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section one:
21 ANNUAL GENERAL
ST
MEETING
Venue : CempakaRaya Room,
All In All,
Hotel Equatorial Kuala Lumpur,
Jalan Sultan Ismail,
A Good Year 50250 Kuala Lumpur
Date : Friday, 29 June 2007
Time : 3.00 p.m.
1 Notice of Annual General Meeting
section two: section three:
INTEGRAX GROUP FINANCIALS 2006
2 Chairman’s Report 22 Definitions
5 Profiles of Directors 23 Directors’ Report
7 Group Structure / 26 Statement by Directors
Group Organisation
26 Statutory Declaration
8 Lumut Port
27 Report of the Auditors
9 Profile of Senior Management to the Members
10 Lekir Bulk Terminal (LBT) 28 Consolidated Balance Sheet
12 Lumut Maritime Terminal (LMT) 29 Consolidated Income Statement
14 Resources 30 Balance Sheet of the Company
17 Analysis of Shareholdings 31 Income Statement of the Company
20 Group Quarterly Results 32 Consolidated Statement of
20 5-Year Financial Summary Changes in Equity
32 Statement of Changes
in Equity of the Company
33 Consolidated Cash Flow Statement
35 Cash Flow Statement of the Company
37 Notes to the Financial Statements
68 Properties owned by the Group
section four:
GOVERNANCE 2006
69 Corporate Governance Statement
74 Audit Committee Report
78 Statement on Internal Control
section five:
FORM OF PROXY
2006 annual report
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the Twenty-First Annual General Meeting of the Company will be held at CempakaRaya Room, Hotel Equatorial Kuala Lumpur,
Jalan Sultan Ismail, 50250 Kuala Lumpur on Friday, 29 June 2007 at 3.00 p.m. for the following purposes:-
1) To receive and consider the Audited Financial Statements for the financial year ended 31 December 2006 together with Ordinary Resolution 1
the Reports of the Directors and Auditors thereon.
2) To approve the payment of a final tax exempt dividend of 0.8 sen per share and taxable gross dividend of 1.2 sen per Ordinary Resolution 2
share in respect of the financial year ended 31 December 2006 as recommended by the Directors.
3) To re-elect the following Directors retiring in accordance with Article 80 of the Company’s Articles of Association:
i) HARUN HALIM RASIP Ordinary Resolution 3
ii) AMIN HALIM RASIP Ordinary Resolution 4
4) To approve the Directors’ fees of RM800,000 for the financial year ended 31 December 2006. Ordinary Resolution 5
5) To re-appoint Messrs KPMG as Auditors of the Company and to authorise the Directors to fix their remuneration. Ordinary Resolution 6
6) As special business, to consider and if thought fit, to pass, with or without any modifications, the following resolution:-
Proposed Authority To Allot Shares Pursuant To Section 132D of The Companies Act, 1965 Ordinary Resolution 7
“That pursuant to Section 132D of the Companies Act, 1965, and subject always to the approval of the relevant
authorities, the Directors be and are hereby authorised to issue shares in the Company to such persons at any time
until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes
as the Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares to be issued
does not exceed 10% of the issued share capital of the Company for the time being, and that the Directors be and are
also authorised to obtain the approval for the listing of and quotation for the additional shares so issued on the Bursa
Malaysia Securities Berhad.”
7) To transact any other business of which due notice shall have been given.
By Order of the Board
CHAN MAY YEE
Secretary
Kuala Lumpur
7 June 2007
Notes:
1. A proxy may but does not need to be a member of the Company and Section 149(1)(b) of the Companies Act, 1965 (“the Act”) shall not apply.
2. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 17th Floor – Tower Block, Kompleks Antarabangsa, Jalan Sultan Ismail, 50250 Kuala Lumpur,
Malaysia not less than 48 hours before the time appointed for holding the meeting.
3. A member shall be entitled to appoint more than one proxy to attend and vote at the same meeting. The provisions of Section 149(1)(c) of the Act shall not apply to the Company.
4. Where a member appoints more than one proxy the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.
5.
If the appointor is a corporation, this form must be executed under its common seal or under the hand of its attorney.
6. Profiles of the Directors (together with their attendance in Board Meetings) standing for re-election as Directors of the Company for Ordinary Resolutions 3 and 4 are shown on page 5 of the 2006
Annual Report.
7. Explanatory Notes on Special Business
Ordinary Resolution 7 – Proposed Authority To Allot Shares Pursuant To Section 132D Of The Companies Act, 1965
The ordinary resolution proposed in Agenda 6 above, if passed, will empower the Directors of the Company from the date of the above meeting until the next Annual General Meeting, unless
previously revoked or varied at a general meeting, to issue shares in the Company up to an aggregate number not exceeding 10% of the issued share capital of the Company for the time being
for such purposes as they consider would be in the interest of the Company.
1 2006 annual report
Chairman’s Report
1.0 INTRODUCTION BY CARGO TYPE
For and behalf of the Board of Directors, I present to you this Annual
Report for the financial year ended 2006 for your kind attention and FWT YEAR % change
consideration. 2006 2005
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
This year we have reorganized our Annual Report a little and now Conventional / break bulk 67,995 23,563 188.6
have a number of Sections so as to provide Shareholders with more Liquid bulk 563,927 531,869 6.0
information that is hopefully easier to read. Please use the contents LMT Dry bulk 1,539,073 1,530,084 0.6
page to navigate your way through the Annual Report. It also includes LBT Dry Bulk 5,442,317 4,881,301 11.5
pictures and location plans of our assets and interests so as to give –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
you a better appreciation of their nature, condition and their locations. Total 7,613,312 6,966,817 9.3
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Regretfully we still have not organized a corporate website but we have
just recently commissioned someone to now do this and we will make
every effort to ensure it provides its visitors with up to date information BY INDUSTRY SECTOR
as to the Company and its ongoing projects.
FWT YEAR % change
Please do not hesitate to raise any issues, questions or concerns 2006 2005
you may have on any matter to do with this Annual Report and on the –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Group at the forthcoming Annual General Meeting. Chemicals 108,625 53,481 103.1
Mining 434,803 444,722 (2.2)
2.0 COMMENTARY ON THE 2006 RESULTS AND Agriculture 768,427 708,760 8.4
FINANCIAL POSITION Construction Materials 821,019 843,887 (2.7)
Energy 5,442,317 4,881,301 11.5
The Operating Profit we generated was predictably steady on an EBIT
basis but the year’s final numbers were impacted by an increased Others 38,121 34,666 10.0
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
depreciation charge arising as a consequence of the application of Total 7,613,312 6,966,817 9.3
FRS 116: Property, Plant and Equipment. –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Profit before Taxation on a year-on year basis increased by some 12 months ended 2006 2005 % change
14.7% due to a hefty jump of some 120.3% in the contribution from our
Percentage Import 78.8 79.2 (0.5)
associate company, LMTSB, which achieved some decent industrial
property sales and a 9.3 % increase in cargo throughput on a year- Percentage Export 21.2 20.8 1.9
on year basis.
Profit after Taxation increased by 25.3 % year-on-year with the tax We have experienced an overall increase in cargo throughput of 9.3% this 2006
charge being affected again by Deferred Tax accounting adjustments. as compared to 2005 largely due to increases in coal imports for the energy
All of the above gave you an overall increase in Profit for the Year of sector of 11.5% and an increase in cargo emerging from the agriculture sector
29.5% on a year-on-year basis. of 8.4% most of which was liquid bulk in nature. The other sectors did reasonably
well though the mining and construction materials sectors marginally failed to
With respect to our financial position we continue to exhibit a strong exceed their 2005 figures notwithstanding a 4Q 2006 surge in the construction
current asset ratio and a very reasonable overall gearing .Changes of materials sector. All in all, a good year.
note are an increase in Other Investments as we began late in the year
to pay in our investment towards a 20.01% interest in PGMC. Lumut Port Industrial Property
In 2006, LMTSB sold 125.6 acres compared to 79.96 acres in 2005.This was on
3.0 DIVIDEND the back of increased interest in processing and storage activities for the palm
oil sector and in petroleum distribution sector which is a new sector for us and
While we have a stream of projects to cater for from our cash flow going one that promises to raise our overall throughput in years to come.
forward into 2007 and 2008 which will be partially supplemented by full
or partial disposals from our finite investment strategy, we are taking Marine Services
the view that we should maintain a dividend stream. Accordingly the
Board of Directors will recommend a final dividend of 2% in total from This has proven to be a steady but small contributor to overall profitability.
our tax exempt and non-tax exempt sources.
Resources
4.0 COMMENTARY ON 2006 ACTIVITIES During the year under review we embarked on implementing our “finite
investment” strategy with a view to providing some upside benefit (and of
Lumut Port Operations course, associated risk) to our otherwise steady and safe port businesses. As
Set out below are the cargo statistics for Lumut Port in Freight Weight our first project of such nature, we agreed to inject by way of three tranches
Tonnes (“FWT”) by type and broad industry sector: over a period of approximately 6 months, approximately USD12Million for a
20.01% stake in PGMC in the Republic of the Philippines. PGMC’s activities
are the extraction of nickel ore from three deposits and the smelting of some
of such ore, at its two smelters into ferronickel. Additional detail is provided
elsewhere in this Annual Report.
2006 annual report 2
Chairman’s Report (Continued)
Mining of the deposits since our entry has, however, proven to be highly mechanized handling system to and on deep water berths that can
problematic with heavy rains affecting mining and loading operations accommodate the larger vessels used for such cargoes. At time of writing,
throughout the last 5 months of 2006 exacerbated by an outrageous initial estimates indicate capital expenditure of up to RM 80 Million at LBT.
and illegal attempt to subvert PGMC’s contractual rights over its As is the case with LMTSB, LBTSB is reasonably well placed to deal with
Palawan deposit which has been contested vigorously in the courts the cash requirements of such capital expenditure programme through the
and in the political arena. Fortunately things have since got a lot use of retained earnings and debt.
better in 2007.
Naturally all the above comments bear the usual caveats.
The nickel price on the London Metal Exchange at time of agreement
was circa USD12,000 per MT. At time of writing this Report and giving Shareholders should also take note that there have been changes effective
us a warm fuzzy feeling is the fact that the nickel price is now in excess this year in senior personnel involved in the oversight of the Group’s Port
of USD50,000 per MT. Operations at Lumut Port.
During 2006 we also had a look at a number of oil and gas field After 14 years of overseeing the development and running of Lumut Port,
possibilities located in such disparate locations as Australia, Indonesia, Kwek Chee Wah, its COO, and I, as its CEO, have relinquished our positions
Yemen and the United Kingdom. In all we failed to close for reasons to M.Ramachandran and Amin Halim Rasip as COO and CEO of Lumut
that we bid too low or failed to come to agreement. We may have been Port respectively. This is in the interests of timely succession, to permit the
too prudent but we think that if one cannot get something at the price adoption of new strategies as seen by new eyes and to enable more time to
one is happy with then it is best not to do it at all. be spent on building the Group’s interests overseas.
Corporate Developments Kwek and Rama were both recruited by myself and we have worked alongside
each other since the very beginnings of LMT and then again on LBT at the
During 2006 we incorporated a wholly owned subsidiary in Mauritius
stage when an organization and the port facilities did not exist. It was not easy
to deal with investments in India. It has yet to be utilized for such
in the early years where we had to build an organization from scratch and
purposes.
overcome many difficulties to secure cargo over time. On the first day LMT
opened for business we had Zero cargo! It was an arduous effort to get the
cargo base we have now and I well remember how Kwek was indefatigable
5.0 GOING FORWARD in the face of many obstacles and the scepticism of many parties. I learnt
a great deal from Kwek about ports for which I am grateful to him. Most of
Lumut Port Operations
all, however, it is Kwek’s enduring passion for and belief in Lumut Port and
We anticipate a good year in 2007 with some growth in cargo his tireless efforts on a 24 hour basis over the past 14 years for which the
throughput after accounting for the normal fluctuations between Shareholders, the Group and I must extend our thanks to him.
Quarters. Significantly we also see 2007 as the “warm-up” year to
some growth in cargo throughput moving into 2008 and thereafter at Fortunately, Kwek will continue to be involved with the Group on a retained
the LMT with a number of cargo generating activities coming on-stream advisory basis to deal with promotion and marketing in all our port interests
within the LPIP focused around the export of bio diesel and palm oil now and in the future.
derivatives through 2007 and 2008.
New Port Developments
At time of writing, the nameplate bio diesel capacity planned and
being implemented within LPIP in 2007 and 2008 amounts to some We have spent the last three years on the learning curve for new port
300,000 MTPA. developments in countries other than Malaysia. We have looked at and
investigated many port prospects in India, Indonesia, Iran, Yemen, Vietnam,
Such cargo potential will be further supplemented by the coming China, Papua New Guinea, Australia and the Philippines. There has been no
on-stream of a petroleum product storage and distribution facility by dearth of opportunities and the uppermost concern is always to close on one
Petronas Dagangan Berhad, expected to commence construction in or more that possess the right terms and conditions, has inherent viability,
2007 that may yield a cargo throughput of 500,000 KLPA with growth has the legal protection required and has the prospects for growth within
thereafter in response to the demand for such products. the port sector in which we can claim to have the necessary experience
and expertise, which is that of Greenfield multipurpose ports with related
In response to this we will have to take on our share of the capital land developments.
expenditure required which needs to be put into place within LMT to
ensure that all this cargo can be transported efficiently to and from To date we have yet to meet a fully investigated port prospect that meets
the berths through pipelines and to put into place an additional berth our criteria. Fortunately we have several prospects that are still within the
to deal with dangerous petroleum products in addition to other liquid investigation stage. The investigation stage can take some time, up to 2 years
cargoes. LMT is well placed to deal with the cash requirements of such and more, as there are many vested parties involved from governmental
capital expenditure programme through the use of retained earnings authorities to port users. We have even walked away from a number of
and debt. It is anticipated that such capital expenditure over time possibilities that looked good and where a deal was imminent but that did
would amount up to some RM22 Million at LMT. This is in addition to not give us all the necessary factors of safety.
the capital expenditure that would occur in normal circumstances.
Port prospects under investigation stages currently include several in
With the realization of the abovementioned throughput at LMT, thought Indonesia where infrastructure needs are critical and another in Papua New
has to be and has been given to undertaking a rationalization as Guinea. A key issue in Indonesia is the necessary legislation required for port
between the two terminals, LMT and LBT , to fulfil (a) the interests of projects undertaken by corporates though it must be said that Indonesia is
cargo and vessel owners in lowering their shipping costs through the making gratifying progress with respect to investment, taxation, employment
use of larger vessels and (b) to optimize the utilization of the capabilities and port legislation.
of LMT and LBT to the mutual benefit of LMTSB and LBTSB respectively
through cargo and berth dedication and (c) to mitigate environmental Recently on 15th February 2007 we signed an agreement with a Propinsi-
issues within LPIP in the future. This applies particularly to the handling owned company to assess, fund, build and operate a liquid terminal in the
of dry bulk cargo and liquid bulk cargo categories. Propinsi Jawa Timur which prospects are promising given the import and
logistical needs of Jawa Timur. On the 10th May 2007 we signed another
To be able to handle any consequential increase in dry bulk cargo
agreement to investigate a port and an 800 hectare industrial development
throughput at LBT, further capital expenditure will be required at LBT project in Nanggroe Aceh Darussalam. We expect more such prospects in
for the installation of a high capacity loading capability to deal with the future in Indonesia and elsewhere.
certain dry bulk cargoes that would most benefit from the use of
2006 annual report
Chairman’s Report (Continued)
Lumut Port Industrial Park
While 2006 was a good year for industrial property sales, we approach 2007 6.0 OVERALL APPROACH
knowing that we have a shrinking land bank to deal with going forward. The Our overall strategy moving forward with a mix of higher risk projects
prospects currently of expanding this land bank in a contiguous manner are mixed with lower risk projects remains in place. From our acquisition
currently remote and our current strategy is to extract as much value as we of INDX you can ascertain that we also look to spreading out all risk
can out of the balance. Prices for land at LPIP have increased by some 25% by employing the use of the equity markets where an opportunity
over the last 6 months which helps. LPIP is still the best deal in Peninsula exists and when we can.
Malaysia for parties requiring land next to an international standard port
facility. We take the view that the increasing cargo throughput anticipated
in future will go some way to dealing with property income shortfalls going 7.0 COMMENT ON THE EXCLUSION OF RELATED PARTY
forward. The real solution, however, lies in bringing on-stream other port- TRANSACTIONS FROM EGM CIRCULAR
related property projects elsewhere.
We have seen some significant changes in our shareholdings with
Marine Services the reduction of interests held by parties connected with the State
Government of Perak to less than 10% and the entry of a number of
This year we desire to progress our interest in expanding this profit centre by foreign investment funds. We welcome this. As a consequence of the
extending this business into the region. The potential for an economic short diminished stake by parties related to the State Government of Perak
sea haul capability is still very significant in South East Asia. our need for approval by shareholders at an EGM in respect to certain
transactions that were deemed Related Party Transactions because
Resources of such stake has become unnecessary.
Consistent with our “finite” investment approach in this area we are pulling
out all stops in efforts to get our interest in PGMC into a more liquid form by 8.0 THE STATE OF FRS
seeking a listing on an exchange that makes sense in the short term. To this
end we looked at several listed companies on the Philippine Stock Exchange As we have done in past years, we provide our Chief Financial Officer
with a view to doing a reverse takeover but none of the deals available had an opportunity to vent in respect to FRS: The FRS deluge continues
merit in terms of timing or dilution or tidiness. Accordingly the plan now is to unabated and companies (and to be fair, even auditors) continue
list one of the smelters owned by PGMC as an interim step while keeping the to struggle with its demands and the increased costs involved in
mining activities separate within PGMC. The key value of PGMC has always complying with FRS. Recently the MASB was forced to climb down
been in the relatively lower capital cost of its smelters and the established from its perch by the Ministry of Finance in respect to the accounting
technology it employs for smelting. treatment for future income tax benefits that, if one thinks that deferred
tax is a sensible thing to do, was the correct call by the Ministry.
We continue to look at resource opportunities and are convinced that the Nonetheless the spat did make one wonder what thought the Ministry
commodities boom has time to run. had put into making FRS prescriptive and part of the law of the land
years ago thus disembowelling a Board’s view on what is true and fair.
Dr. Kenneth Courtis, the founding chairman of Asia Capital Partners and By now it has surely have dawned on people that FRS is very much
former managing director of Goldman Sachs Asia has been quoted in May part of this 20 year old globalization thing (and that includes the stuff
2007 as saying: “We are still in the first phase of the commodities boom” such as WTO, Free Trade, Open Markets, FTA’s, TRIPS, GATS, the spin
pointing to continued strong demand from China, India, a resurgence from of Governance and Transparency and so on).
a strengthening Japan and emerging economies such as Vietnam, which
will have a population bigger than Japan by 2020. Many nations must have felt significant pressure then and now to toe
the line and our leaders must have thought it prudent to pick and
Corporate Developments choose what they would resist. Perhaps FRS was an issue that was
In 1Q 2007 we have started the process of incorporating a wholly owned thought not important enough, but did they have to give it the force
subsidiary in the Philippines named Integrax Philippines, Inc for purposes of of law? Of more concern going forward is the more insidious stuff
holding our investment in PGMC and other resource projects as may come emerging from globalization and the apparent lack of open knowledge
along in due course in the Philippines. about all of this. However credit should be given when it is due and
some minds are surely at work to look after our common interests.
In 2Q 2007 we acquired a 32.56% interest in P.T IndoExchange Tbk (“INDX”), One would only wish it was more publicly evident so we could get to
a company listed on the Jakarta Stock Exchange. This stake cost us Rph100 know where we are going.
per share (RM0.04 sen, equivalent) or approximately RM1.6 Million. We are
in the process of implementing a tender offer for shares we do not already 9.0 FRS AND THE COMPANY
own at a price of Rph110 per share, being the highest price transacted by
any party prior to triggering a tender offer, in accordance with the rules that Shareholders should expect some volatility in our results going forward
exist in Indonesia. stemming from changes in the basis of calculation of depreciation. We
got hit with increased depreciation charges this year as a consequence
INDX was previously engaged unsuccessfully in IT activities and has of the dictates of the FRS and our auditors’ own prudence. Nonetheless
minimal activities currently. It is relatively small with about 300 shareholders. the basis of calculation of depreciation will be re-assessed annually
Our intention is to utilise INDX to take on projects in Indonesia, together so the prospect of increased cargo throughput will have an impact on
with the Company, consistent with our areas of interest and experience and the depreciation number and thereby affect results.
other opportunities as may present themselves. We intend that INDX retain a
large Indonesian shareholder base and a significant public spread to permit 10.0 EXPRESSION OF GRATITUDE AND THANKS
investors to participate in INDX projects. We anticipate that the process of
“tidying up”, resetting its capital base and structure and getting it set to take On behalf of the Board of Directors let me express our gratitude and
off will be about 3 to 6 months. The quoted last done price per share at time thanks to our management and staff who have worked hard and for
of writing was Rph 170 per share. long hours all year, to our contractors and suppliers, to our business
partners and associates and to our Bondholders for their good faith
and finally to our shareholders who have remained steadfast.
Terima Kasih and Thank You
HARUN BIN HALIM RASIP
Chairman
2006 annual report
Profiles of Directors
Harun bin Halim Rasip Amin Halim Rasip
Chairman, Co-Chief Executive Executive Director and Co-Chief Executive
Malaysian, aged 53, Chairman, Co-Chief Executive Malaysian, aged 52, Executive Director and Co-Chief
(Ports and Other Business) and Chief Financial Officer, Executive (Marine and Other Business), appointed to
appointed to the Board on 29 May 2001. He is a member the Board on 29 May 2001.
of the Audit Committee of the Board.
He graduated from the University of Newcastle, Australia
He graduated from the University of Western Australia in 1977 with a Bachelor of Engineering Degree in Naval
with a Bachelor of Commerce Degree (Accounting). He Architecture. He also holds a Master of Science Degree
then articled with Price Waterhouse in Perth, Western from the Massachusetts Institute of Technology (MIT)
Australia for admission to the Institute of Chartered in United States of America where he specialised in
Accountants in Australia. He returned to Price Water- Financial Engineering.
house, Kuala Lumpur in 1978 and left in 1983. He
was thereafter involved in the activities of the Halim His core strengths include extensive technical design
Rasip Holdings Sdn Bhd (“HRH”) Group as Managing knowledge and ‘hands on’ practical operational
Director in the functions of promotion, finance, business experience in several engineering disciplines, acquired
development and management. He is deemed a from over 20 years involvement in various sectors
connected party to HRH, a major shareholder of including ship design, ship repair, ship management,
Integrax. steel fabrication, maintenance systems, control
systems, quality assurance, manufacturing, integrated
He is a member of the Institute of Chartered Accountants logistics systems, system reliability, survey, hook up
in Australia and Malaysian Institute of Accountants. and commissioning, subsea engineering, offshore oil
and gas industry and consultancy.
He is a member of the Executive Committee of the
Federation of Public Listed Companies Bhd (FPLC) His commercial financial and business creation
since 2004, besides being a member of its Technical & strengths have been involved in the past and present
Regulatory Committee and Accounting Standards Sub- activities of HRH Group being shipowning, ship
Committee since 2003. On 27 July 2006, he resigned management, fabrication, maintenance, manufacturing,
as the Non-Executive Chairman of Landmarks Berhad oil and gas industry services and logistics.
and a Non-Independent and Non-Executive Director of
Shangri-la Hotels (Malaysia) Berhad. He is deemed a connected party to HRH, a major
shareholder of Integrax. He does not hold directorships
He is deemed interested in various related party in any other public company. He is deemed interested
transactions. He is the elder brother of Encik Amin Halim in various related party transactions. He is the younger
Rasip. His indirect interest in the shares of Integrax is brother of Encik Harun Halim Rasip. His indirect interest
disclosed in the Directors’ Report shown on page 24 of in the shares of Integrax is disclosed in the Directors’
the 2006 Annual Report. Report shown on page 24 of the 2006 Annual Report.
He attended all the six (6) Board of Directors’ meetings He attended all the six (6) Board of Directors’ meetings
held during the financial year ended 31 December held during the financial year ended 31 December
2006. He has not been convicted for offences within the 2006. He has not been convicted for offences within the
past ten years other than for traffic offences, if any. past ten years other than for traffic offences, if any.
2006 annual report
Profiles of Directors (Continued)
Nelson Gylding Dorrell Borch YB Dato’ Ir. Onn bin Hamzah Stanislaw Wassylko
Independent Non-Executive Director Non-Independent and Non-Executive Director Independent Non-Executive Director
Canadian, aged 45, Independent Non-Executive Malaysian, aged 59, Non-Independent and Non- Australian, aged 60, Independent Non-Executive
Director, appointed to the Board on 5 April 2001. Executive Director, appointed to the Board on 11 Director, appointed to the Board on 21 June 2004.
He is the Chairman of the Audit Committee and April 2003. He is the Chairman of the Nomination Committee
Remuneration Committee and a member of the and a member of the Audit Committee and
Nomination Committee of the Board. He graduated from the University of Tasmania with Remuneration Committee of the Board.
a Bachelor of Engineering (Electrical) Degree.
He obtained his Bachelor of Science (Civil) Degree He registered as a Professional Engineer with the After Matriculating he graduated from Frankston
from University of British Columbia in 1986. Upon Board of Engineers Malaysia (B.E.M) since 1974. Teachers College (Monash University) with a
completion of his Bachelor Degree, he joined CBR Trained Primary Teachers Certificate. He has more
Ocean Construction Supplies Ltd., Vancouver, He was appointed as a Director of Techart than 30 years of international working experience
British Columbia as a Technical Services Engineer Sdn Bhd since 1984, a company engaged in in oil and gas, maritime and construction related
before being promoted to Manager Masonry and providing Engineering and Project Management sectors.
Packaged Materials Division in 1989. Subsequently, Consultancy.
he joined CBR Tilbury Cement Ltd., Delta, British He has managed and is involved in several foreign
Columbia in 1993 as Sales and Distribution Manager He was the Teluk Intan UMNO Division (1995- companies incorporated in Australia and Singapore
British Columbia and Alaska. In early 1994, he 2005) Chief and is currently State Assemblyman for providing consultancy and engineering services to
was relocated from Canada to Kuala Lumpur to Changkat Jong, Perak. the international oil and gas industry and maritime
set up and manage Terra Geotechnics Sdn. Bhd., industry.
a joint venture Civil / Geotechnical Engineering He is the nominee Director of Perbadanan
Consultancy Practice as the Chief Executive Kemajuan Negeri Perak, a shareholder of Integrax. He attended all the six (6) Board of Directors’
Officer / Managing Partner. His responsibilities He is also an Independent Non-Executive Director meetings held during the financial year ended 31
included management, procurement and execution of IRM Group Berhad. Save as disclosed, he has December 2006.
of project consultancy work and financial and no family relationship with any Director or major
general management of the joint venture company. shareholder of Integrax and he does not have any He has no family relationship with any Director
He left Terra Geotechnics Sdn. Bhd. in 2001 to conflict of interest with the Company. and / or major shareholder and he does not have
become an Executive Director in P.T. Indocement any conflict of interest with the Company. He has
Tunggal Prakasa based in Jakarta, Indonesia. He attended all the six (6) Board of Directors’ not been convicted for offences within the past ten
meetings held during the financial year ended 31 years other than for traffic offences, if any. Currently,
He attended five (5) out of six (6) Board of Directors’ December 2006. He has not been convicted for he does not hold directorships in any other public
meetings held during the financial year ended 31 offences within the past ten years other than for company incorporated in Malaysia. His direct
December 2006. traffic offences, if any. interest in the shares of Integrax is disclosed in the
Directors’ Report shown on page 24 of the 2006
He has no family relationship with any Director Annual Report.
and / or major shareholder and he does not have
any conflict of interest with the Company. He has
not been convicted for offences within the past ten
years other than for traffic offences, if any. Currently,
he does not hold directorships in any other public
company incorporated in Malaysia. His direct
interest in the shares of Integrax is disclosed in the
Directors’ Report shown on page 24 of the 2006
Annual Report.
2006 annual report 6
Group Structure
Ports & Related
Investment Property Marine Services Resources
Development
Integrax Pelabuhan Radikal Platinum Group
Resources Pte. Ltd. Lumut Sdn. Bhd. Rancak Sdn. Bhd. Metals Corporation
100% 100% 100% 20.01%
Lekir Bulk 3 Dormant Malaysian
Integrax Mauritius Ltd. Terminal Sdn. Bhd. Companies
100% 80% 100%
Integrax Lumut Maritime
Philippines, Inc. Terminal Sdn. Bhd.
100% 50% less 1 share
P.T. Integrax Indonesia
LMT Capital Sdn. Bhd.
100% 100%
(in process of formation)
Group Organisation
CHAIRMAN AND
BOARD OF DIRECTORS
Remuneration Nomination Audit and Risk
Committee Committee Management Committee
Statutory Auditor
External Consultants
Co-Chief Executive / Co-Chief
Chief Finance Officer Executive
Support Resources / Port Port Lumut Marine
Services Investments Projects Project Port Services
Project Project
Managers / Managers /
Advisors Advisors
Legal / Finance / Project C.O.O
Administration Managers /
Corporate Accounting Advisors Lumut Port
2006 annual report
Lumut Port
Lumut Maritime
Terminal
Taiwan
T
MANJUNG
LU AY
MU
IPO IGHW
H-
Myanmar
H
India Laos
R
SELA
VE
Philippines
G RI
Thailand D IN D IN
T DI
LUMUT
LUMUT PANGKOR
ISLAND
SITIAWAN
ND
Sri
Lanka Malaysia Lumut Port
Papua Industrial Park
ING
Singapore New
Guinea
Indonesia
Lekir Bulk Terminal
STRAITS
OF
MALACCA
FACILITIES AND SERVICES Terminal Location Coordinates
Terminal Location Coordinates are as follows:
Lumut Port is located on the west coast of Peninsular Malaysia in the
State of Perak directly off the Straits of Malacca. Lumut Port comprises
two(2) terminals, Lekir Bulk Terminal (LBT) and Lumut Maritime Terminal Terminal Location
Coodinates Latitude Longitude
(LMT). Strategically located to serve nearer trades within South-East Asia,
Myanmar, Bangladesh, India, Sri Lanka, Pakistan, and farther trades with LMT 04° 15.3’ N 100° 39.6’ E
the Far East region, Australia / Pacific region, Africa/Mid East region and LBT 04° 08.7’ N 100° 37.3’ E
EU region.
Pilot Station
Located at latitude 4° 10.5 minutes north and longitude 100° 35 minutes
east (south of Pulau Pangkor). The Pilot Station is within 10.5 nautical
miles of Lumut Maritime Terminal and within 3 nautical miles of Lekir Bulk
Terminal.
2006 annual report
Lumut Port
PROFILE OF SENIOR MANAGEMENT
M. Ramachandran Lian Ka Siew
Chief Operating Officer Head of Division – Corporate Services
Currently the Chief Operating Officer and has Joined the Company in April 2006 as the Head
been the Operations Manager of LMTSB since of Division – Corporate Services. His role in the
June 1994. He is a member of Chartered Institute Company includes overseeing the Accounts and
of Transport, United Kingdom. His responsibilities Finance Department, Human Resource Department
apart from overseeing daily operations and port and Procurement Departments.
business development and marketing, include Lian graduated from the Malaysian Institute of
planning, development of systems, operational Certified Public Accountants (MICPA) while he was
procedures / controls / tariff and terms of business articled with Coopers and Lybrand (now known
and implementation of the same and determining as PricewaterhouseCoopers) Kuala Lumpur from
organization, operational and productivity 1989 till 1994. After his articleship, Lian held a
standards. few senior finance and accounts position with
listed companies in the property development and
manufacturing industry. Apart from being a member
of MICPA, Lian is also a member of Malaysian
Institute of Accountants.
Revindran a/l Radaandi Izudin Bin Ismail
Support Services Manager Operations Manager
Support Services Manager of LMTSB since May Currently the Operations Manager and has been
2002. He holds a Bachelor of Science Engineering the Assistant Manager (Marine) since August 2002.
in Electrical and a Certificate in Electrical / He holds a master (D1MC) in Nautical Studies
Electronics from Singapore Port Institute. He (Science) from Maritime Academy Malaysia. His
reports directly to the Chief Operating Officer of main responsibilities are overseeing planning,
LMTSB. His primary responsibilities include total coordination and managing daily port operations
plant maintenance, recruitment, training, projects of LBT and LMT on the Performance, Custody,
and contractor assessment, determination of Marine, Safety and Security matters, including port
productivity and efficiency of plant and project business, liaison with customers and government
development of LBT and LMT. agencies, port development projects, development
of operational procedures and supervision of
project and special cargoes.
2006 annual report
Lekir Bulk Terminal (LBT)
LBT DEVELOPMENT HISTORY DKSB Project Team
Consequent to the in-principle indicative approval of the State Government Project Directors - First Island : Harun Halim Rasip and
of Perak of the Lekir Coastal Development Project (“Lekir Coastal Project”) Ahmad Jauhari Yahya
in 1996, two companies were formed by three partners to promote, develop Employer’s Representative : Terra Geotechnics Sdn. Bhd.
and implement the Lekir Coastal Project, which comprised two related Contractor : Van Oord ACZ
developments:
Desa Kilat Sdn. Bhd. (DKSB) LBT executed a Jetty Terminal Usage Agreement with TNB Janamanjung
The promotion and development of the Lekir Coastal Project comprising the Sdn. Bhd. in August 1999 for the provision of coal unloading and delivery
reclamation of land from the sea in the form of islands and the sale of these services to the Power Station, thus securing an anchor customer. LBT
islands. Total area available for reclamation was 20,000 acres. commenced the construction of Phase I of the dry bulk terminal in May 2000,
comprising berths able to accommodate Capemax and Panamax vessels
Lekir Bulk Terminal Sdn. Bhd. (LBT) with water depths alongside of 20m ACD, a 2,000m trestle, 2 grab discharge
cranes, mechanised handling equipment and controls and appropriate
The promotion and development of a very deep water bulk terminal,
onshore support facilities.
complementary in nature to LMT and the Lekir Coastal Project.
In 30 June 2000, LBT achieved financial close with the issue of an RM445
The founding promoters of DKSB and LBT were:
million Serial Bond rated AA3 by Rating Agency Malaysia Bhd on a non-
Perbadanan Kemajuan Negeri Perak recourse project finance basis.
Halim Rasip Holdings Sdn. Bhd.
Malakoff Berhad
LBT Project Team (Phase I)
The current shareholders of DKSB and LBT are:
Project Director : Harun Halim Rasip
Employer’s Representative : Amin Halim Rasip
DKSB
Financial Advisors : HSBC Investment Bank Plc
The founding promoters Lead Manager : HSBC Bank Malaysia Bhd.
Legal Advisors : Wong & Partners
LBT Insurance Advisors : Bradstock Insurance Brokers Sdn. Bhd.
Integrax Berhad & Malakoff Berhad Engineering Consultants : GHD Pty Ltd, Australia
Contractor : Leighton Contractors (Malaysia) Sdn. Bhd.
DKSB commenced reclamation of the First Island (of 325 hectares) in July with sub-contractor Koch Transporttechnik
1997 in waters of depth 0.5m to 2.0m ACD. The scope of works included GmbH
reclamation of land, slope protection and the construction of a bunded
enclosed body of water.
The First Island was completed on 31 August 1999, and was handed over to
its purchasers, TNB Janamanjung Sdn. Bhd. for the purposes of construction
and operation of a coal-fired 2,100 MW Power Station, and LBT, for the
purposes of its very deep water bulk terminal, pursuant to Site Acquisition
Agreements executed in January 1999.
2006 annual report 10
Lekir Bulk Terminal (LBT) (Continued)
Nature of Terminal Common User Port designed to handle dry bulk and liquid bulk. Gazzetted Customs Port.
Port Operation Working Hours 3 Shifts, 24 Hours Per Day, 365 Days Per Year.
Administrative Working Hours Mondays to Fridays 08:30 am - 17:00 pm
Saturdays 08:30 am - 12:00 noon
Closed Sundays and Public Holidays
Navigable Channel Directly off The Straits of Malacca
Minimum Depth – 20m at all times
Berths South Berths
Length 530m
Draft 20m ACD
North Berths
Length 250m
Draft 18m ACD
Vessel / Size / Parameters Vessels / Maximum 180,000 DWT
Barges / Minimum 7,000 DWT
Services To Vessels Tuggage required, Pilotage compulsory
Port Agency available
Dry Bulk Facilities Storage
Open storage area of 200,000 sq. metres that can be equipped with appropriate stacking and reclaiming equipment
for integration into existing transfer station system. Estimated storage capacity up to 1.5 million MT.
This storage capability excludes the adjacent dedicated coalyard serving the adjacent power station.
Unloading Equipment
2 Grab shipunloaders with 1,500 mt/hour rated capacities feeding 2 import conveyors, with each conveyor having 3,800
MT / hour rated capacity (inclusive of provision for extra grab unloader in future), integrated with a transfer station system
with alternative routing capability.
Direct Transhipment Capability
Direct transhipment at berth possible using existing unloaders for direct ship / barge to ship / barge transfer between
north and south berths, with estimated transhipment capacity of between 500 MT - 700 MT / hour for each unloader
(total 1,000 MT - 1,400MT/hour).
Ship Loading Capability
Plans for future export berth for vessels / barges with 15m ACD water alongside, with export conveyors integrated with
existing transfer station system. Loading rate of 2,500 MT / hour contemplated.
Mobile Equipment
Wheel loaders, dozers, mobile feed / stacker, etc. to suit requirements.
Liquid Bulk Facilities Pipeline wayleaves and tank areas available for direct vessel-to-plant / tank transfer by negotiation.
11 2006 annual report
Lumut Maritime Terminal (LMT)
LMT DEVELOPMENT HISTORY
Subsequent to execution of the Privatisation Agreement with the State Since 1995 the LMT Terminal has improved and extended its facilities with
Government of Perak in February 1993, construction of LMT commenced in additional open and covered storage, handling equipment and, in 2001,
November 1993 on a turnkey design-build basis. an extension to the Main Berth of 280m, with depth alongside of 12m ACD,
resulting in a total overall straight-line berth length of 500m.
The scope of works included the filling of some 70 acres, a 200m marginal
wharf, a 58m marginal barge berth, open and covered storage facilities, LMT PROJECT TEAM (PHASE II)
appropriate infrastructure and an administrative building for a value for RM60
million. Project Director : Harun Halim Rasip
Project Engineer : Yeo Siew Chin
It was completed in July 1995 and was officially opened on 24 July 1995 Employer’s Representative : Amin Halim Rasip
by the Prime Minister of Malaysia, Dato Seri Dr. Mahathir Mohamad in the Funding Provider : International Investment Ltd.
presence of the Chief Minister of Perak, Tan Sri Ramli Ngah Talib, many Contractor : Leighton Contractors (Malaysia)
dignitaries, over 12,000 citizens, 4 helicopters, 1 float plane, a 100 foot yacht Sdn. Bhd.
and the 12,000 DWT MV KOTA MAWAR being the first vessel alongside.
LMT PROJECT TEAM (PHASE I)
Project Director : Harun Halim Rasip
Employer’s Representative : Lim Boon Hong
Advisors : Amin Halim Rasip / Don Rabinowe
Lead Banker : Bank Bumiputra Malaysia Bhd. for
a syndicate of six financial institutions
on a non-recourse project finance basis.
Contractor : Ipco Contractors Sdn. Bhd.
2006 annual report 12
Lumut Maritime Terminal (LMT) (Continued)
Nature of Terminal
Common User Port designed and equipped to handle dry bulk, liquid bulk, containers, all conventional cargo and project
cargoes.
Gazzetted Customs Port.
Port Operation Working Hours 3 Shifts, 24 Hours Per Day, 365 Days Per Year.
Administrative Working Hours Mondays to Fridays, 08:30 am - 17:00 pm
Saturdays, 08:30 am - 12:00 noon
Closed Sundays and Public Holidays
Navigable Channel Within Dindings River off the Straits of Malacca
Minimum depth – 9m
Maximum depth – 12m at high tide
Berths South Berths
Length 200m
Draft 10m ACD
North Berths
Length 280m
Draft 12m ACD
Barge Berths
Two barges longitudinally moored
Draft 3.5m ACD
Vessel / Size / Parameters Vessels / maximum 35,000 DWT alongside
> 35,000 DWT with lighterage
Barges / maximum 8,000 DWT
LOA / maximum 230m
Services to Vessels Tuggage required
Pilotage compulsory
Port Agency available
Container Facilities Storage
Container Yard storage of 6,000 sq. metres
Reefer Points (by nego.)
Equipment
High Stacker 1 Prime Movers 4
Trailers: 6 x 40 ft / 14 x 20 ft Mobile Crane 1
Dry Bulk Facilities Storage
Covered Storage 8,000 sq. metres.
Open Storage 100,000 sq. metres.
Leased areas for specialised cargo owner /
operated facilities and conveyor way leaves
by negotiation.
Mobile Equipment
Wheel Loaders / Excavators 11
Tipper Trucks 15
Hoppers 38 cbm 4
Mobile Conveyors 150 mt/hr 3
300 mt/hr 2
Grabs: - 5 cbm 4
- 8 cbm 4
Liquid Bulk Facilities Pipeline wayleaves and tank areas available for direct vessel-to-plant / tank transfer by negotiation.
Conventional Cargo Facilities Storage
Covered storage 6,200 sq. metres.
Dedicated Storage
Leased areas available for specialised cargo storage / re-packing owner operated facilities by negotiation.
Equipment
Mobile Cranes Capacities on request
Forklifts To suit
Gear To suit
1 2006 annual report
Luzon
Resources Strait
Babuyan Islands
Aparni
South
China Sea
San Luzon
Fernando
Bagulo ISABELA
Philippine
Sea
Angeles
Quezen City
PALAWAN
MANILA
Batangas
Legaspi
Mindoro
SURIGAO
Samar
Panay Leyte
Iloilo
City MANTICAO SMELTER
Bacolod
Cebu
Puerto
Princesa Negros
Butuan
Palawan
Iligan
Sulu Sea
Davao
ILIGAN SMELTER
Zamboanga
Basilan Mount 0 100 200km
Island Apo
MALAYSIA Mindanao 0 100 200mi
Jolo
MINING DEPOSITS
PALAWAN – TORONTO AND PLUTO ORE RESOURCES – DMT
Extraction Activities began 2005 INTERNAL ESTIMATES ONLY SEPTEMBER 2006
SOURCE: PGMC
LUZON – ISABELA Celebes
Extraction Activities Planned 2007 Sea PALAWAN LUZON SURIGAO
MINDANAO – SURIGAO Classification TOTAL ISABELA CAGA - 4 TOTAL
_____________________________________________________________________________
Extraction Activities began 2007
MEASURED RESERVES 8,720,710 6,374,750 12,708,735 27,804,195
INDICATED RESOURCE 935,633 4,928,250 7,855,270 13,719,153
INDONESIA
INFERRED RESOURCE – 19,713,000 – 19,713,000
_____________________________________________________________________________
TOTAL INTERNAL ESTIMATE 9,656,343 31,016,000 20,564,005 61,236,348
_____________________________________________________________________________
_____________________________________________________________________________
Nickel cut-off grade: 1.25%
Surigao – Opening access road Palawan shipside loading
2006 annual report 1
Resources (Continued)
Manticao Smelter
Smelters ESTIMATED
CURRENT CAPACITY
________________________________________________
IIigan 4 million pounds
Manticao 5 million pounds
IIigan Commenced May 2007
Manticao Commencing 3rd Quarter 2007
Smelting Technology available in Philippines with technical
assistance from Japan and South America.
Manticao Smelter
Iligan Smelter
1 2006 annual report
Resources (Continued)
FeNi PRODUCTION FLOWSHEET
8,540 WMT/Mo Ni Ore Punta Silum Pier with 30 Weighing, sampling, to Smelter existing Sundrying, Blending at Shaded Storage Area at
from Palawan by LCT / MT cap. Boom Crane clam Trucksale Stockyard Area with 63,300 2,600 MT Capacity
Dead Barge shell DMT
Preheating Zone Calcining Zone
o o o o
700 C - 750 C 1000 C - 1200 C
coal
Feed Rate
16.6 T/Hr.
- kiln ( L=55M, ø = 2.6M )
- residence time. 55mins
Calcine surge
50mm Vib. Screen Blending Station 3 - units 60 T cap. Ni Ore Bins & bin 40 MT
w/ Jaw crusher at 80 T/Hr 1 - unit 50 T cap. Coal Bin w/ Travelling Conveyor
dust collection
system w/ screw
conveyor
agitator
- metal ( 20% Nickel )
CaC2
- 2 taps/day @ 13.75
laddle refining
calcine bucket over head travelling over head calcine bins - slag (9.6 T/tap)
furnace 27.5 T/day = 5.5 t/day Ni
10T capacity w/ crane 20 T capacity 40 T capacity (each) - 6 taps/day
1.145 T/Hr = 0.23 T/day Ni
Travelling Car 900oC - shell ø = 10.22M
- electrode ø = 1.29 M
o
temp.1600 C
casting machine ingot (25kgs) storage crating loading shipment
- 1 T/crate
2006 annual report 16
Analysis Of Shareholdings As At 30 April 2007
Authorised share capital : RM470,000,000
Issued and paid-up capital : RM300,805,917
Class of share : Ordinary Shares of RM1.00 each
Voting rights : One vote per ordinary share on a poll
One vote per shareholder on a show of hands
Breakdown of ShareholdingS
1) analysis by size of shareholdings
no. of no. of % of issued
Size of Shareholdings Shareholders Shares Share Capital
1 - 99 57 2,186 0.00
100 - 1,000 1,355 1,314,866 0.44
1,001 - 10,000 2,521 11,028,659 3.66
10,001 - 100,000 691 21,020,581 6.99
100,001 to less than 5% of issued shares 96 80,337,661 26.71
5% and above of issued shares 5 187,101,964 62.20
------------------------------ ------------------------------ ------------------------------
Total 4,725 300,805,917 100.00
=============== =============== ===============
2) list of thirty largest shareholders as in the register of Members and the record of depositors
% of issued
no. name no. of Shares Share Capital
1 CIMB Group Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Halim Rasip Holdings Sdn Bhd 53,526,057 17.79
2 Halim Rasip Holdings Sdn Bhd 45,833,042 15.24
3 HSBC Nominees (Asing) Sdn Bhd
Exempt an for JPMORGAN Chase Bank, National Association (Bermuda) 38,510,100 12.80
4 RC Nominees (Tempatan) Sdn Bhd
Kuda Sejati Sdn Bhd 24,945,217 8.29
5 HSBC Nominees (Asing) Sdn Bhd
Exempt an for Credit Suisse 24,287,548 8.07
6 DB (Malaysia) Nominee (Tempatan) Sendirian Berhad
Icapital. Biz Berhad 9,894,700 3.29
7 Employees Provident Fund Board 7,388,500 2.46
8 ECM Libra Avenue Nominees (Asing) Sdn Bhd
DBS Vickers (Hong Kong) Limited for CIM Global Property Fund Limited 7,300,000 2.43
9 Jurukapal Marine Services Sdn Bhd 5,920,000 1.97
17 2006 annual report
Analysis Of Shareholdings As At 30 April 2007 (Continued)
2) list of thirty largest shareholders as in the register of Members and the record of depositors (Continued)
% of issued
no. name no. of Shares Share Capital
10 MIDF Sisma Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Jurukapal Marine Services Sdn Bhd 4,720,000 1.57
11 Nor’aini Binti Hashim 4,347,826 1.45
12 Rozia Hanis Binti Tun Hussein 3,943,912 1.31
13 Lekir Group One Sdn Bhd 3,722,347 1.24
14 Mayban Nominees (Tempatan) Sdn Bhd
Mayban Trustees Berhad for Public Ittikal Fund 2,503,000 0.83
15 Malaysia Nominees (Tempatan) Sendirian Berhad
Great Eastern Life Assurance (Malaysia) Berhad 2,000,073 0.66
16 Kuala-Vest Sdn Bhd 1,917,160 0.64
17 RHB Capital Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Sow Gek Pong 1,762,100 0.59
18 AMMB Nominees (Tempatan) Sdn Bhd
Amtrustee Berhad for SBB Dana Al Ihsan 1,751,700 0.58
19 Yeoh Ah Tu 1,335,500 0.44
20 Yeoh Ah Tu 1,005,100 0.33
21 Mayban Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Yeoh Ah Tu 916,000 0.30
22 Universal Trustee (Malaysia) Berhad
Mayban Balanced Trust Fund 900,000 0.30
23 Yeoh Ah Tu 890,000 0.30
24 Lim Yong Kang 883,500 0.29
25 Kenanga Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Gan Ah Kow @ Gan Sung Chet 768,000 0.26
26 Mayban Nominees (Tempatan) Sdn Bhd
Mayban Trustees Berhad for Hidden Treasures Fund 685,000 0.23
27 HLB Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Wong Yee Hui 640,900 0.21
28 Optimum Capital Sdn Bhd 517,000 0.17
29 Citigroup Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Susy Ding 506,300 0.17
30 Tay Teck Ho 450,000 0.15
2006 annual report 18
Analysis Of Shareholdings As At 30 April 2007 (Continued)
3) list of substantial shareholders
no. name of shareholder direct interest indirect / deemed interest
no. of Shares % no. of Shares %
1. Halim Rasip Holdings Sdn Bhd 99,359,099 33.03 - -
2. Rozia Hanis binti Tun Hussein 4,173,912 1.39 99,359,099*1 33.03
3. Harun bin Halim Rasip - - 113,721,446*2 37.80
4. Amin bin Halim Rasip - - 113,721,446* 2
37.80
5. Kuda Sejati Sdn Bhd 25,300,543 8.41 - -
6. Perbadanan Kemajuan Negeri Perak - - 25,300,543* 3
8.41
7. Utilico Emerging Markets Limited 38,510,100 12.80 - -
Notes:
* 1 Deemed interested by virtue of her shareholding in Halim Rasip Holdings Sdn Bhd
* 2 Deemed interested by virtue of their shareholdings in Halim Rasip Holdings Sdn Bhd, Jurukapal Marine Services Sdn Bhd and Lekir Group One Sdn Bhd
* 3 Deemed interested by virtue of its shareholding in Kuda Sejati Sdn Bhd
4) directors’ shareholdings as at 30 april 2007
no. name of director direct interest indirect / deemed interest
no. of Shares % no. of Shares %
1. Nelson Gylding Dorrell Borch 7,000 0 - -
2. Stanislaw Wassylko 467,000 0.15 - -
3. Harun bin Halim Rasip - - 113,721,446* 1
37.80
4. Amin bin Halim Rasip - - 113,721,446* 1
37.80
5. YB Dato’ Ir Onn bin Hamzah - - - -
Notes:
* 1 Deemed interested by virtue of their shareholdings in Halim Rasip Holdings Sdn Bhd, Jurukapal Marine Services Sdn Bhd and Lekir Group One Sdn Bhd
19 2006 annual report
Group Quarterly Results
Year ended 31 deCeMBer
Year ended 31
rM’000 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter december 2006
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (audited)
Revenue 21,626 23,129 23,085 22,912 90,752
Other income 533 191 191 191 1,107
Operating profit 13,923 13,937 14,064 8,512 35,978
Share of profit after tax of associate 3,516 3,927 1,800 2,428 11,851
Profit before tax 13,410 14,232 12,362 7,646 47,830
Taxation (2,904) (3,157) (2,654) 2,189 (6,526)
Profit after tax 10,506 11,075 9,708 9,835 41,304
Minority interest (1,240) (1,247) (1,410) (1,630) (5,527)
Profit attributable to shareholders 9,266 9,828 8,298 8,205 35,777
Basic earnings per share (sen) 3.08 3.27 2.76 2.73 11.9
5-Year Financial Summary
rM million rM million sen
50 500 30.0
448.26
40 400 25.0
419.99
390.25
366.26
35.77
30 300 20.0
285.53
27.62
23.42
20 200 15.0
21.06
12.5
11.9
10 100 10.0
10.53
9.8
9.7
7.9
‘02 ‘03 ‘04 ‘05 ‘06 ‘02 ‘03 ‘04 ‘05 ‘06 ‘02 ‘03 ‘04 ‘05 ‘06
profiT aTTriBUTaBle ShareholderS’ fUndS earningS per Share
To ShareholderS
2006 annual report 20
Financials 2006
Page
Definitions 22
Directors’ Report 23 -25
Statement by Directors 26
Statutory Declaration 26
Report of the Auditors to the Members 27
Consolidated Balance Sheet 28
Consolidated Income Statement 29
Balance Sheet of the Company 30
Income Statement of the Company 31
Consolidated Statement of Changes in Equity 32
Statement of Changes in Equity of the Company 32
Consolidated Cash Flow Statement 33 - 34
Cash Flow Statement of the Company 35 - 36
Notes to the Financial Statements 37 - 67
Properties owned by the Group 68
2006 annual report
Definitions
In this annual report and financial statements, unless otherwise stated, the following abbreviations shall have the following meanings:-
“Act” : Companies Act, 1965,
“IRPL” : Integrax Resources Pte Ltd (Company No. 200410224 H), a wholly-owned subsidiary of Integrax
“Group” : Integrax and its subsidiaries
“Integrax” or “the Company” : Integrax Berhad (Company No. 49317-W)
“IML” : Integrax (Mauritius) Limited ( Company No. 62055 C1 / GBL), a wholly-owned subsidiary of Integrax
“ICPS” : Irredeemable convertible preference shares of RM0.10 each in Integrax
“ICULS” : 3% irredeemable convertible unsecured loan stocks 2003/2005
“Ordinary Share(s)” : Ordinary share(s) of RM1.00 each in Integrax
“HRH” : Halim Rasip Holdings Sdn. Bhd. (Company No. 64655-T)
“JMS” : Jurukapal Marine Services Sdn. Bhd. (Company No. 183955-W)
“LBTSB” : Lekir Bulk Terminal Sdn. Bhd. (Company No. 414060-T), an 80% owned subsidiary of PLSB
“LBT Serial Bonds” : 12½ years zero coupon Serial Bonds of RM445 million issued by LBTSB
“LBT RCCPS” : Redeemable cumulative convertible preference share(s) of RM0.01 each in LBTSB issued at a premium of RM0.99 each
“LBT RNCPS” : Redeemable non-cumulative convertible preference share(s) of RM0.01 each in LBTSB issued at a premium of
RM0.99 each
“LGI” : Lekir Group One Sdn. Bhd. (Company No. 445689-P)
“LMTSB” : Lumut Maritime Terminal Sdn. Bhd. (Company No. 180480-D)
“LMT RPS” : Redeemable preference share(s) of RM0.01 each in LMTSB issued at a premium of RM0.99 each which is convertible to
ordinary shares of RM1.00 each in LMTSB by agreement of all LMTSB’s shareholders
“LMTC” : LMT Capital Sdn. Bhd. (Company No. 488241-T), a wholly-owned subsidiary of LMTSB
“LMTC RPS” : Redeemable preference share(s) of RM1.00 each in LMTC issued at a premium of RM9,999 each
“MASB” : Malaysian Accounting Standards Board
“PGMC” : Platinum Group Metals Corporation, an investment by the Group in the Republic of the Philippines
“PKS” : Petrokapal Sdn Bhd (Company No. 30921-D)
“PLSB” : Pelabuhan Lumut Sdn. Bhd. (Company No. 168205-M), a wholly-owned subsidiary of Integrax
“RM” and “sen” : Ringgit Malaysia and sen respectively
“RRSB” : Radikal Rancak Sdn Bhd (Company No. 576210-X), a wholly-owned subsidiary of Integrax
“SKSB” : Segmen Kembara Sdn Bhd (Company No. 685897-K) a wholly-owned subsidiary of Integrax
“TKSB” : Trek Kembara Sdn Bhd (Company No. 701742-W) a wholly-owned subsidiary of Integrax
“WKSB” : Wijaya Kristal Sdn Bhd (Company No. 708247-M) a wholly-owned subsidiary of Integrax
2006 annual report 22
Directors’ Report For The Year Ended 31 December 2006
The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the year
ended 31 December 2006.
PRINCIPAL ACTIVITIES
The Company remains an investment holding company and the principal activities of the subsidiaries are as stated in Note 5 to the financial statements. There
has been no significant change in the nature of these activities during the financial year.
RESULTS
Group Company
RM RM
Profit for the year attributable to:-
Shareholders of the Company 35,777,113 9,548,463
Minority interest 5,526,875 -
––––––––––– –––––––––––
41,303,988 9,548,463
–––––––––––
––––––––––– –––––––––––
–––––––––––
RESERVES AND PROVISIONS
There were no material transfers to or from reserves and provisions during the year under review except as disclosed in the financial statements.
DIVIDENDS
Since the end of the previous financial year, the Company paid a first and final tax exempt dividend of approximately 2 sen per share amounted to
RM 6,016,118 in respect of financial year ended 31 December 2005 on 31.7.2006.
The Directors have yet to deliberate on the dividend to be paid for the year under review.
DIRECTORS OF THE COMPANY
Directors who served since the date of the last report are:
Harun bin Halim Rasip
Amin bin Halim Rasip
Nelson Gylding Dorrell Borch
Dato’ Che On @ Onn bin Hamzah
Stanislaw Wassylko
23 2006 annual report
Directors’ Report For The Year Ended 31 December 2006 (Continued)
DIRECTORS’ INTERESTS
The holdings and deemed holdings in the ordinary shares of the Company and of its related corporations (other than wholly-owned subsidiaries) of those who
were Directors at year end as recorded in the Register of Directors’ Shareholdings are as follows:
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Number of ordinary shares of RM1.00 each
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
At At
Direct interest 1.1.2006 Bought (Sold) 31.12.2006
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Company
Nelson Gylding Dorrell Borch 7,000 - - 7,000
Stanislaw Wassylko 467,000 - - 467,000
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Number of ordinary shares of RM1.00 each
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
At At
Deemed interest 1.1.2006 Bought (Sold) 31.12.2006
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Company
Harun bin Halim Rasip* 113,721,446 - - 113,721,446
Amin bin Halim Rasip* 113,721,446 - - 113,721,446
LBTSB
Harun bin Halim Rasip* 54,400,000 - - 54,400,000
Amin bin Halim Rasip* 54,400,000 - - 54,400,000
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Number of LBT RCCPS of RM0.01 each
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
At At
Deemed interest 1.1.2006 Bought (Sold) 31.12.2006
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
LBTSB
Harun bin Halim Rasip* 16,000,000 - - 16,000,000
Amin bin Halim Rasip* 16,000,000 - - 16,000,000
* Deemed interest by virtue of their shareholdings in JMS, HRH and/or for LGI.
By virtue of their deemed interest in the shares of the Company, Encik Harun bin Halim Rasip and Encik Amin bin Halim Rasip are deemed interested in the
shares of the subsidiaries during the financial year to the extent that the Company has an interest.
Other than as disclosed above, none of the other Directors holding office at 31 December 2006 had any interest in the shares of the Company and of its
related corporations during the financial year.
DIRECTORS’ BENEFITS
Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other than a benefit included
in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements) by reason of a contract made
by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a
substantial financial interest, other than certain Directors who have significant financial interests in companies which traded with certain companies in the
Group in the ordinary course of business as disclosed under Note 27 to the financial statements.
There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company to acquire benefits by
means of the acquisition of shares in or debentures of the Company or any other body corporate.
2006 annual report 24
Directors’ Report For The Year Ended 31 December 2006 (Continued)
ISSUE OF SHARES AND DEBENTURES
There were no changes in the issued and paid-up capital of the Company during the financial year.
OPTIONS GRANTED OVER UNISSUED SHARES
No options were granted to any person to take up unissued shares of the Company during the year.
OTHER STATUTORY INFORMATION
Before the balance sheets and income statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that:
i) there are no bad debts to be written off and no provision need to be made for doubtful debts, and
ii) all current assets have been stated at the lower of cost and net realisable value.
At the date of this report, the Directors are not aware of any circumstances:
i) that would render it necessary to write off any bad debts or provide for any doubtful debts, or
ii) that would render the value attributed to the current assets in the Group and in the Company financial statements misleading, or
iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or
inappropriate, or
iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of the Group and of the
Company misleading.
At the date of this report, there does not exist:
i) any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which secures the liabilities of any other
person, or
ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.
No contingent liability or other liability of any company in the Group, other than those stated in Note 25, has become enforceable, or is likely to become
enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability
of the Group and of the Company to meet their obligations as and when they fall due.
In the opinion of the Directors, the results of the operations of the Group and of the Company for the financial year ended 31 December 2006 have not been
substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval
between the end of that financial year and the date of this report.
AUDITORS
The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
(Signed) (Signed)
HARUN BIN HALIM RASIP AMIN BIN HALIM RASIP
Kuala Lumpur,
Date: 20 April 2007
25 2006 annual report
Statement By Directors Pursuant To Section 169(15) Of The Companies Act, 1965
In the opinion of the Directors, the financial statements set out on pages 28 to 67 are drawn up in accordance with the provisions of the Companies Act, 1965
and applicable approved accounting standards for entities other than private entities issued by the Malaysian Accounting Standards Board so as to give a
true and fair view of the state of affairs of the Group and of the Company at 31 December 2006 and of the results of their operations and cash flows for the
year ended on that date.
Signed in accordance with a resolution of the Directors:
(Signed) (Signed)
HARUN BIN HALIM RASIP AMIN BIN HALIM RASIP
Kuala Lumpur,
Date: 20 April 2007
Statutory Declaration Pursuant To Section 169(16) Of The Companies Act, 1965
I, Harun bin Halim Rasip, the Director primarily responsible for the financial management of Integrax Berhad, do solemnly and sincerely declare that the
financial statements set out on pages 28 to 67 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously
believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by the )
above named HARUN BIN HALIM RASIP ) (Signed)
in Kuala Lumpur on 20 April 2007 )
Before me:
(Signed)
SOH AH KAU
Commissioner for Oaths
Kuala Lumpur
2006 annual report 26
Report Of The Auditors To The Members Of Integrax Berhad
(Company No. 49317-W) (Incorporated in Malaysia)
We have audited the financial statements set out on pages 28 to 67. The preparation of the financial statements is the responsibility of the Company’s
Directors.
It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to report our opinion to you, as a body, in
accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility to any other person for the content of
this report.
We conducted our audit in accordance with approved Standards on Auditing in Malaysia. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by the Directors, as well as evaluating the overall financial statements presentation. We believe our audit provides a reasonable basis for our opinion.
In our opinion:
(a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting
standards for entities other than private entities issued by the Malaysian Accounting Standards Board so as to give a true and fair view of:
i) the state of affairs of the Group and of the Company at 31 December 2006 and the results of their operations and cash flows for the year ended
on that date; and
ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements of the Group and of the Company;
and
(b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the Company and the subsidiaries of which we
have acted as auditors have been properly kept in accordance with the provisions of the said Act.
The subsidiaries in respect of which we have not acted as auditors are identified in Note 5 to the financial statements and we have considered their financial
statements and the auditors’ reports thereon.
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 consolidated financial statements and we have received satisfactory information and
explanations required by us for those purposes.
The audit reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment made under subsection
(3) of Section 174 of the Act.
(Signed) (Signed)
KPMG HEW LEE LAM SANG
Firm Number: AF 0758 Partner
Chartered Accountants Approval Number: 1862/10/07(J)
Kuala Lumpur,
Date: 20 April 2007
27 2006 annual report
Consolidated Balance Sheet As At 31 December 2006
NOTE 2006 2005
RM RM
Assets
Property, plant and equipment 3 374,347,417 385,546,765
Intangible assets 4 128,029,993 128,029,993
Investment in associates 6 75,590,749 73,217,052
Other investments 7 45,354,999 10,029,999
–––––––––––– ––––––––––––
Total non-current assets 623,323,158 596,823,809
–––––––––––– ––––––––––––
Receivables, deposits and prepayments 8 25,357,340 22,056,610
Cash and cash equivalents 9 112,298,155 136,514,482
–––––––––––– ––––––––––––
Total current assets 137,655,495 158,571,092
–––––––––––– ––––––––––––
Total assets 760,978,653 755,394,901
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
Equity
Share capital 10 300,805,917 300,805,917
Reserves 10 45,405,990 46,891,043
Retained earnings 102,056,846 72,295,851
–––––––––––– ––––––––––––
Total equity attributable to shareholders of the Company 448,268,753 419,992,811
Minority interest 36,785,976 31,259,101
–––––––––––– ––––––––––––
Total equity 485,054,729 451,251,912
–––––––––––– ––––––––––––
Liabilities
LBT Serial Bonds (secured) 11 108,376,830 134,285,558
Deferred tax liabilities 12 41,656,650 36,360,486
Payables and accruals 13 71,271,329 71,520,025
Preference share capital 14 40,000 40,000
Preference share capital premium account 15 3,960,000 3,960,000
–––––––––––– ––––––––––––
Total non-current liabilities 225,304,809 246,166,069
–––––––––––– ––––––––––––
Payables and accruals 13 24,603,252 26,059,629
LBT Serial Bonds (secured) 11 25,908,728 31,844,182
Current tax liabilities 107,135 73,109
–––––––––––– ––––––––––––
Total current liabilities 50,619,115 57,976,920
–––––––––––– ––––––––––––
Total liabilities 275,923,924 304,142,989
–––––––––––– ––––––––––––
Total equity and liabilities 760,978,653 755,394,901
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
The notes on pages 37 to 67 are an integral part of these financial statements.
2006 annual report 28
Consolidated Income Statement For The Year Ended 31 December 2006
Note 2006 2005
RM RM
Revenue 17 90,751,921 88,774,452
Cost of sale (28,116,815) (26,454,254)
–––––––––––– ––––––––––––
Gross profit 62,635,106 62,320,198
Administrative expenses (12,375,169) (7,954,426)
Other operating expenses (931,504) (453,396)
Other operating income 1,106,874 682,800
–––––––––––– ––––––––––––
Results from operating activities 18 50,435,307 54,595,176
Interest income 3,673,579 2,826,193
Finance costs 20 (18,130,576) (21,082,746)
–––––––––––– ––––––––––––
Operating profit 35,978,310 36,338,623
Share of profit after tax of equity accounted associates 11,851,297 5,379,127
–––––––––––– ––––––––––––
Profit before tax 47,829,607 41,717,750
Tax expense 21 (6,525,619) (8,743,826)
–––––––––––– ––––––––––––
Profit for the year 41,303,988 32,973,924
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
Attributable to:
Shareholders of the Company 35,777,113 27,625,723
Minority interest 5,526,875 5,348,201
–––––––––––– ––––––––––––
Profit for the year 41,303,988 32,973,924
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
Basic earnings per ordinary share (sen): 22 11.9 9.7
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
The notes on pages 37 to 67 are an integral part of these financial statements.
29 2006 annual report
Balance Sheet As At 31 December 2006
Note 2006 2005
RM RM
Assets
Property, plant and equipment 3 462,417 3,119,666
Investment in subsidiaries 5 138,009,498 137,509,500
Receivables, deposits and prepayments 8 190,396,353 134,645,660
Other investments 7 16,000,000 16,000,000
–––––––––––– ––––––––––––
Total non-current assets 344,868,268 291,274,826
–––––––––––– ––––––––––––
Receivables, deposits and prepayments 8 10,368,397 10,093,823
Cash and cash equivalents 9 5,279,759 56,296,459
–––––––––––– ––––––––––––
Total current assets 15,648,156 66,390,282
–––––––––––– ––––––––––––
Total assets 360,516,424 357,665,108
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
Equity
Share capital 10 300,805,917 300,805,917
Reserves 10 46,705,593 46,705,593
Retained earnings 10,579,319 7,046,974
–––––––––––– ––––––––––––
Total equity 358,090,829 354,558,484
–––––––––––– ––––––––––––
Liabilities
Payables and accruals 13 2,325,631 3,033,515
Current tax liabilities 99,964 73,109
–––––––––––– ––––––––––––
Total current liabilities 2,425,595 3,106,624
–––––––––––– ––––––––––––
Total liabilities 2,425,595 3,106,624
–––––––––––– ––––––––––––
Total equity and liabilities 360,516,424 357,665,108
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
The notes on pages 37 to 67 are an integral part of these financial statements.
2006 annual report 30
Income Statement For The Year Ended 31 December 2006
Note 2006 2005
RM RM
Revenue 17 15,040,000 10,677,035
Other income 1,899,075 1,193,300
Administrative expenses (2,758,209) (2,013,396)
Other expenses (931,504) (503,896)
–––––––––––– ––––––––––––
Results from operating activities 18 13,249,362 9,353,043
Interest income 862,673 1,254,903
Finance costs 20 - (484,229)
–––––––––––– ––––––––––––
Profit before tax 14,112,035 10,123,717
Tax expense 21 (4,563,572) (3,463,594)
–––––––––––– ––––––––––––
Profit for the year 9,548,463 6,660,123
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
The notes on pages 37 to 67 are an integral part of these financial statements.
31 2006 annual report
Consolidated Statement Of Changes In Equity For The Year Ended 31 December 2006
<––––––––––––––––––– Attributable to shareholders of the company –––––––––––––––––––>
<––––––––––––––––––– Non-Distributable –––––––––––––––––––––> Distributable
Capital
Group Share Share redemption Translation Retained Minority Total
capital premium reserve reserve ICPS ICULS earnings Total interest equity
RM RM RM RM RM RM RM RM RM RM
At 1 January 2005 268,851,692 51,246,048 165,000 - 1,037,070 24,266,564 44,690,578 390,256,952 25,910,900 416,167,852
Conversion of ICULS to ordinary shares 22,936,231 3,440,469 - - - (24,266,564) - 2,110,136 - 2,110,136
Conversion of ICPS to ordinary shares 9,017,994 (7,980,924) - - (1,037,070) - - - - -
Redemption of LBT RNCPS - - 20,450 - - - (20,450) - - -
Profit for the year - - - - - - 27,625,723 27,625,723 5,348,201 32,973,924
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
At 31 December 2005 300,805,917 46,705,593 185,450 - - - 72,295,851 419,992,811 31,259,101 451,251,912
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Foreign exchange translation differences - - - (1,485,053) - - - (1,485,053) - (1,485,053)
Profit for the year - - - - - - 35,777,113 35,777,113 5,526,875 41,303,988
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Total recognised income and expense
for the year - - - (1,485,053) - - 35,777,113 34,292,060 5,526,875 39,818,935
Dividends to shareholders - - - - - - (6,016,118) (6,016,118) - (6,016,118)
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
At 31 December 2006 300,805,917 46,705,593 185,450 (1,485,053) - - 102,056,846 448,268,753 36,785,976 485,054,729
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Note 10 Note 10 Note 10 Note 10 Note 16 Note 10
Statement Of Changes In Equity For The Year Ended 31 December 2006
<––––––––––––––––––––––––– Non-Distributable –––––––––––––––––––––––––>Distributable
Share Share Retained
Company capital premium ICPS ICULS earnings Total
RM RM RM RM RM RM
At 1 January 2005 268,851,692 51,246,048 1,037,070 24,266,564 386,851 345,788,225
Conversion of ICULS to ordinary shares 22,936,231 3,440,469 - (24,266,564) - 2,110,136
Conversion of ICPS to ordinary shares 9,017,994 (7,980,924) (1,037,070) - - -
Profit for the year - - - - 6,660,123 6,660,123
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
At 31 December 2005 300,805,917 46,705,593 - - 7,046,974 354,558,484
Profit for the year - - - - 9,548,463 9,548,463
Dividends to shareholders - - - - (6,016,118) (6,016,118)
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
At 31 December 2006 300,805,917 46,705,593 - - 10,579,319 358,090,829
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Note 10 Note 10 Note 16
The notes on pages 37 to 67 are an integral part of these financial statements.
2006 annual report 32
Consolidated Cash Flow Statement For The Year Ended 31 December 2006
Note 2006 2005
RM RM
Cash flows from operating activities
Profit before tax 47,829,607 41,717,750
Adjustments for:
Depreciation of property, plant and equipment 3 8,707,031 4,393,391
Share of profit after tax of equity accounted associates (11,851,297) (5,379,127)
Finance costs 20 18,130,576 21,082,746
Interest income (3,673,579) (2,826,193)
Gain on disposal of property, plant and equipment (321,275) -
Property, plant and equipment written-off 1,785 -
–––––––––––– ––––––––––––
Operating profit before changes in working capital 58,822,848 58,988,567
Changes in working capital:
Payables and accruals (306,627) 675,275
Receivables, deposits and prepayments 8,157,174 7,790,915
–––––––––––– ––––––––––––
Cash generated from operations 66,673,395 67,454,757
Tax paid (4,546,552) (1,120,006)
–––––––––––– ––––––––––––
Net cash from operating activities 62,126,843 66,334,751
–––––––––––– ––––––––––––
Cash flows from investing activities
Interest received 3,673,579 2,826,193
Acquisition of property, plant and equipment 3 (13,785) (2,833,608)
Acquisition of other investments 7 (35,325,000) -
Proceeds from disposal of property, plant and equipment 2,825,592 -
Redemption of LBT RNCPS - (1,104,300)
Share of LBT RCCPS dividend paid to minority shareholders - (288,000)
Share of LBT RNCPS dividend paid to minority shareholders - (119,265)
–––––––––––– ––––––––––––
Net cash used in investing activities (28,839,614) (1,518,980)
–––––––––––– ––––––––––––
Cash flows from financing activities
Redemption of LBT serial bonds (50,000,000) (50,000,000)
(Increase) / Decrease in debt service reserve account (18,635,319) 17,260,000
Dividends paid to shareholders (6,016,118) -
ICULS interest paid - (484,229)
–––––––––––– ––––––––––––
Net cash used in financing activities (74,651,437) (33,224,229)
–––––––––––– ––––––––––––
The notes on pages 37 to 67 are an integral part of these financial statements.
33 2006 annual report
Consolidated Cash Flow Statement For The Year Ended 31 December 2006 (Continued)
Note 2006 2005
RM RM
Net (decrease) / increase in cash and cash equivalents (41,364,208) 31,591,542
Cash and cash equivalents at 1 January (i) 111,069,482 79,477,940
Effect of foreign currency translation in consolidation (1,487,438) -
–––––––––––– ––––––––––––
Cash and cash equivalents at 31 December (i) 68,217,836 111,069,482
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
i) Cash and cash equivalents
Cash and cash equivalents included in the cash flow statements comprise the following balance sheet amounts:
Note 2006 2005
RM RM
Cash and bank balances 9 22,470,836 24,554,482
Deposits (excluding deposits pledged and deposits held in a Debt Service Reserve account) 9 45,747,000 86,515,000
–––––––––––– ––––––––––––
68,217,836 111,069,482
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
The notes on pages 37 to 67 are an integral part of these financial statements.
2006 annual report 34
Cash Flow Statement For The Year Ended 31 December 2006
Note 2006 2005
RM RM
Cash flows from operating activities
Profit before tax 14,112,035 10,123,717
Adjustments for:
Depreciation of property, plant and equipment 3 164,932 97,110
Dividend income (15,040,000) (10,677,035)
Finance costs - 484,229
Gain on disposal of property, plant and equipment (321,275) -
Property, plant and equipment written off 1,785 -
Interest income (862,673) (1,254,903)
–––––––––––– ––––––––––––
Operating loss before changes in working capital (1,945,196) (1,226,882)
Changes in working capital:
Payables and accruals (707,942) 772,420
Receivables, deposits and prepayments (474,383) (1,447,612)
–––––––––––– ––––––––––––
Cash used in operating activities (3,127,521) (1,902,074)
Dividend received 6,084,000 7,687,465
Tax paid (391,417) (394,433)
–––––––––––– ––––––––––––
Net cash from operating activities 2,565,062 5,390,958
–––––––––––– ––––––––––––
Cash flows from investing activities
Interest received 862,673 1,254,903
Acquisition of property, plant and equipment 3 (13,785) (809,113)
Increase in investment in subsidiaries (499,998) (1,500,000)
Proceeds from disposal of property, plant and equipment (net) 2,825,592 -
Redemption of LBT RNCPS - 966,293
–––––––––––– ––––––––––––
Net cash from / (used in) investing activities 3,174,482 (87,917)
–––––––––––– ––––––––––––
Cash flows from financing activities
Dividends paid to shareholders of the Company (6,016,118) -
ICULS interest paid - (484,229)
Decrease / (Increase) in advances to / from subsidiary (50,740,126) 435,440
–––––––––––– ––––––––––––
Net cash used in financing activities (56,756,244) (48,789)
–––––––––––– ––––––––––––
The notes on pages 37 to 67 are an integral part of these financial statements.
35 2006 annual report
Cash Flow Statement For The Year Ended 31 December 2006 (Continued)
Note 2006 2005
RM RM
Net (decrease) / increase in cash and cash equivalents (51,016,700) 5,254,252
Cash and cash equivalents at 1 January (i) 56,296,459 51,042,207
–––––––––––– ––––––––––––
Cash and cash equivalents at 31 December (i) 5,279,759 56,296,459
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
i) Cash and cash equivalents
Cash and cash equivalents included in the cash flow statements comprise the following balance sheet amounts:
Note 2006 2005
RM RM
Cash and bank balances 9 79,759 12,796,459
Deposits with licensed banks 9 5,200,000 43,500,000
–––––––––––– ––––––––––––
5,279,759 56,296,459
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
The notes on pages 37 to 67 are an integral part of these financial statements.
2006 annual report 36
Notes To The Financial Statements
Integrax Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Board of the Bursa Malaysia Securities
Berhad. The address of its registered office and principal place of business is as follows:-
Registered office/Principal place of business
17th Floor Tower Block
Kompleks Antarabangsa
Jalan Sultan Ismail
50250 Kuala Lumpur
The consolidated financial statements as at and for the year ended 31 December 2006 comprise the Company and its subsidiaries (together referred to as
the Group) and the Group’s interest in its associate. The financial statements of the Company as at and for the year ended 31 December 2006 do not include
other entities.
The Company is principally engaged in investment holding while the principal activities of other Group entities are stated in Note 5 to the financial
statements.
1. BASIS OF PREPARATION
(a) Statement of compliance
The financial statements of the Group and of the Company have been prepared in accordance with applicable approved accounting standards
for entities other than private entities issued by the Malaysian Accounting Standards Board (MASB), accounting principles generally accepted in
Malaysia and the provisions of the Companies Act, 1965.
The MASB has issued a number of new and revised Financial Reporting Standards (FRSs) which are applicable to the Group effective for accounting
periods beginning on or after 1 January 2006. The MASB has also issued FRS 124, Related Party Transaction, and FRS 117, Leases which are
applicable for annual periods commencing on or after 1 October 2006, Amendments to FRS 121, The Effects of Changes in Foreign Exchange
Rates – Net Investment in a Foreign Operation, which are applicable for annual periods commencing on or after 1 July 2007 and FRS 139, Financial
Instruments: Recognition and Measurement but for which the MASB has yet to announce the effective date of this standard.
The Group has not early adopted the standards above and by virtue of the exemption provided specifically in these respective standards, the
impact of applying these standards on these financial statements upon first adoption of these standard as required by paragraph 30(b) of FRS 108,
Accounting Policies, Changes in Accounting Estimates and Errors is not disclosed.
The adoption of the FRSs has no impact to the financial statements of the Group and of the Company.
The financial statements were approved by the Board of Directors on 20 April 2007.
(b) Basis of measurement
The financial statements have been prepared on the historical cost basis.
(c) Functional and presentation currency
These financial statements are presented in Ringgit Malaysia (RM), which is the Company’s functional currency. All financial information presented in
RM has been rounded to the nearest Ringgit, unless otherwise stated.
(d) Use of estimates and judgements
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which
the estimate is revised and in any future periods affected.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the
most significant effect on the amount recognised in the financial statements are described in the following notes:-
• Note 3 - depreciation of property, plant and equipment
• Note 4 - valuation of recoverable amount for cash generating unit
37 2006 annual report
Notes To The Financial Statements (Continued)
2. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these financial statements, and have been applied
consistently by Group entities, unless otherwise stated.
(a) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities, including unincorporated entities, controlled by the Group. Control exists when the Group has the power to govern the
financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently
are exercisable are taken into account.
The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the
date that control ceases.
Investments in subsidiaries are stated in the Company’s balance sheet at cost less impairment losses.
(ii) Minority interest
Minority interests at the balance sheet date, being the portion of the net assets of subsidiaries attributable to equity interests that are not owned
by the Company, whether directly or indirectly through subsidiaries, are presented in the consolidated balance sheet and statement of changes
in equity within equity, separately from equity attributable to the equity shareholders of the Company. Minority interests in the results of the
Group are presented on the face of the consolidated income statement as an allocation of the total profit or loss for the year between minority
interests and the equity shareholders of the Company.
Where losses applicable to the minority exceed the minority’s interest in the equity of a subsidiary, the excess, and any further losses applicable
to the minority, are charged against the Group’s interest except to the extent that the minority has a binding obligation to, and is able to, make
additional investment to cover the losses. If the subsidiary subsequently reports profits, the Group’s interest is allocated all such profits until the
minority’s share of losses previously absorbed by the Group has been recovered.
(iii) Associates
Associates are entities, including unincorporated entities, in which the Group has significant influence, but not control, over the financial and
operating policies.
Associates are accounted for in the consolidated financial statements using the equity method. The consolidated financial statements include
the Group’s share of the income and expenses of the equity accounted associates, after adjustments to align the accounting policies with those
of the Group, from the date that significant influence commences until the date that significant influence ceases.
When the Group’s share of losses exceeds its interest in an equity accounted associate, the carrying amount of that interest (including any long
term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation
or has made payments on behalf of the investee.
Investments in associates are stated in the Company’s balance sheet at cost less impairment losses, if any.
(iv) Transactions eliminated on consolidation
Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the
consolidated financial statements.
Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s
interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence
of impairment.
2006 annual report 38
Notes To The Financial Statements (Continued)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(b) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the
transaction.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at
the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are
retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising
on retranslation are recognised in the income statement.
(ii) Operations denominated in functional currencies other than Ringgit Malaysia
The assets and liabilities of operations in functional currencies other than RM, including goodwill and fair value adjustments arising on
acquisition, are translated to RM at exchange rates at the balance sheet date. The income and expenses of foreign operations are translated
to RM at exchange rates at the dates of the transactions.
On disposal, accumulated translation differences are recognised in the consolidated income statement as part of the gain or loss on sale.
(iii) Net investment in foreign operations
Exchange differences arising from monetary items that in substance form part of the Company’s net investment in foreign operations, are
recognised in the Company’s income statement. Such exchange differences are reclassified to equity in the consolidated financial statements
only when the loan is denominated in either the functional currency of the Company or the foreign operation. Deferred exchange differences
are released to the income statement upon disposal of the investment.
(c) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of
materials and direct labour, any other costs directly attributable to bringing the assets to working condition for its intended use, and the costs
of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality
of the related equipment is capitalised as part of that equipment.
The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair
value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a
willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without
compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar items.
When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major
components) of property, plant and equipment.
(ii) Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the
future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day
servicing of property, plant and equipment are recognised in the income statement as incurred.
39 2006 annual report
Notes To The Financial Statements (Continued)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(c) Property, plant and equipment (Continued)
(iii) Depreciation
Leasehold land is amortised in equal instalments over the period of the lease of ninety-nine years. Buildings and renovation are depreciated
over the period of 50 years and 3 years respectively.
The estimated useful lives and depreciation method of other items of property, plant and equipment for current and comparative periods are
as follows:-
Industrial building, civil - Gross Post Construction dry bulk cargo throughput expressed in metric tonnes to-date allocated over
works and infrastructure a prudent estimate of the total gross post construction throughput capacity expressed in metric tonnes
over 50 years.
Plant and machinery, tools - Gross Post Construction dry bulk cargo throughput expressed in metric tonnes to date allocated over
office equipment and furniture a prudent estimate of the total gross post construction throughput capacity expressed in metric tonnes
over 30 years
The estimation of the total gross post construction throughput capacity is based on the historical actual throughput and the estimated throughput
over the estimated useful lives. As such, this involves estimation uncertainty and critical judgement as the actual throughput in the future might
differ from the estimated future throughput capacity.
Depreciation methods, useful lives and residual rates are reassessed at each reporting date.
(iv) Change in estimates
Estimates in respect of certain items of plant and equipment were revised in 2006 (see note 3).
(d) Intangible assets
(i) Goodwill
Goodwill arises on the acquisition of subsidiaries and associates.
For acquisitions prior to 1 January 2006, goodwill represents the excess of the cost of the acquisition over the Group’s interest in the fair values
of the net identifiable assets and liabilites.
With the adoption of FRS 3 beginning 1 January 2006, goodwill represents the excess of the cost of the acquisition over the Group’s interest in
the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree.
Goodwill is allocated to cash-generating units and is tested annually for impairment or more frequently if events or changes in circumstances
indicate that it might be impaired.
In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment. The entire
carrying amount of the investment is tested for impairment when there is objective evidence of impairment.
Acquisition of minority interest
Goodwill arising on the acquisition of a minority interest in a subsidiary represents the excess of the cost of the additional investment over the
carrying amount of the net assets acquired at the date of exchange.
Goodwill is allocated to cash generating units and is tested annually for impairment or more frequently if events or changes in circumstance
indicate it might be impaired.
2006 annual report 40
Notes To The Financial Statements (Continued)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(e) Investment in equity securities
Investments in equity securities are recognised initially at purchase price plus attributable transaction costs.
Subsequent to initial recognition, investments in non-current equity securities are stated at cost less allowance for diminution in value.
Where in the opinion of the Directors, there is a decline other than temporary in the value of non-current equity securities, the allowance for
diminution in value is recognised as an expense in the financial year in which the decline is identified.
(f) Receivables
Receivables are initially recognised at their cost when the contractual right to receive cash or another financial asset from another entity is
established.
Subsequent to initial recognition, receivables are stated at cost less allowance for doubtful debts.
Receivables are not held for the purpose of trading.
(g) Cash and cash equivalents
Cash and cash equivalents consist of cash in hand, balances and deposits with banks and highly liquid investments which have an insignificant
risk of changes in value. For the purpose of the cash flow statement, cash and cash equivalents are presented net of bank overdrafts, pledged
deposits and cash held in a Debt Service Account maintained by a subsidiary for the settlement of its Serial Bonds.
(h) Impairment of assets
The carrying amounts of assets are reviewed at each reporting date to determine whether there is any indication of impairment.
If any such indication exists then the assets’ recoverable amounts are estimated. For goodwill and intangible assets that have indefinite useful lives,
recoverable amount is estimated at each reporting date.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit
is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are
recognised in the income statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount
of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use,
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time
value of money over an appropriate period of time inclusive of the ascertainable residual value of such assets and the risks specific to the asset and
such other methods as may be appropriate.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed
at each reporting date for any indications that the losses have decreased or no longer exists. An impairment loss is reversed if there has been
a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised. Reversals of impairment losses are credited to the income statement in the year in which the reversals are recognised.
41 2006 annual report
Notes To The Financial Statements (Continued)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(i) Share capital
(i) Shares issue expenses
Incremental costs directly attributable to issue of shares and share options classified as equity are recognised as a deduction from equity.
(ii) Preference share capital
Preference share capital is classified as equity if it is non-redeemable, or is redeemable but only at the Company’s option, and any dividends
are discretionary. Dividends thereon are recognised as distributions within equity. Preference share capital is classified as a liability if it is
redeemable on a specific date or at the option of the shareholders, or if dividend payments are not discretionary. Dividends thereon are
recognised as interest expense in the income statement.
(j) Compound financial instruments
Compound financial instruments issued by the Company comprise convertible notes that can be converted to share capital at the option of the
holder, and the number of shares to be issued does not vary with changes in their fair value.
The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity
conversion option. The equity component is recognised initially as the difference between the fair value of the compound financial instrument as a
whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in
proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective
interest method. The equity component of a compound financial instrument is not remeasured subsequent to initial recognition.
(k) Loans and borrowings
Loans and borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income
statement over the period of the loans and borrowings using the effective interest method.
(l) Employee benefits
Short term employee benefits
Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted
basis and are expensed as the related service is provided.
The Group’s contribution to the Employee’s Provident Fund are charged to the income statements in the year to which they relate. Once the
contributions have been paid, the Group has no further payment obligations.
(m) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and
it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
(n) Payables
Payables are measured initially and subsequently at cost. Payables are recognised when there is a contractual obligation to deliver cash or another
financial asset to another entity.
2006 annual report 42
Notes To The Financial Statements (Continued)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(o) Revenue
(i) Port services
Income from port services is recognised in the income statement once the service is rendered. Income arising from the fixed portion of the port
service revenue is recognised on an accrual basis.
(ii) Dividend income
Dividend income is recognised when the right to receive payment is established.
(iii) Interest income
Interest income is recognised in the income statement as it accrues, taking into account the effective yield on the asset.
(iv) Office facility
Office facility fees are recognised in the income statement upon the facility is provided. Office facility revenue is recognised on an accrual
basis.
(v) Rental income
Rental income is recognised in the income statement as it accrues.
(p) Lease payments
Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives
received are recognised as an integral part of the total lease expense, over the term of the lease.
(q) Financing costs
Bond interest
This represents interest on LBT Serial Bonds comprising 19 series of zero coupon bonds up to the aggregate nominal value of RM445 million,
principal and interest combined, which were issued by one of the subsidiary companies to finance the development of the dry bulk terminal.
During construction period
All interest on the LBT Serial Bonds that were directly attributable to the project development during the period of construction up to 27 December
2002 were capitalised as Project Development Costs and subsequently allocated appropriately towards property, plant and equipment for
amortisation in accordance with Note 2(c)(iii).
Post construction period
All interest on the LBT Serial Bonds that are incurred and directly attributable to the project development after completion of the construction of the
dry bulk terminal are recognised as an expense in the period in which it is incurred.
(r) Tax expense
Tax expense comprises current and deferred tax. Tax expense is recognised in the income statement except to the extent that it relates to items
recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet
date, and any adjustment to tax payable in respect of previous years.
43 2006 annual report
Notes To The Financial Statements (Continued)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(r) Tax expense (Continued)
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and
liabilities for reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences:
the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects
neither accounting nor taxable profit (tax loss). Deferred tax is measured at the tax rates that are expected to be applied to the temporary
differences when they reverse, based on the laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax liability is recognised for all taxable temporary differences.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary difference
can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related
tax benefit will be realised.
(s) Earnings per share
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss
attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted
EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares
outstanding for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees.
(t) Segment reporting
A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in
providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are
different from those of other segments.
3. PROPERTY, PLANT AND EqUIPMENT
Industrial Plant and
buildings, machinery,
Long term Buildings civil works tools, office
leasehold Freehold and and equipment and
Group land land renovation infrastructure furniture Total
RM RM RM RM RM RM
Cost
At 1 January 2005 18,758,729 565,912 1,975,000 155,029,293 218,642,323 394,971,257
Additions - - 603,613 - 2,229,995 2,833,608
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
At 31 December 2005 / 1 January 2006 18,758,729 565,912 2,578,613 155,029,293 220,872,318 397,804,865
Additions - - - - 13,785 13,785
Disposals - (565,912) (2,095,155) - - (2,661,067)
Write off - - - - (2,100) (2,100)
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
At 31 December 2006 18,758,729 - 483,458 155,029,293 220,884,003 395,155,483
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
2006 annual report 44
Notes To The Financial Statements (Continued)
3. PROPERTY, PLANT AND EqUIPMENT (Continued)
Industrial Plant and
buildings, machinery,
Long term Buildings civil works tools, office
leasehold Freehold and and equipment and
Group (Continued) land land renovation infrastructure furniture Total
RM RM RM RM RM RM
Depreciation
At 1 January 2005:
Accumulated depreciation 537,071 - 133,249 2,110,115 5,084,274 7,864,709
Depreciation for the year 189,480 - 84,884 1,201,861 2,917,166 4,393,391
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
At 31 December 2005 / 1 January 2006:
Accumulated depreciation 726,551 - 218,133 3,311,976 8,001,440 12,258,100
Depreciation for the year 189,480 - 137,652 2,398,890 5,981,009 8,707,031
Disposals - - (156,750) - - (156,750)
Write off - - - - (315) (315)
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
At 31 December 2006:
Accumulated depreciation 916,031 - 199,035 5,710,866 13,982,134 20,808,066
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Carrying amounts
At 1 January 2005 18,221,658 565,912 1,841,751 152,919,178 213,558,049 387,106,548
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
At 31 December 2005 / 1 January 2006 18,032,178 565,912 2,360,480 151,717,317 212,870,878 385,546,765
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
At 31 December 2006 17,842,698 - 284,423 149,318,427 206,901,869 374,347,417
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Freehold Furniture Office
Company land Buildings Renovation and fittings equipment Total
RM RM RM RM RM RM
Cost
At 1 January 2005 565,912 1,975,000 - - - 2,540,912
Additions - 195,155 408,458 130,681 74,819 809,113
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
At 31 December 2005 / 1 January 2006 565,912 2,170,155 408,458 130,681 74,819 3,350,025
Additions - - - - 13,785 13,785
Disposals (565,912) (2,095,155) - - - (2,661,067)
Write off - - - - (2,100) (2,100)
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
At 31 December 2006 - 75,000 408,458 130,681 86,504 700,643
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
45 2006 annual report
Notes To The Financial Statements (Continued)
3. PROPERTY, PLANT AND EqUIPMENT (Continued)
Freehold Furniture Office
Company (Continued) land Buildings Renovation and fittings equipment Total
RM RM RM RM RM RM
Depreciation
At 1 January 2005:
Accumulated depreciation - 133,249 - - - 133,249
Depreciation for the year - 39,500 45,384 6,074 6,152 97,110
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
At 31 December 2005 / 1 January 2006:
Accumulated depreciation - 172,749 45,384 6,074 6,152 230,359
Depreciation for the year - 1,500 136,152 13,068 14,212 164,932
Disposals - (156,750) - - - (156,750)
Write off - - - - (315) (315)
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
At 31 December 2006:
Accumulated depreciation - 17,499 181,536 19,142 20,049 238,226
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Carrying amounts
At 1 January 2005 565,912 1,841,751 - - - 2,407,663
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
At 31 December 2005 / 1 January 2006 565,912 1,997,406 363,074 124,607 68,667 3,119,666
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
At 31 December 2006 - 57,501 226,922 111,539 66,455 462,417
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
(a) Security
Property, plant and equipment of the Group with net book value amounting to RM373,885,000 (2005 - RM382,427,099) have been charged to
banks as security for LBT Serial Bonds (see note 11).
(b) Change in estimates
During the year ended 31 December 2006, the Group reassessed the estimated useful lives and depreciation methods of its property, plant and
equipment and this has resulted in a change in the estimated total gross post construction throughput capacity of the industrial building, civil works
and infrastructure and also plant and equipment and tools. The effect of these changes is an increase in depreciation charge of RM3,766,209. The
effect in subsequent periods is not disclosed as it is impracticable, and the effect will be reassessed at each reporting date.
2006 annual report 46
Notes To The Financial Statements (Continued)
4. INTANGIBLE ASSETS
Goodwill on consolidation
Group
RM
At cost
Balance at 1 January 2005 / 31 December 2005 / 31 December 2006 128,029,993
–––––––––––
–––––––––––
Impairment testing for cash-generating unit containing goodwill
The carrying amount of goodwill is attributable to the acquisition a subsidiary, PLSB:
Group
2006 2005
RM RM
Carrying amount:
At 31 December 128,029,993 128,029,993
–––––––––––
––––––––––– –––––––––––
–––––––––––
The annual impairment test was done to the goodwill based on its recoverable amount. The recoverable amount is the present value of all foreseeable
future shareholders distributable profits after tax discounted at the shareholders’ required rate of return, or the risk discount rate plus the Net Assets
Value. The projections of future shareholder’s distributable profits are based on best estimate assumptions derived from the operating unit experience.
5. INVESTMENTS IN SUBSIDIARIES
(a) Investment in subsidiaries
Company
2006 2005
RM RM
At cost:
Unquoted shares 138,009,498 137,509,500
–––––––––––
––––––––––– –––––––––––
–––––––––––
Details of subsidiaries are as follows:
Country of Effective
Incorporation Ownership Interest Principal Activities
2006 2005
% %
Name of Subsidiary
PLSB Malaysia 100 100 Investment holding
RRSB Malaysia 100 100 Provision of tuggage services
IRPL* Singapore 100 100 Investment holding
IML* Mauritius 100 - Dormant
SKSB Malaysia 100 - Dormant
TKSB Malaysia 100 - Dormant
WKSB Malaysia 100 - Dormant
Subsidiary of PLSB
LBTSB Malaysia 80 80 Development, ownership and
management of a dry bulk
terminal
* Not audited by KPMG
47 2006 annual report
Notes To The Financial Statements (Continued)
6. INVESTMENTS IN ASSOCIATES
Group
2006 2005
RM RM
At cost:
Unquoted shares in Malaysia 70,590,502 70,590,502
Share of post-acquisition reserves 24,689,905 12,838,608
–––––––––––– ––––––––––––
95,280,407 83,429,110
Less: Dividends (19,689,858) (10,212,058)
–––––––––––– ––––––––––––
75,590,749 73,217,052
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
Represented by:
Group’s share of net assets of other than goodwill 37,769,535 35,395,838
Goodwill on acquisition 37,821,214 37,821,214
–––––––––––– ––––––––––––
75,590,749 73,217,052
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
Summary of financial information on associates:
Country of Effective Profit / Total Total
incorporation ownership interest Revenues (Loss) assets liabilities
2006 2005 (100%) (100%) (100%) (100%)
2006 % % RM RM RM RM
LMTSB Malaysia 50% less 50% less
one (1) share one (1) share 70,877,704 23,702,597 187,431,596 111,874,192*
LMTC Malaysia 50% less 50% less
one (1) share one (1) share # # # #
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
70,877,704 23,702,597 187,431,596 111,874,192
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
2005
LMTSB Malaysia 50% less 50% less
one (1) share one (1) share 46,045,742 10,760,405 174,234,685 103,424,678*
LMTC Malaysia 50% less 50% less
one (1) share one (1) share # # # #
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
46,045,742 10,760,405 174,234,685 103,424,678*
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
# LMTC is held as an associate through LMTSB. The financial information is consolidated with LMTSB.
* Included in total liabilities is preference share premium of RM 19,800,000.
2006 annual report 48
Notes To The Financial Statements (Continued)
6. INVESTMENTS IN ASSOCIATES (Continued)
Details of Associate Companies:
Country of
Name of Company Incorporation Effective Ownership Interest Principal Activities
2006 2005
% %
LMTSB Malaysia 50% less 50% less Development of an integrated privatised project
(held through PLSB) one (1) share one (1) share encompassing ownership and operations of multi-
purpose port facilities, operation and maintenance of
a bulk terminal, sales and rental of port related land
and other ancillary activities
LMTC Malaysia 50% less 50% less Dormant
(held through LMTSB) one (1) share one (1) share
7. OTHER INVESTMENTS
Group
2006 2005
RM RM
Non-current
LMT RPS 10,029,999 10,029,999
Unquoted shares 35,325,000 -
–––––––––––– ––––––––––––
Balance at 31 December 45,354,999 10,029,999
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
Unquoted shares amounting to RM 35,325,000 relates to equity investment in PGMC of 2,084,583,332 Redeemable Class B shares. As at 31 December
2006, this investment represents 17.25% of PGMC’s equity. PGMC is not equity accounted for as at 31 December 2006 as the investment had not
been fully completed and the redemption feature of the investment had not expired. Subsequent to year end, on 13 February 2007, the Group further
increased its shareholding to 2,501,562,695 Redeemable Class B shares representing 20.01% of PGMC’s equity.
Company
2006 2005
RM RM
Non-current
LBT RCCPS 16,000,000 16,000,000
LBT RNCPS - 966,293
Less: Redemption of LBT RNCPS - (966,293)
–––––––––––– ––––––––––––
Balance at 31 December 16,000,000 16,000,000
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
49 2006 annual report
Notes To The Financial Statements (Continued)
8. RECEIVABLES, DEPOSITS AND PREPAYMENTS
Group Company
2006 2005 2006 2005
RM RM RM RM
Non-current
Non-trade
Amount due from subsidiaries - - 190,396,353 134,645,660
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
Current
Trade
Trade receivables 8,913,938 8,535,530 - -
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
Current
Non-trade
Other receivables, deposits and prepayment 16,443,402 13,521,080 2,454,606 1,980,223
Amount due from subsidiaries - - 7,913,791 8,113,600
–––––––––––– –––––––––––– –––––––––––– ––––––––––––
16,443,402 13,521,080 10,368,397 10,093,823
–––––––––––– –––––––––––– –––––––––––– ––––––––––––
25,357,340 22,056,610 10,368,397 10,093,823
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
Amount due from subsidiaries
Included in the non-current amounts due from subsidiaries are balances arising from the acquisition of LMT RPS and LMTSB ordinary shares by PLSB
from the Company and the disposal of the LBT RCCPS from PLSB to the Company. The non-current amount due from subsidiaries is unsecured, interest
free and is not repayable within the next 12 months except by agreement between the companies.
The current amount due from subsidiaries are unsecured, interest free and have no fixed term of repayment.
9. CASH AND CASH EqUIVALENTS
Group Company
2006 2005 2006 2005
RM RM RM RM
Cash and bank balances 22,478,155 24,554,482 79,759 12,796,459
Deposits with licensed banks 89,820,000 111,960,000 5,200,000 43,500,000
–––––––––––– –––––––––––– –––––––––––– ––––––––––––
112,298,155 136,514,482 5,279,759 56,296,459
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
Included in fixed deposits of the Group is an amount of RM5,000 (2005 - RM5,000) which has been pledged by LBTSB with a bank for guarantee
facilities for the purpose of a bond required by Kastam Diraja Malaysia in respect of its dry bulk terminal’s customs legal landing point status.
Included in deposits with licensed banks and cash and bank balances are amounts of RM44,068,000 (2005 - RM25,440,000) and RM7,319 (2005 - Nil)
respectively held in a Debt Service Reserve Account maintained by LBTSB for the settlement of its Serial Bonds.
2006 annual report 50
Notes To The Financial Statements (Continued)
10. CAPITAL AND RESERVES
Group and Company
2006 2005
RM RM
Authorised:
Ordinary shares of RM1.00 each
Balance at 1 January 470,000,000 470,000,000
ICPS of RM0.10 each
Balance at 1 January 30,000,000 30,000,000
–––––––––––– ––––––––––––
Balance at 31 December 500,000,000 500,000,000
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
Issued and paid up:
Ordinary shares of RM1.00 each
Balance at 1 January 300,805,917 268,851,692
Nil / Conversion of 10,370,700 ICPS to new ordinary shares of RM1.00 each
during the year on the basis of one (1) ordinary share for every 1.15 ICPS held - 9,017,994
Nil / Conversion of 26,376,700 ICULS to new ordinary shares of RM1.00 each
during the year on the basis of one (1) ordinary share for every 1.15 ICULS held - 22,936,231
–––––––––––– ––––––––––––
Balance at 31 December 300,805,917 300,805,917
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
ICPS of RM0.10 each
Balance at 1 January - 1,037,070
Nil / Conversion of 10,370,700 ICPS to new ordinary shares of RM1.00 each
during the year on the basis of one (1) ordinary share of every 1.15 ICPS held - (1,037,070)
–––––––––––– ––––––––––––
- -
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
Balance at 31 December 300,805,917 300,805,917
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
The ICPS present in the previous year had the following rights attached to them:
(a) The registered holder of the ICPS had the right to convert the ICPS into new ordinary shares of the Company of RM1.00 each at a conversion rate
of one (1) ordinary share for every 1.15 ICPS held;
(b) The ICPS was convertible into new ordinary shares of the Company up to and including 12 September 2005; and
(c) The ICPS did not bear any dividend and was not entitled to any rights, bonus, issues, allotment and/or any other distributions that maybe declared
by the Company. The ICPS holders were not entitled to voting rights except where the rights of the ICPS were affected or on a resolution for the
winding up of the Company.
All outstanding ICPS were fully converted to 9,017,994 ordinary shares at the end of the previous financial year.
Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations as well as
from the translation of liabilities that hedge the Company’s net investment in a foreign subsidiary.
Section 108 tax credit
Subject to agreement by the Inland Revenue Board, the Company has sufficient Section 108 tax credit and tax exempt income to frank all of its
distributable reserves at 31 December 2006 if paid out as dividends.
51 2006 annual report
Notes To The Financial Statements (Continued)
10. CAPITAL AND RESERVES (Continued)
Capital redemption reserve
The capital redemption reserve was created as a consequence of the redemption of the LBT RNCPS by transferring the required nominal amount
redeemed from retained profits.
Minority interests
This consists of the minority shareholders’ proportion of ordinary share capital and reserves of LBTSB, net of their share of LBTSB’s goodwill on
consolidation.
11. LBT SERIAL BONDS (SECURED)
Group
2006 2005
RM RM
Bond liability is payable as follows:-
Less than one year 25,908,728 31,844,182
More than one year 108,376,830 134,285,558
–––––––––––– ––––––––––––
134,285,558 166,129,740
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
The LBT Serial Bonds are secured, to the Trustee for the bondholders, by the following:
(i) A debenture incorporating a fixed and floating charge over LBTSB’s entire assets, both present and future.
(ii) A fixed charge over LBTSB’s eligible investments and over the Debt Service Reserve Account and Security Account.
(iii) A fixed charge over LBTSB’s interest and benefit to its insurance policies
(iv) A fixed charge over LBTSB’s interest and benefits to its Project Agreements.
The LBT Serial Bonds average effective interest rate determined by reference to the yield to maturity is 8% (2005: 8%) per annum.
The main covenants of the LBT Serial Bonds facility are as follows:-
(i) Required level of Debt to Equity Ratio does not exceed 3:1;
(ii) Required minimum Debt Service Cover Ratio of 1.1:1;
(iii) Open and maintain a Debt Service Reserve Account with a bank with a minimum rating of AA from Rating Agency of Malaysia or its equivalent
from Malaysia Rating Corporation Berhad for the purpose of (iv) below; and
(iv) Ensure that there is paid to the credit of the Debt Service Reserve Account an amount at least equal to the nominal value of the bond that it to
mature within any forthcoming period of 6 months at a date that is at least 6 months prior to such bond maturity date and shall further ensure that,
until the final Maturity Date, the Debt Service Reserve Requirement is met at all times.
2006 annual report 52
Notes To The Financial Statements (Continued)
12. DEFERRED TAx LIABILITIES
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:-
Group
2006 2005
RM RM
Liabilities
Property, plant and equipment
- capital allowance 53,915,600 51,672,712
Assets
Unabsorbed capital allowance (12,258,950) (15,312,226)
–––––––––––– ––––––––––––
41,656,650 36,360,486
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
In recognising the deferred tax assets attributable to the unabsorbed capital allowance, the Directors made an assumption that there will not be
any substantial change (more than 50%) in the shareholders before these assets are utilised. If there is substantial change in the shareholders, the
unabsorbed capital allowance carry forward will not be available to the Group.
Deferred tax liabilities and assets are offset where there is a legally enforceable right to set off current tax assets against current tax liabilities and
where the deferred taxes relate to the same tax authority. The unabsorbed capital allowance at year end carried forward of RM 47,149,811 is subject to
agreement by the Inland Revenue Board.
Movement in temporary differences during the year
Recognised Recognised
in income in income
At statement At statement At
1.1.2005 (note 21) 31.12.2005 (note 21) 31.12.2006
RM RM RM RM RM
Property, plant and equipment
- Capital allowances 43,165,157 8,507,555 51,672,712 3,126,611 54,799,323
Unabsorbed capital allowance (14,386,964) (925,262) (15,312,226) 2,169,553 (13,142,673)
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
28,778,193 7,582,293 36,360,486 5,296,164 41,656,650
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
53 2006 annual report
Notes To The Financial Statements (Continued)
13. PAYABLES AND ACCRUALS
Group Company
2006 2005 2006 2005
RM RM RM RM
Non-current
Non-trade
Other payables and accruals 71,271,329 71,520,025 - -
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
Current
Trade
Trade payables 6,002,654 5,639,407 - -
Non-trade
Other payables and accruals 18,600,598 20,420,222 852,263 1,560,205
Amount due to subsidiary - - 1,473,368 1,473,310
–––––––––––– –––––––––––– –––––––––––– ––––––––––––
24,603,252 26,059,629 2,325,631 3,033,515
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
The amount due to subsidiary is unsecured, interest free and with no fixed terms of repayment.
Included in other payables and accruals of the Group are amounts relating to bond interest accruals as follows:-
2006 2005
RM RM
Repayable in less than one year 18,091,272 18,155,818
More than one year 71,271,329 71,520,025
–––––––––––– ––––––––––––
89,362,601 89,675,843
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
14. PREFERENCE SHARE CAPITAL
Group
2006 2005
RM RM
Authorised:
Redeemable Non-cumulative Convertible Preference Shares of RM0.01 each (LBT RNCPS) 1,000,000 1,000,000
Redeemable Cumulative Convertible Preference Shares of RM0.01 each (LBT RCCPS) 1,000,000 1,000,000
–––––––––––– ––––––––––––
2,000,000 2,000,000
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
2006 annual report 54
Notes To The Financial Statements (Continued)
14. PREFERENCE SHARE CAPITAL (Continued)
Group
2006 2005
RM RM
Issued and fully paid
LBT RNCPS
Balance at 1 January - 11,043
Redemption during the year - (11,043)
Balance at 31 December - -
LBT RCCPS 40,000 40,000
–––––––––––– ––––––––––––
Balance at 31 December 40,000 40,000
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
On 19 August 2005, LBTSB redeemed all its outstanding 2,045,000 LBT RNCPS at a redemption price of RM1.00 each.
The LBT RCCPS have the following rights:-
(i) The right to receive a fixed cumulative preferential dividend of 10% per annum on the redemption value.
(ii) The right to redemption at the nominal amount and a premium of RM0.99 per share at any time before the expiry of 15 years from 21 May 2002 at
the discretion of LBTSB.
15. PREFERENCE SHARE CAPITAL PREMIUM ACCOUNT
Group
2006 2005
RM RM
The share premium account arose from the following:-
Nil / 1,104,300 LBT RNCPS at a premium of RM 0.99 each
Balance at 1 January - 1,093,257
Redemption during the year - (1,093,257)
Balance at 31 December - -
4,000,000 LBT RCCPS at premium of RM0.99 each 3,960,000 3,960,000
–––––––––––– ––––––––––––
Balance at 31 December 3,960,000 3,960,000
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
55 2006 annual report
Notes To The Financial Statements (Continued)
16. ICULS
On 31 March 2003, the Company issued RM47,194,000 nominal value new ICULS for the acquisition of the LMTC RPS. The conversion period of the
ICULS was from 31 March 2003 to the Maturity Date of the ICULS on 24 December 2005. The ICULS were not redeemable for cash except upon the
occurrence of a default.
The registered holder of the ICULS had the right to convert the ICULS into new ordinary shares of the Company of RM1.00 each at a conversion rate of
one (1) ordinary share for every 1.15 ICULS held.
The ICULS had a coupon rate of 3% per annum. The coupon rate was payable annually in arrears on the anniversary of the date of issuance except for
the last interest payment. The last interest payment was made on the maturity date and was calculated from the date of the following previous interest
payment up to the maturity date.
The liability portion represents the present value of the total interest payable at the coupon rate of 3% per annum.
Group / Company
Equity Liability
Component Component Total
RM RM RM
Balance as at 1 January 2005 24,266,564 2,110,136 26,376,700
Conversion of ICULS into ordinary shares (24,266,564) (2,110,136) (26,376,700)
–––––––––––– –––––––––––– ––––––––––––
Balance at 31 December 2005 - - -
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
All ICULS were fully converted to ordinary shares at the end of the previous financial year.
17. REVENUE
Group Company
2006 2005 2006 2005
RM RM RM RM
Gross dividend income from subsidiaries - - 15,040,000 10,677,035
Port operations income 84,380,109 82,697,740 - -
Provision of tug services 6,371,812 6,076,712 - -
–––––––––––– –––––––––––– –––––––––––– ––––––––––––
90,751,921 88,774,452 15,040,000 10,677,035
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
2006 annual report 56
Notes To The Financial Statements (Continued)
18. RESULTS FROM OPERATING ACTIVITIES
Group Company
2006 2005 2006 2005
RM RM RM RM
Results from operating activities is arrived at after charging:-
Auditor’s remuneration
- audit work 46,296 43,400 18,000 18,000
- non-audit work 10,000 2,500 5,000 -
Depreciation of property, plant and equipment 8,707,031 4,393,391 164,932 97,110
Property, plant and equipment written off 1,785 - 1,785 -
Personnel expenses
- Contributions to Employee provident fund 32,428 14,387 32,428 14,387
- Salaries and allowances 263,142 130,500 263,142 130,500
Rental - Tug hire 4,854,500 4,851,500 - -
Tax expense on dividend declared 32,058 (169,510) - -
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
and after crediting:-
Gain on disposal of property, plant and equipment 321,275 - 321,275 -
Management fees 600,000 600,000 600,000 880,000
Office facility fees 165,600 82,800 165,600 82,800
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
19. KEY MANAGEMENT PERSONNEL COMPENSATION
Group Company
2006 2005 2006 2005
RM RM RM RM
Directors’ fees 800,000 900,000 800,000 820,000
Directors’ allowance 9,500 21,500 - -
–––––––––––– –––––––––––– –––––––––––– ––––––––––––
809,500 921,500 800,000 820,000
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
57 2006 annual report
Notes To The Financial Statements (Continued)
20. FINANCE COSTS
Group Company
2006 2005 2006 2005
RM RM RM RM
Interest
- LBT Serial Bonds interest expense 17,842,576 20,270,762 - -
- ICULS - 484,229 - 484,229
Share of LBT RCCPS dividend to minority shareholders (net of tax) 288,000 288,000 - -
Share of LBT RNCPS dividend to minority shareholders (net of tax) - 39,755 - -
–––––––––––– –––––––––––– –––––––––––– ––––––––––––
18,130,576 21,082,746 - 484,229
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
21. TAx ExPENSE
(a) Components of tax expense
Group Company
2006 2005 2006 2005
RM RM RM RM
Current tax expense
Malaysian - current year 1,159,600 1,118,327 4,563,572 3,427,379
- prior year - 43,206 - 36,215
Overseas - current year 69,855 - - -
Deferred tax expense
Deferred tax recognised in the income statement (Note 12) 5,296,164 7,582,293 - -
–––––––––––– –––––––––––– –––––––––––– ––––––––––––
6,525,619 8,743,826 4,563,572 3,463,594
Share of tax of equity accounted associates 4,559,474 1,982,655 - -
–––––––––––– –––––––––––– –––––––––––– ––––––––––––
11,085,093 10,726,481 4,563,572 3,463,594
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
2006 annual report 58
Notes To The Financial Statements (Continued)
21. TAx ExPENSE (Continued)
(b) Reconciliation of effective tax expense
Group Company
2006 2005 2006 2005
RM RM RM RM
Profit before tax 47,829,607 41,717,750 14,112,035 10,123,717
Share of tax of equity accounted associates 4,559,474 1,982,655 - -
–––––––––––– –––––––––––– –––––––––––– ––––––––––––
52,389,081 43,700,405 14,112,035 10,123,717
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
Tax at Malaysian tax rate of 28% 14,668,943 12,236,113 3,951,370 2,834,700
Effect of tax rates in foreign jurisdiction 29,916 - - -
Effect of change in tax rate* (4,120,250) - - -
Non-deductible expenses 412,895 835,287 570,355 591,400
Effect of lower tax rate (80,000) (80,000) - -
Other items 173,589 (2,308,125) 41,847 1,279
–––––––––––– –––––––––––– –––––––––––– ––––––––––––
11,085,093 10,683,275 4,563,572 3,427,379
Under provision in prior year - 43,206 - 36,215
–––––––––––– –––––––––––– –––––––––––– ––––––––––––
11,085,093 10,726,481 4,563,572 3,463,594
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
* In the Malaysian Budget 2007, it was announced that the corporate income tax rate will be reduced to 27% in 2007 and to 26% in 2008. Consequently
deferred tax assets and liabilities are measured using these tax rates.
22. EARNINGS PER SHARE
Basic earnings per share
The calculation of basic earnings per share at 31 December 2006 was based on the profit attributable to ordinary shareholders of RM35,777,113
(2005 - RM27,625,723) and a weighted average number of ordinary shares outstanding during the year of 300,805,917 (2005 - 283,901,324).
Weighted average number of ordinary shares
Group
2006 2005
Issued ordinary shares at 1 January 300,805,917 268,851,692
Effect of shares issued from January to December - 15,049,632
–––––––––––– ––––––––––––
Weighted average number of ordinary shares at 31 December 300,805,917 283,901,324
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
Group
2006 2005
Sen Sen
Basic earnings per share 11.9 9.7
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
59 2006 annual report
Notes To The Financial Statements (Continued)
23. SEGMENT REPORTING
Segment information is presented in respect of the Group’s business and geographical segments. The primary format, business segments, is based on
the Group’s management and internal reporting structure. Inter-segment pricing is determined based on negotiated terms.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Unallocated items mainly comprise interest-earning assets and revenue and interest-bearing loans, borrowings, financial instruments and expenses.
Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one
period.
Business segments
The Group comprises the following main business segments:-
Port operations Ownership and operation of 2 port facilities, Lumut Maritime Terminal (port facility for dry and liquid bulk, breakbulk
and containers) and Lekir Bulk Terminal (port facility for dry and liquid bulk) comprising Lumut Port
Marine services Provision of tuggage services
Investment holding Investment in ordinary shares of subsidiary companies, LBT RNCPS (which were fully redeemed in 2005), LBT
RCCPS, LMT RPS and other unquoted shares
Industrial property Sale of industrial property
Geographical segments
No segment information on the basis of geographical segments is presented as all of the external customers and segment assets are located in
Malaysia.
Group Port Marine Investment Industrial
2006 operations services holding property Eliminations Consolidated
RM RM RM RM RM RM
Business segments
Revenue from external customers 84,380,109 6,371,813 - - - 90,751,922
Inter-segment revenue - - 15,040,000 - (15,040,000) -
Share of revenue of associate 23,617,227 - - 11,814,538 - 35,431,765
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Gross segment revenue 107,997,336 6,371,813 15,040,000 11,814,538 (15,040,000) 126,183,687
Share of revenue of associate (23,617,227) - - (11,814,538) - (35,431,765)
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Total segment revenue 84,380,109 6,371,813 15,040,000 - (15,040,000) 90,751,922
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Segment result 50,793,556 1,505,033 13,186,381 - (15,040,000) 50,444,970
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Unallocated expenses (9,663)
Results from operating activities 50,435,307
Interest income 3,673,579
Financing costs (18,130,576)
–––––––––––
Operating profit 35,978,310
Share of profit after tax of
equity accounted associates 11,851,297
–––––––––––
Profit before taxation 47,829,607
Tax expense (6,525,619)
–––––––––––
Net profit for the year 41,303,988
–––––––––––
–––––––––––
2006 annual report 60
Notes To The Financial Statements (Continued)
23. SEGMENT REPORTING (Continued)
Group Port Marine Investment Industrial
2006 operations services holding property Others Eliminations Consolidated
RM RM RM RM RM RM RM
Business segments
Segment assets 604,697,383 1,658,433 79,028,346 - 3,742 - 685,387,904
Investment in associate 60,472,599 - - 15,118,150 - - 75,590,749
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Total assets 665,169,982 1,658,433 79,028,346 15,118,150 3,742 - 760,978,653
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Total liabilities 274,433,509 521,462 966,553 - 2,400 - 275,923,924
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Capital expenditure - - 13,785 - - - 13,785
Depreciation of property,
plant and equipment 8,542,099 - 164,932 - - - 8,707,031
Group Port Marine Investment Industrial
2005 operations services holding property Eliminations Consolidated
RM RM RM RM RM RM
Business segments
Revenue from external customers 82,697,740 6,076,712 - - - 88,774,452
Inter-segment revenue - - 10,677,035 - (10,677,035) -
Share of revenue of associate 21,697,691 - - 1,320,575 - 23,018,266
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Gross segment revenue 104,395,431 6,076,712 10,677,035 1,320,575 (10,677,035) 111,792,718
Share of revenue of associate (21,697,691) - - (1,320,575) - (23,018,266)
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Total segment revenue 82,697,740 6,076,712 10,677,035 - (10,677,035) 88,774,452
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Segment result 55,035,875 1,184,575 9,067,388 - (10,677,035) 54,610,803
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Unallocated expenses (15,627)
Results from operating activities 54,595,176
Interest income 2,826,193
Financing costs (21,082,746)
–––––––––––
Operating profit 36,338,623
Share of profit after tax of
equity account associates 5,379,127
–––––––––––
Profit before tax 41,717,750
Tax expense (8,743,826)
–––––––––––
Profit for the year 32,973,924
–––––––––––
–––––––––––
61 2006 annual report
Notes To The Financial Statements (Continued)
23. SEGMENT REPORTING (Continued)
Group Port Marine Investment Industrial
2005 operations services holding property Others Eliminations Consolidated
RM RM RM RM RM RM RM
Business segments
Segment assets 602,308,596 1,867,427 77,987,763 - 14,063 - 682,177,849
Investment in associate 59,305,812 - - 13,911,240 - - 73,217,052
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Total assets 661,614,408 1,867,427 77,987,763 13,911,240 14,063 - 755,394,901
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Total liabilities 301,983,096 520,579 1,636,314 - 3,000 - 304,142,989
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Capital expenditure 2,024,495 - 809,113 - - - 2,833,608
Depreciation of property
plant and equipment 4,296,281 - 97,110 - - - 4,393,391
24. FINANCIAL INSTRUMENTS
The main risks arising from the Group’s and Company’s financial instruments are credit risk and interest rate risk. The Board reviews the normal practice
adopted by the Group for managing each of these risks which are summarised as below:-
Credit risk
At the balance sheet date, the Group has no significant exposure to credit risk.
The Group’s primary exposure to credit risk arises through its trade receivables. Appropriate informal credit evaluations were performed on customers
prior to entering into contractual agreements with them or with customers requiring credit over a certain amount. The exposure to credit risk is monitored
by management on an on-going basis.
At the balance sheet date, 93% (2005: 94%) of the trade receivables are owed by TNB Janamanjung Sdn. Bhd. which is the current sole customer of
LBTSB. The maximum exposure to credit risk is represented by the carrying amount of each financial asset presented on the balance sheet.
Interest rate risk
The Group and the Company place cash balances with reputable licensed banks to generate interest income for the Group and the Company. The
Group and the Company manage its interest rate risk by placing such balances on varying maturities ranging from 1 week to 12 months and interest
rate terms with interest rates ranging from 2.6% to 3.2%.
2006 annual report 62
Notes To The Financial Statements (Continued)
24. FINANCIAL INSTRUMENTS (Continued)
Effective interest rates analysis
In respect of interest-earning financial assets and interest-bearing financial liabilities, the following table indicates their average effective interest rates
at the balance sheet date and the periods in which they mature:-
Average
Group effective Less More
interest than 1-2 2-3 3-4 4-5 than
2006 rate Total 1 year years years years years 5 years
% RM RM RM RM RM RM RM
Fixed rate instruments
Fixed deposits and REPO
with licensed banks 3.0 89,820,000 89,820,000 - - - - -
LBT Serial Bonds 8.0 (134,285,558) (25,908,728) (23,954,076) (22,146,889) (20,476,045) (18,087,616) (23,712,204)
Preference share capital 10.0 (40,000) - - - - - (40,000)
Preference share
capital premium 10.0 (3,960,000) - - - - - (3,960,000)
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
(48,465,558) 63,911,272 (23,954,076) (22,146,889) (20,476,045) (18,087,616) (27,712,204)
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
2005
Fixed rate instruments
Fixed deposits and REPO
with licensed banks 2.2 - 3.7 111,960,000 111,960,000 - - - - -
LBT Serial Bonds 8.0 (166,129,740) (31,844,182) (25,908,728) (23,954,076) (22,146,889) (20,476,045) (41,799,820)
Preference share capital 10.0 (40,000) - - - - - (40,000)
Preference share
capital premium 10.0 (3,960,000) - - - - - (3,960,000)
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
(58,169,740) 80,115,818 (25,908,728) (23,954,076) (22,146,889) (20,476,045) (45,799,820)
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Average
Company effective Less More
interest than 1-2 2-3 3-4 4-5 than
2006 rate Total 1 year years years years years 5 years
% RM RM RM RM RM RM RM
Fixed rate instruments
Fixed deposits and REPO
with licensed banks 3.16 5,200,000 5,200,000 - - - - -
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
5,200,000 5,200,000 - - - - -
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
2005
Fixed rate instruments
Fixed deposits and REPO
with licensed banks 2.4-2.7 43,500,000 43,500,000 - - - - -
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
43,500,000 43,500,000 - - - - -
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
63 2006 annual report
Notes To The Financial Statements (Continued)
24. FINANCIAL INSTRUMENTS (Continued)
Fair values
Recognised financial instruments
In respect of cash and cash equivalents, trade and other receivables, amounts due from subsidiaries and associate, trade and other payables, the
carrying amounts approximate fair value due to the relatively short term nature of these financial instruments.
The aggregate fair values of the other financial assets and liabilities carried on the balance sheet as at 31 December are shown below:-
2006 2005
Carrying Fair Carrying Fair
Group amount value amount value
RM RM RM RM
Financial assets
Other long term unquoted investments
- LMT RPS 10,029,999 ### 10,029,999 ###
- Unquoted shares 35,325,000 ### - ###
–––––––––––– –––––––––––– –––––––––––– ––––––––––––
45,354,999 - 10,029,999 -
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
Financial liabilities
Secured LBT Serial Bonds 134,285,558 # 166,129,740 #
Bond interest accruals 89,362,601 ## 89,675,843 ##
Preference share capital and share premium held
by minority shareholders:
- LBT RCCPS 4,000,000 #### 4,000,000 ####
–––––––––––– –––––––––––– –––––––––––– ––––––––––––
227,648,159 - 259,805,583 -
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
2006 2005
Carrying Fair Carrying Fair
Company amount value amount value
RM RM RM RM
Financial liabilities
Other long term unquoted investments
- LBT RCCPS 16,000,000 ##### 16,000,000 #####
–––––––––––– –––––––––––– –––––––––––– ––––––––––––
16,000,000 - 16,000,000 -
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
2006 annual report 64
Notes To The Financial Statements (Continued)
24. FINANCIAL INSTRUMENTS (Continued)
# It is not practicable to estimate the fair value of this financial liability representing the nominal amount of 12 (2005: 14) series of bonds issued by
a subsidiary company to finance the development of the dry bulk terminal. This liability is carried at its original cost of RM134,285,558 (2005:
RM166,129,740) on the balance sheet.
The main covenants of the LBT Serial Bonds facility are disclosed in Note 11 to the financial statements.
## It is not practicable to estimate the fair value of this financial liability representing the interest payable on LBT Serial Bonds incurred up to 31
December 2006. This liability is carried at its original cost of RM 89,362,601 (2005: RM89,675,843) in the balance sheet.
### It is not practicable to estimate the fair valued of the investment representing 50% less one (1) share of the issued and paid-up LMT RPS capital
of this unquoted company and the investment in unquoted shares of PGMC. These investments is carried at its original cost of RM10,029,999
(2005: RM10,029,999) and RM 35,325,000 (2005: RM nil) in the balance sheet respectively.
The LMT RPS are non-cumulative and may be redeemed out of the retained profits of LMTSB at LMTSB’s shareholders’ option.
#### It is not practicable to estimate the fair value of these financial liabilities representing 20% of the issued and paid-up LBT RCCPS capital. These
financial liabilities are carried at its original cost as stated above on the balance sheet.
The principal terms of the LBT RCCPS is disclosed in Note 14 to the financial statements.
##### It is not practicable to estimate the fair value of this investment representing 80% of the issued and paid-up LBT RCCPS capital. This investment
is carried at its original cost of RM16,000,000 (2005: RM16,000,000) in the balance sheet.
As at 31 December 2006, the net tangible assets reported by this unquoted company was RM183,929,881 (2005:RM156,295,507).
The principal terms of the LBT RCCPS are disclosed in Note 14 to the financial statements.
As at the balance sheet date, there are no unrecognised financial instruments.
25. CONTINGENCIES
The Directors are of the opinion that provisions are not required in relation to the Company’s interest in LBTSB, whereby a right is granted to its single
minority shareholder to sell (put) to the Company its 20% stake or 13,600,000 ordinary shares of RM1.00 each in LBTSB at fair value after and upon
the redemption of all classes of preference shares issued by LBTSB after 15 years provided it remains the sole beneficial owner of the 20% stake.
The Directors are of the opinion that the amount is not capable of reliable measurement.
26. CAPITAL AND OTHER COMMITMENTS
Group
2006 2005
RM RM
Other investments
Contracted but not provided for and payable:
Within one year 6,400,000 -
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
Capital commitment amounting to USD1,726,000 for other investments relates to the final tranche of Redeemable Class B shares in PGMC to be
subscribed under the shareholder’s agreement.
65 2006 annual report
Notes To The Financial Statements (Continued)
27. INTER COMPANY AND RELATED PARTY TRANSACTIONS
Controlling related party relationships are in respect of:-
(i) The Company’s subsidiaries as disclosed in Note 5.
(ii) The Directors of the Company, Harun Halim Rasip and Amin Halim Rasip, who deemed to be interested by virtue of their shareholdings in HRH,
JMS and LGI.
(a) Significant inter-company transactions of the Company are as follows:-
Company
2006 2005
RM RM
Subsidiary companies
Redemption of LBT RNCPS - 940,700
Ordinary dividend receivable from PLSB 9,312,000 5,292,000
Ordinary dividend receivable from RRSB 430,700 1,209,600
Preference dividend receivable from LBTSB 1,152,000 1,185,865
Management fee receivable from PLSB - 280,000
Administrative fee receivable from LBTSB 187,200 180,000
––––––––––––
–––––––––––– ––––––––––––
––––––––––––
(b) Significant non-trade inter company and related party balances
Outstanding significant non-trade related party balances at 31 December 2006 (in addition to related party disclosures mentioned elsewhere in
the financial statements) are as follows:-
Group Company
2006 2005 2006 2005
RM RM RM RM
Amounts owing by/(to)
- PLSB - - 139,319,684 140,217,660
- RRSB - - 230,791 1,209,600
- LBTSB - - 2,304,000 1,332,000
- IRPL - - 56,455,669 -
- SKSB - - (489,946 ) -
- TKSB - - (491,955 ) -
- WKSB - - (491,467 ) -
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
Amount owing by LMTSB 100,000 202,106 100,000 202,106
Redemption of LBT RNCPS - - - 940,700
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
Amounts owing to related parties - HRH, a company in which
certain Directors (Harun bin Halim Rasip and Amin bin
Halim Rasip) have substantial financial interest - (163,153) - (163,153)
Amount owing by related party - PKS, a company wholly
owned by HRH - 82,800 - 82,800
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
The amounts owing by subsidiary companies and associate are interest free, unsecured and have no fixed terms of repayment.
2006 annual report 66
Notes To The Financial Statements (Continued)
27. INTER COMPANY AND RELATED PARTY TRANSACTIONS (Continued)
(c) Significant related party transactions
Set out below are the significant related party transactions in the normal course of business for the financial year (in addition to related party
disclosures mentioned elsewhere in the financial statements). The related party transactions described below were carried out on terms and
conditions not more materially different from those obtainable in transactions with unrelated parties.
Group Company
2006 2005 2006 2005
RM RM RM RM
(i) Transactions with companies in which certain Directors
(Harun bin Halim Rasip and Amin bin Halim Rasip)
have interests:
Office rental and supporting service charges paid to HRH - (300,000) - (300,000)
Office facilities fees receivable from PKS, a company
wholly owned by HRH 165,600 82,800 165,600 82,800
(ii) Transactions with associated company - LMTSB
Management fee receivable 600,000 600,000 600,000 600,000
Operations and maintenance fees payable (23,262,315) (21,602,754) - -
Tuggage services receivable 6,371,813 6,076,712 - -
LMTC RPS dividend receivable - - - 898,810
––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
–––––––––––– ––––––––––––
––––––––––––
28. SUBSEqUENT EVENTS
On 27 March 2007, the Group announced the incorporation of a wholly-owned subsidiary named Integrax Philippines, Inc (“IP”) in the Republic of the
Philippines with a capital of 9,600,000 shares of One (1) Peso each. The intended principal activity of IP is to be the investment entity of the Company
to hold its equity interest in Platinum Group Metals Corporation and for future investments into the Republic of Philippines.
On 30 March 2007 and 2 April 2007, the Company purchased a total of 39,940,000 fully paid up shares representing 32.56% of the issued and paid up
capital of PT Indoexchange Tbk (“INDX”), a company listed on the Jakarta Stock Exchange from Asean Small Cap Fund and several other shareholders
at a price of Rph100 per share. A Tender Offer for the balance of shares in INDX not already owned by the Company is required to be made in
compliance with Indonesian capital market regulations and laws.
67 2006 annual report
Properties Owned By The Group As At 31 December 2006
Land area / Net book
(built-up area) Tenure / value
No. Lot No. / Location Description Date of Acquisition (sq. metres) (Age of building) RM
1. H.S. (D) 17396 Bulk terminal, berths, trestle and 25 February 2002 1,088,866.727 99 years 167,161,125
P.T. 24776 mechanical handling equipment (4,662) Leasehold
Mukim of Sitiawan and structures, office and Expiring
District of Manjung maintenance 24/2/2101
Perak Darul Ridzuan buildings, land and waterbody (4 years)
2. H.S. (D) 75362 3 units low cost flats 19 May 1995 190 Freehold 57,501
P.T. 2193 (190) (11 years)
Mukim of Setul
District of Seremban
Notes:
1. No revaluation was done on the abovementioned properties.
2. Property No. 2 is currently not being utilised for any purpose and property no. 1 is being utilised for bulk terminal activities.
3. List excludes industrial properties on which are located the port facilities of the Lumut Maritime Terminal owned by Lumut Maritime Terminal Sdn Bhd,
an associate company set out below:
Approximate
Land Area Tenure /
No. Description of Title/Mukim Description (acres) (Age of building)
1. H.S(D)Dgs 7105, PT6973 Wharfs, Open Storage Areas, 72.54 Leasehold – 99 years
Mukim Lumut Warehouses & Office building Expiring on 21 December 2094
(12 years)
2 H.S(D)Dgs 6247, PT2273 Waterbody 27.46 Leasehold – 99 years
Mukim Lumut Expiring on 18 December 2093
2006 annual report 68
Corporate Governance Statement
A. Introduction
The Board of Directors is committed to ensuring that the highest standards of corporate governance is practiced throughout the Group as a fundamental
part of discharging their responsibilities to protect and enhance shareholders value and the financial performance of the Group.
The Directors are pleased to set out below how the Company has applied the principles set out in Part 1 of the Malaysian Code on Corporate Governance
(“Code”). Except for matters specifically identified, the Board of Directors has complied with the best practices set out in the Code.
B. Board of Directors
1) Composition and Board Balance
An effective Board leads and controls the Group. The Board currently has five (5) members, comprising two (2) Executive Directors and three (3)
Non-Executive Directors. The Independent Non-Executive Directors are Mr Nelson Gylding Dorrell Borch and Mr Stanislaw Wassylko. The Board
complies with paragraph 15.02 of the Listing Requirements which requires that at least two directors or one-third of the Board, whichever is the
higher, are independent Directors. No individual or group of individuals dominates the Board’s decision making.
Encik Harun Halim Rasip is the Chairman, a Co-Chief Executive and Chief Financial Officer of the Company. The Board is mindful of the several
roles held by him but is of the opinion that there are sufficient independent-minded Directors on the Board who are fully aware and cognizant of
their responsibilities and liabilities as independent directors to provide the necessary check and balance. He, as a rule, also abstains from all
deliberations and voting on matters that he is directly or deemed interested.
Together, the Directors bring a wide range of business and financial experience to direct the expanding Group. A brief profile of each Director is
set out on pages 5 to 6 of this report.
2) Meetings
During the financial year, the Board held six (6) meetings. The attendance record of Directors at Board Meetings held during the financial year
ended 31 December 2006 can be found in the Profile of Directors on pages 5 to 6.
3) Supply of information to the Board members
All Directors are provided with an Agenda with Board papers on a timely basis prior to the meeting to enable them to deliberate on an informed
basis on the issues to be raised at the meeting. The Board papers includes, among others, the following details:-
• minutes of meetings of all Committees of the Board
• operational and financial reporting of the Group
• business development of the Group
• Audit Committee reporting
• regulatory and other administrative matters
All proceedings of Board Meetings are minuted and signed by the Chairman of the Meeting in accordance with the provision of Section 156 of the
Companies Act, 1965.
The Directors have unrestricted access to all information within the Group whether as a full board or in their individual capacity, in furtherance of
their duties.
The Directors also have access to the advice and services of the Company Secretary and independent professional advice should the need arise.
The newly appointed Directors are encouraged to visit the Group’s operating sites to familiarise themselves with the operations of the Group.
69 2006 annual report
Corporate Governance Statement (Continued)
B. Board of Directors (Continued)
4) Directors’ training
Directors are encouraged to attend continuous education programmes to keep them abreast of changes in legislations and regulations that affect
business operations. All the Directors have attended and completed the Mandatory Accreditation Programme (MAP).
Following the repeal of Practice Note No 15/2003 on Continuing Education Programme (CEP) prescribed by BMSB, the Board of Directors of each
listed issuers has a duty to evaluate and determine the training needs of its Directors on a continuous basis. The training must be one that aids the
Director in the discharge of his duties as a Director.
During the year, the Directors did not attend any BMSB sponsored CEP programmes but Directors have been encouraged, in their individual
capacities, to attend various conferences, dialogues and seminars whenever possible to deepen their knowledge of various sectors and the
existing economic climate.
5) Re-election of Directors
In accordance with the Company’s Articles of Association, all newly appointed Directors are subject to re-election by shareholders at the first
Annual General Meeting (“AGM”) after their appointments. At every AGM one-third (1/3) of the existing Directors will retire from office and all
Directors retire from office once at least every three years but shall be eligible for re-election. Directors who attain an age over seventy (70) years
retire at every AGM pursuant to Section 129(6) of the Companies Act, 1965.
The names of the Directors who are standing for re-election at the forthcoming Twenty-First Annual General Meeting of the Company are shown on
page 1 of this report. The relevant information of the retiring Directors can be found in the Profile of Directors.
6) Audit Committee
The composition and terms of reference of the Audit Committee together with its report are presented on pages 74 to 77 of this report.
7) Nomination Committee
The Nomination Committee was formed on 26 February 2002, and is responsible to ensure that the Directors of the Board comprise persons that
provide the required mix of responsibilities, business skills and experience. The Nomination Committee also assists the Board in reviewing on an
annual basis the appropriate balance and size of Non-Executive participation and in establishing procedures and processes towards an annual
assessment of the effectiveness of the Board as a whole, the Committees of the Board and the contribution of each individual Director.
The Nomination Committee comprises the following members:
1) Stanislaw Wassylko - Chairman
2) Nelson Gylding Dorrell Borch - Member
During the financial year, the Committee held one (1) meeting to review the appropriate balance and size of the Board and assessed the effectiveness
of the Board as a whole. No new appointments were made to the Board for the financial year under review. Re-appointment or re-election of
Directors at the AGM is recommended by this Committee to the Board for its approval.
2006 annual report 70
Corporate Governance Statement (Continued)
B. Board of Directors (Continued)
8) Remuneration Committee
The Remuneration Committee was formed on 26 February 2002, and is responsible to ensure that the remuneration packages necessary to attract,
retain and motivate Directors of the quality required to manage the business of the Company and to align the interest of the Directors with those of
the shareholders are in place.
The following Directors are members of the Remuneration Committee:
1) Nelson Gylding Dorrell Borch* - Chairman
2) Stanislaw Wassylko* - Member
(* Independent Non-Executive Director)
For the financial year ended 31 December 2006, the Committee held one (1) meeting.
9) Directors’ remuneration
The Board as a whole determines the remuneration of Non-Executive Directors with individual Directors abstaining from decisions in respect of
their individual remuneration.
The details of the remuneration of each Director during the period are as follows:
Salaries Fees Bonus and Benefits Total Total
Incentives in kind 2006 2005
RM RM RM RM RM RM
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Executive Directors*
Harun Halim Rasip - 340,000 - - 340,000 340,000
Amin Halim Rasip - 340,000 - - 340,000 340,000
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Executive Directors
Mohd Sofian Jaafar - - - - - 20,000
(resigned on 5 July 2005)
Nelson Gylding Dorrell Borch - 40,000 - - 40,000 40,000
YB Dato’ Ir. Onn Hamzah - 40,000 - - 40,000 40,000
Stanislaw Wassylko - 40,000 - - 40,000 40,000
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
- 800,000 - - 800,000 820,000
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Payable to HRH
Non-Executive Directors do not receive any performance related remuneration. The Directors’ fees payable to Directors is determined by the Board and
recommended for the approval of shareholders.
71 2006 annual report
Corporate Governance Statement (Continued)
C. Shareholders
1) Dialogue between the Company and Investors
The Board and Management convey information about the Company performance, corporate strategy and other matters affecting
shareholders’ interests through the distribution of annual reports, circulars and corporate announcements released to BMSB.
In addition, information on the development of Lumut Port can be accessed from the website at www.lumutport.com. The Company holds
occasional briefings with fund managers, institutional investors and investment analysts.
Presentations, where appropriate, will be made with a question and answer session to explain and provide a rationale of the Group’s strategy,
performance and major developments to shareholders during the Annual General Meeting.
Shareholders may contact Encik Harun Halim Rasip for any enquiries at (email) harunhalimrasip@integrax.com.my, (tel) 603-21417166
(fax) 603-21412995. At all times, shareholders may contact the Company Secretary for information.
2) Annual General Meeting
In accordance with the Company’s Articles of Association, Notice of Annual General Meeting for each financial year end together with the related
papers were sent out to shareholders at least 21 days before the date of the meeting.
At the Annual General Meeting, shareholders are encouraged to ask questions both about the resolution being proposed or about the Group’s
operations, plans and prospects in general. The Executive Directors and where appropriate, the Chairman of the Board, will respond to shareholders’
questions during the meeting. Where appropriate, the Chairman will undertake to provide a written answer to any significant question that cannot
be readily answered at the meeting.
Each item of special business included in the Notice of Annual General Meeting will be accompanied by a full explanation of the effects of a
proposed resolution. Separate resolutions are proposed for substantially separate issues at each meeting and the Chairman shall declare the
number of proxy votes received both for and against each separate resolution.
The Company will provide shareholders, upon written request, with a summary of the discussions held at the Annual General Meeting.
D. Accountability and Audit
1) Financial Reporting
The Board takes responsibility for presenting a balanced and understandable assessment of the Group’s position and prospects each time it
releases its quarterly and annual financial statements to shareholders. The Audit Committee will assist the Board to oversee the Group’s financial
reporting processes and the quality of its financial reporting.
2) Internal Control
The Group’s Internal Control Statement is set out on page 78.
3) Relationship with the Auditors
The role of the Audit Committee in relation to the external auditors is stated on page 76.
4) Directors’ responsibility statement for preparing the Annual Financial Statements
The Directors are required by the Companies Act, 1965 to prepare financial statements for each financial year which are to be made out in
accordance with the applicable approved accounting standards for entities other than private entities issued by the Malaysian Accounting
Standards Board and to give a true and fair view of the state of affairs of the Group and the Company at the end of the financial year and of the
results and cash flows of the Group and Company for the financial year.
2006 annual report 72
Corporate Governance Statement (Continued)
D. Accountability and Audit (Continued)
In preparing the financial statements for the financial year ended 31 December 2006, the Directors have:
• used appropriate accounting policies and applied them consistently;
• made judgements and estimates that are reasonable and prudent;
• stated whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the
financial statements.
• prepared financial statements on the going concern basis as the Directors have a reasonable expectation, having made enquiries, that
the Group and Company have adequate resources to continue in operational existence for the foreseeable future.
The Directors have responsibility for ensuring that the Company keeps proper accounting records which disclose with reasonable accuracy the
financial position of the Group and Company and which enable them to ensure that the financial statements comply with the Companies Act, 1965.
The Directors have the general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group, and to detect
and prevent fraud and other irregularities.
E. Other Information
1) Options, warrants or convertible securities
The Company did not issue/exercise any options or warrants and convertible securities during the financial year.
2) Imposition of sanctions and/or penalties
There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management by any relevant
regulatory bodies during the financial year.
3) Non-audit fees
During the financial year, non-audit fees paid to the external auditors amounted to RM10,000 (2005: RM2,500). This fee is in respect of the services
rendered in connection with the Internal Control Statement Review of the Company and the preparation of net operating cash flow of a subsidiary
company as disclosed in Note 18 to the financial statements.
4) Material contracts
There were no material contracts entered by the Company and its subsidiaries involving Directors’ and major shareholders’ interests during the
financial year other than the transactions as disclosed in Note 27 to the financial statements.
5) Recurrent Related Party Transactions (“RRPT”) of Revenue Nature
The details of recurrent related party transactions conducted during the financial year ended 31 December 2006 pursuant to the Shareholders’
Mandate are as follows:
Interested Director Actual Value from
Transacting entity Nature of Nature of and Interested 1 January 2006 to
in the Group Related Party Transaction Relationship Major Shareholders 31 December 2006
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
RRSB Perbadanan Kemajuan Provision of tuggage Note 1 - YB Dato’ Ir Onn RM6,371,813
Negeri Perak (“PKNP”) and related services bin Hamzah
to LMTSB by RRSB - Kuda Sejati Sdn Bhd
- PKNP
Note 1
RRSB is a wholly-owned subsidiary of Integrax. Kuda Sejati Sdn Bhd is a wholly-owned subsidiary of PKNP and a substantial shareholder of
Integrax. Perak Corporation Berhad (“PCB”) is the holding company of LMTSB. PKNP is the holding company of PCB. YB Dato’ Ir Onn bin Hamzah
is a representative of PKNP on the Board of Integrax Berhad.
73 2006 annual report
Audit Committee Report
MEMBERS OF ThE AuDIT COMMITTEE
Chairman of the Committee
Nelson Gylding Dorrell Borch, Independent Non-Executive Director
Members of the Committee
Harun Halim Rasip (MIA 1232)
Stanislaw Wassylko, Independent Non-Executive Director
Secretary
Chan May Yee
Meetings
During the financial year ended 31 December 2006, four (4) Audit Committee meetings were held. A record of the attendance to these meeting is as follows:
No. of Meetings
Name of Committee Member Attended/held during his office
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Nelson Gylding Dorrell Borch 3/4
Harun Halim Rasip 4/4
Stanislaw Wassylko 4/4
TERMS OF REFERENCE
1. Appointment/Composition
The members of the Committee shall be appointed by the Board and their period of appointment shall be concurrent with their tenure in the Board.
The Audit Committee shall consist of not less than 3 members of whom a majority shall be Independent Directors and the Independent Director is one who:
a) is not an Executive Director of the Company or any related corporation (hereinafter each corporation shall be referred to as “the said Corporation”);
b) has not been within the last 2 years and is not an officer (except as non-executive director) of the said Corporation. For this purpose, “officer”
shall have the meaning given in Section 4 of the Companies Act, 1965;
c) is not a major shareholder of the said Corporation;
d) is not a relative of any Executive Director, officer or major shareholder of the said Corporation. For this purpose, “relative” means the spouse,
parent, brother, sister, child (including adopted or step child) and the spouse of such brother, sister or child;
e) is not acting as a nominee or representative of any Executive Director or major shareholder of the said Corporation;
f) has not been engaged as a professional adviser by the said Corporation under such circumstances as prescribed by the Exchange or
is not presently a partner, director (except as an independent director) or major shareholder, as the case may be, of a firm or corporation which
provides professional advisory services to the said Corporation under such circumstances as prescribed by the Exchange; or
g) has not engaged in any transaction with the said Corporation under such circumstances as prescribed by the Exchange or is not presently
a partner, director or major shareholder, as the case may be, of a firm or corporation (other than subsidiaries of the Company) which has
engaged in any transaction with the said Corporation under such circumstances as prescribed by the Exchange.
2006 annual report 74
Audit Committee Report (Continued)
1. Appointment/Composition (Continued)
At least one member of the Committee must be a member of the Malaysian Institute of Accountants or if he is not a member of the Malaysian
Institute of Accountants, he must have at least 3 years’ working experience and:
a) he must have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act 1967; or
b) he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967;
OR fulfills such other requirements as prescribed by the Exchange.
No alternate director can be a member of the Committee. A quorum shall be 2 members and a majority of members present must be independent
directors.
The members of an Audit Committee shall elect a Chairman from among their number who shall be an independent director.
The Board shall, within 3 months of a vacancy occurring in the Audit Committee which results in the number of members reduced to below 3,
appoint such number of new members as may be required to make up the minimum number of 3 members.
The Board shall review the term of office and performance of an Audit Committee and each of its members at least once every 3 years to determine
whether such Audit Committee and members have carried out their duties in accordance with their terms of reference.
2. Meetings
Meetings shall be held not less than four times a year. In addition, the Chairman may call a meeting of the Committee if a request is made by any
Committee member, the Company’s Chairman or the internal or external auditors if they consider it necessary.
Meetings will be attended by the members of the Committee and the Company Secretary who shall act as the Secretary of the Committee.
Participants may be invited from time to time to attend the meeting depending on the nature of the subject under review. These participants may include
the Directors, General Managers, Division Heads, representatives from the Finance and Internal Audit Departments and external auditors. However, at
least once a year the Committee shall meet with the external auditors.
3. Authority
The Committee is authorised by the Board to carry out the duties mentioned below. It has unrestricted access to all of the Group’s records, resources
and personnel to enable it to discharge its duties. It is also authorised by the Board to seek outside legal or other independent advice and to secure
attendance of outside experts if it considers necessary.
The Committee shall be empowered to convene meetings with the external auditors without presence of the executive members of the Committee,
whenever deemed necessary.
The Committee shall have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity, if any.
The Committee shall promptly report to the Exchange of a matter reported by the Audit Committee to the Board of Directors of the Company which has
not been satisfactorily resolved resulting in a breach of Bursa Malaysia Listing Requirements.
75 2006 annual report
Audit Committee Report (Continued)
4. Duties
a) To discuss and liaise with external auditors the scope of their audit plan to ensure the smooth implementation of the audit of the Group and
to review and evaluate their findings on internal control system and audit reports on the financial statements;
b) To assist in the development of an environment in which controls can operate effectively and to keep under review the effectiveness of internal
control systems and the findings of internal auditors;
c) To provide a forum for non-executive directors to improve their understanding of the Group’s operations to enable them to perform a more
active role;
d) To review the quarterly and year-end financial statements, prior to the approval by the Board of Directors, focusing particularly on:
• Any changes in major policies and practices;
• Significant adjustments arising from the audit;
• The going concern assumption; and
• Compliance with accounting standards and other legal requirements.
e) To discuss problems and reservations arising from the interim and final audits, and any matter the auditor may wish to discuss (in the absence
of management where necessary);
f) To review any related party transactions and conflict of interest situation that may arise within the Company and the Group;
g) To review the assistance given by the employees of the Company and the Group to the external auditors;
h) To review and assess the appropriateness of the Group’s accounting policies and the adequacy of management reporting requirements;
i) To do the following for internal audit function now undertaken by external consultants:
• review the adequacy of the scope, functions and resources of the internal audit function;
• review the internal audit programme and results of the internal audit process and where necessary ensure that appropriate action is
taken on the recommendations of the internal audit function;
• review any appraisal or assessment of the performance of the internal audit function; and
• approve any appointment or termination of the internal audit function.
j) To review the Group’s business ethics and compliance with the law;
k) To perform any other such functions as may be agreed by the Audit Committee and the Board;
l) Upon the request of the external auditors, the Chairman of the Audit Committee shall convene a meeting of the Committee to consider any
matter the external auditors believes should be brought to the attention of the Directors or shareholders;
m) To consider the appointment of the external auditors, audit fees and any questions of resignation or dismissal;
n) To recommend the nomination of a person or persons as external auditors; and
o) To consider the proceedings of the Risk Management Committee (“RMC”), review the methodology and processes adopted by the RMC
in its deliberations on an ongoing basis and review its findings for appropriate recommendations to the Board.
5. Minutes
The Secretary shall maintain minutes of the proceedings of the meetings and circulate such minutes to all members of the Committee.
6. Procedures of The Audit Committee
a) Calling of meetings
The members may meet together for the despatch of business, adjourn and otherwise regulate their meetings as they think fit, provided that
they shall have a minimum of four meetings in a financial year. The Secretary shall on the requisition of a member summon a meeting of the
Audit Committee.
2006 annual report 76
Audit Committee Report (Continued)
b) Notice of meeting
Notice of a meeting of the Audit Committee shall be given to all the members in writing. Unless otherwise determined by the Board of Directors from
time to time, seven (7) days’ notice shall be given, except in the case of an emergency, shorter notice may be given.
c) Voting and proceeding of meeting
The decision of the Audit Committee shall be by a majority of votes and the determination by a majority of the members shall for all purposes be deemed
a determination of the Audit Committee. In case of an equality of votes, the Chairman of the meeting shall have a second or casting vote.
Circular Resolutions signed by all the members shall be valid and effective as if it had been passed at a meeting of the Audit Committee.
d) Keeping of minutes
The members shall cause minutes to be made of all proceedings of the Audit Committee. Such minutes shall be signed by the Chairman of the
meeting at which the proceedings were held or by the Chairman of the next succeeding meeting.
e) Custody, production and inspection of minutes
The minutes of proceedings of the Audit Committee shall be kept by the Secretary at the registered office of the Company, and shall be open to the
inspection of any member of the Committee or any member of the Board of Directors.
SuMMARy OF ACTIVITIES OF ThE COMMITTEE DuRING ThE FINANCIAl yEAR
The activities undertaken by the Audit Committee for the financial year were as follows:-
a) Reviewed the quarterly financial statements and annual report, prior to the approval by the Board of Directors, focusing particularly on:
• any changes in major policies and practices;
• significant adjustments arising from the audit;
• the going concern assumption; and
• compliance with accounting standards and other legal requirements.
b) Reviewed the related party transactions and conflict of interest situation that had arisen within the Company and the Group;
c) Reviewed and assessed the appropriateness of the Group’s accounting policies and the adequacy of management reporting requirements;
d) Considered the appointment of the external auditors and audit fees;
e) Undertaking group risk management assessment measures and making recommendations to the Board in relation thereto;
f) Discussed and liaised with external auditors of scope of their audit plan prior to commencement of audit;
g) Discussed and reviewed with external auditors their evaluation of internal control systems of the Group; and
h) Reviewed the internal audit programme and results of the internal audit process and ensured appropriate actions were taken on the
recommendations by the internal auditors.
INTERNAl AuDIT FuNCTION
During the year the Group ceased to have, for its port operations and industrial land activities, an in-house internal audit capability as it was determined that
external consultants would be able to undertake such function more effectively. This is also now consistent with the mode adopted for all the other activities
of the Group. As such it is independent. The principal role of the external consultants is to undertake independent, regular and systematic reviews of the
systems of internal control so as to provide reasonable assurance that such systems continue to operate satisfactorily and effectively. It is the responsibility
of the Chief Financial Officer, with the input of external consultants, to provide the Audit Committee with independent and objective reports on the state of
internal control of the various business segments with the Group and the extent of compliance of the business segments with the Group’s established policies
and procedures as well as relevant statutory requirements.
Further details of the activities of the internal audit function are set out in the Statement on Internal Control on page 78.
77 2006 annual report
Statement On Internal Control
INTRODuCTION
We, the Board of Directors, are required to give you a statement in this Annual Report on the state of the internal control system in effect within the Group
to safeguard your investment and the Group’s assets. This is to be done in accordance with, inter alia, the Malaysian Code on Corporate Governance and
Paragraph 15.27(b) of the BMSB Listing Requirements in accordance with BMSB’s Statement on Internal Control: Guidance for Directors of Public Listed
Companies. We are pleased to provide the following statement outlining the nature and scope of internal controls of the Group during the year.
1. Board Responsibility
1.1 We affirm our responsibility for the Group’s systems of internal control and risk management and the responsibility to review the adequacy
and integrity of such systems.
1.2 It should be noted however, that such systems are designed to manage, not eliminate, the risk of failure to achieve business objectives and
that any system can only provide a reasonable, not absolute assurance against material misstatement or loss.
1.3 We confirm that we have had systems of internal control and risk management in place during the year necessary to identify, evaluate, monitor
the efficacy of internal controls and manage significant risks effected directly by the Chief Financial Officer reporting to the Audit Committee
and the Board in conjunction with external consultants. In the previous year an internal audit function existed for our port operation business
but in the interests of greater effectiveness this function was closed and an external consultant was engaged.
2. Risk Management Framework
2.1 The Audit Committee responsibilities include the work of monitoring the internal control system and risk management of all the businesses
under our management. In fulfilling the risk management responsibility the Audit Committee reports, on a quarterly basis, to the Board with an
overall risk profile assessment within a Risk Management Framework approved by the Board on an overall Group basis. Such a risk profile is
prepared and amended by the Chief Financial Officer in conjunction with senior management and an external consultant as appropriate for each
business segment of the Group in accordance with their individual Risk Management Framework. The Audit Committee will use the risk profile to
direct and require the Chief Financial Officer to monitor risk and implement approved measures (together with key management) to permit risk
management to be more effective and timely.
2.2 The Chief Executives responsible for each business segment will be its Risk Officer with the Chief Financial Officer of the Company as Chief
Risk Officer of the Group.
3. Internal Audit
3.1 The Group has available to it an internal audit function conducted by the internal audit function of a shareholder and by external consultants for the
Port Operation and Industrial Properties business segments and utilises the services of an external consultant to fulfil the internal audit function for other
business segments and at Company level. The foregoing and the authority levels present in each business segment provides the Board and the Audit
Committee with much of the assurances it requires regarding the adequacy and efficiency of the systems of internal controls.
3.2 The Chief Financial Officer, the Company Secretary, external consultants and advisers with key management staff further provided support to
the Audit Committee in their review and deliberations in regard to corporate regulatory compliance issues and other regulatory compliances
issues relating to the Group’s business activities which are reported to the Board on an as and when required basis.
4. Other Risk and Control Processes
4.1 We perceive that all aspects of risk management, internal audit, a formalised organisational hierarchy, formalised authority levels, health,
safety, security, human resource management, environmental matters, accepted industry standards of quality and performance and the
importance of the customer satisfaction are interlinked and should be incorporated into an overall quality and control system. This process
has been substantially completed but, as it fundamentally is an ongoing process, it continues to require improvement and adjustment to
changing business conditions.
4.2 The Chief Financial Officer reports to the Board at every Board meeting on significant changes in the business and financial domestic/foreign
environment as well as maintains continuous close interaction, in between Board meetings, with all our five (5) Board members and the
Company’s appointed Advisers and Consultants in respect of all business initiatives, strategies and new projects being undertaken at
Company and subsidiary/associate company levels.
5. Weaknesses in Internal Controls That Result in Material losses
5.1 There were no material losses incurred during the year as a result of weaknesses in internal control and the Board and management continue
to take measures to strengthen the control environment within the Group.
2006 annual report 78
Notes
79 2006 annual report
Form Of Proxy
I/We, …………………………………………………………………………………………………................................................................................……………...
of……………………………………………………………………….................................................................................………………..………………...........…..
being a *member/members of Integrax Berhad hereby appoint Mr/Ms/Madam/Miss………...................................................................................…………..
of……………………………………………………………………………………………………………………..................................................................................
or failing him/her…………………………………………………………………………………………………...................................................................................
of……………………………………………………………………………………………………………………..................................................................................
as my/our proxy to vote for me/us and on my/our behalf at the Twenty-First Annual General Meeting of the Company to be held at CempakaRaya Room,
Hotel Equatorial Kuala Lumpur, Jalan Sultan Ismail, 50250 Kuala Lumpur on Friday, 29 June 2007 at 3.00 p.m. and at any adjournment thereof.
My/Our proxy(ies) is/are to vote as indicated below:-
No. Relating to:- For Against
1. Receiving of the Audited Financial Statements and Reports (Ordinary Resolution 1)
2. Payment of final tax exempt dividend and taxable gross dividend (Ordinary Resolution 2)
3. Re-election of Harun Halim Rasip (Ordinary Resolution 3)
4. Re-election of Amin Halim Rasip (Ordinary Resolution 4)
5. To approve payment of Directors’ fees (Ordinary Resolution 5)
6. Re-appointment of Messrs KPMG as Auditors (Ordinary Resolution 6)
7. Proposed authority to allot shares pursuant to
Section 132D of the Companies Act, 1965 (Ordinary Resolution 7)
Please indicate with an “X” in the space provided, how you wish your vote to be cast. In the absence of specific directions, the proxy may vote or abstain at his/her discretion.
Dated ………….day of ………………….2007
No. of Shares : __________________________________
CDS Account No : __________________________________
………………………………..........……………
Signature/Common Seal of Shareholder(s)
Notes
1. A proxy may but does not need to be a member of the Company and Section 149(1)(b) of the Companies Act, 1965 (“the Act”) shall not apply.
2. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 17th Floor – Tower Block, Kompleks Antarabangsa, Jalan Sultan Ismail,
50250 Kuala Lumpur, Malaysia not less than 48 hours before the time appointed for holding the meeting.
3. A member shall be entitled to appoint more than one proxy to attend and vote at the same meeting. The provisions of Section 149(1)(c) of the Act shall not apply to
the Company.
4. Where a member appoints more than one proxy the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.
5. If the appointor is a corporation, this form must be executed under its common seal or under the hand of its attorney.
2006 annual report 80
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Stamp
The Company Secretary
Integrax Berhad (49317 – W)
17th Floor – Tower Block
Kompleks Antarabangsa
Jalan Sultan Ismail
50250 Kuala Lumpur
Malaysia
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