HarbourLink AR2013 Cover FA...Dato’ Mohamed Salleh Bin Bajuri Member, Independent Non-Executive...
Transcript of HarbourLink AR2013 Cover FA...Dato’ Mohamed Salleh Bin Bajuri Member, Independent Non-Executive...
annual report 2013
HA
RB
OU
R-LIN
K G
RO
UP B
ER
HA
D (592902-D)
w w w . h a r b o u r . c o m . m y
HARBOUR-LINK GROUP BERHAD (592902-D)
Wisma Harbour, Parkcity Commerce Square, Jalan Tun Ahmad Zaidi,
97000 Bintulu, Sarawak, Malaysia.
Tel: 086-318 998 Fax: 086-332 429
E-mail: [email protected]
ANNUAL REPORT 2013
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HARBOUR-LINK GROUP
Established in 2002, Harbour-Link Group Berhad consolidated all related business activities and was of�cially listed on the Main Market of Bursa Malaysia Securities Berhad on 6 January 2004. With its roots �rmly planted in the shipping and total logistics services, engineering & construction industry for the past 36 years, Harbour-Link Group has grown steadily and built multi-disciplinary industry expertise covering a comprehensive range of services to ful�ll its client's needs. Today, Harbour-Link Group's business footprint extends across the Intra-Asian region and it has successfully established itself as a reputable brand-name within the industries that it operates.
Corporate Information
Corporate Structure
Board of Directors
Group Managing Director’s Statement
Group Financial Highlights
Corporate Governance Statement
Audit Committee Report
Statement on Risk Management & Internal Control
Financial Statements
Analysis of Shareholdings
List of Properties
Notice of Annual General Meeting
Appendix I
Proxy Form
Contents BOARD OF DIRECTORS
Yong Piaw SoonGroup Managing Director
Dato’ Mohamed Salleh Bin BajuriIndependent Non-Executive Director
Tan Sri Celestine Ujang AK JilanIndependent Non-Executive Director
Wong Siong SehExecutive Director
Dato’ Toh Guan SengExecutive Director
Lee Seng ChiongExecutive Director
Hii Kwong WuiExecutive Director
Lau Sii HinExecutive Director
Sie Shwee IngIndependent Non-Executive Director
REGISTERED OFFICE
Wisma HarbourParkcity Commerce SquareJalan Tun Ahmad Zaidi97000 Bintulu, Sarawake-mail : [email protected]
REGISTRARS
Mega Corporate Services Sdn BhdLevel 15-2, Bangunan Faber Imperial CourtJalan Sultan Ismail50250 Kuala LumpurTel : (03) 2692 4271Fax : (03) 2732 5388e-mail : [email protected]
AUDIT COMMITTEE
Dato’ Mohamed Salleh Bin BajuriChairman, Independent Non-Executive Director
Tan Sri Celestine Ujang AK JilanMember, Independent Non-Executive Director
Sie Shwee IngMember, Independent Non-Executive Director
REMUNERATION COMMITTEE
Dato’ Mohamed Salleh Bin BajuriChairman, Independent Non-Executive Director
Sie Shwee IngMember, Independent Non-Executive Director
Yong Piaw SoonMember, Group Managing Director
NOMINATION COMMITTEE
Sie Shwee IngChairman, Independent Non-Executive Director
Tan Sri Celestine Ujang AK JilanMember, Independent Non-Executive Director
Dato’ Mohamed Salleh Bin BajuriMember, Independent Non-Executive Director
COMPANY SECRETARIES
Lim Seck Wah (MAICSA 0799845)M. Chandrasegaran A/L S. Murugasu (MAICSA 0781031)
AUDITORS
Ernst & YoungChartered Accountants113-115, 1st Floor, Lot 3401Parkcity Commerce SquareJalan Tun Ahmad Zaidi97000 Bintulu, Sarawak
PRINCIPAL BANKERS
Malayan Banking BerhadAmBank BerhadHong Leong Bank BerhadUnited Overseas Bank (Malaysia) BhdCIMB Bank BerhadPublic Bank BerhadBank Islam Malaysia Berhad
STOCK EXCHANGE LISTING
Main Market of the Bursa MalaysiaSecurities BerhadStock Name : HARBOURStock Code : 2062
Harbour-Link Group Berhad (592902-D) Annual Report 2013 1
01
02
03
08
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22
24
123
126
128
131
HARBOUR-LINK GROUP
Established in 2002, Harbour-Link Group Berhad consolidated all related business activities and was of�cially listed on the Main Market of Bursa Malaysia Securities Berhad on 6 January 2004. With its roots �rmly planted in the shipping and total logistics services, engineering & construction industry for the past 36 years, Harbour-Link Group has grown steadily and built multi-disciplinary industry expertise covering a comprehensive range of services to ful�ll its client's needs. Today, Harbour-Link Group's business footprint extends across the Intra-Asian region and it has successfully established itself as a reputable brand-name within the industries that it operates.
Corporate Information
Corporate Structure
Board of Directors
Group Managing Director’s Statement
Group Financial Highlights
Corporate Governance Statement
Audit Committee Report
Statement on Risk Management & Internal Control
Financial Statements
Analysis of Shareholdings
List of Properties
Notice of Annual General Meeting
Appendix I
Proxy Form
Contents BOARD OF DIRECTORS
Yong Piaw SoonGroup Managing Director
Dato’ Mohamed Salleh Bin BajuriIndependent Non-Executive Director
Tan Sri Celestine Ujang AK JilanIndependent Non-Executive Director
Wong Siong SehExecutive Director
Dato’ Toh Guan SengExecutive Director
Lee Seng ChiongExecutive Director
Hii Kwong WuiExecutive Director
Lau Sii HinExecutive Director
Sie Shwee IngIndependent Non-Executive Director
REGISTERED OFFICE
Wisma HarbourParkcity Commerce SquareJalan Tun Ahmad Zaidi97000 Bintulu, Sarawake-mail : [email protected]
REGISTRARS
Mega Corporate Services Sdn BhdLevel 15-2, Bangunan Faber Imperial CourtJalan Sultan Ismail50250 Kuala LumpurTel : (03) 2692 4271Fax : (03) 2732 5388e-mail : [email protected]
AUDIT COMMITTEE
Dato’ Mohamed Salleh Bin BajuriChairman, Independent Non-Executive Director
Tan Sri Celestine Ujang AK JilanMember, Independent Non-Executive Director
Sie Shwee IngMember, Independent Non-Executive Director
REMUNERATION COMMITTEE
Dato’ Mohamed Salleh Bin BajuriChairman, Independent Non-Executive Director
Sie Shwee IngMember, Independent Non-Executive Director
Yong Piaw SoonMember, Group Managing Director
NOMINATION COMMITTEE
Sie Shwee IngChairman, Independent Non-Executive Director
Tan Sri Celestine Ujang AK JilanMember, Independent Non-Executive Director
Dato’ Mohamed Salleh Bin BajuriMember, Independent Non-Executive Director
COMPANY SECRETARIES
Lim Seck Wah (MAICSA 0799845)M. Chandrasegaran A/L S. Murugasu (MAICSA 0781031)
AUDITORS
Ernst & YoungChartered Accountants113-115, 1st Floor, Lot 3401Parkcity Commerce SquareJalan Tun Ahmad Zaidi97000 Bintulu, Sarawak
PRINCIPAL BANKERS
Malayan Banking BerhadAmBank BerhadHong Leong Bank BerhadUnited Overseas Bank (Malaysia) BhdCIMB Bank BerhadPublic Bank BerhadBank Islam Malaysia Berhad
STOCK EXCHANGE LISTING
Main Market of the Bursa MalaysiaSecurities BerhadStock Name : HARBOURStock Code : 2062
Corporate Information
Harbour-Link Group Berhad (592902-D)Annual Report 20132
HARBOUR IVORY SDN BHD(738249-M)
HARBOUR-LINKNAVIGATIONSDN BHD(678560-X)
HARBOUR HORNBILL SDN BHD(733539-X)
HARBOUR-LINK (M)SDN BHD(222555-H)
HLG PETROLEUMSDN BHD(722821-K)
EASTERN SOLDARENGINEERING & CONSTRUCTIONSDN BHD(153971-K)
HLG RESOURCES SDN BHD(720931-A)
HARBOUR AGENCIES(SARAWAK) SDN BHD(461102-P)
ECL (MALAYSIA) SDN BHD (151779-W)
HARBOUR-LINKLINES SDN BHD(738254-T)
ARCADIA PROPERTIES SDN BHD(874993-P)
(679380-P) (682237-W)
(681960-T) (738252-M)
(738253-H)52% (733542-X)
(326947-H) (200610417 E)
(Co. 2001E/2010)
(487253-X)(409418-A)
25% (420982-H)
(759230-A)95% (739564-H)70% (739560-D)60% (739562-P)60% (739565-T)
60% (917772-U)
(533994-D)
(311969-P) (311131-U)
(311075-X) (237806-K)
(206893-W) (795956-H)
(636328-U)
(291744-P) (354145-A)
(311383-D) (446351-K)
(410555-M) (660675-K)
(LL07749)50% (524951-W)49% (185955-A)
51%
80%
49% 85% (919962-D)
80%
1. YONG PIAW SOON
2. DATO’ MOHAMED SALEH BIN BAJURI
3. TAN SRI CELESTINE UJANG AK JILAN`
4. WONG SIONG SEH
5. DATO’ TOH GUAN SENG
6. LEE SENG CHIONG
7. HII KWONG WUI
8. LAU SII HIN
9. SIE SHWEE ING
80%
1235
678
9
4
Corporate Structure
HARBOUR IVORY SDN BHD(738249-M)
HARBOUR-LINKNAVIGATIONSDN BHD(678560-X)
HARBOUR HORNBILL SDN BHD(733539-X)
HARBOUR-LINK (M)SDN BHD(222555-H)
HLG PETROLEUMSDN BHD(722821-K)
EASTERN SOLDARENGINEERING & CONSTRUCTIONSDN BHD(153971-K)
HLG RESOURCES SDN BHD(720931-A)
HARBOUR AGENCIES(SARAWAK) SDN BHD(461102-P)
ECL (MALAYSIA) SDN BHD (151779-W)
HARBOUR-LINKLINES SDN BHD(738254-T)
ARCADIA PROPERTIES SDN BHD(874993-P)
(679380-P) (682237-W)
(681960-T) (738252-M)
(738253-H)52% (733542-X)
(326947-H) (200610417 E)
(Co. 2001E/2010)
(487253-X)(409418-A)
25% (420982-H)
(759230-A)95% (739564-H)70% (739560-D)60% (739562-P)60% (739565-T)
60% (917772-U)
(533994-D)
(311969-P) (311131-U)
(311075-X) (237806-K)
(206893-W) (795956-H)
(636328-U)
(291744-P) (354145-A)
(311383-D) (446351-K)
(410555-M) (660675-K)
(LL07749)50% (524951-W)49% (185955-A)
51%
80%
49% 85% (919962-D)
80%
1. YONG PIAW SOON
2. DATO’ MOHAMED SALEH BIN BAJURI
3. TAN SRI CELESTINE UJANG AK JILAN`
4. WONG SIONG SEH
5. DATO’ TOH GUAN SENG
6. LEE SENG CHIONG
7. HII KWONG WUI
8. LAU SII HIN
9. SIE SHWEE ING
80%
1235
678
9
4
Board of Directors
Harbour-Link Group Berhad (592902-D) Annual Report 2013 3
Harbour-Link Group Berhad (592902-D)Annual Report 20134
YONG PIAW SOON, 61Group Managing Director/Malaysian
He was appointed to the Board of Harbour-Link Group on 27 December 2003. On 12 February 2004, he was appointed to the Remuneration Committee of the Company. He is a founder member of Harbour-Link Group and his active involvement in the shipping and freight forwarding industry in East Malaysia since the early 1970s has distinguished him as one of the industry’s pioneers. He started his business in the early 1970s in timber export and other logging related activities. In 1975, he ventured into the forwarding and shipping business. His astute business instincts and in-depth knowledge of the shipping and forwarding industry has positioned him well to spearhead and lead the business expansion and development of Harbour-Link Group throughout the years.
Under his leadership, Harbour- Link Group has grown to become a major player in the shipping and forwarding industry in the region. He has succeeded in elevating Harbour-Link Group to a higher level of business achievement and diversi�ed into Engineering, Shipping & Marine Services, Freight Forwarding & Logistic services, Equipment Sales & Rental and Property Development & Construction. He has laid a good foundation for the future of the Harbour-Link Group of Companies. He sits on the Board of several subsidi-ary companies of Harbour-Link Group and Herdsen Corporation Sdn.Bhd. & its subsidiaries. He does not hold any directorships in other public companies.1
DATO’ MOHAMED SALLEH BIN BAJURI, 62Independent Non-Executive Director/Malaysian
He was appointed to the Board of Harbour-Link Group Berhad on 27 December 2003. On 12 February 2004, he was appointed to the Nomination Committee and Remuneration Committee of the Company. He was appointed to the Audit Committee on 25 August 2008. Dato’ Mohamed Salleh is a Chartered Accountant by profession. He started his career in Malaysia in 1978 as an auditor with Peat Marwick & Co. In 1979, he joined Mayban Finance Berhad as Manager and was promoted in 1982 to General Manager, a position which he held until 1987, following his transfer to Malayan Banking Berhad. He left Maybank in 1992 to join JB Securities Sdn Bhd as Managing Director. In 1996, he was appointed as Group Executive Director of CRSC Holdings Berhad, a position he held until June 2009. He is now Executive Vice Chairman of the company.
His directorship in other public listed companies includes Asian Pac Holdings Berhad, Eden Inc. Berhad, SAM Engineering & Equipment (M) Berhad and Milux Corporation Berhad. 2
TAN SRI CELESTINE UJANG AK JILAN, 66Independent Non-Executive Director/Malaysian
He was appointed to the Board of Harbour-Link Group Berhad on 8 September 2008. He was appointed to the Audit Committee and Nomination Committee of the Company on the same date. Tan Sri Celestine who obtained his Senior Cambridge Certi�cate (Grade I) in 1965 served as an Administrative O�cer with the Sarawak State Government from 1966 to 1973. He also served as a full Minister in the State Cabinet for 20 years from 1974 till 1981 and from 1987 till 2001 and as Speaker of State Legislative Assembly for 7 years, from 1981 till 1987.
He is currently the Deputy Chairman of Bintulu Development Authority, a post he has held since October 2003. He is a Member of Curtin University of Technology, Sarawak Campus Council, Deputy President of Dayak Chamber of Commerce and Industry and a Member of the Board of Trustees for the Dayak Cultural Foundation. He was conferred the award Panglima Negara Bintang Sarawak (PNBS) which carries the title “Dato Sri” in 1982. Then on 1st June 2013, he was conferred the award Panglima Setia Mahkota (PSM) which carries the title “Tan Sri” by Yang di-Pertuan Agong Tuanku Abdul Halim Mu’adzam Shah.
He is currently the Chairman of Permodalan Dayak Berhad.3WONG SIONG SEH, 51Executive Director/Malaysian
He was appointed to the Board on 27 December 2003 and, is a founder member of Harbour-Link Group. He started his career in early 1980s working as an executive in a prominent shipping company in Sibu. His involvement in the shipping industry has earned him vast experience and exposure and, a sound understanding of the industry which includes ship management, freighting, chartering services and other related services. In 1983, he joined Antah Transact Sdn Bhd as an Operations Manager. He was attached to the company for 9 years where he was involved in providing logistic services in the oil and gas industry. He left Antah Transact Sdn Bhd in 1992 to join HLM Group and later was appointed as Director on 1 March 1994.
He is in charge of the Harbour-Link Group’s shipping and container liner service operations, management and business development. He also sits on the Board of several subsidiary companies of the Group. He does not hold any directorships in other public companies. 4
Board of Directorscont’d
Harbour-Link Group Berhad (592902-D) Annual Report 2013 5
YONG PIAW SOON, 61Group Managing Director/Malaysian
He was appointed to the Board of Harbour-Link Group on 27 December 2003. On 12 February 2004, he was appointed to the Remuneration Committee of the Company. He is a founder member of Harbour-Link Group and his active involvement in the shipping and freight forwarding industry in East Malaysia since the early 1970s has distinguished him as one of the industry’s pioneers. He started his business in the early 1970s in timber export and other logging related activities. In 1975, he ventured into the forwarding and shipping business. His astute business instincts and in-depth knowledge of the shipping and forwarding industry has positioned him well to spearhead and lead the business expansion and development of Harbour-Link Group throughout the years.
Under his leadership, Harbour- Link Group has grown to become a major player in the shipping and forwarding industry in the region. He has succeeded in elevating Harbour-Link Group to a higher level of business achievement and diversi�ed into Engineering, Shipping & Marine Services, Freight Forwarding & Logistic services, Equipment Sales & Rental and Property Development & Construction. He has laid a good foundation for the future of the Harbour-Link Group of Companies. He sits on the Board of several subsidi-ary companies of Harbour-Link Group and Herdsen Corporation Sdn.Bhd. & its subsidiaries. He does not hold any directorships in other public companies.1
DATO’ MOHAMED SALLEH BIN BAJURI, 62Independent Non-Executive Director/Malaysian
He was appointed to the Board of Harbour-Link Group Berhad on 27 December 2003. On 12 February 2004, he was appointed to the Nomination Committee and Remuneration Committee of the Company. He was appointed to the Audit Committee on 25 August 2008. Dato’ Mohamed Salleh is a Chartered Accountant by profession. He started his career in Malaysia in 1978 as an auditor with Peat Marwick & Co. In 1979, he joined Mayban Finance Berhad as Manager and was promoted in 1982 to General Manager, a position which he held until 1987, following his transfer to Malayan Banking Berhad. He left Maybank in 1992 to join JB Securities Sdn Bhd as Managing Director. In 1996, he was appointed as Group Executive Director of CRSC Holdings Berhad, a position he held until June 2009. He is now Executive Vice Chairman of the company.
His directorship in other public listed companies includes Asian Pac Holdings Berhad, Eden Inc. Berhad, SAM Engineering & Equipment (M) Berhad and Milux Corporation Berhad. 2
TAN SRI CELESTINE UJANG AK JILAN, 66Independent Non-Executive Director/Malaysian
He was appointed to the Board of Harbour-Link Group Berhad on 8 September 2008. He was appointed to the Audit Committee and Nomination Committee of the Company on the same date. Tan Sri Celestine who obtained his Senior Cambridge Certi�cate (Grade I) in 1965 served as an Administrative O�cer with the Sarawak State Government from 1966 to 1973. He also served as a full Minister in the State Cabinet for 20 years from 1974 till 1981 and from 1987 till 2001 and as Speaker of State Legislative Assembly for 7 years, from 1981 till 1987.
He is currently the Deputy Chairman of Bintulu Development Authority, a post he has held since October 2003. He is a Member of Curtin University of Technology, Sarawak Campus Council, Deputy President of Dayak Chamber of Commerce and Industry and a Member of the Board of Trustees for the Dayak Cultural Foundation. He was conferred the award Panglima Negara Bintang Sarawak (PNBS) which carries the title “Dato Sri” in 1982. Then on 1st June 2013, he was conferred the award Panglima Setia Mahkota (PSM) which carries the title “Tan Sri” by Yang di-Pertuan Agong Tuanku Abdul Halim Mu’adzam Shah.
He is currently the Chairman of Permodalan Dayak Berhad.3WONG SIONG SEH, 51Executive Director/Malaysian
He was appointed to the Board on 27 December 2003 and, is a founder member of Harbour-Link Group. He started his career in early 1980s working as an executive in a prominent shipping company in Sibu. His involvement in the shipping industry has earned him vast experience and exposure and, a sound understanding of the industry which includes ship management, freighting, chartering services and other related services. In 1983, he joined Antah Transact Sdn Bhd as an Operations Manager. He was attached to the company for 9 years where he was involved in providing logistic services in the oil and gas industry. He left Antah Transact Sdn Bhd in 1992 to join HLM Group and later was appointed as Director on 1 March 1994.
He is in charge of the Harbour-Link Group’s shipping and container liner service operations, management and business development. He also sits on the Board of several subsidiary companies of the Group. He does not hold any directorships in other public companies. 4
Board of Directorscont’d
Harbour-Link Group Berhad (592902-D)Annual Report 20136
DATO’ TOH GUAN SENG, 58Executive Director/Malaysian
He was appointed to the Board of Harbour-Link Group on 27 December 2003 and, is a founder member of Eastern Soldar Engineering & Construction Sdn Bhd (”ESEC”). He has more than 30years’ experience in the oil and gas industry. He started his career as a Unit Group Leader with Jurong Engineering Pte. Ltd (Singapore) and later ventured into business by setting up his trading �rm dealing with LPG safety equipments. In 1986, he founded ESEC, and over the period of 26years, under his able leadership, ESEC Group has managed to penetrate into the oil and gas and petrochemical industries resulting in the gradual and steady growth of ESEC.
He is currently the President of the Negeri Sembilan Foundry & Engineering Industries Association, Deputy President of Federation of Malaysia Foundry & Engineering Industries Association (FOMFEIA) and committee members of Negeri Sembilan Chinese Chamber of Commerce and Industry (NSCCCI). He was conferred the “Datoship-DIMP” by Sultan Pahang on 14 Dec 2012.
He does not hold any directorships in other public companies.5
HII KWONG WUI, 51Executive Director/Malaysian
He was appointed to the Board on 27 December 2003. He started his career in Pan Sarawak Co. Sdn Bhd in 1981 as a Shipping Executive. In 1994, he joined HLM Group and was appointed as the Regional Director in charge of Sibu and Kuching regions in 1996. He has more than 30 years’ experience in the shipping industry. He is responsible for the daily operations, management and business development of both the Sibu and Kuching regions. He also sits on the Board of several subsidiary companies of Harbour-Link Group.
He does not hold any directorships in other public companies.7
LEE SENG CHIONG, 54Executive Director/Malaysian
He was appointed to the Board on 27 December 2003. He started his career in 1981 as a Shipping Executive where he gained experience in shipping operations, marketing and management. He joined HLM Group and was appointed as Regional Director in 1994. Presently is in charge of the Bintulu region shipping operations, management and business development. He also sits on the Board of several subsidiary companies of Harbour-Link Group.
He does not hold any directorships in other public companies. 6
LAU SII HIN, 62Executive Director/Malaysian
He was appointed to the Board on 27 December 2003. In the early 1980s, he joined Sri Minah Enterprise Sdn Bhd as a Logging Manager. He joined HLM Group in 1994 and was appointed as Regional Director the same year. He has more than 30 years’ experience in the transportation, inventory and mechanical industries. He is a key personnel who oversees the transport department which includes workshop repair, maintenance and store procurement as well as the day-to-day transport operations. He also sits on the Board of several subsidiary companies of Harbour-Link Group.
He does not hold any directorships in other public companies.8SIE SHWEE ING, 45Independent Non-Executive Director/Malaysian
Sie Shwee Ing, 45, was appointed as an Independent Non-Executive Director of Harbour-Link Group Berhad on 27 February 2006. He graduated from Swinburne University of Technology, Melbourne with a degree in civil engineering. He is a registered member with the Board of Engineers, Malaysia, as well as the Institution of Engineers, Australia.
He is a member of Audit Committee and the Remuneration Committee (appointed on 27 August 2008) and is also the Chairman of the Nomination Committee (appointed on 27 August 2008).
Besides being active in the corporate world, he also renders his expertise and support to community activities and industry associations by sitting in as a committee member of Pertubuhan Kontraktor Pembangunan Dan Kejuruteraan Sivil Sarawak, and has held the position of Honorary Treasurer for two terms (2007-2008, 2011-2012).
He does not hold any directorships in other public companies. 9
Board of Directorscont’d
Harbour-Link Group Berhad (592902-D) Annual Report 2013 7
DATO’ TOH GUAN SENG, 58Executive Director/Malaysian
He was appointed to the Board of Harbour-Link Group on 27 December 2003 and, is a founder member of Eastern Soldar Engineering & Construction Sdn Bhd (”ESEC”). He has more than 30years’ experience in the oil and gas industry. He started his career as a Unit Group Leader with Jurong Engineering Pte. Ltd (Singapore) and later ventured into business by setting up his trading �rm dealing with LPG safety equipments. In 1986, he founded ESEC, and over the period of 26years, under his able leadership, ESEC Group has managed to penetrate into the oil and gas and petrochemical industries resulting in the gradual and steady growth of ESEC.
He is currently the President of the Negeri Sembilan Foundry & Engineering Industries Association, Deputy President of Federation of Malaysia Foundry & Engineering Industries Association (FOMFEIA) and committee members of Negeri Sembilan Chinese Chamber of Commerce and Industry (NSCCCI). He was conferred the “Datoship-DIMP” by Sultan Pahang on 14 Dec 2012.
He does not hold any directorships in other public companies.5
HII KWONG WUI, 51Executive Director/Malaysian
He was appointed to the Board on 27 December 2003. He started his career in Pan Sarawak Co. Sdn Bhd in 1981 as a Shipping Executive. In 1994, he joined HLM Group and was appointed as the Regional Director in charge of Sibu and Kuching regions in 1996. He has more than 30 years’ experience in the shipping industry. He is responsible for the daily operations, management and business development of both the Sibu and Kuching regions. He also sits on the Board of several subsidiary companies of Harbour-Link Group.
He does not hold any directorships in other public companies.7
LEE SENG CHIONG, 54Executive Director/Malaysian
He was appointed to the Board on 27 December 2003. He started his career in 1981 as a Shipping Executive where he gained experience in shipping operations, marketing and management. He joined HLM Group and was appointed as Regional Director in 1994. Presently is in charge of the Bintulu region shipping operations, management and business development. He also sits on the Board of several subsidiary companies of Harbour-Link Group.
He does not hold any directorships in other public companies. 6
LAU SII HIN, 62Executive Director/Malaysian
He was appointed to the Board on 27 December 2003. In the early 1980s, he joined Sri Minah Enterprise Sdn Bhd as a Logging Manager. He joined HLM Group in 1994 and was appointed as Regional Director the same year. He has more than 30 years’ experience in the transportation, inventory and mechanical industries. He is a key personnel who oversees the transport department which includes workshop repair, maintenance and store procurement as well as the day-to-day transport operations. He also sits on the Board of several subsidiary companies of Harbour-Link Group.
He does not hold any directorships in other public companies.8SIE SHWEE ING, 45Independent Non-Executive Director/Malaysian
Sie Shwee Ing, 45, was appointed as an Independent Non-Executive Director of Harbour-Link Group Berhad on 27 February 2006. He graduated from Swinburne University of Technology, Melbourne with a degree in civil engineering. He is a registered member with the Board of Engineers, Malaysia, as well as the Institution of Engineers, Australia.
He is a member of Audit Committee and the Remuneration Committee (appointed on 27 August 2008) and is also the Chairman of the Nomination Committee (appointed on 27 August 2008).
Besides being active in the corporate world, he also renders his expertise and support to community activities and industry associations by sitting in as a committee member of Pertubuhan Kontraktor Pembangunan Dan Kejuruteraan Sivil Sarawak, and has held the position of Honorary Treasurer for two terms (2007-2008, 2011-2012).
He does not hold any directorships in other public companies. 9
Board of Directorscont’d
Harbour-Link Group Berhad (592902-D)Annual Report 20138
Group ManagingDirector’s Statement
On behalf of the Board of Directors of Harbour-Link Group Berhad, it gives me great pleasure to present the Annual Report and Financial Statements of the Group and the Company for the �nancial year ended 30 June 2013.
Dear valued shareholders,
Harbour-Link Group Berhad (592902-D) Annual Report 2013 9
Group ManagingDirector’s Statement
On behalf of the Board of Directors of Harbour-Link Group Berhad, it gives me great pleasure to present the Annual Report and Financial Statements of the Group and the Company for the �nancial year ended 30 June 2013.
Dear valued shareholders,
Group Managing Director’s Statementcont’d
Harbour-Link Group has delivered another year of sustainable results with a turnover of RM422.7 million and an operation profit of RM49.8 million. Despite a contraction of 10.6% in revenue compared to the last financial year, the Group managed to chalk up RM49.8 million in profit from operations, which is the group’s best performance thus far.
The decrease in revenue is mainly attributable to the completion of major equipment supply projects. This was however partly compensated by the substantial increase in the logistics and equipment rental businesses and some marginal increase in the shipping business as a result of increases in cargo volumes.
Gross profit margin has steadily improved over the years, increasing to 16.43% this year against 12.3% last year, as we continue to reap the rewards from our ongoing efforts to enhance operational efficiencies and optimize equipment utilization. Stable economic conditions along with stable fuel prices over the last period have also enabled the Group to execute its plans more effectively.
Profit before tax for the financial year ending 30 June 2013 was RM17.6 million compared to the RM35.2 million achieved in the preceding year. The lower profit before taxation was mainly due to impairment of goodwill of RM25.555 million. Profit attributable to shareholders was RM5.093 million, a reduction from RM27.2 million of the previous period after the effect of the impairment on goodwill. Although the charge on goodwill has affected FY2013 financial performance, there will be no impact on the Group’s cash flows.
DiviDenD
It continues to be the goal of the Group to observe a sustainable dividend payments policy that balances its need to ensure cash for reinvestment while delivering consistent returns to shareholders.
On behalf of the Board of Directors, I am pleased to propose a first and final single tier dividend of 2.5 sen per ordinary share for the financial year ended 30 June 2013.
OutlOOk
We believe that the prospects for the Malaysian logistics industry is bright, supported by continued economic growth and strong intra-Asian trade. Growth in cargo volumes is expected to continue taking into consideration the resilience of the country’s external trade thus far and this is a positive indicator for the industry especially for import and export forwarding, air and ocean freight related businesses.
Looking forward, the coming period is expected to be favorable as we expect that government measures such as the Government Transformation Programme (GTP) and the Economic Transformation Programme (ETP), will continue to cultivate a conducive business environment for growth of the business activities of the Group.
The Group will continue to benefit from the economic activities generated by the inflow of foreign direct investments into SCORE (Sarawak Corridor of Renewable Energy) and the Sabah Development Corridor. Initiatives by the government to boost the country’s petroleum sector especially with projects focused on developing the global oil trading and storage business such as the Refinery and Petrochemical Integrated Development (RAPID) in Pengerang will also support future business growth of the Group.
We will continue to tap into the synergies of the group’s integrated businesses to capitalize on our strengths and nurture our capabilities for future opportunities. Maintaining a strong balance sheet has been and continues to be a priority for the Group to ensure we are well positioned to face future challenges and take advantage of new opportunities.
We are focused on growing the value of the services and products that we sell and to do this we will continue our ongoing efforts to enhance the capabilities of our people. In an increasingly competitive employment market, we need to work harder and smarter to come up with effective strategies to attract, retain and develop talent. Moving forward, we are mindful that it is ultimately our people that are our key competitive advantage and our human capital is the long term driver for sustainable growth and value creation for all stakeholders.
AcknOwleDgements
On behalf of the Board, I wish to express my heartfelt appreciation to all our employees across the Group for their invaluable contributions, dedication and commitment in helping us to achieve the record-breaking results of the past year. To the management team, I thank you for your relentless efforts in striving for the continuous improvement of our services and the growth of the Group. My sincere thanks and appreciation to our customers, vendors, business associates and the various government and statutory bodies for their support and facilitation of the Group in its operations. I also thank our shareholders for their continued confidence in us.
Last but not least my commendations and appreciation to my fellow board members who have continued to fulfill their obligations with distinction.
I look forward to working with you to achieve even greater success in the coming years.
YOng PiAw sOOnGroup Managing Director
Harbour-Link Group Berhad (592902-D)Annual Report 201310
0
100000
200000
300000
400000
500000
0
5000
10000
15000
20000
25000
30000
422,
708
472,
973
357,
060
308,
706
327,
564
345,
491
287,
868
217,
536
RevenueRM’000
2006 2007 2008 2009 2010 2011 2012 2013
5,09
3
27,1
92
13,2
01
19,2
01
26,2
25
26,2
93
5,05
2
3,96
3
Prof it Attributable toShareholders of ParentRM’000
2006 2007 2008 2009 2010 2011 2012 2013
49,7
51
41,3
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26,3
6531,1
54 35,
628
40,5
37
13,0
63
7,9
78
Prof it from OperationRM’000
2006 2007 2008 2009 2010 2011 2012 2013
Group Financial Highlights
2006Rm’000
2007Rm’000
2008Rm’000
2009Rm’000
2010Rm’000
2011Rm’000
2012Rm’000
2013Rm’000
Revenue 217,536 287,868 345,491 327,564 308,706 357,060 472,973 422,708
Profit from operation 7,978 13,063 40,537 35,628 31,154 26,365 41,350 49,751
Profit before taxation 4,378 7,943 36,099 32,310 26,750 20,171 35,230 17,645
Profit attributable to shareholders of parent 3,963 5,052 26,293 26,225 19,201 13,201 27,192 5,093
Total assets 238,306 307,009 316,408 355,574 387,587 371,069 447,868 444,109
Total liabilities 69,703 130,493 115,011 131,367 145,382 185,037 237,394 227,407
Per share Data (sen)
Net assets 92.60 95.40 108.90 122.20 130.56 102.22 115.64 119.07
Earning per share 2.18 2.78 14.45 14.41 10.55 7.25 14.94 2.80
Financial Ratios
Gross profit margin (%) 8.2 8.4 15.5 16.1 14.4 12.0 12.28 16.43
Return on shareholders’ funds (%) 2.4 2.9 13.3 11.8 8.08 7.10 12.92 2.35
Trade receivables’ turnover (days) 85 81 80 71 68 65 80 91
Debt to equity 0.2 0.5 0.3 0.3 0.4 0.5 0.4 0.4
Interest coverage (times) 2.4 2.6 8.4 8.6 6.5 4.2 5.0 2.3
Harbour-Link Group Berhad (592902-D) Annual Report 2013 11
Corporate Governance Statement
The Board of Directors (“the Board”) of Harbour-Link Group Berhad (“Harbour” or “the Company”) recognises and subscribes the principles and recommendations set out in the Malaysian Code on Corporate Governance 2012 (“the Code”) as a key factor towards achieving an optimal governance framework and process in managing the business and operational activities of the Company and its subsidiaries (“the Group”).
The implementation of the recommendations as set out in Code is an ongoing process, thus, the Company strives to ensure that the areas of the Code which have yet to be implemented are given due attention.
The Statement below sets out the manner in which the Group has applied the principles of the Code and the extent of compliance with recommendations advocated therein.
PRinciPle 1 - estAblish cleAR ROles AnD ResPOnsibilities OF the bOARD AnD mAnAgement
The Board recognises the key role it plays in charting the strategic direction of the Company and has assumed the following principal responsibilities in discharging its fiduciary and leadership functions:
• reviewing and adopting a strategic plan for the Company, addressing the sustainability of the Group’s business; • overseeing the conduct of the Group’s business and evaluating whether or not its businesses are being properly managed; • identify principal business risks faced by the Group and ensuring the implementation of appropriate internal controls and
mitigating measures to address such risks; • ensuring that all candidates appointed to senior management positions are of sufficient calibre, including the orderly
succession of senior management personnel;• overseeing the development and implementation of a shareholder communications policy, including an investor relations
programme for the Company; and • reviewing the adequacy and integrity of the Group’s internal control and management information systems.
To assist in the discharge of its stewardship role, the Board has established Board Committees, namely the Audit Committee, Nomination Committee and Remuneration Committee to examine specific issues within their respective terms of reference as approved by the Board and report to the Board with their recommendations. The ultimate responsibility for decision making, however, lies with the Board.
board charter
The Directors and Management of the Company are aware of their respective roles and responsibilities, including the limits of authority accorded. The Board recognizes the need to formalize the Board Charter to provide clarity and guidance to Directors and Management on their respective role and to include a formal schedule of matters reserved for deliberation and decision. The Board will look into the matter to formalize the Board Charter.
code of conduct and whistle-blower Policy
Though the Company has yet to formalize the Code of Conduct and Whistle-Blower policy, the Board has always conducted themselves in an ethical manner while executing their duties and function.
strategies promoting sustainability
The Board regularly review the strategic direction of the Company and the progress of the Company’s operations, taking into account changes in the business and political environment and risk factors such as level of competition.
supply of, and Access to, information
The Board is supplied with relevant information and reports on financial, operational, corporate, regulatory, business development and audit matters, by way of Board reports or upon specific requests, for decisions to be made on an informed basis and effective discharge of Board’s responsibilities.
Harbour-Link Group Berhad (592902-D)Annual Report 201312
Corporate Governance Statementcont’d
PRinciPle 1 - estAblish cleAR ROles AnD ResPOnsibilities OF the bOARD AnD mAnAgement cont’d
supply of, and Access to, information cont’d
Good practices have been observed for timely dissemination of meeting agenda, including the relevant Board and Board Committee papers to all Directors prior to the Board and Board Committee meetings to facilitate informed Board decision and to deal with matters arising from such meetings. The Executive Directors and/or other relevant Board members will be furnished with comprehensive explanation on pertinent issues and recommendations by Management. The issues are then deliberated and discussed thoroughly by the Board prior to decision making.
In addition, the Board members are updated on the Company’s activities and its operations on a regular basis. All Directors have access to all information of the Company on a timely basis to enable them to discharge their duties and responsibilities.
The Directors is supported by the Company Secretary in discharging their duties and functions. The Company Secretary ensures that the Board is regularly updated on relevant regulatory requirements, codes or new statutes issue from time to time. The Company Secretary also ensures that the proceedings and resolutions reached at each Board meeting are recorded in the Minutes Book kept at the registered office.
PRinciPle 2 - stRengthen cOmPOsitiOn OF the bOARD
The Board consists of nine (9) members, comprising of the Group Managing Director, five (5) Executive Directors and three (3) Independent non-executive directors. This composition fulfills the requirements as set out under the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa”), which stipulate that at least two (2) Directors or one-third of the Board, whichever is higher, must be Independent. The profile of each Director is set out in this Annual Report. The Directors, with their differing backgrounds and specializations, collectively bring with them a wide range of experience and expertise in areas such as finance; accounting and audit; corporate affairs; and marketing and operations.
nomination committee – selection and Assessment of Directors
A Nomination Committee has been established, with specific terms of reference, by the Board, comprising exclusively Independent Non-Executive Directors as follows:
chairman Mr. Sie Shwee Ing Independent Non-Executive Director
members Dato’ Mohamed Salleh Bin Bajuri Independent Non-Executive Director Tan Sri Celestine Ujang Ak Jilan Independent Non-Executive Director
The Nomination Committee is primarily responsible for recommending suitable appointments to the Board, taking into consideration the Board structure, size, composition and the required mix of expertise and experience which the Director should bring to the Board. It assesses the effectiveness of the Board as a whole, the Board Committees and the contribution of each Director, including Non-Executive Directors.
The final decision on the appointment of a candidate recommended by Nomination Committee rests with the whole Board. The Board is entitled to the services of the Company Secretary who would ensure that all appointments are properly made upon obtaining all necessary information from the Directors.
During the financial year, the Nomination Committee met once, attended by all members, to assess the balance composition of Board members based on merits, Directors’ contribution and Board effectiveness. The Company has no policy on gender diversity or target set but believes in merits and commitment of its Board members. The Nomination Committee assesses the Board members on an objective basis for both genders.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 13
Corporate Governance Statementcont’d
PRinciPle 2 - stRengthen cOmPOsitiOn OF the bOARD cont’d
Directors’ Remuneration
A Remuneration Committee has been established by the Board, comprising a majority of Non-Executive Directors as follows:
chairman Dato’ Mohamed Salleh Bin Bajuri Independent Non-Executive Director
members Mr. Yong Piaw Soon Group Managing Director Mr. Sie Shwee Ing Independent Non-Executive Director
The Remuneration Committee has been entrusted by the Board to determine that the levels of remuneration are sufficient to attract and retain Directors of quality required to manage the business of the Group. The Remuneration Committee is entrusted under its terms of reference to assist the Board, amongst others, to recommend to the Board the remuneration of the Executive Directors. In the case of Non-Executive Directors, the level of remuneration shall reflect the experience and level of responsibilities undertaken by the Non-Executive Directors concerned. In all instances, the deliberations are conducted, with the Directors concerned abstaining from discussions on their individual remuneration. During the financial year under review, the Committee met once attended by all members.
Details of Directors’ remuneration for the financial year ended 30 June 2013 are as follows:
Remuneration (Rm)
Executive Directors 2,057,435
Non-Executive Directors 158,080
total 2,215,515
The remuneration paid to the Directors, analysed in the following bands, is as below:-
Range of Remuneration (Rm) executive non-executive
50,000 and below - 1
50,001 – 100,000 - 2
200,001 – 300,000 1 -
300,001 – 400,000 3 -
400,001 – 500,000 1 -
500,001 – 600,000 - -
600,001 – 700,000 1 -
There is no service contract made between any Director and the Company or its subsidiary companies.
PRinciPle 3 – ReinFORce inDePenDence OF the bOARD
The Code recommends that the Chairman of the Board is a Non-Executive Director or the Board must comprise a majority of independent directors if the Chairman is not an independent director. As the Company has not appointed a Chairman, the Board meetings were chaired by the Group Managing Director.
The Group Managing Director is responsible for ensuring the adequacy and effectiveness of the Board’s governance process and acts as a facilitator at Board meetings to ensure all Directors participate and deliberate at all Board meetings and that no Board member dominates discussion. As the Group Managing Director, supported by fellow Executive Directors, he implements the Group’s strategies, policies and decision adopted by the Board and oversees the operations and business development of the Group.
Harbour-Link Group Berhad (592902-D)Annual Report 201314
Corporate Governance Statementcont’d
PRinciPle 3 – ReinFORce inDePenDence OF the bOARD cont’d
The Independent Non-Executive Directors bring objective and independent views, advice and judgment on interests, not only of the Group, but also of shareholders and stakeholders. Independent Non-Executive Directors are essential in protecting the interests of shareholders and contribute significantly to the Company’s decision by giving rationale and fair view and to decide impartially.
The Board recognizes the importance of establishing criteria on independence to be used in the annual assessment of its Independent Non-Executive Directors. Although the definition on independence according to the Listing Requirements of Bursa is used, the Board review and assess the independence of its independent directors annually based on their conduct, argue on the matters objectively and make decision rationally and other independence criteria to, inter-alia, include the nine (9)-year tenure for Independent Non-Executive Directors.
PRinciPle 4 – FOsteR cOmmitment OF DiRectORs
The Board ordinarily meets at least four (4) times a year. Additional meetings are convened when urgent and important decisions need to be made between scheduled meetings. Board and Board Committee papers which are prepared by the Management, provide the relevant facts and analysis to facilitate the Board’s decision making. The meeting agenda, the relevant reports and Board papers are furnished to Directors and Board Committee members well before the meeting to allow the Directors sufficient time to peruse for effective discussion and decision making during meetings. At the quarterly Board meetings, the Board reviews the business performance of the Group and discuss major operational and financial issues. The Chairman of the Audit Committee highlights to the Board at each Board meeting of any salient matters noted by the Audit Committee that may require the Board’s attention or direction.
board meetings
There were four (4) Board meetings held during the financial year ended 30 June 2013, with details of Directors’ attendance set out below:
meetings Attended (out of 4 held)
Mr. Yong Piaw Soon Group Managing Director 4/4
Tan Sri Celestine Ujang Ak Jilan Independent Non-Executive Director 4/4
Dato’ Mohamed Salleh Bin Bajuri Independent Non-Executive Director 4/4
Mr. Wong Siong Seh Executive Director 4/4
Dato’ Toh Guan Seng Executive Director 4/4
Mr. Lee Seng Chiong Executive Director 4/4
Mr. Hii Kwong Wui Executive Director 4/4
Mr. Lau Sii Hin Executive Director 3/4
Mr. Sie Shwee Ing Independent Non-Executive Director 4/4
It is the practice of the Company for Directors to devote sufficient time and efforts to carry out their responsibilities. In addition, the Board recognizes the need to formalize a policy in its Board Charter, requiring Directors to notify the Chairman before accepting any new directorships notwithstanding that the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) allow a Director to sit on the boards of 5 listed issuers. Such notification is expected to include an indication of time that will be spent on the new appointment.
Directors’ training – continuing education Programmes
The Board is mindful of the importance for its members to undergo continuous training to keep abreast with changes to regulatory requirements and the impact such regulatory requirements have on the Group.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 15
Corporate Governance Statementcont’d
PRinciPle 4 – FOsteR cOmmitment OF DiRectORs cont’d
Directors’ training – continuing education Programmes cont’d
All the Directors of the Company have attended the Mandatory Accreditation Programme conducted by Bursatra Sdn Bhd within the stipulated timeframe required in the Listing Requirements.
During the financial year, all Board Members have attended pertinent training as below :-
name of Director Date training attended
(a) Mr. Yong Piaw Soon 22nd February 2013 Briefing on leadership pipeline
25th June 2013 Economic Transformation Programme – Progress and Opportunities
(b) Tan Sri Celestine Ujang Ak Jilan 16th – 18th October 2012 International Energy Week 2012: Energizing Sustainable Transformation & Opportunities in SWK
10th August 2012 Government Transformation Programme (GTP) 2.0 Open Day & Lab
23rd January 2013 Forensic Accounting for Non-Executive Directors
(c) Dato’ Mohamed Salleh Bin Bajuri 5th December 2012 Managing Corporate Risk and Achieving Internet Control Through Statutory Compliance
31st October 2012 3rd APAC Pricing Strategy Forum
27th March 2013 Director’s Training Workshop : Meeting Bursa’s Financial Reporting Timelines
20th June 2013 Advocacy Session on Corporate Disclosure for Directors
(d) Mr. Wong Siong Seh 12th July 2013 Shipnet training
20th – 21st May 2013 SSM National Conference 2013
22nd February 2013 Briefing on leadership pipeline
(e) Dato‘ Toh Guan Seng 11th August 2012 Fire Prevention Awareness Campaign
16th – 17th August 2012 Air Lift Tank Roof
16th October 2012 Seminar Percukaian Kebangsaan 2012
22nd February 2013 Briefing on leadership pipeline
(f ) Mr. Lee Seng Chiong 20th November 2012 Ship Arrest
22nd February 2013 Briefing on leadership pipeline
29th April 2013 Conveyor system facility workshop
(g) Mr. Hii Kwong Wui 11th – 12th June 2013 SSM National Conference 2013
22nd February 2013 Briefing on leadership pipeline
(h) Mr. Lau Sii Hin 12th October 2012 Continuing Professional Development Seminar
19th November 2012 Governance, Risk and Control for Company Secretaries
11th – 12th June 2013 SSM National Conference 2013
22nd February 2013 Briefing on leadership pipeline
(i) Mr. Sie Shwee Ing 11th October 2013 Seminar Percukaian Kebangsaan 2012
23rd January 2013 Forensic Accounting for Non-Executive Directors
7th June 2013 Seminar on Occupational Safety and Health in Construction
Harbour-Link Group Berhad (592902-D)Annual Report 201316
Corporate Governance Statementcont’d
PRinciPle 4 – FOsteR cOmmitment OF DiRectORs cont’d
Directors’ training – continuing education Programmes cont’d
Throughout the year, the Directors received updates and briefings, particularly on regulatory, industry and legal developments, including information on regular significant changes in business and procedures instituted to mitigate such risks.
The External Auditors briefed the Board members on any changes to the Malaysian Financial Reporting Standards that would affect the Group’s financial statements during the financial year under review. The Directors continue to undergo relevant training programmes to further enhance their skills and knowledge in the discharge of their stewardship role.
The Company Secretaries updates the Board Members on the relevant guidelines on statutory and regulatory requirements from time to time.
PRinciPle 5 – uPhOlD integRitY in FinAnciAl RePORting bY cOmPAnY
It is the Board’s commitment to present a balanced and meaningful assessment of the Group’s financial performance and prospects at the end of each reporting period and financial year, primarily through the quarterly announcement of Group’s results to Bursa Securities, the annual financial statements of the Group and Company as well as the Group Managing Director’s statement and review of the Group’s operations in the Annual Report, where relevant. A statement by the Directors of their responsibilities in the preparation of financial statements is set out in the ensuing paragraph.
statement of Directors’ Responsibility for Preparing Financial statements
The Board is responsible to ensure that the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965, Malaysian Financial Reporting Standards and International Financial Reporting Standards so as to give a true and fair view of the financial position of the Group as at the end of the financial year and of the financial performance and cash flows of the Group for the financial year then ended.
The Directors are satisfied that in preparing the financial statements of the Group for the year ended 30 June 2013, the Group has adopted suitable accounting policies and applied them consistently, prudently and reasonably. The Directors also consider that all applicable approved accounting standards have been followed in the preparation of the financial statements, subject to any material departures being disclosed and explained in the notes to the financial statements. The financial statements have been prepared on the going concern basis.
The Directors are responsible for ensuring that the Group keeps sufficient accounting records to disclose with reasonable accuracy, the financial position of the Group and which enable them to ensure that the financial statements comply with the Companies Act, 1965. Audit committee
In assisting the Board to discharge its duties on financial reporting, the Board has established an Audit Committee, comprising wholly Independent Non-Executive Directors, with Dato’ Mohamed Salleh Bin Bajuri as the Committee Chairman. The composition of the Audit Committee, including its roles and responsibilities, are set out in the Audit Committee Report of this Annual Report. One of the key responsibilities of the Audit Committee in its specific terms of reference is to ensure that the financial statements of the Group and Company comply with applicable financial reporting standards in Malaysia. Such financial statements comprise the quarterly financial report announced to Bursa and the annual statutory financial statements.
The Board is committed in upholding the integrity of the group financial reporting. The Audit Committee is responsible to assess, evaluate and recommend the external auditors to ensure they are of the right calibre with professional ethic and integrity. The Audit Committee also review on the types of non-audit services permitted to be provided by the external auditors of the Company so as not to compromise their independence and objectivity.
In assessing the independence of external auditors, the Audit Committee will require written assurance by the external auditors, confirming that they are, and have been, independent throughout the conduct of the audit engagement with the Company in accordance with the independence criteria set out by the International Federation of Accountants and the Malaysian Institute of Accountants.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 17
Corporate Governance Statementcont’d
PRinciPle 6 – RecOgnise AnD mAnAge Risks OF the gROuP
The Board undertakes the responsibility for evaluating, reviewing and monitoring the vital enterprise risks that affect the business and operations. The management has the on going process to manage and mitigate key businesses risk with the intent to strengthen the risk management and internal control system as a whole.
The Group’s in-house internal audit function is independent of the activities or operations of the Group. It undertakes regular reviews of the adequacy and effectiveness of the Group’s system of internal controls and risk management process, as well as appropriateness and effectiveness of the corporate governance practices. The Internal Audit Function reports directly to the Audit Committee. Further details on the internal audit function can be seen in the Audit Committee Report and the Statement on Risk Management and Internal Control in this Annual Report.
PRinciPle 7 – ensuRe timelY AnD high quAlitY DisclOsuRe
The Board is aware of the need to establish corporate disclosure policies and procedures to enable comprehensive, accurate and timely disclosures relating to the Company and its subsidiaries to be made to the regulators, shareholders and stakeholders. On this basis, the Board will formalize pertinent policies and procedures not only to comply with the disclosure requirements as stipulated in the Listing Requirements of Bursa, but also setting out the persons authorised and responsible to approve and disclose material information to regulators, shareholders and stakeholders.
To augment the process of disclosure, the Board will earmark a dedicated section for corporate governance on the Company’s website where information on the Company’s announcements to the regulators, rights of shareholders and the Company’s Annual Report may be accessed.
PRinciPle 8 – stRengthen RelAtiOnshiP between the cOmPAnY AnD its shARehOlDeRs
shareholder participation at general meeting
The Annual General Meeting (“AGM”), which is the principal forum for shareholder dialogue, allows shareholders to review the Group’s performance via the Company’s Annual Report and pose questions to the Board for clarification. At the AGM, shareholders participate in deliberating resolutions being proposed or on the Group’s operations in general.
The Notice of AGM is circulated at least twenty one (21) days before the date of the meeting to enable shareholders to go through the Annual Report and papers supporting the resolutions proposed. Shareholders are invited to ask questions both about the resolutions being proposed before putting a resolution to vote as well as matters relating to the Group’s operations in general. All the resolutions set out in the Notice of the last AGM were put to vote by show of hands and duly passed. The outcome of the AGM was announced to Bursa on the same meeting day. Going forward, the Board will adopt poll voting for related party transactions, if any, which require specific approvals, including the announcement of the detailed results showing the number of votes cast for and against each resolution.
communication and engagement with shareholders
The Board recognises the importance of being transparent and accountable to the Company’s investors and, as such, has various channels to maintain communication with them. The various channels of communications are through the quarterly announcements on financial results to Bursa, relevant announcements and circulars, when necessary, the Annual and Extraordinary General Meetings and through the Group’s website at where shareholders can access pertinent information concerning the Group.
Harbour-Link Group Berhad (592902-D)Annual Report 201318
Audit Committee Report
membeRs
Composition of the Audit Committee and their respective designation are as follow:
name of Directors Designation
Dato’ Mohamed Salleh Bin Bajuri Independent Non-Executive Director Chairman
Tan Sri Celestine Ujang Ak Jilan Independent Non-Executive Director Member
Sie Shwee Ing Independent Non-Executive Director Member
teRms OF ReFeRence
1. Objectives
The primary functions of the Audit Committee are to assist the Board in fulfilling the following objectives:
• Overseefinancialreporting;
• AssesstheadequacyandeffectivenessoftheGroup’srisksandcontrolenvironment;and
• Reviewtheinternalandexternalauditprocesses.
2. membership
The Audit Committee shall be appointed by the Board from amongst the Directors and shall consist of no fewer than three (3) members. All the Audit Committee members must be Non-Executive Directors with a majority of them being Independent Non-Executive Directors. All the Audit Committee members should be financially literate with at least one of whom must be a member of the Malaysian Institute of Accountants or possesses such other qualifications and/or experience as prescribed and approved by Bursa Malaysia.
The members of the Audit Committee shall elect a Chairman from among its members who is an Independent Non-Executive Director. The Chairman elected shall be subjected to endorsement by the Board.
In the event that a member of the Audit Committee resigns, dies or for any other reasons cease to be a member with the result that the number of members is reduced to below three (3), the Board shall within three (3) months of such event, appoint such number of new members as may be required to make up the minimum number of three (3) members.
The Board is to review the term of office and performance of the Audit Committee and each of its members at least once in every three (3) years to determine whether the Audit Committee and its members have carried out their duties in accordance with their terms of reference.
3. Authority
The Audit Committee is authorized by the Board to:
• investigateanyactivitieswithinitstermofreferenceandhavefullandunrestrictedaccesstoanyinformationpertainingtothe Company and the Group and any employee or member of the Management as well as the necessary resources to do so;
• havedirect communicationchannelswithboth the internalandexternalauditors, andbeable toconvenemeetingswith them excluding the attendance of Executive Board members, whenever deemed necessary; and
• obtain external legal or other independent professional advice and also retain persons having special competenceconsidered necessary and reasonable to assist the Audit Committee in fulfilling its responsibilities.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 19
Audit Committee Reportcont’d
teRms OF ReFeRence cont’d
4. meetings
The Audit Committee shall meet at least four (4) times a year or more frequently as need arises. The Chairman shall also convene a meeting if requested to do so by any Member, the Management or the Internal or External auditors to consider any matter within the scope and responsibilities of the Audit Committee.
Meetings will be attended by the members of the Audit Committee and the Company Secretary who shall act as the Secretary of the Audit Committee. The Group Managing Director, head of finance, head of internal audit and representatives of the external auditors shall normally be invited to attend these meetings as well. Other Board members and employees may attend meetings upon the invitation of the Audit Committee to assist in resolving and clarifying matters raised. The Audit Committee shall be able to convene meetings with the external auditors, internal auditors or both, without Executive Board members present whenever deemed necessary.
The agenda for Audit Committee meetings shall be circulated before each meeting to members of Audit Committee.
A quorum shall be two (2) members and the majority of the members present must be Independent Non-Executive Directors.
5. Duties and Responsibilities
The duties and responsibilities of the Audit Committee shall include:
• To review theeffectivenessof internal control systemsand toconsidermajorfindingson internal investigationsandmanagement’s response;
• ToreviewthequarterlyandannualfinancialstatementsoftheGroup,focusingparticularlyon:
(a) any changes in accounting policies and practices; (b) significant adjustments and unusual events arising from the audit; (c) the going concern assumption; and (d) compliance with applicable approved accounting standards, the Main Market Listing Requirements of Bursa
Malaysia and other regulatory requirements; • Todothefollowinginrelationtotheexternalauditfunction:
(a) consider the appointment of the external auditors by reviewing their suitability and independence, the audit fees and any question of resignation or dismissal;
(b) review with external auditors their audit plan and nature and scope of the audit prior to commencement of audit; (c) discuss issues and reservations arising from the interim and final audits, and any matters the external auditors may
wish to discuss (in the absence of Management and Executive Board members where necessary); and (d) review with the external auditors their evaluation of the effectiveness of the internal control system, and in
particular to review the external auditors’ management letter and the management’s response;
• Todothefollowinginrelationtotheinternalauditfunction:
(a) consider the appointment of internal auditors to ensure they have relevant qualification and any question of resignation or dismissal;
(b) review the adequacy of the scope, functions and resources of the internal audit function in that it has the necessary authority to carry out its work; and
(c) review the internal audit plan and results of the internal audit and where necessary, ensure that appropriate actions are taken on the recommendations by the internal audit function;
Harbour-Link Group Berhad (592902-D)Annual Report 201320
Audit Committee Reportcont’d
teRms OF ReFeRence cont’d
5. Duties and Responsibilities cont’d
The duties and responsibilities of the Audit Committee shall include: cont’d
• ToreviewanyrelatedpartytransactionsandconflictofinterestsituationthatmayarisewithintheGroupincludinganytransaction, procedure, or course of conduct that may raise questions of management integrity, to ensure that such transactions are undertaken on the Group’s normal commercial terms and are reported annually to shareholders via the Annual Report;
• ToverifytheallocationofEmployees’ShareOptionScheme(“ESOS”)incompliancewiththecriteriaasstipulatedintheby-laws of ESOS of the Company, if any; and
• ToundertakeanyotherfunctionsorresponsibilitiesasmaybedefinedbytheBoard.
summARY OF Activities OF the AuDit cOmmittee
The Audit Committee held five (5) meetings in the financial year ended 30 June 2013. The details of the attendance of each of the members are as follow:
name of committee members no. of meetings Attended
Dato’ Mohamed Salleh Bin Bajuri 5/5
Tan Sri Celestine Ujang Ak Jilan 5/5
Sie Shwee Ing 5/5 In line with the terms of reference of the Audit Committee the following activities were carried out by the Audit Committee during the financial year ended 30 June 2013 in the discharge of its responsibilities and duties:
• Reviewed thequarterlyandyearendfinancial statements toensure theGroup’s compliancewith theMainMarketListingRequirements of Bursa Malaysia, applicable approved accounting standards issued by Malaysian Accounting Standards Board and other legal and regulatory requirements before recommending them for the Board’s approval;
• Reviewed and assessed the appropriateness of the Group’s accounting policies and the adequacy of financial reportingrequirements;
• Considered the appointment of the external auditors and audit fees by evaluating the external auditor’s competence,independence and the scope of work to be conducted;
• Reviewed theexternalauditors’ scopeofworkandauditplans forfinancial yearprior to thecommencementofauditanddiscuss the results of their examinations and recommendations;
• Reviewedthecompetencyofinternalauditfunctionincludingtheprocesses,auditplanandresourcerequirements,aswellasthe quarterly internal audit reports presented on the findings, recommendations and Management’s responses thereto, are adequately addressed by Management;
• ReviewedtherelatedpartytransactionsandconflictofinterestthathavearisenwithintheGroup;and
• ReviewedandrecommendedtotheBoardforapprovaltheStatementonRiskManagement&InternalControlforinclusioninthe Annual Report.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 21
Audit Committee Reportcont’d
summARY OF Activities OF the inteRnAl AuDit FunctiOn
The Group’s in-house internal audit function is independent of the activities or operations of the Group. Its principle role is to provide reasonable assurance that the Group’s risk management and internal control system is sound and operating effectively. The internal audit division performs routine audit on and reviews all operating and functional units within the Group, with emphasis on key risk areas. The internal auditors adopt a risk-based approach towards the planning and conduct of audits.
During the financial year under review, the internal auditors carried out the following activities:
• Presented and obtained approval from the Audit Committee the Internal Audit Plan setting out the internal audit workexpected to be carried out during the financial year;
• Presented the Internal Audit Reports to Audit Committee highlighting audit findings, recommendations to improve andmanagement responses at each quarter;
• PerformedfollowupauditsonthesefindingsandupdatestatustotheAuditCommittee.
The total costs incurred for the internal audit function of the Group for the financial year was approximately RM155,376.
Harbour-Link Group Berhad (592902-D)Annual Report 201322
Statement on Risk Management & Internal Control
The Board of Directors of Harbour-Link Group Berhad (“the Board”) is pleased to provide the following Statement on the main features and state of the Group’s risk management and internal control:
ResPOnsibilitY
The Board recognizes the importance of maintaining a sound risk management practices and internal control system to safeguard shareholders’ investment and the Group’s assets. Therefore, the Board affirms its overall responsibility for the Group’s approach in assessing and reviewing the adequacy of the risks management practices and integrity of the internal control systems. The assessment and review by the Board are an ongoing process that is in place for the whole financial year under review and up to the date of approval of this Statement, that covers risk management procedures and financial, operational and compliance control of the Group, except for associates and joint ventures. However, such procedures are designed to manage the Group’s risks within an acceptable risk appetite rather than eliminate the risk of failure to achieve the Group’s business objectives. Such procedures can only provide reasonable rather than absolute assurance against material misstatement, fraud or loss.
In pursuant of these objectives, the Board is assisted by the Management to ensure the implementation and compliance of approved policies and procedures on risks and internal controls by identifying and evaluating the risks faced, formulating relevant policies and procedures to manage these risks, and designing, implementing and monitoring a sound system of internal control in the Group’s day to day operations.
Risk mAnAgement
The Group’s risk management is an ongoing process to identify, evaluate and manage the principal risks faced by the businesses in the Group. The Group’s principle risks are documented in the Group’s risk register for each of its core businesses together with the corresponding internal controls to mitigate those risks affecting the achievement of the Group’s business objectives. The register is reviewed by Management when there has been significant change to the business environment in which the Group operates in or when deemed necessary. The Management and Internal Audit function are currently in discussion to draw up a more robust risk management framework and review processes.
inteRnAl AuDit FunctiOn
The Group has an independent in-house internal audit function which reports directly to the Audit Committee. The Internal Audit function includes undertaking regular and continuous reviews on the adequacy and efficiency of the Group’s internal controls, procedures and operations, highlighting significant risks and non compliance issues impacting the Group and where applicable, providing recommendations to improve on the effectiveness of controls and operations. These reviews are performed according to the Internal Audit Plan which is presented to and approved by the Audit Committee. The Internal Audit adopts a risk-based approach when preparing its Internal Audit Plan and maintains a flexible approach in execution of the Internal Audit Plan to allow it to be robust enough to address emerging as well as potential risks. The results of these planned audit reviews are reported on a quarterly basis at the Audit Committee meetings.
OtheR keY elements OF Risk mAnAgement & inteRnAl cOntROl
These other key elements of risk management and internal control system further support the maintenance of a strong risk management and internal control environment in the Group include:
• Audit Committee that comprises ofwholly independent non-executive directors and its activities undertakenduring thefinancial year under review are set out in the Audit Committee Report;
• EstablishotherBoardCommitteestoassisttheBoardinprovidingindependentoversight function, namely Nomination andRemuneration Committee with responsibilities and authorities clearly specified in their respective terms of reference;
• Scheduledoperationsandmanagementmeetings;
• Organizationstructurewithclearlydefinedlinesofresponsibility,delegationofauthorityandaprocessofhierarchicalreporting;
Harbour-Link Group Berhad (592902-D) Annual Report 2013 23
Statement on Risk Management & Internal Controlcont’d
OtheR keY elements OF Risk mAnAgement & inteRnAl cOntROl cont’d
These other key elements of risk management and internal control system further support the maintenance of a strong risk management and internal control environment in the Group include: cont’d
• Existenceoflimitsofauthoritywhichprovidestheauthoritylimitsoftheemployeesintheapprovalofvarioustransactions;
• EffectivereportingsystemingeneratingtimelyfinancialinformationforManagementreviewanddecisionmaking;
• QuarterlyreviewsoftheperformanceandfinancialresultsoftheGrouptotheBoard;
• The Board is furnished with timely and detailed Board papers and is further briefed on all significant matters for theirconsideration and deliberation;
• AnannualbudgetingprocesswhereeachbusinessesintheGrouppreparesitsbudgetforthefollowingfinancialyearandthebudget is then reviewed by the Management after which the budget is submitted to the Board;
• ReviewandapprovalofallproposalsrelatingtosignificantcapitalandinvestmentacquisitionbytheBoard;
• Adequateinsurancecoverageonmajorassetsandtransactionstopreventmateriallossesandreducecontingentliabilitiesofthe Group;
• Documentedpoliciesandstandardoperatingprocedures forkeyprocessesareupdated fromtime to time in tandemwithchanges to business environment or regulatory guidelines;
• Employmentofqualifiedandcapableworkforce;and
• ActiveparticipationbycertainmembersoftheBoardintheday-to-dayrunningoftheoperationsandregulardialogueswithsenior management on operational matters.
AssuRAnce & cOmmitment
The Board has received reasonable assurance from the Group Managing Director and Group Finance & Accounts Manager that the Group’s risk management and internal control system are operating adequately and effectively, in all material aspects based on the risk management practices and internal control system adopted by the Group.
The Board and Management remain committed towards continuous measures to improve and strengthen the risk management and internal control environment within the Group.
cOnclusiOn
There were no material losses incurred during the financial year under review as a result of weaknesses in risk management and internal controls. Overall, the Board is satisfied that the assessment and review process of the Group’s businesses are in place to provide reasonable assurance on the adequacy and effectiveness of the risk, control and governance framework of the Group.
Review OF the stAtement bY eXteRnAl AuDitORs
The external auditors have reviewed this Statement for inclusion in the Annual Report for financial year under review. Based on their review, the external auditors have reported to the Board that nothing had come to their attention that causes them to believe that this Statement is inconsistent with their understanding of the process the Board has adopted in the review of the adequacy and integrity of the risk management and internal control of the Group.
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Directors’ Report
Statement by Directors
Statutory Declaration
Independent Auditors‘ Report
Statements of Comprehensive Income
Statements of Financial Position
Statements of Changes in Equity
Statements of Cash Flows
Notes to the Financial Statements
Notes to the Financial Statements - Supplementary Information
FinancialStatementsContents
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Directors’ Report
Statement by Directors
Statutory Declaration
Independent Auditors‘ Report
Statements of Comprehensive Income
Statements of Financial Position
Statements of Changes in Equity
Statements of Cash Flows
Notes to the Financial Statements
Notes to the Financial Statements - Supplementary Information
FinancialStatementsContents
Harbour-Link Group Berhad (592902-D)Annual Report 201326
Directors’ Report
The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 30 June 2013.
PRINCIPAL ACTIVITIES The principal activities of the Company are investment holding and provision of management services. The principal activities of the subsidiaries are disclosed in Note 17 to the financial statements. There have been no significant changes in the nature of the principal activities during the financial year. RESULTS
Group Company
RM RM
Profit for the year 6,549,978 4,725,607
Attributable to:
Owners of the Company 5,093,101 4,725,607
Non-controlling interest 1,456,877 -
6,549,978 4,725,607 There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements. In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature. DIVIDENDS The amount of dividends paid by the Company since 30 June 2012 were as follows: In respect of the financial year ended 30 June 2012 as reported in the directors' report of that year:
RM
First and final tax exempt (single-tier) dividend of 2% per share on 182,000,002 ordinary shares, declared on 30 October 2012 and paid on 21 December 2012. 3,640,000
At the forthcoming Annual General Meeting, the first and final tax exempt (single-tier) dividend in respect of the financial year ended 30 June 2013, of 2.5% on 182,000,002 ordinary shares amounting to a divdend payable of RM4,550,000 (2.5 sen per ordinary share) will be proposed for shareholders' approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 30 June 2014.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 27
Directors’ Reportcont’d
DIRECTORS The names of the directors of the Company in office since the date of the last report and at the date of this report are: Yong Piaw Soon Tan Sri Celestine Ujang Ak Jilan Dato' Mohamed Salleh Bin Bajuri Wong Siong Seh Dato' Toh Guan Seng Lee Seng Chiong Hii Kwong Wui Lau Sii Hin Sie Shwee Ing
DIRECTORS' BENEFITS Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate. Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the director or the fixed salary of the full-time employee of the Company as shown in Note 9 to the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 36 to the financial statements. DIRECTORS' INTERESTS According to the register of directors' shareholdings, the interests of directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year were as follows:
Number of Ordinary Shares of RM1 Each01.07.2012 Acquired Sold 30.06.2013
Ordinary share of the Company
Direct Interest:Yong Piaw Soon 10,266,545 - - 10,266,545 Tan Sri Celestine Ujang Ak Jilan 125,000 - 49,600 75,400 Dato' Mohamed Salleh Bin Bajuri 409,832 - - 409,832 Wong Siong Seh 5,939,200 - - 5,939,200 Dato' Toh Guan Seng 2,300,000 - - 2,300,000 Lee Seng Chiong 1,028,000 - - 1,028,000 Hii Kwong Wui 1,070,000 - - 1,070,000 Lau Sii Hin 537,000 - - 537,000
Deemed Interest:Yong Piaw Soon 99,141,575 593,000 1,000,000 98,734,575 Wong Siong Seh 99,141,575 593,000 1,000,000 98,734,575
Harbour-Link Group Berhad (592902-D)Annual Report 201328
DIRECTORS’ INTERESTS cont’d By virtue of their substantial interest in shares of the Company, Yong Piaw Soon and Wong Siong Seh are also deemed to be interested in the shares of its subsidiaries to the extent the holding company has an interest. OTHER STATUTORY INFORMATION (a) Before the statements of comprehensive income and statements of financial position of the Group and of the Company were
made out, the directors took reasonable steps:
(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and
(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.
(b) At the date of this report, the directors are not aware of any circumstances which would render:
(i) the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; and
(ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading.
(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.
(e) At the date of this report, there does not exist:
(i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or
(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year.
(f ) In the opinion of the directors:
(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and
(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.
Directors’ Reportcont’d
Harbour-Link Group Berhad (592902-D) Annual Report 2013 29
SIGNIFICANT EVENTS Details of the significant events are disclosed in Note 17 to the financial statements. AUDITORS The auditors, Ernst & Young, have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the directors dated 16 October 2013. YONG PIAW SOON WONG SIONG SEH
Directors’ Reportcont’d
Harbour-Link Group Berhad (592902-D)Annual Report 201330
We, YONG PIAW SOON and WONG SIONG SEH, being two of the directors of HARBOUR-LINK GROUP BERHAD, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 33 to 121 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 30 June 2013 and of their financial performance and cash flows for the year then ended. The supplementary information set out in Note 41 to the financial statements have been presented in accordance with directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants. Signed on behalf of the Board in accordance with a resolution of the directors dated 16 October 2013.
YONG PIAW SOON WONG SIONG SEH
I, YONG PIAW SOON, being the director primarily responsible for the financial management of HARBOUR-LINK GROUP BERHAD, do solemnly and sincerely declare that the accompanying financial statements set out on pages 33 to 122 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by theabovenamed YONG PIAW SOON atBintulu in the State of Sarawak on 16 October 2013 YONG PIAW SOON Before me
LAU SONG TINGNo. Q100Commissioner for OathsBintulu, Sarawak
Statement by DirectorsPursuant to Section 169(15) of the Companies Act, 1965
Statutory DeclarationPursuant to Section 169(16) of the Companies Act, 1965
Harbour-Link Group Berhad (592902-D) Annual Report 2013 31
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of Harbour-Link Group Berhad, which comprise the statements of financial position as at 30 June 2013 of the Group and of the Company, and statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 33 to 121.
Directors’ responsibility for the financial statements
The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsile for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 30 June 2013 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.
REPORT ON OTHER LEGAL AND REGULATORY REqUIREMENTS
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
(b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 17 to the financial statements, being financial statements that have been included in the consolidated financial statements.
(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.
(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act.
Independent Auditors’ Reportto the Members of Harbour-Link Group Berhad - 592902-D
(Incorporated in Malaysia)
Harbour-Link Group Berhad (592902-D)Annual Report 201332
OTHER REPORTING RESPONSIBILITIES
The supplementary information set out in Note 41 on page 122 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
OTHER MATTERS
1. As stated in Note 2.2 to the financial statements, Harbour-Link Group Berhad adopted Malaysian Financial Reporting Standards on 1 July 2012 with a transition date of 1 July 2011. These standards were applied retrospectively by directors to the comparative information in these financial statements, including the statements of financial position as at 30 June 2012 and 1 July 2011, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended 30 June 2012 and related disclosures. We were not engaged to report on the comparative information and it is unaudited. Our responsibilities as part of our audit of the financial statements of the Group and of the Company for the year ended 30 June 2013 have, in these circumtances, including obtaining sufficient appropriate audit evidence that the opening balances as at 1 July 2012 do not contain misstatements that materially affect the financial position as of 30 June 2013 and financial performance and cash flows for the year then ended.
2. This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
ERNST & YOUNG CHIN MUI KHIONG PETER AF: 0039 No. 1881/03/14 (J) Chartered Accountants Chartered Accountant Bintulu, Malaysia
16 October 2013
Independent Auditors’ Reportto the Members of Harbour-Link Group Berhad - 592902-D(Incorporated in Malaysia)cont’d
Harbour-Link Group Berhad (592902-D) Annual Report 2013 33
Statements of Comprehensive Incomefor the Financial Year Ended 30 June 2013
Group Company
Note 2013 2012 2013 2012
RM RM RM RM
Revenue 4 422,707,999 472,972,827 10,250,591 17,790,048
Cost of sales (353,263,317) (414,901,799) - -
Gross profit 69,444,682 58,071,028 10,250,591 17,790,048
Other items of income
Other income 5 8,595,670 12,500,334 797,882 556,146
Other items of expense
Administrative and other expenses (53,844,123) (29,221,788) (3,496,304) (9,337,999)
Finance costs 6 (7,783,302) (7,102,380) (1,896,564) (910,997)
Share of profit of associates 740,846 962,623 - -
Share of profit of jointly controlled entities 490,806 20,373 - -
Profit before tax 7 17,644,579 35,230,190 5,655,605 8,097,198
Income tax expense 10 (11,094,601) (9,221,369) (929,998) (2,213,161)
Profit net of tax 6,549,978 26,008,821 4,725,607 5,884,037
Other comprehensive income:
Foreign currency translation 187,057 (89,180) - -
Total comprehensive income for the year 6,737,035 25,919,641 4,725,607 5,884,037
Harbour-Link Group Berhad (592902-D)Annual Report 201334
Statements of Comprehensive Incomefor the Financial Year Ended 30 June 2013cont’d
Group Company
Note 2013 2012 2013 2012
RM RM RM RM
Profit attributable to:
Owners of the Company 5,093,101 27,191,536 4,725,607 5,884,037
Non-controlling interest 1,456,877 (1,182,715) - -
6,549,978 26,008,821 4,725,607 5,884,037
Total comprehensive income attributable to:
Owners of the Company 5,280,158 27,102,356 4,725,607 5,884,037
Non-controlling interest 1,456,877 (1,182,715) - -
6,737,035 25,919,641 4,725,607 5,884,037
Earnings per share attributable to owners of the Company (sen per share)
Basic 11 2.80 14.94
Diluted N/A N/A
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 35
Statements of Financial Positionas at 30 June 2013
Group Company
Note 2013 2012 As at
01.07.2011 2013 2012 As at
01.07.2011
RM RM RM RM RM RM
ASSETS
Non-current assets
Property, plant and equipment 13 189,443,869 166,205,806 159,221,406 6,411,316 6,630,277 6,921,281
Investment properties 14 10,352,781 10,065,467 9,454,663 - - -
Prepaid land lease payments 15 37,336,812 42,394,337 45,450,741 - - -
Intangible assets 16 105,000 25,659,646 25,659,646 - - -
Investment in subsidiaries 17 - - - 178,224,623 175,164,623 172,800,002
Investment in associates 18 3,029,574 2,649,833 1,808,461 1,466,200 1,466,200 1,466,200
Investment in jointly controlled entities 19 3,073,114 2,582,308 2,561,935 - - -
Other investments 20 652,445 652,445 652,445 - - -
Deferred tax assets 21 761,953 446,166 1,373,000 - - -
244,755,548 250,656,008 246,182,297 186,102,139 183,261,100 181,187,483
Current assets
Development properties 22 10,644,039 3,126,294 - - - -
Inventories 23 2,840,727 2,788,002 2,827,903 - - -
Trade and other receivables 24 109,429,661 113,580,954 69,095,162 18,670,420 21,296,210 27,729,562
Investment securities 25 1,774,378 23,421,022 - - - -
Other current assets 26 38,261,764 12,108,786 16,296,662 1,144,552 3,370,324 2,994,622
Cash and bank balances 28 36,402,895 42,186,911 36,667,358 634,384 732,015 852,268
199,353,464 197,211,969 124,887,085 20,449,356 25,398,549 31,576,452
Total assets 444,109,012 447,867,977 371,069,382 206,551,495 208,659,649 212,763,935
Harbour-Link Group Berhad (592902-D)Annual Report 201336
Statements of Financial Positionas at 30 June 2013cont’d
Group Company
Note 2013 2012 As at
01.07.2011 2013 2012 As at
01.07.2011
RM RM RM RM RM RM
Equity and liabilities
Current liabilities
Loans and borrowings 29 68,281,591 40,823,292 39,467,999 2,507,009 431,325 7,305,566
Trade and other payables 30 60,253,233 106,722,368 44,657,560 35,132,505 39,859,403 38,946,649
Other current liabilities 31 5,427,775 1,288,524 4,949,478 - - -
Income tax payable 4,153,127 2,621,502 1,424,176 - - -
138,115,726 151,455,686 90,499,213 37,639,514 40,290,728 46,252,215
Net current assets/(liabilities) 61,237,738 45,756,283 34,387,872 (17,190, 158) (14,892,179) (14,675,763)
Non-current liabilities
Deferred tax liabilities 21 10,646,389 10,031,539 8,008,139 44,313 43,879 14,639
Loans and borrowings 29 78,645,029 75,907,169 86,529,353 1,625,605 2,168,586 2,584,662
89,291,418 85,938,708 94,537,492 1,669,918 2,212,465 2,599,301
Total liabilities 227,407,144 237,394,394 185,036,705 39,309,432 42,503,193 48,851,516
Net assets 216,701,868 210,473,583 186,032,677 167,242,063 166,156,456 163,912,419
Equity attributable to owners of the Company
Share capital 32 182,000,002 182,000,002 182,000,002 182,000,002 182,000,002 182,000,002
Retained earnings/(accumulated losses) 82,201,457 80,748,356 57,196,820 (14,757,939) (15,843,546) (18,087,583)
Other reserve 33 (62,944,880) (62,944,880) (62,944,880) - - -
Foreign currency translation reserve 34 97,877 (89,180) - - - -
201,354,456 199,714,298 176,251,942 167,242,063 166,156,456 163,912,419
Non-controlling interest 15,347,412 10,759,285 9,780,735 - - -
Total equity 216,701,868 210,473,583 186,032,677 167,242,063 166,156,456 163,912,419
Total equity and liabilities 444,109,012 447,867,977 371,069,382 206,551,495 208,659,649 212,763,935
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 37
Statements of Changes in Equityfor the Financial Year Ended 30 June 2013
Attributable to owners of the Company
Distributable Non-Distributable
Group NoteShare
Capital
Retained Earnings
Other
Reserve
Foreign Currency
Translation Reserve
Total Equity
Attributed to Owners
of the Company
Non -Controlling
Interests Total
Equity
RM RM RM RM RM RM RM
At 1 July 2012 182,000,002 85,219,430 - 258,636 267,478,068 10,759,285 278,237,353
Effects of adopting MFRS 2.3 - (4,471,074) (62,944,880) (347,816) (67,763,770) - (67,763,770)
182,000,002 80,748,356 (62,944,880) (89,180) 199,714,298 10,759,285 210,473,583
Total comprehensive income - 5,093,101 - 187,057 5,280,158 1,456,877 6,737,035
Increase in investment by non-controlling interest in a subsidiary - - - - - 2,940,000 2,940,000
Acquisition of subsidiary - - - - - 382,500 382,500
Dividends 12 - (3,640,000) - - (3,640,000) - (3,640,000)
Dividend paid to non-controlling interest in subsidiaries - - - - - (191,250) (191,250)
At 30 June 2013 182,000,002 82,201,457 (62,944,880) 97,877 201,354,456 15,347,412 216,701,868
Harbour-Link Group Berhad (592902-D)Annual Report 201338
Statements of Changes in Equityfor the Financial Year Ended 30 June 2013cont’d
Attributable to owners of the Company
Distributable Non-Distributable
Group Note Share
Capital
Retained Earnings
Other
Reserve
Foreign Currency
Translation Reserve
Total Equity
Attributed to Owners
of the Company
Non - Controlling
Interests Total
Equity
RM RM RM RM RM RM RM
At 1 July 2011 182,000,002 61,640,694 - 347,816 243,988,512 9,780,735 253,769,247
Effects of adopting MFRS 2.3 - (4,443,874) (62,944,880) (347,816) (67,736,570) - (67,736,570)
182,000,002 57,196,820 (62,944,880) - 176,251,942 9,780,735 186,032,677
Total comprehensive income - 27,191,536 - (89,180) 27,102,356 (1,182,715) 25,919,641
Increase in investment by non-controlling interest in a subsidiary - - - - - 2,290,265 2,290,265
Dividends 12 - (3,640,000) - - (3,640,000) - (3,640,000)
Dividend paid to non-controlling interest in subsidiaries - - - - - (129,000) (129,000)
At 30 June 2012 182,000,002 80,748,356 (62,944,880) (89,180) 199,714,298 10,759,285 210,473,583
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 39
Statements of Changes in Equityfor the Financial Year Ended 30 June 2013
cont’d
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Note Share
Capital Accumulated
Losses Total
Equity
RM RM RM
Company
2013
At 1 July 2012 182,000,002 (15,843,546) 166,156,456
Total comprehensive income - 4,725,607 4,725,607
Dividends 12 - (3,640,000) (3,640,000)
At 30 June 2013 182,000,002 (14,757,939) 167,242,063
2012
At 1 July 2011 182,000,002 (18,087,583) 163,912,419
Total comprehensive income - 5,884,037 5,884,037
Dividends 12 - (3,640,000) (3,640,000)
At 30 June 2012 182,000,002 (15,843,546) 166,156,456
Harbour-Link Group Berhad (592902-D)Annual Report 201340
Statements of Cash Flowsfor the Financial Year Ended 30 June 2013
Group Company
Note 2013 2012 2013 2012
RM RM RM RM
Operating activities
Profit before tax 17,644,579 35,230,190 5,655,605 8,097,198
Adjustments for:
Amortisation of prepaid land lease payments 7 908,781 304,841 - -
Recovery of bad debts 5 (766,620) - - -
Depreciation of property, plant and equipment 7 15,998,636 15,473,003 311,951 314,188
Dividend income 4 - - (8,514,591) (16,074,048)
Depreciation of investment properties 7 217,612 216,217 - -
Gain on disposal of property, plant and equipment, net 5, 7 (1,245,182) (3,173,289) - -
Interest expense 6 7,783,302 7,102,380 1,896,564 910,997
Interest income 5 (276,540) (169,168) (797,882) (556,146)
Property, plant and equipment written off 7 148,200 79,060 2,674 261
Impairment loss on trade and other receivables 7 5,035,900 4,051,260 - -
Impairment loss on loan to a subsidiary 7 - - - 6,136,000
Reversal of allowance for impairment on trade and other receivables 5 (3,233,869) (3,939,330) - -
Impairment loss on intangible assets 7 25,554,646 - - -
Intangible asset written off 7 23,056 2,439 - -
Share of result of associates (740,846) (962,623) - -
Share of result of jointly controlled entity (490,806) (20,373) - -
Unrealised foreign exchange loss/(gain), net 5, 7 382,996 (6,257) - -
Total adjustments 49,299,266 18,958,160 (7,101,284) (9,268,748)
Harbour-Link Group Berhad (592902-D) Annual Report 2013 41
Statements of Cash Flowsfor the Financial Year Ended 30 June 2013
cont’d
Group Company
Note 2013 2012 2013 2012
RM RM RM RM
Operating cash flows before changes in working capital 66,943,845 54,188,350 (1,445,679) (1,171,550)
Changes in working capital
(Increase)/decrease in inventories (52,725) 39,901 - -
Decrease/(increase) in trade and other receivables 5,861,436 (44,483,031) 2,625,790 297,352
Increase in development properties (3,008,863) (228,210) - -
(Increase)/decrease in other current assets (27,967,631) 7,284,788 (24,053) 453
(Decrease)/increase in trade and other payables (50,066,034) 62,047,207 (4,726,898) 912,754
Increase/(decrease) in other current liabilities 4,139,251 (3,660,954) - -
Increase in short-term deposits pledged for bank borrowings (203,111) (8,636) (240,000) -
Total changes in working capital (71,297,677) 20,991,065 (2,365,161) 1,210,559
Taxes paid (10,676,843) (8,106,611) (3,131) (814)
Taxes refunded 4,333,126 - 2,494,290 -
Interest received 276,540 169,168 797,882 556,146
Interest paid (8,143,440) (7,248,901) (1,896,564) (910,997)
Net cash flows (used in)/from operating activities (18,564,449) 59,993,071 (2,418,363) (316,656)
Investing activities
Net cash outflow from acquisition of a subsidiary 17 (295,318) (1,634,601) (3,060,000) (2,364,621)
Purchase of property, plant and equipment (21,722,131) (24,693,098) (96,674) (23,445)
Purchase of investment property (604) (827,021) - -
Decrease/(increase) in investment securities 21,646,644 (23,158,872) - -
Proceeds from disposal of property, plant and equipment 2,491,725 11,763,541 1,010 -
Dividends received 115,591 121,251 7,343,693 13,514,786
Net cash flows from/(used in) investing activities 2,235,907 (38,428,800) 4,188,029 11,126,720
Harbour-Link Group Berhad (592902-D)Annual Report 201342
Statements of Cash Flowsfor the Financial Year Ended 30 June 2013cont’d
Group Company
Note 2013 2012 2013 2012
RM RM RM RM
Financing Activities
Dividends paid to non-controlling interest in a subsidiaries (191,250) (129,000) - -
Dividends paid on ordinary shares (3,640,000) (3,640,000) (3,640,000) (3,640,000)
Capital contributed by non-controlling interest in subsidiaries 2,940,000 2,290,265 - -
Proceeds from loan and borrowings 34,587,445 8,915,769 - -
Repayment of loans and borrowings (13,318,522) (16,568,618) (470,923) (7,290,317)
Repayment of finance lease payables (13,902,976) (10,246,950) - -
Net cash flows from/(used in) financing activities 6,474,697 (19,378,534) (4,110,923) (10,930,317)
Net (decrease)/increase in cash and cash equivalents (9,853,845) 2,185,737 (2,341,257) (120,253)
Effects of exchange rate changes on cash and cash equivalents 186,873 (88,670) - -
Cash and cash equivalents at 1 July 32,801,618 30,704,551 732,015 852,268
Cash and cash equivalents at 30 June 28 23,134,646 32,801,618 (1,609,242) 732,015
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 43
Notes to the Financial Statementsfor the Year Ended 30 June 2013
1. CORPORATE INFORMATION
The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Board of Bursa Malaysia Securities Berhad. The registered office of the Company is located at Wisma Harbour, Parkcity Commerce Square, Jalan Tun Ahmad Zaidi, 97000 Bintulu, Sarawak.
The principal activities of the Company are investment holding and provision of management services. The principal activities of the subsidiaries are disclosed in Note 17 to the financial statements. There have been no significant changes in the nature of the principal activities during the financial year.
The financial statements were authorised in accordance with a resolution of the directors on 16 October 2013.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of preparation The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial
Reporting Standards ("MFRS") as issued by Malaysian Accounting Standards Board ("MASB"), International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. At the beginning of the current financial year, the Group and the Company adopted MFRS which are mandatory for the financial periods beginning on or after 1 July 2012 as described fully in Note 2.2.
The financial statements have been prepared on a historical cost basis except as disclosure in the accounting policies below.
The financial statements are presented in Ringgit Malaysia (RM).
2.2 First-time adoption of MFRS
These financial statements are the Group and the Company’s first financial statements prepared in accordance with MFRSs and MFRS – First-time Adopting of Malaysian Financial Reporting Standards been applied.
For periods up to and including the year ended 30 June 2012, the audited financial statements of the Group and the Company were prepared in accordance with Financial Reporting Standards (“FRS”). Accordingly, the Group has prepared financial statements which comply with MFRS applicable for periods ending on or after 30 June 2013, together with the comparative period data as at and for the year ended 30 June 2012, as described in the accounting policies.
In preparing these financial statements, the Group’s and the Company’s opening statement of financial position was prepared as at 1 July 2011 (the tansition date to MFRS framework).
Harbour-Link Group Berhad (592902-D)Annual Report 201344
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.3 Application and adoption of MFRS
Except for certain differences, the requirements under FRS and MFRS are similar. The significant accounting policies adopted in preparing these financial statements are consistent with those of the audited financial statement for the year ended 30 June 2012 except as discussed below.
(a) Business combination MFRS 1 provides the option to apply MFRS 3 Business Combinations, prospectively from the date of transition or
from a chosen date prior to the date of transition. The Group has elected for retrospective application of MFRS 3 from 26 December 2003, the date of the Group’s first business combination, which would require restatement of all business combinations prior to 1 July 2011.
During the financial year 2003, the Group undertook a restructuring scheme involving Tongkah Holdings Berhad (“THB”), Harbour Link (M) Sdn. Bhd. (“HLM”), Harbour Agencies (Sarawak) Sdn. Bhd. (“HAS”) and Eastern Soldar Engineering & Construction Sdn. Bhd. (“ESEC”). The Group accounted for the restructuring using the acquisition method and resulted in the recognition of goodwill of approximate of RM94.5 million.
Under MFRS 3 Business Combination, HLM was assessed to be the accounting acquirer in the restructuring. Accordingly, the consolidated financial statements of Harbour-Link Group Berhad have been prepared as a continuation of the consolidated financial statement of HLM. As HLM and HAS were under common control of Mr. Yong Piaw Soon, the Group has elected to account the acquisition of HAS using the pooling of interest method. The acquisition of ESEC is accounted for using the acquisition method while the acquisition of THB were accounted for as acquisition of assets. The effects arising from the above change is summarized as follows:
1 July 2011 30 June 2012
RM RM
Consolidated statement of financial position
Property, plant and equipment 1,515,517 1,480,480
Investment properties 79,574 78,345
Intangible assets (68,932,887) (68,932,887)
Deferred tax liabilities 398,774 389,708
Other reserves (62,944,880) (62,944,880)
Adjustment to retained earnings (4,443,874) (4,471,074)
Consolidated statement of comprehensive income
Administrative expenses - depreciation 36,266
Income tax expenses (9,066)
Adjustment to profit for the year 27,200
Harbour-Link Group Berhad (592902-D) Annual Report 2013 45
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.3 Application and adoption of MFRS cont’d
(b) Foreign currency translation reserve
Under FRS, the Group recognised translation differences on foreign operations in other comprehensive income and accumulated the amount in a separate component of equity. Upon transition to MFRS, the Group has elected to deem all foreign currency translation differences that arose prior to the date of transition in respect of all foreign operations to be nil at the date of transition. Accordingly, at date of transition to MFRS, the cumulative foreign currency translation differences of RM347,816 (30 June 2012 : 347,816) were adjusted to retained earnings.
(c) Definition of cash and cash equivalents
Under FRS, the Group and the Company defined cash and cash equivalents as cash at bank and on hand, demand deposits, and short-term highly liquid investments which have an insignificant risk of changes in value, net of outstanding bank overdrafts that form an integral part of the Group’s and the Company’s cash management.
Upon transition to MFRS, the Group and the Company redefined its cash and cash equivalents as cash at bank and on hand and short-term deposits with a maturity of three months or less, net of outstanding bank overdrafts. The comparative information for the relevant years in the statements of cash flows have been restated accordingly.
In the preparation of the Group’s opening MFRS statements of financial positions, the amounts previously reported in accordance with FRS framework have been adjusted for the financial effects arising from the adoption of the MFRS framework. A reconciliation of these changes is summaries in the following tables. (i) Reconciliation of consolidated financial position as at 1 July 2011
Under FRSFramework
Group effectsof transition to
MFRSUnder MFRS
Framework
RM RM RM
ASSETS
Non-current assets
Property, plant and equipment 157,705,889 1,515,517 159,221,406
Investment properties 9,375,089 79,574 9,454,663
Prepaid land lease payments 45,450,741 - 45,450,741
Intangible assets 94,592,533 (68,932,887) 25,659,646
Investment in associates 2,561,935 - 2,561,935
Investment in jointly controlled entities 1,808,461 - 1,808,461
Other investments 652,445 - 652,445
Deferred tax assets 1,373,000 - 1,373,000
313,520,093 (67,337,796) 246,182,297
Harbour-Link Group Berhad (592902-D)Annual Report 201346
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.3 Application and adoption of MFRS cont’d (i) Reconciliation of consolidated financial position as at 1 July 2011 cont’d
Under FRSFramework
Group effectsof transition to
MFRSUnder MFRS
Framework
RM RM RM
Current assets
Inventories 2,827,903 - 2,827,903
Trade and other receivables 69,095,162 - 69,095,162
Other current assets 16,296,662 - 16,296,662
Cash and bank balances 36,667,358 - 36,667,358
124,887,085 - 124,887,085
TOTAL ASSETS 438,407,178 (67,337,796) 371,069,382
Current liabilities
Loans and borrowings 39,467,999 - 39,467,999
Trade and other payables 44,657,560 - 44,657,560
Other current liabilities 4,949,478 - 4,949,478
Tax payables 1,424,176 - 1,424,176
90,499,213 - 90,499,213
Non-current liabilities
Deferred tax liabilities 7,609,365 398,774 8,008,139
Loans and borrowings 86,529,353 - 86,529,353
94,138,718 398,774 94,537,492
TOTAL LIABILITIES 184,637,931 398,774 185,036,705
NET ASSETS 253,769,247 (67,736,570) 186,032,677
EqUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY
Share capital 182,000,002 - 182,000,002
Retained earnings 61,640,694 (4,443,874) 57,196,820
Other reserve - (62,944,880) (62,944,880)
Foreign currency translation reserve 347,816 (347,816) -
243,988,512 (67,736,570) 176,251,942
Non-controlling interest 9,780,735 - 9,780,735
253,769,247 (67,736,570) 186,032,677
Harbour-Link Group Berhad (592902-D) Annual Report 2013 47
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.3 Application and adoption of MFRS cont’d (ii) Reconciliation of consolidated financial position as at 30 June 2012
Under FRSFramework
Group effectsof transition to
MFRSUnder MFRS
Framework
RM RM RM
ASSETS
Non-current assets
Property, plant and equipment 164,725,326 1,480,480 166,205,806
Investment properties 9,987,122 78,345 10,065,467
Prepaid land lease payments 42,394,337 - 42,394,337
Intangible assets 94,592,533 (68,932,887) 25,659,646
Investment in associates 2,582,308 2,582,308
Investment in jointly controlled entities 2,649,833 - 2,649,833
Other investments 652,445 - 652,445
Deferred tax assets 446,166 - 446,166
318,030,070 (67,374,062) 250,656,008
Current assets
Development properties 3,126,294 - 3,126,294
Inventories 2,788,002 - 2,788,002
Trade and other receivables 113,580,954 - 113,580,954
Other current assets 12,108,786 - 12,108,786
Investment securities 133,101 - 133,101
Cash and bank balances 65,474,832 - 65,474,832
197,211,969 - 197,211,969
TOTAL ASSETS 515,242,039 (67,374,062) 447,867,977
Current liabilities
Loans and borrowings 40,823,292 - 40,823,292
Trade and other payables 106,722,368 - 106,722,368
Other current liabilities 1,288,524 - 1,288,524
Tax payables 2,621,502 - 2,621,502
151,455,686 - 151,455,686
Harbour-Link Group Berhad (592902-D)Annual Report 201348
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.3 Application and adoption of MFRS cont’d (ii) Reconciliation of consolidated financial position as at 30 June 2012 cont’d
Under FRSFramework
Group effectsof transition to
MFRSUnder MFRS
Framework
RM RM RM
Non-current liabilities
Deferred tax liabilities 9,641,831 389,708 10,031,539
Loans and borrowings 75,907,169 - 75,907,169
85,549,000 389,708 85,938,708
TOTAL LIABILITIES 237,004,686 389,708 237,394,394
NET ASSETS 278,237,353 (67,763,770) 210,473,583
EqUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY
Share capital 182,000,002 - 182,000,002
Retained earnings 85,219,430 (4,471,074) 80,748,356
Other reserve - (62,944,880) (62,944,880)
Foreign currency translation reserve 258,636 (347,816) (89,180)
267,478,068 (67,763,770) 199,714,298
Non-controlling interest 10,759,285 - 10,759,285
278,237,353 (67,763,770) 210,473,583
Harbour-Link Group Berhad (592902-D) Annual Report 2013 49
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.3 Application and adoption of MFRS cont’d
(iii) Reconciliation of consolidated statement of comprehensive income for the financial year ended 30 June 2012
Under FRSFramework
Group effectsof transition to
MFRSUnder MFRS
Framework
RM RM RM
Revenue 472,972,827 - 472,972,827
Cost of sales (414,901,799) - (414,901,799)
Gross profit 58,071,028 - 58,071,028
Other items of income
Other income 12,500,334 - 12,500,334
Other items of expense
Administrative and other expenses (29,185,522) (36,266) (29,221,788)
Finance costs (7,102,380) - (7,102,380)
Share of profit of associates 962,623 - 962,623
Share of profit of jointly controlled entities 20,373 - 20,373
Profit before tax 35,266,456 (36,266) 35,230,190
Income tax expense (9,230,435) 9,066 (9,221,369)
Profit net of tax 26,036,021 (27,200) 26,008,821
Other comprehensive income:
Foreign currency translation (89,180) - (89,180)
Total comprehensive income for the year 25,946,841 (27,200) 25,919,641
Harbour-Link Group Berhad (592902-D)Annual Report 201350
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.3 Application and adoption of MFRS cont’d (iii) Reconciliation of consolidated statement of comprehensive income for the financial year ended 30 June 2012
cont’d
Under FRSFramework
Group effectsof transition to
MFRSUnder MFRS
Framework
RM RM RM
Profit attributable to:
Owners of the Company 27,218,736 (27,200) 27,191,536
Non-controlling interest (1,182,715) - (1,182,715)
26,036,021 (27,200) 26,008,821
Total comprehensive income attributable to:
Owner of the Company 27,129,556 (27,200) 27,102,356
Non-controlling interest (1,182,715) - (1,182,715)
25,946,841 (27,200) 25,919,641
Basic earnings per share (sen) 14.95 (0.01) 14.94
(iv) Reconciliation of consolidated statement of cash flows for the financial year ended 30 June 2012
Under FRSFramework
Group effectsof transition to
MFRSUnder MFRS
Framework
RM RM RM
Increase in investment securities - (23,158,872) (23,158,872)
Increase in short term deposits pledged for bank borrowings - (8,636) (8,636)
Cash and cash equivalents at beginning of the year 31,306,680 (602,129) 30,704,551
Cash and cash equivalents at end of the year 56,571,255 (23,769,637) 32,801,618
Harbour-Link Group Berhad (592902-D) Annual Report 2013 51
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.4 Standards issued but not yet effective
The standards and interpretations that are issued but not yet effective up to the date of issuance of the Group’s and the Company’s financial statements are disclosed below. The Group and the Company intend to adopt these standards, if applicable, when they become effective.
Description
Effective for period
beginning on or after
Amendments to MFRS 101: Presentation of Financial Statements (Annual Improvements 2009-2011 Cycle)
1 January 2013
MFRS 3 Business Combinations (IFRS 3 Business Combinations issued by IASB in March 2004) 1 January 2013
MFRS 10 Consolidated Financial Statements 1 January 2013
MFRS 11 Joint Arrangements 1 January 2013
MFRS 12 Disclosure of Interests in Other Entities 1 January 2013
MFRS 13 Fair Value Measurement 1 January 2013
MFRS 119 Employee Benefits 1 January 2013
MFRS 127 Separate Financial Statements 1 January 2013
MFRS 128 Investment in Associate and Joint Ventures 1 January 2013
MFRS 127 Consolidated and Separate Financial Statements (IAS 27 as revised by IASB in December 2003) 1 January 2013
Amendment to IC Interpretation 2 Member’s Shares in Co-operative and Similar Instruments (Annual Improvements 2009-2011 Cycle)
1 January 2013
IC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine 1 January 2013
Amendments to MFRS 7: Disclosures - Offsetting Financial Assets and Financial Liabilities 1 January 2013
Amendments to MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards - Government loans
1 January 2013
Amendments to MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards - Annual Improvements 2009-2011 Cycle)
1 January 2013
Amendments to MFRS 116: Property, Plant and Equipment (Annual Improvements 2009-2011 Cycle) 1 January 2013
Amendments to MFRS 132: Financial Instruments: Presentation (Annual Improvements 2009-2011 Cycle)
1 January 2013
Amendments to MFRS 134: Interim Financial Reporting (Annual Improvements 2009-2011 Cycle) 1 January 2013
Amendments to MFRS 10: Consolidated Financial Statements: Transition Guidance 1 January 2013
Amendments to MFRS 11: Joint Arrangements: Transition Guidance 1 January 2013
Amendments to MFRS 12: Disclosure of Interests in Other Entities: Transition Guidance 1 January 2013
Amendments to MFRS 132 Offsetting Financial Assets and Financial Liabilities 1 January 2014
Amendments to MFRS 10, MFRS 12 and MFRS 127: Investment Entities 1 January 2014
Amendments to MFRS 136: Recoverable Amount Disclosure for Non-financial Assets 1 January 2014
Amendments to MFRS 139: Novation of Derivatives and Continuance of Hedge Accounting 1 January 2014
IC Interpretation 21: Levies 1 January 2014
MFRS 9 Financial Instruments 1 January 2015
The directors expect that the adoption of the standards and interpretations above will have no material impact on the financial statements in the period of initial application expect for the impact as disclosed below:
Harbour-Link Group Berhad (592902-D)Annual Report 201352
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.4 Standards issued but not yet effective cont’d
MFRS 10 Consolidated Financial Statements
MFRS 10 replaces part of MFRS 127 Consolidated and Separate Financial Statements that deals with consolidated financial statements and IC Interpretation 112 Consolidation – Special Purpose Entities.
Under MFRS 10, an investor controls an investee when (a) the investor has power over an investee, (b) the investor has exposure, or rights, to variable returns from its involvement with the investee, and (c) the investor has ability to use its power over the investee to affect the amount of the investor’s returns. Under MFRS 127 Consolidated and Separate Financial Statements, control was defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
MFRS 10 includes detailed guidance to explain when an investor has control over the investee. MFRS 10 requires the investor to take into account all relevant facts and circumstances.
The Group is currently assessing the impact of adoption of MFRS 10.
MFRS 12 Disclosures of Interests in Other Entities
MFRS 12 includes all disclosure requirements for interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are required. This standard affects disclosures only and has no impact on the Group’s financial position or performance.
MFRS 127 Separate Financial Statements
As a consequence of the new MFRS 10 and MFRS 12, MFRS 127 is limited to accounting for subsidiaries, jointly controlled entities and associates in separate financial statements.
MFRS 128 Investments in Associates and Joint Ventures
As a consequence of the new MFRS 11 and MFRS 12, MFRS 128 is renamed as MFRS 128 Investments in Associates and Joint Ventures. This new standard describes the application of the equity method to investments in joint ventures in addition to associates.
MFRS 3 Business Combinations (IFRS 3 Business Combinations issued by IASB in March 2004) and MFRS 127 Consolidated and Separate Financial Statements (IAS 27 as revised by IASB in December 2003)
An entity shall apply these earlier versions of MFRS 3 and MFRS 127 only if the entity has elected to do so as allowed in MFRS 10 Consolidated Financial Statements. The adoptions of these standards are not expected to have any significant impact to the Group and the Company.
Amendments to MFRS 101: Presentation of Financial Statements (Annual Improvements 2009-2011 Cycle)
The amendments to MFRS 101 change the grouping of items presented in other comprehensive income. Items that could be reclassified (or recycled) to profit or loss at a future point in time (for example, exchange differences on translation of foreign operations and net loss or gain on available-for-sale financial assets) would be presented separately from items which will never be reclassified (for example, actuarial gains and losses on defined benefit plans and revaluation of land and buildings). The amendment affects presentation only and has no impact on the Group’s financial position and performance.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 53
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.4 Standards issued but not yet effective cont’d
MFRS 13 Fair Value Measurement
MFRS 13 establishes a single source of guidance under MFRS for all fair value measurements. MFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under MFRS when fair value is required or permitted.
Upon adoption of MFRS 13, the Group will take into consideration the highest and best use of certain properties in measuring the fair value of such properties. The adoption of MFRS 13 is expected to result in higher fair value of certain properties of the Group.
MFRS 9 Financial Instruments: Classification and Measurement
MFRS 9 reflects the first phase of the work on the replacement of MFRS 139 Financial Instruments: Recognition and Measurement and applies to classification and measurement of financial assets and financial liabilities as defined in MFRS 139 Financial Instruments: Recognition and Measurement. The adoption of the first phase of MFRS 9 will have an effect on the classification and measurement of the Group’s financial assets. The Group will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued.
2.5 Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at
the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.
All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.
The acquisitions of subsidiaries are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received.
In business combinations achieved in stages, previously held equity interests in the acquiree are re-measured to fair
value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.
The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognised on the acquisition date at fair value, or at the non-controlling interest’s proportionate share of the acquiree net identifiable assets.
Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group’s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree’s identifiable assets and liabilities is recorded as goodwill in the statement of financial position. The accounting policy for goodwill is set out in Note 2.31. In instances where the latter amount exceeds the former, the excess is recognised as a gain on bargain purchase in profit or loss on the acquisition date.
Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.
Harbour-Link Group Berhad (592902-D)Annual Report 201354
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.6 Transactions with non-controlling interests
Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and is presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately from equity attributable to owners of the Company.
Changes in the Company owners’ ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the parent.
2.7 Subsidiaries A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to
obtain benefits from its activities.
In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.
2.8 Associates An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. An
associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate.
The Group’s investments in associates are accounted for using the equity method. Under the equity method, the investment in associates is measured in the statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the associates. Goodwill relating to associates is included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s profit or loss for the period in which the investment is acquired.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.
After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investment in its associates. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in profit or loss.
The financial statements of the associates are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.
In the Company’s separate financial statements, investments in associates are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 55
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.9 Joint controlled entities
A joint controlled entities is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control, where the strategic financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control. The Group recognises its interest in joint controlled entities using the equity method. Under the equity method, the investment in joint controlled entities is measured in the statements of financial position at cost plus post acquisition changes in the Group's share of net assets of the joint venture. The joint controlled entities is equity accounted from the date the Group obtains joint control until the date the Group ceases to have joint control over the joint venture.
Adjustments are made in the Group's consolidated financial statements to eliminate the Group's share of intragroup balances, income and expenses and unrealised gains and losses on transactions between the Group and its jointly controlled entity.
The financial statements of the joint venture are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies into line with those of the Group.
In the Company’s separate financial statements, its investment in joint controlled entities is stated at cost less impairment losses. On disposal of such investment, the difference between net disposal proceeds and the carrying amount is included in profit or loss.
2.10 Foreign currency
(a) Functional and presentation currency
The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency.
(b) Foreign currency transactions
Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.
Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.
Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.
Harbour-Link Group Berhad (592902-D)Annual Report 201356
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.10 Foreign currency cont’d
(c) Foreign operations The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the reporting
date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and accumulated in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in the profit or loss.
Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date.
2.11 Property, plant and equipment and depreciation
All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset’s
carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the profit or loss during the financial period in which they are incurred.
Subsequent to recognition, property, plant and equipment except for freehold land are stated at cost less accumulated depreciation and any accumulated impairment losses.
Freehold land has an unlimited useful life and therefore is not depreciated. Incomplete capital expenditure are also not depreciated as these assets are not available for use. Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates:
Buildings 2% Plant, and machinery and containers 5% - 20% Vessels and drydocking 5% - 50% Motor vehicles 12.5% - 20%
Furniture, fittings and equipment and others 5% - 20% The carrying values of property, plant and equipment are reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not be recoverable.
The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount is recognised in profit or loss and the unutilised portion of the revaluation surplus on that item is taken directly to retained earnings.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 57
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.12 Investment properties
Investment properties comprises principally land and buildings held for long term rental yields or for capital appreciation or both, and are not occupied by the Group. Investment properties are stated at cost less accumulated depreciation and accumulated impairment. Freehold land is not depreciated as it has infinite life.
Depreciation of investment properties is provided for on a straight-line basis to write off the cost of the investment properties to its residual value over the estimated useful life, at the following annual rate:
Buildings 2% On disposal of an investment property, or when it is permanently withdrawn from use and no future economic benefits
are expected from its disposal, it shall be derecognised. The difference between the net disposal proceeds and the carrying amount is recognised in profit or loss in the period of the retirement or disposal.
Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the carrying value at the date of change in use. For a transfer from owner-occupied property to investment property, the property is accounted for in accordance with the accounting policy for property, plant and equipment set out in Note 2.11 up to the date of change in use.
2.13 Engineering contracts
Where the outcome of an engineering contracts can be estimated reliably, contract revenue and contract costs are recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the reporting date. The stage of completion is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs.
Where the outcome of a construction contract cannot be reliably estimated, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
Contract revenue comprises the initial amount of revenue agreed in the contract and variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and they are capable of being reliably measured.
When costs incurred on construction contracts plus recognised profits (less recognised losses) exceeds progress billings, the balance is classified as amount due from customers on contracts. When progress billings exceed costs incurred plus recognised profits (less recognised losses), the balance is classified as amount due to customers on contracts.
2.14 Borrowing costs
Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.
Harbour-Link Group Berhad (592902-D)Annual Report 201358
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.15 Inventories Inventories are stated at the lower of cost and net realisable value.
Cost is determined using the first in, first out method. The cost of raw materials comprises costs of purchase. The costs of
finished goods and work-in-progress comprises costs of raw materials, direct labour, other direct costs and appropriate proportions of manufacturing overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completing and the estimated costs necessary to make the sale.
2.16 Leases A lease is an agreement whereby the lessor conveys to the lessee in return for a payment, or series of payments, the right
to use an asset for an agreed period of time.
(a) As lessee Finance leases Leases of property, plant and equipment where the Group assumes substantially all the risks and rewards of
ownership are classified as finance leases.
Finance leases are capitalised at the lower of the fair value of the leased assets and the estimated present value of the underlying lease payments at the date of inception. Each lease payment is allocated between the liability and finance charges so as to achieve a periodic constant rate of interest on the lease principal outstanding. The corresponding rental obligations, net of finance charges, are included in borrowings. The interest element of the finance charge is charged to profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Property, plant and equipment acquired under finance lease contracts is depreciated over the useful life of the assets. If there is no reasonable certainty that the ownership will be transferred to the Group, the asset is depreciated over the shorter of the lease term and its useful life.
Operating leases Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified
as operating leases. Payments made under operating leases are charged to profit or loss over the lease period.
(b) As lessor Finance leases Leases of assets where the lessee assumes substantially all the risks and rewards of ownership are classified as finance leases.
When assets are leased out under a finance lease, the present value of the lease payments is recognised as a
receivable. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance income. Lease income is recognised over the term of the lease using the net investment method so as to reflect a constant periodic rate of interest on the balance outstanding.
Operating leases Assets leased out under operating leases are included in property, plant and equipment in the statement of
financial position. They are depreciated over their useful lives on bases consistent with similar owned property, plant and equipment. Rental income (net of any incentives given to lessees) is recognised on a straight-line basis over the lease term.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 59
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.17 Prepaid land lease payments
Prepaid land lease payments are initially measured at cost. Following initial recognition, prepaid land lease payments are measured at cost less accumulated amortisation and accumulated impairment losses. The prepaid land lease payments are amortised over their lease terms ranging from 30 to 60 years.
2.18 Income taxes (a) Current tax The income tax expense for the period comprises current and deferred tax. Tax is recognised in profit and loss,
except to the extend that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively.
Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operates and includes all taxes based upon the taxable profits, including withholding taxes payable by a foreign subsidiary, associate or jointly controlled entity on distributions of retained earnings to companies in the Group.
(b) Deferred tax Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all temporary differences, except:
- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
- in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:
- where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
- in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
Harbour-Link Group Berhad (592902-D)Annual Report 201360
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.18 Income taxes cont’d
(b) Deferred tax cont’d The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
2.19 Employee benefits
Define contribution plans
Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into
separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in the profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund (“EPF”).
2.20 Cash and cash equivalents
For the purposes of the cash flow statements, cash and cash equivalents include cash on hand and at bank and short-term deposits with a maturity of three months or less, net of outstanding bank overdrafts.
2.21 Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:
(a) Revenue from services
Transportation and forwarding services, management services, labour supply, rental services are recognised on an accrual basis when services have been rendered.
(b) Engineering contracts
Revenue from engineering contracts is accounted for using the stage of completion method as described in Note 2.13 to the financial statements.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 61
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.21 Revenue recognition cont’d
(c) Sales of goods Revenue is recognised net of discounts and upon transfer of significant risks and rewards of ownership to the
buyer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.
(d) Interest income Interest income is recognised using the effective interest method.
(e) Management fees Management fees are recognised when services are rendered.
(f) Dividend income Dividend income is recognised when the Group’s right to receive payment is established.
(g) Rental income Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives
provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis.
(h) Development properties
(i) Sale of completed development property
A development property is regarded as sold when the significant risks and rewards have been transferred to the buyer, which is normally on unconditional exchange of contracts. For conditional exchanges, sales are recognised only when all the significant conditions are satisfied.
(ii) Sale of development property under construction
Where development property is under construction and agreement has been reached to sell such property when construction is complete, the directors consider whether the contract comprises:
- Where a contract is judged to be for the construction of a property, revenue is recognised using the percentage of completion method as construction progresses.
- Where the contract is judged to be for the sale of a completed property, revenue is recognised when the significant risks and rewards of ownership of the real estate have been transferred to the buyer (i.e. revenue is recognised using the completed contract method).
If, however, the legal terms of the contract are such that the construction represents the continuous transfer of work in progress to the purchaser, the percentage of completion method of revenue recognition is applied and revenue is recognised as work progresses.
In the above situation, the percentage of work completed is measured based on the costs incurred up until the end of the reporting periods as a proportion of total costs expected to be incurred.
Harbour-Link Group Berhad (592902-D)Annual Report 201362
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.22 Financial assets
Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.
The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets.
(a) Financial assets at fair value through profit or loss
Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.
Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income.
Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that is held primarily for trading purposes are presented as current whereas financial assets that is not held primarily for trading purposes are presented as current or non-current based on the settlement date.
The Group does not have financial assets designated at fair value through profit or loss during the financial year.
(b) Loans and receivables
Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.
Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest
method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.
Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.
(c) Held-to-maturity investments
Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity.
Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process.
Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 63
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.22 Financial assets cont’d
(d) Available-for-sale financial assets
Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories.
After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss.
The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Group and the Company's right to receive payment is established.
Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less
impairment loss. Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within
12 months after the reporting date.
A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset.
2.23 Impairment of financial assets
The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.
(a) Trade and other receivables and other financial assets carried at amortised cost
To determine whether there is objective evidence that an impairment loss on financial assets has been incurred,
the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.
Harbour-Link Group Berhad (592902-D)Annual Report 201364
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.23 Impairment of financial assets cont’d
(a) Trade and other receivables and other financial assets carried at amortised cost cont’d
If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.
(b) Unquoted equity securities carried at cost
If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.
(c) Available-for-sale financial assets
Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.
If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss.
Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or loss.
2.24 Financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.
Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 65
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.24 Financial liabilities cont’d
(a) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences.
The Group and the Company have not designated any financial liabilities as at fair value through profit or loss.
(b) Other financial liabilities
The Group’s and the Company's other financial liabilities include trade payables, other payables and loans and borrowings.
Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.
Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.
A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.
2.25 Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (“CGU”)).
In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.
Harbour-Link Group Berhad (592902-D)Annual Report 201366
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.25 Impairment of non-financial assets cont’d
Impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.
2.26 Segment reporting
For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 40, including the factors used to identify the reportable segments and the measurement basis of segment information.
2.27 Contingencies A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be
confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group.
Contingent liabilities and assets are not recognised in the statement of financial position of the Group.
2.28 Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event,
it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
2.29 Share capital and share issuance expenses
An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments.
Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 67
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.30 Development properties
Development properties are properties acquired or being constructed for sale in the ordinary course of business, rather than to be held for the Company’s own use, rental or capital appreciation.
Development properties are held as inventories and are measured at the lower of cost and net realisable value.
The costs of development properties include:
- Freehold and leasehold rights for;
- Amounts paid to contractors for construction; and
- Borrowing costs, planning and design costs, costs of site preparation, professional fees for legal services, property transfer taxes, construction overheads and other related costs.
Non-refundable commissions paid to sales or marketing agents on the sale of real estate units are expensed when incurred.
Net realisable value of development properties is the estimated selling price in the ordinary course of the business,
based on market prices at the end of the reporting period and discounted for the time value of money if material, less the estimated costs of completion and the estimated costs necessary to make the sale.
The costs of development properties recognised in profit or loss on disposal are determined with reference to the specific costs incurred on the property sold and an allocation of any non-specific costs based on the relative size of the property sold.
2.31 Intangible assets
(a) Goodwill Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated
impairment losses. For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition date, to each of the
Group’s cash-generating units that are expected to benefit from the synergies of the combination.
The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired, by comparing the carrying amount of the cash-generating unit, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods.
Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained.
Harbour-Link Group Berhad (592902-D)Annual Report 201368
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.31 Intangible assets cont’d
(b) Other intangible assets
Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial acquisition, intangible assets are measured at cost less any accumulated amortisation and accumulated impairment losses.
Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in profit or loss.
Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually, or more frequently if the events and circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. Such intangible assets are not amortised. The useful life of an intangible asset with an indefinite useful life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial acquisition, intangible assets are measured at cost less any accumulated amortisation and accumulated impairment losses.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.
Club membership Club membership was acquired separately and is carried at cost less accumulated impairment losses.
2.32 Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder
for a loss it incurs because a specified debtor fails to make payment when due.
Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.
As at reporting date, no values are placed on corporate guarantees provided by the Company to secure bank loans and other banking facilities granted to its subsidiaries where such loans and banking facilities are fully collateralised by fixed and floating charges over the property, plant and equipment and other assets of the subsidiaries and where the directors regard the value of the credit enhancement provided by the corporate guarantees is minimal.
3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 69
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES cont’d
3.1 Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
(a) Impairment of goodwill
Goodwill are tested for impairment annually and at other times when such indicators exist. This requires an estimation of the value in use of the cash-generating units to which goodwill are allocated.
When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows. Further details of the carrying value, the key assumptions applied in the impairment assessment of goodwill are given in Note 16.
(b) Impairment of loans and receivables
The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.
Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivable at the reporting date is disclosed in Note 24.
4. REVENUE Revenue of the Group and of the Company consists of the following:
Group Company
2013 2012 2013 2012
RM RM RM RM
Shipping, forwarding and transportation 287,790,956 359,150,548 - -
Engineering contract 51,113,545 78,911,925 - -
Hiring of plant and machinery 76,525,724 33,382,308 - -
Dividend income from
- associates - - 115,591 121,251
- subsidiaries - - 8,399,000 15,952,797
Management fees - 10,000 1,095,000 1,080,000
Maintenance services 5,163,286 817,027 - -
Rental income 1,188,750 360,000 641,000 636,000
Others 925,738 341,019 - -
422,707,999 472,972,827 10,250,591 17,790,048
Harbour-Link Group Berhad (592902-D)Annual Report 201370
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
5. OTHER INCOME
Group Company
2013 2012 2013 2012
RM RM RM RM
Gain on disposal of property, plant and equipment 1,250,191 5,682,457 - -
Insurance claims 5,399 - - -
Interest income 276,540 169,168 7,431 3,445
Interest received from subsidiaries - - 790,451 552,701
Management fee received 1,079,734 1,082,118 - -
Reversal of allowance for impairment on loan and receivables
- Trade receivables (Note 24) 3,212,656 3,888,359 - -
- Other receivables 21,213 50,971 - -
Recovery of bad debts 766,620 - - -
Rental income 546,797 256,074 - -
Realised foreign exchange gain 288,185 432,747 - -
Unrealised foreign exchange gain 94,883 314,692 - -
Sundry income 1,053,452 623,748 - -
8,595,670 12,500,334 797,882 556,146
6. FINANCE COSTS
Group Company
2013 2012 2013 2012
RM RM RM RM
Interest expense on:
Interest bearing bank borrowings 5,013,302 4,662,818 160,012 314,162
Bankers' acceptance interest 1,019,485 500,239 - -
Interest paid to subsidiaries - - 1,736,552 596,835
Obligation under finance lease 2,055,367 2,084,060 - -
Other interest 55,286 1,784 - -
8,143,440 7,248,901 1,896,564 910,997
Less: Interest capitalised into:
- Development property (360,138) (146,521) - -
7,783,302 7,102,380 1,896,564 910,997
Harbour-Link Group Berhad (592902-D) Annual Report 2013 71
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
7. PROFIT BEFORE TAX
The following items have been included in arriving at profit before tax:
Group Company
2013 2012 2013 2012
RM RM RM RM
Employee benefits expense (Note 8) 36,325,163 34,818,131 2,179,611 1,960,434
Non-executive directors’ remuneration (Note 9) 158,080 159,080 158,080 159,080
Amortisation of prepaid land lease payments (Note 15) 908,781 304,841 - -
Auditors' remuneration
- current year 288,495 272,299 25,000 25,000
- overprovision in prior year (9,400) (600) (1,000) -
Impairment loss on financial assets:
- Trade receivables (Note 24) 5,035,888 4,032,818 - -
- Other receivables 12 18,442 - -
- Loan to a subsidiary - - - 6,136,000
Depreciation of property, plant and equipment (Note 13) 15,998,636 15,473,003 311,951 314,188
Depreciation of investment properties (Note 14) 217,612 216,217 - -
Loss on disposal of property, plant and equipment 5,009 2,509,168 - -
Realised foreign exchange loss 264,196 380,443 - -
Unrealised foreign exchange loss 477,879 308,435 - -
Property, plant and equipment written off 148,200 79,060 2,674 261
Impairment loss on intangible assets (Note 16) 25,554,646 - - -
Intangible assets written off 23,056 - - -
Rental expenses 2,117,744 2,889,450 54,578 40,983 8. EMPLOYEE BENEFITS EXPENSE
Group Company
2013 2012 2013 2012
RM RM RM RM
Salaries and wages 28,660,342 26,995,981 1,752,590 1,566,609
Allowances 1,822,302 2,029,675 12,934 17,504
Bonus 1,901,824 1,901,671 164,798 153,813
Contributions to defined contribution plan and social security contributions 3,635,296 3,632,940 249,289 222,850
Other benefits 305,399 257,864 - (342)
36,325,163 34,818,131 2,179,611 1,960,434
Included in employee benefits expense of the Group and of the Company are Executive Directors' remuneration amounting to RM3,947,393 (2012: RM3,515,476) and RM706,938 (2012: RM673,871) respectively.
Harbour-Link Group Berhad (592902-D)Annual Report 201372
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
9. DIRECTORS’ REMUNERATION
The details of remuneration receivable by directors of the Group and the Company during the year are as follows:
Group Company
2013 2012 2013 2012
RM RM RM RM
Executive:
Salaries and other emoluments 3,192,232 2,787,799 578,140 556,071
Bonus 310,585 365,124 56,488 48,988
Contributions to defined contribution plan and social security contributions 444,576 362,553 72,310 68,812
Total executive director’s remuneration (excluding benefits-in-kind) (Note 8) 3,947,393 3,515,476 706,938 673,871
Estimated money value of benefits in-kind 34,409 31,925 - -
Total executive directors’ remuneration (including benefits-in-kinds) 3,981,802 3,547,401 706,938 673,871
Non-executive directors’ remuneration:
Allowance 22,000 23,000 22,000 23,000
Fees 136,080 136,080 136,080 136,080
Total non-executive directors’ remuneration 158,080 159,080 158,080 159,080
Total directors’ remuneration (Note 36 (b)) 4,139,882 3,706,481 865,018 832,951
The number of directors of the Company whose total remuneration during the financial year fell within the following bands is analysed below:
Number of Directors
2013 2012
Executive directors:
RM650,001-RM700,000 1 1
RM400,001-RM450,000 1 1
RM350,001-RM400,000 1 1
RM300,001-RM350,000 2 2
RM250,001-RM300,000 1 1
Non-executive directors:
Below RM50,000 1 1
RM50,001-RM100,000 2 2
Harbour-Link Group Berhad (592902-D) Annual Report 2013 73
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
10. INCOME TAX EXPENSE
The major components of income tax expense for the years ended 30 June 2013 and 2012 are:
Group Company
2013 2012 2013 2012
RM RM RM RM
Current income tax:
Malaysian income tax 10,816,047 6,707,023 878,476 2,183,921
Foreign tax - 20,711 - -
(Over)/underprovision in prior year (17,719) (38,964) 51,088 -
10,798,328 6,688,770 929,564 2,183,921
Deferred income tax (Note 21):
Relating to origination and reversal of temporary differences 361,233 2,257,553 (1,807) (2,585)
(Over)/underprovision in prior year (64,960) 275,046 2,241 31,825
296,273 2,532,599 434 29,240
Total income tax recognised in profit or loss 11,094,601 9,221,369 929,998 2,213,161
Domestics income tax is calculated at the Malaysian statutory tax rate of 25% (2012: 25%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdiction. The corporate tax rate applicable to the Singapore subsidiary of the Group is 17% (2012: 17%).
Harbour-Link Group Berhad (592902-D)Annual Report 201374
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
10. INCOME TAX EXPENSE cont’d
A reconciliation of income tax expense applicable to profit before tax at the statutory income tax rate to income tax expense at the effective tax rate of the Group and Company are as follows:
Group 2013 2012
RM RM
Profit before tax 17,644,579 35,230,190
Tax at Malaysian statutory tax rate of 25% (2012: 25%) 4,411,145 8,807,548
Different tax rate in other countries 3,614 (48,763)
Expenses not deductible for tax purposes 8,636,502 1,450,754
Income not subject to tax (1,706,846) (979,228)
Deferred tax assets not recognised during the year 1,817,895 1,343,256
Utilisation of previously unrecognised unutilised tax losses and unabsorbed capital allowance (1,985,030) (1,588,280)
Over provision of tax expense in prior years (17,719) (38,964)
(Over)/underprovision of deferred tax in prior years (64,960) 275,046
Income tax expense for the year 11,094,601 9,221,369
Company
Profit before tax 5,655,605 8,097,198
Tax at Malaysian statutory tax rate of 25% (2012: 25%) 1,413,901 2,024,300
Expenses not deductible for tax purposes 120,518 1,616,285
Income not subject to tax (657,750) (1,459,249)
Underprovision of tax expense in prior years 51,088 -
Underprovision of deferred tax in prior years 2,241 31,825
Income tax expense for the year 929,998 2,213,161
Harbour-Link Group Berhad (592902-D) Annual Report 2013 75
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
11. EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing profit for the year, net of tax, attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the financial year.
The following tables reflect the profit and share data used in the computation of basic earnings per share for the years ended 30 June:
Group
2013 2012
RM RM
Profit net of tax attributable to owners of the Company used in the computation of basic earnings per share 5,093,101 27,191,536
Weighted average number of ordinary shares in issue 182,000,002 182,000,002
Basic earnings per share (sen) 2.80 14.94 There is no dilution in the earning per share for the current and the previous year end as there are no dilutive potential
ordinary shares outstanding at the end of the reporting period.
12. DIVIDENDS
Group and Company
2013 2012
RM RM
Recognised during the year:
Dividends on ordinary shares
First and final tax exempt (single-tier) dividend for 2012: 2 sen (2011: 2 sen) per share 3,640,000 3,640,000
Proposed but not recognised as a liability as at 30 June:
Dividends on ordinary shares, subject to shareholders’ approved at the AGM:
First and final tax exempt (single-tier) dividend for 2013 : 2.5 sen (2012: 2 sen) per share 4,550,000 3,640,000
At the forthcoming Annual General Meeting, the first and final tax exempt (single-tier) dividend in respect of the financial year ended 30 June 2013, of 2.5% on 182,000,002 ordinary shares amounting to a dividend payable of RM4,550,000 (2.5 sen per ordinary share) will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 30 June 2014.
Harbour-Link Group Berhad (592902-D)Annual Report 201376
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
13. PROPERTY, PLANT AND EQUIPMENT
* Land andBuildings
Plant andMachinery
andContainers Vessels
MotorVehicles
Furniture,Fittings,
Equipment,and Others
ConstructionWork-in-Progress Total
Group RM RM RM RM RM RM RM
At 30 June 2013
Cost At 1 July 2012 21,052,880 147,155,961 69,903,568 11,709,985 11,480,482 2,941,220 264,244,096
Effects of MFRS adoption 1,813,335 - - - - - 1,813,335
22,866,215 147,155,961 69,903,568 11,709,985 11,480,482 2,941,220 266,057,431
Additions 8,386,484 25,187,335 3,676,984 752,802 1,481,055 2,383,792 41,868,452
Transfer to investment properties (Note 14) (504,322) - - - - - (504,322)
Reclassification - 180,730 (180,730) - - - -
Acquisition of subsidiary - 364,262 - 224,418 144,943 - 733,623
Exchange difference - (19,387) - 301 20,363 - 1,277
Disposals/written off (330,394) (1,750,919) - (196,610) (398,981) - (2,676,904)
At 30 June 2013 30,417,983 171,117,982 73,399,822 12,490,896 12,727,862 5,325,012 305,479,557
Accumulated depreciation
At 1 July 2012 2,548,278 62,965,028 16,848,235 8,210,163 8,947,066 - 99,518,770
Effects of MFRS adoption 332,855 - - - - - 332,855
2,881,133 62,965,028 16,848,235 8,210,163 8,947,066 - 99,851,625
Acquisition of a subsidiary - 21,755 - 220,191 138,619 - 380,565
Depreciation charge for the year 325,590 9,852,334 3,815,445 1,263,662 1,827,221 - 17,084,252
Recognised in profit or loss (Note 7) 249,283 9,109,875 3,815,445 1,023,993 1,800,040 - 15,998,636
Capitalised in construction cost (Note 27) 76,307 742,459 - 239,669 27,181 - 1,085,616
Reclassification - 27,109 (27,109) - - - -
Exchange difference - (19,388) - 389 20,406 - 1,407
Disposals/written off (118,712) (634,276) - (196,606) (332,567) - (1,282,161)
At 30 June 2013 3,088,011 72,212,562 20,636,571 9,497,799 10,600,745 - 116,035,688
Net carrying amount 27,329,972 98,905,420 52,763,251 2,993,097 2,127,117 5,325,012 189,443,869
Harbour-Link Group Berhad (592902-D) Annual Report 2013 77
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
13. PROPERTY, PLANT AND EQUIPMENT cont’d
* Land andBuildings
Plant andMachinery
andContainers Vessels
MotorVehicles
Furniture,Fittings,
Equipment,and Others
ConstructionWork-in-Progress Total
Group RM RM RM RM RM RM RM
At 30 June 2012
Cost
At 1 July 2011 20,651,852 132,329,632 75,096,312 11,382,559 11,806,947 1,970,491 253,237,793
Effects of adopting MFRS 1,813,335 - - - - - 1,813,335
22,465,187 132,329,632 75,096,312 11,382,559 11,806,947 1,970,491 255,051,128
Additions 401,028 19,588,737 7,184,808 833,798 670,906 970,729 29,650,006
Acquisition of a subsidiary - 797,073 2,906,842 41,500 35,970 - 3,781,385
Exchange difference - 642 - 453 482 - 1,577
Disposals/written off - (5,560,123) (15,284,394) (548,325) (1,033,823) - (22,426,665)
At 30 June 2012 22,866,215 147,155,961 69,903,568 11,709,985 11,480,482 2,941,220 266,057,431
Accumulated depreciation
At 1 July 2011 2,257,726 58,434,793 19,983,529 7,435,507 7,420,349 - 95,531,904
Effects of adopting MFRS 297,818 - - - - - 297,818
2,555,544 58,434,793 19,983,529 7,435,507 7,420,349 - 95,829,722
Acquisition of a subsidiary - 400,000 1,365,402 41,500 15,519 - 1,822,421
Depreciation charge for the year 325,589 8,245,927 3,952,724 1,238,808 2,191,700 - 15,954,748
Recognised in profit or loss (Note 7) 249,282 7,846,217 3,952,724 1,233,080 2,191,700 - 15,473,003
Capitalised in construction cost (Note 27) 76,307 399,710 - 5,728 - - 481,745
Exchange difference - 676 - 616 795 - 2,087
Disposals/written off - (4,116,368) (8,453,420) (506,268) (681,297) - (13,757,353)
At 30 June 2012 2,881,133 62,965,028 16,848,235 8,210,163 8,947,066 - 99,851,625
Net carrying amount 19,985,082 84,190,933 53,055,333 3,499,822 2,533,416 2,941,220 166,205,806
Harbour-Link Group Berhad (592902-D)Annual Report 201378
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
13. PROPERTY, PLANT AND EQUIPMENT cont’d
* Land and buildings of the Group
FreeholdLand Buildings
Building-in-Progress Total
RM RM RM RM
At 30 June 2013
Cost
At 1 July 2012 2,140,000 16,495,399 2,417,481 21,052,880
Effects of adopting MFRS - 1,813,335 - 1,813,335
2,140,000 18,308,734 2,417,481 22,866,215
Additions 7,623,270 - 763,214 8,386,484
Transfer to investment properties (Note 14) - - (504,322) (504,322)
Reclassification - 2,676,373 (2,676,373) -
Disposals/written off - (330,394) - (330,394)
At 30 June 2013 9,763,270 20,654,713 - 30,417,983
Accumulated depreciation
At 1 July 2012 - 2,548,278 - 2,548,278
Effects of adopting MFRS - 332,855 - 332,855
- 2,881,133 - 2,881,133
Depreciation charge for the year - 325,590 - 325,590
Disposals/written off - (118,712) - (118,712)
At 30 June 2013 - 3,088,011 - 3,088,011
Net carrying amount 9,763,270 17,566,702 - 27,329,972
Harbour-Link Group Berhad (592902-D) Annual Report 2013 79
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
13. PROPERTY, PLANT AND EQUIPMENT cont’d
* Land and buildings of the Group cont’d
FreeholdLand Buildings
Building-in-Progress Total
RM RM RM RM
At 30 June 2012
Cost
At 1 July 2011 2,140,000 16,495,399 2,016,453 20,651,852
Effects of adopting MFRS - 1,813,335 - 1,813,335
2,140,000 18,308,734 2,016,453 22,465,187
Additions - - 401,028 401,028
At 30 June 2012 2,140,000 18,308,734 2,417,481 22,866,215
Accumulated depreciation
At 1 July 2011 - 2,257,726 - 2,257,726
Effects of adopting MFRS - 297,818 - 297,818
- 2,555,544 - 2,555,544
Depreciation charge for the year - 325,589 - 325,589
At 30 June 2012 - 2,881,133 - 2,881,133
Net carrying amount 2,140,000 15,427,601 2,417,481 19,985,082
Harbour-Link Group Berhad (592902-D)Annual Report 201380
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
13. PROPERTY, PLANT AND EQUIPMENT cont’d
Land andBuilding
MotorVehicles
Furniture,Fittings and
Equipmentand Others Total
Company RM RM RM RM
At 30 June 2013
Cost
At 1 July 2012 6,785,510 677,769 865,957 8,329,236
Additions - - 96,674 96,674
Disposals/written off - - (14,275) (14,275)
At 30 June 2013 6,785,510 677,769 948,356 8,411,635
Accumulated depreciation
At 1 July 2012 481,630 665,956 551,373 1,698,959
Depreciation charge for the year (Note 7) 129,657 11,809 170,485 311,951
Disposals/written off - - (10,591) (10,591)
At 30 June 2013 611,287 677,765 711,267 2,000,319
Net carrying amount 6,174,223 4 237,089 6,411,316
At 30 June 2012
Cost
At 1 July 2011 6,785,510 677,769 843,286 8,306,565
Additions - - 23,445 23,445
Written off - - (774) (774)
At 30 June 2012 6,785,510 677,769 865,957 8,329,236
Accumulated depreciation
At 1 July 2011 351,973 652,736 380,575 1,385,284
Depreciation charge for the year (Note 7) 129,657 13,220 171,311 314,188
Written off - - (513) (513)
At 30 June 2012 481,630 665,956 551,373 1,698,959
Net carrying amount 6,303,880 11,813 314,584 6,630,277
Harbour-Link Group Berhad (592902-D) Annual Report 2013 81
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
13. PROPERTY, PLANT AND EQUIPMENT cont’d (a) During the financial year, the Group acquired property, plant and equipment at aggregate costs of RM41,868,452 (2012:
RM29,650,006) of which RM20,146,321 (2012: RM4,956,908) were acquired by means of hire purchase and finance lease arrangements.
(b) Net carrying amount of property, plant and equipment under hire purchase and finance lease arrangements are as follows:
Group
2013 2012
RM RM
Motor vehicles 1,238,891 1,580,899
Plant and machinery and equipment 53,302,857 49,085,069
54,541,748 50,665,968
Details of the terms and conditions of the hire purchase and finance lease arrangements are disclosed in Note 35(b).
(c) The net carrying amount of property, plant and equipment pledged for loans and borrowings as referred in Notes 29.
Group Company
2013 2012 2013 2012
RM RM RM RM
Buildings 9,944,112 7,945,858 6,174,223 6,303,880
Freehold land 2,090,000 2,090,000 - -
Plant and machinery 7,531,851 1,893,938 - -
Vessels 49,050,881 45,388,978 - -
68,616,844 57,318,774 6,174,223 6,303,880
Harbour-Link Group Berhad (592902-D)Annual Report 201382
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
14. INVESTMENT PROPERTIES
Group
2013 2012
RM RM
At 1 July 9,987,122 9,375,089
Effects of adopting MFRS 78,345 79,574
10,065,467 9,454,663
Transfer from property, plant and equipment (Note 13) 504,322 -
Additions 604 827,021
Depreciation for the year (Note 7) (217,612) (216,217)
At 30 June 10,352,781 10,065,467
Fair value of the investment properties 13,680,000 12,938,000
Investment properties with aggregate carrying value of RM10,352,781 (2012: RM10,065,467) are under pledge for securities for borrowings as disclosed in Note 29.
Investment properties comprises a number of commercial properties leased to third parties.
15. PREPAID LAND LEASE PAYMENTS
Group
2013 2012
RM RM
Cost
At 1 July 43,786,578 46,538,141
Transfer to development properties (Note 22) (4,216,489) (2,751,563)
At 30 June 39,570,089 43,786,578
Accumulated amortisation
At 1 July 1,392,241 1,087,400
Transfer to development properties (Note 22) (67,745) -
Charge for the year ( Note 7) 908,781 304,841
At 30 June 2,233,277 1,392,241
Net carrying amount 37,336,812 42,394,337
Prepaid land lease payments with aggregate carrying value of RM36,563,878 (2012: RM41,794,397) are under pledge for securities for borrowings as disclosed in Note 29.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 83
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
16. INTANGIBLE ASSETS
Group
Goodwill
Transferable Club
Membership Total
RM RM RM
Cost
At 1 July 2011 95,213,520 140,000 95,353,520
Effects of adopting MFRS (69,658,874) - (69,658,874)
At 30 June 2012/ 30 June 2013 25,554,646 140,000 25,694,646
Accumulated amortisation and impairment
At 1 July 2011 725,987 35,000 760,987
Effects of adopting MFRS (725,987) - (725,987)
At 30 June 2012 - 35,000 35,000
Impairment loss recognised in profit or loss (Note 7) 25,554,646 - 25,554,646
At 30 June 2013 25,554,646 35,000 25,589,646
Net carrying amount:
30 June 2012 25,554,646 105,000 25,659,646
30 June 2013 - 105,000 105,000
Impairment testing of goodwill
After adopting MFRS from the date of transition as referred in Note 2.3, the remaining goodwill arising from business combination was from engineering contracts.
The recoverable amount of a CGU has been determined based on value in use calculations using cash flow projections from financial budgets approved by management covering a five-year period. The followings describes each key assumptions on which the management has based on its cash flow projections to undertake impairment testing for goodwill:
(i) Budgeted gross margin
The basis used to determine the value assigned to the budgeted gross margins is the average gross margins achieved in the year immediately before the budgeted year increased for the expected efficiency improvements.
(ii) Growth rate
The forecasted growth rate are based on the Company’s estimates and do not exceed the long-term average growth date for the industry relevant to the CGU.
(iii) Discount rate
The discount rate used are pre-tax and reflect risks relating to the industry.
Harbour-Link Group Berhad (592902-D)Annual Report 201384
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
16. INTANGIBLE ASSETS cont’d
Impairment loss recognised
During the financial year, an impairment loss was recognised to write down all the carrying value of goodwill from engineering contracts due to higher discount rate of 12% (2012: 9%) with higher risk perceived. The impairment loss has been recognised in the statement of comprehensive income under the line item “administrative and other expenses”.
17. INVESTMENT IN SUBSIDIARIES
Company
2013 2012
RM RM
Unquoted shares at cost 178,324,623 175,264,623
Accumulated impairment losses (100,000) (100,000)
178,224,623 175,164,623
(a) Details of the subsidiaries are as follows:
Name of SubsidiariesCountry of
Incorporation Principal Activities
% of ownership interest held by
Group
2013 2012
% %
Harbour-Link (M) Sdn. Bhd. (“HLM”)*
Malaysia Management services and investment holding
100 100
Eastern Soldar Engineering & Construction Sdn. Bhd.(“ESEC”)*
Malaysia Investment holding, multi-discipline engineering and procurement
100 100
Harbour Agencies (Sarawak) Sdn. Bhd. (“HAS”)*
Malaysia Shipping and forwarding 100 100
Harbour-Link Navigation Sdn. Bhd. (“HLN”)*
Malaysia Investment holding 100 100
Harbour Link Lines Sdn. Bhd. (“HLLines”)*
Malaysia Port and shipping agency services, freight forwarder and maritime services
80 80
HLG Resources Sdn. Bhd.* (“HLG Resources”)
Malaysia Investment holding, agriculture and property development
100 100
HLG Petroleum Sdn. Bhd.* Malaysia Investment holding and trading in petroleum and petrochemical products
100 100
Harbour Hornbill Sdn. Bhd.* Malaysia Ship owning and ship management 80 80
Harbour Ivory Sdn. Bhd.* Malaysia Ship owning and ship operator services 80 80
Arcadia Properties Sdn. Bhd.* (“APSB”)
Malaysia Investment holding 51 51
Harbour-Link Group Berhad (592902-D) Annual Report 2013 85
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
17. INVESTMENT IN SUBSIDIARIES cont’d
(a) Details of the subsidiaries are as follows: cont’d
Name of SubsidiariesCountry of
Incorporation Principal Activities
% of ownership interest held by
Group
2013 2012
% %
Subsidiaries of HLM
A.T Dunia (Btu) Sdn. Bhd.* Malaysia Forwarding and transportation 100 100
HLG Engineering Sdn. Bhd.* Malaysia Consultancy services and provision of engineering works
100 100
Harbour Services Corporation Sdn. Bhd.*
Malaysia Hiring, stevedoring, transportation and sales of pallets
100 100
Harbour Agencies (Sibu) Sdn. Bhd.*
Malaysia Ship owning and ship management 100 100
Harbour-Link Logistics Sdn. Bhd.(“HLLogistics”)*
Malaysia Hiring and transportation 100 100
Progresif Lengkap Sdn. Bhd. (“PL”)*
Malaysia Road safety, training and consultancy 100 100
Harbour Services (Kuching) Sdn. Bhd.*
Malaysia Ship owning and ship management 100 100
Harbour Services Sdn Bhd * (Note (i))
Malaysia Forwarding and transportation 49 -
Harbour-Link (Labuan) Limited* Malaysia Dormant 100 100
Harbour Agencies Sdn. Bhd.* Malaysia 100 100
Harbour Services (Miri) Sdn. Bhd.* Malaysia Dormant 100 100
Harbour-Link Leasing Sdn. Bhd.* Malaysia 100 100
Subsidiary of PL
Road Safety & Driving Academy Sdn. Bhd.*
Malaysia Dormant 100 100
Subsidiaries of ESEC
ESE Energy Sdn. Bhd.* Malaysia Civil engineering and ancillary works 100 100
Eastern Soldar (Singapore) Pte. Ltd.**
Singapore Provision of civil, mechanical and engineering works, construction and procurement
100 100
ESEC (Cambodia) Pte. Ltd. (“ECPL”) **
Cambodia Dormant 100 100
Harbour-Link Group Berhad (592902-D)Annual Report 201386
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
17. INVESTMENT IN SUBSIDIARIES cont’d
(a) Details of the subsidiaries are as follows: cont’d
Name of SubsidiariesCountry of
Incorporation Principal Activities
% of ownership interest held by
Group
2013 2012
% %
Subsidiary of HAS
Harbour Agencies (Sabah) Sdn. Bhd.*
Malaysia Shipping and forwarding 100 100
Navasco Shipping Sdn. Bhd.* Malaysia Ship owning and ship management 100 100
Subsidiaries of HLN
Harbour Eagle Sdn. Bhd.* Malaysia
Ship owning and ship management
100 100
Harbour Challenger Sdn. Bhd.* Malaysia 100 100
Satun Shipping Sdn. Bhd.* Malaysia 100 100
Harbour Gemini Sdn. Bhd.* Malaysia 52 52
Harbour-Link Shipping Sdn. Bhd.* Malaysia Dormant 100 100
Harbour-Link Marine Services Sdn. Bhd.*
Malaysia Ship management and consultancy services 100 100
Subsidiaries of HLLogistics
Harbour-Link Logistics (S) Sdn. Bhd. (“HLLS”)*
MalaysiaHiring of equipments and machinery and
provision of transportation services
100 100
Siong Jaya Sdn. Bhd.* Malaysia 100 -
Subsidiaries of HLLines
Harbour-Link Lines (JB) Sdn. Bhd.* Malaysia
Port agent, ship operator and provision of freighting and marine services
70 70
Harbour-Link Lines (KCH) Sdn. Bhd.* Malaysia 60 60
Harbour-Link Lines (KK) Sdn. Bhd.* Malaysia 95 95
Harbour-Link Lines (PK) Sdn. Bhd.* Malaysia 60 60
Harbour Jupiter Sdn. Bhd. * Malaysia Dormant 100 100
Subsidiary of APSB
Sarawak Edible Oils Sdn. Bhd.* Malaysia Dormant 100 100
Subsidiary of HLG Resources
HLG Equipment Sdn. Bhd.* Malaysia Provision of port related services services 60 60
* Audited by Ernst & Young, Malaysia. ** Audited by firms of auditors other than Ernst & Young, Malaysia.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 87
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
17. INVESTMENT IN SUBSIDIARIES cont’d
(a) Details of the subsidiaries are as follows: cont’d (i) Although the Group owns 49% of the equity interest of Harbour Services Sdn. Bhd. (“HSSB”), the Group has the
power to govern the financial and operating policies of HSSB by virtue of the right to appoint three directors out of total four directors to the board of directors of HSSB.
Acquisition of subsidiaries
On 27th November 2012, Harbour-Link Logistics Sdn. Bhd., a wholly-owned sub-subsidiary of the Group had acquired the remaining 51% of the issued and paid up share capital of Siong Jaya Sdn. Bhd. (“SJSB”) for a total consideration of RM255,000.
On 2 January 2013, Harbour-Link (M) Sdn. Bhd., a wholly-owned sub-subsidiary of the Company had acquired 49% equity interest in Harbour Services Sdn. Bhd. (“HSSB”) for a total consideration of RM367,500.
The fair values of the identifiable assets and liabilities of SJSB and HSSB as at the date of acquisition were:
SJSB HSSB Total
RM RM RM
Property, plant and equipment 342,507 10,551 353,058
Deferred tax assets - 1,493 1,493
Trade and other receivables 298,757 2,829,793 3,128,550
Other current assets - 8,164 8,164
Tax recoverable - 15,195 15,195
Cash and bank balances 80,085 1,243,051 1,323,136
721,349 4,108,247 4,829,596
Trade and other payables 238,652 3,358,247 3,596,899
Tax payables 641 - 641
Deferred tax liabilities 4,598 - 4,598
243,891 3,358,247 3,602,138
Total identifiable net assets 477,458 750,000 1,227,458
Less: Non-controlling interests measured at proportionate share of net identifiable assets - (382,500) (382,500)
Goodwill arising from acquisition 23,056 - 23,056
Total cost of acquisition 500,514 367,500 868,014
Harbour-Link Group Berhad (592902-D)Annual Report 201388
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
17. INVESTMENT IN SUBSIDIARIES cont’d
Acquisition of subsidiaries cont’d
The fair values of the identifiable assets and liabilities of SJSB and HSSB as at the date of acquisition were: cont’d
SJSB HSSB Total
RM RM RM
The effect on the acquisition on cash flows is as follows:
Total cost of acquisition 500,514 367,500 868,014
Less: Carrying amount of investment in associate previously held (245,514) - (245,514)
Purchase consideration satisfied by cash 255,000 367,500 622,500
Cash and cash equivalents of subsidiaries acquired (80,085) (247,097) (327,182)
Net cash outflow on acquisition 174,915 120,403 295,318
18. INVESTMENT IN ASSOCIATES
Group Company
2013 2012 2013 2012
RM RM RM RM
Unquoted shares in Malaysia, at cost 1,672,200 1,917,200 1,466,200 1,466,200
Share of post-acquisition reserves 1,357,374 732,633 - -
3,029,574 2,649,833 1,466,200 1,466,200
Details of the associates are as follows:
Name of AssociatesCountry of
Incorporation Principal ActivitiesProportion of
Ownership Interest
2013 2012
% %
Eastock Resources Sdn. Bhd. * Malaysia Renting of property 25 25
ECL (Malaysia) Sdn. Bhd ** Malaysia Shipping and related services 49 49
Siong Jaya Sdn. Bhd. (“SJSB”) * Malaysia Hiring and transportation - 49
HKK Jaya Sdn. Bhd. ** Malaysia Ship owning and ship operator services 42 42
* Audited by Ernst & Young, Malaysia ** Audited by firms of auditors other than Ernst & Young, Malaysia
With the acquisition of the remaining equity interest in SJSB on 27 November 2012, the investment in SJSB has been
reclassified to investment in subsidiaries.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 89
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
18. INVESTMENT IN ASSOCIATES cont’d
The summarised financial information of the associates, not adjusted for the proportion of ownership interest held by the Group is as follows:
Group
2013 2012
RM RM
Assets and liabilities
Current assets 6,669,370 6,879,083
Non-current assets 12,692,257 12,839,239
Total assets 19,361,627 19,718,322
Current liabilities 3,299,093 4,774,870
Non-current liabilities 6,552,087 8,048,287
Total liabilities 9,851,180 12,823,157
The Group’s share of the revenue and expenses of the associates are as follows:
Revenue 5,940,942 6,846,663
Profit for the year 740,846 962,623
19. INVESTMENT IN JOINTLY CONTROLLED ENTITIES
Group
2013 2012
RM RM
Unquoted shares at cost 650,000 650,000
Share of post-acquisition profit 2,423,114 1,932,308
3,073,114 2,582,308 Details of the jointly controlled entities are as follows:
Name of Jointly Controlled EntitiesCountry of
Incorporation Principal Activities
Proportion of Ownership
Interest
2013 2012
% %
A&H Project Services Sdn. Bhd. ** Malaysia Transportation and crane renting 50 50
** Audited by firms of auditors other than Ernst & Young, Malaysia.
Harbour-Link Group Berhad (592902-D)Annual Report 201390
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
19. INVESTMENT IN JOINTLY CONTROLLED ENTITIES cont’d
The Group’s share of the assets, liabilities, income and expenses of the jointly controlled entities are as follows:
Group
2013 2012
RM RM
Assets and liabilities
Current assets 3,174,995 2,553,025
Non-current assets 70,812 31,010
Total assets 3,245,807 2,584,035
Current liabilities 171,031 -
Non-current liabilities 1,662 1,727
Total liabilities 172,693 1,727
Results
Revenue 2,051,653 137,760
Profit for the year 490,806 20,373
20. OTHER INVESTMENTS
Group
2013 2012
RM RM
Available-for-sale investment
Unquoted shares at cost
- outside Malaysia 652,445 652,445 Available-for-sale investment represent investment made to non-listed investment outside Malaysia. The investment is recorded at cost since the fair value cannot be reliably estimated. There is no market value for the investment and the Group does not intend to dispose the investment in the foreseeable future.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 91
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
21. DEFERRED TAX ASSETS/(LIABILITIES)
Group Company
2013 2012 2013 2012
RM RM RM RM
At 1 July (9,195,665) (6,236,365) (43,879) (14,639)
Effects of adopting MFRS (389,708) (398,774) - -
(9,585,373) (6,635,139) (43,879) (14,639)
Exchange differences 315 - - -
Recognised in profit or loss (Note 10) (296,273) (2,532,599) (434) (29,240)
Acquisition of subsidiaries (3,105) (417,635) - -
At 30 June (9,884,436) (9,585,373) (44,313) (43,879) The following amounts, determined after appropriate offsetting, are shown in the statement of financial position.
Group Company
2013 2012 2013 2012
RM RM RM RM
Deferred tax assets 761,953 446,166 - -
Deferred tax liabilities (10,646,389) (10,031,539) (44,313) (43,879)
(9,884,436) (9,585,373) (44,313) (43,879) Group
Tax Losses
Unabsorbed Capital
Allowances
Allowance for
Impairment Losses Total
RM RM RM RM
Deferred tax assets:
At 1 July 2012 131,311 613,896 741,352 1,486,559
Recognised in profit or loss 31,320 2,613,222 1,065,067 3,709,609
Acquisition of subsidiaries - 2,717 - 2,717
At 30 June 2013 162,631 3,229,835 1,806,419 5,198,885
At 1 July 2011 (28,457) 210,312 1,191,145 1,373,000
Recognised in profit or loss 159,768 403,584 (449,793) 113,559
At 30 June 2012 131,311 613,896 741,352 1,486,559
Harbour-Link Group Berhad (592902-D)Annual Report 201392
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
21. DEFERRED TAX ASSETS/(LIABILITIES) cont’d
Group
Property, Plant and
Equipment
RM
Deferred tax liabilities
At 1 July 2012 (10,682,224)
Effects of adopting MFRS (389,708)
(11,071,932)
Exchange differences 315
Recognised in profit or loss (4,005,882)
Acquisition of subsidiaries (5,822)
At 30 June 2013 (15,083,321)
At 1 July 2011 (7,609,365)
Effects of adopting MFRS (398,774)
(8,008,139)
Recognised in profit or loss (2,646,158)
Acquisition of subsidiary (417,635)
At 30 June 2012 (11,071,932)
Harbour-Link Group Berhad (592902-D) Annual Report 2013 93
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
21. DEFERRED TAX ASSETS/(LIABILITIES) cont’d
Company
Property, Plant and
Equipment
RM
2013
Deferred tax liabilities
At 1 July 2012 (43,879)
Recognised in profit or loss (Note 10) (434)
At 30 June 2013 (44,313)
2012
Deferred tax liabilities
At 1 July 2011 (14,639)
Recognised in profit or loss (Note 10) (29,240)
At 30 June 2012 (43,879)
22. DEVELOPMENT PROPERTIES
Group
LeaseholdLand
DevelopmentCost Total
RM RM RM
2013
At 1 July 2012 2,751,563 374,731 3,126,294
Cost incurred during the year - 3,369,001 3,369,001
Transfer from prepaid land lease payment (Note 15) 4,148,744 - 4,148,744
At 30 June 2013 6,900,307 3,743,732 10,644,039
2012
At 1 July 2011 - - -
Cost incurred during the year - 374,731 374,731
Transfer from prepaid land lease payment (Note 15) 2,751,563 - 2,751,563
At 30 June 2012 2,751,563 374,731 3,126,294
Harbour-Link Group Berhad (592902-D)Annual Report 201394
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
22. DEVELOPMENT PROPERTIES cont’d
Included in property development cost during the financial year are:
Group
2013 2012
RM RM
Interest expense 360,138 146,521
23 INVENTORIES
Group
2013 2012
RM RM
At cost
Petrol, diesel and lubricant 1,115,946 1,383,061
Spare parts 1,402,375 1,071,188
Consumable store 228,690 262,591
2,747,011 2,716,840
At net realisable value
Pallets 93,716 71,162
2,840,727 2,788,002
24. TRADE AND OTHER RECEIVABLES
Group Company
2013 2012 2013 2012
RM RM RM RM
Current
Trade receivables
Third parties 112,044,097 109,037,567 - -
Amounts due from associates 22,331 - - -
Amounts due from related parties - 32,168 - -
112,066,428 109,069,735 - -
Less: Allowance for impairment Third parties (6,873,256) (5,061,931) - -
Amount due from associates (11,907) - - -
(6,885,163) (5,061,931) - -
Trade receivables, net 105,181,265 104,007,804 - -
Harbour-Link Group Berhad (592902-D) Annual Report 2013 95
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
24. TRADE AND OTHER RECEIVABLES cont’d
Group Company
2013 2012 2013 2012
RM RM RM RM
Other receivables
Advances 35,964 103,626 - -
Sundry receivables 2,421,176 7,410,779 11,466 29,689
Amount due from subsidiaries - - 2,354,133 1,649,760
Loan to subsidiaries - - 22,481,983 25,797,323
Deposits 1,793,646 2,077,187 32,050 28,650
4,250,786 9,591,592 24,879,632 27,505,422
Less: Allowance for Impairment (2,390) (18,442) (6,209,212) (6,209,212)
4,248,396 9,573,150 18,670,420 21,296,210
Total trade and other receivables 109,429,661 113,580,954 18,670,420 21,296,210
Add:
Investment securities (Note 25) 1,774,378 23,421,022 - -
Cash and bank balances (Note 28) 36,402,895 42,186,911 634,384 732,015
Total loans and receivables 147,606,934 179,188,887 19,304,804 22,028,225
(a) Trade receivables
Ageing analysis of trade receivables
The ageing analysis of the Group’s trade receivables are as follows:
Group
2013 2012
RM RM
Neither past due nor impaired 43,240,466 56,704,677
1 to 6 months past due but not impaired 41,703,162 36,278,767
84,943,628 92,983,444
Impaired 27,122,800 16,086,291
112,066,428 109,069,735
Harbour-Link Group Berhad (592902-D)Annual Report 201396
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
24. TRADE AND OTHER RECEIVABLES cont’d
(a) Trade receivables cont’d
Receivables that are neither past due nor impaired
Credit terms of trade receivables range from payment in advance to 120 days (2012: range from payment in advance to 120 days).
Other than receivables that are impaired, trade receivables comprises:
- Receivables in relation to engineering business arising from rendering of engineering services to companies with a good collection track record with the Group and the Company. These receivables include retention sums which are to be settled in accordance with the terms of the respective contracts:
- Receivables in relation to shipping and marine services business arising from providing shipping and agency related services to companies with a good collection track record with the Group and the Company. These receivables have more than four years of experience with the Group and losses have occurred infrequently.
- Receivables in relation to total logistics services business arising from providing forwarding and logistics related services to companies with good collection track record with the Group and the Company.
Receivables that are past due but not impaired comprises:
- As at 30 June 2013, trade receivables of the Group of RM41,703,162 (2012: RM36,278,767) were past due but not impaired. These relate to customers for whom there is no objective evidence that the receivables are not fully recoverable.
Group
2013 2012
RM RM
At 30 June 2013
Up to 6 months 41,703,162 36,278,767
Trade receivables that are impaired:
As at 30 June 2013, trade receivables of the Group a of RM27,122,800 (2012: RM16,086,291) was impaired and provided for. These receivables were individually impaired either because of significant delay in collection period or because the debtors are in unexpectedly difficult economic situations. Movements of the Group’s allowance for impairment of trade and other receivables are as follows:
Group
CollectivelyImpaired
2013
IndividuallyImpaired
2013Total2013
RM RM RM
Trade receivables - nominal amounts 11,418,621 15,704,179 27,122,800
Less: Allowance for impairment (2,779,454) (4,105,709) (6,885,163)
8,639,167 11,598,470 20,237,637
Harbour-Link Group Berhad (592902-D) Annual Report 2013 97
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
24. TRADE AND OTHER RECEIVABLES cont’d
(a) Trade receivables cont’d
Trade receivables that are impaired: cont’d
Group
CollectivelyImpaired
2012
IndividuallyImpaired
2012Total2012
RM RM RM
Trade receivables - nominal amounts 11,580,397 4,505,894 16,086,291
Less: Allowance for impairment (2,447,656) (2,614,275) (5,061,931)
9,132,741 1,891,619 11,024,360
Group
2013 2012
RM RM
At 1 July 5,061,931 4,917,472
Charge for the year (Note 7) 5,035,888 4,032,818
Reversal of impairment losses (Note 5) (3,212,656) (3,888,359)
At 30 June 6,885,163 5,061,931
(b) Related party balances
Amounts due from subsidiaries and loans to subsidiaries are unsecured and non-interest bearing, except amount of RM12,963,498 bear interest of ranging from 4% to 6% (2012: 4% to 6%) per annum.
Other receivables that are impaired
As at 30 June 2013, the Group and Company have provided impairment allowance of RM12 (2012: RM18,442) and RM6,136,000 (2012: RM6,209,212) respectively for delay in the collection period.
25. INVESTMENT SECURITIES
Group
2013 2012
RM RM
Held for trading investments - Quoted unit trusts in Malaysia 1,774,378 23,421,022
Market value of the quoted unit trusts 1,774,378 23,421,022
Harbour-Link Group Berhad (592902-D)Annual Report 201398
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
26. OTHER CURRENT ASSETS
Group Company
2013 2012 2013 2012
RM RM RM RM
Amount due from customers on construction contracts (Note 27) 12,126,647 2,212,959 - -
Tax recoverable 2,859,405 5,767,838 1,120,151 3,369,976
Prepayment 23,275,712 4,127,989 24,401 348
38,261,764 12,108,786 1,144,552 3,370,324
27. GROSS AMOUNT DUE FROM/(TO) CUSTOMERS FOR CONTRACT WORK-IN-PROGRESS
Group
2013 2012
RM RM
Construction contract costs incurred to date 147,952,079 74,377,909
Add: Attributable profits 19,754,735 11,106,352
167,706,814 85,484,261
Less: Progress billings (161,007,942) (84,559,826)
Amount due to customers for contract works 6,698,872 924,435
Amounts due from customers for contract work (included in other current assets - Note 26) 12,126,647 2,212,959
Amounts due to customers on contract work (included in other current liabilities - Note 31) (5,427,775) (1,288,524)
6,698,872 924,435
Advances received on contracts (included in other payables) 308,155 2,072,856
Retention sums on contracts, included within trade receivables 7,692,924 9,793,917 The costs incurred to date on construction contracts include the following charges made during the financial year:
Group
2013 2012
RM RM
Hire of plant and machinery 3,247,779 8,086,847
Depreciation of property, plant and equipment 1,085,616 481,745
Rental expenses 644,472 360,531
Harbour-Link Group Berhad (592902-D) Annual Report 2013 99
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
28. CASH AND BANK BALANCES
Group Company
2013 2012 2013 2012
RM RM RM RM
Cash at bank and on hand 26,976,723 35,850,310 394,384 732,015
Short term deposits with licensed banks 9,426,172 6,336,601 240,000 -
Cash and bank balances 36,402,895 42,186,911 634,384 732,015 Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between 1 day and twelve months depending on the immediate cash requirements of the Group, and earn interests at respective short-term deposit rates. The weighted average effective interest rate as at 30 June 2013 for the Group and the Company were 2% (2012: 2.00%) and 2% (2012: Nil) respectively per annum. Short term deposits with licensed banks of the Group and of the Company amounting to RM1,547,680 (2012: RM348,615) and RM240,000 (2012: Nil) respectively are pledged as securities for bank borrowings.
Included in short-term deposit with licensed banks of the Group are deposits amounted to RM243,647 (2012: RM 240,117) under the name of the director of the subsidiary who held in trust on behalf of the subsidiary.
For the purpose of cash flow statements, cash and cash equivalents comprise the following at the reporting date:
Group Company
2013 2012 2013 2012
RM RM RM RM
Cash and short term deposits 36,402,895 42,186,911 634,384 732,015
Bank overdrafts (Note 29) (11,720,569) (9,036,678) (2,003,626) -
Short term deposits pledged as securities for bank borrowings (1,547,680) (348,615) (240,000) -
Cash and cash equivalents 23,134,646 32,801,618 (1,609,242) 732,015
Harbour-Link Group Berhad (592902-D)Annual Report 2013100
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
29. BORROWINGS
Group Company
2013 2012 2013 2012
Maturity RM RM RM RM
Current
Secured:
Obligations under finance leases (Note 35(b)) 2014 14,230,586 11,418,329 - -
Bank overdrafts (Note 28) On demand 11,720,569 9,036,678 2,003,626 -
Bankers’ acceptances 2014 31,854,493 10,219,748 - -
Term loans - RM loan:
BLR - 0.5% 2014 1,075,061 1,011,584 - -
BLR - 0.3% 2014 981,286 - - -
BLR - 1.5% 2014 283,074 267,622 - -
BLR + 0% (a) 2014 503,383 431,325 503,383 431,325
BLR + 0% (b) 2014 1,586,596 1,717,815 - -
BLR + 0.15% 2014 142,325 121,817 - -
BLR + 1% 2014 3,650,260 4,653,942 - -
BLR + 2% 2014 22,652 38,324 - -
KLIBOR + 1.25% 2014 530,304 530,304 - -
KLIBOR + 1.5% 2014 76,313 228,000 - -
KLIBOR + 1.75% 2014 93,696 224,004 - -
3.38% p.a. fixed rate & BLR - 2% 2014 199,936 206,330 - -
4.15% p.a. fixed rate & BLR -1.45% 2014 325,745 326,299 - -
7.0016% fixed rate 2014 419,456 391,171 - -
7.25% fixed rate 2014 585,856 - - -
Total short term borrowings 68,281,591 40,823,292 2,507,009 431,325
Harbour-Link Group Berhad (592902-D) Annual Report 2013 101
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
29. BORROWINGS cont’d
Group Company
2013 2012 2013 2012
Maturity RM RM RM RM
Non-current
Secured:
Obligations under finance leases (Note 35(b)) 2015 - 2018 22,524,280 19,359,751 - -
Term loans - RM loan:
BLR - 0.5% 2015 - 2020 2,616,968 3,692,269 - -
BLR - 0.3% 2015 - 2018 3,451,814 - - -
BLR - 1.45% 2015 - 2026 4,982,914 5,305,764 - -
BLR - 1.5% 2015 - 2025 4,951,236 5,262,656 - -
BLR + 0% (a) 2015 - 2017 1,625,605 2,168,586 1,625,605 2,168,586
BLR + 0% (b) 2015 - 2026 28,208,695 29,674,384 - -
BLR + 0.15% 2015 - 2018 556,747 699,126 - -
BLR + 1% 2015 - 2017 2,968,085 3,898,982 - -
BLR + 2% - - 24,377 - -
KLIBOR + 1.25% 2015 - 2020 2,695,672 3,225,976 - -
KLIBOR + 1.5% - - 77,413 - -
KLIBOR + 1.75% - - 94,789 - -
3.38% p.a. fixed rate & BLR - 2% 2015 - 2021 1,248,415 1,436,420 - -
7.0016% fixed rate 2015 - 2015 567,220 986,676 - -
7.25% fixed rate 2015 - 2017 2,247,378 - - -
Total long term borrowings 78,645,029 75,907,169 1,625,605 2,168,586
Total loan and borrowings 146,926,620 116,730,461 4,132,614 2,599,911 The remaining maturities of the loans and borrowings as at 30 June 2013 are as follows:
Group Company
2013 2012 2013 2012
RM RM RM RM
On demand or within one year 68,281,591 40,823,292 2,507,009 431,325
More than 1 year and less than 2 years 19,137,589 17,687,066 532,754 465,612
More than 2 years and less than 5 years 29,668,965 24,724,692 1,092,851 1,625,433
5 years or more 29,838,475 33,495,411 - 77,541
146,926,620 116,730,461 4,132,614 2,599,911
Harbour-Link Group Berhad (592902-D)Annual Report 2013102
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
29. BORROWINGS cont’d
Obligations under finance leases
These obligations are secured by a charge over the lease assets (Note 13). The effective interest rate as at reporting date ranging from 5.03% to 7.78% (2012: 5.08% to 7.78%) per annum. These obligations are denominated in RM.
Bank overdrafts
Bank overdrafts and bankers’ acceptances are denominated in RM and are secured by fixed and floating charges over certain landed property of the subsidiaries, short-term deposits of the Group and of the Company and against corporate guarantee from the Company. The effective interest rate as at reporting were 7.6% (2012: 7.6%) per annum.
RM loan at BLR - 0.3%
This loan is secured by fixed charge over the certain plant and machineries of Harbour-Link Logistics Sdn Bhd., subsidiaries of the Company and corporate guarantee provided by the Company.
RM loan at BLR - 0.5%
This loan is secured by fixed charge over the container vessel and tugboat of Harbour Ivory Sdn. Bhd. and Harbour Agencies (Sibu) Sdn. Bhd., subsidiaries of the Company and corporate guarantee provided by the Company.
RM loan at BLR - 1.45%
This loan is secured by fixed charge over certain leasehold land of Harbour-Link Logistics Sdn. Bhd., a sub-subsidiary of the Company and corporate guarantee provided by the Company.
RM loan at BLR - 1.5%
This loan is secured by fixed charge over certain leasehold land of Harbour-Link (M) Sdn. Bhd., a subsidiary of the Company and corporate guarantee provided by the Company.
RM loan at BLR + 0% (a)
This loan is secured by fixed charge over land and buildings of the Company.
RM loan at BLR + 0% (b)
This loan is secured by fixed charge over leasehold land of Sarawak Edible Oils Sdn. Bhd. a sub-subsidiary of the Company and corporate guarantee provided by the Company.
RM loan at BLR + 0.15%
This loan is secured by fixed charge over certain leasehold land of Harbour-Link Logistics Sdn. Bhd., a sub-subsidiary of the Company and corporate guarantee provided by the Company.
RM loan at BLR + 1%
This loan is secured by fixed charge over two container vessels of Harbour Hornbill Sdn Bhd. and fixed charge over certain leasehold land of Harbour-Link (M) Sdn. Bhd., subsidiaries of the Company as disclosed in Note 13 and corporate guarantee provided by the Company.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 103
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
29. BORROWINGS cont’d
RM loan at BLR + 2%
This loan is secured by fixed charge over the certain leasehold land of Harbour Agencies (Sarawak) Sdn. Bhd., a subsidiary of the Company and corporate guarantee provided by the Company.
RM loan at KLIBOR + 1.25%
This loan is secured by fixed charge over the dumb barge of Harbour Agencies (Sibu) Sdn. Bhd., a sub-subsidiary of the Company and corporate guarantee provided by the Company.
RM loan at KLIBOR + 1.5%
This loan is secured by fixed charge over the certain plant and machineries of Harbour-Link Logistics Sdn. Bhd., a sub-subsidiary of the Company and corporate guarantee provided by the Company.
RM loan at KLIBOR + 1.75%
This loan is secured by fixed charge over the certain plant and machineries of Harbour-Link Logistics Sdn. Bhd., a sub-subsidiary of the Company and corporate guarantee provided by the Company.
RM loan at 4.15% p.a. fixed rate for the first three years and BLR -1.45% subsequently
This loan is secured by fixed charge over leasehold land of Harbour-Link Logistics Sdn. Bhd., a sub-subsidiary of the Company and corporate guarantee provided by the Company.
RM loan at 7.0016% fixed rate
This loan is secured by fixed charge over the vessel of Satun Shipping Sdn. Bhd., sub-subsidiary of the Company and corporate guarantee provided by the Company.
RM loan at 7.25% fixed rate
This loan is secured by fixed charge over the vessel of Harbour Services (Kch) Sdn. Bhd., sub-subsidiary of the Company and corporate guarantee provided by the Company.
RM bank loan at 3.38% fixed for the first year and BLR - 2% subsequently
The loan is secured by way of legal charges on investment properties of Harbour-Link (M) Sdn. Bhd., and corporate guarantee provided by the Company.
Harbour-Link Group Berhad (592902-D)Annual Report 2013104
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
30. TRADE AND OTHER PAYABLES
Group Company
2013 2012 2013 2012
RM RM RM RM
Current
Trade payables
Third parties 32,750,674 90,089,453 - -
Amount due to related parties 4,022,657 2,483,857 - -
Amount owing to subsidiaries - - 1,235,760 1,554,278
36,773,331 92,573,310 1,235,760 1,554,278
Other payables
Accrued operating expenses 10,157,788 8,048,845 211,367 175,900
Other payables 9,982,358 5,259,836 94,381 35,192
Loan from subsidiaries - - 33,350,997 38,094,033
Deposit received 3,339,756 840,377 240,000 -
23,479,902 14,149,058 33,896,745 38,305,125
Total trade and other payables 60,253,233 106,722,368 35,132,505 39,859,403
Add: Loans and borrowings (Note 29) 146,926,620 116,730,461 4,132,614 2,599,911
Total financial liabilities carried at amortised cost 207,179,853 223,452,829 39,265,119 42,459,314
(a) Trade and other payables
These amounts are non-interest bearing. Credit terms of trade and other payables range from payment in advance to 120 days (2012: range from payments in advance to 120 days).
(b) Loan from subsidiaries
These amounts are unsecured and are repayable on demand and bear interest of 4% (2012: 4%) per annum.
31. OTHER CURRENT LIABILITIES
Group
2013 2012
RM RM
Amounts due to customers on contract work 5,427,775 1,288,524
Harbour-Link Group Berhad (592902-D) Annual Report 2013 105
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
32. SHARE CAPITAL
Company
Number of ordinary shares of RM1 each Amount
2013 2012 2013 2012
RM RM
Authorised 500,000,000 500,000,000 500,000,000 500,000,000
Issued and fully paid 182,000,002 182,000,002 182,000,002 182,000,002
33. OTHER RESERVE
Other reserve represented restructuring reserve arising from business combination as referred in Note 2.3.
34. EXCHANGE TRANSLATION RESERVE
The exchange translation reserve represents exchange differences arising from the translation of the financial statements of
foreign operations whose functional currencies are different from that of the Group’s presentation currency.
35. COMMITMENTS
(a) Capital commitments
Capital expenditure as at the reporting date is as follows:
Group
2013 2012
RM RM
Capital expenditure
Approved and contracted for:
Property, plant and equipment 192,000 8,256,000
Operating lease commitments as lessor
In the previous financial year, a subsidiary of the Company had entered into a lease arrangement to lease a building to a third party for a period of 10 years commencing 10 June 2009 to 30th June 2019.
In the financial year, a subsidiary of the Company had entered into a lease arrangement to lease of vacant land to a third party for a period of 33 months commencing 1st April 2013 to 31st December 2015.
Harbour-Link Group Berhad (592902-D)Annual Report 2013106
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
35. COMMITMENTS cont’d
(a) Capital commitments cont’d
Operating lease commitments as lessor cont’d
As at the end of the financial year, the future aggregate minimum lease payments receivable under non-cancellable operating leases contracted for but not recognised as assets were as follows:
Group
2013 2012
RM RM
Lease receivables
- Receivables within 1 year 3,675,000 360,000
- Receivables between 1 and 5 years 6,412,500 1,440,000
- Receivables after 5 years - 360,000
10,087,500 2,160,000
(b) Finance lease commitments
The Group has finance leases for certain items of plant and equipment and motor vehicles (Note 13). These leases do not have terms of renewal, but have purchase options at nominal values at the end of the lease term.
Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:
Group
2013 2012
RM RM
Future minimum lease payments:
Not later than 1 year 16,148,098 13,009,507
Later than 1 year but not later than 2 years 12,286,200 11,027,698
Later than 2 years but not later than 5 years 12,004,853 9,602,286
Total future minimum lease payments 40,439,151 33,639,491
Less: Future finance charges (3,684,285) (2,861,411)
Present value of finance lease liabilities 36,754,866 30,778,080
Harbour-Link Group Berhad (592902-D) Annual Report 2013 107
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
35. COMMITMENTS cont’d
(b) Finance lease commitments cont’d
Group2013 2012
RM RM
Analysis of present value of finance lease liabilities
Not later than 1 year 14,230,586 11,418,329
Later than 1 year but not later than 2 years 11,254,266 10,159,178
Later than 2 years but not later than 5 years 11,270,014 9,200,573
36,754,866 30,778,080
Less: Amount due within 12 months (Note 29) (14,230,586) (11,418,329)
Amount due after 12 months (Note 29) 22,524,280 19,359,751 36. RELATED PARTY DISCLOSURES
(a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following significant transactions at terms agreed between the parties during the financial year:
2013 2012Group RM RM
Companies in which the certain directors have substantial interest:
Income
Sales of services
- Navasco Shipping Sdn. Bhd. - 7,500
- Sri Minah Enterprise Sdn. Bhd. 7,250 1,700
- Marup Quarry Sdn. Bhd. 77,899 41,750
- Herdsen Sago Industrial Sdn. Bhd. 6,220 33,381
- Herdsen Quarry Sdn. Bhd. 185,357 -
- Slingtex Industrial Sdn. Bhd. - 7,990
Expenditure
Purchase of services
- Navasco Shipping Sdn. Bhd. - 204,522
- Lucky In Sdn Bhd 12,000 -
- Sun Swee Trading Co 17,000 -
- Utama Bena Engineering 46,000 -
- Keywork Sdn Bhd 74,970 -
Harbour-Link Group Berhad (592902-D)Annual Report 2013108
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
36. RELATED PARTY DISCLOSURES cont’d
2013 2012
Group RM RM
Purchase of parts and tyres & materials- Sri Minah Enterprise Sdn. Bhd. 810,765 1,099,689 - Marup Quarry Sdn. Bhd. 110,316 93,517 - Herdsen Quarry Sdn. Bhd. 235,972 - - Slingtex Industrial Sdn. Bhd. 66,080 16,278
Rental- Herdsen Corporation Sdn. Bhd. 1,200 - - Marup Quarry Sdn. Bhd. 9,680 - - Sri Minah Enterprise Sdn. Bhd. 267,559 198,018
Associates
IncomeSales of services 293,143 126,195
Jointly controlled entity
Income
Sales of services 14,000 258,195
ExpenditurePurchase of services 6,529,306 -
2013 2012
Company RM RM
Transactions with subsidiaries:
IncomeDividend income 8,399,000 15,952,797 Interest income 790,451 556,146 Management fee from subsidiaries 1,095,000 1,080,000 Rental income 641,000 636,000
ExpenditureInterest expense 1,736,552 596,835 Insurance expense 5,540 5,983
Harbour-Link Group Berhad (592902-D) Annual Report 2013 109
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
36. RELATED PARTY DISCLOSURES cont’d
(b) Compensation of key management personnel
The remuneration of directors and other members of key management during the year was as follows:
Group Company
2013 2012 2013 2012
RM RM RM RM
Short-term employee benefits 9,399,888 6,415,855 1,421,086 1,162,059
Post-employment benefits:
Defined contribution plan 1,124,040 732,766 154,127 68,812
10,523,928 7,148,621 1,575,213 1,230,871
Included in the total key management personnel are:
Directors’ remuneration (Note 9) 4,139,882 3,706,481 865,018 832,951
37. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group and the Company are exposed to market risk (including foreign currency exchange risk and interest rate risk), credit risk and liquidity risk. The Group’s overall financial risk management objective is to minimise any potential adverse effects from the unpredictability of financial markets on the Group’s financial performance in order to ensure the Group creates value for its shareholders. Financial risk management is carried out through risk reviews, internal control systems, insurance programmes and adherence to the Group’s financial risk management policies. The management regularly reviews these risks and approves the treasury policies, which covers the management of these risks.
The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risk and the objectives, policies and processes for the management of these risks.
(a) Market risk
(i) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.
The currency exposure profile of the Group’s and the Company’s financial assets and financial liabilities is disclosed in the respective notes to the financial statements.
Currency risks as defined by MFRS 7 arise on account of monetary assets and liabilities being denominated in a currency that is not the functional currency.
Harbour-Link Group Berhad (592902-D)Annual Report 2013110
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
37. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont’d
(a) Market risk cont’d
(i) Foreign currency risk cont’d
As at 30 June 2013, the Group’s and Company’s Ringgit Malaysia (“RM”) functional entities had United States Dollar (“USD”) and Singapore Dollar (“SGD”) denominated net monetary liabilities, as well as the effects to the Group’s and the Company’s profit before tax if the USD and SGD had strengthened by 5% (2012: 3%) and weakened by 3% (2012: 3%) against RM.
Group Company
2013 2012 2013 2012
RM RM RM RM
RM/USD - Strengthen 5% (2012: 3%) 282,956 50,773 - -
RM/USD - Weaken 3% (2012: 3%) (166,088) (50,773) - -
RM/SGD - Strengthen 5% (2012: 3%) 474 30,257 - -
RM/USD - Weaken 3% (2012: 3%) (284) (30,257) - -
(ii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates.
The Group’s interest bearing assets are primarily short-term bank deposits with financial institutions. The interest rates on these deposits are monitored closely to ensure that they are maintained at favourable rates. The Group considers the risk of significant changes to interest rates on deposits to be unlikely.
The Group’s primary interest rate risk relates to interest-bearing debts. The Group managers its interest rate exposure by keep closely monitoring the debt market and where necessary, maintaining a prudent mix of fixe and floating rate borrowings and a mix of interest revision dates. This strategy allows it to capitalise on cheaper funding in a low interest rate environment and to achieve a certain level of protection against rate hikes.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 111
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
37. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont’d
(a) Market risk cont’d
(ii) Interest rate risk cont’d
If the Group’s borrowings at variable rates on which effective hedges have not been entered into changes in the following basis points, with all other variables being held constant, the effects on profit before tax would be as follows:
Group Company
2013 2012 2013 2012
RM RM RM RM
Borrowings based on cost of funds (“COF”):
- increase by 50 basis points (176,252) (73,001) - -
- decrease by 25 basis points 88,126 36,500 - -
Borrowings based on base lending rate (“BLR”):
- increase by 50 basis points (353,678) (349,871) (20,663) (13,000)
- decrease by 25 basis points 176,839 174,935 10,332 6,499
(b) Liquidity Risk
The Group manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities at a reasonable level to its overall debt position. As far as possible, the Group raises committed funding from both capital markets and financial institutions and balances its portfolio with some short term funding so as to achieve overall cost effectiveness.
Harbour-Link Group Berhad (592902-D)Annual Report 2013112
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
37. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont’d
(b) Liquidity Risk cont’d
Analysis of financial instruments by remaining contractual maturities
The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations.
On demand or within one year
More than 1 year and less than 2 years
More than 2 years and less than 5
years5 years and
more Total
Group RM RM RM RM RM
At 30 June 2013
Financial liabilities
Trade and other payables 60,253,233 - - - 60,253,233
Loans and borrowings 74,756,668 23,185,970 37,997,173 38,338,932 174,278,743
Total undiscounted financial liabilities 135,009,901 23,185,970 37,997,173 38,338,932 234,531,976
At 30 June 2012
Financial liabilities
Trade and other payables 106,722,368 - - - 106,722,368
Loans and borrowings 47,001,688 21,886,172 31,508,222 44,329,362 144,725,444
Total undiscounted financial liabilities 153,724,056 21,886,172 31,508,222 44,329,362 251,447,812
Harbour-Link Group Berhad (592902-D) Annual Report 2013 113
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
37. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont’d
(b) Liquidity Risk cont’d
Analysis of financial instruments by remaining contractual maturities cont’d
The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations. cont’d
On demand or within one
year
More than 1 year and less than 2 years
More than 2 years and less than 5
years5 years and
more Total
Company RM RM RM RM RM
At 30 June 2013
Financial liabilities
Trade and other payables, excluding financial guarantees * 35,132,505 - - - 35,132,505
Loans and borrowings 2,798,884 632,964 1,824,503 - 5,256,351
Total undiscounted financial liabilities 37,931,389 632,964 1,824,503 - 40,388,856
At 30 June 2012
Financial liabilities
Trade and other payables, excluding financial guarantees * 39,859,403 - - - 39,859,403
Loans and borrowings 632,964 632,964 1,898,892 547,123 3,711,943
Total undiscounted financial liabilities 40,492,367 632,964 1,898,892 547,123 43,571,346
* At the reporting date, the counterparty to the financial guarantees does not have a right to demand cash as the default has not occurred. Accordingly, financial guarantees under the scope of MFRS 139 are not included in the above maturity profile analysis.
(c) Credit Risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss.
Credit risk arises from credit exposures to customers, including outstanding receivables, as well as deposits, cash and bank balances and derivative financial instruments with financial institutions.
For trade and other receivables, the Group controls these risks by the application of credit approvals, limits and monitoring procedures. The Group also minimises its exposure through analysing the counterparties’ financial condition prior to entering into any services/contracts where appropriate to mitigate credit risk. Trade receivables are monitored on an ongoing basis via Group management reporting procedures. For other financial assets (deposits, cash and bank balances with financial institutions) the Group adopts the policy of dealing only with counterparties of high credibility (i.e. banks and financial institutions).
Harbour-Link Group Berhad (592902-D)Annual Report 2013114
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
37. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont’d
(c) Credit Risk cont’d
Exposure to credit risk
At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by:
- The maximum exposure to credit risk is represented by the carrying amount of each financial assets in the statement of financial position after deducting any impairment allowance.
- A nominal amount of RM178,688,147 (2012: RM216,515,957) relating to corporate guarantee provided by the Company to banks on the subsidiaries’ borrowings.
Financial assets that are neither past due nor impaired.
Informations regarding trade and other receivables that are neither past due nor impaired is disclosed in Note 24. Deposits with banks and other financial institutions, that are neither past due nor impaired are placed with or entered into with reputable financial institutions.
Financial assets that are either past due or impaired.
Information regarding financial assets that are either past due or impaired is disclosed in Note 24.
38. FAIR VALUE OF FINANCIAL INSTRUMENTS
(a) Fair value of financial instruments that carried at fair values
The following table shows an analysis of financial instruments recorded at fair value by level of the fair value hierarchy:
Level 1 Level 2 Level 3 Total
RM RM RM RM
Group
At 30 June 2013
Financial assets
Investment securities 1,774,378 - - 1,774,378
At 30 June 2012
Financial assets
Investment securities 23,421,022 - - 23,421,022
Harbour-Link Group Berhad (592902-D) Annual Report 2013 115
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
38. FAIR VALUE OF FINANCIAL INSTRUMENTS cont’d
(a) Fair value of financial instruments that carried at fair values cont’d
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable,
either directly or indirectly; and Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on
observable market data.
There have been no transfers between the fair value hierarchy during the financial year ended 30 June 2013 and 30 June 2012.
Determination of fair value
Fair value of investment securities is determined directly by reference to their published market price at the reporting date.
(b) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value.
Group Company
NoteCarrying amount
Fair value
Carrying amount
Fair value
RM RM RM RM
At 30 June 2013
Financial assets:
Other investments 20 652,445 a - a
Financial liabilities:
Term loans with fixed rate 29 3,819,910 3,923,627 - -
Finance lease payables 35(b) 36,754,866 36,656,527 - -
Harbour-Link Group Berhad (592902-D)Annual Report 2013116
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
38. FAIR VALUE OF FINANCIAL INSTRUMENTS cont’d
(b) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value. cont’d
Group Company
NoteCarrying amount
Fair value
Carrying amount
Fair value
RM RM RM RM
At 30 June 2012
Financial assets:
Other investments 20 652,445 a - a
Financial liabilities:
Term loans with fixed rate 29 1,377,847 1,152,272 - -
Finance lease payables 35(b) 30,778,080 30,279,198 - -
a It is not practicable to estimate the fair values of the non-current unquoted shares because of the lack of quoted market prices and the inability to estimate fair value without incurring excessive costs.
(c) Determination of fair value
Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value.
The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are
reasonable approximation of fair value:
Note
Trade and other receivables 24
Trade and other payables 30
Loan and borrowings (current): 29
- Term loan except for the following loans:
- RM loan at 7.25% fixed rate
- RM loan at 7.0016% fixed rate
Loan and borrowings (non current) except for the following loans: 29
- Term loan except for the following loans:
- RM loan at 7.25% fixed rate
- RM loan at 7.0016% fixed rate
Harbour-Link Group Berhad (592902-D) Annual Report 2013 117
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
38. FAIR VALUE OF FINANCIAL INSTRUMENTS cont’d
(c) Determination of fair value cont’d
Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value. cont’d
The carrying amount of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date.
The carrying amounts of the current portion of loans and borrowings are reasonable approximations of fair values due to the insignificant impact of discounting.
The fair values of current loans and borrowings are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.
Finance lease payables
The fair values of the finance lease payables are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending borrowing or leasing arrangements at the reporting date.
39. CAPITAL MANAGEMENT
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholders value. In order to maintain or achieve an optimal capital structure, the Group may adjust the dividend payment, return capital to shareholders, obtain new financing facilities or dispose assets to reduce borrowings.
Management monitors capital based on the Group’s and the Company’s gearing ratio. The Group and the Company are also required by certain banks to maintain a gearing ratio of not exceeding certain percentage varying between 100% and 200%. The Group’s and the Company’s strategies are to maintain gearing ratio of not exceeding 100%.
The gearing ratio is calculated as net debt divided by equity capital. Net debt is calculated as total borrowings, trade and other payables less investment securities and cash and bank balances. Equity capital is equivalent to capital and reserves attributable to owners of the Company.
Harbour-Link Group Berhad (592902-D)Annual Report 2013118
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
39. CAPITAL MANAGEMENT cont’d
Group Company
Note 2013 2012 2013 2012
RM RM RM RM
Loans and borrowings 29 146,926,620 116,730,461 4,132,614 2,599,911
Trade and other payables 30 60,253,233 106,722,368 35,132,505 39,859,403
Less:
Investment securities 25 (1,774,378) (23,421,022) - -
Cash and bank balances 28 (36,402,895) (42,186,911) (634,384) (732,015)
Net debt 169,002,580 157,844,896 38,630,735 41,727,299
Equity attributable to the owners of the Company 201,354,456 199,714,298 167,242,063 166,156,456
Capital and net debt 370,357,036 357,559,194 205,872,798 207,883,755
Gearing ratio 45.63% 44.15% 18.76% 20.07%
40. SEGMENT INFORMATION
(a) Reporting format
The primary segment reporting format is determined to be business segments as the Group’s risks and rates of return are affected predominantly by differences in the services provided. Secondary information is reported geographically. The operating businesses are organised and managed separately according to the nature of the services provided, with each segment representing a strategic business unit that serves different markets.
(b) Business segments
The Group is organised into three major business segments:
(i) Shipping and marine services (ii) Logistic services and equipment rental (iii) Engineering contracts
Other business activities include investment holding, property rental, road safety and sales of pallets, none of which are of a sufficient size to be reported separately, are grouped under shipping and marine services. Property development activities are included under adjustment column.
Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a group basis and are not allocated to operating segments.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 119
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
40. SEGMENT INFORMATION cont’d
(b) Business segments cont’d
The directors are of the opinion that all inter-segment transactions have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties.
The following table provides an analysis of the Group’s revenue, results, assets, liabilities and other information by business
segment:
Shipping, Marine Services & Others
Logistics Services & Equipment Rental
Engineering Contracts
Elimination/Adjustments Note Total
2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
RM RM RM RM RM RM RM RM RM RM
REVENUE
External sales 241,563,710 239,299,259 130,030,744 154,761,643 51,113,545 78,911,925 - - 422,707,999 472,972,827
Inter-segment sales 7,958,263 8,347,227 8,465,681 9,626,799 - - (16,423,944) (17,974,026) A - -
Total revenue 249,521,973 247,646,486 138,496,425 164,388,442 51,113,545 78,911,925 (16,423,944) (17,974,026) 422,707,999 472,972,827
RESULTS
Profit/(loss) before tax 12,412,389 20,215,363 25,313,657 23,871,714 (17,457,500) 2,268,018 (2,623,967) (11,124,905) A 17,644,579 35,230,190
Amortisation 120,557 284,629 20,212 20,212 - - 768,012 - A 908,781 304,841
Depreciation 5,749,223 6,329,067 9,877,726 8,584,516 556,622 758,175 32,677 17,462 A 16,216,248 15,689,220
Finance cost 3,324,077 3,707,134 3,851,690 3,254,608 165,405 27,153 442,130 113,485 A 7,783,302 7,102,380
Impairment of intangible assets - - - - 25,554,647 - - - 25,554,647 -
Share of results associates companies 740,846 959,510 - 3,113 - - - - 740,846 962,623
Share of results jointly controlled entities - - 490,806 20,373 - - - - 490,806 20,373
ASSETS
Investment in associates 3,029,574 2,404,319 - 245,514 - - - - 3,029,574 2,649,833
Investment in jointly controlled entities - - 3,073,114 2,582,308 - - - - 3,073,114 2,582,308
Addition to non-current assets 4,553,248 10,892,684 19,414,277 19,290,604 14,878,943 1,179,663 3,022,588 1,073,040 B 41,869,056 30,477,027
Segment assets 172,065,509 173,472,274 216,954,417 228,915,858 72,243,800 53,290,826 (17,154,714) (7,810,981) C 444,109,012 447,867,977
LIABILITIES
Segment liabilities 111,372,911 91,235,370 129,694,469 156,440,893 21,738,064 9,045,301 (35,398,300) (19,327,170) D 227,407,144 237,394,394
Harbour-Link Group Berhad (592902-D)Annual Report 2013120
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
40. SEGMENT INFORMATION cont’d
A Elimination of inter-segment revenues, interest income and dividend received at consolidation and results on property development activity.
B Additions to non-current assets consists of:
2013 2012
RM RM
Property, plant and equipment (Note 13) 41,868,452 29,650,006
Investment properties (Note 14) 604 827,021
41,869,056 30,477,027
C The following items (deducted from)/added to segment assets to arrive at total assets reported in the consolidated statement of financial positions.
2013 2012
RM RM
Inter-segment assets elimination (68,553,513) (50,966,485)
Property development assets
- Property, plant and equipment 6,316,120 3,173,154
- Prepaid land lease payments 31,542,271 36,459,027
- Other current assets 13,540,408 3,523,323
(17,154,714) (7,810,981)
D The following items are (deducted from)/added to segment liabilities to arrive at total liabilities reported in the consolidated statement of financial position.
2013 2012
RM RM
Inter-segment liabilities elimination (68,553,513) (50,966,485)
Property development liabilities
- Term loan 29,795,292 31,392,200
- Finance lease payables 506,953 95,922
- Deferred tax liabilities 9,431 11,115
- Trade and other payables 2,843,537 254,677
(35,398,300) (19,327,170)
Harbour-Link Group Berhad (592902-D) Annual Report 2013 121
Notes to the Financial Statementsfor the Year Ended 30 June 2013
cont’d
40. SEGMENT INFORMATION cont’d
(c) Geographical segments
Sales to external customers disclosed in geographical segments are based on the geographical location of its customers. The Group’s three business segments operate in two main geographical areas:
Total Revenue From External Customers
2013 2012
RM RM
(i) Malaysia 419,235,569 469,767,179
(ii) Singapore 3,472,430 3,205,648
Consolidated 422,707,999 472,972,827
Harbour-Link Group Berhad (592902-D)Annual Report 2013122
Notes to the Financial Statementsfor the Year Ended 30 June 2013cont’d
41. SUPPLEMENTARY INFORMATION-BREAKDOWN OF RETAINED EARNINGS INTO REALISED AND UNREALISED
The breakdown of the retained earnings of the Group and accumulated losses of the Company as at 30 June 2013 into realised and unrealised earnings is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1 - Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirement, issued by the Malaysia Institute of Accountants.
Group Company
2013 2012 2013 2012
RM RM RM RM
Total retained earnings of the Company and the subsidiaries
Realised 115,575,414 122,417,619 (14,713,626) (15,799,667)
Unrealised (10,267,432) (9,579,116) (44,313) (43,879)
105,307,982 112,838,503 (14,757,939) (15,843,546)
Total share of retained earnings from associates and jointly controlled entities 3,780,488 2,664,941 - -
Less: Consolidated adjustments (26,887,013) (34,755,088) - -
82,201,457 80,748,356 (14,757,939) (15,843,546)
Harbour-Link Group Berhad (592902-D) Annual Report 2013 123
Analysis of ShareholdingsAs at 9 October 2013
Authorised Share Capital : RM500,000,000.00 divided into 500,000,000 ordinary shares of RM1.00 each
Issued and Paid-Up Capital : RM182,000,002.00 divided into 182,000,002 ordinary shares of RM1.00 each
Class of Shares : Ordinary Shares of RM1.00 each fully paid
Voting Rights : One vote per ordinary share
SIZE OF SHAREHOLDINGS AS AT 9 OCTOBER 2013
Size of HoldingsNo. of
ShareholdersTotal
Holdings %
Less than 100 shares 14,186 336,081 0.19
100 – 1,000 shares 2,180 657,541 0.36
1,001 – 10,000 shares 903 3,683,031 2.02
10,001 – 100,000 shares 234 6,840,113 3.76
100,001 – below 5% of issued shares 82 79,748,661 43.82
5% and above of issued shares 5 90,734,575 49.85
17,590 182,000,002 100.00
DIRECTORS’ SHAREHOLDINGS AS AT 9 OCTOBER 2013
Direct Interest Deemed Interest
No. Name Shares % Shares %
1. Yong Piaw Soon 10,266,545 5.64 98,734,575 54.25*
2. Wong Siong Seh 5,939,200 3.26 98,734,575 54.25*
3. Dato’ Toh Guan Seng 2,300,000 1.26 - -
4. Hii Kwong Wui 1,070,000 0.59 - -
5. Lee Seng Chiong 1,028,000 0.56 - -
6. Lau Sii Hin 537,000 0.30 - -
7. Dato’ Mohamed Salleh Bin Bajuri 409,832 0.23 - -
8. Tan Sri Celestine Ujang Anak Jilan 75,400 0.04 - -
9. Sie Shwee Ing - - - -
Harbour-Link Group Berhad (592902-D)Annual Report 2013124
Analysis of ShareholdingsAs at 9 October 2013cont’d
SUBSTANTIAL SHAREHOLDERS AS AT 9 OCTOBER 2013
Direct Interest Deemed Interest
No. Name Shares % Shares %
1. Enricharvest Sdn. Bhd. 57,388,475 31.53 - -
2. United Joy Sdn. Bhd. 41,346,100 22.72 - -
3. Yong Piaw Soon 10,266,545 5.64 98,734,575 54.25*
4. Wong Siong Seh 5,939,200 3.26 98,734,575 54.25*
Note
* Deemed interest by virtue of him being substantial shareholder in Enricharvest Sdn. Bhd. & United Joy Sdn. Bhd.
THIRTY (30) LARGEST SHAREHOLDERS AS AT 9 OCTOBER 2013
No. NamesNo. of
Shares held %
1 KENANGA NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR UNITED JOY SDN BHD
23,666,100 13.00
2 KENANGA NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR ENRICHARVEST SDN BHD
21,572,000 11.85
3 HLIB NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR ENRICHARVEST SDN BHD
18,364,700 10.09
4 UNITED JOY SDN. BHD. 14,180,000 7.79
5 ENRICHARVEST SDN. BHD. 12,951,775 7.12
6 HDM NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR YONG PIAW SOON
8,266,545 4.54
7 KENANGA NOMINEES (ASING) SDN BHDPLEDGED SECURITIES ACCOUNT FOR STATE FINANCE INTERNATIONAL LIMITED
7,545,800 4.15
8 LEE POH IM 5,830,000 3.20
9 ENRICHARVEST SDN. BHD. 4,500,000 2.47
10 KENANGA NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR WONG SIONG SEH
3,822,400 2.10
11 UNITED JOY SDN. BHD. 3,500,000 1.92
12 KENANGA NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR WONG PIK NGIIK
2,568,700 1.41
13 KENANGA NOMINEES (ASING) SDN BHDPLEDGED SECURITIES ACCOUNT FOR BRIGHT JOY LIMITED
2,551,100 1.40
14 BRIGHT JOY LIMITED 2,367,300 1.30
15 TOH GUAN SENG 2,300,000 1.26
16 YAP ENG ENG 2,002,500 1.10
Harbour-Link Group Berhad (592902-D) Annual Report 2013 125
Analysis of ShareholdingsAs at 9 October 2013
cont’d
THIRTY (30) LARGEST SHAREHOLDERS AS AT 9 OCTOBER 2013 cont’d
No. NamesNo. of
Shares held %
17 KENANGA NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR YONG PIAW SOON
2,000,000 1.10
18 KENANGA NOMINEES (TEMPATAN) SDN BERHADPLEDGED SECURITIES ACCOUNT FOR GOH TAI SIANG
1,817,900 1.10
19 STATE FINANCE INTERNATIONAL LIMITED 1,552,700 0.85
20 CIMSEC NOMINEES (TEMPATAN) SDN BHDCIMB BANK FOR WONG SIONG SEH
1,500,000 0.82
21 TA NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR GOH TAI SIANG
1,445,800 0.79
22 KENANGA NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR WONG SING KUOK
1,389,200 0.76
23 KENANGA NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR WONG SING KUOK
1,285,200 0.71
24 KENANGA NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR WONG YIIK KUO
1,198,400 0.66
25 MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHADGREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD
1,184,000 0.65
26 KENANGA NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR HII KWONG WUI
1,070,000 0.59
27 CIMSEC NOMINEES (TEMPATAN) SDN BHDCIMB BANK FOR WONG LING POH
977,000 0.54
28 HDM NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR LEE SENG CHIONG
945,000 0.52
29 PUBLIC NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR WONG SUI YUING
903,500 0.50
30 WONG KIM ENG 879,400 0.48
Harbour-Link Group Berhad (592902-D)Annual Report 2013126
List of PropertiesAs at 30 June 2013
Description Tenure Existing use
Land area/Built-up
area
Approximateage of
building
Net bookvalue
at 30 June2013
(RM’000)Date of
acquisition
Harbour-Link Group Bhd
Unit 6-12, Lot 2646,Parkcity Commerce Square,Jalan Tun Ahmad Zaidi,Bintulu, Sarawak
Leasehold landexpiring on18.02.2057
Office 2,561.7 sq metres
5 years 5,872 18 August 2006
Harbour-Link (M) Sdn Bhd
Lot 3064, Block 26,Kemena Land District,Bintulu, Sarawak
Leasehold landexpiring on11.10.2062
Workshop, storage
area and warehouse
20,240.0 sq metres
10 years 3,703 20 February 1998
Lot 3065, Block 26,Kemena Land District,Bintulu, Sarawak
Leasehold landexpiring on11.10.2066
Workshop, storage
area and warehouse
8,096.0 sq metres
10 years 493 29 March 2000
Lot 4010, Block 26,Kemena Land District,Bintulu, Sarawak
Leasehold landexpiring on24.01.2067
Workshop, storage
area and warehouse
12,139.0 sq metres
10 years 1,281 2 August 2002
Lot 566, Block 4,Muara Tebas Land District,Kuching, Sarawak
Leasehold land expiring on31.12.2036
Container storage
yard
28,730.0 sq metres
5 years 1,570 28 January 2004
Lot 4054, Block 26,Kemena Land District,Bintulu, Sarawak
Leasehold landexpiring on08.02.2070
Storage yard rented
to 3rd party
5,798 sq metres
3 years 2,020 11 March 2009
Harbour Agencies (Sarawak) Sdn Bhd
Lot 1684, Block 11,Seduan Land District,Sibu, Sarawak
Leasehold land expiring on03.12.2034
VacantAgriculture
land
9,220.0 sq metres
- 578 2 October 2003
Harbour Services (Miri) Sdn Bhd
Lot 2132, Kuala Baram Land District,Miri, Sarawak
Leasehold land expiring on05.02.2064
Single storeywarehouseindustrial building
5,260.0 sq metres
6 years 575 6 February 2004
Harbour-Link Group Berhad (592902-D) Annual Report 2013 127
List of PropertiesAs at 30 June 2013
cont’d
Description Tenure Existing use
Land area/Built-up
area
Approximateage of
building
Net bookvalue
at 30 June2013
(RM’000)Date of
acquisition
Harbour-Link Logistics Sdn Bhd
Lot 3120, Block 26,Kemena Land District,Bintulu, Sarawak
Leasehold landexpiring on16.01.2058
VacantIndustrial
land
39,580.0 sq metres
- 7,644 26 October 2010
Lot 19, Industrial Zone 4,Kota Kinabalu Industrial ParkJalan Sepanjar, Kota Kinabalu, Sabah
Leasehold landexpiring on31.12.2098
Workshop and
storage yard
12,205.8 sq metres
5 years 2,406 11 July 2005
Sarawak Edible Oils Sdn Bhd
Lot 1218, Block 20,Kemena Land District, Bintulu, Sarawak
Leasehold landTenure 60 years
Vacant/Industrial
land
472,500.0 sq metres
- 36,987 26 April 2010
Lot 1218, Block 20,Kemena Land District, Bintulu, Sarawak
Leasehold landTenure 60 years
Under development
35,500.0 sq metres
- 10,644 26 April 2010
Eastern Soldar Engineering & Construction Sdn Bhd
Lot No. 21667,Pekan of Bukit Kepayang,District of Seremban,Negeri Sembilan
Freehold Factory and office
10,219.0 sq metres
18 years 4,556 10 November
1992
Lot No. 11441, No. 1,Jalan Kesuma 3/7,Bandar Tasik Kesuma,43700 Beranang, Selangor
Freehold VacantCorner lot
three-storey
shopoffice
224 sq metres
10 years 464 20 April 1999
PT No. 11643, H.S. (D) : 215207Bandar Sri SendayanSeremban, Negeri Sembilan
Freehold Industrialvacant land
28,329.0 sqmetres
1 year 7,623 22 May 2013
Harbour-Link Group Berhad (592902-D)Annual Report 2013128
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the Eleventh Annual General Meeting ("AGM") of the Company will be held at Grand Millennium Ballroom 3, Parkcity Everly Hotel, Jalan Tun Razak, 97000 Bintulu, Sarawak on Tuesday, 26 November 2013 at 10.30 a.m. for the purpose of transacting the following businesses, to pass as Ordinary Resolutions:-
AGENDA
1. To receive the Audited Financial Statements for the financial year ended 30 June 2013 together with the Directors’ and Auditors’ Reports thereon.
2. To approve a first and final single tier dividend of 2.5 sen per ordinary share of RM1.00 each for the financial year ended 30 June 2013.
3. To approve the Directors’ fees for the financial year ended 30 June 2013.
4. To re-elect the following Directors retiring in accordance with Article 103 of the Company’s Articles of Association and being eligible, offer themselves for re-election:-
(i) Dato’ Mohamed Salleh Bin Bajuri (ii) Dato’ Toh Guan Seng (iii) Mr Lau Sii Hin
5. To re-appoint Messrs Ernst & Young as Auditors of the Company to hold office until the conclusion of the next AGM and to authorise the Board of Directors to fix their remuneration.
AS SPECIAL BUSINESSTo consider, and if thought fit, to pass the following as ordinary resolutions:-
6. RETENTION OF INDEPENDENT DIRECTOR
THAT subject to the passing of Resolution 3, Dato’ Mohamed Salleh Bin Bajuri be retained as Independent Non-Executive Director pursuant to the Malaysian Code on Corporate Governance 2012.
7. PROPOSED RENEWAL OF AUTHORITY TO ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965
“THAT pursuant to Section 132D of the Companies Act, 1965 ("Act") and subject to the approvals of the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue shares in the Company from time to time and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten (10) per cent of the issued share capital of the Company as at the date of this AGM AND THAT the Directors be and are also hereby empowered to obtain the approval from Bursa Malaysia Securities Berhad for the listing of and quotation for the additional shares so issued AND THAT such authority shall continue in force until the conclusion of the next AGM of the Company.”
8. PROPOSED AMENDMENTS TO THE COMPANY’S ARTICLES OF ASSOCIATION
“THAT the proposed amendments to the Company’s Articles of Association as set out in Appendix I be and is hereby approved and adopted AND THAT the Directors of the Company be and is hereby authorised to give effect to the said amendments”.
Please refer to Note A
(Resolution 1)
(Resolution 2)
(Resolution 3)(Resolution 4)(Resolution 5)
(Resolution 6)
(Resolution 7)
(Resolution 8)
(Special Resolution 1)
Harbour-Link Group Berhad (592902-D) Annual Report 2013 129
Notice of Annual General Meeting cont’d
NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT Subject to the approval of the shareholders, a first and final single-tier dividend of 2.5 sen per ordinary share of RM1.00 each for the financial year ended 30 June 2013 will be paid on 20 December 2013 to Depositors registered in the Record of Depositors at the close of business at 5.00 p.m. on 29 November 2013.
A depositor shall qualify for entitlement only in respect of:
a) Shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 29 November 2013 in respect of ordinary transfers; and
b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad.
By Order of the Board
LIM SECK WAH (MAICSA NO. 0799845)M. CHANDRASEGARAN A/L S. MURUGASU (MAICSA NO. 0781031) Company Secretaries SarawakDated: 31 October 2013
Notes :-
A. This Agenda item is meant for discussion only as the provision of the Company’s Articles of Association do not require a formal approval of the shareholders and hence, is not put forward for voting.
1. For the purpose of determining a member who shall be entitled to attend, speak and vote at the AGM, the Company shall be requesting the Record of Depositors as at 20 November 2013. Only a depositor whose name appears on the Record of Depositors as at 20 November 2013 shall be entitled to attend the said meeting or appoint proxies to attend, speak and vote on his/her stead.
2. A member entitled to attend and vote at a meeting of the Company is entitled to appoint up to two (2) proxies to attend. A proxy may but need not be a member of the Company and the provisions of Section 149(1) (a) and (b) of the Companies Act, 1965 shall not apply. Where a member appoints more than one proxy, the appointment shall be invalid unless he/she specifies the proportion of his/her holdings to be represented by each proxy.
3. (i) Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.
(ii) Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.
4. The instrument appointing a proxy, in the case of an individual, shall be signed by the appointer or by his attorney duly authorised in writing, and in the case of a corporation, shall be executed under its Common Seal or under the hand of an officer or attorney of the corporation duly authorised.
5. The instrument appointing the proxy, with the power of attorney or other authority (if any) under which it is signed or a notarially certified or office copy of such power of attorney, must be deposited at the Registered Office of the Company at Wisma Harbour, Parkcity Commerce Square, Jalan Tun Ahmad Zaidi, 97000 Bintulu, Sarawak not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof.
Harbour-Link Group Berhad (592902-D)Annual Report 2013130
Notice of Annual General Meetingcont’d
6. Explanatory note on Special Business:-
Ordinary Resolution 7
YBhg Dato’ Mohamed Salleh Bin Bajuri has served the Board for a consecutive term of nine (9) years. The Nomination Committee has assessed his independence and has based on the following attributes recommended him to continue as Independent Non-Executive Director:-
• havein-depthunderstandingofthebusinessoftheGroupandcouldprovidetheBoardvaluableandinsightadvice; • activelyparticipatedinBoarddeliberationanddecisionmakinginanobjectivemanner;and • upholdsindependentjudgementandtherearenocircumstancesandrelationshipsthatmayhamperhisindependence. Ordinary Resolution 8
The effect of the resolution under item 7 of the agenda, if passed, will give the flexibility and authority to the Directors of the Company, from the date of the forthcoming Eleventh AGM, to issue and allot new shares in the Company up to and not exceeding in total 10% of the issued and paid-up share capital of the Company as at the date of the Eleventh AGM, for such purposes as they consider would be in the interest of the Company. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next AGM of the Company following the forthcoming Eleventh AGM.
The mandate obtained last year was not exercised and hence no proceed was raised therefrom. The Board would like to renew the mandate to enable the Directors of the Company to issue and allot shares at any time to such persons in their absolute discretion without convening a general meeting as it would be both time and cost consuming to organise a general meeting. The renewed authority for allotment of shares will provide flexibility to the Company for the allotment of shares for the purpose of funding future investment, working capital and/or acquisitions, if there is such investment opportunity arises during the financial year 2014.
Special Resolution 1
The Special Resolution 1, if passed, will render the Company’s Articles of Association to be in line with the amendments to the Main Market Listing Requirements of Bursa Securities which took effect on 3 January 2012.
Harbour-Link Group Berhad (592902-D) Annual Report 2013 131
Appendix I
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY
ARTICLE NO. EXISTING PROVISIONS AMENDED PROVISIONS
Article 2(Definition)
- “Exempt Authorised Nominee” means an authorized nominee as defined under the Central Depositories Act which is exempted from compliance with the provisions of Section 25A(1) of the Central Depositories Act.
Article 81 Proxy may demand for poll
The instrument appointing a proxy to vote at a meeting shall be deemed also to confer authority to demand, or join in demanding a poll, and, a demand by a person as proxy for a member shall be the same as a demand by the member. A proxy shall be entitled to vote on a show of hands on any questions at any general meeting.
The instrument appointing a proxy to vote at a meeting shall be deemed also to confer authority to demand, or join in demanding a poll, and, a demand by a person as proxy for a member shall be the same as a demand by the member. A proxy shall be entitled to vote on a show of hands on any questions at any general meeting and shall have the same rights as the member to speak at the meeting.
Article 88 (b)
Appointment of more than one proxy for authorized nominee company
Where a Member of the Company is an authorized nominee as defined under the Central Depositories Act, it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.
Where a Member of the Company is an authorized nominee, as defined under the Central Depositories Act, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds which is credited with ordinary shares of the Company. The appointment of two (2) proxies in respect of any particular securities account shall be invalid unless the authorized nominee specifies the proportion of its shareholding to be represented by each proxy.
Article 88 (c) (New)
- Where a Member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“Omnibus Account”), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each Omnibus Account it holds. The appointment of two (2) or more proxies in respect of any particular Omnibus Account shall be invalid unless the Exempt Authorised Nominee specifies the proportion of its shareholding to be presented by each proxy.
Harbour-Link Group Berhad (592902-D)Annual Report 2013132
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FORM OF PROXY(Before completing this form please refer to the notes below)
I/We I/C No./Co. No./CDS A/C No. (Full name in block letters)
of (Full address)
being a member/members of HARBOUR-LINK GROUP BERHAD hereby appoint the following person(s):-
Name of proxy, NRIC No. & Address No. of shares to be represented by proxy
1.
2.
or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Eleventh Annual General Meeting of the Company to be held at Grand Millennium Ballroom 3, Parkcity Everly Hotel, Jalan Tun Razak, 97000 Bintulu, Sarawak on Tuesday, 26 November 2013 at 10.30 a.m. My/our proxy/proxies is/are to vote as indicated below:-
FIRST PROXY SECOND PROXY
Ordinary Resolutions FOR AGAINST FOR AGAINST
1 - Single tier 2.5 sen dividend
2 - Directors’ fees
3 - Re-election of Dato’ Mohamed Salleh Bin Bajuri
4 - Re-election of Dato’ Toh Guan Seng
5 - Re-election of Mr Lau Sii Hin
6 - Re-appointment of Messrs Ernst & Young
7 - Retention of Independent Director
8 - Section 132D
Special Resolution 1 – Proposed amendment of Articles of Association
(Please indicate with a “√” or “X” in the space provided how you wish your vote to be cast. If no instruction as to voting is given, the proxy will vote or abstain from voting at his/her discretion. The first named proxy shall be entitled to vote on a show of hands).
Dated this day of 2013 Signature/Common SealNotes :-1. For the purpose of determining a member who shall be entitled to attend, speak and vote at the AGM, the Company shall be requesting the Record of Depositors as at
20 November 2013. Only a depositor whose name appears on the Record of Depositors as at 20 November 2013 shall be entitled to attend the said meeting or appoint proxies to attend, speak and vote on his/her stead.
2. A member entitled to attend and vote at a meeting of the Company is entitled to appoint up to two (2) proxies to attend. A proxy may but need not be a member of the Company and the provisions of Section 149(1) (a) and (b) of the Companies Act, 1965 shall not apply. Where a member appoints more than one proxy, the appointment shall be invalid unless he/she specifies the proportion of his/her holdings to be represented by each proxy.
3. (i) Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.
(ii) Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.
4. The instrument appointing a proxy, in the case of an individual, shall be signed by the appointer or by his attorney duly authorised in writing, and in the case of a corporation, shall be executed under its Common Seal or under the hand of an officer or attorney of the corporation duly authorised.
5. The instrument appointing the proxy, with the power of attorney or other authority (if any) under which it is signed or a notarially certified or office copy of such power of attorney, must be deposited at the Registered Office of the Company at Wisma Harbour, Parkcity Commerce Square, Jalan Tun Ahmad Zaidi, 97000 Bintulu, Sarawak not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof.
No. of ordinary shares heldHARBOUR-LINK GROUP BERHAD(Company No: 592902-D)(Incorporated in Malaysia)
Please AffixStamp
The Company SecretaryHARBOUR-LINK GROUP BERHAD (592902-D)
Wisma Harbour, Parkcity Commerce SquareJalan Tun Ahmad Zaidi97000 Bintulu, Sarawak
Malaysia
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BRANCHES LIST
HEAD OFFICE:Wisma Harbour, Parkcity Commerce Square, Jalan Tun Ahmad Zaidi, 97000 Bintulu, Sarawak.Tel : 086 - 318 998Fax : 086 - 332 429Email : [email protected] : www.harbour.com.my
BRUNEITel : (673) 234 2227Fax : (673) 234 2226Email : [email protected]
HONG KONG, PRCTel : (852) 2850 6081Fax : (852) 2850 6298Email : [email protected]
JOHOR BAHRUTel : 07 - 356 2800Fax : 07 - 353 2810Email : [email protected]
KLIATel : 03 - 8778 8918Fax : 03 - 8778 8912Email : [email protected]
KOTA KINABALUTel : 088 - 267 225Fax : 088 - 261 225Email : [email protected]
KOTA KINABALU (Container Liner Services)Tel : 088 - 233 691Fax : 088 - 232 692Email : [email protected]
KOTA KINABALU (Depot)Tel : 088 - 492 790Fax : 088 - 492 775Email : ro�[email protected]
KUCHINGTel : 082 - 341 212Fax : 082 - 341 313Email : [email protected]
KUCHING (Container Liner Services)Tel : 082 - 339 600Fax : 082 - 480 600Email : [email protected]
LABUAN F.TTel : 087 - 431 699Fax : 087 - 427 699Email : [email protected]
MIRITel : 085 - 420 225Fax : 085 - 420 270Email : [email protected]
PENANGTel : 04 - 324 9453Fax : 04 - 324 9454Email : [email protected]
PORT KLANGTel : 03 - 3001 3018Fax : 03 - 3166 7013Email : [email protected]
PORT KLANG (Container Liner Services)Tel : 03 - 3325 2010Fax : 03 - 3325 2011Email : [email protected]
SANDAKANTel : 089 - 225 561Fax : 089 - 225 563Email : [email protected]
SEREMBANTel : 06 - 7646 699Fax : 06 - 7627 500Email : [email protected]
SIBUTel : 084 - 341 558Fax : 084 - 341 557Email : [email protected]
TAWAUTel : 089 - 752 311Fax : 089 - 752 313Email : [email protected]
TG. KIDURONG, BINTULUTel : 086 - 253 811Fax : 086 - 251 676Email : [email protected]