport business that we are in, our
marine logistics fleet continues to serve our coal clients.
However, with the shrinking market share brought about by
a decline in the coal market, our focus has shifted towards
offshore support services, and we are adjusting the composition
of our fleet accordingly.
All these initiatives are aimed at streamlining our range of
services and products, and thus will enable us to target key
markets effectively. As a result, the new SESB, although facing
intense industry challenges, has continued to maintain its
revenue level and delivered a turnaround pre-tax profit.
Financial Highlights
SESB changed its financial year end from 31 December to 31
March, in line with the change effected at its parent company,
Scomi Group Bhd (“SGB”). Consequently, the current financial
period is for a period of 15 months compared to 12 months for
FY2011.
SESB posted a revenue of RM1.47 billion for the financial period
ended 31 March 2013 compared to RM1.26 billion in the 12
months ended 31 December 2011. On the back of this revenue,
SESB recorded a Profit Before Tax (“PBT”) of RM134.7 million for
the financial period as compared to a loss of RM84.65 million
for the previous 12 months.
The key driver of SESB’s turnaround results was the improved
operational performance of the Oilfield Services division which
achieved a revenue of RM1.15 billion and a PBT of RM98.24
million for the financial period. This exceptional performance
was a result of increased activity in Asia and West Africa,
improved operational efficiencies and better cost management.
Additionally, there were no major provisions for vessel and
goodwill impairment at our Marine Services division and it
posted a revenue of RM318.3 million and a PBT of RM36.46
million for the 15 months ended 31 March 2013.
The performance of the Marine Services business was impacted
by the generally weaker coal sector and specifically the expiry
of a major coal transportation contract which reduced both
revenue and profits. Nevertheless, the Marine Services business
continues to be profitable with the ongoing contracts and
better contribution from our offshore support segment.
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
It should be noted that SESB has only recently completed
its corporate restructuring exercise and is now in a phase of
consolidation to position itself for stronger growth. In view
of this, the Board of Directors has decided not to declare a
dividend for the financial period and to utilise the capital
to drive growth for sustainable returns and hence improve
shareholder value.
Corporate Restructuring
On 29 February 2012, we announced our plan to consolidate
a major portion of Scomi Group Bhd’s (“SGB”) Oilfield Services
and Marine Services businesses under the renamed entity,
SESB. The corporate exercise, which concluded on 12 March
2013, involved the disposal by SGB to SESB of the:
•the share capital of Scomi Oilfield Limited and Scomi Sosma
Sdn Bhd and;
•48% of the issued and paid-up share capital of Scomi KMC
Sdn Bhd
The exercise also involved both an internal restructuring of
legal entities within the Oilfield Services (“OFS”) operations
of SGB to transfer the OFS Eastern Hemisphere business to
SESB, and a capital repayment of RM135.61 million to SESB
shareholders.
At an Extraordinary General Meeting convened on 11 June
2012, SESB shareholders approved a capital repayment
involving cash distribution amounting to RM135.61 million on
the basis of RM0.185 for every existing ordinary SESB share held.
As a result of the exercise, the par value of each SESB share was
reduced from RM1.00 to RM0.45, and the share premium of the
Company was reduced accordingly.
With the conclusion of the exercise the Group was renamed
from Scomi Marine Bhd to Scomi Energy Services Bhd to better
reflect the composition of the businesses of the Group.
The reorganisation has created a broader and more competitive
energy services provider and hence SESB is now established
as a comprehensive, integrated drilling support and marine
services business. The newly streamlined Company is primed
to succeed in the eastern energy markets with a strategic and
profitable range of offerings, and solidly positioned the SESB
group as a key player in the oil and gas sector. Moreover, as
SESB is starting out with a manageable debt level and a notably
stronger balance sheet, this robust financial foundation will
assist us to raise capital for future business expansion.
We have also consolidated the coal transport segment of
the Marine Services division. PT Rig Tenders Tbk (“PTRT”), an
80% owned subsidiary of SESB, acquired the entire equity
interest in three firms owned by its parent company Scomi
Marine Services Pte. Ltd., in a deal worth RM177 million. The
three companies are CH Logistics Private Limited, CH Ship
Management Private Limited and Grundtvig Marine Private
Limited. The acquisition was completed on 12 April 2012, and
consolidated the Indonesian marine businesses into PTRT
which should ultimately improve its financial performance.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Board Of Directors
It is with regret that post the financial period under review, we
bade farewell to two board members. On 31 May 2013, Tan Sri
Asmat bin Kamaludin resigned as the Chairman of the Board
of Directors of SESB. An experienced personality, he had ably
helmed your company throughout his tenure. Further, Vice
Admiral Dato’ Haron Bin Dato’(Dr) Mohd Salleh (Rtd) also retired
from the Board upon attaining the age of 70, pursuant to the
Articles of Association of the Company. We will certainly miss
their experience and valuable contribution.
CHAIRMAN’S STATEMENT
For the Marine Services segment, we will continue to evaluate
strategic investment opportunities in specialised offshore
vessels, combining our expertise with Oilfield Services division’s
experience to innovate solutions for our offshore clients.
Acknowledgements
The new SESB has made an excellent debut, emerging on solid
foundations and moving forward with confidence. I sincerely
appreciate the patience and encouragement of all stakeholders
who saw us through this transition.
SESB has also welcomed two new members to the Board
of Directors. I, myself, joined SESB on 16 May 2013 and was
appointed as the Chairman on 31 May 2013. And Mr Lee Chun
Fai, who represents IJM Corporation Berhad, joined the Board as
a Non-Independent Non-Executive Director on 17 May 2013.
On behalf of the Board of Directors, I would like to express our
profound gratitude to our customers, shareholders, business
partners and bankers whose loyalty inspires us to meet their
expectations. We are also thankful to the governments of all
the countries in which we operate; we rely on their regulatory
guidance to achieve sustainable success.
Prospects
Finally, I offer my deepest gratitude to the people who are
at the heart of SESB, which are the management and staff,
whose talents and teamwork form the very essence of our
business. Our success is the fruit of their collective efforts. My
fellow Directors have, with prudence and courage, steered the
Company through this transformation. And of course, I extend
my most heartfelt appreciation for each and every shareholder
who has continued to have confidence in the potential of our
organisation. I thank you for your support.
Our outlook for the ensuing financial year is positive. The
eastern hemisphere’s energy sector, an approximately USD6.0
billion market, is forecast to have robust growth in exploration
and production. Regulatory shifts in Myanmar and Indonesia
are anticipated to support further development of both
countries’ vast energy resources. Thus, we are well-positioned
to seize the opportunities to provide products and services for
both onshore and offshore operations throughout our target
markets.
We anticipate an improvement in the performance of SESB as
during the course of the financial period, our Oilfield Services
division recorded several major contract wins including
landmark contracts in Qatar with Qatar Petroleum and in
Indonesia with Total E&P Indonesie. Several other key contracts
were also won in Turkmenistan and Malaysia. These contracts
are anticipated to contribute positively towards the future
financial position of SESB.
Our Marine Services strategy is to reduce our presence in
coal logistics and shift the focus to offshore support, where
higher charter rates, lower operating costs and stronger or
more robust markets will bolster both the top and bottom line
figures.
We will continue to practice stringent cost control measures
both at the corporate and operational levels to strengthen our
financial position. We aim to improve our cash flow position
by reviewing the current bond at the Oilfield Services division
as well as better management of inventory and days sales
outstanding (“DSO”) days.
SESB ended this financial period with an order book of over
RM5.1 billion. There are also several significant tenders in the
pipeline for Oilfield Services division, though for the immediate
future we will focus on contract execution and service quality
enhancements.
Sincerely,
Tan Sri Nik Mohamed bin Nik Yaacob
Chairman
/2 1
Transforming an
ordinary item into
valuable energy.
A PIN WHEEL
Using imagination, even a simple piece of paper has the
potential to become an object of greater value. In paper art,
Scomi sees its own credo to realise potential.
Shah Hakim Zain
Chief
Executive Officer
P
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
MANAGEMENT REVIEW OF OPERATIONS
Dear Stakeholders,
The first review of operations for the newly
restructured Scomi Energy Services Bhd
(formerly known as Scomi Marine Services)
(“SESB” or “Company”) and its group of
companies (the “Group”) is a milestone in
the development of our business, and I am
delighted to record that, for the 15-month
financial period ended 31 March 2013, the
combined revenue for the Marine Services
and Oilfield Services (“OFS”) divisions
jumped to RM1.47 billion, while Profit
Before Tax (“PBT”) reached RM134.7 million.
This is an affirmation that, despite the challenges we faced
during the year, we are moving in the right direction to improve
our operational performance and financial standing.
soft this past year, but steadily rising demand drove exploration
and production activity, which in turn led to some recordsetting contracts for SESB.
Overview
A Spears & Associates Inc (“Spears”) report predicted a 5-6%
increase in drilling activity in the Far East in 2012, but at end
of the year reported a 2% drop, primarily due to a 15% drop in
Indonesia, where the rig count dropped from 55 to 45 in the
course of the year as a result of legal battles over regulatory
issues. Civil upheaval and political uncertainty in Egypt has
resulted in a slowdown of drilling and exploration activities.
However, moving forward for 2013 Spears is predicting
international drilling activity to grow by 12% in Mid East and 6%
in Far East. This bodes well for the new SESB entity as our focus is
now on the Eastern Hemisphere.
2012 was a less cataclysmic year for the global economy, but
there were still challenges. Growth in the USA and EU ranged
from nil to nominal, and although these are no longer our target
markets, globalisation has made for permeable borders, and a
regional fiscal malaise still takes a worldwide toll. Trade between
China and the West declined, but intra-regional trade in the East
is on the rise. China’s 2012 GNP was near the top of the list at
7.5%, and although the country’s demand for consumer goods
dropped, its demand for energy increased alongside that of
India, the other giant developing economy. Oil prices remained
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MANAGEMENT REVIEW OF OPERATIONS
Overall, our operational report for the past fifteen months is
encouraging. Our product development has resulted in waste
management equipment which is lighter, more durable and
more effective. Drilling fluid systems for deepwater and high
pressure high temperature are being enhanced and improved.
Greener solutions using environmentally friendly chemicals
and components are also currently being developed. Under
the production enhancement business, we have continued
our research and development for our flow assurance
products and have successfully developed a liquid pour point
depressant, which is a niche product segment. We are in the
midst of changing the composition of the marine vessel fleet
to profitably meet the region’s offshore needs. More stringent
cost management has helped to mitigate business vagaries, and
our decision to focus on the Eastern market is starting to show
results.
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
improve cost management, provide stronger financial standing
for greater flexibility in raising capital and thus increase the
growth potential of a more diversified oil and gas business.
The restructuring adheres to Scomi’s strategy to focus into the
eastern hemisphere where we have identified Asia, Western
Africa, Russia and the Middle East as our most profitable spheres
of operation. However, as an organisation, we are nimble
enough to move into any region should the identified business
prospect be positive for our organisation.
The merger of Marine Services and Oilfield Services divisions
under SESB offers a powerful value proposition to both our
existing and our potential clients, expands our range of services
and products and hence our revenue potential.
Financial Performance
The new SESB
Over the past 15 months, we have completed our
reorganisation. SESB now contains two divisions: OFS, offering
integrated drilling fluids, drilling waste management solutions,
multiple drilling services and production enhancement
technologies; and Marine Services, which provides marine
transportation for the coal industry and offshore support vessels
to the oil and gas sector.
Consolidating OFS Eastern Hemisphere, Scomi Sosma, Scomi
KMC and Scomi Energy Services will facilitate better marketing,
For the financial period, the OFS division gained steady
momentum, achieving a PBT of RM98.24 million, spurred by
revenue of RM1.15 billion. Both Thailand and Malaysia recorded
a strong performance, while West Africa continued to benefit
from a high level of activity.
Meanwhile, the Marine Services division posted a revenue of
RM318.3 million and a PBT of RM36.46 million. For the coal
segment, revenue was lower than during the 2011 financial
year as a result of lower tonnage carried, owing to a general
slowdown in the industry, expiry of a major coal contract that
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
was replaced with a time charter contract with lower rates and
smaller fleet. The bottom line was further affected by vessel
impairment and doubtful debt provision.
Operations Review
Oilfield Services
This financial period returned very gratifying results for the
OFS group. Tighter controls on costs, higher profit margins on
recent contracts and the realignment of the corporate and
capital structures effected by the merger, all contributed to
improvements in revenue and profit.
Oil prices remained fairly soft in 2012, with the Brent crude
oil index hovering around the USD100 per barrel mark, but
the demand for energy continues to climb, especially in the
world’s largest developing nations. Exploration and production
are rising accordingly, and very markedly so in the eastern
hemisphere. The operations in Gulf, Turkmenistan, Indonesia and
Thailand are participating in more tenders, and rig counts are
still going up in Malaysia, Indonesia and Thailand.
The oil and gas sector is one of the National Key Economic Areas
(“NKEAs”) in Malaysia’s Economic Transformation Programme.
The resulting increase in activity has been good news for Scomi,
as we signed a RM2.1 billion contract with PETRONAS Carigali
under which we will provide drilling products and engineering
services for a term of five years. Petronas has also announced
plans to develop marginal fields in Malaysia and this presents us
with new opportunities to explore and move into.
In January 2013, we signed a RM380 million contract with Total
E&P Indonesia for the provision of drilling fluids and completion
services over a three-year period. This is our first collaboration
with Total E&P Indonesie and is the largest single award that
Scomi has won in Indonesia. Work has commenced on this
project and we anticipate positive contribution in the next
financial period.
Qatar and Turkmenistan operations also made significant
contributions to our order book last year. A breakthrough
drilling fluids contract with Qatar Petroleum, worth RM130
million over three years, will require Scomi to formulate
solutions for challenging drilling environments onshore as
well as providing drilling fluids services for an initial four rigs,
with more rigs anticipated towards the end of the financial
period. In Turkmenistan, one of our key focus countries,
we sealed a RM98.5 million, two-year deal with Dragon Oil
Ltd for drilling and completion fluids services. Further, the
Turkmenistan operations were awarded a 3-year drilling fluids
and drilling waste management contract by PETRONAS Carigali
(Turkmenistan) Sdn Bhd, valued at RM155 million.
Our other markets such as the Gulf, Australia and Russia,
which are all mainly drilling waste management markets have
continued to improve their performance during the financial
period due to the increased sales activity with our proprietary
range of drilling waste management products.
MANAGEMENT REVIEW OF OPERATIONS
Our Production Enhancement Technologies division, although
a minority contributor towards the financial performance of
SESB, has continued to maintain its market share through
the provision of its products and solutions to the Asia market
focused from Malaysia and to the rest of the world focused from
our operations in France.
While our operational and in-country business development
activities have been our focus, on a macro level we have also
continued to participate in global energy conferences and
exhibitions to build recognition of our brand ‘Scomi’ while
using the opportunity to further enhance the presence of our
products and services. Several of the prominent global events
where we were represented were the prestigious 25th World
Gas Conference in Malaysia, Neftegaz oil and gas exhibition in
Russia, the 12th China International Petroleum & Petrochemical
Technology & Equipment Exhibition (CIPPE) and the Abu Dhabi
International Petroleum Exhibition and Conference (ADIPEC).
Marine Services
This financial period was a mixed bag for the Marine Services
division. The coal transport segment saw revenue drop, as a
general contraction in the industry led to a decrease in business.
Revenue dipped sharply in mid-2012 when a major coal
contract in Indonesia expired. The loss was mitigated, however,
by the signing of a replacement time charter contract albeit at a
lower rate. Lower operating costs further cushioned the impact,
as the fleet reduced bunker consumption, third-party re-charter
and interest expenses.
Meanwhile, the hike in offshore exploration and production
has boosted the demand for support vessels. In October 2012,
an SESB subsidiary, PT Rig Tenders, signed a two-year, RM120
million contract with PT Pertamina Hulu Energi Offshore North
West Java (“Pertamina”) to provide three vessels for offshore
support services – a utility vessel, an anchor-handling tug, and
an accommodation barge with a 288-man capacity.
With the ongoing strategic initiative to revitalise our fleet, it now
stands at a count of 82 vessels in total and continues to enjoy an
overall utilisation rate of over 80%.
Key Initiatives
The OFS division has made some remarkable advances in
product development. We have progressed from the role of a
distributor of drilling waste management products to designing
and manufacturing our own extensive portfolio of waste
management products.
Around the world, policies concerning drilling waste
management (“DWM”) are tightening, with legislation trending
toward zero discharge. The DWM business is expected to
grow exponentially, and we estimate our addressable markets
– Asia, the Middle East, Russia and West Africa – to be worth
RM6.5 billion. With our extensive range of products, packaged
solutions and services, we are well- poised to serve the needs of
those markets.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
MANAGEMENT REVIEW OF OPERATIONS
We are in the vanguard of the microwave technology
development for the treatment of oil-contaminated drill
cuttings, and the prospects for this technology are starting to
create waves both within the industry and amongst investment
analysts. Scomi has innovated the use of microwave in waste
management treatment and this process has numerous
advantages over both existing microwave technologies and the
standard method of thermomechanical cuttings cleaning. Our
technology is anticipated to reduce power consumption by as
much as 50%, address a wider range of waste products, increase
the returns on investment, reduce downtime and maintenance
costs, and comply with EU standards. Its reduced footprint
and weight makes it a suitable option for offshore rigs, and
we already anticipate several installations once the product is
commercialised and introduced to the market.
Another recent innovation is the CIP, Clean-In-Place, automated
tank cleaning system, which totally eliminates the need for
human entry. When the product was initially introduced in 2011
to a client in Labuan, Malaysia, four offshore tanks were cleaned
in 12 hours, with only 10% of the normal waste generated and
no human entry. Using conventional systems, this job would
have required 30 men moving in and out of the tanks over three
to four days. This product has gained recognition and currently
four of the CIP systems are operating in Malaysia and Thailand,
and we expect that number to rise over the coming year.
All of our drilling waste management research and
development is carried out at our Houston office working in
partnership with reputable manufacturers and vendors.
Our Drilling Fluids (“DF”) technologies is also continuously
enhanced and improved to meet the exigent needs of drilling
exploration needs. All research and development is carried out
at our dedicated facility, the Global Research and Technology
Centre (“GRTC”) here in Malaysia. Researchers are exploring
multifunctional formulations and products suited for extreme
environmental conditions including deepwater, ultra-deepwater
and high temperature high pressure wells. Further, in line with
the focus on generating less waste or cleaner waste, several
eco-friendly product components are being introduced to
our product line so that our DF formulations have better
performance capabilities, greater recyclable properties and
waste generated would require less treatment prior to disposal.
For our Production Enhancement Technologies, our laboratory
in Peyrius, France, is concentrating on improving our range of
products and chemicals including flow assurance, separation
technology and integrity chemicals, to better suit the needs of
the clients.
The Marine Services division is actively reconfiguring its fleet in
light of the growing demand in the oil and gas sector and the
steady drop in the coal transport business. A fleet revitalisation
plan is in place that includes disposing of several tugs and
barges and purchasing offshore support vessels that include
anchor handling and supply tugs as well as accommodation
barges.
Pleased as we are with our product development and its
success in the marketplace, we also set high standards for the
services that our support staff provide. To ramp up our service
excellence, we invested heavily in building both technical
expertise and soft skills. At GRTC we have an extensive training
programme developed in-house by a team of dedicated
trainers. These trainers research and develop training modules
catered specifically to provide the technical and management
skills required by our engineers to deliver quality service.
It is compulsory for every drilling fluid engineer to attend
an 8-week Comprehensive Drilling Fluids school and to be
certified prior to commencing work on a client’s rig. The GRTC
Training Calendar covers a wide range of subjects both at
intermediate and advanced levels for drilling fluids, drilling
waste management, solids control, drilling fluid technologies,
comprehensive engineering software, well control and
managing drilling operations. In tandem with their technical
skills development, we also emphasize on soft skills training
which will assist our employees vastly in delivering the expected
service quality. Scomi Group Bhd’s training unit, Group Learning
and Development (“GLaD”) travel around the globe to various
locations to conduct training programmes that include
customer service, teamwork, time management and finance.
Each employee has a Learning and Development KPI that
requires them to attend a minimum of 40 hours of training
per year. The aim of this initiative is to teach, train and coach the
over 2,000 employees of SESB to realise their greatest potential.
Outlook
Financial analysts are predicting lower volatility in the global
economy next year, which is most welcome after four years
of tumultuous market behaviour. The Brent crude oil index
is expected to hold steady around the USD100 per barrel
mark, a drop of about 10% from 2012, resulting primarily from
increasing oil production from non-OPEC countries. Although
energy prices are slightly depressed, the demand is on a steady
upward trend, most notably in the largest developing nations,
China and India.
Japan’s decision to turn away from nuclear power following
the Fukushima earthquake is spurring liquid natural gas
development in Southeast Asia and the Middle East. In fact, the
market for gas continues to make strides worldwide, growing at
five times the rate of global oil demand, and we believe that the
greater demand will spur heightened energy exploration and
production regardless of the dip in oil prices.
Scomi’s markets in the eastern hemisphere show great promise
for the coming year. Last year, the EU voted to lift most of the
sanctions it had imposed against Myanmar. This has opened
the door to a great deal of new foreign investment, and the
Burmese government opened 30 blocks for tender in April 2013,
19 of which are deepwater.
The Chinese government has announced subsidies for shale
gas projects and will further encourage this development by
waiving tax on imports of shale-gas exploration equipment.
Indonesia has vowed to reduce red tape in order to improve
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
investment opportunities and to encourage exploration and
production. Indonesia has the second highest gas reserves in
the Asia Pacific after Australia.
Operators in Malaysia have discovered approximately 1.4 billion
barrels of oil equivalent (“BBOE”), which accounts for 72% of total
discoveries in the region. We are projecting for our combined
operations in Malaysia, Indonesia and Thailand to be the key
contributors to our annual revenue for the next several years.
We have also actively participated in many tenders in Southeast
Asia, India and Turkmenistan, a few of which we are currently
anticipating award details within this calendar year. For the
immediate future, we shall minimise our contract bidding efforts
as we place increased emphasis on execution and service quality.
Lower coal prices and lower demand for commodities in general
have made the coal transport business less attractive to the
Marine Services division. We will nonetheless continue to serve
our major customers where we have term contracts, but with a
smaller fleet. For the offshore segment, the numbers of wells to
be drilled and new platforms to be installed are all set to rise in
the region. The demand for offshore support vessels is predicted
to exceed the supply, and this should lead to a high utilisation
rate for our fleet and a hike in daily charter rates. We continue
to look for investment opportunities in selected offshore vessels
which is expected to improve profitability.
With the restructuring complete, SESB is now an upstream
drilling and marine services business. This consolidation of all
our oil and gas businesses under one entity also allows our
valuable investors to participate in a more diversified oil & gas
business with greater growth potential. We believe we are
now better structured to respond to market needs, innovate
MANAGEMENT REVIEW OF OPERATIONS
solutions and cement our foothold in the eastern hemisphere.
Through this we will also be able to create value and realise
potential for all our stakeholders, especially our shareholders
who have patiently supported SESB through its growth period.
Lower coal prices and lower demand for commodities in general
have made the coal transport business less attractive to the
Marine Services Division. We will nonetheless continue to serve
our major customers where we have term contracts, but with a
smaller fleet. For the offshore segment, the number of wells to
be drilled and new platforms to be installed are all set to rise.
The demand for offshore support vessels is predicted to exceed
the supply, and this should lead to a high utilisation rate for
our fleet and a hike in daily charter rates. We continue to look
for strategic investment opportunities in specialised offshore
vessels that will structure the fleet for optimal profitability.
With the restructuring complete, SESB is now an upstream
drilling and marine services business. This consolidation of all
our oil and gas businesses under one entity also allows our
valuable investors to participate in a more diversified oil & gas
business with greater growth potential. We believe we are
now better structured to respond to market needs, innovate
solutions and cement our foothold in the eastern hemisphere.
Through this we will also be able to create value and realise
potential for all our stakeholders, especially our shareholders
who have patiently supported SESB through its growth period.
Sincerely,
Shah Hakim Zain
Chief Executive Officer
/2 9
Transforming basic
material into
enduring worth.
A DIAMOND
Using imagination, even a simple piece of paper has the
potential to become an object of greater value. In paper art,
Scomi sees its own credo to realise potential.
P
/3 2
CORPORATE SOCIAL RESPONSIBILITY
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Aristotle believed that the whole is
greater than the sum of the parts.
At Scomi Energy Services Bhd
(“SESB” or the “Company”) and its
group of companies (the “Group”),
we too believe in combining our
processes, our people and our
brand, to reach out to all our
stakeholders and those that we
come in contact with.
SESB is committed to making a positive and meaningful impact
in the communities where we are present. We believe that
the Group does not operate in isolation and as such, we are
proactive and resolute in our stand that our business objectives
and decisions take into account sustainability for continued
growth in the environments that we are in.
We continue to focus on our social, environmental and
economic impacts in creating value for our business, our
shareholders as well as our other stakeholders. On this
premise, we have made corporate social responsibility (”CSR“) a
cornerstone for our efforts. Our CSR activities have progressed
more holistically, evolving from individual acts of philanthropy
to becoming a mindset that influences decision-making and
business strategy.
The Marketplace
We remain committed to operating responsibly and upholding
best business practices while adhering to the highest ethical
standards in our business approach and dealings with all our
customers, vendors, the Government and other stakeholders in
general.
Communication is an integral element in ensuring timely
information of the company reaches its key stakeholders. Hence
throughout the financial period, SESB played host to numerous
media communicators, investment analysts and fund managers
to provide them with the latest information of the Group.
We also ensured timely announcements to Bursa Malaysia
on material activities and events, distribution of quarterly
“Letter to Shareholders” to the investment communities on
the Group financial performance, and also media releases on
key developments of our business. News on SESB’s business
as well as our operations globally is disseminated through the
newsletter, FOCUS, produced by our parent company Scomi
Group Bhd. This newsletter is shared with customers, partners,
suppliers, employees and other stakeholders. Meanwhile,
comprehensive information on the Group is easily accessible via
our website and this includes our Annual Reports, Circulars to
Shareholders, media releases and media coverage.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
In creating value for our customers, we ensured that all our
products adhere to regulatory requirements and quality
standards. Further, to add value for our customers, we have also
extended to our customers several technical training modules
on Drilling Fluids Technologies, Drilling Waste Management and
Drilling Operations. The modules cater not only for technical
personnel but also non-technical personnel who come in
contact with the services that we provide. Through this training
we are able to enhance their knowledge of our products and
services as well as building cognizance of the latest technology,
products and services that we provide.
To further enhance our presence and to create awareness of
our brand and products, the Group as a whole participated in
numerous energy and transportation exhibitions, conferences
and forums in Malaysia, China, the Gulf and Russia.
CORPORATE SOCIAL RESPONSIBILITY
initiatives such as projects involvement and stretch assignments
of increasing responsibility and complexity. At the same time,
we provide our employees with training and professional
development opportunities to ensure they are equipped
with the relevant knowledge and skills for career progression.
We have made it a requirement for all executives to attend a
minimum of 40 hours of training a year, while non-executives
need to fulfill at least 20 training hours annually.
To foster and enhance unity, the Group has also put in place
a number of programmes that stamps our unique identity
and brand as ‘Scomi’. These programmes have had immense
participation by our employees. We seek to create a sense of
belonging and ownership by interacting with our employees
and maintaining effective and clear communication with them.
Details of our Group Learning and Development and human
capital development activities are set out in page 35 to 37.
The Workplace
We credit the success of our business to the contribution and
steadfast commitment of our people, being our most valuable
asset. As SESB has expanded, it has always nurtured a working
environment which attracts, develops, motivates and retains the
best talents. Employees were consistently being challenged to
push their performance levels, be driven to deliver results and
continue to outdo themselves.
We are committed to creating a working culture that values and
rewards performance while cultivating and reinforcing a sense
of belonging to the Group. Based on performance delivery,
employees were rewarded with bonus increments.
To bring out the best in our employees, we introduced various
The Environment
In the current global economy, there is increased pressure for
companies to operate in a manner which is sustainable while
promoting environmental conservation. As an environmentally
concerned global technology enterprise, we are committed to
providing innovative solutions whether in the energy services
or transport solutions industries, with the lowest environmental
footprint.
Scomi employees across the globe are committed to “greening
the earth” and have organised a number of programmes and
initiatives to minimise wastage of resources and mitigate
negative environmental effects. We have also endeavoured to
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CORPORATE SOCIAL RESPONSIBILITY
leverage on technology and intellectual capital to create clean
and green solutions aimed at environmental sustainability while
obtaining optimum customer satisfaction.
Our commitment towards the environment is reflected in our
product portfolio. Our Drilling Fluids are constantly engineered
to provide optimised performance and enhance recyclability
properties. The systems are engineered to prevent loss of
fluids and damage to the surfaces during drilling. They also
ensure efficient waste carrying properties as well as adsorbtion
properties that allow the drilling waste to be easily cleaned
for disposal. Our Drilling Waste Management solutions handle
drilling waste solids control, containment and handling,
treatment and disposal ensure that all waste generated are
effectively separated, contained and treated prior to disposal,
for minimal impact to the environment. These are achieved
through research and development for innovative products and
also the creation of efficient solutions to meet individual waste
management challenges.
Certification
SESB ensures where possible all its business units, subsidiaries
and joint venture partners are certified to either ISO 9001-2000,
ISO 14001 or 18001 depending on Process requirements and or
Risk identification reviews.
The Community
As a caring corporate organisation, SESB believes that it has a
responsibility to give back and support communities across the
26 countries in which we operate. With the understanding that
corporate responsibility is integral for success and essential for
holistic growth, we strive to ensure our CSR programmes make a
positive difference to the community. This has been our guiding
principle since our establishment and signifies efforts to raise
standards of living and enriching communities over the years.
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
In Malaysia we have continued to support the activities of,
Yayasan Scomi. Yayasan Scomi, established by our parent
company Scomi Group Bhd in 2005 is a non-profit foundation
dedicated to developing communities through education and
living assistance. Yayasan Scomi organises CSR activities with
participation of Scomi employees, to support the underserved
public irrespective of race, religion or creed. Over the years, it
has provided educational assistance and scholarships for needy
students along with rural school and motivational programmes
as well as helped the less fortunate in terms of the provision of
food and other basic living necessities.
Yayasan Scomi organised several key community engagement
and relief programmes including its annual blood donation
drive which was co-organised with University Malaya Medical
Centre at Scomi’s Global headquarters. It also continued its
support for 10 under-priviledged families it has adopted in
Malaysia, extending financial support to them to uplift their
living conditions.
Todate Yayasan Scomi has provided scholarships to over thirty
students, special education needs continuous training and
equipment to three schools and helped more than six hundred
individuals through their underprivileged assistance initiatives.
Yayasan Scomi also initiated a partnership with Mercy Malaysia,
an internationally renowned Malaysian NGO for the deployment
of Scomi’s staff as Mercy Malaysia’s volunteers in its community
programmes. This partnership will enable Scomi staff to pledge
their support and sign up as volunteers to participate in the
various community programmes driven by Mercy Malaysia.
Above and beyond the corporate driven activities, each
business unit is empowered to organise its own CSR activities.
This can be as simple as creating a moment of joy for the
underprivileged by interacting with them or as altruistic as
home or education improvement for a deserving family or
community. We believe the quantum is not of import rather the
quality of the helping hand is. Hence with all our global hands
reaching out together the sum of the parts becomes greater
once again.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
HUMAN CAPITAL DEVELOPMENT
People at the Heart
At the core of any organisation is its
people. They are the heart, the source of
energy that energises the organisation’s
processes to fruition; and they are the
soul, the values that exemplify the culture
of an organisation.
Thus at Scomi Energy Services Bhd (formerly known as
Scomi Marine Bhd) (“SESB” or the “Company”) and its group
of companies (the “Group”) there is a concerted focus on the
development of our people as they are the key engine in driving
innovatio­n and creating value for all our stakeholders. All SESB’s
initiatives for human capital development follow the strategic
initiatives of its parent company Scomi Group Bhd (“SGB” ­or
“Scomi”) and its group of companies.
SESB provides a platform for the growth of talent. We are
a global multicultural organisation that provides different
exposures to our people. Priding ourselves on being part of
a lean organisation, our people can easily make a difference
by creating a legacy and leaving a footprint. Further with
every member in the team being encouraged to contribute
and to have their voice heard through informal and open
communication, it naturally extrapolates into building bonds
with colleagues and cultivating relationships. Hence we have
heard the rallying call of being Team Scomi.
For this team, Scomi’s value proposition is “You provide the
Talent, we provide Career Development”. To set them on that
path various, seemingly divergent, development channels have
been specifically created to nurture the talents. However, all
these individualistic channels have one common underlying
theme. They are all built upon the Scomi Brand Values of
New Ideas, Working Together, Goal Oriented and Customer
Responsible. The values in turn support our Brand Vision of
Realising Potential.
Learning & Development
To bring all of these intentions together to form a cohesive and
coherent learning and development path, SGB has a dedicated
Group Learning and Development (“GLaD”) team that conducts
training programmes for staff across all the global business units
of Scomi. GLaD is responsible for addressing the identified skills
and knowledge gaps, and for managing Scomi’s comprehensive
talent development programmes. Hence SESB also follows the
training programmes and initiatives organised by GLaD. During
the financial period, GLaD carried out its strategic objectives
comprising the following initiatives:
Work @ Scomi & Induction Programme
This two-day training is mandatory for all new employees,
introducing them to the Scomi business, culture and brand. It
offers the recruits an insight into what Scomi stands for, what
it expects from its employees and, conversely, what employees
can expect from the company.
Core Values, Functional Skills and Managerial Skills
Programmes
These programmes which encompass Scomi’s core values as
well as functional and managerial skills were held in several of
our global locations including Kuala Lumpur, Labuan, Kemaman,
Jakarta, Bangkok, Dubai, Perth, Turkmenbashy and Ashgabat.
The intention was to reach out to employees and to make it
easier for global employees to attend our in-house training.
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HUMAN CAPITAL DEVELOPMENT
The Executive Management Programme
This programme brings together mid-level management from
our global operations, and is geared towards enhancing their
leadership skills while allowing them to meet and network with
their global counterparts. In 2012, the Executive Management
Programme was held in Kuala Lumpur and Dubai.
The Management Leadership Development Programme
This aims to develop future leaders for the Group, hence the
high-level training focuses on effective management and
leadership skills. In 2012, the programme was held in Kuala
Lumpur.
The Management Trainee Programme
Aimed at fresh graduates who are recruited into Scomi, this
18-month programme exposes the new recruits to all facets
of the Group’s operations be it technical or management
skills. During this time, the trainees are attached to different
departments to enable them to pick up relevant skills that will
set them on the right track for further development in Scomi.
Mentoring & Coaching Programme
One-to-one mentoring and coaching is offered to managers
who have demonstrated leadership potential, to help them
deal with challenges and issues as they move up the leadership
ladder. It is geared towards ensuring a secure leadership
pipeline and forms part of SESB’s succession plan.
Global Executive Learning (GEL)
This is a two-day learning programme for senior management
and is normally held in conjunction with our annual Global
Executive Meeting, a conference for senior management from
Scomi’s global operations. These sessions use out-of-the box
learning methods to reiterate key leadership messages to the
senior management. For the programme in 2012 “Stallions
Strengths”, the senior management group had to work with
horses, which are known as highly sensitive sentient beings
that cannot be forced into action. Thus the team through this
exercise and using the Values in Action methodology were able
to identify strengths and areas for improvement in nurturing
teams.
Aside from its training programmes, GLaD also helms various
strategic employee development initiatives within the
organisation. Building the methodologies and the frameworks,
GLaD works hand-in-hand with the business division’s Human
Resource and Technical Training departments to implement the
plans.
Technical Training
While the managerial and soft skills training and development
moves in one stream, there is the other stream of technical
training that is also focused upon. For Drilling Fluids, our
trainings are mainly conducted at our Global Research and
Technology Centre (“GRTC”), where we have an extensive
training calendar that includes a compulsory Drilling Fluids
School for drilling fluids engineers, technical and non-technical
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
drilling fluids operations, drilling operations, wellbore control,
drilling engineering software, managing drilling operations
and others. On several occasions, our trainers have travelled
to a client’s location on special request to conduct these
similar trainings. During the financial period, our GRTC training
department conducted over 17 training sessions and a total
of 13,130 training hours. Our Drilling Waste Management
trainings are conducted at our research and engineering centre
in Houston, while on-the-job trainings are conducted at the
individual business units.
As part of our technical expertise development, we ensure that
in every location that we operate in, the local employees are
given equal opportunity to grow and develop their technical
skills. Hence intensive on-the-job trainings are conducted to
allow them to upskill themselves.
Our training and development programmes have created global
diversity within our organisation with different nationalities
working across the globe united under the one brand of Scomi
and as part of Team Scomi.
Performance Management
To inculcate a high performance culture, SESB uses Performance
Assessment & Capability Enhancement (“PACE”), a performance
management tool, to assess its employees on three leadership
capabilities, namely People Leadership, Personal Leadership
and Business Leadership. PACE was conceptualised to evaluate
an individual’s performance and also to highlight areas of
improvement for personal development.
Through PACE, employees are engaged in a discussion to
explore their strengths and agree on improvement areas while
also mapping out a career plan that will allow them to realise
their potential. Using PACE, the management is also able to
identify employees with high potential and these individuals
are presented with opportunities to advance and fast-track their
careers.
Competency Mapping
Having a talented and resourceful team is critical for our
business continuity and hence we have placed great focus on
talent management. To ensure our talents have a progressive
growth path, an extensive competency mapping programme
for the technical line has been completed. This allows each
individual to clearly map their experiences against requirements
and hence, clearly chart a career path for themselves. Through
this we believe we will develop an engaged team that will
translate into continued growth results for us.
Succession Planning
SESB’s succession plan involves nurturing and developing
employees from within the organisation. Our efforts are always
forward-looking, taking into account the future needs based
on strategic plans, goals, objectives, priority programmes and
projects.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
We have in place, a succession plan to manage gaps that may
arise when individuals in key positions leave or are promoted
to ensure smooth transition and continuity at the workplace.
Our plans mostly involve a combination of training and
development programmes organised for existing staff as well as
new recruits.
Career Planning Discussions
The Group Chief Executive Officer together with the Chief of
Staff and Chief Learning Officer conduct sessions with selected
employees to discuss their individual development plans and
their career goals. Developmental interventions in terms of
experience, exposure and training needs are then planned
so that the company can provide the employee with every
opportunity to ensure that those career goals are met.
HUMAN CAPITAL DEVELOPMENT
To cultivate the right attitude towards QHSE, the QHSE teams
across all our locations globally organise a number of QHSErelated programmes including safety briefings, toolbox talks
specific to operations, fire safety briefings and demonstrations
and various campaigns communicated internally. Above all,
Management has also taken a step further to ensure employees
practise good QHSE standards by including QHSE requirements
into performance appraisals.
Our drive to maintain best practices in QHSE has earned us
commendations from many clients in various parts of the
world including Australia, Indonesia, Malaysia and the United
Arab Emirates. They have acknowledged our employees
with certificates and awards for exemplary portrayal of QHSE
standards.
Safety at Work
Team Scomi
SESB continues to place great emphasis on the importance
of maintaining best practices in Quality, Health, Safety and
Environment (“QHSE”) at all levels in our workplaces. All our
business units throughout the Group have QHSE teams whose
main focus is to communicate our QHSE policies and safeguard
our stakeholders including personnel, contractors and suppliers.
With all these initiatives slowly but surely being built brick by
brick into the structure of SESB, we wish to evolve as part of
Team Scomi into being a diverse group of individuals who are
qualified yet street-smart, disciplined yet flexible and adaptable,
goal oriented yet unconventional and team players yet selfstarters.
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Liquid Mud Plant at
Kemaman Supply Base,
Malaysia
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
STATEMENT ON CORPORATE GOVERNANCE
A Statement on Corporate
Governance communicates to
the stakeholders the philosophy,
policies, practices and culture of
an organisation in pursuit of its
objectives and goals.
Towards this purpose, the Board of Directors (“the Board”) of
Scomi Energy Services Bhd (formerly known as Scomi Marine
Bhd) (“the Company”) sets out below the various principles and
practices that were adopted with regards to the governance
framework of the Company and its subsidiaries (“the Group”). In
developing its governance framework, the Board was guided
by the principles and best practices on structure and processes
codified by the Malaysian Code on Corporate Governance 2012
(“the Code”).
Introduction
The Board remains committed to ensuring and continuously
raising the level of corporate governance throughout the Group
in the interests of the stakeholders. The goal is always to ensure
that the Group remains at the forefront of good corporate
governance and is recognised as such. As such, the Board
remains committed to its responsibility towards governing,
guiding and monitoring the direction of the Group within the
eventual objective of creating and enhancing long term value
aligned to the shareholders’ interests, while taking into account
the interests of other stakeholders.
This Statement sets out the practices and processes that the
Group has implemented with respect to each of the principles
of corporate governance in its particular circumstances and
the extent of compliance with the recommendations set out in
the Code and the Main Market Listing Requirements (“MMLR”)
of Bursa Malaysia Securities Berhad (“Bursa Malaysia”) for the
financial period ended 31 March 2013.
The Board of Directors
The Board
The success of the Board in fulfilling its oversight responsibility
depends on its size, composition and leadership qualities. The
Board consists of the Chairman and six (6) Directors, including
an Alternate Director, of whom four (4) are independent as
defined by the MMLR. The Independent Directors make up
more than 50% of the composition of the Board. Hence, the
composition of the Board fulfils the prescribed requirement
for one-third (1/3) of the composition of the Board to be
Independent Directors. The appointment of Independent
Directors is to ensure that the Board includes Directors who
can effectively exercise their best judgment objectively for
the exclusive benefit of the Company and the Group. The
composition of the Board reflects a diversity of backgrounds,
skills, experience and competencies in the areas of strategic
planning, marketing, corporate governance, risk management,
business operations and finance and accounting that enables
the Board to function effectively in leading and directing the
Group. Given the calibre and integrity of its members and
the objectivity and independent judgment brought by the
Independent Directors, the Board is of the opinion that its
current size and composition contribute to an effective Board.
The Board’s role is to govern and set the strategic direction of
the Company, whilst the Management manages the Company
and the Group in accordance with the strategic direction and
delegations of the Board. The responsibility of the Board is to
oversee the activities of the Management in carrying out these
delegated duties.
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STATEMENT ON CORPORATE GOVERNANCE
Whilst the Board has not established a Board Charter formalising
a schedule of matters requiring the Board’s attention and
deliberation at Board meetings and intends to do so in the
forthcoming year, the Company is led and controlled by an
effective Board where it assumes, amongst others, the following
principal responsibilities in discharging its stewardship role and
fiduciary and leadership functions:
•reviewing and adopting a strategic plan for the Company and
the Group, and subsequently monitoring the implementation
of the strategic plan by the Management to ensure
sustainable growth of the Company and the Group;
•overseeing the conduct of the Company and the Group’s
business;
•evaluating principal risks of the Company and the Group
and ensuring the implementation of appropriate risk
management and internal control systems to manage these
risks;
•reviewing the adequacy and the integrity of the Company
and the Group’s risk management and internal control
systems;
• succession planning of the Company;
•providing input and overseeing the development and
implementation of the investor relations and shareholder
communications policy for the Company and the Group; and
•reviewing the adequacy and the integrity of the management
information and internal controls system of the Company and
the Group.
The Board meets at least a minimum of six (6) times a year, with
special meetings convened as and when necessary. The Board
is responsible for setting the corporate goals of the Group and
business plan, which are implemented by the Management
and monitored by the Board. Timely and periodic review of the
Group’s performance and implementation of the business plan
by the Management are conducted by the Board to assess the
progress made towards achieving the overall goals of the Group.
The Board is of the opinion that its current composition and size
is adequate to meet the requirements of the Group’s business
objectives, and the Independent Non-Executive Directors bring
added objectivity to the Board in its decision making.
The responsibilities of the Chairman of the Board and the Chief
Executive Officer of the Company are clearly divided to ensure
a balance of power and authority. The Chairman is responsible
for ensuring the Board’s overall effectiveness with the Chief
Executive Officer focusing on branding/marketing, strategy
development and human resource development. The Chief
Executive Officer has the general responsibility of managing
operational and business aspects, organisational effectiveness
and implementation of directives, strategies and decisions.
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
The Board’s approving authority is delegated to the
Management through a clear and formally defined Delegated
Authority Limits (DAL), which is the primary instrument that
governs and manages the business decision-making process
in the Group. Whilst the objective of the DAL is to empower
Management, the key principle adhered to in its formulation
is to ensure that a system of internal controls, and checks and
balances are incorporated therein. The DAL is implemented
in accordance with the Group’s policies and procedures and
in compliance with the applicable statutory and regulatory
requirements. The DAL is continuously reviewed and updated to
ensure relevance to the Group’s operations.
In discharging its duties and responsibilities, the Board is
guided by the Code of Conduct of the Group which provides
the framework to ensure that the Group conducts itself in
compliance with laws and ethical values. The Board and all
employees of the Company and the Group are committed
to adhering to best practices in corporate governance and
observing the highest standards of integrity and behaviour in all
activities conducted by the Company and the Group, including
the interaction with its customers, suppliers, shareholders,
employees and business partners, and within the community
and environment in which the Company and the Group
operate. The Board ensures that compliance is monitored
through a Confirmation of Compliance declaration process
where all employees of the Group of grades 15 and above are
required to confirm their receipt and understanding of the
Code of Conduct and further required to certify their continued
compliance with the Code of Conduct on an annual basis.
The Code of Conduct is available on the Company’s Corporate
website at www.scomigroup.com.my.
The Group is also committed to openness, probity and
accountability. An important aspect of accountability and
transparency is the existence of a mechanism to enable
employees of the Group to voice their concerns in a responsible
and effective manner. It is a fundamental term of every contract
of employment that an employee will faithfully serve his
employer and not disclose confidential information about the
employer’s affairs. Nevertheless, where an individual discovers
information which he believes shows serious malpractice or
wrongdoing within the organisation, there should be internal
mechanisms to enable him to safely report, in good faith, any
suspected breaches of the law or company procedure that has
come to his notice.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
To address this concern, the Group has formalised and
established a Whistleblower Framework and Policy, to provide
an avenue for employees to raise genuine concerns internally or
report any breach or suspected breach of any law or regulation,
including the Group’s policies and procedures, to the Disclosure
Officer in a safe and confidential manner, thereby ensuring
that employees may raise concerns without fear of reprisals.
The Whistleblower Framework and Policy is subject to periodic
assessment and review to ensure that it remains relevant to the
Group’s changing business circumstances. The Whistleblower
Framework and Policy is available on the Company’s Corporate
website at www.scomigroup.com.my.
The Board is cognisant of the importance of business
sustainability and, in managing the Group’s business, take into
consideration its impact on the environment and society in
general. Balancing the environment, social and governance
aspects with the interests of various stakeholders is essential
to enhancing investor and public trust. We acknowledge
our responsibility to all the lives we touch either directly or
indirectly, and are committed to making a positive impact
in the many communities where we have a presence while
further strengthening our corporate reputation via upholding
a culture of integrity and transparency. Over the years, our
approach towards corporate social responsibility (CSR) has
become progressively more holistic, evolving from individual
acts of philanthropy into a mindset that influences our every
decision and strategy. We further ensure that this mindset is
shared among all our employees by reinforcing the principles of
integrity and corporate citizenship in our training and internal
communication, and encouraging a spirit of volunteerism across
our operations, globally. Apart from the Code of Conduct, the
Group has in place other internal policies and procedures to
address corporate sustainability. We also realise that, given
the nature of the businesses we are involved in, we can make
a positive impact on the environment. Hence, we invest
significantly in research and development to develop ‘green’
products that are efficient, cost-effective and, most importantly,
that leave the environment clean.
Every Director has full and unrestricted access to information
within the Group. Where required, the Board and its Committees
are provided with independent professional advice, the cost
of which is borne by the Company. The Board may also seek
advice from the Key Management Team or Management
on issues under their respective purview or request further
explanation, information or update on any aspect of the Group’s
operations or business concerns. The Board is supplied with
quality and timely information, which allows it to discharge its
responsibilities effectively and efficiently.
STATEMENT ON CORPORATE GOVERNANCE
The agenda for each meeting together with a set of
comprehensive Board Papers for each agenda item are delivered
to each Director in advance of meetings, to provide the Board
with sufficient time to review the matters to be deliberated for
effective discussion and decision making during the meeting,
and where necessary, to obtain supplementary information
before the meeting.
Number of Directorships in public listed companies
In compliance with Paragraph 15.06 of the Main Market Listing
Requirements of Bursa Malaysia, each of the Directors of the
Company holds not more than five (5) directorships in public
listed companies. This ensures the Directors’ commitments,
resources and time are focused for effective input to the Board.
A brief profile of the Directors is presented on pages 10 to 15 of
this Annual Report.
The Board Committees
The Board has established and delegated specific
responsibilities to three (3) Committees of the Board which
operate within clearly defined written Terms of Reference. The
Committees deliberate on issues in-depth before putting up
their recommendations to the Board for approval. The ultimate
responsibility for decision making lies with the Board.
The Board Committees are:
• Audit and Risk Management Committee (“ARMC”)
• Nomination and Remuneration Committee (“NRC”)
• Options Committee (“OC”) (Dissolved on 4 December 2012)
With the exception of the OC, none of these Board Committees
have the power to act on behalf of the Board and are required
to review and evaluate particular issues which are thereafter
tabled to the Board with their respective recommendations.
The minutes of the meetings and circular resolutions of the
respective Board Committees are presented to the Board for
information.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
STATEMENT ON CORPORATE GOVERNANCE
The Composition of the Board and its Committees are as follows:
Audit and Risk
Nomination and
Management Options Remuneration
Committee Committee* Committee
Non-Independent Non-Executive Chairman
Tan Sri Asmat bin Kamaludin(1)
– –C
Independent Non-Executive Chairman
Tan Sri Nik Mohamed bin Nik Yaacob(2)
– –C
Independent Non-Executive Directors
Dato’ Meer Sadik bin Habib Mohamed
Vice Admiral Dato’ Haron bin Dato’ (Dr) Mohd Salleh (Rtd)(3)
Mr Mok Yuen Lok
Mr Liew Willip
M
M
C
–
Non-Independent Non-Executive Director
Mr Lee Chun Fai(4)
Non-Independent Executive Director
Encik Shah Hakim @ Shahzanim bin Zain (“En. Shah”)
Madam Loong Chun Nee (Alternate Director to En. Shah)
–
C
–
M
–
M
M
M
M ––
–
–
M
–
–
Note:
CChairman
MMember
* Option Committee was dissolved on 4 December 2012
1. Resigned on 31.05.2013
2. Appointed as Director on 16.05.2013 and designated as Chairman on 31.05.2013
3. Vacation of office on 16.05.2013
4. Appointed as Director on 17.05.2013
The Nomination and Remuneration Committee
The Nomination and Remuneration Committee (“NRC”), which
comprises three (3) Non-Executive Directors, all of whom are
independent, is delegated with the combined responsibilities
for selection of new Directors to the Board and the Board
Committees, and for assessing the Directors on an ongoing
basis, and to recommend the remuneration of the NonExecutive Directors and the Chief Executive Officer.
Through an established process implemented by the
Board, the NRC annually reviews the required mix of skills,
experience, competencies and other qualities of the Board,
and effectiveness of the Board as a whole, and the core
competencies the Non-Executive Directors bring to the Board.
The NRC is also responsible for making recommendations to
the Board on the re-election of Directors in accordance with
the Company’s Articles of Association. In addition, the NRC also
evaluates the Chief Executive Officer’s performance for approval
by the Board. All assessments and evaluations carried out by the
NRC are properly documented.
•the candidates’ skills, knowledge, expertise and
experience;
• the candidates’ professionalism;
• the candidates’ integrity; and
•in the case of candidates for the position of
independent non-executive directors, their ability
to discharge such responsibilities/functions
as expected from independent non-executive
directors;
•consider, in making it recommendations, candidates
for directorships proposed by the Chief Executive
Officer (“CEO”) and within the bounds of practicability,
candidates proposed by any other senior executive or
any director or shareholder; and
•recommend to the Board, Directors to fill the seats on
the Board Committees.
(b)To conduct an annual review of the required mix of
skills and experience and other qualities, including core
competencies which the Non-Executive Directors should
bring to the Board.
The salient Terms of Reference of the NRC includes:
(a)To:
•recommend to the Board potential candidates for
directorships to be filled by the shareholders or the
Board giving consideration to –
(c)To assess, on an annual basis, the effectiveness of the
Board as a whole, the Committees of the Board and the
contributions of each individual director.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
(d)From time to time, examine the size of the Board with a view
to present recommendation to the Board on the optimum
number of directors on the Board to ensure its effectiveness.
(e)To ensure that new appointees to the Board undergo an
orientation and education programmes.
(f )To make recommendation to the Board concerning the
re-election of directors under the retirement by rotation
provisions in the Company’s Articles of Association.
(g)Annually, review and assess the training needs of individual
director and propose suitable training programmes to be
attended.
(h)To develop the CEO mission and objectives, succession for
the CEO and annual evaluation of the performance of the
CEO.
(i)To establish and recommend to the Board a fair and
transparent remuneration policy framework designed to
attract, retain and motivate individuals of the highest quality.
(j)To conduct, on an annual basis (or when the need
arises as in the case of proposing remuneration and/or
compensation for a new director), a review and thereon
provide advice and recommendations to the Board on
all aspects of reward structure accorded to the Executive
Directors.
(k)To determine and agree on the Company’s policy on the
duration of contracts and other matters with the Executive
Director.
(l)To consider any published guidelines or recommendations
regarding the remuneration of directors of listed companies
which it considers relevant or appropriate.
(m)To review and, where necessary, updating these Terms of
Reference annually or when it deems appropriate.
(n) To consider other topics as defined by the Board.
During the financial period under review, the NRC consisted
of three (3) members who are all Non-Executive, a majority of
whom are Independent. The appointment of Directors is a vital
process as it determines the composition and quality of the
Board’s capacity and competencies. The NRC is delegated the
responsibility to ensure an effective process for the selection of
new Directors to the Board. The NRC reviews and assesses the
proposed appointment of new Directors, and thereupon make
the appropriate recommendations to the Board for approval.
The NRC is additionally responsible for making
recommendations to the Board on the re-election of Directors.
The NRC is also responsible for reviewing candidates for
appointment to the Board Committees and makes appropriate
recommendations thereon to the Board for approval.
STATEMENT ON CORPORATE GOVERNANCE
It is tasked with assessing the effectiveness of the Board and
Board Committees and the performance of individual Directors
in order to ensure that the required mix of skills and experience
are present on the Board. In the course of assessing the
effectiveness of the Board and the Board Committees and the
contributions of each individual Director, the NRC also evaluates
and determines the training needs for each of the Directors in
order to enhance the skills of the Directors and aid them in the
discharge of their duties as Directors.
In accordance with the approved Terms of Reference of the NRC,
the NRC carried out the following activities during the financial
period ended 31 March 2013:
• assessed the annual performance of each individual Director;
• assessed the independence of each Independent Director;
•reviewed the skills, experience and competencies of each
individual Director and based thereupon, to assess the
training needs of each individual Director;
•assessed the effectiveness of the Board and the Committees
of the Board;
•reviewed the skills, experience and competencies of the NonExecutive Directors;
•assessed the adequacy of the size and composition of the
Board;
•reviewed the proposed remuneration for the Non-Executive
Directors of the Company;
•reviewed the retirement and re-election of the Directors
pursuant to the Articles of Association of the Company;
•evaluated and recommended to the Board the CEO’s
Balanced Scorecard for the financial period under review;
•reviewed and recommended to the Board the CEO’s Balanced
Scorecard for the new financial year; and
•reviewed and recommended to the Board the appointment
of a new Director.
The NRC collectively conducted the assessments of the
effectiveness of the Board and its Committees and the
performance of each individual Director, which considered the
qualification, contribution and performance of Directors on their
competency, character, commitment, integrity and experience
in meeting the needs of the Group. The assessment and
comments by the NRC were summarised and reported to the
Board. The Chairman of the NRC discussed the NRC’s assessment
of the performance of each individual Director in separate
one-on-one sessions. All assessments and evaluations carried
out by the NRC in the discharge of its functions were properly
documented.
The Audit and Risk Management Committee
The Board takes responsibility to give a true and fair view of
the state of affairs of the Group in the Financial Statements,
and to present a balanced and understandable assessment
on the Group’s position and prospects in all its reports to
regulatory authorities as well as the shareholders. Prompt public
announcement of the periodic financial reports and annual
audited Financial Statements, and regular press releases reflect
the Board’s commitment to provide timely and transparent
information to the public.
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STATEMENT ON CORPORATE GOVERNANCE
Additionally, further information touching on the business,
operations, and prospects and outlook of the Group are
provided in the Annual Report.
In discharging its fiduciary responsibility, the Board is assisted by
the ARMC to oversee the financial reporting processes and the
quality of the Group’s Financial Statements.
The primary responsibility of the Audit and Risk Management
Committee (“ARMC”) is to assist the Board to review the
adequacy and integrity of the Group’s financial administration
and reporting, internal control and risk management systems,
and governing the appointment of and working relationship
with the External Auditors.
The ARMC comprises three (3) members, of which a majority are
Independent Non-Executive Directors.
The Board, through the ARMC maintains an appropriate,
formal and transparent relationship with the Group’s Internal
and External Auditors. The ARMC has explicit authority to
communicate directly with the Group’s Internal and External
Auditors and vice versa the Group’s Internal and External
Auditors were also given direct access to the ARMC to highlight
any issues of concern at any time. Further, the ARMC meets the
External Auditors without the presence of Executive Directors
or the Management whenever necessary, but no less than
twice a year. Meetings with the External Auditors are held to
further discuss the Group’s audit plans, audit findings, Financial
Statements, as well as to seek their professional advice on other
related matters.
The ARMC is also empowered by the Board, amongst others,
to consider and recommend the appointment of the External
Auditor, the audit fee and any questions of resignation or
dismissal as well as to review all non-audit services to be
provided by the External Auditors to the Company with a view
to auditor independence. The ARMC works strictly with the
External Auditors in establishing procedures in assessing the
suitability and independence of External Auditors. The ARMC
has received confirmation from the External Auditors that for the
audit of the Financial Statements of the Group and Company for
the financial period ended 31 March 2013, they have maintained
their independence in accordance with their firm’s requirements
and with the provisions of the By-Laws on Professional
Independence of the Malaysian Institute of Accountants and
they have reviewed the non-audit services provided to the
Group during the financial period in accordance with the
independence requirements and are not aware of any non-audit
services that have compromised their independence as External
Auditors of the Group. The External Auditors also reaffirmed their
independence at the completion of the audit.
The Statement of Responsibility by Directors in respect of the
preparation of the annual audited Financial Statements for the
financial period ended 31 March 2013 is set out in page 62 of
this Annual Report.
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Relationship with Auditors
The Board, through the ARMC, maintains an appropriate, formal
and transparent relationship with the Company’s Internal and
External Auditors.
Meetings with the External Auditors are held to further discuss
the Group’s audit plans, audit findings, Financial Statements as
well as to seek their professional advice on other related matters.
The ARMC meets the External Auditors without the presence of
Executive Director and the Management whenever necessary
and at least twice a year.
The ARMC has undertakes an assessment of the External
Auditors and would assess them on an annual basis and report
to the Board its recommendation for the re-appointment
of the External Auditors at the Annual General Meeting.
The External Auditors assured the ARMC that they were
independent throughout the conduct of the audit engagement
in accordance with the terms of all relevant professional and
regulatory requirements.
The ARMC Report enumerating its membership, Terms of
Reference, its roles and relationship with both the internal and
External Auditors and activities during the financial period
ended 31 March 2013 is set out on pages 55 to 59 of this Annual
Report.
Timely and High Quality Disclosure
The Board recognises the importance of maintaining
transparency and accountability to its shareholders. The Board
ensures that all the shareholders of the Company are treated
equitably and the rights of all investors are protected. The Board
provides its shareholders and investors with comprehensive,
accurate and quality information on a timely and even basis to
keep them abreast of all material business matters affecting the
Group.
Timely disclosure of material information is critical towards
building and maintaining corporate creditability and investor
confidence. Recognising the importance of accurate and timely
public disclosures of corporate information in order for the
shareholders to exercise their ownership rights on an informed
basis, the Board has established a Group Communication Policy
with the following intention:
•to provide guidance and structure in disseminating corporate
information to, and in dealing with investors, analysts, media
representatives, employees and the public;
•to raise Management and employee awareness on disclosure
requirements and practices;
•to ensure compliance with legal and regulatory requirements
on disclosure; and
•to protect the brand equity of the Group by managing the
risk associated with the brand i.e. exposures to the brand that
can undermine its ability to maintain its desired differentiation
and competitive advantage.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
The Group Communication Policy outlines how the Group
identifies and distributes information in a timely manner to
all shareholders. It also reinforces the Group’s commitment to
the continuous disclosure obligations imposed by law, and
describes the procedures implemented to ensure compliance.
The Board through the Management oversees the Group’s
corporate disclosure practices and ensures implementation
and adherence to the policy. The Board has authorised the CEO
as the primary spokesperson responsible for communicating
information to all stakeholders including the public.
The Group also maintains a corporate website, www.
scomigroup.com.my to disseminate information and enhance
its investor relations. All timely disclosure, material information
and announcements made to Bursa Malaysia will be published
on the website shortly after the same is released by the news
wire service or filing with relevant authorities. Supplemental,
non-material information will be posted on the website as soon
as practicable after it is available.
Email address, name and contact number of the designated
person by the Company are listed on the website to enable
the public to forward queries to the Company. The Group
recognises the need for due diligence in maintaining, updating
and clearly identifying the accuracy, veracity and relevance of
information on the website. All timely disclosure and material
information documents will be clearly date-identified and
retained on the website as part of the public disclosure record
for a minimum period of 2 years. The Group Communications
division has ongoing responsibility for ensuring that information
in the website is up-to-date.
Besides that, the Company will also organise separate quarterly
briefings for fund managers, institutional investors and
investment analyst as well as the media, not only to promote
the dissemination of the financial results of the Company and
the Group but also to keep them updated on the progress and
development of the Group’s business and prospects.
Internal Controls and Risk Management
The Board firmly believes in maintaining a sound risk
management framework and internal control system with a view
to safeguarding shareholders’ investment and the assets of the
Group. The expanding size and geographical spread of the Group
involve exposure to a wide variety of risks, where the nature of
these risks means that events may occur, which could give rise to
unanticipated or unavoidable losses.
In establishing and reviewing the risk management and internal
control systems, the Board recognises that such systems can
provide only reasonable, but not absolute, assurance against the
occurrence of any material misstatement or loss.
The ARMC meets on a regular basis to ensure that there is clear
accountability for managing significant identified risks and
that identified risks are satisfactorily addressed on an ongoing
basis. In addition, the adequacy and effectiveness of the risk
management and internal control systems is also periodically
reviewed by the ARMC.
STATEMENT ON CORPORATE GOVERNANCE
Regular assessments on the adequacy and integrity of the
internal controls and monitoring of compliance with policies
and procedures are also carried out through internal audits.
The Group has outsourced the activities and function of the
internal audit to a professional service provider who reports
directly to the ARMC. The internal audit plan that covers internal
audit coverage and scope of work is presented for ARMC’s
and the Board’s consideration and approval annually. Internal
Audit Reports are presented to the ARMC during its quarterly
meetings which encompass the audit findings together
with recommendations thereon. Senior and functional line
Management are tasked to ensure management action plans
are carried out effectively and regular follow-up audits are
performed to monitor the continued compliance.
The Statement on Risk Management and Internal Control is set
out on pages 49 to 54 of this Annual Report.
The Options Committee
The OC of the Board was dissolved on 4 December 2012
pursuant to the termination of the Company’s Employee
Share Option Scheme (“ESOS”) on 26 June 2012, but prior
to its dissolution, it was entrusted with the responsibility of
overseeing the administration of the ESOS in accordance with
its by-laws (“By-Laws”) and the applicable laws and regulations.
The OC comprises one (1) Independent Non-Executive Director,
one (1) Non-Independent Non-Executive Director and one (1)
Non-Independent Executive Director. The OC meets as and
when required, and at least once during each financial year.
The salient Terms of Reference of the OC are as follows:
(a)To determine participation eligibility and to decide on the
number of options to be offered to eligible employees and/
or persons as stipulated in the By-Laws, throughout the
duration of the scheme.
(b)To ensure the maximum number of new options that may
be offered to eligible employees and/or persons shall not
exceed the limits set against their respective categories and
subject to the criteria for allocation as set out in the By-Laws.
(c)To evaluate and decide on the eligible employees’ and/or
persons’ periodic entitlement to exercise their options as
stipulated in the By-Laws.
(d)To make offers to eligible employees and/or persons who
are entitled to participate in the scheme after taking into
consideration the performance, seniority, number of years in
service, grading and/or potential contribution of the eligible
employees and/or persons.
(e)To recommend to the Board, when necessary, any
amendments to be made to all or any of the provisions
of the scheme, subject to the approvals of all relevant
authorities and the Company’s shareholders at a general
meeting.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
STATEMENT ON CORPORATE GOVERNANCE
Re-election of Directors
In accordance with the Company’s Articles of Association, at least one-third (1/3) of the Board is subject to retirement by rotation at
each Annual General Meeting (“AGM”). Pursuant to Article 86 of the Articles of Association, Tan Sri Asmat bin Kamaludin and Vice Admiral
Dato’ Haron bin Dato’ (Dr) Mohd Salleh (Rtd) retired from the Board and were re-elected at the 16th AGM held on 26 June 2012.
Board Meetings and Attendance
During the financial year ended 31 March 2013, twelve (12) Board meetings were held. The attendance record of each Director at the
Board meetings and the Board Committee meetings is as follows:
Tan Sri Asmat bin Kamaludin
Vice Admiral Dato’ Haron bin Dato’
(Dr) Mohd Salleh (Rtd)
Dato’ Meer Sadik bin Habib Mohamed
Mr Mok Yuen Lok
Mr Liew Willip
Encik Shah Hakim @ Shahzanim bin Zain
Madam Loong Chun Nee (Alternate Director to En. Shah)
Board
Meeting
Audit and Risk
Nomination and
Management Options Remuneration
Committee Committee* Committee
9/12
–
–
1/1
12/12
11/12
10/12
12/12
11/12
11/12*
7/7
6/7
6/7
–
–
–
1/1
–
–
1/1
1/1
–
1/1
–
1/1
–
–
–
* Attended meetings in the capacity as “an invitee”.
Directors’ Training
All members of the Board have attended the Mandatory
Accreditation Programme as required under the Main Market
Listing Requirements of Bursa Malaysia Securities Berhad.
To remain relevant in the rapidly changing and complex
modern business environment, our Directors are committed to
continuing education and lifelong learning to enable fulfilment
of their responsibilities to the Company and to sustain their
active participation in Board deliberations. The Directors’
commitment to continuing development helps to foster
intellectual honesty, which is a crucial part of good governance.
For this purpose, a dedicated training budget for Directors’
continuing education is provided each year by the Company.
In addition to the NRC’s evaluation and determination of the
training needs for each of the Directors, the Directors may also
request to attend training courses according to their needs
as a Director or member of the respective Board Committees
on which they serve. Throughout the period under review,
the Directors were also invited to attend a series of talks on
Corporate Governance organised by Bursa Malaysia together
with various professional associations and regulatory bodies.
During the financial period ended 31 March 2013, the
members of the Board attended various training programmes,
conferences, seminars and courses organised by the relevant
regulatory authorities and professional bodies on areas relevant
to the Group’s business, Directors’ roles, responsibilities,
effectiveness and/or corporate governance issues. Training
programmes, conferences, seminars and courses attended by
Directors during the period under review are as follows:
Key Areas
Topics
Corporate Governance
•Corporate Governance
Blueprint and Malaysia Code
of Corporate Governance
2012
•Making the Most of the
Chief Financial Officer Role:
Everyone’s Responsibility?
•Governance, Risk
Management and
Compliance: What Directors
Should Know
•Briefing on New Corporate
Governance Blueprint and
Regulatory Updates
•4th Annual Corporate
Governance Summit KL 2012
•Idris Jala Luncheon Talk –
Sustaining Progress in the
Face of Economic Uncertainty
•Corporate Governance (by
Panasonic)
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
STATEMENT ON CORPORATE GOVERNANCE
Key Areas
Topics
Risk Management
•Optimising IFRS / MFRS
Convergence
•Financial Institutions
Directors’ Education (FIDE)
Training
The aggregate remuneration above is broadly categorised into
the following bands:
RM0 to RM50,000
RM50,001 to RM100,000
above RM100,000
Business Management • World Economic Forum on
& Economics East Asia (WEF)
•8th World Islamic Economic
Forum (WIEF)
Board Leadership
•Mandatory Accreditation
Programme (MAP)
Oil & Gas Industry
•5th International Petroleum
Technology Conference (IPTC)
•6th International Petroleum
Technology Conference (IPTC)
Others
• PNB Half Day Conference
Directors’ Remuneration
The NRC is also responsible for reviewing the remuneration of
the Non-Executive Directors and the Chief Executive Officer/
Executive Director, whereupon recommendations are made
to the Board for approval and implementation. In this respect,
the NRC adopts a fair and transparent remuneration policy and
packages at sufficient level such that the Group can attract
and retain the individuals with skills and experience needed to
manage the Group’s business successfully.
The Non-Executive Directors’ remuneration is based on standard
agreed fees, in addition to allowances for attendance at meetings
of the Board and Board Committees. The Directors (with the
exception of Tan Sri Asmat bin Kamaludin and Mr Liew Willip)
were also entitled to share options under the Company’s ESOS.
All Directors who served during the financial period ended 31
March will be paid an annual Directors’ fee subject to and upon
the shareholders’ approval at the forthcoming 17th AGM to be
held in September 2013. The aggregate remuneration paid or
payable to the Directors of the Company who served during the
financial period, and the bands, are as follows:
Executive Non-Executive
Directors
Directors
Total
(RM’000)
(RM’000) (RM’000)
Salaries and bonuses 497.115
Fees
–
Allowances
–
Defined contribution
plan
–
Estimated value of
benefit-in-kind
84.523
–
355
79
Total
4341,015.638
581.638
Executive Non-Executive
Directors
Directors
497.115
355
79
–
–
–
84.523
–
–
1
–
5
–
Total
–
5
1
Annual assessment of independence of Independent NonExecutive Directors (“INEDs”)
The Independent Directors make up more than 50% of the
composition of the Board. The appointment of Independent
Directors ensures that the Board includes Directors who can
effectively exercise their independent and objective judgment
to the Board deliberations and to mitigate risks arising from
conflict of interest or undue influence from interested parties.
The Company does not have term limits for both Executive
Directors and Independent Non-Executive Directors as the
Board believes that continued contribution by Directors
provides benefits to the Board and the Group as a whole.
All INEDs fulfill the criteria of “independence” as prescribed
under Chapter 1 of the MMLR. In addition, the NRC has
assessed the independence of each Independent Director and
recommended that they continue to act as Independent NonExecutive Directors of the Company on the following basis:
(i)they have no interest or ties in the company that could
adversely affect independent and objective judgement and
place the interest of the company above all other interests;
(ii)
they have met the criteria for independence set out in
Chapter 1 of the MMLR; and
(iii)
they continue to be able to exercise independent
judgement and to act in the best interests of the Company.
The NRC will review and recommend to the Board, a policy on
the term of tenure of Directors of the Company and the Group,
excluding the tenure of the Chairman of the Company and
the Group. The independence of Directors cannot be assessed
only based on the quantitative aspect as stated in the MMLR,
the Board viewed that the true independence emanates
from intellectual honesty, manifested through a genuine
commitment to serve the best interests of the Company.
Mr Mok Yuen Lok was appointed to the Board as an INED on 29
March 2002, and has therefore served in the Board for more than
9 years.
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STATEMENT ON CORPORATE GOVERNANCE
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Following an assessment conducted by the Board through
the Nomination Committee, the Board viewed that Mr Mok
Yuen Lok continues to remains objective and independent
in expressing his views and in participating in deliberations
and decision-making of the Board and the Board committees,
notably in fulfilling his responsibilities as the Chairman of Audit
& Risks Management Committee. His professional knowledge
and experience in the audit and accounting sectors enable him
to provide the Board with a diverse set of experience, expertise,
skills and competencies. The length of his service on the Board
does not in any way interfere with his independent judgment
and ability to act in the best interests of the Group. Hence,
based on the recommendation by the Nomination Committee,
the Board recommended that Mr Mok Yuen Lok continue to act
as an INED of the Company.
provided in the notice of the AGM and any general meetings
of the shareholders or the related circular to shareholders in
order to assist the shareholders’ understanding of matters and
the implications of their decision in voting for or against a
resolution.
Joint Company Secretaries
The Board, the Management Team, both Internal and External
Auditors of the Company and if required, the Advisers,
are present at the AGM and any general meetings of the
shareholders to answer questions or concerns raised by
shareholders. Before the commencement of the AGM and
any general meetings of the shareholders, the Directors and
the Management Team will take the opportunity to engage
directly with the shareholders to account for their stewardship
of the Company. Direct engagement with shareholders
provides a better appreciation of the Company’s objectives,
quality of its management and challenges, while also making
the Company aware of the expectations and concerns of its
shareholders. During the AGM and any general meetings of
the shareholders, there is always a presentation by the CEO
or the Chief Investment and Performance Officer on the
operating and financial performance of the Company and the
Group, the prospects of the Group and the subject matters
tabled for decision. Besides that, the Chairman of the AGM
and any general meetings of the shareholders will invite the
shareholders to raise questions pertaining to the Company’s
financial performance and other items for adoption at the
meeting, before putting a resolution to vote. The Chairman of
the AGM and any general meetings of the shareholders will
also share with the shareholders the Company’s responses to
questions submitted in advance of the AGM and any general
meetings of the shareholders by the Minority Shareholder
Watchdog Group.
The Joint Company Secretaries are full time employees of the
Company. They are qualified company secretaries who are
responsible for advising the Board on governance matters
together with the Chief Legal & Governance Officer. The
Board has access to the advice and services of the Company
Secretaries who are responsible for ensuring that the
established procedures and relevant statutes and regulations
are complied with.
Relationship with Shareholders
The Board takes responsibility for ensuring that relevant
information is made available to the shareholders in a timely
manner to keep them abreast of all material business matters
affecting the Group.
Shareholders are encouraged to attend the AGM and any
general meetings of the shareholders where it provides the
opportunity for shareholders to raise questions or concerns with
regard to the Group as a whole and it also serves as a platform
for shareholders to have direct access to the Board.
The Company at all times dispatched its notices of the AGM
and any general meetings of the shareholders, Annual Report
and related circulars to shareholders at least twenty one
(21) days before the AGM and any general meetings of the
shareholders, unless otherwise required by law, in order to
provide sufficient time to shareholders to understand and
evaluate the matters involved as well as to make necessary
arrangements to attend, participate and vote either in person,
by corporate representative, by proxy or by attorney, to exercise
their ownership rights on an informed basis during the AGM
and any general meetings of the shareholders. Where special
business items are to be transacted, a full explanation is
All the resolutions set out in the notices of the AGM and any
general meetings of the shareholders are put to vote by a
show of hands, unless otherwise required by shareholders or
by law. The Board encourages and facilitates poll voting where
the Chairman of the AGM and any general meeting of the
shareholders will inform shareholders of their right to demand
a poll vote at the commencement of the AGM. The outcome
of the AGM and any general meetings of the shareholders are
announced to Bursa Malaysia on the same day the meeting
is held.
This Statement is made in accordance with the resolution of the
Board dated 31 July 2013.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
The duty of the Board of Directors,
amongst others, is to maintain a sound
risk management and internal control
system to safeguard shareholders’
investments and the assets of Scomi
Energy Services Bhd (formerly known
as Scomi Marine Bhd) Group.
Introduction
Risk Management Framework
In compliance with Paragraph 15.26(b) and Practice Note 9 of
the Main Market Listing Requirements (“Listing Requirements”)
of Bursa Malaysia Securities Berhad (“Bursa Malaysia”), and
Statement on Risk Management and Internal Control: Guidance
for Directors of Listed Issuers, the Board is pleased to present
the Statement on Risk Management and Internal Control which
outlines the nature and scope of risk management and internal
control of the Group during the financial period under review
and up to the date of approval of this statement for inclusion in
the Annual Report.
A company’s business strategies and activities involve risks. With
the increasingly global and dynamic business environment,
proactive management of the overall business risks is a
prerequisite in ensuring that the Group achieves its strategic
objectives. Best practices require the company to have welldefined processes for the management of these risks.
Responsibility of the Board
The Board, in ensuring its responsibility to ensure the existence
of a sound risk management and internal control system within
the Group, continuously reviews and evaluates the adequacy
and integrity of its system of internal control.
Notwithstanding the above, the Board recognises that such
system has inherent limitations as it is designed to manage
and control, rather than eliminate the risks of failure towards
achieving the Group’s business objectives. Therefore, such
system of internal control can provide only reasonable, but
not absolute, assurance against the occurrence of any material
misstatement and loss.
In addition to the prevailing laws, regulations and technical
and societal standards, the Group’s vision states that it has a
commitment to “provide value added service and total support
to its Business Operating Units, Stakeholders and Partners”. This
value coupled with individual leadership and accountability
empowers all of employees of the Group to be responsible and
promote its Risk Management policy.
In line with these, the Company is committed in ensuring
that it plans and executes its activities to ensure that the risks
inherent in its business are identified and effectively managed.
Risk management activities are to be regarded as an integral
part of the Group’s philosophy and business practices, and not
in isolation. The management of risks is aimed at achieving the
appropriate balance between realising opportunities for gains
while avoiding or minimising losses to the Group.
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STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
The Group’s Enterprise Risk Management Framework (“Framework”) serves to inform and provide guidance to Directors, senior
management, functional line management and staff in managing the risks of the Group. Towards this end, the Framework sets out:
•the fundamentals and principles of risk and risk management that is to be applied in all situations and throughout all facets of the
Group;
• the process for identifying, assessing, responding, monitoring and reporting of risks and controls;
• the roles and responsibilities of each level of management in the Group; and
• the mechanisms, tools and techniques for managing risks in the Group.
The elements of the risk management process are summarised in the diagram below:
Policy
Identification
Objective
Area
rStrategic
Operational
Reporting
Compliance
Reporting
Assessment
Risk Management
Process
Monitoring
Corporate
Business Unit
Market Unit
Product
Project
Treatment
Risk Reporting Structure
Infrastructure
The Group’s Risk Management Policy is premised on the following key principles:
•effective risk management contributes to corporate governance and is integral to the achievement of the Company’s overall
business objectives;
• every employee of the Group have the responsibility to manage risks within their areas of responsibility;
•risk management should be embedded into the day-to-day management processes and is explicitly applied in decision-making and
strategic planning;
•the risk management processes applied should aim to take advantage of opportunities, manage uncertainties and avoid or
minimise threats;
•regular reporting and monitoring of activities emphasise the accountability for managing risks whereby they are assigned to the
relevant risk owner(s) and the execution of the action plan and progress is reflected in the risk owner’s Balanced Scorecard; and
•each Business Operating Unit has its own Ad-hoc Risk Management Working Committee and Risk Management Working Committee
to review the effectiveness of its risk management practices and procedures. The respective Enterprise Risk Management/Assurance
Department will then update such reviews in its quarterly risk report to the ARMC.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
Risk Management Process
The objective of the risk management process is to ensure that risks are identified, analysed and responded to. The process includes
the systematic application of management policies, procedures and practices to the activities of risk identification, assessment,
treatment, monitoring and reporting as depicted by the diagram below:
Identification
Reporting
Assessment
Risk Management
Process
Monitoring
Treatment
The Enterprise Risk Management process comprises the following steps:
• IDENTIFY risks
• ASSESS the potential impact and likelihood of the risk occurring
• TREAT risk by assigning relevant risk owner to consider existing controls
and selecting, prioritising and implementing appropriate actions in a given
timeline
•MONITOR the internal and external environment for potential changes to
risks and ensure that risk responses continue to operate effectively
• REPORT on risks and the status of risk responses adopted
The risk management process is an ongoing process and is
applied at the beginning of any major new project, venture or
change in operational environment. A quarterly review of risks is
undertaken to ensure that the risk profile is kept up to date. The
risk management process applied to all levels of activity in the
Group, with the objective of establishing accountability for both
risks and mitigation at the source of the risk. The Group will only
accept a commercial level of risk that will provide reasonable
assurance on the long term profitability and survival of the
Group. New risks are:
•immediately reported to the Head of Business Operating Unit,
who shall make a decision on the appropriate risk treatment
strategy;
•updated into the Business Operating Unit’s risk register or
database;
•reported to the respective Business Operating Unit’s
Enterprise Risk Management/ Assurance Department and
subsequently Risk Management Working Committee, for
monitoring of the risk;
• monitored through the risk management process; and
•communicated to the ARMC and, if necessary, reported to the
Board.
Risk Reporting Structure
Every individual in the Group plays an integral role in the
effective management of its risks. The risk management
reporting structure adopted by the Group, which ensures the
assignment of responsibility for risk management and facilitate
the process for assessing and communicating risk issues from
transactional levels to the Board is summarised as follows:
Board of Directors
Audit & Risk
Management
Committee
Ad-hoc Risk Management
Working Committee
Internal Audit
Risk Management
Working Committee
Enterprise Assurance
Department
Business Units
Corporate Functions
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STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
The Framework implemented within the Group continues to
define, highlight, report and manage the key business and
operational risks faced by all Business Operating Units within
the Group. Monitoring of the management action plans during
the review period was performed by the Management and/
or the outsourced internal audit service provider (“the Internal
Auditors”). The Management reports to the ARMC on a quarterly
basis on areas of high risks faced by the Group and on the
adequacy and effectiveness of the risk management and
internal control system adopted throughout the Group.
Further information on the Group’s risk management activities
is highlighted in the ARMC Report on pages 55 to 59 of this
Annual Report.
Internal Control System
Internal control is a process effected jointly by the Board and
the Management, with the Management assuming the role to
implement Board policies on risk and control.
The Group’s system of internal control is designed, operated and
monitored in accordance with the Group’s business objectives,
internal organization and the external environment in which it
operates in.
Internal Organisation
The Group has a well defined organisational structure and
methods of assigning authority and responsibility to its specific
requirements. It also ensures check and balances through
segregation of duties.
Clear reporting lines and authority limits govern the approval
process, which is supported by a written Delegated Authority
Limits and other policies, processes and procedures.
Clear Objectives
New corporate goals for each financial year are developed and
presented to the Board for approval.
The execution strategy towards achieving the corporate goals
is set in the corporate and individual Balanced Scorecard that
concentrates on four dimensions such as finance, markets,
internal process and learning and development, resulting in a
strategy map that provides a framework for the measurement of
performance.
An annual business plan and budget is developed, presented
and approved by the Board before implementation.
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
The performance of the Group that is compared against the
budget is reviewed periodically. Where there are significant
variances, appropriate corrective actions are taken. The result
of such performance reviews is reported to the Audit and Risk
Management Committee (“ARMC”) and the Board on a quarterly
basis.
Delegated Authority Limits
The Board delegates appropriate authority to the Management
via a clearly defined Delegated Authority Limits (“DAL”) to
govern and manage the business decision making process
in the Group. Whilst the objective of the DAL is to empower
the Management, the principle adhered to in its formulation
is to ensure that a system of internal control and checks and
balances are incorporated therein.
The DAL is implemented in accordance with the Group’s
policies and procedures, and in compliance with the applicable
statutory and regulatory requirements. The DAL is regularly
reviewed and updated to ensure its relevance to the Group’s
business and operations.
Policies and Procedures
Where relevant, internal policies and procedures such as
standard operating procedures and people policy are formalised
in writing to ensure compliance with the internal control system
and the applicable statutory and regulatory requirements.
Where internal policies and procedures are documented, regular
reviews are performed to ensure that they remain current and
relevant.
The Group has successfully implemented SAP throughout
most of its business units. The implementation of SAP marks
a significant milestone in the roll-out of Project BEST which is
a global initiative to establish best practice processes across
key functions promoting greater visibility, transparency and
efficiency across the Group.
Code of Conduct
The Board and employees of the Group are committed to
adhering to the best practice in corporate governance and
observing the highest standards of integrity and behaviour in
all activities conducted by the Group, including the interaction
with its customers, suppliers, shareholders, employees and
business partners, and within the community and environment
in which the Group operates.
The Board and employees of the Group play an important role
in establishing, maintaining and enhancing the reputation,
image and brand of the Group and ensuring the observance to
and compliance with the standards of integrity and behaviour
that the Group is committed to.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
All employees of the Group of grades 15 and above are
required to confirm their receipt and understanding of the
Code of Conduct and further required to certify their continued
compliance with the Code of Conduct on an annual basis.
The Group is also committed to ensuring that its supply chain
adheres to the following:
• that it operates within safe working conditions;
• that its workers are treated with dignity and respect; and
•that environmentally responsible manufacturing processes
are implemented and adhered to.
In addition to these commitments, the Group requires that its
suppliers (“Suppliers”) adhere, in all of their activities, to the laws,
rules and regulations of the countries in which they operate in.
In furtherance of these commitments and towards the
advancement of social and environmental responsibility, the
Group requires that suppliers adhere to the Suppliers Code
of Conduct. The Suppliers Code of Conduct shall be read
together with the contract/agreement between the Group
and the Supplier. The Group expects its suppliers to abide by
the Suppliers Code of Conduct when conducting business
with or for the Group. It is the responsibility of every supplier to
comply with the principles of the Suppliers Code of Conduct, as
amended from time to time.
The breach of the Suppliers Code of Conduct may lead to formal
warnings, disclosure of nature of breach to all employees of the
Group, removal from preferred vendor list and/or immediate
termination as the Group’s supplier subject to terms of contract/
agreement, depending on the severity of the situation.
Quality, Safety and Environmental Policy
The Group places the highest priority and is committed
to provide all our customers with services that meet their
expectations in relation to Quality, Safety and Environmental
Protection.
The high standard of work is achieved by operating an
integrated Quality, Safety and Environmental Management
System (QHSE) that meets the requirements of the ISO
9001:2008 (Quality) Standards, the ISM Code for Safe Operation
of Ships and Pollution Prevention, OHSAS 18001:2007 and the
ISO 14001:2004 Environmental Standards.
The ISPS (International Ship & Port Facility Security) Code
is implemented for vessel operations and certified by ISSC
(International Ship Security).
STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
Information and Communication
Comprehensive Board papers, which include financial and nonfinancial information covering risk, product and service quality,
market share and other key operational issues are provided to
the Board for monitoring as well as to facilitate decision making.
A structured internal communication system is implemented
to keep employees in all locations informed of relevant
developments on matters involving the Group.
Whistleblower Policy & Framework
The Group has in place a Whistleblower Policy & Framework,
which provides an avenue for employees to raise concerns
internally or report any breach or suspected breach of
regulations and other improprieties. Proper arrangements
have been put in place for fair and independent investigation
on such matters, if required. The effectiveness of this policy
is monitored and reviewed regularly by the Whistleblower
Steering Committee.
Internal Audit
As part of its broader effort to ensure its system of checks and
balances are operating as designed, the outsourced internal
audit functions of the Group (“the Internal Auditors”), which are
independent of Management and operations, and with no cross
auditing within the Group, provides assurance on the adequacy
and integrity of the system of internal control of the Group.
Regular management review of the key business areas is
conducted pursuant to an internal audit plan, for which the
coverage and scope are reviewed by the ARMC and approved
by the Board annually before its implementation. Reports
on management reviews, incorporating the management’s
responses and actions plans, are tabled to the ARMC for review,
with status update on the action plans on quarterly basis.
Review or appraisal of the performance of the Internal Auditors
is also done by the ARMC annually.
In addition to the internal audit functions, the ARMC also
receives the ARMC Report and Management Letter from the
external auditors that primarily focus on financial controls.
Where there are incidents of non-compliances, appropriate
corrective actions have been taken and relevant procedures
have been introduced.
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STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
Adequacy and Effectiveness of Risk Management and
Internal Control
The Chief Executive Officer and the Chief Financial Officer
have provided the Board with assurance that the Group’s
risk management and internal control system is operating
adequately and effectively, in all material aspects.
Taking into consideration the assurance from the management
team and the external auditors, the Board is of the view that the
Group’s risk management and internal control system in place
for the financial period under review is adequate to safeguard
shareholders’ investment and the Group’s assets.
Review of this Statement
As required by Paragraph 15.23 of the Listing Requirements,
the External Auditors have reviewed this Statement on Risk
Management and Internal Control. Their review was performed
in accordance with Recommended Practice Guide (“RPG”) 5
issued by the Malaysian Institute of Accountants.
Based on their review, the External Auditors have reported to
the Board that nothing has come to their attention that causes
them to believe that this Statement is inconsistent with their
understanding of the process the Board has adopted in the
review of the adequacy and integrity of internal control of the
Group. RPG 5 does not require the External Auditors to and
they did not consider whether the Statement covers all risks
and controls, or to form an opinion on the effectiveness of the
Group’s risk and control procedures.
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Additionally, the internal audit function has also reviewed
this statement and reported to the ARMC that, save for its
presentations to the ARMC on the individual lapses in internal
controls during the course of its internal audit assignment
for the year, to the best of its knowledge the function has
not identify any other circumstances which suggest any
fundamental deficiencies in the system of internal control of the
Group.
This Statement is made in accordance with the resolution of the
Board dated 31 July 2013.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
AUDIT AND RISK MANAGEMENT COMMITTEE REPORT
Pursuant to Paragraph 15.15 of the
Main Market Listing Requirements of
Bursa Malaysia Securities Berhad, the
Board of Directors (“the Board”) of
Scomi Energy Services Bhd (formerly
known as Scomi Marine Bhd) (“the
Company”) and its subsidiaries
(“the Group”) is pleased to present
the Report of the Audit and Risk
Management Committee for the
financial period ended 31 March 2013.
Objective
The objective of the Audit and Risk Management Committee
(“ARMC”) is to assist the Board to review the adequacy and
integrity of the Group’s financial administration and reporting,
internal control and risk management systems, including the
management information systems and systems for compliance
with the applicable laws, regulations, rules, directives and
guidelines.
Terms of Reference of the ARMC
(c)A majority of the members of the ARMC must be financially
literate with sufficient financial experience and ability and
at least one member of the ARMC must be an Accountant
or such other qualification as defined by the Main Market
Listing Requirements of Bursa Malaysia Securities Berhad
(“Listing Requirements”).
(d)The ARMC shall have a mixture of expertise and experience,
including an understanding of the industry(ies) in which the
Group operates.
(e)Members of the ARMC shall elect a Chairman from among
themselves who is an Independent Non-Executive Director.
Balance and Composition
(a)The members of the ARMC are to be appointed by the
Board and shall comprise at least three (3) members, all of
whom must be Non-Executive Directors with a majority of
them being Independent Directors.
(f )Members of the ARMC may relinquish their membership
in the ARMC with prior written notice to the Company
Secretary.
(b)None of the members of the ARMC shall be an Alternate
Director.
(g)In the event of any vacancies arising in the ARMC resulting
in the number of members of the ARMC falling below three
(3), the vacancy should be filled within three (3) months of
it arising.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
AUDIT AND RISK MANAGEMENT COMMITTEE REPORT
Powers of the ARMC
(a)In carrying out its duties and responsibilities, the ARMC shall,
at the expense of the Company:
(c)To monitor regular rotation of audit partners by the
independent auditors.
•have the authority to investigate any matter within its
Terms of Reference;
(d)To discuss with the external auditors before the audit
commences, the nature and scope of the audit, and ensure
co-ordination where more than one audit firm is involved;
•have full, free and unrestricted access to the Group’s
records, properties, personnel and other resources;
•have direct communication channels with the external
auditors and person(s) carrying out the internal audit
function;
•be able to obtain independent professional or other
advice in furtherance of its duties; and
•be able to convene meetings with the external auditors,
the internal auditors or both, excluding the attendance
of the other Directors and employees, whenever
deemed necessary.
(b)The ARMC is not authorised to implement its
recommendations on behalf of the Board but shall report its
recommendation back to the Board for its consideration and
implementation.
(c)Where the ARMC is of the view that a matter reported
by it to the Board of Directors has not been satisfactorily
resolved resulting in a breach of the Listing Requirements
of Bursa Malaysia Securities Berhad, the ARMC is authorised
to promptly report such matters to Bursa Malaysia Securities
Berhad.
Duties and Responsibilities of the ARMC
(a)To consider and recommend to the Board of Directors the
appointment of the external auditors, the audit fee and any
questions of resignation or dismissal.
(b)Pre-approve all non-audit services to be provided by the
independent auditors to the Company in accordance with
the Committee’s policies and procedures, and regularly
review:
•the adequacy of the ARMC’s policies and procedures
for pre-approving the use of the independent auditors
for non-audit services with a view to the auditors’
independence;
•the non-audit services pre-approved in accordance with
the ARMC’s policies and procedures; and
•fees paid to the independent auditors for pre-approved
non-audit services.
(e)To act as an intermediary between the management or
other employees, and the external auditors;
(f )To review the quarterly results and year-end financial
statements, focusing particularly on:
• any changes in accounting policies and practices;
• significant adjustments arising from the audit;
• litigation that could affect results materially;
• the going concern assumption; and
•compliance with accounting standards and other legal
requirements.
(g)To discuss problems and reservations arising from the
interim and final audits, and any matter the auditors may
wish to discuss (in the absence of management where
necessary).
(h)To review the external auditors’ management letter and
management response;
(i)In relation to the internal audit function:
•review the adequacy of the scope, functions,
competency and resources of the internal audit
function, and that it has the necessary authority to carry
out its work;
•review the internal audit plan and results of the
internal audit process and where necessary ensure that
appropriate action is taken on the recommendation of
the internal audit function;
•review any appraisal or assessment of the performance
of members of internal audit function; and
•
review the independence of the internal audit function.
(j)To consider and report back to the Board of Directors any
related party transactions and conflict of interests situation
that may arise within the Company or Group including any
course of conduct that raises questions of management
integrity.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
(k)To consider the major findings of internal investigations and
management responses.
(l) To consider other topics as defined by the Board.
(m)To review and verify that the allocation of options pursuant
to the Company’s employees’ share options scheme (“ESOS”)
complies with the criteria disclosed to the employees.
(n)To establish procedures for the receipt, retention and
treatment of complaints on accounting, internal accounting
controls or audit matters, as well as for confidential,
anonymous submission by Company employees of
concerns regarding questionable transactions and behavior.
(o)To review and consider the appropriateness and adequacy
of internal processes for risk oversight and management.
In particular, the ARMC shall:
•consider whether the Group has effective management
systems in place to identify, assess, monitor and manage
its key risk areas;
•review, approve and ensure adherence to the Group’s
risk management policy and strategies;
•establish the roles and respective accountabilities of the
Board, the Board Committees and the management in
managing risks;
•provide for regular review of the effectiveness of the
Group’s implementation of its risk management system;
•receive regular reports on the risk profile of the Group,
describing material risks (both financial and nonfinancial) faced by the Group and action plans taken by
the management to mitigate the risks; and
•review the appropriateness of management response to
key risk areas.
(p)In relation to major business investment proposals and/or
feasibility studies:
•to review and evaluate the viability of the proposal/
feasibility study prepared by the project sponsor(s); that
all risks have been considered and are within the Board’s
risk appetite; and that action plans or strategies to
mitigate identified risks are adequate;
•to conduct meetings with the project sponsor(s) and
Chief Executive Officer (“CEO”),if necessary, to discuss
risk matters related to the proposal; and
•to make recommendation to the Board on the
appropriate course of action to take.
AUDIT AND RISK MANAGEMENT COMMITTEE REPORT
(q)To oversee the Group’s internal compliance and control
systems established by the management, including
reviewing the effectiveness of these systems and approving
management’s programmes and policies to ensure
effectiveness.
Meetings and Minutes
(a)The ARMC shall meet at least four (4) times during a financial
year, but additional meetings may be called at any time at
the discretion of the Chairman. In order to form a quorum,
the majority of members present must be independent
directors.
(b)The CEO, the Head of the Group Internal Audit Department
and a representative of the external auditors shall normally
attend meetings. Other persons may attend meetings only
upon the invitation of the ARMC. However, at least twice a
year the ARMC shall meet with the external auditors without
executive board members or management present.
(c)The Company Secretary shall act as secretary of the ARMC
and shall be responsible, with the concurrence of the
Chairman of the ARMC, for drawing up and circulating the
agenda and notice to all ARMC members at least seven (7)
days prior to each meeting. If there is a unanimous consent
by the members present at the meeting, a short notice shall
suffice.
(d)The secretary of the ARMC shall record all proceedings and
minutes are to be prepared and circulated to the ARMC
members and the Board of Directors. In addition, the
Chairman of the ARMC will report significant matters and
resolutions, at each Board of Directors meeting.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
AUDIT AND RISK MANAGEMENT COMMITTEE REPORT
Members and Meeting Attendance
The members of the ARMC during the financial period ended 31 March 2013 and their attendance at meetings are as follows:
Name
ARMC
Designation
Attendance
(attended/held)
Mok Yuen Lok
Dato’ Meer Sadik bin Habib Mohamed
Vice Admiral Dato’ Haron bin Dato’
(Dr) Mohd Salleh (Rtd)
Chairman
Member
Independent Non-Executive Director
Independent Non-Executive Director
6/7
6/7
Member
Independent Non-Executive Director
7/7
The composition of the ARMC complies with paragraph 15.09 of the Main Market Listing Requirements of Bursa Malaysia Securities
Berhad.
During the financial period ended 31 March 2013, a total of seven (7) meetings were held on 21 February 2012, 16 April 2012, 21 May
2012, 17 July 2012, 24 August 2012, 19 November 2012 and 26 February 2013 respectively. A quorum, established by the presence of
the majority of members who are independent directors, was met at all times.
Summary of Activities for the Year
The following activities were carried out by the ARMC in the
financial period ended 31 March 2013 in the performance of
its duties and responsibilities as set out in the ARMC’s Terms of
Reference:
(a)reviewed and recommended to the Board the reappointment of the external auditors and the audit fee;
(b)reviewed and discussed with the external auditors the
nature and scope of their audit and ensure that the audit is
comprehensive;
(c)conducted two (2) meetings with the external auditors
without the presence of the executive board members and
management;
(d)reviewed the external auditor’s report to the ARMC, the
management letter and management responses thereto;
(e)considered the major findings by the external auditors and
management’s responses thereto;
(f )reviewed the quarterly results and annual financial reports
of the Group prior to submission to the Board for their
consideration and approval;
(g)reviewed the annual internal audit plan and scope of work
for the year for the Group and the Company, prepared by
the outsourced internal audit function;
(h)reviewed the internal audit reports, which incorporated
audit findings, recommendations and management
responses of the Group and the Company, provided by the
outsourced internal audit function;
(i)reviewed and verified the related party transactions and
provide recommendations on the same to the Board;
(j)reviewed the transactions involving related parties and/
or conflicts of interests entered into by the Group on a
quarterly basis;
(k)reviewed and verified that the allocation of options during
the period of review pursuant to the Company’s ESOS
scheme is in compliance with the criteria as disclosed to the
employees;
(l)reviewed the Group’s system and practices for the
identification and management of risks;
(m)reviewed and evaluated risk considerations in relation to
major business proposals and adequacy of action plans to
mitigate risks identified;
(n)reviewed the Statement on Corporate Governance,
Statement on Risk Management and Internal Control and
ARMC Report to be published in the Company’s Annual
Report; and
(o)tabled the minutes of the ARMC meetings to the Board on a
quarterly basis.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Internal Audit Function
The Group’s internal audit function is outsourced to two external
professional service firms to cover the Marine Services Division
and Oilfield Services Division. Both of the professional services
firms are independent of management and operations (“the
Outsourced Internal Audit Functions”). The Outsourced Internal
Audit Functions undertake independent and planned reviews
of the system of internal control so as to provide the necessary
feedback on the adequacy and integrity of the system. Through
the internal audit functions, the Company undertakes regular
and systematic reviews of the risk management and internal
control system so as to provide reasonable assurance that such
system continues to operate satisfactorily and effectively in the
Group.
The Outsourced Internal Audit Functions report directly to
the ARMC, which reviews the annual internal audit plans and
scope of work for the Group and the Company as well as the
performance of the outsourced internal audit functions.
During the period under review, the Internal Auditors
conducted various internal audit engagements in accordance
with the risk-based internal audit plans that were reviewed and
approved by the ARMC. Details of the internal audit activities
carried out by the Internal Auditors are as follows:
1.prepared and presented a risk-based audit plan, audit
approach, scope of work and resource requirements to the
ARMC and the Board for deliberation and approval;
2.evaluated and appraised the appropriateness, adequacy
and application of accounting, financial and other controls
within their areas of review, and promoted effective controls
to be implemented within the Group and the Company
after considering its cost of implementation;
3.carried out investigations and special reviews requested by
management;
4.ascertained the level of operational and business
compliance with established policies, procedures and
statutory requirements;
5.ascertained the extent to which the Group’s and the
Company’s assets were accounted for, performed
verification on their existence and provided
recommendations for safeguarding such assets against
losses;
AUDIT AND RISK MANAGEMENT COMMITTEE REPORT
6.appraised the reliability and usefulness of information
developed within the Group and the Company for
management and decision making;
7.identified and recommended opportunities for
improvements to the existing system of internal control,
operations and processes in the Group and the Company;
and
8.reviewed the annual Statement on Risk Management and
Internal Control and ARMC report to be published in the
Annual Report.
All internal audit activities for financial period ended 31 March
2013 were conducted by the Outsourced Internal Audit
Functions. The total costs incurred by the Group for the internal
audit function for the period from 1 January 2012 to 31 March
2013 was USD60,208.00 (equivalent to RM186,446) for the
Marine Services Division and RM495,955 for the Oilfield Services
Division.
This Statement is made in accordance with the resolution of the
Board dated 31 July 2013.
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ADDITIONAL INFORMATION
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Additional
Information
1. Material Contracts of the Company and its Subsidiaries, involving Directors’ and Major Shareholders’ Interests
There are no material contracts involving Directors’ and Major Shareholders’ interests either still subsisting at the end of the previous
financial period or entered into since the end of the said financial period.
2. Status of Utilisation of Proceeds Raised from Corporate Exercises
(a)As disclosed in Note 39(f ) to the Audited Financial Statements of this Annual Report, Scomi Marine Services Pte Ltd (“SMS”), a
wholly-owned subsidiary of the Company, completed the disposal of its entire equity interest in the following:
(i) CH Logistics Pte Ltd and its wholly-owned subsidiary, SEA Master Pte Ltd;
(ii) CH Ship Management Pte Ltd; and
(iii)Grundtvig Marine Pte Ltd and its 95%-owned subsidiary, PT Batuah Abadi Lines, to PT. Rig Tenders Indonesia TBK (“PTRT”),
a 80.54%-owned subsidiary of SMS for a total consideration of USD57.00 million (equivalent to approximately RM176.52
million), of which USD30.00 million (equivalent to approximately RM90.40 million) was settled in cash and the remaining
USD27.00 million (equivalent to approximately RM86.12 million) was settled by way of an issuance of vendor notes on
12 April 2012. The cash proceeds were utilized towards the capital repayment by the Company. The proceeds from the
vendor notes will be utilized as working capital for the Group.
3. Non-Audit Fees
The amount of non-audit fees incurred during the financial period ended 31 March 2013 amounted to RM 1,692,000.
4. Share Buy-back
The following are the share buy-back transactions during the financial period under review. The purchase price of shares is the
average price for all shares purchased in the month and the total purchase price includes incidental costs. As disclosed in Notes
29 of the Audited Financial Statements of this Annual Report, all shares bought back previously have been maintained as treasury
shares and there has been no resale of the Company’s treasury shares nor have there been any shares cancelled during the financial
period under review.
Average
No. of
Lowest Purchase
Total
shares Purchase
Highest
Price of Purchase
Bought Back
Price RM
Price RM Shares RM
Price RM
Balance as at 1 January 2012
February 2012
March 2013
Balance as at 31 July 2013
143,000
1,000
1,000
145,000
–
–
–
–
–
–
–
–
0.332
47,457
0.451
451
0.436
436
0.33348,344
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
ADDITIONAL INFORMATION
5. Employees’ Share Option Scheme (“ESOS”)
The ESOS which was implemented on 18 October 2005 is the Company’s only employees’ share option scheme currently in
existence during the financial period ended 31 March 2013. There was no ESOS option granted during the financial period ended
31 March 2013. Please refer to the Directors’ Report, Note 28(b) and Note 39(d) to the Audited Financial Statements of this Annual
Report for the details of the ESOS.
The ESOS had been terminated on 26 June 2012.
6. Directors’ Conflict of Interest
Save as disclosed below, the Directors of the Company do not have any existing conflicts of interest with the Company:
Director of the Company Nature of existing conflict of interest
Shah Hakim @ Shahzanim
bin Zain (“En Shah Hakim”)
En Shah Hakim is the Chief Executive Officer/
Non-Independent Executive Director of the
Company; and a substantial shareholder
of Suria Business Solutions Sdn Bhd (“Suria”).
Transactions
Leasing agreement with Orix Rentec
(Malaysia) Sdn Bhd for leasing of
personal computers, which will be
supplied to them by a related party, Suria.
En Shah Hakim is the Chief Executive Officer/
Non-Independent Executive Director of the
Company; and a substantial shareholder of Suria. Tenancy of office space at Dataran Prima,
Petaling Jaya, Selangor provided by Scomi
Oiltools Sdn Bhd, a subsidiary of the
Company to Suria.
Provision of airline ticketing reservation
and ticket purchasing services by
LTS to the Company and its subsidiaries.
Puan Mazlina binti Zain, the sister of, and person
connected to, En Shah Hakim is the owner
of Lintas Travel Services Sdn Bhd (“LTS”).
In respect of the above transactions, En Shah Hakim had declared the nature of his conflict of interest and had abstained from
deliberating and voting on the relevant resolutions of the Board of Directors of the Company.
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STATEMENT OF DIRECTORS’ RESPONSIBILITY
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
The Directors are required by the
Companies Act, 1965 (“the Act”) to prepare
the financial statements of Scomi Energy
Services Bhd (formerly known as Scomi
Marine Bhd) (“the Company”) for each
financial year which have been properly
drawn up in accordance with the provisions
of the Act, the Main Market Listing
Requirements of Bursa Malaysia Securities
Berhad and the applicable Financial
Reporting Standards in Malaysia.
The Directors are responsible for ensuring that the Financial
Statements give a true and fair view of the state of affairs of the
Company and its subsidiaries (“the Group”) at the end of the
financial year and of the results and cash flows for the financial
year.
In preparing the Financial Statements, the Directors have:
•adopted appropriate accounting policies and applied them
consistently;
•made judgments and estimates that are reasonable and
prudent; and
• prepared the financial statements on a going concern basis.
The Directors are responsible to ensure that the Group keeps
accounting records which disclose with reasonable accuracy
the financial position of the Group which enable them to ensure
that the Financial Statements comply with the Act.
The Directors are responsible for taking such steps as
are reasonably open to them to preserve the interests of
stakeholders, to safeguard the assets of the Group and to detect
and prevent fraud and other irregularities.
The financial statements of the Company for the financial period
ended 31 July 2013 are set out on pages 67 to page 176 of this
Annual Report.
Anchor Handling Tug
and Supply Vessel
Transforming a
simple element into
a symbol of precision.
A NAUTILUS SHELL
Using imagination, even a simple piece of paper has the
potential to become an object of greater value. In paper art,
Scomi sees its own credo to realise potential.
FINANCIAL STATEMENTS
Directors’ Report P 6 7
Statements of Comprehensive Income P 75
Statements of Financial Position P 76
Consolidated Statement of Changes in Equity P 78
Company Statement of Changes in Equity P 80
Statements of Cash Flows P 8 1
Notes to the Financial Statements P 82
Supplementary Information P 172
Statement by Directors P 1 7 3
Statutory Declaration P 1 7 4
Independent Auditors’ Report P 175
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
DIRECTORS’ REPORT
Directors’
Report
The Directors have pleasure in submitting their report with the audited financial statements of the Group and Company for the
15 months financial period ended 31 March 2013.
Principal Activities
The principal activity of the Company is investment holding.
The principal activities of the Group consist of marine transportation, other shipping related services, provision of integrated drilling
fluids and drilling waste management solutions and production chemicals.
Significant changes during the financial period are disclosed in Note 39.
Change of Name
With effect from 28 February 2013, the name of the Company was changed from Scomi Marine Bhd to Scomi Energy Services Bhd.
Change of Financial Year-End
The Group and the Company changed its financial year end from 31 December to 31 March. Consequently, the comparatives for the
statements of comprehensive income, changes in equity and cash flows as well as certain comparatives in the notes to the financial
statements of the Group and the Company for the period of 15 months from 1 January 2012 to 31 March 2013, are not comparable to
those of the previous 12 months ended 31 December 2011. The next financial statements will be for a period of 12 months from 1 April
2013 to 31 March 2014.
Financial Results
Group Company
RM’000
RM’000
Profit/(loss) for the financial period
97,092(4,823)
Attributable to:
Owners of the Company
90,096(4,823)
Non-controlling interests
6,996–
97,092(4,823)
Dividends
There were no dividends on ordinary shares paid or declared by the Company since the end of the Company’s previous financial year.
The Directors do not recommend any dividend in respect for the financial period ended 31 March 2013.
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DIRECTORS’ REPORT
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Directors’ Report (continued)
Reserves and Provisions
Material transfers to or from reserves and provisions during the financial period are as disclosed in the financial statements.
Treasury Shares
During the financial period, the Company repurchased 2,000 units of its ordinary shares from the open market on Bursa Malaysia
Securities Bhd for a total consideration of RM805. The average price paid for the shares repurchased was approximately RM0.40 per share.
Details of the treasury shares are set out in Note 29 to the financial statements.
Employees’ Share Option Scheme
The Company implemented an Employees’ Share Option Scheme (“ESOS”) on 18 October 2005 for a period of 10 years. The ESOS is
governed by the By-Laws which were approved by the shareholders on 26 September 2005. The ESOS was early terminated on
26 June 2012.
Details of the ESOS are set out in Note 28 (b) to the financial statements.
Significant Events During The Financial Period
Significant events during the financial period are disclosed in Note 39 to the financial statements.
Significant Events After The End Of The Reporting Period
Significant events after the end of the reporting period are disclosed in Note 40 to the financial statements.
Directors
The Directors who have held office during the period since the date of the last report are as follows:
Vice Admiral Dato’ Haron bin Dato’ (Dr) Mohd Salleh (Rtd)Vacation of office on 16 May 2013
Tan Sri Asmat bin Kamaludinresigned on 31 May 2013
Tan Sri Nik Mohamed bin Nik Yaacob appointed on 16 May 2013
Dato’ Meer Sadik bin Habib Mohamed
Mok Yuen Lok
Lee Chun Fai appointed on 17 May 2013
Liew Willip
Shah Hakim @ Shahzanim bin Zain
Loong Chun Nee alternate to Shah Hakim @ Shahzanim bin Zain
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
DIRECTORS’ REPORT
Directors’ Interests
According to the Register of Directors’ Shareholdings, particulars of interests of Directors who held office at the end of the financial
period in shares and options over shares in the Company are as follows:
Number of ordinary shares of RM1.00/RM0.45 each in the Company8
At
At
1.1.2012
Bought
Sold
31.3.2013
’000’000’000’000
Direct interest in the Company
Tan Sri Asmat bin Kamaludin1
50––
50
Dato’ Meer Sadik bin Habib Mohamed242,784
–
–42,784
Mok Yuen Lok
20––
20
Loong Chun Nee
130
–
–
130
Shah Hakim @ Shahzanim bin Zain3
–
2,108–
2,108
Indirect interest in the Company
Dato’ Meer Sadik bin Habib Mohamed4647 – –647
Shah Hakim @ Shahzanim bin Zain5
313,393
1,223,9499––7
6
Tan Sri Asmat bin Kamaludin 10––
10
NOTES
1Deemed interested by virtue of Section 6A(2) of the Act through his interest in Bi-Bot Holdings Sdn Bhd, whereby all the shares are held through CIMSEC Nominees
(Tempatan) Sdn Bhd.
238,600,000 shares held through RHM Capital Nominees (Tempatan) Sdn Bhd.
3 Held through Maybank Securities Nominees (Tempatan) Sdn Bhd
4Deemed interested by virtue of Section 134 (12)(c) of the Companies Act, 1965 (“the Act”) through the shareholdings in the Company of his spouse, Datin Zarida binti
Noordin.
5Deemed interested by virtue of Section 6A(4) of the Act, through his shareholding in Kaspadu Sdn. Bhd., which holds an interest in Scomi Group Bhd, which in turn is a
substantial shareholder in the Company.
6 Deemed interested by virtue of Section 134 (12)(c) of the Act through the shareholding in the Company of his spouse, Puan Sri Habibah binti Mohd Salleh.
7 Indirect interest reduce threshold set out in Section 6A(4) of the Company Act 1965 of which a person ceases to be a substantial securities holder.
8 The par value of ordinary shares of the Company was reduced from RM1.00 each to RM0.45 each on 17 August 2012.
9Issuance and allotment of shares pursuant to the disposal by Scomi Group Bhd to the Company of 76.08% of the issue and paid-up ordinary and preference shares of
Scomi Oilfield Limited.
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DIRECTORS’ REPORT
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Directors’ Report (continued)
Number of options over ordinary shares of RM1.00 each in the Company
Exercise At
At
price
1.1.2012
Granted Terminated 31.3.2013
RM/share’000’000’000’000
Direct Interest in the Company
Vice Admiral Dato’ Haron binDato’ (Dr) Mohd Salleh (Rtd)
Dato’ Meer Sadik bin Habib Mohamed
Mok Yuen Lok
Shah Hakim @ Shahzanim bin Zain
Loong Chun Nee
1.15
1.15
1.15
1.15
1.15
600
600
600
600
4,450
–
–
–
–
–
(600)
(600)
(600)
(600)
(4,450)
–
–
–
–
–
The share option was terminated on 26 June 2012.
By virtue of the above Directors’ interests in shares and options in the Company, the Directors are deemed to have interest in shares of
all the subsidiaries of the Company to the extent of the Directors’ interests in the Company.
Other than as disclosed above, according to the Register of Directors’ Shareholdings, the Directors in office at the end of the financial
period did not hold any interest in the shares and options over shares in the Company, or share options over shares, Irredeemable
Convertible Secured Loan Stocks, Irredeemable Convertible Unsecured Loan Stocks and warrants of its related corporations during the
financial period except as in the following:
Number of ordinary shares of RM0.10 each in the holding company
At
At
1.1.2012
Bought
Sold
31.3.2013
’000’000’000’000
Direct Interest in Scomi Group Bhd
Tan Sri Asmat bin Kamaludin1265129 –394
3
Shah Hakim @ Shahzanim bin Zain22,7796,036
–
8,815
Loong Chun Nee
220
2,082
(601)
1,701
Vice Admiral Dato’ Haron bin Dato’ (Dr) Mohd Salleh (Rtd)
20
8
–
28
Indirect Interest in Scomi Group Bhd
Shah Hakim @ Shahzanim bin Zain4
172,275––
172,275
Number of ordinary shares of RM1.00 each in a related company
At
At
1.1.2012
Bought
Sold
31.3.2013
’000’000’000’000
Direct Interest in Scomi Engineering Bhd
Shah Hakim @ Shahzanim bin Zain5
623––
623
Loong Chun Nee
25
–
–
25
Indirect Interest in Scomi Engineering Bhd
7
Shah Hakim @ Shahzanim bin Zain6
192,568
54,782–
–
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
DIRECTORS’ REPORT
Number of options over ordinary shares of RM0.10 each in the holding company
Exercise
At
At
price
1.1.2012 Forfeited Exercised 31.3.2013
RM/share’000’000’000’000
Direct Interest in Scomi Group Bhd
Tan Sri Asmat bin Kamaludin
1.24
700
–
–
700
Shah Hakim @ Shahzanim bin Zain
0.17
1,357
–
–1,357
1.12
6,000––
6,000
Loong Chun Nee
1.11
3,220
–
–
3,220
0.24
2,000
–
(2,000)
–
The options held over ordinary shares in Scomi Group Bhd were granted pursuant to Scomi Group Bhd’s Employees’ Share Option
Scheme, which was implemented on 28 April 2003 and has expired on 27 April 2013.
Number of options over ordinary shares of RM1.00 each in a related company
Exercise
At
At
price
1.1.2012 Forfeited Exercised 31.3.2013
RM/share’000’000’000’000
Direct Interest in Scomi Engineering Bhd
Shah Hakim @ Shahzanim bin Zain
1.00
1,500
–
–
1,500
The options held over ordinary shares in Scomi Engineering Bhd were granted pursuant to Scomi Engineering Bhd’s Employees’ Share
Option Scheme, which was implemented on 26 January 2006.
Irredeemable Convertible Secured Loan Stocks (“ICSLS”) in the holding company
At
Converted/
At
1.1.2012
Bought
Sold
31.3.2013
’000’000’000’000
Direct Interest in the Scomi Group Bhd
Tan Sri Asmat bin Kamaludin1
398–
(398)
–
Loong Chun Nee
330
–
(330)
–
Warrants in the holding company
At
Exercised/
At
1.1.2012
Bought
Sold
Expired 31.3.2013
’000’000’000’000’000
Direct Interest in the Scomi Group Bhd
Tan Sri Asmat bin Kamaludin1
Vice Admiral Dato’ Haron bin Dato’ (Dr) Mohd Salleh (Rtd)
Indirect interest in the Scomi Group Bhd
Shah Hakim @ Shahzanim bin Zain
53
30
–
–
–
61,995
(30)
(30)
–
(23)
–
(61,995)
–
–
–
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DIRECTORS’ REPORT
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Directors’ Report (continued)
Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) in a related company
At
Converted/
At
1.1.2012
Bought
Sold 31.3.2013
’000’000’000’000
Indirect Interest in Scomi Engineering Bhd
7
Shah Hakim @ Shahzanim bin Zain6
54,782–
(54,782)
–
1Deemed interested by virtue of Section 6A(2) of the Companies Act, 1965 through Tan Sri Asmat bin Kamaludin’s direct interest in Bi-Bot Holdings Sdn Bhd, whereby
215,000 shares, 322,500 ICSLS and 43,000 warrants are held through CIMSEC Nominees (Tempatan) Sdn Bhd.
2 2,250,000 shares held through BHLB Trustee Berhad (PCM for Shah Hakim @ Shahzanim Bin Zain).
38,286,000 shares held through Maybank Securities Nominees (Tempatan) Sdn Bhd pledged Securities Account for Shah Hakim @ Shahzanim Bin Zain (Margin) and
Maybank Nominees (Tempatan) Sdn Bhd pledged Securities Account for Shah Hakim @ Shahzanim Bin Zain.
4 Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through Shah Hakim @ Shahzanim bin Zain’s shareholding in Kaspadu Sdn Bhd.
5 123,000 shares held through Maybank Securities Nominees (Tempatan) Sdn Bhd pledged Securities Account for Shah Hakim @ Shahzanim Bin Zain (Margin).
6Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through Shah Hakim @ Shahzanim bin Zain’s shareholding in Kaspadu Sdn. Bhd., which holds an
interest in the Company, which in turn is a substantial shareholder of Scomi Engineering Bhd.
7 Shah Hakim @ Shahzanim bin Zain is not deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 as at 31 March 2013.
By virtue of his interests in the shares and options in the Company as disclosed above, Shah Hakim @ Shahzanim bin Zain is deemed to
have an interest in the shares of all its subsidiaries.
Other than as disclosed above, according to the Register of Directors’ Shareholdings, the Directors in office at the end of the financial
period did not hold any interest in the shares, options over share in the Company or shares, options over shares, ICSLS, ICULS and
warrants of its related corporations during the financial period.
Directors’ Benefits
During and at the end of the financial period, no arrangements subsisted to which the Company is a party, with the object or objects
of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any
other body corporate.
Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than Directors’
remuneration as disclosed in Note 8 to 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 he is a member, or with a company in which he has a substantial financial interest except as
disclosed in Note 34 to the financial statements.
Statutory Information on the Financial Statements
Before the financial statements were made out, the Directors took reasonable steps:
(a)to ascertain that proper action had been taken in relation to the writing off of bad debts and the impairment for doubtful debts
and satisfied themselves that all known bad debts had been written off and that adequate impairment had been made for doubtful
debts; and
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
DIRECTORS’ REPORT
(b)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 Company had been written down to an amount which they might be expected
so to realise.
At the date of this report, the Directors are not aware of any circumstances:
(a)which would render the amounts written off for bad debts or the amount of the impairment for doubtful debts in the financial
statements of the Group and Company inadequate to any substantial extent; or
(b) which would render the values attributed to current assets in the financial statements of the Group and Company misleading; or
(c)which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and Company
misleading or inappropriate.
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 period which, in the opinion of the Directors, will or may affect the ability of the Group or Company to meet their
obligations when they fall due.
At the date of this report, there does not exist:
(a)any charge on the assets of the Group or Company which has arisen since the end of the financial period which secures the liability
of any other person; or
(b) any contingent liability of the Group or Company which has arisen since the end of the financial period.
At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial
statements which would render any amount stated in the financial statements misleading.
In the opinion of the Directors:
(a)the results of the operations of the Group and Company during the financial period were not substantially affected by any item,
transaction or event of a material and unusual nature except as disclosed in Note 39 to the financial statements; and
(b)there has not arisen in the interval between the end of the financial period and the date of this report any item, transaction or event
of a material and unusual nature which is likely to affect substantially the results of the operations of the Group or Company for the
financial period in which this report is made, except as disclosed in Note 40 to the financial statements.
Holding Company
The Directors regard Scomi Group Bhd, a company incorporated in Malaysia and is listed on the Main Board of Bursa Malaysia Securities
Berhad as the holding company.
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DIRECTORS’ REPORT
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Directors’ Report (continued)
Auditors
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
Signed on behalf of the Board of Directors in accordance with their resolution dated 31 July 2013.
Mok Yuen LokShah Hakim @ Shahzanim bin Zain
DirectorDirector
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
STATEMENTS OF COMPREHENSIVE INCOME FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
Statements of
Comprehensive Income
for the 15 Months Financial Period Ended 31 March 2013
Group Company
Period YearPeriod Year
endedendedendedended
Note 31.3.201331.12.2011 31.3.201331.12.2011
restated
restated
RM’000RM’000RM’000RM’000
Revenue
5 1,471,693
Cost of sales (1,100,961)
1,258,185 (1,043,370) ––
––
Gross profit
370,732214,815
––
Other operating income
44,36548,760 9,220182
Administrative expenses
(154,748)(176,663)(11,327)(7,680)
Marketing and selling expenses
(78,067)(52,986)
––
Other operating expenses
(12,924)(76,846) (1,138)(116,092)
Operating profit/(loss)
Finance costs
Share of results of associates
Share of results of joint ventures
Profit/(loss) before taxation
Taxation
169,358(42,920)(3,245)(123,590)
6
(41,356)(42,892) (1,578)(49)
14
133(2,978)
––
15
6,5684,140
––
7
9
Profit/(loss) for the financial period/year
Other Comprehensive Income/(Loss)
Exchange differences on translation of foreign operations
Cash flow hedges:
Fair value (losses)/gains arising during the financial period/year
Other comprehensive (loss)/income for the financial period/year
Total comprehensive income/(loss) for the financial period/year
134,703(84,650)(4,823)(123,639)
(37,611)(35,383)
––
97,092(120,033) (4,823)(123,639)
(13,852)14,216
––
(9,673)13,472
(23,525)27,688
––
––
73,567(92,345)(4,823)(123,639)
Profit/(loss) for the financial period/year attributable to:
Owners of the parent
90,096(116,476) (4,823)(123,639)
Non-controlling interests
6,996(3,557)
––
97,092(120,033) (4,823)(123,639)
Total comprehensive income/(loss) for the financial
period/year attributable to:
Owners of the parent
71,756(94,310)(4,823)(123,639)
Non-controlling interests
1,8111,965
––
73,567(92,345)(4,823)(123,639)
SenSen
Earnings/(loss) per share attributable to the owners
of the Company:
10
Basic earnings/(loss) per share
3.85(4.97)
Diluted earnings/(loss) per share
3.85(4.97)
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH 2013
Statements of
Financial Position
as at 31 March 2013
Group Company
As at
As at
As at
As at
As at
As at
Note 31.3.201331.12.2011 1.1.2011 31.3.201331.12.2011 1.1.2011
restatedrestatedrestatedrestated
RM’000RM’000RM’000RM’000RM’000RM’000
Non-Current Assets
Property, plant and equipment
Investment properties
Investment in subsidiaries
Investment in associates
Investment in joint ventures
Amount due from a subsidiary
Intangible assets
Deferred tax assets
Derivative financial assets
Other receivables
11
12
13
14
15
16
17
18
19
22
528,267561,540161,142 493740809
1,3821,5601,214
–––
–––
1,270,678453,444566,663
380 2473,225 225
225
3,225
51,72447,15725,081
19,66319,44119,912
––––29,01226,723
113,991108,680106,403
–––
18,50231,70343,525
–––
–
–23,941
–––
262
147
–
–––
714,508751,034364,531
1,291,059502,862617,332
Current Assets
Inventories
21
198,559176,477137,021
–––
Trade and other receivables
22
409,319478,442307,787 11,1192,9459,710
Tax recoverable
16,00617,91119,458
–––
Derivative financial assets
19
–
–7,974
–––
Short term deposits,
cash and bank balances
23
152,671138,762 97,717 5,059 1,17311,282
Assets classified as held for sale
24
776,555811,592569,95716,178 4,11820,992
–
–755,668
–––
776,555 811,5921,325,625 16,178 4,11820,992
Less: Current Liabilities
Trade and other payables
25
Borrowings
26
Financial guarantee liabilities
27
Derivative financial instruments
19
Tax payable
333,881312,308180,159
273,7469,5627,884
191,527175,466192,762
14
3110,030
57127221 57 70221
48954 - –––
17,70118,18116,583
–––
Liabilities classified as held
for sale
24
543,655506,136389,725
274,807 9,66318,135
–
–123,219
–––
543,655506,136512,944
274,807 9,66318,135
Net Current Assets/(Liabilities)
232,900305,456812,681
(258,629)(5,545) 2,857
947,4081,056,4901,177,212
1,032,430497,317620,189
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH 2013
Group Company
As at
As at
As at
As at
As at
As at
Note 31.3.201331.12.2011 1.1.2011 31.3.201331.12.2011 1.1.2011
restatedrestatedrestatedrestated
RM’000RM’000RM’000RM’000RM’000RM’000
Capital and reserves attributable
to owners of the Company
Share capital
Treasury shares
Share premium
Other reserve
Retained earnings
28
29
30
31
31
1,005,535733,009733,009
1,005,535733,009733,009
(48)(47) (4)(48)(47) (4)
–121,913121,913
–
121,913 121,913
(660,680)(173,251)(261,412) 26,8814,8795,929
219,918(64,971)51,505
62 (362,518)(240,713)
Equity and reserves
attributable to the owners
of the Company
Non-controlling interests
564,725616,653645,011
1,032,430497,236620,134
70,349119,201117,318
–––
Total equity and reserve
635,074735,854762,329
1,032,430497,236620,134
Non-current liabilities
Borrowings
Provision for retirement benefits
Other payables
Derivative financial instruments
Deferred tax liabilities
Financial guarantee liabilities
26
32
25
19
18
27
276,812311,334403,675
–2455
6,744
6,957 4,358
–
–
–
19,775–––––
6,166 2934,919
–––
2,8372,0521,931 –––
––––57 –
312,334320,636414,883
–8155
947,4081,056,4901,177,212
1,032,430497,317620,189
/7 7
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/7 8
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Consolidated Statement
of Changes in Equity
for the 15 Months Financial Period Ended 31 March 2013
Attributable to owners of the Company
Share
option
NonShare
TreasuryShare
and other
Retained
controlling Total
capital shares premium reserves earnings
Total interests equity
Note RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000
Balance as at
1 January 2012 (restated)
733,009
(47)
121,913
(173,251)
(64,971)
616,653
119,201
735,854
Comprehensive income
Profit for the financial period
–
–
–
–
90,096
90,096
6,996
97,092
Other comprehensive loss
Currency translation differences
31(a)–––
(11,568)–
(11,568)
(2,284)
(13,852)
Cash flow hedges
- fair value loss
31(b)
–
–
–
(9,673)
–
(9,673)
–
(9,673)
- transfer to profit or loss
31(b)
–
–
–
2,901
–
2,901
(2,901)
–
Total other comprehensive loss
–
–
–
(18,340)
–
(18,340)
(5,185)
(23,525)
Total comprehensive income/(loss)–––
(18,340)
90,096
71,756
1,811
73,567
Transaction with owners
Share options of ultimate
holding company granted
to directors and employees
Value of employees services
28(b)–––
1,235–
1,235
272
1,507
Value of options terminated/
lapsed
28(b)–––
(5,276)
5,276–––
–––
(4,041)
5,276
1,235
272
1,507
Purchase of treasury shares
29
–
(1)
–
–
–
(1)
–
(1)
Acquisition of non-controlling
interests
39(b)––––
(150,684)
(150,684)
(73,047)
(223,731)
Dilution of interest in subsidiaries 39(f )
–
–
–
–
(21,926)
(21,926)
22,112
186
Issuance of share capital28(a)
675,681––––
675,681–
675,681
Capital reduction
and repayment
39(e)(403,155)
–(121,913) 26,881 362,127(136,060)
–(136,060)
Adjustment arising from
predecessor accounting method 31(c)
–
–
– (491,929)
– (491,929)
– (491,929)
Total transactions with owners
272,526
Balance at 31 March 2013 1,005,535
(1)
(48)
(121,913)
(469,089)
194,793
(123,684)
(50,663)
(174,347)
–(660,680) 219,918 564,725 70,349 635,074
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
Attributable to owners of the Company
Share
option
NonShare
TreasuryShare
and other
Retained
controlling Total
capital shares premium reserves earnings
Total interests equity
Note RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000
Balance as at 1 January 2011,
as previously stated
733,009
(4) 121,913 (259,977) (103,723) 491,218
46,914
538,132
Effects of early adoption of
standards
41–––
(1,435)
1,186
(249)
(5,461)
(5,710)
Effects of predecessor accounting
39––––
154,042
154,042
75,865
229,907
As restated 733,009
(4)121,913(261,412) 51,505645,011117,318762,329
Comprehensive loss
Loss for the financial year
–
–
–
–
(116,476)
(116,476)
(3,557)
(120,033)
Other comprehensive loss
Currency translation differences
31(a)–––
12,441–
12,441
1,775
14,216
Cash flow hedges
- fair value gain
31(b)–––
13,472–
13,472–
13,472
- transfer to profit or loss
31(b)
–
–
–
(3,747)
–
(3,747)
3,747
–
Total other comprehensive loss–––
22,166–
22,166
5,522
27,688
Total comprehensive income/(loss)–––
22,166
(116,476)
(94,310)
1,965
(92,345)
Share options of ultimate
holding company granted
to directors and employees
Value of employees services
28(b)–––
1,267–
1,267
171
1,438
Value of options lapsed/forfeited 28(b)
–
–
–
(1,834)
–
(1,834)
–
(1,834)
–
–
–(567) –(567)171(396)
Purchase of treasury shares
29
–
(43)
–
–
–
(43)
–
(43)
Non-controlling interests arising
from business combination
39––––––
(253)
(253)
Adjustment arising from
predecessor accounting method
31(e)–––
66,562–
66,562–
66,562
Total transactions with owners
–
(43)
–
65,995
–
65,952
(82)
65,870
Balance at 31 December 2011
733,009
(47)
121,913
(173,251)
(64,971)
616,653
119,201
735,854
/7 9
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/8 0
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
Company Statement
of Changes In Equity
for the 15 Months Financial Period Ended 31 March 2013
Non-distributable Distributable
Share Treasury
Share
Other
Retained
capital
shares premium reserves
earnings
Total
Note RM’000RM’000RM’000RM’000
RM’000 RM’000
Company
Balance as at 1 January 2012,
as restated
733,009
(47)
121,913
4,879
(362,518)
497,236
Purchase of treasury shares
29
–
Comprehensive loss for
the financial period –
Capital reduction and repayment
39(e) (403,155)
Issuance of share capital
28(a) 675,681
Share options:
- value of employees services
–
- value of options terminated
28(b)
–
(1)
–
–
–
(1)
–
–
–
–
(121,913)
–
–
26,881
–
(4,823)
362,127
–
(4,823)
(136,060)
675,681
–
–
–
–
397
(5,276)
–
5,276
397
–
At 31 March 20131,005,535
(48)
Balance as at 1 January 2011,
as previously stated
- effects of early adoption
of standards
41
–
26,881
621,032,430
733,009
(4)
121,913
5,929
(240,955)
619,892
–
–
–
–
242
242
As restated
Purchase of treasury shares
29
Comprehensive loss for the financial year Share options: - value of employees services
28(b)
- value of options lapsed/forfeited
28(b)
733,009
–
–
(4)
(43)
–
121,913
–
–
5,929
–
–
(240,713)
–
(123,639)
620,134
(43)
(123,639)
–
–
–
–
–
–
784
(1,834)
–
1,834
784
–
At 31 December 2011
733,009
(47)
121,913
4,879
(362,518)
497,236
P
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
STATEMENTS OF CASH FLOWS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
/8 1
Statements of
Cash Flows
for the 15 Months Financial Period Ended 31 March 2013
Group Company
Period YearPeriod Year
endedendedendedended
31.3.201331.12.2011 31.3.201331.12.2011
restated
restated
RM’000RM’000RM’000RM’000
Net cash generated from/(used in) operating activities
20
279,679303,660 (745)121
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment
31,2713,672
––
Purchase of property, plant and equipment
(94,794)(77,009)
–(108)
Purchase of investment properties
–(945) ––
Purchase of intangible assets
(5,767)– ––
Acquisition of investment in an associated company
––
(1,584)–
Repayment of advance from associated companies
––
142,320–
Net cash generated from/(used in) investing activities
(69,290)(74,282)
140,736(108)
Cash flows from financing activities
Repayment of capital
39(e)(136,060)–
(136,060)–
Repayment of borrowings
(83,677)(478,957)
(41)(10,030)
Proceeds from borrowings
65,211329,113
––
Interest paid on borrowings
(40,704)(39,517)
(3)(49)
(Increase)/Decrease in short-term deposits pledged securities
(10,411)(872) ––
Purchase of treasury shares
29
(1)(43) (1)(43)
Net cash generated from/(used in) financing activities
(205,642)(190,276)(136,105)(10,122)
Net increase/(decrease) in cash and cash equivalents4,74739,1023,886(10,109)
Cash and cash equivalents at beginning of
financial period/year
136,49196,318 1,17311,282
Currency translation differences
(1,946)1,071
––
Cash and cash equivalents at end of
financial period/year 23
139,292136,491 5,0591,173
Significant non-cash transaction
Significant non-cash transaction during the period was in relation to the acquisition of the Eastern Hemisphere Entities of the Oilfield
Services Segment of Scomi Group Bhd (“SOLE”) and acquisition of Scomi Sosma Sdn Bhd (“SSSB”). Details of the transaction are
disclosed in Note 39(a) and 39(b).
P
/8 2
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Notes to the
Financial Statements
for the 15 months Financial Period ended 31 March 2013
1 General Information
The principal activity of the Company is investment holding.
The principal activities of the Group consist of marine transportation, other shipping related services, provision of integrated drilling
fluids and drilling waste management solutions and production chemicals.
The significant changes during the financial period are disclosed in Note 39.
The Company is a public limited liability company, incorporated and domiciled in Malaysia. The Company is listed on the Main Board
of Bursa Malaysia Securities Berhad.
The Directors regard Scomi Group Bhd, a company incorporated in Malaysia and is listed on the Main Board of Bursa Malaysia
Securities Berhad as the holding company.
The registered office and principal place of business of the Company is located at Level 17, 1 First Avenue, Bandar Utama, 47800
Petaling Jaya, Selangor Darul Ehsan, Malaysia.
2 Basis of Preparation of Financial Statements
The financial statements of the Group and Company have been prepared in accordance with the provisions of the Malaysian
Financial Reporting Standards (“MFRS”), International Financial Reporting Standards and the requirements of the Companies Act
1965 in Malaysia.
The financial statements of the Group and the Company for the financial period ended 31 March 2013 are the first set of financial
statements prepared in accordance with the MFRS, including MFRS 1, “First-time Adoption of Malaysian Financial Reporting
Standards”. The Group and Company have consistently applied the same accounting policies in its opening MFRS statements of
financial position at 1 January 2011 (transition date) and throughout all periods presented, as if these policies had always been in
effect. Comparative figures for 2011 in these financial statements have been restated to give effect to these changes. Subsequent to
the transition in the financial reporting framework to MFRS on 1 January 2012, the restated comparative information has not been
audited under MFRS. However, the comparative statements of financial position as at 31 December 2011, comparative statements of
comprehensive income, changes in equity and cash flows for the financial year then ended have been audited under the previous
financial reporting framework, Financial Reporting Standards (“FRS”) in Malaysia.
The financial statements have been prepared under the historical cost convention.
The preparation of financial statements in conformity with MFRS requires the use of certain critical accounting estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires Directors
to exercise their judgment in the process of applying the Group and Company’s accounting policies. Although these estimates and
judgment are based on the Directors’ best knowledge of current events and actions, actual results may differ. The areas involving a
higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are
disclosed in Note 4.
(a) MFRS 1 Mandatory Exceptions
Estimates
MFRS estimates as at transition date is consistent with the estimates as at the same date made in conformity with FRS.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
(b) MFRS 1 Exemption Options
(i) Exemption for business combinations
MFRS 1 provides the option to apply MFRS 3 “Business Combinations” prospectively for business combinations that occurred
from the transition date or from a designated date prior to the transition date. This provides relief from full retrospective
application that would require restatement of all business combinations prior to the transition date or a designated date
prior to the transition date. The Group elected to apply MFRS 3 prospectively to business combinations that occurred after
1 January 2011. Business combinations that occurred prior to 1 January 2011 have not been restated. In addition, the Group
has also applied MFRS 127 “Consolidated and Separate Financial Statements” from the same date.
(ii)Exemption for deemed cost – investment in subsidiaries, jointly ventures, associates, property, plant and equipment and
investment properties
As allowed by MFRS 1, the Group elected to measure its investment in subsidiaries, joint ventures, associates, property, plant
and equipment and investment properties at carrying amount as at transition date, 1 January 2011, as their deemed cost as
at that date.
(iii) Designation of previously recognised financial instruments
MFRS 1 permits a previously recognised financial instrument to be designated as available for sale or fair value through
profit or loss on the transition date provided the criteria in MFRS 139 “Financial Instruments: Recognition and Measurement”
are met. The Group and Company elected to designate all its previously recognised financial instruments based on the
designation under its previous Generally Accepted Accounting Principles (“GAAP”) which also complies with MFRS 139.
The impact of adoption of MFRS has no significant impact to the financial statements.
During the financial period, the Directors of the Group adopted the following Malaysian Financial Reporting Standards (“MFRS”)
issued by the Malaysia Accounting Standard Board (MASB):
(a)Standards, Amendments to Published Standards and Interpretations that are Applicable to the Group and have
been Early Adopted.
•
FRS 10 “Consolidated financial statements” (effective from 1 January 2013) changes the definition of control. An investor
M
controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the investee. It establishes control as the basis for determining
which entities are consolidated in the consolidated financial statements and sets out the accounting requirements for the
preparation of consolidated financial statements. It replaces all the guidance on control and consolidation in MFRS 127
“Consolidated and separate financial statements” and IC Interpretation 112 “Consolidation – special purpose entities”. There
are three elements to the definition of control in MFRS 10: (i) power by investor over an investee, (ii) exposure, or rights, to
variable returns from investor’s involvement with the investee, and (iii) investor’s ability to affect those returns through its
power over the investee.
•
FRS 11 “Joint arrangements” (effective from 1 January 2013) requires a party to a joint arrangement to determine the type
M
of joint arrangement in which it is involved by assessing its rights and obligations arising from the arrangement, rather than
its legal form. There are two types of joint arrangement: joint operations and joint ventures. Joint operations arise where
a joint operator has rights to the assets and obligations relating to the arrangement and hence accounts for its interest
in assets, liabilities, revenue and expenses. Joint ventures arise where the joint operator has rights to the net assets of the
arrangement and hence equity accounts for its interest. Proportional consolidation of joint ventures is no longer allowed.
/8 3
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/8 4
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
2 Basis of Preparation of Financial Statements (continued)
•
FRS 12 “Disclosures of interests in other entities” (effective from 1 January 2013) sets out the required disclosures for entities
M
reporting under the two new standards, MFRS 10 and MFRS 11, and replaces the disclosure requirements currently found
in MFRS 128 “Investments in associates”. It requires entities to disclose information that helps financial statement readers to
evaluate the nature, risks and financial effects associated with the entity’s interests in subsidiaries, associates, joint arrangements
and unconsolidated structured entities.
•
T he revised MFRS 127 “Separate financial statements” (effective from 1 January 2013) includes the provisions on separate
financial statements that are left after the control provisions of MFRS 127 have been included in the new MFRS 10.
•
The revised MFRS 128 “Investments in associates and joint ventures” (effective from 1 January 2013) includes the
requirements for joint ventures, as well as associates, to be equity accounted following the issue of MFRS 11.
As a result of the early adoption of the above Standards, Scomi Group Bhd is regarded as the holding company of
the Group.
The effects of early adoption of these standards to the Group are as disclosed in Note 41.
(b)Standards, Amendments to Published Standards and Interpretations to Existing Standards that are Applicable to
the Group but not yet Effective and have not been Early Adopted.
The Group will apply the new standards, amendments to standards and interpretations in the following periods:
(i) Financial Year beginning on/after 1 April 2013
•
MFRS 13 “Fair value measurement” (effective from 1 January 2013) aims to improve consistency and reduce complexity
by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements
for use across MFRSs. The requirements do not extend the use of fair value accounting but provide guidance on
how it should be applied where its use is already required or permitted by other standards. The enhanced disclosure
requirements are similar to those in MFRS 7 “Financial instruments: Disclosures”, but apply to all assets and liabilities
measured at fair value, not just financial ones.
•
mendment to MFRS 101 “Presentation of items of other comprehensive income” (effective from 1 July 2012) requires
A
entities to separate items presented in ‘other comprehensive income’ (“OCI”) in the statement of comprehensive income
into two groups, based on whether or not they may be recycled to profit or loss in the future. The amendments do not
address which items are presented in OCI.
•
Amendment to MFRS 119 “Employee benefits” (effective from 1 January 2013) makes significant changes to the
recognition and measurement of defined benefit pension expense and termination benefits, and to the disclosures for
all employee benefits. Actuarial gains and losses will no longer be deferred using the corridor approach. MFRS 119 shall
be withdrawn on application of this amendment.
•
mendment to MFRS 7, “Financial Instruments: Disclosures” (effective from 1 January 2013) requires more extensive
A
disclosures focusing on quantitative information about recognised financial instruments that are offset in the statement
of financial position and those that are subject to master netting or similar arrangements irrespective of whether they
are offset.
•
Amendments to MFRS 134 “Interim Financial Reporting” (effective from 1 January 2013) require additional disclosures on
fair value information for financial instruments and segment reporting. The additional disclosures are required in interim
financial reports issued in FY2013.
P
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
Changes in accounting policies due to new standards or amendments that apply on or after 1 January 2013 also require
disclosures in interim financial reports where the changes are significant.
The Group will apply the new standards, amendments to standards and interpretations in the following periods:
(ii) Financial Year beginning on/after 1 April 2014
•
mendment to MFRS 132, “Financial Instruments: Presentation” (effective from 1 January 2014) does not change the
A
current offsetting model in MFRS 132. It clarifies the meaning of ‘currently has a legally enforceable right of set-off’
that the right of set-off must be available today (not contingent on a future event) and legally enforceable for all
counterparties in the normal course of business. It clarifies that some gross settlement mechanisms with features that
are effectively equivalent to net settlement will satisfy the MFRS 132 offsetting criteria.
(iii)Financial Year beginning on/after 1 April 2015
•
MFRS 9 “Financial instruments - classification and measurement of financial assets and financial liabilities” (effective from
1 January 2015) replaces the multiple classification and measurement models in MFRS 139 with a single model that
has only two classification categories: amortised cost and fair value. The basis of classification depends on the entity’s
business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.
The accounting and presentation for financial liabilities and for de-recognising financial instruments has been relocated
from MFRS 139, without change, except for financial liabilities that are designated at fair value through profit or loss
(“FVTPL”). Entities with financial liabilities designated at FVTPL recognise changes in the fair value due to changes in
the liability’s credit risk directly in OCI. There is no subsequent recycling of the amounts in OCI to profit or loss, but
accumulated gains or losses may be transferred within equity.
The guidance in MFRS 139 on impairment of financial assets and hedge accounting continues to apply.
MFRS 7 requires disclosures on transition from MFRS 139 to MFRS 9.
The Group is assessing the impact of the new standards, amendments to published standards and interpretations to existing
standards that are applicable to the Group but not yet effective and have not been early adopted to the Group and Company.
3 Summary of Significant Accounting Policies
Unless otherwise stated, the following accounting policies have been applied consistently in dealing with items that are considered
material in relation to the financial statements.
3.1Basis of Consolidation – Subsidiaries
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to the
end of the financial period.
Subsidiaries are those entities (including special purpose entities) over which the Group has power to govern the financial
and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and
effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group
controls another entity.
/8 5
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/8 6
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
3 Summary of Significant Accounting Policies (continued)
3.1Basis of Consolidation – Subsidiaries (continued)
The Group also assesses existence of control where it does not have more 50% of the voting power but is able to govern the
financial and operating policies by virtue of de-facto control. De-facto control may arise in circumstances where the size of the
Group’s voting rights relative to the size and dispersion of holdings of other shareholders give the group the power to govern
the financial and operating policies.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the
date that control ceases.
The Group applies predecessor accounting to account for certain business combinations under common control. Under the
predecessor accounting, assets and liabilities acquired are not restated to their respective fair values but at the carrying amounts
from the consolidated financial statements of the holding company of the Group and adjusted to ensure uniform accounting
policies of the Group. The difference between any consideration given and the aggregate carrying amounts of the assets and
liabilities (as of the date of the transaction) of the acquired entity is recorded as an adjustment to merger reserve. No additional
goodwill is recognised. The acquired entity’s results, assets and liabilities are consolidated as if both the acquirer and acquiree
had always been combined. Consequently, the consolidated financial statements reflect both entities’ full year’s results. The
corresponding amounts for the previous year reflect the combined results of both entities.
The Group applies the acquisition method to account for certain business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree
and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any
non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling
interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
In a business combination achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in
the acquiree is remeasured to fair value at the successive acquisition dates at each stage, and the changes in fair value is taken
through profit or loss.
Profit or loss and each component of other comprehensive income of the subsidiaries are attributed to the parent and the noncontrolling interest, even if this results in the non-controlling interest having a deficit balance.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance
with MFRS 139 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified
as equity is not remeasured, and its subsequent settlement is accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of noncontrolling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair
value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss. Refer to accounting policy Note
3.9 (c) on goodwill.
Inter-company transactions, balances, income and expenses on transactions between group companies are eliminated. Profits
and losses resulting from inter-company transactions that are recognised in assets are also eliminated. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
P
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
3.2Changes in Ownership Interests in Subsidiaries Without Change of Control
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is,
as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the
relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to
non-controlling interests are also recorded in equity.
3.3Disposal of Subsidiaries
When the Group ceases to have control over a subsidiary any retained interest in the entity is re-measured to its fair value at the
date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying
amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset.
In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if
the Group had directly disposed of the related assets or liabilities. The amounts previously recognised in other comprehensive
income are reclassified to profit or loss.
3.4Investments in Associates
Associates are those corporations, partnerships or other entities in which the Group exercises significant influence, but which
it does not control, generally accompanying a shareholding of between 20% and 50% of voting rights. Significant influence
is power to participate in financial and operating policy decisions of associates but not power to exercise control over those
policies. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the
investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor’s share of
the profit or loss of the investee after the date of acquisition. The Group’s investment includes goodwill identified on acquisition.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the
amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.
Dilution gains and losses arising in investments in associates are recognised in profit of loss.
The Group’s share of post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements
in reserves is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the
investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other
unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or
made payments on behalf of the associate.
The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is
impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of
the associate and its carrying value and recognises the amount adjacent to ‘share of profit/(loss) of an associate’ to profit or loss.
Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognised
in the Group’s financial statements only to the extent of unrelated investor’s interests in the associates. Unrealised losses are
eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates
have been changed where necessary to ensure consistency with the policies adopted by the Group.
On disposal of investments in an associate, the difference between disposal proceeds and the carrying amounts of the
investments are recognised in profit or loss.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
3 Summary of Significant Accounting Policies (continued)
3.5Joint Arrangements
A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to
joint control. Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the
strategic financial and operating decisions relating to the activity require the unanimous consent of all the parties sharing
control (the venturers).
Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter to
recognise the Group’s share of the post-acquisition profits or losses and movements in other comprehensive income. When
the Group’s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term
interests that, in substance, form part of the Group’s net investment in the joint ventures), the Group does not recognise further
losses, unless it has incurred obligations or made payments on behalf of the joint ventures.
Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest
in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the
asset transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the
policies adopted by the Group. The change in accounting policy has been applied as from 1 January 2011. There is no impact on
the net assets of the periods presented.
3.6Investments in Subsidiaries, Joint Ventures and Associates
In the Company’s separate financial statements, investments in subsidiaries, joint ventures and associates are carried at cost
less accumulated impairment losses. On disposal of investments in subsidiaries, joint ventures and associates, the difference
between disposal proceeds and the carrying amounts of the investments is recognised in profit or loss. The accounting policy in
relation to impairment of non-financial assets is as disclosed in Note 3.10.
3.7Property, Plant and Equipment
Property, plant and equipment, other than freehold land and capital work-in-progress, are stated at cost less accumulated
depreciation or amortisation and impairment losses, if any. The cost of an item of property, plant and equipment initially
recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and
condition necessary for it to be capable of operating in the manner intended by management. Cost also includes borrowing
costs that are directly attributable to the acquisition, construction or production of a qualifying asset. See accounting policy
Note 3.12.
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 recognised
as expenses in profit or loss during the financial period in which they are incurred.
Freehold land is not depreciated as it has an infinite life. Leasehold land classified as finance lease is amortised in equal
instalments over the period of the respective leases. See accounting policy Note 3.16 on finance leases. Capital work-in-progress
is stated at cost. Expenditure relating to capital work-in-progress is capitalised when incurred and depreciated only when the
assets are ready for intended use.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
Other property, plant and equipment are depreciated on the straight line method to allocate the cost of the assets to their
residual values over their estimated useful lives. The principal annual rates used for this purpose are as follows:
Freehold buildings
Leasehold buildings
Tools, plant and machinery, marine and plant equipment
Renovation, office equipment, fittings and computers
Motor vehicles
Marine vessels
Dry docking (included within vessels)
2 – 20%
2 – 33 1/3%
8 1/3 – 33 1/3%
10 – 33 1/3%
15 – 33 1/3%
4%
20% – 40%
Residual values and useful lives of assets are reviewed, and adjusted if appropriate, at each reporting date.
At each reporting date, the Group assesses whether there is any indication of impairment. Where an indication of impairment
exists, the carrying amount of the asset is assessed and written down immediately to its recoverable amount. See accounting
policy Note 3.10 on impairment of non-financial assets.
When property, plant and equipment are disposed of, the resultant gain or loss on disposal is determined by comparing the
disposal proceeds with the carrying amount and is included in profit or loss.
3.8Investment Properties
Investment properties, principally comprising freehold land and buildings, are held for long term rental yields or for capital
appreciation or both, and are not occupied by the Group.
Investment properties are measured initially at its cost, including related transaction costs and borrowings costs if the
investment property meets the definition of qualifying asset.
After the initial recognition, investment property is stated at cost less any accumulated depreciation and impairment losses.
Buildings are depreciated on the straight line basis to allocate the cost to their residual values over their estimated useful lives of
20 to 50 years. Freehold land is not depreciated as it has an infinite life.
Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that future economic benefits
associated with the expenditure will flow to the Group and the cost of the item can be measured reliably. All other repairs and
maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the
replaced part is derecognised.
Investment property is derecognised either when it has been disposed of or when the investment property is permanently
withdrawn from use and no future economic benefit is expected from its disposal.
Gains and losses on disposals are determined by comparing net disposal proceeds with the carrying amount and are included
in profit or loss.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
3 Summary of Significant Accounting Policies (continued)
3.9Intangible Assets
(a) Research and Development
Research expenditure is recognised as an expense when incurred. Costs incurred on development projects (relating to the
design and testing of new or improved products) are recognised as intangible assets when the following criteria are fulfilled:
(i) it is technically feasible to complete the intangible asset so that it will be available for use or sale;
(ii) management intends to complete the intangible asset and use or sell it;
(iii) there is an ability to use or sell the intangible asset;
(iv) it can be demonstrated how the intangible asset will generate probable future economic benefits;
(v)adequate technical, financial and other resources to complete the development and to use or sell the intangible asset
are available; and
(vi) the expenditure attributable to the intangible asset during its development can be reliably measured.
Other development expenditure that do not meet these criteria are recognised as an expense when incurred. Development
costs previously recognised as an expense are not recognised as an asset in a subsequent period. Capitalised development
costs recognised as intangible assets are amortised from the point at which the asset is ready for use on a straight-line basis
over a period not exceeding ten years for drilling waste management technology.
Development cost work-in-progress is tested for impairment annually, in accordance with MFRS 136 “Impairment of Assets”.
See accounting policy Note 3.10 on impairment of non-financial assets.
(b)Patents
Patent rights to use an intellectual property for the development of technologies relating to crude oil waste, oil recovery
recycling and treatment for oil and gas industry are shown at historical cost. Patent rights have a finite useful life and are
carried at cost less accumulated amortisation and impairment. Amortisation is calculated using the straight-line method to
allocate the cost of patent rights over their estimated useful economic lives of 5 years.
(c)Goodwill
Goodwill represents the excess of the cost of acquisition of subsidiaries, jointly controlled entities and associates over the fair
value of the Group’s share of the identifiable net assets at the date of acquisition.
Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill is tested annually for impairment and
carried at cost less accumulated impairment losses. Impairment losses on goodwill (inclusive of impairment losses
recognised in a previous interim period) are not reversed. Gains and losses on the disposal of a subsidiary include the
carrying amount of goodwill relating to the subsidiary sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those
cash-generating units or groups of cash-generating units that are expected to benefit from synergies of the business
combination in which the goodwill arose, identified according to operating segment.
In respect of acquisitions of joint ventures and associates, the carrying amount of goodwill is included in the carrying
amount of the investment in joint ventures and associates respectively. Such goodwill is also tested for impairment as part
of the overall balance. The accounting policy in relation to impairment of non-financial assets is as disclosed in Note 3.10.
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3.10
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
Impairment of Non-Financial Assets
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually
for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount
by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an
asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the
lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than
goodwill that suffered impairment are reviewed for possible reversal of the impairment at the end of the reporting period.
The impairment loss is charged to profit or loss. Impairment losses on goodwill are not reversed. In respect of other assets,
any subsequent increase in recoverable amount is recognised in profit or loss.
3.11
Financial Assets
(a)Classification
The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and
receivables and available-for-sale. The classification depends on the purpose for which the financial assets were
acquired. Management determines the classification at initial recognition.
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified
in this category if it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term.
Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are
classified as current assets if expected to be settled within 12 months; otherwise there are classified as non-current.
(ii)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. They are included in current assets, except for maturities more than 12 months after the end of
the reporting period. These are classified as non-current assets. The Group’s loans and receivables comprise ‘trade
and other receivables’ and ‘cash and bank balances’ in the statement of financial position (Notes 22 and 23).
(iii) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in
any of the other categories. They are included in non-current assets unless the investment matures or management
intends to dispose of it within 12 months of the end of the reporting period.
(b) Recognition and Initial Measurement
Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Group commits
to purchase or sell the asset.
Financial assets are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value
through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and
transaction costs are expensed in the income statements.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
3 Summary of Significant Accounting Policies (continued)
3.11
Financial Assets (continued)
(c) Subsequent Measurement – Gains and Losses
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair
value. Loans and receivables are subsequently carried at amortised cost using the effective interest method.
Changes in the fair values of financial assets at fair value through profit or loss, including the effects of currency
translation, interest and dividend income are recognised in profit or loss in the period in which the changes arise.
Changes in the fair value of available-for-sale financial assets are recognised in other comprehensive income, except
for impairment losses (see accounting policy Note 3.11(d) and foreign exchange gains and losses on monetary assets.
The exchange differences on monetary assets are recognised in profit or loss, whereas exchange differences on nonmonetary assets are recognised in other comprehensive income as part of fair value change.
Interest and dividend income on available-for-sale financial assets are recognised separately in the income statements.
Interest on available-for-sale debt securities calculated using the effective interest method is recognised in the income
statements. Dividend income on available-for-sale equity instruments are recognised in the income statements when
the Group’s right to receive payments is established.
(d) Subsequent Measurement – Impairment of Financial Assets
Assets Carried at Amortised Cost
The Group assesses at the end of the reporting period whether there is objective evidence that a financial asset or
group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are
incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial
recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows
of the financial asset or group of financial assets that can be reliably estimated.
The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:
(i) significant financial difficulty of the issuer or obligor;
(ii) a breach of contract, such as a default or delinquency in interest or principal payments;
(iii)the Group, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a
concession that the lender would not otherwise consider;
(iv) it becomes probable that the borrower will enter bankruptcy or other financial reorganisation;
(v) disappearance of an active market for that financial asset because of financial difficulties; or
(vi)observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio
of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with
the individual financial assets in the portfolio, including adverse changes in the payment status of borrowers in the
portfolio; and national or local economic conditions that correlate with defaults on the assets in the portfolio.
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 (excluding future credit losses that have not been incurred) discounted at the financial
asset’s original effective interest rate. The asset’s carrying amount of the asset is reduced and the amount of the loss
is recognised in profit or loss. If loans and receivables have a variable interest rate, the discount rate for measuring any
impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group
may measure impairment on the basis of an instrument’s fair value using an observable market price.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
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 (such as an improvement in the debtor’s credit rating),
the reversal of the previously recognised impairment loss is recognised in profit or loss.
When an asset is uncollectible, it is written off against the related allowance account. Such assets are written off after all
the necessary procedures have been completed and the amount of the loss has been determined.
Assets Classified as Available-for-Sale
The Group assesses at the end of the reporting period whether there is objective evidence that a financial asset or a
group of financial assets is impaired.
For debt securities, the Group uses criteria and measurement of impairment loss applicable for ‘assets carried at
amortised’ cost above. If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale
increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in
profit or loss, the impairment loss is reversed through profit or loss.
In the case of equity securities classified as available-for-sale, in addition to the criteria for ‘assets carried at amortised
cost’ above, a significant or prolonged decline in the fair value of the security below its cost is also considered as an
indicator that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative
loss that had been recognised directly in equity is removed from equity and recognised in profit or loss. The amount of
cumulative loss that is reclassified to income statement is the difference between the acquisition cost and the current
fair value, less any impairment loss on that financial asset previously recognised in profit or loss. Impairment losses
recognised in profit or loss on equity instruments classified as available-for-sale are not reversed through profit or loss.
(e)De-Recognition
Financial assets are de-recognised when the rights to receive cash flows from the investments have expired or have
been transferred and the Group has transferred substantially all risks and rewards of ownership.
Receivables that are factored out to banks and other financial institutions with recourse to the Group are not
derecognised until the recourse period has expired and the risks and rewards of the receivables have been fully
transferred. The corresponding cash received from the financial institutions is recorded as borrowings.
When available-for-sale financial assets are sold, the accumulated fair value adjustments recognised in other
comprehensive income are reclassified to profit or loss.
3.12
Financial Liabilities
Financial liabilities are recognised on the statement of financial position when, and only when, the Group becomes a party
to the contractual provisions of the financial instrument.
Financial liabilities are recognised initially at fair value, plus, in the case of financial liabilities other than derivatives, directly
attributable transactions costs.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
3 Summary of Significant Accounting Policies (continued)
3.12
Financial Liabilities (continued)
Subsequent to initial recognition, all financial liabilities are measured at amortised cost using the effective interest method
except for derivatives which are measured at fair value.
For financial liabilities other than derivatives, gains and losses are recognised in profit or loss when the liabilities are
derecognised, and through the amortisation process. Any gains or losses arising from changes in fair value of derivatives are
recognised in profit or loss. Net gains or losses on derivatives include exchange differences.
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 difference terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as derecognition of the original liability and the
recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.
(a) Trade Payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal
operating cycle of the business if longer). Otherwise, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method.
(b) Borrowings and Borrowing Costs
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried
at amortised cost; any difference between initial recognised amount and the redemption value is recognised in profit or
loss over the period of the borrowings using the effective interest method, except for borrowing costs incurred for the
construction of any qualifying asset.
Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is
required to complete and prepare the asset for its intended use or sale.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To
the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as
a pre-payment for liquidity services and amortised over the period of the facility to which it relates.
3.13
Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when there is
a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the
asset and settle the liability simultaneously.
3.14
Derivative Financial Instruments and Hedging Activities
Derivative that are used/designated as hedging instruments are initially recognised at fair value on the date the derivative
contract is entered into. Such derivatives are subsequently remeasured to their fair value. The method of recognising gain
or loss depends on whether the derivative is designated as a hedging instrument, and the nature of the item being hedged.
Derivatives that do not qualify for hedge accounting are classified as held for trading and accounted for in accordance with
the accounting policy set out in Note 3.11. Derivatives that qualify for hedge accounting are designated as either:
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
(a) hedges of the fair value of recognised assets or liabilities or firm commitments (fair value hedges);
(b)hedges of highly probable forecast transactions or hedges of foreign currency risk of firm commitments (cash flow
hedges); or
(c) hedges of net investments in foreign operations.
At the inception of a hedge relationship, the Group documents the relationship between hedging instruments and hedged
items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also
documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in
hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
The fair values of various derivative instruments used for hedging purposes are disclosed in Note 19. Movements on the
hedging reserve in other comprehensive income are shown in Note 31. The full fair value of a hedging derivative is classified
as a non-current asset or liability when the remaining hedged item is more than 12 months and as a current asset or liability
when the remaining maturity of the hedged item is less than 12 months.
(a) Fair Value Hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in profit or loss
as ‘finance costs’, together with any changes in the fair value of the hedged asset or liability that are attributable to the
hedged risk.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged
item for which the effective interest method is used is amortised to profit or loss over the period to maturity of the
hedged item.
(b) Cash Flow Hedge – Interest Rate Swaps
The Group has entered into interest rate swaps that are cash flow hedges for the Group’s exposure to interest rate risk
on certain of its borrowings. These contracts entitle the Group to receive interest at floating rates on notional principal
amounts and oblige the Group to pay interest at fixed rates on the same notional principal amounts, thus allowing the
Group to raise borrowings at floating rates and swap them into fixed rates.
The fair value changes on the effective portion of interest rate swaps designated as cash flow hedges are recognised in
other comprehensive income, accumulated in the hedging reserve and reclassified to profit or loss when the hedged
interest expense on the borrowings is recognised in profit or loss. The fair value changes on the ineffective portion of
interest rate swaps are recognised immediately in profit or loss.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction
is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain
or loss that was reported in equity is immediately transferred to profit or loss within ‘other operating expenses’.
(c) Cash Flow Hedge – Cross Currency Interest Rate Swaps (“CCIRS”)
The Group has previously entered into CCIRS that are designated as cash flow hedges for the Group’s exposure to
foreign exchange risk on its Murabahah Medium Term Notes, which were issued by a subsidiary. The CCIRS involve the
exchange of principals and fixed interest receipts in the foreign currency, in which the issued Murabahah Medium Term
Notes are denominated, for principals and fixed interest payments in the subsidiary’s functional currency.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognised in other comprehensive income and transferred to profit or loss within ‘finance costs’ in the periods when
the underlying hedged items affect profit or loss. The gain or loss relating to the ineffective portion of the CCIRS is
recognised immediately in profit or loss within ‘other operating expenses’.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
3 Summary of Significant Accounting Policies (continued)
3.14
Derivative Financial Instruments and Hedging Activities (continued)
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction
is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain
or loss that was reported in equity is immediately transferred to profit or loss within ‘other operating expenses’.
(d) Derivatives held-for-Trading and Accounted for at Fair Value through Profit or Loss
Certain derivative instruments do not qualify for hedge accounting or are not designated as such by the Group.
Changes in the fair value of any these instruments are recognised immediately in profit or loss within ‘other operating
expenses’.
3.15
Financial Guarantee Contracts
Financial guarantee contracts are contracts that require the Group or Company to make specified payments to reimburse
the holder for a loss it incurs because a specified debtor fails to make payments when due, in accordance with the terms of
a debt instrument.
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially
measured at fair value and subsequently at the higher of the amount determined in accordance with MFRS 137 “Provisions,
contingent liabilities and contingent assets” and the amount initially recognised less cumulative amortisation, where
appropriate.
The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the
contractual payments under the debt instrument and the payments that would be required without the guarantee, or the
estimated amount that would be payable to a third party for assuming the obligations.
Where financial guarantees in relation to loans or payables of subsidiaries are provided by the Company for no
compensation, the fair values are accounted for as contributions and recognised as part of the cost of investment in
subsidiaries.
3.16Leases
A lease is an agreement whereby the lessor conveys to the lessee in return for a payment, or series of payments, the right to
use an asset for an agreed period of time.
(a) Finance Leases
Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are
classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of
the leased property and the present value of the minimum lease payments.
Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate of interest on
the remaining balance of the liability. The corresponding rental obligations, net of finance charges, are included in other
long-term payables. The interest element of the finance cost is charged to profit or loss over the lease period so as to
produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant
and equipment acquired under finance leases are depreciated over the shorter of the estimated useful life of the asset
and the lease term.
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(b)OperatingLease
Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified
as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged
to profit or loss on the straight line basis over the lease period. Initial direct costs incurred by the Group in negotiating
and arranging operating leases are capitalised as prepayments and recognised in profit or loss over the lease term on a
straight-line basis.
3.17Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average basis.
The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related
production overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable value is the
estimated selling price in the ordinary course of business, less applicable variable selling expenses.
3.18
Cash and Cash Equivalents
For purposes of the statements of cash flows, cash and cash equivalents comprise cash on hand, bank balances, deposits
held at call with banks excluding deposits which are pledged for banking facilities, and other short-term, highly liquid
investments with original maturities of three months or less, less bank overdrafts. Bank overdrafts are included within
borrowings in current liabilities in the statements of financial position.
3.19
Non-Current Assets (or Disposal Groups) Held-for-Sale
Non-current assets (or disposal groups) are classified as assets held–for-sale when their carrying amount is to be recovered
principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying
amount and fair value less costs to sell. The assets are not depreciated or amortised while they are classified as held-for-sale.
Any impairment loss on initial classification and subsequent measurement is recognised as an expense. Any subsequent
increase in fair value less costs to sell (not exceeding the accumulated impairment loss that has been previously recognised)
is recognised in profit or loss.
Non-current assets (or disposal groups) cease to be classified as assets held-for-sale if there are changes to a plan of sale
resulting from certain event or circumstances.
The non-current assets (or disposal group) that cease to be classified as held for sale are measured at the lower of (1)
its carrying amount before the asset (or disposal group) was classified as held-for-sale, adjusted for any depreciation or
amortisation that would have been recognised had the assets (or disposal groups) not been classified as held-for-sale, and
(2) its recoverable amount at the date of the subsequent decision not to sell.
Any adjustment arising from the re-measurement of the carrying amount of the non-current assets (or disposal group) that
cease to be classified as held-for-sale are recognised in profit or loss within “other operating expenses” from the date of the
subsequent decision not to sell.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
3 Summary of Significant Accounting Policies (continued)
3.20 Share Capital
(a)Classification
Ordinary shares with discretionary dividends are classified as equity.
(b) Share Issue Costs
Incremental costs directly attributable to the issue of new shares or options are deducted against share premium account.
(c) Dividend Distribution
Distribution to holders of equity investment are debited directly into equity, net of any related income tax benefit and
the corresponding liability is recognised in the period in which the dividends are approved.
(d) Purchase of Own Shares
Where the Company or its subsidiaries purchases the Company’s equity share capital (treasury shares), the consideration
paid, including any directly attributable incremental external costs, net of tax, is included in equity attributable to the
controlling equity holders as treasury shares until they are cancelled, reissued or disposed of. Where such shares are
subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs
and the related tax effects, is included in equity attributable to the controlling equity holders.
3.21
Income Taxes
The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the
extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also
recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantially enacted at the end of the
reporting period in the countries where the Group’s subsidiaries and associates operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be
paid to the tax authorities. This liability is measured using the single best estimate of the most likely outcome.
Deferred tax is recognised using the liability method, on temporary differences arising between the amounts attributed to
assets and liabilities for tax purposes and their carrying amounts in the financial statements. However deferred tax is not
accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination
that at the time of the transaction affects neither the accounting nor taxable profit or loss. Deferred tax is determined
using tax rates (and tax laws) that have been enacted or substantially enacted by the end of the reporting period and are
expected to apply in the period when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the
deductible temporary differences, unused tax losses and unused tax credits can be utilised.
Deferred tax is recognised on temporary differences arising on investments in subsidiaries, associates and joint ventures
except where the timing of the reversal of the temporary difference can be controlled by the Group and it is probable that
the temporary difference will not reverse in the foreseeable future.
Deferred and income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income tax assets and liabilities relate to taxes levied by the same
taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances
on a net basis.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
3.22
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
Employee Benefits
(a) Short term Employee Benefits
Wages, salaries and bonuses are accrued in the financial period/year in which the associated services are rendered by
employees of the Group. 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.
(b) Defined Contribution Plan
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity (a
fund) and will have no legal or constructive obligations to pay further contributions if the fund does not hold sufficient
assets to pay all employees benefits relating to employee service in the current and prior periods.
As required by law, companies in Malaysia make contributions to the Employees’ Provident Fund (“EPF”). The Group’s
foreign subsidiaries make contributions to their respective state pension schemes on a mandatory basis. Such
contributions are charged to profit or loss in the period to which they relate. Once the contributions have been paid, the
Group has no further payment obligations. Prepaid contributions are recognised as an asset to the extent that a cash
refund or a reduction in the future payments is available.
(c) Defined Benefit Plan
A defined benefit plan is a pension plan that is not a defined contribution plan. Typically, defined benefit plans define an
amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such
as age, years of service and compensation.
The liability recognised in the statement of financial position in respect of defined benefit pension plans is the present
value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets, together
with adjustments for actuarial gains or losses and past service costs. The defined benefit obligation is calculated
annually by an independent actuary using the projected unit credit method. The present value of the defined benefit
obligation is determined by discounting the estimated future cash outflows using interest rates of bond market that
are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the
terms to the related pension liability.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions in excess of the
greater of 10% of the value of plan assets or 10% of the defined benefit obligation are charged or credited to profit or
loss over the employees’ expected average remaining working lives.
Past-service costs are recognised immediately in profit or loss, unless the changes to the plan are conditional on the
employees remaining in service for a specified period of time (the vesting period). In this case, the past service costs are
amortised on a straight line basis over the vesting period.
(d) Termination Benefits
The Group recognises termination benefits when it is demonstrably committed to either terminating the employment
of current employees according to a detailed formal plan without possibility of withdrawal, or providing termination
benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits are payable when
employment is terminated by the Group before the normal retirement date, or whenever an employee accepts
voluntary redundancy in exchange for these benefits. Benefits falling due more than 12 months after the end of the
reporting period are discounted to present value.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
3 Summary of Significant Accounting Policies (continued)
3.22
Employee Benefits (continued)
(e) Share-Based Compensation
The Company operated an equity-settled, share-based compensation plan for the Directors and employees of the
Company and its subsidiaries (“ESOS”).
The fair value of the employee services received in exchange for the grant of the options is recognised as an expense in
profit or loss. The total amount to be expensed is determined by reference to the fair value of the options granted:
•
•
•
including any market performance conditions;
e xcluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales
growth targets and remaining an employee of the entity over a specified time period); and
excluding the impact of any non-vesting conditions (for example, the requirement for employees to save).
Non-market investing conditions are included in assumptions about the number of options that are expected to vest.
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting
conditions are to be satisfied.
At the end of the reporting period, the Company revises its estimates of the number of options that are expected to
vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in
profit or loss, with a corresponding adjustment to share option reserve in equity.
When the options are exercised, the Company issues new shares. The proceeds received net of any directly attributable
transaction costs are credited to share capital (nominal value) and share premium when the options are exercised and a
corresponding reversal to retained earnings is made from the share option reserve. When options are not exercised and
lapse or are forfeited, the share option reserve is transferred to retained earnings.
In the separate financial statements of the Company, the grant by the Company of options over its equity instruments
to the employees of subsidiary undertakings in the Group is treated as a capital contribution. The fair value of employee
services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase
to investment in subsidiary undertakings, with a corresponding credit to equity.
3.23Provisions
Provisions are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable
that an outflow of resources will be required to settle the obligation; and a reliable estimate of the amount can be made.
Where the Group expects a provision to be reimbursed (for example, under an insurance contract), the reimbursement is
recognised as a separate asset but only when the reimbursement is virtually certain. Provisions are not recognised for future
operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined
by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect
to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a
pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The
increase in the provision due to the passage of time is recognised as finance cost expense.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
3.24 Contingent Assets and Liabilities
The Group does not recognise contingent assets and liabilities, but discloses their existence in the financial statements. A
contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence
or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation
that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A
contingent liability also arises in the extremely rare case where there is a liability that cannot be recognised because it
cannot be measured reliably. However, contingent liabilities do not include financial guarantee contacts.
A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the control of the Group. The Group does not recognise
contingent assets but discloses their existence where inflows of economic benefits are probable, but not virtually certain.
In the acquisition of subsidiaries by the Group under a business combination, the contingent liabilities assumed are
measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interests.
The Group recognises separately the contingent liabilities of the acquirees as part of allocating the cost of a business
combination where their fair values can be measured reliably. Where the fair values cannot be measured reliably, the
resulting effect will be reflected in the goodwill arising from the acquisitions.
Subsequent to the initial recognition, the Group measures the contingent liabilities that are recognised separately at the
date of acquisition at the higher of the amount that would be recognised in accordance with the provisions of MFRS 137
“Provisions, contingent liabilities and contingent assets” and the amount initially recognised, when appropriate, cumulative
amortisation recognised in accordance with MFRS 118 “Revenue”.
3.25 Revenue Recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of services in the ordinary course
of the Group’s activities. The Group recognises revenue when it is probable that the economic benefits associated with the
transaction will flow to the Group and the amount of revenue can be reliably measured. Revenue is shown net of services
tax, returns, rebates and discounts and after eliminating sales within the Group.
(a) Sales of Goods
Sales of goods, including chemicals, are recognised when risks and rewards of ownership of the goods are transferred to
the buyer.
(b) Rendering of Services
Revenue from rendering of drilling waste management, marine transportation services, and other shipping related
services are recognised as and when the services are rendered, by reference to completion of the specific transaction,
assessed on the basis of the actual service provided as a proportion of the total services to be provided.
(c) Rental Income
Rental income from operating leases is recognised on a straight-line basis over the term of the lease.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
3 Summary of Significant Accounting Policies (continued)
3.25 Revenue Recognition (continued)
(d) Charter Hire Income
Revenue from charter hire is recognised on an accrual basis but is deferred when the terms of billings have not been
agreed by third parties or when certain conditions necessary for realisation have yet to be fulfilled.
(e) Management and Agency Fees
Management and agency fees are recognised on an accrual basis, by reference to completion of the specific transaction,
assessed on the basis of the actual service provided as a proportion of the total services to be provided.
(f) Dividend Income
Dividend income is recognised when the right to receive payment is established.
(g) Interest Income
Interest income is recognised using the effective interest method. When a loan and receivable is impaired, the Group
reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at original
effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on
impaired loans and receivables is recognised using the original effective interest rate.
3.26
Foreign Currencies
(a) Functional and Presentation Currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (the “functional currency”). The financial statements are
presented in Ringgit Malaysia, which is the Company’s functional and presentation currency.
(b) Transactions and Balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss, except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in profit
or loss within ‘finance costs’. All other foreign exchange gains and losses are presented in profit or loss within
’administrative expenses’.
Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale are
analysed between translation differences resulting from changes in the amortised cost of the security and other
changes in the carrying amount of the security. Translation differences related to changes in amortised cost are
recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income.
Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit
or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary
financial assets, such as equities classified as available for sale, are included in other comprehensive income.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
(c) Group Companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the presentation
currency as follows:
•
•
•
a ssets and liabilities for each statement of financial position presented are translated at the closing rate at the date
of that statement of financial position;
income and expenses for each statement of comprehensive income or separate statement of comprehensive
income presented are translated at average exchange rates (unless this average is not a reasonable approximation
of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are
translated at the rate on the dates of the transactions); and
all resulting exchange differences are recognised as a separate component of other comprehensive income.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and
of borrowings and other financial instruments designated as hedges of such investments, are recognised in other
comprehensive income.
When a foreign operation is sold, or any borrowings forming part of the net investment are repaid, a proportionate share
of such exchange differences is reclassified to profit or loss as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of
the foreign entity and translated at the closing rate.
3.27
Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker.
The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating
segments, has been identified as the Group Chief Executive Officer.
4 Critical Accounting Estimates and Judgements
Estimates and judgements are continually evaluated by the Directors and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
Critical Accounting Estimates and Assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely
equal the related actual results. To enhance the information content of the estimates, certain key variables that are anticipated
to have a material impact to the Group’s results and financial position are tested for sensitivity to changes in the underlying
parameters. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are outlined below.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
4 Critical Accounting Estimates and Judgements (continued)
(a) Estimated Impairment of Goodwill
The Group tests goodwill for impairment annually in accordance with its accounting policy. More regular reviews are
performed if events indicate that this is necessary.
Determining whether goodwill is impaired requires an estimation of the value in use and fair value less costs to sell of the
cash-generating units to which goodwill has been allocated. The value in use calculation requires the entity to estimate the
future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present
value. Fair value less costs to sell is determined based on indicative values on a willing buyer willing seller basis, as provided
by an independent valuer. The recoverable amounts of goodwill have been determined based on the higher of fair value
less costs to sell and value-in-use calculations, which resulted in no impairment loss during the year.
The carrying amount of goodwill and estimates used in the calculation are disclosed in Note 17 to the financial statements.
The Directors are of the opinion that any reasonably expected change in the key assumptions used to determine the
recoverable amounts of the CGUs, would not result in any impairment.
(b) Impairment of Property, Plant and Equipment – Marine Vessels
The recoverable amounts of marine vessels have been determined based on the higher of fair value less costs to sell and
value-in-use calculations as disclosed in Note 11. Based on this assessment, there was an impairment charge of RM4,628,100
(31.12.2011: RM95,218,000) recognised in profit or loss for the financial period ended 31 March 2013.
(c) Impairment of Investments in Subsidiaries, Associates And Joint Ventures
The Company assess the impairment of investments in subsidiaries, associates and joint ventures when is an indicator of
impairment. The carrying amounts are disclosed in Note 13 and 14 respectively. Based on this assessment, there was a
reversal of impairment charge of RM385,000 (impairment loss of 31.12.2011: RM113,219,000) for investment in subsidiaries
and RM Nil (31.12.2011: RM3,000,000) for investment in associates recognised in profit or loss for the financial period ended
31 March 2013.
(d) Income Taxes
The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the
worldwide provision for income taxes, including determination of taxable income, capital allowances and deductibility of
certain expenses during the estimation of the provision for income taxes. There are many transactions and calculations for
which the ultimate tax determination is uncertain during the ordinary course of business.
The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be
due. The Group has made assumptions and judgements in relation to provision for tax disputes based on, among others,
historical experience with local tax authorities in the relevant countries and timing of the potential liabilities. These
assumptions and judgements are made in consultation with and according to the advice from local independent tax
professionals. Any changes to these assumptions and judgement will impact the carrying amount of the potential liabilities.
Where the final tax outcome of these matters is different from the amounts that were initially recorded, such as if the
actual future taxable profits, or if the amounts of carry forward tax losses, unutilised tax incentives, capital allowances and
tax recoverable amounts that are approved by the tax authorities differ from those currently estimated by the Group, such
differences will impact the income tax and deferred income tax provisions in the period in which such determination is
made.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
i) Tax Recoverable
The Group has carried forward tax recoverable of RM8.9 million related to certain subsidiaries. The Directors and local
independent tax professionals believe that the amount can be set off against future tax payables.
ii) Deferred Taxes
The Group has significant unrecognised tax losses, unutilised tax incentives and capital allowances as disclosed in Note 18.
As at 31 March 2013, the Group has deferred tax asset of RM18.5 million. The deferred tax assets were recognised based on
budgeted future taxable profits as the Directors are of the opinion that and it is probable that the future taxable profits will
be achieved within those entities.
(e)Litigations
The Group operates across many countries and is required to comply with all applicable laws and regulations of the countries in
which the Group operates. Significant judgement is required to determine the likelihood of the obligation and the estimation
of amounts to be recognised in respect of legal matters, subject to uncertain future events. The legal cases may extend over
several years and the amount or timing may differ from current assumptions.
Based on legal advice, the Group has recognised RM3.0 million as provisions as disclosed in Note 25. Contingent liabilities of RM
Nil (31.12.2011: RM2.1 million) are as disclosed in Note 35.
5 Revenue
Group Company
Period YearPeriod Year
endedendedendedended
31.3.201331.12.2011 31.3.201331.12.2011
restated
restated
RM’000RM’000RM’000RM’000
Sale of goods
Rendering of services
Rental/charter hire income
Management and agency fees
629,658741,699
161,742100,476
678,347413,890
1,9462,120
1,471,6931,258,185
––
––
––
––
––
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
6 Finance Costs
Group Company
Period YearPeriod Year
endedendedendedended
31.3.201331.12.2011 31.3.201331.12.2011
restated
restated
RM’000RM’000RM’000RM’000
Interest expense on:
- bank loans and other borrowings
9,4158,990
- Sukuk/Murabahah
29,22230,527
- Effect of interest on CCIRS
8982,304
- Effect of hedging – fair value hedge
–21
349
––
––
––
39,53541,842
349
Currency exchange*––––
Amortisation of loan arrangement
1,8211,050
––
Discounting of amount due to a subsidiary
––
1,575–
41,35642,892 1,57849
*Included in currency exchange is a gain of RM3,058,000 (2011: loss of RM13,472,000) transferred from hedging reserve which is
offset by a corresponding exchange of (loss)/gain arising from revaluation of hedged borrowings.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
7 Profit/(Loss) before Taxation
Group Company
Period YearPeriod Year
endedendedendedended
31.3.201331.12.2011 31.3.201331.12.2011
restated
restated
RM’000RM’000RM’000RM’000
Profit/(Loss) before taxation is stated after (crediting)/charging:
Depreciation:
- Property, plant and equipment
88,87397,092 247177
- Investment properties
182144 ––
Amortisation of patents rights and development cost 43154 ––
Amortisation of loan expenses
1,7951,050
––
Impairment loss:
- Property, plant and equipment
6,98495,219
––
- Intangible assets
–36,294
––
- Receivables
4,10118,277
––
- Investment in subsidiary
–––113,219
- Investment in associate
–––3,000
- Insurance recoverable
–9,467
––
- Other recoverable
–12,513
––
- Associates and subsidiaries
–17,404
––
- Investment properties
–455 ––
Reversal of impairment loss:
- Property, plant and equipment
(216)– ––
- Receivables
(6,496)(8,065)
––
- Investment in subsidiary
––
(385)–
- Insurance recoverable
(9,467)– ––
- Other recoverable
(3,811)– ––
- Associates and subsidiaries
(5,265)–
(8,369)(446)
Management fee (33,245)(3,735)
–326
License fees 10,72530,391
––
Net (gain)/loss on foreign exchange
- Realised (17,471)6,3271,134263
- Unrealised 23,437
6,323 456
Rental of premises
4,37510,529 372280
Rental of equipment
13,80440,096
62136
Loss/(gain) from disposal of property, plant and equipment
3,220(2,362)
––
Allowance for inventories
1,6381,453
––
Interest income
(18,140)(22,245) (460)(862)
Employee benefits (Note 8)
188,921140,415 4,6094,802
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
7 Profit/(Loss) before Taxation (continued)
Group Company
Period YearPeriod Year
endedendedendedended
31.3.201331.12.2011 31.3.201331.12.2011
restated
restated
RM’000RM’000RM’000RM’000
Auditors’ remuneration:
PricewaterhouseCoopers Malaysian firm
Statutory audit
- Current year
- Under/(over) provision in prior year
Non-audit fees
- Current year
Overseas affiliates of PricewaterhouseCoopers
Malaysian firm:
Statutory audit
- Current year
- Under/(over) provision in prior year
Non-audit fees
- Under/(over) provision in prior year
Other external auditors:
Statutory audit
- Current year
- Under/(over) provision in prior year
Non-audit fees
- Current year
1,1971,146 16050
–(20) ––
1,581–
750–
1,6641,467
––
(176)92 ––
22–––
6030 ––
102–––
89–––
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
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8 Employee Benefit Cost
The aggregate amount of emoluments received/receivable by Directors of the Company during the financial period/year is as follows:
Group Company
Period YearPeriod Year
endedendedendedended
31.3.201331.12.2011 31.3.201331.12.2011
restated
restated
RM’000RM’000RM’000RM’000
Non-executive Directors:
- fees
430332355227
- Other emoluments
81547954
- share options
–29 –29
511415434310
3234 ––
588–
582–
–19 –19
Executive Directors:
- fees - salaries and other emoluments
- share options
6205358219
1,131468
1,016329
The aggregate employee benefit costs, including Executive Directors, during the financial period/year is as follows:
Group Company
Period YearPeriod Year
endedendedendedended
31.3.201331.12.2011 31.3.201331.12.2011
restated
restated
RM’000RM’000RM’000RM’000
Wages, salaries and bonuses
163,406121,831 2,8953,238
Termination benefits
1,25837 ––
Contribution to defined contribution plan
4,9234,162
––
Pension costs:
- defined contribution plan
5,2111,938 466396
- defined benefit plans (Note 32)
1,1171,634
––
Share option expenses
- current year (Note 28(b))
1,2351,438 397784
Other employee benefits (including allowances) 11,7719,375 851384
188,921140,415 4,6094,802
P
/1 1 0
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
9Taxation
Group Company
Period YearPeriod Year
endedendedendedended
31.3.201331.12.2011 31.3.201331.12.2011
restated
restated
RM’000RM’000RM’000RM’000
Current tax
- Malaysian income tax
- Foreign income tax
5,9851,667
16,63921,194
––
––
22,62422,861
Deferred income tax (Note 18)
14,98712,522
––
––
37,61135,383
––
Numerical reconciliation between tax expense and the product of accounting profit/(loss) multiplied by the Malaysian tax rate:
Group Company
Period YearPeriod Year
endedendedendedended
31.3.201331.12.2011 31.3.201331.12.2011
restated
restated
RM’000RM’000RM’000RM’000
Profit/(loss) before taxation
134,703(84,650)(4,823)(123,639)
Tax calculated at the Malaysian tax rate of 25% (2011: 25%)
33,676(21,163)(1,206)(30,910)
Tax effects of:
- different tax rates in other countries
(17,509)23,033
––
- expenses not deductible for tax purposes
19,84134,443 78429,585
- income not subject to tax (954)(6,635)(2,189)(205)
-u
tilisation of previously unrecognised tax losses and
unabsorbed capital allowances
–(628) ––
- share of results of associates
33745 ––
- share of results of joint venture
(1,747)(1,192)
––
- deferred tax assets not recognised
6963,0602,6111,530
- deferred tax – (over)/under provision in prior years
(1,595)2,414
––
- income tax – under provision in prior years
5,167250 ––
- others
31,056
––
Taxation expense
37,61135,383
––
P
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
10 Earnings/(Loss) per Share
(a) Basic Earnings/(Loss) per Share
Basic loss per share of the Group is calculated by dividing the loss attributable to owners of the Company for the financial
period/year by the weighted average number of ordinary shares in issue during the financial period/year, excluding ordinary
shares purchased by the Company and held as Treasury shares (Note 29). As the Group applies predecessor accounting, the
number of shares as of the merger date is to be reflected throughout the current and previous financial periods for the purposes
of calculating the basic and diluted earnings per share.
Group
Period
Year
ended
ended
31.3.2013
31.12.2011
restated
Profit/(loss) attributable to owners of the Company (RM’000)
90,096(116,476)
Weighted average number of ordinary shares of RM0.45 each in issue (’000)
2,341,6302,341,632
Basic earnings/(loss) per share (sen)
3.85(4.97)
(b) Diluted Loss per Share
The diluted loss per share of the Group is similar to the basic loss per share as the options over unissued ordinary shares granted
pursuant to the ESOS at 31.12.2011 have an anti-dilutive effect. The exercise price of the ESOS of RM1.15 is above the average
market value of the Company’s shares as at 31.12.11. ESOS has been terminated during the financial period as disclosed in Note
28 (b).
11 Property, Plant and Equipment
Buildings
Renovation,
on Non- fittings,Capital
Freeholdfreehold
Leasehold
Marine Rental rental Motorand officework in
Group
land
land buildings vessels equipment equipment vehicles equipment progress Total
RM’000RM’000RM’000
RM’000 RM’000 RM’000RM’000 RM’000
RM’000
RM’000
Cost
At 1 January 2012,
as restated
Additions
Disposals
Reclassification Currency translation
differences
1,328
2,902
14,899 776,086
342,706
11,735
6,115
43,104
2,059 1,200,934
–
–
1,280
28,713
54,720
537
550
1,728
7,266
94,794
(89)(159)(1,398)
(71,740)(9,218)(1,037)(465)(1,551) –
(85,657)
–
–
–
2,013
6
–
–
(6)
(2,013)
–
(25)
(54)
1,214
2,689
At 31 March 2013
(58)
(14,615)
1,731
(202)
29
(249)
14,723 720,457
389,945
11,033
6,229
43,026
(19)
(13,462)
7,293 1,196,609
/1 1 1
P
/1 1 2
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
11 Property, Plant and Equipment (continued)
Buildings
Renovation,
on Non- fittings,Capital
Freeholdfreehold
Leasehold
Marine Rental rental Motorand officework in
Group
land
land buildings vessels equipment equipment vehicles equipment progress Total
RM’000RM’000RM’000
RM’000 RM’000 RM’000RM’000 RM’000
RM’000
RM’000
Accumulated
depreciation
At 1 January 2012,
as restated
Charge for the year
Disposals
Reclassification
Currency translation
differences
104
2,607
11,575 310,364
183,989
8,352
4,356
22,828
– 544,175
–
115
821
45,467
34,245
1,126
659
6,440
–
88,873
– (207)(1,324)
(34,088)(6,407) (602)(452)(1,313) –
(44,393)
–
––
–––
––
–
–
4
(48)
108
2,467
(33)
(7,549)
11,039314,194
(888)
210,939
At 31 March 2013
Accumulated
impairment
At 1 January 2012,
as restated
Charge for the year
Disposal
Reversal of impairment
loss
At 31 March 2013
Net book value
At 31 March 2013
Cost (restated)
At 1 January 2011
Effect of early adoption
of standards
Predecessor accounting
–
–
–
79,509
–
–
112
–
406
–
15,890
(79,509)
–
At 1 January 2011
112
406
15,890
Additions
Reclassification from
assets of disposal group
held-for-sale
Disposals
Currency translation
differences
–
–
1,218
–
At 31 December 2011
–
–
–
–
–
–
–
500
–
–
–
–
–
–
1,106
222
95,219
4,176
(13,215)
–
50086,180
3,184320,083
(162)
(64)
(345)
8,714
4,499
27,610
–
(9,085)
–579,570
–
2,308
–
–
–
–
–
–
–
–
–
–
–
–
–
95,219
6,984
(13,215)
(216)
–
–
–
–
(216)
–
–
–
–88,772
2,092
176,914
2,319
1,730
15,416
7,293528,267
–
410
890
–
80,809
–
302,819
–
10,261
(1)
3,895
3
40,885
–
–
(79,507)
374,268
–
302,819
10,261
4,304
41,778
–
375,570
302
23,909
47,413
834
551
2,154
1,846
77,009
2,495
–
–
(1,230)
759,979
(8,298)
–
(12,295)
–
(95)
1,890
(593)
2,874
(3,534)
154
–
768,610
(26,045)
(2)
1
(63)
496
4,769
735
(37)
(168)
59
5,790
1,328
2,902
14,899
776,086
342,706
11,735
6,115
43,104
2,059 1,200,934
P
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
Buildings
Renovation,
on Non- fittings,Capital
Freeholdfreehold
Leasehold
Marine Rental rental Motorand officework in
Group
land
land buildings vessels equipment equipment vehicles equipment progress Total
RM’000RM’000RM’000
RM’000 RM’000 RM’000RM’000 RM’000
RM’000
RM’000
Accumulated
depreciation (restated)
At 1 January 2011
Charge for the year
Reclassification from
assets held-for-sale
Disposals
Currency translation
differences
At 31 December 2011
106
–
397
159
11,411
630
–
66,188
173,622
22,907
6,976
1,456
3,056
793
18,860
4,959
–
–
214,428
97,092
–
–
2,046
–
–
(391)
247,148
(7,827)
–
(12,295)
–
(95)
1,177
(593)
2,444
(3,534)
–
–
252,815
(24,735)
(2)
5
(75)
4,855
(245)
15
(77)
99
–
4,575
104
2,607
11,575
310,364
183,989
8,352
4,356
22,828
–
544,175
Accumulated
impairment (restated)
At 1 January 2011
Charge for the year
Reclassification from
assets held-for-sale
–
–
–
–
–
–
–
85,329
–
–
–
–
–
–
–
–
–
–
–
85,329
–
–
–
9,890
–
–
–
–
–
9,890
At 31 December 2011
–
–
–
95,219
–
–
–
–
–
95,219
Net book value (restated)
At 31 December 2011
1,224
295
3,324
370,503
158,717
3,383
1,759
20,276
2,059
561,540
At 1 January 2011
6
9
4,479
–
129,197
3,285
1,248
22,918
–
161,142
Office
Motor
Company
equipment
Renovation
vehicles
Total
RM’000RM’000RM’000RM’000
Cost
At 1 January 2012/ 31 March 2013
570
428
200
1,198
Accumulated depreciation
At 1 January 2012
Charge for the financial period
251
91
70
107
137
49
458
247
At 31 March 2013
342177186705
Net book value
At 31 March 2013
228251 14493
/1 1 3
P
/1 1 4
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
11 Property, Plant and Equipment (continued)
Office
Motor
Company
equipment
Renovation
vehicles
Total
RM’000RM’000RM’000RM’000
Cost
At 1 January 2011
566
324
200
1,090
Additions 4104 –108
At 31 December 2011
570
428
200
1,198
Accumulated Depreciation
At 1 January 2011
Charge for the financial year
179
72
5
65
97
40
281
177
At 31 December 2011
251
70
137
458
Net Book Value
At 31 December 2011
319
358
63
740
At 1 January 2011387319103809
(i)The net book value of motor vehicles of the Group and of Company acquired under finance leases at the end of the reporting
period was RM1,332,000 (31.12.2011: RM1,938,000 ; 1.1.2011: RM1,782,000) and RM14,000 (31.12.2011: RM63,000 ; 1.1.2011:
RM103,000) respectively.
(ii)Management performed an impairment assessment on certain vessels to assess the carrying amounts of these vessels due to
loss of a major customer in the Marine Services segment. Arising from this assessment, the Group recognised an impairment
charge of RM4,628,100 (31.12.2011: RM95,219,000) which represented the write-down of certain vessels to their recoverable
amounts. The recoverable amount was based on the higher of fair value less cost to sell and value-in-use calculation, with all
tug and barges being regarded as a cash-generating unit. The recoverable amounts of the vessels were determined based on
fair value (based on independent third party valuation reports) less costs to sell, which is the indicative values of the vessels on a
willing buyer willing seller basis.
(iii) Certain property, plant and equipment of the Group are charged as security for banking facilities (Note 26) as follows:
Group
As at
As at
As at
31.3.2013
31.12.2011
1.1.2011
restated
restated
RM’000RM’000RM’000
Marine vessels
152,860 92,066557,480
Land and buildings
1,216––
154,076 92,066557,480
P
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
12 Investment Properties
Group
Period
Year
ended
ended
31.3.2013
31.12.2011
restated
Freehold land and buildings
RM’000
RM’000
Cost
At beginning of financial period/year
3,8322,889
Additions–945
Currency translation differences
3(2)
At end of financial period/year
3,8353,832
Accumulated Depreciation and Impairment Losses
At beginning of financial period/year
2,2731,675
Charge for the financial period/year
182144
Impairment losses–455
Currency translation differences
(2)(2)
At end of financial period/year
2,4532,272
Group
As at
As at
As at
31.3.2013
31.12.2011
1.1.2011
restated
restated
RM’000RM’000RM’000
Net book value
1,3821,5601,214
At fair value:
3,7902,9612,710
The fair values of the investment properties in the prior years were determined based on current prices in active markets. The
valuations for the current financial period was carried out on 16 May 2013 by a registered valuer.
The following amounts have been recognised in profit or loss:
Group
Period
Year
ended
ended
31.3.2013
31.12.2011
restated
RM’000
RM’000
Rental income
681135
Direct operating expenses of investment properties that generated rental income
––
/1 1 5
P
/1 1 6
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
12 Investment Properties (continued)
There were no direct operating expenses arising from investment property that generated rental income during the year as all
expenses were incurred by the tenant.
13 Investment in Subsidiaries
Company
Period
Year
ended
ended
31.3.2013
31.12.2011
restated
RM’000
RM’000
At beginning of financial period/year
453,444566,663
Investments in subsidiary companies (a)
948,080–
Deemed investment – capital contribution (b)
(131,231)–
1,270,293566,663
Reversal of/(impairment loss) in investments
385(113,219)
1,270,678453,444
At end of financial period/year
Unquoted equity shares, at cost
11,01611,016
Deemed investment – capital contribution
1,569,591752,742
1,580,607763,758
Less: Accumulated impairment losses (c)
(309,929)(310,314)
1,270,678453,444
(a) Investment in subsidiary companies during the financial period comprised the following:
RM’000
Subsidiaries
Scomi Oilfield Limited
940,600
Scomi Sosma Sdn Bhd
6,710
Scomi KMC Sdn Bhd
770
948,080
Details of the acquisitions are set out in Note 39 of the financial statements.
(b)Deemed investment – capital contribution reflects the Company’s interest in the subsidiaries where the Company provides
capital injection to the subsidiaries with no fixed term of repayment. As disclosed in Note 39(f ), the proceeds received from
disposal of Marine Logistic Companies by a subsidiary were utilised to repay the Company during the financial period.
P
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
(c)Impairment assessments for investment in subsidiaries
Investments in subsidiaries are assessed at each reporting period for an indication that the investment may be impaired. Where
such an indication exists, the recoverable amount of the identified cost of investment is determined based on the higher of
value-in-use calculations and fair value less costs to sell.
During the financial period, the Company’s investment in Scomi Marine Services Pte Ltd (“SMS”) was reviewed for reversal of
impairment using fair value less costs to sell as certain vessels were disposed at a gain. Arising from the above assessment, the
Company recognised a reversal of impairment of RM385,000 (impairment loss of 31.12.2011: RM103,819,000) for the financial
period ended 31 March 2013.
Details of the significant subsidiaries are as follows:
Group’s
Country of
effective equity interest
Name of company
incorporation 31.3.2013 31.12.2011 1.1.2011
%
%
%
Direct subsidiaries
Scomi Oilfield Limited
Scomi Marine Services Pte Ltd
(“SMS”)*
Bermuda
Singapore
Principal activities
100.00
76.08
76.08
Investment holding
100.00
100.00
100.00
Investment holding
Trans Advantage Sdn. Bhd.
Malaysia100.00
100.00
100.00 Ship chartering
and ship
management
Scomi KMC Sdn Bhd Malaysia
52.00
51.04
(including 4% held by
Scomi Oiltools Sdn Bhd)
51.04
Provision of oilfield
equipment, supplies
and services
Scomi Sosma Sdn Bhd Malaysia
100.00
40.00
40.00 Distribution of
chemical
products and
services
Significant Subsidiaries of
Scomi Oilfield Limited
Scomi Oiltools Sdn Bhd Malaysia
100.00
76.08
76.08 Provision of oilfield
equipment, supplies
and services and
provision of
management services
Scomi Oiltools (Cayman) Ltd *
Cayman
100.00
76.08
76.08 Provision of oilfield
Islands equipment, supplies
and services to Qatar
and United Arab
Emirates
/1 1 7
P
/1 1 8
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
13 Investment in Subsidiaries (continued)
Group’s
Country of
effective equity interest
Name of company
incorporation 31.3.2013 31.12.2011 1.1.2011
%
%
%
Scomi Oiltools Ltd Principal activities
Cayman
100.00
76.08
76.08 Provision of oilfield
Islands equipments, supplies
and service in
Pakistan and
Myanmar
Scomi Oiltools (Africa) Limited
Cayman 100.00
76.08
76.08 Investment holding Islandand provision of
oilfield
equipment, supplies
and services to Congo
and Nigeria
Scomi Oiltools (Thailand) Ltd * Thailand
100.00
76.08
76.08 Provision of oilfield
equipment, supplies
and services
Scomi Oiltools Egypt SAE*~
Egypt
100.00
76.08
76.08
Provision of oilfield
equipment, supplies
and services
KMCOB Capital Berhad
Malaysia
100.00
76.08
76.08 Undertake the issuance of private
debt securities in such
classes, series, from
or denomination and
to secure the
redemption thereof
and the utilisation of
proceeds from such
issuance and to
undertake any
refinancing exercise
in respect of such
private debt securities
100.00
76.08
76.08 Provision of oilfield
equipment, suppliers
and services
Scomi Oiltools (S) Pte Ltd α
Singapore
Scomi Oiltools Oman LLC * Oman
KMC Oiltools BV
Netherlands
51.00
38.80
38.80 Provision of oilfield
equipment, suppliers
and services
100.00
76.08
76.08 Intellectual property
holder and coordinator
P
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
Group’s
Country of
effective equity interest
Name of company
incorporation 31.3.2013 31.12.2011 1.1.2011
%
%
%
Principal activities
Significant Subsidiaries of
Scomi Oilfield Limited (continued)
Scomi Oiltools Pty Ltd *
Australia
100.00
76.08
76.08
Provision of oilfield
equipment, supplies
and services
Significant Subsidiaries of
Scomi Oiltools (S) Pte Ltd
PT Scomi Oiltools *
Indonesia
95.00
72.28
72.28
Provision of oilfield
equipment, supplies
and services
Scomi Oiltools (RUS) Russia
100.00
76.08
76.08
Limited Liability Company *
Provision of oilfield
equipment, supplies
and services
Significant Subsidiary of
Scomi Oilfield (Africa) Limited
WASCO Oil Services
Congo
60.00
45.65
45.65 Provision of oilfield
Company Nigeria Limited equipment, supplies
and services
Significant Subsidiary of Scomi
Marine Services Pte. Ltd.
PT. Rig Tenders Indonesia, Tbk * +
Indonesia
80.54
80.54
80.54
Ship owning and
chartering
Subsidiary of PT. Rig
Tenders Indonesia, Tbk.
Rig Tenders Marine Pte. Ltd. * CH Logistic Pte. Ltd. *
Singapore
80.54
80.54
80.54
Singapore
80.54
100.00
100.00
CH Ship Management Pte. Ltd. *
Singapore
80.54
100.00
100.00
Goldship Private Limited *
Singapore
80.54
100.00
100.00Dormant
Grundtvig Marine Pte. Ltd.*
Singapore
80.54
100.00
100.00
Ship chartering
Investment holding
Provision of
management services
Investment holding
/1 1 9
P
/1 2 0
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
13 Investment in Subsidiaries (continued)
Group’s
Country of
effective equity interest
Name of company
incorporation 31.3.2013 31.12.2011 1.1.2011
%
%
%
Subsidiary of Grundtvig
Marine Pte. Ltd.
PT. Batuah Abadi Lines *
Significant Subsidiary of
Scomi Sosma Sdn Bhd
Scomi Anticor S.A. α Principal activities
Indonesia
76.51
95.00
95.00 Ship owning and
chartering
France
100.00
40.00
40.00 Design and field
deployment of various
oil and gas production
chemicals
*Audited by affiliates of PricewaterhouseCoopers, Malaysia.
+ Listed on the Indonesian Stock Exchange.
αAudited by firms other than PricewaterhouseCoopers, Malaysia and its affiliates.
~Scomi Oilfield Limited (“SOL”), a subsidiary of the Group entered into a Letter of Variation to defer the transfer of shares of Scomi Oiltools Egypt SAE (“SOES”) from
Scomi Oiltools Bermuda Limited (“SOBL”), a subsidiary of the holding company, to SOL to a date to be mutually agreed later and until such time, SOBL will
continue to hold the SOES Sale Shares in its name as trustee for SOL’s sole and exclusive benefit as the beneficiary, based on the terms of a trust deed entered
into by SOBL and SOL. As a result thereof, SOES has been consolidated as a subsidiary.
14 Investment in Associates
As at
As at
As at
31.3.201331.12.2011 1.1.2011
restated
restated
RM’000 RM’000 RM’000
Group
Share of net assets of associates 380 2473,225
Company
Unquoted equity shares, at cost
Less: Accumulated impairment loss
16,85716,85716,857
(16,632)(16,632)(13,632)
225 2253,225
P
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
(a) The Group’s share of revenue, loss after taxation, assets and liabilities of associates are as follows:
Period
Year
ended
ended
31.3.2013
31.12.2011
restated
RM’000
RM’000
Revenue
21,70814,123
Profit/(loss) after taxation
(5,244)(7,616)
Group’s share of results for the financial period/year
133(2,978)
As at
As at
As at
31.3.201331.12.2011 1.1.2011
restated
restated
RM’000 RM’000 RM’000
Group
Share of net assets of associates 380 2473,225
Total assets
43,94237,65536,431
Total liabilities
(43,152)(35,812)(34,610)
Net assets
7901,8431,821
(b) Impairment assessments for investment in associates
Investments in associates are assessed at each reporting period for indication that the investment may be impaired. Where such
indication exists, the recoverable amount of the identified cost of investment is determined based on the higher of value-in-use
calculations and fair value less costs to sell.
In prior financial year, an investment in an associate was reviewed for impairment using a value-in-use calculation. An
impairment of RM3 million was recognised for the financial year.
/1 2 1
P
/1 2 2
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
14 Investment in Associates (continued)
(c) Details of the associates are as follows:
Group’s effective
Name of
Country of equity interest held
associated company
incorporation 31.3.2013 31.12.2011 1.1.2011
%
%
%
Held by the Company
Southern Petroleum Transportation
Vietnam
20.00
20.00
20.00
Joint Stock Company
Emerald Logistics Sdn Bhd
Malaysia
49.00
49.00
49.00
Held by Scomi Marine
Services Pte. Ltd.
King Bridge Enterprises Ltd
British Virgin
Islands
49.00
49.00
49.00
Principal activities
Owner and operator
of tankers
Ship chartering and
management
Investment holding
15 Investment in Joint Ventures
As at
As at
As at
31.3.201331.12.2011 1.1.2011
restated
restated
RM’000 RM’000 RM’000
Group
Share of net assets of joint ventures
Company
Unquoted equity shares, at cost
Deemed investment – capital contribution (a)
Deemed investment – financial guarantee liabilities
51,72447,15725,081
1,0501,0501,050
18,28218,06018,531
331331331
19,66319,44119,912
(a)The deemed investment – capital contribution relates to advances provided to certain joint ventures that are contractually not
receivable until the external borrowings of the joint venture have been repaid.
P
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
Summarised financial information in respect of the Group’s joint ventures are set out below:
Period
Year
ended
ended
31.3.2013
31.12.2011
restated
RM’000
RM’000
Revenue
22,92117,130
Profit after taxation
6,5393,833
6,5684,140
Group’s share of results for the financial period/year
As at
As at
As at
31.3.201331.12.2011 1.1.2011
restated
restated
RM’000 RM’000 RM’000
Total assets
66,38368,97570,995
Total liabilities
(35,925)(42,516)(49,219)
Net assets
30,45826,45921,776
Capital contribution
18,61217,79818,862
Group’s share of jointly-controlled entities’ net assets
49,07044,25740,638
As at 1 January 2011, a joint venture was classified within assets of disposal group held-for-sale as disclosed in Note 24 of the
financial statements.
Details of the joint ventures are as follows:
Group’s effective
Name of
Country of equity interest held
jointly-controlled entity
incorporation 31.3.2013 31.12.2011 1.1.2011
%
%
%
Held by the Company
Rig Tenders Offshore Pte Ltd *
Singapore
Marineco Limited * Gemini Sprint Sdn. Bhd.*
Held by Scomi Oilfield Limited
Vibratherm Limited
70.00
51.00
Malaysia
Malaysia
70.00
70.00
51.00
51.00
Principal activities
Ship owning and
chartering
Ship chartering
51.00
51.00
51.00 Ship chartering and
management
England
50.00
38.04
– Development of
microwave thermal
treatment equipment
/1 2 3
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/1 2 4
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
15 Investment in Joint Ventures (continued)
*Companies with ownership of more than half of the equity shareholding in the companies but treated as joint ventures
pursuant to the contractual rights and obligations of the respective joint venture agreements.
As at the date of the financial statements, Vibratherm Limited remained inactive, therefore no share of results was recorded.
16 Amount Due from a Subsidiary
Company
As at
As at
As at
31.3.201331.12.2011 1.1.2011
restated
restated
RM’000 RM’000 RM’000
Amount due from a subsidiary
–29,01226,723
The amount due from a subsidiary was denominated in US Dollar, unsecured, interest free and was repaid during the financial period.
17 Intangible Assets
Capitalised
Development
development cost work in
costs in progress
Patents and other Drilling
EMS
intangible
waste
Engineering
Group
Goodwill
assets equipment
Package
RM’000 RM’000 RM’000 RM’000 Total
RM’000
Cost, Restated
At 1 January 2012
401,925
493
–
–
402,418
Additions – 4662,8172,4845,767
Currency translation differences(44)(50)11 9(74)
At 31 March 2013
401,881
909 2,828 2,493408,111
Accumulated Depreciation and
Impairment, Restated
At 1 January 2012
293,347
391
–
–
293,738
Amortisation – 72359 –431
Currency translation differences
–
(49)
–
–
(49)
At 31 March 2013
293,347
Carrying amount108,534
414
359
–294,120
495 2,469 2,493113,991
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
Patents
and other
intangible
Group Goodwill
assets
Total
restated restated restated
RM’000 RM’000 RM’000
Cost
At 1 January 2011
362,035
501
362,536
Transfer from asset held-for-sale
39,845
–
39,845
Currency translation differences
45
(8)
37
At 31 December 2011
401,925
493
402,418
Accumulated Depreciation and Impairment
At 1 January 2011
255,831
302
256,133
Amortisation–
54
54
Impairment losses
36,294–
36,294
Currency translation differences
1,222
35
1,257
At 31 December 2011
293,347
391
293,738
Carrying amount
108,578
102
108,680
The remaining useful life of the patent and capitalised development cost is 2 years and 4 years respectively (31.12.2011: 3 years and
5 years respectively, 1.1.2011: 4 years and 6 years respectively)
(a)Goodwill
Goodwill is monitored by the management at the Marine Services - Indonesia and Oilfield Services level, which represents the
lowest level within the Group at which goodwill is monitored for reporting to internal management.
The carrying amounts of goodwill allocated to the Group’s cash-generating units (“CGUs”) are as follows:
Group
As at
As at
As at
31.3.201331.12.2011 1.1.2011
restated
restated
RM’000 RM’000 RM’000
Marine Services - Indonesia
7,0147,0144,685
Oilfield Services
101,520101,564101,519
108,534108,578106,204
/1 2 5
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/1 2 6
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
17 Intangible Assets (continued)
Goodwill Allocated to Marine Services - Indonesia
Goodwill allocated to Marine Services – Indonesia CGU arose from the Marine Logistics Business acquired from Chuan Hup
Holdings Limited on 30 September 2005.
During the financial period, the carrying amount of goodwill was reviewed for impairment using fair values less costs to sell
method.
The recoverable amount of the CGU is determined based on indicative values of the vessels in the CGU on a willing buyer willing
seller basis, as provided by an independent valuer. The indicative values were derived based on the specification of each vessel.
Based on the recoverable amounts determined using the basis stated above, no impairment charge (31.12.2011: RM36,294,000)
has been recognised in the financial period ended 31 March 2013.
Sensitivity Analysis
If a 10% reduction has been applied to the fair value less costs to sell, no impairment would result.
Goodwill Allocated to Oilfield Services
The recoverable amount of the CGU in the current financial period is determined based on value in use calculations.
The value in use calculations use pre-tax cash flow p
rojections based on financial budgets approved covering a five-year period.
The key assumptions used in the value in use calculations CGUs are as follows:
31.3.2013
31.12.2011
restated
%
%
Gross margin
14.0 – 55.0
Revenue growth rate in the first 5 years
6.0 – 30.0
Discount rate
9.0 – 23.0
Terminal growth rate
3.0 – 8.0
12.0 – 47.0
6.0 – 30.0
9.0 – 23.0
3.0 – 8.0
The projections over these periods were based on an approved business plan and reflect the expectation of usage, revenue,
growth, operating costs and margins based on past experience and current assessment of market share, expectations of market
growth and industry growth. The discount rates used are pre-tax and reflect specific risk relating to individual countries. The
terminal growth rate is based on long term growth rates relating to the individual countries.
Sensitivity Analysis
If the management’s estimated growth rate year on year and terminal value growth rate had been reduced by 2%, no
impairment would result.
If a nil terminal growth rate was applied to the discounted cash flows of the CGU, no impairment would result.
P
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
(b) Capitalised development cost work in progress
EMS Engineering Package
The capitalised development cost work in progress relating to the EMS Engineering Package was tested for impairment based in
the following assumptions:
31.3.2013
%
Gross margin
Revenue growth rate in the first 5 years
Discount rate
Terminal growth rate
49.0 – 56.0
No growth
9.0 – 23.0
Nil
The projections over these periods reflect the expectation of usage, revenue, growth, operating costs and margins are based
current assessment of market share, expectations of market growth and industry growth. The discount rates used are pre-tax
and reflect specific risk relating to individual countries where this technology is expected to be used.
The EMS Engineering Package is expected to commence commercial production in 2014.
18 Deferred Tax
Deferred tax assets and liabilities are offset when there is legally enforceable right to set off current tax assets against current tax
liabilities and when the deferred taxes relate to the same authority. The following amounts, determined after appropriate offsetting,
are shown in the statement of financial position.
Group
As at
As at
As at
31.3.201331.12.2011 1.1.2011
restated
restated
RM’000 RM’000 RM’000
Deferred tax assets
18,50231,70343,525
Deferred tax liabilities
(2,837)(2,052)(1,931)
15,66529,65141,594
/1 2 7
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/1 2 8
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
18 Deferred Tax (continued)
Period
Year
ended
ended
31.3.2013
31.12.2011
restated
RM’000
RM’000
At beginning of financial period/year
29,65141,594
Charged to statement of comprehensive income (Note 9):
- tax losses, capital allowances and tax incentives
(15,375)(13,136)
- trade and other payables
2,1721,308
- provision for retirement benefits
26
- others
(1,786)(700)
(14,987)(12,522)
Reclassified within liabilities directly associated with disposal group (Note 24)
–12
Currency translation differences
1,001567
At end of financial period/year
15,66529,651
Group
As at
As at
As at
31.3.201331.12.2011 1.1.2011
restated
restated
RM’000 RM’000 RM’000
Deferred tax assets
- tax losses, capital allowances and tax incentives
- trade and other payables
- provision for retirement benefits
14,95330,32843,464
3,5411,369 61
86–
18,50231,70343,525
Deferred tax liabilities
- others
(2,837)(2,052)(1,931)
The amount of deductible temporary differences for which no deferred tax asset is recognised in the statement of financial position
is as follows:
Group Company
As at
As at
As at
As at
As at
As at
31.3.201331.12.2011 1.1.201131.3.201331.12.2011 1.1.2011
restatedrestatedrestatedrestated
RM’000RM’000RM’000RM’000RM’000RM’000
Deductible temporary differences
17,27016,167 8,2624,2004,1553,678
Deferred tax assets have not been recognised on the deductible temporary differences as it is not probable that there will be future
taxable profits in those companies to utilise the deferred tax assets.
P
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
19 Derivative Financial Instruments
Group
As at
As at
As at
31.3.201331.12.2011 1.1.2011
restated
restated
RM’000 RM’000 RM’000
Derivative financial assets/(liabilities)
Cross currency interest rate swaps
(6,640)– –
Interest rate swaps–
–26,287
Currency forward contracts
(15)(347) 709
(6,655) (347)26,996
Current assets/(liabilities)
Cross currency interest rate swaps
(474)– –
Interest rate swaps–
–7,265
Currency forward contracts
(15) (54)709
(489) (54)7,974
Non-current assets/(liabilities)
Cross currency interest rates swaps (6,166)– –
Interest rate swaps–
–19,022
Current forward contracts–(293) –
There was no ineffectiveness to be recorded from the cash flow hedges.
(a) Currency Forward Contracts
(6,166) (293)19,022
At the date of the statement of financial position, the total notional amount of outstanding currency forward contracts of the
Group was RM2.5 million (31.12.2011:RM1.2 million, 1.1.2011:RM Nil).
(b) Interest Rate Swaps
As at 31 March 2013, the Group had no outstanding interest rate swap contracts (31.12.2011: NIL, 1.1.2011: RM78.3 million).
(c) Cross Currency Interest Rate Swaps (‘CCIRS’)
The notional principal amounts of the outstanding CCIRSs at 31 March 2013 were RM199.5 million (31.12.2011: NIL, 1.1.2011:
RM463.5 million).
The Group had entered into Cross Currency Interest Rate Swaps (“CCIRS”) during 2012 and early 2013, that were designated as
cash flow hedges to hedge the Group’s exposure to foreign exchange risk on its Sukuk Murabahah (“the Sukuk”). These contracts
entitled the Group to receive principal and fixed interest amounts in RM and obliged the Group to pay principal and fixed
interest amounts in USD. These CCIRS contracts have maturities of up to 5 years from 31 March 2013. Based on the terms of the
Sukuk, the semi-annual interest cash flows are built up on a monthly basis in the Financial Services Reserve Account (“FSRA”)
and the principal is built up in the 6 months preceding the maturity of the Sukuk tranches. The CCIRSs reflect the timing of these
cash flows.
/1 2 9
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/1 3 0
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
19 Derivative Financial Instruments (continued)
As at 31 March 2013, the Group had hedged approximately 66% of the RM denominated Sukuk. The USD interest rates on
the CCIRS contracts designated as hedging instruments in the cash flow hedges ranged from 6.16% to 7.82% per annum
(31.12.2011: NIL and 1.1.2011: 5.53% to 7.23% per annum) and the interest rates in RM ranged from 6.25% to 7.20% per annum
(31.12.2011: NIL and 1.1.2011: 5.85% to 6.95% per annum). Gains and losses recognised in the hedging reserve in equity on the
CCIRSs as of 31 March 2013 will be continuously released to the income statement within finance cost until the full repayment
of the Sukuk (Note 26(c)).
20 Cash Generated from Operations
Group Company
Period YearPeriod Year
endedendedendedended
31.3.201331.12.2011 31.3.201331.12.2011
restated
restated
RM’000RM’000RM’000RM’000
Cash Flows from Operating Activities
Profit/(loss) before taxation for the period/year
134,703(84,650)(4,823)(123,639)
Adjustments for:
Depreciation:
- Property, plant and equipment
88,87397,092 247177
- Investment properties
182144 ––
Amortisation of patents rights and development cost 43154 ––
Impairment loss:
- Property, plant and equipment
6,98485,329
––
- Intangible assets
–36,294
––
- Receivables
4,10118,277
––
- Investment in subsidiary
–––113,219
- Investment in associate
–––3,000
- Insurance recoverable
–9,467
––
- Other recoverable
–12,513
––
- Associates and subsidiaries
–17,404
––
- Investment properties
–455 ––
Reversal of impairment loss:
- Property, plant and equipment
(216)– ––
- Receivables
(6,496)(8,065)
––
- Investment in subsidiary
––
(385)–
- Insurance recoverable
(9,467)– ––
- Other recoverable
(3,811)– ––
- Associates and subsidiaries
(5,265)–
(8,369)(446)
Unrealised foreign exchange (gain)/loss
23,4376,323
456
Loss/(gain) from disposal of property, plant and equipment
3,220(2,362)
––
Fair value gain on financial instrument derivatives
4356,743 (70)(94)
Allowance for inventories
1,6381,453
––
Interest income
(18,140)(22,245)(460)(862)
Finance costs
41,35642,892 1,57849
Provision for retirement benefits
1,1171,634
––
Share of results of associates
(133)2,978
––
Share of results of joint ventures
(6,568)(4,140)
––
Share option expense
1,2351,438 397784
Operating cash in/(out) flows before changes in working capital
257,616219,028(11,881)(7,756)
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
Group Company
Period YearPeriod Year
endedendedendedended
31.3.201331.12.2011 31.3.201331.12.2011
restated
restated
RM’000RM’000RM’000RM’000
Operating cash in/(out) flows before changes in working capital
257,616219,028(11,881)(7,756)
Changes in working capital;
- inventories
(23,720)(40,909)
––
- trade and other receivables
21,402(13,509) (10)20
- associated companies
5,878(17,911) 5,962(234)
- trade and other payables
(6,246)142,431
257918
- amount due from/to subsidiary companies
––4,9161,670
- in amount due from/to holding companies
20,780(6,607) (701)469
- in amount due from/to a related company
(4,441)16,707 3475,236
- amount due from /to a joint venture company
10,9591,325
–(244)
Retirement benefits paid
(837)(349) ––
Tax paid
(19,852)(18,791)
––
Interest received
18,14022,245 36542
Net cash generated from/(used in) operating activities
279,679303,660
(745)121
21Inventories
Group
As at
As at
As at
31.3.201331.12.2011 1.1.2011
restated
restated
RM’000 RM’000 RM’000
Raw materials
17,5358,4975,151
Work in progress
713,5884,962
Finished goods
164,585160,330122,144
Consumables
16,3684,0624,764
198,559176,477137,021
The cost of inventories recognised as expense and included in cost of sales amounted to RM474.6 million (31.12.2011: RM405.9
million).
/1 3 1
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/1 3 2
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
22 Trade and Other Receivables
Group Company
As at
As at
As at
As at
As at
As at
31.3.201331.12.2011 1.1.201131.3.201331.12.2011 1.1.2011
restatedrestatedrestatedrestated
RM’000RM’000RM’000RM’000RM’000RM’000
Current
Trade receivables
355,904411,380237,555
Less: Allowance for impairment (29,584)(33,720)(21,151)
–––
–––
Trade receivables – net 326,320377,660216,404
–––
Other receivables
56,43669,37953,487
–––
Deposits
15,9377,1703,041 484848
Prepayments
16,45824,503 9,829
393050
Insurance recoverable
1,5409,884
–
–––
Less: Allowance for impairment
- insurance recoverable –(9,467)
–
–––
- other receivables
(8,702)(12,513)
–
–––
81,66988,95666,357
877898
Amount due from the ultimate
holding company –––
669 –48
Amounts due from related companies
1,2819,1647,228 9211,3596,541
Amounts due from subsidiaries
–––19,70613,95616,395
Amount due from an
associated company
12,16720,04117,49512,16718,12917,895
Amounts due from joint ventures
21 25303 21244 –
Less: Allowance for impairment on
amounts due from an associated
company and a subsidiary
(12,139)(17,404)
–(22,452)(30,821)(31,267)
1,33011,82625,02611,0322,8679,612
409,319478,442307,787 11,1192,9459,710
Non Current
Other receivables
262147 – –––
409,581478,589307,787 11,1192,9459,710
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
Group
Credit terms for trade receivables range from 30 to 90 days (31.12.2011: 30 to 90 days; 1.1.2011: 30 to 90 days). No interest is charged
on outstanding trade receivables within the stipulated credit period from the due date of invoice. Thereafter, interest is charged at
1.5% to 2.0% (31.12.2011: 1.5% to 2.0%; 1.1.2011: 1.5% to 2.0%) per annum on the outstanding balance.
Included in prepayments is an amount of RM4,924,000 (31.12.2011: RM12,119,000 ; 1.1.2011: RM Nil) relating to advances for
purchases of oil and bunker.
Company
Amounts due from intercompany are unsecured, interest-free and are repayable on demand of the Company, except for certain
amounts that are expected to be repayable over 5 years and discounted at a rate of 5.5%.
23 Short-Term Deposits, Cash and Bank Balances
Group Company
As at
As at
As at
As at
As at
As at
31.3.201331.12.2011 1.1.201131.3.201331.12.2011 1.1.2011
restatedrestatedrestatedrestated
RM’000RM’000RM’000RM’000RM’000RM’000
Cash and bank balances
89,21676,44085,657 5,059772 –
Short-term deposits with licensed banks 63,45562,32212,060
– 40111,282
Less: Restricted cash
Bank overdraft
152,671138,762 97,717 5,059 1,17311,282
(12,682)(2,271)(1,399)
–––
(697)– – –––
139,292136,491 96,318 5,059 1,17311,282
Cash and cash equivalents
The effective interest rates for short term deposits with licensed banks of the Group and Company at the end of the reporting
period range from 0.05% to 6.5% (31.12.2011: 0.06% to 6.25%) per annum. Short term deposits of the Group and Company have
maturity periods ranging from 1 to 365 days (31.12.2011: 1 days to 365 days; 1.1.2011: 1 to 365 days).
Short term deposits of the Group amounting to RM 12,682,000 (2011: RM2,271,000,1.1.2011: RM1,399,000) have been pledged to
licensed banks for banking facilities and placed in escrow for the purposes of repayment of borrowings.
24 Assets and Liabilities Held for Sale
Assets and Liabilities Held for Sale as at 1 January 2011
Pursuant to signing of the Master Framework Agreement (“the Agreement”) and Share Purchase Agreement (“SPA”) on 29
September 2010 and 16 December 2010 respectively, a wholly owned subsidiary, Scomi Marine Services Pte Ltd (“SMS”) shall
dispose its entire equity shareholding in its subsidiaries, CH Ship Management Pte Ltd, CH Logistics Pte Ltd, Goldship Private Limited
and Grundtvig Marine Pte Ltd (“Target companies”) to PT Rig Tenders Indonesia Tbk (“PTRT”) and SMS’s interest in PTRT will be
diluted following a proposed renunciation by SMS of its entitlement to a proposed rights issue.
On 15 June 2011, SMS entered into the Deed of Mutual Termination, Discharge and Release (“the Deed”) to mutually terminate the
Agreement. Following the mutual termination of the Agreement, the Group ceased to classify PTRT and the Target companies as a
disposal groups held-for-sale, and reclassified the entire results of PTRT and the Target companies as continuing operations for the
years ended 31 December 2011, with amounts in the prior period being described as “restated”.
/1 3 3
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/1 3 4
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
24 Assets and Liabilities Held for Sale (continued)
Subsequent to the Group ceasing to classify PTRT and the Target companies as disposal groups held-for-sale, management assessed
the recoverable amount of the assets and liabilities of the disposal group, after adjusting for depreciation and amortisation that
would have been recognised had the assets not been classified as held-for-sale. Accordingly, depreciation of property, plant and
equipment of RM39,500,000 was recognised in the consolidated statement of comprehensive income for the financial year ended
31 December 2011.
Other than impairment of vessels of RM95,219,000 (Note 11) and goodwill of RM36,294,000 in respect of Marine Services (Note 17) for
the financial year ended 31 December 2011, no other impairment was identified for the assets associated with the disposal group.
25Payables
Group Company
As at
As at
As at
As at
As at
As at
31.3.201331.12.2011 1.1.201131.3.201331.12.2011 1.1.2011
restatedrestatedrestatedrestated
RM’000RM’000RM’000RM’000RM’000RM’000
Current:
Trade payables
Other payables
Accruals and provisions
193,708138,824 70,724
–––
193,708138,824 70,724
–––
3,6383,599 5802,248––
117,353139,788 24,404 1,3023,2932,375
120,991143,387 24,984 3,5503,2932,375
Amounts payable to associates
4961,026 853
–––
Amounts payable to subsidiaries
–––
271,0095,5805,295
Amounts payable to ultimate
holding company
16,10913,91220,519
–421 –
Amounts payable to related companies 2,577
15,159 63,079
177268214
Amounts payable to joint ventures
––––––
19,18230,09784,451
271,1866,2695,509
333,881312,308180,159274,7369,5627,884
Non-Current:
Amounts payable to ultimate
holding company
Other payables
Total
18,583–––––
1,192–––––
353,656312,308180,159274,7369,5627,884
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
Group
Credit terms for trade payables granted to the Group range from cash terms to 90 days (31.12.2011: cash terms to 90 days; 1.1.2011:
cash terms to 90 days).
Included in provisions is an amount of RM3.0 million (31.12.2011: RM Nil) for certain legal claims brought against a subsidiary of the
Group arising from the ordinary course of business. Management is uncertain of the expected utilisation of the balance provided
as at 31 March 2013, but are of the view that the outcome of these legal claims will not give rise to any significant loss beyond the
amounts provided at 31 March 2013.
Included in amounts due to the holding company is an amount of RM19.2 million for the purchase consideration due to holding
company arising from the acquisition of Scomi Sosma Sdn Bhd as disclosed in Note 39 (b). The amount is payable in full over 2 years,
which has therefore been discounted at a rate of 5.5% per annum. The effect of discounting of RM1.6 million has been recorded in
other operating income in the current financial period.
Company
The amounts payable to related companies are payments made on behalf by these companies and are unsecured, interest-free and
repayable on demand.
26Borrowings
Group Company
As at
As at
As at
As at
As at
As at
31.3.201331.12.2011 1.1.201131.3.201331.12.2011 1.1.2011
restatedrestatedrestatedrestated
RM’000RM’000RM’000RM’000RM’000RM’000
Current:
Bank loans
125,088113,253 79,511
–––
Finance leases
143763143130
Revolving credit
15,48521,68429,014
–––
Revolving credit
–
–10,000
–
–10,000
Murabahah Medium Term Notes
–
40,492 74,174
–––
Sukuk Murabahah
50,243–––––
Bank overdrafts
697–––––
191,527175,466192,762
Non-Current:
Bank loans
Finance leases
Murabahah Medium Term Notes
Sukuk Murabahah
19,55410,196 175
–––
– 24163 –2455
–301,114403,337
–––
257,258–––––
276,812311,334403,675
14
3110,030
–2455
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
26Borrowings (continued)
Group Company
As at
As at
As at
As at
As at
As at
31.3.201331.12.2011 1.1.201131.3.201331.12.2011 1.1.2011
restatedrestatedrestatedrestated
RM’000RM’000RM’000RM’000RM’000RM’000
Total borrowings:
Bank loans Finance leases
Revolving credit
Revolving credit
Murabahah Medium Term Notes
Sukuk Murabahah Bank overdrafts
144,642123,449 79,686
–––
14 61226 145585
15,48521,68429,014
–––
–
–10,000
–
–10,000
–341,606477,511
–––
307,501–––––
697–––––
468,339486,800596,437
14
5510,085
The maturity contractual repricing or profile of borrowings (whichever is earlier) is analysed as follows:
Group Company
As at
As at
As at
As at
As at
As at
31.3.201331.12.2011 1.1.201131.3.201331.12.2011 1.1.2011
restatedrestatedrestatedrestated
RM’000RM’000RM’000RM’000RM’000RM’000
Due within the next 12 months
Due between 1 to 2 years
Due between 2 to 5 years
191,527175,466192,762
55,38546,57779,645
221,427264,757324,030
14
3110,030
–2432
– –23
468,339486,800596,437
14
5510,085
The effective interest rates per annum on the Group’s borrowings at the end of the reporting period are as follows:
31.3.201331.12.2011 1.1.2011
restated
restated
%
%
%
Bank loans
Revolving credit
Murabahah Medium Term Notes/Sukuk
1.98 – 7.50
2.21 – 2.52
6.48 – 7.62
(a) Bank loans and revolving credit are secured by:
(i) Legal charge over certain landed properties and vessels of certain subsidiaries; and
(ii) Corporate Guarantees from Scomi Energy Services Bhd.
0.45 – 7.50
2.83
6.48-7.62
0.26 – 8.00
3.30 – 4.70
6.44 – 7.06
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
(b) Finance leases
Group Company
As at
As at
As at
As at
As at
As at
31.3.201331.12.2011 1.1.201131.3.201331.12.2011 1.1.2011
restatedrestatedrestatedrestated
RM’000RM’000RM’000RM’000RM’000RM’000
Instalments payable:
Not later than 1 year
Between 1 to 2 years
Between 2 to 3 years
Less:
Future finance charges
144068143535
– 24111 –2335
– –55 – –23
14 64234 145893
– (3)(8) – (3)(8)
Present value of hire
purchase payables
14 61226 145585
Analysed as:
Due within 12 months
Due between 1 to 2 years
Due between 2 to 3 years
143763143130
– 24108 –2432
– –55 – –23
14 61226 145585
The finance leases are secured against the respective assets acquired.
(c) RM630 million Murabahah Bonds and RM342.55 million Sukuk Murabahah
RM630 million of Medium Term Notes were issued by KMCOB Capital Berhad (“KMCOB Capital”), a subsidiary of SOL, on 14
December 2006, under the Murabahah Islamic principle (“Murabahah Bonds”).
The Murabahah Bonds were issued in 4 series with tenures from 4 to 7 years from 14 December 2006, being the date of
issuance. The profit rate ranges from 5.75% to 6.15% per annum, payable semi-annually in arrears.
Following the debt rationalisation exercise on Murabahah Bonds in June 2006, the tenure and repayment term have been varied
from 7 to 10 years from 14 December 2006 and profit rate ranges from 6.05% to 6.95% per annum.
On 14 December 2011, KMCOB Capital had issued a Sukuk Murabahah of RM342.55 million (“the Sukuk”). The proceeds raised
from the issuance under the Sukuk was utilised for early redemption of the outstanding amount of the existing Murabahah
Bonds in full. The Sukuk Murabahah is issued with a tenure and repayment term of 1 to 7 years from 14 December 2011 and
profit rate ranges 6.25% to 7.5% per annum.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
26Borrowings (continued)
The Sukuk are secured by:
(i)corporate guarantees from Scomi Oilfield Limited (“SOL”);
(ii)corporate guarantees from certain existing and future principal subsidiaries of SOL whose revenue or profit/loss after tax are
at least 5% of the consolidated revenue or consolidated profit/loss after tax of the SOL Group;
(iii)charge over the issued and paid up share capital of the existing and future principal subsidiaries in the SOL Group;
(iv) debenture over the present and future assets of the KMCOB Capital;
(v)assignment over Financial Services Reserve Account (“FSRA”) maintained by KMCOB Capital to meet its most immediate six
months profit and principal payment obligations; and
(vi)any other security as may be required by the rating agency to achieve the requisite rating. As at 31 March 2013, no security
is given to the rating agency to achieve the requisite rating.
Loan Covenant Compliance as at 31 March 2013
(i)A subsidiary company did not fulfil one of its clauses in relation to its bank loan. Accordingly, the bank was contractually
entitled to request for immediate repayment of the outstanding balance of RM9.9 million as at 31 March 2013. At the end
of the reporting period, the carrying value of RM9.9 million has been included within borrowings under current liabilities.
Subsequent to the end of the reporting period, approval for a waiver from the bank in respect of the clause was received.
(ii)A subsidiary did not fulfil its Annual Debt Service Cover Ratio (“ADSCR”) financial covenant. Management had obtained
indulgence from the bondholders via a waiver of any breach of terms prior to the end of the reporting period as a result of
non-compliance of the ADSCR for the period. Therefore, no reclassification was required.
27 Financial Guarantee Liabilities
Group Company
As at
As at
As at
As at
As at
As at
31.3.201331.12.2011 1.1.201131.3.201331.12.2011 1.1.2011
restatedrestatedrestatedrestated
RM’000RM’000RM’000RM’000RM’000RM’000
24,69015,057
830
100,028 8,14410,893
Notional values
Financial guarantee
liabilities – fair value
- current
- non-current
57127221 57 70221
––––57 –
57127221 57127221
The Group provided a corporate guarantee to a bank in respect a RM49.6 million loan facilities granted to a joint venture.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
28 Share Capital
(a) Share Capital
Company
Period
Year Period
Year
endedendedendedended
31.3.201331.12.201131.3.201331.12.2011
Number of shares Nominal value
RM‘000RM‘000RM‘000RM‘000
Authorised:
Ordinary shares
At beginning of the financial period/year
998,000998,000
998,000998,000
Created during the financial period/year 3,002,000–
1,350,900–
Capital reduction
––
(548,900)–
4,000,000998,0001,800,000998,000
At end of the financial period/year
Redeemable Convertible Cumulative Preference
Shares of RM0.01 each
At beginning and end of financial period/year
200 ,000200,000 2,0002,000
Ordinary shares
At beginning of the financial period/year
Issued during the financial period
Capital reduction (Note 39 (e)) 733,009733,009
733,009733,009
1,608,766–
675,681–
––
(403,155)–
2,341,775733,009
1,005,535733,009
At end of the financial period/year
The creation of the new shares were pursuant to the acquisition of Eastern Hemisphere Entities of the Oilfield Services Segment
of Scomi Group Bhd as disclosed in Note 39(a).The new ordinary shares issued during the financial period ranked pari passu in
all respects with the existing ordinary shares of the Company.
(b) Employees’ Share Option Scheme
The Company implemented an Employees’ Share Option Scheme (“ESOS”) on 18 October 2005 for a period of 10 years for the
benefit of eligible employees and Directors of the Company and the Group. The ESOS is governed by the By-Laws which were
approved by the shareholders on 26 September 2005.
The ESOS was early terminated on 26 June 2012.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
28 Share Capital (continued)
(b) Employees’ Share Option Scheme (continued)
The movements in the number of options over the ordinary shares of RM1.00 each in the Company during the financial period
are as follows:
Exercise
Grant date
Expiry date
price
RM
At
1.1.2012
Granted
Terminated
‘000
’000
’000
At
31.3.2013
’000
22 November
2005
18 October
2015
1.15
5,700
–
(5,700)
–
1 December
2005
18 October
2015
1.15
5,200
–
(5,200)
–
3 February
2006
18 October
2015
1.15
7,810
–
(7,810)
–
17 October
2006
18 October
2015
1.15
1,200
–
(1,200)
–
10 May 2007
18 October
2015
1.15
1,260
–
(1,260)
–
11 July 2007
18 October
2015
1.15
2,880
–
(2,880)
–
Total
24,050
–
(24,050)
–
The movements in share option reserve are as follows:
Group Company
Period YearPeriod Year
endedendedendedended
31.3.201331.12.2011 31.3.201331.12.2011
restated
restated
RM’000RM’000RM’000RM’000
At beginning of financial period/ year
Recognised in income statement (Note 8)
Value of options lapsed
14,30014,867 4,8795,929
1,2351,438 397784
(5,276)(2,005)(5,276)(1,834)
At end of financial period/year
10,25914,300
–4,879
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
There were no options granted during the financial period. The significant inputs into the model for the six tranches of options
granted from 2005 to 2007 are as follows:
Company
As at
As at
As at
31.3.201331.12.2011 1.1.2011
Valuation assumptions:
Weighted average share price at the date of grant (RM)
Weighted average exercise price (RM)
Expected volatility of share prices (%)
Expected option life (years)
Risk-free interest rate per annum (%)
Expected dividend yield (%)
–1.141.14
–1.151.15
–3030
–56
–
3.5 – 4.1
3.5 – 4.1
–2.192.19
Expected volatility was determined by calculating the historical volatility of the Company’s share price over the previous 7
years. The expected life used in the model has been adjusted based on management’s best estimate, for the effects of nontransferability, exercise restrictions and behavioural considerations.
29 Treasury Shares
Group and Company
No. of ordinary shares
of RM1 each No. of nominal value
Period
Year Period
Year
endedendedendedended
31.3.201331.12.201131.3.201331.12.2011
‘000
‘000 RM’000 RM’000
At beginning of financial period/year
Purchased during the year
1436
474
2137 143
At end of financial period/year
145143 4847
During the financial period, the Company repurchased 2,000 (2011: 137,000) units of its issued and paid-up share capital from
the open market on Bursa Malaysia for RM846 (31.12.2011: RM43,100, 01.01.2011: RM490). The average price paid for the shares
repurchased was approximately RM0.42 (31.12.2011: RM0.31, 01.01.2011:RM0.49) per share. The repurchase transactions were
financed by internally generated funds.
The shares repurchased are being held as Treasury shares as allowed under Section 67A of the Companies Act, 1965. The Company
has the right to reissue these shares at a later date. As Treasury shares, the rights attached as to voting, dividends and participation in
other distribution are suspended.
None of the Treasury Shares repurchased has been sold as at 31 March 2013.
At the end of the reporting period, 145,000 (2011: 143,000, 1.1.2011:6,000) ordinary shares are held as Treasury shares at a carrying
value of RM48,000 (2011: RM47,100,1.1.2011:RM4,000) and the number of outstanding shares in issue after setting off against
Treasury shares is 2,341,630,000 (31.12.2011: 732,866,000 shares, 1.1.2011: 733,003,000 shares).
/1 4 1
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
29 Treasury Shares (continued)
The shareholders of the Company, by an ordinary resolution passed in an Annual General Meeting held on 28 June 2012, renewed
their approval for the Company to repurchase its own shares. The Directors of the Company are committed to enhancing 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.
30 Share Premium
Group and Company
Period
Year
ended
ended
31.3.2013
31.12.2011
RM’000
RM’000
At beginning of financial period/year
Less: Capital reduction (Note 39(e))
121,913121,913
(121,913)–
At end of financial period/year –121,913
Share premium is not distributable as cash dividends.
31Reserves
Group Company
As at
As at
As at
As at
As at
As at
31.3.201331.12.2011 1.1.201131.3.201331.12.2011 1.1.2011
restatedrestatedrestatedrestated
RM’000RM’000RM’000RM’000RM’000RM’000
Exchange fluctuation Reserve (a)
Hedging reserve (b)
Merger reserve (c)
Capital reserve (d)
Retained earnings (e)
Share option reserve (Note 28(b))
(244,277)(232,709)(245,150)
–––
(10,220) (3,448)(13,173)
–––
(443,323)48,606(17,956)
–––
26,881––
26,881––
219,918(64,971)51,505
62 (362,518)(240,713)
10,25914,30014,867
–4,8795,929
(440,762)(238,222)(209,907) 26,943 (357,639)(234,784)
(a) Exchange Fluctuation Reserve
Foreign currency translation differences arising from the translation of the financial statements of foreign subsidiaries are taken
to the exchange fluctuation reserve as described in Note 3.26.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
(b) Hedging Reserve
Group Company
Period YearPeriod Year
endedendedendedended
31.3.201331.12.2011 31.3.201331.12.2011
restated
restated
RM’000RM’000RM’000RM’000
At beginning of financial period/year Reclassification to statement of comprehensive income - finance costs
Transfer to profit or loss
At end of financial period/year
(c) Merger Reserve
(3,448)(13,173)
(9,673)13,472
2,901(3,747)
(10,220)(3,448)
––
––
––
––
The movement in the merger reserve is as follows:
Period
Year
ended
ended
31.3.2013
31.12.2011
restated
RM’000
RM’000
At the beginning of period/ year * 48,606(17,956)
Movement of reorganisation reserve
- movement in the inter-company balances
- adjustment for acquisition of SOLE, SSSB and SKMC
22,12966,562
(514,058)–
(491,929)66,562
(443,323)48,606
At the end of period/ year * *This represents the net equity comprising the carrying amount of assets and liabilities of SOLE, SSSB and SKMC as at 1
January 2011 from the consolidated financial statements of Scomi Group Bhd after elimination of amount due from Scomi
Oiltools Bermuda Limited, which represents a 76.08% equity interest.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
31Reserves (continued)
(d) Capital Reserve
Group Company
Period YearPeriod Year
endedendedendedended
31.3.201331.12.2011 31.3.201331.12.2011
restated
restated
RM’000RM’000RM’000RM’000
At beginning of financial period/year
Capital reduction (Note 39(e))
––––
26,881–
26,881–
At end of financial period/year
26,881–
26,881–
(e) Retained Earnings
Under the single-tier tax system which came into effect from the year of assessment 2008, companies are not required to have
tax credits under Section 108 of the Income Tax Act, 1967 for dividend payment purposes. Dividends paid under this system are
tax exempt in the hands of shareholders.
Companies with Section 108 tax credits as at 31 December 2007 may continue to pay franked dividends until the Section 108
tax credits are exhausted or 31 December 2013 whichever is earlier unless they opt to disregard the Section 108 tax credits to
pay single-tier dividends under the special transitional provisions of Finance Act, 2007.
As at 31 March 2013, the Company has sufficient Section 108 tax credits to frank approximately RM0.8 million of its retained
earnings if paid out as dividends. In addition, the Company has tax exempt income as at 31 March 2013 amounting to
approximately RM51.1 million available for distribution of tax exempt dividends to its shareholders.
32 Provision for Retirement Benefits
The Group operates an unfunded defined benefit plan for qualifying employees and vessel crew of its subsidiaries in Indonesia.
Under the plan, the employees and vessel crew are entitled to retirement benefits as defined in Indonesian Labour Laws and
government regulations regarding maritime.
The amounts recognised in the statement of financial position are determined as follows:
Group
As at
As at
As at
31.3.201331.12.2011 1.1.2011
restated
restated
RM’000 RM’000 RM’000
Present value of unfunded obligations
7,5138,0034,358
Unrecognised actuarial loss
(769)(1,046)
–
Liability in the statement of financial position
6,7446,9574,358
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
The amounts recognised in the statement of comprehensive income are as follows:
Group
Period
Year
ended
ended
31.3.2013
31.12.2011
restated
RM’000
RM’000
Current service costs
1,3321,352
Interest cost
397226
Others
(417)–
1,3121,578
Amortisation of actuarial gain/(loss)
(195)56
1,1171,634
Total expense included in staff costs (Note 8)
The movements in the retirement benefit liability recognised in the statement of financial position are as follows:
Group
Period
Year
ended
ended
31.3.2013
31.12.2011
restated
RM’000
RM’000
At beginning of financial period/year
6,9574,358
Total expense charged to statement of comprehensive income (Note 8)
1,1171,634
Benefit payments made during the year
(837)(349)
Currency translation differences
(493)(604)
Reclassified from disposal group held-for-sale
–1,918
At end of financial period/year
The principal actuarial assumptions used are as follows:
6,7446,957
Group
As at
As at
As at
31.3.201331.12.2011 1.1.2011
restated
restated
Discount rate (per annum) (%)
Expected rate of salary increases (per annum) (%)
Normal retirement age (years)
4.0 – 11.0
5.0 – 10.0
45 – 60
6.5 – 7.5
8.0
55 – 60
8.5 – 8.75
8.0 – 9.0
55 – 60
The most recent actuarial valuation was carried out as at 31 March 2013 by independent professional actuaries using the projected
unit credit method.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
33 Operating Lease Commitments
The future minimum lease payments under non-cancellable operating leases are as follows:
Group
As at
As at
As at
31.3.201331.12.2011 1.1.2011
restated
restated
RM’000 RM’000 RM’000
In respect of rental:
Instalments payable
- not later than 1 year
- later than 1 year but not later than 5 years
- later than 5 years
13,2043,3725,967
7,029 5,94610,544
–
–
2,857
20,233 9,31819,368
34 Significant Related Party Transactions
In the normal course of business, the Group and Company undertake a variety of transactions at mutually agreed terms with
subsidiary companies and other related parties. The related parties with whom the Group and Company transact with, include the
following companies:
Related parties
Relationships
Scomi Group Bhd
Scomi Engineering Bhd
Holding company
Fellow subsidiary
a)In addition to the related party disclosures mentioned elsewhere in the financial statements, set out below are the Group’s other
significant related party transactions.
Group Company
Period YearPeriod Year
endedendedendedended
31.3.201331.12.2011 31.3.201331.12.2011
restated
restated
RM’000RM’000RM’000RM’000
Holding company – Scomi Group Bhd:
Rental expenses
Advances provided
(509)(407) ––
(17,583)–(17,583)–
Related companies:
Management Fees Receivable/(Payable)
Scomi Oiltools Inc
Scomi Oiltools South America Limited
Scomi Group Berhad
Scomi Oiltools Bermuda Limited
(1,354)(3,298)
––
552597 ––
–(608) –(327)
29,830–––
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
Group Company
Period YearPeriod Year
endedendedendedended
31.3.201331.12.2011 31.3.201331.12.2011
restated
restated
RM’000RM’000RM’000RM’000
SAP Maintenance Fee Income/(Expenses)
Scomi Oiltools (Europe) Limited
Scomi Solutions Sdn Bhd
154694 ––
(4,242)(4,855) (89)(35)
License Fee Income/(Expenses)
Scomi Oiltools Bermuda Limited
Scomi Oiltools (Europe) Limited
(11,391)(3,576)
––
657957 ––
Interest Income
Scomi Oiltools Bermuda Limited
Scomi Oiltools Overseas (M) Limited
14,32217,461
2,2252,270
Rental Expenses
Scomi Engineering Bhd
(1,059)(410)(352)(280)
Consultancy Fee for Monorail Project
Scomi Rail Bhd
(2,000)– ––
Training Fee
Global Learning and Development Sdn Bhd
––
––
(250)– ––
Joint ventures:
Recharter Fee
Rig Tenders Offshore Pte Ltd
(9,989)(7,928)
Associates:
Chartering Income
Emerald Logistics Sdn Bhd
–1,852
––
–1,852
Recharge of Expenses Paid on Behalf
Emerald Logistics Sdn Bhd
Related Parties:
Airline Ticketing Services by Lintas
(1,755)(1,207)
––
Rental income - Suria
681135 ––
339680339680
NOTE
Suria Business Solutions Sdn. Bhd. (“Suria”) and Lintas Travel & Tours Sdn. Bhd. (“Lintas”) are companies connected to certain Directors;
Information regarding outstanding balances arising from related party transactions as at 31 March 2013 is disclosed in Note 22 and
Note 25.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
34Significant Related Party Transactions (continued)
b) Compensation of Key Management Personnel
The remuneration of Directors and other members of key management during the financial period were as follows:
Group Company
Period YearPeriod Year
endedendedendedended
31.3.201331.12.2011 31.3.201331.12.2011
restated
restated
RM’000RM’000RM’000RM’000
Salaries and short-term employee benefits
Defined contribution plan
Other long-term benefits
Share-based payments
9,3328,841 605656
508545 94149
–––26
386106 48–
10,2269,493 747831
Included in the total key management personnel are:
Group Company
Period YearPeriod Year
endedendedendedended
31.3.201331.12.2011 31.3.201331.12.2011
restated
restated
Directors’ remuneration (Note 8)
588–
582–
Directors of the Group and Company and other members of key management have been granted the following number of
options under the Employee Share Options Scheme (“ESOS”):
Group and Company
As at
As at
31.3.2013
31.12.2011
restated
RM’000
RM’000
At beginning of the financial period/year
22,13022,130
Forfeited
(22,130)–
At end of the financial period/year
–22,130
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
c) Significant Balances at the Financial Period End
(i) Significant balances with related parties
Group
As at
As at
31.3.2013
31.12.2011
restated
RM’000
RM’000
Amount due to Scomi Group Berhad
Amount due to Scomi Solutions Sdn Bhd
(34,692)(13,912)
(4,338)(1,180)
(ii) Significant balances with associate
Group
As at
As at
31.3.2013
31.12.2011
restated
RM’000
RM’000
Amount due (from)/to Emerald Logistic Sdn Bhd
(149)2,057
35 Contingent Liabilities (Unsecured)
Group Company
As at
As at
As at
As at
As at
As at
31.3.201331.12.2011 1.1.201131.3.201331.12.2011 1.1.2011
restatedrestatedrestatedrestated
RM’000RM’000RM’000RM’000RM’000RM’000
Taxation
Litigation
7741,8946,320
–2,0519,400
–––
–––
36 Capital Commitments
Group Company
As at
As at
As at
As at
As at
As at
31.3.201331.12.2011 1.1.201131.3.201331.12.2011 1.1.2011
restatedrestatedrestatedrestated
RM’000RM’000RM’000RM’000RM’000RM’000
Authorised capital expenditure not
recognised in the financial statements:
- contracted for
20,23627,004 6,234
- not contracted for
234,84442,12853,598
–––
–––
/1 4 9
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/1 5 0
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
37 Segment Information
Segmental Reporting
Management has determined the operating segments based on reports reviewed by the Chief Operating Decision Maker (“CODM”)
which are used for allocating resources and assessing performance of the operating segments.
The Chief Operating Decision Maker considers the business from the industry perspective and the service rendered. The following
reportable segments have been identified:
(i) Marine Services
(ii) Oilfield Services
-provision of transportation of bulk aggregates for the coal industry.
-supply and manufacturing of equipment, supply of a wide range of specialised chemicals and
provision of services
The segment information has been restated to reflect the impact of predecessor accounting.
Marine Oilfield
Services Services
Total
RM’000 RM’000 RM’000
Period Ended 31 March 2013
Revenue
External sales
318,2991,153,3941,471,693
Total revenue
318,2991,153,3941,471,693
Results
Profit from operations
31,346116,773148,119
Finance cost
(3,388)(37,968)(41,356)
Other operating income
1,80419,43521,239
Share of results in associates
133 –133
Share of results in joint ventures
6,568
–6,568
Profit before Tax
36,463
98,240
134,703
Taxation (5,853)(31,758) (37,611)
Profit after tax
30,61066,482 97,092
Other Information
Depreciation and amortisation
46,53842,94889,486
Interest income
86017,28018,140
Impairment of property, plant and equipment
4,1762,8086,984
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
Marine
Oilfield
Services Services
Total
restated restated restated
RM’000 RM’000 RM ’000
Year ended 31 December 2011
Revenue
External sales
377,045
881,140
1,258,185
Total revenue
377,045
881,140
1,258,185
Results
Profit/(loss) from operations
(118,223)
17,141
(101,082)
Finance costs
(1,821)
(41,071)
(42,892)
Other operating income
8,323
49,839
58,162
Share of results in associates
(2,978)
–
(2,978)
Share of results in joint ventures
4,140
–
4,140
(Loss)/profit before tax
(110,559)
25,909
(84,650)
Taxation
(6,100)
(29,283)
(35,383)
Loss after tax
(116,659)
(3,374)
(120,033)
Other Information
Depreciation and amortisation71,65625,63497,290
Interest income
524
21,721
22,245
Impairment of property, plant and equipment
95,219
–
95,219
Impairment of intangible assets
36,294
–
36,294
Marine Oilfield
Services Services
Total
RM’000 RM’000 RM’000
At 31 March 2013
Assets
Assets employed in the segment
516,439 888,0121,404,451
Investment in associates
380 –380
Investment in joint venture
51,701
2351,724
Unallocated Corporate Assets:
Tax recoverable
16,006
Deferred tax assets
18,502
Total assets
1,491,063
/1 5 1
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/1 5 2
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
37 Segment information
Marine Oilfield
Services Services
Total
RM’000 RM’000 RM’000
Liabilities
Liabilities in segment
375,695 453,101828,796
Unallocated Corporate Liabilities:
Tax payable17,701
Deferred tax liabilities
2,837
Derivatives financial instruments
6,655
Total liabilities855,989
Net assets
635,074
Marine
Oilfield
Services Services
Total
restated restated restated
RM’000 RM’000 RM ’000
At 31 December 2011
Assets
Assets employed in the segment
385,483
1,080,125
1,465,608
Investment in associates
247
–
247
Investment in joint ventures
47,157
–
47,157
Unallocated Corporate Assets:
Tax recoverable
17,911
Deferred tax assets
31,703
Total assets
1,562,626
Liabilities
Liabilities in segment
80,064
726,128
806,192
Unallocated Corporate Liabilities:
Tax payable
18,181
Deferred tax liabilities
2,052
Derivatives
347
Total liabilities
826,772
Net assets
735,854
Unallocated costs represent corporate expenses. Assets employed in segment consist of property, plant and equipment, receivables
and cash and cash equivalents, and mainly exclude deferred tax assets and tax recoverable. Liabilities in segment comprise payables
and exclude taxation and deferred tax liabilities.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
38 Financial Risk Management Objectives and Policies
The Group’s activities expose it to market risk (including currency risk and interest rate risk), credit risk and liquidity risk. The Group’s
overall risk management program seeks to minimise adverse effects from the unpredictability of financial markets on the Group’s
financial performance. The Group uses financial instruments such as currency forwards and cross currency interest rate swaps
(“CCIRS”) to manage against financial risk exposures.
The Board of Directors is responsible for setting the objectives and underlying principles of financial risk management for the Group
and the Company. The management team then establishes detailed policies such as risk identification and measurement, exposure
limits and risk management strategies. Financial risk management is carried out by treasury personnel. Risk management policies
and procedures are reviewed regularly to reflect changes in market condition and the Group’s activities.
(a) Market Risk
Market risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in market
prices such as foreign exchange rates and interest rates. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters while optimising the return on risk.
(i) Currency Risk
Apart from the Ringgit Malaysia (“RM”), the Group transacts business in various foreign currencies including Singapore Dollar
(“SGD”), Indonesia Rupiah (“IDR”), United States Dollar (“USD”), Nigerian Naira (“NGN”) and therefore is exposed to currency
exchange risk.
These exposures are managed primarily by using natural hedges that arise from offsetting assets and liabilities that are
denominated in foreign currencies wherever possible and closely monitoring of the currency exposures by management.
The Group’s significant currency exposure is as follows:
Functional Currency
USD
RM Others
Total
RM’000RM’000RM’000RM’000
As 31 March 2013
Financial assets
Cash and cash equivalents
- Ringgit Malaysia
- US Dollar
- Others
7,13413,942
–21,076
22,823 85,110 1,570109,503
11,152 9,045 1,89522,092
Trade and other receivables
- Ringgit Malaysia
–58,675
–58,675
- US Dollar 182,23092,62226,956
301,808
- Others
22,117 20,155 6,82649,098
245,456279,549 37,247562,252
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/1 5 4
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
38 Financial Risk Management Objectives And Policies (continued)
Functional Currency
USD
RM Others
Total
RM’000RM’000RM’000RM’000
Financial Liabilities
Borrowings
- Ringgit Malaysia
- US Dollar
- Others
Trade and other payables - Ringgit Malaysia
- US Dollar
- Others
307,501 25,149
–332,650
31,679 94,074
–125,753
9,935––
9,935
3,91076,210
–80,120
89,872 94,842 12,460197,174
40,23830,091 6,03376,362
483,135320,366 18,493821,994
Net financial (liabilities)/assets
(237,679) (40,817) 18,754(259,742)
Net financial (liabilities)/asset denominated in respective
entities’ functional currency
Net assets/(liabilities)
83,502(28,742)
– 54,760
(154,177) (69,559) 18,754(204,982)
Functional Currency
USD
RM Others
Total
restatedrestatedrestatedrestated
RM’000RM’000RM’000RM’000
As 31 December 2011
Financial Assets
Cash and cash equivalents
- Ringgit Malaysia
- US Dollar
- Others
2,017
24,243
14,450
8,528
76,307
8,164
–
3,863
1,190
10,545
104,413
23,804
Trade and other receivables
- Ringgit Malaysia
–
- US Dollar
162,308
- Others
19,956
123,619
118,495
31,840
–
15,738
6,633
123,619
296,541
58,429
222,974
366,953
27,424
617,351
Financial liabilities
Borrowings
- Ringgit Malaysia
- US Dollar
- Others
341,606
77,388
–
35,728
32,006
–
–
–
72
377,334
109,394
72
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
Functional Currency
USD
RM Others
Total
restatedrestatedrestatedrestated
RM’000RM’000RM’000RM’000
Trade and other payables - Ringgit Malaysia
2,027
69,228
–
71,255
- US Dollar31,99343,36614,85190,210
- Others
102,225
42,553
6,065
150,843
555,239
222,881
20,988
799,108
Net financial (liabilities)/assets
Net financial (liabilities)/assets denominated in
respective entities’ functional currency
(332,265)
144,072
6,436
(181,757)
–
104,361
Net assets/(liabilities)
(225,095)
6,436
(77,396)
77,170
27,191
171,263
The Company’s financial assets and liabilities are significantly denominated in Malaysian Ringgit (“RM”), which is its
functional currency. The Company is not significantly exposed to foreign currency risk.
If the USD changed against the RM by 10% with all other variables including the tax rate being held constant, the effects
arising from net financial liability/asset position will be as follows:
Increase/ Increase/
(decrease) (decrease)
2013
2011
Loss after tax Loss after tax
restated
RM’000
RM’000
Group
USD against RM
- strengthened
(1,118)11,943
- weakened
1,118(11,943)
(ii) Cash Flow and Fair Value Interest Rate Risk
Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in
market interest rates. Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate due to
changes in market interest rates. As the Group has no significant interest-bearing assets, the Group’s income is substantially
independent of changes in market interest rates.
The Group’s and the Company’s exposure to cash flow interest rate risks arises mainly from variable-rate borrowings. The
Group manages a portion of these cash flow interest rate risks using floating-to-fixed interest rate swaps.
/1 5 5
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/1 5 6
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
38 Financial Risk Management Objectives and Policies (continued)
The sensitivity analysis below have been determined based on the exposure to interest rates for both derivatives and
non-derivative instruments at the date of the statement of financial position and the stipulated change taking place at the
beginning of the financial period and held constant throughout the reporting period in the case of instruments that have
floating rates. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management
personnel and represents management’s assessment of the possible change in interest rates.
(iii)Interest Rate Risk
If interest rates have been 50 basis points higher or lower and all other variables were held constant, the Group’s loss after
tax for the financial period ended 31 March 2013 would increase/decrease by approximately RM734,480.
This is mainly attributable to the Group’s exposure to interest rates on the portion of the floating rate borrowings which is
not hedged.
(b) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations and arises principally from the Group’s receivables from customers, cash and cash equivalents and
financial assets (derivative instruments).
The Group adopts the policy of dealing only with customers of appropriate credit history to mitigate credit risk. For other
financial assets, the Group adopts the policy of dealing with financial institutions and other counterparties that are regulated
and with sound credit rating.
In relation to the amounts receivable from related parties, the Group monitors the recoverability of these amounts regularly. As
at the end of the reporting period, there was no indication that the amounts receivable from related parties are not recoverable
other than those disclosed in Note 22.
The Company’s other receivables are neither past due nor impaired, other than an impairment of RM22,452,000 (31.12.2011:
RM30,821,000) in respect of certain balances.
As the Group and the Company do not hold any collateral, the maximum exposure to credit risk for each class of financial
instruments is the carrying amount of that class of financial instruments presented on the balance sheet, except as follows:
Group
As at
As at
31.3.2013
31.12.2011
restated
RM’000
RM’000
Corporate guarantees provided to a bank
– notional values
Fair value of financial guarantee liabilities 24,69015,057
57127
Company
As at
As at
31.3.2013
31.12.2011
restated
RM’000
RM’000
Corporate guarantees provided to banks on
– notional values
Fair value of financial guarantee liabilities
100,0288,144
57127
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
(i) Financial assets that are neither past due nor impaired
Bank deposits that are neither past due nor impaired are mainly deposits with banks with sound credit-ratings assigned by
international credit-rating agencies. Trade receivables that are neither past due nor impaired are substantially companies
with a good collection track record with the Group.
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit
ratings (if available) or to historical information about counterparty default rates:
Group 1 – new customers (less than 6 months)
Group 2 – existing customers (more than 6 months) with no defaults in the past
Group 3 – existing customers (more than 6 months) with some defaults/delays in the past. All were fully recovered.
None of the financial assets that are fully performing has been renegotiated during the financial period. The historical
information of the financial assets that are neither past due nor impaired are as follows:
Group Company
As at
As at
As at
As at
31.3.201331.12.2011 31.3.201331.12.2011
restated
restated
RM’000RM’000RM’000RM’000
Group 1
Group 2
Group 3
8,89112,551
––
178,986211,142
––
––––
187,877223,693
––
(ii) Financial assets that are past due and/or not impaired
The age analysis of financial assets past due but not impaired is as follows:
Group
As at
As at
31.3.2013
31.12.2011
restated
RM’000
RM’000
Neither past due nor impaired
187,877223,693
Past due but not impaired:
1 to 30 days
60,45381,247
31 to 60 days
38,70530,805
61 to 90 days
12,71815,020
91 to 120 days
12,42511,748
More than 120 days
14,14215,147
Past due and impaired
29,58433,720
355,904411,380
/1 5 7
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/1 5 8
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
38 Financial Risk Management Objectives and Policies (continued)
(iii) The movement of the allowance for impairment is as follows:
Group
Period
Year
ended
ended
31.3.2013
31.12.2011
restated
RM’000
RM’000
At beginning of financial period/year
33,72021,151
Allowance made
4,10118,277
Reversal of allowance
(6,496)(8,065)
Currency exchange differences
(1,741)2,357
At end of financial period/year
29,58433,720
(C) Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities. At the date of the statement of
financial position, assets held by the Group and Company for managing liquidity risk included cash and short-term deposits as
disclosed in Note 23.
Management monitors rolling forecasts of the Group’s and Company’s liquidity reserve, comprising cash and cash equivalents
(Note 23), on the basis of expected cash flow. This is generally carried out at local level in the operating companies of the
Group in accordance with practice and limits set by the Group. These limits vary by location to take into account the liquidity
management policy involving projecting cash flows in major currencies and considering the level of liquid assets necessary to
meet these; monitoring liquidity ratios; and maintaining debt financing plans. As at 31 March 2013, the Group and Company do
not have any undrawn borrowing facility balances except trade facilities.
Between 2
Less than 1 year and 5 years
RM’000
RM’000
Group
At 31 March 2013
Trade and other payables
(333,881) (19,775)
Financial guarantee liabilities(57) –
Borrowings
(191,527)(276,812)
(525,465)(296,587)
At 31 December 2011, Restated
Trade and other payables
(312,380)
–
Financial guarantee liabilities
(127)
–
Borrowings
(175,466)
(311,334)
(487,913)
(311,334)
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
Between 2
Less than 1 year and 5 years
RM’000
RM’000
Company
At 31 March 2013
Trade and other payables
(9,820)–
Financial guarantee liabilities
(57)–
Borrowings
(14)–
(9,891)–
At 31 December 2011, as Restated
Trade and other payables
(9,562)
–
Financial guarantee liabilities
(70)
(57)
Borrowings
(31)
(24)
(9,663)
(81)
The table below analyses the Group’s and Company’s derivative financial instruments for which contractual maturities are
essential for an understanding of the timing of the cash flows into relevant maturity groupings based on the remaining period
from the date of the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the
contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting
is not significant.
BetweenBetweenBetweenBetween
Less than
1 and 2
2 and 3
3 and 4
4 and 5
1 year
years
years
years
years
RM’000RM’000RM’000RM’000RM’000
At 31 March 2013
Derivative Financial Instruments:
Net-settled – Forward foreign
exchange contract
Gross-settled CCIRS
- Receipts
- Payments
(15)––––
57,02654,069 52,18148,63420,963
(57,450)(53,847) (51,413) (47,235)(20,538)
(439) 222 7681,399 425
/1 5 9
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
38 Financial risk management objectives and policies (continued)
BetweenBetweenBetweenBetween
Less than
1 and 2
2 and 3
3 and 4
4 and 5
1 year
years
years
years
years
RM’000RM’000RM’000RM’000RM’000
At 31 December 2011, as Restated
Derivative Financial Instruments:
Net-settled – Forward foreign
exchange contract
(54)
–
–
–
–
(54)
–
–
–
–
(d) Capital Risk
The Group and Company manages its various entities’ capital to ensure that entities in the Group will be able to continue as a
going concern while maximising the return to stakeholders through the optimisation of the debt and equity balances.
Management reviews the capital structure periodically. As part of this review, management considers the cost of capital and
the risks associated with each class of capital. Management will balance its overall capital structure through the payment of
dividends, or the redemption of existing loans and at all times monitors its gearing ratio.
The gearing ratios are as follows:
Group
As at
As at
31.3.2013
31.12.2011
restated
RM’000
RM’000
Total borrowings (Note 26)
468,339486,800
Total equity and reserves attributable to the owners of the Company
564,725616,653
Gearing ratio (times)
0.830.79
The Group are in compliance with all externally imposed capital requirements for the financial period/year ended 31 March
2013 and 31 December 2011 except for breaches of loan covenants as disclosed in Note 26. The breaches do not affect the
Group’s overall strategy for capital risk management. Details of significant financial covenant ratios are as follows:
(i) Scomi Oilfield Limited (“SOL”)
SOL is required by the bondholders of the Sukuk Murabahah to maintain financial covenants such as Net Debt to Equity
Ratio and Annual Debt Service Cover Ratio, to be tested at every reporting period until the Sukuk Murabahah is fully repaid
in year 2018.
Other than as disclosed in Note 26, SOL met all required financial covenants.
(ii) PT Rig Tenders Indonesia TBK (“PTRT”)
PTRT is required to observe the financial covenants, to be assessed at every reporting period, including Debt Service
Coverage Ratio, Ratio of Total Debt over Earnings Before Interest, Taxation, Depreciation and Amortisation (“EBITDA”), Total
Debt over Shareholders’ Funds and a specified ratio of Vessel Valuation over Loan Amount.
PTRT met all the required financial ratios as at 31 March 2013.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
(e) Fair Value Measurement
For financial instruments that are measured in the statement of financial position at fair value. This requires disclosure of fair
value measurements by level of the following fair value measurement hierarchy:
(i) Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
(ii)Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as
prices) or indirectly (that is, derived from prices) (level 2);
(iii) Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
The following table presents the Group’s assets and liabilities that are measured at fair value at 31 March 2013 and
31 December 2011.
Fair Value
Level 1
Level 2
Level 3
Total
RM’000RM’000RM’000RM’000
At 31 March 2013
Financial Liabilities
Derivative financial instruments
Forward contract
- Cross currency interest rate swaps
–(15) –(15)
–(6,640)
–(6,640)
–(6,655)
–(6,655)
At 31 December 2011, as Restated
Financial Liabilities
Derivative financial instruments
- Forward contract
- Cross currency interest rate swaps
–
–
(346)
–
–
–
(346)
–
–
(346)
–
(346)
The fair value of financial instruments traded in active markets is based on quoted market prices at the statement of financial
position date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer,
broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market
transactions on arm’s length basis.
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These
valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity
specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
/1 6 1
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/1 6 2
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
39 Significant Events During the Financial Period
(a) Acquisition of the Eastern Hemisphere Entities of the Oilfield Services Segment of SGB (“SOLE”)
The Group acquired 100% of SOLE for a purchase consideration RM1,020.02 million from Scomi Group Berhad, Standard
Chartered Private Equity Limited (“SCPEL”) and Fuji Investment I (“FII”). The entity to be acquired is SOL and its subsidiaries which
comprise:
(i) Scomi Oiltools Sdn Bhd;
(ii) Scomi Oiltools Oman LLC;
(iii) Scomi Oiltools Pty Ltd;
(iv) Scomi Oiltools Egypt SAE;
(v) Scomi Oiltools (Thailand) Ltd;
(vi) KMC Oiltools BV;
(vii) Scomi Oiltools (Cayman) Limited (“SOCL”);
(viii) Scomi Oiltools Ltd (Cayman);
(ix) Scomi Oiltools (Africa) Limited;
(x) KMCOB Capital Berhad;
(xi) Scomi Oiltools (S) Pte Ltd; and
(xii) a joint venture, Vibratherm Limited.
The purchase consideration was settled in the following manner:
(i) Issuance of 1,608,765,957 SESB Shares at an issue price of RM0.47 per share amounting to RM756.1 million; and
(ii)
Aggregate of
–net amount due from Scomi Oiltools Bermuda Limited (“SOBL”) and its subsidiaries upon completion of the proposed
internal reorganisation to streamline and reorganise the various legal entities within the SOL and its subsidiaries into two
distinct group of companies comprising entities operating in the Eastern and Western hemisphere respectively (“Proposed
SOL Reorganisation’) to SOLE (“Net Amount Due”); and
–sum of RM53.6 million (USD17million) payable by SOBL to SOCL, upon completion of the Proposed SOL Reorganisation
(“Assignment Sum”).
The acquisition of SOLE was approved and effected by the shareholders on 20 February 2013 and was completed in March
2013.
In applying the predecessor accounting method, the results, assets and liabilities of SOLE have been accounted for in the
Group’s financial statements as if the transaction had been effected from the date the holding company, the common
control shareholder, gained control over SOLE. The balance sheet as at 1 January 2011 has been restated to reflect the
carrying value of assets and liabilities of SOLE from the holding company’s perspective which held an equity interest of
76.08%.
The fair value of the Company’s shares is valued at RM0.42 based on the quoted market price on the completion date.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
(a) Acquisition of the Eastern Hemisphere Entities of the Oilfield Services Segment of SGB (“SOLE”) (continued)
(i)The merger reserve, being the difference of fair value of shares acquired and carrying value of assets and liabilities in SOLE as
at 31 March 2013 has been computed as follows:
RM’000 RM’000 RM’000
Purchase consideration
Fair value of 1,608,765,957 SESB shares issued
514,059
Payable
201,549
715,608
Less:
Assets
Non-Current Assets
Property, plant and equipment
(195,456)
Investment in joint venture
(25)
Available-for-sale investment (30,536)
Intangible assets (102,819)
Deferred tax assets (16,569)
Investment property
(892)
Other receivables
(152)
Total non-current assets
(346,449)
Current Assets
Inventories
Tax recoverable
Receivables, deposits and prepayments
Short term deposits, cash and bank balances
(197,328)
(15,188)
(1,459,911)
(53,686)
Total current assets
(1,726,113)
Total assets
(2,072,562)
Add:
Liabilities
Current Liabilities
Payables
1,170,710
Borrowings
156,968
Derivative financial instrument
489
Current tax liabilities
15,058
Total current liabilities
1,343,225
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
39 Significant Events During the Financial Period (continued)
RM’000 RM’000 RM’000
Non-current liabilities
Borrowings
Provision for retirement benefits
Deferred tax liabilities
Other payables
Provision for other liabilities and charges
Derivative financial instruments
Total non-current liabilities
268,005
4,676
2,403
971
223
6,166
282,444
Total liabilities
1,625,669
Reserves
Other reserves
(118,591)
Retained earnings
196,726
Total reserves
78,135
Non-controlling interests
94,145
Amount recognised as merger reserve within other reserves
440,995
(ii)The acquisition of the remaining equity interest of 23.92% is accounted as transaction with non controlling interest with
effect from the current financial period.
RM’000
Share of net assets of SOLE acquired
71,600
Less: Purchase consideration
- Fair value of shares issued
(155,947)
- Payable
(61,143)
Decrease in retained earnings
(145,490)
(b) Acquisition of Scomi Sosma Sdn. Bhd. (“SSSB”)
On 26 February 2013, the Company acquired 100% of the issued and paid up ordinary share capital of SSSB for a purchase
consideration of RM6.7 million. The purchase consideration was settled via an assignment of the rights and benefits of amount
due by PTRT of RM18.9 million, of which RM12.2 million will be used to settle the amount owing by SSSB to SGB.
The fair value of the purchase consideration was based on 40% of the equity interest of SSSB, being the ownership held by the
holding company, who is the common control shareholder.
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
The merger reserve, being the difference of fair value of shares acquired and carrying value of assets and liabilities in SSSB as at 1
January 2011 has been computed as follows:
RM’000 RM’000 RM’000
Fair value of purchase consideration
2,684
Less:
Assets
Non-Current Assets
Property, plant and equipment
(772)
Intangible assets
(3,358)
Investment property
(490)
Deferred tax assets
(1,167)
Total non-current assets
(5,787)
Current Assets
Inventories
(1,231)
Receivables, deposits and prepayments
(6,845)
Short-term deposits, cash and bank balances
(4,704)
Total current assets
(12,780)
Total assets
(18,567)
Add:
Liabilities
Current Liabilities
Payables
15,099
Current tax
426
Total current liabilities
15,525
Reserves
Other reserves
(563)
Retained earnings
(383)
(946)
Non controlling interest
2,912
Amount recognised as merger reserve within other reserves
1,608
The holding company completed the acquisition of the remaining 60% equity interest in SSSB on 26 February 2013. In applying
predecessor accounting, this transaction has been accounted for as a transaction with non-controlling interest during the
current financial period. The impact to the Group is immaterial.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
39 Significant Events During the Financial Period (continued)
(c) Acquisition of Scomi KMC Sdn Bhd (“SKMC”)
On 12 March 2013, the Company acquired 48% of the issued ordinary share capital of share capital of SKMC for a purchase
consideration of RM0.8 million from the holding company. The purchase consideration was settled via cash.
The merger reserve has been computed as follows:
RM’000 RM’000 RM’000
Purchase consideration, in cash
770
Less:
Assets
Non-Current Assets
Property, plant and equipment
(1,319)
Deferred tax assets
(758)
Total non-current assets
(2,077)
Current Assets
Receivables, deposits and prepayments
(69,871)
Short term deposits, cash and bank balances
(3,295)
Tax recoverable
(876)
Total current assets
(74,042)
Total assets
(76,119)
Add:
Liabilities
Current Liabilities
Payables
42,614
Total liabilities
42,614
Reserves
Other reserves
25,366
Retained earnings
7,170
32,536
Non-controlling interests
919
Amount recognised as merger reserve within other reserves
720
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
(d) Termination of Employees’ Share Option Scheme (“ESOS”)
The Company terminated the ESOS which was implemented on 18 October 2005 for a period of 10 years (due to expire on 17
October 2015). The Directors did not offer the ESOS holders compensation upon termination.
The transaction was completed on 26 June 2012.
The termination has been accounted for as an acceleration of vesting conditions and recognised immediately in the income
statement as the amount that otherwise would have been recognised for services expected to be received over the remainder
of the vesting period. Therefore, Company has recorded an income statement charge of RM0.4 million, being the remaining fair
value of the employee services expected to be received in exchange for the grant of options.
The ESOS reserve which amounted to RM5.2 million has been credited to retained earnings.
(e) Capital Reduction and Repayment to Shareholders of the Company
The Company undertook the following:
(i)reduction of the par value of the existing ordinary shares of RM1.00 each in SMB to RM0.45 each by cancelling RM0.55 for
each share pursuant to Section 64 of the Companies Act, 1965 (“Par Value Reduction”); and
(ii)reduction of the entire amount standing to the credit of the share premium account of SMB pursuant to Section 60(2) and
64 of the Companies Act, 1965 (“Share Premium Reduction”).
The Par Value Reduction of RM403.2 million and Share Premium Reduction of RM121.9 million will give rise to a credit of
RM525.1 million which is proposed to be utilised to facilitate the following:
(i)capital repayment to the shareholders of the Company via a cash distribution in the total sum of RM135.6 million or RM0.185
for every existing share;
(ii)setting-off of the entire accumulated losses of the Company from the credit remaining after the proposed capital
repayment. As at 31 December 2011, the accumulated losses of the Company stood at RM362.1 million; and
(iii) setting-off of the estimated expenses of RM0.5 million against the capital reserves of the Company.
The remaining RM26.9 million shall be credited to the capital reserves of SESB, within other reserves and is not available for
distribution via cash dividends.
The capital repayment to shareholders was completed on 29 August 2012.
(f) Disposal of MLC
Scomi Marine Services Pte. Ltd (“SMS”) disposed of its entire equity interest in CH Logistic Pte. Ltd. (“CHL”), Sea Master Pte. Ltd.
(“Sea Master”), CH Ship Management Pte. Ltd. (“CHSM”), Grundtvig Marine Pte. Ltd. (“GMPL”) and PT Batuah Abadi Lines (“PBAL”),
collectively referred to as “Marine Logistics Companies (“MLC”) to a 88.54% owned subsidiary of SMS, PT. Tenders Indonesia
TBK (“PTRT”) for a total consideration of RM179.9 million , settled via an issuance of a vendor note of RM85.2 million and cash
consideration of RM94.7 million.
As a result of the disposal, the Group’s effective interest in MLC was diluted.
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/1 6 8
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
39 Significant Events During the Financial Period (continued)
The increase in non-controlling interests has been computed as follows:
RM’000
Net assets of MLC acquired by PTRT
Less: Purchase consideration for acquisition of MLC
290,161
(176,529)
Increase in net assets of PTRT after acquisition
113,632
Increase in non-controlling interest of 19.46% arising from increase
in net assets of PTRT after acquisition
22,112
40 Subsequent Events after the end of the Reporting Period
(a) Joint venture with Freight Management Holdings Bhd (“FMHB”)
On 3 June 2013, the Company entered into a joint venture agreement has entered into with FMHB for the purpose of:
(i) Setting up a joint venture company (Vessel Owner) to jointly acquire and own marine vessels.
(ii) Setting up another joint venture company (Vessel Operator) to jointly operate marine vessels.
One of the joint venture companies, Transenergy Shipping Pte. Ltd., has been incorporated as at the date of the financial
statements.
The Company will own a 50% equity interest in each entity.
(b) Refinancing of Sukuk Murabahah
As set out in the Sukuk Murabahah Trust Deed dated 7 December 2011, the Group is permitted to undertake the SOL Assets
Disposals (herein defined as collectively the US/Mexico Asset Disposal and West Africa Disposal) subject to the terms and
conditions set out and in accordance to Clause 11(c) in, the SOL Asset Disposal shall be completed on or before 31 December 2012.
The US/Mexico Asset Disposal was completed in November 2011.
In February 2012, the Company announced that SOL Group has obtained an indulgence to complete or cause to be completed the
West Africa Disposal (herein defined as the disposal of SOL assets located in Nigeria and Congo) on or before 31 December 2013.
Negotiations with certain financial institutions are currently ongoing to obtain refinancing for the early redemption of the
remaining Sukuk Murabahah for the portion due in 2018 amounting to RM88.7 million at par instead of raising funds via the
West Africa Disposal.
Subsequent to the end of financial period, the bond holders on 28 June 2013 approved the following in relation to the
refinancing:
(i)refinancing exercise to be undertaken by the Issuer (“Refinancing”) as a plan and source of funding for the early redemption
of the remaining Sukuk at par (being the full nominal value) together with the accrued profit thereon (if any) on such date to
be notified by the Issuer to the Facility Agent, at least five (5) Business Days prior to the proposed date of redemption of the
sukuk; and
(ii)KMCOB Capital Berhad pursuant to the refinancing, to redeem the remaining outstanding Series under the Sukuk
Murabahah (“Remaining Outstanding Sukuk”), prior to their respective Maturity Date, at per (being the full nominal value)
together with the accrued profit thereon (if any) on such date to be notified by the Issuer to the Facility Agent, at least five
P
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
(5) Business Days prior to the proposed date of redemption of the Remaining Outstanding Sukuk,
However, the early redemption exercise is subject to the completion of the refinancing being no later than 13 December
2013. The Directors are of the opinion that the refinancing will be completed by this date.
41 Early Adoption of Standards
As disclosed in Note 2(b) the Group has early adopted MFRS 10, 11, 12, 127 and 128 in line with the accounting policies of the
holding company, Scomi Group Berhad. Consequently, this resulted in the Group changing its accounting policy to conform with
the holding company’s accounting policies.
Under MFRS 11 investments in joint arrangements are classified as either joint operations or joint ventures depending on the
contractual rights and obligations each investor has rather than the legal structure of the joint arrangement.
The Group has re-evaluated its involvement in its joint arrangements and has determined that its investments in Gemini Sprint Sdn
Bhd (“GSSB”) and Marineco Limited (“MCL”) are joint ventures, therefore, The Group no longer has control over Gemini Sprint Sdn
Bhd and Marineco Limited as they are deemed as joint ventures.
The assets, liabilities revenues and expenses of GSSB and MCL had been deconsolidated retrospectively to the earliest period
presented. The Group applies equity method of accounting for both joint ventures.
The following table summarises the adjustments made to the Group’s statements of financial position at 1 January 2011 and 31
December 2011 and its statements of comprehensive income and cash flows for the financial year ended 31 December 2011 as a
result of the early adoption.
Statement of Financial Position
Group Company
As
As
previouslypreviously
reported Adjustments As restated
reported Adjustments As restated
RM’000RM’000RM’000RM’000RM’000RM’000
1 January 2011
Intangible assets and goodwill
4,685
101,718
106,403
–
–
–
Property, plant and equipment
66,798
94,344
161,142
809
–
809
Investment properties–
1,214
1,214–––
Investment in subsidiaries–––
572,481
(5,818)
566,663
Investment in associate3,225
–3,2253,225
–3,225
Investment in jointly controlled entities
–
25,081
25,081
–
19,912
19,912
Amount due from a subsidiary
–
–
–
40,575
(13,852)
26,723
Trade and other receivables
20,840
286,947
307,787
9,710
–
9,710
Cash and cash equivalents12,66685,05197,71711,282
–11,282
Deferred tax assets–
43,525
43,525–––
Non-current assets held for sale
755,668
–
755,668
–
–
–
Derivative financial instruments–
31,915
31,915–––
Inventories–
137,021
137,021–––
Tax recoverable–
19,458
19,458–––
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
41 Early Adoption of Standards (continued)
Group Company
As
As
previouslypreviously
reported Adjustments As restated
reported Adjustments As restated
RM’000RM’000RM’000RM’000RM’000RM’000
Overall impact on total assets
863,882
826,274
1,690,156
638,082
242
638,324
Trade and other payables
32,429
147,730
180,159
7,884
–
7,884
Borrowings31,452564,985596,43710,085
–10,085
Financial guarantees liabilities –221221221 –221
Current tax liabilities83
16,500
16,583–––
Deferred tax liabilities
433
1,498
1,931–––
Non-current liabilities held for sale
123,219
–
123,219
–
–
–
Provision for retirement benefits–
4,358
4,358–––
Derivative financial instruments1,1393,7804,919
–
–
–
Overall impact on total liabilities
188,755
739,072
927,827
18,190
–
18,190
Other reserves (122,982)(138,430)(261,412) 5,929
–
5,929
Retained profits(103,723)155,228 51,505(240,955)
242(240,713)
Non-controlling interests
46,914
70,404
117,318–––
Overall impact on total equity
(179,791)
87,202
(92,589)
(235,026)
242
(234,784)
31 December 2011
Intangible assets and goodwill
7,014
101,666
108,680
–
–
–
Property, plant and equipment
439,183
122,357
561,540
740
–
740
Investment properties–
1,560
1,560–––
Investment in subsidiaries–––
459,854
(6,410)
453,444
Investment in associate247 –247225 –225
Investment in jointly controlled entities 20,188
26,969
47,157
–
19,441
19,441
Amount due from a subsidiary
–
–
42,526
42,526
(13,514)
29,012
Inventories–
176,477
176,477–––
Tax recoverable–
17,911
17,911–––
Trade and other receivables
140,035
338,554
478,589
2,945
–
2,945
Cash and cash equivalents
80,646
58,116
138,762
1,173
–
1,173
Non-current assets held for sale––––––
Deferred tax assets6
31,697
31,703–––
Overall impact on total assets
687,319
875,307
1,562,626
507,463
(483)
506,980
Trade and other payables
81,047
231,261
312,308
9,562
–
9,562
Borrowings 28,963457,837486,800
55
–
55
Financial guarantees liabilities –127127127 –127
Current tax liabilities
2,877
15,304
18,181–––
Deferred tax liabilities–
1,610
2,052–––
Derivative financial instruments773426347 – – –
Provision for retirement benefits
2,315
4,642
6,957
–
–
–
Non-current liabilities held for sale––––––
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
Group Company
As
As
previouslypreviously
reported Adjustments As restated
reported Adjustments As restated
RM’000RM’000RM’000RM’000RM’000RM’000
Overall impact on total liabilities
116,417
710,355
826,772
9,744
–
9,744
Other reserves
(113,703)
(59,548)
(173,251)
4,879
–
4,879
Retained profits (215,422) 150,451 (64,971)(362,035)
(483)(362,518)
Non-controlling interests
45,152
74,049
119,201–––
Overall impact on total equity
Statement of Consolidated Income
(283,973)
164,952
(119,021)
(357,156)
(483)
(357,639)
Group Company
As
As
previouslypreviously
reported Adjustments As restated
reported Adjustments As restated
RM’000RM’000RM’000RM’000RM’000RM’000
31 December 2011
Revenue
390,821
867,364
1,258,185–––
Cost of revenue
(421,240)
(622,130)
(1,043,370)
–
–
–
Other operating income
953
47,807
48,760
907
(725)
182
Administrative expenses (31,559)(145,104)(176,663) (7,999)
319 (7,680)
Selling and distribution expenses
–
(52,986)
(52,986)
–
–
–
Other operating expenses
(45,873)
(30,973)
(76,846)
(115,773)
(319)
(116,092)
Other gain/(losses) – net––––––
Finance costs (2,638)(40,254)(42,892)
(49)
–
(49)
Share of results of an associates
(2,978)
–
(2,978)
–
–
–
Share of results of jointly
controlled entities
2,447
1,693
4,140
–
–
–
Tax expense (6,120)(29,263)(35,383)
–
–
–
Overall impact on profit
(116,187)
(3,846)
(120,033)
(122,914)
(725)
(123,639)
Currency translation differences
8,576
5,640
14,216–––
Cash flow hedges
2,645
10,827
13,472–––
Overall impact on total
comprehensive income
11,221
(104,966)
16,467
27,688
12,621
(92,345)
–
(122,914)
–
(725)
–
(123,639)
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NOTES TO THE FINANCIAL STATEMENTS FOR THE 15 MONTHS FINANCIAL PERIOD ENDED 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
42 Approval of Financial Statements
The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 31 July 2013.
43Supplementary Information on the Breakdownof Realised and Unrealised Retained Profits or Accumulated Losses
The breakdown of the accumulated losses as at 31 March 2013 into realised and unrealised profits or losses 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 or Losses in the Context of Disclosure Pursuant
to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.
Group Company
As at
As at
As at
As at
31.3.201331.12.2011 31.3.201331.12.2011
restated
restated
RM’000RM’000RM’000RM’000
Total retained earnings of the Company and its subsidiaries:
- realised
1,067,940289,671
- unrealised
(318,978)(263,125)
767(353,983)
(705)(8,535)
748,96226,546
62(362,518)
Total share of retained earnings from associated companies
- realised
40,03141,242
––
- unrealised––––
Total share of retained earnings from jointly controlled entities
- realised
17,34810,959
––
- unrealised––––
806,34178,747
Less: Consol adjustments
(586,424)(143,718)
62(362,518)
––
219,918(64,971)
62(362,518)
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
STATEMENT BY DIRECTORS PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965
Statement by
Directors
Pursuant to Section 169(15) of the Companies Act, 1965
We, Mok Yuen Lok and Shah Hakim @ Shahzanim bin Zain, being two of the Directors of Scomi Energy Services Bhd (formerly known as
Scomi Marine Bhd), state that, in the opinion of the Directors, the financial statements set out on pages 75 to 172 are drawn up so as to
give a true and fair view of the state of affairs of the Group and the Company as at 31 March 2013 and of its results and cash flows for
the financial period ended on that date in accordance with Malaysian Financial Reporting Standards, International Financial Reporting
Standards and the provisions of the Companies Act, 1965.
The information set out in Note 43 to the financial statements 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.
Signed on behalf of the Board of Directors in accordance with their resolution dated 31 July 2013.
Mok Yuen LokShah Hakim @ Shahzanim Bin Zain
DirectorDirector
Petaling Jaya
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STATUTORY DECLARATION PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Statutory
Declaration
Pursuant to Section 169(16) of the Companies Act, 1965
I, Mukhnizam Bin Mahmud, being the officer primarily responsible for the financial management of Scomi Energy Services Bhd (formerly
known as Scomi Marine Bhd), do solemnly and sincerely declare that the financial statements set out on pages 75 to 172 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.
Mukhnizam Bin Mahmud
Subscribed and solemnly declared by the above named Mukhnizam Bin Mahmud at Kuala Lumpur on 31 July 2013,
before me
Commissioner for Oaths
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SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF SCOMI ENERGY SERVICES BHD
Independent
Auditors’ Report
to the Members of Scomi Energy Services Bhd
Report on the financial statements
We have audited the financial statements of Scomi Energy Services Bhd (formerly known as Scomi Marine Bhd) on pages 75 to 172
which comprise the statements of financial position as at 31 March 2013 of the Group and of the Company, and the statements of
comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the period
then ended, and a summary of significant accounting policies and other explanatory information, as set out on Notes 1 to 42.
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 control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on 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 control relevant to the entity’s preparation of
financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of
31 March 2013 and of their financial performance and cash flows for the financial period 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 in Malaysia, we also report the following:
(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.
(c)we are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial
statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the
Group and we have received satisfactory information and explanations required by us for those purposes.
(d)the audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made
under Section 174(3) of the Act.
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INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF SCOMI ENERGY SERVICES BHD
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Independent Auditors’ Report to the Members of Scomi Energy Services Bhd (continued)
Other reporting responsibilities
The supplementary information set out in Note 43 on page 172 is disclosed to meet the requirement of Bursa Malaysia Securities
Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information
in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of
Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA
Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all
material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
Other matters
1.As stated in Note 2 to the financial statements, the Group and Company adopted Malaysian Financial Reporting Standards on 1
January 2012 with a transition date of 1 January 2011. These standards were applied retrospectively by Directors to the comparative
information in these financial statements, including the statements of financial position as at 31 December 2011 and 1 January
2011, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the financial
year ended 31 December 2011 and related disclosures. We were not engaged to report on the restated comparative information
and it is unaudited. Our responsibilities as part of our audit of the financial statements of the Group and of the Company for the
period ended 31 March 2013 have, in these circumstances, included obtaining sufficient appropriate audit evidence that the
opening balances as at 1 January 2012 do not contain misstatements that materially affect the financial position as of 31 March
2013 and financial performance and cash flows for the period then ended.
2.This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act 1965 in
Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
PricewaterhouseCoopers
Yee Wai Yin
(No. AF: 1146)(No. 2081/08/14 (J))
Chartered Accountants
Chartered Accountant
Kuala Lumpur
31 July 2013
P
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
ANALYSIS OF SHAREHOLDINGS AS AT 31 JULY 2013
Analysis of
Shareholdings
as at 31 July 2013
Authorised Share Capital Issued and Paid-Up Capital Types of Shares Voting Rights :R
M1,802,000,000.00 divided into 4,000,000,000 ordinary shares of RM0.45 each and 200,000,000
redeemable convertible cumulative preference shares (“RCCPS”) of RM0.01 each
:R
M1,053,798,945.75 divided into 2,341,775,435 ordinary shares of RM0.45 each. This includes
145,000 ordinary shares purchased by the Company under share buy-back scheme and retained as
treasury shares
: Ordinary shares of RM0.45 each and RCCPS of RM0.01 each
: One vote per ordinary share
Distribution of Shareholdings
Size of Shareholdings No. of holders
Less than 100 100 to 1,000 1001 to 10,000
10,001 to 100,000 100,001 to less than 5% of issued shares 5% and above of issued shares 33
554
2,715
1,151
198
3
Shareholders
% of shares No. of holders
0.71
11.90 58.34
24.73
4.25
0.06 784
443,116
14,616,600
38,278,700
482,506,961
1,805,784,274 Shareholding
% of shares
0.00
0.02
0.62
1.63
20.61
77.12
Total 4,654100.00
2,341,630,435100.00
List of Top Thirty (30) Holders
No. Name of shareholders No. of shares
Percentage %
1
Scomi Group Bhd 1,223,949,234
52.27
2
Malaysian Trustees Berhad
Scomi Group Bhd 313,043,478
13.37
3
Cartaban Nominees (Asing) Sdn Bhd
Exempt an for Standard Chartered Private Equity Limited 268,791,562
11.48
4
Citigroup Nominees (Asing) Sdn Bhd
UBS AG for Broad Peak Master Fund Ltd (Fuji Inv) 116,025,161
4.95
5
UOBM Nominees (Asing) Sdn Bhd
TAEL One Partners Ltd for Petroworld Investments Inc 110,000,000
4.70
6
HDM Nominees (Asing) Sdn Bhd
UOB Kay Hian Pte Ltd for TAEL One Partners Ltd 61,499,200
2.63
7
RHB Capital Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Meer Sadik bin Habib Mohamed (HHSB761007) 38,600,000
1.65
8
Lembaga Tabung Haji 37,440,000
1.60
9
CIMSEC Nominees (Tempatan) Sdn Bhd
CIMB for United Flagship Sdn Bhd (PB) 11,079,400
0.47
/1 7 7
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/1 7 8
ANALYSIS OF SHAREHOLDINGS AS AT 31 JULY 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
List of Top Thirty (30) Holders (cont’d)
No. Name of shareholders No. of shares
Percentage %
10
HSBC Nominees (Asing) Sdn Bhd
Exempt an for the Bank of New York Mellon (Mellon Acct) 7,932,800
0.34
11
HLIB Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Abu Sahid bin Mohamed (MG0172-003) 7,591,300
0.32
12
Hemant Hiralal Kothari 6,169,500
0.26
13
KAF Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Rentak Rimbun Sdn Bhd (RE001) 5,056,900
0.22
14
HSBC Nominees (Asing) Sdn Bhd
Exempt an for Credit Suisse (SG-BR-TST-Asing) 4,400,000
0.19
15
Meer Sadik bin Habib Mohamed 4,183,996
0.18
16
Citigroup Nominees (Asing) Sdn Bhd
Exempt an for OCBC Securities Private Limited (Client A/C-NR) 3,185,000
0.14
17
Ambank (M) Berhad
Pledged Securities Account for Ali bin Abdul Kadir (Smart) 3,000,000
0.13
18
SNG Beng Hock Michael 2,500,000
0.11
19
HLB Nominees (Tempatan) Sdn Bhd
Pledged Securities account for Abu Sahid bin Mohamed 2,145,000
0.09
20
Citigroup Nominees (Asing) Sdn Bhd
Exempt an for Citibank NA, Singapore (Julius Baer) 2,111,500
0.09
21
Maybank Securities Nominees (Tempatan) Sdn Bhd
Pledged securities account for Shah Hakim bin Zain (Margin) 2,108,000
0.09
22
Citigroup Nominees (Tempatan) Sdn Bhd
Universal Trustee (Malaysia) Berhad for CIMB Islamic Small Cap Fund 1,274,700
0.05
23
Stancil A/L J P Benedict 1,200,000
0.05
24
HLIB Nominees (Tempatan) Sdn Bhd
Hong Leong Bank Bhd for Chai Sung Lee 1,172,800
0.05
25
Lee Chiah Cheang 1,046,000
0.04
26
HLIB Nominees (Tempatan) Sdn Bhd
Pledged securities account for Abdul Murad bin Khalid 1,000,000
0.04
27
Kenanga Nominees (Tempatan) Sdn Bhd
Pledged securities account for Koh Kin Lip 1,000,000
0.04
28
Low Chu Mooi 1,000,000
0.04
29
Malaysia Nominees (Tempatan) Sendirian Berhad
Malaysian Trustee Berhad for Alliance Vision Fund (00-10033-000) 1,000,000
0.04
30
Rickoh Corporation Sdn Bhd 1,000,000
0.04
Total 2,240,505,531
95.68
P
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
ANALYSIS OF SHAREHOLDINGS AS AT 31 JULY 2013
Substantial Shareholders
Direct shareholding Deemed interested shareholding
Name of substantial shareholders No. of shares
%
No. of shares
%
Scomi Group Bhd 1,536,992,712(1) 65.64350,000(2)0.02
Standard Chartered Private Equity Limited (“SCPEL”) 268,791,562(3)
11.48––
Standard Chartered Asia Limited –
–
268,791,562(4)
11.48
Standard Chartered MB Holdings B.V. –
–
268,791,562(4)11.48
Standard Chartered Holdings (International) B.V. –
–
268,791,562(4)11.48
SCMB Overseas Limited –
–
268,791,562(4)11.48
Standard Chartered Bank
–
–
268,791,562(4)11.48
Standard Chartered Holdings Limited
–
–
268,791,562(4)11.48
Standard Chartered PLC
–
–
268,791,562(4)
11.48
NOTES
(1) 313,043,478 shares held through Malaysian Trustees Berhad.
(2)Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 (“the Act”) through its shareholding in Scomi Energy Sdn Bhd, which in turn is interested in the
Company.
(3) Held through Cartaban Nominees (Asing) Sdn Bhd.
(4)Deemed interested by virtue of Section 6A(4) of the Act through its shareholding in SCPEL, which in turn is interested in the Company, whereby all the shares are held
through Cartaban Nominees (Asing) Sdn Bhd.
Directors’ Shareholdings
Direct Interest
Directors
No. of shares
%
Tan Sri Nik Mohamed bin Nik Yaacob Dato’ Meer Sadik bin Habib Mohamed Mok Yuen Lok Liew Willip Lee Chun Fai
Shah Hakim @ Shahzanim bin Zain Loong Chun Nee No. of shares
Indirect Interest
%
–
–
–
–
42,783,996(1) 1.83647,404(2)0.03
20,000 *
–
–
–
–––
–
–
–
–
2,108,000(3) 0.095,056,900(4)0.22
130,000
0.01
–
–
NOTES
*Negligible.
(1) 38,600,000 shares held through RHB Capital Nominees (Tempatan) Sdn Bhd.
(2) Deemed interested by virtue of Section 134(12)(c) of the Companies Act, 1965 through his spouse, Datin Zarida binti Noordin’s shareholding in the Company.
(3) Held through Maybank Securities Nominees (Tempatan) Sdn Bhd.
(4) Deemed interested by virtue of Section 6A(4) of the Act through his shareholdings in Rentak Rimbun Sdn Bhd which in turn is interested in the Company.
KAF Nominees (Tempatan) Sdn Bhd pledged securities Account for Rentak Rimbun Sdn Bhd (RE001).
/1 7 9
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/1 8 0
LIST OF PROPERTIES AS AT 31 MARCH 2013
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
List of
Properties
as at 31 March 2013
Registered
Description /
Existing
No Owner
location address
use
Tenure of land:
freehold or leasehold Approximate
(years)/date
Land area/ age of
of acquisition
Built-up area building
Audited
net book
value as at
31.03.2013
RM ‘000
1
Scomi Oiltools Master: Land held under
Five-storey
Freehold
Built-up area: 16 years
Land &
Sdn Bhd
Geran 46494, Lot 42410 shop office
31.10.1999
11,755 sq ft
building: 891
Pekan Cempaka,
Daerah Petaling,
Negeri Selangor,
Malaysia
(formerly known
as PT 42410 H.S.(D)
135924 part of Geran
35997 Lot 102
Geran 40176
Lot 15386 and
Geran 43061
Lot 15386, Mukim
of Sungai Buloh
Daerah Petaling,
Negeri Selangor,
Malaysia)
2
Scomi Oiltools Kemaman Warehouse
Sdn Bhd
No. 24, Kemaman Supply Base, 24007 Kemaman, Terengganu, Malaysia
Warehouse
Not applicable
Built-up areas: 22 years
for office use,
15.11.1991
19,200 sq ft
laboratory,
milling and
storage
activities
Building: 219
3
P.T. Rig Tenders Office building
Office building Freehold/
Indonesia, Tbk Wisma Rig Tenders
29.07.1993
Jl. Dr Saharjo
No.129
Jakarta 12860
Land area: n/a
Built- up area:
512 m2
13 years
29.5
4
P.T. Rig Tenders Land
Indonesia, Tbk Jl. Dr Saharjo
No.129
Jakarta 12860
Land area: 490 m2
Built- up area:
n/a
n/a
–
Land area:
n/a
Built-up area:
371 m2
15
21.2
Land for the
Freehold/
building as
01.01.1997
mentioned
in item 3
5
P.T. Rig Tenders Single storey house
Staff
Freehold
Indonesia, Tbk Simpang Gatot accommodation 01.10.1995
Subroto VIII
Jl. Garuda no.8
Banjarmasin 70236
P
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
LIST OF PROPERTIES AS AT 31 MARCH 2013
Registered
Description /
Existing
No Owner
location address
use
Tenure of land:
freehold or leasehold Approximate
(years)/date
Land area/ age of
of acquisition
Built-up area building
Audited
net book
value as at
31.03.2013
RM ‘000
6
P.T. Rig Tenders
Indonesia, Tbk
Single storey house
Staff
Freehold
Jl. Veteran Simpang accommodation 31.12.1996
SMP VII Rt.29 no. 66
Banjarmasin 70232
Land area:
n/a
Built-up area:
388 m2
16
7.4
7
P.T. Rig Tenders Indonesia, Tbk
Land
Jl Belitung Darat no.88 Banjarmasin 70116
Land area:
190 sq metres
Built-up area:
n/a
n/a
–
8
P.T. Rig Tenders Indonesia, Tbk
Single storey house
Staff
Freehold
Persada Mas Bumi
accommodation 31.10.2000
Asri Barat
Jl Ahmad Yani no. 8
Banjarmasin
Land area :
n/a
n/a
Built-up area:
200 sq metres
29.5
9
Scomi Sosma
Sdn Bhd
Land held under
Land
Geran 250133, Lot 7627,
Mukim of Sepang,
Selangor Darul Ehsan
Freehold
7.4.2011
Land area:
n/a
0.7412 hectares
176
Land held under Land
Geran 250134, Lot 7628,
Mukim of Sepang,
Selangor Darul Ehsan
Freehold
7.4.2011
Land area:
n/a
0.6229 hectares
148
Land held under Land
Geran 250135, Lot 7629,
Mukim of Sepang,
Selangor Darull Ehsan
Freehold
7.4.2011
Land area:
n/a
0.6993 hectare
166
Land for
Freehold
the building
09.01.2003
as mentioned
in item 7
/1 8 1
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/1 8 2
CORPORATE DIRECTORY
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Corporate
Directory
CORPORATE
OPERATING LOCATIONS
Scomi Energy Services Bhd
(formerly known as
Scomi Marine Bhd)
Level 17, 1 First Avenue
Bandar Utama
47800 Petaling Jaya
Selangor Darul Ehsan
Malaysia
Tel: +603 7717 3000
Fax: +603 7725 9082
AU S T R A L I A ( Per th)
Scomi Oiltools Pty Ltd
15, Boulder Road
Malaga
Western Australia
6090 Australia
Scomi Oiltools Sdn Bhd
Level 17, 1 First Avenue
Bandar Utama
47800 Petaling Jaya
Selangor Darul Ehsan
Malaysia
Tel: +603 7717 3000
Fax: +603 7728 5202
Scomi Sosma Sdn Bhd
Level 17, 1 First Avenue
Bandar Utama
47800 Petaling Jaya
Selangor Darul Ehsan
Malaysia
Tel: +603 7717 3000
Fax: +603 7728 5202
A M ER I C A- N O R TH
( H ou s ton )
Scomi Equipment Inc
6818 N. San Houston
Parkway West
Houston, Texas
77064 USA
E G YP T (Cairo)
Scomi Oiltools Egypt S A E
Km 10, Ain Sukhna Road
Kattamia, Oilfield Services
Complex
Cairo, Egypt
FR AN CE
Scomi Anticor S A E
6 Avenue des Amandiers
Z.A. du Mardaric
04310 Peyruis
France
IN DO N E SIA ( Ja k a r ta )
PT Scomi Oiltools
Gedung Tetra Pak
Suite 101/104/103
Jl. Buncit Raya Kav 100
Jakarta Selatan 12510
Indonesia
PT Rig Tenders
Indonesia Tbk
Gedung Philips
Jl. Buncit Raya Kav. 100
Jakarta Selatan 12510
Indonesia
IN DIA (M umbai)
KMC Oiltools India
Private Ltd
912-A, Building No. 9
Solitaire Corporate Park
Andheri-Ghatkopar Link Road
Chakala, Andheri (East)
Mumbai, 400093
India
MALAYSIA (Kemaman)
Scomi Oiltools Sdn Bhd
Warehouse 24
Letterbox No. 72
Kemaman Supply Base
24007 Kemaman
Terengganu Darul Iman
Malaysia
IN DO N E SIA
(B alik papan)
PT Scomi Oiltools
Jl. Mulawarman Rt 45
No. 2, Manggar
Balikpapan 76116
East Kalimantan
Indonesia
MALAYSIA (Labuan)
Scomi Oiltools Sdn Bhd
Asian Supply Base
Ranca-Ranca Industrial Estate
P O Box 82023
87030 Labuan Federal
Territory, Labuan
Malaysia
C H I N A ( Tan g g u)
Scomi Oiltools (S) Pte Ltd
A1-704, Teda New Skyline
No. 12, Nan Hai Road
Teda Tianjin, 300457
P.R. China
IN DO N E SIA
(B anjarmasin)
PT Batuah Abadi Lines
Jl. Belitung Darat No. 88
Rt. 19 Banjarmasin
Kalimantan Selatan
Indonesia
MarineCo Limited
Level 6 (D), Main Office Tower
Financial Park, Jalan Merdeka
P O Box 80887
87018 Labuan Federal
Territory, Labuan
Malaysia
CO N G O ( Poi nte N o ir)
Scomi Oiltools Africa
Limited
Zone Industrielle de la foire
Pointe-Noire
Congo
IN DO N E SIA (D uri)
PT Scomi Oiltools
Jl. Raya Duri Dumai Km 131
Duri, Pekanbaru
Sumatera 28884
Indonesia
MALAYSIA (Miri)
Scomi Oiltools Sdn Bhd
Lot 2164, 1st Floor
Saberkas Commercial Centre
Jalan Pujut-Lutong
98000 Miri
Sarawak, Malaysia
C H I N A ( B ei j i ng )
Scomi Oiltools (S) Pte Ltd
Rm 1507, Tower B, Eagle Plaza
No. 26, Xiao Yun Road
Chaoyang District
Beijing 100027
P.R. China
C H I N A ( Sh eko u)
Scomi Oiltools (S) Pte Ltd
Rm 23C Tower A
Neptunus Building
No. 2221, Nanhai Rd
Nanshan District
518054 Shenzhen
Guangdong Prov
P.R. China
P
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
MALAYSIA (Selangor)
Global Research &
Technology Centre
No. 9, Jalan Astaka U8/83
Seksyen U8
40150 Shah Alam
Selangor Darul Ehsan
Malaysia
MYA N MA R
Scomi Oiltools
(Thailand) Ltd
Unit #109, Building 1
Hotel Yangon
No.91/93, Corner of Pyay
Road and Kabaraye Pagoda
Road, 8th Mile Junction
Mayangone Township
Yangon, Myanmar
N I GE RI A (O n n e)
Wasco Oil Service
Company Nigeria Limited
#9 Wharf Road
Onne, Rivers State
Nigeria
Wasco Oil Service
Company Nigeria Limited
Onne Oil & Gas
Free Zone Complex
Onne, Rivers State
Nigeria
OMA N (A za i b a)
Scomi Oiltools Oman LLC
Building No. 272
Way No. 44803
Office No. 1104 (2nd Floor)
Azaiba, Sultanate of Oman
PAKISTAN (Islamabad)
Scomi Oiltools Ltd
(Pakistan Branch)
Plot No. 212, Service Road
Industrial Area, I-10/3
Islamabad, Pakistan
PAKISTAN (Karachi)
Scomi Oiltools Ltd
(Pakistan Branch)
B-31, Maghal Tobaco
Godown No 19-20
SITE, Karachi
Pakistan
QATA R
Scomi Oiltools
(Cayman) Limited
940 Al-Khalidia Street
Zone No.26
Najma, Doha, Qatar
P O Box 2471
RU SSI A ( M os cow)
Scomi Oiltools (Rus) LLC
3rd floor, bld.1 24/2
Sretenka Str
107045 Moscow
Russia
RU SSI A
( Wes ter n S i beria)
Scomi Oiltools (Rus) LLC
16 bld. 7, Industrialnaya Str
628616 Nizhnevartovsk
Tyumen Region
Russia
SAU DI A R A B IA
Scomi Oiltools
(Cayman) Limited
(Saudi Arabia Branch)
c/o Tanajib for General
Contracting Est.
P O Box 30415
Salman A-farezi Street
Near Silver Tower, Behind
Saudi Hollandi Bank
Al-Khobar 31952
Kingdom of Saudi Arabia
SI N G A P O R E
Scomi Oiltools (S) Pte Ltd
50 Ubi Crescent #01-08
Ubi Tech Park, Singapore
408568
CORPORATE DIRECTORY
Scomi Marine Services
Pte Ltd
8 Admiralty Street
#07-09 Admirax
Singapore 757438
SUDAN (Khartoum)
Scomi Oiltools Overseas
(M) Limited
No. 649, Square 4
El-Safa, Khartoum
Republic of Sudan
THAIL AN D (B ang ko k )
Scomi Oiltools
(Thailand) Ltd
13th Floor, CTI Tower
191/77, Ratchadapisek Road
Kwaeng Klongtoey
Khet Klongtoey
Bangkok
10110 Thailand
TU R KM E N ISTAN
(B alk anabat)
Scomi Oiltools Ltd
(Turkmenistan Branch)
Jebel Base #2, Jebel v.
Balkanabat
Turkmenistan
TURKMENISTAN
(Hazar)
Scomi Oiltools Ltd
(Turkmenistan Branch)
High Road 9 kilometer
Hazar
Turkmenistan 745030
TU R KM E N ISTAN
( Turk menbashy)
Scomi Oiltools Ltd
(Turkmenistan Branch)
Shagadam Street 8
Turkmenbashy City
Turkmenistan 745000
THAIL AN D
(L ank rabue)
Scomi Oiltools
(Thailand) Ltd
163, Moo 6 Tumbol
Lankrabue
Amphur Lankrabue
Kamphaengphet
62170 Thailand
U. A. E. (D ubai )
Scomi Oiltools
(Cayman) Limited
(Dubai Branch)
Oilfield Supply Centre
Building B-10, Jebel Ali
Free Zone, Dubai
United Arab Emirates
THAIL AN D
(S o ng k hla)
Scomi Oiltools
(Thailand) Ltd
424/9 Moo 2
Songkhla – Koh Yor Road
Amphur Muang, Songkhla
90100 Thailand
U. A. E. (Abu D ha b i)
Scomi Oiltools
(Cayman) Ltd
Liwa Street/Liwa Tower
Mezzanine Floor, M02
P O Box 45333
Abu Dhabi
United Arab Emirates
TU R KM E N ISTAN
(Ashg abat)
Scomi Oiltools Ltd
(Turkmenistan Branch)
Yimpash Business Centre
Office 101(A)
Turkmenbashy Street
54 Ashgabat
Turkmenistan 744013
V IE TN AM
Scomi Oiltools Pte Ltd
(Vietnam Branch)
c/o PTSC Supply Base
65A, 30/4 Road
Thang Nhat Ward
Vung Tau City
S R Vietnam
/1 8 3
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/1 8 4
NOTICE OF ANNUAL GENERAL MEETING
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Notice of Annual
General Meeting
NOTICE IS HEREBY GIVEN that the 17th Annual General Meeting of SCOMI ENERGY SERVICES BHD (formerly known as Scomi Marine Bhd)
(“the Company”) will be held at Ballroom 1, First Floor, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur on
Wednesday, 25 September 2013 at 2.30 p.m. to transact for the following business:
As Ordinary Business:
To consider and, if thought fit, to pass the following:
1.To receive the Financial Statements for the financial period ended 31st March 2013 and the Reports of
the Directors and Auditors thereon.
2.To re-elect Dato’ Meer Sadik bin Habib Mohamed who retires in accordance with Article 86 of the
Company’s Articles of Association and being eligible, offer himself for re-election.
3.To re-elect the following Directors who retire in accordance with Article 93 of the Company’s Articles
of Association and being eligible, offer themselves for re-election:
(i) Tan Sri Nik Mohamed bin Nik Yaacob
(ii) Mr Lee Chun Fai
4.To appoint Messrs KPMG as Auditors of the Company for the financial year ending 31st March 2014, in
replacement of the retiring Auditors, Messrs PricewaterhouseCoopers, and to authorise the Directors
to fix their remuneration.
(Ordinary Resolution 1)
(Ordinary Resolution 2)
(Ordinary Resolution 3)
(Ordinary Resolution 4)
As Special Business:
To consider and, if thought fit, to pass the following:
5. To approve the payment of Directors’ fees for the financial period ended 31 March 2013.
6. Authority to Issue and Allot Shares Pursuant to Section 132D of the Companies Act, 1965
“THAT subject to the Companies Act, 1965 (as may be amended, modified or re-enacted from time
to time), the Articles of Association of the Company and the approvals of the relevant governmental
and/or regulatory authorities, where necessary, the Directors be and are hereby authorised, pursuant
to Section 132D of the Companies Act, 1965, to issue and allot shares in the Company, at any time
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 issued pursuant to this resolution
does not exceed ten percent (10%) of the issued and paid-up share capital of the Company for the
time being and that the Directors be and are hereby further authorised to obtain approval for the
listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad.
THAT such authority shall commence upon the passing of this resolution and shall continue to be in
force until:
i.the conclusion of the next Annual General Meeting at which time the authority will lapse, unless
the authority is renewed by an ordinary resolution passed at the next Annual General Meeting,;
ii.the expiration of the period within which the next Annual General Meeting after that date is
required by law to be held; or
iii.revoked or varied by an ordinary resolution passed by the Company’s shareholders in a general
meeting,
whichever occurs first.”
(Ordinary Resolution 5)
(Ordinary Resolution 6)
P
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTICE OF ANNUAL GENERAL MEETING
7.
Proposed Renewal of Authority for the Purchase by the Company of its ordinary shares of
up to 10% of the issued and paid-up share capital (“Share Buy-back”)
“THAT subject to the Companies Act, 1965 (as may be amended, modified or re-enacted from time to
time), the Articles of Association of the Company, the requirements of the Bursa Malaysia Securities
Berhad (“Bursa Securities”) and the approvals of the relevant governmental and/or regulatory
authorities, where necessary, approval be and is hereby given for the Company to purchase such
number of ordinary shares of RM0.45 each in the Company of up to ten percent (10%) of its issued and
paid up share capital (“SES Shares”) from the market of Bursa Securities, from time to time, as may be
determined by the Directors of the Company, in the manner set out in the Share Buy-Back Statement
to the Company’s shareholders dated 3 September 2013 (“the Share Buy-Back Statement”);
(Ordinary Resolution 7)
THAT such authority shall commence upon the passing of this resolution and shall continue to be in
force until:
i.the conclusion of the next Annual General Meeting at which time the authority will lapse, unless
the authority is renewed by an ordinary resolution passed at the next Annual General Meeting;
ii.the expiration of the period within which the next Annual General Meeting after that date is
required by law to be held; or
iii.revoked or varied by an ordinary resolution passed by the Company’s shareholders in a general
meeting,
whichever occurs first, but not so as to prejudice the completion of any purchase of SES Shares by the
Company prior to the lapse or expiration or revocation or variation of the authority as aforesaid.
AND THAT the Directors of the Company be and are hereby authorised to take all such steps and do
all acts and deeds and to execute, sign and deliver on behalf of the Company all necessary documents
to give full effect to and for the purpose of completing or implementing the Share Buy-Back in the
manner set out in the Share Buy-Back Statement, and that following completion of the Share Buy-Back,
the power to cancel or retain as treasury shares, any or all of the SES Shares so purchased, resell on the
market of Bursa Securities or distribute as dividends to the Company’s shareholders or subsequently
cancel, any or all of the treasury shares, with full power to assent to any condition, revaluation,
modification, variation and/or amendment in any manner as may be required by any relevant authority
or otherwise as they deem fit in the best interests of the Company.”
8. Proposed Amendments to the Articles of Association of the Company
“THAT approval be and is hereby given for the Company to amend its Articles of Association as set out
in Part B of the Circular to Shareholders of the Company dated 3 September 2013;
AND THAT the Directors of the Company be authorised to do all such acts, deeds and things as are
necessary and/or expedient in order to give full effect to the Proposed Amendments to the Articles
of Association of the Company with full powers to assent to any conditions, modifications and/or
amendments as may be required by any relevant authorities.”
(Special Resolution 1)
/1 8 5
P
/1 8 6
NOTICE OF ANNUAL GENERAL MEETING
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
Notice of Annual General Meeting (continued)
9. To transact any other business of the Company for which due notice shall have been given.
By Order of the Board
Chong Mei Yan (MAICSA 7047707)
Ong Wei Leng (MAICSA 7053539)
Company Secretary
Petaling Jaya
Date: 3 September 2013
NOTE 1: Appointment of Proxy
(i)A member of the Company entitled to attend and vote at the meeting may appoint a proxy or proxies (but not more than two) to attend and vote on his/her behalf. A
proxy may but need not be a member of the Company.
(ii)Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her holding to be represented by each proxy.
(iii)Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one proxy (but not more than
two proxies) in respect of each securities account it holds with ordinary shares standing to the credit of the said securities account.
(iv)The instrument appointing a proxy, in the case of an individual shall be signed by the appointer or his/her attorney duly authorised in writing and in the case of a
corporation, either under seal or under the hand of an officer or attorney duly authorised. If no name is inserted in the space for the name of your proxy, the Chairman of
the Meeting will act as your proxy.
(v)The instrument appointing a proxy, with the power of attorney or other authority (if any) under which it is signed or a notarially certified or office copy of such power or
authority, must be completed and deposited at the office of the Share Registrar of the Company, Symphony Share Registrars Sdn Bhd at Level 6, Symphony House, Block
D13, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan, not less than forty-eight (48) hours before the time appointed for holding the
Annual General Meeting or any adjournment thereof and in default the instrument of proxy shall not be treated as valid.
(vi)For the purpose of determining a member who shall be entitled to attend the forthcoming 17th Annual General Meeting, the Company shall be requesting Bursa
Malaysia Depository Sdn Bhd in accordance with Articles 54 of the Company’s Articles of Association and Section 34(1) of the Securities Industry (Central Depositories)
Act, 1991 to issue a General Meeting Record of Depositors as at 19 September 2013. Only depositor whose name appears on the General Meeting Record of Depositors as
at 19 September 2013 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his/her behalf.
NOTE 2: Financial Statements for the financial period ended 31 March 2013 and the Reports of the directors and Auditors thereon
This agenda is tabled for discussion only as the provision of Section 169(1) of the Companies Act, 1965 does not require a formal approval of the shareholders and hence is not
put forward for voting.
NOTE 3:Explanatory Note on Item 6 of the Agenda (Ordinary Resolution 6)
The ordinary resolution under Item 6 above is proposed pursuant to Section 132D of the Companies Act, 1965, and if passed, will give the Directors of the Company authority
from the date of the forthcoming 17th Annual General Meeting of the Company, to issue and allot shares in the Company at any time up to an aggregate amount not
exceeding 10% of the issued and paid-up share capital of the Company for such purposes as the Directors deem fit and in the interest of the Company (“Share Mandate”).
This Share Mandate, unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company or the expiry of the
period within which the next Annual General Meeting of the Company is required by law to be held. With this Share Mandate, the Company will be able to raise capital from
the equity market in a shorter period of time compared to a situation without the Share Mandate. In addition, the costs involved will also be lower as the need to have an
extraordinary general meeting of the Company (“EGM”) will be dispensed with if the proposed issuance of shares is within the 10% threshold. The Company will have to seek
shareholders’ approval at an EGM to be convened in the event that the proposed issuance of shares exceeds the 10% threshold allowed by the Share Mandate.
The proposed resolution is to seek a renewal of the Share Mandate which was approved by the shareholders at the 16th Annual General Meeting of the Company held on
26 June 2012. As the date of this notice, no new shares in the Company were issued and allotted pursuant to the Share Mandate, which will lapse at the conclusion of the
forthcoming 17th Annual General Meeting to be held on 25 September 2013.
NOTE 4: Explanatory Note on Item 7 of the Agenda (Ordinary Resolution 7)
The ordinary resolution under Item 7 above, if passed, will empower the Directors to purchase the shares of up to ten percent (10%) of the issued and paid-up share capital
of the Company by utilising funds not exceeding the retained profits and the share premium account of the Company. This authority, unless revoked or varied at a general
meeting, will expire at the earlier of either the conclusion of the next Annual General Meeting of the Company or the expiry of the period within which the next Annual
General Meeting of the Company is required by law to be held.
The details relating to Ordinary Resolution 7 are set out in the Circular to Shareholders dated 3 September 2013.
NOTE 5: Explanatory Note on the Item 8 of the Agenda (Special Resolution 1)
The special resolution under Item 8 above, the Proposed Amendments to the Articles of Association are made principally to ensure that the Articles of Association of the
Company comply with the amended Main Market Listing Requirements of Bursa Malaysia Securities Berhad.
The details relating to Special Resolution 1 are set out in the Circular to Shareholders dated 3 September 2013.
P
SCOMI ENERGY SERVICES BHD ANNUAL REPORT 2013
NOTICE OF NOMINATION
/1 8 7
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FORM OF PROXY
Scomi Energy Services Bhd
(formerly known as Scomi Marine Bhd)
(Company No. 397979-A)
(Incorporated in Malaysia under the Companies Act, 1965)
Registered Office: Level 17, 1 First Avenue, Bandar Utama,
47800 Petaling Jaya, Selangor Darul Ehsan
I/We
CDS Account No.
No. of Ordinary Shares Held
NRIC/Passport No.
(Full name)
of
(Full address)
being a *member/members of Scomi Energy Services Bhd (formerly known as Scomi Marine Bhd), hereby
appoint
NRIC/Passport No.
(Full name)
of
(Full address)
or failing him/her
NRIC/Passport No.
(Full name)
of
(Full address)
or failing *him/her the Chairman of the Meeting as *my/our proxy to vote for *me/us on *my/our behalf at the Annual General
Meeting of the Company to be held at the Ballroom 1, First Floor, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1,
60000 Kuala Lumpur on Wednesday, 25 September 2013 at 2.30 p.m. or any adjournment thereof.
Resolutions
For
Against
Ordinary Business
To re-elect Dato’ Meer Sadik bin Habib Mohamed who retires in accordance
with Article 86 of the Company’s Articles of Association and being eligible,
Resolution 1
offer himself for re-election.
To re-elect the following Directors who retire in accordance with Article 93 of
the Company’s Articles of Association and being eligible, offer themselves for re-election:
Ordinary
Resolution 2
(i) Tan Sri Nik Mohamed Bin Nik Yaacob
Ordinary
(ii) Mr Lee Chun Fai
Resolution 3 To appoint Messrs KPMG as Auditors of the Company for the financial year ending
Ordinary
31 March 2014, in replace​ment of the retiring Auditors, Messrs PricewaterhouseCoopers,
Resolution 4 and to authorise the Directors to fix their remuneration.
Special Business
Ordinary To approve the payment of Directors’ fees for the financial period
Resolution 5 ended 31 March 2013.
Ordinary
Authority to Issue and Allot Shares Pursuant to Section 132D of the Companies Act, 1965
Resolution 6
Ordinary
Proposed Renewal of Authority for the Purchase by the Company of its ordinary shares
Resolution 7
of up to 10% of the issued and paid-up share capital (Share Buy-back)
Special Proposed Amendments to the Articles of Association of the Company
Resolution 1
Please indicate with a tick mark (“ ”) in the space provided to show how you wish your vote to be casted. 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/Seal
Fold this flap for sealing
NOTES
(i)A member of the Company entitled to attend and vote at the meeting may appoint a proxy or proxies (but not more than two) to attend and
vote on his/her behalf. A proxy may but need not be a member of the Company.
(ii)Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her holding to be
represented by each proxy.
(iii)Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one
proxy (but not more than two proxies) in respect of each securities account it holds with ordinary shares standing to the credit of the said
securities account.
(iv)The instrument appointing a proxy, in the case of an individual shall be signed by the appointer or his/her attorney duly authorised in writing
and in the case of a corporation, either under seal or under the hand of an officer or attorney duly authorised. If no name is inserted in the space
for the name of your proxy, the Chairman of the Meeting will act as your proxy.
(v)The instrument appointing a proxy, with the power of attorney or other authority (if any) under which it is signed or a notarially certified or office
copy of such power or authority, must be completed and deposited at the office of the Share Registrar of the Company, Symphony Share
Registrars Sdn Bhd at Level 6, Symphony House, Block D13, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan,
not less than forty-eight (48) hours before the time appointed for holding the Annual General Meeting or any adjournment thereof and in default
the instrument of proxy shall not be treated as valid.
(vi)For the purpose of determining a member who shall be entitled to attend the forthcoming 17th Annual General Meeting, the Company shall be
requesting Bursa Malaysia Depository Sdn Bhd in accordance with Articles 54 of the Company’s Articles of Association and Section 34(1) of the
Securities Industry (Central Depositories) Act, 1991 to issue a General Meeting Record of Depositors as at 19 September 2013. Only depositor
whose name appears on the General Meeting Record of Depositors as at 19 September 2013 shall be entitled to attend the said meeting or
appoint proxies to attend and/or vote on his/her behalf.
Then fold here
Affix
Stamp
The Registrar of Scomi Energy Services Bhd
(formerly known as Scomi Marine Bhd)
Symphony Share Registrars Sdn Bhd
Level 6, Symphony House
Block D13, Pusat Dagangan Dana 1
Jalan PJU 1A/46, 47301 Petaling Jaya
Selangor Darul Ehsan, Malaysia
1st fold here
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This page has been intentionally left blank.
Scomi Energy Services Bhd
(formerly known as Scomi Marine Bhd)
Scomi Energy Services Bhd (397979-A) Annual Report 2013
Scomi Energy Services Bhd (397979-A) (formerly known as Scomi Marine Bhd)
Level 17, 1 First Avenue
Bandar Utama
47800 Petaling Jaya
Selangor Darul Ehsan
Malaysia
Annual Report_Cover3
1533-03/13
23.08.13
REALISING POTENTIAL,
CREATING VALUE
Telephone +603 7717 3000
Facsimile +603 7725 9028
www.scomienergy.com.my
Scomi
Annual
Report
2013
1533_Scomi ARCover
22cm (w) x 28cm (h)
CMYK
R4
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