ANNUAL REPORT 2019 - Scomi · 2019. 11. 7. · Annual Reort 2019 5 1. Listed on the Bursa Malaysia Securities Berhad (Kuala Lumpur Stock Exchange). 2. Includes 0.01% held by Scomi

SCOMI GROUP BHDANNUAL REPORT

2019

002 Key Financial Indicators

003 Key Financial Highlights

004 Corporate Structure

006 Corporate Statement

007 Corporate Information

008 Board of Directors

012 Key Senior Management

014 Management Discussion & Analysis

020 Sustainability Statement

022 Corporate Governance Overview Statement

037 Statement on Risk Management & Internal Control

040 Audit & Risk Management Committee Report

044 Additional Information

046 Statement of Directors’ Responsibility

047 Financial Statements

225 Analysis of Shareholdings

229 Analysis of Warrant Holdings

231 List of Properties

232 Corporate Directory

234 Notice of Annual General Meeting

239 Form of Proxy

Contents

2 Scomi Group Bhd

20191,2 20182 20173 20163 20153

RM’000 RM’000 RM’000 RM’000 RM’000 (Restated)

Continuing operationsTurnover 643,502 613,957 826,892 1,383,332 1,798,572 EBITDA (142,270) (114,613) 17,666 199,531 257,911 Depreciation and amortization 78,021 80,839 104,962 110,032 97,524 Finance costs 23,165 23,943 61,107 63,706 56,480 Share of (loss)/profit in associates (2,299) - - 495 (124)Share of (loss)/profit from joint ventures (3,866) (36,663) (24,208) (10,628) 1,117 (Loss)/Profit before tax (243,453) (219,395) (148,403) 25,793 103,907 Taxation (20,883) (13,058) (17,248) (13,889) (37,535) (Loss)/Profit from continuing operations (264,336) (232,453) (165,651) 11,904 66,372 Loss from discontinued operations (161,633) (99,629) - - (71) (Loss)/Profit for the year (425,969) (332,082)) (165,651) 11,904 66,301 Non-controlling interest 29,798 82,108 58,246 10,632 (22,045) (Loss)/Profit attributed to owners of the Company (396,171) (249,974) (107,405) 22,536 44,256 Numbers of shares in issue (‘000) 1,093,907 1,093,907 1,917,510 1,917,510 1,568,637Weighted average number of shares assumed in issue (‘000) 1,093,907 1,092,657 1,903,083 1,903,083 1,554,210 Weighted average number of shares used to compute diluted earnings per share (‘000) 1,093,907 1,092,657 1,903,083 1,903,083 1,903,083

Basic - Net (Loss)/Earning Per Share (sen)** (36.22) (22.88) (5.64) 1.18 2.85

Fully diluted - Net (Loss)/Earning Per Share (sen)@ (36.22) (22.88) (5.64) 1.18 2.33

Notes

**Based on profit/(loss) attributed to owner of the Company and the weighted average number of shares assumed to be in issue in the respective period/year.@Based on profit/(loss) attributed to owner of the Company and the weighted average number of shares assumed to be in issue in the respective period/year after taking into consideration the dilutive effect of convertible bonds.

1 The results for the financial period ended 30 June 2019 is for a period of fifteen (15) months.

2 The results for the continuing operations for the financial period ended 30 June 2019 and financial year ended 31 March 2018 excludes the Transport Solutions segment as it was deconsolidated as at 30 June 2019.

3 The results for the continuing operations for the financial years ended 31 March 2017, 31 March 2016 and 31 March 2015 includes the Transport Solutions segment.

Key Financial Indicators

Annual Report 2019 3

Turnover (RM Million)

20191

15 Months

20181

12 Months (Restated)

20172

12 Months

20162

12 Months

20152

12 Months

(Loss)/Profit Before Tax (RM Million)

20162

12 Months

20152

12 Months

25.8

103.9

20191

15 Months

20181

12 Months (Restated)

20172

12 Months

(Loss)/Profit attributed to owners of the Company(RM Million)

20162

12 Months

20152

12 Months

22.5

(396.1)

44.3

20191

15 Months

20181

12 Months

20172

12 Months

1,383.3

614.0

826.9

1,798.6

(243.5)

Key Financial Highlights

643.5

(148.4)

(219.4)

(107.4)

(250.0)

Total Assets(RM Million)

8262018 : 2,045

Net Tangible Assets

(RM Million)

(127)2018 : 85

Shareholder’sFund

(RM Million)

(24)2018 : 362

Basic Loss per share

(sen)

(36.22)2018 : (22.88)

1 The results for the continuing operations for the financial period ended 30 June 2019 and financial year ended 31 March 2018 excludes the Transport Solutions segment as it was deconsolidated as at 30 June 2019.

2 The results for the continuing operations for the financial years ended 31 March 2017, 31 March 2016 and 31 March 2015 includes the Transport Solutions segment.

4 Scomi Group Bhd

Scomi OiltoolsBermuda Limited

(Bermuda)

SCOMI GROUP BHD1

Scomi EnergyServices Bhd1

Scomi InternationalPrivate Limited

(Singapore)

Scomi SolutionsSdn Bhd Gemini Sprint

Sdn Bhd

Trans Advantage

Sdn Bhd

Scomi MarineServices Pte Ltd

(Singapore)

King Bridge Enterprises

Limited (BVI)

PT Rig TendersIndonesia Tbk6

(Indonesia)

Rig Tenders Marine Pte Ltd

(Singapore)

Rig TendersOshore Pte Ltd

(Singapore)

CH ShipManagement

Pte Ltd(Singapore)

Grundtvig Marine Pte Ltd

(Singapore)

CH Logistics Pte Ltd

(Singapore)

Sosma (B) Sdn Bhd*

(Brunei)

PT Batuah Abadi Lines

(Indonesia)

Scomi SosmaSdn Bhd

Ophir Production

Sdn Bhd

Scomi D & PSdn Bhd

Marineco Limited

(Labuan)

Emerald LogisticsSdn Bhd

TransenergyShipping Pte Ltd

(Labuan)

Scomi KMCSdn Bhd

Scomi Oiltools(Thailand) Ltd7

(Thailand)

PT Scomi Oiltools(Indonesia)

PT Inti Jatam Pura

(Indonesia)

Scomi Oiltools(RUS) LLC(Russia)

Southern PetroleumTransportation Joint

Stock Company (Vietnam)

Scomi EcosolveLimited

(BVI)

Scomi ChemicalsSdn Bhd

Scomi OBMTerminal Sdn Bhd

Global Learningand Development

Sdn Bhd

Scomi EnergySdn Bhd

Scomi EnviroSdn Bhd

Scomi SGSBSdn Bhd

Strong EleganceSdn Bhd

Scomi PrecisionEngineering Sdn Bhd

Scomi OiltoolsOverseas (M)

Limited(Mauritius)

KMC OiltoolsAlgerie EURL

(Algeria)

Scomi OiltoolsEgypt SAE3,4

(Egypt)

Scomi Oiltools deMexico S de RL de

CV5*(Mexico)

Scomi Oiltools(Europe) Ltd(Scotland)

Scomi Oiltools Inc(Texas, USA)

Oilfield Services deMexico S de RL de

CV5*(Mexico)

65.65%2

51%

49%

80.54%

70% 50%

95%

95%

95%

30%

51%

30%

51% 13.84%

48% 4%

49% 50%

Corporate Structure as at 25 October 2019

PT Multi Jaya Persada

(Indonesia)

95%


1. Listed on the Bursa Malaysia Securities Berhad (Kuala Lumpur Stock Exchange).2. Includes 0.01% held by Scomi Energy Sdn Bhd.3 Scomi Oiltools Bermuda Limited holds on trust for Scomi Oilfield Limited pursuant to a trust deed dated 8 March 2013.4. Includes 1 share each held by Scomi Oiltools Ltd and Scomi Oiltools (Cayman) Ltd.5. Includes 1 share held by an individual.6. Listed on the Indonesia Stock Exchange.7. Includes 1 Class A share each held by Scomi Oiltools Sdn Bhd and Scomi Oiltools (Cayman) Ltd.8. Includes 1 share held by Scomi Oilfield Limited.9. Includes 1 quota (similar to share in other jurisdictions) held by Scomi Rail Bhd.10. Includes 0.0004% held by Scomi Rail Bhd.11. In Winding-Up.12. In Judicial Management.

Notes:* Except as otherwise expressly stated, all companies in this corporate structure are incorporated in Malaysia.* Except as otherwise expressly stated, all companies in this corporate structure are wholly owned by their respective holding companies.

Scomi EngineeringBhd12

TransenergyShipping

ManagementSdn Bhd

Scomi OiltoolsSdn Bhd

Scomi PlatinumSdn Bhd

Scomi Oiltools (S) Pte Ltd

(Singapore)

Scomi Equipment Inc.

(Texas, USA)

KMC Oiltools India Pte Ltd8

(India)

Global OilfieldProducts Sdn Bhd

Scomi OiltoolsPty Ltd

(Australia)

KMCOB CapitalBerhad

Scomi OiltoolsOman LLC

(Oman)

Vibratherm Limited

(England & Wales)

Wasco Oil ServiceCompany Nigeria

Limited(Nigeria)

Midgard Oilfield Services Ltd (Cayman)

Scomi Oiltools(Cayman) Ltd

(Cayman Islands)

Scomi Oiltools(Africa) Limited

(Cayman Islands)

Scomi OilfieldLimited

(Bermuda)

Scomi ArgentinaSociedad Anonima

(Argentina)

Scomi TransitProjects Brazil

Sdn Bhd

Urban TransitServicos DoBrasil LTDA9

(Brazil)

ScomiTransportation

Systems Sdn Bhd

Scomi RailBhd11

Scomi CoachSdn Bhd

Scomi CoachMarketing Sdn Bhd

Scomi SpecialVehicles

Sdn Bhd11

Scomi TradingSdn Bhd

Urban TransitPrivate Limited10

(India)

Quark Fabricação DeEquipamentos FerroviåriosE Serviços De Engenharia

LTDA (Brazil)

Scomi TransitProjects Brazil(Sao Paulo) Sdn Bhd12

Scomi TransitProjects Sdn Bhd

100%

50%

50% 25%

60%

51%

70%

80%

KMC Oiltools BV* (Netherlands)

Energy Services Division

Oilfield Services (Western) Division

Transport Solutions Division

Key:

49%

50%

6 Scomi Group Bhd

With a presence in 19 countries, the Scomi group of companies is a global technology enterprise in the energy and logistics industries.

We aim to realise potential for our stakeholders.

Our customers:

We will develop and offer customers innovative and competitive products and services that help them grow their business.

Our shareholders:

We are committed to providing long-term superior returns to our shareholders.

Our people:

We aim to provide our employees with developmental opportunities so they can succeed on personal and professional levels.

Our suppliers:

We will treat our suppliers as our partners in the mutual interest of business growth.

Our society / environment:

As a good corporate citizen, we will give back to the communities we operate in, worldwide.

We are a global technology enterprise.

Our global reach, capabilities and talent provide us with the necessary resources to develop and own new technology in all areas of our business.

We focus on Energy & Logistics.

All our businesses are focused on the Energy and Logistics sectors with the ability to compete globally. All of us in the Scomi family should remember that any new initiatives we undertake will focus on these areas of business.

We provide innovative solutions.

We innovate to respond to an evolving environment. Our products and operations meet today’s needs while anticipating tomorrow’s. We are committed to developing competitive and innovative solutions to create efficiency, add value and grow with our customers to shape our future.

Corporate Statement


BOARD OF DIRECTORS

Dato’ Sreesanthan A/L EliathambyIndependent Non-Executive Director

Liew WillipIndependent Non-Executive Director

Dato’ Mohd Shahrom Bin MohamadIndependent Non-Executive Director

Amirul Azhar Bin BaharomIndependent Non-Executive Director

Foong Choong HongNon-Independent Non-Executive Director

Lee Chun FaiNon-Independent Non-Executive Director

Shah Hakim @ Shahzanim Bin ZainNon-Independent Non-Executive Director

Sammy Tse Kwok FaiExecutive Director/Chief Executive Officer

AUDIT AND RISK MANAGEMENT COMMITTEELiew Willip (Chairman)Dato’ Sreesanthan A/L EliathambyFoong Choong Hong

NOMINATION AND REMUNERATION COMMITTEEDato’ Mohd Shahrom Bin Mohamad (Chairman)Lee Chun FaiLiew Willip

REGISTERED OFFICELevel 15, Menara TSR, No. 12, Jalan PJU 7/3Mutiara Damansara, 47810 Petaling JayaSelangor Darul Ehsan, MalaysiaTel : 03-7717 3000Fax : 03-7728 5258

ADMINISTRATIVE AND CORRESPONDENCE ADDRESSLevel 15, Menara TSR, No. 12, Jalan PJU 7/3Mutiara Damansara, 47810 Petaling JayaSelangor Darul Ehsan, MalaysiaTel : 03-7717 3000Fax : 03-7728 5258Website : www.scomigroup.com.myEmail : [email protected]

REGISTRARBoardroom Share Registrars Sdn Bhd(formerly known as Symphony Share Registrars Sdn Bhd)11th Floor, Menara SymphonyNo. 5, Jalan Prof Khoo Kay KimSeksyen 13, 46200 Petaling JayaSelangor Darul Ehsan, MalaysiaTel : +603 7890 4700Fax : +603 7890 4670Email : [email protected]

COMPANY SECRETARYSim Bee Sin (MAICSA 7056323)Tai Yit Chan (MAICSA 7009143)Wong Siew Yeen (MAICSA 7018749)

AUDITORSKPMG PLT (LLP0010081-LCA & AF 0758)Chartered AccountantsLevel 10, KPMG Tower, 8, First Avenue, Bandar Utama47800 Petaling Jaya, Selangor Darul Ehsan, Malaysia

STOCK EXCHANGE LISTINGMain Market of Bursa Malaysia Securities BerhadStock Name: SCOMIStock Code: 7158

INVESTOR RELATIONSZubaidi Bin HarunLevel 15, Menara TSR, No. 12, Jalan PJU 7/3Mutiara Damansara, 47810 Petaling JayaSelangor Darul Ehsan, MalaysiaTel : 03-7717 3000Fax : 03-7728 5258Email : [email protected]

PRINCIPAL BANKERS

Malayan Banking BerhadLevel 37, 100 Menara Maybank, Jalan Tun Perak50050 Kuala Lumpur, Malaysia

OCBC Bank (Malaysia) BerhadMenara OCBC, 18 Jalan Tun Perak50050 Kuala Lumpur, Malaysia

Hong Leong Bank BerhadLevel 1, Wisma Hong Leong18 Jalan Perak 50450 Kuala Lumpur, Malaysia

CIMB Bank BerhadLevel 20, Menara CIMB, Jalan Stesen Sentral, KL Sentral50470 Kuala Lumpur, Malaysia

PT Bank Maybank Indonesia TbkSentral Senayan 3, Jl. Asia Afrika No. 8Senayang Gelora Bung KarnoJakarta 10270, Indonesia

PT Bank Mandiri (Persero) TbkPlaza Mandiri, Jl. Jend. Gatot Subroto Kav.36-38Jakarta 12190, Indonesia

ICICI Bank Limited9, Raffles Place, #50-01, Republic PlazaSingapore, 048619

Corporate Information

8 Scomi Group Bhd

Dato’ Sreesanthan, aged 59, a Malaysian, is an Independent Non-Executive Director of the Company and was appointed to the Board on 18 April 2006.

Dato’ Sreesanthan, is an Advocate & Solicitor and a Consultant with the legal firm of Messrs Jerald Gomez & Associates. He obtained his undergraduate law degree from the University of Malaya and his post graduate degree in law from the University of Oxford, United Kingdom.

He was formerly a Partner with the legal firm of Messrs Zain & Co, Messrs Zul Rafique & Partners and Messrs Kadir Andri & Partners. Dato’ Sreesanthan is on the Disciplinary Committee Panel of the Advocates and Solicitors’ Disciplinary Board.

Dato’ Sreesanthan is a member of the Audit and Risk Management Committee of the Board. He attended 10 out of the 11 Board Meetings held during the financial period ended 30 June 2019.

Dato’ Sreesanthan A/L EliathambyIndependent Non-Executive Director

Mr Liew, 52, a Malaysian, was appointed to the Board as an Independent Non- Executive Director on 3 January 2017.

Mr Liew is a commerce graduate of the University of Melbourne and a Chartered Financial Analyst. Upon graduation, Mr Liew worked with international accounting firm KPMG as an auditor.

Subsequently, he joined a local stockbroking company as an investment analyst, and later, moved to the Kuala Lumpur office of an international investment bank, Barclays deZoete Wedd, where he was the senior equity analyst. In 1996, Mr Liew was hired to set up the Malaysian equity research operations of another international investment bank, NatWest Markets, where he was the Director and Head of Research. In 1998, Mr Liew joined the national asset management company, Pengurusan Danaharta Nasional Berhad (“Danaharta”), where he was among the pioneer staff members. At Danaharta, Mr Liew was the Assistant General Manager/Head of Research unit (Corporate Services Division).

After leaving Danaharta in 2000, Mr Liew co-founded an independent investment advisory company, and a consulting company that specialized in financial and investor communications. Mr Liew is currently the Managing Director of a company providing consulting services.

Mr Liew is a Chairman of the Audit and Risk Management Committee and Nomination and Remuneration Committee of the Board.

He attended all 11 Board meetings held during the financial period ended 30 June 2019.

Liew WillipIndependent Non-Executive Director

Board of Directors


Dato’ Mohd Shahrom, 67, male, Malaysian, was appointed to the Board as an Independent Non-Executive Director on 4 September 2019.

Dato’ Mohd Shahrom holds a Bachelor of Law (Honours) degree from University Teknologi Mara. He is a Member of the Chartered Institute of Arbitrators (MCIArb) and Fellow of Asian Institute of Alternative Dispute Resolution (FAiADR).

He started his career as an army officer cadet in 1974 and saw service in the Malaysian Military Police Corp from 1975 to 1986. He read Law as an army scholar. Upon admission to the Bar in 1987, he joined Zaid Ibrahim & Co, Advocates & Solicitors as partner. In 1990, he took up the position as Managing Partner of Shahrom & Co, Advocates and Solicitors before leaving in 1991 and co-founded Abu Talib Shahrom, Advocates & Solicitors. Since 3 June 2019, he is the Managing Partner of Shahrom & Co. He has been involved in several high profile strategic agreements, contracts and projects in the past 3 decades.

He also holds directorship in Pharmaniaga Berhad.

Dato’ Mohd Shahrom is a Chairman of the Nomination and Remuneration Committee of the Board. He did not attend any of the Board Meetings held during the financial period ended 30 June 2019 as he was appointed after the financial period end.

Dato’ Mohd Shahrom Bin MohamadIndependent Non-Executive Director

En Amirul Azhar, 45, male, Malaysian, was appointed to the Board as an Independent Non-Executive Director on 4 September 2019.

En Amirul Azhar graduated with a LLB Hons from Staffordshire University, United Kingdom in 1996.

He began his career as a Research Analyst with Cazenove & Co and had been in the financial services industry for a number of years where he was amongst others, with the Securities Commission, BDO Capital Consultants Sdn Bhd and KAF Fund Management Sdn Bhd.

He had also previously served as the Group Managing Director and CEO of Vastalux Energy Berhad and Acting Group Chief Executive Officer of Avillion Berhad.

His directorships in other public companies include Independent Non-Executive Chairman of UMS Neiken Group Berhad and Independent Non-Executive Director of Rohas Tecnic Berhad. He had also previously sat on the boards of DWL Resources Berhad, Avillion Berhad, Admiral Marina Berhad and Vastalux Energy Berhad.

He did not attend any of the Board Meetings held during the financial period ended 30 June 2019 as he was appointed after the financial period end.

Amirul Azhar Bin BaharomIndependent Non-Executive Director

Board of Directors

10 Scomi Group Bhd

Mr Foong, aged 58, a Malaysian, is a Non-Independent Non-Executive Director of the Company and was appointed to the Board on 17 March 2003.

Mr Foong graduated from Middlesex University (UK) in Management Studies majoring in Finance and is a Fellow of the Chartered Management Institute (UK) (FCMI), and a Certified Financial Planner (CFP).

Having completed his college and undergraduate studies in the United Kingdom, he joined British merchant bank Robert Fleming Merchant Bank as an Economist and Investment specialist, specialising in portfolio pension fund investments in Far East public equities. In 1988 he then became the Managing Director for an international procurement house based in the Far East, a company of British conglomerate – Associated British Foods Plc (ABF Plc) building supply channels between Asian producers and developed markets around the world.

Since then he has been heading an international trade & investment company Asian Asset Group (AAG). He is involved with the Food industry, Oil & Gas industry, Islamic Finance industry, Healthcare and Engineering technology in the O&G and Petrochemical industry.

He holds board positions and senior positions in an Advisory role working with MNCs to plan and oversee corporate development activities in Asia. He is a member on the Economic Policy, Trade & Investment Council at the Malaysian International Chamber of Commerce International (MICCI).

Mr. Foong is also a Regional board member (Director) of Chartered Management Institute (Malaysia) (CMI Malaysia)

He is a member of the Audit and Risk Management Committee of the Board. He attended all of the 11 Board Meetings held during the financial period ended 30 June 2019.

Foong Choong HongNon-Independent Non-Executive Director

Mr Lee, 48, a Malaysian, was appointed to the Board as Non-Independent Non-Executive Director on 31 May 2015.

He holds a Bachelor of Accountancy (Honours) degree from University Utara Malaysia in 1995 and a Master of Business Administration from Northwestern University (Kellogg) and The Hong Kong University of Science & Technology in 2012.

He started his career with a public accounting firm. In October 1995, he joined Road Builder (M) Holdings Bhd (“RBH Group”) and was the Head of Corporate Services Division of RBH Group prior to the acquisition of RBH Group by IJM Corporation Berhad (“IJM”) in 2007. Currently, he is the Deputy Chief Executive Officer and Deputy Managing Director of IJM and also Head of Infrastructure Division and Head of Corporate Strategy and Investment of the IJM Group. Previously, he has served as the Deputy Chief Financial Officer.

His directorships in other public listed companies include Scomi Energy Services Bhd, IJM Corporation Berhad and WCE Holdings Berhad. His directorships in public companies include IJM Land Berhad, Road Builder (M) Holdings Bhd and Sebana Golf & Marina Resort Berhad.

He is a member of the Nomination and Remuneration Committee of the Board. He attended all of the 11 Board Meetings held during the financial period ended 30 June 2019.

Lee Chun FaiNon-Independent Non-Executive Director

Board of Directors


Notes:

Save as disclosed, none of the Directors have:

• any family relationship with any Director and/or Major Shareholder of Scomi Group Bhd;

• any conflict of interest or any personal interest in any business arrangement, involving Scomi Group Bhd;

• any conviction for offences within the past five (5) years (other than traffic offences, if any); and

• any public sanction or penalty imposed by the relevant regulated bodies during the financial period ended 30 June 2019.

Board of Directors

Encik Shah Hakim, aged 54, a Malaysian, is the Non-Independent Non-Executive Director of the Company. He was appointed to the Board as Non-Independent Executive Director of the Company on 3 March 2003 and was re-designated as Non-Independent Non-Executive Director on 2 August 2018 upon his resignation as the Chief Executive Officer of the Company.

Encik Shah Hakim started his career as an auditor with Ernst & Young and was subsequently promoted as Consulting Manager, responsible for servicing large corporations. He went on to be appointed as Executive Director of a regional packaging manufacturer in 1992, with direct operational responsibility. He currently sits on the Board of listed company Scomi Energy Services Bhd. He also sits on the Board of public companies Scomi Engineering Bhd and KMCOB Capital Berhad.

He attended all of the 11 Board Meetings held during the financial period ended 30 June 2019.

Shah Hakim @ Shahzanim Bin ZainNon-Independent Non-Executive Director


Mr Tse, 56, male, a British, is an Executive Director and Chief Executive Officer of the Company and was appointed to the Board on 24 July 2018.

Mr Tse holds a Bachelor of Arts (Hon) in Geography and Geology from the University of Hong Kong (1986) and a Master of Business Management from the Chinese University of Hong Kong (1995). He is a Fellow Member of The Institute of Directors, United Kingdom and the Hong Kong Institute of Directors.

He started his career in IFS (HK) Limited in 1990 before joining the Hong Kong Telecom Group (now known as PCCW Limited) in 1992 where he held various positions culminating in the position as General Manager of Fixed Mobile Integration. He then joined Hutchinson Telecom as Director of International and Multimedia Services in 1998. In 2000, he was promoted as the Chief Executive Officer of Hutchinson E-commerce Limited. In 2004, he took up the position as Chief Operating Officer of entities within the South China Group before leaving in 2007 to take up the position as Executive Director and Chief Executive Officer of EPI Holdings Limited, a company listed on the Main Board of the Hong Kong Stock Exchange. He resigned from these positions in 2016 but continues to provide consultancy services to this company.

He also holds directorship in Scomi Energy Services Bhd.

He attended all of the 9 Board Meetings held from the date of his appointment up to the financial year ended 30 June 2019.

Sammy Tse Kwok FaiExecutive Director and Chief Executive Officer

12 Scomi Group Bhd

Chacko KunjuvaruChief Financial OfficerScomi Group Bhd

Chacko Kunjuvaru, male, aged 42, Malaysian, has more than 18 years of experience in Finance and Accounting roles, having worked with some of the larger engineering and Oil & Gas companies in Malaysia.

He joined Scomi Group Bhd in 2010 as Senior Manager Finance. He then joined Scomi Energy Services Bhd (“SESB”) as General Manager, Finance and Accounts in 2012. In 2015 he was appointed as Group Financial Controller for SESB and subsequently as its Chief Financial Officer.

On 1 March 2018, he assumed his current role as the Chief Financial Officer of Scomi Group Bhd.

Sammy Tse Kwok FaiChief Executive OfficerScomi Group Bhd

Mr Tse, male, aged 56, a British, is the Chief Executive Officer of the Company and was appointed on 2 August 2018.

Mr Tse holds a Bachelor of Arts (Hon) in Geography and Geology from the University of Hong Kong (1986) and a Master of Business Management from the Chinese University of Hong Kong (1995). He is a Fellow Member of The Institute of Directors, United Kingdom and the Hong Kong Institute of Directors.

He started his career in IFS (HK) Limited in 1990 before joining the Hong Kong Telecom Group (now known as PCCW Limited) in 1992 where he held various positions culminating in the position as General Manager of Fixed Mobile Integration. He then joined Hutchinson Telecom as Director of International and Multimedia Services in 1998. In 2000, he was promoted as the Chief Executive Officer of Hutchinson E-commerce Limited. In 2004, he took up the position as Chief Operating Officer of entities within the South China Group before leaving in 2007 to take up the position as Executive Director and Chief Executive Officer of EPI Holdings Limited, a company listed on the Main Board of the Hong Kong Stock Exchange. He resigned from these positions in 2016 but continues to provide consultancy services to this company.

Key Senior Management


Key Senior Management

Sharifah Norizan ShahabudinHead, Legal & Corporate SecretarialScomi Group Bhd

Sharifah Norizan Shahabudin, female, aged 53, Malaysian, is the Head, Legal & Corporate Secretarial for Scomi Group Bhd. She has over 20 years of experience in the practice of intellectual property, corporate and commercial and securities law. Prior to joining the in-house legal and secretarial team of Scomi in 2006, Norizan had previously been in private practice in the firms of Shearn Delamore & Co., Zaid Ibrahim & Co. and Azra & Associates.

Norizan’s experience includes a broad range of corporate and commercial advisory work, which has included mergers and acquisitions, take-overs, reverse take-overs, corporate restructurings, cross-border transactions, joint ventures and government tenders and contracts. She has also been involved in the listings of companies on Bursa Malaysia.

Norizan holds a Bachelor Degree in Law from University of Lancaster, U.K. and was admitted as an advocate and solicitor to the High Court of Malaya in 1990.

Notes:

Save as disclosed, none of the Senior Management have:

• any family relationship with any Director and/or Major Shareholder of Scomi Group Bhd;

• any conflict of interest or any personal interest in any business arrangement, involving Scomi Group Bhd;

• any conviction for offences within the past five (5) years (other than traffic offences, if any); and

• any public sanction or penalty imposed by the relevant regulated bodies during the financial period ended 30 June 2019.

14 Scomi Group Bhd

SCOMI GROUP BHD : MANAGEMENT DISCUSSION AND ANALYSIS

OVERVIEW OF GROUP’S BUSINESS AND OPERATIONS Scomi Group Bhd (“SGB”, “the Group”) is a Malaysian technology enterprise with a global presence in 19 countries. Currently operating primarily in the oil and gas industry, the Group also has the experience and expertise in urban transport solutions with the capability to provide innovative engineered solutions to meet client requirements in the industries it operates in. For its primary operations in the oilfield services, its business is operated by its Malaysian public listed subsidiary, Scomi Energy Services Bhd (“SESB”). The operations include Drilling Fluids services (“DF”), Drilling Waste Management services (“DWM”) and Production Enhancement Chemicals. SESB, which has over 30 years of experience in this industry segment, has the proven track records for drilling in challenging environments such as horizontal, multilateral, deep-water and high temperature & high pressure wells. Under the Marine Services (“MS”) segment, it provides marine logistic services to the energy sector primarily via the provision of tugs and barges as well as a small fleet of offshore support vessels. Its focus is in the oil and gas upstream industry as well as the coal industry. For the latter, we provide coal barging, berthing services and ship management services. The Group also has operations in the transport solutions business comprising the rail and commercial vehicles. The rail business includes monorail, conventional rail, rolling stocks while commercial vehicles focuses on buses, coaches, truck mounted equipment and special purpose vehicles. However, the entire segment has been deconsolidated from the consolidated financial statements of Scomi Group Bhd as at 30 June 2019. The Group’s business emphasis continues to be on technology ownership, offering differentiation and integration capability. Hence, all of the various corporate exercises ongoing within the organisation is also geared towards regaining the financial health of the organisation with the potential to expand on the above business emphasis. Our operations are managed by a dedicated team of management and staff and governed by experienced Board of Directors. During the year under review and current year, Mr Cyrus Eruch Daruwalla resigned from the Board of Directors and Dato’ Mohd Shahrom bin Mohamad and Encik Amirul Azhar bin Baharom joined the Board of Directors. Mr Shah Hakim Zain who was the Chief Executive Officer since 2003 has resigned his position and the Company would like to thank him for all his years of service. Mr Shah Hakim, however continues to be a member of the Board of Directors. Mr Sammy Tse Kwok Fai was appointed as an Executive Director and also the Chief Executive Officer. We thank our Directors, management and staff for their efforts during the year. FINANCIAL HIGHLIGHTS The financial results for the financial period ended 30 June 2019 (FY2019) is for a period of fifteen months. Further the financial highlights discussed in this section for the financial period ended 30 June 2019 and financial year 31 March 2019 (“FY2018”) excludes the Transport Solutions segment as it was deconsolidated as at 30 June 2019.

Management Discussion & Analysis



FY2019 (RM’000) Audited

(15 months)

FY2018 (RM’000) Restated

(12 months) Revenue 643,502 613,957

Cost of Sales/Services (519,993) (539,495)

Gross Profit 123,509 74,462

Operating Cost (168,328) (124,341)

Other Cost (46,784) (93,516)

Net loss on impairment of financial instruments (123,911) (17,837)

Finance Cost net of Finance income (21,774) (21,500)

Share of loss from joint ventures and associates (6,165) (36,663)

Loss Before Tax (243,453) (219,395)

Taxation (20,883) (13,058)

Loss for the period from Continuing Operations (264,336) (232,453)

Loss for the period from Discontinued Operations (161,633) (99,629)

Loss For The Period (425,969) (332,082)

Loss Attributable To The Owners of the Company (396,171) (249,974)

Total Equity Attributable to Owners of the Company (23,728) 361,633

Borrowings 186,289 716,326

Net Debt/Equity Ratio N/A 1.98

Loss Per Share – continuing operations (sen) (21.44) (13.76)

Loss Per Share – discontinued operations (sen) (14.78) (9.12)

The operations in the oil and gas industry under SESB continue to be the largest contributor to the Group’s financial results. Despite the sluggish oil price, rig counts have been showing marginal improvements throughout the year under review. However, while the outlook for rig count in Asia Pacific shows improvements these markets are still ultra-competitive which for our business has resulted in deflated margins. The offshore support vessels are still impacted by the reduced activity in oil and gas exploration while the coal tonnage haulage reduced in the latter half of the year under review as vessels were under maintenance. The Group’s GP of RM123.5 million and GP margin of 19.2% has showed improvement as compared to the previous financial year mainly due to better product mix at Oilfield Services, particularly from higher drilling waste management revenue which traditionally has higher margins than drilling fluid products. The improvement was also due to better margins at Marine Services segment due to high utilisation of its vessels which positively impacted its margins. The Group has also further rationalised its operating cost during the period with significant reduction on an annualised basis. However, the financial result was also impacted by the Loss From Discontinued Operations of RM161.6 million (as a result of the deconsolidation of Scomi Engineering Bhd (“SEB”) and its subsidiaries from the financial statements of the Group as well as the impairment that was required to be made for the advances to the deconsolidated subsidiaries of RM123.2 million and other related adjustments of RM38.0 million. This resulted in the Group’s negative NA position of RM23.7 million as at 30 June 2019.


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There were no revenues recognised for Transport Solutions during the period due to the termination of its Mumbai Monorail and Sao Paulo Line 17 Monorail contracts during the financial period and the segment’s results have been shown under Discontinued Operations. The agreements for the settlement and completion of the KL Monorail Fleet Expansion Project (“KLMFEP”) were signed and five (5) refurbished trains were delivered during the period under review. The manufacture of the seven (7) new trains under the agreement is expected to commence in the first quarter of 2020. Moving forward, the Group is looking to strengthen its financial health through several corporate exercises that have been announced which includes capital reconstruction and recapitalisation. It is anticipated that the successful implementation of these exercises will place the Group in a better position to capitalise on business prospects that may potentially contribute to the bottom line of the organisation. CAPITAL STRUCTURE AND SIGNIFICANT CHANGES TO ASSETS

FY2019 (RM’000)

FY2018 (RM’000)

Non-current 426,559 801,010

Current 399,384 1,244,150

Total Assets 825,943 2,045,160

The reduction in Group’s total assets was mainly due to:

• Deconsolidation of SEB and its subsidiaries from the consolidated financial statement of the Group.

• Reduction in inventory and receivables due to lower activity levels as well as to better manage working capital.

• Impairment and depreciation of assets during the year

• Lower Cash and Bank Balances which reflects the reduced business activities within the Group.

Equity & Liabilities Capital and Reserves Attributable to Owners of the Company

FY2019 (RM’000)

FY2018 (RM’000)

Share Capital 224,964 664,964

Total Equity Attributable to Owners of the Company (23,728) 361,633

Total Equity 293,829 707,358

Non-Current Liabilities 64,111 173,618

Current Liabilities 468,003 1,164,184

Total Liabilities 532,114 1,337,802

Total Equity and Liabilities 825,943 2,045,160

Net Assets Per Share (RM) (0.02) 0.33

As at 30 June 2019, the lower Equity level as well as Net Assets Per Share was mainly as a result of Net Losses registered during the period which was principally due to the deconsolidation of SEB and its subsidiaries and the vessel impairment cost. The reduction in Group’s total liabilities is mainly due to deconsolidation of SEB and its subsidiaries as well lower activity levels at Oilfield Services resulting in reduction in the utilisation of working capital lines.




CASH FLOW, CASH AND BANK BALANCES

FY2019

(RM’000) For Continuing Operations

Net cash from operating activities* 103,205

Net cash from investing activities 34,184

Net cash outflow for financing activities (70,991)

Net decrease in cash and cash equivalents 66,398

Effect of exchange rate fluctuations on cash held 4,263

Cash and cash equivalents at the beginning of the year (31,407)

Cash and cash equivalents at the end of the year 39,254

*included in operating activities in FY 2019 is cash flow from Net Impact From Derecognition of Liabilities of RM68.453 million due to the deconsolidation of the subsidiaries during the year. Cash flow generation continues to be challenging due to the softer activity levels particularly at Oilfield Services. The Group continues to be prudent in its cash management to fund its business operations going forward. KNOWN TREND AND EVENTS The oil price throughout FY2019 has continued to be volatile. The surge experienced mid-year 2018 exceeding USD80 per barrel did not sustain and the price slumped at the end of the year 2018. However there was an increase early in the year 2019 and it currently hovers around the mid USD60’s per barrel range. Global rig count has seen some improvement, however markets continue to be extremely competitive which is resulting in eroded margins. Further, the trend is moving towards provision of bundled services, which is impacting SESB as some of the required products and services may not be available in its portfolio. Malaysia is seeing an increased focus on improving public transport and this presents opportunities in the rail segment whether directly as a main contractor or indirectly as a second or third level supplier or subject matter expert.


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OPERATIONAL HIGHLIGHTS For the oil and gas industry, one of the major breakthroughs in FY2019 was the market expansion into Kuwait. In Q4 FY2019, it expanded its market reach in the Middle East with its first contract win in Kuwait for the provision of drilling fluids and related services with a total contract value estimated at USD150million over the contract period of 5 years. This project is anticipated to commence in the 2nd quarter of 2020 and should subsequently contribute to the revenue of the organisation by the 3rd quarter of 2020. Further, focusing on its specialised technology and engineering offering, SESB’s Malaysia operations formalised several agreements with Petronas Chemicals Marketing (Labuan) Ltd in June 2019 for collaboration in research, development and marketing of chemical solutions. Through this collaboration that has been ongoing since 2016, SESB continues to develop commercially viable products which will enhance the drilling and exploration processes. These products are being promoted in both domestic and global markets. SESB has continued to remain vigilant of its operational costs which includes amongst others manpower, asset utilisation and inventory. Across its global operations, it has managed to consistently reduce its inventory throughout FY2019. However increasing asset utilisation has been a challenge as most of its drilling waste management equipment are currently deployed and the imitations are the ability to quickly turnaround the equipment under maintenance and to invest in new asset. The transport solutions business of SGB has faced a slew of challenges during FY2019. Although it has completed and commissioned Phase 2 of its Mumbai Monorail project and the full alignment was ready for operations, its client, Mumbai Metropolitan Region Development Authority (“MMRDA”) arbitrarily terminated its contract in December 2018. Hence SEB and its consortium partner Larsen & Toubro Limited are seeking legal recourse. The monorail project in Brazil also saw no progress since the last reporting under the previous financial year. The highlight for this business was the resolution of KLMFEP project whereby two agreements were signed between Scomi Transit Projects Sdn Bhd (“STPSB”), an indirectly wholly owned subsidiary of SGB and Prasarana Malaysia Berhad. The two agreements are Settlement Agreement for the refurbishment of five 4-car trains to be put into revenue service of the current operations of the KL Monorail and Completion Agreement for the completion and delivery of seven new 4-car trains. The Settlement Agreement contract value is RM181 million while the Completion Agreement contract value is RM122 million. To date STPSB has refurbished all five 4-car trains. Three trains were handed over to operations on 16th August 2019 as agreed and the balance two trains were handed over in September 2019, two months ahead of schedule. The Company continues to pursue other opportunities in the Monorail sector and is also is actively exploring various business structures to operate effectively in this segment as we continue leveraging on the knowledge we possess in this sector. OUTLOOK & PROSPECTS IN FY2020 The oil and gas industry is still the dominant energy generator globally. Hence with our primary operations in this industry, the Group will look to grow its current markets while expanding to new markets that are showing growth for oil and gas activity. The geographic focus is on markets that has high demand and potentially high margin business. Therefore, in order to grow in these markets, the division continues to explore opportunities to provide its core products, services and technical expertise in addition to offering specialised technology focused product offerings such as graphene-enhanced and green-based products. Our market expansion during the financial period under review into Kuwait and the services that we are providing under that contract that includes the construction of a Liquid Mud Plant and its operations and maintenance should provide us with the enhanced track record to continue to breakthrough to markets in that region.




While the outlook of the organisation for the transport solutions business from an accounting standards viewpoint may not be classified positively, the potential locally and globally for this business segment is still dynamic and growing. As urban population grows the need for viable public transport solution also grows in tandem. The major focus for SGB in FY2020 is to complete the manufacture and delivery of the seven new 4-car trains for the KL Monorail. To continue to develop this business, SGB will explore the opportunities available in the rail industry both locally and abroad. The rail industry in Malaysia is showing renewed vibrancy. There exists opportunities in excess of RM230 billion that Malaysian companies with relevant experience may benefit from. The expertise and experience that the Group has in the complete cycle of a monorail project from design, engineering, manufacture, commission and operate and maintain will stand in good stead to enable the company to be at the forefront or potentially as a technology partner and a second or third-tier supplier. Among the key business strategies potentially to be employed to grow this business segment would include partnerships and collaborations, leasing and maintenance services and technology expertise. Whilst the focus will be on the monorail segment, opportunities are also available in other rail segments such as people movers for airports, electric or diesel powered rolling stock and other urban mass transit projects. Some of the key projects that present prospects for the company are ECRL, High-Speed Rail, MRT and LRT which are being implemented or potentially to be implemented in the country. Further the technical and engineering expertise inherent in the company presents the opportunity to move into the electric commercial vehicle industry as the industry matures and the potential presents itself. Intrinsic to the success of the business is the resources and technical expertise within the organisation. For all the businesses within the Group, SGB has been awarded contracts during the financial period under review for both product delivery and technology collaboration. The businesses are also delivering on these contracts and this is only possible if the subject matter experts and a knowledgeable management team is in place to drive the business forward. With these resources within the Group, among SGB’s strategies would be to explore and open new markets. However, there will always be the inherent risk exposure of entering a new market especially as the gestation period for success in a new market is uncertain. Hence to mitigate this risk, SGB will aggressively explore partnerships that will bring the local market knowledge and market share with it to complement SGB’s technical and technological expertise. In addition, SGB will also move towards being asset light by building integration capability with suppliers and contractors using their facilities and resources and integrating with SGB’s expertise so that the Group can then position itself not only as a holistic solution provider but also as a second or third-tier supplier for the product portfolio in the industries that we operate in.


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Sustainability Statement

1

OUR BUSINESS SUSTAINABILITY The Financial Year 2018 was the first year of reporting on the Sustainability Statement for Scomi Group Bhd (“SGB”, the “Company”). As we report for this Financial Period 2019 which is a 15-month reporting period, SGB is mindful that the sustainability framework and practices are still a work in progress. We will strive for continuous improvements in the collation of the information and in presenting the information which includes performance targets and achievements. SGB was primarily involved in two core business segments, Energy Logistics for the oil & gas and coal industries and Transport Solutions for the urban transport industry. Its sustainability statement continues to remain in line with its Corporate Statement, “we are a global technology enterprise that provides innovative solutions focusing on the energy and logistics sectors to realise potential for our stakeholders”. Thus, the company’s sustainability rests in the ability to introduce innovative products and services for its customers and integration capability as technology partners.

SUSTAINABILITY FRAMEWORK & SCOPE The scope as envisioned to build the sustainability framework of the organisation looks at three key areas as follows :

i. the sustainability framework; ii. the strategic thrusts for new products & services and integration capability; and iii. the engagement of social responsibility for the community.

As the Company moves forward additional sustainability initiatives and actions will be introduced to enhance its business viability. The Company is going through a restructuring process comprising corporate exercises including capital reconstruction and recapitalisation, which is aimed at strengthening the financial position of the Company and to enable it to optimise on business opportunities for growth. Further, its subsidiary, Scomi Engineering Bhd, which is the group of companies involved in the Transport Solutions business segment, was also placed under Judicial Management on 24th January 2019, the details of which is discussed in the Management Discussion and Analysis section of this annual report. Hence with this ongoing business restructuring, the macro sustainability framework of the Company as disclosed in the Annual Report 2018, continues to be in an infancy stage. However, the Company is mindful of the need to ensure its business sustainability and the responsibility is entrusted to the individual business unit within its group of companies. The management of each business unit addresses this requirements through its annual business performance and budget which is presented and discussed with the respective Board of Directors.


Sustainability Statement

2

Moving forward, as the restructuring of the Company is finalised, a core working group will be established to review and formalise the sustainability framework, its scope and its strategic initiatives to continue the Company’s thrust for business growth. The current business sustainability activities initiated and being carried out in the organisation include :

• Improvement of financial position of the Company This is being addressed by the corporate exercises being carried out by SGB as announced to Bursa Malaysia accordingly.

o Proposed Share Capital Reduction o Proposed Rights Issue of Shares with Warrants o Proposed Liabilities Settlement o Proposed Restricted Issue of new Consolidated Shares with detachable warrants

• Expansion of markets for oil & gas industry

Scomi Energy Services Bhd, has successfully expanded its market in the Middle East moving into Kuwait. It is also cautiously exploring the markets of US and Argentina, which are lucrative markets for the drilling waste management business.

• Increase product offering to existing clients In all markets that the Company offers its oilfield services product range and the related services through its subsidiaries, it is looking to upsell its range of products and services by introducing its clients to the complementary range within its portfolio.

• Completion of delivery on transport solution projects With the award of the Settlement Agreement for the Kuala Lumpur Monorail Fleet Expansion Project, the focus is on completing the deliverables to the agreed timelines. The update on this project is discussed in the Management Analysis and Discussion section of this Annual Report.

The Company has always believed in engaging with the communities where it operates in as it is cognisant of its social responsibility towards the betterment of the community. However, during the period under review, the Company turned its focus to business sustainability which took critical importance. Further with the SEB group being placed under judicial management, there was a workforce reduction based on the business strategy of the judicial manager. Hence social responsibility activities was turned towards internal engagement with its employees and its staff welfare. During the period under review, the Company has strived to ensure all its commitments to its personnel are looked into and brought to even status expeditiously. The approach to the sustainability activities and its reporting for SGB still requires much development and improvement to ensure a more comprehensive management and monitoring. The Company is optimistic that with the completion of the proposed improvement to its financial position and its business prospects, it will be better positioned to provide greater analysis of its activities for future Annual Reports.

22 Scomi Group Bhd

Corporate Governance Overview StatementCORPORATE GOVERNANCE OVERVIEW STATEMENT

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INTRODUCTION The vision of Scomi Group Bhd (the “Company”) and its group of companies (the “Group”) is to be a global technology enterprise, providing innovative solutions to the energy and logistics industries, with an aim to realise potential for our shareholders and stakeholders. The Board of Directors (the “Board”) of the Company is mindful of its accountability to shareholders and other stakeholders and in order to steer the Company and the Group towards achieving its mission and vision as well as sustainable business growth, and to implement sound corporate governance practices throughout the Group, the Board is committed to ensure that the highest standards of corporate governance are practiced by the Group at all times and views this as a fundamental part of discharging its roles and responsibilities. This Corporate Governance Overview Statement (“Statement”) provides an overview of the corporate governance (“CG”) practices of the Company under the leadership of the Board during the financial period ended 30 June 2019. This Statement is prepared in compliance with the Bursa Malaysia Securities Bhd’s Main Market Listing Requirements (“Listing Requirements”) and is to be read together with the Corporate Governance Report for the financial period ended 30 June 2019 (“CG Report”). The Corporate Governance Report is available on the Company’s website, www.scomigroup.com.my and via an announcement on the website of Bursa Securities. PRINCIPLE A : BOARD LEADERSHIP AND EFFECTIVENESS I. BOARD RESPONSIBILITIES The Board is responsible for oversight over the control and management of the Company to protect and promote the interest of its shareholders, with the overriding objective of enhancing the long-term value of the Group, whilst the Management manages the Company and the Group in accordance with the strategic direction and delegations of the Board. In this regard, the Board remains focused and committed to maintaining good governance standard whilst ensuring that the appropriate management of risks is mitigated by leveraging on Management’s knowledge and experience. The Board also plays an active role guiding the strategic direction and business plan of the Group, supervising Management, reviewing performance and determining business risk parameters. To ensure effective discharge of its responsibilities, the corporate goals, medium and long term strategic business plans of the Group are reviewed on a regular basis, in tandem with the Group’s performance and implementation of the Management’s action plans, to assess the progress made towards achieving the overall goals of the Group. In addition to the above, the Board reserves for its decision a formal schedule of matters, which include the following: (a) reviewing and adopting a strategic plan for the Company and the Group;

The Board constructively challenges and contributes to the development of the Company and the Group’s strategic directions, and subsequently monitors the implementation of the strategic business plan by the Management to ensure sustainable growth and optimisation of returns for the Company and the Group. The Group has in place an annual strategy planning session, whereby the Management presents to the Board its recommended strategy and proposed strategic business plans for the upcoming financial year. At the annual strategy planning and budget Board meeting, the Board reviews and deliberates upon the proposed strategic business plans for the upcoming financial year as well as probes Management to ensure Management has taken, and suggests Management to take into consideration the varying opportunities and risks whilst developing the strategic business plan. In conjunction with this, the Board also reviews and approves the proposed annual budget for the upcoming financial year and the key performance indicators (“KPIs”) for the Corporate Balanced Scorecard (“BSC”) as prepared and presented by the Management.


CORPORATE GOVERNANCE OVERVIEW STATEMENT

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(b) overseeing and evaluating the conduct and performance of the Company and the Group’s business;

The Chief Executive Officer (“CEO”) has overall responsibility, with the support of the Key Management Team, for the day-to-day management of the business and operation of the Group as well as the implementation of the Board’s policies, directives, strategies and decisions. On a quarterly basis, both the Audit and Risk Management Committee of the Board (“ARMC”) and the Board reviews the Group’s key financial performance metrics with the CEO who highlights concerns and issues, if any, faced by the Group. The actual performance of the Group is assessed on a quarterly basis against the approved budget, the results of the corresponding quarter of the preceding year and the immediate preceding quarter. Where significant variances in the performance results are reported by the Management to the ARMC and the Board, it is accompanied with explanations, clarifications and the corrective action taken. Besides this, the ARMC and the Board are also informed by the Management of the key initiatives and significant operational issues. A summary of the performance of each business division is also provided to the Board. The relevant members of the Management are invited to attend the ARMC and/or Board meetings to support the CEO to update on the progress of key initiatives, business targets and achievements to date, and to provide clarification on the challenges and issues faced by the Management and business units.

(c) identifying principal risks of the Company and the Group and ensuring the implementation of appropriate internal controls and mitigation measures to manage these risks; Whilst the Board has overall responsibility for the Group’s risk management framework and internal controls system, it has delegated the implementation of the risk management framework and internal controls system to the Management and tasked the ARMC with the oversight responsibility to review the adequacy and effectiveness of the risk management framework and internal controls system. However, the Board recognises that such systems are designed to manage and reduce, rather than eliminate, the risks identified to acceptable levels. Therefore, the internal controls implemented can only provide reasonable and not absolute assurance against the occurrence of any material misstatement, loss or fraud. The Management reports to the ARMC on a quarterly basis on all risks areas faced by the Group and the audit findings identified from the internal audit activities conducted by the Group Internal Audit Department (“GIA”). In February 2019, the Company ceased sharing resources relating to the internal audit function with its subsidiary. Subsequent to the end of the financial period, a firm specialising in internal audit services was appointed to carry out the internal audit function for the Group. The ARMC deliberates the actions taken by the Management to address high risks areas and audit findings. The ARMC also acts as an intermediary between the Management or other employees, and the external auditors where the external auditors are invited to present to the ARMC the audit plan, the audit findings, the independent auditors’ report as well as any other matters considered by the external auditors as important and requiring the ARMC’s attention. The ARMC also conducts private meetings with the external auditors, to give opportunity to the external auditors to raise any matters without the presence of the Executive Board Member and Management. Minutes of the meetings of the ARMC which record the deliberations of the ARMC are presented to the Board. The Chairman of the ARMC will also report to the Board on the principal risks and internal controls related matters and recommendations deliberated by the ARMC at the immediate subsequent Board meeting. Details of the Enterprise Risk Management Framework and internal controls system of the Group are as set out in the Statement of Risk Management and Internal Control in this Annual Report.

(d) reviewing the adequacy and the integrity of the management information, risk management and internal controls system of the Company and the Group; The risk management and internal controls system of the Company and the Group is subject to the Board’s regular review with a view towards appraising the adequacy, effectiveness and efficiency of such system within the Group and to ensure that these systems are viable and robust.

Corporate Governance Overview Statement

24 Scomi Group Bhd


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(e) overseeing management performance and ensure a sound succession plan for key positions with the

Company; The Board, through the Nomination and Remuneration Committee (“NRC”), annually develops and agrees on the CEO’s BSC with the CEO based on the strategic objectives, measures and KPIs which are aligned to the Group’s corporate goal and strategic business plan set by the Board. In discharging its responsibility for succession planning, the NRC and the Board receive updates on the succession plan for management from the Head of Group Human Resources (“Group HR”). During the financial period under review, En Shah Hakim Zain resigned as CEO of the Company on 2 August 2018 and Mr Sammy Tse Kwok Fai was appointed the CEO on the same date. The nomination of Mr Sammy Tse Kwok Fai had been deliberated and reviewed by the NRC based on his skills, expertise and experience before recommending to the Board for approval. The NRC is also tasked by the Board to evaluate the performance of the CEO against the approved KPIs or initiatives as set out in the BSC of the CEO at the end of each financial year. Subsequently, the NRC provides the Board with its recommendation for the CEO’s performance evaluation at the end of the financial year, for decision.

(f) overseeing the development and implementation of the investor relations and shareholder communications policy for the Company and the Group. Recognising the importance of accurate and timely public disclosures of corporate information in order for the shareholders to exercise their ownership rights on an informed basis, the Board has established a Global Communications Policy.

Establish Clear Roles and Responsibilities To enhance the Board and the Management’s accountability to the Company and its shareholders, the Board has established clear functions reserved for the Board and those delegated to the Management. The Board operates under a Board Charter and Board Policy Manual, which establishes a formal schedule of matters and outlines the types of information required for the Board’s attention and deliberation at the Board meetings. The Board Charter is available on the Company’s website at www.scomigroup.com.my. The Board has established two (2) Board Committees, namely the ARMC and the NRC. The Board Committees review in detail on the matters within their Terms of Reference (“TOR”) and make the necessary recommendations to the Board, which retains full responsibility for approval of these recommendations. In order to ensure orderly and effective discharge of its functions and responsibilities of the Board, the Board has delegated specific responsibilities to the relevant Board Committees, CEO and Management through a clear and formally defined written TOR and delegated authority limits (“DAL”), which are the primary instruments that govern and manage the decision-making process in the Group. Whilst the objective of the DAL is to empower Management, the key principle adhered to in its formulation is to ensure that a system of internal controls and checks and balances are incorporated therein. The TOR and DAL are continuously reviewed and updated to ensure their relevance to the Group’s operations as well as for compliance with legislation and standards. The Board is kept apprised of the activities of the Board Committees through circulation of the minutes of the Board Committee meetings as well as by the briefings given by the Chair of the respective Board Committees on key matters discussed within their respective committees. The Board Charter, TORs, DAL and all other policies and procedures of the Company are reviewed as and when required, to ensure a relevant and optimum structure for efficient and effective decision making in the organisation. The Board Charter, TORs, DAL and all policies and procedures of the Company, if relevant, are adopted by the subsidiaries to ensure that their corporate practices are aligned with the strategies of the Company. The Board Charter provides that the roles of the Chairman and the CEO are to be held by two separate individuals with each having a clear scope of duties and responsibilities to ensure there is a balance of power and authority. The Chairman is responsible for the leadership, effectiveness, conduct and governance of the Board, while the CEO has overall responsibility, with the support of the Key Management Team, for the day-to-day management of the business and operations of the Group as well as the implementation of the Board’s policies, directives, strategies and decisions.




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Reinforce Independence In general, the tenure of an Independent Director shall not exceed a cumulative term of nine (9) years. In line with the recommendation of the Code, the Board, through the NRC, has assessed the independence of each Independent Director annually. All the Independent Directors had given their confirmation on their independence pursuant to the Listing Requirements and responses had been collated by the Company Secretary. Taking into consideration interests disclosed by each Independent Director and having regard to the criteria for assessing the independence of Directors under the annual Board assessment and the Listing Requirements, the Board is satisfied with the level of independence demonstrated by all the Non-Executive Directors and their ability to act in the best interests of the Company during deliberations at Board meetings. Further, the Board had recommended that Dato’ Sreesanthan a/l Eliathamby who has served the Board for more than nine (9) years to continue to act as Independent Non-Executive Director of the Company. As Dato’ Sreesanthan a/l Eliathamby has served the Board for more than nine (9) years, annual shareholders’ approval will be sought for him to continue to act as Independent Non-Executive Director of the Company. Dato’ Sreesanthan a/l Eliathamby is recommended to continue to act as Independent Non-Executive Director of the Company based on the following justifications: (a) that he fulfils the criteria set out in the definition of “Independent Director” in the Listing Requirements; (b) that his vast experience and expertise enable the Board to discharge its duties effectively and in a

competent manner; (c) that although he has served the Company as Independent Director for a cumulative term of more than

nine (9) years, he has at all times acted in the best interest of the Company, providing independent views to the deliberations and decision making of the Board and Board Committees and fully understands and provides critical oversight over the Company’s objective and strategies as well as the business operation of the Company and the Group;

(d) that he has proven to be reliable Independent Director with his professionalism, aptitude and business outlook and perspectives, devoted sufficient time and attention to his professional obligations for informed and balanced decision making and has also exercised due care and diligence during his tenure in the best interest of the Company and the shareholders; and

(e) that he has provided confirmation in writing that he is independent of the Management, the Board and major shareholders and are free from any business or other relationship which could interfere with the exercise of independent judgment or the ability to act in the best interests of the Company and the Group.

Board Committees The Board has established two (2) committees of the Board, namely the ARMC and the NRC, which operate within clearly defined written TOR. The Board Committees deliberate issues on a broad and in-depth basis before putting up any recommendation to the Board for decision. Notwithstanding the existence of the Board Committees and the relevant authorities granted to a committee under its TOR, ultimate responsibility for the affairs of the Company and decision-making lies with the Board. The Board keeps itself abreast of the significant matters and resolutions deliberated by each Board Committee through the reports by the Chairman of the relevant Board Committees and the tabling of the Minutes of the Board Committees meetings and circular resolutions passed by each Board Committee at the immediate subsequent Board meeting. The Board is satisfied that the ARMC and NRC have effectively and efficiently discharged their roles and responsibilities with respect to their functions as defined in the respective TOR. As such, there is no need to separate the audit, risk management, nomination and remuneration functions into distinct committees.


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The composition of the Board and its Committees is as follows:

Board Committees

ARMC NRC

Independent Non-Executive Directors Dato’ Sreesanthan a/l Eliathamby (1) M - Tan Sri Nik Mohamed bin Nik Yaacob (2) C - Dato’ Mohammed Azlan bin Hashim (3) - C Mr Liew Willip (4) C M Dato’ Mohd Shahrom bin Mohamad (5) - C Encik Amirul Azhar Bin Baharom (6) - - Non-Independent Non-Executive Directors Mr Cyrus Eruch Daruwalla (7) Encik Shah Hakim @ Shahzanim Bin Zain (8) - - Mr Foong Choong Hong (9) M - Mr Lee Chun Fai - M CEO/Executive Director Mr Sammy Tse Kwok Fai (10) - -

Notes: C – Chairman M – Member (1) Re-designated as an Independent Non-Executive Director on 24 August 2018. (2) Resigned as an Independent Non-Executive Director and Chairman of the ARMC on 19 July 2018. (3) Resigned as an Independent Non-Executive Director and Chairman of the NRC on 14 April 2018. (4) Appointed as Chairman of the ARMC on 25 October 2019. (5) Appointed as an Independent Non-Executive Director on 4 September 2019 and a member of the NRC on 23 September 2019.

Subsequently, he was appointed as Chairman of the NRC on 25 October 2019. (6) Appointed as an Independent Non-Executive Director on 4 September 2019. (7) Resigned as Non-Independent Non-Executive Director on 15 October 2018. (8) Resigned as Chief Executive Officer and re-designated as Non-Independent Non-Executive Director on 2 August 2018. (9) Appointed as a member of the ARMC on 18 October 2018. (10) Appointed as an Executive Director on 24 July 2018 and Chief Executive Officer on 2 August 2018. The ARMC and NRC established by the Board are tasked to: ARMC : Details are provided in pages 40 to 43 of this Annual Report. NRC : • ensure an effective process for selection of new Directors and assessment of the effectiveness of the

Board and Board Committees and the performance of individual Directors which will result in the required mix of skills, experience and responsibilities being present on the Board;

• establish, review and report to the Board on a formal and transparent policy on Executive Directors’

remuneration; and • review and recommend to the Board the remuneration of the Executive Directors in all its forms with the

aim of attracting, retaining and motivating individuals of the highest quality needed to run the Company successfully.

The members of the NRC are appointed by the Board based on recommendations from the NRC and shall comprise at least three (3) members who are all non-executive, a majority of whom are Independent Directors. Members of the NRC elect a Chairman from among themselves who is an Independent Non-Executive Director. All members of the NRC, including the Chairman, shall hold office only so long as they serve as Directors of the Company. Members of the NRC may relinquish their membership in the NRC with prior written notice to the Company Secretary. The NRC reports its recommendations back to the Board for its consideration and approval. In the event of any vacancies arising in the NRC resulting in the number of members of the NRC falling below three (3), the vacancy should be filled within three months. The NRC meets




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at least once during a financial year. In the interim period between meetings, if the need arises, issues shall be resolved through circular resolution. A circular resolution in writing, stating the reason(s) to arrive at a recommendation or resolution, signed by a majority of the members, shall be valid and effective as if it had been passed at a meeting duly convened and constituted. The duties and responsibilities of the ARMC and NRC are set out in the TOR of the NRC which is available at the Company’s website at www.scomigroup.com.my. Board and Board Committee Meetings The schedule of meetings of the Board and its Committees as well as the Annual General Meeting ("AGM”) is prepared and circulated to the Board before the beginning of the year to facilitate the Directors in planning ahead. Special meetings of the Board and its Committees are convened between the scheduled meetings as and when urgent and important direction from and/or decisions of the Board and/or its Committees are required. During the financial period ended 30 June 2019, eleven (11) Board Meetings, six (6) ARMC Meetings and three (3) NRC Meetings were held. The Board is satisfied with the level of commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of the Company. The attendance record of the Directors at the meetings of the Board and its Committees is as follows:

MEETING ATTENDANCE (attended/held)

BOARD ARMC NRC

Independent Non-Executive Directors Dato’ Sreesanthan A/L Eliathamby (1) 10/11 5/6 - Tan Sri Nik Mohamed Bin Nik Yaacob (2) 2/2 2/2 - Dato’ Mohammed Azlan Bin Hashim (3) - - - Mr Liew Willip (4) 11/11 6/6 3/3 Dato’ Mohd Shahrom bin Mohamad (5) - - - Encik Amirul Azhar Bin Baharom (6) - - - Non-Independent Non-Executive Directors Mr Cyrus Eruch Daruwalla (7) 3/3 - - Encik Shah Hakim @ Shahzanim Bin Zain (8) 11/11 - - Mr Foong Choong Hong (9) 11/11 3/3 - Mr Lee Chun Fai 11/11 - 3/3 CEO/Executive Director Mr Sammy Tse Kwok Fai(10)

9/9 - -

Notes: (1) Re-designated as an Independent Non-Executive Director on 24 August 2018. (2) Resigned as an Independent Non-Executive Director and Chairman of the ARMC on 19 July 2018. (3) Resigned as an Independent Non-Executive Director and Chairman of the NRC on 14 April 2018. (4) Appointed as Chairman of the ARMC on 25 October 2019. (5) Appointed as an Independent Non-Executive Director on 4 September 2019 and a member of the NRC on 23 September 2019.

Subsequently, he was appointed as Chairman of the NRC on 25 October 2019. (6) Appointed as an Independent Non-Executive Director on 4 September 2019. (7) Resigned as Non-Independent Non-Executive Director on 15 October 2018. (8) Resigned as Chief Executive Officer and re-designated as Non-Independent Non-Executive Director on 2 August 2018. (9) Appointed as a member of the ARMC on 18 October 2018. (10) Appointed as an Executive Director on 24 July 2018 and Chief Executive Officer on 2 August 2018. Ethics and Code of Conduct In discharging its duties and responsibilities, the Board is also guided by the Code of Conduct of the Group which provides the framework to ensure that the Group conduct itself in compliance with laws and ethical values. The Board ensures that compliance is monitored through a Confirmation of Compliance declaration process where all employees of the Group of Grade 15 and above are required to confirm their receipt and understanding of the Code of Conduct and further to certify their continued compliance with the Code of Conduct on an annual basis. This serves to drive organisational culture and continuing awareness amongst


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the employees of the need to understand, develop and maintain a value-based culture beyond mere compliance. It is a condition of appointment and/or employment with the Group that the Board and all employees of the Group to comply with the Code of Conduct and all applicable laws, regulations and other policies of the Group and failure to comply may result in the commencement of disciplinary proceedings that may lead to termination of appointment and/or employment. The appropriateness and effectiveness of the Code of Conduct of the Group are continuously monitored and appropriate agreed improvements and reporting procedures will be adopted where necessary. The Code of Conduct is available on the Company’s website at www.scomigroup.com.my. Whistleblowing Policy and Procedures The Group is also committed to openness, probity and accountability. An important aspect of accountability and transparency is the existence of a mechanism to enable employees of the Group to voice their concerns in a responsible and effective manner. To address this concern, the Group has formalised and established a “Whistleblower Framework and Policy” as published in the website, to provide an avenue for employees to raise genuine concerns internally or report any breach or suspected breach of any law or regulation, including the Group’s policies and procedures, to the Disclosure Officer in a safe and confidential manner, thereby ensuring that employees may raise concerns without fear of reprisals. The Whistleblower Steering Committee has been tasked by the Board to overseeing the implementation of the Whistleblower Framework and Policy, whilst duties relating to the day-to-day administration of the policy are performed by the Disclosure Officer. The Whistleblower Framework and Policy is subject to periodic assessment and review to ensure that it remains relevant to the Group’s changing business circumstances. The Whistleblower Policy is available on the Company’s website at www.scomigroup.com.my. Environmental, Social and Governance The Board is cognisant of the importance of business sustainability and, in managing the Group’s business, take into consideration its impact on the environment and society in general. Balancing the environment, social and governance aspects with the interest of various stakeholders is essential to enhancing investor and public trust. We acknowledge our responsibility to all the lives we touch either directly or indirectly and are committed to making a positive impact in the many communities where we have a presence while further strengthening our corporate reputation via upholding a culture of integrity and transparency. Over the years, our approach towards corporate social responsibility has become progressively more holistic, evolving from individual acts of philanthropy to becoming a mindset that influences business decision and strategy. We further ensure that this mindset is shared among all our employees by reinforcing the principles of integrity and corporate citizenry in our training and internal communication and encouraging a spirit of volunteerism across our operations globally. We also realise that, given the nature of the businesses we are involved in, we can make a positive impact on the environment. Hence, we invest significantly in research and development to develop ‘green’ products that are efficient, cost-effective and, most importantly, environmentally friendly. The Board also strives to promote conservation and encourages a paperless environment for all Board and Board Committees meetings, where digital access is given to meeting papers to save on the distribution of hard copies. Access to Information Every Director has full, free and unrestricted access to information within the Group. Where required, the Board and its Committees are provided with independent professional advice or other advice in furtherance of their duties, the cost of which is borne by the Company. The Board may also seek advice from the Management or request further explanation, information or update on any aspect of the Group’s operations or business concerns. The Board is supplied with quality and timely information, which allows it to discharge its responsibilities effectively and efficiently. The agenda for each meeting together with a set of comprehensive Board Papers for each agenda item are delivered to each Director in advance of meetings, to enable the Board sufficient time to review the matters to be deliberated for effective discussion and decision making during the meeting, and where necessary, to obtain supplementary information before the meeting. In addition, the Directors have full and unrestricted access to the advice and dedicated support services of the Company Secretary appointed by the Board. The Company Secretary, who is qualified, experienced and




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competent, advises the Board on procedural and regulatory requirements to ensure that the Board adheres to the Company’s constitution, board policies, procedures and regulatory requirements in carrying out its roles and responsibilities effectively. II. BOARD COMPOSITION The Board recognises the benefits of having a diverse Board to ensure that the mix and profiles of the Board members in term of age, ethnicity, gender skillset and professional background provide the necessary range of perspectives, experience and expertise required to achieve effective stewardship and management. The Articles of Association of the Company provides for a minimum of two (2) directors and a maximum of twelve (12) directors. At any one time, at least two (2) Directors or one-third (1/3) of the Board, whichever is higher, shall be Independent Directors, who are to provide independent judgment, experience and objectivity to the Board deliberations so that the interests of all shareholders are taken into account by the Board. The Directors shall elect a Chairman among themselves who shall be a Non-Executive Director. The Board currently consisted of eight (8) members, comprising one (1) Executive Director and seven (7) Non-Executive Directors of whom four (4) are independent Directors as defined by the Listing Requirements. The Board will consider the appointment of a Chairman of the Board upon completion of the proposed restructuring exercise. The composition of the Board reflects a diversity of backgrounds, skills and experiences in the areas of business, economics, finance, legal, general management and strategy that contributes effectively in leading and directing the management and affairs of the Group. Given the calibre and integrity of its members and the objectivity and independent judgment brought by the Independent Directors, the Board is of the opinion that its current size and composition contribute to an effective Board. The Board will appoint an Independent Non-Executive Director as the Senior Independent Director of the Company in the near future. The main duties and responsibilities of the Senior Independent Director of the Company are to serve as the point of contact between the Independent Directors and the Chairman on sensitive issues and to act as a designated contact to whom shareholders’ concerns or queries may be raised, as an alternative to the formal channel of communication with shareholders. A brief description of the background of each Director is as set out in the Profile of Directors section of this Annual Report. New Appointment to the Board The appointment of directors is a vital process as it determines the composition and quality of the Board’s mix of skills and competencies. The nomination and appointment of new Directors takes place within the parameters set out in the TOR of the NRC and the Board Composition Policy. Annual Board Evaluation The Board, through the NRC undertakes an annual assessment of the Board as a whole and each individual Directors’ performance. This includes a review of the desirable mix of competencies, qualification, knowledge, skills, expertise and personal characteristics of Directors and any gaps that exist in the optimum mix of skills required for the Board. It is tasked with assessing the effectiveness of the Board and Board Committees and the performance of individual directors to ensure that the required mix of skills and experience are present on the Board. In the course of assessing the effectiveness of the Board and the Board Committees and the contributions of each individual Director, the NRC also evaluates and determines the training needs for each of the Directors in order to equip them with the necessary skills and knowledge to keep up with industry developments and trends in meeting the challenges of the Board and aid them in the discharge of their duties as Directors. The NRC together with the CEO, representing the Management, collectively conducted the assessments of the effectiveness of the Board and its Committees and the performance of each individual Director, which considered the qualification, contribution and performance of Directors taking into account their competencies, character, commitment, integrity, experience and time expended in meeting the needs of the Group. The effectiveness of the Board was assessed internally and facilitated by the Company Secretary.


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All assessments and evaluations carried out by the NRC in the discharge of its functions are properly documented, summarised and reported to the Board. In accordance with the approved TOR of the NRC, the NRC carried out the following activities during the financial period ended 30 June 2019: • assessed the annual performance of each individual Director;

• assessed the continued independence of each Independent Director;

• reviewed the skills, experience and competencies of each individual Director and based thereupon,

assessed the training needs of each individual Director;

• assessed the effectiveness of the Board, the ARMC and other Committees of the Board;

• reviewed the skills, experience and competencies of the non-executive Directors;

• assessed the adequacy of the size and composition of the Board;

• reviewed the proposed remuneration for the Non-Executive Directors of the Company;

• reviewed the retirement and re-election of the Directors pursuant to the Articles of Association of the Company;

• evaluated and recommended to the Board the former CEO’s BSC for the financial year ended 31

March 2018;

• evaluated and recommended to the Board the CEO’s BSC for the financial period under review;

• assessed and recommended to the Board the appointment and remuneration package for the CEO and executive Director;

• reviewed the composition of the Board and Board Committees and recommended to the Board the

proposed appointment of Independent Non-Executive Director and member to the Board Committees. • reviewed the developments relating to legal proceedings taken by the authorities against one of the

Directors. III. REMUNERATION The NRC is responsible for the review of the overall remuneration policy for the Directors and the CEO whereupon recommendations are submitted to the Board for approval. The NRC advocates a fair and transparent remuneration policy framework such that the Group may attract, retain and motivate high quality Directors. The Non-Executive Directors are paid by way of fees for their services, as from time to time determined by the Company in AGM and are not compensated based on the Company’s (Group’s) performance and results as this may impair the Directors’ objectivity and independence, particularly when asked to endorse risky business decisions that may have a vast upside potential. The Non-Executive Directors are reimbursed for all their travelling, hotel and other expense properly and necessarily expended by them in and about the business of the Company and are paid meeting allowances together with travelling and other expenses incurred, in attending the meetings of the Board or any Board Committees of the Company. The Executive Director is not entitled to the abovementioned Director’s fee or any meeting attendance allowances. The remuneration package for the CEO comprises a fixed direct compensation, principally salary and benefits-in-kind and a variable direct compensation which includes a short-term incentive and long-term incentive, taking into consideration market rates and practices. The variable direct compensation will be determined based on the CEO’s achievement based on the KPIs set in his BSC. The CEO, who serves as an Executive Director of the Company received no payment from the Company, save for the remuneration paid to him for his management position arising from his employment contract with the Company.




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Section 230(1) of the Companies Act, 2016 (the “Act”) provides amongst others, that “any benefits” payable to the directors of a listed company and its subsidiaries shall be approved at a general meeting. In view that the “benefits payable to the directors” under the Act is not defined by the Act itself, the Board approved the NRC’s recommendation to seek the approval of the shareholders for the benefits payable to the Directors for the period from the forthcoming AGM to held on 28 November 2019 until the date of the next AGM of the Company (“Relevant Period”) at the upcoming AGM of the Company in accordance with the remuneration structure set out below:

Type of Benefit Chairman (RM/meeting)

Non-Executive Directors (RM/meeting)

Meeting Allowance • Board Meeting • ARMC Meeting • NRC Meeting

• 1,500 • 1,500 • 1,000

• 1,500 • 1,000 • 1,000

The estimated benefits payable to the Directors for the Relevant Period are expected to come up to approximately RM240,000.00. In determining the estimated total benefits payable to the Directors for the Relevant Period, the size of the Board and Board Committees and the number of scheduled meetings of the Board and Board Committees to be held during the Relevant Period based on the above remuneration structure were taken into consideration. The Board is of the view that it is just and equitable for the Non-Executive Directors to be paid the Directors’ remuneration (excluding Directors’ fees) as and when incurred, particularly after they have discharged their responsibilities and rendered their services to the Company throughout the Relevant Period. The structure of the remuneration package for the Non-Executive Directors was last revised by the Board in respect of the financial year ended 31 December 2009 and since then the remuneration package for the Non-Executive Directors has remained unchanged. In view of the current challenges faced by the Group, although the Non-Executive Directors are burdened with increasing tasks, responsibilities and liabilities as well as tighter corporate and capital market rules and regulations, the Board concurred with the recommendation of the NRC to maintain the same remuneration structure and Directors’ fees for the Non-Executive Directors in respect of the financial period ended 30 June 2019, which is subject to the approval of the shareholders at the forthcoming AGM of the Company. Nonetheless, the Non-Executive Directors did not receive any payment of Directors’ fees since year 2017 in respect of the financial years ended 31 March 2017 and 31 March 2018 despite the fees had been approved by the shareholders at the respective AGMs, due to the financial position of the Company. The remuneration of individual Directors of the Company, including the remuneration for services rendered to the Group for the financial period ended 30 June 2019, are as follows:- The Group and the Company

Directors

Fee Salaries Other Allowances Total

Company Group Group /

Company Company Group Company Group

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'00

0

Dato’ Mohammed Azlan bin Hashim (1) 3 3 - - - 3 3

Tan Sri Nik Mohamed bin Nik Yaacob (2) 17 32 - 6 11 23 43

Mr Cyrus Eruch Daruwalla (3) 26 26 - 4 4 30 30

Dato’ Sreesanthan A/L Eliathamby (4) 70 70 - 22 22 92 92

Mr Foong Choong Hong (5) 66 66 - 20 20 86 86

Mr Lee Chun Fai 60 118 - 19 37 79 155

Mr Liew Willip(6) 70 70 - 25 25 95 95

Encik Shah Hakim @ Shahzanim bin Zain (7) 44 823 242 14 28 300 1,093

Mr Sammy Tse Kwok Fai (8) - - 2,135 - 2,135 2,135

Dato’ Mohd Shahrom bin Mohamed (9) - - - - - - -

Encik Amirul Azhar bin Baharom (10) - - - - - - -

Grand Total 356 1,208 2,377 110 147 2,843 3,732


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Notes:

(1) Resigned as an Independent Non-Executive Director and Chairman of the NRC on 14 April 2018. (2) Resigned as an Independent Non-Executive Director and Chairman of the ARMC on 19 July 2018. (3) Resigned as a Non-Independent Non-Executive Director on 15 October 2018. (4) Re-designated as an Independent Non-Executive Director on 24 August 2018. (5) Appointed as a member of the ARMC on 18 October 2018. (6) Appointed as Chairman of the ARMC on 25 October 2019. (7) Resigned as Chief Executive Officer and re-designated as Non-Independent Non-Executive Director on 2 August 2018. (8) Appointed as an Executive Director on 24 July 2018 and Chief Executive Officer on 2 August 2018. (9) Appointed as an Independent Non-Executive Director on 4 September 2019 and a member of the NRC on 23 September 2019.

Subsequently, he was appointed as Chairman of the NRC on 25 October 2019. (10) Appointed as an Independent Non-Executive Director on 4 September 2019. PRINCIPLE B : EFFECTIVE AUDIT AND RISK MANAGEMENT I. Audit and Risk Management Committee In discharging its fiduciary responsibility, the Board is assisted by the ARMC to oversee the financial reporting processes and the quality of the Group’s financial statements. The ARMC members, all of whom are financially literate, reviewed the Company and the Group’s financial statements, prior to recommending them for approval by the Board and issuance to the shareholders and stakeholders. The ARMC is chaired by an Independent Non-Executive Director who is distinct from the Chairman of the Board. The ARMC has met six (6) times during the financial period under review in order to carry out their duties in accordance with the TOR. The CEO and CFO formally presented to the ARMC and the Board the details of financial performance of the Company and the Group, for review of quarter-to-quarter and year-to-date performance against the approved budget. The attendance of each ARMC member is set out in page 27 of this Annual Report. The primary objective of the ARMC is to assist the Board to review the adequacy and integrity of the Group’s financial administration and reporting, internal control and risk management systems, including the management information system and systems for compliance with applicable laws, regulations, rules, directives and guidelines. The Board, through the ARMC, maintains an appropriate, formal and transparent relationship with the Group’s internal and external auditors. The ARMC is guided by the Group’s policies and procedures in accessing the suitability and independence of the external auditors, which also includes the provision of non-audit services by the external auditors to the Group and the Company to ensure their independence is not compromised. Those policies and procedures are to be read in conjunction with the TOR of the ARMC, which outlines the duties and responsibilities of the ARMC relating to the appointment of the external auditors. The ARMC has explicit authority to communicate directly with the Group’s internal and external auditors and vice versa the Group’s internal and external auditors also have direct access to the ARMC to highlight any issues of concern at any time. Further, the ARMC meets the external auditors without the presence of Executive Directors or the Management whenever necessary, but no less than twice a year. Meetings with the external auditors are held to further discuss the Group’s audit plans, audit findings, financial statements, as well as to seek their professional advice on other related matters. The ARMC is also tasked by the Board to consider the appointment of the external auditor, the audit fee and any questions relating to the resignation or dismissal as well as all non-audit services to be provided by the external auditors to the Company with a view to auditor independence and to provide its recommendations thereon to the Board. The ARMC had at its meeting held on 25 October 2019 undertook an annual assessment of the suitability and independence of the external auditors, KPMG PLT (“KPMG”) in accordance with the Policy on the Selection of External Auditors of the Company which was adopted in 2014. Being satisfied with KPMG’s performance, technical competency and audit independence as well as fulfilment of criteria as set out in the Policy on the Selection of External Auditors of the Company and Paragraph 15.21 of the Listing Requirements, the ARMC recommended the re-appointment of KPMG, who have consented to act, as external auditors of the Company for financial year ending 30 June 2020. The ARMC was also satisfied that the provision of the non-audit services by KPMG for the financial period ended 30 June 2019 did not in any way impair their objectivity and independence as external auditors of the Company. Subsequently, the Board at its meeting held on 25




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October 2019 concurred with the ARMC on its recommendation for the shareholders’ approval to be sought at the forthcoming AGM on the re-appointment of KPMG as external auditors of the Company for the financial year ending 30 June 2020. The membership, TOR, roles and relationship with both the internal and external auditors and activities of the ARMC during the financial period ended 30 June 2019 are set out on ARMC Report of this Annual Report. II. Risk Management and Internal Control Framework The Board firmly believes in maintaining a sound risk management framework and internal controls system with a view to safeguard shareholders’ investment and the assets of the Group. The size and geographical spread of the Group involve exposure to a wide variety of risks, where the nature of these risks means that events may occur which could give rise to unanticipated or unavoidable losses. In establishing and reviewing the risk management and internal controls system, the Board recognises that such systems can provide only reasonable, but not absolute, assurance against the occurrence of any material misstatement or loss. The ARMC meets on a regular basis to ensure that there is clear accountability for managing significant identified risks and that identified risks are satisfactorily addressed on an ongoing basis. In addition, the adequacy and effectiveness of the risk management and internal controls system is also periodically reviewed by the ARMC. The Board has received assurance from the CEO and the CFO that the Group’s risk management and internal controls system is operating adequately and effectively, in all material aspects. Regular assessments on the adequacy and integrity of the internal controls and monitoring of compliance with policies and procedures are also carried out through internal audits. The risk-based internal audit plan that covers internal audit coverage and scope of work is presented to the ARMC for its consideration and approval annually. Internal audit reports encompassing the audit findings together with recommendations thereon are presented to the ARMC on a periodic basis. The GIA, senior and functional line management are tasked to ensure management action plans are carried out effectively and regular follow-up audits are performed to monitor the continued compliance. In February 2019, the Company ceased sharing resources relating to the internal audit function with its subsidiary. Subsequent to the end of the financial period, a firm specializing in internal audit services was appointed to carry out the internal audit function. The main features of the risk management framework and internal controls system of the Group are as set out on Statement on Risk Management and Internal Control of this Annual Report. PRINCIPLE C : INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS I. COMMUNICATION WITH STAKEHOLDERS The Board recognises the importance of maintaining transparency and accountability to its shareholders. The Board ensures that all the shareholders of the Company are treated equitably and provides with comprehensive, accurate and quality information on a timely and non-selective basis, in order to keep them abreast of all material business matters affecting the Company and the Group. Recognising the importance of accurate and timely public disclosures of corporate information in order for the shareholders to exercise their ownership rights on an informed basis, the Board has established a Global Communications Policy with the following intention:

• to provide guidance and structure in disseminating corporate information to, and in dealing with investors, analysts, media representatives, employees and the public;

• to raise management and employees’ awareness on the disclosure requirements and practices; • to ensure compliance with legal and regulatory requirements on disclosure; and


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• to protect the brand equity of the Group by managing the risk associated with the brand i.e. exposures to the brand that can undermine its ability to maintain its desired differentiation and competitive advantage.

The Global Communications Policy outlines how the Group identifies and distributes information in a timely manner to all shareholders. It also reinforces the Group’s commitment to the continuous disclosure obligations imposed by law, and describes the procedures implemented to ensure compliance. The Board through the Management oversees the Group’s corporate disclosure practices and ensures implementation and adherence to the policy. The Board has authorised the GCEO as the primary spokesperson responsible for communicating information to all stakeholders including the public. The Group also maintains a corporate website, www.scomigroup.com.my to disseminate information and enhance its investor relations. All disclosures, material information and announcements made to Bursa Securities are published on the website shortly after the same is released by the news wire service or the relevant authorities. Supplemental, non-material information will be posted on the website as soon as practicable after it is available. The Group recognises the need for due diligence in maintaining, updating and clearly identifying the accuracy, veracity and relevance of information on the website. All timely disclosure and material information will be clearly date-identified and retained on the website as part of the public disclosure record for a minimum period of two (2) years. The Corporate Communications Department has ongoing responsibility for ensuring that information in the website is up-to-date. In addition, the email address, name and contact number of the Company’s designated person is listed in the website to enable the public to forward queries to the Company. II. CONDUCT OF GENERAL MEETINGS Shareholders are encouraged to attend the AGM and any general meetings of the shareholders, which is the principal forum for dialogue between the Board and the shareholders and provides shareholders the opportunity to raise questions or concerns with regards to the Group as a whole, as well as to discuss any other important matters with the Management and the Board. The financial year end of the Company has been changed from 31 March to 30 June. The Company has obtained approval from Companies Commission of Malaysia for an extension of time for holding the AGM of the Company which is due to be held latest by 23 November 2019, i.e. within fifteen (15) months after the last preceding AGM pursuant to Section 340(2)(b) of the Companies Act 2016. A notice period of more than 21 days will be given to shareholders for the upcoming AGM in 2019 in compliance with the Companies Act 2016 and the Listing Requirements. This is to provide sufficient time to shareholders to understand and evaluate the matters involved as well as to make necessary arrangements to attend, participate and vote either in person, by corporate representative, by proxy or by attorney, to exercise their ownership rights on an informed basis during the AGM and any general meetings of the shareholders. Where special business items are to be transacted, a full explanation is provided in the notice of the AGM and any general meetings of the shareholders or the related circular to shareholders in order to assist the shareholders’ understanding of matters and the implication of their decision in voting for or against a resolution. In line with paragraph 8.29A of the Listing Requirements, all the resolutions set out in the notices of the 16th AGM were put to vote by poll. The Company had appointed Symphony Share Registrars Sdn Bhd as Poll Administrator to conduct the polling process, and Symphony Corporatehouse Sdn Bhd as Independent Scrutineers to verify the poll results. Voting at the previous AGMs was conducted through electronic poll voting (e-voting), where personalised wristbands were issued by the Share Registrar upon registration. The electronic poll voting was conducted upon completion of the deliberation of all items to be transacted at the AGMs. The Chairman, upon the verification of the poll results by the Independent Scrutineers, announced the results for each resolution, which include votes in favour and against and declared whether the resolutions were carried. The outcomes of the AGMs were announced to Bursa Securities on the same day the meeting was held. The Minutes of the AGMs were also made available on the Company’s website at www.scomigroup.com.my.




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The Board, the Management Team, both internal and external auditors of the Company and if required, the Advisers, are present at the AGM and any general meetings of the shareholders to answer questions or concerns raised by shareholders. Before the commencement of the AGM and any general meetings of the shareholders, the Directors and the Management Team will take the opportunity to engage directly with the shareholders which provides the shareholders a better appreciation of the Company’s objectives, quality of its management and the challenges faced, while also making the Company aware of the expectations and concerns of its shareholders. During the AGM and any general meetings of the shareholders, there is always a presentation by the CEO or a representative from the Management Team on the Group’s strategy, the operations and financial performance of the Group, the major developments and the prospects of the Group and the subject matters tabled for decision. Besides that, the Chairman of the AGM and any general meetings of the shareholders will invite the shareholders to raise questions pertaining to the Company’s financial performance and other items for adoption at the meeting, before putting a resolution to vote. The Chairman of the AGM and any general meetings of the shareholders will also share with the shareholders the Company’s responses to questions submitted in advance of the AGM and any general meetings of the shareholders by the Minority Shareholder Watchdog Group, if any. At the 16th AGM, majority of the Directors were present in person. Following the presentation by the CEO of the Group’s strategy, the operations and financial performance of the Group, the major developments and the prospects of the Group to the shareholders, the Chairman of the AGM invited shareholders to raise questions pertaining to the Company’s financial performance and other items for adoption at the meeting, before putting a resolution to vote. The Directors, CEO, Management, internal and external auditors were in attendance to respond to the questions or concerns raised by shareholders. FOCUS AREAS AND PRIORITIES ON CORPORATE GOVERNANCE I. PROFESSIONAL DEVELOPMENT OF DIRECTORS All Directors have attended the Mandatory Accreditation Programme as required under the Listing Requirements. To remain relevant in the rapidly changing and complex modern business environment, our Directors are committed to continuing education and lifelong learning to fulfil their responsibilities to the Company and enhance their contributions to board deliberations. In addition to the NRC’s evaluation and determination of the training needs for each of the Directors, the Directors may also request to attend training courses according to their needs as a Director or member of the respective Board Committees on which they serve. Throughout the period under review, the Directors were also invited to attend a series of talks on Corporate Governance organised by Bursa Securities together with various professional associations and regulatory bodies. An appropriate induction is provided to any newly appointed Directors in order for them to familiarise themselves with the Group’s organisational structure, strategic plans, significant financial, accounting and risk issues and other important matters and become effective in their role within the shortest practicable time. The induction programme also allowed them to get acquainted with Senior Management, so as to facilitate board interaction and independent access to the Management. During the financial period under review, the Board members have attended various training programmes, conferences, seminars and courses organised by the relevant regulatory authorities and professional bodies on areas relevant to the Group’s business, Directors’ roles, responsibilities, effectiveness and/or corporate governance issues. Training programmes, conferences, seminars and courses attended by Directors during the period under review are as follows:


36 Scomi Group Bhd


Page 15 of 15

Programmes Attended • Seminar Global Islamic FinTech 2018 • MICCI Business Forum 2018 • PKF MFRS 9 Financial Instruments and MFRS 16 Leases – The Malaysian Accounting Standards Board

• Bursa Cyber Security in the Boardroom – Accelerating from Acceptance to Action • PNB Leadership Forum 2019 – Positive Autocracy : A Leadership Model for Industry 4.0 • Invest Asia Conference 2019, Singapore • Talk on CG Watch : How Does Malaysia Rank? • 22nd Credit Suisse Asian Investment Conference, Hong Kong • 15th Invest Malaysia Conference – Invest Malaysia • PNB Leadership Forum • CIMB 11th Annual Malaysia Corporate Day • Talk on Corporate Liability : New Era of Corporate Liability under Malaysian Anti Bribery Laws by M/S

Wong & Partners • Budget Talk 2019 by PWC • IJM Digital Strategy Workshop by Technical University of Munich • Investors’ Conference – Malaysia : A New Dawn • CLSA Investors’ Forum – Hong Kong • IJM Senior Management Forum – Waking Up to A New Reality • Daiwa Asean Corporate Day, Tokyo

• Competitive Malaysia Series II 2019 : Leadership and Talent Management to be Globally Competitive • Case Study Workshop for Independent Directors Apart from attending the training programmes, conferences and seminars organised by the relevant regulatory authorities and professional bodies, the Directors continuously received briefings and updates on regulatory and industry development, including information on the Group’s businesses and operations, risk management activities and other initiatives undertaken by the Group. This Statement is made in accordance with the resolution of the Board dated 31 October 2019.



Statement on Risk Management and Internal Control STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

(SGB: FY2019) Page 1 of 3

INTRODUCTION The Board of Directors is pleased to provide the following statement which has been prepared in accordance with the Statement on Risk Management and Internal Control - Guidelines for Directors of Listed Issuers endorsed by Bursa Securities. It outlines the main features of the Risk Management Framework and Internal Controls System of the Group covering all operations during the financial year under review pursuant to the Paragraph 15.26(b) of the Listing Requirements and the Malaysia Code on Corporate Governance 2017. The disclosures in this statement do not include the risk management and internal control practices of the Group’s material Associates. INTERNAL AUDIT FUNCTION Scomi Group Bhd and Transport Solutions segment shared the Internal Audit (“IA”) function with a significant subsidiary, Scomi Energy Services Bhd. In January 2019, the Board of Directors of Scomi Group Bhd and Transport Solutions segment deliberated and decided to cease the sharing of the IA resources with Scomi Energy Services Bhd. The Board opted to outsource its IA to minimise cost. Subsequently, this decision was deliberated in the Audit and Risk Management Committee in February 2019. In this respect, there were no internal audit activities since December 2018 being performed for Scomi Group Bhd and Transport Solutions segment while IA function for Scomi Energy Sevices Bhd is functional and operating throughout the financial period. In September 2019, the Scomi Group Bhd and Transport Solutions segment appointed a firm specialising in internal audit services to carry out its the internal audit activities. RESPONSIBILITY AND ACCOUNTABILITY The Board The Board is committed to ensure that its Group’s Risk Management Framework and Internal Controls System are effective and adequate. However, the Board recognises that such systems are designed to manage and reduce, rather than eliminate the risks identified to acceptable levels. Therefore, the internal controls implemented can only provide reasonable and not absolute assurance against the occurrence of any material misstatement, loss or fraud. The Board has overall responsibility for the Group’s Risk Management Framework and Internal Controls System and has delegated the implementation of the framework and system to the Management whilst the Audit and Risk Management Committee of the Board (the “ARMC”) was tasked by the Board with oversight responsibility to review the adequacy and effectiveness of the Risk Management Framework and Internal Controls System. The Management The Management acknowledges responsibility for implementing the processes to identify, assess, treat, monitor and report on risks and the effectiveness of the Internal Controls System, taking appropriate and timely corrective actions as required. It assures the Board that the Group’s risks are effectively managed based on the Risk Management Framework adopted by the Group and the Internal Controls System are operating adequately and effectively, in all material aspects. On a quarterly basis, Management reports to the ARMC on all risk areas faced by the Group as well as actions taken by Management to address those high risk areas. At the same meeting, findings identified from the internal audit reviews conducted by the Group Internal Audit and actions taken by Management to address the findings are reported to the ARMC. The Chairman of the ARMC will also report to the Board if there are significant matters arising from the risks and internal controls related matters and recommendations deliberated by the ARMC at the immediate subsequent Board meeting.

38 Scomi Group Bhd

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL


RISK MANAGEMENT FRAMEWORK The management of risks is aimed at achieving an appropriate balance between realising opportunities for gains while minimising losses to the Group. The Group is committed to ensuring that the organisation achieves its strategic objectives and that the risks inherent in its business are identified and effectively managed. The Group has established an Enterprise Risk Management Framework (“Framework”) which serves to inform and provide guidance to Directors, senior management, functional line management and staff in managing risks affecting businesses and operations of the Group. The risk management process is applied to all levels of activity in the Group, with the objective of establishing accountability and ensuring risk mitigation at the source. The level of risk tolerance of the Group is expressed through the use of a risk impact and likelihood Matrix. Once the risks level is determined, the risk owner is required to deal with the relevant risks by adhering to the Group’s risk treatment guidance on the actions to be taken and establish Risk Action Plans (“RAP”) to detail out mitigating activities to be carried out with the prescribed timeline for implementation. INTERNAL CONTROLS SYSTEM The internal controls system of the Group covers amongst others, matters on governance, organisational, financial, business strategy, operations, regulatory and compliance control matters which includes: Structured Organisational Reporting Lines The Board is supported by two (2) Board Committees which provide focus and counsel in the areas of:

1. Audit and Risk Management; and 2. Nomination and Remuneration of Directors and CEO.

Certain Board responsibilities are delegated to the Board Committees through defined Terms of Reference, which are reviewed from time to time. On a quarterly basis, board papers, which include financial and non-financial matters such as quarterly results, business strategies, explanation of the performance of the Group and corporate activities and exercises of the Group are tabled to the Board for deliberation and approval. Delegated Authority Limits (“DAL”) The Board’s approving authority on certain specified activities is delegated to the Management through a formally defined DAL which is the primary instrument that governs and manages the business decision making process in the Group. The key principle adhered to in its formulation is to ensure that a system of internal controls, and checks and balances are incorporated therein. The DAL was reviewed and updated during the financial period to ensure its relevance to the Group’s operations. Code of Conduct The Board and employees of the Group are committed to adhering to the best practises in corporate governance and observing the highest standards in integrity and behaviour in all activities conducted by the Group. All employees of the Group of managerial level and above are required to annually confirm their receipt and understanding of the Code of Conduct and certify their continued compliance. Policies, Procedures, Processes and Systems Processes are documented and formalised in the form of internal policies and procedures to ensure compliance with internal controls and relevant rules and regulations. These documents are made available on the Scomi intranet for easy access by the employees.

Statement on Risk Management and Internal Control


STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL


Information and Communication Following from the organisational reporting structure, information is communicated and disseminated to all employees in all locations within the Group. To ensure compliance to the Listing Requirements, the Board and Principle Officers of the Company are informed in advance before the commencement of each closed period, during which time they are to comply with the additional disclosure requirements related to the dealings as set out in the Listing Requirements. Whistleblower Framework and Policy The Group has in place a Whistleblower Framework and Policy, to provide an avenue for employees to raise genuine concerns internally or report any breach or suspected breach of any law or regulation. These disclosures are investigated, pursuant to which remedial and/or disciplinary actions may be taken, if warranted. These disclosures and the results of the investigations undertaken are reported to the Board on a timely basis. Independent Assurance Mechanism Regular assessments on the adequacy and integrity of the internal controls and monitoring of compliance with policies and procedures are carried out through internal audits. The internal audit function reports to the ARMC quarterly and is independent of the activities and operations of the Group. Internal audit reports, which encompass audit findings together with recommendations thereon, are presented to the ARMC during its quarterly meetings. In addition to this internal assurance mechanism, the Group also received ARMC reports and the management letter from its External Auditors that primarily focuses on financial controls which are presented to the ARMC for deliberation. Besides this, the ARMC also conducts private meetings with the External Auditors, to give an opportunity to the External Auditors to raise any matters without executive board members or the Management present. BOARD ASSURANCE AND LIMITATION

The Board of Directors has received an assurance from the CEO and CFO that the Company’s risk management and internal control system is operating adequately and effectively, in all material aspects, based on the risk management and internal control system of the Company.

While the Board reiterates that the Risk Management Framework and Internal Controls System should be continuously improved in line with evolving business developments, it should also be noted that the framework and system can only manage rather than eliminate the risks of the failure to achieve business objectives. Therefore, the Risk Management Framework and Internal Controls System in the Group can only provide reasonable but not absolute assurance against material misstatements, losses and frauds.

This Statement is made in accordance with the resolution of the Board dated 31 October 2019.

Statement on Risk Management and Internal Control

40 Scomi Group Bhd

AUDIT AND RISK MANAGEMENT COMMITTEE REPORT

Page 1 of 4

The Board of Directors of Scomi Group Bhd (the “Company”) (the “Board”) is pleased to present the Report of the Audit and Risk Management Committee (the “ARMC” or “Committee”) for the financial period ended 30 June 2019 (“FY2019”) to provide insights into the manner in which the ARMC discharged its functions for FY2019. TERMS OF REFERENCE (“TOR”) The details of the TOR of the ARMC are available for reference on the Company’s website at www.scomigroup.com.my. COMPOSITION As at the date of this report, the ARMC comprised three (3) members, all of whom are Non-Executive Directors, and two (2) of them being Independent Directors. As disclosed in the Profile of Directors section of this Annual Report, two (2) members of the Committee fulfil the financial expertise requirement of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Listing Requirements”) and the majority of the members of the Committee are financially literate with sufficient financial experience and ability to assist in discharging the Board’s fiduciary duties with respect to its responsibility for overseeing the following: (i) the financial administration and reporting process and ensuring that the financial results of the

Group and the Company are truly and fairly presented in its financial statements; (ii) the adequacy and effectiveness of the risk management and internal control systems; (iii) the performance of the external and internal audit functions; and (iv) the fairness and reasonableness of the related party transactions (“RPTs”) entered into by the

Company with related parties. The composition of the ARMC complies with paragraph 15.09(1) of the Listing Requirements. MEETINGS AND ATTENDANCE A total of six (6) ARMC meetings were held during the period under review, which were on 28 May 2018, 11 July 2018, 29 August 2018, 30 November 2018, 28 February 2019 and 30 May 2019. A quorum, established by the presence of a majority of members who are Independent Directors, was always met. The Chief Executive Officer (“CEO”), the Chief Financial Officer (“CFO”), the Head of Legal and Corporate Secretarial, the Head of Group Internal Audit (“GIA”) and the Head of Assurance were invited to the ARMC meetings to provide a direct flow of information to the ARMC as well as to provide clarification in the finding of any issues arising. The responsible personnel were invited to brief the ARMC on specific issues involving their respective areas of responsibility arising from the risk management and internal audit reports, when necessary. The external auditors were also invited to present to the ARMC the audit plan, the audit findings, the independent auditors’ report as well as any other matters as they considered were important for the ARMC’s attention. During the financial period under review, the ARMC has conducted one (1) private meeting with the external auditors, to give opportunity to the external auditors to raise any matters without the presence of the executive board members and the Management. On 4 December 2018, the Company received a notice in writing pursuant to Section 281 of the Companies Act 2016 from Messrs KPMG PLT on their resignation as External Auditors of the Company. Subsequent thereto, Messrs KPMG PLT was approached and the ARMC has recommended the appointment of Messrs KPMG PLT as the Auditors of the Company for the financial period ended 30 June 2019. The appointment of Messrs KPMG PLT was approved by the Board on 6 August 2019 upon receipt of their written consent to act as Auditors of the Company. The said appointment was announced to Bursa Malaysia Securities Berhad on the same day.

Audit and Risk Management Committee Report



Page 2 of 4

In February 2019, the Company ceased sharing resources relating to the internal audit function with its subsidiary. Subsequent to the end of the financial period, a firm specialising in internal audit services was appointed to carry out the internal audit function. During the financial period under review, the members of the ARMC and their attendance of Meetings held are as follows:

NAME ARMC DESIGNATION ATTENDANCE (attended/held)

Tan Sri Nik Mohamed Bin Nik Yaacob(1) Chairman Independent Non-Executive Director 2/2

Dato' Sreesanthan A/L Eliathamby Member Independent Non-Executive Director 5/6

Liew Willip(2) Chairman(3) Independent Non-Executive Director 6/6

Foong Choong Hong(3) Member Non-Independent Non-Executive Director 3/3

Note: (1) Resigned as an Independent Non-Executive Director and member of the ARMC on 19 July 2018. (2) Appointed as Chairman of the ARMC on 25 October 2019. (3) Appointed as member of the ARMC on 18 October 2018. The minutes of each ARMC meeting were recorded and tabled to the ARMC for adoption at subsequent ARMC meetings and thereafter all minutes of ARMC meetings and circular resolutions passed are presented to the Board for notation. The proceeding of ARMC meetings and recommendations of the ARMC as well as the significant matters and resolutions deliberated by the ARMC were reported to the Board at its immediate subsequent meeting for consideration and approval. The Board, through its Nomination and Remuneration Committee, has reviewed the performance of the ARMC and the skills, experience and competencies possessed by the members of the ARMC through an annual ARMC effectiveness assessment. The Board is satisfied with the performance of the ARMC and its members where they have carried out their duties and responsibilities in accordance with the TOR of the ARMC. SUMMARY OF ACTIVITIES In accordance with the approved TOR of the ARMC, the ARMC carried out the following activities during the FY2019: 1. reviewed the quarterly financial performance and annual audited financial statements of the

Company prior to submission to the Board for consideration and approval; 2. reviewed the quarterly financial performance of the Company and its substantial subsidiaries

against the approved budget where explanations, clarifications and corrective action taken for significant variances are reported by the Management to the ARMC;

3. reviewed and discussed with the external auditors the nature and scope of the audit plan and

ensure that the audit plan is comprehensive; 4. reviewed the audit findings arising from the statutory audit activities conducted by the external

auditors and the Management’s responses thereto; 5. reviewed and recommended to the Board the proposed non-audit services to be provided by

the external auditors in accordance with the Policy on the Selection of External Auditors; 6. reviewed the non-audit fees paid or payable to the external auditors based on the approved

audit plan and non-audit services for the Group and the Company and recommended the same to the Board for approval;


42 Scomi Group Bhd


Page 3 of 4

7. conducted private meetings with the external auditors, without the presence of the CEO and Management, to give the external auditors the opportunity to raise any matters of concern and, arising therefrom, directing Management to take further action on such matters;

8. reviewed and approved the annual risk-based internal audit plan and scope of work for the

Group and the Company and ensured the adequacy of resources and competencies of the GIA to carry out the internal audit on all significant businesses and support functions based on identification and evaluation of the respective risks and control environment;

9. reviewed the internal audit reports comprising audit findings, recommendations and the

Management responses for the Group and the Company prepared by the GIA; 10. reviewed the reports prepared by the GIA relating to the follow-up audits on all major areas of

concern and recurring issues and risk areas to assess the extent to which the Management has made progress in implementing the agreed action plans arising from the prior internal audit reviews;

11. reviewed the update report from the GIA on the status of the implementation of the

recommendations as stated in the management letter prepared by the external auditors; 12. reviewed the list of related party transactions and conflict of interest entered into by the

Company; 13. reviewed the Group and the Company’s risk profiles and actions plan taken by the

Management to control and mitigate the risks on a quarterly basis except for the third quarter ended 31 December 2018 due to lack of resources;

14. reviewed the proposed amendments to the Terms and Reference of the ARMC and

recommended to the Board for approval; 15. reviewed the proposed change in the financial year end of the Company and recommended to

the Board for approval;

16. reviewed the resignation and appointment of the external auditors of the Company for the financial period ended 30 June 2019;

17. reviewed the Minutes of the ARMC meetings of substantial subsidiaries; 18. reviewed the annual Corporate Governance Overview Statement and Corporate Governance

Report, Statement on Risk Management and Internal Control and ARMC Report to be published in the Annual Report;

19. tabled the approved Minutes of the ARMC meetings for the notation of the Board on a quarterly

basis; and 20. reported significant matters and resolutions deliberated by the ARMC to the Board. INTERNAL AUDIT FUNCTION During FY2019, the Group had an in-house Internal Audit Department led by the Head of GIA who reported directly to the ARMC. The GIA carried out their functions according to the standards set by recognised professional bodies. However, in February 2019, the Company ceased sharing resources relating to the internal audit (“IA”) function with its subsidiary and subsequent to the end of the financial period on 23 September 2019, a firm specialising in IA services, namely GRC Consulting Services Sdn Bhd, was appointed to carry out the Group’s IA function. The IA function for the Oilfield and Marine Services Division was functional and operating throughout the financial period. The GIA provides independent and objective assessment on the adequacy and effectiveness of the governance, risk management and internal control processes within the Group. Through the GIA, the Company undertakes regular and systematic reviews of the risk management and internal controls system so as to provide reasonable assurance that such internal controls system continues to operate adequately and effectively in the Group.




Page 4 of 4

The GIA report directly to the ARMC to ensure impartiality and independence. The ARMC reviews the risk based internal audit plans and scope of work for the year for the Group and the Company as well as the performance of the GIA in undertaking their internal audit function. The ARMC has direct communication channels with, and full access to, the GIA for all internal audit reports prepared. During the financial period under review, the GIA conducted various internal audit engagements in accordance with the approved risk-based internal audit plans that are consistent with the corporate goal of the Group. Details of the internal audit activities carried out by the GIA are as follows: 1. prepared and presented the risk-based internal audit plan, audit strategy, scope of work and

resource requirements to the ARMC for deliberation and approval; 2. evaluated and appraised the soundness, adequacy and application of financial and other

controls and promoting effective controls in the Group and the Company at reasonable cost; 3. ascertained the level of operational compliance with established policies, procedures and

statutory requirements; 4. ascertained the extent to which the Group’s and the Company’s assets are accounted for,

verification of their existence and safeguarding assets from losses; 5. identified and recommended opportunities for improvements to the existing system of internal

control, operations and processes in the Group and the Company; 6. conducted follow-up audits on major areas of concern and recurring themes to ensure that the

corrective actions were implemented appropriately to enhance the governance, risk management and control processes within the Group and the Company;

The total costs incurred for the internal and outsourced audit function of the Group (including Scomi Energy Services Bhd Group) for the FY2019 amounted to RM1,185,659.00, while the total cost incurred for the internal and outsourced audit function of the Group (excluding Scomi Energy Services Bhd Group) amounted to RM409,000.00. This Statement is made in accordance with the resolution of the Board dated 31 October 2019.


44 Scomi Group Bhd

Additional InformationAdditional Compliance Information

1. Material Contracts of the Company and its Subsidiaries, involving the interests of the Directors, Chief

Executive Officer or Major Shareholders’ Interests There was no material contract entered into by the Group involving the interest of Directors, Chief Executive Officer or major shareholders, either still subsisting at the end of the financial period ended 30 June 2019 or entered into since the end of the previous financial year.

2. Utilisation of Proceeds Raised from Corporate Proposals The utilisation of proceeds raised from the recent proposed private placement is as follows:-

Proposed Utilisation

Actual Utilisation

Purpose RM’000 RM’000

Part repayment of advances from SESB 11,000 11,000

Part repayment to the non-trade creditors 4,885 4,277

Working capital 11,906 7,991

Redemption of securities pledged 15,659 15,659

Estimated expenses in relation to the Proposals 1,550 751

45,000 39,678

3. Audit and Non-Audit Fees

The amount of audit and non-audit fees incurred for the services rendered to the Company and the Group by the external auditor during the financial year under review are as follows:

Types of Fees The Company (RM)

The Group (RM)

Audit fee 530,000 4,458,000

Non-audit fee 24,000 111,000


Additional Compliance Information

4. Director’s Conflict of Interest

Save as disclosed below and the disclosures in the Notes to the Financial Statements of the Company for the financial year ended 30 June 2019, the Directors of the Company do not have any existing conflicts of interest or any personal interest in any business arrangement involving the Company:

Director of the Company

Nature of existing conflict of interest Transactions

Shah Hakim @ Shahzanim bin Zain (“Encik Shah Hakim”)

Encik Shah Hakim is the Non-Independent Non-Executive Director of the Company; and a substantial shareholder of Suria Business Solutions Sdn Bhd (“Suria”)

Tenancy of office space at Dataran Prima, Petaling Jaya, Selangor provided by Scomi Oiltools Sdn Bhd, a subsidiary of SESB to Suria.

Puan Mazlina binti Zain, the sister of, and person connected to, Encik Shah Hakim is the owner of Lintas Travel Services Sdn Bhd (“LTS”).

Provision of airline ticketing reservation and ticket purchasing services by LTS to the Company and its subsidiaries.

Tan Sri Nik Mohamed Bin Nik Yaacob (“Tan Sri Nik”), Lee Chun Fai (“Mr Lee”), Encik Shah Hakim and Mr Sammy Tse Kwok Fai (“Mr Tse”)

Both Tan Sri Nik and Mr Lee are the common directors of the Company and Scomi Energy Services Bhd (“SESB”). Encik Shah Hakim is the Non-Independent Non-Executive Director of SESB and the substantial shareholder of SGB. Mr Tse is the Executive Director/Chief Executive Officer of SESB and the Executive Director and shareholder of the Company.

a. Renting premises from the

Company for the Group Research and Technology Centre (“GRTC”) by Scomi Oiltools Sdn Bhd, a subsidiary of SESB.

b. Sale of GRTC by the Company to SESB.

c. Sharing of rental of office premises 1 First Avenue and Level 15 Menara TSR between the Company and SESB.

d. Sharing of costs for Legal and Information & Communications Technology Services between the Company and SESB.

e. Sharing of maintenance of accounting system between Scomi Solutions Sdn Bhd, a subsidiary of the Company and SESB.

In respect of each of the above transactions, the relevant Director concerned had declared the nature of his conflict of interest and had abstained from deliberating and voting on the relevant resolutions of the Board of Directors of the Company.

Additional Information

46 Scomi Group Bhd

Statement of Directors’ ResponsibilityAPPENDIX D

Page 1 of 1

STATEMENT OF DIRECTORS’ RESPONSIBILITY The Directors are required by the Companies Act, 2016 (the “Act”) to prepare the financial statements of Scomi Group Bhd (the “Company”) and its subsidiaries (the “Group”) for each financial year which have been made out in accordance with the applicable Malaysian Financial Reporting Standards, the International Financial Reporting Standards, the provisions of the Act, and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, and to present it before the Company at its annual general meeting. The Directors are responsible to ensure that the financial statements give a true and fair view of the state of affairs of the Group and the Company as at 30 June 2019, and of the results and cash flows of the Group and the Company for the financial period ended 30 June 2019. In preparing the financial statements, the Directors have: adopted appropriate accounting policies and applied them consistently; made judgments and estimates that are reasonable and prudent; and prepared the financial statements on a going concern basis. The Directors are responsible to ensure that the Group and the Company keep accounting records which disclose with reasonable accuracy the financial position of the Group and the Company which enable them to ensure that the financial statements comply with the Act. The Directors are also responsible for taking such steps as are reasonably open to them to preserve the interests of stakeholders, to safeguard the assets of the Group, and to detect and prevent fraud and other irregularities.

APPENDIX D

Page 1 of 1

STATEMENT OF DIRECTORS’ RESPONSIBILITY The Directors are required by the Companies Act, 2016 (the “Act”) to prepare the financial statements of Scomi Group Bhd (the “Company”) and its subsidiaries (the “Group”) for each financial year which have been made out in accordance with the applicable Malaysian Financial Reporting Standards, the International Financial Reporting Standards, the provisions of the Act, and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, and to present it before the Company at its annual general meeting. The Directors are responsible to ensure that the financial statements give a true and fair view of the state of affairs of the Group and the Company as at 30 June 2019, and of the results and cash flows of the Group and the Company for the financial period ended 30 June 2019. In preparing the financial statements, the Directors have: adopted appropriate accounting policies and applied them consistently; made judgments and estimates that are reasonable and prudent; and prepared the financial statements on a going concern basis. The Directors are responsible to ensure that the Group and the Company keep accounting records which disclose with reasonable accuracy the financial position of the Group and the Company which enable them to ensure that the financial statements comply with the Act. The Directors are also responsible for taking such steps as are reasonably open to them to preserve the interests of stakeholders, to safeguard the assets of the Group, and to detect and prevent fraud and other irregularities.

048 Directors’Report

056 Statements of Financial Position

058 Statements of Profit or Loss & Other Comprehensive Income

060 Consolidated Statement of Changes in Equity

062 Statement of Changes in Equity

063 Statements of Cash Flows

066 Notes to the Financial Statements

209 Statement by Directors

210 Statutory Declaration

211 Independent Auditors’ Report

219 Appendix

FinancialStatements

48 Scomi Group Bhd

Draft – for discussion purposes and subject to final amendments 1

Scomi Group Bhd (Company No. 571212-A)(Incorporated in Malaysia) and its subsidiaries

Directors’ report for the financial period ended 30 June 2019The Directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial period ended 30 June 2019.

Principal activities

The Company is principally engaged in investment holding activities whilst the principal activities of the subsidiaries are as stated in Note 6 to the financial statements. There has been no significant change in the nature of these activities during the financial period.

As disclosed in Note 25 to the financial statements, the Group has deconsolidated the financial position and results of Scomi Engineering Bhd and its subsidiaries since January 2019.

Subsidiaries

The details of the Company’s subsidiaries are disclosed in Note 6 to the financial statements.

Change of financial year end

The financial year end of the Company was changed from 31 March to 30 June. Accordingly, the financial statements of the Company for the financial period ended 30 June cover a fifteen (15) months period compared to the twelve (12) months for the financial year ended 31 March 2018.

Results Group CompanyRM’000 RM’000

Loss for the financial period attributable to:Owners of the Company 396,171 182,771Non-controlling interests 29,798 -

425,969 182,771

Reserves and provisions

On 31 January 2019, the Company has undertaken a reduction of RM440,000,000 of the issued share capital (“Capital Reduction Exercise”) pursuant to Section 116 of the Companies Act 2016. RM440,000,000 credit arising from such cancellation was being utilised to set-off against the accumulated losses of the Company.

There were no other material transfers to or from reserves and provisions during the financial period under review except as disclosed in Note 25 to the financial statements.

Dividends

No dividend was paid during the financial period and the Directors do not recommend any dividend to be paid for the financial period under review.

Directors’ Report for the financial period ended 30 June 2019



Company No. 571212-A

Consolidation of subsidiaries with different financial year end

The following subsidiaries of the Company continue to have or to adopt a financial period which does not coincide with the Company in relation to the financial period ended 30 June 2019, subject to the following conditions:-

(i) approval by the Companies Commission of Malaysia pursuant to Section 247(7) of the Companies Act 2016; and

(ii) the Company is to ensure compliance with Sections 252 and 253 of the Companies Act 2016 and the approved accounting standards pertaining to the preparation of consolidated financial statements.

Subsidiaries of the Company affected by the above are as follows:

(a) Scomi Oiltools Inc; (b) Scomi Oiltools Russia LLC; (c) Scomi Oiltools (Europe) Ltd; (d) Scomi Oiltools de Mexico S de RL de CV;(e) PT Inti Jatam Pura;(f) PT Scomi Oiltools;(g) PT Multi Jaya Persada;(h) PT Rig Tenders Indonesia Tbk;(i) KMC Oiltools India Pvt Ltd;(j) KMC Oiltools Algeria EURL;(k) Wasco Oil Service Company Nigeria Ltd.;(l) Rig Tenders Marine Pte. Ltd.;(m) CH Logistic Pte. Ltd.;(n) CH Ship Management Pte. Ltd.;(o) Grundtvig Marine Pte. Ltd.;(p) Rig Tenders Offshore Pte. Ltd.;(q) Oilfield Services de Mexico S de RL de CV;(r) Urban Transit Servicos do Brasil LTDA*; and(s) Quark Fabricacao de Equipamentos Ferroviarios E. Servicos De Engenharia LTDA.*

*These subsidiaries have been deconsolidated during the financial period as disclosed in Note 25 to the financial statements.

Directors of the Company

Directors who served during the financial period until the date of this report are:

Shah Hakim @ Shahzanim bin ZainFoong Choong Hong Dato’ Sreesanthan A/L EliathambyLee Chun Fai Liew Willip Sammy Tse Kwok Fai (Appointed on 24 July 2018) Amirul Azhar bin Baharom (Appointed on 4 September 2019) Dato’ Mohd Shahrom bin Mohamad (Appointed on 4 September 2019)Dato’ Mohamed Azlan bin Hashim (Resigned on 14 April 2018) Tan Sri Nik Mohamed bin Nik Yaacob (Resigned on 19 July 2018) Cyrus Eruch Daruwalla (Resigned on 15 October 2018)


50 Scomi Group Bhd

Draft – for discussion purposes and subject to final amendments 3 Company No. 571212-A

List of Directors of Subsidiaries

Pursuant to Section 253 of the Companies Act 2016 in Malaysia, the Directors of the subsidiaries who served during the financial period until the date of this report are disclosed in the Appendix on page 219 of the financial statements.

Directors’ interests in shares

The interests and deemed interests in the shares, and/or warrants over ordinary shares, of the Company and of its related corporations (other than wholly owned subsidiaries) of those who were Directors at financial period end (including the interests of the spouses or children of the Directors who themselves are not Directors of the Company) as recorded in the Register of Directors’ Shareholdings are as follows:

Number of ordinary shares At At

1.4.2018/Date of

appointment

Bought Sold 30.6.2019

’000 ’000 ’000 ’000The CompanyDirect interests

Shah Hakim @ Shahzanim bin Zain 11,865 - - 1,865Foong Choong Hong 205 - - 205Sammy Tse Kwok Fai - 1 - 1

Indirect interests Shah Hakim @ Shahzanim bin Zain 288,726 - - 88,726

Number of warrantsAt At

1.4.2018 Bought Sold 30.6.2019’000 ’000 ’000 ’000

The CompanyDirect interests

Shah Hakim @ Shahzanim bin Zain 4576 - - 576Foong Choong Hong 103 - - 103

Indirect interests Shah Hakim @ Shahzanim bin Zain 544,056 - - 44,056

Number of ordinary shares At At

1.4.2018 Bought Sold 30.6.2019’000 ’000 ’000 ’000

SubsidiariesScomi Energy Services Bhd (“SESB”)Direct interest

Shah Hakim @ Shahzanim bin Zain 32,108 - - 2,108

Indirect interest Shah Hakim @ Shahzanim bin Zain 657 - - 57




Directors’ interests in shares (continued)1 886,214 shares held through Maybank Securities Nominees (Tempatan) Sdn Bhd pledged

Securities Account for Shah Hakim @ Shahzanim bin Zain (Margin) and Maybank Nominees (Tempatan) Sdn Bhd pledged Securities Account for Shah Hakim @ Shahzanim bin Zain.

2 Deemed interested by virtue of Section 8(4) of the Companies Act 2016 through his shareholding in Kaspadu Sdn Bhd, Rentak Rimbun Sdn Bhd and Onstream Sdn Bhd.

3 Held through Maybank Securities Nominees (Tempatan) Sdn Bhd pledged Securities Account for Shah Hakim @ Shahzanim bin Zain (Margin).

4 372,821 warrants held through Maybank Securities Nominees (Tempatan) Sdn Bhd pledged Securities Account for Shah Hakim @ Shahzanim bin Zain (Margin) and Maybank Nominees (Tempatan) Sdn Bhd pledged Securities Account for Shah Hakim @ Shahzanim bin Zain.

5 Deemed interested by virtue of Section 8(4) of the Companies Act 2016 through his shareholding holding in Kaspadu Sdn Bhd, Rentak Rimbun Sdn Bhd and Onstream Sdn Bhd.

6 Deemed interested by virtue of Section 8(4) of the Companies Act 2016 through his shareholding in Rentak Rimbun Sdn Bhd.

Save as disclosed above, none of the other Directors holding office at 30 June 2019 had any interest in the shares and options over shares of the Company and of its related corporations during the financial period.

Directors’ benefitsSince the end of the previous financial period, no Director of the Company has received nor become entitled to receive any benefit (other than a benefit included in the aggregate amount of remuneration received or due and receivable by Directors as shown in the financial statements or the fixed salary of a full time employee of the Company or of related corporations) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest other than those disclosed in Note 36 to the financial statements.


52 Scomi Group Bhd


Directors’ benefits (continued)

There were no arrangements during and at the end of the financial period which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Issue of shares and debentures

There were no changes in the issued and paid-up capital of the Company during the financial period. There were no debentures issued during the financial period. Details of the issued and paid-up capital are set out in Note 14 to the financial statements.

Treasury shares

There was no repurchase of the Company’s shares during the financial period under review. Details of the treasury shares are set out in Note 15 to the financial statements.

Options granted over unissued shares

No options were granted to any person to take up unissued shares of the Company during the financial period, except as disclosed below:

Warrants BOn 30 January 2018, the Company executed a Deed Poll pertaining to the creation and issuance of detachable 491,279,410 warrants in the Company pursuant to the:

i) bonus issue of 477,765,360 warrants on the basis of 1 warrant for every 2 existing ordinary shares held in the Company; and

ii) issuance of 13,514,050 warrants arising from the merger of Scomi Engineering Bhd with the Company to be undertaken by way of a members scheme of arrangement pursuant to Section 365 of the Companies Act 2016.

The Warrants B were listed on Main Market Bursa Malaysia Securities Berhad.

As at the end of the financial period, 491,279,410 Warrants B remained unexecised. There are no movement in the Warrants as at 31 March 2018 and 30 June 2019.

The main features of the Warrants B are as follows:

i) the Warrants may be exercised at any time within a period of 5 years commencing from and including the date of issuance of the Warrants. Any Warrants not exercised during the exercise period will thereafter lapse and cease to be valid;

ii) the exercise price was RM0.21 per Warrant; iii) each Warrant entitles the holder to subscribe for 1 new Consolidated Share at the

exercise price at any time during the exercise period, subject to adjustments in accordance with the provisions of the Deed Poll;




Options granted over unissued shares (continued)

iv) the Warrant holders shall not be entitled to any voting rights or to participate in any form of distribution other than on winding up, compromise or arrangement of the Company as set out the Deed Poll and/ or offer of further securities in the Company until and unless such holders exercise their Warants into new Consolidated Shares;

v) where a resolution has been passed for a members’ voluntary winding up of the Company, or where there is a compromise or arrangement, whether or not for the purpose of or in connection with a scheme for the reconstruction of the Company or the amalgamation of the Company with 1 or more companies, then every holder of the Warants shall be entitled upon and subject to the provisions of the Deed Poll at any time within 6 weeks after the passing of such resolution for a members’ voluntary winding up of the Company or 6 weeks after the granting of the court order approving the compromise or arrangement, by the irrevocable surrender of his/her Warrants to the Company, elect to be treated as if he/she had immediately prior to the commencement of such winding up, compromise or arrangement exercised the exercise rights represented by his/her Warrants to the extent specified in the relevant subscription forms and be entitled to receive out of the assets of our Company which would be available in liquidation as if he/she had on such date been the holder of the new Consolidated Shares to which he/she would have been entitled to pursuant to such exercise; and

vi) the Warrants shall be transferable in the manner provided under the Securities Industry (Central Depositories) Act 1991 and the Rules of Bursa Malayia Depository Sdn Bhd.

Significant events during the financial period

Details of the significant events during the financial period are disclosed in Note 38 to the financial statements.

Significant events subsequent to the financial period end

Details of the subsequent events after the financial period are disclosed in Note 39 to the financial statements.

Indemnity and insurance costs

During the financial period, the total amount of insurance effected for Directors and Officers of the Company on group basis is RM50 million.

No indemnity was given nor was any insurance taken for auditors of the Company.


54 Scomi Group Bhd


Other statutory information

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that:

i) all known bad debts have been written off and adequate provision made for doubtful debts, and

ii) any current assets which were unlikely to be realised in the ordinary course of business have been written down to an amount which they might be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances:

i) that would render the amount written off for bad debts or the amount of the provision for doubtful debts in the Group and in the Company inadequate to any substantial extent, or

ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or

iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate, or

iv) not otherwise dealt with in this report or the financial statements that would render any amount stated in the financial statements of the Group and of the Company misleading.

At the date of this report, there does not exist:

i) any charge on the assets of the Group or of the Company that has arisen since the end of the financial period and which secures the liabilities of any other person, or

ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial period.

No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial period which, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.

In the opinion of the Directors, except as disclosed in Note 25 and Note 27 to the financial statements, the financial performance of the Group and of the Company for the financial period ended 30 June 2019 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial period and the date of this report.




Auditors

The auditors, KPMG PLT, have indicated their willingness to accept re-appointment.

The auditors’ remuneration is disclosed in Note 27 to the financial statements.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

……………………………………………….Liew Willip Director

……………………………………………….Sammy Tse Kwok Fai Director

Petaling Jaya

Date: 31 October 2019


56 Scomi Group Bhd



Statements of financial position as at 30 June 2019 Group Company

Note 30.6.2019 31.3.2018 30.6.2019 31.3.2018RM’000 RM’000 RM’000 RM’000

AssetsProperty, plant and equipment 3 297,237 441,585 479 113Investment properties 4 - 2,140 - -Intangible assets 5 103,531 277,293 - -Investments in subsidiaries 6 - - 332,967 397,364Investments in associates 7 8,847 7,439 - -Investments in joint ventures and

joint operations 8 2,083 25,413 - 8,657Other investments 9 - 108 - -Deferred tax assets 10 529 41,507 - -Trade and other receivables 11 14,332 5,525 - 49,770

Total non-current assets 426,559 801,010 333,446 455,904

Inventories 12 82,815 126,876 - -Current tax assets 13,490 20,921 - -Trade and other receivables 11 236,745 994,226 68 2,424Cash and bank balances 13 66,334 102,127 582 78

399,384 1,244,150 650 2,502Assets classified as held for sale - - - 4,264

Total current assets 399,384 1,244,150 650 6,766Total assets 825,943 2,045,160 334,096 462,670

Statements of Financial Position as at 30 June 2019


Draft – for discussion purposes and subject to final amendments 10Company No. 571212-A

Statements of financial position as at 30 June 2019 (continued)

Group CompanyNote 30.6.2019 31.3.2018 30.6.2019 31.3.2018

RM’000 RM’000 RM’000 RM’000Equity

Share capital 14 224,964 664,964 224,964 664,964Treasury shares 15 - (3,239) - (3,239)Other reserves 16 (71,984) (97,856) - -Accumulated losses (176,708) (202,236) (41,833) (295,985)

Total equity attributable to owners of the Company (23,728) 361,633 183,131 365,740

Non-controlling interests 6(a) 317,557 345,725 - -Total equity 293,829 707,358 183,131 365,740

LiabilitiesTrade and other payables 17 1,028 3,738 - 36,343Loans and borrowings 18 50,196 150,944 396 -Provision for retirement benefits 19 8,401 8,932 - -Deferred tax liabilities 10 4,486 10,004 - -

Total non-current liabilities 64,111 173,618 396 36,343

Trade and other payables 17 307,605 553,043 150,482 60,492Loans and borrowings 18 136,093 565,382 87 95Derivative financial liabilities 20 - 10,516 - -Current tax liabilities 24,305 35,243 - -

Total current liabilities 468,003 1,164,184 150,569 60,587

Total liabilities 532,114 1,337,802 150,965 96,930Total equity and liabilities 825,943 2,045,160 334,096 462,670

The notes on pages 66 to 208 are an integral part of these financial statements.

Statements of Financial Position as at 30 June 2019 (continued)

58 Scomi Group Bhd



Statements of profit or loss and other comprehensive income for the financial period ended 30 June 2019

Group Company

Note

1.4.2018 to30.6.2019

1.4.2017 to

31.3.2018

1.4.2018 to

30.6.2019

1.4.2017 to

31.3.2018RM’000 RM’000 RM’000 RM’000

RestatedRevenue 21 643,502 613,957 - -Cost of sales/services (519,993) (539,495) - -Gross profit 123,509 74,462 - -Other income 5,512 17,891 3,709 6,831Selling and distribution expenses (56,213) (52,743) - -Administrative expenses (112,115) (71,598) (19,508) (16,816)Net loss on impairment of

financial instruments (123,911) (17,837) (53,391) (51,647)Other expenses (52,296) (111,407) (111,045) (440,784)Results from operating

activities (215,514) (161,232) (180,235) (502,416)Finance costs 22 (23,165) (23,943) (2,536) (769)Finance income 23 1,391 2,443 - 18,930Share of loss of equity -

accounted for associates, net of tax (2,299) - - -

Share of loss of equity -accounted for joint ventures, net of tax (3,866) (36,663) - -

Loss before tax (243,453) (219,395) (182,771) (484,255)Tax expense 24 (20,883) (13,058) - -Loss from continuing

operations for the financial period/year (264,336) (232,453) (182,771) (484,255)

Discontinued operationLoss from discontinued operation 25 (161,633) (99,629) - -Loss for the financial

period/year 27 (425,969) (332,082) (182,771) (484,255)

Statements of Profit or Loss and Other Comprehensive Income for the period ended 30 June 2019



Statements of profit or loss and other comprehensive income for the financial period ended 30 June 2019 (continued)

Group Company

Note1.4.2018 to30.6.2019

1.4.2017 to31.3.2018

1.4.2018 to30.6.2019

1.4.2017 to31.3.2018

RM’000 RM’000 RM’000 RM’000Restated

Other comprehensive income, net of tax

Items that will not be reclassified subsequently to profit or loss

Retirement benefits 470 350 - -Items that are or may be

reclassified subsequently to profit or loss

Cash flow hedges - (16,233) - -Foreign currency translation

differences for foreign operations 31,394 (21,545) - -

Other comprehensive income/(loss) for the financial period, net of tax 28 31,864 (37,428) - -

Total comprehensive loss for the financial period/year (394,105) (369,510) (182,771) (484,255)

Loss attributable to:Owners of the Company (396,171) (249,974) (182,771) (484,255)Non-controlling interests 6(a) (29,798) (82,108) - -

Loss for the financial period/year (425,969) (332,082) (182,771) (484,255)

Total comprehensive loss attributable to:Owners of the Company (369,991) (278,748) (182,771) (484,255)Non-controlling interests (24,114) (90,762) - -

Total comprehensive lossfor the financial period/year (394,105) (369,510) (182,771) (484,255)

Basic loss per ordinary share (sen):from continuing operations (21.44) (13.76)from discontinued operation (14.78) (9.12)-

29 (36.22) (22.88)


Statements of Profit or Loss and Other Comprehensive Income

for the period ended 30 June 2019 (continued)

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Draft – for discussion purposes and subject to final amendments 16Scomi Group Bhd (Company No. 571212-A)(Incorporated in Malaysia) and its subsidiaries Statements of cash flows for the financial period ended 30 June 2019

Group Company

Note1.4.2018 to30.6.2019

1.4.2017 to31.3.2018

1.4.2018 to30.6.2019

1.4.2017 to31.3.2018

RM’000 RM’000 RM’000 RM’000Cash flows from operating

activitiesLoss before tax from: 27- continuing operations (243,453) (219,395) (182,771) (484,255)- discontinued operation (96,726) (98,814) - -

Adjustments for:Amortisation of:- intangible assets 812 430 - -- Government grant - (269) - -Depreciation- property, plant and equipment 80,793 88,316 158 118- investment properties 169 205 - 51Disposal loss on property, plant

and equipment 35,241 6,452 (50) -Disposal gain on investment

properties (3,643) - (2,236) -Loss on disposal of subsidiaries 26 (2,181) - - -Finance costs 44,097 75,850 2,536 769Finance income (1,391) (2,443) - (18,930)Impairment losses:

- property, plant and equipment 1,542 4,322 - -

- trade receivables and other receivables 128,959 26,147 53,391 51,647

- investment in subsidiaries - - 64,397 440,784- investment in associates 6,111 - - -- investment in joint ventures 9,653 6,688 8,657 -- intangible assets - 3,815 - -

Provisions for retirement benefits 1,093 749 - -

Reversal of impairment losses:- inventories (3,983) (4,602) - -- receivables (5,048) (4,764) - -Share of results in joint

ventures and associates 6,165 36,663 - -Reclassification from hedge

reserve to profit or loss due to termination of hedge accounting - (29,217) - -

Unrealised loss/(gain) on foreign exchange (1,761) 79,878 2,776 (5,936)

Statements of Cash Flows for the period ended 30 June 2019

64 Scomi Group Bhd


Statements of cash flows for the financial period ended 30 June 2019 (continued)

Group Company

Note1.4.2018 to30.6.2019

1.4.2017 to31.3.2018

1.4.2018 to30.6.2019

1.4.2017 to31.3.2018

RM’000 RM’000 RM’000 RM’000Provision for redemption

of securities pledged to financial institution 38,000 - 38,000 -

Write-off:- property, plant and

equipment 994 117 - -- inventories 590 2,317 - -

Operating loss beforechanges in working capital (3,967) (27,555) (15,142) (15,752)

Changes in working capital:Inventories 28,406 51,223 - -Trade and other receivables,

prepayments and other financial assets 39,673 (20,326) (3,521) (42,347)

Trade and other payables (7,434) 72,778 12,617 46,553Net impact from derecognition of

liabilities 68,453 - - -Cash generated from/(used

in) operations 125,131 76,120 (6,046) (11,546)Net tax paid (20,772) (12,744) - -Retirement benefits paid (1,154) (2,267) - -Net cash from/(used in)

operating activities 103,205 61,109 (6,046) (11,546)

Cash flows from investing activities

Acquisition of: - joint venture and associates - (17,724) - (8,657)- property, plant and equipment (18,760) (36,451) (563) -Proceeds from disposal of

property, plant and equipment 16,977 32,404 89 -Proceeds from disposal of

investment properties 5,712 - 6,500 -Proceeds from disposal of

subsidiaries, net of cash disposed off 19,054 - - -

Repayment of advance from jointly-controlled entities 9,810 - - -

Interest received 1,391 2,443 18,930Net cash from/(used in)

investing activities 34,184 (19,328) 6,026 10,273

Statements of Cash Flows for the period ended 30 June 2019 (continued)



Statements of cash flows for the financial period ended 30 June 2019 (continued)

Group Company

Note1.4.2018 to30.6.2019

1.4.2017 to31.3.2018

1.4.2018 to30.6.2019

1.4.2017 to31.3.2018

RM’000 RM’000 RM’000 RM’000Cash flows from financing

activitiesProceeds from borrowings 31,006 13,050 506 -Repayment of borrowings (74,842) (43,680) (118) (214)Interest paid on borrowings (21,104) (24,141) (26) -Increase in short-term deposits pledged as security (6,213) - - -

Proceeds from sale of treasury shares 162 1,533 162 1,533

Net cash (used in)/from financing activities (70,991) (53,238) 524 1,319

Net increase/(decrease) in cash and cash equivalents 66,398 (11,457) 504 46

Effect of exchange rate fluctuations on cash held 4,263 (52,751) - -

Cash and cash equivalents at beginning of financial period/year (31,407) 32,801 78 32

Cash and cash equivalents at end of the financial period/year (i) 39,254 (31,407) 582 78

Notes to statements of cash flows

(i) Cash and cash equivalents

Cash and cash equivalents included in the statements of cash flows comprise the following statements of financial position amounts:


RM’000 RM’000 RM’000 RM’000

Cash and bank balances 13 41,428 47,551 582 78Deposits placed with

licensed banks 13 24,906 54,576 - -

66,334 102,127 582 78Less: Pledged deposits 13 (27,080) (54,214) - - Bank overdrafts 18 - (79,320) - -

39,254 (31,407) 582 78


Statements of Cash Flows for the period ended 30 June 2019 (continued)

66 Scomi Group Bhd

Draft – for discussion purposes and subject to final amendments 19Scomi Group Bhd (Company No. 571212-A)(Incorporated in Malaysia) and its subsidiaries

Notes to the financial statements Scomi Group Bhd is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The address of the principal place of business and registered office of the Company is as follows:

Level 15, Menara TSR, No. 12, Jalan PJS 7/3, Mutiara Damansara, 47810 Petaling Jaya Selangor Darul Ehsan

The consolidated financial statements of the Company as at and for the financial period ended 30 June 2019 comprise the Company and its subsidiaries (together referred to as the “Group” and individually referred to as “Group Entities”) and the Group’s interests in associates and joint ventures.

As disclosed in Note 25, the Group has deconsolidated the financial position and results of Scomi Engineering Bhd and its subsidiaries since January 2019.

The Company principally engaged in investment holding activities, whilst the principal activities of the subsidiaries are stated in Note 6 to the financial statements.

These financial statements were authorised for issue by the Board of Directors on 31 October 2019.

1. Basis of preparation

(a) Statement of compliance

The financial statements of the Group and the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

The following are accounting standards, interpretations and amendments of the MFRSs that have been issued by the Malaysian Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Company:

MFRSs, interpretations and amendments effective for annual periods beginning on or after 1 January 2019 MFRS 16, Leases IC Interpretation 23, Uncertainty over Income Tax Treatments Amendments to MFRS 3, Business Combinations (Annual Improvements to

MFRS Standards 2015-2017 Cycle) Amendments to MFRS 9, Financial Instruments – Prepayment Features with

Negative Compensation Amendments to MFRS 11, Joint Arrangements (Annual Improvements to

MFRS Standards 2015-2017 Cycle)

Notes to the Financial Statements



1. Basis of preparation (continued)

(a) Statement of compliance (continued)

MFRSs, interpretations and amendments effective for annual periods beginning on or after 1 January 2019 Amendments to MFRS 112, Income Taxes (Annual Improvements to MFRS

Standards 2015-2017 Cycle) Amendments to MFRS 119, Employee Benefits – Plan Amendment,

Curtailment or Settlement Amendments to MFRS 123, Borrowing costs (Annual improvements to MFRS

Standards 2015-2017 Cycle) Amendments to MFRS 128, Investments in Associates and Joint Ventures –

Long-term Interests in Associates and Joint Ventures

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2020 Amendments to MFRS 3, Business Combinations – Definition of a Business Amendments to MFRS 101, Presentation of Financial Statements and MFRS

108, Accounting Policies, Changes in Accounting Estimates and Errors –Definition of Material

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2021 MFRS 17, Insurance Contracts

MFRSs, Interpretations and amendments effective for annual periods beginning on or after a date yet to be confirmed Amendments to MFRS 10, Consolidated Financial Statements and MFRS

128, Investments in Associates and Joint Ventures – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The Group and the Company plan to apply the abovementioned accounting standards, interpretations and amendments:

from the annual period beginning on 1 July 2019 for those accounting standard, interpretations and amendments that are effective for annual periods beginning on or after 1 January 2019, except for amendments to MFRS 3, amendments to MFRS 11 and amendments to MFRS 128 which are not applicable to the Group and the Company.

from the annual period beginning on 1 July 2020 for those amendments that are effective for annual periods beginning on or after 1 January 2020, except for amendments to MFRS 3 which is not applicable to the Group and the Company.

The Group and the Company do not plan to apply MFRS 17, Insurance Contractsthat is effective for annual periods beginning on or after 1 January 2021 as it is not applicable to the Group and the Company.


68 Scomi Group Bhd



(a) Statement of compliance (continued)

The initial application of the applicable accounting standards, interpretations and amendments are not expected to have any material financial impacts to the currentfinancial period and prior period financial statements of the Group and the Company, except as mentioned below:

MFRS 16, Leases

MFRS 16 replaces the guidance in MFRS 117, Leases, IC Interpretation 4, Determining whether an Arrangement contains a Lease, IC Interpretation 115, Operating Leases – Incentives and IC Interpretation 127, Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

MFRS 16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligations to make lease payments. There are recognition exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the current standard which continues to be classified as finance or operating lease.

The Group and the Company expect to recognise right-of-use assets and lease liabilities on 1 July 2019. Overall, net current liabilities will be higher due to presentation of a portion of the liability as current liability.



(b) Basis of measurement

The financial statements have been prepared on the historical cost basis other than as disclosed in Note 2 and on the assumption that the Group and the Company will continue as going concerns.

The Group and the Company report the following:

i) the Group and the Company incurred net losses of RM426 million and RM183million respectively for the 15-month financial period ended 30 June 2019 andas at that date, the current liabilities of the Group and of the Company exceeded their current assets by RM69 million and RM150 million respectively. As at the balance sheet date, the Group has a deficit in equity attributable to owners of the Company amounting to RM24 million; and

ii) the Company announced on 30 August 2019 that it has triggered the prescribed criteria in Paragraphs 8.04(2) of the Main Market Listing Requirements and Bursa Malaysia Securities Berhad Practice Note 17 (“PN 17”) as its consolidated shareholders’ equity is 25 percent or less than its issued and paid-up capital (excluding treasury shares) and its shareholder’s equity is less than RM40 million as of 30 June 2019.

The Company has submitted an application to Bursa Malaysia Securities Berhad (“Bursa Malaysia”) for a waiver from complying with Paragraph 8.04(2) of the Listing Requirements (“PN17 Waiver”) on 3 September 2019 which is currently pending a decision from Bursa Malaysia. If the Company is unable to obtain the waiver for PN 17, it will be classified as an affected listed issuer,following which, the Company will be required to submit a regularisation plan to Bursa Malaysia within 12 months from the announcement date that the regularisation plan does not result in a significant change in the business direction or policy of the Group. In the event that the Group undertakes a regularisation plan which will result in a significant change in its business direction or policy, the Company is required to submit the regularisation plan to Securities Commission (“SC”) for approval. Thereafter, the Company is required to implement the plan within the timeline stipulated by either Bursa Malaysia or SC, as the case may be.

Should the Company fail to comply with the obligations to regularise its condition, the Company’s listed securities will be suspended from the market and de-listing procedures can be taken against the Company.





(b) Basis of measurement

The financial statements have been prepared on the historical cost basis other than as disclosed in Note 2 and on the assumption that the Group and the Company will continue as going concerns.

The Group and the Company report the following:

i) the Group and the Company incurred net losses of RM426 million and RM183million respectively for the 15-month financial period ended 30 June 2019 andas at that date, the current liabilities of the Group and of the Company exceeded their current assets by RM69 million and RM150 million respectively. As at the balance sheet date, the Group has a deficit in equity attributable to owners of the Company amounting to RM24 million; and

ii) the Company announced on 30 August 2019 that it has triggered the prescribed criteria in Paragraphs 8.04(2) of the Main Market Listing Requirements and Bursa Malaysia Securities Berhad Practice Note 17 (“PN 17”) as its consolidated shareholders’ equity is 25 percent or less than its issued and paid-up capital (excluding treasury shares) and its shareholder’s equity is less than RM40 million as of 30 June 2019.

The Company has submitted an application to Bursa Malaysia Securities Berhad (“Bursa Malaysia”) for a waiver from complying with Paragraph 8.04(2) of the Listing Requirements (“PN17 Waiver”) on 3 September 2019 which is currently pending a decision from Bursa Malaysia. If the Company is unable to obtain the waiver for PN 17, it will be classified as an affected listed issuer,following which, the Company will be required to submit a regularisation plan to Bursa Malaysia within 12 months from the announcement date that the regularisation plan does not result in a significant change in the business direction or policy of the Group. In the event that the Group undertakes a regularisation plan which will result in a significant change in its business direction or policy, the Company is required to submit the regularisation plan to Securities Commission (“SC”) for approval. Thereafter, the Company is required to implement the plan within the timeline stipulated by either Bursa Malaysia or SC, as the case may be.

Should the Company fail to comply with the obligations to regularise its condition, the Company’s listed securities will be suspended from the market and de-listing procedures can be taken against the Company.


70 Scomi Group Bhd



(b) Basis of measurement (continued)

iii) A subsidiary of the Company has outstanding guaranteed serial bonds of RM104 million of which RM54 million is due for repayment on 14 December 2019 and RM50 million is due for repayment on 14 December 2020. The guarantor of the serial bonds has a covenant which requires the subsidiary to progressively build up the principal redemption in debt payment account for repayment of the bonds. By 30 June 2019, the subsidiary was required to have built up principal redemption in debt payment account of RM51.5 million. However, at 30 June 2019, the total principal redemption build up in the debt payment account was only RM18.6 million and there was a shortfall of RM32.9 million. The subsidiary has obtained a waiver from the bond guarantor on 28 June 2019 to fulfill the redemption build up amount by 30 November 2019. The Directors assessed the subsidiary’s financial position and does not expect its internally generated funds will be sufficient to meet the balance required for the repayment of the guaranteed serial bonds due on 14 December 2019.

Consequently, the subsidiary and its financial advisors are pursuing a debt restructuring plan to refinance the aforesaid guaranteed serial bonds and short term bank borrowings. As the debt restructuring plan is not expected to be finalised in time to repay the Guaranteed Serial Bonds, the subsidiary is seeking to secure a bridging loan of RM35 million to enable repayment of the guaranteed serial bonds of RM54 million due on 14 December 2019. The subsidiary has secured a bridging loan offer from a new lender but this is subject to the subsidiary securing an irrevocable and unconditional financial guarantee of RM35 million in favour of the new lender as security. The subsidiary is currently negotiating with the bond guarantor of the serial bonds for this financial guarantee.

As of to date, the successful implementation of the proposed debt restructuring plan is uncertain as it is dependent on acceptance of a formalised plan by the current lender banks and the serial bond guarantor, and the ability of the subsidiary to secure the aforesaid financial guarantee from the serial bond guarantor.

These events and conditions indicate that a material uncertainty exists that may cast significant doubt on the ability of the Group and of the Company to continue as going concerns and therefore, the Group and the Company may be unable to realise their assets and discharge their liabilities in the normal course of business.




Nevertheless, the financial statements of the Group and of the Company have been prepared on going concern basis, the validity of which is dependent on the successful implementation of the following:

i) The Company has submitted a proposed corporate exercise to Bursa Malaysia as disclosed in Note 38. The Directors believe that the Company is able to obtain the relevant approvals from the authorities and shareholders to embark on the proposed corporate exercise. Thereon, the Directors are of the view that the Company will be able to regularise the condition under PN 17.

The Directors also anticipate that the Company will obtain sufficient subscriptions of the proposed right issues to enable the Group and the Company to meet their financial obligations as and when they fall due within the next 12 months.

To date, a shareholder, certain parties and a Director have provided letters of undertaking to subscribe for RM77 million of the proposed right issues. The Company has already received proceeds of RM42 million from the proposed rights issue in July 2019, from a few of these parties;

ii) A subsidiary is successful in obtaining a bridging loan to repay the outstanding guaranteed serial bonds due in December 2019;

iii) The Company is able to obtain further financing from financial institution by pledging unencumbered shares of a subsidiary;

iv) The Group and the Company are able to obtain support from its creditors to extend the credit periods.

Should the going concern basis for the preparation of the financial statements no longer be appropriate, adjustments will need to be made relating to the classification and recoverability of recorded assets amounts or to the classification and additional amounts of liabilities that may be necessary.

(c) Functional and presentation currency

These financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional currency. All financial information is presented in RM and has been rounded to the nearest thousand, unless otherwise stated.

(d) Use of estimates and judgements

The preparation of the financial statements in conformity with MFRSs requires Directors to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.






Nevertheless, the financial statements of the Group and of the Company have been prepared on going concern basis, the validity of which is dependent on the successful implementation of the following:

i) The Company has submitted a proposed corporate exercise to Bursa Malaysia as disclosed in Note 38. The Directors believe that the Company is able to obtain the relevant approvals from the authorities and shareholders to embark on the proposed corporate exercise. Thereon, the Directors are of the view that the Company will be able to regularise the condition under PN 17.

The Directors also anticipate that the Company will obtain sufficient subscriptions of the proposed right issues to enable the Group and the Company to meet their financial obligations as and when they fall due within the next 12 months.

To date, a shareholder, certain parties and a Director have provided letters of undertaking to subscribe for RM77 million of the proposed right issues. The Company has already received proceeds of RM42 million from the proposed rights issue in July 2019, from a few of these parties;

ii) A subsidiary is successful in obtaining a bridging loan to repay the outstanding guaranteed serial bonds due in December 2019;

iii) The Company is able to obtain further financing from financial institution by pledging unencumbered shares of a subsidiary;

iv) The Group and the Company are able to obtain support from its creditors to extend the credit periods.

Should the going concern basis for the preparation of the financial statements no longer be appropriate, adjustments will need to be made relating to the classification and recoverability of recorded assets amounts or to the classification and additional amounts of liabilities that may be necessary.

(c) Functional and presentation currency

These financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional currency. All financial information is presented in RM and has been rounded to the nearest thousand, unless otherwise stated.

(d) Use of estimates and judgements

The preparation of the financial statements in conformity with MFRSs requires Directors to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.


72 Scomi Group Bhd



(d) Use of estimates and judgements (continued)

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

(i) Estimated impairment of goodwill and amortisation of intangible assets

The Group tests goodwill for impairment annually in accordance with its accounting policy. More regular reviews are performed if events indicate that this is necessary.

Determining whether goodwill is impaired requires an estimation of the value-in-use and fair value less costs of disposals of the cash-generating units to which goodwill has been allocated. The value-in-use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate, in order to calculate the net present value. Fair value less costs of disposals is determined based on indicative values on a willing buyer willing seller basis, as provided by an independent valuer. The recoverable amounts of goodwill have been determined based on the higher of fair value less costs of disposals and value-in-use calculations.

The Directors are of the opinion that any reasonably expected change in the key assumptions used to determine the recoverable amounts of the CGUs, would not result in any impairments.

The carrying amount of goodwill and estimates used in the calculation are disclosed in Note 5 to the financial statements.

(ii) Income taxes

The Group is subject to income taxes in numerous jurisdictions. Significantjudgement is required in determining recoverability of withholding and income taxes worldwide provision for income taxes, including determination of taxable income, capital allowances and deductibility of certain expenses during the estimation of the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business.

The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The Group has made assumptions and judgements in relation to provision for tax disputes based on, among others, historical experience with local tax authorities in the relevant countries and timing of the potential liabilities. These assumptions and judgements are made in consultation with and according to the advice from local independent tax professionals. Any changes to these assumptions and judgements will impact the carrying amount of the potential liabilities.




(ii) Income taxes (continued)

Where the final tax outcome of these matters is different from the amounts that were initially recorded, such as if the actual future taxable profits, or if the amounts of carry-forward tax losses, unutilised tax incentives and capital allowances that are approved by the tax authorities differ from those currently estimated by the Group, such differences will impact the income tax and deferred income tax provisions in the financial period in which such determination is made.

Deferred tax assets are recognised to the extent that it is probable that taxable income will be available against which the temporary differences can be utilised. Significant judgement is required in determining the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable income.

(iii) Litigations

The Group operates across many countries and is required to comply with all applicable laws and regulations of the countries in which the Group operates. Significant judgement is required to determine the likelihood of the obligation and the estimation of amounts to be recognised in respect of legal matters, subject to uncertain future events. The legal cases may extend over several periods and the amount or timing may differ from current assumptions.

(iv) Measurement of expected credit loss (“ECL”)

The Group applies MFRS 9 to measure expected credit losses of trade receivables. There are assumptions and judgements such as historical bad debts, customer concentration, customer creditworthiness, current economic trends and changes in customer payment terms made to assess and measure ECL.

(v) Impairment of property, plant and equipment – marine vessels

The recoverable amounts of marine vessels have been determined based on the higher of fair value less costs of disposals and value-in-use calculations as disclosed in Note 3. There are significant judgements and assumptions used to determine the value-in-use amount.






(ii) Income taxes (continued)

Where the final tax outcome of these matters is different from the amounts that were initially recorded, such as if the actual future taxable profits, or if the amounts of carry-forward tax losses, unutilised tax incentives and capital allowances that are approved by the tax authorities differ from those currently estimated by the Group, such differences will impact the income tax and deferred income tax provisions in the financial period in which such determination is made.

Deferred tax assets are recognised to the extent that it is probable that taxable income will be available against which the temporary differences can be utilised. Significant judgement is required in determining the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable income.

(iii) Litigations

The Group operates across many countries and is required to comply with all applicable laws and regulations of the countries in which the Group operates. Significant judgement is required to determine the likelihood of the obligation and the estimation of amounts to be recognised in respect of legal matters, subject to uncertain future events. The legal cases may extend over several periods and the amount or timing may differ from current assumptions.

(iv) Measurement of expected credit loss (“ECL”)

The Group applies MFRS 9 to measure expected credit losses of trade receivables. There are assumptions and judgements such as historical bad debts, customer concentration, customer creditworthiness, current economic trends and changes in customer payment terms made to assess and measure ECL.

(v) Impairment of property, plant and equipment – marine vessels

The recoverable amounts of marine vessels have been determined based on the higher of fair value less costs of disposals and value-in-use calculations as disclosed in Note 3. There are significant judgements and assumptions used to determine the value-in-use amount.


74 Scomi Group Bhd




(vi) Impairment of investments in subsidiaries, associates and joint ventures

The Group and Company assess the impairment of investments in subsidiaries, associates and joint ventures when there is an indication of impairment. The carrying amounts are disclosed in Notes 6, 7 and 8. The recoverable amount of investment in subsidiary was determined based on the value-in-use and involves significant judgements and assumptions.

(vii) Deconsolidation of Scomi Engineering Bhd and its subsidiaries

As disclosed in Note 25 to the financial statements, As at 30 June 2019, Directors have determined that the Company has lost control of Scomi Engineering Bhd and its subsidiaries (“SEB Group”) upon the appointment of judicial managers on 24 January 2019 by the High Court of Malaysia (“The High Court”). The assets and liabilities and the results of SEB Group have been deconsolidated since that date. There are significant judgements made by Directors to determine whether the Company has rights to variable returns from its involvement with its subsidiary and has the ability to affect these returns through its power over the entity.

(viii) Valuation of inventories

Inventories shall be measured at the lower of cost and net realisable value. Inventories are considered critical due to the level of judgement involved in the valuation and the assessment of adequacy of write-down for slow moving and obsolete inventories.

There is a significant judgement involved in assessing the level of inventory write-down required in respect of slow moving and obsolete inventories.


2. Significant accounting policies

The accounting policies set out below have been applied consistently to the financial periods presented in these financial statements and have been applied consistently by Group entities, unless otherwise stated.

Arising from the adoption of MFRS 15, Revenue from Contracts with Customers and MFRS 9, Financial Instruments, there are changes to the accounting policies of:

i) financial instruments; ii) revenue recognition; and iii) impairment losses of financial instruments

as compared to those adopted in previous financial statements. The impact arising from the changes are disclosed in Note 40.

(a) Basis of consolidation

(i) Subsidiaries

Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. The Group also considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return.

Investments in subsidiaries are measured in the Company’s statement offinancial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investments includes transaction costs.




2. Significant accounting policies

The accounting policies set out below have been applied consistently to the financial periods presented in these financial statements and have been applied consistently by Group entities, unless otherwise stated.

Arising from the adoption of MFRS 15, Revenue from Contracts with Customers and MFRS 9, Financial Instruments, there are changes to the accounting policies of:

i) financial instruments; ii) revenue recognition; and iii) impairment losses of financial instruments

as compared to those adopted in previous financial statements. The impact arising from the changes are disclosed in Note 40.

(a) Basis of consolidation

(i) Subsidiaries

Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. The Group also considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return.

Investments in subsidiaries are measured in the Company’s statement offinancial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investments includes transaction costs.


76 Scomi Group Bhd


2. Significant accounting policies (continued)

(a) Basis of consolidation (continued)

(ii) Business combinations

Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on which control is transferred to the Group.

For new acquisitions, the Group measures the cost of goodwill at the acquisition date as: the fair value of the consideration transferred; plus the recognised amount of any non-controlling interests in the acquiree;

plus if the business combination is achieved in stages, the fair value of the

existing equity interest in the acquiree; less the net recognised amount (generally fair value) of the identifiable assets

acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

(iii) Acquisitions of non-controlling interests

The Group accounts all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves.

(iv) Acquisitions from entities under common control

Business combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the Group are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later, at the date that common control was established; for this purpose comparatives are restated. The assets and liabilities acquired are recognised at the carrying amounts recognised previously in the Group controlling shareholder’s consolidated financial statements. The components of equity of the acquired entities are added to the same components within Group equity and any resulting gain/loss is recognised directly in equity.




(v) Loss of control

Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the former subsidiary, any non-controlling interests and the other components of equity related to the former subsidiary from the consolidated statement of financial position. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity accounted investee or a financial asset depending on the level of influence retained.

(vi) Associates

Associates are entities, including unincorporated entities, in which the Group has significant influence, but not control, over the financial and operating policies.

Investments in associates are accounted for in the consolidated financial statements using the equity method less any impairment losses, unless it is classified as held for sale or distribution. The cost of the investment includes transaction costs. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of the associates, after adjustments if any, to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases.

When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest including any long-term investments is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the associate.

When the Group ceases to have significant influence over an associate, any retained interest in the former associate at the date when significant influence is lost is measured at fair value and this amount is regarded as the initial carrying amount of a financial asset. The difference between the fair value of any retained interest plus proceeds from the interest disposed of and the carrying amount of the investment at the date when equity method is discontinued is recognised in the profit or loss.

When the Group’s interest in an associate decreases but does not result in a loss of significant influence, any retained interest is not remeasured. Any gain or loss arising from the decrease in interest is recognised in profit or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified proportionately to the profit or loss if that gain or loss would be required to be reclassified to the profit or loss on the disposal of the related assets or liabilities.






(v) Loss of control

Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the former subsidiary, any non-controlling interests and the other components of equity related to the former subsidiary from the consolidated statement of financial position. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity accounted investee or a financial asset depending on the level of influence retained.

(vi) Associates

Associates are entities, including unincorporated entities, in which the Group has significant influence, but not control, over the financial and operating policies.

Investments in associates are accounted for in the consolidated financial statements using the equity method less any impairment losses, unless it is classified as held for sale or distribution. The cost of the investment includes transaction costs. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of the associates, after adjustments if any, to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases.

When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest including any long-term investments is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the associate.

When the Group ceases to have significant influence over an associate, any retained interest in the former associate at the date when significant influence is lost is measured at fair value and this amount is regarded as the initial carrying amount of a financial asset. The difference between the fair value of any retained interest plus proceeds from the interest disposed of and the carrying amount of the investment at the date when equity method is discontinued is recognised in the profit or loss.

When the Group’s interest in an associate decreases but does not result in a loss of significant influence, any retained interest is not remeasured. Any gain or loss arising from the decrease in interest is recognised in profit or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified proportionately to the profit or loss if that gain or loss would be required to be reclassified to the profit or loss on the disposal of the related assets or liabilities.


78 Scomi Group Bhd




(vi) Associates (continued)

Investments in associates are measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of the investment includes transaction costs.

(vii) Joint arrangements

Joint arrangements are arrangements of which the Group has joint control, established by contracts requiring unanimous consent for decisions about the activities that significantly affect the arrangements’ returns.

Joint arrangements are classified and accounted for as follows:

A joint arrangement is classified as “joint operation” when the Group or the Company has rights to the assets and obligations for the liabilities relating to an arrangement. The Group and the Company account for each of its share of the assets, liabilities and transactions, including its share of those held or incurred jointly with the other investors, in relation to the joint operation.

A joint arrangement is classified as “joint venture” when the Group or the Company has rights only to the net assets of the arrangements. The Group accounts for its interest in the joint venture using the equity method. Investments in joint venture are measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs.

(viii) Non-controlling interests

Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group is presented in the consolidated statement of profit or loss and other comprehensive income as an allocation of the profit or loss and the comprehensive income for the financial period between non-controlling interests and owners of the Company.

Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.




(ix) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

Unrealised gains arising from transactions with equity-accounted associates and joint ventures are eliminated against the investment to the extent of the Group’s interest in the investees. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(b) Foreign currency

(i) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate at that date.

Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting date, except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of equity instruments where they are measured at fair value through other comprehensive income or a financial instrument designated as a cash flow hedge, which are recognised in other comprehensive income.

In the consolidated financial statements, when settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented in the foreign currency translation reserve (“FCTR”) in equity.






(ix) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

Unrealised gains arising from transactions with equity-accounted associates and joint ventures are eliminated against the investment to the extent of the Group’s interest in the investees. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(b) Foreign currency

(i) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate at that date.

Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting date, except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of equity instruments where they are measured at fair value through other comprehensive income or a financial instrument designated as a cash flow hedge, which are recognised in other comprehensive income.

In the consolidated financial statements, when settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented in the foreign currency translation reserve (“FCTR”) in equity.


80 Scomi Group Bhd



(b) Foreign currency (continued)

(ii) Operations denominated in functional currencies other than Ringgit Malaysia (“RM”)

The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the reporting period. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to RM at exchange rates at the dates of the transactions.

The income and expenses of foreign operations in hyperinflationary economies are translated to RM at the exchange rate at the end of the reporting period. Prior to translating the financial statements of foreign operations in hyperinflationary economies, their financial statements for the current financial period are restated to account for changes in the general purchasing power of the local currency. The restatement is based on relevant price indices at the end of the reporting period.

Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign currency translation reserve (“FCTR”) in equity. However, if the operation is a non-wholly owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the FCTR related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.

When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.



(c) Financial instruments

Unless specifically disclosed below, the Group and the Company generally applied the following accounting policies retrospectively. Nevertheless, as permitted by MFRS 9, Financial Instruments, the Group and the Company have elected not to restate the comparatives.

(i) Recognition and initial measurement

A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the Group or the Company becomes a party to the contractual provisions of the instrument.

Current financial period

A financial asset (unless it is a trade receivable without significant financing component) or a financial liability is initially measured at fair value plus or minus, for an item not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issuance. A trade receivable without a significant financing component is initially measured at the transaction price.

An embedded derivative is recognised separately from the host contract where the host contract is not a financial asset, and accounted for separately if, and only if, the derivative is not closely related to the economic characteristics and risks of the host contract and the host contract is not measured at fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract.

Previous financial year

Financial instrument was recognised initially, at its fair value plus or minus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that were directly attributable to the acquisition or issue of the financial instrument.

An embedded derivative was recognised separately from the host contract and accounted for as a derivative if, and only if, it was not closely related to the economic characteristics and risks of the host contract and the hostcontract was not recognised as fair value through profit or loss. The host contract, in the event an embedded derivative was recognised separately, was accounted for in accordance with policy applicable to the nature of the host contract.





(c) Financial instruments

Unless specifically disclosed below, the Group and the Company generally applied the following accounting policies retrospectively. Nevertheless, as permitted by MFRS 9, Financial Instruments, the Group and the Company have elected not to restate the comparatives.

(i) Recognition and initial measurement

A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the Group or the Company becomes a party to the contractual provisions of the instrument.


A financial asset (unless it is a trade receivable without significant financing component) or a financial liability is initially measured at fair value plus or minus, for an item not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issuance. A trade receivable without a significant financing component is initially measured at the transaction price.

An embedded derivative is recognised separately from the host contract where the host contract is not a financial asset, and accounted for separately if, and only if, the derivative is not closely related to the economic characteristics and risks of the host contract and the host contract is not measured at fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract.


Financial instrument was recognised initially, at its fair value plus or minus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that were directly attributable to the acquisition or issue of the financial instrument.

An embedded derivative was recognised separately from the host contract and accounted for as a derivative if, and only if, it was not closely related to the economic characteristics and risks of the host contract and the hostcontract was not recognised as fair value through profit or loss. The host contract, in the event an embedded derivative was recognised separately, was accounted for in accordance with policy applicable to the nature of the host contract.


82 Scomi Group Bhd



(c) Financial instruments (continued)

(ii) Financial instrument categories and subsequent measurement

Financial assets


Categories of financial assets are determined on initial recognition and are not reclassified subsequent to their initial recognition unless the Group or the Company changes its business model for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change of the business model.

(a) Amortised cost

Amortised cost category comprises financial assets that are held within a business model whose objective is to hold assets to collect contractual cash flows and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The financial assets are not designated as fair value through profit or loss. Subsequent to initial recognition, these financial assets are measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

Interest income is recognised by applying effective interest rate to the gross carrying amount except for credit impaired financial assets (see Note 2(k)(i)) where the effective interest rate is applied to the amortised cost.

(b) Fair value through other comprehensive income

(i) Debt investments

Fair value through other comprehensive income category comprises debt investment where it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the debt investment, and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The debt investment is not designated as at fair value through profit or loss. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.




(ii) Financial instrument categories and subsequent measurement (continued)

Financial assets (continued)

Current financial period (continued)

(b) Fair value through other comprehensive income (continued)

(i) Debt investments (continued)


(ii) Equity investments

This category comprises investment in equity that is not held for trading, and the Group and the Company irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an investment-by-investment basis. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of investment. Other net gains and losses are recognised in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are not reclassified to profit or loss.

(c) Fair value through profit or loss

All financial assets not measured at amortised cost or fair value through other comprehensive income as described above are measured at fair value through profit or loss. This includes derivative financial assets (except for a derivative that is a designated and effective hedging instrument). On initial recognition, the Group or the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at fair value through other comprehensive income as at fair value through profit or loss if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets categorised as fair value through profit or loss are subsequently measured at their fair value. Net gains or losses, including any interest or dividend income, are recognised in the profit or loss.

All financial assets, except for those measured at fair value through profit and loss and equity investments measured at fair value through other comprehensive income, are subject to impairment assessment (see Note 2(k)(i)).









(b) Fair value through other comprehensive income (continued)

(i) Debt investments (continued)


(ii) Equity investments

This category comprises investment in equity that is not held for trading, and the Group and the Company irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an investment-by-investment basis. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of investment. Other net gains and losses are recognised in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are not reclassified to profit or loss.

(c) Fair value through profit or loss

All financial assets not measured at amortised cost or fair value through other comprehensive income as described above are measured at fair value through profit or loss. This includes derivative financial assets (except for a derivative that is a designated and effective hedging instrument). On initial recognition, the Group or the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at fair value through other comprehensive income as at fair value through profit or loss if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets categorised as fair value through profit or loss are subsequently measured at their fair value. Net gains or losses, including any interest or dividend income, are recognised in the profit or loss.

All financial assets, except for those measured at fair value through profit and loss and equity investments measured at fair value through other comprehensive income, are subject to impairment assessment (see Note 2(k)(i)).


84 Scomi Group Bhd







In the previous financial year, financial assets of the Group and the Company were classified and measured under MFRS 139, Financial Instruments: Recognition and Measurement as follows:

(a) Financial assets at fair value through profit or loss

Fair value through profit or loss category comprised financial assets that were held for trading, including derivatives (except for a derivative that was a financial guarantee contract or a designated and effective hedging instrument), contingent consideration in a business combination or financial assets that were specifically designated into this category upon initial recognition.

Derivatives that were linked to and must be settled by delivery of unquoted equity instruments whose fair values could not be reliably measured were measured at cost.

Other financial assets categorised as fair value through profit or loss were subsequently measured at their fair values with the gain or loss recognised in profit or loss.

(b) Held-to-maturity

Held-to-maturity investments category comprised debt instruments that were quoted in an active market and the Group or the Company had the positive intention and ability to hold them to maturity.

Financial assets categorised as held-to-maturity investments were subsequently measured at amortised cost using the effective interest method.

(c) Loans and receivables

Loans and receivables category comprised debt instruments that were not quoted in an active market, trade and other receivables and cash and cash equivalents.

Financial assets categorised as loans and receivables were subsequently measured at amortised cost using the effective interest method.






Previous financial year (continued)

(d) Available-for-sale financial assets

Available-for-sale category comprised investments in equity and debt instruments that were not held for trading.

Investments in equity instruments that did not have a quoted market price in an active market and whose fair value could not be reliably measured were measured at cost. Other financial assets categorised as available-for-sale were subsequently measured at their fair values with the gain or loss recognised in other comprehensive income, except for impairment losses, foreign exchange gains and losses arising from monetary items and gains and losses of hedged items attributable to hedge risks of fair value hedges which were recognised in profit or loss. On derecognition, the cumulative gain or lossrecognised in other comprehensive income was reclassified from equity into profit or loss. Interest calculated for a debt instrument using the effective interest method was recognised in profit or loss.

All financial assets, except for those measured at fair value through profit or loss, were subject to impairment assessment (see Note 2(k)(i)).









(d) Available-for-sale financial assets

Available-for-sale category comprised investments in equity and debt instruments that were not held for trading.

Investments in equity instruments that did not have a quoted market price in an active market and whose fair value could not be reliably measured were measured at cost. Other financial assets categorised as available-for-sale were subsequently measured at their fair values with the gain or loss recognised in other comprehensive income, except for impairment losses, foreign exchange gains and losses arising from monetary items and gains and losses of hedged items attributable to hedge risks of fair value hedges which were recognised in profit or loss. On derecognition, the cumulative gain or lossrecognised in other comprehensive income was reclassified from equity into profit or loss. Interest calculated for a debt instrument using the effective interest method was recognised in profit or loss.

All financial assets, except for those measured at fair value through profit or loss, were subject to impairment assessment (see Note 2(k)(i)).


86 Scomi Group Bhd





Financial liabilities


The categories of financial liabilities at initial recognition are as follows:

(a) Fair value through profit or loss

Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument), contingent consideration in a business combination and financial liabilities that are specifically designated into this category upon initial recognition.

On initial recognition, the Group or the Company may irrevocably designate a financial liability that otherwise meets the requirements to be measured at amortised cost as at fair value through profit or loss:

(a) if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise;

(b) a group of financial liabilities or assets and financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to the Group’s key management personnel; or

(c) if a contract contains one or more embedded derivatives and the host is not a financial asset in the scope of MFRS 9, where the embedded derivative significantly modifies the cash flows and separation is not prohibited.

Financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair value with gains or losses, including any interest expense are recognised in the profit or loss.

For financial liabilities where it is designated as fair value through profit or loss upon initial recognition, the Group and the Company recognise the amount of change in fair value of the financial liability that is attributable to change in credit risk in the other comprehensive income and remaining amount of the change in fair value in the profit or loss, unless the treatment of the effects of changes in the liability’s credit risk would create or enlarge an accounting mismatch.





Financial liabilities (continued)


(b) Amortised cost

Other financial liabilities not categorised as fair value through profit or loss are subsequently measured at amortised cost using the effective interest method.

Interest expense and foreign exchange gains and losses are recognised in the profit or loss. Any gains or losses on derecognition are also recognised in the profit or loss.


In the previous financial year, financial liabilities of the Group and the Company were subsequently measured at amortised cost other than those categorised as fair value through profit or loss.

Fair value through profit or loss category comprised financial liabilities that were derivatives or financial liabilities that were specifically designated into this category upon initial recognition.

Derivatives that were linked to and must be settled by delivery of unquoted equity instruments that did not have a quoted price in an active market for identical instruments whose fair values otherwise could not be reliably measured were measured at cost.

Financial liabilities categorised as fair value through profit or loss were subsequently measured at their fair values with the gain or loss recognised in profit or loss.

(iii) Regular way purchase or sale of financial assets

A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date or settlement date accounting in the current year.

Trade date accounting refers to:

(a) the recognition of an asset to be received and the liability to pay for it on the trade date, and

(b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a receivable from the buyer for payment on the trade date.







Financial liabilities (continued)


(b) Amortised cost

Other financial liabilities not categorised as fair value through profit or loss are subsequently measured at amortised cost using the effective interest method.

Interest expense and foreign exchange gains and losses are recognised in the profit or loss. Any gains or losses on derecognition are also recognised in the profit or loss.


In the previous financial year, financial liabilities of the Group and the Company were subsequently measured at amortised cost other than those categorised as fair value through profit or loss.

Fair value through profit or loss category comprised financial liabilities that were derivatives or financial liabilities that were specifically designated into this category upon initial recognition.

Derivatives that were linked to and must be settled by delivery of unquoted equity instruments that did not have a quoted price in an active market for identical instruments whose fair values otherwise could not be reliably measured were measured at cost.

Financial liabilities categorised as fair value through profit or loss were subsequently measured at their fair values with the gain or loss recognised in profit or loss.

(iii) Regular way purchase or sale of financial assets

A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date or settlement date accounting in the current year.

Trade date accounting refers to:

(a) the recognition of an asset to be received and the liability to pay for it on the trade date, and

(b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a receivable from the buyer for payment on the trade date.


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(iii) Regular way purchase or sale of financial assets (continued)

Settlement date accounting refers to:

(c) the recognition of an asset on the day it is received by the Group or the Company, and

(d) derecognition of an asset and recognition of any gain or loss on disposal on the day that is delivered by the Group or the Company.

Any change in the fair value of the asset to be received during the financial period between the trade date and the settlement date is accounted in the same way as it accounts for the acquired asset.

Generally the Group or the Company applies the settlement date accounting unless otherwise stated for the specific class of asset.

(iv) 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 in accordance with the original or modified terms of a debt instrument.


Financial guarantees issued are initially measured at fair value. Subsequently, they are measured at higher of:

• the amount of the loss allowance; and• the amount initially recognised less, when appropriate, the

cumulative amount of income recognised in accordance to the principles of MFRS 15, Revenue from Contracts with Customers.

Liabilities arising from financial guarantees are presented together withother provisions.


In the previous financial year, fair value arising from financial guarantee contracts were classified as deferred income and was amortised to profit or loss using a straight-line method over the contractual period or, when there was no specified contractual period, recognised in profit or loss upon discharge of the guarantee. When settlement of a financial guarantee contract was probable, an estimate of the obligation was made. If the carrying value of the financial guarantee contract was lower than the obligation, the carrying value was adjusted to the obligation amount and accounted for as a provision.




(v) Hedge accounting

At inception of a designated hedging relationship, the Group and the Company document the risk management objective and strategy for undertaking the hedge. The Group and the Company also document the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.

(a) Fair value hedge


A fair value hedge is a hedge of the exposure to changes in fair value of a recognised asset or liability or an unrecognised firm commitment, or an identified portion of such an asset, liability or firm commitment, that is attributable to a particular risk and could affect the profit or loss.

In a fair value hedge, the gain or loss on the hedging instrument shall be recognised in profit or loss (or other comprehensive income, if the hedging instrument hedges an equity instrument which the Group or the Company has elected to present the subsequent changes in fair value of the investment in equity in other comprehensive income).

The hedging gain or loss on the hedged item shall adjust the carrying amount of the hedged item and be recognised in profit or loss. If the hedged item is a financial asset (or a component thereof) that is measured at fair value through other comprehensive income, the hedging gain or loss on the hedged item shall be recognised in profit or loss. However, if the hedged item is an equity instrument for which an entity has elected to present changes in fair value in other comprehensive income, those amounts shall remain in other comprehensive income. When a hedged item is an unrecognised firm commitment (or a component thereof), the cumulative change in the fair value of the hedged item subsequent to its designation is recognised as an asset or a liability with a corresponding gain or loss recognised in profit or loss.






(v) Hedge accounting

At inception of a designated hedging relationship, the Group and the Company document the risk management objective and strategy for undertaking the hedge. The Group and the Company also document the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.

(a) Fair value hedge


A fair value hedge is a hedge of the exposure to changes in fair value of a recognised asset or liability or an unrecognised firm commitment, or an identified portion of such an asset, liability or firm commitment, that is attributable to a particular risk and could affect the profit or loss.

In a fair value hedge, the gain or loss on the hedging instrument shall be recognised in profit or loss (or other comprehensive income, if the hedging instrument hedges an equity instrument which the Group or the Company has elected to present the subsequent changes in fair value of the investment in equity in other comprehensive income).

The hedging gain or loss on the hedged item shall adjust the carrying amount of the hedged item and be recognised in profit or loss. If the hedged item is a financial asset (or a component thereof) that is measured at fair value through other comprehensive income, the hedging gain or loss on the hedged item shall be recognised in profit or loss. However, if the hedged item is an equity instrument for which an entity has elected to present changes in fair value in other comprehensive income, those amounts shall remain in other comprehensive income. When a hedged item is an unrecognised firm commitment (or a component thereof), the cumulative change in the fair value of the hedged item subsequent to its designation is recognised as an asset or a liability with a corresponding gain or loss recognised in profit or loss.


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(v) Hedge accounting (continued)

(a) Fair value hedge (continued)


In the previous financial year, the gain or loss from remeasuring the hedging instrument at fair value or the foreign currency component of its carrying amount translated at the exchange rate prevailing at the end of the reporting period was recognised in profit or loss. The gain or loss on the hedged item, except for hedge item categorised as available-for-sale, attributable to the hedged risk was adjusted to the carrying amount of the hedged item and recognised in profit or loss. For a hedge item categorised as available-for-sale, the fair value gain or loss attributable to the hedge risk was recognised in profit or loss. Fair value hedge accounting was discontinued prospectively when the hedging instrument expired or was sold, terminated or exercised, the hedge was no longer highly effective or the hedge designation was revoked.

(b) Cash flow hedge


A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with all, or a component of, a recognised asset or liability or a highly probable forecast transaction and could affect the profit or loss. In a cash flowhedge, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income and accumulated in equity and the ineffective portion is recognised in profit or loss. The effective portion of changes in the fair value of the derivative that is recognised in other comprehensive income is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge.

Subsequently, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss in the same financial period or periods during which the hedged forecast cash flows affect profit or loss. If the hedge item is a non-financial asset or liability, the associated gain or loss recognised in other comprehensive income is removed from equity and included in the initial amount of the asset or liability. However, loss recognised in other comprehensive income that will not be recovered in one or more future periods is reclassified from equity into profit or loss immediately.





(b) Cash flow hedge (continued)


The Group designates only the change in fair value of the spot element of forward contracts as the hedging instrument in cash flow hedging relationships. The change in fair value of the forward element of forward exchange contracts (“forward points”) and/or the foreign currency basis spread are separately accounted for as cost of hedging and recognised in a cost of hedging reserve within equity.

Cash flow hedge accounting is discontinued prospectively when the hedging instrument expires or is sold, terminated or exercised, the hedge is no longer highly effective, the forecast transaction is no longer expected to occur or the hedge designation is revoked. If the hedge is for a forecast transaction, the cumulative gain or loss on the hedging instrument remains in equity until the forecast transaction occurs. When hedge accounting for cash flow hedges is discontinued, the amount that has been accumulated in the hedging reserve and the cost of hedging reserve remains in equity until, for a hedge of a transaction resulting in recognition of a non-financial item, it is included in the non-financial item’s cost on its initial recognition or, for other cash flow hedges, it is reclassified to profit or loss in the same financial period or periods as the hedged expected future cash flows affect profit or loss.

If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in the hedging reserve and the cost of hedging reserve are immediately reclassified to profit or loss.


In the previous financial year, cost of hedging was expensed to profit or loss.

(c) Hedge of net investment

A hedge of a net investment is a hedge in the interest of the net assets of a foreign operation. In a net investment hedge, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income and the ineffective portion is recognised in profit or loss. The cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss on disposal of the foreign operation.







(b) Cash flow hedge (continued)


The Group designates only the change in fair value of the spot element of forward contracts as the hedging instrument in cash flow hedging relationships. The change in fair value of the forward element of forward exchange contracts (“forward points”) and/or the foreign currency basis spread are separately accounted for as cost of hedging and recognised in a cost of hedging reserve within equity.

Cash flow hedge accounting is discontinued prospectively when the hedging instrument expires or is sold, terminated or exercised, the hedge is no longer highly effective, the forecast transaction is no longer expected to occur or the hedge designation is revoked. If the hedge is for a forecast transaction, the cumulative gain or loss on the hedging instrument remains in equity until the forecast transaction occurs. When hedge accounting for cash flow hedges is discontinued, the amount that has been accumulated in the hedging reserve and the cost of hedging reserve remains in equity until, for a hedge of a transaction resulting in recognition of a non-financial item, it is included in the non-financial item’s cost on its initial recognition or, for other cash flow hedges, it is reclassified to profit or loss in the same financial period or periods as the hedged expected future cash flows affect profit or loss.

If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in the hedging reserve and the cost of hedging reserve are immediately reclassified to profit or loss.


In the previous financial year, cost of hedging was expensed to profit or loss.

(c) Hedge of net investment

A hedge of a net investment is a hedge in the interest of the net assets of a foreign operation. In a net investment hedge, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income and the ineffective portion is recognised in profit or loss. The cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss on disposal of the foreign operation.


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(vi) Derecognition

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or transferred, or control of the asset is not retained or substantially all of the risks and rewards of ownership of the financial asset are transferred to another party. On derecognition of a financial asset, the difference between the carrying amount of the financial asset and the sum of consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged, cancelled or expires. A financial liability is also derecognised when its terms are modified and the cash flows of the modified liability are substantially different, in which case, a new financial liability based on modified terms is recognised at fair value. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

(vii) Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group or the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and liability simultaneously.



(d) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less any accumulated depreciation and any accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour. Cost also may include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.

Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within “other income” and “other expenses” respectively in profit or loss.

(ii) Subsequent costs

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.





(d) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less any accumulated depreciation and any accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour. Cost also may include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.

Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within “other income” and “other expenses” respectively in profit or loss.

(ii) Subsequent costs

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.


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(d) Property, plant and equipment (continued)

(iii) Depreciation

Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from the remainder of that asset, then that component is depreciated separately.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment from the date that they are available for use. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use.

The estimated useful lives for the current and comparative periods are as follows:

Freehold buildings 5 – 50 years Leasehold land 15 years Leasehold buildings 3 – 50 years Marine vessels 25 years Tools, plant and machinery 3 – 12 years Renovation, office equipment, fittings and computers 3 – 10 years Motor vehicles 3 – 7 years Monorail test track 33 years

Depreciation methods, useful lives and residual values are reviewed at the end of the reporting period, and adjusted as appropriate.



(e) Leased assets

(i) Finance lease

Leases in terms of which the Group or the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each financial period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

Leasehold land which in substance is a finance lease is classified as property, plant and equipment or as investment property if held to earn rental income or for capital appreciation or for both.

(ii) Operating lease

Leases, where the Group or the Company does not assume substantially all the risks and rewards of ownership are classified as operating leases and, except for property interest held under operating lease, the leased assets are not recognised on the statement of financial position. Property interest held under an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as investment property and measured using fair value model.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.

Leasehold land which in substance is an operating lease is classified as prepaid lease payments.

(f) Intangible assets

(i) Goodwill

Goodwill arises on business combinations is measured at cost less any accumulated impairment losses. In respect of equity-accounted associates and joint ventures, the carrying amount of goodwill is included in the carrying amount of the investment and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the equity-accounted associates and joint ventures.





(e) Leased assets

(i) Finance lease

Leases in terms of which the Group or the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each financial period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

Leasehold land which in substance is a finance lease is classified as property, plant and equipment or as investment property if held to earn rental income or for capital appreciation or for both.

(ii) Operating lease

Leases, where the Group or the Company does not assume substantially all the risks and rewards of ownership are classified as operating leases and, except for property interest held under operating lease, the leased assets are not recognised on the statement of financial position. Property interest held under an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as investment property and measured using fair value model.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.

Leasehold land which in substance is an operating lease is classified as prepaid lease payments.

(f) Intangible assets

(i) Goodwill

Goodwill arises on business combinations is measured at cost less any accumulated impairment losses. In respect of equity-accounted associates and joint ventures, the carrying amount of goodwill is included in the carrying amount of the investment and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the equity-accounted associates and joint ventures.


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(f) Intangible assets (continued)

(ii) Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in profit or loss as incurred.

Expenditure on development activities, whereby the application of research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to and has sufficient resources to complete development and to use or sell the asset.

The expenditure capitalised includes the cost of materials, direct labour and overheads costs that are directly attributable to preparing the asset for its intended use. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. Other development expenditure is recognised in profit or loss as incurred.

Capitalised development expenditure is measured at cost less any accumulated amortisation and any accumulated impairment losses.

(iii) Other intangible assets

Intangible assets, other than goodwill, that are acquired by the Group, which have finite useful lives, are measured at cost less any accumulated amortisation and any accumulated impairment losses.

(iv) Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.

(v) Amortisation

Goodwill and intangible assets with indefinite useful lives are not amortised but are tested for impairment annually and whenever there is an indication that they may be impaired.

Other intangible assets are amortised from the date that they are available for use. Amortisation is based on the cost of an asset less its residual value. Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets.




(v) Amortisation (continued)


30.6.2019 31.3.2018 capitalised development costs:

- Drilling waste equipment and EMS engineering package 9 years 10 years - Bus 5 years 5 years

patents rights - 1 year

Development costs work-in-progress are amortised based on the expected production unit of 750 (2018: 750).

Amortisation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted, if appropriate.

(g) Investment properties

(i) Investment properties carried at cost

Investment properties are properties which are owned to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes.

Investment properties are stated at cost less any accumulated depreciation and any accumulated impairment losses, consistent with the accounting policy for property, plant and equipment as stated in accounting policy Note 2(d).

Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use and capitalised borrowing costs.

Depreciation is charged to the profit or loss on a straight-line basis over the estimated useful lives of 20 to 50 periods for buildings. Freehold land is not depreciated.

An investment property is derecognised on its disposal, or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal. The difference between the net disposal proceeds and the carrying amount is recognised in profit or loss in the financial period in which the item is derecognised.






(v) Amortisation (continued)


30.6.2019 31.3.2018 capitalised development costs:

- Drilling waste equipment and EMS engineering package 9 years 10 years - Bus 5 years 5 years

patents rights - 1 year

Development costs work-in-progress are amortised based on the expected production unit of 750 (2018: 750).

Amortisation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted, if appropriate.

(g) Investment properties

(i) Investment properties carried at cost

Investment properties are properties which are owned to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes.

Investment properties are stated at cost less any accumulated depreciation and any accumulated impairment losses, consistent with the accounting policy for property, plant and equipment as stated in accounting policy Note 2(d).

Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use and capitalised borrowing costs.

Depreciation is charged to the profit or loss on a straight-line basis over the estimated useful lives of 20 to 50 periods for buildings. Freehold land is not depreciated.

An investment property is derecognised on its disposal, or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal. The difference between the net disposal proceeds and the carrying amount is recognised in profit or loss in the financial period in which the item is derecognised.


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(g) Investment properties (continued)

(ii) Reclassification to/from investment property

When an item of property, plant and equipment is transferred to investment property following a change in its use, any difference arising at the date of transfer between the carrying amount of the item immediately prior to transfer and its fair value is recognised directly in equity as a revaluation of property, plant and equipment. However, if a fair value gain reverses a previous impairment loss, the gain is recognised in profit or loss. Upon disposal of an investment property, any surplus previously recorded in equity is transferred to retained earnings; the transfer is not made through profit or loss.

When the use of a property changes such that it is reclassified as property, plant and equipment or inventories, its fair value at the date of reclassification becomes its cost for subsequent accounting.

(h) Inventories

Inventories are measured at the lower of cost and net realisable value.

The cost of inventories is calculated using the weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of work-in-progress and finished goods, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

(i) Non-current assets held for sale or distribution to owners

Non-current assets, or disposal group comprising assets and liabilities, that are expected to be recovered primarily through sale or distribution to owners rather than through continuing use, are classified as held for sale or distribution.

Immediately before classification as held for sale or distribution, the assets, or components of a disposal group, are remeasured in accordance with the Group’s accounting policies. Thereafter generally the assets, or disposal group, are measured at the lower of their carrying amount and fair value less costs of disposal.

Any impairment loss on a disposal group is first allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets and investment property, which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale or distribution and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.



(i) Non-current assets held for sale or distribution to owners (continued)

Intangible assets and property, plant and equipment once classified as held for sale or distribution are not amortised or depreciated. In addition, equity accounting of equity-accounted associates and joint ventures ceases once classified as held for sale or distribution.

(j) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in fair value with original maturities of three months or less, and are used by the Group and the Company in the management of their short-term commitments. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

(k) Impairment

(i) Financial assets

Unless specifically disclosed below, the Group and the Company generally applied the following accounting policies retrospectively. Nevertheless, as permitted by MFRS 9, Financial Instruments, the Group and the Company elected not to restate the comparatives.


The Group and the Company recognise loss allowances for expected credit losses on financial assets measured at amortised cost, debt investments measured at fair value through other comprehensive income and lease receivables. Expected credit losses are a probability-weighted estimate of credit losses.

The Group and the Company measure loss allowances at an amount equal to lifetime expected credit loss, except for debt securities that are determined to have low credit risk at the reporting date, cash and bank balance and other debt securities for which credit risk has not increased significantly since initial recognition, which are measured at 12-month expected credit loss. Loss allowances for trade receivables and lease receivables are always measured at an amount equal to lifetime expected credit loss.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit loss, the Group and the Company consider reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment and including forward-looking information, where available.





(i) Non-current assets held for sale or distribution to owners (continued)

Intangible assets and property, plant and equipment once classified as held for sale or distribution are not amortised or depreciated. In addition, equity accounting of equity-accounted associates and joint ventures ceases once classified as held for sale or distribution.

(j) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in fair value with original maturities of three months or less, and are used by the Group and the Company in the management of their short-term commitments. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

(k) Impairment

(i) Financial assets

Unless specifically disclosed below, the Group and the Company generally applied the following accounting policies retrospectively. Nevertheless, as permitted by MFRS 9, Financial Instruments, the Group and the Company elected not to restate the comparatives.


The Group and the Company recognise loss allowances for expected credit losses on financial assets measured at amortised cost, debt investments measured at fair value through other comprehensive income and lease receivables. Expected credit losses are a probability-weighted estimate of credit losses.

The Group and the Company measure loss allowances at an amount equal to lifetime expected credit loss, except for debt securities that are determined to have low credit risk at the reporting date, cash and bank balance and other debt securities for which credit risk has not increased significantly since initial recognition, which are measured at 12-month expected credit loss. Loss allowances for trade receivables and lease receivables are always measured at an amount equal to lifetime expected credit loss.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit loss, the Group and the Company consider reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment and including forward-looking information, where available.


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(k) Impairment (continued)

(i) Financial assets (continued) Current financial period (continued)

Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of the asset, while 12-month expected credit losses are the portion of expected credit losses that result from default events that are possible within the 12 months after the reporting date. The maximum period considered when estimating expected credit losses is the maximum contractual period over which the Group and the Company are exposed to credit risk.

The Group and the Company estimate the expected credit losses on trade receivables using a provision matrix with reference to historical credit loss experience.

An impairment loss in respect of financial assets measured at amortised cost is recognised in profit or loss and the carrying amount of the asset is reduced through the use of an allowance account.

An impairment loss in respect of debt investments measured at fair value through other comprehensive income is recognised in profit or loss and the allowance account is recognised in other comprehensive income.

At each reporting date, the Group and the Company assess whether financial assets carried at amortised cost and debt securities at fair value through other comprehensive income are credit-impaired. A financial asset is credit impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

The gross carrying amount of a financial asset is written off (either partially or full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Group or the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s or the Company’s procedures for recovery amounts due.




(i) Financial assets (continued)


All financial assets (except for financial assets categorised as fair value through profit or loss, investments in subsidiaries and associates and joint venture) were assessed at each reporting date whether there was any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, were not recognised. For an investment in an equity instrument, a significant or prolonged decline in the fair value below its cost was an objective evidence of impairment. If any such objective evidence exists, then the impairment loss of the financial asset was estimated.

An impairment loss in respect of loans and receivables and held-to-maturity investments was recognised in profit or loss and was measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset was reduced through the use of an allowance account.

An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the difference between the asset’s acquisition cost (net of any principal repayment and amortisation) and the asset’s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale financial asset has been recognised in other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity to profit or loss.

An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the financial 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.

Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available-for-sale is not reversed through profit or loss.

If, in a subsequent financial period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss.






(i) Financial assets (continued)


All financial assets (except for financial assets categorised as fair value through profit or loss, investments in subsidiaries and associates and joint venture) were assessed at each reporting date whether there was any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, were not recognised. For an investment in an equity instrument, a significant or prolonged decline in the fair value below its cost was an objective evidence of impairment. If any such objective evidence exists, then the impairment loss of the financial asset was estimated.

An impairment loss in respect of loans and receivables and held-to-maturity investments was recognised in profit or loss and was measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset was reduced through the use of an allowance account.

An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the difference between the asset’s acquisition cost (net of any principal repayment and amortisation) and the asset’s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale financial asset has been recognised in other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity to profit or loss.

An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the financial 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.

Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available-for-sale is not reversed through profit or loss.

If, in a subsequent financial period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss.


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(ii) Other assets

The carrying amounts of other assets (except for inventories, lease receivables, deferred tax asset, assets arising from employee benefits, investment property measured at fair value and non-current assets (or disposal groups) classified as held for sale) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each financial period at the same time.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units. Subject to an operating segment ceiling test, for the purpose of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to a cash-generating unit or a group of cash-generating units that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or cash-generating unit is the greater of its value-in-use and its fair value less costs of disposal. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit.

An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its estimated recoverable amount.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of cash-generating units) and then to reduce the carrying amounts of the other assets in the cash-generating unit (groups of cash-generating units) on a pro rata basis.




(ii) Other assets (continued)

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profit or loss in the financial period in which the reversals are recognised.

(l) Equity instruments

Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.

(i) Issue expenses

Costs directly attributable to the issue of instruments classified as equity are recognised as a deduction from equity.

(ii) Ordinary shares

Ordinary shares are classified as equity.

(iii) Repurchase, disposal and reissue of share capital (treasury shares)

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares that are not subsequently cancelled are classified as treasury shares in the statement of changes in equity.

Where treasury shares are sold or reissued subsequently, the difference between the sales consideration net of directly attributable costs and the carrying amount of the treasury shares is recognised in equity.

(m) Compound financial instruments

A compound financial instrument is a non-derivative financial instrument that contains both a liability and an equity component.

Compound financial instruments issued by the Group comprise convertible notes that can be converted to share capital at the option of the holder, when the number of shares to be issued does not vary with changes in their fair value.






(ii) Other assets (continued)

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profit or loss in the financial period in which the reversals are recognised.

(l) Equity instruments

Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.

(i) Issue expenses

Costs directly attributable to the issue of instruments classified as equity are recognised as a deduction from equity.

(ii) Ordinary shares

Ordinary shares are classified as equity.

(iii) Repurchase, disposal and reissue of share capital (treasury shares)

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares that are not subsequently cancelled are classified as treasury shares in the statement of changes in equity.

Where treasury shares are sold or reissued subsequently, the difference between the sales consideration net of directly attributable costs and the carrying amount of the treasury shares is recognised in equity.

(m) Compound financial instruments

A compound financial instrument is a non-derivative financial instrument that contains both a liability and an equity component.

Compound financial instruments issued by the Group comprise convertible notes that can be converted to share capital at the option of the holder, when the number of shares to be issued does not vary with changes in their fair value.


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(m) Compound financial instruments (continued)

The proceeds are first allocated to the liability component, determined based on the fair value of a similar liability that does not have a conversion feature or similar associated equity component. The residual amount is allocated as the equity component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured subsequent to initial recognition.

Interest and losses and gains relating to the financial liability are recognised in profit or loss. On conversion, the financial liability is reclassified to equity; no gain or loss is recognised on conversion.

(n) Employee benefits

(i) Short-term employee benefits

Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(ii) State plans

The Group’s contributions to statutory pension funds are charged to profit or loss in the financial period to which they relate. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

(iii) Defined benefit plans

The Group’s net obligation in respect of defined benefit retirement plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior financial periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefits obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset to the Group, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.



(n) Employee benefits (continued)

(iii) Defined benefit plans (continued)

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income. The Group determines the net interest expense or income on the net defined liability or asset for the financial period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then net defined benefit liability or asset, taking into account any changes in the net defined benefit liability or asset during the financial period as a result of contributions and benefit payments.

Net interest expense and other expenses relating to defined benefit plans are recognised in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Group recognises gain and losses on the settlement of a defined benefit plan when the settlement occurs.

(iv) Share-based payment transactions

The grant date fair value of share-based payment granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the financial period that the employees unconditionally become entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

The fair value of employee share options is measured using a binomial lattice model. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted average historic volatility adjusted for changes expected due to publicly available information), weighted average expected life of the instruments (based on historical experience and general option holder behaviour), expected dividends, and the risk-free interest rate (based on government bonds). Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value.






(iii) Defined benefit plans (continued)

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income. The Group determines the net interest expense or income on the net defined liability or asset for the financial period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then net defined benefit liability or asset, taking into account any changes in the net defined benefit liability or asset during the financial period as a result of contributions and benefit payments.

Net interest expense and other expenses relating to defined benefit plans are recognised in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Group recognises gain and losses on the settlement of a defined benefit plan when the settlement occurs.

(iv) Share-based payment transactions

The grant date fair value of share-based payment granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the financial period that the employees unconditionally become entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

The fair value of employee share options is measured using a binomial lattice model. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted average historic volatility adjusted for changes expected due to publicly available information), weighted average expected life of the instruments (based on historical experience and general option holder behaviour), expected dividends, and the risk-free interest rate (based on government bonds). Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value.


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(v) Termination benefits

Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those benefits and when the Group recognises costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the end of the reporting period, then they are discounted.

(o) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

Warranties

A provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical warranty data and a weighting of all possible outcomes against their associated probabilities.

(p) Revenue and other income

(i) Revenue


Revenue is measured based on the consideration specified in a contract with a customer in exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third parties. The Group or the Company recognises revenue when (or as) it transfers control over a product or service to customer. An asset is transferred when (or as) the customer obtains control of the asset.



(p) Revenue and other income (continued)

(i) Revenue (continued)


The Group or the Company transfers control of a good or service at a point in time unless one of the following overtime criteria is met:

(a) the customer simultaneously receives and consumes the benefits provided as the Group or the Company performs;

(b) the Group’s or the Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or

(c) the Group’s or the Company’s performance does not create an asset with an alternative use and the Group or the Company has an enforceable right to payment for performance completed to date.


Goods sold

Revenue from the sale of goods in the course of ordinary activities is measured at fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised.

Services

Revenue from services rendered is recognised in profit or loss in proportion to the stage of completion of the transaction at the end of the reporting period. The stage of completion is assessed by reference to surveys of work performed.

Construction contracts

Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments, to the extent that it is probable that they will result in revenue and can be measured reliably. As soon as the outcome of a construction contract can be estimated reliably, contract revenue and contract cost are recognised in profit or loss in proportion to the stage of completion of the contract. Contract expenses are recognised as incurred unless they create an asset related to future contract activity.








The Group or the Company transfers control of a good or service at a point in time unless one of the following overtime criteria is met:

(a) the customer simultaneously receives and consumes the benefits provided as the Group or the Company performs;

(b) the Group’s or the Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or

(c) the Group’s or the Company’s performance does not create an asset with an alternative use and the Group or the Company has an enforceable right to payment for performance completed to date.


Goods sold

Revenue from the sale of goods in the course of ordinary activities is measured at fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised.

Services

Revenue from services rendered is recognised in profit or loss in proportion to the stage of completion of the transaction at the end of the reporting period. The stage of completion is assessed by reference to surveys of work performed.

Construction contracts

Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments, to the extent that it is probable that they will result in revenue and can be measured reliably. As soon as the outcome of a construction contract can be estimated reliably, contract revenue and contract cost are recognised in profit or loss in proportion to the stage of completion of the contract. Contract expenses are recognised as incurred unless they create an asset related to future contract activity.


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Construction contracts (continued)

The stage of completion is assessed by reference to the proportion that contract costs incurred for work performed to-date bear to the estimated total contract costs.

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a contract is recognised immediately in profit or loss.

Charter hire income

Revenue from charter hire is recognised on an accrual basis but is deferred when the terms of billings have not been agreed by third parties or when certain conditions necessary for realisation have yet to be fulfilled.

Management and agency fees Management and agency fees are recognised on an accrual basis by reference to completion of the specific transaction, assessed on the basis of the actual services provided as a proportion of the total services to be provided.

(ii) Rental income

Rental income from investment property is recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease. Rental income from sub-leased property is recognised as other income.

(iii) Dividend income

Dividend income is recognised in profit or loss on the date that the Group’sor the Company’s right to receive payment is established, which in the case of quoted securities is the ex-dividend date.

(iv) Interest income

Interest income is recognised as it accrues using the effective interest method in profit or loss except for interest income arising from temporary investment of borrowings taken specifically for the purpose of obtaining a qualifying asset which is accounted for in accordance with the accounting policy on borrowing costs.



(q) Borrowing costs

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

(r) Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the financial period, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial periods.

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.





(q) Borrowing costs

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

(r) Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the financial period, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial periods.

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.


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(r) Income tax (continued)

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax assets and liabilities on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(s) Earnings per ordinary share

The Group presents basic and diluted earnings per share data for its ordinary shares (“EPS”).

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the financial period, adjusted for own shares held.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees.

(t) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. Operating segment results are reviewed regularly by the chief operating decision maker, which in this case is the Chief Executive Officer of the Group, to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.

(u) Contingencies

(i) Contingent liabilities

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.



(u) Contingencies (continued)

(ii) Contingent assets

When an inflow of economic benefit of an asset is probable where it arises from past events and where existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity, the asset is not recognised in the statements of financial position but is being disclosed as a contingent asset. When the inflow of economic benefit is virtually certain, then the related assets is recognised.

(v) Fair value measurements

Fair value of an asset or a liability, except for share-based payment and lease transactions, is determined as 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 measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market.

For non-financial asset, the fair value measurement 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.

When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair value are categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: unobservable inputs for the asset or liability.

The Group recognises transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances that caused the transfers.

(w) Discontinued operations

A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale or distribution, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative statement of profit or loss and other comprehensive income is re-presented as if the operation had been discontinued from the start of the comparative period.





(u) Contingencies (continued)

(ii) Contingent assets

When an inflow of economic benefit of an asset is probable where it arises from past events and where existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity, the asset is not recognised in the statements of financial position but is being disclosed as a contingent asset. When the inflow of economic benefit is virtually certain, then the related assets is recognised.

(v) Fair value measurements

Fair value of an asset or a liability, except for share-based payment and lease transactions, is determined as 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 measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market.

For non-financial asset, the fair value measurement 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.

When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair value are categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: unobservable inputs for the asset or liability.

The Group recognises transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances that caused the transfers.

(w) Discontinued operations

A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale or distribution, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative statement of profit or loss and other comprehensive income is re-presented as if the operation had been discontinued from the start of the comparative period.


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ntsDraft – for discussion purposes and subject to final amendments 68

Company No. 571212-A

3. Property, plant and equipment (continued)

Motorvehicles

Officeequipment and fittings Renovation Total

RM’000 RM’000 RM’000 RM’000CompanyCostAt 1 April 2017/31 March 2018/

1 April 2018 838 3,684 750 5,272Additions 563 - - 563Disposals (298) - - (298)

At 30 June 2019 1,103 3,684 750 5,537

Accumulated depreciationAt 1 April 2017 620 3,676 745 5,041Depreciation for the year 115 1 2 118

At 31 March 2018/1 April 2018 735 3,677 747 5,159Depreciation for the financial period 149 6 3 158Disposals (259) - - (259)

At 30 June 2019 625 3,683 750 5,058

Carrying amountsAt 1 April 2017 218 8 5 231

At 31 March 2018/1 April 2018 103 7 3 113

At 30 June 2019 478 1 - 479

(a) Leased property, plant and equipment

The net carrying amount of motor vehicles, leased property, plant and equipment acquired under finance lease arrangements as at the end of the reporting period are as follows:

Group Company30.6.2019 31.3.2018 30.6.2019 31.3.2018RM’000 RM’000 RM’000 RM’000

Land and buildings 837 35,710 - -Equipment and motor vehicles 478 3,269 478 103

1,315 38,979 478 103




Motorvehicles

Officeequipment and fittings Renovation Total

RM’000 RM’000 RM’000 RM’000CompanyCostAt 1 April 2017/31 March 2018/

1 April 2018 838 3,684 750 5,272Additions 563 - - 563Disposals (298) - - (298)

At 30 June 2019 1,103 3,684 750 5,537

Accumulated depreciationAt 1 April 2017 620 3,676 745 5,041Depreciation for the year 115 1 2 118

At 31 March 2018/1 April 2018 735 3,677 747 5,159Depreciation for the financial period 149 6 3 158Disposals (259) - - (259)

At 30 June 2019 625 3,683 750 5,058

Carrying amountsAt 1 April 2017 218 8 5 231

At 31 March 2018/1 April 2018 103 7 3 113

At 30 June 2019 478 1 - 479

(a) Leased property, plant and equipment

The net carrying amount of motor vehicles, leased property, plant and equipment acquired under finance lease arrangements as at the end of the reporting period are as follows:


Land and buildings 837 35,710 - -Equipment and motor vehicles 478 3,269 478 103

1,315 38,979 478 103


116 Scomi Group Bhd



(b) Leasehold buildings

The entire leasehold buildings of the Group are situated on parcels of land owned by third parties and a State Government.

(c) Impairment loss - Marine vessels

During the financial period ended 30 June 2019, the prolonged decline in global oil and gas prices has resulted in a decrease in charter contracts for the Group vessels, which indirectly has an impact on the recoverable amount of the vessels. Accordingly, the Group reviewed the recoverable amount of its vessels, which resulted in an impairment loss during the financial period amounting to RM1,542,000 (year ended 31.3.2018: RM4,322,000).

The recoverable amount of the vessels of the Group were determined based on the higher of fair value less costs of disposal and value-in-use calculation. In valuing the vessels using fair value less costs of disposal, the valuer had taken into consideration the prevailing market conditions and made adjustments for differences such as age, size and specification where necessary before arriving at the most appropriate fair value for the vessels. The fair value measurement of the vessels was performed by an independent valuer not connected with the Group, who has appropriate qualifications and recent experience in the fair value measurement of the vessels in the relevant sector.

The fair value was based on the following key assumptions:

(i) historical transacted prices remain relevant; and (ii) the growth of oil and gas industries will not deteriorate further.

The value-in-use calculations use pre-tax cash flow projections based on financial budgets approved by the Board covering a five-year period. The key assumptions used in the value-in-use calculation in the current financial period are as follows:

30.6.2019 31.3.2018% %

Discount rate 9.7 12.0Terminal growth rate 2.0 0.0

The Directors are of the opinion that there are no reasonable possible changes in any key assumptions that would cost the carrying amount of the marine vessels to materially exceed the recoverable amount.



(d) Security

The net carrying amount of property, plant and equipment of the Group charged as security for banking facilities granted to the Group (see Note 18) are as follows:

Group30.6.2019 31.3.2018RM’000 RM’000

Marine vessels 140,359 164,756

4. Investment properties Group Company

30.6.2019 31.3.2018 30.6.2019 31.3.2018RM’000 RM’000 RM’000 RM’000

CostAt beginning of the financial

period/year 4,860 5,075 - 4,678Transfer to assets held for sale - - - (4,678)Disposal (2,069) - - -Effect of movements in exchange

rates 99 (205) - -

At end of the financial period/year 2,890 4,870 - -

Depreciation and impairmentAt beginning of the financial

period/yearAccumulated depreciation 2,265 2,121 - 363Accumulated impairment loss 455 455 - -

2,720 2,576 - 363Depreciation for the financial period 169 205 - 51Transfer to assets held for sale - - - (414)Effect of movements in exchange

rates 1 (51) - -At end of the financial period/year

Accumulated depreciation 2,435 2,275 - -Accumulated impairment loss 455 455 - -

2,890 2,730 - -

Carrying amountAt end of the financial period/year - 2,140 - -Fair value at end of the financial

period/year - 9,381 - -





(d) Security

The net carrying amount of property, plant and equipment of the Group charged as security for banking facilities granted to the Group (see Note 18) are as follows:

Group30.6.2019 31.3.2018RM’000 RM’000

Marine vessels 140,359 164,756

4. Investment properties Group Company

30.6.2019 31.3.2018 30.6.2019 31.3.2018RM’000 RM’000 RM’000 RM’000

CostAt beginning of the financial

period/year 4,860 5,075 - 4,678Transfer to assets held for sale - - - (4,678)Disposal (2,069) - - -Effect of movements in exchange

rates 99 (205) - -

At end of the financial period/year 2,890 4,870 - -

Depreciation and impairmentAt beginning of the financial

period/yearAccumulated depreciation 2,265 2,121 - 363Accumulated impairment loss 455 455 - -

2,720 2,576 - 363Depreciation for the financial period 169 205 - 51Transfer to assets held for sale - - - (414)Effect of movements in exchange

rates 1 (51) - -At end of the financial period/year

Accumulated depreciation 2,435 2,275 - -Accumulated impairment loss 455 455 - -

2,890 2,730 - -

Carrying amountAt end of the financial period/year - 2,140 - -Fair value at end of the financial

period/year - 9,381 - -


118 Scomi Group Bhd


4. Investment properties (continued)

The following is recognised in profit or loss in respect of investment properties:

Group Company1.4.2018

to 30.6.2019

1.4.2017 to

31.3.2018

1.4.2018 to

30.6.2019

1.4.2017 to

31.3.2018RM’000 RM’000 RM’000 RM’000

Rental income 181 181 204 408

There were no direct operating expenses arising from investment property that generated rental income during the financial period as all expenses were incurred by the tenant.

(a) Fair value information

Fair value of investment properties are categorised as follows:

Level 1 Level 2 Level 3 TotalGroup RM’000 RM’000 RM’000 RM’00030.6.2019Freehold land - - - -Freehold land and buildings - - - -

- - - -

31.3.2018Freehold land - 5,431 - 5,431Freehold land and buildings - 3,950 - 3,950

- 9,381 - 9,381




4. Investment properties (continued)

(a) Fair value information (continued)

Level 1 fair value

Level 1 fair value is derived from quoted price (unadjusted) in active markets for identical investment properties that the entity can access at the measurement date.

Level 2 fair value

Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for the investment property, either directly or indirectly.

Level 2 fair values of land and buildings is determined by external, independent property valuers. The fair values of land and buildings have been generally derived using the comparison method. In this approach, sales and listing of comparable properties recorded within the same location are compiled. Sales price of comparable properties in close proximity are adjusted for differences in attributes to arrive at a comparison.

Level 3 fair value

Level 3 fair value is estimated using unobservable inputs for the investment property.


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122 Scomi Group Bhd


5. Intangible assets (continued)

(a) Amortisation

The amortisation of patents and capitalised development costs are allocated to the cost of inventory and are recognised in cost of sales as inventory is sold.

Useful life of the patents have expired and the remaining useful lives of the capitalised development costs is 9 years (31.3.2018: 10 years).

(b) Impairment

(i) Impairment testing for cash-generating units containing goodwill

The carrying amounts of goodwill allocated to the Group’s cash-generating units (“CGUs”) are as follows:

Group30.6.2019 31.3.2018RM’000 RM’000

Oilfield services 99,603 102,130Transport solutions - 48,764

99,603 150,894

The recoverable amount of the CGUs in the current financial period is determined based on value-in-use calculations for oilfield services.

The goodwill for Transport Solutions has been deconsolidated (Note 25).

The value-in-use calculations used pre-tax cash flow projections based on approved financial budgets. The projections were based on an approved business plan and reflect the expectation of usage, revenue growth, operating costs, technological obsolescence and margins based on past experience and current assessment of market share, expectations of market growth and industry growth.



(b) Impairment (continued)

(i) Impairment testing for cash-generating units containing goodwill (continued)

Goodwill allocated to Drilling Services

During the financial period, the cash-generating units with the allocated goodwill was reviewed for impairment using the value-in-use calculations. The value-in-use calculations used pre-tax cash flow projections for each country based on financial budgets approved by the Board covering a five-year period.

The value-in-use calculations used pre-tax cash flow projections based on financial budgets approved by the Board covering a five-year period. The key assumptions used in the value-in-use calculations in the current financial period are as follows:

30.6.2019 31.3.2018% %

Revenue growth rates in the first 5 periods 0.0 - 20.0 0.0 - 56.0Discount rates 9.0 - 21.0 9.0 - 26.0Terminal growth rates 0.0 0.0

The projections over these periods were based on an approved business plan and reflect the expectation of usage, revenue growth, operating costs and margins based on past experience and current assessment of market share, expectations of market growth and industry growth. The discount rates used are pre-tax and reflect specific risk relating to individual countries in which the Group operates. The terminal growth rate is based on long-term growth rates relating to the individual countries.

Based on the calculations, no impairment has been recognised in the current financial period. However, an increase/(decrease) of a one percentage point in the discount rate used would have (decreased)/increased the recoverable amount by approximately (RM24.1 million)/RM28.1 million.





(b) Impairment (continued)

(i) Impairment testing for cash-generating units containing goodwill (continued)

Goodwill allocated to Drilling Services

During the financial period, the cash-generating units with the allocated goodwill was reviewed for impairment using the value-in-use calculations. The value-in-use calculations used pre-tax cash flow projections for each country based on financial budgets approved by the Board covering a five-year period.

The value-in-use calculations used pre-tax cash flow projections based on financial budgets approved by the Board covering a five-year period. The key assumptions used in the value-in-use calculations in the current financial period are as follows:

30.6.2019 31.3.2018% %

Revenue growth rates in the first 5 periods 0.0 - 20.0 0.0 - 56.0Discount rates 9.0 - 21.0 9.0 - 26.0Terminal growth rates 0.0 0.0

The projections over these periods were based on an approved business plan and reflect the expectation of usage, revenue growth, operating costs and margins based on past experience and current assessment of market share, expectations of market growth and industry growth. The discount rates used are pre-tax and reflect specific risk relating to individual countries in which the Group operates. The terminal growth rate is based on long-term growth rates relating to the individual countries.

Based on the calculations, no impairment has been recognised in the current financial period. However, an increase/(decrease) of a one percentage point in the discount rate used would have (decreased)/increased the recoverable amount by approximately (RM24.1 million)/RM28.1 million.


124 Scomi Group Bhd


6. Investments in subsidiaries Company

30.6.2019 31.3.2018RM’000 RM’000

At costQuoted shares in Malaysia 877,466 1,219,026Unquoted shares 152,598 152,598

1,030,064 1,371,624

Less: Impairment loss (697,097) (974,260)

332,967 397,364At market value

Quoted shares in Malaysia 106,697 108,197

Impairment review of investment in subsidiaries

Due to the presence of impairment indicators during the financial period arising from the operations of the Company’s subsidiaries, the Company has undertaken an impairment assessment on investment in subsidiaries.

The recoverable amounts of the subsidiaries was determined based on value-in-use calculations. The key assumptions used as disclosed in Note 3(c) and Note 5(b)(i).

The impairment of RM64,397,000 during the financial period is due to deconsolidation of Scomi Engineering Bhd as disclosed in Note 25 to the financial statements.

Deconsolidation of subsidiaries

During the financial period, the Company has lost control in Scomi Engineering Bhd as disclosed in Note 25 to the financial statements.


6. Investments in subsidiaries (continued)

Details of the subsidiaries are as follows:

Name of entity

Principal place of business/ Country of

incorporation Principal activities

Effective ownership

interest30.6.2019 31.3.2018

Subsidiaries of SGB % %

Scomi Energy Services Bhd (“SESB”)

Malaysia Investment holding 65.6 65.6

Scomi Engineering Bhd (“SEB”) (Judicial managersappointed) @

Malaysia Investment holding, provision of management services to subsidiaries and the design, manufacture and supply of monorail trains and related services

100.0 100.0

Scomi Oiltools Bermuda Limited (“SOBL”)

Bermuda Investment holding 100.0 100.0

Scomi Solutions Sdn.Bhd.

Malaysia Management services and technical support in relation to information technology

100.0 100.0

Scomi Precision Engineering Sdn.Bhd.

Malaysia Ceased business operations

100.0 100.0

Scomi Chemicals Sdn.Bhd.


Global Learning and Development Sdn.Bhd.

Malaysia Provision of training, development and coaching and consultancy services in relation to educational, training and business application services

100.0 100.0

Scomi Energy Sdn.Bhd.

Malaysia Investment holding and the provision of management services to its subsidiaries

100.0 100.0





Details of the subsidiaries are as follows:

Name of entity


incorporation Principal activities

Effective ownership

interest30.6.2019 31.3.2018

Subsidiaries of SGB % %

Scomi Energy Services Bhd (“SESB”)


Scomi Engineering Bhd (“SEB”) (Judicial managersappointed) @

Malaysia Investment holding, provision of management services to subsidiaries and the design, manufacture and supply of monorail trains and related services

100.0 100.0

Scomi Oiltools Bermuda Limited (“SOBL”)


Scomi Solutions Sdn.Bhd.

Malaysia Management services and technical support in relation to information technology

100.0 100.0

Scomi Precision Engineering Sdn.Bhd.

Malaysia Ceased business operations

100.0 100.0

Scomi Chemicals Sdn.Bhd.


Global Learning and Development Sdn.Bhd.

Malaysia Provision of training, development and coaching and consultancy services in relation to educational, training and business application services

100.0 100.0

Scomi Energy Sdn.Bhd.

Malaysia Investment holding and the provision of management services to its subsidiaries

100.0 100.0


126 Scomi Group Bhd


6. Investments in subsidiaries (continued) Details of the subsidiaries are as follows (continued):

Name of entity


incorporation Principal activitiesEffective ownership

interest30.6.2019 31.3.2018

% %Subsidiaries of SGB (continued)Scomi OBM Terminal

Sdn. Bhd. Malaysia Renting and leasing of

other machinery, equipment and tangible goods

100.0 100.0

Scomi International Private Limited #

Singapore Provision of integrated project management, consultancy, sales, marketing and other services

100.0 100.0

Scomi Ecosolve Limited

British Virgin Islands

Investment holding and the commercial exploitation of intellectual property and rights related to technologies

100.0 100.0

Scomi Enviro Sdn.Bhd.

Malaysia Provision of equipment and services for the treatment of crude oil emulsion, sludge, slop and recovery of crude oil, treatment of non aqueous fluids, treatment of oil contaminated solids and waste water treatment

100.0 100.0

Subsidiaries of SOBLScomi Oiltools

Overseas (M) Limited

Mauritius Ceased business operation

100.0 100.0

Scomi Oiltools (Europe) Ltd *^

Scotland Ceased business operation

100.0 100.0

KMC Oiltools Algerie EURL

Algeria Ceased business operation

100.0 100.0

Scomi Oiltools Inc Texas, USA Ceased business operation

100.0 100.0



Details of the subsidiaries are as follows (continued):

Name of entity

Principal place of business/ Country of incorporation Principal activities

Effective ownership

interest30.6.2019 31.3.2018

% %Subsidiaries of SOBL (continued)Oilfield Services de

Mexico S de RL de CV ^

Mexico Ceased operations since 11 November 2011

100.0 100.0

Scomi Oiltools de Mexico S de RL de CV ^


100.0 100.0

Scomi Oiltools Egypt SAE # ~

Egypt Provision of oilfield equipment, supplies and services

100.0 100.0

Subsidiaries of SESBScomi Marine

Services Pte. Ltd. # Singapore Investment holding 65.6 65.6

Scomi Oilfield Limited (“SOL”) ~


Trans Advantage Sdn. Bhd.

Malaysia Ship chartering and ship management

65.6 65.6

Scomi KMC Sdn. Bhd. (including 4% held by Scomi Oiltools Sdn. Bhd.)

Malaysia Provision of oilfield equipment, supplies and services

34.1 34.1

Scomi Sosma Sdn.Bhd.

Malaysia Distribution of chemical products and services

65.6 65.6

Scomi D&P Sdn. Bhd. Malaysia Investment holding 65.6 65.6






Name of entity


Effective ownership

interest30.6.2019 31.3.2018

% %Subsidiaries of SOBL (continued)Oilfield Services de

Mexico S de RL de CV ^


100.0 100.0

Scomi Oiltools de Mexico S de RL de CV ^


100.0 100.0

Scomi Oiltools Egypt SAE # ~

Egypt Provision of oilfield equipment, supplies and services

100.0 100.0

Subsidiaries of SESBScomi Marine

Services Pte. Ltd. # Singapore Investment holding 65.6 65.6

Scomi Oilfield Limited (“SOL”) ~


Trans Advantage Sdn. Bhd.

Malaysia Ship chartering and ship management

65.6 65.6

Scomi KMC Sdn. Bhd. (including 4% held by Scomi Oiltools Sdn. Bhd.)

Malaysia Provision of oilfield equipment, supplies and services

34.1 34.1

Scomi Sosma Sdn.Bhd.

Malaysia Distribution of chemical products and services

65.6 65.6

Scomi D&P Sdn. Bhd. Malaysia Investment holding 65.6 65.6


128 Scomi Group Bhd




Name of entity



interest30.6.2019 31.3.2018

% %Subsidiaries of SESB (continued)Scomi Argentina

SociedadAnonima

Argentina Promotion, marketing and sales of drilling fluids, solid control equipment, drilling waste management and production chemicals

45.96 45.96

Subsidiary of Scomi Marine Services Pte. Ltd.PT Rig Tenders

Indonesia, Tbk # +

Indonesia Ship owning and chartering 52.8 52.8

Subsidiaries of PT Rig Tenders Indonesia, TbkRig Tenders

Marine Pte. Ltd. #

Singapore Ship chartering 52.8 52.8

CH Logistic Pte. Ltd. #

Singapore Investment holding 52.8 52.8

CH Ship Management Pte. Ltd. #

Singapore Provision of management services

52.8 52.8

Grundtvig Marine Pte. Ltd. #

Singapore Investment holding 52.8 52.8

Subsidiary of Grundtvig Marine Pte. Ltd.PT Batuah

Abadi Lines # Indonesia Ship owning and chartering 50.2 50.2

Subsidiary of Scomi Sosma Sdn. Bhd.Scomi Anticor

S.A.S. (1)France Design and field deployment

of various oil and gas production chemicals

- 65.6

Scomi Sosma (B) Sdn.Bhd. ^

Brunei Dormant 32.8 32.8



Name of entity


Effectiveownership interest

30.6.2019 31.3.2018% %

Subsidiaries of SOLScomi Oiltools

Sdn. Bhd.Malaysia Provision of oilfield

equipment, supplies and provision of management services

65.6 65.6

Scomi Oiltools (Cayman) Ltd. #

United Arab Emirates/Cayman

Islands

Provision of oilfield equipment, supplies and services in Saudi Arabia and United Arab Emirates

65.6 65.6

Scomi Oiltools (Africa) Ltd.

Congo & Nigeria/ Cayman Islands

Investment holding and provision of oilfield equipment, supplies and services in Congo and Nigeria

65.6 65.6

Scomi Oiltools (Thailand) Ltd #

Thailand Provision of oilfield equipment, supplies and services

65.6 65.6

Scomi Oiltools (S) Pte. Ltd.

Singapore Investment holding and provision of oilfield equipment, supplies and services

65.6 65.6





Name of entity


Effectiveownership interest

30.6.2019 31.3.2018% %

Subsidiaries of SOLScomi Oiltools

Sdn. Bhd.Malaysia Provision of oilfield

equipment, supplies and provision of management services

65.6 65.6

Scomi Oiltools (Cayman) Ltd. #

United Arab Emirates/Cayman

Islands

Provision of oilfield equipment, supplies and services in Saudi Arabia and United Arab Emirates

65.6 65.6

Scomi Oiltools (Africa) Ltd.

Congo & Nigeria/ Cayman Islands

Investment holding and provision of oilfield equipment, supplies and services in Congo and Nigeria

65.6 65.6

Scomi Oiltools (Thailand) Ltd #

Thailand Provision of oilfield equipment, supplies and services

65.6 65.6

Scomi Oiltools (S) Pte. Ltd.

Singapore Investment holding and provision of oilfield equipment, supplies and services

65.6 65.6


130 Scomi Group Bhd



Name of entity



interest30.6.2019 31.3.2018

% %Subsidiaries of SOL (continued)Scomi Equipment

Inc. United State of America

Research and development and the provision of engineering services to support the drillmanagement operations of Scomi’s group of companies globally

65.6 65.6

KMC Oiltools BV $

Netherlands Intellectual property ownership and management

65.6 65.6

Scomi Oiltools Pty. Ltd. #

Australia Provision of oilfield equipment, supplies and services

65.6 65.6

KMCOB Capital Berhad

Malaysia Undertake the issuance of private debt securities in such classes, series, form or denomination and to secure the redemption thereof and the utilisation of proceeds from such issuance and to undertake any refinancing exercise in respect of such private debt securities

65.6 65.6

Scomi Oiltools Oman LLC #

Oman Provision of oilfield equipment, supplies and services

33.5 33.5



Name of entity



interest30.6.2019 31.3.2018

% %Subsidiary of Oiltools Sdn. Bhd. Scomi KMC Sdn.

Bhd. Malaysia Provision of oilfield

equipment, supplies and services

34.1 34.1

Subsidiary of Scomi Oiltools (Africa) LimitedWASCO Oil

Services Company Nigeria Limited

Nigeria Provision of oilfield equipment, supplies and services

65.6 65.6

Subsidiaries of Scomi Oiltools (S) Pte. Ltd.KMC Oiltools

India Pte.Ltd. # India Provision of oilfield


65.6 65.6

PT Scomi Oiltools#

Indonesia Provision of oilfield equipment, supplies and services

65.6 65.6

Scomi Oiltools(RUS) LLC #

Russia Provision of oilfield equipment, supplies and services

65.6 65.6

PT Inti Jatam Pura


62.4 62.4

PT Multi JayaPersada


62.4 62.4





Name of entity



interest30.6.2019 31.3.2018

% %Subsidiary of Oiltools Sdn. Bhd. Scomi KMC Sdn.

Bhd. Malaysia Provision of oilfield


34.1 34.1

Subsidiary of Scomi Oiltools (Africa) LimitedWASCO Oil

Services Company Nigeria Limited

Nigeria Provision of oilfield equipment, supplies and services

65.6 65.6

Subsidiaries of Scomi Oiltools (S) Pte. Ltd.KMC Oiltools

India Pte.Ltd. # India Provision of oilfield


65.6 65.6

PT Scomi Oiltools#


65.6 65.6

Scomi Oiltools(RUS) LLC #

Russia Provision of oilfield equipment, supplies and services

65.6 65.6

PT Inti Jatam Pura


62.4 62.4

PT Multi JayaPersada


62.4 62.4


132 Scomi Group Bhd



Name of entity



interest30.6.2019 31.3.2018

% %

Subsidiaries of SEBScomi Transit

Projects Sdn.Bhd. @

Malaysia Development, manufacture and supply of monorail transportation infrastructure systems, equipment and services

100.0 100.0

Urban TransitPrivate Limited @

India Supply of transportation infrastructure system, equipment and services

100.0 100.0

Urban TransitServicos Do Brasil LTDA @

Brazil Supply of transportation infrastructure systems,equipment and services

100.0 100.0

Scomi SpecialVehicles Sdn. Bhd. @ *

Malaysia Manufacture and fabricationof road transport equipment, material handling equipment and in the provision of related engineering support services

100.0 100.0

ScomiTransportation Systems Sdn. Bhd. @


Scomi TransitProjects Brazil Sdn. Bhd. @


100.0 100.0

Scomi Transit Projects Brazil (Sao Paulo) Sdn. Bhd. (Judicial managers appointed)@


100.0 100.0




Name of entity

Principal place of

business/ Country of

incorporationPrincipal activitiesEffective ownership

interest30.6.2019 31.3.2018

% %Subsidiaries of SEB (continued)Quark

Fabricacao DeEquipamentos Ferroviarios EServicos DeEngenharia LTDA

Brazil Dormant 100.0 100.0

Subsidiary of Scomi Special Vehicles Sdn. Bhd.Scomi TradingSdn. Bhd. @

Malaysia Marketing agent for road transport equipment and related products

100.0 100.0

Subsidiaries of Scomi Transportation Systems Sdn. Bhd.Scomi Rail Bhd

(Receiver and manager appointed) @ *

Malaysia Design, manufacture andsupply of monorail trains and provision of engineering support services and engineering works involving the design, construction, installation, testing and commissioning of electrical and mechanical systems

100.0 100.0

Scomi Coach Sdn. Bhd.@

Malaysia Manufacturing, fabrication and assembly of commercial coaches, truck vehicle bodies and other related services

100.0 100.0






Name of entity

Principal place of


incorporationPrincipal activitiesEffective ownership

interest30.6.2019 31.3.2018

% %Subsidiaries of SEB (continued)Quark

Fabricacao DeEquipamentos Ferroviarios EServicos DeEngenharia LTDA

Brazil Dormant 100.0 100.0

Subsidiary of Scomi Special Vehicles Sdn. Bhd.Scomi TradingSdn. Bhd. @

Malaysia Marketing agent for road transport equipment and related products

100.0 100.0

Subsidiaries of Scomi Transportation Systems Sdn. Bhd.Scomi Rail Bhd

(Receiver and manager appointed) @ *

Malaysia Design, manufacture andsupply of monorail trains and provision of engineering support services and engineering works involving the design, construction, installation, testing and commissioning of electrical and mechanical systems

100.0 100.0

Scomi Coach Sdn. Bhd.@

Malaysia Manufacturing, fabrication and assembly of commercial coaches, truck vehicle bodies and other related services

100.0 100.0


134 Scomi Group Bhd




Name of entity

Principal place of



interest30.6.2019 31.3.2018

% %Subsidiaries of Scomi Coach Sdn. Bhd.Scomi Coach

Marketing Sdn. Bhd.@

Malaysia Undertake the business of management and marketing agent to purchase, take on lease, hire or otherwise acquire, maintain, repair of coaches and vehicles bodies

100.0 100.0

# Audited by other member firms of KPMG International. + Listed on the Indonesian Stock Exchange. Not audited by KPMG PLT. ~ Scomi Oilfield Limited (“SOL”), a subsidiary of the Group, entered into a Letter of

Variation to defer the transfer of shares of Scomi Oiltools Egypt SAE (“SOES”) from Scomi Oiltools Bermuda Limited (“SOBL”), a subsidiary of the Group, to SOL to a date to be mutually agreed later and until such time, SOBL will continue to hold the SOES shares in its name as trustee for SOL’s sole and exclusive benefit as the beneficiary, based on the terms of a trust deed entered into by SOBL and SOL.

(1) On 31 January 2019, Scomi Sosma Sdn. Bhd., an indirectly wholly-owned subsidiary of the Company, sold its entire interests in Scomi Anticor S.A.S to Vink + Co GMBH Handelsgesellschaft UND CO.KG. Scomi Anticor S.A.S ceased to be a subsidiary of the Company from 31 January 2019.

@ Deconsolidated from 24 January 2019 onwards due to loss of control on these subsidiaries upon appointment of judicial managers (Note 25).

^ In members’ winding up* In winding up by the Court $ In liquidation



(a) Non-controlling interest in subsidiaries

The Group’s subsidiary that has material non-controlling interests (“NCI”) is SESB as follows:

SESB30.6.2019 31.3.2018RM’000 RM’000

NCI percentage of ownership and voting interest 34.35% 34.35%

Carrying amount of NCI 317,557 345,725

Loss allocated to NCI (29,798) (82,108)

Total comprehensive loss allocated to NCI (24,114) (90,762)

Summarised financial information before intra-group elimination

SESB30.6.2019 31.3.2018RM’000 RM’000

Non-current assets 428,314 564,427Current assets 429,491 463,368Non-current liabilities (63,715) (93,560)Current liabilities (356,094) (397,530)

Net assets 437,996 536,705

SESB1.4.2018 to 30.6.2019

1.4.2017 to 31.3.2018

RM’000 RM’000Financial period/Year ended Revenue 643,494 613,957

Loss for the financial period/year (103,462) (225,918)

Total comprehensive expense (86,926) (251,406)

Cash flows from/(used in) operating activities 13,095 (2,988)Cash flows used in investing activities 26,306 (15,935)Cash flows used in financing activities (44,839) (31,859)

Net increase/(decrease) in cash and cash equivalents (5,438) (50,782)

Dividends paid to NCI - -





(a) Non-controlling interest in subsidiaries

The Group’s subsidiary that has material non-controlling interests (“NCI”) is SESB as follows:

SESB30.6.2019 31.3.2018RM’000 RM’000

NCI percentage of ownership and voting interest 34.35% 34.35%

Carrying amount of NCI 317,557 345,725

Loss allocated to NCI (29,798) (82,108)

Total comprehensive loss allocated to NCI (24,114) (90,762)

Summarised financial information before intra-group elimination

SESB30.6.2019 31.3.2018RM’000 RM’000

Non-current assets 428,314 564,427Current assets 429,491 463,368Non-current liabilities (63,715) (93,560)Current liabilities (356,094) (397,530)

Net assets 437,996 536,705

SESB1.4.2018 to 30.6.2019

1.4.2017 to 31.3.2018

RM’000 RM’000Financial period/Year ended Revenue 643,494 613,957

Loss for the financial period/year (103,462) (225,918)

Total comprehensive expense (86,926) (251,406)

Cash flows from/(used in) operating activities 13,095 (2,988)Cash flows used in investing activities 26,306 (15,935)Cash flows used in financing activities (44,839) (31,859)

Net increase/(decrease) in cash and cash equivalents (5,438) (50,782)

Dividends paid to NCI - -


136 Scomi Group Bhd


7. Investments in associates Note Group

30.6.2019 31.3.2018RM’000 RM’000

At costUnquoted shares - outside Malaysia 26,675 16,857Add: Share of post-acquisition profit (1,928) 371Less: Impairment loss (a) (15,900) (9,789)

8,847 7,439

(a) Impairment review of investment in associate

Due to the presence of impairment indicator during the financial period arising from slowdown of operation of an associate, the Group has undertaken an impairment assessment on investment in the associate.

The recoverable amount for the associate was determined based on value-in-use calculations. The value-in-use calculations use pre-tax cash flow projections based on financial budgets approved by the Board covering a five-year period. The value-in-use was based on the following key assumptions.

30.6.2019 31.3.2018% %

Discount rates 9.0 - 21.0 9.0 - 26.0Terminal growth rates 0.0 0.0 Based on the assessment, the Group has impaired the entire carrying amount of the associate of RM6,111,000 after the Group’s share of losses in the current financial period.

Details of the material associate is as follows:

Name of entity


incorporationNature of relationship

Effectiveownership

interest and voting interest

30.6.2019 31.3.2018% %

Held by SESB

Southern Petroleum Transportation Joint Stock Company*

Vietnam Owner and operator of tankers

9.1 9.1


7. Investments in associates (continued)

Details of the other associates are as follows:

Name of entity



Effectiveownership


30.6.2019 31.3.2018% %

Held by SESB

Emerald Logistics Sdn. Bhd.

Malaysia Ship chartering and management

32.1 32.1

Held by Scomi Marine Services Pte. Ltd.

King Bridge Enterprise Ltd.


Investment holding 32.1 32.1

Held by Scomi Oilfield Limited

Midgard Oilfield Services Ltd.(1)

Turkmenistan/CaymanIslands

Provision of oilfield equipment, supplies and services

32.1 -

* Company with direct ownership less than 20% of the equity shareholding but treated as associates as the Group is able to exercise significant influence over the company.

(1) On 20 February 2019 Scomi Oilfield Limited, an indirectly wholly-owned subsidiary sold 51% of equity interest in Scomi Oiltools Ltd (incorporated in Cayman Islands) to Midgard Oilfield Services FZ LLC (“Midgard”). Scomi Oilfield Limited continues to hold 49% direct interest in Scomi Oiltools Ltd and the residual interest in Scomi Oiltools Ltd is recognised under investments in associates. Scomi Oiltools Ltd has changed name to Midgard Oilfield Services Ltd subsequent to the disposal.





Details of the other associates are as follows:

Name of entity



Effectiveownership


30.6.2019 31.3.2018% %

Held by SESB

Emerald Logistics Sdn. Bhd.


32.1 32.1

Held by Scomi Marine Services Pte. Ltd.

King Bridge Enterprise Ltd.


Investment holding 32.1 32.1

Held by Scomi Oilfield Limited

Midgard Oilfield Services Ltd.(1)

Turkmenistan/CaymanIslands

Provision of oilfield equipment, supplies and services

32.1 -

* Company with direct ownership less than 20% of the equity shareholding but treated as associates as the Group is able to exercise significant influence over the company.

(1) On 20 February 2019 Scomi Oilfield Limited, an indirectly wholly-owned subsidiary sold 51% of equity interest in Scomi Oiltools Ltd (incorporated in Cayman Islands) to Midgard Oilfield Services FZ LLC (“Midgard”). Scomi Oilfield Limited continues to hold 49% direct interest in Scomi Oiltools Ltd and the residual interest in Scomi Oiltools Ltd is recognised under investments in associates. Scomi Oiltools Ltd has changed name to Midgard Oilfield Services Ltd subsequent to the disposal.


138 Scomi Group Bhd



The following table summarises the information of the Group’s material associate, adjusted for any differences in accounting policies and reconciles the information to the carrying amount of the Group’s interest in the associates.

30 June 2019

Southern Petroleum

Transportation Joint Stock Company

Otherimmaterialassociates Total

Group RM’000 RM’000 RM’000Summarised financial informationAs at 30 June 2019Non-current assets 128,003Current assets 23,230Non-current liabilities (37,757)Current liabilities (42,862)

Net assets 65,279

Financial period ended 30 June 2019Total comprehensive income 10,172

Included in the total comprehensiveincome is:

Revenue 203,195

Reconciliation of net assets to carrying amount as at 30 June 2019

Group’s share of net assets 8,847 15,900 24,747(-) Impairment loss - (15,900) (15,900)Carrying amount in the statement of

financial position 8,847 - 8,847

Group’s share of results for thefinancial period ended 30 June 2019

Group’s share of total comprehensiveloss 1,726 (4,025) (2,299)

Other informationDividends received by the Group -



31 March 2018

Southern Petroleum



Group RM’000 RM’000 RM’000Summarised financial informationAs at 31 March 2018Non-current assets 150,194Current assets 11,643Non-current liabilities (59,413)Current liabilities (37,145)

Net assets 75,279

Financial year ended 31 March 2018Total comprehensive income -


Revenue 119,720

Reconciliation of net assets to carrying amount as at 31 March 2018


financial position 6,971 468 7,439

Group’s share of results for thefinancial year ended 31 March 2018

Group’s share of total comprehensiveincome - - -






31 March 2018

Southern Petroleum



Group RM’000 RM’000 RM’000Summarised financial informationAs at 31 March 2018Non-current assets 150,194Current assets 11,643Non-current liabilities (59,413)Current liabilities (37,145)

Net assets 75,279

Financial year ended 31 March 2018Total comprehensive income -


Revenue 119,720

Reconciliation of net assets to carrying amount as at 31 March 2018


financial position 6,971 468 7,439

Group’s share of results for thefinancial year ended 31 March 2018

Group’s share of total comprehensiveincome - - -



140 Scomi Group Bhd


8. Investments in joint ventures and joint operations


RM’000 RM’000 RM’000 RM’000At cost

Unquoted shares - outside Malaysia 13,089 4,432 8,657 -

Share of post-acquisition loss (46,234) (42,368) - -

Deemed investment -capital contribution (a) 51,240 61,051 - -

Deemed investment -financial guarantee liabilities 329 329 - -

Add: Additions during the financial period (b) - 8,657 - 8,657

Less: Impairment loss (c) (16,341) (6,688) (8,657) -

Share of net assets 2,083 25,413 - 8,657

(a) Deemed investment – capital contribution

The deemed investment – capital contribution relates to advances provided to certain joint ventures that are contractually not receivable until the external borrowings of the joint ventures have been repaid.

(b) Additions during the financial period

There was no additional investments during the financial year. The additional investments in joint ventures in previous financial year, which comprised of investments in Scomi SGSB Sdn. Bhd. and Strong Elegance Sdn. Bhd. amounting to RM255,200 and RM8,402,500 respectively.

(c) Impairment loss on investment in joint venture

Due to the presence of impairment indicators during the financial period arising from the operation of a joint venture, the Group and the Company have undertaken an impairment assessment on the investment in the joint venture.

Based on the assessment, the Group and the Company recognised an impairment loss of RM9,653,000 (year ended 31.3.2018: RM6,688,000) and RM8,657,000 (year ended 31.3.2018: Nil) respectively on the cost of the investment in the joint venture in the profit or loss of the Group and the Company.


8. Investments in joint ventures and joint operation (continued)

(d) Details of the joint ventures are as follows:

Name of entity

Principal placeof business/ Country of


interest30.6.2019 31.3.2018

Joint ventures under SGB % %Strong Elegance Sdn.

Bhd.Malaysia Power and energy

generation through renewable energy resources, thermal, gas, diesel, oil, hydro or any other means

30.0 30.0

Scomi SGSB Sdn. Bhd.

Malaysia Engineering, procurement and construction services for renewable energy projects

51.0 51.0

Joint ventures under SESBMarineCo Limited* Malaysia Leasing of marine

vessels and the provision of marine vessels transportation services

33.5 33.5

Gemini Sprint Sdn.Bhd.*

Malaysia Chartering of marine vessels, managing the maintenance of marine vessels and provision of offshore marine services

33.5 33.5

Transenergy ShippingPte. Ltd.

Malaysia Ship chartering 32.8 32.8

Transenergy Shipping Management Sdn.

Bhd.


32.8 32.8

Rig Tenders Offshore Pte. Ltd.*

Singapore Dormant 32.8 32.8





(d) Details of the joint ventures are as follows:

Name of entity

Principal placeof business/ Country of


interest30.6.2019 31.3.2018

Joint ventures under SGB % %Strong Elegance Sdn.

Bhd.Malaysia Power and energy

generation through renewable energy resources, thermal, gas, diesel, oil, hydro or any other means

30.0 30.0

Scomi SGSB Sdn. Bhd.

Malaysia Engineering, procurement and construction services for renewable energy projects

51.0 51.0

Joint ventures under SESBMarineCo Limited* Malaysia Leasing of marine

vessels and the provision of marine vessels transportation services

33.5 33.5

Gemini Sprint Sdn.Bhd.*

Malaysia Chartering of marine vessels, managing the maintenance of marine vessels and provision of offshore marine services

33.5 33.5

Transenergy ShippingPte. Ltd.

Malaysia Ship chartering 32.8 32.8

Transenergy Shipping Management Sdn.

Bhd.


32.8 32.8

Rig Tenders Offshore Pte. Ltd.*

Singapore Dormant 32.8 32.8


142 Scomi Group Bhd



(d) Details of the joint ventures are as follows (continued):

Name of entity

Principal place of business/ Country of incorporation

Principal activities

Effective equity interest

30.06.2019%

31.3.2018%

Joint ventures under Scomi Oilfield LimitedVibratherm Limited # England and

WalesManufacture and/or

assembly of equipment for drilling waste treatment

32.8 32.8

Scomi Platinum Sdn. Bhd.

Malaysia Dormant 32.8 32.8

Global Oilfield Products Sdn. Bhd.

Malaysia Manufacture of oilfield supplies

16.4 16.4

Joint venture under Scomi D&P Sdn. Bhd.Ophir Production Sdn.

Bhd.Malaysia Development and

production of crude oil19.7 19.7

Joint operations under SEBLarsen & Toubro and

SEB (unincorporated consortium)^

India Design, civil construction, manufacture and supply of monorail trains and provision of related engineering support services and engineering works involving the design, construction, installation, testing and commissioning of electrical and mechanical systems in relation to the Mumbai monorail project

36.1 36.1

* Companies with ownership of more than half of the direct equity shareholding in the companies but treated as joint ventures pursuant to the contractual rights and obligations of the respective joint venture agreement.

# As at the date of the financial statements, Vibratherm Limited remained inactive, therefore no share of results was recorded.

^ Deconsolidated from 24 January 2019 onwards due to loss of control on SEB upon appointment of judicial manager (Note 25).



The following table summarises the information of the Group’s joint venture, adjusted for any differences in accounting policies and reconciles the information to the carrying amount of the Group’s interest in the joint ventures.

Summarised financial information of joint ventures Group

30.6.2019 31.3.2018RM’000 RM’000

Total assets 15,403 370,002Total liabilities (6,598) (275,788)Net assets 8,805 94,214

Financial period/year ended 30 June/31 MarchLoss from operations (18,424) (97,672)

Included in the total comprehensive income:Revenue 48,037 190,407

Group’s share of net assetsGroup’s share of net assets 2,083 25,413

Group’s share of results for the financial period/year ended 30 June/ 31 March

Group’s share of loss from operations (3,866) (36,663)





The following table summarises the information of the Group’s joint venture, adjusted for any differences in accounting policies and reconciles the information to the carrying amount of the Group’s interest in the joint ventures.

Summarised financial information of joint ventures Group

30.6.2019 31.3.2018RM’000 RM’000

Total assets 15,403 370,002Total liabilities (6,598) (275,788)Net assets 8,805 94,214

Financial period/year ended 30 June/31 MarchLoss from operations (18,424) (97,672)

Included in the total comprehensive income:Revenue 48,037 190,407

Group’s share of net assetsGroup’s share of net assets 2,083 25,413

Group’s share of results for the financial period/year ended 30 June/ 31 March

Group’s share of loss from operations (3,866) (36,663)


144 Scomi Group Bhd



Summarised financial information of joint operations

1.4.2018 to 30.6.2019

1.4.2017 to 31.3.2018

Group RM’000 RM’000

Revenue - 2,919Cost of sales - (10,816)

Gross loss - (7,897)

30.6.2019 31.3.2018RM’000 RM’000

Receivables - 17,369Payables - (46,283)

9. Other investments

Fair value through other

comprehensive income Available-for-sale

30.6.2019 31.3.2018Note RM’000 RM’000

GroupNon-currentUnquoted shares 9.1 - 108

9.1 At 1 April 2018, the Group designated the investments as equity securities as at fair value through other comprehensive income because these equity securities represent investments that the Group intends to hold for long-term strategic purposes. In previous financial year, this investment was classified as available-for-sale. The Group has disposed the investment during the financial period.

9.2 Included in the other investments is the investment retained in Scomi Engineering Bhd being recognised at fair value through other comprehensive income when control in Scomi Engineering Bhd is lost as explained in Note 25.


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146 Scomi Group Bhd


10. Deferred tax assets/(liabilities) (continued) 10.3 Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the following items (stated at net):


Deductible temporary differences 9,407 17,667 - -

Unutilised tax losses and tax incentives 38,660 40,076 38,660 38,660

48,067 57,743 38,660 38,660

Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Group and the Company can utilise the benefits therefrom.

11. Trade and other receivables


RM’000 RM’000 RM’000 RM’000Non-currentAmount due from a deconsolidated

subsidiary (a) 123,177 - 102,095 -Amount due from subsidiaries (c) - - 106,665 99,540Less: Allowance for impairment loss (123,177) - (208,760) (49,770)

Amount due from subsidiary - net - - - 49,770Other receivables 14,332 5,525 - -

14,332 5,525 - 49,770CurrentTradeTrade receivables (b) 181,821 284,836 - -Less: Allowance for impairment loss (44,758) (60,298) - -

Trade receivables - net 137,063 224,538 - -Amount due from customers on

contract - 607,055 - -

137,063 831,593 - -


11. Trade and other receivables (continued)


Current RM’000 RM’000 RM’000 RM’000Non-tradeOther receivables 61,958 17,853 65 1,024VAT recoverable 19,000 60,000 - -Deposits 3,921 18,561 1 1,152Prepayments 10,672 32,121 2 2Tax recoverable - 32,004 - -

95,551 160,539 68 2,178

Amount due from: - subsidiaries (c) - - - 105,845- joint ventures (c) 1,260 2,094 - -- associates (c) 4,131 - - -

Less: Allowance for impairment loss (1,260) - - (105,599)

4,131 2,094 - 246

236,745 994,226 68 2,424

251,077 999,751 68 52,194

(a) The amount is in respect of unsecured advances made to Scomi Engineering Bhdand its subsidiaries that was deconsolidated during the financial period, which is subject to interest at 9.19% (31.3.2018: 9.19%). The advances are not expected to be repaid within a period of 12 months from the date of the statements of financial position.

(b) Credit terms for trade receivables range from 30 to 90 days (31.3.2018: 30 to 90 days). No interest is charged on outstanding trade receivables within the stipulated credit period from the due date of invoice. Thereafter, interest is charged at 1.5% to 2.0% (31.3.2018: 1.5% to 2.0%) per annum on the outstanding balance.

(c) Related party balances receivable

- Amount due from subsidiaries of the Company is unsecured and non-interest bearing except for certain advances amounting to RM22 million (year ended 31.3.2018: RM17.3 million) which bear interest at 6.00% (31.3.2018: 6.00%) per annum.

- Amount due from joint ventures and associates of the Group are unsecured, interest free and repayable upon demand.




11. Trade and other receivables (continued)


Current RM’000 RM’000 RM’000 RM’000Non-tradeOther receivables 61,958 17,853 65 1,024VAT recoverable 19,000 60,000 - -Deposits 3,921 18,561 1 1,152Prepayments 10,672 32,121 2 2Tax recoverable - 32,004 - -

95,551 160,539 68 2,178

Amount due from: - subsidiaries (c) - - - 105,845- joint ventures (c) 1,260 2,094 - -- associates (c) 4,131 - - -

Less: Allowance for impairment loss (1,260) - - (105,599)

4,131 2,094 - 246

236,745 994,226 68 2,424

251,077 999,751 68 52,194

(a) The amount is in respect of unsecured advances made to Scomi Engineering Bhdand its subsidiaries that was deconsolidated during the financial period, which is subject to interest at 9.19% (31.3.2018: 9.19%). The advances are not expected to be repaid within a period of 12 months from the date of the statements of financial position.

(b) Credit terms for trade receivables range from 30 to 90 days (31.3.2018: 30 to 90 days). No interest is charged on outstanding trade receivables within the stipulated credit period from the due date of invoice. Thereafter, interest is charged at 1.5% to 2.0% (31.3.2018: 1.5% to 2.0%) per annum on the outstanding balance.

(c) Related party balances receivable

- Amount due from subsidiaries of the Company is unsecured and non-interest bearing except for certain advances amounting to RM22 million (year ended 31.3.2018: RM17.3 million) which bear interest at 6.00% (31.3.2018: 6.00%) per annum.

- Amount due from joint ventures and associates of the Group are unsecured, interest free and repayable upon demand.


148 Scomi Group Bhd


12. Inventories

Group30.6.2019 31.3.2018RM’000 RM’000

At costConsumables 29,413 34,284Raw materials 2,245 7,040Work-in-progress - 4,669Finished goods 51,157 80,883

82,815 126,876Recognised in profit or loss:Inventories recognised as cost of sales 179,482 296,871Inventories written down 590 2,317Reversal of write-down (3,983) (4,602)

The write-down and reversal are included in cost of sales.

Reversal of write-down

During the financial period, there was a reversal of write-down amount to RM3,983,000 (year ended 31.3.2018: RM 4,602,000) due to sales of inventories previously written down.

13. Cash and bank balances


Short-term deposits placed with licensed banks 24,906 54,576 - -

Cash and bank balances 41,428 47,551 582 78

66,334 102,127 582 78Less:Pledged deposits and bank

balances (27,080) (54,214) - -

39,254 (47,913) 4,500 78

The effective interest rates for short-term deposits placed with licensed banks of the Group and of the Company at the end of the reporting period range from 0.18% to 6.50% (31.3.2018: 0.18% to 6.50%) per annum. Short-term deposits of the Group and of the Company have maturity periods ranging from 1 day to 365 days (31.3.2018: 1 day to 365 days).

Included in the Group’s bank balances and deposits placed with licensed banks are RM27,080,000 (31.3.2018: RM54,214,000) pledged for repayment of Guaranteed Serial Bonds and bank facilities granted to the Group as disclosed in Notes 18(a) and 18(b), respectively.




14. Share capital Group and Company

30.6.2019 31.3.2018Number

of shares AmountNumber

of shares Amount’000 RM’000 ’000 RM’000

Issued and fully paid shares:Ordinary shares:At beginning of the financial

period/year 1,093,907 664,964 1,917,510 636,582Share consolidation - - (958,755) -

1,093,907 664,964 958,755 636,582

Issued during the financial period/year - - 135,152 28,382

Capital reduction - (440,000) - -

At end of the financial period/year 1,093,907 224,964 1,093,907 664,964

a) The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company. In respect of the Company’s treasury shares that are held by the Group (see Note 15), all rights are suspended until those shares are reissued.

b) The Company has undertaken a reduction of RM440,000,000 of the issued share capital (“Capital Reduction Exercise”) pursuant to Section 116 of the Companies Act 2016. The corresponding credit arising from such cancellation was being utilised to set-off against the accumulated losses amounting to RM440,000,000 of the Company. The Capital Reduction Exercise was completed on 31 January 2019.

c) In previous financial year, the Company submitted formal proposals (“Proposal Letters”) to the Board of Directors of Scomi Energy Services Bhd (“SESB”) and Scomi Engineering Bhd (“SEB”), which are 65.6%-owned and 72.3%-ownedsubsidiaries of the Company respectively, in respect of the proposed mergers of SESB and SEB with the Company to be undertaken by way of a members; scheme of arrangement pursuant to Section 366 of the Companies Act 2016 (“Proposed Mergers”). However, the shareholders of SESB did not approve the Proposed Merger with the Company.

In conjunction with the merger of SEB with the Company, the Company undertook the following:

- Share consolidation (2:1) exercise was carried out in the previous financial year. 1,917,510,141 existing shares of the Company were consolidated into 958,755,070 shares (including 3,224,350 shares held as treasury shares).

- In previous financial year, the issuance and allotment of 135,152,390 new shares of the Company and 13,514,050 new warrants of the Company (shares were issued at RM0.21 per share while the theoretical value attached to each warrant was determined based on the Trinomial option pricing model at RM0.113 per warrant).


150 Scomi Group Bhd


15. Treasury shares

In the previous financial period, pursuant to the Share Consolidation, 3,224,350 shares were cancelled and these shares were being held as treasury shares. While the shares are held as treasury shares, the rights attached to them as to voting, dividends and participation in other distribution and otherwise are suspended.

During the financial period, 1,250,000 (31.3.2018: 9,952,850) units of treasury shares were sold for total value of RM162,566 (31.3.2018: RM1,533,226). Subsequent to the sales of the treasury shares, no ordinary shares (31.3.2018: 1,250,000) are held as treasury shares at the end of the reporting period.

There was no repurchase of the Company’s shares during the financial period.

16. Other reserves

Translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations, as well as from the translation of liabilities that hedge the Group’s net investment in a foreign operation.

17. Trade and other payables

Group Company30.6.2019 31.3.2018 30.6.2019 31.3.2018

Note RM’000 RM’000 RM’000 RM’000

Non-currentAmount due to subsidiary (b) - - - 36,343Other payables and accruals 1,028 3,738 - -

1,028 3,738 - 36,343

CurrentTrade payables (a) 95,311 250,921 - -Amount due to subsidiaries (b) - - 66,325 37,536Other payables and accruals (c) 212,294 302,122 84,157 22,956

307,605 553,043 150,482 60,492

308,633 556,781 150,482 96,835

(a) Trade payables

Trade payables are non-interest bearing and credit terms for trade payables range from cash term to 120 days (31.3.2018: cash term to 120 days).

(b) Amounts due to subsidiaries

The amount due to subsidiaries is unsecured and interest free except for RM47,501,000 (31.3.2018: RM58,505,000), which is subject to interest of 7% (31.3.2018: interest free) when exceeds the credit term.



(c) Other payables and accruals

Included in other payables is an amount of RM0.97 million (31.3.2018: RM10.3 million) for the amount due to directors of the Company and the companies connected to the directors.

18. Loans and borrowings Group Company

30.6.2019 31.3.2018 30.6.2019 31.3.2018RM’000 RM’000 RM’000 RM’000

Non-currentGuaranteed Serial

Bonds – secured 50,000) 77,500 - -Less: Bond arrangement costs (200) (678) - -

49,800 76,822 - -Revolving credits – secured - 37,652 - -Finance lease liabilities - 36,470 - -Hire purchase creditors 396 - 396 -

50,196 150,944 396 -CurrentGuaranteed Serial

Bonds – secured 55,000 27,500 - -Less: Bond arrangement costs (883) -

54,117 27,500 - -Bank loans – secured 40,618 213,571 -Bank overdrafts – secured - 79,320 - -Revolving credits – secured 41,271 242,369 - -Finance lease liabilities - 2,622 - 95Hire purchase creditors 87 - 87 -

136,093 565,382 87 95

186,289 716,326 483 95





(c) Other payables and accruals

Included in other payables is an amount of RM0.97 million (31.3.2018: RM10.3 million) for the amount due to directors of the Company and the companies connected to the directors.

18. Loans and borrowings Group Company

30.6.2019 31.3.2018 30.6.2019 31.3.2018RM’000 RM’000 RM’000 RM’000

Non-currentGuaranteed Serial

Bonds – secured 50,000) 77,500 - -Less: Bond arrangement costs (200) (678) - -

49,800 76,822 - -Revolving credits – secured - 37,652 - -Finance lease liabilities - 36,470 - -Hire purchase creditors 396 - 396 -

50,196 150,944 396 -CurrentGuaranteed Serial

Bonds – secured 55,000 27,500 - -Less: Bond arrangement costs (883) -

54,117 27,500 - -Bank loans – secured 40,618 213,571 -Bank overdrafts – secured - 79,320 - -Revolving credits – secured 41,271 242,369 - -Finance lease liabilities - 2,622 - 95Hire purchase creditors 87 - 87 -

136,093 565,382 87 95

186,289 716,326 483 95


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18. Loans and borrowings (continued)

Reconciliation of movement of liabilities to cash flows arising from financing activities (continued)

Company

At1 April 2018

RM’000

Interest charge /

amortisation cost

RM’000

Net changes fromfinancing cash flows

RM’000

At30 June

2019RM’000

Finance lease liabilities from financing activities 95 26 362 483

At 1 April 2017

RM’000

Interest charge /

amortisation cost

RM’000

Net changes from financing cash flows

RM’000

At 31 March

2018RM’000

Term loans - secured 124 - (124) -Finance lease liabilities 185 - (90) 95Total liabilities from

financing activities 309 - (214) 95

(a) RM300.00 million Guaranteed Serial Bonds

Security The Bonds are secured by an irrevocable and unconditional financial guarantee issued by Danajamin Nasional Berhad (“Danajamin”) pursuant to a financial guarantee insurance facility.

Breach of bond covenantsDuring the financial period, there was a breach in the bonds covenant where asubsidiary was unable to maintain the subsidiary’s EBITDA to subsidiary’s gross debt ratio of not less than 0.30 times. However, the subsidiary obtained a waiver from Danajamin for this non-compliance.

Besides, there was an additional covenant which requires the subsidiary to progressively build up the principal redemption in debt payment account for repayment of the bonds of RM55 million due on 14 December 2019. By 30 June 2019, the subsidiary was required to have built up principal redemption in debt payment account of RM51.5 million. However, at 30 June 2019, the total principal redemption build up in the debt payment account was RM18.6 million and there was a shortfall of RM32.9 million. The subsidiary has obtained a waiver from the bond guarantor on 28 June 2019 to fulfill the redemption build up amount by 30 November 2019.

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Reconciliation of movement of liabilities to cash flows arising from financing activities (continued)

Company

At1 April 2018

RM’000

Interest charge /

amortisation cost

RM’000

Net changes fromfinancing cash flows

RM’000

At30 June

2019RM’000

Finance lease liabilities from financing activities 95 26 362 483

At 1 April 2017

RM’000

Interest charge /

amortisation cost

RM’000

Net changes from financing cash flows

RM’000

At 31 March

2018RM’000

Term loans - secured 124 - (124) -Finance lease liabilities 185 - (90) 95Total liabilities from

financing activities 309 - (214) 95

(a) RM300.00 million Guaranteed Serial Bonds

Security The Bonds are secured by an irrevocable and unconditional financial guarantee issued by Danajamin Nasional Berhad (“Danajamin”) pursuant to a financial guarantee insurance facility.

Breach of bond covenantsDuring the financial period, there was a breach in the bonds covenant where asubsidiary was unable to maintain the subsidiary’s EBITDA to subsidiary’s gross debt ratio of not less than 0.30 times. However, the subsidiary obtained a waiver from Danajamin for this non-compliance.

Besides, there was an additional covenant which requires the subsidiary to progressively build up the principal redemption in debt payment account for repayment of the bonds of RM55 million due on 14 December 2019. By 30 June 2019, the subsidiary was required to have built up principal redemption in debt payment account of RM51.5 million. However, at 30 June 2019, the total principal redemption build up in the debt payment account was RM18.6 million and there was a shortfall of RM32.9 million. The subsidiary has obtained a waiver from the bond guarantor on 28 June 2019 to fulfill the redemption build up amount by 30 November 2019.


154 Scomi Group Bhd



(a) RM300.00 million Guaranteed Serial Bonds (continued)

The bonds and financial guarantee insurance facility are supported and secured by:

(i) Corporate Guarantees from subsidiaries; (ii) Pledge of shares of subsidiaries; (iii) Assignment of contract proceeds; and (iv) Debentures made by subsidiaries

(b) Bank loans, revolving credit and bank overdrafts

Breach of loan covenant In the previous year, a subsidiary of the Group breached loan covenants in respect of compliance with debt to net cash accruals ratio, minimum tangible net worth and adjusted tangible net worth covenant a subsidiary of the Group. These loan covenants have not been regularised as at 30 June 2019. As a result of the breaches, the non-current portion of the bank loan amounted to RM6.6 million (31.3.2018: RM43.1 million) continued to be reclassed to current liabilities as the subsidiary was unable to obtain a waiver from the bank.

Security of bank loans, revolving credit and bank overdrafts

(i) Assignment and charge of relevant fixed deposits; (ii) Assignment of contract proceeds; and (iii) Corporate Guarantees from the subsidiaries

Finance lease liabilities and hire purchase creditors

Finance lease liabilities and hire purchase creditors are payable as follows:

<-------------- 30.6.2019 --------------> <-------------- 31.3.2018 -------------->Present Present

Future value of Future value ofminimum minimum minimum minimum

lease lease lease leasepayments Interest payments payments Interest payments

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000GroupLess than one

period 110 23 87 4,982 2,360 2,622Between one and

five periods 470 74 396 27,190 12,819 14,371More than five

periods - - - 26,840 4,741 22,099

580 97 483 59,012 19,920 39,092

CompanyLess than one

period 110 23 87 106 11 95Between one and

five periods 470 74 396 - - -580 97 483 106 11 95


19. Provision for retirement benefits

The Group operates an unfunded defined benefits plan for qualifying employees and vessel crew of its subsidiaries in Indonesia. Under the plan, the employees and vessel crew are entitled to retirement benefits as defined in Indonesian Labour Laws and government regulations regarding maritime.

The amounts recognised in the statement of financial position are determined as follows:

Group30.6.2019 31.3.2018RM’000 RM’000

Non-currentPresent value of unfunded obligations 8,401 8,932

Funding

The management has planned to provide an indication of the effect of the defined benefit plan on the entity’s future cash flows, an entity shall disclose:

(a) a description of any funding arrangements and funding policy that affect future contributions;

(b) the expected contributions to the plan for the next annual reporting period; and (c) information about the maturity profile of the defined benefit obligation. This will

include the weighted average duration of the defined benefit obligation and may include other information about the distribution of the timing of benefit payments, such as a maturity analysis of the benefit payments.

Movement in net defined benefit liability

The following table shows a reconciliation from the opening balance to the closing balance for net defined benefit liability and its components:

Group30.6.2019 31.3.2018RM’000 RM’000

Balance at beginning of the financial period/year 8,932 10,800Included in profit or lossCurrent service costs 788 1,621Interest cost 124 258Others 181 (1,130)

1,093 749Included in other comprehensive lossRemeasurement (gain)/loss

Actuarial (gain)/loss arising from:- Financial assumption - 138- Experience adjustment (470) (488)

(470) (350)OtherBenefits paid (1,154) (2,267)

Balance at end of the financial period/year 8,401 8,932




19. Provision for retirement benefits

The Group operates an unfunded defined benefits plan for qualifying employees and vessel crew of its subsidiaries in Indonesia. Under the plan, the employees and vessel crew are entitled to retirement benefits as defined in Indonesian Labour Laws and government regulations regarding maritime.

The amounts recognised in the statement of financial position are determined as follows:

Group30.6.2019 31.3.2018RM’000 RM’000

Non-currentPresent value of unfunded obligations 8,401 8,932

Funding

The management has planned to provide an indication of the effect of the defined benefit plan on the entity’s future cash flows, an entity shall disclose:

(a) a description of any funding arrangements and funding policy that affect future contributions;

(b) the expected contributions to the plan for the next annual reporting period; and (c) information about the maturity profile of the defined benefit obligation. This will

include the weighted average duration of the defined benefit obligation and may include other information about the distribution of the timing of benefit payments, such as a maturity analysis of the benefit payments.

Movement in net defined benefit liability

The following table shows a reconciliation from the opening balance to the closing balance for net defined benefit liability and its components:

Group30.6.2019 31.3.2018RM’000 RM’000

Balance at beginning of the financial period/year 8,932 10,800Included in profit or lossCurrent service costs 788 1,621Interest cost 124 258Others 181 (1,130)

1,093 749Included in other comprehensive lossRemeasurement (gain)/loss

Actuarial (gain)/loss arising from:- Financial assumption - 138- Experience adjustment (470) (488)

(470) (350)OtherBenefits paid (1,154) (2,267)

Balance at end of the financial period/year 8,401 8,932


156 Scomi Group Bhd


19. Provision for retirement benefits (continued)

The principal actuarial assumptions used were as follows:

Group30.6.2019 31.3.2018

Discount rates (per annum) (%) 8.0 7.0Expected rates of salary increases (per

annum) (%) 0.0 – 8.0 0.0 – 8.0Normal retirement age (periods) 55 55

The most recent actuarial valuation was carried out as at 18 June 2019 by independent professional actuaries using the projected unit credit method.

20. Derivative financial liabilities

Nominal value Liabilities

31.3.2018 31.3.2018Group RM’000 RM’000Cash flow hedges

Cross currency interest rate swaps (10,516) (10,516)

(10,516) (10,516)

Included in:Non-current liabilities -Current liabilities (10,516)

(10,516)

Cross currency interest rate swaps (“CCIRSs”)

The notional principal amount of the outstanding CCIRSs at 31 March 2018 was RM105 million.

The Group had entered into CCIRSs, that were designated as cash flow hedges to hedge the Group’s exposure to foreign exchange risk on its Guaranteed Serial Bonds. These contracts entitled the Group to receive principal and fixed interest amounts in RM and obliged the Group to pay principal and fixed interest amounts in USD and the CCIRSs reflect the timing of these cash flows. The CCIRSs contracts had maturities of up to 5 years from 31 March 2013. The USD interest rates on the CCIRSs contracts designated as hedging instruments in the cash flow hedges ranged from 4.08% to 7.30% per annum and the interest rates in RM ranged from 4.10% to 7.20% per annum in the prior year. In December 2017, the Group decided to discontinue its application of hedge accounting on the cash flow hedge.

During the financial period ended 30 June 2019, the CCIRSs were closed out as there was a mis-match between the original hedge and the repayment of the Guaranteed Serial Bonds, which was extended in December 2017. Gains and losses recognised on the CCIRSs as of 31 March 2018 was released to the profit or loss within finance costs upon the close out of the CCIRSs.




21. Revenue

Group 1.4.2018 to30.6.2019

1.4.2017 to31.3.2018

RM’000 RM’000

Revenue from contracts with customers 513,210 540,181

Other revenueRental income 130,292 73,776

Total revenue 643,502 613,957


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Note

s to t

he Fi

nanc

ial St

ateme

nts

160 Scomi Group Bhd


22. Finance costs

Group Company1.4.2018 to 30.6.2019

1.4.2017 to 31.3.2018

1.4.2018 to 30.6.2019

1.4.2017 to 31.3.2018

RM’000 RM’000 RM’000 RM’000

Interest expense on:- Amount due from subsidiary - - 2,510 758- finance leases 26 11 26 11- guaranteed serial bonds 6,873 4,677 - -- bank loans and others 12,832 6,717 - -- effect of interest on CCIRSs - 2,088 - -

19,731 13,493 2,536 769Amortisation of bonds

arrangement costs 3,434 10,450 - -

23,165 23,943 2,536 769

23. Finance income


1.4.2017 to 31.3.2018

1.4.2018 to 30.6.2019

1.4.2017 to 31.3.2018

RM’000 RM’000 RM’000 RM’000

Interest income of financial asset calculated using the effective interest rate method that are:- At amortised cost 1,391 2,443 - -

Other finance income - - - 18,930

1,391 2,443 - 18,930


24. Tax expense

Recognised in profit or loss


to 30.6.2019

1.4.2017 to

31.3.2018

1.4.2018 to

30.6.2019

1.4.2017 to

31.3.2018RM’000 RM’000 RM’000 RM’000

Current tax expenseCurrent financial period/year 16,042 18,743 - -Underprovision in prior financial

period/year 6,251 3,123 - -

22,293 21,866 - -Deferred tax expenseReversal and origination of

temporary differences (1,373) (6,820) - -Over provision in prior financial

period/year (37) (1,173) - -

(1,410) (7,993) - -

Total income tax expense 20,883 13,874 - -

Income tax is attributable to- Continuing operations 20,883 13,058 - -- Discontinued operation - 816 - -

20,883 13,874 - -




24. Tax expense

Recognised in profit or loss


to 30.6.2019

1.4.2017 to

31.3.2018

1.4.2018 to

30.6.2019

1.4.2017 to

31.3.2018RM’000 RM’000 RM’000 RM’000

Current tax expenseCurrent financial period/year 16,042 18,743 - -Underprovision in prior financial

period/year 6,251 3,123 - -

22,293 21,866 - -Deferred tax expenseReversal and origination of

temporary differences (1,373) (6,820) - -Over provision in prior financial

period/year (37) (1,173) - -

(1,410) (7,993) - -

Total income tax expense 20,883 13,874 - -

Income tax is attributable to- Continuing operations 20,883 13,058 - -- Discontinued operation - 816 - -

20,883 13,874 - -


162 Scomi Group Bhd


24. Tax expense (continued)

Reconciliation of tax expense


1.4.2017 to 31.3.2018

1.4.2018 to 30.6.2019

1.4.2017 to 31.3.2018

RM’000 RM’000 RM’000 RM’000

Loss from continuing operations for the financial period / year (264,336) (232,453) (182,771) (484,255)

Total income tax expenses 20,883 13,058 - -Loss before tax from

continuing operation for the financial period/year (243,453) (219,395) (182,771) (484,255)

Income tax calculated using Malaysia tax rate 24% (2018: 24%) (58,429) (52,655) (43,865) (116,221)

Tax effects of:- non-deductible expenses 26,268 51,821 43,865 116,221- effect of tax rates in

foreign jurisdictions 12,799 4,346 - -- tax exempt income (5,505) (2,732) - -- deferred tax assets not

recognised in respect of current period’s tax losses and unabsorbed capital allowances 39,536 10,861 - -

- underprovision in prior financial period 6,214 1,417 - -

Tax expense on continuing operation 20,883 13,058 - -


25. Deconsolidation of Scomi Engineering Bhd (SEB) and its subsidiaries

On 7 December 2018, the Directors made a Judicial Management Application for Scomi Engineering Bhd, a wholly owned subsidiary of the Company, in the High Court of Malaysia (“The High Court”) which was subsequently approved on 24 January 2019. Dato’ Heng Ji Keng and Andrew Heng were appointed as judicial managers to manage the affairs of Scomi Engineering Bhd.

In accordance with Section 414(2) of the Companies Act 2016 (“CA 2016”), during the financial period for which a judicial management order is in force, all powers conferred, and duties imposed on the directors by CA 2016 or by the constitution of the company shall be exercised and performed by the judicial managers and not by the Directors.

In accordance with MFRS 10, Consolidated Financial Statements, the Group controls an entity when it is exposed, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Effective from the date of appointment of judicial managers by the High Court, the Company has lost its ability to be involved in SEB’s activities to affect the returns from Scomi Engineering Bhd.

Accordingly, the Directors have determined that the Company has lost control in SEB upon the appointment of the judicial managers and the assets and liabilities and the results of SEB and its subsidiaries (“SEB Group”) have been deconsolidated from that date.

As the SEB Group contributed wholly to the operating segment of transport solutions, hence, this segment has been deemed as discontinued operations during the financial reporting period. The comparatives for the Statements of Profit and Loss and Other Comprehensive Income of the Group have been restated to reflect the discontinued operations.

25.1 The profit or loss contribution from SEB Group as follows:

Unaudited Audited1.4.2018 to24.1.2019

1.4.2017 to31.3.2018

RM’000 RM’000Revenue - 90,061Cost of sales - (108,361)Gross loss - (18,300)Selling and distribution expense (107) (2,881)Administrative expense (61,209) (25,549)Net loss on impairment of financial instruments

- (8,310)Other expense (14,478) (25,629)Finance costs (20,932) (18,145)Loss before tax for the financial period/year (96,726) (98,814)Tax expense - (815)Loss for the financial period/year (96,726) (99,629)Loss on deconsolidation of subsidiaries (64,907) -Loss from discontinued operation (161,633) (99,629)




25. Deconsolidation of Scomi Engineering Bhd (SEB) and its subsidiaries

On 7 December 2018, the Directors made a Judicial Management Application for Scomi Engineering Bhd, a wholly owned subsidiary of the Company, in the High Court of Malaysia (“The High Court”) which was subsequently approved on 24 January 2019. Dato’ Heng Ji Keng and Andrew Heng were appointed as judicial managers to manage the affairs of Scomi Engineering Bhd.

In accordance with Section 414(2) of the Companies Act 2016 (“CA 2016”), during the financial period for which a judicial management order is in force, all powers conferred, and duties imposed on the directors by CA 2016 or by the constitution of the company shall be exercised and performed by the judicial managers and not by the Directors.

In accordance with MFRS 10, Consolidated Financial Statements, the Group controls an entity when it is exposed, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Effective from the date of appointment of judicial managers by the High Court, the Company has lost its ability to be involved in SEB’s activities to affect the returns from Scomi Engineering Bhd.

Accordingly, the Directors have determined that the Company has lost control in SEB upon the appointment of the judicial managers and the assets and liabilities and the results of SEB and its subsidiaries (“SEB Group”) have been deconsolidated from that date.

As the SEB Group contributed wholly to the operating segment of transport solutions, hence, this segment has been deemed as discontinued operations during the financial reporting period. The comparatives for the Statements of Profit and Loss and Other Comprehensive Income of the Group have been restated to reflect the discontinued operations.

25.1 The profit or loss contribution from SEB Group as follows:

Unaudited Audited1.4.2018 to24.1.2019

1.4.2017 to31.3.2018

RM’000 RM’000Revenue - 90,061Cost of sales - (108,361)Gross loss - (18,300)Selling and distribution expense (107) (2,881)Administrative expense (61,209) (25,549)Net loss on impairment of financial instruments

- (8,310)Other expense (14,478) (25,629)Finance costs (20,932) (18,145)Loss before tax for the financial period/year (96,726) (98,814)Tax expense - (815)Loss for the financial period/year (96,726) (99,629)Loss on deconsolidation of subsidiaries (64,907) -Loss from discontinued operation (161,633) (99,629)


164 Scomi Group Bhd


25. Deconsolidation of Scomi Engineering Bhd (SEB) and its subsidiaries (continued)

25.2 Cash flows from/(used in) discontinued operation

Unaudited Audited1.4.2018

to24.1.2019

1.4.2017 to31.3.2018

RM’000 RM’000Net cash used in operating activities 26,676 41,223Net cash from investing activities - 35Net cash from/(used in) financing activities (26,676) (12,212)Effect on cash flows - 29,046

25.3 The assets and liabilities of SEB Group as at 24 January 2019 are as follows:

Unaudited24.1.2019RM’000

Assets:Property, plant and equipment 49,418Intangible assets 149,878Deferred tax assets 39,324Available-for-sale financial asset -Inventories 12,091Trade and other receivables 708,574Current tax assets 650Cash and cash equivalents -Total assets 959,935

Deferred tax liabilities (5,936)Loans and borrowings (498,505)Trade and other payables (419,725)Current tax liabilities (13,668)Deferred income -Total liabilities (937,834)

Total net assets 22,101

Adjustments:Reclassification of foreign currency translation reserve to profit or loss 21,956

Goodwill written off 20,850Net assets of SEB Group in the consolidation books of SGB Group 64,907

Fair value of the interest in SEB after deconsolidation -

Loss on deconsolidation of subsidiaries 64,907



25.4 Lack of accounting records

During the financial period, a secured creditor has appointed a receiver and manager for a significant local subsidiary of SEB. The accounting records of the subsidiary together with other subsidiaries of SEB were seized by the receiver and manager. The Mumbai Metropolitan Rails Development Authority (“MMRDA”) also took the accounting records of a subsidiary of SEB in India. The records of a subsidiary in Brazil are also unavailable due to closure of that office. The Directors are in the process of obtaining the accounting records.

As a result of lack of accounting records, the Directors are unable to obtain sufficient and appropriate documentation to determine the appropriateness of certain balances and the effect of misstatements, if any, for the following:

i. the amounts disclosed in Note 25.1 on the loss for the financial period ended 24 January 2019 for SEB Group amounting to RM96.7 million and loss on deconsolidation of subsidiaries amounting to RM64.9 million;

ii. the amount disclosed in Note 25.3 on the net assets of SEB Group as at 24 January 2019 amounting to RM64.9 million; and

iii. the adoption of MFRS 15 of SEB Group and its consequential financial effect on the accumulated losses of the Group as at 1 April 2018; net assets of SEB Group as at 24 January 2019 amounting to RM64.9 million as disclosed in Note 25.3; and loss on discontinued operation of the Group amounting to RM161.6 million as disclosed in Note 25.1.

26. Disposal of subsidiaries

The list of significant disposal of subsidiaries during 2019 is as follows:

Name of subsidiary Date disposed

Effective interest

disposedScomi Oiltools Ltd (“SOLC”) February 2019 51.0%Scomi Anticor S.A.S (“Anticor”) January 2019 65.6%





25.4 Lack of accounting records

During the financial period, a secured creditor has appointed a receiver and manager for a significant local subsidiary of SEB. The accounting records of the subsidiary together with other subsidiaries of SEB were seized by the receiver and manager. The Mumbai Metropolitan Rails Development Authority (“MMRDA”) also took the accounting records of a subsidiary of SEB in India. The records of a subsidiary in Brazil are also unavailable due to closure of that office. The Directors are in the process of obtaining the accounting records.

As a result of lack of accounting records, the Directors are unable to obtain sufficient and appropriate documentation to determine the appropriateness of certain balances and the effect of misstatements, if any, for the following:

i. the amounts disclosed in Note 25.1 on the loss for the financial period ended 24 January 2019 for SEB Group amounting to RM96.7 million and loss on deconsolidation of subsidiaries amounting to RM64.9 million;

ii. the amount disclosed in Note 25.3 on the net assets of SEB Group as at 24 January 2019 amounting to RM64.9 million; and

iii. the adoption of MFRS 15 of SEB Group and its consequential financial effect on the accumulated losses of the Group as at 1 April 2018; net assets of SEB Group as at 24 January 2019 amounting to RM64.9 million as disclosed in Note 25.3; and loss on discontinued operation of the Group amounting to RM161.6 million as disclosed in Note 25.1.

26. Disposal of subsidiaries

The list of significant disposal of subsidiaries during 2019 is as follows:

Name of subsidiary Date disposed

Effective interest

disposedScomi Oiltools Ltd (“SOLC”) February 2019 51.0%Scomi Anticor S.A.S (“Anticor”) January 2019 65.6%


166 Scomi Group Bhd


26. Disposal of subsidiaries (continued)

Effects of disposals (as at date of disposal)

The cash flows and net assets of subsidiaries disposal are provided below:

SOLC Anticor Total RM’000 RM’000 RM’000

Property, plant and equipment 6,609 453 7,062 Inventories 11,165 - 11,165 Intangible asset - 2,724 2,724 Trade and other receivables 11,053 6,673 17,726 Trade and other payables (8,798) (3,192) (11,990)Cash and bank balances - 2,487 2,487

Net assets 20,029 9,145 29,174 Less:Equity interest retained as associates (9,814) - (9,814)Consideration received, satisfied in cash (5,166) (16,375) (21,541)(Loss)/Gain on disposal of subsidiaries (5,049) 7,230 (2,181)

Consideration received, satisfied in cash 5,166 16,375 21,541Cash and cash equivalents of subsidiaries

disposed off - (2,487) (2,487)Cash flow on disposal, net of cash and

cash equivalents of a subsidiary disposed 5,166 13,888 19,054


27. Loss for the financial period/year


1.4.2017 to 31.3.2018

1.4.2018 to 30.6.2019

1.4.2017 to 31.3.2018

RM’000 RM’000 RM’000 RM’000Loss before tax is stated

after charging/(crediting):Auditor’s remuneration:

- KPMG in MalaysiaStatutory audit 2,652 1,173 530 260Non-audit fees 111 188 24 22

- Overseas affiliates of KPMG Malaysian firmStatutory audit 1,725 2,432 - -

- Other external auditorsStatutory audit 81 325 - -

Amortisation:- intangible assets 812 430 - -- government grant - (269) - -

Depreciation:- property, plant and

equipment 77,040 80,204 158 118- investment property 169 205 - 51

Loss/(Gain) on disposal of property, plant and equipment 35,241 6,486 (50) -

Gain on disposal of investment properties (3,643) - (2,236) -

Impairment loss:- property, plant and

equipment 1,542 4,322 - -- trade and other receivables 128,959 17,837 52,313 -- amount due from

subsidiaries - - 1,078 51,647- investment in subsidiaries - - 64,397 440,784- intangible assets - - - -- investment in associates 6,111 - - -- investment in joint ventures 9,653 6,688 8,657 -

Termination cost for CCIRS - 29,350 -Provision for redemption

of pledged securities 38,000 - 38,000 -Lease rental expense:

- land and office premises 16,045 15,774 420 804- plant and machineries 17,015 12,767 - -

Net (gain)/loss on foreign exchange:- realised (626) (6,347) - -- unrealised (16,033) 52,975 2,776 (5,936)

Provision for retirement benefits 1,093 749 - -Rental income from a related

company (190) (181) (204) (408)




27. Loss for the financial period/year


1.4.2017 to 31.3.2018

1.4.2018 to 30.6.2019

1.4.2017 to 31.3.2018

RM’000 RM’000 RM’000 RM’000Loss before tax is stated

after charging/(crediting):Auditor’s remuneration:

- KPMG in MalaysiaStatutory audit 2,652 1,173 530 260Non-audit fees 111 188 24 22

- Overseas affiliates of KPMG Malaysian firmStatutory audit 1,725 2,432 - -

- Other external auditorsStatutory audit 81 325 - -

Amortisation:- intangible assets 812 430 - -- government grant - (269) - -

Depreciation:- property, plant and

equipment 77,040 80,204 158 118- investment property 169 205 - 51

Loss/(Gain) on disposal of property, plant and equipment 35,241 6,486 (50) -

Gain on disposal of investment properties (3,643) - (2,236) -

Impairment loss:- property, plant and

equipment 1,542 4,322 - -- trade and other receivables 128,959 17,837 52,313 -- amount due from

subsidiaries - - 1,078 51,647- investment in subsidiaries - - 64,397 440,784- intangible assets - - - -- investment in associates 6,111 - - -- investment in joint ventures 9,653 6,688 8,657 -

Termination cost for CCIRS - 29,350 -Provision for redemption

of pledged securities 38,000 - 38,000 -Lease rental expense:

- land and office premises 16,045 15,774 420 804- plant and machineries 17,015 12,767 - -

Net (gain)/loss on foreign exchange:- realised (626) (6,347) - -- unrealised (16,033) 52,975 2,776 (5,936)

Provision for retirement benefits 1,093 749 - -Rental income from a related

company (190) (181) (204) (408)


168 Scomi Group Bhd


27. Loss for the financial period/year (continued)


1.4.2017 to 31.3.2018

1.4.2018 to 30.6.2019

1.4.2017 to 31.3.2018

RM’000 RM’000 RM’000 RM’000

Loss before tax is statedafter charging/(crediting)(continued):Reversal of impairment losses:

- inventories (3,983) (4,602) - -- receivables (5,048) (4,764) - -

Written off:- property, plant and

equipment 994 117 - -- inventories 590 2,317 - -

Employee benefits costs (including Executive Director):- Wages, salaries and other

employee benefits (including allowances) 210,436 165,073 12,660 7,316

- Defined contribution plan 7,773 7,341 722 806- Defined benefit plans 1,093 749 - -

Notes to the Financial StatementsNotes to the Financial Statements



28. Other comprehensive (loss)/income

1.4.2018 to 30.6.2019 1.4.2017 to 31.3.2018Tax Tax

Before (expense)/ Net Before (expense)/ Nettax benefit of tax tax benefit of tax

Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000Items that are or may be

reclassified subsequently to profit or loss

Cash flow hedges- Losses arising during

the financial period - - - 1(16,233) - (16,233)Foreign currency

translation differences for foreign operations- Gross arising during

the financial period 9,438 - 9,438 (21,545) - (21,545)- Reclassifications to

profit or loss on deconsolidation of subsidiary 21,956 - 21,956 - - -

Items that will not be reclassified subsequent to profit and loss

Retirement benefits 470 - 470 350 - 350

31,864 - 31,864 (37,428) - (37,428)

Notes to the Financial StatementsNotes to the Financial Statements

170 Scomi Group Bhd


29. Loss per ordinary share

The calculation of basic loss per ordinary share was based on the profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding (excluding treasury shares), calculated as follows:

Loss attributable to ordinary shareholders

GroupContinuingoperations

Discontinuedoperation Total

RM’000 RM’000 RM’0001.4.2018 to 30.6.2019Loss attributable to ordinary shareholders 234,538 161,633 396,171

Continuingoperations

Discontinuedoperation Total

RM’000 RM’000 RM’0001.4.2017 to 31.3.2018Loss attributable to ordinary shareholders 150,345 99,629 249,974

Group30.6.2019 31.3.2018

’000 ’000

Issued ordinary shares at 1 April 1,093,907 1,917,510

Share consolidation - (958,755)Issuance of ordinary shares - 135,152

- 1,093,907Treasury shares at end of financial period/year - (1,250)

Weighted average number of shares (basic) 1,093,907 1,092,657

Group30.6.2019 31.3.2018

Sen SenFrom continuing operations (21.44) (13.76)From discontinued operation (14.78) (9.12)

Basic loss per ordinary share (36.22) (22.88)

Diluted loss per ordinary share are not presented as the Company has no shares with potential dilutive effects as at 30 June 2019 and the warrants exercise price is more than the average share price for the financial period (31.3.2018: None).




30. Operating segment

Management has determined the operating segments based on reports reviewed by the Chief Operating Decision Maker (“CODM”) which are used for allocating resources and assessing performance of the operating segments.

The Chief Operating Decision Maker considers the business from the industry perspective and the service rendered. The following reportable segments have been identified:

(i) Oilfield Services - supply and manufacturing of equipment, supply of a wide range of specialised chemicals and provision of services.

(ii) Marine Services - provision of transportation of bulk aggregates for the coal industry and other shipping related services.

Performance is measured based on segment profit before tax, interest, depreciation and amortisation, as included in the internal management reports that are reviewed by the Chief Operating Decision Maker (“CODM”) (i.e. the Group’s Chief Executive Officer). Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. Unallocated costs represent corporate expenses.

As disclosed in Note 25 to the financial statements, As at 30 June 2019, Directors have determined that the Company has lost control in Scomi Engineering Bhd and its subsidiaries (“SEB Group”) since the appointment of judicial managers on 24 January 2019 by the High Court of Malaysia (“The High Court”). The assets and liabilities and the results of SEB Group have been deconsolidated since that date. As a result of the deconsolidation, the segment results are not presented under operating segment.


172 Scomi Group Bhd


30. Operating segment (continued)

Segment assets

The total of segment asset is measured based on all assets (including goodwill) of a segment, as included in the internal management reports that are reviewed by the CODM. Segment total assets is used to measure the return of assets of each segment.

Segment liabilities

Segment liabilities information is neither included in the internal management reports nor provided regularly to the CODM. Hence, no disclosure is made on segment liability.

Segment capital expenditure

Segment capital expenditure is the total costs incurred during the financial period to acquire property, plant and equipment, and intangible assets other than goodwill.

Inter-External segment Total

1.4.2018 to 30.6.2019 RM’000 RM’000 RM’000Revenue

Oilfield services 497,022 - 497,022Marine services 146,480 - 146,480

643,502 - 643,5021.4.2017 to 31.3.2018Revenue

Oilfield services 486,429 - 486,429Marine services 127,528 - 127,528

613,957 - 613,957


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Geographical segments

Segment revenue based on the location of the sales of services or rental/charter hire is disclosed in Note 21. Total non-current assets are determined based on where the assets are located.

Geographical information

GroupTotal non-current

assets30.6.2019 31.3.2018RM’000 RM’000

Malaysia 35,502 302,665Indonesia 204,924 260,748Turkmenistan - 4,346Russia 6,377 7,565Nigeria 1,545 10,377India - 456Brazil - 134Other countries 178,211 214,719

426,559 801,010

Major customers

The following are the major customers with revenue equal or more than 10% of the Group’s total revenue:

Revenue Segment1.4.2018 to30.6.2019

1.4.2017 to 31.3.2018

RM’000 RM’000

Customer A 74,165 -* MarineCustomer B 82,491 73,883 Oilfield

156,656 73,883

*contributed less than 10% during the current financial period/year

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Geographical segments

Segment revenue based on the location of the sales of services or rental/charter hire is disclosed in Note 21. Total non-current assets are determined based on where the assets are located.

Geographical information

GroupTotal non-current

assets30.6.2019 31.3.2018RM’000 RM’000

Malaysia 35,502 302,665Indonesia 204,924 260,748Turkmenistan - 4,346Russia 6,377 7,565Nigeria 1,545 10,377India - 456Brazil - 134Other countries 178,211 214,719

426,559 801,010

Major customers

The following are the major customers with revenue equal or more than 10% of the Group’s total revenue:

Revenue Segment1.4.2018 to30.6.2019

1.4.2017 to 31.3.2018

RM’000 RM’000

Customer A 74,165 -* MarineCustomer B 82,491 73,883 Oilfield

156,656 73,883

*contributed less than 10% during the current financial period/year

Revenue for 2 (31.3.2018: 1) major customers constitutes 24.3% (31.3.2018: 12%) of total consolidated revenue.


178 Scomi Group Bhd


31. Financial instruments

(a) Categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows:

(i) Amortised cost (“AC”);

Carrying amount AC

30.6.2019 RM’000 RM’000Financial assetsGroupTrade and other receivables* 221,405 221,405Cash and bank balances 66,334 66,334

287,739 287,739CompanyTrade and other receivables* 66 66Cash and bank balances 582 582

648 648

Financial liabilitiesGroupLoans and borrowings 186,289 186,289Trade and other payables 308,633 308,633

494,922 494,922CompanyLoans and borrowings 483 483Trade and other payables 150,482 150,482

150,965 150,965


31. Financial instruments (continued)

(a) Categories of financial instruments (continued)

The table below provides and analysis of financial instruments as at 31 March 2018 categorised as follows:(i) Loan and receivables (“L&R”)(ii) Fair value through profit or loss (“FVTPL”) – Held for trading (“HFT”); and(iii) Financial liabilities measured at amortised cost (“FL”).

Carryingamount L&R AFS

31.3.2018 RM’000 RM’000 RM’000Financial assetsGroupAvailable-for-sale financial assets 108 - 108Trade and other receivables* 967,630 967,630 -Cash and bank balances 102,127 102,127 -

1,069,865 1,069,757 108CompanyTrade and other receivables* 52,192 52,192 -Cash and bank balances 78 78 -

52,270 52,270 -

Carryingamount FL FVTPLRM’000 RM’000 RM’000

Financial liabilitiesGroupLoans and borrowings 716,326 716,326 -Trade and other payables 556,781 556,781 -Derivative financial liabilities 10,516 - 10,516

1,283,623 1,273,107 10,516

CompanyLoans and borrowings 95 95 -Trade and other payables 96,835 96,835 -

96,930 96,930 -* Excluding prepayments





(a) Categories of financial instruments (continued)

The table below provides and analysis of financial instruments as at 31 March 2018 categorised as follows:(i) Loan and receivables (“L&R”)(ii) Fair value through profit or loss (“FVTPL”) – Held for trading (“HFT”); and(iii) Financial liabilities measured at amortised cost (“FL”).

Carryingamount L&R AFS

31.3.2018 RM’000 RM’000 RM’000Financial assetsGroupAvailable-for-sale financial assets 108 - 108Trade and other receivables* 967,630 967,630 -Cash and bank balances 102,127 102,127 -

1,069,865 1,069,757 108CompanyTrade and other receivables* 52,192 52,192 -Cash and bank balances 78 78 -

52,270 52,270 -

Carryingamount FL FVTPLRM’000 RM’000 RM’000

Financial liabilitiesGroupLoans and borrowings 716,326 716,326 -Trade and other payables 556,781 556,781 -Derivative financial liabilities 10,516 - 10,516

1,283,623 1,273,107 10,516

CompanyLoans and borrowings 95 95 -Trade and other payables 96,835 96,835 -

96,930 96,930 -* Excluding prepayments


180 Scomi Group Bhd



(b) Net gains and losses arising from financial instruments


to30.6.2019

1.4.2017 to

31.3.2018

1.4.2018 to

30.6.2019

1.4.2017 to

31.3.2018RM’000 RM’000 RM’000 RM’000

Financial liabilities measured at amortised cost (22,386) (51,870) (2,536) (769)

Financial liabilities measured at fair value through profit or loss - (2,088) - -

Loans and receivables 8,135 (3,546) -

(14,251) (57,504) (2,536) (769)



(c) Financial risk management

The Group has exposure to the following risks from its use of financial instruments:

Credit risk Liquidity risk Market risk

(d) Credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from the individual characteristics of each customer and deposits with banks. The Company’s exposure to credit risk arises principally from loans and advances to subsidiaries and financial guarantees given to banks for credit facilities granted to subsidiaries. There are no significant changes as compared to prior financial periods.

Trade receivables

Risk management objectives, policies and processes for managing the risk

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis.

The Group adopts the policy of dealing only with customers of appropriate credit history to mitigate credit risk. For other financial assets, the Group adopts the policy of dealing with financial institutions and other counterparties that are regulated and with sound credit rating.

At each reporting date, the Group or the Company assesses whether any of the trade receivables are credit impaired.

The gross carrying amounts of credit impaired trade receivables are written off (either partially or full) when there is no realistic prospect of recovery. This is generally the case when the Group or the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. Nevertheless, trade receivables that are written off could still be subject to enforcement activities.

Exposure to credit risk, credit quality and collateral

The Group and the Company do not hold any collateral from their customers.

As at the end of the reporting period, the maximum exposure to credit risk arising from trade receivables are represented by the carrying amounts in the statement of financial position.





(c) Financial risk management

The Group has exposure to the following risks from its use of financial instruments:

Credit risk Liquidity risk Market risk

(d) Credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from the individual characteristics of each customer and deposits with banks. The Company’s exposure to credit risk arises principally from loans and advances to subsidiaries and financial guarantees given to banks for credit facilities granted to subsidiaries. There are no significant changes as compared to prior financial periods.

Trade receivables


Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis.

The Group adopts the policy of dealing only with customers of appropriate credit history to mitigate credit risk. For other financial assets, the Group adopts the policy of dealing with financial institutions and other counterparties that are regulated and with sound credit rating.

At each reporting date, the Group or the Company assesses whether any of the trade receivables are credit impaired.

The gross carrying amounts of credit impaired trade receivables are written off (either partially or full) when there is no realistic prospect of recovery. This is generally the case when the Group or the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. Nevertheless, trade receivables that are written off could still be subject to enforcement activities.


The Group and the Company do not hold any collateral from their customers.

As at the end of the reporting period, the maximum exposure to credit risk arising from trade receivables are represented by the carrying amounts in the statement of financial position.


182 Scomi Group Bhd



(d) Credit risk (continued)

Trade receivables (continued)

Exposure to credit risk, credit quality and collateral (continued)

Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are stated at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due more than 180days, which are deemed to have higher credit risk, are monitored individually.

Concentration of credit risk

The exposure of credit risk for trade receivables as at the end of the reporting period by (e.g. geographic region/segment) was:

Group30.6.2019 31.3.2018RM’000 RM’000

Malaysia 8,029 86,833Other Asia 77,633 74,573Middle East and Africa 51,199 39,673Other countries 202 23,459

137,063 224,538

Recognition and measurement of impairment loss

In managing credit risk of trade receivables, the Group manages its debtors and takes appropriate actions (including but not limited to legal actions) to recover long overdue balances. Generally, trade receivables will pay within 120 days. The Group’s debt recovery process is as follows:

a) Above 180 days past due after credit term, the Group will start to initiate a structured debt recovery process which is monitored by the sales management team; and b) Above 365 days past due, the Group will evaluate options of commencing legal proceeding against the customer.

The Group uses an allowance matrix to measure ECLs of trade receivables for all segments. Consistent with the debt recovery process, invoices which are past due 90 days will be considered as credit impaired.

Loss rates are calculated using a ‘roll rate’ method based on the probability of a receivable progressing through successive stages of delinquency to 180 days past due





Recognition and measurement of impairment loss (continued)

Loss rates are based on actual credit loss experience over the past two years. The Group also considers differences between (a) economic conditions during the period over which the historic data has been collected, (b) current conditions and (c) the Group’s view of economic conditions over the expected lives of the receivables. Nevertheless, the Group believes that these factors are immaterial for the purpose of impairment calculation for the period.

The following table provides information about the exposure to credit risk and ECLs for trade receivables as at 30 June 2019 which are grouped together as they are expected to have similar risk nature.

Group

Gross-carrying amount

Lossallowance

Net balance

30.6.2019 RM’000 RM’000 RM’000Current (not past due) 79,145 (905) 78,2401-30 days past due 14,925 (459) 14,46631-60 days past due 17,339 (1,257) 16,08261-90 days past due 9,040 (269) 8,771

120,449 (2,890) 117,559

Credit impairedMore than 90 days past due 61,372 (41,868) 19,504

181,821 (44,758) 137,063








Loss rates are based on actual credit loss experience over the past two years. The Group also considers differences between (a) economic conditions during the period over which the historic data has been collected, (b) current conditions and (c) the Group’s view of economic conditions over the expected lives of the receivables. Nevertheless, the Group believes that these factors are immaterial for the purpose of impairment calculation for the period.

The following table provides information about the exposure to credit risk and ECLs for trade receivables as at 30 June 2019 which are grouped together as they are expected to have similar risk nature.

Group

Gross-carrying amount

Lossallowance

Net balance

30.6.2019 RM’000 RM’000 RM’000Current (not past due) 79,145 (905) 78,2401-30 days past due 14,925 (459) 14,46631-60 days past due 17,339 (1,257) 16,08261-90 days past due 9,040 (269) 8,771

120,449 (2,890) 117,559

Credit impairedMore than 90 days past due 61,372 (41,868) 19,504

181,821 (44,758) 137,063


184 Scomi Group Bhd






The movements in the allowance for impairment in respect of trade receivables during the year are shown below:

Trade receivables

Credit impaired TotalRM’000 RM’000

Balance at 1 April 2018 as per MFRS 139 60,298Adjustments on initial

application MFRS 9 19,586Balance at 1 April 2018 as per

MFRS 9 79,884 79,884Deconsolidation of

subsidiaries (16,330) (16,330)Amounts written off (20,431) (20,431)Net remeasurement of loss

allowance (526) (526)Currency translation

differences 2,161 2,161Balance at 30 June 2019 44,758 44,758

Comparative information under MFRS 139, Financial Instruments: Recognition and Measurement

IndividualGroup Gross impairment Net

RM’000 RM’000 RM’00031.3.2018Current (not past due) 100,612 - 100,6121 to 30 days past due 41,191 - 41,19131 to 120 days past due 28,860 - 28,860More than 120 days past due 114,173 (60,298) 53,875

284,836 (60,298) 224,538

The movements in the allowance for impairment losses of trade receivables during the financial period were:

GroupRM’000

As at 1 April 2017 64,466Impairment loss recognised 13,056Impairment loss reversed (7,399)Currency translation differences (9,825)

As at 31 March 2018 60,298








The allowance account in respect of trade receivables is used to record impairment losses. Unless the Group is satisfied that recovery of the amount is possible, the amount considered irrecoverable is written off against the receivable directly.

Financial guarantees


As at the end of the reporting period, the Company does not provide unsecured financial guarantees to banks in respect of banking facilities granted to its subsidiaries.

Investments and other financial assets


Investments are allowed only in short-term deposits placed with licensed banks and only with counterparties that have a credit rating equal to or better than the Group.


As at the end of the reporting period, the Group has only invested in short-term deposits placed with licensed banks. The maximum exposure to credit risk is represented by the carrying amounts in the statement of financial position.

These licensed banks have low credit risks in view of the sound credit rating and management does not expect any counterparty to fail to meet its obligations.

The investments and other financial assets are unsecured.

Intercompany loans and advances


The Company provides unsecured loans and advances to subsidiaries. The Company monitors the results of the subsidiaries regularly.


As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statement of financial position.


186 Scomi Group Bhd




Intercompany loans and advances (continued)

Recognition and measurement of impairment loss

Generally, the Company considers loans and advances to subsidiaries have low credit risk. The Company assumes that there is a significant increase in credit risk when a subsidiary’s financial position deteriorates significantly. As the Company is able to determine the timing of payments of the subsidiaries’ loans and advances when they are payable, the Company considers the loans and advances to be in default when the subsidiaries are not able to pay when demanded. The Company considers a subsidiary’s loan or advance to credit impaired when: The subsidiary is unlikely to repay its loan or advance to the Company in full; The subsidiary’s loan or advance is overdue for more than 365 days; or The subsidiary is continuously loss making and is having a deficit

shareholders’ fund.

The Company determines the probability of default for these loans and advances individually using internal information available.

The following table provides information about the exposure to credit risk and ECLs for subsidiaries’ loans and advances as at 30 June 2019:

Company Gross Impairmentcarrying loss Netamount allowance balanceRM’000 RM’000 RM’000

30.6.2019Credit impaired 208,760 (208,760) -

The movement in the allowance for impairment in respect of subsidiaries’ loans and advances during the year is as follows:

Company Lifetime ECLRM’000

Balance at 1 April 2018 per MFRS 139 155,369Adjustment on initial application of MFRS 9 -Balance at 1 April 2018 per MFRS 9 155,369Net remeasurement of loss allowance 53,391Balance at 30 June 2019 208,760






The movements in the allowance for impairment losses of inter-company loans and advances during the financial year were:

Company RM’000

As at 1 April 2017 103,722Impairment loss recognised 51,647

As at 31 March 2018 155,369

(e) Other receivables

Credit risk on other receivables are mainly arising from non-trade debtors.

As at the end of reporting period, the maximum exposure to credit risk is represented by their carrying amount in the statement of financial position.

As at the end of reporting period, the Group and the Company did not recognised any allowance for impairment losses.

(f) Liquidity risk

Liquidity risk is the risk that the Group and the Company will not be able to meet its financial obligations as they fall due. The Group’s and the Company’s exposure to liquidity risk arises principally from its various payables, loans and borrowings.

The Group and the Company maintain a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.








The movements in the allowance for impairment losses of inter-company loans and advances during the financial year were:

Company RM’000

As at 1 April 2017 103,722Impairment loss recognised 51,647

As at 31 March 2018 155,369

(e) Other receivables

Credit risk on other receivables are mainly arising from non-trade debtors.

As at the end of reporting period, the maximum exposure to credit risk is represented by their carrying amount in the statement of financial position.

As at the end of reporting period, the Group and the Company did not recognised any allowance for impairment losses.

(f) Liquidity risk

Liquidity risk is the risk that the Group and the Company will not be able to meet its financial obligations as they fall due. The Group’s and the Company’s exposure to liquidity risk arises principally from its various payables, loans and borrowings.

The Group and the Company maintain a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.


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190 Scomi Group Bhd



(f) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other prices that will affect the Group’s financial position or cash flows.

(i) Currency risk

The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group Entities. The currencies giving rise to this risk are primarily U.S. Dollar (“USD”), Indian Rupee (“INR”) and Brazalian Real (“BRL”).


The Group does not have a fixed policy to hedge its sales and purchases via a forward contracts. These exposures are managed primarily by using natural hedges that arise from offsetting assets and liabilities that are denominated in foreign currencies whenever possible and close monitoring of the currency exposures by management.

Exposure to foreign currency risk

The Group’s exposure to foreign currency (a currency which is other than the functional currency of the Group Entities) risk, based on carrying amounts as at the end of the reporting period was:

Denominated inUSD

30.6.2019 RM’000Balances recognised in the statement of

financial positionGroupTrade and other receivables 4,441Cash and bank balances 1,616Loans and borrowings (17,437)Trade and other payables (31,191)

Net exposure (42,571)

CompanyCash and bank balances 19Trade and other payables (2,850)

Net exposure (2,831)





(f) Market risk (continued)

(i) Currency risk (continued)

Exposure to foreign currency risk (continued)

Denominated in31.3.2018 USD INR BRL

RM’000 RM’000 RM’000Balances recognised in the

statement of financial positionGroupTrade and other receivables 6,891 350,251 167,029Cash and bank balances 358 156 51Loans and borrowings (116,782) (52,326) -Trade and other payables (82,183) (15,487) (58,147)

Net exposure (191,716) 282,594 108,933

CompanyCash and bank balances 18 - -Intra-group balances (544) - -

Net exposure (526) - -

Currency risk sensitivity analysis

A 5% (year ended 31.3.2018: 10%) strengthening of the RM against the following currencies at the end of the reporting period would have increased post-tax profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. This analysis assumes that all other variables, in particular interest rates, remained constant.

Group CompanyProfit or loss Profit or loss

30.6.2019 31.3.2018 30.6.2019 31.3.2018RM’000 RM’000 RM’000 RM’000

USD (1,653) 14,570 (143) 40INR - (21,477) - -BRL - (8,279) - -

A 5% (year ended 31.3.2018: 10%) weakening of RM against the above currencies at the end of the reporting period would have had equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remained constant.


192 Scomi Group Bhd




(ii) Interest rate risk

The Group’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes ininterest rates.


The Group manages its interest rate exposure by maintaining a mix of fixed and floating rate borrowings. The Group reviews its debt portfolio, taking into account the investment holding period and nature of its assets. The Group also uses hedging instruments such as cross currency interest rate swaps to minimise its exposure to interest rate volatility.

Exposure to interest rate risk

The interest rate profile of the Group’s and the Company’s significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period was:


Fixed rateinstrumentsFinancial assets 24,906 54,576 - -Financial liabilities (103,917) (143,415) - (95)

(79,011) (88,839) - (95)

Floating rate instrumentsFinancial liabilities (81,889) (572,911) - -

Interest rate risk sensitivity analysis

(a) Fair value sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial liabilities at fair value through profit or loss, and the Group does not designate derivatives as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss.




(ii) Interest rate risk (continued)

(b) Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points (“bp”) in interest rates at the end of the reporting period would have increased/(decreased) equity and post-tax profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remained constant.

Equity Profit or loss100 bp 100 bp 100 bp 100 bp

increase decrease increase decreaseGroup RM’000 RM’000 RM’000 RM’00030.6.2019Floating rate

instruments - - (622) (622)

31.3.2018Floating rate

instruments - - (3,492) 3,492

(g) Fair value of information

The carrying amounts of cash and cash equivalents, short-term receivables and payables and short-term borrowings reasonably approximate fair values due to the relatively short term nature of these financial instruments.






(ii) Interest rate risk (continued)

(b) Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points (“bp”) in interest rates at the end of the reporting period would have increased/(decreased) equity and post-tax profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remained constant.

Equity Profit or loss100 bp 100 bp 100 bp 100 bp

increase decrease increase decreaseGroup RM’000 RM’000 RM’000 RM’00030.6.2019Floating rate

instruments - - (622) (622)

31.3.2018Floating rate

instruments - - (3,492) 3,492

(g) Fair value of information

The carrying amounts of cash and cash equivalents, short-term receivables and payables and short-term borrowings reasonably approximate fair values due to the relatively short term nature of these financial instruments.


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(g) Fair value information (continued)

Level 2 fair value

Non-derivative financial liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period. For other borrowings, the market rate of interest is determined by reference to similar borrowing arrangements.

Transfers between Level 1 and Level 2 fair values

There has been no transfer between Level 1 and 2 fair values during the financial period (31.3.2018: no transfer in either directions).

Level 3 fair value

Financial instruments not carried at fair value

Type used Description of valuation technique and inputs

Bank loans, finance leases and Guaranteed Serial Bonds

Discounted cash flows using a rate based on current market rate of borrowing of the respective Group entities at the reporting date.


32. Capital management

The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Directors monitor and are determined to maintain an optimal debt-to-equity ratio that complies with debt covenants and regulatory requirements.

The debt-to-equity ratios at 30 June 2019 and at 31 March 2018 were as follows:

Group30.6.2019 31.3.2018RM’000 RM’000

Total loans and borrowings (Note 18) 186,289 716,326Less: Cash and bank balances (Note 13) (66,334) (102,127)

Net debt 119,955 614,199

Total equity attributable to the owners of the Company (23,728) 361,633

Net debt-to-equity ratio (5.06) 1.70

There was no change in the Group’s approach to capital management during the financial period.

As of 30 June 2019, the Company has triggered Paragraphs 8.04(2) of the Listing Requirements of Bursa Malaysia Securities Berhad. The Company has also triggered the Prescribed Criteria under Paragraph 2.1(a) of PN17 and Paragraph 2.1(e) that: (i) its shareholders’s equity on a consolidated basis is 25% or less of its share capital

and its shareholder’s equity is less than RM40.0 million; and(ii) the auditors have highlighted a material uncertainty related to going concern in the

Company’s latest audited financial statements and its shareholders’ equity on a consolidated basis is 50% or less of share capital (excluding treasury shares).

The Group is also required to comply with various financial covenants, details of which are set out in Note 18.

The Company has submitted an application to Bursa Malaysia Securities Berhad (“Bursa Malaysia”) for a waiver from complying with Paragraph 8.04(2) of the Listing Requirements (“PN17 Waiver”) on 3 September 2019 which is currently pending a decision from Bursa Malaysia.




32. Capital management

The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Directors monitor and are determined to maintain an optimal debt-to-equity ratio that complies with debt covenants and regulatory requirements.

The debt-to-equity ratios at 30 June 2019 and at 31 March 2018 were as follows:

Group30.6.2019 31.3.2018RM’000 RM’000

Total loans and borrowings (Note 18) 186,289 716,326Less: Cash and bank balances (Note 13) (66,334) (102,127)

Net debt 119,955 614,199

Total equity attributable to the owners of the Company (23,728) 361,633

Net debt-to-equity ratio (5.06) 1.70

There was no change in the Group’s approach to capital management during the financial period.

As of 30 June 2019, the Company has triggered Paragraphs 8.04(2) of the Listing Requirements of Bursa Malaysia Securities Berhad. The Company has also triggered the Prescribed Criteria under Paragraph 2.1(a) of PN17 and Paragraph 2.1(e) that: (i) its shareholders’s equity on a consolidated basis is 25% or less of its share capital

and its shareholder’s equity is less than RM40.0 million; and(ii) the auditors have highlighted a material uncertainty related to going concern in the

Company’s latest audited financial statements and its shareholders’ equity on a consolidated basis is 50% or less of share capital (excluding treasury shares).

The Group is also required to comply with various financial covenants, details of which are set out in Note 18.

The Company has submitted an application to Bursa Malaysia Securities Berhad (“Bursa Malaysia”) for a waiver from complying with Paragraph 8.04(2) of the Listing Requirements (“PN17 Waiver”) on 3 September 2019 which is currently pending a decision from Bursa Malaysia.


198 Scomi Group Bhd


33. Operating leases

Leases as lessee

Non-cancellable operating lease rentals are payable as follows:


Less than one year 2,601 4,191 - -Between one and five years 3,658 5,738 - -

6,259 9,929 - -

The Group and the Company lease office space under operating leases. The leases typically run for a period of 1 to 3 years from date of agreement, with an option to renew the leases after that date. Lease payment are reviewed every year to reflect market rentals. None of the leases includes contingent rentals.

Leases as lessor

The Group lease out their fleet of coaches under operating leases. The future minimum lease receivables under non-cancellable leases are as follows:


Less than one year - 5,085 - -Between one and five years - 5,884 - -

- 10,969 - -


34. Other commitments

Group30.6.2019 31.3.2018RM’000 RM’000

Authorised capital expenditure but not recognised in the financial statementsNot contracted 20,895 34,847

Analysed as:Property, plant and equipment 20,895 33,055Others - 1,792

35. Contingent liabilities

The Directors are of the opinion that provisions are not required in respect of the contingent liabilities, as it is not probable that a future sacrifice of economic benefits will be required.

Group30.6.2019 31.3.2018RM’000 RM’000

Contingent liabilities not considered remoteTaxation 2,000 2,000

36. Related parties

Identity of related parties

For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the Company has the ability, directly or indirectly, to control or jointly control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control. Related parties may be individuals or other entities.

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly and entity that provides key management personnel services to the Group. The key management personnel include all the Directors of the Group, and certain members of senior management of the Group.

The Group has related party relationship with subsidiaries, associates and key management personnel.

Significant related party transactions

Related party transactions have been entered into, in the normal course of business under negotiated terms. The significant related party transactions of the Group and the Company are shown below. The balances related to the transactions below are shown in Notes 11 and 17.




34. Other commitments

Group30.6.2019 31.3.2018RM’000 RM’000

Authorised capital expenditure but not recognised in the financial statementsNot contracted 20,895 34,847

Analysed as:Property, plant and equipment 20,895 33,055Others - 1,792

35. Contingent liabilities

The Directors are of the opinion that provisions are not required in respect of the contingent liabilities, as it is not probable that a future sacrifice of economic benefits will be required.

Group30.6.2019 31.3.2018RM’000 RM’000

Contingent liabilities not considered remoteTaxation 2,000 2,000

36. Related parties

Identity of related parties

For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the Company has the ability, directly or indirectly, to control or jointly control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control. Related parties may be individuals or other entities.

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly and entity that provides key management personnel services to the Group. The key management personnel include all the Directors of the Group, and certain members of senior management of the Group.

The Group has related party relationship with subsidiaries, associates and key management personnel.

Significant related party transactions

Related party transactions have been entered into, in the normal course of business under negotiated terms. The significant related party transactions of the Group and the Company are shown below. The balances related to the transactions below are shown in Notes 11 and 17.


200 Scomi Group Bhd


36. Related parties (continued)

Significant related party transactions (continued)


Income/(Expenses)A. Subsidiaries

Interest income on advances - - 4,786 8,133Interest expenses on

intercompanies' advances - (2,510) (348)Rental income on investment

properties - - 204 408Advances to Scomi

Engineering Bhd - - - (7,790)Advances from Scomi Energy

Services Bhd - - - 5,027Disposal of investment

property to Scomi Energy Services Bhd - - 6,500 -

Personnel cost - (4,745) (11,842)Shared cost between the

Company and Scomi Energy Services Bhd - - (847) -

Administrative cost - - (859) -

B. Related partiesAirline ticketing services

provided by Lintas (38) (809) - (125)Rental income for office -

Suria Business Solutions Sdn Bhd - Directors 190 181 - -

Lintas Travel & Tours Sdn. Bhd. (“Lintas”) and Suria Business Solutions Sdn. Bhd. are companies connected to a Director.


C. Key management personnel

Salaries and short-term employee benefits 8,144 2,774 2,779 511

Defined contribution plan 339 228 77 58

8,483 3,002 2,856 569

Other key management personnel comprise persons other than the Directors of Group Entities, having authority and responsibility for planning, directing and controlling the activities of the Group Entities either directly or indirectly.




37. Directors’ remuneration

The aggregate amount of emoluments received/receivable by Directors of the Company during the financial period is as follows:


Non-executive directorsFees 1,208 775* 355 551*Other emoluments 389 137 353 101

1,597 912 708 652Executive directorSalaries and bonuses 1,747 480 1,747 -Fees - 748* - -Defined contribution plan - 58 - -Estimated monetary value of

benefits-in-kind 388 31 388 -Other emoluments - 14 - -

2,135 1,331 2,135 -

3,732 2,243 2,843 652

* The proposed annual Directors’ fees are subject to the shareholders’ approval at the forthcoming Annual General Meeting of the Company or of the respective subsidiary.

38. Significant events during the financial period

(i) The Company announced on 27 May 2019, 30 May 2019 and 18 July 2019 proposing to undertake the following proposals:

(a) proposed reduction of the Company’s issued share capital pursuant to Section 116 of the Companies Act, 2016 (“Act”)

(b) proposed consolidation of every four (4) existing ordinary shares in the Company (“SGB Share” or “Share”) into one (1) SGB Share

(c) proposed renounceable rights issue of up to 1,188,890,151 new Consolidated Shares (“Rights Shares”) together with up to 396,296,717 free detachable warrants (“Warrants C”) on the basis of three (3) Rights Shares together with one (1) free Warrant C for every one (1) Consolidated Share held by the entitled shareholders (“Entitled Shareholders”), on an entitlement date to be determined later (“Rights Entitlement Date”) at an issue price of RM0.18 per Rights Share (“Issue Price”)

(d) proposed settlement of liabilities owing by the Company to Malayan Banking Berhad (“Maybank”)

(e) proposed net-off of the amount repayable to Sammy Tse Kwok Fai (“STKF”) against the subscription moneys payable by STKF pursuant to the proposed Right Issues of shares with warrant.

Collectively, (a), (b), (c), (d) and (e) are referred to as the “Proposals”. The applications in relation to the Proposals have been submitted to Bursa Malaysia Securities Malaysia on 20 August 2019.


202 Scomi Group Bhd


38. Significant events during the financial period (continued)

(ii) On 20 February 2019, Scomi Oilfield Limited, an indirect 65.65% owned subsidiary of the Company, disposed 51 ordinary shares, representing 51% of equity interest in Scomi Oiltools Ltd (incorporated in Cayman Islands) to Migard Oilfield Services FZ LLC for a cash consideration of USD1,500,000 (RM6,104,250 equivalent).

When completed of the disposal, Scomi Oiltools Ltd ceased to be a subsidiary of the Company. Scomi Oiltools Limited continue to hold 49% interest in Scomi Oiltools Ltd.

(iii) On 25 January 2019, Scomi Sosma Sdn Bhd, an indirect 65.65% owned subsidiary of the Company, entered into a Sale and Purchase Agreement with Vink + Co GMBH Handelsgesellschaft UND CO. KG (“Vink”) to sell its entire interest in Scomi Anticore S.A.S to Vink for a total cash consideration of USD 3,700,000 (RM15,303,200 equivalent). The sale transaction completed on 31 January 2019.

Scomi Anticore S.A.S ceased to be a subsidiary of the Company upon completion of the disposal on 31 January 2019.

(iv) On 28 August 2018, the Company entered into a Sale and Purchase Agreement with Scomi Energy Services Bhd, its 65.65% own subsidiary, for the disposal of an investment property known as Scomi Global Research Technology Centre to SESB at the consideration of RM6,500,000. The sale was completed on 31January 2019.

(v) On 14 August 2018, the Company announced to undertake a proposed capital reduction which amounting to RM440,000,000 of the Company’s issued share capital pursuant to Section 116 of the Companies Act, 2016. The corresponding credit of RM440,000,000 was being utilised to set-off against the accumulated losses of the Company. The capital reduction exercise was completed on 31 January 2019.

39. Significant events subsequent to the financial period end

(i) On 16 July 2019, the Company has entered into a settlement agreement with Maybank to settle in full the Company’s liabilities and obligations owing to Maybank pursuant to the Memorandum of Deposit via a settlement sum of RM38.00 million, of which RM23.00 million cash settlement shall be settled via the proceeds from the Proposed Rights Issue of Shares with Warrants (Note 38) andRM15.00 million shall be settled via the issuance of 83,333,333 new Consolidated Shares to Maybank pursuant to the Proposed Liabilities Settlement (“Settlement Agreement”).

(ii) On 19 July 2019, the Company entered into a share sale agreement with Scomi Engineering Bhd, a deconsolidated subsidiary during the financial period to purchase the shares of Scomi Transit Projects Sdn Bhd (STP), a direct subsidiary of SEB, with an aggregate amount of the purchase price as follows:

(a) cash consideration of RM900,000; and (b) set-off intercompany balance amount due from SEB to the Company

amounting to RM8,000,000.


39. Significant events subsequent to the financial period end (continued)

The proposed disposal of the shares was intervened by a secured creditor of SEB via a court order due to SEB has provided a corporate guarantee to one of its subsidiaries. The hearing of the court has been adjourned to 4 November 2019. As a result, the Group has not consolidated STP as of 30 June 2019.

(iii) The Company had on 30 August 2019 announced that it had triggered the Prescribed Criteria under 8.04(2) of the Listing Requirements of Bursa Malaysia Securities Berhad. The Company has also triggered the Prescribed Criteria under Paragraph 2.1(a) of PN17 and Paragraph 2.1(e) that: a. its shareholders’s equity on a consolidated basis is 25% or less of its share

capital and its shareholder’s equity is less than RM40.0 million; and b. the auditors have highlighted a material uncertainty related to going concern in

the Company’s latest audited financial statements and its shareholders’ equity on a consolidated basis is 50% or less of share capital (excluding treasury shares).

The Company has submitted an application to Bursa Malaysia Securities Berhad (“Bursa Malaysia”) for a waiver from complying with Paragraph 8.04(2) of the Listing Requirements (“PN17 Waiver”) on 3 September 2019 which is currently pending a decision from Bursa Malaysia. In the event that the waiver application is not approved by Bursa Securities, the Company will be classified as an affected listed issuer and will be required to submit a regularisation plan to Bursa Malaysia and Securities Commission.

40. Significant changes in accounting policies

40.1 Impact on financial statements

The accounting policies set out in Note 2 have been applied in preparing the financial statements of the Group and of the Company for the financial period ended 30 June 2019 and the comparative information presented in these financial statements for the financial year ended 31 March 2018.

During the financial period, the Group and the Company adopted MFRS 15, Revenue from Contracts with Customers and MFRS 9, Financial Instruments on their financial statements with date of initial application of 1 April 2018.

40.2 Accounting for revenue from contracts with customers

The Group and the Company applied MFRS 15 using the cumulative effect method, i.e. by recognising the cumulative effect of initially applying MFRS 15 as an adjustment to the opening balance of equity at 1 April 2018. Therefore, the comparative information have not been restated and continue to be reported under MFRS 118, Revenue and MFRS 111, Construction Contracts.




39. Significant events subsequent to the financial period end (continued)

The proposed disposal of the shares was intervened by a secured creditor of SEB via a court order due to SEB has provided a corporate guarantee to one of its subsidiaries. The hearing of the court has been adjourned to 4 November 2019. As a result, the Group has not consolidated STP as of 30 June 2019.

(iii) The Company had on 30 August 2019 announced that it had triggered the Prescribed Criteria under 8.04(2) of the Listing Requirements of Bursa Malaysia Securities Berhad. The Company has also triggered the Prescribed Criteria under Paragraph 2.1(a) of PN17 and Paragraph 2.1(e) that: a. its shareholders’s equity on a consolidated basis is 25% or less of its share

capital and its shareholder’s equity is less than RM40.0 million; and b. the auditors have highlighted a material uncertainty related to going concern in

the Company’s latest audited financial statements and its shareholders’ equity on a consolidated basis is 50% or less of share capital (excluding treasury shares).

The Company has submitted an application to Bursa Malaysia Securities Berhad (“Bursa Malaysia”) for a waiver from complying with Paragraph 8.04(2) of the Listing Requirements (“PN17 Waiver”) on 3 September 2019 which is currently pending a decision from Bursa Malaysia. In the event that the waiver application is not approved by Bursa Securities, the Company will be classified as an affected listed issuer and will be required to submit a regularisation plan to Bursa Malaysia and Securities Commission.

40. Significant changes in accounting policies

40.1 Impact on financial statements

The accounting policies set out in Note 2 have been applied in preparing the financial statements of the Group and of the Company for the financial period ended 30 June 2019 and the comparative information presented in these financial statements for the financial year ended 31 March 2018.

During the financial period, the Group and the Company adopted MFRS 15, Revenue from Contracts with Customers and MFRS 9, Financial Instruments on their financial statements with date of initial application of 1 April 2018.

40.2 Accounting for revenue from contracts with customers

The Group and the Company applied MFRS 15 using the cumulative effect method, i.e. by recognising the cumulative effect of initially applying MFRS 15 as an adjustment to the opening balance of equity at 1 April 2018. Therefore, the comparative information have not been restated and continue to be reported under MFRS 118, Revenue and MFRS 111, Construction Contracts.


204 Scomi Group Bhd


40. Significant changes in accounting policies (continued)

40.2 Accounting for revenue from contracts with customers (continued)

As disclosed in Note 25.4 to the financial statements, the accounting records of certain subsidiaries were seized by a receiver and manager and an authority; and loss of accounting records of a subsidiary have been lost due to closure of office in overseas.

The MFRS 15 requires the Group to identify the contract, identify separate performance obligations, determine the transaction price and allocate the transactions price.

As a result of lack of accounting records, the Directors are unable to obtain sufficient and appropriate evidence to determine the appropriateness of certain balances and the effect of misstatements, if any. The adoption of MFRS 15 of SEB Group and its consequential financial effect on the accumulated losses of the Group as at 1 April 2018; net assets of SEB Group as at 24 January 2019 amounting to RM64.9 million as disclosed in Note 25.3 to the financial statements; and loss on discontinued operation of the Group amounting to RM161.6 million as disclosed in Note 25.1 to the financial statements.

40.3 Accounting for financial instruments

(a) Transition

In the adoption of MFRS 9, the following transitional exemptions as permitted by the standard have been adopted:

i) The Group and the Company have not restated comparative information for prior financial periods with respect to classification and measurement (including impairment) requirements. Differences in the carrying amounts of financial assets and financial liabilities resulting from the adoption of MFRS 9 are recognised in retained earnings and reserves as at 1 April 2018. Accordingly, the information presented for as at 31 March 2018 does not generally reflect the requirements of MFRS 9, but rather those of MFRS 139, Financial Instruments: Recognition and Measurement.

ii) The following assessments have been made based on the facts and circumstances that existed at the date of initial application:

- the determination of the business model within which a financial asset is held;

- the designation and revocation of previous designations of certain financial assets and financial liabilities as measured at FVTPL; and

- the designation of certain investments in equity instruments not held for trading as at FVOCI.


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40.3 Accounting for financial instruments (continued)

(b) Classification of financial assets and financial liabilities on the date of initial application of MFRS 9 (continued)

There were no changes to the Group’s and the Company’s classification and measurement of the financial liabilities on the adoption of MFRS 9 other than as disclosed below:

31 March 2018 1 April 2018

Category under MFRS

139

Reclassification to new MFRS 9 category

Remeasurement

Fair value through profit or loss (“FVTPL”) Notes

RM’000 RM’000 RM’000GroupFinancial

liabilitiesFair value

through profit or loss – held for trading

Derivative financial liabilities 10,516 - 10,516 40.3(b)(iii)

(i) Reclassification from loans and receivables to amortised cost

Trade and other receivables and cash and bank balances that were classified as loans and receivables under MFRS 139 are now reclassified at amortised cost. An increase of RM19.6 million in allowance for impairment was recognised in opening retained earnings of the Group as at 1 April 2018 respectively on transition to MFRS 9.

(ii) Reclassification from AFS to FVOCI

Investment in quoted shares are investments that the Group intends to hold for long term strategic purposes. As permitted by MFRS 9, the Group has designated these investments as measured at FVOCI at the date of initial application.

(iii) Reclassification from FVTPL designated upon initial recognition to mandatorily recognition FVTPL

There were derivatives, where the Group manages and assesses its performance on a fair value basis classified as FVTPL which are designated upon initial recognition. There is no change in the carrying amount as going forward these derivatives are mandatorily recognised as FVTPL.

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40.3 Accounting for financial instruments (continued)

(b) Classification of financial assets and financial liabilities on the date of initial application of MFRS 9 (continued)

There were no changes to the Group’s and the Company’s classification and measurement of the financial liabilities on the adoption of MFRS 9 other than as disclosed below:

31 March 2018 1 April 2018

Category under MFRS

139

Reclassification to new MFRS 9 category

Remeasurement

Fair value through profit or loss (“FVTPL”) Notes

RM’000 RM’000 RM’000GroupFinancial

liabilitiesFair value

through profit or loss – held for trading

Derivative financial liabilities 10,516 - 10,516 40.3(b)(iii)

(i) Reclassification from loans and receivables to amortised cost

Trade and other receivables and cash and bank balances that were classified as loans and receivables under MFRS 139 are now reclassified at amortised cost. An increase of RM19.6 million in allowance for impairment was recognised in opening retained earnings of the Group as at 1 April 2018 respectively on transition to MFRS 9.

(ii) Reclassification from AFS to FVOCI

Investment in quoted shares are investments that the Group intends to hold for long term strategic purposes. As permitted by MFRS 9, the Group has designated these investments as measured at FVOCI at the date of initial application.

(iii) Reclassification from FVTPL designated upon initial recognition to mandatorily recognition FVTPL

There were derivatives, where the Group manages and assesses its performance on a fair value basis classified as FVTPL which are designated upon initial recognition. There is no change in the carrying amount as going forward these derivatives are mandatorily recognised as FVTPL.


208 Scomi Group Bhd


41. Comparative figures

During the financial period, the Company changed its financial year end from 31 March to 30 June. Accordingly, the comparatives for the statements of profit or loss and other comprehensive income, changes in equity and cash flows as well as the comparatives in their relevant notes to the financial statements for the year ended 31 March 2018 are not comparable to the results for the current financial period ended 30 June 2019.



Statement by Directors pursuant to Section 251(2) of the Companies Act 2016

In the opinion of the Directors, the financial statements set out on pages 56 to 208 are drawn

up in accordance with Malaysian Financial Reporting Standards, International Financial

Reporting Standards and the requirements of Companies Act 2016 in Malaysia so as to give

a true and fair view of the financial position of the Group and of the Company as of 30 June

2019 and of their financial performance and cash flows for the financial period then ended.


…………………………………………………Liew Willip Director

…………………………………………………Sammy Tse Kwok FaiDirector

Petaling Jaya







In the opinion of the Directors, the financial statements set out on pages 56 to 208 are drawn

up in accordance with Malaysian Financial Reporting Standards, International Financial

Reporting Standards and the requirements of Companies Act 2016 in Malaysia so as to give

a true and fair view of the financial position of the Group and of the Company as of 30 June

2019 and of their financial performance and cash flows for the financial period then ended.


…………………………………………………Liew Willip Director

…………………………………………………Sammy Tse Kwok FaiDirector

Petaling Jaya



210 Scomi Group Bhd



Statutory declaration pursuant to Section 251(1)(b) of the Companies Act 2016

I, Chacko Kunjuvaru, the officer primarily responsible for the financial management of Scomi

Group Bhd, do solemnly and sincerely declare that the financial statements set out on pages

56 to 208 are, to the best of my knowledge and belief, correct and I make this solemn

declaration conscientiously believing the declaration to be true, and by virtue of the Statutory

Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed Chacko Kunjuvaru, NRIC: 770103-

01-7229, MIA CA 23373, at Petaling Jaya in the State of Selangor Darul Ehsan on 31 October

2019

………………………………….Chacko Kunjuvaru

Before me:


INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF SCOMI GROUP BHD(Company No. 571212-A)(Incorporated in Malaysia)

Report on the Audit of the Financial Statements

Qualified Opinion

We have audited the financial statements of Scomi Group Bhd, which comprise the statements of financial position as at 30 June 2019 of the Group and of the Company, and the 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 financial period then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 56 to 208.

In our opinion, except for the possible effects of the matter described in the basis for qualified opinion section of our report, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 30 June 2019, and of their financial performance and cash flows for the financial period then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

Basis for Qualified Opinion

As disclosed in Note 25.4 to the financial statements, the accounting records of certain subsidiaries were seized by a receiver and manager and an overseas authority; and the accounting records of a foreign subsidiary have been lost due to closure of its office overseas.

As a result of lack of accounting records, we are unable to obtain sufficient and appropriate evidence to determine the appropriateness of certain balances and the effect of misstatements, if any, for the following:

i. the amounts disclosed in Note 25.1 to the financial statements on the loss for the financial period ended 24 January 2019 for Scomi Engineering Bhd and its subsidiaries (“SEBGroup”) amounting to RM96.7 million and loss on deconsolidation of subsidiaries amounting to RM64.9 million;

ii. the amount disclosed in Note 25.3 to the financial statements on the net assets of SEB Group as at 24 January 2019 amounting to RM64.9 million; and

iii. the adoption of MFRS 15 of SEB Group and its consequential financial effect on the accumulated losses of the Group as at 1 April 2018; net assets of SEB Group as at 24 January 2019 amounting to RM64.9 million as disclosed in Note 25.3 to the financial statements; and loss on discontinued operation of the Group amounting to RM161.6 million as disclosed in Note 25.1 to the financial statements.

Statutory Declaration pursuant to Section 251(1)(b) of the Companies Act 2016



INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF SCOMI GROUP BHD(Company No. 571212-A)(Incorporated in Malaysia)

Report on the Audit of the Financial Statements

Qualified Opinion

We have audited the financial statements of Scomi Group Bhd, which comprise the statements of financial position as at 30 June 2019 of the Group and of the Company, and the 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 financial period then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 56 to 208.

In our opinion, except for the possible effects of the matter described in the basis for qualified opinion section of our report, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 30 June 2019, and of their financial performance and cash flows for the financial period then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

Basis for Qualified Opinion

As disclosed in Note 25.4 to the financial statements, the accounting records of certain subsidiaries were seized by a receiver and manager and an overseas authority; and the accounting records of a foreign subsidiary have been lost due to closure of its office overseas.

As a result of lack of accounting records, we are unable to obtain sufficient and appropriate evidence to determine the appropriateness of certain balances and the effect of misstatements, if any, for the following:

i. the amounts disclosed in Note 25.1 to the financial statements on the loss for the financial period ended 24 January 2019 for Scomi Engineering Bhd and its subsidiaries (“SEBGroup”) amounting to RM96.7 million and loss on deconsolidation of subsidiaries amounting to RM64.9 million;

ii. the amount disclosed in Note 25.3 to the financial statements on the net assets of SEB Group as at 24 January 2019 amounting to RM64.9 million; and

iii. the adoption of MFRS 15 of SEB Group and its consequential financial effect on the accumulated losses of the Group as at 1 April 2018; net assets of SEB Group as at 24 January 2019 amounting to RM64.9 million as disclosed in Note 25.3 to the financial statements; and loss on discontinued operation of the Group amounting to RM161.6 million as disclosed in Note 25.1 to the financial statements.

Independent Auditors’ Report to the members of Scomi Group Bhd

212 Scomi Group Bhd

Draft – for discussion purposes and subject to final amendments 165Company No. 571212-A Scomi Group Bhd.

Independent Auditors’ Report for the Financial Period Ended 30 June 2019

Basis for Qualified Opinion (continued)

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our auditors’ report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.

Independence and Other Ethical Responsibilities

We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Material Uncertainty Related to Going Concern

We draw your attention to Note 1(b) to the financial statements. The events and conditions as disclosed in the Note 1(b) to the financial statements indicate that a material uncertainty exists that may cast significant doubt on the ability of the Group and of the Company to continue as going concerns and therefore, the Group and the Company may be unable to realise their assets and discharge their liabilities in the normal course of business.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current financial period. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for Qualified Opinion section and Material Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.

i) Deconsolidation of Scomi Engineering Bhd and its subsidiaries

Refer to Note 2 (a) – Significant accounting policy: Basis of consolidation and Note 25 – Deconsolidation of Scomi Engineering Bhd and its subsidiaries

The key audit matter

As disclosed in Note 25 to the financial statements, the Directors have determined that the Company has lost control of Scomi Engineering Bhd and its subsidiaries (“SEB Group”) upon the appointment of judicial managers on 24 January 2019 by the High Court of Malaysia (“The High Court”). The assets and liabilities and the results of SEB Group have been deconsolidated since that date. As a result of the deconsolidation, the Group has recorded a net loss on deconsolidation of RM161.6 million in the profit or loss of the Group for the current financial period.



Key Audit Matters (continued)

i) Deconsolidation of Scomi Engineering Bhd and its subsidiaries (continued)

The key audit matter (continued)

We have identified the deconsolidation of SEB Group as a key audit matter due to the significance of the transaction and it involved significant judgment made by the Directors.

How the matter was addressed in our audit

We performed the following audit procedures, among others:

o evaluated the appropriateness of Directors’ assessment that the Company has lost control of the subsidiary;

o assessed Directors’ computation of the net loss of the deconsolidation is appropriate and assessed the adequacy and accuracy of the disclosures in the financial statements for the deconsolidation of the SEB Group (refer to Basis of Qualified Opinion above).

ii) Valuation of goodwill

Refer to Note 2(f)(i) and 2(f)(iii) – Significant accounting policy: Goodwill and other intangible assets and Note 5 – Intangible assets.


The Group has a carrying amount of goodwill of RM99.6 million in relation to its drilling services business as at 30 June 2019. The drilling services business continues to be affected by the prolonged decline in global oil and gas prices. In relation to goodwill, the Group is required to perform an annual impairment assessment. The goodwill impairment assessment is considered a key audit matter due to the continuing losses of the drilling services business in recent years and the judgement involved in the assessment of the recoverable amount of the drilling services cash-generating unit by the Group.



o assessed the key assumptions such as revenue, margin and operating costs applied in the discounted cash flow projection prepared by the Group for its goodwill impairment assessment by collaborating key market related assumptions to external data and approved budgets to contracts secured and historical performance;

o engaged our valuation specialist when considering the appropriateness of the discount rates applied in the discounted cash flow projection;

o assessed the sensitivity of key inputs to the impairment assessment in order to understand the impact of a reasonably possible change in key assumptions on the overall assessment; and






i) Deconsolidation of Scomi Engineering Bhd and its subsidiaries (continued)

The key audit matter (continued)

We have identified the deconsolidation of SEB Group as a key audit matter due to the significance of the transaction and it involved significant judgment made by the Directors.



o evaluated the appropriateness of Directors’ assessment that the Company has lost control of the subsidiary;

o assessed Directors’ computation of the net loss of the deconsolidation is appropriate and assessed the adequacy and accuracy of the disclosures in the financial statements for the deconsolidation of the SEB Group (refer to Basis of Qualified Opinion above).


Refer to Note 2(f)(i) and 2(f)(iii) – Significant accounting policy: Goodwill and other intangible assets and Note 5 – Intangible assets.


The Group has a carrying amount of goodwill of RM99.6 million in relation to its drilling services business as at 30 June 2019. The drilling services business continues to be affected by the prolonged decline in global oil and gas prices. In relation to goodwill, the Group is required to perform an annual impairment assessment. The goodwill impairment assessment is considered a key audit matter due to the continuing losses of the drilling services business in recent years and the judgement involved in the assessment of the recoverable amount of the drilling services cash-generating unit by the Group.



o assessed the key assumptions such as revenue, margin and operating costs applied in the discounted cash flow projection prepared by the Group for its goodwill impairment assessment by collaborating key market related assumptions to external data and approved budgets to contracts secured and historical performance;

o engaged our valuation specialist when considering the appropriateness of the discount rates applied in the discounted cash flow projection;

o assessed the sensitivity of key inputs to the impairment assessment in order to understand the impact of a reasonably possible change in key assumptions on the overall assessment; and


214 Scomi Group Bhd


Company No. 571212-A Scomi Group Bhd.Independent Auditors’ Report for the

Financial Period Ended 30 June 2019



How the matter was addressed in our audit (continued)

o considered the adequacy of the Group’s disclosures in relation to the goodwill impairment assessment.

iii) Valuation of marine vessels

Refer to Note 2(d) – Significant accounting policy: Property, plant and equipment and Note 3 – Property, plant and equipment.


At 30 June 2019, included in the Group’s property, plant and equipment was the carrying amount of marine vessels of RM192.2 million. The marine services sector continues to be affected by the prolonged decline in global oil and gas prices in recent years. This is an indication that the carrying amount of marine vessels may be impaired.

The Group estimates the recoverable amount of the marine vessels based on the discounted cash flow projections and/or by relying on external valuation reports.

How the matter was addressed in our audit We performed the following audit procedures, among others:

o assessed the key assumptions such as revenue, terminal growth rate and discount rate applied in the discounted cash flow projections prepared by the Group for its marine vessel impairment assessment by collaborating key market related assumptions to external data and approved budget to contracts secured and historical performance;

o assessed the sensitivity of key inputs to the impairment assessment in order to understand the impact of a reasonably possible change in key assumptions on the overall assessment;

o assessed the competency, credentials and objectivity of the external valuation expert engaged by the Group; and

o considered the adequacy of the Group’s disclosure in relation to the marine vessels impairment assessment.




iv) Valuation of investment in subsidiaries (Company level)

Refer to Note 2(a)(i) – Significant accounting policy: Subsidiaries and Note 6 –Investments in subsidiaries.


As at 30 June 2019, the Company has an investment in subsidiaries of RM332.9 million which is mainly related to investment in Scomi Energy Services Bhd. The subsidiary had incurred group operating losses in recent years, which has increased the risk that the carrying amount of the investment might exceed its recoverable amount.

Directors use discounted cash flows to determine the recoverable amount of the investment in subsidiaries. Significant judgement and assumptions are used in determining the recoverable amount.



o assessed the key assumptions such as revenue, margin and operating costs applied in the discounted cash flow projection prepared by the Group for its investment in subsidiaries impairment assessment by collaborating key market related assumptions to external data and the approved budgets to contracts secured and historical performance;

o engaged our valuation specialist when considering the appropriateness of the discount rates applied in the discounted cash flow projection; and

o assessed the sensitivity of key inputs to the impairment assessment in order to understand the impact of a reasonably possible change in key assumptions on the overall assessment.






iv) Valuation of investment in subsidiaries (Company level)

Refer to Note 2(a)(i) – Significant accounting policy: Subsidiaries and Note 6 –Investments in subsidiaries.


As at 30 June 2019, the Company has an investment in subsidiaries of RM332.9 million which is mainly related to investment in Scomi Energy Services Bhd. The subsidiary had incurred group operating losses in recent years, which has increased the risk that the carrying amount of the investment might exceed its recoverable amount.

Directors use discounted cash flows to determine the recoverable amount of the investment in subsidiaries. Significant judgement and assumptions are used in determining the recoverable amount.



o assessed the key assumptions such as revenue, margin and operating costs applied in the discounted cash flow projection prepared by the Group for its investment in subsidiaries impairment assessment by collaborating key market related assumptions to external data and the approved budgets to contracts secured and historical performance;

o engaged our valuation specialist when considering the appropriateness of the discount rates applied in the discounted cash flow projection; and

o assessed the sensitivity of key inputs to the impairment assessment in order to understand the impact of a reasonably possible change in key assumptions on the overall assessment.


216 Scomi Group Bhd



Information Other than the Financial Statements and Auditors’ Report Thereon

The Directors of the Company are responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon.

Our opinion on the financial statements of the Group and of the Company does not cover the Annual Report and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the Annual Report and, in doing so, consider whether the Annual Report is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of the Annual Report, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial Statements

The Directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the ability of the Group and of the Company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.




Auditors’ Responsibilities for the Audit of the Financial Statements (continued)

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit 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 internal control of the Group and of the Company.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group or of the Company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or the Company to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that gives a true and fair view.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.







As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit 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 internal control of the Group and of the Company.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group or of the Company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or the Company to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that gives a true and fair view.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.


218 Scomi Group Bhd




From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our auditors’ report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act 2016 in Malaysia, we report that the subsidiaries of which we have not acted as auditors are disclosed in Note 6 to the financial statement.

In addition, we report to you that the Company has not kept proper accounting records of certain subsidiaries and we have not received all the information and explanations we require for our audit as highlighted under the Basis for Qualified Opinion.

Other Matter

This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

KPMG PLT Chua See GuanLLP0010081-LCA & AF 0758 Approval Number: 03169/02/2021 J Chartered Accountants Chartered Accountant

Petaling Jaya, Selangor



Appendix

Directors of subsidiary companies of the Company

The list of directors who served on the boards of the *subsidiary companies of the Company during the financial period until the date of the Directors’ Report is set out below.

Name of Subsidiary Company Name of DirectorScomi Energy Services Bhd. Dato’ Sri Meer Sadik bin Habib Mohamed

Lee Chun FaiDato’ Jamelah binti JamaluddinRavinder Singh Grewal A/L Sarbjit SinghShah Hakim @ Shahzanim bin ZainStephen Fredrick BrackerDr Ir Jeyanthi a/p RamasamyRuziah binti Mohd AminSammy Tse Kwok Fai

Scomi Solutions Sdn. Bhd. Rohaida binti Ali BadaruddinScomi Chemicals Sdn. Bhd. Rohaida binti Ali Badaruddin

Zubaidi bin HarunScomi Precision Engineering Sdn. Bhd. Mukhnizam bin MahmudGlobal Learning and Development Sdn. Bhd. Rohaida binti Ali Badaruddin

Azah binti OthmanScomi Energy Sdn. Bhd. Rohaida binti Ali Badaruddin

Mukhnizam bin MahmudScomi Enviro Sdn. Bhd. Mukhnizam bin MahmudScomi OBM Terminal Sdn. Bhd. Kanesan A/L Veluppillai

Shah Hakim @ Shahzanim bin ZainScomi International Pte. Ltd. Mukhnizam bin Mahmud

Shah Hakim @ Shahzanim bin ZainDato’ Sreesanthan A/L EliathambyLee Chun FaiManoj MohankaTatang Tabrani

Scomi KMC Sdn. Bhd. Aminuddin bin Omar AzaddinHilmy Zaini bin Zainal

Scomi Sosma Sdn. Bhd. Hilmy Zaini bin ZainalZubaidi bin Harun

Trans Advantage Sdn. Bhd. Mukhnizam bin MahmudAbu Zaharoff bin Abu Bakar

* This is referring to the subsidiary undertakings included in the consolidated financial statements for the financial period pursuant to Section 253 (2)(b) of Companies Act 2016.




Appendix

Directors of subsidiary companies of the Company

The list of directors who served on the boards of the *subsidiary companies of the Company during the financial period until the date of the Directors’ Report is set out below.

Name of Subsidiary Company Name of DirectorScomi Energy Services Bhd. Dato’ Sri Meer Sadik bin Habib Mohamed

Lee Chun FaiDato’ Jamelah binti JamaluddinRavinder Singh Grewal A/L Sarbjit SinghShah Hakim @ Shahzanim bin ZainStephen Fredrick BrackerDr Ir Jeyanthi a/p RamasamyRuziah binti Mohd AminSammy Tse Kwok Fai

Scomi Solutions Sdn. Bhd. Rohaida binti Ali BadaruddinScomi Chemicals Sdn. Bhd. Rohaida binti Ali Badaruddin

Zubaidi bin HarunScomi Precision Engineering Sdn. Bhd. Mukhnizam bin MahmudGlobal Learning and Development Sdn. Bhd. Rohaida binti Ali Badaruddin

Azah binti OthmanScomi Energy Sdn. Bhd. Rohaida binti Ali Badaruddin

Mukhnizam bin MahmudScomi Enviro Sdn. Bhd. Mukhnizam bin MahmudScomi OBM Terminal Sdn. Bhd. Kanesan A/L Veluppillai

Shah Hakim @ Shahzanim bin ZainScomi International Pte. Ltd. Mukhnizam bin Mahmud

Shah Hakim @ Shahzanim bin ZainDato’ Sreesanthan A/L EliathambyLee Chun FaiManoj MohankaTatang Tabrani

Scomi KMC Sdn. Bhd. Aminuddin bin Omar AzaddinHilmy Zaini bin Zainal

Scomi Sosma Sdn. Bhd. Hilmy Zaini bin ZainalZubaidi bin Harun

Trans Advantage Sdn. Bhd. Mukhnizam bin MahmudAbu Zaharoff bin Abu Bakar

* This is referring to the subsidiary undertakings included in the consolidated financial statements for the financial period pursuant to Section 253 (2)(b) of Companies Act 2016.

Appendix

220 Scomi Group Bhd


Appendix (continued)

Directors of subsidiary companies of the Company (continued)

Name of Subsidiary Company Name of DirectorScomi Marine Services Pte. Ltd. Mukhnizam bin Mahmud

Tan Hoon GeeShah Hakim @ Shahzanim bin ZainRohaida binti Badaruddin

Scomi D&P Sdn. Bhd. Shah Hakim @ Shahzanim bin ZainMukhnizam bin Mahmud

Scomi Oilfield Limited (Bermuda) Aminuddin Yusof LanaShah Hakim @ Shahzanim bin ZainTatang Tabrani

Scomi Oiltools Sdn. Bhd. Hilmy Zaini bin ZainalZubaidi bin Harun

KMCOB Capital Berhad Shah Hakim @ Shahzanim bin ZainMukhnizam bin Mahmud

Scomi Oiltools (Cayman) Ltd Shah Hakim @ Shahzanim bin ZainRamesh Veetikat Ramachandran

Scomi Oiltools (Africa) Limited Hilmy Zaini bin ZainalRamesh Veetikat Ramachandran

Scomi Oiltools (Thailand) Ltd Hilmy Zaini bin ZainalRamesh Veetikat RamachandranMonntri Bunprasit




Name of Subsidiary Company Name of DirectorScomi Oiltools Oman LLC Authorised Managers

Michael George FieldingRamesh Veetikat RamachandranNorasazly bin Mohd TahaMuhammad Farook (power limited to

Administrative and Technical only)Khalid Muhammad Alizubair AlzubairRashad Muhammad Alizubair Alzubair

Scomi Oiltools Pty Ltd Hilmy Zaini bin ZainalIan Duncan CrabbNicholas Harold Doust

PT Rig Tenders Indonesia Tbk CommissionersTatang TabraniMohammad Faisal IbrahimShah Hakim @ Shahzanim bin ZainSyed Abdullah bin Syed Abd KadirHilmy Zaini bin ZainalDirectorsAbdul Rahman AbbasMukhnizam bin MahmudMastura binti Mansor

Scomi Anticor S.A.S Ramesh Veetikat RamachandranJessie ChanDaniel Bertrand

Wasco Oil Service Company Nigeria Limited Chief Samuel Odu EzediaroHilmy Zaini bin ZainalRamesh Veetikat Ramachandran

KMC Oiltools India Private Limited Pradip Kumar SinhaHilmy Zaini bin Zainal

PT Scomi Oiltools Erwin AriyantoMastura Binti MansorHilmy Zaini bin Zainal

Scomi Oiltools (RUS) Limited Liability Hilmy Zaini bin ZainalCompany Mukhnizam bin Mahmud

Rig Tenders Marine Pte Ltd Mukhnizam Bin MahmudTan Hoon Gee

Appendix





Name of Subsidiary Company Name of DirectorScomi Oiltools Oman LLC Authorised Managers

Michael George FieldingRamesh Veetikat RamachandranNorasazly bin Mohd TahaMuhammad Farook (power limited to

Administrative and Technical only)Khalid Muhammad Alizubair AlzubairRashad Muhammad Alizubair Alzubair

Scomi Oiltools Pty Ltd Hilmy Zaini bin ZainalIan Duncan CrabbNicholas Harold Doust

PT Rig Tenders Indonesia Tbk CommissionersTatang TabraniMohammad Faisal IbrahimShah Hakim @ Shahzanim bin ZainSyed Abdullah bin Syed Abd KadirHilmy Zaini bin ZainalDirectorsAbdul Rahman AbbasMukhnizam bin MahmudMastura binti Mansor

Scomi Anticor S.A.S Ramesh Veetikat RamachandranJessie ChanDaniel Bertrand

Wasco Oil Service Company Nigeria Limited Chief Samuel Odu EzediaroHilmy Zaini bin ZainalRamesh Veetikat Ramachandran

KMC Oiltools India Private Limited Pradip Kumar SinhaHilmy Zaini bin Zainal

PT Scomi Oiltools Erwin AriyantoMastura Binti MansorHilmy Zaini bin Zainal

Scomi Oiltools (RUS) Limited Liability Hilmy Zaini bin ZainalCompany Mukhnizam bin Mahmud

Rig Tenders Marine Pte Ltd Mukhnizam Bin MahmudTan Hoon Gee

Appendix

222 Scomi Group Bhd




Name of Subsidiary Company Name of DirectorCH Logistics Pte Ltd Shah Hakim @ Shahzanim bin Zain

Mukhnizam Bin MahmudTan Hoon Gee

CH Ship Management Pte Ltd Shah Hakim @ Shahzanim bin ZainMukhnizam bin MahmudTan Hoon Gee

Grundtvig Marine Pte Ltd Kanesan A/L VeluppillaiMukhnizam Bin MahmudTan Hoon Gee

PT Batuah Abadi Lines Hilmy Zaini bin ZainalAbdul Hadi (Indonesian)

Scomi Engineering Bhd. (appointed Judicial Managers)#

Shah Hakim @ Shahzanim bin Zain

Kanesan A/L VeluppillaiScomi Trading Sdn. Bhd.# Rohaida binti Ali Badaruddin

Zubaidi bin HarunScomi Transportation Systems Sdn. Bhd.# Rohaida binti Ali Badaruddin

Zubaidi bin HarunScomi Coach Marketing Sdn. Bhd.# Rohaida binti Ali Badaruddin

Zubaidi bin HarunScomi Coach Sdn. Bhd.# Rohaida binti Ali Badaruddin

Zubaidi bin HarunScomi Rail Bhd.(appointed receiver and manager)#

Rohaida binti Ali Badaruddin

Zubaidi bin HarunScomi Special Vehicles Sdn. Bhd.(in winding

up by the Court)#Rohaida binti Ali Badaruddin

Zubaidi bin HarunScomi Transit Projects Brazil Sdn. Bhd.# Rohaida binti Ali Badaruddin

L. Joseph Nixon A/L S. Lourdesamy




Name of Subsidiary Company Name of DirectorScomi Transit Projects Brazil (Sao Paulo) Sdn. Rohaida binti Ali Badaruddin

Bhd.# L. Joseph Nixon A/L S. LourdesamyScomi Transit Projects Sdn. Bhd.# Rohaida binti Ali Badaruddin

L. Joseph Nixon A/L S. LourdesamyUrban Transit Servicos Do Brazil LTDA # Karalyn RachelUrban Transit Private Limited (India) Kanesan A/L Veluppillai

Stanislaus Roshan AnthonysamyQuark Fabricacao De Equipamentos Hilmy Zaini bin Zainal

Ferroviarios E Servicos De Engenharia Karalyn Rachel Kenton MoreiraLTDA (Brazil) # Halan Lemos Moreira

Scomi Ecosolve Limited (BVI) Shah Hakim @ Shahzanim bin ZainMidgard Oilfield Services Ltd. – Pakistan(Branch) (formerly known as Scomi Oiltools Ltd.)

Hilmy Zaini bin ZainalRamesh Veetikat Ramachandran

Scomi Oiltools Bermuda Limited (Bermuda) Mukhnizam bin MahmudScomi Oiltools Overseas (M) Limited Mukhnizam bin MahmudScomi Oiltools (Europe) Ltd (Scotland) Stephen Fredrick BrackerScomi Oiltools Inc (Texas, USA) Abu Zaharoff bin Abu Bakar

Michael Kent WalkerScomi Oiltools de Mexico RL de CV (Mexico) Stephen Fredrick Bracker

Michael Kent WalkerKMC Oiltools Algerie EURL (Algeria) John McDonaldOilfield Services de Mexico S de RL de CV Stephen Fredrick Bracker

(Mexico) Michael Kent WalkerScomi Equipment Inc. (Texas, USA) Stephen Fredrick Bracker

Nicholas Harold Doust PT Inti Jatam Pura Dick Sadikin Sapi’ie

Mastura binti MansorPT Multi Jaya Persada Dick Sadikin Sapi’ie

Mastura binti MansorRig Tenders Offshore Pte Ltd Shah Hakim @ Shahzanim bin Zain

Sean Lee Yun FengScomi Oiltools (S) Pte Ltd (Singapore) Mukhnizam bin Mahmud

Tan Hoon Gee

Appendix





Name of Subsidiary Company Name of DirectorScomi Transit Projects Brazil (Sao Paulo) Sdn. Rohaida binti Ali Badaruddin

Bhd.# L. Joseph Nixon A/L S. LourdesamyScomi Transit Projects Sdn. Bhd.# Rohaida binti Ali Badaruddin

L. Joseph Nixon A/L S. LourdesamyUrban Transit Servicos Do Brazil LTDA # Karalyn RachelUrban Transit Private Limited (India) Kanesan A/L Veluppillai

Stanislaus Roshan AnthonysamyQuark Fabricacao De Equipamentos Hilmy Zaini bin Zainal

Ferroviarios E Servicos De Engenharia Karalyn Rachel Kenton MoreiraLTDA (Brazil) # Halan Lemos Moreira

Scomi Ecosolve Limited (BVI) Shah Hakim @ Shahzanim bin ZainMidgard Oilfield Services Ltd. – Pakistan(Branch) (formerly known as Scomi Oiltools Ltd.)

Hilmy Zaini bin ZainalRamesh Veetikat Ramachandran

Scomi Oiltools Bermuda Limited (Bermuda) Mukhnizam bin MahmudScomi Oiltools Overseas (M) Limited Mukhnizam bin MahmudScomi Oiltools (Europe) Ltd (Scotland) Stephen Fredrick BrackerScomi Oiltools Inc (Texas, USA) Abu Zaharoff bin Abu Bakar

Michael Kent WalkerScomi Oiltools de Mexico RL de CV (Mexico) Stephen Fredrick Bracker

Michael Kent WalkerKMC Oiltools Algerie EURL (Algeria) John McDonaldOilfield Services de Mexico S de RL de CV Stephen Fredrick Bracker

(Mexico) Michael Kent WalkerScomi Equipment Inc. (Texas, USA) Stephen Fredrick Bracker

Nicholas Harold Doust PT Inti Jatam Pura Dick Sadikin Sapi’ie

Mastura binti MansorPT Multi Jaya Persada Dick Sadikin Sapi’ie

Mastura binti MansorRig Tenders Offshore Pte Ltd Shah Hakim @ Shahzanim bin Zain

Sean Lee Yun FengScomi Oiltools (S) Pte Ltd (Singapore) Mukhnizam bin Mahmud

Tan Hoon Gee

Appendix

224 Scomi Group Bhd

Appendix Draft – for discussion purposes and subject to final amendments 177

Company No. 571212-A Appendix (continued) Directors of subsidiary companies of the Company (continued) Name of Subsidiary Company Name of Director

Scomi Oiltools Egypt S.A.E Amira Saad Zaghloul Muhammad Asri bin Omar Norasazly bin Mohd Taha

Scomi Argentina Sociedad Anonima Osmar Ely (Netherlands) Julio Cesar Pulisich

KMC Oiltools BV (Netherlands) (in Liquidation) Stephen Fredrick Bracker Orangefield (Netherlands) B.V.

Gemini Sprint Sdn Bhd Mukhnizam bin Mahmud Heath Andrew McIntyre Hilmy Zaini bin Zainal Wong Soo Pin

MarineCo Limited Mukhnizam bin Mahmud Heath Andrew MycIntyre Ramesh Veetikat Ramachandran Wong Soo Pin

Sosma (B) Sdn Bhd Azmin bin Othman Haji Amran bin Haji Md. Said

# These subsidiaries’ income and expenses were included in consolidated financial

statements until the Company ceases to control the subsidiary as disclosed in Note 2.


11

Total number of issued shares : 1,093,907,460 ordinary shares

Class of shares : Ordinary shares

Voting rights : One vote per ordinary share

No. of shareholders : 20,035

Distribution of Shareholdings as at 30 September 2019

Size of shareholding Shareholder Shareholding

No. of Shareholders % No. of Shares Held %

Less than 100 651 3.25 22,906 Negligible 100 to 1,000 3,311 16.53 2,180,036 0.20 1,001 to 10,000 9,466 47.25 45,523,826 4.16 10,001 to 100,000 5,613 28.02 192,917,018 17.64 100,001 to less than 5% of issued shares 993 4.96 619,271,809 56.61 5% and above of issued shares 1 Negligible 233,991,865 21.39

Total: 20,035 100.00 1,093,907,460 100.00

List of Top Thirty (30) Largest Shareholders as at 30 September 2019

No Name of Shareholder No. of Shares Held %

1. IJM Corporation Berhad 233,991,865 21.39

2. UOBM Nominees (Asing) Sdn Bhd TAEL One Partners Ltd for Amadia Investments Ltd 54,318,700 4.97

3. UOB Kay Hian Nominees (Tempatan) Sdn Bhd Multi-Purpose Credit Sdn Bhd for Kaspadu Sdn Bhd 41,526,527 3.80

4. Kaspadu Sdn Bhd 30,548,315 2.79

5. UOB Kay Hian Nominees (Asing) Sdn Bhd Exempt An for UOB Kay Hian Pte Ltd (A/C Clients) 22,740,240 2.08

6. RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Kaspadu Sdn Bhd (SBSSB 1311005) 13,500,000 1.23

7. Bara Aktif Sdn Bhd 12,784,285 1.17

8. Maybank Securities Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Mohamed Faroz Bin Mohamed Jakel (STF) 10,008,100 0.91

9. Public Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Nik Awang @ Wan Azmi bin Wan Hamzah (E-KPG/JRL) 7,857,142 0.72

10. Lim Fong Peng @ Lim Fung Feng 7,246,120 0.66

11. Ler Long Exh 6,420,285 0.59

Analysis of Shareholdings as at 30 September 2019

226 Scomi Group Bhd

List of Top Thirty (30) Largest Shareholders as at 30 September 2019

No Name of Shareholder No. of Shares Held %

12. HSBC Nominees (Asing) Sdn Bhd Exempt An for Bank Julius Baer & Co. Ltd. (Singapore Bch) 6,082,500 0.56

13. Rhakjesh Paaren A/L Balakrisnen 5,852,400 0.54

14. Maybank Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Ong Eng Hock 5,700,000 0.52

15. Mohammed Feroz Bin Mohammed Ilyas 5,000,000 0.46

16. Public Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Au Kwan Seng (E-KLC) 5,000,000 0.46

17. UOBM Nominees (Tempatan) Sdn Bhd TOIC Investments Ltd for Zubaidi bin Harun 4,985,000 0.46

18. Citigroup Nominees (Asing) Sdn Bhd Exempt An for OCBC Securities Private Limited (Client A/C – NR) 4,764,428 0.44

19. Sng Beng Hock Michael 4,250,000 0.39

20. CIMB Group Nominees (Asing) Sdn. Bhd. Exempt An for DBS Bank Ltd (SFS) 4,150,000 0.38

21. Yap Kin Choong 4,040,000 0.37

22. Maybank Securities Nominees (Asing) Sdn Bhd Exempt An for Maybank Kim Eng Securities Pte Ltd (A/C 648849) 3,800,000 0.35

23. Public Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Sin Huan Kwang (E-TWU) 3,650,000 0.33

24. Low Chu Mooi 3,573,571 0.33

25. Au Yong Mun Yue 3,500,000 0.32

26. Ong Yew Beng 3,400,000 0.31

27. Lim Kim Hua 3,099,000 0.28

28. Public Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Koh Ah Hai (E-TSA) 2,951,000 0.27

29. Harbans Kaur A/P Bakh Singh 2,600,000 0.24

30. Rentak Rimbun Sdn Bhd 2,588,857 0.24



Shareholding of Substantial Shareholders as at 30 September 2019

Name of Shareholder Direct Indirect

No. of Shares Held % No. of Shares Held %

IJM Corporation Berhad 233,991,865 21.39 - -

Kaspadu Sdn Bhd 85,574,842(1) 7.82 562,670(2) 0.05

Shah Hakim @ Shahzanim Bin Zain 1,865,049(3) 0.17 88,726,369(4) 8.11

Tan Sri Dato’ Kamaluddin Bin Abdullah - - 86,137,512(5) 7.87

Amadia Investments Ltd 75,818,700(6) 6.93 - -

TAEL One Partners Ltd (acting in its capacity as the general partner of The Asian Entrepreneur LegacyOne, L.P.) (the “Fund”) - - 75,818,700(7) 6.93

United Overseas Bank Limited - - 75,818,700(8) 6.93

Notes:

(1) 55,026,527 shares held through RHB Capital Nominees (Tempatan) Sdn Bhd and UOB Kay Hian Nominees (Tempatan) Sdn Bhd.(2) Deemed interested by virtue of Section 8(4) of the Companies Act 2016 through its shareholding in Onstream Marine Sdn Bhd.(3) 886,214 shares held through Maybank Securities Nominees (Tempatan) Sdn Bhd pledged Securities Account

for Shah Hakim @ Shahzanim Bin Zain (Margin) and Maybank Nominees (Tempatan) Sdn Bhd pledged Securities Account for Shah Hakim @ Shahzanim Bin Zain.

(4) Deemed interested by virtue of Section 8(4) of the Companies Act 2016 through his shareholding in Kaspadu Sdn Bhd, Rentak Rimbun Sdn Bhd and Onstream Sdn Bhd.(5) Deemed interested by virtue of Section 8(4) of the Companies Act 2016 through his shareholding in Kaspadu Sdn Bhd.(6) Held through UOBM Nominees (Asing) Sdn Bhd for TAEL One Partners Ltd for Amadia Investments Ltd and HLG Nominees (Asing) Sdn Bhd Exempt An for UOB Kay Hian Pte Ltd (A/C Clients).(7) Deemed interested by virtue of Section 8(4) of the Companies Act 2016. Amadia Investments Ltd is an investment vehicle of the Fund.(8) Deemed interested by virtue of its investment in the Fund.


228 Scomi Group Bhd

Shareholding of Directors as at 30 September 2019



Scomi Group Bhd

Dato’ Sreesanthan A/L Eliathamby - - - -

Foong Choong Hong 205,000 0.02 - -

Lee Chun Fai - - - -

Liew Willip - - - -

Shah Hakim @ Shahzanim Bin Zain 1,865,049(1) 0.17 88,726,369(2) 8.11

Sammy Tse Kwok Fai 1,000 # - -

Related Companies- Scomi Energy Services Bhd



Shah Hakim @ Shahzanim Bin Zain 2,108,000(3) 0.09 56,900(4) #

Notes:# Negligible.(1) 886,214 shares held through Maybank Securities Nominees (Tempatan) Sdn Bhd pledged Securities Account

for Shah Hakim @ Shahzanim Bin Zain (Margin) and Maybank Nominees (Tempatan) Sdn Bhd pledged Securities Account for Shah Hakim @ Shahzanim Bin Zain.

(2) Deemed interested by virtue of Section 8(4) of the Companies Act 2016 through his shareholding in Kaspadu Sdn Bhd and Rentak Rimbun Sdn Bhd.(3) Held through Maybank Securities Nominees (Tempatan) Sdn Bhd pledged Securities Account for Shah Hakim @ Shahzanim Bin Zain (Margin).(4) Deemed interested by virtue of Section 8(4) of the Companies Act, 2016 through his shareholding in Rentak Rimbun Sdn Bhd.



Total number of warrants issued : 491,279,410 warrants

No. of warrants outstanding : 491,279,410 warrants

Exercise price of warrants : RM0.21

Expiry date of warrants : 18 February 2023

Distribution of warrant holdings as at 30 September 2019

List of Top Thirty (30) Largest Warrant Holders as at 30 September 2019

No Name of Warrantholders No. of Warrantholdings %

1 IJM Corporation Berhad 116,996,768 23.81 2 UOBM Nominees (Asing) Sdn Bhd 27,159,350 5.53 TAEL One Partners Ltd for Amadia Investments Ltd 3 UOB Kay Hian Nominees (Tempatan) Sdn Bhd 20,763,263 4.23 Multi-Purpose Credit Sdn Bhd for Kaspadu Sdn Bhd 4 Kaspadu Sdn Bhd 15,274,157 3.11

5 UOB Kay Hian Nominees (Asing) Sdn Bhd 11,098,927 2.26 Exempt An for UOB Kay Hian Pte Ltd (A/C Clients) 6 Teh Kai Sing 6,992,857 1.42

7 RHB Capital Nominees (Tempatan) Sdn Bhd 6,750,000 1.37 Pledged Securities Account For Kaspadu Sdn Bhd (Sbssb1311005) 8 RHB Capital Nominees (Tempatan) Sdn Bhd 4,000,000 0.81 Lee Leong Lai (T-471274) 9 SJ Sec Nominees (Tempatan) Sdn Bhd 3,850,000 0.78 Pledged Securities Account for In Fwn Sin (SMT) 10 Lim Fong Peng @ Lim Fung Feng 3,623,060 0.74

Size of Warrant Holdings Warrant Holder Warrant Holding

No. of Holders % No. of Holdings %

Less than 100 1,142 6.11 36,694 0.01

100 to 1,000 5,502 29.45 2,725,576 0.55

1,001 to 10,000 8,969 48.00 32,781,210 6.67

10,001 to 100,000 2,634 14.10 80,687, 617 16.42

100,001 to less than 5% of issued shares 435 2.33 230,892,195 47.00

5% and above of issued shares 2 0.01 144,156,118 29.34

Total: 18,684 100.00 491,279,410 100.00

Analysis of Warrant Holdings as at 30 September 2019

230 Scomi Group Bhd

List of Top Thirty (30) Largest Warrant Holders as at 30 September 2019

No Name of Warrantholders No. of Shares Held %

11 Citigroup Nominees (Asing) Sdn Bhd 3,127,400 0.64 Exempt An for Bank of Singapore Limited (Foreign) 12 Maybank Nominees (Tempatan) Sdn Bhd 3,000,000 0.61 Soh Chong Kim @ So Chong Kim 13 Shah Aref Bin Sairi 3,000,000 0.61 14 UOBM Nominees (Tempatan) Sdn Bhd 2,492,500 0.51 TOIC Investments Ltd for Zubaidi bin Harun 15 CGS-CIMB Nominees (Tempatan) Sdn Bhd 2,317,000 0.47 Pledged Securities Account for Retnarasa A/L Annarasa (MY2355) 16 Kenanga Nominees (Tempatan) Sdn Bhd 2,200,000 0.45 Rakuten Trade Sdn Bhd for Goh Sew Wah 17 Wan Zulkifli bin Wan Abdullah 2,150,000 0.44 18 Sng Beng Hock Michael 2,125,000 0.43 19 Maybank Securities Nominees (Asing) Sdn Bhd 1,900,000 0.39 Exempt An for Maybank Kim Eng Securities Pte Ltd (A/C 648849) 20 Yeoh Sooi Bar 1,837,000 0.37 21 Tang Kim Hong 1,700,000 0.35 22 Ler Long Exh 1,662,028 0.34 2 3 Soh Chong Kim @ So Chong Kim 1,500,000 0.31 24 Lim Keng Chuan 1,450,714 0.30 25 Lee Sok Ee 1,433,400 0.29 26 Peter Leong Fui Kian 1,347,500 0.27 27 Bara Aktif Sdn Bhd 1,278,428 0.26 28 UOBM Nominees (Tempatan) Sdn Bhd 1,257,500 0.26 TOIC Investments Ltd for Helmy Had Bin Sabtu 29 Mohammad Palino bin Rindau 1,224,000 0.25 30 Syed Mohd Azudin bin Syed Idrus 1,200,000 0.24

Analysis of Warrant Holdings as at 30 September 2019


Tenure of land: Freehold or Approximate Description/ leasehold Audited NBV age of Registered Location (years)/date Land/ as at 30.06.19 buildingNo Owner address Existing use of acquisition Built Up area (RM ‘000) (FY2019)

1 P.T. Rig Land Land for the Freehold Land area: 11.5 n/a Tenders Jl Belitung Darat building as 09.01.2003 190 sq metres Indonesia, No.88 mentioned Built-up area: Tbk Banjarmasin in item 2 n/a 70116

2 P.T. Rig Office building Office Freehold Land area: - 24 years Tenders Jl Belitung Darat building 06.05.1997 n/a Indonesia, No.88 Built-up area: Tbk Banjarmasin 972 sq metres 70116

3 Scomi Master: Land Five storey Freehold Built up area: - 22 years Oiltools held under shop office 31.10.1999 11,755 sq ft Sdn Bhd Geran 46494, Lot 42410 Pekan Cempaka, Daerah Petaling, Negeri Selangor, Malaysia (formerly known as PT 42410 H.S.(D) 135924 part of Geran 35997 Lot 102 Geran 40176 Lot 15386 and Geran 43061 Lot 15386, Mukim of Sungai Buloh Daerah Petaling, Negeri Selangor, Malaysia)

4 Scomi Land and buliding: Office and Freehold Land area: Land and 14 years Energy Geran 58840 warehouse 23.12.2009 1,575m2 building: Services Lot 64254 Building 6,460 Bhd Mukim of area: Damansara 1,795m2

District of Petaling Selangor Darul Ehsan

List of Properties

232 Scomi Group Bhd

CORPORATEMalaysia

Scomi Group Bhd Level 15, Menara TSRNo. 12, Jalan PJU 7/3Mutiara Damansara47810 Petaling JayaSelangor Darul EhsanMalaysia

Scomi Energy Services BhdLevel 15, Menara TSRNo. 12, Jalan PJU 7/3Mutiara Damansara47810 Petaling JayaSelangor Darul EhsanMalaysia

Scomi Oiltools Sdn BhdLevel 15, Menara TSRNo. 12, Jalan PJU 7/3Mutiara Damansara47810 Petaling JayaSelangor Darul EhsanMalaysia

Scomi Sosma Sdn BhdLevel 15, Menara TSRNo. 12, Jalan PJU 7/3Mutiara Damansara47810 Petaling JayaSelangor Darul EhsanMalaysia

OPERATING LOCATIONS

AustraliaScomi Oiltools Pty Ltd15 Boulder Road, Malaga Perth, Western Australia 6090Australia

BrazilUrban Transit Servicos do Brasil LtdaAv Eng Luis Carlos Berrini 1700, 110 AndarCidade Monções 04571-000Sao Paulo, Brasil

CongoOiltools Africa LtdZone Industrielle de la Foire Avenue Jean Marie MavoungouBP 685 Pointe NoireRepublique du Congo

ChinaScomi Oiltools LtdBeijing Representative OfficeRoom A0910, Tower ANorth Star Huibin PlazaNo.8 Beichendonglu RoadChao Yang District, BeijingChina

EgyptOiltools Egypt SAE56 Farida Queen St from Ahmed BadawyMerage - MaadiCairo, Egypt

IndiaKMC Oiltools India Pvt. LtdUnit No.305, Western Edge II3rd Floor, Near Western Express HighwayBorivali (E), Mumbai 400066MaharashtraIndia

IndonesiaPT Rigtenders Indonesia TBKTetrapack Bld. 1st floor, Jl. Buncit Raya Kav. 100South of JakartaIndonesia

PT Scomi Oiltools Jl.Mulawarman No.155Rt 05, Kelurahan ManggarBalikpapan76116East KalimantanIndonesia

PT Rig Tenders IndonesiaPT Batuah Abadi LinesJl.Belitung Darat No.88Rt 19, BanjarmasinSouth KalimantanIndonesia

PT Scomi OiltoolsJl. Raya Duri Dumai KM 131Duri, PekanbaruSumatra 28884Indonesia

MalaysiaGlobal Research & Technology CentreNo. 9 Jalan Astaka U8/83Seksyen U8, 40150 Shah AlamSelangor Darul EhsanMalaysia

Scomi Oiltools Sdn Bhd (Kemaman)Warehouse 24, Letterbox No.72Kemaman Supply base24007 KemamanTerengganu Darul ImanMalaysia

Scomi Oiltools Sdn Bhd (Labuan)Labuan Integrated BaseLot 205331935, Jalan KinabenuaLetter Box 8202387030 Labuan Federal TerritoryLabuan, Malaysia

Marine Co LimitedLevel 6-D, Main Office TowerFinancial Park, Jalan MerdekaPO Box 8088787018 Labuan Federal TerritoryLabuan, Malaysia

Scomi Oiltools Sdn Bhd (Miri)Lot 2164, 1st Floor Saberkas Commercial CentreJalan Pujut-Lutong98000 Miri, SarawakMalaysia

Scomi SosmaLot 32, Tangjung Kidurong97000 Bintulu, SarawakMalaysia

Corporate Directory


MyanmarScomi Oiltools (Thailand) LtdC/o: Business Suite #4-11Level 4, Sedona Hotel YangonNo.1 Kaba Aye Pagoda RoadYankin Township, YangonMyanmar

NigeriaWasco Oil Service Company Nigeria LTDNo.9 Wharf Road, Before Onne Police StationOnne, Rivers State,Nigeria

OmanScomi Oiltools Oman LLCBuilding 272, Way No 44803, Office No 1104 (2nd Floor)P.O. Box 302, Postal Code 130, AzaibaOman

PakistanScomi Oiltools LTDPlot No. 212, East Service Road,Industrial Area I-10/3IslamabadPakistan

Scomi Oiltools LtdPlot No. A-146SITE, SuperhighwayKarachiPakistan

RussiaScomi Oiltools (Rus)Bld.1, 24/2 Sretenka Str.107045 MoscowRussia

Western Siberia OfficeBld.8, 5 Kuzovatkina Str.628600 NizhnevartovskTyumen RegionRussia

Western Siberia OfficeQuarter 04 Block 01Yugozapadnaya Industrial District628305 Nefteyugansk TownTyumen RegionRussia

Saudi ArabiaScomi Oiltools (Cayman) Ltd803, 8th Floor, Al Jarbou Tower Custodian of the Two Holy Mosque RdAqrabia P.O.Box 31151Al Khobar 31952Saudi Arabia

ThailandScomi Oiltools (Thailand) Ltd21 Floor CTI Tower, 191/45, Ratchadapisek Road, Khet KlongtoeyBangkok 10110Thailand

Scomi Oiltools (Thailand) Ltd163, Moo 6 Tumbol LankrabueAmphur LankrabueKamphaengphet62170 Thailand

Scomi Oiltools (Thailand) Ltd424/9, Moo 6 Songkhla-Koh Yor RoadAmphur Muang, SongkhlaKamphaengphet90100 Thailand

TurkmenistanMidgard Oilfield Services LtdOffice L7, 12th Floor, Berkarar Business Center82, Ataturk (1972) Street744028 AshgabatTurkmenistan

Midgard Oilfield Services Ltd(Turkmenistan Branch)High Road 9 Kilometer745030 HazarTurkmenistan

Midgard Oilfield Services Ltd(Turkmenistan Branch)Petronas Base, Turkmenbashy CityBalkan Region

UAEScomi Oiltools (Cayman) LtdMezzanine Floor M02, Liwa TowerP.O Box 45333, Liwa Street,Abu DhabiUnited Arab Emirates

Scomi Oiltools (Cayman) LtdOilfield Supply Centre, Building B-40, Jebel Ali Free ZoneP.O. Box 1779DubaiUnited Arab Emirates

USAScomi Equipment Inc6607 Theall Road, Houston/ TX 77066,TexasUSA

VietnamScomi Oiltools LtdC/o: 9A, Pham Van NghiThang Nhat wardVung Tau CityVietnam

Corporate Directory

234 Scomi Group Bhd

NOTICE IS HEREBY GIVEN that the 17th Annual General Meeting of SCOMI GROUP BHD (the “Company”) will be held at Persatuan Alumni Universiti Malaya, Lot 10476, Jalan Susur Damansara (Jalan Damansara Lama), Off Jalan Gegambir, 50480 Kuala Lumpur on Thursday, 28 November 2019 at 10.00 a.m. to transact the following business:

AS ORDINARY BUSINESS:

1. To receive the Audited Financial Statements for the financial period ended 30 June 2019 and the Reports of the Directors and Auditors thereon.

2. To re-elect the following Directors who retire by rotation in accordance with Article 82 of the Articles of Association of the Company and who being eligible, have offered themselves for re-election: (i) Dato’ Sreesanthan a/l Eliathamby (ii) Foong Choong Hong

3. To re-elect the following Directors who retire in accordance with Article 89 of the Articles of Association of the Company and who being eligible, have offered themselves for re-election: (i) Dato’ Mohd Shahrom bin Mohamad (ii) Amirul Azhar bin Baharom

4. To approve the payment of Directors’ fees amounting up to RM355,821.20 for Non-Executive Directors in respect of the financial period ended 30 June 2019.

5. To approve the payment of Directors’ benefits payable (excluding Directors’ fees) to Non-Executive Directors up to an amount of RM240,000.00, from 28 November 2019 until the date of the next Annual General Meeting of the Company.

6. To re-appoint Messrs KPMG PLT as Auditors of the Company for the financial year ending 30 June 2020 and to authorise the Directors to fix their remuneration.

AS SPECIAL BUSINESS:

7. Authority for Dato’ Sreesanthan a/l Eliathamby to continue to act in office as an Independent Non-Executive Director

“THAT authority be and is hereby given to Dato’ Sreesanthan a/l Eliathamby who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, to continue in office as an Independent Non-Executive Director of the Company until the conclusion of the next Annual General Meeting in accordance with the Malaysian Code on Corporate Governance 2017.”

8. Authority for the Directors to Issue and Allot Shares pursuant to Sections 75 and 76 of the Companies Act 2016 (the “Act”)

“THAT, subject to the Act, the Articles of Association of the Company and the approvals of the relevant governmental and/or regulatory authorities, where necessary, the Directors be and are hereby authorised, pursuant to Sections 75 and 76 of the Act, to issue and allot shares in the Company, at any time and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit, provided that the aggregate number of new shares to be issued and allotted pursuant to this resolution does not exceed ten percent (10%) of the total number of issued shares of the Company for the time being AND THAT such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”

(Please refer to note 8)

(Ordinary Resolution 1)(Ordinary Resolution 2)

(Ordinary Resolution 3)(Ordinary Resolution 4) (Ordinary Resolution 5)

(Ordinary Resolution 6)

(Ordinary Resolution 7)

(Ordinary Resolution 8)(Please refer

Explanatory Note 9)

(Ordinary Resolution 9)(Please refer

Explanatory Note 10)

Notice of Annual General Meeting


9. Proposed Adoption of the Constitution of the Company

“THAT the existing Memorandum of Association and Articles of Association of the Company be and are hereby deleted in its entirety and that the new Constitution of the Company as set out in the Circular to Shareholders dated 31 October 2019 be and is hereby adopted as the new Constitution of the Company AND THAT the Board of Directors of the Company be and is hereby authorised to assent to any conditions, modifications and/or amendments as may be required by any relevant authorities, and to do all acts and things and take all such steps as may be considered necessary to give full effect to the foregoing.”

10. To transact any other business of the Company for which due notice shall have been given in accordance with the Companies Act 2016 and the Articles of Association of the Company.

By Order of the Board

SIM BEE SIN (MAICSA 7056323)TAI YIT CHAN (MAICSA 7009143)WONG SIEW YEEN (MAICSA 7018749)

Company SecretariesSelangor Darul EhsanDate: 31 October 2019

Notes:

(1) Other than an exempt authorised nominee, a member of the Company entitled to attend and vote at the meeting may appoint a proxy or proxies (but not more than two) to attend and vote on his/her behalf. A proxy may but need not be a member of the Company.

(2) Where a member or an exempt authorised nominee appoints two proxies, the appointments shall be invalid unless he or it specifies the proportion of his or its holding to be represented by each proxy.

(3) Where a member is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, who 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 with ordinary shares standing to the credit of the said Omnibus Account.

(4) The instrument for the appointment of a proxy, in the case of an individual shall be signed by the appointer or his/her attorney duly authorised in writing and in the case of a corporation, either under seal or under the hand of an officer or attorney duly authorised. If no name is inserted in the space for the name of your proxy, the Chairman of the meeting will act as your proxy.

(5) The instrument for the appointment of a proxy must be completed and deposited at the office of the Share Registrar of the Company, Boardroom Share Registrars Sdn Bhd (formerly known as Symphony Share Registrars Sdn Bhd) at 11th Floor, Menara Symphony, No. 5, Jalan Prof. Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya, Selangor Darul Ehsan, Malaysia, not less than forty-eight (48) hours before the time for holding the 17th Annual General Meeting (“AGM”) or any adjournment thereof, and in case of a poll, not less than twenty-four (24) hours before the time appointed for the taking of the poll, and in default, the instrument of proxy shall not be treated as valid.

(6) The lodging of a completed Form of Proxy to the Share Registrar of the Company will not preclude you from attending and voting in person at the meeting should you subsequently wish to do so. Should you subsequently decide to attend and vote in person at the meeting, you are requested to rescind your earlier appointment of proxy(ies), and notify the Share Registrar of the Company as soon as practicable.

(7) For the purpose of determining a member who shall be entitled to attend this 17th AGM, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd in accordance with Articles 57 and 58 of the Articles of Association of the Company and Section 34(1) of the Securities Industry (Central Depositories) Act, 1991, to issue a General Meeting Record of Depositors as at 18 November 2019. Only a depositor whose name appears on the General Meeting Record of Depositors as at 18 November 2019 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his or its behalf.

(Special Resolution)(Please refer

Explanatory Note 11)


236 Scomi Group Bhd

Audited Financial Statements for the financial period ended 30 June 2019 and the Reports of the Directors and Auditors thereon

(8) The Audited Financial Statements under Agenda 1 are laid before the shareholders for discussion only as the provision of Section 340(1)(a) of the the Act, the Audited Financial Statements does not require a formal approval of the shareholders and hence, the matter is not put forward for voting.

Explanatory notes on Special Businesses

(9) Ordinary Resolution 8 - Authority for Dato’ Sreesanthan a/l Eliathamby (“Dato’ Sreesanthan”) to continue to act in office as an Independent Non-Executive Director.

The Board of Directors has via the Nomination and Remuneration Committee conducted an annual performance evaluation and assessment of Dato’ Sreesanthan who has served as Independent Director of the Company for a cumulative term of more than nine (9) years and recommended him to continue to act as Independent Director of the Company based on the following justifications:-

(a) that he fulfils the criteria set out in the definition of “Independent Director” in the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad; (b) that his vast experience and expertise enable the Board to discharge its duties effectively and in a competent manner; (c) that although he has served the Company as Independent Director for a cumulative term of more than nine (9) years, he has at all times acted in the best interest of the Company, providing independent views to the deliberations and decision making of the Board and Board Committees and fully understands and provides critical oversight over the Company’s objective and strategies as well as the business operation of the Company and the Group; (d) that he has proven to be reliable Independent Director with his professionalism, aptitude and business outlook and perspectives, devoted sufficient time and attention to his professional obligations for informed and balanced decision making. He has also exercised due care and diligence during his tenure in the best interest of the Company and the shareholders; and (e) that he has provided confirmation in writing that he is independent of the Management, the Board and major shareholders and are free from any business or other relationship which could interfere with the exercise of independent judgment or the ability to act in the best interests of the Company and the Group.

(10) Ordinary Resolution 9 - Proposed renewal of the authority for Directors to issue and allot shares

The ordinary resolution 9 above is proposed for the purpose of granting a renewed general mandate for issuance and allotment of shares by the Company under Sections 75 and 76 of the Act, and if passed, will give the Directors the authority, from the date of the 17th AGM, to issue and allot shares in the Company at any time up to an aggregate amount not exceeding ten percent (10%) of the total number of issued share of the Company for such purposes as the Directors may deem fit and in the interest of the Company (“Share Mandate”).

This Share Mandate, unless revoked or varied at a General Meeting, will expire at the conclusion of the next AGM of the Company. With this Share Mandate, the Company will have the flexibility to undertake any possible fund raising activities, including but not limited to further placing of shares, for any purpose, including funding future investment project(s), working capital and/or acquisition(s) without convening a General Meeting, which may delay the capital raising initiatives and incur relevant costs in organising the required General Meeting.

The Company had, during its 16th AGM held on 24 August 2018, obtained shareholders’ approval for the general mandate for issuance of shares pursuant to Sections 75 and 76 of the Act. As at the date of this notice, the Company has not issued any new shares under the Share Mandate which was approved at the 16th AGM held on 24 August 2018 and which will lapse at the conclusion of the 17th AGM.

(11) Special Resolution – Proposed adoption of the Constitution of the Company

The Special Resolution, if passed, will align the Constitution of the Company with the Act, the MMLR of Bursa Malaysia Securities Berhad and prevailing statutory and regulatory requirements as well as to render clarity and consistency throughout. Details of which as set out in the Circular to Shareholders dated 31 October 2019.



Abstention from voting

(12) The interested Directors of the Company who are shareholders of the Company will abstain from voting on the relevant resolutions in respect of their re-election as the Directors of the Company at the 17th AGM.

(13) All the Non-Executive Directors (“NEDs”) of the Company who are shareholders of the Company will abstain from voting on Ordinary Resolutions 5 and 6 concerning remuneration to the NEDs at the 17th AGM.

Personal data privacy

(14) By lodging of a completed Form of Proxy to the Share Registrar of the Company for appointing a proxy(ies) and/or representative(s) to attend and vote in person at the 17th AGM and any adjournment thereof, a member of the Company is hereby:

(i) consenting to the collection, use and disclosure of the member’s personal data by the Company (or its agents) for the purpose of the processing and administration by the Company (or its agents) of proxies and representatives appointed for the 17th AGM (including any adjournment thereof) and the preparation and compilation of the attendance list, minutes and other documents relating to the 17th

AGM (including any adjournment thereof), and in order for the Company (or its agents) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”);

(ii) warranting that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal data of such proxy(ies) and/or representative(s) for the Purposes (“Warranty”); and

(iii) agreeing that the member will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of the Warranty.

For the purposes of this paragraph, “personal data” shall have the same meaning given in section 4 of the Personal Data Protection Act 2010.


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Form of Proxy

SCOMI GROUP BHDCompany No: 200201003549 (571212-A)Registered Office: Level 15, Menara TSR, No. 12, Jalan PJU 7/3Mutiara Damansara, 47810 Petaling JayaSelangor Darul Ehsan, Malaysia

I/We NRIC No / Company No (Full name as per NRIC/Certificate of Incorporation in capital letters)

of (Full address)

being a member of Scomi Group Bhd, hereby appoint (Full name as per NRIC/Passport and NRIC/Passport No)

of (Full address)

or failing him/her

(Full name as per NRIC/Passport and NRIC/Passport No)

of (Full address)or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the 17th Annual General Meeting of Scomi Group Bhd (the “Company”) to be held at Persatuan Alumni Universiti Malaya, Lot 10476, Jalan Susur Damansara (Jalan Damansara Lama), Off Jalan Gegambir, 50480 Kuala Lumpur on Thursday, 28 November 2019 at 10.00 a.m., or any adjournment thereof.

Ordinary Business For Against

Special Business For Against

Proposed Adoption of the Constitution of the Company

Please indicate with a check mark (“ ”) in the space provided to show how you wish your vote to be cast. If no specific direction as to voting is given, the proxy will vote or abstain at his/her discretion.

Dated this ____________________ day of _____________ 2019 Signature/Seal _____________________

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2

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4

5

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To re-elect Dato’ Sreesanthan a/l Eliathamby as Director

To re-elect Mr Foong Choong Hong as Director

To re-elect Dato’ Mohd Shahrom bin Mohamad as Director

To re-elect Encik Amirul Azhar bin Baharom as Director

To approve the payment of Directors’ fees amounting to RM355,821.20 for Non-Executive Directors in respect of the financial period ended 30 June 2019.

To approve the payment of Directors’ remuneration (excluding Directors’ fees) to Non-Executive Directors up to an amount of RM240,000.00, from 28 November 2019 until the date of the next Annual General Meeting of the Company.

To re-appoint Messrs KPMG PLT as Auditors of the Company for the financial year ending 30 June 2020 and to authorise the Directors to fix their remuneration.

Authority for Dato’ Sreesanthan a/l Eliathamby to continue to act in office as an Independent Non-Executive Director

Authority for the Directors to Issue and Allot Shares pursuant to Sections 75 and 76 of the Companies Act 2016

CDS Account No.

No. of Ordinary Shares Held

Notes:(1) Other than an exempt authorised nominee, a member of the Company entitled to attend and vote at the meeting may appoint a proxy or proxies (but not more than two) to attend and vote on his/her behalf. A proxy may but need not be a member of the Company.(2) Where a member or an exempt authorised nominee appoints two proxies, the appointments shall be invalid unless he or it specifies the proportion of his or its holding to be represented by each proxy.(3) Where a member is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, who 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 with ordinary shares standing to the credit of the said Omnibus Account.(4) The instrument for the appointment of a proxy, in the case of an individual shall be signed by the appointer or his/her attorney duly authorised in writing and in the case of a corporation, either under seal or under the hand of an officer or attorney duly authorised. If no name is inserted in the space for the name of your proxy, the Chairman of the meeting will act as your proxy.(5) The instrument for the appointment of a proxy must be completed and deposited at the office of the Share Registrar of the Company, Boardroom Share Registrars Sdn Bhd (formerly known as Symphony Share Registrars Sdn Bhd) at 11th Floor, Menara Symphony, No. 5, Jalan Prof. Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya, Selangor Darul Ehsan, Malaysia, not less than forty-eight (48) hours before the time for holding the 17th Annual General Meeting (“AGM”) or any adjournment thereof, and in case of a poll, not less than twenty-four (24) hours before the time appointed for the taking of the poll, and in default, the instrument of proxy shall not be treated as valid.(6) The lodging of a completed Form of Proxy to the Share Registrar of the Company will not preclude you from attending and voting in person at the meeting should you subsequently wish to do so. Should you subsequently decide to attend and vote in person at the meeting, you are requested to rescind your earlier appointment of proxy(ies), and notify the Share Registrar of the Company as soon as practicable.(7) For the purpose of determining a member who shall be entitled to attend this 17th AGM, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd in accordance with Articles 57 and 58 of the Articles of Association of the Company and Section 34(1) of the Securities Industry (Central Depositories) Act, 1991, to issue a General Meeting Record of Depositors as at 18 November 2019. Only a depositor whose name appears on the General Meeting Record of Depositors as at 18 November 2019 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his or its behalf.

Personal Data Privacy:By lodging of a completed Form of Proxy to the Share Registrar of the Company for appointing a proxy(ies) and/or representative(s) to attend and vote in person at the 17th AGM and any adjournment thereof, the member accepts and agrees to the personal data privacy terms as set out in the Notice of 17th AGM dated 31 October 2019.

Fold this flap for sealing

Then fold here

The Registrar of Scomi Group BhdBoardroom Share Registrars Sdn Bhd(formerly known as Symphony Share Registrars Sdn Bhd)11th Floor, Menara SymphonyNo. 5, Jalan Prof Khoo Kay KimSeksyen 13, 46200 Petaling JayaSelangor Darul Ehsan, Malaysia

AffixStamp

1st fold here

Scomi Group Bhd 200201003549 (571212-A)

Level 15, Menara TSR, No. 12, Jalan PJU 7/3Mutiara Damansara, 47810 Petaling JayaSelangor Darul Ehsan, MalaysiaT +603 7717 3000 F +603 7728 5258 W www.scomigroup.com.my

Documents

ANNUAL REPORT 2019 - Scomi · 2019. 11. 7. · Annual Reort 2019 5 1. Listed on the Bursa Malaysia Securities Berhad (Kuala Lumpur Stock Exchange). 2. Includes 0.01% held by Scomi