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HARBOUR-LINK GROUP BERHAD(592902-D)
annualreport
2016
Established in 2002, Harbour-Link Group Berhad consolidated all related business activities and was officially 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 41 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.
HARBOUR-LINK GROUP BERHAD(592902-D)
REGISTERED OFFICE
Wisma HarbourParkcity Commerce SquareJalan Tun Ahmad Zaidi97000 Bintulu, Sarawake-mail : [email protected]
SHARE REGISTRAR
Mega Corporate Services Sdn BhdLevel 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail,50250 Kuala LumpurTel : (03) 2692 4271Fax : (03) 2732 5388e-mail : [email protected]
COMPANY SECRETARIES
Lim Seck Wah (MAICSA 0799845)
M. Chandrasegaran A/L S. Murugasu (MAICSA 0781031)
AUDIT COMMITTEE
Bin Lay ThiamChairman, Independent Non-Executive Director
Dato' Mohamed Salleh Bin BajuriMember, Independent Non-Executive Chairman
Datuk Pau Chiong UngMember, Independent Non-Executive Director
REMUNERATION COMMITTEE
Datuk Pau Chiong UngChairman, Independent Non-Executive Director
Dato' Mohamed Salleh Bin BajuriMember, Independent Non-Executive Chairman
Yong Piaw SoonMember, Group Managing Director
Bin Lay ThiamMember, Independent Non-Executive Director
NOMINATION COMMITTEE
Dato' Mohamed Salleh Bin BajuriChairman, Independent Non-Executive Chairman
Datuk Pau Chiong UngMember, Independent Non-Executive Director
Bin Lay ThiamMember, Independent Non-Executive Director
AUDITORS
Ernst & YoungChartered Accountants115, 1st FloorParkcity Commerce SquareJalan Tun Ahmad Zaidi97000 Bintulu, Sarawak
PRINCIPAL BANKERS
Malayan Banking BerhadAmBank BerhadHong Leong Bank BerhadUnited Overseas Bank (Malaysia) Bhd
STOCK EXCHANGE LISTING
Main Market of the Bursa MalaysiaSecurities BerhadStock Name : HARBOURStock Code : 2062
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Corporate Information
Corporate Structure
Board of Directors
Key Senior Management
Chairman’s Statement
Group Financial Highlights
Corporate Governance Statement
Other Information
Audit Committee Report
Statement on Risk Management & Internal Control
Financial Statements
Analysis of Shareholdings
Analysis of Warrantholdings
List of Properties
Notice of Annual General Meeting
Proxy Form
BOARD OF DIRECTORS
Dato' Mohamed Salleh Bin BajuriIndependent Non-Executive Chairman(Appointed as Chairman on 1 July 2016)
Yong Piaw SoonGroup Managing Director
Wong Siong Seh Executive Director
Dato' Toh Guan SengExecutive Director
Lee Seng ChiongExecutive Director
Hii Kwong WuiExecutive Director
Lau Sii HinExecutive Director
Datuk Pau Chiong UngIndependent Non-Executive Director
Bin Lay ThiamIndependent Non-Executive Director
Established in 2002, Harbour-Link Group Berhad consolidated all related business activities and was officially 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 41 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.
HARBOUR-LINK GROUP BERHAD(592902-D)
REGISTERED OFFICE
Wisma HarbourParkcity Commerce SquareJalan Tun Ahmad Zaidi97000 Bintulu, Sarawake-mail : [email protected]
SHARE REGISTRAR
Mega Corporate Services Sdn BhdLevel 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail,50250 Kuala LumpurTel : (03) 2692 4271Fax : (03) 2732 5388e-mail : [email protected]
COMPANY SECRETARIES
Lim Seck Wah (MAICSA 0799845)
M. Chandrasegaran A/L S. Murugasu (MAICSA 0781031)
AUDIT COMMITTEE
Bin Lay ThiamChairman, Independent Non-Executive Director
Dato' Mohamed Salleh Bin BajuriMember, Independent Non-Executive Chairman
Datuk Pau Chiong UngMember, Independent Non-Executive Director
REMUNERATION COMMITTEE
Datuk Pau Chiong UngChairman, Independent Non-Executive Director
Dato' Mohamed Salleh Bin BajuriMember, Independent Non-Executive Chairman
Yong Piaw SoonMember, Group Managing Director
Bin Lay ThiamMember, Independent Non-Executive Director
NOMINATION COMMITTEE
Dato' Mohamed Salleh Bin BajuriChairman, Independent Non-Executive Chairman
Datuk Pau Chiong UngMember, Independent Non-Executive Director
Bin Lay ThiamMember, Independent Non-Executive Director
AUDITORS
Ernst & YoungChartered Accountants115, 1st FloorParkcity Commerce SquareJalan Tun Ahmad Zaidi97000 Bintulu, Sarawak
PRINCIPAL BANKERS
Malayan Banking BerhadAmBank BerhadHong Leong Bank BerhadUnited Overseas Bank (Malaysia) Bhd
STOCK EXCHANGE LISTING
Main Market of the Bursa MalaysiaSecurities BerhadStock Name : HARBOURStock Code : 2062
01
02
04
08
09
11
12
20
21
23
26
123
126
129
131
Corporate Information
Corporate Structure
Board of Directors’
Key Senior Management
Chairman’s Statement
Group Financial Highlights
Corporate Governance Statement
Other Information
Audit Committee Report
Statement on Risk Management & Internal Control
Financial Statements
Analysis of Shareholdings
Analysis of Warrantholdings
List of Properties
Notice of Annual General Meeting
Proxy Form
BOARD OF DIRECTORS
Dato' Mohamed Salleh Bin BajuriIndependent Non-Executive Chairman(Appointed as Chairman on 1 July 2016)
Yong Piaw SoonGroup Managing Director
Wong Siong Seh Executive Director
Dato' Toh Guan SengExecutive Director
Lee Seng ChiongExecutive Director
Hii Kwong WuiExecutive Director
Lau Sii HinExecutive Director
Datuk Pau Chiong UngIndependent Non-Executive Director
Bin Lay ThiamIndependent Non-Executive Director
Annual Report 2016 1
Corporate Information
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)
HLG RESOURCES SDN BHD(720931-A)
ECL (MALAYSIA) SDN BHD (151779-W)
HARBOUR-LINKLINES SDN BHD(738254-T)
ARCADIA PROPERTIES SDN BHD(874993-P)
HARBOUR AGENCIES(SARAWAK) SDN BHD(461102-P)
EASTERN SOLDARENGINEERING & CONSTRUCTIONSDN BHD(153971-K)
• ESE Energy Sdn Bhd(326947-H)
• Eastern Soldar(Singapore) Pte Ltd
(200610417 E)
• ESEC (Cambodia) Pte. Ltd. (Co. 2001E/2010)
• Harbour JupiterSdn Bhd (759230-A)
• Harbour-Link (Singapore)Pte. Ltd. (201423615W)
• 95% Harbour-Link Lines (KK) Sdn Bhd (739564-H)
• 70%Harbour-Link Lines (JB) Sdn Bhd (739560-D)
• 60%Harbour-Link Lines (PK) Sdn Bhd (739562-P)
• 63.75%Harbour-Link Lines (KCH) Sdn Bhd(739565-T)
• 60% HLG EquipmentSdn Bhd (917772-U)
• 100% Harbour Link TradingPte. Ltd. (201605190R)
• 85% HKK JayaSdn Bhd (919962-D)
• Sarawak Edible Oils Sdn Bhd (533994-D)
• Harbour Challenger Sdn Bhd (679380-P)
• Harbour Eagle Sdn Bhd (682237-W)
• Satun Shipping Sdn Bhd (681960-T)
• Harbour-Link Shipping Sdn Bhd (738252-M)
• Harbour-Link Marine Services Sdn Bhd (738253-H)
• 52% Harbour Gemini Sdn Bhd (733542-X)
• Harbour Agencies (Sibu) Sdn Bhd (291744-P)
• Harbour Services (Kuching) Sdn Bhd (354145-A)
• Harbour Xtra Sdn Bhd (1146365-W)
• 85% Harbour Ruby Sdn Bhd (1153587-X)
• 85% Harbour Zenith Sdn Bhd (1153350-W)
• 100% Navasco Shipping Sdn Bhd (409418-A)
• A.T. Dunia (BTU) Sdn Bhd (311969-P)
• Harbour Services Corporation Sdn Bhd (311131-U)
• Harbour Agencies Sdn Bhd (237806-K)
• Harbour-Link Logistics Sdn Bhd (206893-W)
• Harbour-Link Logistics (S) Sdn Bhd (795956-H)
• Siong Jaya Sdn Bhd (636328-U)
• Harbour Services (Miri) Sdn Bhd (311383-D)
• Harbour-Link Leasing Sdn Bhd (446351-K)
• Progresif Lengkap Sdn Bhd (410555-M)
• Road Safety & Driving Academy Sdn Bhd (660675-K)
• Harbour-Link (Labuan) Limited (LL07749)
• 50% A & H Project Services Sdn Bhd (524951-W)
• 47% Harbour Services Sdn Bhd (185955-A)
• 70% HLG Engineering Sdn Bhd (311075-X)
• 60% Best Success Bonded Store Supply Sdn Bhd (955626-T)
• 55% Serimaju Konsortium Sdn Bhd (1151695-K)
80% 100% 100% 100% 100% 100% 100% 49% 85% 51%80%
• Harbour Agencies (Sabah) Sdn Bhd (487253-X)
• 25% Eastock Resources Sdn Bhd (420982-H)
• 54.79% Advance Mariner Lines Sdn Bhd (1173777-U)
• 100% AML Shipping Sdn Bhd (1173948-H)
• 100% AML Shipping (Singapore)Pte. Ltd. (201620045G)
Harbour-Link Group Berhad (592902-D)2
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)
HLG RESOURCES SDN BHD(720931-A)
ECL (MALAYSIA) SDN BHD (151779-W)
HARBOUR-LINKLINES SDN BHD(738254-T)
ARCADIA PROPERTIES SDN BHD(874993-P)
HARBOUR AGENCIES(SARAWAK) SDN BHD(461102-P)
EASTERN SOLDARENGINEERING & CONSTRUCTIONSDN BHD(153971-K)
• ESE Energy Sdn Bhd(326947-H)
• Eastern Soldar(Singapore) Pte Ltd
(200610417 E)
• ESEC (Cambodia) Pte. Ltd. (Co. 2001E/2010)
• Harbour JupiterSdn Bhd (759230-A)
• Harbour-Link (Singapore)Pte. Ltd. (201423615W)
• 95% Harbour-Link Lines (KK) Sdn Bhd (739564-H)
• 70%Harbour-Link Lines (JB) Sdn Bhd (739560-D)
• 60%Harbour-Link Lines (PK) Sdn Bhd (739562-P)
• 63.75%Harbour-Link Lines (KCH) Sdn Bhd(739565-T)
• 60% HLG EquipmentSdn Bhd (917772-U)
• 100% Harbour Link TradingPte. Ltd. (201605190R)
• 85% HKK JayaSdn Bhd (919962-D)
• Sarawak Edible Oils Sdn Bhd (533994-D)
• Harbour Challenger Sdn Bhd (679380-P)
• Harbour Eagle Sdn Bhd (682237-W)
• Satun Shipping Sdn Bhd (681960-T)
• Harbour-Link Shipping Sdn Bhd (738252-M)
• Harbour-Link Marine Services Sdn Bhd (738253-H)
• 52% Harbour Gemini Sdn Bhd (733542-X)
• Harbour Agencies (Sibu) Sdn Bhd (291744-P)
• Harbour Services (Kuching) Sdn Bhd (354145-A)
• Harbour Xtra Sdn Bhd (1146365-W)
• 85% Harbour Ruby Sdn Bhd (1153587-X)
• 85% Harbour Zenith Sdn Bhd (1153350-W)
• 100% Navasco Shipping Sdn Bhd (409418-A)
• A.T. Dunia (BTU) Sdn Bhd (311969-P)
• Harbour Services Corporation Sdn Bhd (311131-U)
• Harbour Agencies Sdn Bhd (237806-K)
• Harbour-Link Logistics Sdn Bhd (206893-W)
• Harbour-Link Logistics (S) Sdn Bhd (795956-H)
• Siong Jaya Sdn Bhd (636328-U)
• Harbour Services (Miri) Sdn Bhd (311383-D)
• Harbour-Link Leasing Sdn Bhd (446351-K)
• Progresif Lengkap Sdn Bhd (410555-M)
• Road Safety & Driving Academy Sdn Bhd (660675-K)
• Harbour-Link (Labuan) Limited (LL07749)
• 50% A & H Project Services Sdn Bhd (524951-W)
• 47% Harbour Services Sdn Bhd (185955-A)
• 70% HLG Engineering Sdn Bhd (311075-X)
• 60% Best Success Bonded Store Supply Sdn Bhd (955626-T)
• 55% Serimaju Konsortium Sdn Bhd (1151695-K)
80% 100% 100% 100% 100% 100% 100% 49% 85% 51%80%
• Harbour Agencies (Sabah) Sdn Bhd (487253-X)
• 25% Eastock Resources Sdn Bhd (420982-H)
• 54.79% Advance Mariner Lines Sdn Bhd (1173777-U)
• 100% AML Shipping Sdn Bhd (1173948-H)
• 100% AML Shipping (Singapore)Pte. Ltd. (201620045G)
Annual Report 2016 3
Corporate StructureCont’d
DATO’ MOHAMED SALLEH BIN BAJURI, 65Independent Non-Executive Chairman/Malaysian/Male
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. On 1 July 2016, he was appointed as the Chairman of the Company. 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. He was later seconded to Malayan Banking Berhad and promoted General Manager in 1988. 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.
WONG SIONG SEH, 54Executive Director/Malaysian/Male
He was appointed to the Board of Harbour-Link Group Berhad 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.
DATO’ TOH GUAN SENG, 61Executive Director/Malaysian/Male
He was appointed to the Board of Harbour-Link Group Berhad on 27 December 2003 and, is a founder member of Eastern Soldar Engineering & Construction Sdn Bhd (”ESEC”). He has more than 40 years’ 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 29 years, 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 Chambers of Commerce and Industry (NSCCCI).
He does not hold any directorships in other public companies.
YONG PIAW SOON, 64Group Managing Director/Malaysian/Male
He was appointed to the Board of Harbour-Link Group Berhad 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 subsidiary companies of Harbour-Link Group and Herdsen Corporation Sdn. Bhd. & its subsidiaries. He does not hold any directorships in other public companies.
Harbour-Link Group Berhad (592902-D)4
Board of Directors
DATO’ MOHAMED SALLEH BIN BAJURI, 65Independent Non-Executive Chairman/Malaysian/Male
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. On 1 July 2016, he was appointed as the Chairman of the Company. 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. He was later seconded to Malayan Banking Berhad and promoted General Manager in 1988. 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.
WONG SIONG SEH, 54Executive Director/Malaysian/Male
He was appointed to the Board of Harbour-Link Group Berhad 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.
DATO’ TOH GUAN SENG, 61Executive Director/Malaysian/Male
He was appointed to the Board of Harbour-Link Group Berhad on 27 December 2003 and, is a founder member of Eastern Soldar Engineering & Construction Sdn Bhd (”ESEC”). He has more than 40 years’ 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 29 years, 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 Chambers of Commerce and Industry (NSCCCI).
He does not hold any directorships in other public companies.
YONG PIAW SOON, 64Group Managing Director/Malaysian/Male
He was appointed to the Board of Harbour-Link Group Berhad 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 subsidiary companies of Harbour-Link Group and Herdsen Corporation Sdn. Bhd. & its subsidiaries. He does not hold any directorships in other public companies.
Annual Report 2016 5
Board of DirectorsCont’d
LEE SENG CHIONG, 57Executive Director/Malaysian/Male
He was appointed to the Board of Harbour-Link Group Berhad 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.
HII KWONG WUI, 54Executive Director/Malaysian/Male
He was appointed to the Board of Harbour-Link Group Berhad 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.
DATUK PAU CHIONG UNG, 64Independent Non-Executive Director/Malaysian/Male
He was appointed to the Board of Harbour-Link Group Berhad on 13 January 2015. Holding a technical certi�cate of wood working from Japan, he has been engaged in timber and shipping industries for the last 30 years.
In his working experience, he has served as Shipping Manager, General Manager and Managing Director of a number of shipping, timber extraction and export companies. He is currently Director of numerous private companies involving in wood manufacturing and shipping. He was appointed and served as Senator of Malaysian Parliament for a period of 6 years from 2007 to 2013. Currently he is Adviser to Secretariat of the Advancement of Malaysian Entrepreneurs (SAME), Prime Minister Department, Malaysia. He is also the Chief Executive O�cer of Timberwell Bhd.
LAU SII HIN, 65Executive Director/Malaysian/Male
He was appointed to the Board of Harbour-Link Group Berhad 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.
BIN LAY THIAM, 46Independent Non-Executive Director/Malaysian/Male
He was appointed to the Board of Harbour-Link Group Berhad on 6 February 2014. He is a Chartered Accountant by profession and a member of the Malaysian Institute of Accountants and Malaysian Institute of Certi�ed Public Accountants and a Fellow of the Association of Chartered Certi�ed Accountants.
Started his career at KPMG Peat Marwick, Kuala Lumpur in 1990 where he was attached to the audit division and later seconded to the consultancy division. During his tenure of 10 years in KPMG Peat Marwick, he gained professional exposure in auditing, business advisory and consultancy services. He joined Fiamma Holdings Berhad, in 2000, assuming the role of Group Accounts & Corporate A�airs manager, principally involved in corporate reporting, compliance and fund raising. In 2005, he was appointed the Group Financial Controller of Harbour-Link Group Berhad. He continued to pursue his career advancement as the Chief Financial O�cer in Southern Acids Berhad in 2010 and subsequently as the Chief Financial O�cer in GSB Group Berhad in 2011, where he was principally responsible for the �nancial a�airs, business development and treasury functions.He is currently the Senior General Manager (Finance) of Econpile Holdings Berhad.
Harbour-Link Group Berhad (592902-D)6
Board of DirectorsCont’d
LEE SENG CHIONG, 57Executive Director/Malaysian/Male
He was appointed to the Board of Harbour-Link Group Berhad 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.
HII KWONG WUI, 54Executive Director/Malaysian/Male
He was appointed to the Board of Harbour-Link Group Berhad 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.
DATUK PAU CHIONG UNG, 64Independent Non-Executive Director/Malaysian/Male
He was appointed to the Board of Harbour-Link Group Berhad on 13 January 2015. Holding a technical certi�cate of wood working from Japan, he has been engaged in timber and shipping industries for the last 30 years.
In his working experience, he has served as Shipping Manager, General Manager and Managing Director of a number of shipping, timber extraction and export companies. He is currently Director of numerous private companies involving in wood manufacturing and shipping. He was appointed and served as Senator of Malaysian Parliament for a period of 6 years from 2007 to 2013. Currently he is Adviser to Secretariat of the Advancement of Malaysian Entrepreneurs (SAME), Prime Minister Department, Malaysia. He is also the Chief Executive O�cer of Timberwell Bhd.
LAU SII HIN, 65Executive Director/Malaysian/Male
He was appointed to the Board of Harbour-Link Group Berhad 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.
BIN LAY THIAM, 46Independent Non-Executive Director/Malaysian/Male
He was appointed to the Board of Harbour-Link Group Berhad on 6 February 2014. He is a Chartered Accountant by profession and a member of the Malaysian Institute of Accountants and Malaysian Institute of Certi�ed Public Accountants and a Fellow of the Association of Chartered Certi�ed Accountants.
Started his career at KPMG Peat Marwick, Kuala Lumpur in 1990 where he was attached to the audit division and later seconded to the consultancy division. During his tenure of 10 years in KPMG Peat Marwick, he gained professional exposure in auditing, business advisory and consultancy services. He joined Fiamma Holdings Berhad, in 2000, assuming the role of Group Accounts & Corporate A�airs manager, principally involved in corporate reporting, compliance and fund raising. In 2005, he was appointed the Group Financial Controller of Harbour-Link Group Berhad. He continued to pursue his career advancement as the Chief Financial O�cer in Southern Acids Berhad in 2010 and subsequently as the Chief Financial O�cer in GSB Group Berhad in 2011, where he was principally responsible for the �nancial a�airs, business development and treasury functions.He is currently the Senior General Manager (Finance) of Econpile Holdings Berhad.
Annual Report 2016 7
Board of DirectorsCont’d
OTHER INFORMATION
(a) Family Relationship
None of the Directors have any family relationship with any director and/or major shareholder of the Company.
(b) Conflict of Interest
The Company has entered into recurrent related party transactions with parties in which the Directors of the Company, namely Yong Piaw Soon, Wong Siong Seh, Lee Seng Chiong, Hii Kwong Wui and Lau Sii Hin have direct and/or indirect interests.
Save for the above mentioned disclosure, none of the other Directors have any conflict of interest with the Company.
(c) Conviction of Offences
None of the Directors have any conviction for offences within the past 5 years other than traffic offences, if any.
CHAIRMAN’SSTATEMENTDear valued Shareholders,
On behalf of the Board of Directors, I am pleased to present the Annual Report for the financial year ended 30 June 2016.
Harbour-Link Group Berhad (592902-D)8
FAMIly RElATIONsHIp ANd OTHER dIsClOsuRE – KEy sENIOR MANAgEMENT
None of the Key Senior Management has family relationship with any director and/or major shareholder of the Company and does not have any conflict of interest with the Company or been convicted of any offence within the past 5 years, nor had any public sanction or penalty imposed by the relevant regulatory bodies during the financial year.
sANdRA CHAN lEE HuNg, 45Financial Controller/Malaysian/Female
She obtained her professional degree in Association of Chartered Certified Accounts, United Kingdom in 1996. She is a Chartered Accountant and is currently a member of the Malaysian Institute of Accountants (MIA). She has obtained her fellowship Association of Chartered Certified Accountants in 2003.
She joined Harbour-Link Group Berhad as Internal Audit Supervisor in 1990 in charge of auditing team in the Company. Later, she was promoted to Accountant in 2003 and Senior Account and Finance manager in 2008 to oversee corporate and financial matters of Harbour-Link Group Berhad. Subsequently, she was appointed as Financial Controller on 1 September 2016.
She does not hold any directorships in other public companies.
Key Senior Management
CHAIRMAN’SSTATEMENTDear valued Shareholders,
On behalf of the Board of Directors, I am pleased to present the Annual Report for the financial year ended 30 June 2016.
Annual Report 2016 9
ECONOMIC REVIEW
The global economy expanded at a more moderate pace, with uneven growth momentum across economies. Growth remained modest in the advanced economies amid continued cyclical and structural weaknesses. In Asia, economic expansion was supported by domestic demand, but was weighed down by persistent weakness in export performance. While initial impact from the result of the UK’s EU referendum created uncertainty and heightened risk aversion, financial market volatility has since subsided. Amid continued growth concerns and low inflation, several major and regional central banks conducted further easing to support economic activity. (Source: Economic and Financial Developments in Malaysia in the Second Quarter of 2016, Bank Negara Malaysia).
Malaysia’s economy growth moving at its slowest pace in nearly seven years, as poor global demand for commodities continued to impact the trading nation. It’s also the fifth quarter in a row in which Malaysia’s growth rate has decline. The ringgit has strengthened about 7 per cent this year after a grim 2015 when it plummeted more than 20 per cent against the US dollar due to collapse of global crude prices and slowing demand from top-trade partner China. On the container shipping segment, Moody’s report says that companies operating in this segment have been affected by very weak freight rates since late 2015. Moody’s says that while the decline in freight rates for the container shipping segment can be partly attributed to companies passing on the drop in fuel prices to their customers, it is also a consequence of ongoing oversupply in the market, in which companies order larger, more cost-efficient vessels. As for the current supply-demand imbalance in the container shipping segment, Moody’s says the
situation will persist over the coming 12-18 months. Moody’s projects that supply growth will outpace demand growth by more than 2% in 2016, and keep freight rates low. If bunker fuel prices increase materially, the segment’s profitability will likely come under further pressure. (Source: http://www.moodys.com/viewresearchdoc.aspx)
For Harbour Group, four major segments i.e shipping, logistics, engineering and property development are expected to brace for more competitions and head winds for the current and next financial year.
Despite under such challenging and economic uncertainties and volatile market situation, I am pleased to note that the Group remained resilient, staying true to our core competencies to build our expertise in the total logistics sector, shipping, engineering and property development sector, and serve our customers to the best of our ability. This stable foundation has enabled the achievement of another year of strong performance by the Group.
FINANCIAl REVIEW
The Group achieved a profit before taxation of RM101.9 million and a turnover of RM590.7 million for this financial year as compared to RM76.6 million and RM506.9 million respectively. The logistics, engineering and property development segment remained the main contributor to the Group’s results for FY2016.
The Group’s gearing ratio remained healthy at 0.2 and cash reserves remained strong.
RevenueRM’000
506,
963
457,
563
422,
708
472,
973
357,
060
308,
706
327,
564
590,
764
2009 2010 2011 2012 2013 2014 2015 2016 2009 2010 2011 2012 2013 2014 2015 20162009 2010 2011 2012 2013 2014 2015 2016
Profit Attributable to Shareholders of ParentRM’000
Profit from Operation RM’000
33,4
15
5,09
3
27,1
92
13,2
0119,2
0126,2
25
56,1
98
51,7
90
57,5
56
49,7
51
41,3
50
26,3
65
31,1
54
35,6
28
106,
473
81,6
34
Harbour-Link Group Berhad (592902-D)10
dIVIdENd
In appreciation of the continuing support from our shareholders, it is my pleasure to announce that the Board has recommended a final single tier dividend of 2.0 sen per ordinary share totalling RM8.008 million for the financial year ended 30 June 2016.
OpERATION REVIEW ANd OuTlOOK
In the shipping and marines segment, we have seen some container shipping players consolidating their services and divesting from the shipping market due to slowdown and oversupply in the market. We are not immune to these factors however we are embracing such initiative as slow vessel idling, organizational cost-cutting, and working closely with alliance partners. However, in the near term the industry headwind is expected to persist; the domestic and regional market will most likely to remain challenging for us in view of intense competition and strong pressure on margins due to fluctuation of Ringgit and oil prices. Nonetheless, in order to sustain our performance in this segment, we will continue to scrutinize our costs, evaluate sustainability of our operating routes and improve on our customer base and operational management.
Integrated logistics services segment will continue to benefit from manufacturing sector after its construction period through the handling of inbound raw materials and export of finished products. Equipment rental segment also continues to be active to service the oil and gas plants for periodical maintenance and support. Even though there is a steady stream of revenue from these segments, the Group’s prospect is still closely tied to the performance of the local Malaysian market and global economy which will affect directly to the manufacturing sector. As such, we are cautious on capital expenditure spending on plant and machinery in view of the present economic condition. Despite increased competition and the grim logistics trade outlook of late, we believe our performance will remain satisfactory for the forthcoming financial year. We will continue to maintain and exploring new innovative solutions for our customers and further develop new business opportunities to sustain our growth.
The engineering contract segment depends highly on the performance of the oil and gas industry. Since the decline in the oil price, most oil and gas companies have scaled down their capital expenditures resulting in a slowdown in new projects focused on developing oil and gas manufacturing and storage facilities within Malaysia and other intra-Asian developing regions. As such, we are expecting a contraction in this segment’s performance going forward. However, we are cautiously optimistic that this is but a short term contraction and we will see the industry recover and the engineering contract works increase in tandem with the momentum of growth in the oil and gas industry.
The outlook for the local property market is expected to be moderate as the development of SCORE (Sarawak Corridor of Renewable Energy) continues. The Group’s development project – Kidurong Gateway which is strategically located at the Kidurong Light Industrial Estate, in easy reach of Samalaju Industrial Park which is part of SCORE development area and a stone throw away from Kidurong oil and gas hub and Bintulu Port, continues to garner strong interest from investors. Our vision for this project is to develop the entire 100 acres plot of land into a future township with integrated facilities. We are aiming to launch Phase 3 when it is deemed beneficial and feasible to do so. In the meantime, the Group will continue to look for potential land bank and strengthen its assets portfolio.
Moving forward, barring unforeseen circumstances, the Group’s performance is expected to remain challenging. We are cognisant of the potential challenges that await us ahead especially in the shipping and marine services and engineering but we feel confident we can weather it out and steer the Group to greater success with sustainable earnings growth.
ACKNOWlEdgEMENTs
On behalf of the Board, I would like to extend our appreciation and gratitude to our valued shareholders, customers, vendors, financial institutions, business associates, regulatory authorities and various government bodies for their unwavering support and confidence in the Group.
I would also like to express my gratitude to the Board members, the management and all the staffs for their valuable contribution and commitment to the Group. With the continued support from all our stakeholders, we look forward to another successful year ahead.
dATO’ MOHAMEd sAllEH BIN BAJuRICHAIRMAN
Chairman’s StatementCont’d
RevenueRM’000
506,
963
457,
563
422,
708
472,
973
357,
060
308,
706
327,
564
590,
764
2009 2010 2011 2012 2013 2014 2015 2016 2009 2010 2011 2012 2013 2014 2015 20162009 2010 2011 2012 2013 2014 2015 2016
Profit Attributable to Shareholders of ParentRM’000
Profit from Operation RM’000
33,4
15
5,09
3
27,1
92
13,2
0119,2
0126,2
25
56,1
98
51,7
90
57,5
56
49,7
51
41,3
50
26,3
65
31,1
54
35,6
28
106,
473
81,6
34
Annual Report 2016 11
RevenueRM’000
506,
963
457,
563
422,
708
472,
973
357,
060
308,
706
327,
564
590,
764
2009 2010 2011 2012 2013 2014 2015 2016 2009 2010 2011 2012 2013 2014 2015 20162009 2010 2011 2012 2013 2014 2015 2016
Profit Attributable to Shareholders of ParentRM’000
Profit from Operation RM’000
33,4
15
5,09
3
27,1
92
13,2
0119,2
0126,2
25
56,1
98
51,7
90
57,5
56
49,7
51
41,3
50
26,3
65
31,1
54
35,6
28
106,
473
81,6
34
Group Financial Highlights
2009 2010 2011 2012 2013 2014 2015 2016
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Revenue 327,564 308,706 357,060 472,973 422,708 457,563 506,963 590,764
Profit from Operation 35,628 31,154 26,365 41,350 49,751 57,556 81,634 106,473
Profit before taxation 32,310 26,750 20,171 35,230 17,645 51,023 76,660 101,960
Profit attributable to shareholders of parent
26,225 19,201 13,201 27,192 5,093 33,415 51,790 56,198
Total assets 355,574 387,587 371,069 447,868 444,109 486,410 582,899 589,080
Total liabilities 131,367 145,382 185,037 237,394 227,407 237,276 284,025 225,338
per share data (sen)
Net assets 55.55 59.35 46.46 52.56 54.12 62.22 74.64 90.84
Earning per share 6.55 4.80 3.30 6.79 1.27 8.35 12.94 14.04
Financial Ratios
Gross profit margin (%) 16.1 14.4 12.0 12.3 16.43 17.18 24.33 23.12
Return on shareholders’ funds (%) 11.8 8.08 7.10 12.92 2.35 13.41 17.33 15.45
Trade receivables’ turnover (days) 71 68 65 80 91 78 103.00 87.00
Debt to equity 0.3 0.4 0.5 0.4 0.4 0.3 0.3 0.2
Interest coverage (times) 8.6 6.5 4.2 5.0 2.3 8.0 13 18
Harbour-Link Group Berhad (592902-D)12
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.
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 if 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; 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 Board has approved and adopted a Board Charter on 26 August 2016. The Board Charter aims to ensure that all Board members understand their duties and responsibilities as well as the laws, regulations and best practices governing their conduct.
The Board Charter is to be reviewed periodically and updated in accordance with the needs of the Company and any new regulations that may have an impact on the discharge of the Board’s responsibilities. The Board Charter is accessible at the Company’s website at www.harbour.com.my.
Code of Conduct and Whistle-Blower policy
The Board is guided by the Company’s Code of Conduct (“the Code”) for Directors and Employees in discharging its oversight role effectively. The Code requires all Directors to observe high ethical business standards, and to apply these values to all aspects of the Group’s business and professional practice and act in good faith in the best interests of the Group and its shareholders.
Though the Company has yet to formalize the Whistle-Blower policy, the Board has always conducted themselves in an ethical manner while executing their duties and function. Any complaints or irregularities can be channeled directly to the Group Managing Director or Independent Non-Executive Director for their attention and action.
Company’s 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.
Annual Report 2016 13Annual Report 2016 13
Corporate Governance StatementCont’d
pRINCIplE 1 - EsTABlIsH ClEAR ROlEs ANd REspONsIBIlITIEs OF THE BOARd ANd MANAgEMENT cont’d
Corporate social Responsibility
The Company is committed to the welfare of its employees and to the surrounding communities in which it operates. The management recognizes that for long term sustainability, its strategic orientation will need to cater beyond the financial parameters. During the year, the Company has initiated and continued to support important causes amongst others:-
▪ Contribution of funds to various charitable organizations and associations.▪ Sponsorship of events of various non-profitable organizations and schools.▪ Occupational health and safety at the workplace. Employees are equipped with the necessary training and technical
knowledge besides the equipments and tools at work-sites to promote safety.▪ Promote health awareness amongst employees with the launching of a company-sponsored Annual Preventive Medical
Screening program during the year.▪ Monetary award based on academic achievements under the Group’s Education Fund to children of eligible employees.▪ Take heed to save the environment by reducing wastage and encourage energy conservation and IT savvy.
At this point in time, the Company has no policy formalising its approach to workforce diversity.
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.
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 are provided with agenda of meetings and Board papers which contain management and financial information to be dicussed, in sufficient time prior to every Board meeting to enable them to obtain further explanation, where necessary, in order to be properly informed before the meeting.
The Directors is supported by the qualified 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.
The appointment and removal of the Company Secretary is under the purview of Board.
The Company Secretary also updates the Board at regular intervals regarding changes to the regulatory requirements.
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 Securities”), which stipulated 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.
Harbour-Link Group Berhad (592902-D)14
Corporate Governance StatementCont’d
pRINCIplE 2 - sTRENgTHEN COMpOsITION OF THE BOARd cont’d
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 dato’ Mohamed salleh Bin Bajuri Chairman, Independent Non-Executive Chairman
Members Mr. Bin lay Thiam
datuk pau Chiong ung
Independent Non-Executive Director
Independent Non-Executive Director
The terms of reference of Nomination Committee are uploaded on the corporate website at www.harbour.com.my. 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 Nomination Committee evaluates the Board components based on its diversifying mixed of skills and experience.
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:
• Review the composition of the Board in terms of its balanced mix of skills, experience and expertise.• Review the performance of each Director.• Review performance of audit committee.• Review and evaluate the level of independence of Director who has served more than nine years.
The Board is the progress of drawing up board diversity policy to formalising its approach to boardroom diversity. The Board policy will defined the necessary criteria to be used in determining, selecting and assessment of the Board members moving forward.
directors’ Remuneration
A Remuneration Committee has been established by the Board, comprising a majority of Non-Executive Directors as follows:
Chairman datuk pau Chiong ung Independent Non-Executive Director
Members dato’ Mohamed salleh Bin Bajuri
Mr. yong piaw soon
Mr. Bin lay Thiam
Independent Non-Executive Chairman
Group Managing Director
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.
Annual Report 2016 15
Corporate Governance StatementCont’d
pRINCIplE 2 - sTRENgTHEN COMpOsITION OF THE BOARd cont’d
directors’ Remuneration cont’d
Details of Directors’ remuneration for the financial year ended 30 June 2016 are as follows:
Remuneration (RM)
Executive directors Independent and Non Executive
description Company subsidiary Company subsidiary Total
Salary 700,648 1,981,590 - - 2,682,238
Fee 8,500 - 150,500 - 159,000
Allowance 35,000 - 35,000 - 70,000
Contributions to defined contribution plan and social security contributions 84,538 240,658 - - 325,196
Benefits in-kind - 13,925 - - 13,925
Total 828,686 2,236,173 185,500 - 3,250,359
The remuneration paid to the Directors, analysed in the following bands, is as below:-
Range of Remuneration (RM) Executive Non-Executive
RM50,001 – RM100,000 - 3
RM300,001 – RM350,000 1 -
RM350,001 – RM400,000 2 -
RM500,001 – RM550,000 1 -
RM600,001 – RM650,000 1 -
RM800,001 – RM850,000 1 -
pRINCIplE 3 – REINFORCE INdEpENdENCE OF THE BOARd
The position of Chairman is held by Dato’ Mohamed Salleh Bin Bajuri an Independent Non-Executive Director, whereas Group Managing Director is held by Mr. Yong Piaw Soon, an Executive Director.
The roles and responsibilities of the Chairman and Group Managing Director are distinct and separate to ensure that there is a balance of power and authority. The Chairman, being Non-Executive, heads the Board and is responsible for the leadership, effectiveness, conduct and governance of the Board, whereas the Group Managing Director oversees and manages the day-to-day operations of the Group and undertakes executive decision making and implementation of policies and decisions.
The roles and responsibilities of the Chairman and Group Managing Director are prescribed in the Company’s Board Charter which can be assessed at the corporate website at www.harbour.com.my.
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.
Harbour-Link Group Berhad (592902-D)16
Corporate Governance StatementCont’d
pRINCIplE 3 – REINFORCE INdEpENdENCE OF THE BOARd cont’d
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 Securities is used, the Board review and assess the independence of its independent directors annually based on substance over their conduct, argue on the matters objectively and make decision rationally and other independence criteria. The Board does not adopt the nine (9)-year tenure for Independent Non-Executive Directors but would evaluate it on merit based. If the Nomination Committee recommends for the retention of Independent Non-Executive Director who has served more than 9 years, the Board would deliberate and recommend to shareholders for their mandate to retain as Independent Non-Executive Director.
The Board is of the view that there are significant advantages to be gained from the long serving Directors who possess tremendous insight and knowledge of the Company’s affairs. Furthermore, the ability of a Director to serve effectively as an Independent Director is very much a function of his caliber, qualification, experience and personal qualities, particularly of his integrity and objectivity in discharging his responsibilities in good faith in the best interest of the Company and his duty to vigilantly safeguard the interests of the minority of shareholders of the Company, has no compelling relationship to his tenure as an Independent Director. Although term limits help to ensure that there are fresh ideas and viewpoints available to the Board, they do pose the disadvantage of losing experienced Independent Directors who overtime have developed increased insight in the Company’s and/or the Group’s operations and therefore, provide an increasing contribution to the effectiveness of the Board as a whole.
The Board therefore opined that imposing a fixed term limit for Independent Directors does not necessary assure independence. The Board, therefore, recommends and support the retention of Dato’ Mohamed Salleh Bin Bajuri.
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 five (5) Board meetings held during the financial year ended 30 June 2016, with details of Directors’ attendance set out below:
Meetings Attended(out of 5 held)
Dato’ Mohamed Salleh Bin Bajuri Independent Non-Executive Chairman 5/5
Mr. Yong Piaw Soon Group Managing Director 5/5
Mr. Wong Siong Seh Executive Director 5/5
Dato’ Toh Guan Seng Executive Director 4/5
Mr. Lee Seng Chiong Executive Director 5/5
Mr. Hii Kwong Wui Executive Director 5/5
Mr. Lau Sii Hin Executive Director 5/5
Mr. Bin Lay Thiam Independent Non-Executive Director 5/5
Datuk Pau Chiong Ung Independent Non-Executive Director 5/5
Annual Report 2016 17
Corporate Governance StatementCont’d
pRINCIplE 4 – FOsTER COMMITMENT OF dIRECTORs cont’d
Board Meetings cont’d
It is the practice of the Company for Directors to devote sufficient time and efforts to carry out their responsibilities. All Board members are required to notify the Chairman on any new directorships notwithstanding that the Listing Requirements of 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.
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) Dato’ Mohamed Salleh Bin Bajuri 11th April 2016 Nominating Committee Program Part 2 : Effective Board Evaluations Control for Audit Committees
(b) Mr. Yong Piaw Soon 5th November 2015 2015 Budget & Tax Conference
26th February 2016 Cessation of Business – Voluntary Winding Up &-De-Registration of Company Name under the Companies Act 1965
6th April 2016 Focus Group Series : Corporate Governance Disclosures
11th April 2016 Nominating Committee Program Part 2 : Effective Board Evaluations
(c) Mr. Wong Siong Seh 8 th – 9th August 2015 SSM National Conference 2015
5th November 2015 2015 Budget & Tax Conference
(d) Dato’ Toh Guan Seng 17th November 2015 Seminar Percukaian Kebangsaan 2015
(e) Mr. Lee Seng Chiong 5th November 2015 2015 Budget & Tax Conference
(f ) Mr. Hii Kwong Wui 9th May 2016 2016 Latest Update on Bursa Listing Requirements
(g) Mr. Lau Sii Hin 5th November 2015 2015 Budget & Tax Conference
24th – 25th October 2015 Kursus Angaran Kos Kerja Jalan
26th February 2016 Cessation of Business – Voluntary Winding Up &-De-Registration of Company Name under the Companies Act 1965
26th – 27th April 2016 Overview of the Sarawak Labour Ordinance
(h) Mr. Bin Lay Thiam 30th July 2015 Advocacy Session on MD&A
19th January 2016 Economic & Fx Outlook 2016
6th April 2016 Focus Group Series : Corporate Governance Disclosures
20th – 23rd April 2015 Skills for Success
(i) Datuk Pau Chiong Ung 20th – 21st June 2016 Building The Right Mindset At Workplace To Produce Excellence Results
Harbour-Link Group Berhad (592902-D)18
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, risks mitigation.
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 2016, 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 Mr Bin Lay Thiam 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 Securities 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.
Corporate Governance StatementCont’d
Annual Report 2016 19
pRINCIplE 5 – upHOld INTEgRITy IN FINANCIAl REpORTINg By COMpANy cont’d
Audit Committee cont’d
Having satisfied itself with Messrs Ernst and Young’s performance, the AC will recommend their re-appointment to the Board, upon which the shareholders’ approval will be sought at the Annual General Meeting (“AGM”).
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 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.
In line with good corporate governance and amendments to Listing Requirements of Bursa Securities, all resolutions tabled at general meeting held on or after 1 July 2016 will be voted by way of poll.
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.
Corporate Governance StatementCont’d
Harbour-Link Group Berhad (592902-D)20
NON-AudIT FEEs
The non-audit fees incurred for services rendered to the Company and its subsidiaries for the year ended 30 June 2016 by the Company’s auditors Messrs Ernst & Young (“EY”) and a firm or corporation affiliated to EY were amounted to RM195,400 (2015 : RM140,400).
MATERIAl CONTRACTs
There were no material contracts entered into by the Group which involves directors and major shareholders’ interest during the financial year.
Other Information
Annual Report 2016 21
MEMBERs
Details of the composition of the Audit Committee and the attendance by each member at the Audit Committee meetings for the financial year ended 30 June 2016 are as follow:
designation Name of directors directorshipNo. of Meetings
Attended
Chairman(Redesignated from Member to Chairman
w.e.f 1 July 2016)
Bin Lay Thiam Independent Non-Executive Director
5/5
Member(Redesignated from Chairman to Member
w.e.f 1 July 2016)
Dato’ Mohamed Salleh Bin Bajuri Independent Non-Executive Chairman
5/5
Member Datuk Pau Chiong Ung Independent Non-Executive Director
5/5
TERMs OF REFERENCE
The full Terms of Reference of the Audit Committee, outlining the Audit Committee’s objectives, membership, authority, proceeding of meetings and duties and responsibilities is available on the Group’s website at www.harbour.com.my.
suMMARy OF ACTIVITIEs OF THE AudIT COMMITTEE
The activities undertaken by the Audit Committee in the discharge of its duties and responsibilities during the financial year ended 30 June 2016 are summarised as follows:
Financial Reporting
• Reviewed the quarterly and year end consolidated financial statements to ensure the Group’s compliance with the Main Market Listing Requirements 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 consideration and approval.
• Reviewed and assessed the appropriateness of the Group’s accounting policies, adequacy of financial reporting and disclosure requirements and reasonableness of judgments and projections made in connection with the preparation of the financial statements.
• Reviewed and commented on the annual budget reporting timeline and its submission by the management prior to presenting it to the Board for approval.
Audit Committee Report
Harbour-Link Group Berhad (592902-D)22
ExTERNAl AudIT
• Considered the appointment of the external auditors and audit fees by evaluating the external auditor’s competence, independence, objectivity and the scope of work to be conducted.
• Reviewed the external auditors’ audit plan and areas of audit emphasis for financial year prior to the commencement of audit.
• Reviewed and discussed the auditing issues, where applicable the impact of material adjustments and recommendations arising from the final audit with the external auditors.
• Met once during the financial year with the external auditors without the presence of management and executive directors to discuss issues of concern to the external auditors.
INTERNAl AudIT
• Reviewed the competency of internal audit function including the processes, audit plan and resource requirements, as well as the quarterly internal audit reports presented on the findings, recommendations and Management’s responses thereto are adequately addressed by Management.
• Considered and approved the appointment of the outsourced internal audit function and their fees by evaluating their competency, independence and performance.
OTHER ACTIVITIEs
• Reviewed the related party transactions and any conflict of interest that may have arisen within the Group.
• Reviewed and recommended to the Board for approval the Audit Committee Report and Statement on Risk Management & Internal Control for inclusion in the 2016 Annual Report.
suMMARy OF ACTIVITIEs OF THE INTERNAl AudIT FuNCTION
The Group 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. However during the financial year under review, majority of the internal audit assignments have been outsourced to an independent professional firm in areas where technical skills and resources are not available internally. 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 work expected to be carried out during the financial year.
• Presented the Internal Audit Reports to Audit Committee highlighting audit findings, recommendations to improve and management responses at each quarter.
• Performed follow up audits on these findings and update status to the Audit Committee.
The total costs incurred for the internal audit function of the Group for the financial year was approximately RM317,000.
Audit Committee ReportCont’d
Annual Report 2016 23
Statement on Risk Management & Internal Control
The Board of Directors of Harbour-Link Group Berhad (“the Board”) is pleased to provide the Statement on the main features and state of the Group’s risk management and internal control system pursuant to Para 15.26 (b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.
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. The Board affirms its overall responsibility for the Group’s approach in reviewing the adequacy and effectiveness of the risk management practices and the internal control system.
In carrying out this responsibility, the Board is assisted by the Audit Committee which is empowered by its terms of reference to ensure the adequacy and integrity of the practices and system. This is done through reports the Audit Committee receives from independent audits and Management.
The review by the Board through the Audit Committee is an ongoing process that is in place for the whole financial year under review and up to the date of approval of this Statement. These reviews include risk management procedures as well as financial, operational and compliance control of the Group, except for associates and joint ventures. The Group’s interest in the associate companies is served through Board representation and periodic review of the associate companies’ management accounts by the Management. Enhancements are made in line with the Board’s commitment to improve the Group’s governance, risk management and internal control system in tandem to meeting the Group’s business objectives.
The risk management and internal control system is 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. Accordingly, it can only provide reasonable rather than absolute assurance against material misstatement, fraud or loss.
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 for the financial year under review and up to the date of approval of this Statement. This ongoing process ensures that the risk implications of any changes in the business environment to which the Group operates in are identified and assessed for its relevance and documented accordingly. Subsequent to the financial year ended 30 June 2016, executive management and unit heads carried out a detailed review of the existing key risk profile of the core businesses with the assistance of an appointed consultant. This review was extended to include unit heads and their assistants apart from executive management to create a greater risk awareness culture within the Group. The results of this review are currently being compiled and shall be presented to the Audit Committee upon its finalization. In addition, executive management is also in the process of reviewing the Group’s existing risk management practices with the view of enhancing the risk oversight, risk assessment and communication process.
INTERNAl AudIT FuNCTION
Whilst there is an in-house internal audit team, the Group has also engaged a professional service firm to carry out regular internal audit reviews in accordance with the approved internal audit plan. The internal audit team reports independently and directly to the Audit Committee. The role of the internal audit in the Group includes the following:
• RegularandcontinuousreviewsontheadequacyandefficiencyoftheGroup’sinternalcontrols;
• Highlightingsignificantrisksandnon-complianceissuesrelatingtoproceduresandoperationsthatimpacttheGroup;and
• Whereapplicable,providingrecommendationsto improveontheeffectivenessofcontrolsandoperations.Wherenecessary,follow-up reviews are also being carried out to ensure that appropriate actions are being taken to address internal control weaknesses highlighted.
Harbour-Link Group Berhad (592902-D)24
Statement on Risk Management & Internal ControlCont’d
INTERNAl AudIT FuNCTION cont’d
The Group’s Internal Audit continues to adopt a risk-based audit plan approach to provide assurance to the Board that the internal audit reviews conducted have been prioritized based on Group’s key risks areas and core businesses. Among the core businesses and key areas covered for the financial year under review were:
• logistic division Delivery Customer Service Billings
• shipping division Billings Credit Control and Collection
• property division Procurement Construction
• Engineering division Procurement Treasury
The results of these planned internal audit reviews were discussed with respective unit heads and subsequently, the audit findings including recommendations for improvements were presented to the Audit Committee at their scheduled meetings.
OTHER KEy ElEMENTs OF RIsK MANAgEMENT & INTERNAl CONTROl
These other key elements of risk management and internal control systems further support the maintenance of a strong risk management and internal control environment in the Group:
• AuditCommitteethatcompriseswhollyindependentnon-executivedirectorsanditsactivitiesundertakenduringthefinancialyear under review are set out in the Audit Committee Report;
• Establish other Board Committees to assist the Board in providing independent oversight function, namely NominationCommittee and Remuneration Committee with responsibilities and authorities clearly specified in their respective terms of reference;
• Organization structure with clearly defined lines of responsibility, delegation of authority and a process of hierarchicalreporting;
• Scheduledoperationsmeetings;
• Existenceoflimitsofauthoritywhichprovidestheauthorityoftheemployeesintheapprovalofvarioustransactions;
• 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;
Annual Report 2016 25
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 systems further support the maintenance of a strong risk management and internal control environment in the Group: cont’d
• ReviewandapprovalofallproposalsrelatingtosignificantcapitalandinvestmentacquisitionbytheBoard;
• Adequateinsurancecoverageonmajorassetsandtransactionstopreventmateriallossesandreducecontingentliabilitiesofthe Group;
• Documentedpoliciesandstandardoperatingprocedures forkeyprocessesareupdated fromtime to time in tandemwithchanges to business environment or regulatory guidelines;
• Employmentofqualifiedandcapableworkforce;
• Establishingtraininganddevelopmentplanstoensurestaffarekeptuptodatewithnecessarycompetenciestocarryouttheirduties and responsibilities well; and
• ActiveparticipationbycertainmembersoftheBoardintheday-to-dayrunningoftheoperationsandregulardialogueswithsenior management on operational matters.
CONClusION
The Board is not aware of any material losses incurred during the financial year under review as a result of weaknesses in internal control. 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 governance, risk and internal control system of the Group.
The Board has received assurance from the Group Managing Director and Financial Controller that the Group’s risk management and internal control 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.
REVIEW OF THE sTATEMENT By ExTERNAl AudITORs
As required by Para 15.23 of the Main Market Listing Requirements of Bursa Malaysia Berhad, the external auditors have reviewed this Statement for inclusion in the Annual Report for the Group for financial year under review. Based on their review, the external auditors have reported to the Board that nothing has come to their attention that causes them to believe that this Statement is inconsistent with their understanding of the process the Board has adopted in the review of the adequacy and effectiveness of the risk management and internal control of the Group.
This Statement is made in accordance with a resolution of the Board dated 20 October 2016.
HARBOUR-LINK GROUP BERHAD(592902-D)
27
31
31
32
34
35
37
39
42
122
Directors’ Report
Statement by Directors
Statutory Declaration
Independent Auditors’ Report
Statements of Pro�t or Loss and Other 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
Annual Report 2016 27
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 2016.
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 71,857,929 34,976,417
Attributable to:
Owners of the Company 56,198,349 34,976,417
Non-controlling interest 15,659,580 -
71,857,929 34,976,417
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 2015 were as follows:
In respect of the financial year ended 30 June 2015 as reported in the directors’ report of that year:
RM
First and final tax exempt (single-tier) dividend of 5.5% per share on 182,000,002 ordinary shares, declared on 24 August 2015 and paid on 19 December 2015. 10,010,000
At the forthcoming Annual General Meeting, the first and final tax exempt (single-tier) dividend in respect of the financial year ended 30 June 2016, of 4% on 400,400,004 ordinary shares amounting to a dividend payable of RM8,008,000 (2 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 2017.
Directors’ Report
Harbour-Link Group Berhad (592902-D)28
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 SoonDato’ Mohamed Salleh Bin BajuriDatuk Pau Chiong UngWong Siong SehDato’ Toh Guan SengLee Seng ChiongHii Kwong Wui Lau Sii HinBin Lay Thiam
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 37 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 and options over share in the Company during the financial year were as follows:
Number of ordinary shares of RM1.00 each
Number of ordinary shares of RM0.50 each
01.07.2015 Acquired Share
Split Bonus
Issue Sold 30.06.2016
Ordinary Shares of the Company:
Direct interest
Yong Piaw Soon 11,250,545 - 22,501,090 2,250,109 - 24,751,199
Dato’ Mohamed Salleh Bin Bajuri 409,832 - 819,664 81,966 - 901,630
Wong Siong Seh 7,014,300 - 14,028,600 1,402,860 - 15,431,460
Dato’ Toh Guan Seng 2,300,000 - 4,600,000 460,000 - 5,060,000
Lee Seng Chiong 1,383,000 - 2,766,000 276,600 - 3,042,600
Hii Kwong Wui 1,470,000 - 2,940,000 294,000 - 3,234,000
Lau Sii Hin 750,000 - 1,500,000 150,000 - 1,650,000
Deemed interest
Yong Piaw Soon 96,734,575 - 193,469,150 19,350,576 - 212,819,726
Wong Siong Seh 96,734,575 - 193,469,150 19,350,576 - 212,819,726
Annual Report 2016 29
Directors’ ReportCont’d
DIRECTORS’ INTERESTS cont’d
Number of warrants
01.07.2015 Bonus Issue 30.06.2016
Warrants of the Company:
Direct Interest:
Yong Piaw Soon - 2,250,109 2,250,109
Dato’ Mohamed Salleh Bin Bajuri - 81,966 81,966
Wong Siong Seh - 1,402,860 1,402,860
Dato’ Toh Guan Seng - 460,000 460,000
Lee Seng Chiong - 276,600 276,600
Hii Kwong Wui - 294,000 294,000
Lau Sii Hin - 150,000 150,000
Deemed Interest:
Yong Piaw Soon - 19,350,576 19,350,576
Wong Siong Seh - 19,350,576 19,350,576
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.
ISSUE OF SHARES AND WARRANTS
During the financial year, the Company has completed the following:
(i) share split involving subdivision of every one (1) ordinary share of RM1 held into two (2) new ordinary shares of RM0.50 each (“share split”);
(ii) bonus issue of 36,400,000 new bonus shares of RM0.50 each on the basis of one (1) bonus share for every ten (10) new subdivided ordinary shares after share split;
(iii) bonus issue of 36,400,000 warrants on the basis of one (1) warrant for every ten 10 new subdivided shares after share split. Each warrant is convertible into one new ordinary share of RM0.50 each at an exercise price of RM1.65 per ordinary share.
The share split, bonus issue of shares and warrants were completed on 8 April 2016.
OTHER STATUTORY INFORMATION
(a) Before the statements of profit or loss and other 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.
Harbour-Link Group Berhad (592902-D)30
OTHER STATUTORY INFORMATION cont’d
(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.
SIGNIFICANT EVENTS
Details of the significant events are disclosed in Note 17 to the financial statements.
SUBSEQUENT EVENTS
Details of subsequent events are disclosed in Note 43 to the financial statement.
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 20 October 2016.
YONG PIAW SOON WONG SIONG SEH
Directors’ ReportCont’d
Annual Report 2016 31
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 34 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 2016 and of their financial performance and cash flows for the year then ended.
The supplementary information set out in Note 44 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 20 October 2016.
YONG PIAW SOON WONG SIONG SEH
I, SANDRA CHAN LEE HUNG, being the officer 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 34 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 the abovenamed SANDRA CHAN LEE HUNG at Bintulu in the State of Sarawak on 20 October 2016 SANDRA CHAN LEE HUNG
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)32
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 2016 of the Group and of the Company, and statements of profit or loss and other 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 34 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 responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 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 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 2016 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)
Annual Report 2016 33
OTHER REPORTING RESPONSIBILITIES
The supplementary information set out in Note 44 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
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 YONG VOON KARAF: 0039 1769/04/18 (J/PH)Chartered Accountants Chartered Accountant Kuching, Malaysia
20 October 2016
Independent Auditors’ ReportTo the Members of HARBOUR-LINK GROUP BERHAD - 592902-D (Incorporated in Malaysia)
Cont’d
Harbour-Link Group Berhad (592902-D)34
Statements of Profit or Loss and Other Comprehensive IncomeFor the Financial Year Ended 30 June 2016
Group CompanyNote 2016 2015 2016 2015
RM RM RM RM
Revenue 4 590,764,421 506,963,059 44,908,175 24,657,536
Cost of sales (454,203,546) (383,620,692) - -
Gross profit 136,560,875 123,342,367 44,908,175 24,657,536
Other items of incomeOther income 5 14,774,494 7,084,510 1,594,858 845,825
Other items of expenseAdministrative and other expenses (44,862,155) (48,793,340) (9,544,280) (4,342,090)
Finance costs 6 (5,799,921) (5,737,817) (1,243,510) (1,557,039)
Share of result of associates 1,505,162 649,759 - -
Share of result of joint venture (217,888) 114,192 - -
Profit before tax 7 101,960,567 76,659,671 35,715,243 19,604,232
Income tax expense 10 (30,102,638) (22,017,710) (738,826) 6,486
Profit net of tax 71,857,929 54,641,961 34,976,417 19,610,718
Other comprehensive income:Other comprehensive income to be reclassified to
profit or loss in subsequent periods:
Foreign currency translation 1,049,905 1,100,717 - -
Total comprehensive income for the year 72,907,834 55,742,678 34,976,417 19,610,718
Profit attributable to:Owners of the Company 56,198,349 51,789,526 34,976,417 19,610,718
Non-controlling interest 15,659,580 2,852,435 - -
71,857,929 54,641,961 34,976,417 19,610,718
Total comprehensive income attributable to:Owners of the Company 57,248,254 52,890,243 34,976,417 19,610,718
Non-controlling interest 15,659,580 2,852,435 - -
72,907,834 55,742,678 34,976,417 19,610,718
Earnings per share attributable to owners of the Company (sen per share)
Basic 11 14.04 12.93
Diluted 11 14.04 NA
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Annual Report 2016 35
Group CompanyNote 2016 2015 2016 2015
RM RM RM RM
ASSETS
Non-current assets
Property, plant and equipment 13 207,929,227 197,728,797 6,592,443 6,854,066
Investment properties 14 9,062,903 9,356,272 - -
Prepaid land lease payments 15 6,012,323 6,148,398 - -
Land held for development 23(a) 43,941,575 43,694,038 - -
Intangible assets 16 105,000 105,000 - -
Investment in subsidiaries 17 - - 174,948,623 179,232,623
Investment in associates 18 5,019,044 3,685,381 1,466,200 1,466,200
Investment in joint venture 19 682,867 900,755 - -
Other investments 20 652,445 652,445 - -
Deferred tax assets 21 3,413,129 9,832,252 - -
276,818,513 272,103,338 183,007,266 187,552,889
Current assets
Inventories 22 33,180,141 5,106,023 - -
Development properties 23(b) - 61,906,934 - -
Trade and other receivables 24 144,081,916 133,160,334 66,659,522 18,094,086
Investment securities 25 26,264,410 8,270,415 - -
Other current assets 26 11,226,760 11,455,064 1,171,696 1,241,159
Cash and bank balances 28 97,508,831 90,896,516 2,312,573 1,988,880
312,262,058 310,795,286 70,143,791 21,324,125
Total assets 589,080,571 582,898,624 253,151,057 208,877,014
Statements of Financial PositionAs at 30 June 2016
Harbour-Link Group Berhad (592902-D)36
Statements of Financial PositionAs at 30 June 2016Cont’d
Group CompanyNote 2016 2015 2016 2015
RM RM RM RM
Equity and liabilities
Current liabilities
Loans and borrowings 29 44,112,174 28,278,737 10,786,312 1,297,050
Trade and other payables 30 97,444,852 88,227,356 33,879,873 23,317,714
Other current liabilities 31 1,025,538 85,918,513 - -
Income tax payable 10,024,545 12,543,740 - -
152,607,109 214,968,346 44,666,185 24,614,764
Net current assets/(liabilities) 159,654,949 95,826,940 25,477,606 (3,290,639)
Non-current liabilities
Deferred tax liabilities 21 15,446,320 15,651,759 28,782 56,800
Loans and borrowings 29 57,284,731 53,405,320 5,428 721,205
72,731,051 69,057,079 34,210 778,005
Total liabilities 225,338,160 284,025,425 44,700,395 25,392,769
Net assets 363,742,411 298,873,199 208,450,662 183,484,245
Equity attributable to owners of the Company
Share capital 32 200,200,002 182,000,002 200,200,002 182,000,002
Retained earnings 33 186,679,620 158,691,271 8,250,660 1,484,243
Other reserve 34 (62,944,880) (62,944,880) - -
Foreign currency translation reserve 35 2,673,749 1,623,844 - -
326,608,491 279,370,237 208,450,662 183,484,245
Non-controlling interest 37,133,920 19,502,962 - -
Total equity 363,742,411 298,873,199 208,450,662 183,484,245
Total equity and liabilities 589,080,571 582,898,624 253,151,057 208,877,014
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Annual Report 2016 37
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 2015 182,000,002 158,691,271 (62,944,880) 1,623,844 279,370,237 19,502,962 298,873,199
Profit net of tax - 56,198,349 - - 56,198,349 15,659,580 71,857,929
Other comprehensive income - - - 1,049,905 1,049,905 - 1,049,905
Total comprehensive income - 56,198,349 - 1,049,905 57,248,254 15,659,580 72,907,834
Capital contributed by non-controlling interest in subsidiaries - - - - - 2,741,000 2,741,000
Dividends 12 - (10,010,000) - - (10,010,000) - (10,010,000)
Dividend paid to non-controlling interest in subsidiaries - - - - - (769,622) (769,622)
Bonus issue of shares 18,200,000 (18,200,000) - - - - -
At 30 June 2016 200,200,002 186,679,620 (62,944,880) 2,673,749 326,608,491 37,133,920 363,742,411
At 1 July 2014 182,000,002 111,340,980 (62,944,880) 523,127 230,919,229 18,214,767 249,133,996
Profit net of tax - 51,789,526 - - 51,789,526 2,852,435 54,641,961
Other comprehensive income - - - 1,100,717 1,100,717 - 1,100,717
Total comprehensive income - 51,789,526 - 1,100,717 52,890,243 2,852,435 55,742,678
Acquisition of non-controlling interest in subsidiaries - 110,765 - - 110,765 (1,158,140) (1,047,375)
Dividends 12 - (4,550,000) - - (4,550,000) - (4,550,000)
Dividend paid to non-controlling interest in subsidiaries - - - - - (406,100) (406,100)
At 30 June 2015 182,000,002 158,691,271 (62,944,880) 1,623,844 279,370,237 19,502,962 298,873,199
Statements of Changes in EquityFor the Financial Year Ended 30 June 2016
Harbour-Link Group Berhad (592902-D)38
Company Note Share
Capital
(Accumulated Losses)/
Retained Earnings
Total Equity
RM RM RM
2016
At 1 July 2015 182,000,002 1,484,243 183,484,245
Total comprehensive income - 34,976,417 34,976,417
Bonus issue of shares 18,200,000 (18,200,000) -
Dividends 12 - (10,010,000) (10,010,000)
At 30 June 2016 200,200,002 8,250,660 208,450,662
2015
At 1 July 2014 182,000,002 (13,576,475) 168,423,527
Total comprehensive income - 19,610,718 19,610,718
Dividends 12 - (4,550,000) (4,550,000)
At 30 June 2015 182,000,002 1,484,243 183,484,245
Statements of Changes in EquityFor the Financial Year Ended 30 June 2016Cont’d
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Annual Report 2016 39
Group Company
Note 2016 2015 2016 2015
RM RM RM RM
Operating activities
Profit before tax 101,960,567 76,659,671 35,715,243 19,604,232
Adjustments for:
Accrual of claims 7 - 3,778,036 - -
Amortisation of prepaid land lease payments 7 136,075 93,073 - -
Allowance for impairment net of reversal
- trade receivables 5, 7 (2,918,686) 10,804,842 - -
- other receivables 7 2,378 - - -
Bad debts written off 7 423,382 23,418 - -
Depreciation of property, plant and equipment 7 21,574,026 20,001,013 469,197 512,355
Dividend income 4 - - (43,138,175) (22,887,536)
Depreciation of investment properties 7 222,894 200,485 - -
Gain on disposal of investment properties 5, 7 (379,525) - - -
Gain on disposal of property, plant and equipment, net 5, 7 (823,091) (1,553,075) (6,293) (2,698)
Impairment loss on property, plant and equipment 7 5,941,800 - - -
Impairment loss on investment in subsidiaries 7 - - 4,284,000 -
Interest expense 6 5,799,921 5,737,817 1,243,510 1,557,039
Interest income 5 (1,046,611) (733,966) (1,359,761) (796,544)
Property, plant and equipment written off 7 73,707 119,508 - 458
Reversal of accruals of claims 5 (3,261,037) - - -
Share of result of associates (1,505,162) (649,759) - -
Share of result of joint venture 217,888 (114,192) - -
Unrealised foreign exchange (gain)/loss, net 5, 7 (477,264) 1,420,344 - -
Total adjustments 23,980,695 39,127,544 (38,507,522) (21,616,926)
Statements of Cash FlowsFor the Financial Year Ended 30 June 2016
Harbour-Link Group Berhad (592902-D)40
Group Company
Note 2016 2015 2016 2015
RM RM RM RM
Operating cash flows before changes in working capital 125,941,262 115,787,215 (2,792,279) (2,012,694)
Changes in working capital
(Increase)/decrease in land held for development (247,537) 2,195,445 - -
Decrease/(increase) in development properties 32,527,497 (30,558,292) - -
Decrease/(increase) in inventories 777,580 (1,857,385) - -
(Increase)/decrease in trade and other receivables (7,706,934) (48,677,164) (48,565,436) 1,185,202
Decrease/(increase) in other current assets 1,708,107 (4,699,612) (459,995) 1,984
Increase/(decrease) in trade and other payables 12,234,075 25,373,284 10,562,159 (12,781,263)
(Increase)/decrease in other current liabilities (84,892,975) 46,432,745 - -
Total changes in working capital (45,600,187) (11,790,979) (38,463,272) (11,594,077)
Taxes paid, net of refund (26,408,149) (20,418,353) (237,386) 288,997
Interest received 1,046,611 733,966 1,359,761 796,544
Interest paid (6,165,428) (6,242,061) (1,243,510) (1,557,039)
Net cash flows from/(used in) operating activities 48,814,109 78,069,788 (41,376,686) (14,078,269)
Investing activities
Acquisition of non-controlling interest in subsidiaries - (1,047,375) - (1,008,000)
Dividends received 171,500 110,463 43,138,175 22,887,536
Increase in investment in associates - (40,000) - -
Increase in investment securities (17,993,995) (1,754,200) - -
Proceeds from disposal of property, plant and equipment 8,834,005 4,990,397 6,684 2,700
Proceeds from disposal of investment properties 450,000 - - -
Purchase of property, plant and equipment (38,670,833) (18,448,115) (207,965) (223,540)
Purchase of prepaid land lease payments - (4,300,000) - -
Net cash flows (used in)/from investing activities (47,209,323) (20,488,830) 42,936,894 21,658,696
Statements of Cash FlowsFor the Financial Year Ended 30 June 2016Cont’d
Annual Report 2016 41
Group Company
Note 2016 2015 2016 2015
RM RM RM RM
Financing Activities
Dividends paid to non-controlling interest in subsidiaries (769,622) (406,100) - -
Dividends paid on ordinary shares (10,010,000) (4,550,000) (10,010,000) (4,550,000)
Capital contributed by non-controlling interest in subsidiaries 2,741,000 - - -
Increase in cash at bank pledged for borrowings (422,371) (2,598,627) - -
Decrease/(increase) in short-term deposits pledged for bank borrowings 568,562 (1,853,921) (424,400) (725,746)
Proceeds from loans and borrowings 23,366,921 7,530,000 4,260,000 -
Repayment of loans and borrowings (10,028,619) (33,037,937) (573,351) (533,491)
Repayment of finance lease payables (11,410,405) (15,853,752) (285,040) (264,396)
Net cash flows used in financing activities (5,964,534) (50,770,337) (7,032,791) (6,073,633)
Net (decrease)/increase in cash and cash equivalents (4,359,748) 6,810,621 (5,472,583) 1,506,794
Effects of exchange rate changes on cash and cash equivalents 1,135,619 1,097,171 - -
Cash and cash equivalents at 1 July 80,298,336 72,390,544 333,498 (1,173,296)
Cash and cash equivalents at 30 June 28 77,074,207 80,298,336 (5,139,085) 333,498
Statements of Cash FlowsFor the Financial Year Ended 30 June 2016
Cont’d
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Harbour-Link Group Berhad (592902-D)42
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 for issue in accordance with a resolution of the directors on 20 October 2016.
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”), International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.
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 Changes in accounting policies
The accounting policies adopted are consistent with those of the previous financial year.
2.3 Amendments/standards issued but not yet effective
The amendments/standards issued but not yet effective up to the date of issuance of the Group’s financial statements are listed below. The Group and the Company intend to adopt these amendments/standards, if applicable, when they become effective.
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Annual Report 2016 43
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.3 Amendments/standards issued but not yet effective cont’d
Description
Effective for periodbeginning on
or after
Annual Improvements to MFRSs 2012 - 2014 Cycle 1 January 2016
Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of Depreciation and Amortisation
1 January 2016
Amendments to MFRS 116 and MFRS 141: Agriculture: Bearer Plants 1 January 2016
Amendments to MFRS 11: Accounting for Acquisitions of Interests in Joint Operations 1 January 2016
Amendments to MFRS 127: Equity Method in Separate Financial Statements 1 January 2016
Amendments to MFRS 101: Disclosure Initiative 1 January 2016
Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities: Applying the Consolidation Exception
1 January 2016
MFRS 14: Regulatory Deferral Accounts 1 January 2016
Amendments to MFRS 107: Disclosure Initiative 1 January 2017
Amendments to MFRS 112: Recognition of Deferred Tax Assets for Unrealised Losses 1 January 2017
MFRS 15: Revenue from Contracts with Customers 1 January 2018
Amendments to MFRS 2: Classification and Measurement Share-based Payment Transactions 1 January 2018
Clarifications to MFRS 15: Revenue from Contracts with Customers 1 January 2018
MFRS 9: Financial Instruments 1 January 2018
MFRS 16: Leases 1 January 2019
Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
Deferred
The directors expect that the adoption of the above standards and interpretations will have no material impact on the financial statements in the period of initial application except as discussed below:
Annual Improvements to MFRSs 2012–2014 Cycle
The Annual Improvements to MFRSs 2012-2014 Cycle include a number of amendments to various MFRSs, which are summarised below. The directors of the Company do not anticipate that the application of these amendments will have a significant impact on the Group’s and the Company’s financial statements.
(i) MFRS 7: Financial Instruments - Disclosures
The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset. An entity must assess the nature of the fee and arrangement against the guidance for continuing involvement in MFRS 7 in order to assess whether the disclosures are required.
In addition, the amendment also clarifies that the disclosures in respect of offsetting of financial assets and financial liabilities are not required in the condensed interim financial report.
(ii) MFRS 119: Employee Benefits
The amendment clarifies that market depth of high quality corporate bonds is assessed based on the currency in which the obligation is denominated, rather than the country where the obligation is located. When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used.
The amendment must be applied prospectively.
Harbour-Link Group Berhad (592902-D)44
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.3 Amendments/standards issued but not yet effective cont’d
Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of Depreciation and Amortisation
The amendments clarify that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through the use of an asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortise intangible assets.
The amendments are effective prospectively for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact to the Group as the Group has not used a revenue-based method to depreciate its non-current assets.
Amendments to MFRS 116 and MFRS 141: Agriculture: Bearer Plants
The amendments change the accounting requirements for biological assets that meet the definition of bearer plants. Under the amendments, biological assets that meet the definition of bearer plants will no longer be within the scope of MFRS 141. Instead, MFRS 116 will apply. After initial recognition, bearer plants will be measured under MFRS 116 at accumulated cost (before maturity) and using either the cost model or revaluation model (after maturity). The amendments also require that produce that grows on bearer plants will remain in the scope of MFRS 141 and are measured at fair value less costs to sell.
The amendments are effective for annual periods beginning on or after 1 January 2016 and are to be applied retrospectively, with early adoption permitted. These amendments will not have any impact on the Group’s and the Company’s financial statements.
Amendments to MFRS 11 Joint Arrangement: Accounting for Acquisitions of Interests in Joint Operations
The amendments to MFRS 11 require that a joint operator which acquires an interest in a joint operations which constitute a business to apply the relevant MFRS 3 Business Combinations principles for business combinations accounting. The amendments also clarify that a previously held interest in a joint operation is not remeasured on the acquisition of an additional interest in the same joint operation while joint control is retained. In addition, a scope exclusion has been added to MFRS 11 to specify that the amendments do not apply when the parties sharing joint control, including the reporting entity, are under common control of the same ultimate controlling party.
These amendments are to be applied prospectively for annual periods beginning on or after 1 January 2016, with early adoption permitted. The Directors of the Company do not anticipate that the application of these amendments will have a material impact on the Group’s consolidated financial statements.
Amendments to MFRS 127: Equity Method in Separate Financial Statements
The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associate in their separate financial statements. Entities already applying MFRS and electing to change to the equity method in its separate financial statements will have to apply this change retrospectively. For first-time adopters of MFRS electing to use the equity method in its separate financial statements, they will be required to apply this method from the date of transition to MFRS. The amendments are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments will not have any impact on the Group’s and the Company’s financial statements.
Annual Report 2016 45
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.3 Amendments/standards issued but not yet effective cont’d
Amendments to MFRS 101: Disclosure Initiatives
The amendments to MFRS 101 include narrow-focus improvements in the following five areas:
- Materiality - Disaggregation and subtotals - Notes structure - Disclosure of accounting policies - Presentation of items of other comprehensive income arising from equity accounted investments
The directors of the Company do not anticipate that the application of these amendments will have a material impact on the Group’s and the Company’s financial statements.
Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities - Applying the Consolidation Exception
The amendments clarify that the exemption from presenting consolidated financial statements applies to a parent entity that is a subsidiary of an investment entity, when the investment entity measures all of its subsidiaries at fair value. The amendments further clarify that only a subsidiary that is not an investment entity itself and provides support services to the investment entity is consolidated. In addition, the amendments also provides that if an entity that is not itself an investment entity has an interest in an associate or joint venture that is an investment entity, the entity may, when applying the equity method, retain the fair value measurement applied by that investment entity associate or joint venture to the investment entity associate’s or joint venture’s interests in subsidiaries.
The amendments are to be applied retrospectively and are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments will not have any impact on the Group’s and the Company’s financial statements.
Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
The amendments clarify that:
- gains and losses resulting from transactions involving assets that do not constitute a business, between investor and its associate or joint venture are recognised in the entity’s financial statements only to the extent of unrelated investors’ interests in the associate or joint venture; and
- gains and losses resulting from transactions involving the sale or contribution to an associate of a joint venture of assets that constitute a business is recognised in full.
The amendments are to be applied prospectively to the sale or contribution of assets occurring in annual periods beginning on or after 1 January 2016. Earlier application is permitted.
Amendments to MFRS 107: Disclosure Initiative
The amendments required an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. The disclosure requirement could be satisfied in various way, and one method is by providing reconciliation between the opening and closing balances in statement of financial position for liabilities arising from financing activities.
The amendments are to be applied for annual periods beginning on or after 1 January 2017, with early adoption permitted. The directors of the Company do not anticipate that the application of these amendments will have a material impact on the Company’s financial statements.
Harbour-Link Group Berhad (592902-D)46
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.3 Amendments/standards issued but not yet effective cont’d
Amendments to MFRS 112: Recognition of Deferred Tax Assets for Unrealised Losses
The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explains in which circumstances taxable profit may include the recovery of some assets for more than their carrying amount.
The amendments are to be applied for annual periods beginning on or after 1 January 2017, with early adoption permitted. The directors of the Company do not anticipate that the application of these amendments will have a material impact on the Company’s financial statements.
MFRS 15: Revenue from Contracts with Customers
MFRS 15 establishes a new five-step models that will apply to revenue arising from contracts with customers. MFRS 15 will supersede the current revenue recognition guidance including MFRS 118 Revenue, MFRS 111 Construction Contracts and the related interpretations when it becomes effective.
The core principle of MFRS 15 is that an entity should recognise revenue which depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e when “control” of the goods or services underlying the particular performance obligation is transferred to the customer.
Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2018 with early adoption permitted. The Group is currently assessing the impact of MFRS 15 and plans to adopt the new standard on the required effective date.
MFRS 9: Financial Instruments
In November 2015, MASB issued the final version of MFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous versions of MFRS 9. The standard introduces new requirements for classification and measurement, impairment and hedge accounting. MFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory. The adoption of MFRS 9 will not have an effect on the classification and measurement of the Group’s financial assets and financial liabilities.
MFRS 16: Leases
The scope of MFRS 16 includes leases of all assets, with certain exception. A lease is defined as contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration.
MFRS 16 eliminates the distinction between finance and operating leases for leases under MFRS 117. MFRS 16 requires lessees to account for all leases under a single on-balance sheet model in a similar way to finance leases under MFRS 117. The standard includes two recognition exemptions for lessees - leases of ‘low-value’ assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset).
Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.
Annual Report 2016 47
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.3 Amendments/standards issued but not yet effective cont’d
MFRS 16: Leases cont’d
Lessees will be required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.
A lessee can choose to apply the standard using either a full retrospective or a modified retrospective transition approach. The standard’s transition provisions permit certain reliefs. Early application is permitted, but not before an entities applies MFRS 115.
2.4 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 for like transactions and events in similar circumstances.
The Company controls an investee if and only if the Company has all the following:
(i) Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee);
(ii) Exposure, or rights, to variable returns from its investment with the investee; and
(iii) The ability to use its power over the investee to affect its returns.
When the Company has less than a majority of the voting rights of an investee, the Company considers the following in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power over the investee:
(i) The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
(ii) Potential voting rights held by the Company, other vote holders or other parties;
(iii) Rights arising from other contractual arrangements; and
(iv) Any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.
Subsidiaries are consolidated when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.
Losses within a subsidiary are attributed to the non-controlling interests even if that results in a deficit balance.
Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. The resulting difference is recognised directly in equity and attributed to owners of the Company.
Harbour-Link Group Berhad (592902-D)48
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.4 Basis of consolidation cont’d
When the Group loses control of a subsidiary, a gain or loss calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets and liabilities of the subsidiary and any non-controlling interests, is recognised in profit or loss. The subsidiary’s cumulative gain or loss which has been recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss or where applicable, transferred directly to retained earnings. The fair value of any investment retained in the former subsidiary at the date control is lost is regarded as the cost on initial recognition of the investment.
Business combinations
Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. The Group elects on a transaction-by-transaction basis whether to measure the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Transaction costs incurred are expensed and included in administrative expenses.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with MFRS 139 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of MFRS 139, it is measured in accordance with the appropriate MFRS.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.
Business combinations involving entities under common control
Business combinations involving entities under common control are accounted for by applying the pooling of interest method. The assets and liabilities of the combining entities are reflected at their carrying amounts reported in the consolidated financial statements of the controlling holding company. Any difference between the consideration paid and the share capital of the “acquired” entity is reflected within equity as merger reserve. The statement of profit or loss and other comprehensive income reflects the results of the combining entities for the full year, irrespective of when the combination takes place. Comparatives are presented as if the entities had always been combined since the date the entities had come under common control.
Annual Report 2016 49
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.5 Subsidiaries
A subsidiary is an entity over which the Group has all the following:
(i) Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee);
(ii) Exposure, or rights, to variable returns from its investment with the investee; and
(iii) The ability to use its power over the investee to affect its returns.
In the Company’s separate financial statements, investments in subsidiaries are accounted for 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.
2.6 Investments in associates and joint ventures
An associate is an entity in which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
On acquisition of an investment in associate or joint venture, any excess of the cost of investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill and included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities of the investee over the cost of 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 or joint venture’s profit or loss for the period in which the investment is acquired.
An associate or a joint venture is equity accounted for from the date on which the investee becomes an associate or a joint venture.
Under the equity method, on initial recognition the investment in an associate or a joint venture is recognised at cost, and the carrying amount is increased or decreased to recognise the Group’s share of the profit or loss and other comprehensive income of the associate or joint venture after the date of acquisition. When the Group’s share of losses in an associate or a joint venture equal or exceeds its interest in the associate or joint venture, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.
Profits and losses resulting from upstream and downstream transactions between the Group and its associate or joint venture are recognised in the Group’s financial statements only to the extent of unrelated investors’ interests in the associate or joint venture. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.
The financial statements of the associates and joint ventures 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.
Harbour-Link Group Berhad (592902-D)50
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.6 Investments in associates and joint ventures cont’d
After application of the equity method, the Group applies MFRS 139 Financial Instruments: Recognition and Measurement to determine whether it is necessary to recognise any additional impairment loss with respect to its net investment in the associate or joint venture. When necessary, the entire carrying amount of the investment is tested for impairment in accordance with MFRS 136 Impairment of Assets as a single asset, by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss is recognised in profit or loss. Reversal of an impairment loss is recognised to the extent that the recoverable amount of the investment subsequently increases.
In the Company’s separate financial statements, investments in associates and joint ventures are accounted for 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.
2.7 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.
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.
(b) Foreign currency transactions
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.
(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.
Annual Report 2016 51
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.7 Foreign currency cont’d
(c) Foreign operations cont’d
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.
2.8 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. Leasehold land is depreciated over the remaining lease term. 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.
2.9 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%
Harbour-Link Group Berhad (592902-D)52
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.9 Investment properties cont’d
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 2.8 up to the date of change in use.
2.10 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.
2.11 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.
Annual Report 2016 53
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.12 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.
2.13 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 50 years.
Harbour-Link Group Berhad (592902-D)54
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.14 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 except:
- where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
- in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.
Deferred tax 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.
Annual Report 2016 55
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.14 Income taxes cont’d
(b) Deferred tax cont’d
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.
2.15 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”).
2.16 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.
2.17 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 2.10 to the financial statements.
(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.
Harbour-Link Group Berhad (592902-D)56
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.17 Revenue recognition cont’d
(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.
2.18 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.
Annual Report 2016 57
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.18 Financial assets cont’d
(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.
(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.
Harbour-Link Group Berhad (592902-D)58
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.18 Financial assets cont’d
(d) Available-for-sale financial assets cont’d
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.
2.19 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.
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.
Annual Report 2016 59
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.19 Impairment of financial assets cont’d
(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.
2.20 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.
(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.
Harbour-Link Group Berhad (592902-D)60
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.20 Financial liabilities cont’d
(b) Other financial liabilities cont’d
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.
2.21 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.
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.
2.22 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 42, including the factors used to identify the reportable segments and the measurement basis of segment information.
Annual Report 2016 61
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.23 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.
2.24 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.
2.25 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.
2.26 Inventories
(a) Property inventory
Property acquired or being constructed for sale in the ordinary course of business, rather than to be held for rental or capital appreciation, is held as inventory and is measured at the lower or cost and net realisable value.
Costs includes:
- Freehold and leasehold rights for land - Amount paid to contractors for construction - 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 paid.
Net realisable value is the estimated selling price in the ordinary course of the business, based on market prices at the reporting date and discounted for the time value of money if material, less costs to completion and the estimated costs of sale.
The cost of inventory recognised in profit or loss on disposal is 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.
Harbour-Link Group Berhad (592902-D)62
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.26 Inventories cont’d
(a) Property inventory cont’d
Land held for development are property inventory which consists of land where no development activities have been carried out or where development activities are not expected to be completed within the normal operating cycle, and are hence classified within non-current assets. Land held for development is reclassified to current property inventory at the point when development activities have commenced and where it can be demonstrated than the development activities can be complete within normal operating cycle.
(b) Maintenance consumables
Maintenance consumables are stated at lower of cost and net realisable value. Cost is determined on a first-in first-out basis.
2.27 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.
(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.
Annual Report 2016 63
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.27 Intangible assets cont’d
(b) Other intangible assets cont’d
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.
2.28 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.
2.29 Fair value measurements
The Group and the Company measure financial instruments, such as, derivatives, and non-financial assets such as investment properties, at fair value at each reporting date. Also, fair values of the financial instruments measured at amortised cost are disclosed in Note 39.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the ability takes place either:
- In the principal market for the asset or liability, or - In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible to by the Group and the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
Harbour-Link Group Berhad (592902-D)64
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
2. SIGNIFICANT ACCOUNTING POLICIES cont’d
2.29 Fair value measurements cont’d
The Group and the Company use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair values in measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurements as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group and the Company determine whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Group and the Company have determined classes of assets and liabilities on the basis of nature, characteristics and risks of the assets or liability and the level of the fair value hierarchy as explained above.
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.
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.
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.
Annual Report 2016 65
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
4. REVENUE
Revenue of the Group and of the Company consists of the following:
Group Company
2016 2015 2016 2015
RM RM RM RM
Shipping, forwarding and transportation 384,989,312 360,498,241 - -
Engineering works 58,505,338 70,732,381 - -
Supply and hire of equipment 44,987,329 62,481,813 - -
Dividend income from
- associates - - 171,500 110,463
- subsidiaries - - 42,966,675 22,777,073
Management fees - - 1,116,000 1,116,000
Maintenance services 976,616 437,774 - -
Rental income 6,939,036 8,333,576 654,000 654,000
Sale of properties 94,361,790 4,477,746 - -
Others 5,000 1,528 - -
590,764,421 506,963,059 44,908,175 24,657,536
5. OTHER INCOME
Group Company
2016 2015 2016 2015
RM RM RM RM
Dividend income from investment in securities 95,632 - - -
Gain on disposal of investment properties 379,525 - - -
Gain on disposal of property, plant and equipment 2,094,603 1,553,075 6,293 2,698
Interest income 1,046,611 733,966 86,426 7,472
Interest received from subsidiaries - - 1,273,335 789,072
Management fee received 541,930 908,642 - -
Reversal of allowance for impairment on trade receivables (Note 24) 2,918,686 - - -
Reversal of accrual of claims 3,261,037 - - -
Rental income 468,722 1,325,488 41,304 41,304
Realised foreign exchange gain 779,843 1,085,723 - -
Unrealised foreign exchange gain 915,507 260,141 - -
Sundry income 2,272,398 1,217,475 187,500 5,279
14,774,494 7,084,510 1,594,858 845,825
Harbour-Link Group Berhad (592902-D)66
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
6. FINANCE COSTS
Group Company2016 2015 2016 2015
RM RM RM RM
Interest expense on:
Interest bearing bank borrowings 3,972,220 3,668,931 59,612 97,218
Bankers’ acceptance interest 194,542 324,980 - -
Interest paid to subsidiaries - - 1,164,773 1,425,568
Obligation under finance lease 1,998,666 2,248,150 19,125 34,253
6,165,428 6,242,061 1,243,510 1,557,039
Less: Interest capitalised into:
- Development properties (Note 23) (365,507) (504,244) - -
5,799,921 5,737,817 1,243,510 1,557,039
7. PROFIT BEFORE TAX
The following items have been included in arriving at profit before tax:
Group Company2016 2015 2016 2015
RM RM RM RM
Employee benefits expense (Note 8) 51,136,881 45,406,954 2,741,563 2,566,447
Non-executive directors’ remuneration (Note 9) 185,500 217,834 185,500 217,834
Accrual of claims - 3,778,036 - -
Amortisation of prepaid land lease payments (Note 15) 136,075 93,073 - -
Auditors’ remuneration
- current year 457,888 374,740 45,000 37,000
- underprovision in prior year 6,735 433 - -
Allowance for impairment, net of reversal
- trade receivables - 10,804,842 - -
- other receivables 2,378 - - -
Bad debts written off 423,382 23,418 - -
Depreciation of property, plant and equipment (Note 13) 21,574,026 20,001,013 469,197 512,355
Depreciation of investment properties (Note 14) 222,894 200,485 - -
Hiring of equipment 8,134,476 5,396,710 - -
Impairment loss on property, plant and equipment 5,941,800 - - -
Impairment loss on investment in subsidiaries - - 4,284,000 -
Loss on disposal of property, plant and equipment 1,271,512 - - -
Property, plant and equipment written off 73,707 119,508 - 458
Realised foreign exchange loss 1,411,731 1,037,456 - -
Rental of premises 2,664,406 3,046,219 75,633 69,953
Unrealised foreign exchange loss 438,243 1,680,485 - -
Annual Report 2016 67
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
8. EMPLOYEE BENEFITS EXPENSE
Group Company2016 2015 2016 2015
RM RM RM RM
Salaries and wages 38,958,621 33,426,433 2,215,197 2,007,898
Allowances 2,652,105 3,085,503 11,553 9,746
Bonus 3,078,603 3,207,392 203,292 259,593
Contributions to defined contribution plan and social security contributions 4,696,732 4,698,033 311,521 289,210
Other benefits 1,750,820 989,593 - -
51,136,881 45,406,954 2,741,563 2,566,447
Included in employee benefits expense of the Group and of the Company are Executive Directors’ remuneration amounting to RM3,050,934 (2015 : 3,256,964) and RM828,686 (2015 : RM810,084) respectively.
9. DIRECTORS’ REMUNERATION
The details of remuneration receivable by directors of the Company during the year are as follows:
Group Company2016 2015 2016 2015
RM RM RM RM
Executive:
Salaries and other emoluments 2,470,125 2,609,304 678,060 640,503
Bonus 255,613 326,599 66,088 87,278
Contributions to defined contribution plan and social security contributions 325,196 321,061 84,538 82,303
Total executive director’s remuneration (excluding benefits-in-kind) 3,050,934 3,256,964 828,686 810,084
Estimated money value of benefits in-kind 13,925 25,626 - -
Total executive directors’ remuneration (including benefits-in-kinds) 3,064,859 3,282,590 828,686 810,084
Non-executive directors’ remuneration:
Allowance 35,000 75,000 35,000 75,000
Fees 150,500 142,834 150,500 142,834
Total non-executive directors’ remuneration 185,500 217,834 185,500 217,834
Total directors’ remuneration (Note 37 (b)) 3,250,359 3,500,424 1,014,186 1,027,918
Harbour-Link Group Berhad (592902-D)68
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
9. DIRECTORS’ REMUNERATION cont’d
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
2016 2015
Executive directors:
RM850,001-RM900,000 - 1
RM800,001-RM850,000 1 -
RM750,001-RM800,000 - 1
RM650,001-RM700,000 1 -
RM500,001-RM550,000 1 -
RM450,001-RM500,000 - 1
RM350,001-RM400,000 2 2
RM300,001-RM350,000 1 1
Non-executive directors:
Below RM50,000 - 2
RM50,001-RM100,000 3 2
10. INCOME TAX EXPENSE
The major components of income tax expense for the years ended 30 June 2016 and 2015 are:
Group Company2016 2015 2016 2015
RM RM RM RM
Current income tax:
Malaysian income tax 23,433,229 26,003,738 410,117 -
Under provision in prior years 455,725 955,975 356,727 -
23,888,954 26,959,713 766,844 -
Deferred income tax (Note 21):
Relating to origination and reversal of temporary differences 6,118,234 (4,632,116) (28,018) (2,820)
Under/(over) provision in prior years 95,450 (309,887) - (3,666)
6,213,684 (4,942,003) (28,018) (6,486)
Total income tax recognised in profit or loss 30,102,638 22,017,710 738,826 (6,486)
Annual Report 2016 69
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
10. INCOME TAX EXPENSE cont’d
Domestics income tax is calculated at the Malaysian statutory tax rate of 24% (2015: 25%) of the estimated assessable profit for the year. Tax 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% (2015: 17%).
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:
2016 2015
RM RM
Group
Profit before tax 101,960,567 76,659,671
Tax at Malaysian statutory tax rate of 24% (2015: 25%) 24,470,536 19,164,918
Different tax rate in other countries 48,141 24,168
Expenses not deductible for tax purposes 3,926,921 4,068,422
Income not subject to tax (1,133,514) (1,000,371)
Deferred tax assets not recognised during the year 2,445,387 198,194
Utilisation of previously unrecognised unutilised tax losses and unabsorbed capital allowance (206,008) (1,083,709)
Under provision of tax expense in prior years 455,725 955,975
Under/(over) provision of deferred tax in prior years 95,450 (309,887)
Income tax expense for the year 30,102,638 22,017,710
Company
Profit before tax 35,715,243 19,604,232
Tax at Malaysian statutory tax rate of 24% (2015: 25%) 8,571,658 4,901,058
Expenses not deductible for tax purposes 2,163,603 818,006
Income not subject to tax (10,353,162) (5,721,884)
Under provision of tax expense in prior years 356,727 -
Over provision of deferred tax in prior years - (3,666)
Income tax expense for the year 738,826 (6,486)
Harbour-Link Group Berhad (592902-D)70
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’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 and diluted earnings per share for the years ended 30 June:
Group
2016 2015
RM RM
Profit net of tax attributable to owners of the Company used in the computation of basic earnings per share 56,198,349 51,789,526
Weighted average number of ordinary shares in issue 400,400,004 400,400,004
Basic earnings per share (sen) 14.04 12.93*
Diluted earning per share (sen) β 14.04 NA
* The previous year’s earning per share have been restated to reflect the share split and bonus issue exercise undertaken, as disclosed in Note 32.
β The dilutive earning per share is similar to the basic earning per share as the assumed conversion from the exercise of warrants would be anti dilutive. There is no dilution in earning per share for the previous financial year as there are no potential ordinary shares outstanding at the end of the reporting period.
12. DIVIDENDS
Group and Company
2016 2015
RM RM
Recognised during the year:
Dividends on ordinary shares
First and final single-tier dividend in respect of 2015: 5.5 sen per share 10,010,000 -
First and final single-tier dividend in respect of 2014: 2.5 sen per share - 4,550,000
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 in respect of 2016: 2.0 sen (2015: 5.5 sen) per share 8,008,000 10,010,000
At the forthcoming Annual General Meeting, the first and final tax exempt (single-tier) dividend in respect of the financial year ended 30 June 2016, of 4% on 400,400,004 ordinary shares amounting to a dividend payable of RM8,008,000 (2.0 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 2017.
Annual Report 2016 71
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’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 2016
Cost
At 1 July 2015 39,448,463 190,362,812 88,267,003 16,822,038 14,122,963 349,681 349,372,960
Additions 7,399,244 6,865,600 27,373,685 1,735,452 1,734,771 1,364,397 46,473,149
Reclassification 349,680 (474,073) 324,608 - 149,465 (349,680) -
Transfer from development properties (Note 23) 893,246 - - - - - 893,246
Disposals/written off (1,139,255) (5,237,157) (7,116,914) (1,073,170) (231,567) - (14,798,063)
Exchange difference - 8,220 - - 61,186 - 69,406
At 30 June 2016 46,951,378 191,525,402 108,848,382 17,484,320 15,836,818 1,364,398 382,010,698
Accumulated depreciation
At 1 July 2015 4,956,773 92,549,505 30,554,838 11,554,516 12,028,531 - 151,644,163
Depreciation charge for the year 596,288 12,914,531 6,608,542 1,891,892 1,042,576 - 23,053,829
Recognised in profit or loss (Note 7) 519,980 11,745,239 6,608,542 1,714,150 986,115 - 21,574,026
Capitalised in construction contracts (Note 27) 76,308 1,169,292 - 177,742 56,461 - 1,479,803
Reclassification - (181,993) 121,925 - 60,068 - -
Impairment of assets - - 5,941,800 - - - 5,941,800
Disposals/written off - (4,301,369) (1,087,306) (1,009,941) (143,396) - (6,542,012)
Exchange difference - 8,233 - - (24,542) - (16,309)
At 30 June 2016 5,553,061 100,988,907 42,139,799 12,436,467 12,963,237 - 174,081,471
Net carrying amount 41,398,317 90,536,495 66,708,583 5,047,853 2,873,581 1,364,398 207,929,227
Harbour-Link Group Berhad (592902-D)72
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’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 2015
Cost
At 1 July 2014 36,875,809 181,051,088 82,608,970 15,113,754 13,211,297 568,550 329,429,468
Additions 2,466,386 10,542,187 9,340,796 2,185,772 1,182,104 23,017 25,740,262
Reclassification 106,268 83 (83) - 135,618 (241,886) -
Exchange difference - 12,317 - 7,002 11,142 - 30,461
Disposals/written off - (1,242,863) (3,682,680) (484,490) (417,198) - (5,827,231)
At 30 June 2015 39,448,463 190,362,812 88,267,003 16,822,038 14,122,963 349,681 349,372,960
Accumulated depreciation
At 1 July 2014 4,365,555 81,222,500 25,243,406 10,321,898 11,201,727 - 132,355,086
Depreciation charge for the year 591,218 12,570,257 5,585,198 1,689,377 1,093,481 - 21,529,531
Recognised in profit or loss (Note 7) 514,911 11,419,816 5,585,198 1,443,929 1,037,159 - 20,001,013
Capitalised in construction contracts (Note 27) 76,307 1,150,441 - 245,448 56,322 - 1,528,518
Disposals/written off - (1,030,916) (498,388) (463,759) (277,338) - (2,270,401)
Reclassification - (224,622) 224,622 - - - -
Exchange difference - 12,286 - 7,000 10,661 - 29,947
At 30 June 2015 4,956,773 92,549,505 30,554,838 11,554,516 12,028,531 - 151,644,163
Net carrying amount 34,491,690 97,813,307 57,712,165 5,267,522 2,094,432 349,681 197,728,797
Annual Report 2016 73
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
13. PROPERTY, PLANT AND EQUIPMENT cont’d
*Land and buildings of the Group
FreeholdLand
LeaseholdLand Buildings
Building-in-Progress Total
RM RM RM RM RM
At 30 June 2016
Cost
At 1 July 2015 9,763,270 4,656,595 21,172,335 3,856,263 39,448,463
Additions - - 701,960 6,697,284 7,399,244
Transfer from development properties - - 893,246 - 893,246
Reclassification 341,040 - 1,358,346 (1,349,706) 349,680
Disposal - - (1,139,255) - (1,139,255)
At 30 June 2016 10,104,310 4,656,595 22,986,632 9,203,841 46,951,378
Accumulated depreciation
At 1 July 2015 - 1,034,986 3,921,787 - 4,956,773
Depreciation charge for the year - 90,693 505,595 - 596,288
At 30 June 2016 - 1,125,679 4,427,382 - 5,553,061
Net carrying amount 10,104,310 3,530,916 18,559,250 9,203,841 41,398,317
At 30 June 2015
Cost
At 1 July 2014 9,763,270 4,656,595 20,930,449 1,525,495 36,875,809
Additions - - - 2,466,386 2,466,386
Reclassification - - 241,886 (135,618) 106,268
At 30 June 2015 9,763,270 4,656,595 21,172,335 3,856,263 39,448,463
Accumulated depreciation
At 1 July 2014 - 944,293 3,421,262 - 4,365,555
Depreciation charge for the year - 90,693 500,525 - 591,218
At 30 June 2015 - 1,034,986 3,921,787 - 4,956,773
Net carrying amount 9,763,270 3,621,609 17,250,548 3,856,263 34,491,690
Harbour-Link Group Berhad (592902-D)74
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
13. PROPERTY, PLANT AND EQUIPMENT cont’d
CompanyLand andBuilding
MotorVehicles
Furniture,Fittings and
Equipmentand Others Total
RM RM RM RM
At 30 June 2016
Cost
At 1 July 2015 6,482,834 1,620,093 1,527,866 9,630,793
Additions - - 207,965 207,965
Disposals/written off - (107,656) (12,747) (120,403)
At 30 June 2016 6,482,834 1,512,437 1,723,084 9,718,355
Accumulated depreciation
At 1 July 2015 870,601 860,989 1,045,137 2,776,727
Depreciation charge for the year (Note 7) 129,657 203,667 135,873 469,197
Disposals/written off - (107,655) (12,357) (120,012)
At 30 June 2016 1,000,258 957,001 1,168,653 3,125,912
Net carrying amount 5,482,576 555,436 554,431 6,592,443
CompanyLand andBuildings
MotorVehicles
Furniture,Fittings and
Equipment Total
RM RM RM RM
At 30 June 2015
Cost
At 1 July 2014 6,482,834 1,618,859 1,316,385 9,418,078
Additions - 39,240 220,300 259,540
Disposals/written off - (38,006) (8,819) (46,825)
At 30 June 2015 6,482,834 1,620,093 1,527,866 9,630,793
Accumulated depreciation
At 1 July 2014 740,944 698,597 871,196 2,310,737
Depreciation charge for the year (Note 7) 129,657 200,397 182,301 512,355
Disposals/written off - (38,005) (8,360) (46,365)
At 30 June 2015 870,601 860,989 1,045,137 2,776,727
Net carrying amount 5,612,233 759,104 482,729 6,854,066
Annual Report 2016 75
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
13. PROPERTY, PLANT AND EQUIPMENT cont’d
(a) During the financial year, the Group and the Company acquired property, plant and equipment at aggregate costs of RM46,473,149 (2015: RM25,740,262) and RM207,965 (2015: RM259,540) respectively of which RM7,802,316 (2015: RM7,292,147) and RM NIL (2015: RM36,000) respectively 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 Company
2016 2015 2016 2015
RM RM RM RM
Motor vehicles 3,040,974 3,959,812 555,437 759,104
Plant and machinery and equipment 39,220,341 40,693,157 - -
42,261,315 44,652,969 555,437 759,104 Details of the terms and conditions of the hire purchase and finance lease arrangements are disclosed in Note 36(c).
(c) The net carrying amount of property, plant and equipment pledged for loans and borrowings as referred in Note 29.
Group Company
2016 2015 2016 2015
RM RM RM RM
Buildings 11,675,598 12,206,935 5,482,576 5,612,233
Freehold land 10,054,310 9,713,270 - -
Leasehold land 901,111 1,098,365 - -
Plant and machinery 4,259,734 4,804,935 - -
Vessels 56,061,147 40,489,610 - -
82,951,900 68,313,115 5,482,576 5,612,233
(d) The title of the short leasehold land of the Group and of the Company with the carrying value of RM6,968,747 (2015 : RM6,613,556) and RM5,482,576 (2015 : RM5,692,233) respectively have yet to be issued by the authority.
(e) The Group has performed a review of the recoverable amount of their vessels during the financial year. The review led to the recognition of net impairment loss of RM5,941,800 for the Group, as disclosed in Note 7.
The recoverable amount was based on the fair value less costs of disposal. The fair values of vessels were determined based on the valuation performed by independent ship valuers taking into consideration the type, size and age of the ships and the assumptions that the ships are in good and seaworthy condition, to be transacted between willing buyer and willing seller.
The fair value measurement was categorised as a Level 3 fair value based on inputs in the valuation technique used as defined in Note 2.29.
Harbour-Link Group Berhad (592902-D)76
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
14. INVESTMENT PROPERTIES
Group
2016 2015
RM RM
Cost
At 1 July 11,228,312 11,228,312
Disposal (357,188) -
At 30 June 10,871,124 11,228,312
Accumulated depreciation and impairment
At 1 July 1,872,040 1,671,555
Depreciation for the year (Note 7) 222,894 200,485
Disposal (286,713) -
At 30 June 1,808,221 1,872,040
Net carrying amount 9,062,903 9,356,272
Fair value of the investment properties 19,855,000 11,786,000
Investment properties with aggregate carrying value of RM8,496,597 (2015: RM9,356,272) are under pledge for securities for borrowings as disclosed in Note 29. Investment properties comprises a number of commercial properties leased to third parties.
As at 30 June 2016 and 2015, the fair values of the properties are based on Directors valuation.
Group
2016 2015
RM RM
Rental income from investment properties 360,000 360,000
Direct operating expenses generating rental income (5,122) (2,423)
Direct operating expenses that did not generate rental income (4,572) (16,002)
Annual Report 2016 77
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
15. PREPAID LAND LEASE PAYMENTS
Group
2016 2015
RM RM
Cost
At 1 July 6,806,895 2,506,895
Additions - 4,300,000
At 30 June 6,806,895 6,806,895
Accumulated amortisation
At 1 July 658,497 565,424
Amortisation for the year (Note 7) 136,075 93,073
At 30 June 794,572 658,497
Net carrying amount 6,012,323 6,148,398
Prepaid land lease payments with aggregate carrying value of RM4,171,000 (2015: RM4,257,000) are under pledge for securities for borrowings as disclosed in Note 29.
16. INTANGIBLE ASSETS
Group
Transferable Club Membership
2016 2015
RM RM
Cost
At 1 July 2014/2015 and 30 June 2015/2016 140,000 140,000
Accumulated impairment losses
At 1 July 2014/2015 and 30 June 2015/2016 35,000 35,000
Net carrying amount: 105,000 105,000
Harbour-Link Group Berhad (592902-D)78
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
17. INVESTMENTS IN SUBSIDIARIES
Company
2016 2015
RM RM
Unquoted shares at cost 179,332,623 179,332,623
Accumulated impairment losses (4,384,000) (100,000)
174,948,623 179,232,623
(a) Details of the subsidiaries are as follows:
Name of SubsidiariesCountry of
Incorporation Principal Activities
% of ownershipinterest held by
Groupß
% of ownershipinterest held by non-controlling
interestß
2016 2015 2016 2015
% % % %
Harbour-Link (M) Sdn. Bhd.(“HLM”)*
Malaysia Management services and investment holding
100 100 - -
Harbour Agencies (Sarawak) Sdn. Bhd. (“HAS”)*
Malaysia Shipping and forwarding 100 100 - -
Eastern Soldar Engineering & Construction Sdn. Bhd.(“ESEC”)*
Malaysia Investment holding, multi-discipline engineering and procurement
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
85 85 15 15
HLG Resources Sdn. Bhd.(“HLG Resources”)*
Malaysia Investment holding, agriculture and property development
100 100 - -
HLG Petroleum Sdn. Bhd.(“HLG Petroleum”)*
Malaysia Investment holding and trading in petroleum and petrochemical products
100 100 - -
Harbour Hornbill Sdn. Bhd.*
Malaysia Ship owning and ship management
80 80 20 20
Harbour Ivory Sdn. Bhd.* Malaysia Ship owning and ship operator services
80 80 20 20
Arcadia Properties Sdn. Bhd. (“APSB”)*
Malaysia Investment holding 51 51 49 49
Annual Report 2016 79
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
17. INVESTMENTS IN SUBSIDIARIES cont’d
(a) Details of the subsidiaries are as follows: cont’d
Name of SubsidiariesCountry of
Incorporation Principal Activities
% of ownershipinterest held by
Groupß
% of ownershipinterest held by non-controlling
interestß
2016 2015 2016 2015
% % % %
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
70 70 30 30
Harbour Services Corporation Sdn. Bhd.*
Malaysia Hiring, stevedoring, transportation and sales of pallets
100 100 - -
Harbour-Link Logistics Sdn. Bhd.(“HLLogistics”)*
Malaysia Hiring and transportation 100 100 - -
Progresif Lengkap Sdn. Bhd. (“PLSB”)*
Malaysia Road safety, training and consultancy and transportation
100 100 - -
Harbour Services Sdn. Bhd. * (Note a)
Malaysia Forwarding and transportation
47 47 53 53
Harbour-Link (Labuan)Limited*
Malaysia Dormant 100 100 - -
Harbour Agencies Sdn. Bhd.*
Malaysia Shipping 100 100 - -
Harbour Services (Miri) Sdn. Bhd.*
Malaysia Dormant 100 100 - -
Harbour-Link Leasing Sdn. Bhd.*
Malaysia Leasing 100 100 - -
Best Success Bonded Store Supply Sdn. Bhd. *
Malaysia Provision of storage facilities
60 60 40 40
Serimaju Konsortium Sdn. Bhd.* (Note (b)(ii))
Malaysia Heaping and transportation
55 - 45 -
Harbour-Link Group Berhad (592902-D)80
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
17. INVESTMENTS IN SUBSIDIARIES cont’d
(a) Details of the subsidiaries are as follows: cont’d
Name of SubsidiariesCountry of
Incorporation Principal Activities
% of ownershipinterest held by
Groupß
% of ownershipinterest held by non-controlling
interestß
2016 2015 2016 2015
% % % %
Subsidiary of PLSB
Road Safety & Driving Academy Sdn. Bhd.*
Malaysia Dormant 100 100 - -
Subsidiaries of HLLogistics
Harbour-Link Logistics (S) Sdn. Bhd.*
Malaysia Hiring of equipments and machinery and provision of transportation services
100 100 - -
Siong Jaya Sdn. Bhd.* Malaysia 100 100 - -
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 - -
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.**
Cambodia Dormant 100 100 - -
Annual Report 2016 81
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
17. INVESTMENTS IN SUBSIDIARIES cont’d
(a) Details of the subsidiaries are as follows: cont’d
Name of SubsidiariesCountry of
Incorporation Principal Activities
% of ownershipinterest held by
Groupß
% of ownershipinterest held by non-controlling
interestß
2016 2015 2016 2015
% % % %
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 48 48
Harbour Services (Kuching) Sdn. Bhd.*
Malaysia 100 100 - -
Harbour Agencies (Sibu) Sdn. Bhd.*
Malaysia 100 100 - -
Harbour-Link Shipping Sdn. Bhd.*
Malaysia Ship management 100 100 - -
Harbour-Link Marine Services Sdn. Bhd.*
Malaysia Ship management and consultancy services
100 100 - -
Navasco Shipping Sdn. Bhd.*
Malaysia
Ship owning and ship management
100 - - -
Harbour Xtra Sdn. Bhd.* Malaysia 100 100 - -
Harbour Ruby Sdn. Bhd.* (Note (b)(i))
Malaysia 85 - 15 -
Harbour Zenith Sdn. Bhd.* (Note (b)(i))
Malaysia 85 - 15 -
Harbour-Link Group Berhad (592902-D)82
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
17. INVESTMENTS IN SUBSIDIARIES cont’d
(a) Details of the subsidiaries are as follows: cont’d
Name of SubsidiariesCountry of
Incorporation Principal Activities
% of ownershipinterest held by
Groupß
% of ownershipinterest held by non-controlling
interestß
2016 2015 2016 2015% % % %
Subsidiaries of HLLines
Harbour-Link Lines (JB) Sdn. Bhd.*
Malaysia
Port agent, ship operator and provision of freighting and marine services
70 70 30 30
Harbour-Link Lines (KCH) Sdn. Bhd.*
Malaysia 63.75 63.75 36.25 36.25
Harbour-Link Lines (KK) Sdn. Bhd.*
Malaysia 95 95 5 5
Harbour-Link Lines (PK) Sdn. Bhd.*
Malaysia 60 60 40 40
Harbour-Link Lines (Singapore) Pte Ltd**
Singapore 100 100 - -
Harbour Jupiter Sdn. Bhd. *
Malaysia Ship owning and ship management
100 100 - -
Subsidiary of HLG Resources
HLG Equipment Sdn. Bhd.* MalaysiaProvision of port related
services
60 60 40 40
Harbour-Link Trading Pte. Ltd.** (Note (b)(iv))
Singapore 100 - - -
Subsidiary of HLG Petroleum
Advance Mariner Lines Sdn. Bhd.* (Note (b)(iii))
Malaysia
Port agent, ship operator and provision of freighting and marine services
54.79 - 45.21 -
Subsidiary of Advance Mariner Lines
AML Shipping Sdn. Bhd.* (Note (b)(v))
Malaysia 100 - - -
Subsidiary of APSB
Sarawak Edible Oils Sdn. Bhd.*
Malaysia Property Developer 100 100 - -
* Audited by Ernst & Young, Malaysia. ** Audited by firms of auditors other than Ernst & Young, Malaysia. ß Equal to proportion of voting right held (i) Although the Group owns 47% (2015: 47%) 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.
Annual Report 2016 83
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
17. INVESTMENTS IN SUBSIDIARIES cont’d
(b) Acquisition of subsidiaries
(i) On 5 August 2015, HLN, a subsidiary of the Company, had subscribed for 8,000 new ordinary shares of RM1 each in both Harbour Ruby Sdn. Bhd. (“HRSB”) and Harbour Zenith Sdn. Bhd. (“HZSB”) which represented 80% of the enlarged issued share capital of both HRSB and HZSB for a consideration of RM8,000 each. On 17th February 2016, HLN had further subscribed for 4,072,000 and 3,392,000 new ordinary shares of RM1 each, in HRSB and HZSB respectively which represented of 85% of the enlarged issued paid up share capital of HRSB and HZSB for total consideration of RM4,072,000 and RM3,392,000 respectively. Following the subscription, HRSB and HZSB become 85% owned subsidiaries of HLN.
(ii) On 18 August 2015, HLM, a subsidiary of the Company, had acquired One (1) ordinary share of RM1, representing 50% equity interest in Serimaju Konsortium Sdn. Bhd. (“SKSB”). On 24th August 2015, HLM had further subscribed for 219,999 new ordinary shares of RM1 each in SKSB representing 55% of the enlarged issued share capital of SKSB for a cash consideration of RM219,999. Following the subscription, SKSB becomes a 55% owned subsidiary of HLM.
(iii) On 22 February 2016, HLG Petroleum, a wholly-owned subsidiary of the Company had acquired One (1) ordinary share of RM1, representing 50% equity interest in Advance Mariner Lines Sdn. Bhd. (“AMLSB”). On 22 February 2016, HLG Petroleum had further subscribed for an additional 79,999 new ordinary shares of RM1 each in AMLSB representing 54.79% of the enlarged issued share capital of AMLSB for a cash consideration of RM79,999. Following the acquisition and subscription, AMLSB becomes a 54.79% owned subsidiary of the Group.
(iv) On 1 March 2016, HLG Resources, a wholly-owned subsidiary of the Company incorporated a wholly-owned subsidiary under the name of Harbour-Link Trading Pte. Ltd., a company incorporated in Singapore. The issued and paid up share capital of HLTPL is SGD1.00 comprising 1 ordinary share of SGD1.00 each.
(v) On 10 March 2016, Advance Mariner Lines Sdn Bhd (“AMLSB”), a subsidiary of the Group had acquired 100,000 ordinary shares of RM1 each, representing 100% equity interest in AML Shipping Sdn. Bhd. (“AMLS”) for a total cash consideration of RM100,000. Following the acquisition, AMLS becomes a wholly-owned subsidiary of AMLSB.
(c) The Group’s subsidiaries that have material non-controlling interests (“NCI”) are set out below. The summarised financial information presented below is the amount before inter-company elimination.
(i) Summarised statements of financial position
Arcadia Properties Sdn. Bhd. and its subsidiaries
Harbour-Link Lines Sdn. Bhd. and its subsidiaries Total
2016 2015 2016 2015 2016 2015
RM RM RM RM RM RM
Non-current assets 46,956,926 50,480,912 9,466,493 10,468,122 56,423,419 60,949,034
Current assets 52,190,433 76,253,468 47,878,685 50,116,678 100,069,118 126,370,146
Total assets 99,147,359 126,734,380 57,345,178 60,584,800 156,492,537 187,319,180
Current liabilities 34,748,046 94,918,805 39,976,042 34,823,177 74,724,088 129,741,982
Non-current liabilities 8,043,007 10,769,188 2,782,951 3,634,199 10,825,958 14,403,387
Total liabilities 42,791,053 105,687,993 42,758,993 38,457,376 85,550,046 144,145,369
Equity attributable to owners of the Company 28,723,610 10,715,552 9,838,275 16,650,731 38,561,885 27,366,283
Non-controlling interests 27,632,696 10,330,835 4,747,910 5,476,693 32,380,606 15,807,528
Total equity 56,356,306 21,046,387 14,586,185 22,127,424 70,942,491 43,173,811
Harbour-Link Group Berhad (592902-D)84
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
17. INVESTMENTS IN SUBSIDIARIES cont’d (c) The Group’s subsidiaries that have material non-controlling interests (“NCI”) are set out below. The summarised financial
information presented below is the amount before inter-company elimination. cont’d
(ii) Summarised statements of profit or loss and other comprehensive income
Arcadia Properties Sdn. Bhd. and its subsidiaries
Harbour-Link Lines Sdn. Bhd. and its subsidiaries Total
2016 2015 2016 2015 2016 2015
RM RM RM RM RM RM
Revenue 97,732,676 8,791,523 159,372,774 125,792,779 257,105,450 134,584,302
Profit for the year 35,309,919 3,667,111 (7,079,125) 935,148 28,230,794 4,602,259
Profit attributable to:
Owners of the Company 18,008,059 1,870,227 (6,677,468) 292,639 11,330,591 2,162,866
Non-controlling interest 17,301,860 1,796,884 (401,657) 642,509 16,900,203 2,439,393
35,309,919 3,667,111 (7,079,125) 935,148 28,230,794 4,602,259
Dividend paid to
Non-controlling interests - - 327,125 286,100 327,125 286,100
(iii) Summarised cash flows
Arcadia Properties Sdn. Bhd. and its subsidiaries
Harbour-Link Lines Sdn. Bhd. and its subsidiaries Total
2016 2015 2016 2015 2016 2015
RM RM RM RM RM RM
Net cash generated from/(used in) operating activities 9,430,827 6,674,298 (1,404,226) 5,496,393 8,026,601 12,170,691
Net cash used in investing activities (1,314,698) (25,328) (1,382,723) (6,700,859) (2,697,421) (6,726,187)
Net cash used in from financing activities (3,104,215) (20,138,047) (1,501,629) 2,915,907 (4,605,844) (17,222,140)
Net increase/(decrease) in cash and cash equivalents 5,011,914 (13,489,077) (4,288,578) 1,711,441 723,336 (11,777,636)
Effects of exchange rate changes on cash equivalents - - 43,424 (24,961) (6,579,929) (35,725,963)
Cash and cash equivalents at the beginning of the year 7,215,057 20,704,134 11,308,678 9,622,198 18,523,735 30,326,332
Cash and cash equivalents at the end of the year 12,226,971 7,215,057 7,063,524 11,308,678 12,667,142 (17,177,267)
Annual Report 2016 85
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
18. INVESTMENT IN ASSOCIATES
Group Company
2016 2015 2016 2015
RM RM RM RM
Unquoted shares in Malaysia, at cost 1,712,200 1,712,200 1,466,200 1,466,200
Share of post-acquisition reserves 3,306,844 1,973,181 - -
5,019,044 3,685,381 1,466,200 1,466,200 Details of the associates are as follows:
Name of AssociatesCountry of
Incorporation Principal ActivitiesOwnership of interest
held by the Groupß
2016 2015
% %
Eastock Resources Sdn. Bhd. * Malaysia Renting of property 25 25
ECL (Malaysia) Sdn. Bhd ** MalaysiaShipping and related services
49 49
Smart Shipping Sdn. Bhd ** Malaysia 40 40
Subsidiary of ECL (Malaysia) Sdn. Bhd.
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. ß Equal to proportion of voting right held All the result of the Group’s associates were consolidated using equity method.
Harbour-Link Group Berhad (592902-D)86
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
18. INVESTMENT IN ASSOCIATES cont’d
Summarised financial information in respect of the Group’s material associates is set out below. The summarised financial information represents the amount in the MFRS financial statement of the associates and not the Group’s share of those amounts.
(a) Summarised statements of financial position
ECL (Malaysia) Sdn. Bhd and its subsidiary
2016 2015
RM RM
Assets and liabilities
Current assets 10,903,811 10,047,621
Non-current assets 6,887,871 8,496,975
Total assets 17,791,682 18,544,596
Current liabilities 4,408,692 5,949,159
Non-current liabilities 3,243,989 4,919,757
Total liabilities 7,652,681 10,868,916
Net assets 10,139,001 7,675,680
(b) Summarised statements of profit or loss and other comprehensive income
Revenue 24,152,549 26,994,564
Profit before tax 3,187,040 1,708,262
Income tax expense (1,021,763) (478,191)
Total Comprehensive income 2,165,277 1,230,071
Dividend received from the associate during the year 171,500 110,463
(c) Reconciliation of net assets to carrying amount
As at 30 June
Group’s share of net assets 5,272,485 3,842,345
Goodwill (247,163) (247,163)
Carrying amount in the statement of financial position 5,025,322 3,595,182
Annual Report 2016 87
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
19. INVESTMENT IN JOINT VENTURE
Group
2016 2015
RM RM
Unquoted shares at cost 650,000 650,000
Share of post-acquisition profit 32,867 250,755
682,867 900,755 The Group has 50% of the voting right of its joint arrangement under the contractual arrangements, unanimous consent is
required by all parties to the arrangement for all relevant activities.
The joint arrangement is structured via separate entity and provide the group with the rights to the net assets of the entity under the arrangement. Therefore this entity is classified as joint venture of the Group.
Details of the joint venture is as follows:
Name of Joint VentureCountry of
Incorporation Principal Activities% of ownership interest
held by the Group*Accounting
model applied
2016 2015
% %
A&H Project Services Sdn. Bhd. **
Malaysia Transportation and crane renting
50 50 Equity method
* Equals to the proportion of voting rights held ** Audited by firms of auditors other than Ernst & Young, Malaysia. Summarised financial information of A&H Project Services Malaysia Sdn. Bhd. is set out below. The financial information
represents the amounts in the MFRS financial statements of the joint ventures and not the Group’s share of those amounts.
Harbour-Link Group Berhad (592902-D)88
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
19. INVESTMENT IN JOINT VENTURE cont’d
(i) Summarised statements of financial position
Group
2016 2015
RM RM
Assets and liabilities
Current assets 1,326,804 4,913,191
Non-current assets 141,879 162,800
Total assets 1,468,683 5,075,991
Current liabilities 83,441 3,257,880
Non-current liabilities 19,508 16,601
Total liabilities 102,949 3,274,481
Net assets 1,365,734 1,801,510
(ii) Summarised statements of profit or loss and other comprehensive income
Revenue 257,225 6,121,106
(Loss)/profit for the year (435,776) 252,356
Income tax expense - (23,972)
Total Comprehensive income (435,776) 228,384
(iii) Reconciliation of net assets to carrying amount
Net asset as at 1 July 1,801,509 1,573,125
(Loss)/profit for the year (435,776) 228,384
Net asset as at 30 June 1,365,733 1,801,509
Interest in joint venture 50% 50%
Carrying value of Group’s interest in joint venture 682,867 900,755
Annual Report 2016 89
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
20. OTHER INVESTMENTS
Group
2016 2015
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.
21. DEFERRED TAX ASSETS/(LIABILITIES)
Group Company
2016 2015 2016 2015
RM RM RM RM
At 1 July (5,819,507) (10,764,542) (56,800) (63,286)
Recognised in profit or loss (Note 10) (6,213,684) 4,942,003 28,018 6,486
Exchange differences - 3,032 - -
At 30 June (12,033,191) (5,819,507) (28,782) (56,800)
The following amounts, determined after appropriate offsetting, are shown in the statement of financial position.
Group Company
2016 2015 2016 2015
RM RM RM RM
Deferred tax assets 3,413,129 9,832,252 - -
Deferred tax liabilities (15,446,320) (15,651,759) (28,782) (56,800)
(12,033,191) (5,819,507) (28,782) (56,800)
Harbour-Link Group Berhad (592902-D)90
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
21. DEFERRED TAX ASSETS/(LIABILITIES) cont’d
Group
Prepaid tax inrespect of
development properties
UnutilisedTax losses
Unabsorbed capital
allowances
Allowancefor
impairment losses Total
RM RM RM RM RM
Deferred tax assets:
At 1 July 2015 5,730,695 513,239 2,789,004 4,424,998 13,457,936
Recognised in profit or loss (4,886,750) 645,454 (115,592) (1,166,419) (5,523,307)
At 30 June 2016 843,945 1,158,693 2,673,412 3,258,579 7,934,629
At 1 July 2014 1,390,149 214,409 2,789,612 2,216,615 6,610,785
Recognised in profit or loss 4,340,546 298,830 (608) 2,208,383 6,847,151
At 30 June 2015 5,730,695 513,239 2,789,004 4,424,998 13,457,936
Group
Property, plant and equipment
2016 2015
RM RM
Deferred tax liabilities
At 1 July (19,277,443) (17,375,327)
Exchange differences - 3,032
Recognised in profit or loss (690,377) (1,905,148)
At 30 June (19,967,820) (19,277,443)
Company
Property, plant and equipment
2016 2015
RM RM
Deferred tax liabilities
At 1 July (56,800) (63,286)
Recognised in profit or loss (Note 10) 28,018 6,486
At 30 June (28,782) (56,800)
Annual Report 2016 91
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
21. DEFERRED TAX ASSETS/(LIABILITIES) cont’d
Deferred tax assets have not been recognised in respect of the following items:
Group
2016 2015
RM RM
Unutilised tax losses 12,371,000 4,051,000
Unabsorbed capital allowances 1,706,000 551,000
Allowance for impairment loss - 920,000
14,077,000 5,522,000
As at 30 June 2016 and 2015, the deferred tax assets were not recognised as it was not probable that future taxable profits will be available against which the unutilised tax losses and unabsorbed capital allowances can be utilised. The unutilised tax losses and unabsorbed capital allowances of the Group are available for offsetting against future taxable profits of the respective companies in Malaysia are subject to no substantial changes in shareholdings under the Income Tax Act, 1967 and guidelines issued by the tax authority.
22. INVENTORIES
Group
2016 2015
RM RM
At cost
Petrol, diesel and lubricant 1,454,225 2,137,630
Spare parts 2,678,629 2,585,224
Consumable store 139,710 327,559
Properties held of resale 28,851,698 -
33,124,262 5,050,413
At net realisable value
Pallets 55,879 55,610
33,180,141 5,106,023
Harbour-Link Group Berhad (592902-D)92
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
23. LAND HELD FOR DEVELOPMENT AND DEVELOPMENT PROPERTIES
(a) Land held for development
Group
Leaseholdland
Developmentcost Total
RM RM RM
At 1 July 2014 40,018,243 5,871,240 45,889,483
Cost incurred during the year - 415,107 415,107
Transfer to development properties (2,499,211) (111,341) (2,610,552)
At 30 June 2015 37,519,032 6,175,006 43,694,038
Cost incurred during the year - 247,537 247,537
At 30 June 2016 37,519,032 6,422,543 43,941,575
(b) Development Properties
At 1 July 2014 8,168,663 22,675,735 30,844,398
Cost incurred during the year - 29,292,719 29,292,719
Transfer from development properties 2,499,211 111,341 2,610,552
Transfer to profit and loss (650,921) (189,814) (840,735)
At 30 June 2015 10,016,953 51,889,981 61,906,934
Cost incurred during the year - 10,823,706 10,823,706
Transfer to property, plant and equipment (Note 13) (86,643) (806,603) (893,246)
Transfer to inventories (3,991,507) (24,860,191) (28,851,698)
Transfer to profit or loss (5,938,803) (37,046,893) (42,985,696)
At 30 June 2016 - - -
Included in development properties during the financial year are:
Group
2016 2015
RM RM
Interest expense (Note 6) 365,507 504,244
Annual Report 2016 93
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
24. TRADE AND OTHER RECEIVABLES
Group Company
2016 2015 2016 2015
RM RM RM RM
Trade receivables
Third parties 141,492,309 142,747,033 - -
Amounts due from associates 11,907 11,907 - -
141,504,216 142,758,940 - -
Less: Allowance for impairment
Third parties (17,056,628) (19,975,314) - -
Amounts due from associates (11,907) (11,907) - -
(17,068,535) (19,987,221) - -
Trade receivables, net 124,435,681 122,771,719 - -
Other receivables
Advances 84,655 648,757 495 -
Sundry receivables 8,668,167 4,518,747 39,882 11,821
Amount due from subsidiaries - - 72,581,782 24,069,552
Deposits 10,895,791 5,221,111 246,575 221,925
19,648,613 10,388,615 72,868,734 24,303,298
Less: Allowance for Impairment (2,378) - (6,209,212) (6,209,212)
19,646,235 10,388,615 66,659,522 18,094,086
Total trade and other receivables 144,081,916 133,160,334 66,659,522 18,094,086
Add: Cash and bank balances (Note 28) 97,508,831 90,896,516 2,312,573 1,988,880
Total loans and receivables 241,590,747 224,056,850 68,972,095 20,082,966
Harbour-Link Group Berhad (592902-D)94
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
24. TRADE AND OTHER RECEIVABLES cont’d
(a) Trade receivables
Ageing analysis of trade receivables
The ageing analysis of the Group’s trade receivables are as follows:
Group
2016 2015
RM RM
Neither past due nor impaired 48,969,003 35,444,302
1 to 6 months past due but not impaired 63,082,319 73,672,793
112,051,322 109,117,095
Impaired 29,452,895 33,641,845
141,504,217 142,758,940
Receivables that are neither past due nor impaired
Credit terms of trade receivables range from payment in advance to 120 days (2015: 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 2016, trade receivables of the Group of RM63,082,319 (2015: RM73,672,793) were past due but not impaired. These relate to customers for whom there is no objective evidence that the receivables are not fully recoverable.
Annual Report 2016 95
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
24. TRADE AND OTHER RECEIVABLES cont’d
(a) Trade receivables cont’d
Receivables that are impaired:
The Group’s trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:
Group
CollectivelyImpaired
IndividuallyImpaired Total
2016 2016 2016
RM RM RM
Trade receivables - nominal amounts 8,436,682 21,016,213 29,452,895
Less: Allowance for impairment (3,217,942) (13,850,593) (17,068,535)
5,218,740 7,165,620 12,384,360
Group
CollectivelyImpaired
IndividuallyImpaired Total
2015 2015 2015
RM RM RM
Trade receivables - nominal amounts 7,474,792 26,167,053 33,641,845
Less: Allowance for impairment (2,457,839) (17,529,382) (19,987,221)
5,016,953 8,637,671 13,654,624
Movement in allowance accounts:
Group
2016 2015
RM RM
At 1 July 19,987,221 9,183,475
Charge for the year 2,354,533 22,692,099
Reversal of impairment losses (5,273,219) (11,887,257)
Allowance for impairment, net of reversal (Note 5, 7) (2,918,686) 10,804,842
Written off - (1,096)
At 30 June 17,068,535 19,987,221
Harbour-Link Group Berhad (592902-D)96
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
24. TRADE AND OTHER RECEIVABLES cont’d
(b) Amount due from subsidiaries
Amounts due from subsidiaries are unsecured, receivable on demand and non-interest bearing, except amount of RM15,838,294 (RM18,003,264)) bear interest of ranging from 4% to 6.85% (2015: 4% to 6%) per annum.
Other receivables that are impaired
At the reporting date, the Company has provided an allowance for impairment of RM6,209,212 (2015: RM6,209,212) for impairment on amount due from subsidiary.
There has been no movement in this allowance account for the financial year ended 30 June 2016 and 2015.
25. INVESTMENT SECURITIES
Group
2016 2015
RM RM
Held for trading investments
Quoted money market funds 26,264,410 8,270,415
Fair value of the quoted money market funds 26,264,410 8,270,415
26. OTHER CURRENT ASSETS
Group Company
2016 2015 2016 2015
RM RM RM RM
Amount due from customers on construction contracts (Note 27) 3,134,331 627,374 - -
Tax recoverable 1,536,127 1,404,055 690,407 1,219,865
Prepayment 6,556,302 9,423,635 481,289 21,294
11,226,760 11,455,064 1,171,696 1,241,159
Annual Report 2016 97
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
27. GROSS AMOUNT DUE FROM/(TO) CUSTOMERS FOR CONTRACT WORK-IN-PROGRESS
Group
2016 2015
RM RM
Construction contract costs incurred to date 23,108,261 54,793,626
Add: Attributable profits 3,098,278 9,555,306
26,206,539 64,348,932
Less: Progress billings (24,097,746) (76,754,316)
Amount due to customers for contract works 2,108,793 (12,405,384)
Amounts due from customers for contract work (included in other current assets - Note 26) 3,134,331 627,374
Amounts due to customers on contract work (included in other current liabilities - Note 31) (1,025,538) (13,032,758)
2,108,793 (12,405,384)
Retention sums on contracts, included within trade receivables 1,207,362 1,840,928
The costs incurred to date on construction contracts include the following charges made during the financial year:
Group
2016 2015
RM RM
Hire of plant and machinery 1,299,757 1,147,236
Depreciation of property, plant and equipment (Note 13) 1,479,803 1,528,518
Rental expenses 244,123 304,132
Harbour-Link Group Berhad (592902-D)98
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
28. CASH AND BANK BALANCES
Group Company
2016 2015 2016 2015
RM RM RM RM
Cash at banks and on hand 89,667,643 78,481,494 679,669 780,376
Short term deposits with licensed banks 7,841,188 12,415,022 1,632,904 1,208,504
Cash and bank balances 97,508,831 90,896,516 2,312,573 1,988,880
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 2016 for the Group and the Company were 3% (2015: 3%) and 3% (2015: 3%) respectively per annum. Short term deposits with licensed banks of the Group and of the Company amounting to RM4,727,233 (2015: RM5,295,795) and RM1,632,904 (2015: RM1,208,504) respectively are pledged as securities for bank borrowings.
Included in short-term deposit with licensed banks of the Group are deposits amounted to RM270,626 (2015: RM 264,078) under the name of the director of the subsidiary who held in trust on behalf of the subsidiary.
The Group’s cash and bank amounting to RM3,020,999 (2015 : RM2,598,627) has been deposited to a bank to be solely used as the bank repayment for the Company’s loans and borrowings as referred in Note 29.
For the purpose of cash flow statements, cash and cash equivalents comprise the following at the reporting date:
Group Company
2016 2015 2016 2015
RM RM RM RM
Cash and short term deposits 97,508,831 90,896,516 2,312,573 1,988,880
Bank overdrafts (Note 29) (12,686,393) (2,703,758) (5,818,754) (446,878)
Cash at bank pledged as securities for bank borrowings (3,020,998) (2,598,627) - -
Short term deposits pledged as securities for bank borrowings (4,727,233) (5,295,795) (1,632,904) (1,208,504)
Cash and cash equivalents 77,074,207 80,298,336 (5,139,085) 333,498
Annual Report 2016 99
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
29. BORROWINGS
Group Company
2016 2015 2016 2015Maturity RM RM RM RM
Current
Secured:
Obligations under finance leases(Note 36(c)) 2017 10,715,892 10,515,091 188,044 285,039
Bank overdrafts (Note 28) On demand 12,686,393 2,703,758 5,818,754 446,878
Term loans - RM loan:
BLR - 0.5% 2017 206,760 489,885 - -
BLR - 0.3% 2017 1,079,398 1,071,122 - -
BLR - 1.5% 2017 327,230 400,223 - -
Term Financing-i 2017 262,186 245,537 - -
BLR + 0% (a) 2017 519,514 565,133 519,514 565,133
BLR + 0% (b) 2017 444,174 429,600 - -
BLR + 0% (c) 2017 4,507,844 4,440,000 - -
BLR + 0.15% 2017 163,494 147,552 - -
BLR + 0.25% 2017 451,233 - - -
BLR + 0.35% 2017 924,768 942,248 - -
BLR + 0.5% 2017 1,679,466 - - -
BLR + 0.75% 2017 189,960 189,960 - -
BLR + 1% 2017 907,722 961,588 - -
KLIBOR + 1.25% 2017 530,304 530,304 - -
3.38% p.a. fixed rate & BLR - 2% 2017 227,331 216,593 - -
7.0016% fixed rate 2017 - 117,435 - -
7.75% fixed rate 2017 460,038 - - -
36,283,707 23,966,029 6,526,312 1,297,050
Unsecured:
Bankers’ acceptances 2017 3,568,467 4,312,708 - -
Revolving credit 2017 4,260,000 - 4,260,000 -
7,828,467 4,312,708 4,260,000 -
Total short term borrowings 44,112,174 28,278,737 10,786,312 1,297,050
Harbour-Link Group Berhad (592902-D)100
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
29. BORROWINGS cont’d
Group Company
2016 2015 2016 2015Maturity RM RM RM RM
Non-current
Secured:
Obligations under finance leases (Note 36(c)) 2018 - 2020 16,761,660 20,570,551 5,428 193,473
Term loans - RM loan:
BLR - 0.5% 2018 - 2020 783,424 990,049 - -
BLR - 0.3% 2018 236,383 1,333,647 - -
BLR - 0.75% 2018 - 2026 2,777,921 - - -
BLR - 1.5% 2018 - 2025 4,061,321 4,289,402 - -
Term Financing-i 2018 - 2029 4,502,788 4,764,152 - -
BLR + 0% (a) 2018 - 527,732 - 527,732
BLR + 0% (b) 2018 - 2022 2,115,000 2,544,600 - -
BLR + 0% (c) 2018 - 2026 7,913,730 10,513,730 - -
BLR + 0.15% 2018 119,205 283,136 - -
BLR + 0.25% 2018 - 2021 1,939,655 - - -
BLR + 0.5% 2018 - 2023 9,403,380 - - -
BLR + 0.35% 2018 - 2019 2,710,400 3,596,476 - -
BLR + 0.75% 2018 - 2019 214,524 404,484 - -
BLR + 1% 2018 225,047 1,126,938 - -
KLIBOR + 1.25% 2018 - 2020 1,104,760 1,635,064 - -
3.38% p.a. fixed rate & BLR - 2% 2018 - 2021 598,102 825,359 - -
7.75% fixed rate 2018 - 2020 1,817,431 - - -
Total long term borrowings 57,284,731 53,405,320 5,428 721,205
Total loan and borrowings 101,396,905 81,684,057 10,791,740 2,018,255
The remaining maturities of the loans and borrowings as at the reporting date are as follows:
Group Company
2016 2015 2016 2015
RM RM RM RM
On demand or within one year 44,112,174 28,278,737 10,786,312 1,297,050
More than 1 year and less than 2 years 19,680,379 19,477,025 5,428 715,777
More than 2 years and less than 5 years 27,140,123 26,135,701 - 5,428
5 years or more 10,464,229 7,792,594 - -
101,396,905 81,684,057 10,791,740 2,018,255
Annual Report 2016 101
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’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 3.30% to 6.23% (2015: 4.53% to 7.27%) 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 7.1% (2015: 7.1%) per annum.
Bankers acceptance
Bankers acceptance are secured against the Corporate Guarantee of the Company. The interest rate of the Group was Group as at reporting date ranging from 4.38% to 6.51% (2015 : 4.5% to 7.85%) per annum.
Revolving credit
The interest rate for the revolving credit is 8.35% per annum.
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. and corporate guarantee of the Company.
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. and corporate guarantee of the Company.
RM loan at BLR - 0.75%
This loan is secured by fixed charge over land and buildings of Harbour-Link Logistics Sdn. Bhd. and corporate guarantee of 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. and corporate guarantee of the Company.
Term Financing-i
This loan is secured by fixed charge over freehold land and buildings of Eastern Soldar Engineering & Construction Sdn. Bhd. and corporate guarantee of 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 land and buildings of Harbour Services Corporation Sdn. Bhd. and corporate guarantee of the Company.
Harbour-Link Group Berhad (592902-D)102
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
29. BORROWINGS cont’d
RM loan at BLR + 0% (c)
This loan is secured by fixed charge over leasehold land of Sarawak Edible Oils Sdn. Bhd., cash at bank as refer in Note 28 to the financial statements and corporate guarantee of 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. and corporate guarantee of the Company.
RM loan at BLR + 0.25%
This loan is secured by fixed charge over the vessel of Harbour Xtra Sdn. Bhd. and corporate guarantee of the Company.
RM loan at BLR + 0.35%
This loan is secured by fixed charge over the vessel of Harbour Jupiter Sdn. Bhd. and corporate guarantee of the Company.
RM loan at BLR + 0.5%
This loan is secured by fixed charge over the vessels of Harbour Ruby Sdn. Bhd. and Harbour Zenith Sdn. Bhd. and corporate guarantee of the Company.
RM loan at BLR + 0.75%
This loan is secured by fixed charge over the certain plant and machineries of Harbour-Link Logistics Sdn. Bhd. and corporate guarantee of 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. as disclosed in Note 13 and corporate guarantee provided of the Company.
RM loan at KLIBOR + 1.25%
This loan is secured by fixed charge over the vessel of Harbour Agencies (Sibu) Sdn. Bhd. and corporate guarantee of the Company.
RM loan at 7.0016% fixed rate
This loan is secured by fixed charge over the vessel of Satun Shipping Sdn. Bhd. and corporate guarantee of the Company.
RM loan at 7.75% fixed rate
This loan is secured by fixed charge over the vessel of Harbour Services (Kch) Sdn. Bhd. and corporate guarantee of 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 of the Company.
Annual Report 2016 103
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
30. TRADE AND OTHER PAYABLES
Group Company
2016 2015 2016 2015
RM RM RM RM
Current
Trade payables
Third parties 47,629,779 47,763,703 - -
Amount due to related parties 590,915 3,876,733 - -
Amount owing to subsidiaries - - - 361,770
48,220,694 51,640,436 - 361,770
Other payables
Accrued operating expenses 23,621,162 26,972,808 242,189 254,770
Other payables 13,298,324 6,201,449 166,795 1,179,289
Amount due to related parties 2,550,583 69,083 - -
Amount due to subsidiaries - - 32,270,889 20,441,885
Deposit received 9,754,089 3,343,580 1,200,000 1,080,000
49,224,158 36,586,920 33,879,873 22,955,944
Total trade and other payables 97,444,852 88,227,356 33,879,873 23,317,714
Add: Loans and borrowings (Note 29) 101,396,905 81,684,057 10,791,740 2,018,255
Total financial liabilities carried at amortised cost 198,841,757 169,911,413 44,671,613 25,335,969 (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 (2015: range from payments in advance to 120 days).
(b) Amount due to subsidiaries
These amounts are unsecured and are repayable on demand and bear interest of 4% (2015: 4%) per annum.
(c) Amount due to related parties
The related parties represent the companies in which certain directors have substantial financial interest. These amounts are interest free, unsecured and have no fixed terms of repayments.
Harbour-Link Group Berhad (592902-D)104
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
31. OTHER CURRENT LIABILITIES
Group
2016 2015
RM RM
Amounts due to customers on contract work (Note 27) 1,025,538 13,032,758
Advance deposits in respect of development properties - 72,885,755
1,025,538 85,918,513
32. SHARE CAPITAL
Par value Number ofordinary
shares
Amount
RM RM
Authorised
At 1 July 2014/30 June 2015 and 1 July 2015 1.00 500,000,000 500,000,000
Share split 0.50 500,000,000 -
At 30 June 2016 1,000,000,000 500,000,000
Issued and fully paid
At 1 July 2014/30 June 2015 and 1 July 2015 1.00 182,000,002 182,000,002
Share split 0.50 182,000,002 -
Bonus issue 0.50 36,400,000 18,200,000
At 30 June 2016 400,400,004 200,200,002
During the financial year, the Company has completed the following:
(i) share split involving subdivision of every one (1) ordinary share of RM1 held into two (2) new ordinary shares of RM0.50 each (“share split”);
(ii) bonus issue of 36,400,000 new bonus shares of RM0.50 each on the basis of one (1) bonus share for every ten (10) new subdivided ordinary shares after share split;
(iii) bonus issue of 36,400,000 warrants on the basis of one (1) warrant for every ten 10 new subdivided shares after share split. Each warrant is convertible into one new ordinary share of RM0.50 each at an exercise price of RM1.65 per ordinary share.
The share split, bonus issue of shares and warrants were completed on 8 April 2016. The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company.
The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company residual assets.
Annual Report 2016 105
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
33. RETAINED EARNINGS
The Company may distribute dividend out of its entire retained earnings as at 30 June 2016 and 2015 under the single tier system.
34. OTHER RESERVE
Other reserve represented restructuring reserve arising from business combination.
35. 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.
36. COMMITMENTS
(a) Capital commitments
Capital expenditure as at the reporting date is as follows:
Group
2016 2015
RM RM
Capital expenditure
Approved and contracted for:
Property, plant and equipment 10,888,735 10,130,699
(b) Operating lease commitments as lessor
The Group has the following lease arrangement:
(i) Lease of a building to a third party for a period of 10 years commencing 10th June 2009 to 30th June 2019.
(ii) Lease of a vacant land from a third party for the period of 30 years commencing on the 15th November 2012 to 14th November 2042.
Harbour-Link Group Berhad (592902-D)106
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
36. COMMITMENTS cont’d
(b) Operating lease commitments as lessor cont’d
As at the end of the financial year, the future aggregate minimum lease payments receivables/payables under non-cancellable operating leases contracted for but not recognised as assets/liabilities were as follows:
Group
2016 2015
RM RM
Lease receivables
- Receivables within 1 year 360,000 2,017,500
- Receivables between 1 and 5 years 720,000 1,080,000
1,080,000 3,097,500
Lease payables
- Payables within 1 year 120,120 106,906
- Payables between 1 and 5 years 512,045 459,360
- Payables after 5 years 4,185,927 3,958,408
4,818,092 4,524,674
(c) 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 Company
2016 2015 2016 2015
RM RM RM RM
Future minimum lease payments:
Not later than 1 year 12,089,971 12,125,996 192,089 304,164
Later than 1 year but not later than 2 years 9,373,792 10,202,563 5,512 192,089
Later than 2 years but not later than 5 years 8,591,818 11,978,631 - 5,512
Total future minimum lease payments 30,055,581 34,307,190 197,601 501,765
Less: Future finance charges (2,578,028) (3,221,548) (4,129) (23,253)
Present value of finance lease liabilities 27,477,553 31,085,642 193,472 478,512
Annual Report 2016 107
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
36. COMMITMENTS cont’d
(c) Finance lease commitments cont’d
Analysis of present value of finance lease liabilities:
Group Company
2016 2015 2016 2015
RM RM RM RM
Not later than 1 year 10,715,893 10,515,091 188,044 285,039
Later than 1 year but not later than 2 years 8,679,878 9,222,375 5,428 188,045
Later than 2 years but not later than 5 years 8,081,781 11,348,176 - 5,428
27,477,552 31,085,642 193,472 478,512
Less: Amount due within 12 months (Note 29) (10,715,892) (10,515,091) (188,044) (285,039)
Amount due after 12 months (Note 29) 16,761,660 20,570,551 5,428 193,473
37. 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:
Balance outstanding Transaction values2016 2015 2016 2015
RM RM RM RM
Group
Companies in which the certain directors have substantial interest:
IncomeSales of services
- Azam Teroka Sdn. Bhd. 65,611 38,135 176,661 151,957
- Binary Bonus Sdn. Bhd. - - 2,250 -
- Sri Minah Enterprise Sdn. Bhd. 58,787 - 90,963 15,150
- Marup Quarry Sdn. Bhd. 4,173 - 82,283 120,468
- Herdsen Sago Industrial Sdn. Bhd. 13,722 - 41,700 7,742
- Herdsen Quarry Sdn. Bhd. 3,998 - 69,364 10,300
- Herdsen Corporation Sdn. Bhd. - - 6,319 550
- Slingtex Industrial Sdn. Bhd. - - 38,637 7,917
Progress billings in respect of sales of development properties
- Slingtex Industrial Sdn. Bhd. - - 105,000 367,500
- Certain directors of the Company - - 178,200 1,603,800
Harbour-Link Group Berhad (592902-D)108
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
37. RELATED PARTY DISCLOSURES cont’d
(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: cont’d
Balance outstanding Transaction values2016 2015 2016 2015
RM RM RM RM
Group
Expenditure
Purchase of services
- Sri Minah Enterprise Sdn. Bhd. (13,624) (26,252) 45,260 3,500
- Herdsen Corporation Sdn. Bhd. - (212) - 107,002
- Lucky In Sdn. Bhd. - - - 30,000
- Binary Bonus Sdn. Bhd. (573,772) - 2,053,246 -
- Sun Swee Trading Co. - - - 15,000
- Slingtex Industrial Sdn. Bhd. - - 133,307 -
- Utama Bena Engineering - - - 8,000
- Ricardon Sdn. Bhd. (120,000) (18,000) 23,000 36,750
- Keywork Sdn. Bhd. - (40,508) 160,100 189,174
Purchase of parts and tyres & materials, equipment
- Sri Minah Enterprise Sdn. Bhd. (318) (318) 196,772 237,146
- Marup Quarry Sdn. Bhd. (1,151) (509,013) 1,059,812 1,642,574
- Herdsen Quarry Sdn. Bhd. - (15,953) 1,172,310 289,976
- Sun Swee Trading Co. - (15,000) - 15,000
- Lucky In Sdn. Bhd. - - - 45,000
- Mohd Mahmud Sdn. Bhd. (96,749) (120,588) 379,802 309,562
Rental of equipment and premises
- Marup Quarry Sdn. Bhd. - (6,915) 14,930 14,760
- Herdsen Corporation Sdn. Bhd. - - 1,200 1,000
- Herdsen Quarry Sdn. Bhd. - (19,080) 24,428 19,000
- Sri Minah Enterprise Sdn. Bhd. (113,688) (55,841) 677,617 491,438
- Director of the Company
- Lee Seng Chiong - - 24,000 -
Annual Report 2016 109
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
37. RELATED PARTY DISCLOSURES cont’d
(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: cont’d
Transaction values
2016 2015
RM RM
Associates
Income
Sales of services 406,049 376,125
Dividend received 171,500 110,463
Jointly venture
Income
Sales of services 145,678 3,274,840
Expenditure
Purchase of services 329,627 2,925,853
Company
Transactions with subsidiaries:
Income
Dividend income 42,966,675 22,777,073
Interest income 1,273,335 789,072
Management fee income 1,116,000 1,116,000
Rental income 654,000 654,000
Expenditure
Interest expense 1,164,773 1,425,568
Harbour-Link Group Berhad (592902-D)110
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
37. 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
2016 2015 2016 2015
RM RM RM RM
Short-term employee benefits 10,929,706 9,702,916 929,648 1,385,015
Post-employment benefits:
Defined contribution plan 1,194,232 1,372,193 84,538 206,299
12,123,938 11,075,109 1,014,186 1,591,314
Included in the total key management personnel are:
Directors’ remuneration (Note 9) 3,250,359 3,500,424 1,014,186 1,027,918
38. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group and the Company are exposed to foreign currency exchange risk, 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) 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.
The Group is exposed to currency translation risk arising from its net investments in foreign operations, including Singapore and Cambodia.
As at 30 June 2016, 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 10% (2015: 20%) and 5% (2015: 10%) respectively and weakened by 7% (2015: 5%) respectively against RM.
Annual Report 2016 111
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
38. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont’d
(a) Foreign currency risk cont’d
Group
2016 2015
RM RM
RM / USD - Strengthen 10% (2015: 20%) 623,648 687,770
RM / USD - Weaken 7% (2015: 5%) (436,554) (171,943)
RM / SGD - Strengthen 5% (2015: 10%) (390,187) (240,236)
RM / SGD - Weaken 7% (2015: 5%) 546,262 120,118
(b) 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 manage its interest rate exposure by keeping close monitoring on the debt market and where necessary, maintaining a prudent mix of fixed 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.
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
2016 2015 2016 2015
RM RM RM RM
Borrowings based on cost of funds (“KLIBOR”):
- Increase by 25 basis points (2015: 50 basis point) (30,610) (13,061) (25,197) (2,234)
- Decrease by 25 basis points 30,610 6,531 25,197 1,117
Borrowings based on base lending rate (“BLR”):
- Increase by 25 basis points (2015: 50 basis point) (140,899) (211,294) (1,299) (5,464)
- Decrease by 25 basis points 140,899 105,647 1,299 2,732
(c) 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)112
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
38. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont’d
(c) 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 withinone year
More than 1 year and
less than 2 years
More than2 years and
less than 5 years
5 yearsand more Total
RM RM RM RM RM
Group
At 30 June 2016
Financial liabilities
Trade and other payables 97,444,852 - - - 97,444,852
Loans and borrowings 49,510,923 22,662,048 31,411,550 12,431,116 116,015,637
Total undiscounted financial liabilities 146,955,775 22,662,048 31,411,550 12,431,116 213,460,489
At 30 June 2015
Financial liabilities
Trade and other payables 88,227,356 - - - 88,227,356
Loans and borrowings 32,306,942 20,397,819 30,258,357 7,957,489 90,920,607
Total undiscounted financial liabilities 120,534,298 20,397,819 30,258,357 7,957,489 179,147,963
Company
At 30 June 2016
Financial liabilities
Trade and other payables, excluding financial guarantees * 33,879,873 - - - 33,879,873
Loans and borrowings 11,353,381 5,511 - - 11,358,892
Corporate guarantee 117,015,118 - - - 117,015,118
Total undiscounted financial liabilities 162,248,372 5,511 - - 162,253,883
At 30 June 2015
Financial liabilities
Trade and other payables 23,317,714 - - - 23,317,714
Loans and borrowings 1,384,006 725,542 5,511 - 2,115,059
Corporate guarantee 113,765,744 - - - 113,765,744
Total undiscounted financial liabilities 138,467,464 725,542 5,511 - 139,198,517
Annual Report 2016 113
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
38. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont’d
(d) 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).
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 RM117,015,118 (2015: RM113,765,744) relating to corporate guarantee provided by the Company to banks on the subsidiaries’ borrowings.
Credit risk concentration profile
The Group’s determines concentration of credit risk by monitoring the trade and other receivables on an ongoing basis. At the reporting date, approximately 19% (2015: 32%) of the Group trade receivables was from a major customer located in Malaysia.
Financial assets that are neither past due nor impaired
Information 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.
Harbour-Link Group Berhad (592902-D)114
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
39. FAIR VALUE OF FINANCIAL INSTRUMENTS cont’d
(a) Set out below, is a comparison by class of the carrying amount and the fair value of the Group’s financial instruments, other than those with carrying amounts are reasonable approximation of fair value.
Group Company
NoteCarrying amount
Fair value
Carrying amount
Fair value
RM RM RM RM
At 30 June 2016
Financial assets:
Other investments 20 652,445 a - -
Financial liabilities:
Term loans with fixed rate 29 2,377,469 2,281,257 - -
Finance lease payables 36(c) 27,477,552 27,592,930 193,472 193,371
At 30 June 2015
Financial assets:
Other investments 20 652,445 a - -
Financial liabilities:
Term loans with fixed rate 29 117,435 171,170 - -
Finance lease payables 36(c) 31,085,642 31,064,255 478,512 478,714
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.
(b) 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: 29
- Term loan except for the following loans:
- RM loan at 7.75% fixed rate
- RM loan at 7.0016% fixed rate
Annual Report 2016 115
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
39. FAIR VALUE OF FINANCIAL INSTRUMENTS cont’d
(b) 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.
40. FAIR VALUE MEASUREMENT
Fair value hierarchy
The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:
Level 1 - Quoted prices in active markets for identical assets or liabilities;
Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; and
Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The following table provides the fair value measurement hierarchy of the Group’s and Company’s assets and liabilities.
Harbour-Link Group Berhad (592902-D)116
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
40. FAIR VALUE MEASUREMENT cont’d
Fair value hierarchy cont’d
Quantitative disclosures fair value measurement hierarchy for assets and liabilities as at 30 June 2016 and 2015:
NoteDate of
ValuationLevel 1 Level 2 Level 3 Total
RM RM RM RM
Group
Assets measured at fair valueNon-financial assets
Property, plant and equipment (i) 13 30 June 2016 - - 13,861,102 13,861,102
Financial assets:
Investment securities 25 30 June 2016 26,264,410 - - 26,264,410
26,264,410 - 13,861,102 40,125,512
Assets for which fair values are disclosed
Investment properties (ii) 14 30 June 2016 - - 19,855,000 19,855,000
Liabilities for which fair values are disclosed
Term loans with fixed rate 39(a) 30 June 2016 - 2,281,257 - 2,281,257
Finance lease payables 39(a) 30 June 2016 - 27,592,930 - 27,592,930
- 29,874,187 - 29,874,187
Assets measured at fair valueFinancial assets:
Investment securities 25 30 June 2015 8,270,415 - - 8,270,415
Assets for which fair values are disclosed
Investment properties (ii) 14 30 June 2015 - - 11,786,000 11,786,000
Liabilities for which fair values are disclosed
Term loans with fixed rate 39(a) 30 June 2015 - 171,170 - 171,170
Finance lease payables 39(a) 30 June 2015 - 31,064,255 - 31,064,255
- 31,235,425 - 31,235,425
Company
Liabilities for which fair values are disclosed
Finance lease payables 39(a) 30 June 2016 - 193,371 - 193,371
Finance lease payables 39(a) 30 June 2015 - 478,714 - 478,714
Annual Report 2016 117
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
40. FAIR VALUE MEASUREMENT cont’d
Level 3 fair value measurements
(i) The valuation techniques used is market comparable approach. Market values determined by independent ship valuers taking into consideration the type, size and age of the ships and the assumptions that the ships are in good and seaworthy condition, to be transacted between willing buyer and willing seller.
(ii) The valuation techniques used is market comparable approach. Price per square foot of comparable properties adjusted based on management’s assumptions for key attributes such as property size.
41. 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, cash and bank balances. Equity capital is equivalent to capital and reserves attributable to owners of the Company.
Group Company
Note 2016 2015 2016 2015
RM RM RM RM
Loans and borrowings 29 101,396,905 81,684,057 10,791,740 2,018,255
Trade and other payables 30 97,444,852 88,227,356 33,879,873 23,317,714
Less:
Investment securities 25 (26,264,410) (8,270,415) - -
Cash and bank balances 28 (97,508,831) (90,896,516) (2,312,573) (1,988,880)
Net debt 75,068,516 70,744,482 42,359,040 23,347,089
Equity attributable to the owners of the Company 326,608,491 279,370,237 208,450,662 183,484,245
Capital and net debt 401,677,007 350,114,719 250,809,702 206,831,334
Gearing ratio 18.69% 20.21% 16.89% 11.29%
Harbour-Link Group Berhad (592902-D)118
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
42. 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 four major business segments:
(i) Shipping and marine services (ii) Logistic services and equipment rental (iii) Engineering works (iv) Property development
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.
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.
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.
Annual Report 2016 119
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
42. SEGMENT INFORMATION cont’d
(b) Business segments cont’d
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 Works
Property Development
Elimination/Adjustments Note Total
RM RM RM RM RM RM
30 June 2016
REVENUE
External sales 268,287,397 166,521,153 58,223,195 97,732,676 - 590,764,421
Inter-segment sales 30,872,981 11,850,374 - - (42,723,355) A -
Total revenue 299,160,378 178,371,527 58,223,195 97,732,676 (42,723,355) 590,764,421
RESULTS
(Loss)/profit before tax (3,320,367) 40,554,809 15,606,289 49,097,534 22,302 A 101,960,567
Amortisation 136,075 - - - - A 136,075
Depreciation 7,378,969 12,181,066 1,882,683 354,202 - A 21,796,920
Impairment loss on property, plant and equipment 5,941,800 - - - - 5,941,800
Finance cost 1,561,182 2,743,791 324,402 1,552,920 (382,374) A 5,799,921
Share of results associates 1,505,162 - - - - 1,505,162
Share of results joint venture - (217,888) - - - (217,888)
ASSETS
Investment in associates 5,019,044 - - - - 5,019,044
Investment in joint venture - 682,867 - - - 682,867
Addition to non-current assets 30,802,973 13,445,032 769,631 2,596,296 - B 47,613,932
Segment assets 241,658,436 231,186,187 84,619,093 100,843,510 (69,226,655) C 589,080,571
LIABILITIES
Segment liabilities 110,012,636 89,298,737 17,014,047 43,311,895 (34,299,155) D 225,338,160
Harbour-Link Group Berhad (592902-D)120
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
42. SEGMENT INFORMATION cont’d
(b) Business segments cont’d
The following table provides an analysis of the Group’s revenue, results, assets, liabilities and other information by business segment: cont’d
Shipping, Marine
Services & Others
Logistics Services &
Equipment Rental
Engineering Works
Property Development
Elimination/Adjustments Note Total
RM RM RM RM RM RM
30 June 2015
REVENUE
External sales 282,544,967 147,217,951 73,767,842 3,432,299 - 506,963,059
Inter-segment sales 31,241,445 9,018,050 - - (40,259,495) A -
Total revenue 313,786,412 156,236,001 73,767,842 3,432,299 (40,259,495) 506,963,059
RESULTS
Profit before tax 8,289,250 49,065,213 14,122,782 5,289,554 (107,128) A 76,659,671
Amortisation 93,073 - - - - A 93,073
Depreciation 9,093,166 10,587,225 1,936,704 112,921 - A 21,730,016
Finance cost 2,124,368 3,018,284 359,642 1,563,241 (1,327,718) A 5,737,817
Impairment of intangible assets (539,573) - 539,573 - - -
Share of results associates 649,759 - - - - 649,759
Share of results joint venture - 114,192 - - - 114,192
ASSETS
Investment in associates 3,685,381 - - - - 3,685,381
Investment in joint venture - 900,755 - - - 900,755
Addition to non-current assets 10,514,975 17,897,765 1,038,688 1,003,941 - B 30,455,369
Segment assets 221,165,315 231,136,539 92,898,224 125,972,326 (88,273,780) C 582,898,624
LIABILITIES
Segment liabilities 145,903,595 99,006,728 28,421,126 104,886,447 (94,192,471) D 284,025,425
A Elimination of inter-segment unrealised profit at consolidation.
B Additions to non-current assets consists of:
2016 2015
RM RM
Property, plant and equipment (Note 13) 47,366,395 25,740,262
Prepaid land lease payments (Note 15) - 4,300,000
Land held for development (Note 23(a)) 247,537 415,107
47,613,932 30,455,369
Annual Report 2016 121
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016
Cont’d
42. SEGMENT INFORMATION cont’d
(b) Business segments cont’d
C The following items deducted from segment assets to arrive at total assets reported in the consolidated statement of financial positions.
2016 2015
RM RM
Inter-segment assets elimination (68,360,824) (88,273,780)
Unrealised gain on property, plant and equipment (865,831) -
(69,226,655) (88,273,780) D The following items are deducted from to segment liabilities to arrive at total liabilities reported in the
consolidated statement of financial position.
2016 2015
RM RM
Inter-segment liabilities elimination (34,299,155) (94,192,471)
(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
2016 2015
RM RM
(i) Malaysia 590,764,421 506,108,924
(ii) Singapore - 854,135
Consolidated 590,764,421 506,963,059
43. SUBSEQUENT EVENTS
(a) On 22 July 2016, Advance Mariner Lines Sdn Bhd., a subsidiary of the Group had incorporated a wholly-owned subsidiary under the name of AML Shipping (Singapore) Pte Ltd. (“AMLSPL”) in Singapore. AMLSPL was incorporated with an issued and fully paid-up share capital of SGD 1.00 divided into 1 ordinary share of SGD1.00 each. The intended business activity of AMLSPL is providing services relating to shipping operator, shipping agencies, non-vessel operating common carrier operator, transportation and logistics services.
Harbour-Link Group Berhad (592902-D)122
Notes to the Financial StatementsFor the Financial Year Ended 30 June 2016Cont’d
44. 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 2016 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 Requirements, issued by the Malaysian Institute of Accountants.
Group Company
2016 2015 2016 2015
RM RM RM RM
Total retained earnings of the Company and the subsidiaries
Realised 270,188,547 237,959,356 8,279,442 1,541,043
Unrealised (11,555,927) (7,239,851) (28,782) (56,800)
258,632,620 230,719,505 8,250,660 1,484,243
Total share of retained earnings from associates and joint venture 3,339,771 2,223,936 - -
Less: Consolidated adjustments (75,292,771) (74,252,170) - -
Retained earnings as per financial statements 186,679,620 158,691,271 8,250,660 1,484,243
Annual Report 2016 123
Analysis of ShareholdingsAs at 7 October 2016
Authorised Share Capital : RM500,000,000.00 divided into 1,000,000,000 ordinary shares of RM0.50 each
Issued and Paid-Up Capital : 200,200,002 divided into RM400,400,004.00 ordinary shares of RM0.50 each
Class of Shares : Ordinary Shares of RM0.50 each fully paid
Voting Rights : One vote per ordinary share
SIZE OF SHAREHOLDINGSas at 7 October 2016
Size of HoldingsNo. of
ShareholdersTotal
Holdings %
Less than 100 shares 11,519 422,464 0.11
100 – 1,000 shares 3,404 834,373 0.21
1,001 – 10,000 shares 1,248 5,341,035 1.33
10,001 – 100,000 shares 641 17,858,195 4.46
100,001 – below 5% of issued shares 138 159,273,012 39.78
5% and above of issued shares 6 216,670,925 54.11
16,956 400,400,004 100
DIRECTORS’ SHAREHOLDINGSas at 7 October 2016
Direct Interest Indirect Interest
No. Name Shares % Shares %
1. Yong Piaw Soon 24,751,199 6.18 212,819,726* 53.15
2. Wong Siong Seh 15,431,460 3.85 212,819,726* 53.15
3. Dato’ Toh Guan Seng 5,060,000 1.26 - -
4. Hii Kwong Wui 3,234,000 0.81 - -
5. Lee Seng Chiong 3,042,600 0.76 - -
6. Lau Sii Hin 1,650,000 0.41 - -
7. Dato’ Mohamed Salleh Bin Bajuri 901,630 0.23 - -
8. Datuk Pau Chiong Ung - - - -
9. Bin Lay Thiam - - - -
Note
* Deemed interest by virtue of him being substantial shareholder in Enricharvest Sdn. Bhd. and United Joy Sdn. Bhd.
Harbour-Link Group Berhad (592902-D)124
SUBSTANTIAL SHAREHOLDERSas at 7 October 2016
Direct Interest Indirect Interest
No. Name Shares % Shares %
1. Enricharvest Sdn. Bhd. 126,258,306 31.53 - -
2. United Joy Sdn. Bhd. 86,561,420 21.62 - -
3. Yong Piaw Soon 24,751,199 6.18 212,819,726* 53.15
4. Wong Siong Seh 15,431,460 3.85 212,819,726* 53.15
Note
* Deemed interest by virtue of him being substantial shareholder in Enricharvest Sdn. Bhd. and United Joy Sdn. Bhd.
THIRTY (30) LARGEST SHAREHOLDERSas at 7 October 2016
No. NamesNo. of
Shares held %
1 KENANGA NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR UNITED JOY SDN BhD
47,665,420 11.90
2 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR ENRIChARvEST SDN BhD
47,458,400 11.85
3 HLIB NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR ENRIChARvEST SDN BhD
40,402,340 10.09
4 UNITED JOY SDN. BHD. 31,196,000 7.79
5 ENRICHARVEST SDN. BHD. 28,497,566 7.12
6 KENANGA NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR YONG PIAw SOON
21,451,199 5.36
7 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR wONG SIONG SEh
10,774,500 2.69
8 KENANGA NOMINEES (ASING) SDN BHDPLEDGED SECURITIES ACCOUNT FOR STATE FINANCE INTERNATIONAL LIMITED
10,283,900 2.57
9 ENRICHARVEST SDN. BHD. 9,900,000 2.47
10 LEE POH IM 8,855,440 2.21
11 UNITED JOY SDN. BHD. 7,700,000 1.92
12 CITIGROUP NOMINEES (ASING) SDN BHD EXEMPT AN FOR CITIBANK NEw YORK
6,726,860 1.68
13 HSBC NOMINEES (TEMPATAN) SDN BHD hSBC (M) TRUSTEE BhD FOR MANULIFE INvESTMENT PROGRESS FUND
5,832,620 1.46
14 BRIGHT JOY LIMITED 5,208,060 1.30
15 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR wONG SING KUOK
4,691,240 1.17
16 TOH GUAN SENG 4,600,000 1.15
Analysis of ShareholdingsAs at 7 October 2016Cont’d
Annual Report 2016 125
THIRTY (30) LARGEST SHAREHOLDERS cont’das at 7 October 2016
No. NamesNo. of
Shares held %
17 AMANAHRAYA TRUSTEES BERHADPUBLIC ISLAMIC TREASURES GROwTh FUND
4,450,260 1.11
18 HII ING KWONG 3,594,360 0.90
19 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR LAU ChII hUNG
3,429,200 0.86
20 STATE FINANCE INTERNATIONAL LIMITED 3,415,940 0.85
21 CIMSEC NOMINEES (TEMPATAN) SDN BHD CIMB BANK FOR wONG SIONG SEh
3,300,000 0.82
22 ALLIANCE GROUP NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR YONG PIAw SOON
3,300,000 0.82
23 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR hII KwONG wUI
3,234,000 0.81
24 HSBC NOMINEES (TEMPATAN) SDN BHD hSBC (M) TRUSTEE BhD FOR RhB SMALL CAP OPPORTUNITY UNIT TRUST
2,236,200 0.56
25 AMANAHRAYA TRUSTEES BERHADPUBLIC ISLAMIC OPPORTUNITIES FUND
2,209,080 0.55
26 AFFIN HWANG NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR LEE SENG ChIONG
2,079,000 0.52
27 MAYBANK NOMINEES (TEMPATAN) SDN BHDETIQA INSURANCE BERhAD
2,000,000 0.50
28 KENANGA NOMINEES (ASING) SDN BHDPLEDGED SECURITIES ACCOUNT FOR BRIGhT JOY LIMITED
1,987,500 0.50
29 AMSEC NOMINEES (TEMPATAN) SDN BHDMTRUSTEE BERhAD FOR PACIFIC PEARL FUND
1,746,900 0.44
30 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR wONG SING KUOK
1,730,960 0.43
Analysis of ShareholdingsAs at 7 October 2016
Cont’d
Harbour-Link Group Berhad (592902-D)126
Analysis of WarrantholdingsAs at 7 October 2016
No. of Warrants in issue : 36,400,000
Exercise price of the Warrants : RM1.56
Expiry date of the Warrants : 3 April 2021
WARRANTHOLDINGS DISTRIBUTION as at 7 October 2016
Size of HoldingsNo. of
WarrantholdersNo. of
warrants Held % of
Issued Warrant
Less than 100 shares 14,390 111,289 0.31
100 – 1,000 shares 925 373,318 1.03
1,001 – 10,000 shares 308 1,137,305 3.12
10,001 – 100,000 shares 125 4,080,819 11.21
100,001 – below 5% of issued shares 33 10,996,584 30.21
5% and above of issued shares 6 19,700,685 54.12
15,787 36,400,000 100
DIRECTORS’ WARRANTHOLDINGSas at 7 October 2016
No. Name
Direct Interest Indirect Interest
Warrants % Warrants %
1. Yong Piaw Soon 2,250,109 6.18 19,350,576* 53.16
2. Wong Siong Seh 1,402,860 3.85 19,350,576* 53.16
3. Dato’ Toh Guan Seng 460,000 1.26 - -
4. Hii Kwong Wui 294,000 0.81 - -
5. Lee Seng Chiong 276,600 0.76 - -
6. Lau Sii Hin 150,000 0.41 - -
7. Dato’ Mohamed Salleh Bin Bajuri 81,966 0.23 - -
8. Datuk Pau Chiong Ung - - - -
9. Bin Lay Thiam - - - -
Note
* Deemed interest by virtue of him being substantial shareholder in Enricharvest Sdn. Bhd. and United Joy Sdn. Bhd.
Annual Report 2016 127
SUBSTANTIAL WARRANTHOLDERSas at 7 October 2016
No. Name
Direct Interest Indirect Interest
Warrants % Warrants %
1. Enricharvest Sdn. Bhd. 11,481,356 31.54 - -
2. United Joy Sdn. Bhd. 7,869,220 21.62 - -
3. Yong Piaw Soon 2,250,109 6.18 19,350,576* 53.16
4. Wong Siong Seh 1,402,860 3.85 19,350,576* 53.16
Note
* Deemed interest by virtue of him being substantial shareholder in Enricharvest Sdn. Bhd. and United Joy Sdn. Bhd.
THIRTY (30) LARGEST WARRANTHOLDERSas at 7 October 2016
No. NamesNo. of
Warrants held %
1 KENANGA NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR UNITED JOY SDN BhD
4,333,220 11.90
2 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR ENRIChARvEST SDN BhD
4,314,400 11.85
3 HLIB NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR ENRIChARvEST SDN BhD
3,672,940 10.09
4 UNITED JOY SDN. BHD. 2,836,000 7.79
5 ENRICHARVEST SDN. BHD. 2,594,016 7.12
6 KENANGA NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR YONG PIAw SOON
1,950,109 5.36
7 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR wONG SIONG SEh
979,500 2.69
8 KENANGA NOMINEES (ASING) SDN BHDPLEDGED SECURITIES ACCOUNT FOR STATE FINANCE INTERNATIONAL LIMITED
934,900 2.57
9 ENRICHARVEST SDN. BHD. 900,000 2.47
10 LEE POH IM 805,040 2.21
11 UNITED JOY SDN. BHD. 700,000 1.92
12 BRIGHT JOY LIMITED 473,460 1.30
13 MAYBANK NOMINEES (TEMPATAN) SDN BHD EYO SZE GUAN
467,400 1.28
14 TOH GUAN SENG 460,000 1.26
15 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR wONG SING KUOK
440,940 1.21
16 HII ING KWONG 313,220 0.86
17 STATE FINANCE INTERNATIONAL LIMITED 310,540 0.85
Analysis of WarrantholdingsAs at 7 October 2016
Cont’d
Harbour-Link Group Berhad (592902-D)128
THIRTY (30) LARGEST WARRANTHOLDERS cont’das at 7 October 2016
No. NamesNo. of
Warrants held %
18 CIMSEC NOMINEES (TEMPATAN) SDN BHD CIMB BANK FOR wONG SIONG SEh
300,000 0.82
19 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR YONG PIAw SOON
300,000 0.82
20 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR hII KwONG wUI
294,000 0.81
21 KENANGA NOMINEES (ASING) SDN BHD PLEDGED SECURITIES ACCOUNT FOR BRIGhT JOY LIMITED
290,800 0.80
22 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR wAFIY BIN ABD AZIZ
280,000 0.77
23 LIM LEONG YAO 269,200 0.74
24 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR LAU ChII hUNG
247,200 0.68
25 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR wONG KIE SING
225,660 0.62
26 AMANAHRAYA TRUSTEES BERHAD PUBLIC ISLAMIC OPPORTUNITIES FUND
196,280 0.54
27 AFFIN HWANG NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR LEE SENG ChIONG
189,000 0.52
28 GAN BEE HUANG 176,000 0.48
29 KEK TEK HUAT SENDIRIAN BERHAD 169,900 0.47
30 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR wONG SING KUOK
157,360 0.43
Analysis of WarrantholdingsAs at 7 October 2016Cont’d
Annual Report 2016 129
List of PropertiesAs at 30 June 2016
Description Tenure Existing use
Land area/Built-up
area
Approximateage of
building
Net book value
at 30 June2016
(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
9 years 5,483 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
14 years 3,460 20 February 1998
Lot 3065, Block 26, Kemena Land District, Bintulu Sarawak
Leasehold landexpiring on11.10.2066
Workshop, storage
area and warehouse
8,094.0 sq metres
14 years 455 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
14 years 1,192 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
9 years 1,461 28 January 2004
Lot 4054, Block 26, Kemena Land District, Bintulu, Sarawak
Leasehold landexpiring on08.02.2070
Storage yard rented
to 3rd party
5,798.0 sq metres
7 years 1,894 11 March 2009
Harbour Agencies (Sarawak) Sdn Bhd
Sublot 32 (Survey Lot 8099) of Parent Lots1559 and 1561, Lambir Land District,Miri, Sarawak
Leasehold land 60 years from
the date of registrationof the lease
Double-storey terraced
(corner) houseVacant
349.3 sq metres
- 585 9 March 2016
Lot 1684, Block 11, Seduan Land District, Sibu, Sarawak
Leasehold land expiring on03.12.2034
VacantAgriculture
land
9,220.0sq metres
- 535 2 October 2003
Harbour-Link Group Berhad (592902-D)130
Description Tenure Existing use
Land area/Built-up
area
Approximateage of
building
Net book value
at 30 June 2016
(RM’000)Date of
acquisition
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
10 years 541 6 February 2004
Harbour-Link Logistics Sdn Bhd
Lot 3120, Block 26, Kemena Land District, Bintulu, Sarawak
Leasehold landexpiring on16.01.2058
Warehouse and office
39,580.0 sq metres
- 14,195 26 October 2010
Lot 19, Industrial Zone 4, Kota Kinabalu Industrial ParkJalan Sepanjar, Kota Kinabalu, Sabah
Leasehold landexpiring on31.12.2098
Workshop andstorage yard
12,205.8 sq metres
9 years 4,704 11 July 2005
Eastern Soldar Engineering & Construction Sdn Bhd
Lot No. 21667, Pekan of Bukit Kepayang, District of Seremban, Negeri Sembilan
Freehold Factory and office
10,219.0sq metres
22 years 4,327 10 November 1992
PT No. 11643, H.S.(D): 215207Bandar Sri SendayanSeremban, Negeri Sembilan
Freehold Industrial Vacant land
28,329.0 sq metres
- 8,311 22 May 2013
Sarawak Edible Oils Sdn Bhd
Lot 1218, Block 20, Kemena Land District, Bintulu, Sarawak
Leasehold landexpiring on31.10.2071
Vacant/ Industrial Land
397,041.5sq metres
- 44,305 26 April 2010
Lot 7 (2581), Block 1,Lot 1218, Block 20, Kemena Land District, Bintulu, Sarawak
Leasehold landTenure 60 years
Office 222.8 sq metres
- 1,874 26 April 2010
Harbour Services Corporation Sdn Bhd
PN 5048, Lot 205310934 at Kg. Bukit Kalam, Wilayah Persekutuan Labuan
Leasehold land expiring on13.01.2056
Vacant Land 17,377.2sq metres
- 4,171 6 January 2015
List of PropertiesAs at 30 June 2016Cont’d
Annual Report 2016 131
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the Fourteenth Annual General Meeting (“AGM”) of the Company will be held at Millennium Ballroom 3, Parkcity Everly Hotel, Jalan Tun Razak, 97000 Bintulu, Sarawak on Tuesday, 22 November 2016 at 9.00 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 2016 together with the Directors’ and Auditors’ Reports thereon.
Please refer to Note A
2. To approve a first and final single tier dividend of 2 sen per ordinary share of RM0.50 each for the financial year ended 30 June 2016.
(Resolution 1)
3. To approve the Directors’ fees for the financial year ended 30 June 2016. (Resolution 2)
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 (Resolution 3)(ii) Mr. Lee Seng Chiong (Resolution 4)(iii) Mr. Lau Sii Hin (Resolution 5)
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.
(Resolution 6)
AS SPECIAL BUSINESSTo consider, and if thought fit, to pass the following as ordinary resolutions:-
6. RETENTION OF INDEPENDENT DIRECTOR (Resolution 7)
“THAT subject to passing of Ordinary Resolution 3, Dato’ Mohamed Salleh Bin Bajuri who has served the Board for more than 9 years be retained as Independent Non-Executive Chairman of the Company.”
7. AUTHORITY TO ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965 (Resolution 8)
“THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby empowered to issue shares in the Company, at any time until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issued does not exceed ten per centum (10%) of the issued share capital of the Company at the time of submission to the authority and THAT the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad and THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.”
8. PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE AND PROPOSED NEW SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (“PROPOSED SHAREHOLDERS’ MANDATE”)
(Resolution 9)
“THAT, the mandate granted by the shareholders of the Company at the Thirteenth AGM held on 23 November 2015 pursuant to paragraph 10.09 of the Listing Requirements of Bursa Malaysia Securities Berhad, authorizing the Company and its subsidiary (“HLG Group”) to enter into recurrent related party transactions of a revenue or trading nature as set out in Section 2.3 (i) of the Circular to Shareholders dated 31 October 2016 with the related parties mentioned therein which are necessary for HLG Group’s day-to-day operations, be and is hereby renewed.
THAT approval be and is hereby given for HLG to enter into recurrent related party transactions of a revenue or trading nature as set out in Section 2.3 (ii) of the Circular to Shareholders, which are necessary for HLG Group’s day-to-day operations.
Harbour-Link Group Berhad (592902-D)132
Notice of Annual General MeetingCont’d
THAT the HLG Group be and is hereby authorised to enter into the recurrent transactions with the related parties mentioned therein provided that:-
a) the transactions are in the ordinary course of business and on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders of the Company; and
b) the disclosure will be made in the Annual Report of the breakdown of the aggregate value of the Recurrent Related Party Transactions conducted pursuant to the Proposed Shareholders’ Mandate during the financial year based on the type of Recurrent Related Party Transactions made, the names of the related parties involved in each type of Recurrent Related Party Transactions and their relationships with the Company.
THAT authority conferred shall continue to be in force until:-
i) the conclusion of the next AGM of the Company following the forthcoming Fourteenth AGM at which the Proposed Shareholders’ Mandate is approved, at which time it will lapse, unless by a resolution passed at the AGM, the mandate is again renewed;
ii) the expiration of the period within which the next AGM of the Company is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (the “Act”) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or
iii) revoked or varied by resolution passed by the shareholders in general meeting,
whichever is earlier;
AND THAT the Directors of the Company be and is hereby authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the Proposed Shareholders’ Mandate.”
9. To transact any other business which may properly be transacted at an AGM for which due notice shall have been given.
NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT Subject to the approval of the shareholders, a first and final single-tier dividend of 2 sen per ordinary share of RM0.50 each for the financial year ended 30 June 2016 will be paid on 19 December 2016 to Depositors registered in the Record of Depositors at the close of business at 5.00 p.m. on 30 November 2016.
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 30 November 2016 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 SecretariesSarawakDated: 31 October 2016
Annual Report 2016 133
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 15 November 2016. Only a depositor whose name appears on the Record of Depositors as at 15 November 2016 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 but not more than two (2) proxies 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.
Explanatory note on Special Business:-
i) Ordinary Resolution 7 – Retention of Independent Director
YBhg Dato’ Mohamed Salleh Bin Bajuri has served the Board for a consecutive term of more than 9 years. The Nomination Committee has assessed his independence and has based on the following attributes recommended him to continue as Independent Non-Executive Chairman:-
• havein-depthunderstandingofthebusinessoftheGroupandcouldprovidetheBoardvaluableadviceandinsight;• activelyparticipateinBoarddeliberationanddecisionmakinginanobjectivemanner;and• upholdsindependentjudgementandtherearenocircumstancesandrelationshipsthatmayhamperhisindependence.
ii) Ordinary Resolution 8 – Authority to issue shares pursuant to Section 132D of the Companies Act, 1965
The effect of the Ordinary Resolution if passed, will give the flexibility and authority to the Directors of the Company, from the date of the forthcoming Fourteenth 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 Fourteenth 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 Fourteenth 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 2017.
During the financial year ended 30 June 2016, 36,400,000 new ordinary shares of RM0.50 each were issued pursuant to the Bonus Issue.
iii) Ordinary Resolution 9 – Proposed Shareholders’ Mandate
The explanatory note on Ordinary Resolution 9 is set out in the Circular to Shareholders dated 31 October 2016.
Notice of Annual General MeetingCont’d
Harbour-Link Group Berhad (592902-D)134
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No. of ordinary shares heldHARBOUR-LINK GROUP BERHAD(Company No: 592902-D)(Incorporated in Malaysia)
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 Fourteenth Annual General Meeting of the Company to be held at Millennium Ballroom 3, Parkcity Everly Hotel, Jalan Tun Razak, 97000 Bintulu, Sarawak on Tuesday, 22 November 2016 at 9.00 a.m. My/our proxy/proxies is/are to vote as indicated below:-
ORDINARY RESOLUTIONSFIRST PROXY SECOND PROXY
FOR AGAINST FOR AGAINST1. First and Final Single tier dividend2. Directors’ fees3. Re-election of Dato’ Mohamed Salleh Bin Bajuri 4. Re-election of Mr. Lee Seng Chiong 5. Re-election of Mr. Lau Sii Hin 6. Re-appointment of Messrs Ernst & Young7. Retention of Dato’ Mohamed Salleh Bin Bajuri as Independent Director 8. Authority to issue shares 9. Proposed Renewal of Shareholders’ Mandate and Proposed New
Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature.
(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. All votings will be conducted by way of poll. )
Dated this day of 2016 Signature/Common Seal
Notes:-
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 15 November 2016. Only a depositor whose name appears on the Record of Depositors as at 15 November 2016 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.
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, MalaysiaTel : +60-86-318 998Fax : +60-86-332 429Email : [email protected] : www.harbour.com.my
BRUNEITel : +(673) 2342 227 Fax : +(673) 2342 226Email : [email protected]
GUANG ZHOU, CHINATel : +(86-20) 8760 3907 Fax : +(86-20) 8760 3910Email : [email protected]
HONG KONGTel : +(852) 2850 6081 Fax : +(852) 2850 6298Email : [email protected]
JOHOR BAHRU Tel : +60-7-3562 800 Fax : +60-7-3532 810Email : [email protected]
KLIA (AIR FREIGHT)Tel : +60-3-8778 8918 Fax : +60-3-8778 8912Email : [email protected]
KOTA KINABALUTel : +60-88-267 225 Fax : +60-88-261 225Email : [email protected]
KOTA KINABALU (CONTAINER LINER SERVICES)Tel : +60-88-233 691 Fax : +60-88-232 692Email : [email protected]
KOTA KINABALU (CONTAINER DEPOT)Tel : +60-88-492 790 Fax : +60-88-492 775Email : ro�[email protected]
KUCHINGTel : +60-82-341 212 Fax : +60-82-341 313Email : [email protected]
KUCHING (CONTAINER LINER SERVICES)Tel : +60-82-339 600 Fax : +60-82-480 600Email : [email protected]
LABUAN Tel : +60-87-431 699Fax : +60-87-427 699Email : [email protected]
MIRITel : +60-85-420 225 Fax : +60-85-420 270Email : [email protected]
PENANGTel : +60-4-3249 453 Fax : +60-4-3249 454Email : [email protected]
PORT KLANGTel : +60-3-3001 3018 Fax : +60-3-3166 7013Email : [email protected]
PORT KLANG (CONTAINER LINER SERVICES)Tel : +60-3-3325 2010 Fax : +60-3-3325 2011Email : [email protected]
SANDAKANTel : +60-89-225 561 Fax : +60-89-225 563Email : [email protected]
SEREMBAN (ENGINEERING DIVISION)Tel : +60-6-7646 699 Fax : +60-6-7627 500Email : [email protected]
SIBUTel : +60-84-341 558 Fax : +60-84-341 557Email : [email protected]
SINGAPORE (CONTAINER LINER SERVICES)Tel : +65-6224 6828 Fax : +65-6224 3834Email : [email protected]
TAWAUTel : +60-89-752 311 Fax : +60-89-752 313Email : [email protected]
TG. KIDURONGTel : +60-86-253 811 Fax : +60-86-251 676Email : [email protected]
HARBOUR-LINK GROUP BERHADHARBOUR LINK GROUP BERHAD (592902-D)
Wisma Harbour, Parkcity Commerce Square,Jalan Tun Ahmad Zaidi, 97000 Bintulu, Sarawak, Malaysia.
Tel: 086-318 998Fax: 086-332 429
E-mail: [email protected]
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