PLUS 2003 Annual Report - Notes to the financial statements

8/14/2019 PLUS 2003 Annual Report - Notes to the financial statements

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1 /53NOTES TO THE FINANCIAL STATEMENTS

31 December 2003

1 CORPORATE INFORMATION

The principal activities of the Company are investment holding and provision of expressway operation services.There have been no significant changes in the nature of the principal activities during the financial year.

Its sole and wholly-owned subsidiary, Projek Lebuhraya Utara-Selatan Berhad (“PLUS”) is involved in the opera-

tion and maintenance of a tolled expressway network comprising the North-South Interurban Toll Expressway, theNew Klang Valley Expressway, and a section of Federal Highway Route 2 between Subang and Klang in Peninsular

Malaysia.

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the

Main Board of the Malaysia Securities Exchange Berhad. The registered office of the Company is located at 2nd

Floor, Bangunan MCOBA, 42 Jalan Syed Putra, 50460 Kuala Lumpur.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of

the Directors on 27 February 2004.

2 AWARD OF CONCESSION TO PLUS

The Government of Malaysia (“the Government”) and United Engineers (Malaysia) Berhad (“UEM”) entered intoa Concession Agreement dated 18 March 1988 in connection with the North-South Interurban Toll Expressway,the New Klang Valley Expressway and the Federal Highway Route 2 projects.

Subsequently, UEM and PLUS entered into a Novation Agreement with the Government dated 20 July 1988 where-

by, with the approval of the Government, UEM assigned its rights and transferred its liabilities and obligations

under the Concession Agreement to PLUS.

PLUS was incorporated in 1986 and under the terms of a concession awarded by the Government of Malaysia, hasbeen involved in the construction of and improvements to the expressway network, its maintenance, and toll road

operations.

On 8 July 1999, PLUS entered into a Supplemental Concession Agreement (“SCA”) with the Government for an

extension of the Concession Period to 31 May 2030. Additionally, toll rate structures were revised and toll revenue

sharing arrangements were established between the parties.

On 11 May 2002, PLUS entered into a Second Supplemental Concession Agreement (“SSCA”) with the Govern-

ment whereby toll rate structures were further revised for the remaining period of the Concession Agreement andtoll compensation and set-off arrangements were established between the parties. The new toll rate structures

are as follows:



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• AWARD OF CONCESSION TO PLUS cont

NOTES TO THE FINANCIAL STATEMENTS

31 December 2003

i increase of Class 1 toll rate by 10% from 11.24 sen/km to 12.36 sen/km, which will be in force from 1 January

2002 until 31 December 2004;

ii scheduled increases of Class 1 toll rate by 10% every 3 years thereafter.

Toll rates for other classes of vehicles are determined based on pre-set factors by reference to rates applicable to

Class 1 vehicles.

Details of the compensation and set-off arrangement and other relevant matters in relation to PLUS agreeing to

the lower toll rate structures are set out in Note 3, ‘Debt Restructuring, Revised Toll Rates, Tax Exempt Status, Toll

Compensation Arrangement and Flotation Scheme’.

3 DEBT RESTRUCTURING, REVISED TOLL RATES, TAX EXEMPT STATUS, TOLL COMPENSATION

ARRANGEMENT AND FLOTATION SCHEME

PLUS’ debt restructuring scheme and flotation scheme were preceded by agreements with the Government invol-

ving revised toll rate structures, its tax exempt status and toll compensation arrangements. These are described

in the following sections.

a Revised Toll Rate StructuresIn consideration of PLUS agreeing to the revised toll rate structures applicable from 1 January 2002 (details

of which are set out in Note 2 above) the Government agreed to the following:

i to waive PLUS’ obligation to pay the interest accrued to 1 January 2002 amounting to RM1,729.22 million

on its Government Support Loan;

ii to waive PLUS’ obligation to pay interest on the remaining principal amount of RM750 million on theGovernment Support Loan, after (i) above; and

iii to address the manner in which the Government would discharge its liability in respect of the amount of

compensation due that would arise in each of the remaining Concession Years; such compensation would

arise as the new toll rates which took effect from 1 January 2002 are lower than the toll rates contem-

plated in the SCA previously entered into; and the arrangements have been formalised through the SSCA,

and in the manner described in (c) below, ‘Toll Compensation Arrangements’.

PLUS entered into a Third Supplemental Support Loan Agreement with the Government on 23 May 2002 inconnection with the exemption from the payment of interest on the Government Support Loan, as described

in (i) and (ii) above.



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b Tax Exempt Status

Under the Toll Compensation Arrangements, the Government agreed to grant PLUS tax exempt status for aperiod of five consecutive years from 2002 to 2006. The exemption applies to PLUS’ ‘Adjusted Income’ from

all sources.

Pursuant to the above, the Minister of Finance has, on 25 June 2003, made an order which may be cited as

Income Tax (Exemption) (No. 34) Order 2003 (“Order”), exempting PLUS from payment of income tax in respect

of its adjusted income from all sources from the year of assessment 2002 until the year of assessment 2006.

c Toll Compensation ArrangementsUnder the toll compensation arrangements pursuant to the SSCA, compensation recoverable from the Govern-

ment for the effects of imposing toll rates lower than those previously agreed shall be adjusted for the

following:

i deduction for the notional tax on dividends that PLUS will declare and pay (if any) from the tax exempt

profits earned during the five year tax-exempt period from 2002 to 2006 referred to in (b) above;

ii deduction for interest that would have been payable to the Government on the Government Support Loan,

had the Government not waived PLUS from its obligation to pay such interest;

iii set-off of PLUS’ income tax liabilities against such compensation due to PLUS after the deductions

referred to in (i) and (ii) above; and

iv set-off of any Toll Sharing Amount due to the Government against the resultant from (iii) above.

Under the SSCA, in any Concession Year after the tax-exempt period, if there is any tax amount owing by PLUS

to the Government after taking into consideration the adjustments referred to in (i), (ii) and (iii) above, PLUSshall pay such tax amount owed by it to the Government in cash.

The SSCA provides that the payment of such tax amount shall not include any toll sharing to be paid to the

Government (if applicable), which shall continue to be carried forward for utilisation against future toll com-

pensation amounts. Upon expiry of the Concession Period, any amounts of tax payable and toll sharing amounts

which have not been utilised under the compensation arrangements referred to above are to be paid by PLUS

to the Government. However, if there are any amounts due from the Government upon expiry of the ConcessionPeriod, such amounts are to be unconditionally waived by PLUS.


31 December 2003

• DEBT RESTRUCTURING, REVISED TOLL RATES, TAX EXEMPT STATUS,

TOLL COMPENSATION ARRANGEMENT AND FLOTATION SCHEME cont




31 December 2003

In the event that the Government imposes a toll rate which is lower than the toll rates stated in the SSCA for

any Concession Year, the SSCA provides that the amount of further compensation arising will be paid in full.Notwithstanding such compensation, the other toll compensation arrangements pursuant to the SSCA will

remain in effect.

d Debt Restructuring and Flotation SchemeOn 4 April 2002, PLUS submitted an application to the Securities Commission for the restructuring of its debts

(“Debt Restructuring”) and for an initial public offering (“Flotation Scheme”) via a newly incorporated company,

PLUS Expressways Berhad (“PLUS Expressways”). The Debt Restructuring and the Flotation Scheme were

completed on 31 May 2002 and 17 July 2002 respectively.

Debt Restructuring

The Debt Restructuring involved inter alia:

i a renounceable rights issue of ordinary shares, whereby 316.25 million new PLUS shares of RM1.00 each

were offered to UEM, its then immediate holding company, at an issue price of RM7.59 per share. UEM

renounced its rights to Khazanah Nasional Berhad and upon subscription by the party, raised approximately

RM2,400 million;

ii the conversion of all the Redeemable Convertible Bonds (“RCBs”) in issue into 214.03 million newordinary shares in PLUS at a converted price of RM8.39 per share based on the values prescribed in the

trust deed governing the RCBs;

iii the settlement of the UEM Bond, sale of the Renong SPV Bond to UEM, and full settlement of a loan

previously extended to UEM, for aggregate proceeds of RM3,600 million; as a result, PLUS recognised a

one-time exceptional loss of RM4,239.5 million on 31 May 2002, and the RM3,600 million consideration

received was utilised for part-settlement of PLUS Bonds then in issue; in conjunction with the disposal ofRenong SPV Bond, PLUS transferred its special share held in Renong Debt Management Sdn Bhd, the

issuer of Renong SPV Bond, to UEM;

iv the issuance of RM5,100 million Bai Bithaman Ajil Islamic Debt Securities (“BAIDS”) and utilisation of

these proceeds to fully settle the outstanding balances on the Commercial Loans of RM1,417.2 million

and Serial Bonds of RM568.0 million, and the remaining part settle of PLUS Bonds in issue of RM3,114.8

million;

v the conversion of 368,552,941 Non-cumulative Convertible Preference Shares of PLUS into an equivalentnumber of ordinary shares of RM1 each;





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vi extinguishment of special rights attached to the Special Share issued by PLUS, such that, it would rank

pari passu with the other ordinary shares of PLUS in issue;

vii approval by the High Court for the elimination of accumulated losses of RM3,185.0 million against the

share premium account arising from the issue of ordinary shares referred to in (i) and (ii) above;

viii an internal reorganisation by which PLUS Expressways acquired the entire issued and paid up share

capital of PLUS subsequent to PLUS’ completion of the Debt Restructuring, and in exchange issued new

PLUS Expressways ordinary shares as consideration. The share exchange involved the issue of 4,999.99

million ordinary shares of RM0.25 each in PLUS Expressways in exchange for 1,548.83 million ordinary

shares in PLUS. Accordingly, PLUS Expressways’ issued share capital had increased from 2 ordinary

shares of RM0.25 each to 5,000 million ordinary shares of RM0.25 each. Subsequent to the completion of

the share exchange, PLUS became a wholly-owned subsidiary of PLUS Expressways;

Other than the issue of BAIDS, the Debt Restructuring described above was effected via a Scheme of Arrange-

ment under Section 176 of the Companies Act 1965.

Flotation Scheme

The Flotation Scheme involved the following:

ix The sale by UEM of 630,000,000 ordinary shares of RM0.25 each in PLUS Expressways to Malaysian and

foreign institutional investors at an institutional offering price of RM2.55 per share determined by way of

book-building;

x The non-renounceable restricted sale by UEM of 125,641,000 ordinary shares of RM0.25 each in PLUS

Expressways to previous UEM Shareholders on the basis of one PLUS Expressways ordinary share for

every four ordinary shares of RM0.50 each previously held in UEM, at the restricted offering price ofRM2.295 per share; and

xi The sale by UEM of 174,359,000 ordinary shares of RM0.25 each in PLUS Expressways at the retail offering

price of RM2.295 per share, comprising:

aa 73,000,000 ordinary shares of RM0.25 each in PLUS Expressways, to eligible employees and Directors

of UEM Group, Renong Group and Khazanah Nasional Berhad; and eligible users of ‘Touch ’n Go’ (theelectronic toll payment system used for the expressways); and


31 December 2003



6 /53



bb 101,359,000 ordinary shares of RM0.25 each in PLUS Expressways (and any shares not applied for

under (aa) above), to Malaysian retail investors, of which a minimum of 30% was set aside forBumiputra applicants.

Upon completion of the flotation scheme, PLUS Expressways was officially listed on the Main Board of theMalaysia Securities Exchange Berhad (“MSEB”) on 17 July 2002.

e Issue of RM2,260 million nominal value of Bai Bithaman Ajil Serial BondsOn 20 December 2002, PLUS issued RM2,260 million nominal value of Bai Bithaman Ajil Serial Bonds (“BBA

Serial Bonds”) on a bought-deal basis, and raised net proceeds of RM1,148.93 million to fully redeem the

outstanding Link Bonds in issue.

4 SIGNIFICANT ACCOUNTING POLICIES

a Basis of Accounting and Preparation of the Financial StatementsThe financial statements of the Group and of the Company have been prepared under the historical cost con-

vention and comply with applicable Approved Accounting Standards issued by the Malaysian Accounting

Standards Board (“MASB”) and the provisions of the Companies Act 1965.

During the financial year, the Group and the Company adopted MASB 28 (Discontinuing Operations) andMASB 29 (Employee Benefits) for the first time.

The adoption of MASB 28 has not given rise to any adjustments to the opening balances of retained profits

of the prior year and the current year or to changes in comparatives.

The adoption of MASB 29 resulted in the Group and the Company making provision for obligations in respect

of short-term employee benefits in the form of accumulated compensated absences. These obligations werenot provided for prior to the adoption of MASB 29. The cumulative provision made amounted to approximately

RM1.941 million, and as the effect on the financial statements taken as a whole is not significant, it has been

recognised entirely in the current year results without a prior year adjustment.

In addition to the above, the preparation of the financial statements of the Group for the year ended 31

December 2003 has also taken into account of the re-assessment of the computations applied in arriving at

estimates of accumulated amortisation of Expressway Development Expenditure (“EDE”), details of which aredisclosed in Note 4(e).

The above re-assessments did not, however, have any effects on the comparative in respect of the year ended

31 December 2002.


31 December 2003



7 /53

• SIGNIFICANT ACCOUNTING POLICIES cont

b Basis of Consolidation

The consolidated financial statements include the financial statements of the Company and PLUS for the yearended 31 December 2003. The consolidated financial statements have been prepared using the merger

method of accounting as the combination between PLUS Expressways and PLUS meets the relevant criteria

set out in the MASB 21 “Business Combination”, thus depicting the combination of these entities as if theyhad been in combination for the entire period.

A subsidiary is a company in which the Group has equity interest and where it has power to exercise

control over the financial and operating policies so as to obtain benefits therefrom.

Intragroup transactions, balances and resulting unrealised gains are eliminated on consolidation and the

consolidated financial statements reflect external transactions only. Unrealised losses are eliminated onconsolidation unless cannot be recovered.

c Borrowing CostsBorrowing costs attributable to the acquisition, construction or production of an asset during periods when

activities necessary to prepare the asset for its intended use are in progress, are capitalised as a component

of the cost of the asset. Such capitalisation ceases when substantially all activities necessary to prepare the

asset for its intended use are complete.

Where the carrying amount, inclusive of capitalised borrowing costs, if applicable, of an asset exceeds its

recoverable amount, such excess is written down or adjusted for as a provision for impairment, through an

appropriate charge to the income statement.

d Property, Plant and Equipment, and DepreciationProperty, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Depreciation is provided for on a straight line basis over the estimated useful lives of the property, plant and

equipment. The annual rates of depreciation are as follows:


31 December 2003



8 /53


%

Aircraft 12

Motor Vehicles 20

Furniture and Fittings 20

Office Equipment 20

Computers 20

Telecommunication System 20

Operation Tools and Equipment 20

Buildings 2

e Concession AssetsItems classified as Concession Assets comprise Expressway Development Expenditure (“EDE”) and Heavy

Repairs.

i Expressway Development Expenditure

Expressway Development Expenditure (“EDE”) comprises development and upgrading expenditure (includ-

ing interest charges relating to financing of the development) incurred in connection with the Concession.

In previous years, the amortisation formula applied in the preparation of the financial statements for the

year to arrive at accumulated amortisation as at the balance sheet date was as follows:

Cumulative Toll Revenue

to date wef 1/1/1999

Projected Total Toll Revenuefrom 1/1/1999 to 31/5/2030

The aggregate of the unamortised balance on EDE as at 31 December 1998 and additions incurred there-

after were amortised by annual charges recognised in the income statement annually from 1999 onwards

such that the accumulated amortisation was based on the proportion that toll revenues for the period from

1 January 1999 to the end of the accounting period represented as a percentage of the projected toll

revenues for the period from 1 January 1999 to the expiry of the extended Concession Period. The resul-tant was added to the balance of the accumulated amortisation brought forward as at 1 January 1999,

to arrive at the accumulated amortisation as at the balance sheet date.

Aggregate of Net Book Value

of EDE as at 1/1/1999

and cumulative subsequent

additions to date at cost

x


31 December 2003



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31 December 2003

It is the Group’s accounting policy to normally account for changes in estimates which affect the calcula-

tion of accumulated amortisation, in the amortisation for the financial period in which the change arises.However, the changes that arose with the implementation of the previous revision in toll rate structure and

debt restructuring scheme in 1999 were considered fundamental changes to the relationships between

revenues and costs associated with the Concession. The amortisation formula was, therefore, revised ona prospective basis with effect from 1 January 1999 as described above.

The projected toll revenues used for the purposes of the amortisation calculations for the year ended 31

December 2002 were based on the aggregate of the actual revenues for Concession Years 1999 to 2002

and base case traffic volume projections for Concession Period ending May 2030 prepared by independent

Traffic Consultants in January 2002 using the toll rate structures described in Note 2. In addition to the

projected toll revenue, PLUS also incorporated the projected toll compensation revenue to the end of the

concession period arising from the toll compensation arrangements described in Note 3 in the amount ofprojected toll revenue.

In the preparation of these financial statements for the year ended 31 December 2003, PLUS re-assessed

the computations applied in arriving at estimates of accumulated amortisation of EDE, and the following

were undertaken:

I PLUS re-assessed the useful lives of items classified within EDE, and identified items that wereestimated to have useful lives that would expire before the end of the Concession Period. Whereas

these items had previously been amortised within the total of items classified as EDE, PLUS has re-

computed their accumulated amortisation based on the re-estimated useful lives.

II The accumulated amortisation of EDE had, to 31 December 2002, been computed as described above.

In conjunction with the re-assessment of accumulated amortisation of EDE, PLUS applied to the

remaining amount of EDE (i.e. after re-classification of assets referred to in (I) above) the proportionof toll revenues based on cumulative toll revenues from the commencement of the Concession in 1988

to 31 December 2002, as a percentage of total projected toll revenue for the entire Concession Period,

i.e. from 31 May 1988 to 31 May 2030.

III PLUS also re-assessed accumulated amortisation amounts that had been accounted for previously for

accelerated amortisation of certain stretches of the Expressways, and, in light of the charges recognised

in the income statement for damages from the Bukit Lanjan rockfall, wrote back the accumulatedaccelerated amortisation to 31 December 2003.




31 December 2003

IV Further to the re-assessments described in (I) and (II) above, PLUS also obtained from independent

Traffic Consultants a revised set of traffic volume projections in October 2003, and the base-caseprojections arising have been used for application in the accumulated amortisation computations for

these financial statements to 31 December 2003.

The effects of the above, which have been incorporated in the financial statements for the year ended 31

December 2003 are summarised as follows:

Additional accumulated amortisation/(write back) of EDE arising from:

- Re-assessment of useful lives of assets, referred to in (I) above, and re-computation of accumulated

amortisation based on proportion of toll revenues from commencement of Concession to 31 December

2002 as a percentage of total projected toll revenues for the entire Concession period.

- Write back of accelerated accumulated amortisation to 31 December 2003 net of net book value of

Bukit Lanjan slope written off, referred to in (III) above.

- Additional accumulated amortisation to 31 December 2003 arising from revised traffic and tollrevenue projections obtained in October 2003.

As disclosed in Note 27, the amortisation charge in respect of Concession Assets (excluding Heavy Repairs)

based on the previous traffic volume and toll revenue projections amounted to RM120,863,000, and the

additional accumulated amortisation to 31 December 2003 arising from the revised October 2003 projec-

tions amounted to RM29,450,000. Within this additional accumulated amortisation is the element ofadditional amortisation attributable to the year ended 31 December 2003 (i.e. excluding cumulative

effects to 31 December 2002) of RM2,437,000.

Therefore, with effect from 1 January 2003, the amortisation formula in respect of EDE applied in the

preparation of the financial statements to the end of each financial period has been revised to the following:

Cumulative Toll Revenue to date from theCommencement of the Concession in 1988 Cumulative Actual EDE

to date at costProjected Total Toll Revenue of

the Concession from 1988 to 2030

Charge/ ( Write

back)RM’000

4,345

(37,597)

29,450

x




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31 December 2003

The projected toll revenues used for the purposes of the amortisation calculations are based, as stated

above, on the base case traffic volume projections prepared by independent traffic consultants. Theprojections include the toll rate structures described in Note 2. In addition, PLUS has incorporated the

projected toll compensation revenues to the end of the Concession Period arising from the toll compen-

sation arrangements described in Note 3 in the amount of projected toll revenue.

ii Other Concession Assets

The Concession Assets for which estimates of useful lives indicate expiry before the end of the

Concession Period have, as stated in (i) above, been re-classified within Concession Assets to ‘Other

Concession Assets’. These assets comprise toll equipment, video surveillance equipment, telecommuni-

cation networks, centralised lighting, and toll operation computer hardware and software. Based on therevised estimates of their useful lives, the annual amortisation in respect of these assets is computed ona straight line at the following rates:

%

Software and computers 12.5

Others 10.0

iii Heavy RepairsHeavy repairs relate to costs incurred to repair bridges, slopes and embankments, rectification of settle-

ments and pavement rehabilitation of medium and high traffic sections along the Expressways. The costs

of heavy repairs are amortised on a straight line basis over 7 years commencing from the date incurred,

this being the anticipated economic life of such works.

f ImpairmentsThe carrying amounts of the Group’s and of the Company’s assets and inventories are reviewed at eachbalance sheet date to determine whether there is any indication of impairment. If any such indication exists,

the asset’s recoverable amount is estimated and an impairment loss is recognised whenever the recoverable

amount is less than the carrying amount of the asset. The impairment loss is recognised in the Income

Statement immediately.

All reversals of impairment losses are recognised as income immediately in the Income Statement. An impair-

ment loss is only reversed to the extent that the asset’s carrying amount does not exceed the carrying amountthat would have been determined, net of depreciation or amortisation, if no impairment had been recognised.



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31 December 2003

g Income Tax

Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expectedamount of income taxes payable in respect of the taxable profit for the year and is measured using the tax

rates that have been enacted at the balance sheet date.

Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date

between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In prin-

ciple, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are

recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent

that it is probable that taxable profit will be available against which the deductible temporary differences,

unused tax losses and unused tax credits can be utilised which give rise to net deferred tax benefits, theseare recognised when it is probable that taxable profits will be available in the future against which thedeferred tax benefits can be utilised.

h i Provisions

Provisions are recognised when it is probable that an outflow of resources embodying economic benefits

will be required to settle present obligation (legal or constructive) as a result of a past event and a reli-

able estimate can be made of the amount of the obligation.

ii Provision for Retirement BenefitsProvision for employee retirement benefits made in the financial statements is in accordance with prede-

termined obligations of PLUS for personnel whose employment contracts had been transferred in 1988

from the previous Malaysian Highway Authority, pursuant to the Concession Agreement.

The scheme is unfunded and the provision represents full liabilities based on the length of service of the

personnel concerned, at contracted rates.

The Group also contributes to the statutory Employees Provident Fund in accordance with applicable statu-

tory rates.

i Deferred LiabilitiesFees recovered from third parties as advance payments of future maintenance expenditure, in consideration for

right-of-way access granted by PLUS, are classified as deferred liabilities, and subsequently incurred amounts

are set off against such deferred liabilities.



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31 December 2003

j Foreign Currencies

Transactions denominated in foreign currencies during the year are recorded in Ringgit Malaysia at exchangerates ruling at the time of the transactions or at contracted rates. Foreign currency denominated monetary

assets and liabilities are reported in Ringgit Malaysia at exchange rates which approximate those ruling at

the balance sheet date, or at contracted rates where applicable. Gains or losses on exchange are dealt within the income statement.

k Short Term InvestmentsShort term investments in equity shares are stated at the lower of cost and market value.

l Cash Flow StatementThe cash flow statement, which is prepared using the indirect method, classifies changes in cash and cashequivalents according to operating, investing and financing activities. The Group does not consider any of its

assets other than deposits with licensed financial institutions and cash and bank balances to meet the defi-

nition of cash and cash equivalents. The use of the cash and cash equivalent balances, however, is subject to

the restrictions set out in Note 24.

m Revenue Recognition

i Investment IncomeInvestment income is recognised when the right to receive is established and no significant uncertaintyexists as regard to its recovery.

ii Revenue from Services

Revenue from services rendered is recognised net of service taxes if applicable, and discounts as and when

the services are performed.

iii Toll CompensationPursuant to the Concession Agreement, the Government of Malaysia reserves the right to restructure or

to restrict the imposition of unit toll rate increases by PLUS, and in such event, the Government shall com-

pensate PLUS for any reduction in toll revenue, subject to negotiation and other considerations that the

Government may deem fit. Toll compensation for any Concession Year is recognised in the financial state-

ments as revenue when recovery is probable and the amount that is recoverable can be measured

reliably. The amount of toll compensation accrued and recognised in the income statement for the year

has been estimated after taking into consideration the effects of the arrangements described in Note 3 (c).



14 /53


n Bai Bithaman Ajil Islamic Debt Securities (“BAIDS”)

The BAIDS are bonds issued in accordance with the Islamic finance concept of Bai Bithaman Ajil. In accor-dance with such concept, PLUS sold certain assets to a trustee, and repurchased them back at the same price

together with an agreed profit margin. PLUS’ payment of the purchase price is deferred in accordance with

the maturities of the BAIDS, whilst the profit element is paid half-yearly.

BAIDS are initially recognised at cost, being the fair value of the consideration received. After initial recogni-

tion, the profit element attributable to the BAIDS in each period is recognised as an expense at a constant

rate to the maturity of each series respectively. Further details of the BAIDS in issue are disclosed in Note 20.

o Bai Bithaman Ajil Serial Bonds (“BBA Serial Bonds”)The BBA Serial Bonds are bonds issued in accordance with the Islamic finance concept of Bai Bithaman Ajil.In accordance with such concept, PLUS sold certain assets to the subscribers, and repurchased them at the

same price plus an agreed profit margin. PLUS’ payments are deferred in accordance with the maturities of

the BBA Serial Bonds.

BBA Serial Bonds were initially stated at cost, being the fair value of the consideration received. The profit

element on the BBA Serial Bonds is recognised as an expense and accreted to the principal amount at a

constant rate to the maturity of each series respectively. Further details of BBA Serial Bonds are disclosed inNote 21.

p Financial InstrumentsFinancial assets and financial liabilities carried on the balance sheet include cash and bank balances, trade

and other receivables and payables, borrowings and bonds. The accounting policies on recognition and

measurement of these items are disclosed within this note, ‘Significant Accounting Policies’.

Financial instruments are classified as liabilities or equity in accordance with the substance of the respective

contractual arrangements. Interest, dividends, gains and losses relating to a financial instrument classified asa liability, are reported as expense or income. Distributions to holders of financial instruments classified as

equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforce-

able right to offset and intends to settle either on a net basis or to realise the asset and settle the liability

simultaneously.


31 December 2003



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5 CONCESSION ASSETS

Expressway Development Expenditure (EDE)

Heavy Repairs

Other Concession Assets


31 December 2003

Group Group Company Company

2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

8,257,972 8,377,966 - -

332,889 276,081 - -

84,739 - - -

8,675,600 8,654,047 - -



16 /53

Details of Concession Assets are as follows:

CostAt 1 January

AdditionsWritten offReclassifications

At 31 December

Accumulated AmortisationAt 1 January

AdditionsWritten offReclassifications

At 31 December

Net Book Value at 31 December 2003


As mentioned in Note 4(e), with effect from 1 January 2003, ‘Expressway Development Expenditure’ under

Concession Assets have been re-classified into EDE and Other Concession Assets.


31 December 2003

• CONCESSION ASSETS cont

Expressway

Develop- Other

men t Heavy Concession 2003 2002

Expendi ture Repairs Assets Total Total

RM’000 RM’000 RM’000 RM’000 RM‘000

9,250,599 568,791 - 9,819,390 9,582,573

81,806 131,908 - 213,714 236,817(14,780) - - (14,780) -

(386,601) - 386,601 - -

8,931,024 700,699 386,601 10,018,324 9,819,390

872,633 292,710 - 1,165,343 1,035,513

84,726 75,100 18,657 178,483 129,830(1,102) - - (1,102) -

(283,205) - 283,205 - -

673,052 367,810 301,862 1,342,724 1,165,343

8,257,972 332,889 84,739 8,675,600

8,377,966 276,081 - 8,654,047

17/53NOTES TO THE FINANCIAL STATEMENTS



17 /53

6 PROPERTY, PLANT AND EQUIPMENT

Group

CostAt 1 January 2003AdditionsDisposalsWritten off

At 31 December 2003

Accumulated Depreciation

At 1 January 2003Charge for the yearDisposalsWritten off

At 31 December 2003


31 December 2003

Furniture,Fittings,

Telecom-munication

and Office MotorEquipment Aircraft Vehicles Computers

RM’000 RM’000 RM’000 RM’000

23,999 8,541 21,289 23,328

899 4,636 3,836 3,296

- - (929) -

(812) - (152) (287)

24,086 13,177 24,044 26,337

20,928 1,181 13,863 19,2611,758 1,355 2,246 1,757

- - (905) -

(798) - (152) (287)

21,888 2,536 15,052 20,731

2,198 10,641 8,992 5,606

Operation Capital

Tools and Work inEquipment Buildings Progress Total

RM’000 RM’000 RM’000 RM’000

6,465 3,843 - 87,465

66 - 246 12,979

- - - (929)

- - - (1,251)

6,531 3,843 246 98,264

6,144 391 - 61,768258 77 - 7,451

- - - (905)

- - - (1,237)

6,402 468 - 67,077

129 3,375 246 31,187




Operation Capital

Tools and Work inEquipment Buildings Progress Total

RM’000 RM’000 RM’000 RM’000

6,480 3,843 - 95,581

- - - 7,249

- - - (2,483)

(15) - - (12,882)

6,465 3,843 - 87,465

5,683 314 - 68,683476 77 - 8,443

- - - (2,482)

(15) - - (12,876)

6,144 391 - 61,768

321 3,452 - 25,697

18 /53

• PROPERTY, PLANT AND EQUIPMENT cont

Group

CostAt 1 January 2002AdditionsDisposalsWritten off

At 31 December 2002

Accumulated Depreciation

At 1 January 2002Charge for the yearDisposalsWritten off

At 31 December 2002


31 December 2003

Furniture,Fittings,

Telecom-munication

and Office MotorEquipment Aircraft Vehicles Computers

RM’000 RM’000 RM’000 RM’000

23,587 8,541 17,846 35,284

726 - 5,956 567

(2) - (2,481) -

(312) - (32) (12,523)

23,999 8,541 21,289 23,328

18,674 91 14,357 29,5642,564 1,090 2,019 2,217

(1) - (2,481) -

(309) - (32) (12,520)

20,928 1,181 13,863 19,261

3,071 7,360 7,426 4,067






20 /53

7 INVESTMENT IN SUBSIDIARY

Investment in subsidiary, at cost

The subsidiary, which is incorporated in Malaysia, is as follows:

Name Principal Activity

Projek Lebuhraya Construction, operation and maintenance of the tolled North-SouthUtara-Selatan Berhad Interurban Toll Expressway, New Klang Valley Expressway and

a section of the Federal Highway Route 2.

The investment is stated at cost in the Company’s financial statements. Cost reflects the nominal value of shares

issued by the Company for the acquisition.

8 FUTURE INCOME TAX BENEFIT/ DEFERRED TAX LIABILITY

The provision for future income tax benefit is analysed as follows:

Unabsorbed tax losses

Unabsorbed capital allowances

Timing differences on Expressway Development Expenditure

Other timing differences

The provision for deferred tax liability is as follows:Other timing differences


31 December 2003

Company Company

2003 2002

RM’000 RM’000

1,250,000 1,250,000

Effective Equity Interest

2003 2002

100% 100%


2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

178,389 178,389 - -

1,007,065 1,007,065 - -

(1,032,694) (1,032,694) - -

(82,438) (82,438) - -

70,322 70,322 - -

(734) - (734) -




21 /53

9 TOLL COMPENSATION RECOVERABLE FROM THE GOVERNMENT OF MALAYSIA

Toll compensation revenue

Less: Accrual for toll sharing

The amount of toll compensation recoverable and the set-off of the toll sharing amount are based on the toll

compensation arrangements as described in Note 3(c).

10 SUNDRY RECEIVABLES, DEPOSITS AND PREPAYMENTS

Sundry receivables

Less: Allowance for doubtful debts

Deposits and prepayments


31 December 2003

Group Group

2003 2002

RM’000 RM’000

432,535 294,973

(9,543) (8,077)

422,992 286,896


2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

12,521 6,825 194 -

(1,923) (2,314) - -

10,598 4,511 194 -

15,437 5,193 1,137 -

26,035 9,704 1,331 -




22 /53

11 HOLDING, SUBSIDIARY AND RELATED COMPANIES

The Directors regard UEM, which is incorporated in Malaysia and owns 46.2% of the Company’s equity as at

31 December 2003, as immediate holding company. The intermediate holding company is Syarikat Danasaham

Sdn Bhd and the ultimate holding company is Khazanah Nasional Berhad, both of which are incorporated in

Malaysia. Khazanah Nasional Berhad is wholly-owned by the Minister of Finance Inc., a body corporate whichwas incorporated under the Minister of Finance (Incorporation) Act 1967.

i Amount owing to immediate holding company

Amount owing to immediate holding company

Less: Repayable after twelve months

Repayable within twelve months

The amount owing to immediate holding company is trade in nature except for RM70,000 (2002: RM109,000)

which is non trade in nature.

The amount owing to UEM is non-interest bearing. The long-term portion of the amount owing to UEM of

RM6,884,880 is payable only after PLUS has repaid all amounts borrowed from financial institutions and the

Government of Malaysia.

ii SubsidiaryThe amount owing from/(to) subsidiary is non trade in nature, non-interest bearing and has no fixed term of

repayment.

iii Related companies

Related companies in these financial statements refer to members of Khazanah Nasional Berhad group of com-

panies. The amounts owing from/(to) related companies are trade in nature, non-interest bearing and have nofixed terms of repayment.


31 December 2003


2003 2002 2003 2002RM’000 RM’000 RM’000 RM’000

17,592 24,334 70 109

(6,885) (6,885) - -

10,707 17,449 70 109




23 /53

12 SHORT TERM INVESTMENTS

Quoted shares at cost

Less: Provision for diminution in value

Quoted shares at market value

13 SHORT TERM DEPOSITS WITH LICENSED BANKS, CASH AND BANK BALANCES

Islamic short term deposits

Conventional short term deposits

Short term deposits with licensed banks

Cash and bank balances

The use of the balances is subject to the restrictions set out in Note 24, ‘Security Arrangements of Borrowings

and Bonds’.


31 December 2003


2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

1,164 - - -

(102) - - -

1,062 - - -

1,062 - - -

Group Group Company Company2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

1,041,839 802,022 - -

202,567 122,767 22,889 -

1,244,406 924,789 22,889 -

6,031 5,268 232 1

1,250,437 930,057 23,121 1






16 CAPITAL RESERVE

Non-distributable:Capital redemption reserve

Share premium

The movements in the capital reserves are shown in the Statements of Changes in Equity.

The Capital Redemption Reserve arose upon the redemption by PLUS of Redeemable Convertible Cumulative

Preference Shares in 1999.

Share premium of the Group represents the premium arising from the rights issue and the conversion of the RCBs

as referred to in Note 3d(i) and (ii).

17 MERGER RESERVE

The difference between the nominal value of share of the Company issued as consideration and the nominal value

of the shares acquired has been classified as a merger reserve/(deficit). The merger deficit as at 1 January 2002,

as shown in the Statements of Changes in Equity, is reflected as the subsidiary had accumulated losses and did

not have sufficient reserve for set-off.

31 December 2003

Group Group

2003 2002

RM’000 RM’000

10,000 10,000

451,138 451,138

461,138 461,138






19 BORROWINGS

Group

31 December 2003/2002Government Support Loan (interest free)

Additional Support Loan (interest free)

The maturity profile of borrowings is analysed in Note 23, ‘Maturity Profile of Bonds and Borrowings’.

19.1 Government Support LoanAs described in Note 3(a), in consideration of PLUS agreeing to lower toll rates, the Government and PLUS

entered into a Third Supplemental Support Loan Agreement whereby the Government agreed to waivePLUS’ obligation to pay interest chargeable by the Government under the Support Loan Agreement accrued

up to 1 January 2002, amounting to RM1,729.22 million. The amount of interest waived includes the

interest capitalised and accrued in the intervening period between the represented and actual date of

issue of the Link Bonds as described below. The balance of principal on the Government Support Loan

after deduction of the interest waiver amounts to RM750 million, and the Government has also agreed to

exempt PLUS from its obligation to pay interest on this balance.

In conjunction with a previous debt restructuring scheme undertaken in 1999, PLUS entered into theSecond Supplemental Support Loan Agreement (‘SSSLA’) with the Government in connection with the

issue of RM900 million (in present day value at the issue date) Link Bonds to a related company, Hartanah

Lintasan Kedua Sdn Bhd, in satisfaction of the proposed assumption by another related company, Linkedua

(Malaysia) Berhad, of RM900 million of PLUS’ Government Support Loan.

The Link Bonds did not involve cash inflows or outflows to PLUS upon issue and have been represented,based on the SSSLA, to be issued on 1 September 1999, with a corresponding reduction in the Govern-

ment Support Loan. However, the Link Bonds were issued only on 21 June 2000 from which date the LinkBonds are accreted at the agreed yield, and the interest on the Government Support Loan was capitalised

at the resulting reduced balance.

31 December 2003

Repayable Repayablewithin after

Principal 12 months 12 monthsRM’000 RM’000 RM’000

750,000 - 750,000

212,000 - 212,000

962,000 - 962,000


3 D b 2003



• BORROWINGS cont

In the intervening period between the represented date of issue of the Link Bonds on 1 September 1999 and

the actual issue date on 21 June 2000, the principal balance of the RM900 million Government Support

Loan remained, according to the SSSLA, an obligation of PLUS and was subject to interest at 10% per

annum capitalised semi-annually and repayable from 2011 to 2020 in 20 equal semi-annual instalments.

Upon issue of the Link Bonds on 21 June 2000, PLUS’ obligation in respect of the RM900 million principal

portion of the Government Support Loan was correspondingly reduced. However, the interest cost capi-

talised up to the date of issue of the Link Bonds, which became an obligation of PLUS until the interest

exemption described above, bore interest of 10% per annum capitalised semi-annually, and was to be

repayable from 2011 to 2020 in 20 equal semi-annual instalments.

The applicable repayment terms on PLUS’ balance of the Government Support Loan as at 31 D ecember

2003 and 31 December 2002 will be repayable from 2014 to 2023 in 10 equal annual instalments.

The interest rates applicable to 1 January 2002 were 8% per annum capitalised annually, and 10% per

annum capitalised semi-annually for the respective amounts. Subsequent to 1 January 2002, the RM750

million balance is interest-free as described above.

The relevant details of the security arrangements are stated in Note 24, ‘Security Arrangements of

Borrowings and Bonds’.

19.2 Additional Support LoanOn 25 August 1999, PLUS entered into an Additional Support Loan Agreement with the Government for

an interest-free loan not exceeding RM212 million in consideration for PLUS agreeing to lower its toll

rates for certain years from those specified in the Supplemental Concession Agreement dated 8 July 1999.

PLUS had provided an undertaking to the Government that it would provide such security interest in favour

of the Government in December 2006 (or any other date as may be agreed by PLUS and the Government)

to secure the loan.

However, on 23 May 2002, PLUS entered into a Supplemental Additional Support Loan Agreement for,

inter-alia, the creation of security for the loan, with such security ranking on a subordinated basis to

certain other borrowings of PLUS following completion of PLUS’ Debt Restructuring.

The loan has been fully drawndown and is repayable as one bullet repayment on 2 January 2024.

The relevant details of the security arrangements are stated in Note 24, ‘Security Arrangements ofBorrowings and Bonds’.

31 December 2003




31 December 2003



• BAI BITHAMAN AJIL ISLAMIC DEBT SECURITIES (“BAIDS”) cont

iii PLUS must maintain a Maintenance Reserve Account (“MRA”) during the tenure of the BAIDS which has (i)

within six months from 31 May 2002, a minimum balance equivalent to the projected capital expenditure for

the Expressways in respect of the three months following 31 May 2002; (ii) within nine months from 31 May2002, a minimum balance equivalent to the projected capital expenditure of the Expressways in respect of the

nine months following 31 May 2002, and (iii) within twelve months from 31 May 2002, a minimum balanceequivalent to the projected capital expenditure of the Expressways in respect of the twelve months following

31 May 2002. However, a minimum balance may be withdrawn to meet any payment of the projected capital

expenditure for Expressways, subject always to the condition that PLUS shall transfer monies into the MRA

within 30 days of such withdrawal to maintain the minimum balance described above.

The relevant details of the security arrangements are stated in Note 24, ‘Security Arrangements of Borrowingsand Bonds’.

The terms of the Trust Deed prescribes that in the event of default, the outstanding amount of the Primary Bonds

and the profit element next due will become immediately due and payable.

21 BAI BITHAMAN AJIL SERIAL BONDS (“BBA SERIAL BONDS”)

BBA Serial Bonds

Accreted Profit Element

The BBA Serial Bonds are constituted by a Trust Deed dated 11 December 2002 made by PLUS and the Trustee

for the holders of the BBA Serial Bonds.

As referred to in Note 3(e), PLUS issued RM2,260 million nominal value of BBA Serial Bonds on 20 December2002. The BBA Serial Bonds are negotiable non-interest bearing secured Bonds in bearer form evidencing a promise

by PLUS to pay stated sums on specified dates. The Bonds are issued in 12 series with tenures from 8.5 years to14 years from the date of issue.

31 December 2003

Group Group

2003 2002

RM’000 RM’000

1,148,930 1,148,930

74,710 2,345

1,223,640 1,151,275


31 December 2003



• BAI BITHAMAN AJIL SERIAL BONDS (“BBA SERIAL BONDS”) cont

PLUS sold all its rights, benefits and title under the Concession Agreement at the Purchase Price of RM1,149 million

and subsequently repurchased them for RM2,260 million being the aggregate of the Purchase Price and a Profit

Margin. The profit margin ranges from 5.75% to 6.95% per annum and is compounded semi annually.

The relevant details of the security arrangements are stated in Note 24, ‘Security Arrangements of Borrowingsand Bonds’.

The terms of the Trust Deed prescribes that in the event of default, the nominal amount outstanding of the BBA

Serial Bonds, that is the Asset Sale Price, will become immediately due and payable.

22 DEFERRED LIABILITIES

Deferred liabilities comprise fees received in advance for future maintenance expenditure to be incurred, in consi-deration for right-of-way granted by PLUS, analysed as follows:

Amounts received in advanceAmounts expended

31 December 2003

Group Group

2003 2002

RM’000 RM’000

59,146 48,146

(15,021) (12,729)

44,125 35,417




31 December 2003



• SECURITY ARRANGEMENTS OF BORROWINGS AND BONDS cont

b An assignment (ranking first in point of security) of the rights over the Concession, Construction Guaran-

tees (other than the Performance Bonds), Construction Contracts and Insurances;

c A debenture over the fixed and floating assets of PLUS (other than Security interest already covered under

(a) and (b) above, Support Loan Account, the Performance Bonds, the Performance Bonds Proceeds Account,the Charged Amount and the BBA Security Account);

d An assignment (ranking first in point of security) over PLUS’ rights, title and interest in the Additional

Project Agreements; and

e An assignment (ranking second in point of security after the Government) over the Performance Bonds andPerformance Bonds Proceeds Account.

(hereinafter referred to as “the Designated Debt Security”)

The Security Trustee shall hold the benefit of the Designated Debt Security for the benefits of the Designated

Debts ranking amongst themselves in the following manner:

a ranking first, the BAIDS, Existing Debts and the Government Support Loan shall rank pari passu amongst

themselves; and

b ranking second, the Additional Support Loan.

save and except for:

a The security in respect of the Performance Bonds and the Performance Bonds Proceeds Account, which

shall be held by the Security Trustee only for the benefit of the Designated Debt other than the Government

Support Loan, which shall rank as follows:

• ranking first, the BAIDS, Existing Debts which has been designated as Designated Debt shall rank pari

passu amongst themselves; and

• ranking second, the Additional Support Loan.


31 December 2003




b The security in respect of the FSRA (which forms part of the Additional Project Account mentioned in

(a) above) shall rank as between the Designated Debt as follows:

• ranking first, the BAIDS;

• ranking second, the Existing Debts and the Government Support Loan shall rank pari passu amongstthemselves; and

• ranking third, the Additional Support Loan.

c The security in respect of the Assignment of the Concession shall be held by the Security Trustee only forthe benefit of the Designated Debt other than the Government Support Loan and the Additional Support

Loan, which shall rank pari passu amongst themselves.

The BBA Security Account and the Charged Amounts are excluded from the Designated Debt Security and

are charged to the holders of the BBA Serial Bonds.

The Support Loan Account is totally excluded from the Security and is charged to the Government under

the Support Loan Agreement.

ii Security arrangements for BBA Serial Bonds

a Assignment over the Charged Amounts; and

b Charge over the BBA Security Account.

The BBA Security Account to receive the Charge Amounts shall be managed by the BBA Serial Bonds Trustee.

Determination of the Charged Amounts shall be in the following manner;

a 6 months prior to and ending on the date falling 65 days before maturity date of the BBA Serial Bonds (the

“Relevant Period”), PLUS shall determine the excess cashflow of PLUS (other than proceeds from the

issuance of new shares by PLUS and excluding the FSRA and MRA, which are charged to the holders

of the BAIDS) at the end of each Relevant Period after providing or payment, as the case may be, for the

following:


31 December 2003



i for PLUS’ budgeted operating and capital expenditure requirements for the following Relevant Period;

ii for such of the Existing Debt as remains outstanding;

iii to the FSRA and MRA during the said Relevant Period;

iv in respect of the redemption of BAIDS during the said Relevant Period; and

v for any Toll Revenue sharing payable in cash to the Government pursuant to the Concession Agree-

ment in respect of toll revenue collected for the Relevant Period ending on such date.

25 REVENUE

The revenue of the Group and of the Company consists of the following:

Toll revenue

Gross toll compensation revenue

Less: Notional tax on tax exempt dividends

Notional interest on Government Support Loan

Net toll compensation revenue

Expressway operation services feesTax exempt dividends from subsidiary

Accrual for Government’s share of toll revenue


2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

1,443,003 1,375,800 - -

307,290 294,973 - -

(143,889) - - -

(25,839) - - -

137,562 294,973 - -

1,771 - 28,639 -- - 370,000 -

1,582,336 1,670,773 398,639 -

(1,466) (8,077) - -

1,580,870 1,662,696 398,639 -



31 December 2003



• REVENUE cont

On 8 July 1999, PLUS entered into a Supplemental Concession Agreement (“SCA ”) with the Government for an

extension of the Concession Period to 31 May 2030. Additionally, toll rate structures were revised and toll revenue

sharing arrangements were established between the parties. Based on the terms of the SCA, and the toll revenueearned during the year, the Government is entitled in respect of the Concession Years 2002 to 2008, to 20% of the

amount by which the actual toll revenue of PLUS exceeds the threshold toll revenue as specified in the SCA.

As referred to in Note 3(a), further revised toll rate structures have been imposed through the Second Supplemen-

tal Concession Agreement. The toll compensation revenue is arrived at based on the agreed terms in the Second

Supplemental Concession Agreement entered into with the Government as described in Note 3(c).

26 OTHER OPERATING INCOME

Other operating income comprises the following:

Income from rental of facilities

Income from rental of fibre optic telecommunicationssystem and way leave rights

Others


2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

10,348 10,383 - -

12,502 11,907 - -

10,753 5,654 1 -

33,603 27,944 1 -


31 December 2003



27 PROFIT/(LOSS) FROM OPERATIONS

Profit from operations is arrived at after charging/(crediting):

Auditors’ remuneration

- statutory audit fee

- other services fee

- over provison of other services fees in previous periodsDepreciation of Property, Plant and Equipment

Property, Plant and Equipment written offGain on disposal of property, plant and equipment

Net amortisation charge for Concession Assets (Note i)

Costs relating to Bukit Lanjan rockfall (Note ii)

Directors’ remuneration*

- fees

- other emoluments

- benefit in kindFees paid to a third party in respect of services rendered

by directors

(Write back)/Allowance for doubtful debts

Bad debts written off

Provision for retirement benefits

Rental of equipment

Rental of premises

Provision for diminution in value of short term investmentsListing expenses

* Not included in the above is the remuneration of the Executive Vice Chairman of the Company which is borne by

the immediate holding company.


RM’000 RM’000 RM’000 RM’000

215 215 30 30

205 1,206 94 1,008

- (406) - -7,451 8,443 296 -

14 6 - -

(469) (1,081) - -

178,483 129,830 - -

21,081 - - -

340 247 250 141

654 516 198 17

39 32 3 -

50 19 50 6

(392) 2,314 - -

3,891 - - -

3,346 1,401 - -

1,067 838 145 -

2,067 2,123 747 -

102 - - -- 6,522 - 6,522


31 December 2003

• PROFIT/(LOSS) FROM OPERATIONS cont



Note i:Amortisation of Concession Assets (excluding Heavy Repairs)

based on prior year’s total projected revenue

Amortisation of Heavy Repairs

Write back of accelerated amortisation in prior years

(Note 4(e)(i))Additional amortisation arising from the re-computation ofaccumulated amortisation (Note 4(e)(i))

Additional amortisation arising from the revised traffic

projections in October 2003 (Note 4(e)(i))

Net amortisation charge for Concession Assets

Note ii:Write off of net book value of Bukit Lanjan slope (Note 4(e)(i))

Repair and clearance cost

Costs relating to Bukit Lanjan rockfall


2003 2002 2003 2002RM’000 RM’000 RM’000 RM’000

120,863 70,400 - -

75,100 59,430 - -

(51,275) - - -- - -

4,345 - - -

29,450 - - -

178,483 129,830 - -

13,678 - - -

7,403 - - -

21,081 - - -

• PROFIT/(LOSS) FROM OPERATIONS cont


31 December 2003



28 NET FINANCE (EXPENSE)/INCOME

Net finance expense for the year arose as follows:

Profit element from short term deposits

Interest income from short term deposits

Profit element on BAIDS and BBA Serial Bonds

Interest expense on borrowings and bondsInterest income on Renong SPV Bond and UEM BondInterest income on loan to immediate holding company

29 EXCEPTIONAL ITEMS

Exceptional items comprise the following:

Waiver of interest on Government Support Loan

as disclosed in Note 3(a)(i)Loss on investments as disclosed in Note 3(d)(iii)


2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

31,834 11,916 - -

3,433 9,531 786 -

(377,744) (183,143) - -

- (625,132) - -- 291,706 - -

- 1,656 - -

(342,477) (493,466) 786 -


2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

- 1,729,223 - -- (4,239,536) - -

- (2,510,313) - -


31 December 2003



30 EMPLOYEE COSTS

Employee emoluments

Employee training/welfare

Number of employees at end of the year:

Executive

Non-Executive

31 INCOME TAX

Income tax based on results for the year:

- Current

- Under provision in respect of prior years

- Deferred taxation


RM’000 RM’000 RM’000 RM’000

104,554 96,319 15,565 -

2,842 1,803 217 -

107,396 98,122 15,782 -

Number Number Number Number

336 306 288 -

2,765 2,679 590 -

3,101 2,985 878 -


2003 2002 2003 2002RM’000 RM’000 RM’000 RM’000

(1,538) - (1,538) -

(1,228) - - -

(734) - (734) -

(3,500) - (2,272) -


31 December 2003

• INCOME TAX cont



No provision for taxation arises for the subsidiary, PLUS, as income is not assessed to tax due to the tax exempt

status granted as described in Note 3(b).

As at 31 December 2003, the Group has tax exempt profits available for distribution of approximately

RM3,978,000,000 (2002: RM2,509,300,000), subject to the agreement of the Inland Revenue Board.

The reconciliation of the tax effects of accounting and taxable income are as follows:

Profit/(loss) before income tax

Tax at applicable statutory tax rate of 28%

Tax effect of expenses that are not deductible

in determining taxable profit

Tax effect of income not subject to tax

Current period unabsorbed tax losses

Underprovision of income tax expense in prior yearsTax effect of tax exemptions

Tax expense


2003 2002 2003 2002

RM’000 RM’000 RM’000 RM’000

735,561 (1,774,976) 376,749 (7,840)

205,957 (496,993) 105,490 (2,195)

131,848 1,190,010 382 2,105

- - (103,600) -

- 90 - 90

1,228 - - -(335,533) (693,107) - -

3,500 - 2,272 -


31 December 2003



32 BASIC EARNINGS/(LOSS) PER SHARE

Basic earnings/(loss) per share has been calculated based on the profit or loss after income tax attributable to

ordinary shareholders, and respectively before and after exceptional items, divided by the weighted averagenumber of ordinary shares in issue during the financial year.

These amounts are tabulated as follows:

Profit/(Loss) after income tax attributable to ordinaryshareholders, before exceptional items (RM’000)

Profit/(Loss) after income tax attributable to

ordinary shareholders, after exceptional items (RM’000)

Weighted average number of ordinary shares (’000)

Basis earnings/(loss) per share (sen):

- before exceptional items

- after exceptional items

33 OVER-ACCRUAL OF TAX PAYABLE IN RESPECT OF DIVIDENDS

This is a reversal of an over-accrual in respect of tax payable,for the unavailability of tax credit under Section 108of the Income Tax Act 1967, to frank payment of dividends in previous years.


2003 2002 2003 2002

732,061 735,337 374,477 (7,840)

732,061 (1,774,976) 374,477 (7,840)

5,000,000 5,000,000 5,000,000 3,164,006

14.64 14.71 7.49 (0.25)

14.64 (35.50) 7.49 (0.25)


31 December 2003



34 DIVIDENDS

Interim tax exempt dividend of 3.5 sen per ordinary share paid on 8 October 2003

At the forthcoming Annual General Meeting, a final tax exempt dividend in respect of the financial year ended31 December 2003 of 3.5 sen per ordinary share of RM0.25 each, amounting to a total dividend payable ofRM175,000,000 will be proposed for shareholders’ approval. The financial statements for the current financial

year do not reflect this proposed dividend. Such dividend if approved by the shareholders, will be accounted for

in shareholders’ equity as an appropriation of retained profits in the financial year ending 31 December 2004.

35 SIGNIFICANT RELATED PARTY TRANSACTIONS

Property, plant and equipment transferred from PLUS

Dividend income received/receivable from PLUS

Group Group2003 2002

RM’000 RM’000

175,000 -


RM’000 RM’000 RM’000 RM’000

- - 8,886 -

- - 370,000 -

cont.

44 /53

• SIGNIFICANT RELATED PARTY TRANSACTIONS cont


31 December 2003



Management fees received for expressway operation

services rendered by the Company to:

- PLUS

- subsidiaries of UEM, namely:

- Linkedua (Malaysia) Sdn Bhd (“LINKEDUA”)

- Expressway Lingkaran Tengah Sdn Bhd (“ELITE”)

Interest income received/receivable from UEM in respect of

UEM Bond

Interest income received/receivable from UEM in respect of

loan extended to UEM

Expressways development expenditure works performed

for PLUS by subsidiaries of UEM World Berhad (“UEMWorld”) (formerly known as Global Converge Sdn Bhd),

namely:

- UEM Construction Sdn Bhd (formerly known as

UE Construction Sdn Bhd)

- Projek Penyelenggaran Lebuhraya Berhad

(“PROPEL”)

- Pengurusan Lebuhraya Bhd (“PLB”)

Expressways development expenditure works performed for

PLUS by subsidiaries of UEM, namely:

- Teras Control Systems Sdn Bhd

- Teras Teknologi Sdn Bhd (“TERAS”)

- Infrared Advanced Technologies Sdn Bhd (“IRAT”)


2003 2002 2003 2002RM’000 RM’000 RM’000 RM’000

- - 26,868 -

1,018 - 1,018 -

753 - 753 -

- 141,088 - -

- 1,656 - -

6,079 12,679 - -

1,788 12,818 - -

299 450 - -

4,196 16,170 - -

5,878 1,711 - -

- 746 - -

cont.


31 December 2003




Expressway maintenance expenditure paid/payable to:

- subsidiaries of UEM World, namely:

- Soil Centralab Sdn Bhd

- PROPEL

- Rangkaian Segar Sdn Bhd (“RSSB”), an associated

company of UEM World

Expressway maintenance expenditure paid/payable to:

- UEM

- subsidiaries of UEM, namely:

- Teras Control Systems Sdn Bhd

- TERAS

Project management fees paid/payable to PLB, a subsidiary

of UEM World

Network maintenance management and technical services

performed for PLUS by subsidiaries of UEM World, namely:

- Opus International Consultants Sdn Bhd

- PLB

Provision of information technology services by TERAS,

a subsidiary of UEM

Corporate and administrative support services paid/payable to:

- UEM

- UEM Group Management Sdn Bhd, a subsidiary of

UEM World

- UEM Land Sdn Bhd (formerly known as Renong Berhad),a subsidiary of UEM World


2003 2002 2003 2002RM’000 RM’000 RM’000 RM’000

- 283 - -

181,368 96,170 - -

27 - - -

43,911 77,124 - -

1,951 2,147 - -

3,343 - - -

4,316 3,049 - -

- 13,865 - -

17,406 6,073 - -

3,276 1,719 789 -

36 8 13 8

961 905 45 -

- 32 - -

cont.


31 December 2003




Annual arranger fees paid to UEM in respect of RM50 million

syndicated bank guarantee facility

Amounts payable in respect of Directors’ remuneration:

- Khazanah Nasional Berhad

- UEM

Directors’ remuneration received from LINKEDUA,

a subsidiary of UEM

Amounts payable for service for operations:

- United Services & Automotive Industries Sdn Bhd,

a subsidiary of UEM

- TT dotCom Sdn Bhd (“TT dotCom”), an associated

company of UEM

Purchase of electronic toll collection system by PLUS from:

- IRAT, a subsidiary of UEM

- Rangkaian Segar Sdn Bhd (“RSSB”), an associated

company of UEM World

Rental and maintenance of office space paid/payable to Faber

Union Sdn Bhd, an associated company of UEM World

Toll collection received/receivable from ELITE, a subsidiary

of UEM

Toll collection paid/payable to ELITE, a subsidiary of UEM

Commission for Touch ’n’ Go paid/payable to RSSB, an

associated company of UEM World


2003 2002 2003 2002RM’000 RM’000 RM’000 RM’000

2,282 2,282 - -

6 9 4 3

2 7 - -

5 - 5 -

228 126 - -

400 161 128 -

687 6,704 - -

3,938 3,572 - -

2,647 2,569 733 -

7,366 11,259 - -

3,491 1,520 - -

12,688 10,844 - -

cont.


31 December 2003




Interest income received/receivable from Renong Debt

Management Sdn Bhd, a subsidiary of UEM Land Sdn Bhd,

in respect of Renong SPV Bond

Lease rental income received/receivable in respect of

fibre optic telecommunications network

and wayleave rights from TT dotCom,an associated company of UEM

Income from rental of facilities received/receivable from

associated companies of UEM, namely:

- TT dotCom

- TIME Reach Sdn Bhd

- TIMECEL Sdn Bhd

Professional and secretarial fees paid/payable to

Abu Talib Shahrom & Zahari, of which a director of UEM,

Abu Talib bin Abdul Rahman (resigned on 30 June 2003),

is a partner

Professional fees paid/payable to Signet Share Registration

Services Sdn Bhd, of which a director of the Company,

Dato’ Mohamed Azman Yahya, has interest

Management and administrative expenses received/receivable

from subsidiaries of UEM, namely:

- ELITE, a subsidiary of UEM

- PROPEL, a subsidiary of UEM World


2003 2002 2003 2002RM’000 RM’000 RM’000 RM’000

- 150,618 - -

12,502 11,405 - -

308 370 - -

166 133 - -

- 4,509 - -

509 1,094 - -

107 463 107 463

86 - - -

46 - - -



49 /53

• FINANCIAL INSTRUMENTS, FINANCIAL RISK MANAGEMENT

OBJECTIVES AND POLICIES cont


31 December 2003



Surplus funds where available are mainly placed with approved licensed banks. The Group is exposed to

changes in interest rates that affect interest income from fixed deposits.

The interest profile of the financial liabilities of the Group is as follows:

Fixed rate financial liabilities

Interest free financial liabilities

The weighted average rate on fixed rate financial liabilities applicable is as follows:

Weighted average interest rate/profit element (%)

Weighted average period for which rate is fixed (years)

The interest profile of the financial assets of the Group is as follows:

Floating rate financial assets (Note i)Financial assets on which no interest is earned (Note ii)

Group Group

2003 2002

RM’000 RM’000

6,223,640 6,251,275

962,000 962,000

7,185,640 7,213,275

Group Group

2003 2002

5.85 5.85

14.4 14.4

Group Group

2003 2002

RM’000 RM’000

1,244,406 924,789

6,031 5,268

1,250,437 930,057


31 December 2003





Note iFloating rate financial assets mainly comprise short term deposits placed with licensed banks. The short term

deposits placed with the licensed banks attracted interest /profit element during the year at rates ranging from2.45% to 3.43% (2002: 2.45% to 2.85%) per annum. The maturity dates for short term deposits during the

period range between 1 day to 7 months (2002: 1 day to 3 months).

Note iiFinancial assets on which no interest is earned comprise cash and bank balances.

b Market RiskThe Group holds investment in quoted shares of short term securities. The value of the securities is subject

to fluctuations as a result of changes in market prices whether those changes are caused by factors specific

to the individual security or its issuer or factors affecting all securities traded in the market.

c Foreign Currency RiskThere is no foreign currency financing obtained by the Group for the year ended 31 December 2003 and there

is no anticipation of foreign currency risk exposure for future transactions.

d Credit Risk

The carrying amount of sundry receivables, subsidiary and related company receivables represent the Group’smaximum exposure to credit risk.

The amount recoverable from the Government of Malaysia is not exposed to any credit risk to PLUS other than

if there are any amounts due from the Government upon expiry of the Concession Period in 2030, which will

be required to be unconditionally waived by PLUS, as disclosed in Note 3(c). The credit risk-free character of

the amount recoverable from the Government is in view of the toll compensation arrangements referred to in

Note 3(c).

e Liquidity RiskThe Group’s objectives on liquidity are to maintain a balance between meeting debt service obligations and

covenants, Expressway capital and operating expenditure and meeting shareholder distribution expectations.

f Maturity of Financial LiabilitiesThe maturity profile of the financial liabilities is disclosed in Note 23.

Undrawn committed facilities available at 31 December 2003 in respect of the financial liabilities comprise a

bank overdraft facility of RM50.0 million (2002: RM50 million).

51 /53




31 December 2003



g Fair ValuesThe carrying amounts of cash and short term deposits approximate their fair values because of the short

maturity periods of those instruments.

The fair value of the Group’s long term debt is based as follows:

• in respect of Borrowings comprising Government Support Loans, at the book value as market terms are not

applicable.

• in respect of BAIDS, is estimated by discounting the expected future cash flows using the indicative market

rates available for each of the series.

• in respect of BBA Serial Bonds, is estimated by discounting the expected future cash flows using the indi-

cative market rates available for each of the series.

Set out below is a comparison by category of book values and fair values of all the Group’s financial assets

and financial liabilities.

Borrowings

BAIDS

BBA Serial Bonds

Cash and short term deposits

* Inclusive of approximately RM26.6 million (2002: RM27.0 million) in sundry payables.

** The fair values for BAIDS and BBA Serial Bonds in issue are equivalent to their book values as their effec-

tive rates are considered to be market rates in view of their then recent issue.

2003 2003 2002 2002

Book Value Fair Value Book Value Fair ValueRM’000 RM’000 RM’000 RM’000

(962,000) (962,000) (962,000) (962,000)

(5,026,590)* (5,218,295) (5,127,035)* (5,127,035)**

(1,223,640) (1,005,946) (1,151,275) (1,151,275)**

1,250,437 1,250,437 930,056 930,056


31 December 2003



38 SIGNIFICANT EVENTS

i Under the Toll Compensation Arrangements, the Government agreed to grant PLUS tax exempt status for a

period of five consecutive years from 2002 to 2006. The exemption applies to PLUS’ ‘Adjusted Income’ fromall sources.

Pursuant to the above, the Minister of Finance has, on 25 June 2003, made an order which may be cited as

Income Tax (Exemption) (No. 34) Order 2003 (“Order”), exempting PLUS from payment of income tax in respect

of its adjusted income from all sources from the year of assessment 2002 until the year of assessment 2006.

ii On 26 November 2003, a major rockfall occurred at km21.8 (Northbound) at Bukit Lanjan, New Klang Valley

Expressway (“NKVE”). Following the rockfall incident and in view of concerns on public safety, the Govern-

ment has announced that the affected stretch of the NKVE would be closed for up to 7 months to facilitatethe necessary remedial works. As at 31 December 2003, the following costs were incurred in respect of the

Bukit Lanjan rockfall:

- write off of net book value of Bukit Lanjan slope of RM13.7 million; and

- repair and clearance cost of RM7.4 million.

39 SUBSEQUENT EVENTOn 18 February 2004, the Ministry of Works announced that the Government has approved the abolishment

of the Senai toll plaza effective 1 March 2004. The Senai toll plaza is part of the Senai-Johor Bahru Highway

stretching approximately 25 kilometres operated and maintained by PLUS. As a result of the abolishment, a

compensation of RM331.68 million will be made to PLUS by the Government. The detailed terms of the compen-

sation will be further negotiated with the Government.

40 SEGMENTAL REPORTING

Segmental reporting is not applicable to the Group on the basis that the revenue of the Group is mainly from

expressway toll collections and toll compensation recoverable from the Government, net of Government toll

sharing, as disclosed in note 25, and the Group operates principally in Peninsular Malaysia.


31 December 2003



41 COMPARATIVES

The following income statement comparative figures have been re-classified to conform with current year’s

presentation:

Group

General and administration expenses

Net finance expense

As

As Previously

Restated Adjus tmen ts Stated

RM’000 RM’000 RM’000

67,666 2,567 65,099

493,466 (2,567) 496,033

Documents

PLUS 2003 Annual Report - Notes to the financial statements