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CONTENTS02 Corporate Philosophy 03 Corporate Information 04 Financial Calendar05 Five-Year Group Financial Highlights 06 Revenue Breakdown For Financial Year 201007 Our Fleet 08 Fleet Graph 10 Our Underwater Assets 12 Corporate Structure 16 Calendar of Events17 Awards and Recognition 20 Chairman’s Statement 22 Operational Review 24 Board Of Directors Profiles 28 Senior Management Team 30 Corporate Responsibility 32 Audit Committee Report 38 Statement Of Corporate Governance 49 Statement Of Internal Control 51 Financial Statements 136 Analysis Of Shareholdings
VISIONTo Be The Preferred Offshore Services Partner In Oil & Gas Industry
MISSIONWe provide quality services to the offshore oil and gas industry with emphasis on:
• Promoting Health, Safety, Environment and Security Practices• Developing Human Capital Capabilities• Delivering Operational Excellence• Practicing Good Corporate Governance• Maximising Stakeholders’ Value
OUR SHARED VALUESTRUST, TRANSPARENCY, TEAMWORK, TACT AND TENACITY
2
ALAM MARITIM RESOURCES BERHAD (700849-K)
Corporate Philosophy
ALAM MARITIM GROUP is in compliance with theInternational Safety Management (“ISM”) Code in ourmaritime operations as well as internationally recognisedHealth, Safety and Environment Management System(“HSEMS”) in our business operations. ALAM MARITIMGROUP HSE-MS objectives are:
• Ensuring the existence of safe practices for marineoperations and compliance to health, safety andenvironment protection within the oil and gas industry.
• Ability to conduct risk assessment for all the activities.• Continual improvement on personnel skills on health,
safety and environment (“HSE”) by providing adequateresources on training implementation.
• Maintaining emergency preparedness by ensuring theemergency response system is regularly tested.
• The HSE-MS Objectives can be achieved through thefollowing means:
• Recognizing employees as valuable assets to thecompany, ALAM MARITIM GROUP is committed toprovide a healthy and safe working environment.
• Ensuring employees at every level are safeguarded fromidentified risks.
• Communicating to all employees, ensuring informationare shared and issues are properly addressed throughconsultation.
• Comply with the statutory requirements in the countrieswhere ALAM MARITIM GROUP operates and applyingconsistent HSE standards worldwide. As a minimumrequirement, internationally accepted codes andstandards shall be used in ALAM MARITIM GROUPoperations.
• Contractors managed by ALAM MARITIM GROUP shallcomply with ALAM MARITIM GROUP HSE standards asa minimum.
• Reviewing the HSE performance for frequent updatingto ensure continual improvement in areas where thereare weaknesses within the management system.
• Providing competent personnel and other resources asrequired in ensuring that work is being executed withconsideration towards total accident prevention.
ALAM MARITIM GROUP is totally committed in attainingexcellence towards the protection of Health, Safety andEnvironment, and would seek all Directors, Managers,Executives, every office base staff, and those marinersworking offshore on board ALAM MARITIM GROUP marinespread for their fullest undivided support to execute andmake ALAM MARITIM GROUP Policy on HSE a success andwe can be proud of together.
• Offshore support vessels.• Offshore installation and construction services.• Warehouse and logistics support.
We provide quality services to the offshore oil & gas industrywith emphasis on:
• Promoting health, safety, environment and securitypractises.
• Developing human capital capabilities.• Practising good corporate governance.• Maximising Stakeholders‘ Value.
HEALTH, SAFETY & ENVIRONMENT POLICY
Alam Maritim Group believes that sincere and continual commitment towards excellenceon Health, Safety and Environment is vital in sustaining and preventing injury to human orloss of life, damages to our assets as well as the preservation of the marine environment.
QUALITY POLICY
Alam Maritim Resources Berhad providesthe following services to the oil and gasindustry:
3
Annual Report 2010
Corporate Information
Board of Directors
Dato’ Captain Ahmad Sufian@ Qurnain bin Abdul RashidNon-Executive Chairman
Azmi bin AhmadManaging Director/Chief Executive Officer
Shaharuddin bin Warno @ RahmadExecutive Director/Chief Operating Officer
Ahmad Hassanudinbin Ahmad KamaluddinExecutive Director
Mohd Abd Rahman bin Mohd HashimExecutive Director
Ab Razak bin HashimExecutive Director
Dato’ Haji Ab Wahab bin Haji IbrahimNon-Executive Director
Fina Norhizah binti Haji BaharuZamanNon-Executive Director
Audit Committee
Dato’ Haji Ab Wahab bin Haji Ibrahim(Chairman)
Dato’ Captain Ahmad Sufian@ Qurnain bin Abdul Rashid
Fina Norhizah binti Haji BaharuZaman
Risk Management Committee
Fina Norhizah binti Haji BaharuZaman(Chairman)
Dato’ Haji Ab Wahab bin Haji Ibrahim
Shaharuddin bin Warno @ Rahmad
Ahmad Hassanudin bin Ahmad Kamaluddin
Azmi bin Ahmad(alternate member to Shaharuddin bin Warno @ Rahmad)
Nomination & RemunerationCommittee
Dato’ Captain Ahmad Sufian@ Qurnain bin Abdul Rashid(Chairman)
Dato’ Haji Ab Wahab bin Haji Ibrahim
Azmi bin Ahmad
Shaharuddin bin Warno @ Rahmad
Company Secretary
Haniza binti Sabaran, FCIS(MAICSA No.7032233)
Registered Office andCorrespondence Address
Alam Maritim Resources Berhad(HEAD OFFICE)No. 38F, Level 3 , Jalan Radin AnumBandar Baru Sri Petaling57000 Kuala LumpurMALAYSIATel : + 603 - 9058 2244Fax : + 603 - 9059 6845Website : www.alam-maritim.com.myEmail : [email protected]
Share Registrar
Tricor Investor Services Sdn Bhd(118401-V)Level 17, The Gardens,North Tower, Mid Valley City,Lingkaran Syed Putra,59200 Kuala Lumpur, MALAYSIATel : + 603 - 2264 3883
Auditors
Ernst & Young (AF0039)Level 23A Menara Milenium,Jalan Damanlela,Pusat Bandar Damansara,50490 Kuala Lumpur.Tel : + 603 - 7495 8000
Legal Advisor
Zul Rafique & PartnersD3-3-8Solaris DutamasNo.1 Jalan Dutamans 150480 Kuala LumpurMalaysiaTel : + 603 - 6209 8228
Principal Bankers
• Malayan Banking Berhad• Maybank International (L) Ltd• CIMB Bank Berhad • Bank Pembangunan Malaysia
Berhad• AmBank (M) Berhad• Bank Muamalat Malaysia Berhad• HSBC Amanah
Stock Exchange Listing
Listed on Main Market ofBursa Malaysia Securities Berhad(635998 - W)Sector : Trading/ServicesStock Name : ALAMStock Code : 5115
4
ALAM MARITIM RESOURCES BERHAD (700849-K)
Financial Calendar
29/04/2011
More than 10 percentDeviation between theComprehensive LossAttributable to Ownersof the Parent Stated inUnaudited and AuditedResults for the FinancialYear Ended 31December 2010
29/04/2011
Annual AuditedAccounts for theFinancial Period Ended31/12/2010
28/02/2011
Quarter Report onConsolidated Resultsfor the Financial PeriodEnded 31/12/2010
26/11/2010
Quarterly Report onConsolidated Resultsfor the Financial PeriodEnded 30/9/2010
26/08/2010
Quarterly Report onConsolidated Resultsfor the Financial PeriodEnded 30/6/2010
17/05/2010
Employees' ShareOption Scheme("Scheme")
14/05/2010
Proposed final dividendin respect of thefinancial year ended 31 December 2009
14/05/2010
1. Proposed Renewal of Authority for the Companyto Purchase Its Own Shares
2. Proposed Amendment to the Company's Articlesof Association
25/02/2010
Quarterly Report onConsolidated Resultsfor the Financial PeriodEnded 31/12/2009
20/07/2010
Alam MaritimResources Berhad(“AMRB”) proposedbonus issue of up to272,478,675 newordinary shares ofRM0.25 each in amrb(“share(s)”) (“bonusshare(s)”) on the basisof one (1) bonus sharefor every two (2) existingshares (“bonus issue”)
19/07/2010
Alam Maritim Resources Berhad (“AMRB”) proposedbonus issue of up to 272,478,675 new ordinaryshares of RM0.25 each in AMRB (“Share(s)”) (“BonusShare(s)”) on the basis of one (1) bonus share forevery two (2) existing shares held at a date to bedetermined and announced later (“Proposed Bonus Issue”)
06/07/2010
Notice of Bonus Entitlement
05/07/2010
Alam Maritim Resources Berhad (“AMRB”) proposedbonus issue of up to 272,478,675 new ordinaryshares of RM0.25 each in AMRB (“Share(s)”) (“BonusShare(s)”) on the basis of one (1) bonus share forevery two (2) existing shares held at a date to bedetermined and announced later (“Proposed Bonus Issue”)
25/06/2010
Fifth Annual GeneralMeeting
03/06/2010
Alam Maritim Resources Berhad (“AMRB”) proposedbonus issue of up to 272,478,675 new ordinaryshares of RM0.25 each in AMRB (“Share(s)”) (“BonusShare(s)”) on the basis of one (1) bonus share forevery two (2) existing shares held at a date to bedetermined and announced later (“Proposed Bonus Issue”)
02/06/2010
Notice of Book Closure
01/06/2010
Notice of Fifth AnnualGeneral Meeting
01/06/2010
Final Dividend
27/05/2010
Quarterly Rpt onConsolidated Resultsfor the Financial PeriodEnded 31/3/2010
19/05/2010
Alam Maritim Resources Berhad (“AMRB” or the“Company”) proposed bonus issue of up to272,478,675 new ordinary shares of RM0.25 each inamrb (“Share(s)”) (“Bonus Share(s)”) on the basis ofone (1) bonus share for every two (2) existing sharesheld at a date to be determined and announced later(“Proposed Bonus Issue”)
5
Annual Report 2010
5-year Group Financial Highlights
Revenue Profit Before Tax NTA
1,400,000,000
1,200,000,000
1,000,000,000
800,000,000
600,000,000
400,000,000
200,000,000
0
(200,000,000)
In RM
In Sen
2006
2007
2008
2009
2010
20.0
15.0
10.0
5.00
-
(5.00)
EPS (net)
RM 2006 2007 2008 2009 2010
Revenue 151,161,092 249,900,157 322,854,213 348,917,132 242,191,823
Profit before tax 60,853,274 68,522,841 100,711,492 112,524,398 (18,115,606)
NTA 450,680,936 746,842,527 950,454,515 476,472,759 1,295,790,935
EPS (net) 11.10 10.60 15.10 17.60 (2.13)
2006
2007
2008
2009
2010
6
ALAM MARITIM RESOURCES BERHAD (700849-K)
Revenue Breakdown For Financial Year 2010
2010% RM
1. Charter Hire 74.97% 181,572,851
2. Offshore Installation & Construction 11.28% 27,324,592
3. Sales of Diving Equipment 2.35% 5,691,220
4. Equipment Rental 2.35% 5,683,509
5. Other Shipping Related Income 5.07% 12,276,457
6. Ship Catering 0.67% 1,614,852
7. Vessel Management Fees 2.57% 6,220,915
8. Diving & Underwater Services 0.75% 1,807,427
100% 242,191,823
67 8
5
4
3
2
1
7
Annual Report 2010
Our Fleet
No Vessel name Type Year Built Classiffication BHP Dimension (L x B x D) Accommodations
1 Alam 281 280ft Deck Cargo Barge 2006 BV NA 85.34m x 24.38m x 4.88m N/A
2 Setia Station 1 300 Men Workbarge 2009 BV NA 105.8m x 31.70m x 7.31m 300 berths
3 1MAS-300 Pipelay Accommodation Workbarge 2010 ABS NA 115.6m x 31.7m x 7.31m 300 berths
4 Brompton Sun Multipurpose Supply Vessel/Crew Boat 2000 ABS 9,500 50.25m x 9.1m x 3.86m 200 Pax seating
5 Setia Kilas Crew Boat 2009 ABS 4,200 40.38m x 7.80m x 3.40m 80 Pax seating
6 Setia Deras Crew Boat 2009 ABS 4,200 40.38m x 7.80m x 3.40m 80 Pax seating
7 Setia Cekal Diving Workboat 1996* SCM 4,400 62m x 14.8m x 4.9m 60 berths
8 Setia Sakti DP2 Accommodation/ Workboat 2008 BV 5,150 76m x 20m x 6.1m 134 berths
9 Setia Aman Accommodation/ Workboat 2009 BV 5,220 78m x 20m x 6.5m 174 berths
10 Setia Ulung Accommodation/ Workboat 2009 BV 5,220 78m x 20m x 6.5m 174 berths
11 Setia Cekap Tug Utility 2005 BV 3,500 45m x 11m x 4.0m 20 berths
12 Setia Azam Tug Utility 2007 NKK 3,880 45m x 11.8m x 4.6m 20 berths
13 Setia Wira Tug Utility 2007 BV 3,500 48m x 11.8m x 4.6m 28 berths
14 Setia Yakin Tug Utility 2008 NKK 3,200 45m x 11m x 4.0m 28 berths
15 Setia Zaman Tug Utility 2008 NKK 2,400 40m x 11.8m x 4.6m 26 berths
16 Setia Budi Tug Utility 2008 NKK 2,400 40m x 11.8m x 4.6m 20 berths
17 Setia Gagah Straight Supply Vessel 2003 NKK 4,750 60m x 13.3m x 6.0m 23 berths
18 Setia Handal Straight Supply Vessel 2003 BV 3,000 50m x 11.58m x 4.2m 22 berths
19 Setia Kasturi Straight Supply Vessel 2005 NKK 4,750 60m x 13.3m x 6.0m 24 berths
20 Setia Indah Straight Supply Vessel 2005 BV 4,750 57.5m x 13.8m x 5.5m 42 berths
21 Setia Gigih Straight Supply Vessel 2009 BV 5,220 60m x 13.3m x 6.0m 46 berths
22 Setia Kental Straight Supply Vessel 2009 BV 5,220 60m x 13.3m x 6.0m 46 berths
23 Setia Jaguh Anchor Handling Tug Supply Vessel 1999 BV 8,920 64 m x 15 m x 6.8 m 31 berths
24 Setia Emas Anchor Handling Tug 2004 BV 4,750 48 m x 13.2m x 5.20m 24 berths
25 Setia Fajar Anchor Handling Tug Supply Vessel 2005 BV 5,150 58.7m x 14.6m x 5.50m 42 berths
26 Setia Lestari Anchor Handling Tug Supply Vessel 2005 BV 4,750 58.7m x 14.6m x 5.50m 42 berths
27 Setia Nurani Anchor Handling Tug Supply Vessel 2005 BV 5,150 59m x 14.6m x 5.50m 42 berths
28 Setia Padu Anchor Handling Tug Supply Vessel 2006 BV 5,150 58.7m x 14.6m x 5.50m 42 berths
29 Setia Rentas Anchor Handling Tug Supply Vessel 2007 BV 5,150 58.7m x 14.6m x 5.50m 42 berths
30 Setia Tangkas Anchor Handling Tug Supply Vessel 2007 BV 5,150 8.7m x 14.6m x 5.50m 42 berths
31 Setia Unggul Anchor Handling Tug Supply Vessel 2007 BV 5,150 58.7m x 14.6m x 5.50m 42 berths
32 Setia Wangsa Anchor Handling Tug Supply Vessel 2007 BV 5,150 59.25m x 14.95m x 6.10m 42 berths
33 Setia Tegap Anchor Handling Tug Supply Vessel 2008 BV 5,000 58.7m x 14.6m x 5.50m 42 berths
34 Setia Teguh DP1 Anchor Handling Tug Supply Vessel 2008 BV 5,150 59.25m x 14.95m x 6.10m 42 berths
35 Setia Hebat DP1 Anchor Handling Tug Supply Vessel 2008 BV 5,000 58.7m x 14.6m x 5.50m 50 berths
36 Setia Iman DP1 Anchor Handling Tug Supply Vessel 2010 BV 5,150 59.25m x 14.95m x 6.10m 42 berths
37 Setia Luhur DP1 Anchor Handling Tug Supply Vessel 2010 BV 5,150 59.25m x 14.95m x 6.10m 42 berths
38 Setia Erat DP1 Anchor Handling Tug Supply Vessel 2010 BV 5,150 58.7m x 14.6m x 5.50m 42 berths
39 Setia Qaseh DP1 Anchor Handling Tug Supply Vessel 2010 BV 5,150 58.7m x 14.6m x 5.50m 42 berths
40 Setia Abadi Utility Vessel 1980 BV 1,040 29.33m x 7.08m x 3.0m 21 berths
41 Setia Damai Utility Vessel 1985 SCM 1,608 33.6m x 10.08m x 2.77m 16 berths
42 Setia Jati DP2 Anchor Handling Tug Supply Vessel 2012 ABS 12,000 75m x 17m x 8m 50 berths
(New building)
43 Setia Perkasa DP2 Anchor Handling Tug Supply Vessel 2012 ABS 12,000 75m x 17m x 8m 50 berths
(New building)
* Built in 1974, refurbished in 1996
8
ALAM MARITIM RESOURCES BERHAD (700849-K)
Fleet Graph
Anchor HandlingTug Supply Vessel
Tug/Terminal Support Vessel
Multipurpose Support /Accommodation WorkVessel
Crew Boats/Utility Vessel
Anchor Handling Tug/Terminal Support Vessel Straight Support Vessel
Brakehorsepower
(BHP)
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
02000 2001 2002 2003 2004 20051999
9
Annual Report 2010
Brakehorsepower
(BHP)
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
02006 2007 2008 2009 2010 As at May 2011
Supply Vessel Utility/Maintenance Vessel
Fast Multipurpose Supply vessel
Multipurpose Suppport Vessel Utility/Maintenance Vessel Fast Multipurpose Supply Vessel
10
ALAM MARITIM RESOURCES BERHAD (700849-K)
Our Underwater Assets
Model : PARI SERIES125HP Work-Class ROV
Type : 1,500m (Free-swimming)Dimensions : Length x Width x Height
2,500mm x 1,450mm x 1,800mmWeight in air : 2,400kgPerformance : Forward 700kgf 3.5 knots
Lateral 550kgf 3.0 knotsVertical 500kgf 1.5 knots
Work Capabilities : • Marine and subsea construction/installation support
• Drilling, production & work-over support
• Facility inspection, maintenance and repair support
Model : JERUNG SERIES (3000 MSW) C/W160HP Work-Class ROV
Type : 3,000m (TMS)Power : 440V, 300amps, 50/60Hz
Tooling Options : a. Friction welding for anode installationb. Cable and jumper installationc. Cutting, cleaning and torque toolsd. Wellhead intervention toolse. Cable and pipeline tracker system and trenchingf. Other specialised tooling-marine salvage support
& facility decommission
TETHER MANAGEMENT SYSTEMMajor Diameter : 1,800 mmHeights : 2,000 mmWeight in Air : 2,200 kgWeight in Water : 2,000 kgExcursion Tether Length : 250 metersDesign : Lloyds DNV Rules Sea State 5/6
REMOTELY OPERATED VEHICLE (ROV)
Model : KINGFISHERInspection and LightWork-Class ROV
Type : 300 metersDimension : Length x Width x Height
1400mm x 900mm x 1,100mmWeight in air : 500kgsPerformance : Forward 110kgf 3.0 knots
Reverse 77kgf 3.0 knotsLateral 73kgf 2.5 knotsVertical 55kgf 1.5 knots
Work Capabilities : • Light construction support• Survey support• Seabed mapping / site surveys
Power : 440V, 100amps, 50/60Hz
alam maritim 2010 :Layout 1 5/13/11 7:12 PM Page 10
11
Annual Report 2010
SETIA SELAM 1: 200M 9-MAN SATURATION DIVINGSYSTEM 3-MAN BELL C/W
Divebell
Control and Machinery Van Launching and Recovery System
Surface Decompression Chamber
Generic Specification
The 200m, 9-man saturation diving system with 3-man bell,was designed and fabricated to IMCA DESIGN D024 Standardin 2004 and certified by the American Bureau of Shipping(ABS). The system has undergone Thermal Test successfullyin January 2005 as recommended by International MarineContractor Association (IMCA).
The system is designed to provide the Clients withdeployment flexibility to suit their operating requirementsvis-à-vis 3 diver utilization, uninterrupted diver-change-outs,split-saturation depths, capability, and could be configured tosuit the deck space availability onboard pipe lay barge, heavylift barge, Dynamically Positioning Diving Support Vessel (DPDSV) and also for inland dam work.
The system could be disassembled and land transported toany location via low-loaders and trailers since the height ofthe major components including the road transporters. This200m 9-man saturation diving system 3-men bell comprises7 major lift components; Main Module Skid, Winch Skid,Control Van, Machinery Van, Workshop/Store Container;Hyperbaric Rescue Chamber Flyaway Van and HyperbaricRescue Chamber Skid.
SETIA SELAM 2: 50M AIR/MIXED GAS DIVING SYSTEM C/W
Generic Specification
The IMCA D023 DESIGN compliant air/mixed gas diving system comprises the following units:
A. Control Van - a 20 footer air-conditioned container with lighting and power points, complete with Dive Supervisor’s desk,dive control panel, CCTV, video recorders, divers communication, umbilical and deck decompression chamber.
B. Machinery Van - a 20 footer container complete with hydraulic power pack, air/gas cylinders, air bank, a low pressurecompressor, a high pressure compressor and two exhaust fans.
C. Launching and Recovery System - a skid mounted complete with a 2 tonne A-Frame, a dive stage, clump weight,hydraulic winch and tool box.
ALAM MARITIM (L) INC
ALAM-JV DP 1 (L) INC 100%
60%
51%
49%
100%
ALAM FAST BOATS (L) INC
ALAM BROMPTON (L) INC
TH-ALAM HOLDINGS (L) INC
60%WORKBOAT INTERNATIONALDMCCO
51%ALAM RADIANCE (L) INC
50%ALAM SWIBER DLB 1 (L) INC
WHOLY-OWNED
COMPANIES
PARTIALLY-OWNED
COMPANIES
50%TH ALAM MANAGEMENT(M) SDN BHD
ALAM SUBSEA PTE LTD 100%
75%EASTAR OFFSHOREPTE LTD
ALAM-JV DP 2 (L) INC
ALAM-PE I(L) INC
100%
100%
ALAM-PE II(L) INC
100%
ALAM-PE III(L) INC
100%
ALAM-PE IV(L) INC
100%
12
ALAM MARITIM RESOURCES BERHAD (700849-K)
Corporate Structure(as of 29 April 2011)
ALAM MARITIM (M) SDN BHD
ALAM OFFSHORE LOGISTICS & SERVICES SDN BHD
ALAM FOOD INDUSTRIES (M) SDN BHD
100%
100%
100%
84%
70%
60%
60%
60%
60%
100%
KJ WAJA ENGINEERING(M) SDN BHD
KJ WAJA SERVICESSDN BHD
ALAM HIDRO (M) SDN BHD
ALAM EKSPLORASI (M) SDN BHD
ALAM SYNERGY I (L) INC
ALAM SYNERGY II (L) INC
ALAM SYNERGY III (L) INC
49% ALAM-PE HOLDINGS (L) INC
50% ALAM RADIANCE (M) SDN BHD
50% ALAM SWIBER OFFSHORE (M)SDN BHD
ALAM-PE V(L) INC
100%
ALAM-PEHOLDINGSSDN BHD
100%
13
Annual Report 2010
14
ALAM MARITIM RESOURCES BERHAD (700849-K)
Corporate Structure (cont’d.)(as of 29 April 2011)
No. Company Date and Place Issued and Effective Equity Principal Activityof Incorporation Fully Paid-Up Interest (%)
Share Capital
1. Alam Maritim (M) Sdn Bhd 15.07.1996 Malaysia RM20,000,000.00 100% Ship owning, ship managing, hiring,(“AMSB”) chartering and other related services
2. Alam Maritim (L) Inc (“AMLI”) 14.06.2004 F.T Labuan, USD8,940,100.00 100% Investment holding and ship owningMalaysia
3. Alam Offshore Logistics 20.09.2000 Malaysia RM100,000.00 100% Transportation, ship forwarding, shippingServices Sdn Bhd agency, ship chandelling and other (“Alam Offshore Logistics”) related services
4. Alam Food Industries (M) 14.04.2008 Malaysia RM100,000.00 100% Catering and messing servicesSdn Bhd (“Alam Food Industries”)
5. KJ Waja Engineering (M) 16.11.2000 Malaysia RM1,500,000.00 84% Ship repair & maintenance andSdn Bhd (“KJ Waja”) other related services
6. KJ Waja Services Sdn Bhd 21.07.2005 Malaysia RM100,000.00 84% Supply of ship spares(“KJWS”)
7. Alam Subsea Pte Ltd (“ASPL”) 01.01.2008 Singapore SGD500,000.00 75% Provision of integrated marine serviceto oil and gas companies
8. Eastar Offshore Pte Ltd 01.03.2006 Singapore SGD628,203.00 75% Designing, manufacturing and(“Eastar Offshore”) operating of remotely operated vehicle
(ROV)
9. Alam Hidro (M) Sdn Bhd 05.02.1999 Malaysia RM500,000.00 70% Offshore facilities construction,(“AHSB”) installation, subsea engineering and
underwater services
10. Alam Eksplorasi (M) Sdn Bhd 21.11.2000 Malaysia RM300,000.00 60% Ship owning, ship operating and(“AESB”) chartering
11. Alam Synergy I (L) Inc (“AS I”) 18.09.2006 F.T Labuan, USD1,050,000.00 60% Ship owning and charteringMalaysia
12. Alam Synergy II (L) Inc 18.09.2006 F.T Labuan, USD1,050,000.00 60% Ship owning and chartering(“AS II”) Malaysia
13. Alam Synergy III (L) Inc 18.09.2006 F.T Labuan, USD2,795,000.00 60% Ship owning and chartering(“AS III”) Malaysia
14. Workboat International 03.05.2005 AED1,000,000.00 60% Ship manager, ship operatorDMCCO (“Workboat International”) United Arab Emirates and marine consultancy
15. Alam Fast Boats (L) Inc. 26.08.2008 F.T Labuan, USD100.00 60% Ship owning, ship managing catering,(“AFBLI”) Malaysia chartering and other related services
16. Alam Brompton (L) Inc 15.06.2007 F.T Labuan, USD1,350,000.00 51% Ship management & operation, ship(“ABLI”) Malaysia owning, ship maintenance and marine
consultancy
17. Alam Radiance (L) Inc. 28.5.2009 F.T Labuan, USD3,500,000.00 51% Ship owning, ship management, ship(“ARLI”) Malaysia operation
18. Alam Radiance (M) Sdn Bhd 30.11.2004 Malaysia RM2.00 50% Ship owning, ship management, ship(“ARSB”) operation, maintenance and consultancy
19. Alam Swiber DLB 1 (L) Inc 14.09.2009 F.T Labuan, USD10,000,000.00 50% Ship owning and ship chartering(“ASDLB1”) Malaysia
15
Annual Report 2010
No. Company Date and Place Issued and Effective Equity Principal Activityof Incorporation Fully Paid-Up Interest (%)
Share Capital
20. Alam Swiber Offshore 07.12.2009 Malaysia RM100.00 50% Ship operator(M) Sdn Bhd (“Alam Swiber”)
21. TH Alam Management (M) 04.05.2010 Malaysia RM2.00 50% Ship Management & consultancySdn Bhd (“ TH Alam Management”)
22. Alam -PE Holdings (L) Inc. 17.10.2008 F.T Labuan, USD14,000,000.00 49% Investment holding(“APEHL“) Malaysia
23. Alam -PE I (L) Inc (“Alam-PE I”) 21.8.2008 F.T Labuan, USD100.00 49% Ship owning, ship operating & charteringMalaysia
24. Alam -PE II (L) Inc (“Alam-PE II”) 21.8.2008 F.T Labuan, USD100.00 49% Ship owning, ship operating & charteringMalaysia
25. Alam -PE III (L) Inc (“Alam-PE III”) 21.8.2008 F.T Labuan, USD100.00 49% Ship owning, ship operating & charteringMalaysia
26. Alam -PE IV (L) Inc (“Alam-PE IV”) 21.8.2008 F.T Labuan, USD100.00 49% Ship owning, ship operating & charteringMalaysia
27. Alam-PE V (L) Inc (“Alam-PE V”) 21.8.2008 F.T Labuan, USD100.00 49% Ship owning, ship operating & charteringMalaysia
28. Alam -PE Holdings Sdn Bhd 16.09.2008, Malaysia RM2.00 49% Management Company(“APEHSB”)
29. TH-Alam Holdings (L) Inc 30.12.2009 F.T Labuan, USD17,759,995.00 49% Investment holding(“THAL”) Malaysia
30. Alam-JV DP1 (L) Inc (“AJVDP1”) 02.07.2009 F.T Labuan, USD1.00 49% Ship owningMalaysia
31. Alam-JV DP2 (L) Inc (“AJVDP2”) 02.07.2009 F.T Labuan, USD1.00 49% Ship owningMalaysia
*F.T Labuan = Federal Territory of Labuan
16
ALAM MARITIM RESOURCES BERHAD (700849-K)
Calendar of Events
1 January 2011Delivery of Setia Station 1, a newly built accommodationcrane work barge vessel to Alam Maritim Group.
8 January 2011Alam Maritim Group launched its Green The Earth Day Program atDanau Perikanan, Taman Pertanian Malaysia, Bukit Cerakah, Shah Alam.
13 January 2011
Alam Maritim Group sponsored 120 bicycles to students of SM Tengku Nur Zahirah, Besut, Terengganu in conjunction with CSRprogram organised by Petronas Carigali Sdn Bhd (PeninsularMalaysia Operation).
21 August 2010
Alam Maritim Group presented financial contributions to Rumah Nurhasanah,Pusat Jagaan Baitul Hidayah and Pusat Jagaan Siti Nuraini, Kajang during MajlisSilaturrahim Ramadhan 2010.
25 November 2010Launching ceremony of 1Mas - 300, a newly built 300 men pipelayaccommodation work barge to Alam Maritim Group.
1 October 2010Delivery of MV Setia Luhur, a newly built DP15,150 bhp anchor handling tug supply vessel toAlam Maritim Group.
17 August 2010Delivery of MV Setia Iman, a newly builtDP1 5,150 bhp anchor handling tug supplyvessel to Alam Maritim Group.
18 October 2010Alam Maritim Group was invited as a strategic partner in Carnival My Pelaut organized by MalaysianMarine Department in Celebration of World Maritime Day 2010.
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Annual Report 2010
Awards and Recognition
Year Achievement
2011 Contractor Safety Recognition by ExxonMobil - Marine Contractor of the Quarter Award 2011 in Recognition of Outstanding Contribution to Safety.
2011 HSE Performance Gold Award by PETRONAS Carigali Sdn Bhd – Recognition of HSE Achievement, “Green the Earth” (Environment Category).
2010 HSE Special Award to Alam Maritim Resources Berhad In Recognition Of 250 Days Free Of Total Recordable Case (TRC)
2009 Safety Recognition by ExxonMobil Hurt-Free Operations > 100, 000 Man-Hours
2009 PETRONAS Group HSE & Sustainability Awards FY2008/2009 Major Contractor Safety Category Merit Award In Recognition To Project Of HSE Mentor-Mentee Program In Alam Maritim
2009 Recognition by Carigali Hess For MV Setia Wangsa-Completion of 1 Year Service Without Any Loss Time Injury (“LTI”).
2009 Contractor’s Safety Recognition by ExxonMobil – Injury Free for Contractor Recording up to 100,000 Man-Hours.
2008 ISO 9001:2000 Certification by Bureau Veritas to Alam Maritim Resources Berhad, Alam Maritim (M) Sdn Bhd, Alam Hidro (M) Sdn Bhd And Alam Offshore Logistics & Services Sdn Bhd.
2008 Achievement of 2.7 Million Safe Work-Hours without Loss Time Injury (LTI).
2007 HSE Performance Award by PETRONAS Carigali Sdn Bhd - Recognition of an Excellent HSE Achievement.
2006 Contractor Safety Recognition “Gold Award’ by ExxonMobil-Recognition of Safety Excellence 2006.
2006 Contractors HSE Award by PETRONAS Carigali Sdn Bhd - Recognition of an Excellent HSE Achievement.
2005 Gold Award by PETRONAS Carigali Sdn Bhd - Recognition of Excellent HSE Performance for 2004/2005.
2004 Contractor Safety Recognition “Gold Award” by ExxonMobil – Recognition of Safety Excellence.
2003 Contractor Safety Recognition “Gold Award” by ExxonMobil – Recognition of Safety Excellence in 2003/2004.
2003 Certificate of Achievement 2.4 Million Man-Hours without Loss Time Injury –HSE Performance from TL Offshore Sdn Bhd.
2002 Contractor Safety Award Program by ExxonMobil - Recognition of Safety Excellence.
2001 Contractor Safety Award Program by ExxonMobil – Excellent Safety Performance.
My fellow shareholders,
On behalf of the Board ofDirectors, it gives me greatpleasure to present the AnnualReport of Alam MaritimResources Bhd (AMRB) for the financial year ended 31 December, 2010.
CHAIRMAN’S STATEMENT
ECONOMIC OVERVIEW
In the year under review we witnessed a modestrecovery in the world economy with an averagegrowth of about 3.9% after the contraction in 2009.In Asia the outlook remains strong underpinned bystrengthening domestic demand.
The Malaysian economy in 2010 rebounded by 9.4%,year on year, buoyed by strong exports and aresurgence of demand from the domestic market.Inflation averaged at a manageable rate of slightlyless than 2%. In a nutshell, the Malaysian economyseems firmly on the recovery path, with manyinitiatives undertaken by the Government.
INDUSTRY OVERVIEW
Despite the recovery, the oil and gas industry was notgrowing at similar pace compared to the othereconomic sectors, judging from the cutback in theinvestments and postponements of projects. Wecould say the worst of the global economic meltdownwas over but the pace of recovery varied fromindustry to industry. The oil and gas industry was stillin recovery mode and was grappling with such issuesas debt over hangs and tight credit facilities. Globaldemand shrank from about 86 million barrels perday in the first half of 2008 to about 84 million barrelsper day in 2010, a decline of some 2 million barrelsper day – the biggest decline in over 3 decades.Demand contraction could not have come at a worsetime for the industry, which has invested heavily inprevious years when prices were peaking and WTIreaching record high of USD147 per barrel in July2008. Since then prices have been sliding downwardsand plunged to a level low USD40 per barrel beforegradually strengthening to the current level. And,
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ALAM MARITIM RESOURCES BERHAD (700849-K)
21
Annual Report 2010
compounding this was the fact thatwhilst oil prices and global demand fell,cost remain high – a 50% - 60% declinein oil prices commensurate with a 5%-6% decline in major costs such asdrilling rigs, construction of facilitiesand prices of commodities. Thisenvironment of ‘low price and high cost’has adversely impacted the industry’smargin, leading to a period ofuncertainty and cautious approach byindustry players in moving forward.Understandably, we see deferment ofprojects, cancellations and manpoweroptimization as we come into 2010.Hence, consequently, we continue tosee the ‘soft patches’ in the oil and gasindustry during the year under reviewwhile the industry players get their actsadjusted to the new scenario. Webelieve a full recovery could still besome way away.
FINANCIAL HIGHLIGHTS
For the year ended 31 December 2010,AMRB posted a net loss of RM13.0million from a revenue of RM242.2million. Earnings per share for the yearstood at 2.2 sen per share while nettangible assets per share was 60 sen.In contrast to 2009, the financials of2010 are without a doubt weaker, butthen 2010 was not an ordinary oraverage year, with trials andtribulations at every corner. This isattributable mainly to impairment losson trade receivables.
Under the circumstances we haveperformed well, keeping the companyon a steady course, and we hope toreap the benefits of the betteroperating environment in 2011.
OUTLOOK
Bank Negara has recently reported thatit expects Malaysia’s GDP to grow byabout 5% to 6% in 2011 with inflationexpected to increase to about 2.5% to3.5% this year. Numeroustransformation efforts including theEconomic Transformation Program orETP, the New Economic Model and the10th Malaysia Plan, among others,helped boost the sentiment and kickstart the economy throughout 2010 andinto 2011.
Interestingly the oil and gas sector isidentified as part of the 12 National KeyEconomic Areas, which will beemphasized on by the Government.This should not come as a surpriseconsidering the oil and gas sectormakes up about 20% of Malaysia’s GDPand contributes up to 40% to thegovernment’s coffers.
With the ETP and the Government’sfocus on oil and gas sector plus theplanned capital expenditure of aboutRM40 billion by PETRONAS for 2011,we remain positive about the offshoreservices industry in the years ahead.
STRATEGIC PARTNERSHIP
We have taken various strategic stepsto ensure that we are well positioned toparticipate actively in the expectedgrowth of the business sector.
Towards the end of 2009 AMRB formedtwo joint venture companies; AlamSwiber DLB1 (L) Inc and Alam SwiberOffshore (M) Sdn Bhd with SWIBER GROUP, a Singapore basedinternational operator to venture intopipeline installation and offshoreconstruction activities. Alam Swibertook delivery of a pipe laying barge inSeptember last year and is pursuingsome projects to keep her employed.
In October 2010 AMRB signed aMemorandum of Understanding withstate controlled Yayasan Sabah which isaggressively seeking to increase itsinvolvement in the oil and gas industry.The three main areas which YayasanSabah and Alam Maritim plan toventure into include pipelineinstallation, marine services andsubsea works.
Other than the above, Alam Maritim’sunit Alam Maritim (L) Inc also formed ajoint venture with Singapore basedPacific Crest Pte Ltd to own anaccommodation working barge valuedat US$29 million.
CORPORATE EXERCISE
A bonus issue of one for two wasapproved at the AGM held on 25 June2010 and in July 2010 the bonus issueamounting to 254,237,816 millionshares of RM0.25 each was floated onthe Bursa Malaysia.
ACKNOWLEDGEMENT & APPRECIATION
On behalf of the Board of Directors I would like to bid farewell to YBhgDato’ Mohamed Idris bin Mansor whohas left us in April 2010 for a positionon the Board of PETRONAS.
It was a pleasure working with Dato’Idris on our Board especially with hiswealth of experience in the oil and gasindustry. We wish him well in his newposition with Petronas.
I would also like to welcome on boardPuan Fina Norhizah binti Haji BaharuZaman as an Independent Non-Executive director. Her vast experiencegarnered in PETRONAS, and MISCcoupled with her legal background willbe an asset for the Board of AMRB.
I would like to thank our stakeholdersfor their continuous trust, support andconfidence in AMRB. My sincereappreciation also goes to ourcustomers, shareholders, businessassociates as well as the variousregulatory and government authorities.Last but not least my thanks to thededicated management team andemployees for their commitment and contribution to the success of Alam Maritim.
DATO’ CAPTAIN AHMAD SUFIANChairman
29 April 2011
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ALAM MARITIM RESOURCES BERHAD (700849-K)
OPERATIONAL REVIEW
The Expectation
Following our sterling performance in FY2009 that boasted a22 percent increase in the net profit, we entered the FY2010with sky-high expectations. Having been backed by strongfundamentals and promising market outlook, we sailed thesea with confidence to deliver yet another year of stellarresults to our shareholders.
However, FY2010 ended up being a very tough year for us.The marginal growth in revenue recorded in 2009 was indeeda signal to even more sluggish year of 2010. Oil majors werecautious in their spending, hence only limited number of newcontracts was put on tender. In addition, longer termcontracts were temporarily suspended or subjected to earlytermination. Floods of new players were competing for thelimited number of new contracts, whilst weaker US dollarput more pressure on the already softening daily charter rates.
The business conditions for Offshore Support Vessel (OSV)players remained choppy even towards the 3Q 2010 when themonsoon season had well ended. As a result, the averageutilisation rate of vessels drop significantly, hence theperformance of OSV segment was under pressure.
Looking back at the challenges in 2010, we consider thatFY2010 the most trying year for our Group’s operations sincewe become a main market-listed OSV and integratedoffshore support services company in 2006. Despite tryingour best to deliver optimal result for the shareholders, we only managed to post a revenue of RM242.2 million, 30 percent lower than FY2009 (RM347.4 million). Inevitably,we recorded a net loss of RM13.0 million from a net profit ofRM95.4 million in 2009.
The Postmortem
Our analysis revealed that the slide in earnings wasundoubtedly influenced by several internal and externalfactors. By and large, lower contributions were recorded fromall business sectors vis-a-vis, OSV and Underwater Services,that comprised Offshore Installation & Construction (OIC) aswell as from the Remotely Operated Vehicle (ROV) business,hence significantly affecting the overall performance of ourGroup FY2010.
Unemployed Group’s bigger-sized vessels that were due forrepair and maintenance during the reviewed period furthercaused under utilisation and directly impacted our top andbottom lines. The OSV segment was under more pressurewhen three of our AHT/Supply vessels failed to secure anyjob since the Q4 2010. The average utilisation rate of ourvessels dropped from an average of 90 percent in FY2009 toonly 75 percent in FY2010.
The OSV segment suffered not only in terms of lower averageutilisation rate but also due to softening daily charter ratesarising from overcapacity and cautious stand adopted by oilmajors around the world post economic downturn. The ratesdived from USD2.70 and USD2.20 (FY2009) to the range ofUSD1.75 to USD1.70 per brake horse power for the yearunder review. Besides, weaker US Dollar affected our Grouprevenue to a certain extent. The intense competition amongthe players also did not help the situation.
The detailed revenue contributed by business segments in2010 as compared to 2009 is tabulated for ease of reference.
Segment Revenue (RM Million)
2010 2009
OSV 199.8 223.2
Underwater services, OIC and ROV 47.8 146.9
The Strategy
Having gone through a tsunami that wiped out our profit in2010, we are determined to bounce back and reverse thesituation. With our strong cash and bank balances (FY2010)amounting to RM167.0 million, and shareholders’ funds ofRM465.0 million, we are doing our best to improve thebottom-line figures.
Our strategy is to improve our OSV marketability and henceincreasing average utility rate by exploring not only local butglobal opportunities through existing partners andprospective alliances. Our decisions will be driven by rankingopportunity costs and evaluation for strategic impact atGroup level and on bottom-line. Hence, we will disciplineourselves and ensure a better understanding of the risksinvolved in our operation especially when venturing into newopportunities. We will take all necessary steps to ensure thatour project execution capabilities, from beginning untilcompletion of projects and collection of payment, will beimproved in order to achieve expected returns from ourventures, and also from a longer term perspective overallmanagement capabilities have to excel in view to becominga leading upstream service provider.
As your responsible Management, we are determined toachieve integrity, operational excellence and value for all ourstakeholders. We have identified that in addition to theexternal factors as mentioned earlier; there are several areasin our operations that could benefit from someimprovements and changes in our way of doing business to
ensure non-recurrent of any sub-optimal decisions.Accordingly, we will review our organisational structure to ensure that the business units have greater ownership, comprehensive KPIs and effective control overtheir business.
Moving forward, we will not only limiting ourselves toservicing Malaysian waters, but our strategic partnershipwith established global and regional players such as SwiberGroup and Pacific Radiance Group will become the catalystfor our next venture on the global front. We are now ready tolook for global opportunities in order to bring in more ordersfor our shareholders.
We will place emphasis on strategizing for our new pipe-laybusiness. The recent delivery of our co-owned 300-tonne1MAS-300, the first Malaysian pipe-lay accommodation workbarge of its class, will be the main asset to support any OICcontracts to be secured in 2011 and beyond. We envisage thatwith our strategic partner; Yayasan Sabah on board, we arebetter positioned to make in-roads to participate in the pipeinstallation work, among others, particularly in Sabahwaters.
In order to address the issue of tight availability of dockingspace for vessels to go for statutory surveys and routinemaintenance, we are in the midst of building our own shiprepair facilities at Kuala Linggi Yard in Melaka. We expect tohave the full complement of the services by Q1 2012.Currently, the shipyard is undertaking limited scope of such services.
To overcome downtime due to vessels incidents andaccidents, our Health Safety & Environment (HSE)commitment is to reduce the number of accidents andincidents involving our vessels and operations. In line withPETRONAS campaign for “Zero Tolerance” on unsafepractices, we officially launched ‘ANDA LALAI ANDAMERANA’ campaign on 19 April 2011 targeting the entireGroup of companies including our fleet with primaryobjective to inculcate excellent HSE culture among ouremployees. The numerous awards and certificates ofappreciation we received in the beginning of 2011 from ourclients such as PETRONAS and ExxonMobil reflected thepositive progress we have achieved in this area.
Complementing our HSE efforts to enhance the performanceof the Group and provide guidance to drive the employeestowards high performance work culture are our sharedvalues of TRUST, TRANSPARENCY, TEAMWORK, TACT andTENACITY. While our vision and mission statement give us asense of purpose, the shared values define what we believein and what we stand for. Together they serve as guidingprinciples in our pursuit of operational excellence.
The Outlook
It was reported that oil price per barrel has peaked aboveUSD114 due to the political uncertainties in Libya and theMiddle East. Although this could be considered a short-terminfluence, the fundamentals that should support high oilprice are seen to be strong.
Based on the current scenario, we believe that the crude oilprice will continue building up with revised forecast foraverage price at above USD100 per barrel for 2011 and evenhigher in 2012. We also believe that these higher levels arelikely to be sustainable on the back of recovery in the globaleconomy, which will spur oil demand.
We believe that the Economy Transformation Program andthe twelve National Key Economic Areas initiated by ourGovernment will benefit our oil and gas industry. PETRONAS’plan on capital expenditure for 2011 and its recentannouncement on its intention to develop about 25% of atotal 106 marginal fields in Malaysia, boost our confidencelevel as we sense more opportunities for integrated offshoreservices providers like us.
The move by the national oil company to refocus on local oilfields development is also expected to open more doors of opportunity.
We will endeavour to take full advantage of the optimistic2011 outlook with a view to delivering better results this yearand regaining the confidence of our shareholders.
AZMI AHMADManaging Director/CEO
29 April 2011
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ALAM MARITIM RESOURCES BERHAD (700849-K)
Board of Directors Profiles
DATO’ CAPTAIN AHMAD SUFIAN @ QURNAIN BIN ABDUL RASHIDChairmanIndependent Non-Executive DirectorAged 62, Malaysian
Dato’ Captain Ahmad Sufian @ Qurnain bin Abdul Rashid wasappointed to the Board on 2 May 2006 and is also theChairman of the Nomination and Remuneration Committeeand a member of Audit Committee.
He qualified as a Master Mariner with a Master in Foreign-Going Certificate of Competency from the United Kingdom in1974 and a Diploma in Applied International Managementfrom the Swedish Institute of Management in 1984. He alsoattended the Advance Management Program (“AMP”) atHarvard University in 1993. He is a Fellow of the NauticalInstitute, (UK), a Fellow of the Chartered Institute of Logistics& Transport and a Fellow of the Institute Kelautan Malaysia.He has over 38 years of experience in the internationalmaritime industry.
He is also the Independent Non-Executive Chairman of WCTBerhad, GD Express Carrier Berhad and IndependentDirector of Malaysian Bulk Carriers Berhad and PBB GroupBerhad.
He does not have any family relationship with other directorand/or major shareholder of the company. He has no conflictof interest with the Company and has no conviction for anyoffences within the past 10 years.
AZMI BIN AHMADManaging Director/Chief Executive OfficerNon-Independent Executive DirectorAged 52, Malaysian
Azmi bin Ahmad was appointed to the Board on 2 May 2006.
He is the Chairman of the ESOS Committee, a member ofNomination and Remuneration Committee and alternatemember to Shaharuddin bin Warno @ Rahmad in the RiskManagement Committee.
In 1990, he obtained his Diploma in Accountancy from MARAInstitute of Technology, Malaysia and subsequently in 1992,a Bachelor of Arts (Hons) in Accounting and Finance from theUniversity of South Bank, UK. In 1998, he obtained hisMasters of Business Administration from University of Wales,Cardiff, UK. He began his career in 1978 as a Leftenan Udarain the Royal Malaysian Airforce. In 1985, he joined the MerlinHotel Group as an Administration and Security Officer and in1988, he joined Techart Sdn Bhd as the Head ofAdministration. In 1992, he accepted a position with BankBumiputra Malaysia Berhad as the Manager of the CorporateBanking Division. He left in 1994 and joined Nepline Berhad,a shipping company providing tanker services, as the GeneralManager of the Finance Administration and HumanResources Division where he served for six years until 1999.He left Nepline Berhad to join AMSB in 2000. He is the co-founder of Alam Maritim (M) Sdn Bhd.
He does not have any family relationship with any otherdirector and/ or major shareholder of the Company. He hasno conflict of interest with the Company and has not beenconvicted for any offences within the past 10 years.
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Annual Report 2010
Board of Directors Profiles (cont’d.)
SHAHARUDDIN BIN WARNO @ RAHMADChief Operating Officer,Non-Independent Executive DirectorAged 43, Malaysian
Shaharuddin bin Warno @ Rahmad was appointed to theBoard on 2 May 2006.
He is a member of Risk Management Committee andNomination and Remuneration Committee. He also sits inthe ESOS Committee. He is a member of the Association ofInternational Accountants, UK and an Accredited Fellow ofthe Society of International Accounting Technicians, UK.
He began his career in 1988 as a Trainee with MaybanFinance Berhad. In 1990, he joined Faber Group Berhad as anInternal Auditor. In 1991, he joined Petronas as an Accountsand Costing Supervisor, International Marketing Division. In1995, he was the Finance Manager in Maritime (M) Sdn Bhd,where he gained the know-how and experience to developthe operational and commercial aspects of a company in theoffshore support vessel industry. He is the co-founder ofAlam Maritim (M) Sdn Bhd. He was one of the top threefinalists of The Ernst & Young Entrepreneur of The Year®Malaysia 2007, Master Category Award.
He does not have any family relationship with any otherdirector and/or major shareholder of the Company. He hasno conflict of interest with the Company and has not beenconvicted for any offences within the past 10 years.
MOHD ABD RAHMAN BIN MOHD HASHIMNon-Independent Executive DirectorAged 59, Malaysian
Mohd Abd Rahman Bin Mohd Hashim was appointed to theBoard on 2 May 2006.
In 1970, he completed his HSC while attending King EdwardVII Secondary School. He began his career in 1975 as aManagement Trainee with Century Hotel and left in 1978. Hislast held position prior to leaving was as an AssistantManager (Rooms Division). After leaving Century Hotel, hejoined Holiday Inn, Kuala Lumpur as a Front Office Manager.In 1984, he left Holiday Inn and joined Hilton Hotel, PetalingJaya as the Sales Marketing Manager and served thecompany for six years until 1990.
In 1990, he joined Maritime Pte Ltd, Singapore as theManager of Sales and Marketing, Offshore Division where heacquired the knowledge and skills of the offshore supportvessel industry. In 1993, he was seconded to Maritime (M)Sdn Bhd as Manager of Operations and MarketingDepartment. In 1998, he left Maritime (M) Sdn Bhd toestablish Alam Maritim (M) Sdn Bhd.
He does not have any family relationship with any otherdirector and/or major shareholder of the Company. He hasno conflict of interest with the Company and has not beenconvicted for any offences within the past 10 years.
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ALAM MARITIM RESOURCES BERHAD (700849-K)
Board of Directors Profiles (cont’d.)
AHMAD HASSANUDIN BIN AHMAD KAMALUDDINNon-Independent Executive DirectorAged 65, Malaysian
Ahmad Hassanudin bin Ahmad Kamaluddin was appointedto the Board on 2 May 2006.
He is a member of Risk Management Committee. Hegraduated with a Bachelor of Economics (Analytical) fromUniversity of Malaya. He also attended Business andManagement courses and programmes with HarvardBusiness School, Oxford School of Petroleum Studies andFletcher School of Law and Diplomacy, Tufts University, USA.
He has vast experience in the oil and gas industry havingserved Petronas for almost 29 years in various capacities inboth Downstream and Upstream business sectors. Duringhis tenure he has held various senior management positionsincluding executive secretary to the Fairley Baram UnitisationScheme project, a member of the working committee whichreviewed the Work Programme and Budget of ProductionSharing Contract (“PSC”) contractors, a member of thecommittee working on the Petronas Master Plan Study whichlooked into the development of the oil and gas industry inMalaysia and Head of Business Development underCorporate Planning. Other positions held included Head ofProperty in LNG Sdn Bhd, Deputy General Manager ofInternational Marketing Division in Petronas, ManagingDirector of Petronas Trading Corporation Sdn Bhd (“PETCO”),a wholly owned subsidiary of Petronas, Senior GeneralManager of Malaysian Crude Oil Division in Petronas andCEO of Vinyl Chloride (Malaysia) Sdn Bhd.
Before his retirement, he was the CEO of ASEAN BintuluFertiliser Sdn Bhd, a joint venture company betweenPETRONAS (representing Malaysia) and Indonesia, Thailand,Philippines and Singapore.
During his tenure, he was also appointed to the Board ofvarious subsidiaries of PETRONAS and held an honoraryposition as Vice President of International FertilizerAssociation of the East Asia in 2003. He joined Alam Maritim(M) Sdn Bhd in June 2004.
He does not have any family relationship with any otherdirector and/or major shareholder of the Company. He hasno conflict of interest with the Company and has not beenconvicted for any offences within the past 10 years.
AB RAZAK BIN HASHIMNon-Independent Executive DirectorAged 49, Malaysian
Ab Razak Bin Hashim was appointed to the Board on 2 May 2006.
He graduated in 1984 from MARA Institute of Technology,Malaysia with a Diploma in Civil Engineering and immediatelybegan his career in 1984 as a Technical Assistant at KobenaSambu Joint Venture and left in 1985 to pursue a Bachelor ofScience in Civil Engineering with Glasgow University, UK. Heis a member of the Board of Engineers Malaysia.
Upon graduating from Glasgow University in 1987, he joinedNik Jai Associates as a Civil Engineer. In 1989, he joinedPetronas Carigali Sdn Bhd, Miri as a Planning/ProjectEngineer. In 1990, he was the planning engineer for ShapaduHoldings Sdn Bhd and subsequently he joined Comprimo PteLtd as a Planning/Project Engineer in 1991. He joined TLOffshore Sdn Bhd in 1992 as a Senior Cost/PlanningEngineer. He served the company for eight (8) years and hislast held position prior to leaving was as the Head of Marine& Logistic. In 2000, he left TL Offshore Sdn Bhd and joined ofAlam Maritim (M) Sdn Bhd. He has over 21 years ofexperience in the oil and gas offshore marine industry,inclusive of construction industry, pipe laying, offshorestructures installation, directional drilling, offshore trenchingas well as hook-up and commissioning, amongst others.
He does not have any family relationship with any otherdirector and/ or major shareholder of the Company and hasno conflict of interest with the Company. He has no convictionfor any offences within the past 10 years.
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Annual Report 2010
DATO’ HAJI AB WAHAB BIN HAJI IBRAHIMIndependent Non-Executive DirectorAged 60, Malaysian
Dato’ Haji Ab Wahab bin Haji Ibrahim was appointed to theBoard on 2 May 2006.
He is the Chairman of Audit Committee, a member of theRisk Management Committee and Nomination &Remuneration Committee. He is a Chartered Accountant anda member of the Malaysia Institute of Accountants. Heobtained his Diploma in Accountancy and Degree inAccounting from MARA Institute of Technology, Malaysia in1974 and 1987 respectively. In 2007, he obtained his Mastersof Business Administration (Management Studies) from RockHampton University of USA. In the same year, he washonoured with the Honorary Doctorate Degree in PublicServices by the Irish International University.
He started his career with PETRONAS in 1978 as aManagement Executive and became an Accountant in theCorporate Finance Division four years later. He was laterpromoted to Senior Accountant before being transferred toPetronas Gas Berhad, a subsidiary of Petronas which is listedon the Main Board of Bursa Securities, where he was aSenior Manager and Joint Company Secretary.
In 1996, he became the Head of the Finance Division, OGPTehcnical Services Sdn Bhd, another subsidiary of Petronas,where he served until March 2004. He is currently anIndependent Non-Executive Director on the Board of TanjungOffshore Berhad and also serves as the Chairman of its Audit Committee.
In 2001, he was conferred both the Ahli Mangku Negara(“AMN”) and Pingat Jasa Kebaktian (“PJK”). He was thenconferred the Darjah Indera Mahkota Pahang 2010. He doesnot have any family relationship with any other directorand/or major shareholder of the Company and has noconflict of interest with the Company. He has no convictionfor any offences within the past 10 years.
FINA NORHIZAH BINTI HAJI BAHARU ZAMANIndependent Non-Executive DirectorAged 54, Malaysian
Fina Norhizah binti Haji Baharu Zaman was appointed to theBoard on 22 October 2010. She is the Chairman of RiskManagement Committee and a member of Audit Committee.
She obtained her Bachelor of Law degree from the Universityof Malaya in 1980 and had started her legal career with theMalaysian Attorney General Chambers where she had servedas a Senior Federal Counsel and as the Legal Advisor to theMinistry of Transport.
She did her Masters in Law (specialising in maritime andshipping) at the London School of Economics, University ofLondon and had subsequently joined the InternationalIslamic University, Malaysia in 1984 as a law lecturer. Shewas admitted as an Advocate and Solicitor of the High Courtof Malaya in 1986.
She joined PETRONAS in 1990 and had served thePETRONAS Legal Department in several capacities. In 2000,she was appointed as the General Manager (Legal) of theLogistics and Maritime Business PETRONAS and as GeneralManager of the Legal and Corporate Secretarial AffairsDivision of MISC Berhad.
In 2004, she was appointed as the Senior General Manager ofLegal & Corporate Secretarial Affairs Division and theCompany Secretary of MISC Berhad. She held the positionuntil her retirement in 2007.
She does not have any family relationship with any otherdirector and/or major shareholder of the Company and hasno conflict of interest with the Company. She has noconviction for any offences within the past 10 years.
Board of Directors Profiles (cont’d.)
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ALAM MARITIM RESOURCES BERHAD (700849-K)
Senior Management Team
AZMI BIN AHMADManaging Director /Chief Executive OfficerAlam Maritim Group
SHAHARUDDIN BIN WARNO @ RAHMADExecutive Director /Chief Operating OfficerAlam Maritim Group
AB RAZAK BIN HASHIMExecutive Director AMRB
MOHD ABD RAHMAN BINMOHD HASHIMExecutive Director AMRB
JOHN D’LIMAManaging DirectorWorkboat International
AHMAD HASSANUDIN BIN AHMAD KAMALUDDINExecutive DirectorAlam Maritim GroupExecutive Chairman, AHSBHSE Director
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Annual Report 2010
KAMARUL ZAMAN BINJANTANManaging Director KJ Waja
AZMAN BIN SHABUDINExecutive Director AHSB
BADROL R. AZMI BIN MD. YUNANChief Operating OfficerAlam Swiber
AZMAN BIN ABBASChief Executive OfficerTH Alam Management
HANIZA BINTI SABARANGroup Company Secretary
MD NASIR BIN NOHGroup Financial Controller
MOHAMAD IZHAM BIN CHE ARIFHead, Training Group Fleet ManagementDivision
NIK AZNUDDEEN BINHUSAINAssistant General ManagerGroup Project & Services
CAPTAIN AZHA BIN YUNUSHead, Base Operations
Responsible for:- Alam Offshore Logistics- Alam Food Industries
WU QIONGManaging DirectorEastar Offshore
SAMUEL BERNARDSASSOONExecutive DirectorEastar Offshore
Senior Management Team(cont’d.)
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ALAM MARITIM RESOURCES BERHAD (700849-K)
Corporate Responsibility
a. Workplace – Health, Safety and Environment Report 2010
Every year, AMRB allocates a percentage of its budget to HSE programmes and campaigns due to the increasing number of fleets andthe growing organizational population and increased work activities. For instance, customised and classroom training is provided byinternal personnel and external parties to ensure the culture and values are communicated to and instilled in its employees. Safetycommittees, both at steering committee level and at working committee level, highlight the many different components of AMRB’ssafety processes and programmes in an on-going commitment to ZERO (zero-tolerance) for accidents. In fact, ZETO guidelines aspractised by PETRONAS have been adopted to ensure the Company achieve AMRB’s HSE objectives.
Safety is one of the company’s core values and AMRB is committed to providing a safe working environment in order to achieve zeroinjury to personnel while protecting both its property and the environment. Employees are encouraged to carry out positive interventionstrategies and are rewarded accordingly. In so doing, the company aims to earn a reputation as a leader in providing safe, efficient, andhigh-quality solutions.
The HSE Performance in 2010 has been encouraging with no Lost Time Injury (“LTI”) case recorded for the period under review.Cumulatively, AMRB registered a total completion of over 2,453,430 man-hours worked.
Additional initiatives are being planned to support the Company’s commitment towards HSE aimed at enhancing the aspiration for animprovement in overall HSE performance throughout 2011. Additional efforts in increasing the frequency of visits, inspection and auditas well as Line Management walk-about and involvement through the Mentor Mentee Programme to undertake, among others, HSEvalidation, verification and good HSE practices on board our fleets have effectively contained the increasing risks in our businessoperations as well as prevent recurrence of past incidents.
The number of awards received in 1Q 2011 bear testimony to the improvement achieved. In fact, the Group received various awards fromcustomers and clients based on its track record for safety. These include certificates of achievement for no loss of man hours,Contractor Safety awards and an Excellent HSE Performance Gold Award to reflect the quality and reliability of its services.
d. Sustainable Development
The Group now is pursuing a structured approach to develop a policy on sustainable development. As the Group aspires to make HSEand risk management second nature in its operations, it will do the same in the area of sustainable development. The Group considerssuch a move as a pre-requisite for image building and believe that having it as an integral part of its value proposition will provide theGroup extra mileage in its endeavor to be a preferred partner and service provider. It definitely will reflect the sensitivity of the Groupwhilst operating in a socially-responsible and environmentally-friendly atmosphere. Towards this end the Group has embarked onCSR programmes and put in place policies that promote transparency, corporate governance, human rights, and HSE, among others.In fact, sustainable development has now been made part of the agenda in our five-year Business Plan.
b. Social Community
AMRB remains committed to giving back to the community by aligning itscorporate activities to worthy social causes which extends beyond theworkplace.
During the year under review, the Company contributed in a meaningfulway to society via financial and other forms of aid. This is part of thecorporate social responsibility (CSR) projects which includes visiting oldfolks’ homes, orphanages and other small projects such as participationin voluntary works. The Company also actively participated in programmeswhich are organized by AMRB’s clients.
c. Environment
“Green the Earth” programme is the latest project undertaken by theCompany which was held at Taman Pertanian Malaysia, Shah Alam,Selangor. 120 Bucida Molinette trees were planted by Alam Maritimemployees. This programme was initiated to support the Government’svision to plant 20 million trees by the end of 2014, and forms part of thecompany’s ongoing environmental awareness efforts that emphasize long-term preventative measures to minimise negative environmental effects.This initiative is part of the company’s commitment towards certificationto the ISO14001:2004, Environmental Management System.
This certification is part of Alam Maritim’s quality enhancement exerciseafter it successfully achieved its ISO 9001:2000 in 2008 for QualityManagement systems (QMS). Currently, AMRB Group is in the final stagesof migrating its ISO system to the integrated Management System (Quality,Environmental & Occupational Health & Safety, and MS1722 System)aimed at integrating all its business components to the leverage on itsalready excellent performance.
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ALAM MARITIM RESOURCES BERHAD (700849-K)
Audit Committee Report
MEMBERSHIP AND ATTENDANCE
The Audit Committee members and details of attendance of each member at Audit Committee meetings during 2010 are as follows:
Composition of Audit Committee Number of Meetings Attended
Dato’ Haji Ab Wahab bin Haji Ibrahim 5/5Chairman(Independent Non-Executive Director and a Certified Accountant)
Dato’ Captain Ahmad Suffian @ Qurnain bin Abdul Rashid 5/5(Independent Non-Executive Director)
Dato’ Mohamad Idris bin Mansor 2/2 during tenure(Independent Non-Executive Director)Resigned w.e.f. 28 April 2010
Puan Fina Norhizah binti Haji Baharu Zaman 1/1 during tenure(Independent Non-Executive Director)Appointed w.e.f. 22 October 2010
Upon invitation by the Audit Committee, the Executive Directors, Head of Finance & Accounts, Head of Internal Audit andrepresentatives of the External Auditors attended all the meetings. Prior to the Audit Committee Meetings, private sessionswere held between the Chairman and the Head of Internal Audit without the management’s presence. The Audit Committeealso had 2 meetings with the External Auditors without the management presence.
Minutes of each meeting shall be kept and distributed to each member of the Committee and of the Board. The Chairmanof the Committee shall report on each meeting to the Board. The secretary of the Committee shall be the Group Secretary.
All members of the Audit Committee are financially literate and are able to analyse and interpret financial statements toeffectively discharge their duties and responsibilities as members of the Audit Committee.
COMPOSITION AND TERMS OF REFERENCE
(a) Composition
The Audit Committee shall comprise at least three Directors, the majority of whom are independent. The members ofthe Audit Committee shall be appointed by the Board of Directors and all members of the Audit Committee includingthe Chairman are Independent Directors.
At least one member of the Audit Committee shall be a member of the Malaysian Institute of Accountant or if not amember of the Malaysian Institute of Accountants, must have at least three years’ working experience and have passedthe examinations specified in Part I of the First Schedule of the Accountants Act, 1967 or a member of one of theassociations specified in Part II of the said schedule or fulfils such other requirements as prescribed by Bursa Securities.
No alternate director shall be appointed as a member of the Audit Committee. The Board shall review the terms ofoffice and performance of the members of the Audit Committee at least once every three years to determine whetherthe members have carried out their duties in accordance with their terms of reference.
In the event of any vacancy in the Audit Committee resulting in the noncompliance of subparagraph 15.09(1) of theListing Requirements of the Bursa Malaysia Securities Berhad, the Board shall fill the vacancy within three monthsfrom the date of the vacancy.
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Annual Report 2010
Audit Committee Report (cont’d.)
(b) Chairman
An Independent Non-Executive Director shall be the Chairman of the Audit Committee.
(c) Meetings and Minutes
The Audit Committee shall meet at least four times annually. However, at least twice a year, the Audit Committee shallmeet with the External Auditors without the Executive Directors being present. This year, the Audit Committee mettwice with the External Auditors without the Executive Directors and management being present.
The Head of Finance & Accounts and Head of Internal Audit will normally be in attendance at the meetings.Representatives of the External Auditors are to be in attendance at meeting where matters relating to the audit of thestatutory accounts and/or External Auditors are to be discussed. Other directors, officers and employees of the Companyand/or Group may be invited to attend, except for those portions of the meetings where their presence is consideredinappropriate, as determined by the Audit Committee.
The Company Secretary shall be the Secretary of the Audit Committee and will record, prepare and circulate the minutesof the meetings of the Audit Committee and ensure that the minutes are properly kept and produced for inspection, ifrequired. The Audit Committee shall report to the Board and its minutes tabled and noted by the Board.
(d) Quorum
A majority of the members in attendance must be Independent Directors in order to form a quorum for the meeting.
(e) Authority
The Audit Committee is authorised by the Board to review any activity within the Audit Committee’s terms of reference.
The Audit Committee is authorised to seek any information the Audit Committee requires from any Director or memberof management and has full and unrestricted access to any information pertaining to the Group and the management,and all employees of the Group are required to comply with the requests made by the Audit Committee.
The Audit Committee is authorised by the Board to obtain external professional advice and secure the attendance ofoutsiders with relevant experience and expertise if it considers this necessary, the expenses of which will be borne bythe Company.
In the event that any member of the Audit Committee shall need to seek external professional advice in furtherance ofhis duties, he shall first consult with and obtain approval of the Chairman of the Audit Committee.
Where the Audit Committee is of the view that the matter reported by it to the Board has not been satisfactory resolvedresulting in a breach of the Main Market Listing Requirements, the Audit Committee shall promptly report such matterto Bursa Securities.
The Audit Committee shall have direct communication channels and be able to convene meetings with the ExternalAuditors without the presence of Executive Directors and management, whenever deemed necessary.
34
ALAM MARITIM RESOURCES BERHAD (700849-K)
Audit Committee Report (cont’d.)
RESPONSIBILITIES AND DUTIES
The responsibilities and duties of the Audit Committee are:
(a) Financial Reporting
• To review the quarterly, and annual financial statements of the Company, focusing particularly on:
- any significant changes to accounting policies and practices;- significant adjustments arising from the audits;- compliance with accounting standards and other legal requirements;
and- the going concern assumption.
(b) Related Party Transactions
• To review any related party transactions and conflict of interest situations that may arise within the Group includingany transaction, procedure or course of conduct that raises questions of management integrity.
(c) Audit Reports
• To prepare the annual Audit Committee report to the Board which includes the composition of the Audit Committee,its terms of reference, number of meetings held, a summary of its activities and the existence of an Internal Auditunit and summary of the activities of that unit for inclusion in the Annual Report; and
• To review the Board’s statements on compliance with the Malaysian Code on Corporate Governance for inclusionin the Annual Report.
(d) Internal Control
• To consider annually the Risk Management Framework adopted within the Group and to be satisfied that themethodology employed allows the identification, analysis, assessment, monitoring and communication of risks ina regular and timely manner that will allow the Group to minimise losses and maximise opportunities;
• To ensure that the system of internal control is soundly conceived and in place, effectively administered andregularly monitored;
• To cause reviews to be made of the extent of compliance with established internal policies, standards, plans andprocedures including for example, the Group Policies & Authorities;
• To obtain assurance that proper plans for control have been developed prior to the commencement of major areasof change within the Group;and
• To recommend to the Board steps to improve the system of internal control derived from the findings of the Internaland External Auditors and from the consultations of the Audit Committee itself.
(e) Internal Audit
• To be satisfied that the strategies, plans, manning and organisation for internal auditing are communicated downthrough the Group, specifically:
- to review the Internal Audit plans and to be satisfied as to their consistency with the Risk ManagementFramework used, adequacy of coverage and audit methodologies employed;
- to be satisfied that the Internal Audit unit within the Group has the proper resources and standing to enablethem to complete their mandates and approved audit plans;
- to review status reports from Internal Audit and ensure that appropriate actions have been taken to implementthe audit recommendations;
- to recommend any broader reviews deemed necessary as a consequence of the issues or concerns identified;- to review any appraisal or assessment of the performance of the members of the Internal Audit, approve any
appointment or termination of senior staff members of Internal Audit and inform itself of any resignations ofstaff of Internal Audit and reasons thereof;
- to ensure Internal Audit has full, free and unrestricted access to all activities, records, property and personnelnecessary to perform its duties; and
- to request and review any special audit which it deems necessary.
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Annual Report 2010
Audit Committee Report (cont’d.)
(f) External Audit
• To review the External Auditors’ audit plan, nature and scope of the audit plan, audit report, evaluation of internalcontrols and co-ordination of the External Auditors. The Audit Committee will consider a consolidated opinion onthe quality of external auditing at one of its meetings;
• To review with the External Auditors the Statement on Internal Control of the Group for inclusion in the AnnualReport;
• To review any matters concerning the appointment and re-appointment, audit fee and any questions of resignationor dismissal of the External Auditors;
• To review and evaluate factors related to the independence of the External Auditors and assist them in preservingtheir independence;
• To be advised of significant use of the External Auditors in performing non-audit services within the Group,considering both the types of services rendered and the fees, such that their position as auditors are not deemedto be compromised; and
• To review the External Auditors’ findings arising from audits, particularly any comments and responses inmanagement letters as well as the assistance given by the employees of the Group in order to be satisfied thatappropriate action is being taken.
(g) Other Matters
• To act on any other matters as may be directed by the Board.
SUMMARY OF ACTIVITIES
During the year, the Audit Committee carried out its duties in accordance with its terms of reference. Other main issuesreviewed by the Audit Committee were summarised as follows:
• Review of the Internal Audit Plans and scope for the Company and the Group prepared by the Internal Auditors and theExternal Auditors respectively;
• Review of the reports for the Company and the Group prepared by Internal Auditors and the External Auditors andconsideration of the major findings by the auditors and management’s responses thereto;
• Review of the quarterly and Annual Reports of the Company and the Group prior to submission to the Board of Directorsfor consideration and approval;
• Review the related party transactions entered into by the Company and the Group and the disclosure of such transactionsin the Annual Report of the Company;
• Recommendation to the Board on the proposed dividend to be paid by the Company;
• Meeting with the External Auditors without any executives present;
• Review the fees of the External Auditors;
• Review of the Report on the Audit Committee, Statement on Internal Control and Statement on Corporate Governanceprior to their inclusion in the Company’s Annual Report;
• Review and verify the allocation of options pursuant to the Company’s ESOS schemes.
36
ALAM MARITIM RESOURCES BERHAD (700849-K)
Audit Committee Report (cont’d.)
GROUP INTERNAL AUDIT
The Group has a well established in-house Internal Audit unit which reports directly to the Audit Committee. The purpose,authority and responsibility of Internal Audit as well as the nature of assurance and consulting activities provided to theCompany and the Group is clearly articulated in the Internal Audit Charter that has been approved by the Audit Committee.
The Head of Internal Audit has direct access to the Chairman of the Audit Committee on all matters of control and audit. Allproposals by management regarding the appointment, transfer and removal of the Head of Internal Audit of the Group shallrequire prior approval of the Audit Committee. Any inappropriate restrictions on audit scope are to be reported to the Audit Committee.
The principal responsibility of the Internal Audit Department is to undertake regular and systematic reviews of the systemsof controls so as to provide reasonable assurance that such systems continue to operate satisfactorily and effectively in theGroup. The Audit Committee approves the Internal Audit plan during the fifth Audit Committee meeting each year. Anysubsequent changes to the Internal Audit plan were approved by the Audit Committee. The scope of internal audit covers theaudits of all units and operations, including subsidiaries. The total cost incurred for the Internal Audit Function of the Groupfor 2010 was approximately RM320,000.
The Internal Audit function has adopted a risk-based approach towards the planning and conduct of audits which is consistentwith the Group’s established framework in designing, implementing and monitoring of its control systems.
Other main activities performed by the Internal Audit are as follows:
• Ascertaining the extent of compliance with established policies, procedures and statutory requirements;
• Recommending improvements to the existing systems of controls;
• Carrying out investigations and special reviews requested by management and/or the Audit Committee; and
• Identifying opportunities to improve the operations of and processes in the Company and the Group.
The system of internal controls was satisfactory and has not resulted in any material losses, contingencies or uncertaintiesthat would require disclosure in the Company’s Annual Report.
RISK MANAGEMENT
The effective management of risks associated with all aspects of the Group’s business is critical to maximising the Group’sshareholder value. The business risks for the Group are affected by a number of factors, not all of which are within theGroup’s control. These externally driven challenges, together with general business risk exposures such as corporatereputation and operational issues are constantly reviewed as part of the Risk Management programme of the Group.
The Group adopts a proactive Risk Management programme with the following objectives:
• protecting its assets and reputation;
• preserving the safety and health of its employees;
• ensuring that the Group’s operations do not impact negatively on the environment;
• protecting the interests of all other stakeholders;
• ensuring compliance with the Malaysian Code of Corporate Governance, Head Office guidelines and all applicableMalaysian laws; and
• promoting an effective risk awareness culture where risk management is an integral aspect of the Group’s management systems.
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Annual Report 2010
Audit Committee Report (cont’d.)
The Risk Management Team, headed by the Executive Director, Corporate Planning & Development and comprising SeniorManagers from all functions of the Group is entrusted to drive the Risk Management of the Group. The team’s responsibilitiesare to:
• steer the Group’s Risk Management programme;
• promote a proactive risk awareness culture in the Group;
• conduct a half-yearly review of the business risks;
• coordinate the development of risk mitigation action plans;
• organise training and education for employees on risk management; and
• ensure good corporate governance.
Risk Management is firmly embedded in the Group’s management system and is every employee’s responsibility.
This report is made in accordance with a resolution of the Board of Directors dated 29 April 2011.
38
ALAM MARITIM RESOURCES BERHAD (700849-K)
Statement of Corporate Governance
The Board of Alam Maritim Resources Berhad (“AMRB” or the “AMRB Group”), is committed to seeing continuousimprovement in its business practices throughout the Group by applying the most part, if not all the governance principlesand recommended best practices as set out in the Revised 2007 Malaysian Code of Corporate Governance ["theCode”].The endeavour shall continue as the Board considers enhancement to the standard of corporate governancepractices of the Group is a continuous journey rather than a destination.
The Board of Directors is pleased to present herewith the Corporate Governance Statement (the “CGS”) to investors andstakeholders of AMRB Group. The CGS outlines the major Corporate Governance principles and best practices applied byAMRB Group throughout the financial year ended 31 December 2010 up to the date of the CGS. The CGS is prepared incompliance with Para 15.25 of the Main Market Listing Requirements (MMLR) of Bursa Malaysia Securities Berhad.
A DIRECTORS
The Board
The Board of AMRB is determined and committed with its responsibilities in governing, leading and monitoring thedirection of the Company towards achieving its mission and vision.
Board Balance
At present, AMRB Board consists of eight (8) members comprising five (5) Non Independent Executive Directors andthree (3) Independent Non-Executive Directors.
On 22 October 2010, AMRB welcomed the first independent lady director; Puan Fina Norhizah binti Haji Baharu Zamanon board. She is a distinguished professional trained by MISC and Petronas. She filled the vacancy created by Y Bhg Dato’ Mohamad Idris bin Mansor who left the Board on 28 April 2010 to re-join PETRONAS.
The Board strongly feels that gender diversity is a boon to the current mix of skills and experience that will furtherenhance the Board’s effectiveness in discharging its duties with more responsibilities, effectively and efficiently.
A brief profile of each Director is set out on page 24 to 27 of this Annual Report.
Appointments to the Board
The Nomination Committee is responsible to ensure that the prospective candidate has the required set of personalqualities and competencies to carry out duties and responsibilities as a director. The incumbent’s professionalism,integrity, skills and expertise must be seen to contribute and complement the Board existing strengths.
Accordingly, the appointment of Puan Fina Norhizah binti Haji Baharu Zaman to the Board in 2010 was recommendedby the Nomination Committee after going through a careful selection process led by the Chairman of the NominationCommittee. It was the first appointment to Board since the Nomination Committee was established in 2006.
Board Responsibilities
At the strategic level of AMRB, clear division of responsibilities of the Chairman and the Managing Director/ChiefExecutive Officer (MD/CEO) ensures the balance of power and authority, such that no one person has unfettered powersof decision.
The Board as a whole is responsible in the achievement of the Company’s long term strategic plans. In view of aligningthese corporate plans with current economic conditions and challenges, the Board consistently reviews the short termand medium term performance on an annual basis.
The Board is accountable to the shareholders and it is committed to ensure that the Management; being vested withdelegated authority and powers by the Board, serves and function in the best interest of AMRB’s stakeholders.
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Annual Report 2010
Statement of Corporate Governance(cont’d.)
There is also clear division of the Board and Management. At the Management level, there are various workingcommittees established specifically, HSE Steering and Working Committees, Management Committee, Group RiskManagement Working Committee, Credit Control Committee, Human Resources Policy Committee and TenderCommittee. These Committees meet regularly and as necessary to update knowledge with current information andassess the effectiveness and efficiency of current policy, ensure implementation of new policies and procedures, andcontinuously monitoring effectiveness and efficient running of the day to day management and operations of the Groupof Companies.
Board Meetings
The Board meets on a scheduled basis with at least five (5) times a year. During the financial year ended 31 December2010, the Board has met six (6) times to deliberate and consider various strategic matters including review on quarterlyperformance results, corporate plans and annual budget, risk assessment, debtors analysis and controls, newinvestments proposals and other corporate matters.
The agenda of the meeting and the board papers and necessary information for the Board to deliberate in the meetingis organized by the Company Secretary with consultation of the MD/CEO. The meeting agenda is prepared to take intoaccount the matters reserved for the Board’s decisions. The Company Secretary arranged for the meeting pack to bedisseminated to the Board Members on a timely basis.
The Company Secretary records and keeps the minutes of meeting for the purpose of providing historical record andinsight into those decisions duly made.
The attendance of the Board members to the meetings held during the period under review is as follows:
Board Members No of Meetings Attended
Dato’ Capt Ahmad Sufian @ Qurnain bin Abdul Rashid 6/6(Independent Non-Executive Chairman)
Dato’ Mohamad Idris bin Mansor* 1/1(Independent Non- Executive Director)
Dato’ Haji Ab Wahab bin Haji Ibrahim 6/6(Independent Non Executive Director)
Fina Norhizah binti Haji Baharu Zaman** 1/1(Independent Non Executive Director)
Azmi bin Ahmad 6/6(Managing Director/CEO)
Shaharuddin bin Warno @ Rahmad 5/6(Executive Director/COO)
Ahmad Hassanudin bin Ahmad Kamaluddin 6/6Executive Director
Ab Razak bin Hashim 5/6(Executive Director)
Mohd Abd Rahman bin Mohd Hashim 5/6(Executive Director)
Notes:* resigned w.e.f 28.04.2010** appointed w.e.f 22.10.2010
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ALAM MARITIM RESOURCES BERHAD (700849-K)
Statement of Corporate Governance(cont’d.)
Supply of Information
The Board has full and unlimited access to all information about the Group’s business affairs, the advice and servicesof the Senior Management and the Company Secretary. The Board may, if required, seek independent professionaladvice at the Company’s expense on specific issues to enable the Board to discharge its function in relation to the matterbeing deliberated.
Prior to the Board meetings, all Board members are provided with the agenda and materials containing informationrelevant to the business of the meeting to allow them to obtain further explanations, where necessary.
In dealing with the announcement and disclosures are to Bursa Malaysia Securities Berhad, the Board’s prior approvalis required before any disclosure of such information to the public.
Re-election of Directors
Articles 94 of AMRB’s Articles of Association provide that 1/3 of its directors shall retire from office at the annual generalmeeting and be deemed eligible for re-election. The Article provides that each of them has to retire at least once inevery three (3) years rotation.
At the Sixth Annual General Meeting, Encik Shaharuddin Bin Warno @ Rahmad and Encik Ahmad Hassanudin Bin AhmadKamaluddin shall retire and stand for re-election. Their profiles can be referred to on page 25 and 26, respectively of thisAnnual Report.
Article 100 of AMRB’s Articles of Association provides that Directors who are appointed by the Board during the financialperiod before an AGM are subject to re-election by the shareholders at the next AGM to be held following their appointments.
Therefore, at the Sixth AGM, Puan Fina Norhizah binti Haji Baharu Zaman is due for re-election. Her profile can bereferred to on page 27 of this Annual Report.
Directors’ Training
All the Board Members, including the newly appointed director Puan Fina Norhizah binti Haji Baharu Zaman havesuccessfully attended the Mandatory Accreditation Programme in compliance with the MMLR.
The Board had for the benefit of its new member arranged a special meeting to brief the new member regarding thecurrent affairs and strategies of the Company.
The Board is always mindful that continuing education is essential for them to keep abreast with changes anddevelopments in the market place and the corporate regulatory framework.
Hence, in January 2010 the Group successfully organized two in-house workshops attended by all the Board Membersand invited Management representatives. The workshops focused on Chapter 10 of Bursa Malaysia Main ListingRequirements and FRS 139 of Malaysian Accounting Standard. The workshops were facilitated by trainers from Tricorand a partner of Ernst & Young.
41
Annual Report 2010
Statement of Corporate Governance(cont’d.)
Besides, some of the Board Members had attended the following training/workshops/seminars/professional publiccourses tabulated herein for information:
No Director Training/Workshop/Conference
1 Dato’ Capt Ahmad Sufian @ Qurnain bin Abdul Rashid • Corporate Governance Summit on 6 & 7 July 2010
• Strategic Corporate Culture on 13 April 2010
• Corporate Responsibilities using ISO9001:2008 and ISO 14000:2004
2 Dato’ Haji Ab Wahab bin Haji Ibrahim • Corporate Governance Summit on6 & 7 July 2010
3 Azmi bin Ahmad • Sustainability Programme forCorporate Malaysia at Shangri-laHotel on 23 November 2010
4 Ahmad Hassanudin bin Ahmad Kamaluddin • Corporate Governance Summit on6 & 7 July 2010
• Bursa Malaysia Evening Talks onCorporate Governance, RiskManagement: Thing Can Still GoWrong on 28 October 2010
Board Committees
In ensuring the effectiveness of the Board’s function in shaping the Company’s strategic direction and providing adviceto management, Board has delegated specific responsibilities to three (3) Board’s Committees, namely Audit Committee,Nomination & Remuneration Committee and Risk Management Committee.
These committees have clear defined terms of reference to operate and conduct broad and in depth deliberation onissues before putting up recommendation to the Board.
The terms of reference of the Committees are as follows:
i. Audit Committee (“AC”)
The terms of reference of the AC are spelt out in detail under the Audit Committee Report.
ii. Nomination & Remuneration Committee (“NRC”)
- To identify and recommend new nominees of the Board and recommend the compensation packages for these appointments;
- To assist the Board in reviewing the required mix of skills, experience and other qualities, including thecompetencies which the non executive directors should bring to the Board;
- to review, asses, determine and recommend the level and make-up of the overall remuneration packages ofthe Executive Directors and the Senior Management with the assistance of the Group Human ResourceDepartment;
- To carry out a process to assess the effectiveness of the Board as a whole by assessing the contribution of eachindividual director, including independent non-executive directors, as well as the chief executive officer andchief operating officer.
- To document and report to the Board the result of assessment for the Board’s proper evaluation andidentification of relevant action programmes.
42
ALAM MARITIM RESOURCES BERHAD (700849-K)
Statement of Corporate Governance(cont’d.)
The members of the NRC are as follows:
Committee Members No of Meetings Attended
Dato’ Capt Ahmad Sufian @ Qurnain bin Abdul Rashid 2/2(Chairman)
Dato’ Mohamad Idris bin Mansor * 1/1(Member)
Dato’ Haji Ab Wahab bin Haji Ibrahim 2/2(Member)
Shaharuddin bin Warno @ Rahmad 2/2(Member)
Note:* resigned w.e.f 28.04.2010
iii. Risk Management Committee (“RMC”)
- To ensure regular assessment, identification, measurement, and monitoring of all principal risks of the Group;
- To coordinate and prioritise the Risk Management activities of the Group to ensure all principal risks areadequately managed;
- To ensure comprehensiveness enterprise-wide Risk Management policies and that a framework is in placeto provide a strong control environment;
- To ensure the Group’s Risk Management strategies are continuously aligned with its business strategies andrisk tolerance, whereby risks are considered in the Group’s long term plans and investment or capitalallocations;
- To ensure adequate resources, expertise, and information to manage risks are available throughout the Group;and
- To propagate a risk awareness culture among the Group’s stakeholders, in particular all levels of staff withinthe Group, by way of continuous risk training and education.
43
Annual Report 2010
Statement of Corporate Governance(cont’d.)
The members of the RMC are as follows:
Committee Members No of Meetings Attended
Dato’ Mohamad Idris bin Mansor * 1/1(Member)
Dato’ Haji Ab Wahab bin Haji Ibrahim 2/2(Member)
Shaharuddin bin Warno @ Rahmad 2/2(Member)
Azmi bin Ahmad -(Alternate Member to Shaharuddin bin Warno @ Rahmad)
Fina Norhizah binti Haji Baharu Zaman** -(Chairman)
Encik Ahmad Hassanudin bin Ahmad Kamaluddin*** -(Member)
Notes:* resigned w.e.f 28.04.201** appointed w.e.f 01.03.2010*** appointed w.e.f 18.04.2011
With the vacancy in the chairmanship, the RMC relied on the Group Risk Management Working Committee(“GRMWC”) to deliberate most of the corporate and operational risks of the Group. The GRMWC is chaired byEncik Ahmad Hassanudin bin Ahmad Kamaluddin. Recently, to improve communication between the RMC andGRMWC, the Board appointed Encik Ahmad Hassanudin bin Ahmad Kamaluddin as a member of the RMC. The RMCshall be working closely and maintain effective communication with the GRMWC whilst sharing common principlesin dealing with risky opportunities.
iv. ESOS Committee (“EC”)
- To administer the ESOS and to grant Options in accordance with the Bye-laws;
- To recommend to the Board to establish, amend, and revoke Byelaws, rules and regulations to facilitate theimplementation of the ESOS;
- To construe and interpret the provisions hereof in the best interest of the Company; and
- To exercise such powers and perform such acts as are deemed necessary or expedient to promote the bestinterest of the Company.
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ALAM MARITIM RESOURCES BERHAD (700849-K)
Statement of Corporate Governance(cont’d.)
The members of EC:
Committee Members
Azmi bin Ahmad(Chairman)
Shaharuddin bin Warno @ Rahmad(Member)
Md Nasir bin Noh(Member)
Haniza binti Sabaran(Secretary)
B DIRECTORS’ REMUNERATION
The Level and Make-up of Remuneration
The determination of remuneration packages of the Directors is a matter for the Board as a whole. The remunerationof Directors is structured to attract, motivate and retain them in order to run the Group successfully. At AMRB, therewards for Executive Directors, including CEO and COO are linked to both corporate and individual performance. Onthe other hand, the level of remuneration for the Non-Executive Directors reflects functions and level of responsibilitiesundertaken and contribution to the Group of companies.
Procedure
AMRB has remuneration packages for each director deliberated and approved by its Nomination & RemunerationCommittee prior to the recommendation to the Board. The remuneration packages of both Executive Directors andNon-Executive Directors are drawn based on internal guidelines and benchmarked against the survey of remunerationpackages of other public listed companies in similar industry and within the same band of market capitalisation.
Disclosure
The Board reviews the remuneration of the Executive Directors annually whereby the respective Executive Directorshave abstained from discussions and decisions on their own remuneration.
45
Annual Report 2010
Statement of Corporate Governance(cont’d.)
The aggregate remuneration of Directors for the financial year ended 31 December 2010 is as follows:-
Description Executive Directors Non-Executive Directors Total
Basic Salary & Other emoluments 2,247,000 - 2,247,000
Contribution to EPF 295,830 - 295,830
Bonus 730,200 - 730,200
Fees - 170,965 170,965
Allowances 300,000 61,000 361,000
Share options granted 450,427 91,928 542,355
Benefit in Kind 98,500 15,000 113,500
Total 4,368,922 338,893 4,460,850
* Remuneration Band (RM) Executive Non-Executive
Up to RM50,000 2**
RM50,001 - RM100,000 1
RM100,001 – RM200,000 1
RM500,001- RM550,00 1
RM650,001 – RM700,000 1
RM1,050,001 - RM1, 100,000 1
RM1,150,001 - RM1, 200,000 1
Notes:* Excluding the share option benefit** Directors served the Board partly during the financial year ended 2010.
One of the Executive Directors was on sabbatical leave.
46
ALAM MARITIM RESOURCES BERHAD (700849-K)
Statement of Corporate Governance(cont’d.)
C SHAREHOLDERS
Dialogue between Companies and Investors
The Group recognizes the importance of effective communication with its shareholders, other stakeholders and potentialinvestors to keep them informed of the major development of the Group. Such information is disseminated through thefollowing channels:-
- Quarterly and Full year results Announcement;- Annual Report;- Analyst Briefings/Conference calls;- Circulars to shareholders;- Site visits;- Domestic Exhibitions and/or Road-shows;- Company’s website at www.alam-maritim.com.my
The Company and Institutional shareholders often, represented by their respective fund managers have dialogues withregards to the mutual understanding of AMRB’s corporate and business objectives.
The AGM
The Company establishes that AGM should be the main platform for investors to raise questions pertaining to theoperations and financials of the Group.
Although the AGM is an occasion for shareholders, the Chairman had during the Fifth AGM in 2010 allowedrepresentatives of the media to be present. The previous AGM was also attended by the representative from MinorityShareholders Watchdog Group.
D ACCOUNTABILITY AND AUDIT
Financial Reporting
The Board is responsible to present a balanced, clear and comprehensive assessment of the Group’s financialperformance and prospect through the quarterly and annual financial statements to shareholders. The Board and theAudit Committee have to ensure that the financial statements are drawn up in accordance with the provisions of theCompanies Act 1965 and applicable, approved accounting standards in Malaysia. In presenting the financial statements,the Board has reviewed and ensured that appropriate accounting policies have been used, consistently applied andsupported by reasonable judgments and estimates.
Relationship with Auditors
The Board, via the Audit Committee, has established a formal and transparent arrangement for maintaining anappropriate relationship with its auditors, both external and internal.
Internal Control
The Board has overall responsibility for maintaining a sound and effective system of internal control of the Group,covering not only financial controls but also monitoring operations, compliance and risk management to safeguardshareholders’ investment and the Group’s assets.
Detail information on the Group’s Internal Control pursuant to Paragraph 15.27(b) of Bursa Malaysia ListingRequirements is set forth on pages 49 and 50 of this Annual Report. The Board also recognizes that the system ofinternal control has inherent limitations and is aware that such a system can only provide reasonable and not absoluteassurance against material misstatements, loss or fraud.
47
Annual Report 2010
Statement of Corporate Governance(cont’d.)
The internal control system of the Group is supported by an established organizational structure with well-definedauthority and responsibility lines, and which comprises of appropriate financial, operational and compliance controls.
Statement of Directors’ Responsibility
The Directors are required by the Companies Act 1965 to prepare financial statements for each financial year, which givea true and fair view of the state of affairs of the Group and the Company and of the results and cash flow of the Groupand the Company for the financial year then ended.
In preparing the financial statements for the year ended 31 December 2009, the Directors have:-
• Adopted the appropriate accounting policies and applied them consistently;
• Made judgments and estimates that are reasonable and prudent;
• Ensure that applicable, approved accounting standards have been followed, and any material departures have beendisclosed and explained in the financial statements; and
• Ensure the financial statement have been prepared on a going concern basis
The Directors are responsible for keeping proper accounting records of the Group and Company, which disclose withreasonable accuracy the financial position of the Group and the Company, and which will enable them to ensure thefinancial statements have complied with the provisions of the Companies Act 1965 and the applicable, approvedaccounting standards in Malaysia.
The Directors have the general responsibility for taking such steps that s are reasonably open to them to safeguard theassets of the Group and to prevent and detect fraud and other irregularities.
Compliance Statement
The Board of AMRB is generally satisfied with the Group’s level of compliance with the principles in Part 1 of the Codeand the extent to which the best practices in Part 2 of the Code is applied by the Group.
Other Disclosure Requirements
Besides the overview of the state of corporate governance in the Company, the Board is pleased to disclose the followinginformation:
Share Buybacks
During the financial year, there were no share buybacks by the Company.
Options, warrants or Convertible Securities
A total of 19,925,513 units of ESOS Options were exercised for the financial year ended 31 December 2010.
American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) Programme
During the financial year, the Company did not sponsor any ADR or GDR Programme.
48
ALAM MARITIM RESOURCES BERHAD (700849-K)
Statement of Corporate Governance(cont’d.)
Imposition of Sanctions/Penalties
There were no public sanctions and/or penalties imposed on the Company or its subsidiaries, Directors or managementby the relevant regulatory bodies during the financial year.
Non-Audit Fees
There were no non-audit fees paid to the external auditors during the financial year.
Variation in Results
The Group announced more than 10 percent deviation between the total comprehensive loss attributable to owners ofthe parent stated in the Unaudited Fourth Quarter Financial Statements announced on 28 February 2011 and the AuditedFinancial Statements for the financial year ended 31 December 2010 announced on 29 April 2011.
The reasons for this deviation were disclosed in an announcement through Bursa Malaysia Securities Berhad dated 29 April 2011.
Material Contracts
There were no material contracts entered into by the Company and/or its subsidiaries involving directors and majorshareholders’ interest either subsisting as at 31 December 2010 or entered into during the financial period under review.
49
Annual Report 2010
Statement of Internal Control
RESPONSIBILITY
The Board of Directors recognises the importance of sound internal controls and risk management practices to goodcorporate governance. The Board affirms its overall responsibility for the Group’s system of internal control which includesthe establishment of an appropriate control environment and framework as well as reviewing its adequacy and integrity. Asthere are limitations that are inherent in any system of internal control, this system is designed to manage rather thaneliminate risks that may impede the achievement of the Group’s business objectives. Accordingly, it can only providereasonable but not absolute assurance against material misstatement or loss.
The Group has in place an on-going process for identifying, evaluating, monitoring and managing significant risks faced bythe Group and this process includes reviewing and updating the system of internal controls to take into consideration changesin the regulatory and business environment. This process is regularly reviewed by the Board via the Audit Committee andaccords with the Statement on Internal Control: Guidance for Directors of Public Listed Companies.
The Board ensures that management undertakes such actions as may be necessary in the implementation of the policies andprocedures on risk and control approved by the Board whereby management identifies and assesses the risk faced and thendesigns, implements and monitors appropriate internal controls to mitigate and control those risks.
RISK MANAGEMENT
Risk management is regarded by the Board of Directors to be an integral part of the business operations. Management isresponsible for creating a risk awareness culture and for building the necessary knowledge for risk management. They alsohave the responsibility for managing risks and internal control associated with the operations and ensuring compliance withapplicable laws and regulations.
The main underlying principles of the Group’s policy are:
• Informed risk management is an essential element of the Group’s business strategy• Effective risk management provides greater assurance that the Group’s vision and strategy will be achieved• All material risks are to be identified, analysed, treated, monitored and reported.
OTHER KEY ELEMENTS OF THE SYSTEM OF INTERNAL CONTROL
Apart from the above, the other key elements of the Group’s internal control system which have been reviewed and approvedby the Board are described below:
(a) Operating structure with clearly defined lines of responsibility and delegated authority
• The operating structure includes defined delegation of responsibilities to the committees of the Board and themanagement team.
(b) Independence of the Audit Committee
• The Audit Committee comprises non-executive members of the Board, where all members being independent.The Committee has full access to both Internal and External Auditors and it meets with the External Auditorswithout any executive present at least twice a year.
50
ALAM MARITIM RESOURCES BERHAD (700849-K)
Statement of Internal Control(cont’d.)
(c) Policies, Procedures and Limits of Authority
• Clearly defined delegation of responsibilities to committees of the Board and to management including organisationstructures and appropriate authority levels; and
• Clearly documented internal policies, standards and procedures are in place and regularly updated to reflectchanging risks or resolve operational deficiencies. All policies and standards are approved by the Board and casesof non-compliance are reported to the Board by exception.
(d) Strategic Business Planning, Budgeting and Reporting
• Regular and comprehensive information provided by management for monitoring of performance against strategicplan, covering all key financial and operational indicators. On a quarterly basis, the Managing Director reviewswith the Board on all issues covering, but not restricted to, strategy, performance, resources and standards ofbusiness conduct;
• Detailed budgeting process established requiring all business units to prepare budgets annually which arediscussed and approved by the Board; and
• Effective reporting systems which expose significant variances against budgets and plan are in place to monitorperformance. Key variances are followed up by management and reported to the Board.
(e) Insurance and Physical Safeguard
• Adequate insurance and physical safeguard on major assets in place to ensure that the assets of the Group aresufficiently covered against any mishap that will result in material losses to the Group.
(f) Senior Management Team (Performance Review Committee) Meetings
• Senior Management Team meetings are held on a regular basis to review, identify, discuss and resolve strategic,operational, financial and key management issues.
(g) Other Matters
• Regular meetings are held between the Managing Director/CEO and analysts with a formal presentation conductedon the day the financial results are released after Board’s approval to ensure a transparent relationship and opendialogue with investors and shareholders; and
• Written declaration from all management personnel confirming their compliance with the Group’s Policies andAuthorities and where conflicts of interest situations are disclosed.
Monitoring and review of the effectiveness of the system of internal control
Periodic examination of business process and the state of internal control by the Internal Audit function to monitor and reviewthe effectiveness of the system of internal control. Reports on the reviews carried out by the Internal Auditor are submittedon a regular basis to the management and the Audit Committee.
The monitoring, review and reporting arrangements in place give reasonable assurance that the structure of controls and itsoperations are appropriate to the Group’s operations and that risks are at an acceptable level throughout the Group’s business.Such arrangements, however, do not eliminate the possibility of human error or deliberate circumvention of controlprocedures by employees and others.
This statement is made in accordance with a resolution of the Board of Directors dated 29 April 2011.
FINANCIALSTATEMENTS52 Directors’ Report 57 Statement by Directors 57 Statutory Declaration58 Independent Auditors’ Report 60 Statements of Comprehensive Income61 Statements of Financial Position 64 Statements of Changes in Equity 68 Statements of Cash Flows 70 Notes to the Financial Statements
52
ALAM MARITIM RESOURCES BERHAD (700849-K)
Directors' Report
The directors hereby present their report together with the audited financial statements of the Group and of the Company forthe financial year ended 31 December 2010.
Principal activities
The principal activity of the Company is investment holding. The principal activities of the subsidiaries are disclosed in Note15 to the financial statements.
There have been no significant changes in the nature of the principal activities of the Group and of the Company during thefinancial year.
Results
Group CompanyRM RM
Loss for the year (12,948,905) ( 100,192)
Attributable to:Equity holders of the Company (13,917,996) (100,192)Minority interests 969,091 -
(12,948,905) (100,192)
There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in thestatements of changes in equity.
In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year werenot substantially affected by any item, transaction or event of a material and unusual nature.
Dividends
The amount of dividends paid by the Company since 31 December 2009 were as follows:
RM
In respect of the financial year ended 31 December 2009, as reported in thedirectors' report of that year:
First and final dividend of 0.75 sen per share less 25% taxationon 506,987,098 shares, paid on 8 July 2010 2,860,186
The directors do not propose the payment of any dividend in respect of the current financial year.
53
Annual Report 2010
Directors' Report(cont’d.)
Directors
The names of the directors of the Company in office since the date of the last report and at the date of this report are:
Dato' Captain Ahmad Sufian @ Qurnain bin Abdul RashidDato' Haji Ab Wahab bin Haji IbrahimAzmi bin AhmadShaharuddin bin Warno @ RahmadMohd Abd Rahman bin Mohd HashimAb Razak bin HashimAhmad Hassanudin bin Ahmad KamaluddinDato' Mohamad Idris bin Mansor (resigned on 28 April 2010)Fina Norhizah binti Hj Baharu Zaman (appointed on 22 October 2010)
Directors' benefits
Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which theCompany was a party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures of theCompany or any other body corporate other than those arising from the share options granted under the Company's EmployeeShare Options Scheme.
Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other thanbenefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salaryof a full-time employee of the Company, as shown in Note 6 to the financial statements) by reason of a contract made by theCompany or a related corporation with any director or with a firm of which the director is a member, or with a company inwhich the director has a substantial financial interest.
Directors' interests
According to the register of directors' shareholdings, the interests of directors in office at the end of the financial year inshares and options over shares in the Company and its related corporations during the financial year were as follows:
Number of Ordinary Shares of RM0.25 EachAt 1.1.2010 Bonus Acquired Sold At 31.12.2010
The Company
Direct interest:
Dato' Captain Ahmad Sufian@ Qurnain bin Abdul Rashid 200,000 100,000 100,000 (100,000) 300,000
Dato' Haji Ab Wahab bin Haji Ibrahim 1,000 500 577,500 (577,500) 1,500Azmi bin Ahmad 179,474 11,087 - (157,300) 33,261Shaharuddin bin Warno @ Rahmad 3,676,999 338,499 - (3,000,000) 1,015,498Mohd Abd Rahman bin Mohd Hashim - - 2,837,176 (2,137,176) 700,000Ab Razak bin Hashim 75 37 3,357,500 - 3,357,612Ahmad Hassanudin bin
Ahmad Kamaluddin 1,250 625 1,732,500 (1,732,500) 1,875
54
ALAM MARITIM RESOURCES BERHAD (700849-K)
Directors' Report(cont’d.)
Number of Ordinary Shares of RM0.25 EachAt 1.1.2010 Bonus Acquired Sold At 31.12.2010
Indirect interest:
Dato' Captain Ahmad Sufian@ Qurnain bin Abdul Rashid - - 20,000 - 20,000
Azmi bin Ahmad 255,171,640 127,465,920 - (239,800) 382,397,760Shaharuddin bin Warno @ Rahmad 254,778,090 127,389,045 - - 382,167,135Mohd Abd Rahman bin Mohd Hashim 254,778,090 127,389,045 - - 382,167,135Ab Razak bin Hashim 254,778,090 127,389,045 - - 382,167,135Ahmad Hassanudin bin
Ahmad Kamaluddin 82,500 41,250 - - 123,750
Number of options over ordinary shares of RM0.25 eachAt 1.1.2010 Bonus Granted Exercised At 31.12.2010
The Company
Dato' Captain Ahmad Sufian@ Qurnain bin Abdul Rashid 481,250 240,625 - - 721,875
Dato' Haji Ab Wahab bin Haji Ibrahim 385,000 192,500 - (577,500) -Azmi bin Ahmad 5,358,925 2,679,462 - - 8,038,387Shaharuddin bin Warno @ Rahmad 2,206,600 1,103,300 - - 3,309,900Mohd Abd Rahman bin Mohd Hashim 4,098,051 2,049,025 - (2,837,176) 3,309,900Ab Razak bin Hashim 2,206,601 1,103,300 - (3,309,901) -Ahmad Hassanudin bin
Ahmad Kamaluddin 1,155,000 577,500 - (1,732,500) -
Issue of shares
During the financial year, the Company increased its issued and paid-up ordinary share capital from RM126,746,775 toRM195,287,594 by way of:
(a) Ordinary shares issued pursuant to bonus issue
During the financial year, the Company issued 254,237,816 ordinary shares of RM0.25 each pursuant to bonus issue, byway of capitalisation of the share premium on the basis of 1 new ordinary shares of RM0.25 each for every 2 existingordinary shares of RM0.25 each.
(b) Ordinary shares issued pursuant to the Company's Employee Share Options Scheme
During the financial year, the Company issued 19,925,463 (2009: 14,141,112) ordinary shares of RM0.25 each for cashpursuant to the Company's Employee Share Options Scheme at the exercise price ranging from RM0.44 to RM1.40 (2009:RM0.60 to RM1.59) per ordinary share.
The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary sharesof the Company.
55
Annual Report 2010
Directors' Report(cont’d.)
Employee share options scheme
The Alam Maritim Employee Share Options Scheme ("ESOS") is governed by the by-laws approved by the shareholders at anExtraordinary General Meeting held on 5 June 2006. The ESOS was implemented on 20 July 2006 and is to be in force for aperiod of 5 years from date of implementation.
The salient features and other terms of the ESOS are disclosed in Note 32 to the financial statements.
The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose the names ofthe option holders, who have been granted options to subscribe for less than 5,000,000 ordinary shares of RM0.25 each.Other than the interests of the directors as disclosed above, there are no other holders of 5,000,000 or more options as at 31December 2010.
Other statutory information
(a) Before the statements of comprehensive income and statements of financial position of the Group and of the Companywere made out, the directors took reasonable steps:
(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provisionfor doubtful debts and satisfied themselves that there were no known bad debts and that adequate provision hadbeen made for doubtful debts; and
(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records inthe ordinary course of business had been written down to an amount which they might be expected so to realise.
(b) At the date of this report, the directors are not aware of any circumstances which would render:
(i) it necessary to write off any bad debts or the amount of the provision for doubtful debts in the financial statementsof the Group and of the Company inadequate to any substantial extent; and
(ii) the values attributed to current assets in the financial statements of the Group and of the Company misleading.
(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would renderadherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report orfinancial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.
(e) As at the date of this report, there does not exist:
(i) any charge on the assets of the Group and of the Company which has arisen since the end of the financial yearwhich secures the liabilities of any other person; or
(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year.
(f) In the opinion of the directors:
(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period oftwelve months after the end of the financial year which will or may affect the ability of the Group or of the Companyto meet their obligations when they fall due; and
(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of thefinancial year and the date of this report which is likely to affect substantially the results of the operations of theGroup or of the Company for the financial year in which this report is made.
56
ALAM MARITIM RESOURCES BERHAD (700849-K)
Directors' Report(cont’d.)
Significant events
In addition to the significant events disclosed elsewhere in this report, other significant events are disclosed in Note 15, Note16 and Note 17 to the financial statements.
Subsequent event
Details of subsequent event are disclosed in Note 40 to the financial statements.
Auditors
The auditors, Ernst & Young, have expressed their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the directors dated 29 April 2011.
Dato' Captain Ahmad Sufian @ Qurnain Azmi bin Ahmadbin Abdul Rashid
57
Annual Report 2010
Statement by DirectorsPursuant to Section 169(15) of the Companies Act, 1965
We, Dato' Captain Ahmad Sufian @ Qurnain bin Abdul Rashid and Azmi bin Ahmad, being two of the directors of Alam MaritimResources Berhad, do hereby state that, in our opinion, the accompanying financial statements set out on pages 60 to 135are drawn up in accordance with the applicable Financial Reporting Standards and provisions of the Companies Act, 1965 inMalaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2010and of the results and the cash flows of the Group and of the Company for the year then ended.
The information set out in Note 42 to the financial statements have been prepared in accordance with the Guidance on SpecialMatter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to BursaMalaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.
Signed on behalf of the Board in accordance with a resolution of the directors dated 29 April 2011.
Dato' Captain Ahmad Sufian @ Qurnain Azmi bin Ahmadbin Abdul Rashid
Statutory DeclarationPursuant to Section 169(16) of the Companies Act, 1965
I, Md Nasir bin Noh, being the officer primarily responsible for the financial management of Alam Maritim Resources Berhad,do solemnly and sincerely declare that the accompanying financial statements set out on pages 60 to 135 are in my opinioncorrect, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions ofthe Statutory Declarations Act, 1960.
Subscribed and solemnly declared bythe abovenamed, Md Nasir bin Nohat Kuala Lumpur in the FederalTerritory on 29 April 2011. Md Nasir bin Noh
Before me,
58
ALAM MARITIM RESOURCES BERHAD (700849-K)
Independent Auditors' Reportto the members of Alam Maritim Resources Berhad (Incorporated in Malaysia)
Report on the financial statements
We have audited the financial statements of Alam Maritim Resources Berhad, which comprise the statements of financialposition as at 31 December 2010 of the Group and of the Company, and the statements of comprehensive income, statementsof changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summaryof significant accounting policies and other explanatory notes, as set out on pages 60 to 135.
Directors’ responsibility for the financial statements
The directors of the Company are responsible for the preparation and fair presentation of these financial statements inaccordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia. This responsibility includes:designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financialstatements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriateaccounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit inaccordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free frommaterial misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on our judgment, including the assessment of risks of material misstatementof the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal controlrelevant to the Company’s preparation and fair presentation of the financial statements in order to design audit proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theCompany’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and thereasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the estimatesmade by the directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for audit opinion.
Opinion
In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards andthe Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Companyas at 31 December 2010 and of their financial performance and cash flows for the year then ended.
Report on other legal and regulatory requirements
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company andits subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
(b) We have considered the accounts and the auditors' report of all the subsidiaries of which we have not acted as auditors,which are indicated in Note 15 to the financial statements.
(c) We are satisfied that the accounts of the subsidiaries that have been consolidated with the financial statements of theCompany are in form and content appropriate and proper for the purposes of the preparation of the consolidated financialstatements and we have received satisfactory information and explanations required by us for those purposes.
(d) The auditors’ reports on the accounts of the subsidiaries were not subject to any qualification and did not include anycomment required to be made under Section 174(3) of the Act.
59
Annual Report 2010
Independent Auditors' Reportto the members of Alam Maritim Resources Berhad (Incorporated in Malaysia) (cont’d.)
Other matters
The supplementary information set out in Note 42 on page 135 is disclosed to meet the requirement of Bursa MalaysiaSecurities Berhad. The directors are responsible for the preparation of the supplementary information in accordance withGuidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of DisclosurePursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants("MIA Guidance") and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information isprepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act,1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
Ernst & Young Mohd. Sukarno bin Tun SardonAF: 0039 No. 1697/03/13(J)Chartered Accountants Chartered AccountantKuala Lumpur, Malaysia29 April 2011
60
ALAM MARITIM RESOURCES BERHAD (700849-K)
Statements of Comprehensive IncomeFor the financial year ended 31 December 2010
Group CompanyNote 2010 2009 2010 2009
RM RM RM RM
Revenue 4 242,191,823 348,917,132 - 1,713,250Cost of sales (158,145,033) (194,929,687) - -
Gross profit 84,046,790 153,987,445 - 1,713,250Other income 5,318,479 7,631,583 995,220 988,642Employee benefits expense 5 (22,318,241) (24,646,486) (168,804) (242,828)Other expenses (65,985,339) (25,068,072) (751,320) (520,073)
Operating (loss)/profit 1,061,689 111,904,470 75,096 1,938,991Finance costs 7 (31,228,729) (25,874,837) (7,942) (9,466)Share of results
of jointly controlled entities 12,347,733 23,211,091 - -Share of results of associates (296,299) 3,283,674 - -
(Loss)/profit before tax 8 (18,115,606) 112,524,398 67,154 1,929,525Income tax benefit/ (expense) 9 5,166,701 (17,157,646) (167,346) (292,478)
(Loss)/profit for the year (12,948,905) 95,366,752 (100,192) 1,637,047
Other comprehensive income:
Foreign currency translation, representing othercomprehensive(loss)/income forthe year, net of tax (155,775) 144,791 - -
Total comprehensive (loss)/income for the year (13,104,680) 95,511,543 (100,192) 1,637,047
(Loss)/profit attributable to:Owners of the parent (13,917,996) 91,279,940 (100,192) 1,637,047Minority interest 969,091 4,086,812 - -
(12,948,905) 95,366,752 (100,192) 1,637,047
Total comprehensive (loss)/income attributable to:
Owners of the parent (14,061,240) 91,381,490 (100,192) 1,637,047Minority interest 956,560 4,130,053 - -
(13,104,680) 95,511,543 (100,192) 1,637,047
Earnings per share attributableto owners of the parent:
Basic (Sen) 10 (2.2) 18.3Diluted (Sen) 10 (2.1) 17.6
The accompanying notes form an integral part of the financial statements.
61
Annual Report 2010
Statements of Financial PositionAs at 31 December 2010
As at2009 1.1.2009
2010 (restated) (restated)Group Note RM RM RM
Assets
Non-current assets
Property, vessels and equipment 12 680,229,793 788,815,762 817,699,175Land use rights 13 - - -Intangible assets 14 1,691,092 1,850,173 1,949,538Investment in associates 16 54,907,200 22,225,947 21,667,949Investments in jointly controlled entities 17 80,680,904 45,600,714 25,547,737Deposits with a licensed bank 23 11,567,361 10,094,886 8,797,351
829,076,350 868,587,482 875,661,750
Current assets
Inventories 19 8,507,084 23,362,915 19,985,209Trade receivables 20 117,434,537 150,689,419 199,584,982Other receivables 22 169,307,894 115,547,226 46,568,165Tax recoverable 4,454,598 3,183,093 2,688,782Cash and bank balances 23 167,010,472 193,045,345 112,791,305
466,714,585 485,827,998 381,618,443
Total assets 1,295,790,935 1,354,415,480 1,257,280,193
Equity and liabilities
Current liabilities
Borrowings 27 233,849,190 157,129,155 147,091,902Trade payables 30 28,624,547 28,925,886 39,045,143Other payables 31 51,756,326 117,047,107 134,880,729Tax payable 2,945,324 3,723,530 1,687,866
317,175,387 306,825,678 322,705,640
Net current assets 149,539,198 179,002,320 58,912,803
Non-current liabilities
Borrowings 27 435,164,780 486,316,442 487,982,161Deferred tax liabilities 29 70,945,539 77,511,121 66,396,703
506,110,319 563,827,563 554,378,864
Total liabilities 823,285,706 870,653,241 877,084,504
Net assets 472,505,229 483,762,239 380,195,689
62
ALAM MARITIM RESOURCES BERHAD (700849-K)
Statements of Financial PositionAs at 31 December 2010 (cont’d)
As at2009 1.1.2009
2010 (restated) (restated)Group Note RM RM RM
Equity attributable to owners of the parent
Share capital 24 195,287,595 126,746,775 123,211,497Share premium 24 22,629,064 78,470,938 68,689,027Other reserves 25 (1,033,358) 6,785,533 7,968,503Retained earnings 26 248,141,190 264,469,513 174,996,808
465,024,491 476,472,759 374,865,835Minority interests 7,480,738 7,289,480 5,329,854
Total equity 472,505,229 483,762,239 380,195,689
Total equity and liabilities 1,295,790,935 1,354,415,480 1,257,280,193
2010 2009Company Note RM RM
Assets
Non-current assets
Motor vehicle 12 37,057 92,642Investment in subsidiaries 15 100,302,070 100,302,070
100,339,127 100,394,712
Current assets
Due from subsidiaries 18 616,067,346 623,912,236Due from related corporations 22 3,120 -Tax recoverable 1,392,178 2,468,139Cash and bank balances 23 88,319,606 77,001,774
705,782,250 703,382,149
Total assets 806,121,377 803,776,861
Equity and liabilities
Current liabilities
Borrowings 27 176,948,917 126,789,886Other payables 31 11,357,527 11,718,192
188,306,444 138,508,078
Net current assets 517,475,806 564,874,071
63
Annual Report 2010
Statements of Financial PositionAs at 31 December 2010 (cont’d.)
2010 2009Company Note RM RM
Non-current liabilities
Borrowings 27 390,116,754 445,145,042
Total liabilities 578,423,198 583,653,120
Net assets 227,698,179 220,123,741
Equity attributable to owners of the parentShare capital 24 195,287,595 126,746,775Share premium 24 22,629,064 78,470,938Other reserves 25 4,448,996 6,613,126Retained earnings 26 5,332,524 8,292,902
Total equity 227,698,179 220,123,741
Total equity and liabilities 806,121,377 803,776,861
The accompanying notes form an integral part of the financial statements.
64
ALAM MARITIM RESOURCES BERHAD (700849-K)
Att
ribu
tabl
e to
ow
ners
of t
he p
aren
tN
on-d
istr
ibut
able
D
istr
ibut
able
Shar
e Sh
are
Oth
er
Ret
aine
dM
inor
ity
Tota
lca
pita
l pr
emiu
m
rese
rves
earn
ings
Tota
lin
tere
sts
equi
ty(N
ote
24)
(Not
e 24
)(N
ote
25)
(Not
e 26
)G
roup
RM
R
M
RM
R
MR
M
RM
R
M
At 1
Jan
uary
201
0 12
6,74
6,77
5 78
,470
,938
6,78
5,53
3 26
4,46
9,51
347
6,47
2,75
97,
289,
480
483,
762,
239
Tota
l com
preh
ensi
ve (l
oss)
/inco
me
for
the
year
--
(143
,244
)(1
3,91
7,99
6)
(14,
061,
240)
956,
560
(13,
104,
680)
Tran
sact
ions
wit
h ow
ners
:Is
sue
of o
rdin
ary
shar
es:
- pu
rsua
nt to
ESO
S4,
981,
366
5,03
3,98
3-
- 10
,015
,349
-10
,015
,349
- pu
rsua
nt to
bon
us is
sue
63,5
59,4
54(6
3,55
9,45
4)-
--
--
Shar
e op
tions
gra
nted
und
er E
SOS:
- re
cogn
ised
in in
com
e st
atem
ent
--
519,
467
- 51
9,46
7-
519,
467
- ex
erci
sed
duri
ng th
e ye
ar-
2,68
3,59
7(2
,683
,597
)-
-D
ivid
ends
(Not
e 11
)-
--
(2,8
60,1
86)
(2,8
60,1
86)
-(2
,860
,186
)Ac
quis
ition
of m
inor
ity in
tere
sts
(Not
e 15
(a)(i
)) -
- -
--
(315
,443
)(3
15,4
43)
Pre
miu
m p
aid
on a
cqui
sitio
n of
min
ority
inte
rest
s (N
ote
15(a
)(i))
--
(5,5
11,5
17)
- (5
,511
,517
)-
(5,5
11,5
17)
Accr
etio
n in
a s
ubsi
diar
y (N
ote
15(a
)(ii))
--
- 44
9,85
944
9,85
9(4
49,8
59)
-
Tota
l tra
nsac
tions
with
ow
ners
68
,540
,820
(55,
841,
874)
(7,6
75,6
47)
(2,4
10,3
27)
2,61
2,97
2(7
65,3
02)
1,84
7,67
0
At 3
1 D
ecem
ber
2010
195,
287,
595
22,6
29,0
64(1
,033
,358
) 24
8,14
1,19
0 46
5,02
4,49
17,
480,
738
472,
505,
229
Stat
emen
ts o
f Cha
nges
in E
quit
yFo
r th
e fin
anci
al y
ear
ende
d 31
Dec
embe
r 20
10
65
Annual Report 2010
Att
ribu
tabl
e to
ow
ners
of t
he p
aren
tN
on-d
istr
ibut
able
D
istr
ibut
able
Shar
e Sh
are
Oth
er
Ret
aine
dM
inor
ity
Tota
lca
pita
l pr
emiu
m
rese
rves
earn
ings
Tota
lin
tere
sts
equi
ty(N
ote
24)
(Not
e 24
)(N
ote
25)
(Not
e 26
)G
roup
(con
t’d.
)R
M
RM
R
M
RM
RM
R
M
RM
At 1
Jan
uary
200
912
3,21
1,49
7 68
,689
,027
7,96
8,50
317
4,99
6,80
837
4,86
5,83
55,
329,
854
380,
195,
689
Tota
l com
preh
ensi
ve in
com
e-
- 10
1,55
091
,279
,940
91
,381
,490
4,13
0,05
395
,511
,543
Tran
sact
ions
wit
h ow
ners
:
Issu
e of
ord
inar
y sh
ares
:-
purs
uant
to E
SOS
3,53
5,27
86,
195,
243
- -
9,73
0,52
1-
9,73
0,52
1Sh
are
optio
ns g
rant
ed u
nder
ESO
S:-
reco
gnis
ed in
inco
me
stat
emen
t-
- 2,
302,
148
-2,
302,
148
-2,
302,
148
- ex
erci
sed
duri
ng th
e ye
ar-
3,58
6,66
8 (3
,586
,668
)-
--
-D
ivid
ends
(Not
e 11
)-
--
(1,8
75,4
80)
(1,8
75,4
80)
(2,1
02,1
82)
(3,9
77,6
22)
Accr
etio
n in
a s
ubsi
diar
y (N
ote
15(c
))-
- -
68,2
45
68,2
45(6
8,24
5)-
Tota
l tra
nsac
tions
with
ow
ners
3,
535,
278
9,78
1,91
1(1
,284
,520
)(1
,807
,235
)10
,225
,434
(2,1
70,4
27)
8,05
5,00
7
At 3
1 D
ecem
ber
2009
12
6,74
6,77
5 78
,470
,938
6,78
5,53
326
4,46
9,51
3 47
6,47
2,75
97,
289,
480
483,
762,
239
Stat
emen
ts o
f Cha
nges
in E
quit
yFo
r th
e fin
anci
al y
ear
ende
d 31
Dec
embe
r 20
10 (c
ont’d
.)
66
ALAM MARITIM RESOURCES BERHAD (700849-K)
Stat
emen
ts o
f Cha
nges
in E
quit
yFo
r th
e fin
anci
al y
ear
ende
d 31
Dec
embe
r 20
10 (c
ont’d
.)
Non
-dis
trib
utab
le
Dis
trib
utab
leSh
are
Shar
e O
ther
R
etai
ned
capi
tal
prem
ium
rese
rves
pr
ofit
s To
tal
(Not
e 24
) (N
ote
24)
(Not
e 25
)(N
ote
26)
equi
tyC
ompa
nyR
M
RM
RM
R
MR
M
At 1
Jan
uary
201
0 12
6,74
6,77
5 78
,470
,938
6,61
3,12
6 8,
292,
902
220,
123,
741
Tota
l com
preh
ensi
ve lo
ss fo
r th
e ye
ar-
--
(100
,192
)(1
00,1
92)
Tran
sact
ions
wit
h ow
ners
:Is
sue
of o
rdin
ary
shar
es:
- pu
rsua
nt to
ESO
S4,
981,
366
5,03
3,98
3-
-10
,015
,349
- pu
rsua
nt to
bon
us is
sue
63,5
59,4
54
(63,
559,
454)
--
-Sh
are
optio
ns g
rant
ed u
nder
ESO
S:-
reco
gnis
ed in
inco
me
stat
emen
t-
-51
9,46
7-
519,
467
- ex
erci
sed
duri
ng th
e ye
ar-
2,68
3,59
7(2
,683
,597
)-
-D
ivid
ends
(Not
e 11
)-
--
(2,8
60,1
86)
(2,8
60,1
86)
Tota
l tra
nsac
tions
with
ow
ners
68
,540
,820
(5
5,84
1,87
4)(2
,164
,130
)(2
,860
,186
)7,
674,
630
At 3
1 D
ecem
ber
2010
195,
287,
595
22,6
29,0
644,
448,
996
5,33
2,52
422
7,69
8,17
9
67
Annual Report 2010
Stat
emen
ts o
f Cha
nges
in E
quit
yFo
r th
e fin
anci
al y
ear
ende
d 31
Dec
embe
r 20
10 (c
ont’d
.)
Non
-dis
trib
utab
le
Dis
trib
utab
leSh
are
Shar
e O
ther
R
etai
ned
capi
tal
prem
ium
rese
rves
pr
ofit
s To
tal
(Not
e 24
) (N
ote
24)
(Not
e 25
)(N
ote
26)
equi
tyC
ompa
ny (c
ont’
d.)
RM
R
MR
M
RM
RM
At 1
Jan
uary
200
912
3,21
1,49
7 68
,689
,027
7,89
7,64
6 8,
531,
335
208,
329,
505
Tota
l com
preh
ensi
ve in
com
e fo
r th
e ye
ar
- -
- 1,
637,
047
1,63
7,04
7
Tran
sact
ions
wit
h ow
ners
:Is
sue
of o
rdin
ary
shar
es:
- pu
rsua
nt to
ESO
S 3,
535,
278
6,19
5,24
3-
-9,
730,
521
Shar
e op
tions
gra
nted
und
er E
SOS:
- re
cogn
ised
in in
com
e st
atem
ent
--
2,30
2,14
8 -
2,30
2,14
8-
exer
cise
d du
ring
the
year
-3,
586,
668
(3,5
86,6
68)
--
Div
iden
ds (N
ote
11)
--
-(1
,875
,480
)(1
,875
,480
)
Tota
l tra
nsac
tions
with
ow
ners
3,
535,
278
9,78
1,91
1(1
,284
,520
) (1
,875
,480
)10
,157
,189
At 3
1 D
ecem
ber
2009
12
6,74
6,77
5 78
,470
,938
6,61
3,12
68,
292,
902
220,
123,
741
The
acco
mpa
nyin
g no
tes
form
an
inte
gral
par
t of t
he fi
nanc
ial s
tate
men
ts.
68
ALAM MARITIM RESOURCES BERHAD (700849-K)
Statements of Cash FlowsFor the financial year ended 31 December 2010
Group Company2010 2009 2010 2009
RM RM RM RM
Operating activities(Loss)/profit before tax (18,115,606) 112,524,398 67,154 1,929,525Adjustments for:Interest income (2,233,050) (2,976,348) (995,220) (988,642)Dividend income - - - (1,713,250)Depreciation of property,
vessels and equipment (Note 12) 34,069,546 31,890,538 55,585 55,586Loss/(gain) on disposal of property, vessels
and equipment 1,074,360 (5,409,340) - -Unrealised (loss)/profit
on vessels disposed to associates (960,903) 2,572,411 - -Property, vessels and equipment written off - 429,696 - -Finance costs 31,228,729 25,874,837 7,942 9,466Share options granted under ESOS (Note 5) 519,467 2,302,148 - 91,928Bad debts written off 1,005,763 - - -Impairment loss ontrade receivables 28,020,284 9,035,533 - -Impairment loss on
trade receivables written off (121,692) - - -Net foreign exchange losses 4,405,058 4,576,266 - -Amortisation of intangible assets 119,335 122,260 - -Share of loss/(profit) of associates 296,299 (3,283,674) - -Share of profit of jointly controlled entities (12,347,733) (23,211,091) - -
Operating cash flows before workingcapital changes 66,959,857 154,447,634 (864,539) (615,387)
Changes in working capital:Decrease/(increase) in inventories 14,855,831 (3,377,706) - -Increase in receivables (53,310,707) (30,533,684) - -(Decrease)/increase in payables (65,592,120) (27,952,879) (360,665) 85,752
Cash (used in)/generated from operations (37,087,139) 92,583,365 (1,225,204) (529,635)Tax refund 1,340,920 - 1,340,920 -Taxes paid (4,635,426) (4,543,897) (432,305) (1,594,170)Interest paid (30,037,119) (27,370,446) (28,019,000) (24,334,071)
Net cash (used in)/ generated from operating activities (70,418,764) 60,669,022 (28,335,589) (26,457,876)
69
Annual Report 2010
Statements of Cash FlowsFor the financial year ended 31 December 2010 (cont’d.)
Group Company2010 2009 2010 2009
RM RM RM RM
Investing activitiesPurchase of property, vessels
and equipment (Note 12) (171,570,033) (95,042,684) - -Prepayment of land lease - (10,062,360) - -Acquisition of minority interests (Note 15(a)(i)) (5,826,960) - - -Investment in jointly controlled entities (22,732,457) (352) - -Investment in associates (32,016,649) - - -Decrease in amount due from subsidiaries - - 40,667,089 60,404,157Interest received 2,233,050 2,976,348 995,220 988,642
Net cash (used in)/ generated frominvesting activities (229,913,049) (102,129,048) 41,662,309 61,392,799
Financing activitiesProceeds from disposal of vessels to associates 254,150,360 124,646,000 - -Proceeds from disposal of diving equipment 7,513,556 - - -Proceeds from issuance of ordinary shares (Note 24) 10,015,349 9,730,521 10,015,349 11,940,741Proceeds from MCP/MMTN 95,862,712 95,661,918 95,862,712 95,661,918Repayment of MCP/MMTN (100,000,000) (100,000,000) (100,000,000) (100,000,000)Proceeds from Sukuk
Ijarah MTN 25,000,000 - 25,000,000 -Redemption of Sukuk
Ijarah MTN (30,000,000) (20,000,000) (30,000,000) (20,000,000)Proceeds from drawdown of term loans 6,296,624 22,203,376 - -Repayment of term loans (8,045,078) (2,030,554) - -Proceeds from drawdown of revolving credits 20,000,000 - - -Repayment of hire purchase and
lease financing (Note 28) (4,873,887) (749,063) (26,763) (25,237)Net cash set aside for
collateral and sinking fund (1,613,321) (2,642,263) - -Dividends paid (2,860,186) (3,977,662) (2,860,186) (1,875,480)
Net cash generated from/ (used in) financing activities 271,446,129 122,842,273 (2,008,888) (14,298,058)
Net (decrease)/increase in cash and cash equivalents (28,885,684) 81,382,247 11,317,832 20,636,865
Cash and cash equivalents atbeginning of year 187,207,104 105,824,857 77,001,774 56,364,909
Cash and cash equivalents atend of year (Note 23) 158,321,420 187,207,104 88,319,606 77,001,774
The accompanying notes form an integral part of the financial statements.
70
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the financial statementsFor the financial year ended 31 December 2010
1. Corporate information
The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the MainMarket of Bursa Malaysia Securities Berhad. The registered office is located at 38F, Level 3, Jalan Radin Anum, BandarBaru Sri Petaling, 57000 Kuala Lumpur.
The immediate and ultimate holding company of the Company is SAR Venture Holdings (M) Sdn. Bhd., a private limitedliability company, incorporated and domiciled in Malaysia.
The principal activity of the Company is investment holding. The principal activities of the subsidiaries are disclosed inNote 15 to the financial statements.
There have been no significant changes in the nature of the principal activities of the Company and of its subsidiariesduring the financial year.
The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of thedirectors on 29 April 2011.
2. Summary of significant accounting policies
2.1 Basis of preparation
The financial statements of the Group and of the Company have been prepared in accordance with FinancialReporting Standards ("FRS") and the Companies Act, 1965 in Malaysia. At the beginning of the current financialyear, the Group and the Company adopted new and revised FRS which are mandatory for financial periods beginningon or after 1 January 2010 as described fully in Note 2.2.
The financial statements of the Group and of the Company have been prepared on the historical cost basis and arepresented in Ringgit Malaysia (RM).
2.2 Changes in accounting policies
The accounting policies adopted are consistent with those of the previous financial year except as follows:
On 1 January 2010, the Group and the Company adopted the following new and amended FRS and IC Interpretationsmandatory for annual financial periods beginning on or after 1 January 2010.
- FRS 7 Financial Instruments: Disclosures- FRS 8 Operating Segments- FRS 101 Presentation of Financial Statements (Revised)- FRS 123 Borrowing Costs- FRS 139 Financial Instruments: Recognition and Measurement- Amendments to FRS 1 First-time Adoption of Financial Reporting Standards and FRS 127 Consolidated and
Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate- Amendments to FRS 2 Share-based Payment – Vesting Conditions and Cancellations- Amendments to FRS 132 Financial Instruments: Presentation- Amendments to FRS 139 Financial Instruments: Recognition and Measurement, FRS 7 Financial Instruments:
Disclosures and IC Interpretation 9 Reassessment of Embedded Derivatives- Improvements to FRS issued in 2009- IC Interpretation 9 Reassessment of Embedded Derivatives- IC Interpretation 10 Interim Financial Reporting and Impairment- IC Interpretation 11 FRS 2 – Group and Treasury Share Transactions- IC Interpretation 13 Customer Loyalty Programmes- IC Interpretation 14 FRS119 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and
their Interaction
71
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
2. Summary of significant accounting policies (cont’d.)
2.2 Changes in accounting policies (cont’d.)
FRS 4 Insurance Contracts and TR i-3 Presentation of Financial Statements of Islamic Financial Institutions willalso be effective for annual periods beginning on or after 1 January 2010. These FRS are, however, not applicableto the Group or the Company.
Adoption of the above standards and interpretations did not have any effect on the financial performance or positionof the Group and the Company except for those discussed below:
FRS 7 Financial Instruments: Disclosures
Prior to 1 January 2010, information about financial instruments was disclosed in accordance with the requirementsof FRS 132 Financial Instruments: Disclosure and Presentation. FRS 7 introduces new disclosures to improve theinformation about financial instruments. It requires the disclosure of qualitative and quantitative information aboutexposure to risks arising from financial instruments, including specified minimum disclosures about credit risk,liquidity risk and market risk, including sensitivity analysis to market risk.
The Group and the Company have applied FRS 7 prospectively in accordance with the transitional provisions. Hence,the new disclosures have not been applied to the comparatives. The new disclosures are included throughout theGroup’s and the Company’s financial statements for the year ended 31 December 2010.
FRS 101 Presentation of Financial Statements (Revised)
The revised FRS 101 introduces changes in the presentation and disclosures of financial statements. The revisedStandard separates owner and non-owner changes in equity. The statement of changes in equity includes onlydetails of transactions with owners, with all non-owner changes in equity presented as a single line. The Standardalso introduces the statement of comprehensive income, with all items of income and expense recognised in profitor loss, together with all other items of recognised income and expense recognised directly in equity, either in onesingle statement, or in two linked statements. The Group and the Company have elected to present this statementas one single statement.
In addition, a statement of financial position is required at the beginning of the earliest comparative period followinga change in accounting policy, the correction of an error or the classification of items in the financial statements.
The revised FRS 101 also requires the Group to make new disclosures to enable users of the financial statementsto evaluate the Group’s objectives, policies and processes for managing capital (see Note 39).
The revised FRS 101 was adopted retrospectively by the Group and the Company.
72
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
2. Summary of significant accounting policies (cont’d.)
2.2 Changes in accounting policies (cont’d.)
Amendments to FRS 117 Leases
Prior to 1 January 2010, for all leases of land and buildings, if title is not expected to pass to the lessee by the endof the lease term, the lessee normally does not receive substantially all of the risks and rewards incidental toownership. Hence, the leasehold land held for own use was classified by the Group as operating lease. The up-frontpayment represented prepaid lease payments and were amortised on a straight-line basis over the lease term.
The amendments to FRS 117 Leases clarify that leases of land and buildings are classified as operating or financeleases in the same way as leases of other assets. They also clarify that the present value of the residual value ofthe property in a lease with a term of several decades would be negligible and accounting for the land element asa finance lease in such circumstances would be consistent with the economic position of the lessee. Hence, theadoption of the amendments to FRS 117 has resulted in certain unexpired land leases to be reclassified as financeleases. The Group has applied this change in accounting policy retrospectively and certain comparatives have beenrestated. The following are effects to the consolidated statement of financial positions as at 31 December 2010arising from the above change in accounting policy:
Group2010
RM
Increase/(decrease):Property, vessels and equipment 10,052,363Land use rights (10,052,363)
The following comparatives have been restated:
As previously stated Adjustments As restatedRM RM RM
Consolidated statement of financial position
31 December 2009Property, vessels and equipment 778,763,399 10,052,363 788,815,762Land use rights 10,052,363 (10,052,363) -
FRS 139 Financial Instruments: Recognition and Measurement
FRS 139 establishes principles for recognising and measuring financial assets, financial liabilities and somecontracts to buy and sell non-financial items. The Group and the Company have adopted FRS 139 prospectively on1 January 2010 in accordance with the transitional provisions. The effects arising from the adoption of this Standardhas been accounted for by adjusting the opening balance of retained earnings as at 1 January 2010. Comparativesare not restated. The details of the changes in accounting policies and the effects arising from the adoption of FRS139 are discussed below:
- Impairment of trade receivables
Prior to 1 January 2010, provision for doubtful debts was recognised when it was considered uncollectible.Upon the adoption of FRS 139, an impairment loss is recognised when there is objective evidence that animpairment loss has been incurred. The amount of the loss is measured as the difference between thereceivable’s carrying amount and the present value of the estimated future cash flows discounted at thereceivable’s original effective interest rate. As at 1 January 2010, the Group has remeasured the allowance forimpairment losses as at that date in accordance with FRS 139 and the difference is recognised as adjustmentsto the opening balance of retained earnings as at that date.
73
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
2. Summary of significant accounting policies (cont’d.)
2.2 Changes in accounting policies (cont’d.)
FRS 139 Financial Instruments: Recognition and Measurement (cont’d)
- Financial guarantee contracts
During the current and prior years, the Company provided financial guarantees to banks in connection withbank loans and other banking facilities granted to its subsidiaries. Prior to 1 January 2010, the Company didnot provide for such guarantees unless it was more likely than not that the guarantees would be called upon.The guarantees were disclosed as contingent liabilities. Upon the adoption of FRS 139, all unexpired financialguarantees issued by the Company are recognised as financial liabilities and are measured at their initial fairvalue less accumulated amortisation as at 1 January 2010.
2.3 Standards issued but not yet effective
The Group has not adopted the following standards and interpretations that have been issued but not yet effective:
Effective for annualperiods beginning
Description on or after
FRS 1 First-time Adoption of Financial Reporting Standards 1 July 2010FRS 3 Business Combinations (revised) 1 July 2010Amendments to FRS 2 Share-based Payment 1 July 2010Amendments to FRS 5 Non-current Assets Held for Sale and Discontinued Operations 1 July 2010Amendments to FRS 127 Consolidated and Separate Financial Statements 1 July 2010Amendments to FRS 138 Intangible Assets 1 July 2010Amendments to IC Interpretation 9 Reassessment of Embedded Derivatives 1 July 2010IC Interpretation 12 Service Concession Arrangements 1 July 2010IC Interpretation 15 Agreements for the Construction of Real Estate 1 July 2010IC Interpretation 16 Hedges of a Net Investment in a Foreign Operation 1 July 2010IC Interpretation 17 Distributions of Non-cash Assets to Owners 1 July 2010Amendments to FRS 132 Classification of Rights Issues 1 March 2010Amendments to FRS 1 Limited Exemption from Comparative
FRS 7 Disclosures for First-time Adopters 1 January 2011Amendments to FRS 7 Improving Disclosures about Financial Instruments 1 January 2011
Except for the changes in accounting policies arising from the adoption of the revised FRS 3 and the amendmentsto FRS 127, as well as the new disclosures required under the Amendments to FRS 7, the directors expect that theadoption of the other standards and interpretations above will have no material impact on the financial statementsin the period of initial application. The nature of the impending changes in accounting policy on adoption of therevised FRS 3 and the amendments to FRS 127 are described below.
Revised FRS 3 Business Combinations and Amendments to FRS 127 Consolidated and Separate Financial Statements
The revised standards are effective for annual periods beginning on or after 1 July 2010. The revised FRS 3 introduces anumber of changes in the accounting for business combinations occurring after 1 July 2010. These changes will impactthe amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future reportedresults. The Amendments to FRS 127 require that a change in the ownership interest of a subsidiary (without loss ofcontrol) is accounted for as an equity transaction. Therefore, such transactions will no longer give rise to goodwill, nor willthey give rise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by thesubsidiary as well as the loss of control of a subsidiary. Other consequential amendments have been made to FRS 107Statement of Cash Flows, FRS 112 Income Taxes, FRS 121 The Effects of Changes in Foreign Exchange Rates, FRS 128Investments in Associates and FRS 131 Interests in Joint Ventures. The changes from revised FRS 3 and Amendmentsto FRS 127 will affect future acquisitions or loss of control and transactions with minority interests. The standards maybe early adopted. However, the Group does not intend to early adopt.
74
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
2. Summary of significant accounting policies (cont’d.)
2.4 Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries asat the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidatedfinancial statements are prepared for the same reporting date as the Company. Consistent accounting policies areapplied to like transactions and events in similar circumstances.
All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-grouptransactions are eliminated in full.
Acquisitions of subsidiaries are accounted for by applying the purchase method. Identifiable assets acquired andliabilities and contingent liabilities assumed in a business combination are measured initially at their fair valuesat the acquisition date. Adjustments to those fair values relating to previously held interests are treated as arevaluation and recognised in other comprehensive income. The cost of a business combination is measured asthe aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, andequity instruments issued, plus any costs directly attributable to the business combination. Any excess of the costof business combination over the Group’s share in the net fair value of the acquired subsidiary’s identifiable assets,liabilities and contingent liabilities is recorded as goodwill on the statement of financial position.
The accounting policy for goodwill is set out in Note 2.8(a). Any excess of the Group’s share in the net fair value ofthe acquired subsidiary’s identifiable assets, liabilities and contingent liabilities over the cost of businesscombination is recognised as income in profit or loss on the date of acquisition. When the Group acquires abusiness, embedded derivatives separated from the host contract by the acquiree are reassessed on acquisitionunless the business combination results in a change in the terms of the contract that significantly modifies the cashflows that would otherwise be required under the contract.
Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, andcontinue to be consolidated until the date that such control ceases.
2.5 Transactions with minority interests
Minority interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group andare presented separately in profit or loss of the Group and within equity in the consolidated statements of financialposition, separately from parent shareholders’ equity. Transactions with minority interests are accounted for usingthe entity concept method, whereby, transactions with minority interests are accounted for as transactions withowners. On acquisition of minority interests, the difference between the consideration and book value of the shareof the net assets acquired is recognised directly in equity. Gain or loss on disposal to minority interests is recogniseddirectly in equity.
75
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
2. Summary of significant accounting policies (cont’d.)
2.6 Foreign currencies
(a) Functional and presentation currency
The individual financial statements of each entity in the Group are measured using the currency of the primaryeconomic environment in which the entity operates (“the functional currency”). The consolidated financialstatements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency.
(b) Foreign currency transactions
Transactions in foreign currencies are measured in the respective functional currencies of the Company andits subsidiaries and are recorded on initial recognition in the functional currencies at exchange ratesapproximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreigncurrencies are translated at the rate of exchange ruling at the reporting date. Non-monetary itemsdenominated in foreign currencies that are measured at historical cost are translated using the exchangerates as at the dates of the initial transactions. Non-monetary items denominated in foreign currenciesmeasured at fair value are translated using the exchange rates at the date when the fair value was determined.
Exchange differences arising on the settlement of monetary items or on translating monetary items at thereporting date are recognised in profit or loss except for exchange differences arising on monetary items thatform part of the Group’s net investment in foreign operations, which are recognised initially in othercomprehensive income and accumulated under foreign currency translation reserve in equity. The foreigncurrency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.
Exchange differences arising on the translation of non-monetary items carried at fair value are included inprofit or loss for the period except for the differences arising on the translation of non-monetary items inrespect of which gains and losses are recognised directly in equity. Exchange differences arising from suchnon-monetary items are also recognised directly in equity.
(c) Foreign operations
The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at thereporting date and income and expenses are translated at exchange rates at the dates of the transactions. Theexchange differences arising on the translation are taken directly to other comprehensive income. On disposalof a foreign operation, the cumulative amount recognised in other comprehensive income and accumulatedin equity under foreign currency translation reserve relating to that particular foreign operation is recognisedin the profit or loss.
Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets andliabilities of the foreign operations and are recorded in the functional currency of the foreign operations andtranslated at the closing rate at the reporting date.
76
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
2. Summary of significant accounting policies (cont’d.)
2.7 Property, vessels and equipment, and depreciation
All items of property, vessels and equipment are initially recorded at cost. Subsequent costs are included in theasset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that futureeconomic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to theincome statement during the financial period in which they are incurred.
Subsequent to recognition, property, vessels and equipment are stated at cost less accumulated depreciation andany accumulated impairment losses.
Vessels are depreciated in equal annual instalments calculated to reduce to residual value the cost of vessels overtheir estimated useful lives of 25 years.
Drydocking costs are capitalised and amortised over the period of the vessel's next drydocking cycle which isapproximately over 2.5 years.
Assets under construction are not depreciated as the assets are not available for use.
Depreciation of property and other equipment is provided for on a straight-line basis to write off the cost of eachasset to its residual value over the estimated useful life, at the following annual rates:
Leasehold buildings 2 - 3%Diving equipment 10%Equipment on vessel 10%Computers 33.3%Office equipment 10%Furniture and fittings 10%Renovations 10%Motor vehicles 20%
The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that theamount, method and period of depreciation are consistent with previous estimates and the expected pattern ofconsumption of the future economic benefits embodied in the items of property, vessels and equipment.
An item of property, vessels and equipment is derecognised upon disposal or when no future economic benefitsare expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carryingamount is recognised in profit or loss.
2.8 Intangible assets
(a) Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost ofbusiness combination over the Group’s interest in the net fair value of the identifiable assets, liabilities andcontingent liabilities. Following the initial recognition, goodwill is measured at cost less any accumulatedimpairment losses. Goodwill is not amortised but instead, it is reviewed for impairment, annually or morefrequently if events or changes in circumstances indicate that the carrying value may be impaired. Gains andlosses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
77
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
2. Summary of significant accounting policies (cont’d.)
2.8 Intangible assets (cont’d.)
(b) Other intangible assets
Costs directly attributable to the development of design for deep sea remotely operated subsea vehicles andperipherals are capitalised as intangible assets only when technical feasibility of the project is demonstrated,the Group's intention to complete, its ability to use or sell the asset, how the asset will generate futureeconomic benefits, and the costs can be measured reliably. Such costs include payroll-related costs ofemployees directly involved in the project and other costs directly related to the project. Research costs areexpensed as incurred.
Deferred development costs are subsequently carried at cost less accumulated amortisation and anyaccumulated impairment losses. These costs are amortised to the profit and loss account using the straight-line method over their estimated useful lives of five years.
2.9 Land use rights
Land use rights are initially measured at cost. Following initial recognition, land use rights are measured at costless accumulated amortisation and accumulated impairment losses. The land use rights are amortised over theirlease terms.
2.10 Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any suchindication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimateof the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For thepurpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiablecash flows (cashgenerating units (“CGU”)).
In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted totheir present value using a pre-tax discount rate that reflects current market assessments of the time value ofmoney and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount,the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groupsof CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups ofunits and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.
Impairment losses are recognised in profit or loss except for assets that are previously revalued where therevaluation was taken to other comprehensive income. In this case the impairment is also recognised in othercomprehensive income up to the amount of any previous revaluation.
An assessment is made at each reporting date as to whether there is any indication that previously recognisedimpairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversedonly if there has been a change in the estimates used to determine the asset’s recoverable amount since the lastimpairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverableamount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation,had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the assetis measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment losson goodwill is not reversed in a subsequent period.
78
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
2. Summary of significant accounting policies (cont’d.)
2.11 Subsidiaries
A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so asto obtain benefits from its activities. In the Company’s separate financial statements, investments in subsidiariesare accounted for at cost less impairment losses.
2.12 Associates
An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. Anassociate is equity accounted for from the date the Group obtains significant influence until the date the Groupceases to have significant influence over the associate.
The Group’s investments in associates are accounted for using the equity method. Under the equity method, theinvestment in associates is measured in the statement of financial position at cost plus post-acquisition changesin the Group’s share of net assets of the associates. Goodwill relating to associates is included in the carryingamount of the investment. Any excess of the Group’s share of the net fair value of the associate’s identifiable assets,liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of theinvestment and is instead included as income in the determination of the Group’s share of the associate’s profit orloss for the period in which the investment is acquired.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group doesnot recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.
After application of the equity method, the Group determines whether it is necessary to recognise an additionalimpairment loss on the Group’s investment in its associates. The Group determines at each reporting date whetherthere is any objective evidence that the investment in the associate is impaired. If this is the case, the Groupcalculates the amount of impairment as the difference between the recoverable amount of the associate and itscarrying value and recognises the amount in profit or loss.
The financial statements of the associates are prepared as of the same reporting date as the Company. Wherenecessary, adjustments are made to bring the accounting policies in line with those of the Group.
In the Company’s separate financial statements, investments in associates are stated at cost less impairmentlosses. On disposal of such investments, the difference between net disposal proceeds and their carrying amountsis included in profit or loss.
2.13 Joint venture
The Group has interests in joint ventures which are jointly controlled entities. A joint venture is a contractualarrangement whereby two or more parties undertake an economic activity that is subject to joint control, where thestrategic financial and operating decisions relating to the activity require the unanimous consent of the partiessharing control. A jointly controlled entity is a joint venture that involves the establishment of a separate entity inwhich each venturer has an interest.
Investments in jointly controlled entities are accounted for in the consolidated financial statements using the equitymethod of accounting as described in Note 2.12.
In the Company’s separate financial statements, its investment in joint venture is stated at cost less impairmentlosses. On disposal of such investment, the difference between net disposal proceeds and the carrying amount isincluded in profit or loss.
79
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
2. Summary of significant accounting policies (cont’d.)
2.14 Financial assets
Financial assets are recognised in the statements of financial position when, and only when, the Group and theCompany become a party to the contractual provisions of the financial instrument.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assetsnot at fair value through profit or loss, directly attributable transaction costs.
The Group and the Company determine the classification of their financial assets at initial recognition, and thecategories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturityinvestments and available-for-sale financial assets.
(a) Financial assets at fair value through profit or loss
Financial assets are classified as financial assets at fair value through profit or loss if they are held for tradingor are designated as such upon initial recognition. Financial assets held for trading are derivatives (includingseparated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.
Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fairvalue. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or netlosses on financial assets at fair value through profit or loss do not include exchange differences, interestand dividend income. Exchange differences, interest and dividend income on financial assets at fair valuethrough profit or loss are recognised separately in profit or loss as part of other losses or other income.
Financial assets at fair value through profit or loss could be presented as current or non-current. Financialassets that is held primarily for trading purposes are presented as current whereas financial assets that isnot held primarily for trading purposes are presented as current or non-current based on the settlement date.
The Group and the Company have not designated any financial assets as fair value through profit or lossduring the year ended 31 December 2010.
(b) Loans and receivables
Financial assets with fixed or determinable payments that are not quoted in an active market are classifiedas loans and receivables.
Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effectiveinterest method. Gains and losses are recognised in profit or loss when the loans and receivables arederecognised or impaired, and through the amortisation process.
Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.
80
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
2. Summary of significant accounting policies (cont’d.)
2.14 Financial assets (cont’d.)
(c) Held-to-maturity investments
Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturitywhen the Group has the positive intention and ability to hold the investment to maturity.
Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using theeffective interest method. Gains and losses are recognised in profit or loss when the held-to-maturityinvestments are derecognised or impaired, and through the amortisation process.
Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12months after the reporting date which are classified as current.
The Group and the Company do not have any held-to-maturity investments during the year ended 31December 2010.
(d) Available-for-sale financial assets
Available-for-sale are financial assets that are designated as available for sale or are not classified in any ofthe three preceding categories.
After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or lossesfrom changes in fair value of the financial asset are recognised in other comprehensive income, except thatimpairment losses, foreign exchange gains and losses on monetary instruments and interest calculated usingthe effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognisedin other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustmentwhen the financial asset is derecognised. Interest income calculated using the effective interest method isrecognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit orloss when the Group and the Company's right to receive payment is established.
Investments in equity instruments whose fair value cannot be reliably measured are measured at cost lessimpairment loss.
Available-for-sale financial assets are classified as non-current assets unless they are expected to be realisedwithin 12 months after the reporting date.
The Group and the Company have not designated any financial assets as available-for-sale during the yearended 31 December 2010.
A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired.On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sumof the consideration received and any cumulative gain or loss that had been recognised in other comprehensiveincome is recognised in profit or loss.
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assetswithin the period generally established by regulation or convention in the marketplace concerned. All regularway purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the datethat the Group and the Company commit to purchase or sell the asset.
81
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
2. Summary of significant accounting policies (cont’d.)
2.15 Impairment of financial assets
The Group and the Company assess at each reporting date whether there is any objective evidence that a financialasset is impaired.
(a) Trade and other receivables and other financial assets carried at amortised cost
To determine whether there is objective evidence that an impairment loss on financial assets has beenincurred, the Group and the Company consider factors such as the probability of insolvency or significantfinancial difficulties of the debtor and default or significant delay in payments. For certain categories offinancial assets, such as trade receivables, assets that are assessed not to be impaired individually aresubsequently assessed for impairment on a collective basis based on similar risk characteristics. Objectiveevidence of impairment for a portfolio of receivables could include the Group’s and the Company's pastexperience of collecting payments, an increase in the number of delayed payments in the portfolio past theaverage credit period and observable changes in national or local economic conditions that correlate withdefault on receivables.
If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’scarrying amount and the present value of estimated future cash flows discounted at the financial asset’soriginal effective interest rate. The impairment loss is recognised in profit or loss.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assetswith the exception of trade receivables, where the carrying amount is reduced through the use of an allowanceaccount. When a trade receivable becomes uncollectible, it is written off against the allowance account.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be relatedobjectively to an event occurring after the impairment was recognised, the previously recognised impairmentloss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at thereversal date. The amount of reversal is recognised in profit or loss.
(b) Unquoted equity securities carried at cost
If there is objective evidence (such as significant adverse changes in the business environment where theissuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairmentloss on financial assets carried at cost has been incurred, the amount of the loss is measured as the differencebetween the asset’s carrying amount and the present value of estimated future cash flows discounted at thecurrent market rate of return for a similar financial asset. Such impairment losses are not reversed insubsequent periods.
(c) Available-for-sale financial assets
Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor,and the disappearance of an active trading market are considerations to determine whether there is objectiveevidence that investment securities classified as available-for-sale financial assets are impaired.
If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (netof any principal payment and amortisation) and its current fair value, less any impairment loss previouslyrecognised in profit or loss, is transferred from equity to profit or loss.
Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequentperiods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensiveincome. For available-forsale debt investments, impairment losses are subsequently reversed in profit or lossif an increase in the fair value of the investment can be objectively related to an event occurring after therecognition of the impairment loss in profit or loss.
82
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
2. Summary of significant accounting policies (cont’d.)
2.16 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquidinvestments that are readily convertible to known amount of cash and which are subject to an insignificant risk ofchanges in value. These also include bank overdrafts that form an integral part of the Group’s cash management.
2.17 Construction contracts
Where the outcome of a construction contract can be reliably estimated, contract revenue and contract costs arerecognised as revenue and expenses respectively by using the stage of completion method. The stage of completionis measured by reference to the proportion of contract costs incurred for work performed to date to the estimatedtotal contract costs.
Where the outcome of a construction contract cannot be reliably estimated, contract revenue is recognised to theextent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expensesin the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised asan expense immediately.
When the total of costs incurred on construction contracts plus, recognised profits (less recognised losses), exceedsprogress billings, the balance is classified as amount due from customers on contracts. When progress billingsexceed costs incurred plus, recognised profits (less recognised losses), the balance is classified as amount due tocustomers on contracts.
2.18 Inventories
Inventories are stated at lower of cost and net realisable value.
Cost is determined using the first in, first out method. The cost of inventories includes expenditure incurred inacquiring the inventories and bringing them to their existing location and condition.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs ofcompletion and the estimated costs necessary to make the sale.
2.19 Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a pastevent, it is probable that an outflow of resources embodying economic benefits will be required to settle theobligation and the amount of the obligation can be estimated reliably. Provisions are reviewed at each balancesheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economicresources will be required to settle the obligation, the provision is reversed.
If the effect of the time value of money is material, provisions are discounted using a current pre tax rate thatreflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provisiondue to the passage of time is recognised as a finance cost.
83
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
2. Summary of significant accounting policies (cont’d.)
2.20 Financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into and thedefinitions of a financial liability.
Financial liabilities, within the scope of FRS 139, are recognised in the statement of financial position when, andonly when, the Group and the Company become a party to the contractual provisions of the financial instrument.Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.
(a) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financialliabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities held for trading include derivatives entered into by the Group and the Company that do notmeet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequentlystated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses onderivatives include exchange differences.
The Group and the Company have not designated any financial liabilities as at fair value through profit or loss.
(b) Other financial liabilities
The Group’s and the Company's other financial liabilities include trade payables, other payables and loans and borrowings.
Trade and other payables are recognised initially at fair value plus directly attributable transaction costs andsubsequently measured at amortised cost using the effective interest method.
Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequentlymeasured at amortised cost using the effective interest method. Borrowings are classified as current liabilitiesunless the group has an unconditional right to defer settlement of the liability for at least 12 months after thereporting date.
For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities arederecognised, and through the amortisation process.
A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financialliability is replaced by another from the same lender on substantially different terms, or the terms of an existingliability are substantially modified, such an exchange or modification is treated as a derecognition of the originalliability and the recognition of a new liability, and the difference in the respective carrying amounts is recognisedin profit or loss.
2.21 Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse theholder for a loss it incurs because a specified debtor fails to make payment when due.
Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequentto initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of theguarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group,as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher ofthe best estimate of the expenditure required to settle the present obligation at the reporting date and the amountinitially recognised less cumulative amortisation.
84
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
2. Summary of significant accounting policies (cont’d.)
2.22 Borrowing costs
Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to theacquisition, construction or production of that asset. Capitalisation of borrowing costs commences when theactivities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costsare incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended useor sale.
All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consistof interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.
2.23 Employee benefits
(a) Short term benefits
Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in whichthe associated services are rendered by employees. Short term accumulating compensated absences suchas paid annual leave are recognised when services are rendered by employees that increase their entitlementto future compensated absences. Short term non-accumulating compensated absences such as sick leaveare recognised when the absences occur.
(b) Defined contribution plans
The Group participates in the national pension schemes as defined by the laws of the countries in which it hasoperations. The Malaysian companies in the Group make contributions to the Employee Provident Fund inMalaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes arerecognised as an expense in the period in which the related service is performed.
(c) Employee Share Options Scheme (“ESOS”)
The Company's Employee Share Options Scheme (“ESOS”), an equity-settled, share-based compensationplan, allows the Group’s employees to acquire ordinary shares of the Company. The total fair value of shareoptions granted to employees is recognised as an employee cost with a corresponding increase in the shareoption reserve within equity over the vesting period and taking into account the probability that the options will vest.
The fair value of share options is measured at grant date, taking into account, if any, the market vestingconditions upon which the options were granted but excluding the impact of any non-market vestingconditions. Non-market vesting conditions are included in assumptions about the number of options that areexpected to become exercisable on vesting date. At each balance sheet date, the Group revises its estimatesof the number of options that are expected to become exercisable on vesting date. It recognises the impactof the revision of original estimates, if any, in the profit or loss, and a corresponding adjustment to equity overthe remaining vesting period. The equity amount is recognised in the share option reserve until the option isexercised, upon which it will be transferred to share premium, or until the option expires, upon which it willbe transferred directly to retained earnings. The proceeds received net of any directly attributable transactioncosts are credited to equity when the options are exercised.
85
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
2. Summary of significant accounting policies (cont’d.)
2.24 Leases
(a) As lessee
Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership ofthe leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower,at the present value of the minimum lease payments. Any initial direct costs are also added to the amountcapitalised. Lease payments are apportioned between the finance charges and reduction of the lease liabilityso as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges arecharged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.
Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonablecertainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over theshorter of the estimated useful life and the lease term.
Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over thelease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rentalexpense over the lease term on a straight-line basis.
(b) As lessor
Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classifiedas operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carryingamount of the leased asset and recognised over the lease term on the same bases as rental income. Theaccounting policy for rental income is set out in Note 2.25(a).
2.25 Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and therevenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:
(a) Charter hire of vessels
Charter hire of vessels are recognised when the services are rendered and is computed at the contracteddaily rate. In the event invoices are yet to be issued at year end, the revenue is accrued to the extent of theservices rendered at the balance sheet date.
(b) Revenue from offshore installation and construction
Revenue relating to offshore installation and construction are recognised in accordance with the policy set outin Note 2.17 above.
(c) Diving, underwater services and other shipping related income
The above revenue are recognised on an accrual basis when the services are rendered.
(d) Sales of diving equipment
Revenue from the sales of diving equipment is recognised upon passage of title to the customer whichgenerally coincides with their delivery and acceptance.
86
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
2. Summary of significant accounting policies (cont’d.)
2.25 Revenue recognition (cont’d.)
(e) Management fees
Management fees are recognised on an accrual basis based on a predetermined rate.
(f) Interest income
Interest income is recognised on an accrual basis using the effective interest method.
(g) Dividend income
Dividend income is recognised when the Group's right to receive payment is established.
2.26 Income taxes
(a) Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to thetaxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted orsubstantively enacted by the reporting date.
Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognisedoutside profit or loss, either in other comprehensive income or directly in equity.
(b) Deferred tax
Deferred tax is provided using the liability method on temporary differences at the reporting date between thetax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all temporary differences, except:
- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability ina transaction that is not a business combination and, at the time of the transaction, affects neither theaccounting profit nor taxable profit or loss; and
- in respect of taxable temporary differences associated with investments in subsidiaries, associates andinterests in joint ventures, where the timing of the reversal of the temporary differences can be controlledand it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused taxcredits and unused tax losses, to the extent that it is probable that taxable profit will be available againstwhich the deductible temporary differences, and the carry forward of unused tax credits and unused tax lossescan be utilised except:
- where the deferred tax asset relating to the deductible temporary difference arises from the initialrecognition of an asset or liability in a transaction that is not a business combination and, at the time ofthe transaction, affects neither the accounting profit nor taxable profit or loss; and
- in respect of deductible temporary differences associated with investments in subsidiaries, associatesand interests in joint ventures, deferred tax assets are recognised only to the extent that it is probablethat the temporary differences will reverse in the foreseeable future and taxable profit will be availableagainst which the temporary differences can be utilised.
87
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
2. Summary of significant accounting policies (cont’d.)
2.26 Income taxes (cont’d.)
(b) Deferred tax (cont’d.)
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent thatit is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax assetto be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised tothe extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year whenthe asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted orsubstantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferredtax items are recognised in correlation to the underlying transaction either in other comprehensive incomeor directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off currenttax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the sametaxation authority.
(c) Sales tax
Revenues, expenses and assets are recognised net of the amount of sales tax except:
- Where the sales tax incurred in a purchase of assets or services is not recoverable from the taxationauthority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or aspart of the expense item as applicable; and
- Receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part ofreceivables or payables in the statements of financial position.
2.27 Segment reporting
For management purposes, the Group is organised into operating segments based on their products and serviceswhich are independently managed by the respective segment managers responsible for the performance of therespective segments under their charge. The segment managers report directly to the management of theCompany who regularly review the segment results in order to allocate resources to the segments and to assessthe segment performance. Additional disclosures on each of these segments are shown in Note 41, including thefactors used to identify the reportable segments and the measurement basis of segment information.
2.28 Share capital and share issuance expenses
An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Companyafter deducting all of its liabilities. Ordinary shares are equity instruments.
Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs.Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period inwhich they are declared.
88
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
2. Summary of significant accounting policies (cont’d.)
2.29 Contingencies
A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence willbe confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the controlof the Group.
Contingent liabilities and assets are not recognised in the statements of financial position of the Group.
3 Significant accounting judgements and estimates
The preparation of the Group’s financial statements requires management to make judgements, estimates andassumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure ofcontingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could resultin outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.
3.1 Judgements made in applying accounting policies
In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in thefinancial statements:
(a) Development costs
Development costs are capitalised in accordance with the accounting policy in note 2.8(b). Initial capitalisationof costs is based on management's judgement that technological and economical feasibility is confirmed.The carrying amount of development costs capitalised at the balance sheet date is RM298,337.
3.2 Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheetdate, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilitieswithin the next financial year are discussed below:
(a) Depreciation of vessels and equipment on vessel
The cost of vessels and equipment on vessel are depreciated on a straight-line basis over the assets' usefullife. Management estimates the useful lives of the Group's vessels to be between 8 to 25 years and equipmenton vessel to be 10 years. These are common life expectancies applied in the shipping industry.
Changes in the expected level of usage could impact the economic useful lives and residual values of theseassets, therefore future depreciation charges could be revised.
alam maritim 2010 :Layout 1 5/13/11 5:52 PM Page 88
89
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
4. Revenue
Group Company2010 2009 2010 2009
RM RM RM RM
Charter hire 181,572,851 202,002,407 - -Offshore installation and construction 27,324,592 84,778,312 - -Ship catering 1,614,852 3,301,945 - -Rental of equipment 5,683,509 26,076,057 - -Diving and underwater services 1,807,427 291,444 - -Other shipping related income 12,276,457 6,165,390 - -Sales of diving equipment 5,691,220 20,036,136 - -Dividend income from subsidiaries - - - 1,713,250Vessel's management fees 6,220,915 6,265,441 - -
242,191,823 348,917,132 - 1,713,250
5. Employee benefits expense
Group Company2010 2009 2010 2009
RM RM RM RM
Salaries, bonuses and allowances 16,625,581 17,329,408 129,540 142,000Contributions to defined contribution plan - EPF 1,905,353 1,552,957 - -Social security contributions 150,237 97,632 - -Share options granted under ESOS (Note 25) 519,467 2,302,148 - 91,928Other staff related expenses 3,117,603 3,364,341 39,264 8,900
22,318,241 24,646,486 168,804 242,828
Included in employee benefits expense of the Group and of the Company are executive directors' remunerationamounting to RM4,023,457 (2009: RM3,569,950) and RM Nil (2009: RM Nil) as further disclosed in Note 6.
90
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
6 Directors' remuneration
Group Company2010 2009 2010 2009
RM RM RM RM
Executive directors' remuneration (Note 5):Fees 71,602 73,356 - -Other emoluments 3,951,855 3,496,594 - -
4,023,457 3,569,950 - -
Non-executive directors remuneration (Note 8):Fees 170,965 102,000 170,965 102,000Other emoluments 61,000 131,928 61,000 131,928
231,965 233,928 231,965 233,928
Total directors' remuneration(Note 36(b)) 4,255,422 3,803,878 231,965 233,928
Estimated money valueof benefits-in-kind 113,500 133,500 15,000 15,000
Total directors' remuneration includingbenefits-in-kind 4,368,922 3,937, 378 246,965 248,928
Executive:Salaries and other emoluments 2,547,000 2,125,836 - -Bonus 730,200 518,400 - -Defined contribution plan - EPF 295,830 193,116 - -Share options granted under ESOS 450,427 732,598 - -Estimated money value of benefits-in-kind 98,500 118,500 - -
Total executive directors' remuneration 4,121,957 3,688,450 - -
Non-executive:Fees and other emoluments 231,965 142,000 231,965 142,000Share options granted under ESOS - 91,928 - 91,928Estimated money value of benefits-in-kind 15,000 15,000 15,000 15,000
Total non-executive directors' remuneration 246,965 248,928 246,965 248,928
Total directors' remuneration 4,368,922 3,937,378 246,965 248,928
91
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
6 Directors' remuneration (cont’d.)
The number of directors of the Company whose total remuneration during the financial year fell within the followingbands is analysed below:
Number of Directors2010 2009
Executive directors:RM500,001 - RM600,000 1 2RM700,001 - RM800,000 1 -RM800,001 - RM900,000 - 2RM1,100,001 - RM1,200,00 1 -RM1,201,001 - RM1,300,00 1 -
Non-executive directors:RM10,001 - RM20,000 1 -RM20,001 - RM30,000 1 -RM40,001 - RM50,000 - 1RM50,001 - RM60,000 - 2RM80,001 - RM90,000 1 -RM110,001 - RM120,000 1 -
7. Finance costs
Group Company2010 2009 2010 2009
RM RM RM RM
Interest expense on:Term loans 3,023,667 896,308 - -Hire purchase and finance lease liabilities 1,477,280 931,955 7,942 9,466MCP/MMTN 3,568,258 4,630,986 - -Sukuk Ijarah MTN 24,442,800 24,324,605 - -Other borrowings 1,819,908 1,217,578 - -
34,331,913 32,001,432 7,942 9,466
Less: Interest expensecapitalised inqualifying assetsvesselsunderconstruction(Note 12) (3,103,184) (6,126,595) - -
Net finance expense 31,228,729 25,874,837 7,942 9,466
92
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
8. (Loss)/profit before tax
The following amounts have been charged/(credited) in arriving at (loss)/profit before tax:
Group Company2010 2009 2010 2009
RM RM RM RM
Non-executive directors' remuneration (Note 6) 231,965 233,928 231,965 233,928Auditors’ remuneration:Auditors of the Company:
- statutory audits 167,300 162,300 45,000 45,000Other auditors 35,872 55,017 - -Operating leases:
- lease payments for premises 141,024 560,784 - -- lease payments for survey equipment 1,866,075 8,536,970 - -- lease payments for tugs/barges - 686,684 - -- lease payments for third party vessels 43,831,324 26,917,084 - -
Depreciation of property, vessels andequipment (Note 12) 34,069,546 31,880,541 55,585 55,586
Bad debts written off 1,005,763 - - -Impairment loss on trade receivables 28,020,284 9,035,533 - -Impairment loss on trade receivables
written off (121,692) - - -Amortisation of intangible assets 119,335 122,260 - -Amortisation of land use rights 10,652 9,997 - -Net foreign exchange losses 4,405,058 4,576,266 - -Property, vessels and equipment written off - 429,696 - -Interest income (2,233,050) (2,976,348) (995,220) (988,642)Loss/(gain) on disposal of property, vessels
and equipment 113,457 (2,836,929) - -
9. Income tax (benefit)/expense
Group Company2010 2009 2010 2009
RM RM RM RM
Current income tax:Malaysian income tax 212,009 4,314,522 165,784 192,124Foreign tax - 1,300,846 - -
Under/(over) provision in prior years:Malaysian income tax 1,653,727 455,971 1,562 100,354Foreign tax (620,941) 13,911 - -
1,244,795 6,085,250 167,346 292,478
Deferred tax (Note 29):Relating to origination and reversal oftemporary differences (7,213,022) 10,126,285 - -
Relating to change in tax rates - (21,437) - -Underprovision in prior year 801,526 967,548 - -
(6,411,496) 11,072,396 - -
(5,166,701) 17,157,646 167,346 292,478
Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2009: 25%) of the estimated assessableprofit for the year.
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
93
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
9. Income tax (benefit)/expense (cont'd.)
A reconciliation of income tax expense applicable to (loss)/profit before tax at the statutory income tax rate to incometax expense at the effective income tax rate of the Group and of the Company are as follows:
Group Company2010 2009 2010 2009
RM RM RM RM
(Loss)/profit before tax (18,115,606) 112,524,398 67,154 1,929,525
Taxation at Malaysian statutory tax rate of 25% (2009: 25%) (4,528,902) 28,131,100 16,789 482,381
Effect of income subject to tax rate of 20% - (25,000) - -Different tax rates in other countries 10,605 (777,231) - -Different tax rates in other jurisdiction (207,225) (7,097,109) - -Effect of income not subject to tax (112,082) ( 11,793) - (428,312)Effect of share of results of jointly controlled
entities and associates (3,012,859) (6,623,691) - -Effect of expenses not deductible for tax
purposes 838,687 2,145,377 148,995 138,055Effect of change in tax rates on opening
balance of deferred tax - (21,437) - -Deferred tax assets not
recognised in respectof current year's taxlosses and unabsorbedcapital allowances 10,763 - - -
Underprovision of income tax in prior years 1,032,786 469,882 1,562 100,354Underprovision of deferred tax in
prior year 801,526 967,548 - -
Income tax (benefit)/ expense for the year (5,166,701) 17,157,646 167,346 292,478
10. Earnings per share
(a) Basic
Basic earnings per share amounts are calculated by dividing (loss)/profit for the year attributable to ordinary equityholders of the Company by the weighted average number of ordinary shares in issue during the financial year.
2010 2009RM RM
(Loss)/profit attributable to ordinary equity holders of the Company (13,917,996) 91,279,940Weighted average number of ordinary shares in issue 633,890,370 497,446,671
Basic earnings per share (Sen) (2.2) 18.3
94
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
10. Earnings per share (cont’d.)
(b) Diluted
For the purpose of calculating diluted earnings per share, the (loss)/profit for the year attributable to ordinaryequity holders of the Company and the weighted average number of ordinary shares in issue during the financialyear have been adjusted for the dilutive effects of all potential ordinary shares, i.e. share options granted to employees.
2010 2009RM RM
(Loss)/profit attributable to ordinary equity holders of the Company (13,917,996) 91,279,940Weighted average number of ordinary shares in issue 633,890,370 497,446,671Effects of dilution from share options granted to employees 18,191,816 21,584,549
Adjusted weighted average number of ordinary sharesin issue and issuable 652,082,186 519,031,220
Diluted earnings per share (Sen) (2.1) 17.6
11. Dividends
Dividends in respect Dividendsof year recognised in year
2010 2009 2010 2009RM RM RM RM
Recognised during the year:
First and final dividend of 0.75 sen less 25%taxation, on 506,987,098 ordinary shares - 2,860,186 2,860,186 -
First and final dividend of 0.50 sen less 25%taxation, on 500,127,273 ordinary shares - - - 1,875,480
95
Annual Report 2010
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96
ALAM MARITIM RESOURCES BERHAD (700849-K)
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88,6
69)
--
962,
839
- (1
,463
,595
) (2
8,30
8)
(907
)(8
18,6
40)
At 3
1 D
ecem
ber
2010
12
,039
,510
15
,987
,824
592,
131,
642
21,5
92,3
55
89,0
80,8
92
4,62
8,98
5 4,
861,
117
3,86
6,03
5 80
,540
,433
82
4,72
8,79
3
97
Annual Report 2010
Not
es to
the
Fina
ncia
l Sta
tem
ents
For
the
finan
cial
yea
r en
ded
31 D
ecem
ber
2010
(con
t’d.)
12.
Pro
pert
y, v
esse
ls a
nd e
quip
men
t (co
nt’d
.)
Com
pute
rs,
Div
ing
offi
ceLo
ng te
rm
equi
pmen
t,
equi
pmen
t,
Ass
ets
leas
ehol
d Le
aseh
old
equi
pmen
tM
otor
furn
itur
e un
der
Gro
up (c
ont’
d.)
land
bu
ildin
g Ve
ssel
sD
rydo
ckin
gon
ves
sel
vehi
cles
an
d fi
ttin
gs
Ren
ovat
ions
co
nstr
ucti
on
Tota
lR
M
RM
R
M
RM
R
M
RM
R
M
RM
R
MR
M
Acc
umul
ated
dep
reci
atio
n
At 1
Jan
uary
200
9
As p
revi
ousl
y st
ated
- 24
2,22
1 63
,970
,052
9,
613,
282
6,82
5,03
8 2,
303,
349
1,23
6,26
0 59
0,70
8-
84,7
80,9
10Ef
fect
s of
ado
ptin
gth
e am
endm
ents
to F
RS
117
9,99
7 -
- -
- -
- -
- 9,
997
As r
esta
ted
9,99
7 24
2,22
1 63
,970
,052
9,61
3,28
2 6,
825,
038
2,30
3,34
9 1,
236,
260
590,
708
- 84
,790
,907
Cha
rge
for
the
year
- 24
5,30
1 21
,342
,416
39
2,80
0 8,
167,
443
765,
187
667,
972
299,
422
- 31
,880
,541
Dis
posa
ls-
--
- -
(275
,899
) -
(139
,039
)-
(414
,938
)W
ritt
en o
ff-
--
(5,3
96,3
81)
-(2
0,21
1)-
--
(5,4
16,5
92)
Exch
ange
diff
eren
ces
- 65
1-
- 13
,861
- 95
(1
,165
) -
13,4
42
At 3
1 D
ecem
ber
2009
(res
tate
d)
9,99
7 48
8,17
3 85
,312
,468
4,
609,
701
15,0
06,3
422,
772,
426
1,90
4,32
774
9,92
6 -
110,
853,
360
98
ALAM MARITIM RESOURCES BERHAD (700849-K)
Not
es to
the
Fina
ncia
l Sta
tem
ents
For
the
finan
cial
yea
r en
ded
31 D
ecem
ber
2010
(con
t’d.)
12.
Pro
pert
y, v
esse
ls a
nd e
quip
men
t (co
nt’d
.)
Com
pute
rs,
Div
ing
offi
ceLo
ng te
rm
equi
pmen
t,
equi
pmen
t,
Ass
ets
leas
ehol
d Le
aseh
old
equi
pmen
tM
otor
furn
itur
e un
der
Gro
up (c
ont’
d.)
land
bu
ildin
g Ve
ssel
sD
rydo
ckin
gon
ves
sel
vehi
cles
an
d fi
ttin
gs
Ren
ovat
ions
co
nstr
ucti
on
Tota
lR
M
RM
R
M
RM
R
M
RM
R
M
RM
R
MR
M
Acc
umul
ated
dep
reci
atio
n
At 1
Jan
uary
201
0
As p
revi
ousl
y st
ated
-
488,
173
85,3
12,4
68
9,05
9,53
710
,961
,130
2,84
6,18
11,
927,
046
740,
600
- 11
1,33
5,13
5Ef
fect
s of
ado
ptin
gth
e am
endm
ents
to F
RS
117
9,99
7-
--
--
--
- 9,
997
As r
esta
ted
9,99
7 48
8,17
3 85
,312
,468
9,05
9,53
710
,961
,130
2,
846,
181
1,92
7,04
6 74
0,60
0-
111,
345,
132
Cha
rge
for
the
year
10
,652
40
6,67
9 21
,342
,413
3,
974,
164
6,64
5,76
5 67
8,08
2 59
9,46
641
2,32
5-
34,0
69,5
46D
ispo
sals
--
--
(869
,205
)-
- -
- (8
69,2
05)
Exch
ange
diff
eren
ces
- (3
,102
)-
- 26
9,05
0-
(334
,475
) 22
,054
- (4
6,47
3)
At 3
1 D
ecem
ber
2010
20
,649
89
1,75
010
6,65
4,88
1 13
,033
,701
17,0
06,7
403,
524,
263
2,19
2,03
7 1,
174,
979
-14
4,49
9,00
0
Net
car
ryin
g am
ount
At 3
1 D
ecem
ber
2009
10
,052
,363
14
,076
,320
50
6,81
9,17
410
,721
,916
27,1
59,2
861,
268,
478
3,77
0,26
0 3,
017,
887
211,
930,
078
788,
815,
762
At 3
1 D
ecem
ber
2010
12,0
18,8
61
15,0
96,0
7448
5,47
6,76
1 8,
558,
654
72,0
74,1
52
1,10
4,72
22,
669,
080
2,69
1,05
6 80
,540
,433
68
0,22
9,79
3
99
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
12. Property, vessels and equipment (cont'd.)
Motor Vehicle2010 2009
Company RM RM
Cost
At 1 January/31 December 277,926 2 77,926
Accumulated depreciation
At 1 January 185,284 129,698Depreciation charge for the year 55,585 55,586
At 31 December 240,869 185,284
Net carrying amount
At 31 December 37,057 92,642
(a) Included in the Group's additions for the year are property, vessels and equipment of RM12,485,877 (2009:RM11,127,806) which were acquired by means of hire purchase and finance lease arrangements. Net carryingamounts of property, vessels and equipment held under hire purchase and finance lease arrangements are as follows:
Group Company2010 2009 2010 2009
RM RM RM RM
Motor vehicles 1,104,722 1,268,478 37,057 92,642Diving equipment 26,459,583 - - -Assets under construction - 9,793,519 - -
Details of the terms and conditions of the hire purchase and finance lease arrangements are disclosed in Note 28.
(b) The net carrying amounts of property, vessels and equipment of the Group which are pledged as securities forborrowings as disclosed in Note 27 are as follows:
Group2010 2009
RM RM
Leasehold buildings 15,096,074 14,076,320Vessels 485,476,761 506,819,174
500,572,835 520,895,494
(c) The strata titles for the leasehold buildings with a net carrying amount of RM2,624,735 (2009:RM2,097,260) havenot been issued by the relevant authorities.
(d) As disclosed in Note 7, interest expense capitalised in relation to vessels under construction during the financialyear, for the Group amounted to RM3,103,184 (2009: RM6,126,595).
100
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
13. Land use rights
Group2010 2009
Cost
At 1 January:As previously stated 10,062,360 -Additions - 10,062,360Effects of adopting the amendments to FRS 117 (10,062,360) (10,062,360)
At 31 December (restated) - -
Accumulated amortisation
At 1 January:As previously stated 9,997 -Amortisation for the year - 9,997Effects of adopting the amendments to FRS 117 (9,997) (9,997)
At 31 December (restated) - -
Net carrying amount - -
The title for the leasehold land has not been issued by the relevant authorities.
101
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
14. Intangible assets
Goodwill on Development consolidation costs Total
RM RM RM
Group
Cost
At 1 January 2010 1,422,263 611,300 2,033,563Exchange differences (29,508) (14,625) (44,133)
At 31 December 2010 1,392,755 596,675 1,989,430
At 1 January 2009 1,406,411 603,475 2,009,886Exchange differences 15,852 7,825 23,677
At 31 December 2009 1,422,263 611,300 2,033,563
Accumulated amortisation and impairment
At 1 January 2010 - 183,390 183,390Charge for the year - 119,335 119,335Exchange differences - (4,387) (4,387)
At 31 December 2010 - 298,338 298,338
At 1 January 2009 - 60,348 60,348Charge for the year - 122,260 122,260Exchange differences - 782 782
At 31 December 2009 - 183,390 183,390
Net carrying amount
At 31 December 2010 1,392,755 298,337 1,691,092
At 31 December 2009 1,422,263 427,910 1,850,173
(a) Impairment tests for goodwill
Allocation of goodwill
Goodwill has been allocated to the Group’s Cash Generating Unit (“CGU”) identified according to business segmentas follows:
Offshoresupport
Underwater vessels andservices services Total
RM RM RM
At 31 December 2010 1,208,877 183,878 1,392,755
At 31 December 2009 1,238,385 183,878 1,422,263
102
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
14. Intangible assets (cont’d.)
(a) Impairment tests for goodwill (cont’d.)
Key assumptions used in value-in-use calculations
The recoverable amount of a CGU is determined based on value-in-use calculations using cash flow projectionsbased on financial budgets approved by management covering a five-year period.
The following describes each key assumption on which management has based its cash flow projections toundertake impairment testing of goodwill:
(i) Budgeted gross margin
The basis used to determine the value assigned to the budgeted gross margin is the average margins achievedin the year immediately before the budgeted year increased for expected efficiency improvements.
(ii) Discount rate
The discount rates used are pre-tax and reflect specific risks relating to the relevant segment.
(iii) Bond rate
The bond rates used are the yield on 5-year Singaporean government bond rates at the beginning of thebudgeted year.
15. Investments in subsidiaries
Company2010 2009
RM RM
Unquoted shares, at cost 100,302,070 100,302,070
Details of subsidiaries are as follows:
Group's EffectiveCountry of Principal Interest
Name of Subsidiaries Incorporation Activities 2010 2009% %
(i) Held by the Company:
Alam Maritim (M) Malaysia Ship owning, 100 100Sdn. Bhd. chartering and("AMSB") managing and
other shippingrelated activities
Alam Maritim (L) Inc. Federal Investment 100 100("AMLI") Territory holding and ship
of Labuan, owningMalaysia
103
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
15. Investments in subsidiaries (cont’d.)
Group's EffectiveCountry of Principal Interest
Name of Subsidiaries Incorporation Activities 2010 2009% %
(ii) Held through AMSB:
Alam Hidro (M) Sdn. Malaysia Offshore 70 70Bhd. ("AHSB") facilities
constructionand installationand underwaterservices
Alam Offshore Malaysia Transportation, 100 100Services & Logistics ship forwardingSdn. Bhd. and agent, ship("AOLSB") chandeling and
other relatedactivities
Alam Food Malaysia Catering & 100 100Industries (M) messingSdn. Bhd. ("AFI") services
KJ Waja Malaysia Ship repair & 84 84Engineering maintenance,Sdn. Bhd. ship spare("KJWE") supply and
other relatedservices
(iii) Held through KJWE:
KJ Waja Services Malaysia Ship spare 84 84Sdn. Bhd. supply and("KJWS") other related
services
(iv) Held through AMLI:
Eastar Offshore Pte. Singapore Designing, 75 60Ltd. ("EASTAR") * manufacturing
and operating ofremotelyoperatedvehicles("ROVs")
Alam Subsea Singapore Rental of ROV - 100Pte. Ltd. ("ASPL") * and providing
ROV Services
(v) Held through EASTAR:
Alam Subsea Singapore Rental of ROV 75 -Pte. Ltd. ("ASPL") * and providing
ROV Services
* Audited by firms other than Ernst & Young
104
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
15. Investments in subsidiaries (cont’d.)
(a) Increase investment in a subsidiary - 31 December 2010
(i) On 1 January 2010, the Company through its wholly-owned subsidiary, Alam Maritim (L) Inc. ("AMLI") acquired15,950 ordinary shares of SGD1.00 each in EASTAR Offshore Pte Ltd ("EASTAR") from other shareholders fora total cash consideration of SGD2,400,000. The Company's equity interest in EASTAR increased from 60% to64% thereof.
The additional investment has resulted in the following:
RM
Purchase consideration satisfied by cash 5,826,960Less: Minority interests acquired (315,443)
Premium paid on acquisition of minority interests 5,511,517
(ii) On 1 January 2010, EASTAR increased its issued and paid-up share capital from 432,502 to 628,203 ordinaryshares of SGD1.00 each. Pursuant to the increase in share capital, the Company via AMLI subscribed for anadditional 195,701 ordinary shares of SGD1.00 each in EASTAR. AMLI's equity interest in EASTAR increasedfrom 64% to 75% thereof.
(b) Internal restructuring - 31 December 2010
On 1 January 2010, the Company via EASTAR acquired 500,000 ordinary shares of SGD1.00 each at par representing100% of the total issued and paid up capital of Alam Subsea Pte Ltd ("ASPL") from AMLI for a total sharesconsideration of SGD4,332,245. ASPL is a wholly owned subsidiary of AMLI, a wholly owned subsidiary of the Company.
(c) Increase investment in a subsidiary - 31 December 2009
On 20 March 2009, KJWE increased its issued and paid-up share capital from RM500,000 to RM1,500,000. Pursuantto the increase in share capital, the Company through its wholly owned subsidiary, AMSB subscribed for anadditional 1,000,000 ordinary shares of RM1.00 each in KJWE, resulting in an increase of AMSB's equity interestfrom 51 to 84 percent.
16. Investments in associates
Group2010 2009
RM RM
Unquoted shares, at cost 56,911,582 24,894,933Share of post-acquisition reserves 2,411,273 2,707,572Share of unrealised profits on vessels disposed to associates (4,415,655) (5,376,558)
54,907,200 22,225,947
105
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
16. Investments in associates (cont’d.)
Group's EffectiveCountry of Principal Interest
Name of associate Incorporation Activities 2010 2009% %
(i) Held through AMLI
Alam-PE Federal Ship 49 49Holdings (L) Inc. Territory management("ALAM-PE(H)") of Labuan, and operation,
Malaysia ship owning, shipmaintenanceand marineconsultancy
TH-Alam Holdings Federal Investment 49 -(L) Inc ("THAH") ^ Territory holding
of Labuan,Malaysia
(ii) Held through ALAM-PE(H):
Alam-PE I (L) Inc Federal Ship owning, 49 49("ALAM-PE I") Territory operating and
of Labuan, charteringMalaysia
Alam-PE II (L) Inc Federal Ship owning, 49 49("ALAM-PE II") Territory operating and
of Labuan, charteringMalaysia
Alam-PE III (L) Inc Federal Ship owning, 49 49("ALAM-PE III") Territory operating and
of Labuan, charteringMalaysia
Alam-PE IV (L) Inc Federal Ship owning, 49 49("ALAM-PE IV") Territory operating and
of Labuan, charteringMalaysia
Alam-PE V (L) Inc Federal Ship owning, 49 49("ALAM-PE V") Territory operating and
of Labuan, charteringMalaysia
Alam-PE Services British Virgin Ship - 49Incorporated Island management("ALAM-PE SVS")
Alam-PE Holdings Malaysia Ship 49 -Sdn Bhd management("ALAM-PE(H)SB")
106
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
16. Investments in associates (cont’d.)
Group's EffectiveCountry of Principal Interest
Name of associate Incorporation Activities 2010 2009% %
(iii) Held through THAH:
Alam-JV DP 1 (L) Inc Federal Ship owning 49 -("AJVDP1") Territory
of Labuan,Malaysia
Alam-JV DP 2 (L) Inc Federal Ship owning 49 -("AJVDP2") Territory
of Labuan,Malaysia
^ On 30 November 2009, AMLI entered into a Shareholders' Agreement with Lembaga Tabung Haji ("LTH") to jointlyinvest and own six Anchor Handling Tug Supply ("AHTS") vessels via a newly incorporated entity, TH-Alam Holdings (L) Inc. ("THAH").
The summarised financial information of the associates, adjusted for the proportion of ownership interest held by theGroup, is as follows:
2010 2009RM RM
Assets and liabilitiesCurrent assets 37,334,682 53,458,237Non-current assets 215,762,167 88,738,576
Total assets 253,096,849 142,196,813
Current liabilities 53,582,179 33,123,896Non-current liabilities 140,407,565 83,733,192
Total liabilities 193,989,744 116,857,088
ResultsRevenue 25,892,100 10,975,906Profit for the year 1,688,119 3,130,409
107
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
17. Investment in jointly controlled entities
Group2010 2009
RM RM
Unquoted shares, at cost 36,798,709 14,066,252Share of post-acquisition reserves 43,882,195 31,534,462
80,680,904 45,600,714
Details of the jointly controlled entities are as follows:
Proportion of ownershipName of jointly controlled Country of Principal Interest
entities Incorporation Activities 2010 2009% %
(i) Held through AMSB:
Alam Eksplorasi (M) Malaysia Ship owning, 60 60Sdn. Bhd. ("AESB") operating and
chartering
Alam Synergy I (L) Federal Ship owning, 60 60Inc. ("AS I") Territory operating and
of Labuan, charteringMalaysia
Alam Synergy II (L) Federal Ship owning, 60 60Inc. ("AS II") Territory operating and
of Labuan, charteringMalaysia
Alam Synergy III (L) Federal Ship owning, 60 60Inc. ("AS III") Territory operating and
of Labuan, charteringMalaysia
Alam Swiber Malaysia Ship operator 50 50Offshore (M) SdnBhd ("ASOSB") ^^
Alam Radiance Malaysia Ship owning, 50 -(M) Sdn Bhd ship management("ARMSB") *** ship operation,
maintenanceand consultancy
108
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
17. Investment in jointly controlled entities (cont’d.)
Proportion of ownershipName of jointly controlled Country of Principal Interest
entities Incorporation Activities 2010 2009% %
(ii) Held through AMLI:
Workboat United Arab Ship 60 60International Emirates managementFZCO and operation,("WBI") ship owning, ship
maintenanceand marineconsultancy
Alam Brompton Federal Ship 51 51(L) Inc. ("ABLI") Territory management
of Labuan, and operation,Malaysia ship owning, ship
maintenanceand marineconsultancy
Alam Fast Boats Federal Ship owning, 50 50(L) Inc. ("AFBLI") Territory operating and
of Labuan, charteringMalaysia
Alam Swiber Federal Ship owning 50 50DLB 1 (L) Inc. Territory and chartering("ASDLB1") ^ of Labuan,
Malaysia
Alam Radiance Federal Ship owning, 50 -(L) Inc. Territory operating and("ARLI") ** of Labuan, chartering
Malaysia
TH-Alam Malaysia Ship 50 -Management (M) managementSdn Bhd ("THAM") * and consultancy
^ On 17 September 2009, AMLI entered into a Shareholders' Agreement with Swiber Engineering Limited (“SEL”) tojointly own and charter an accommodation pipelay work barge, via a newly incorporated entity, Alam Swiber DLB1 (L) Inc (“ASDLB1”).
^^ On 17 September 2009, AMSB entered into a Shareholders' Agreement with Swiber Offshore Construction Pte Ltd(“SOC”) to jointly undertake offshore installation and construction projects, via a newly incorporated entity, AlamSwiber Offshore (M) Sdn Bhd (“ASOSB").
* On 1 June 2010, AMLI entered into a Shareholders' Agreement with LTH to jointly manage vessels under THAH viaa newly incorporated entity, TH-Alam Management (M) Sdn. Bhd. ("THAM").
** On 2 August 2010, AMLI signed a Joint Venture Agreement with Pacific Crest Pte Ltd (“PCPL”) to jointly invest andown an accommodation work barge via a newly incorporated entity, Alam Radiance (L) Inc. ("ARLI").
*** On 2 August 2010, AMLI signed a Joint Venture Agreement with PCPL to jointly manage barge under ARLI via anewly incorporated entity, Alam Radiance (M) Sdn Bhd ("ARMSB").
109
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
17. Investment in jointly controlled entities (cont’d.)
The Group's aggregate share of the income, expenses, assets and liabilities of the jointly controlled entities are as follows:
2010 2009RM RM
Assets and liabilitiesCurrent assets 78,838,818 54,396,561Non-current assets 225,681,283 124,559,709
Total assets 304,520,101 178,956,270
Current liabilities 95,032,261 68,923,596Non-current liabilities 128,962,891 64,326,459
Total liabilities 223,995,152 133,250,055
ResultsRevenue 97,171,558 111,221,819Expenses, including finance costs and taxation (88,544,312) (93,941,021)
18. Amount due from subsidiaries
Amount due from subsidiaries are non-trade in nature, unsecured and repayable on demand except for an amount ofRM570,000,000 (2009: RM575,000,000) which bears interest rate between 4.58% per annum and 5.63% per annum (2009:between 4.58% per annum and 5.63% per annum).
Further details on related party transactions are disclosed in Note 36.
19. Inventories
Group2010 2009
RM RM
CostRaw materials 2,290,783 1,474,658Work-in-progress 5,996,510 21,639,822Spare parts 219,791 248,435
8,507,084 23,362,915
110
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
20. Trade receivables
Group2010 2009
RM RM
Third parties 127,518,450 121,853,110Accrued charter hire income 24,487,474 22,522,558Construction contracts:Due from customers on contract (Note 21) 3,467,500 16,454,046
155,473,424 160,829,714Less: Allowance for impairment (38,038,887) (10,140,295)
Trade receivables, net 117,434,537 150,689,419
Trade receivables are non-interest bearing and are generally on 30 to 90 days (2009: 30 to 90 days) terms. They arerecognised at their original invoice amounts which represent their fair values on initial recognition.
Other information on financial risks of trade receivables are disclosed in Note 38(a).
Ageing analysis of trade receivables
The ageing analysis of the Group's trade receivables is as follows:
Group2010
RM
Neither past due nor impaired 50,315,916
1 to 30 days past due not impaired 17,378,46931 to 60 days past due not impaired 1,339,46761 to 90 days past due not impaired 1,761,48891to 120 days past due not impaired 661,405More than 121 days past due not impaired 16,720,722
37,861,551Impaired 67,295,957
155,473,424
Receivables that are neither past due nor impaired
Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment recordswith the Group.
None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.
111
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
20. Trade receivables (cont'd.)
Receivables that are past due but not impaired
The Group has trade receivables amounting to RM37,861,551 that are past due at the reporting date but not impaired.
At the reporting date, 19.4% of trade receivables that are not impaired are amounts due from established creditworthyoil majors with minimum collection risk. The balance of receivables that are past due but not impaired are unsecuredin nature. The Management is confident that the remaining receivables are recoverable as these accounts are still active.
Receivables that are impaired
The Group’s trade receivables that are impaired at the reporting date and the movement of the allowance accounts usedto record the impairment are as follows:
Group2010
RM
Individually impaired
Trade receivables - nominal amounts 67,295,957Less: allowance for impairment (38,038,887)
29,257,070
Movement in allowance accounts:
Group2010
RM
At 1 January 10,140,295Charge for the year (Note 9) 28,020,284Written off (121,692)
At 31 December 38,038,887
Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are insignificant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral orcredit enhancements.
112
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
21. Due from customers on contract
Group2010 2009
RM RM
Construction contract costs incurred to date 26,685,028 99,080,213Less: Foreseeable losses (11,340,698) (7,749,337)
15,344,330 91,330,876Less: Progress billings (11,876,830) (74,876,830)
3,467,500 16,454,046
22. Other receivables
Group Company2010 2009 2010 2009
RM RM RM RM
Amount due from related parties:- Jointly controlled entities 73,018,084 84,301,702 1,248 -- Associates 76,711,991 10,057,659 1,872 -
149,730,075 94,359,361 3,120 -Deposits 10,130,429 12,825,013 - -Prepayments 5,632,074 4,115,102 - -Sundry receivables 4,046,683 4,479,117 - -
169,539,261 115,778,593 3,120 -Less: Provision for doubtful debts (231,367) (231,367) - -
Receivables, net 169,307,894 115,547,226 3,120 -
Other details on financial risks of other receivables are disclosed in Note 38.
113
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
23. Cash and cash equivalents
Group Company2010 2009 2010 2009
RM RM RM RM
Non-current assetsDeposits with a licensed bank 11,567,361 10,094,886 - -
Current assetsCash on hand and at banks 142,806,877 183,517,730 78,319,606 70,501,774Deposits with licensed banks 24,203,595 9,527,615 10,000,000 6,500,000
167,010,472 193,045,345 88,319,606 77,001,774
Total cash and bank balances 178,577,833 203,140,231 88,319,606 77,001,774
Bank overdrafts (Note 27) (4,586,157) (1,876,192) - -Amounts set aside as sinking fund (7,508,926) (6,000,000) - -Amounts set aside as
margin deposits for bankguarantee facilities (8,161,330) (8,056,935) - -
Total cash and cash equivalents 158,321,420 187,207,104 88,319,606 77,001,774
The weighted average effective interest rate per annum and the remaining maturity of deposits of the Group as at 31December 2010 are 1.90% (2009: 1.90%) and 1,280 days (2009: 1,280 days) respectively.
Other information on financial risks of cash and cash equivalents are disclosed in Note 38.
24. Share capital and share premium
Number of ordinary shares Amountof RM0.25 each
Share capital Share capital (issued and (issued and Share
fully paid) fully paid) premium TotalRM RM RM
At 1 January 2009 492,845,986 123,211,497 68,689,027 191,900,524Pursuant to ESOS (Note 32) 14,141,112 3,535,278 9,781,911 13,317,189
At 31 December 2009 and 1 January 2010 506,987,098 126,746,775 78,470,938 205,217,713Pursuant to ESOS (Note 32) 19,925,463 4,981,366 7,717,580 12,698,946Pursuant to bonus issue 254,237,816 63,559,454 (63,559,454) -
At 31 December 2010 781,150,377 195,287,595 22,629,064 217,916,659
114
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
24. Share capital and share premium (cont’d.)
Number of ordinary shares of RM0.25 each Amount2010 2009 2010 2009
RM RMAuthorised share capital
At 1 January/ 31 December 1,000,000,000 1,000,000,000 250,000,000 250,000,000
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to onevote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.
(a) Ordinary shares issued pursuant to bonus issue
During the financial year, the Company issued 254,237,816 ordinary shares of RM0.25 each pursuant to bonusissue, by way of capitalisation of the share premium on the basis of 1 new ordinary shares of RM0.25 each for every2 existing ordinary shares of RM0.25 each.
(b) Ordinary shares issued pursuant to the Company's Employee Share Options Scheme
During the financial year, the Company issued 19,925,463 (2009: 14,141,112) ordinary shares of RM0.25 each forcash pursuant to the Company's Employee Share Options Scheme at the exercise price ranging from RM0.44 toRM1.40 (2009: RM0.60 to RM1.59) per ordinary share.
25. Other reserves
Premium paid ForeignEmployee on acquisition currency
share option of minority translationreserve interest reserve Total
RM RM RM RM
Group
At 1 January 2009 7,897,646 - 70,857 7,968,503
Foreign currency translation, representingother comprehensive income - - 101,550 101,550
Transaction with owners:Share options granted under ESOS:Recognised in income statement 2,302,148 - - 2,302,148Exercised during the year (3,586,668) - - (3,586,668)
(1,284,520) - - (1,284,520)
At 31 December 2009 6,613,126 - 172,407 6,785,533
At 1 January 2010 6,613,126 - 172,407 6,785,533
Foreign currency translation, representingother comprehensive income - - (143,244) (143,244)
Transaction with owners:Premium paid on acquisition of
minority interests (Note 15(a)(i)) - (5,511,517) - (5,511,517)Share options granted under ESOS:Recognised in income statement 519,467 - - 519,467Exercised during the year (2,683,597) - - (2,683,597)
(2,164,130) (5,511,517) - (7,675,647)
At 31 December 2010 4,448,996 (5,511,517) 29,163 (1,033,358)
115
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
25. Other reserves (cont’d.)
Premium paid ForeignEmployee on acquisition currency
share option of minority translationreserve interest reserve Total
RM RM RM RM
Company
At 1 January 2009 7,897,646 - - 7,897,646
Transaction with owners:Share options granted under ESOS:
Recognised in income statement 2,302,148 - - 2,302,148Exercised during the year (3,586,668) - - (3,586,668)
At 31 December 2009 6,613,126 - - 6,613,126
At 1 January 2010 6,613,126 - - 6,613,126
Transaction with owners:Share options granted under ESOS:
Recognised in income statement 519,467 - - 519,467Exercised during the year (2,683,597) - - (2,683,597)
At 31 December 2010 4,448,996 - - 4,448,996
The nature and purpose of each category are as follows:
(a) Employee share option reserve
Employee share option reserve represents the equity-settled share options granted to employees (Note 32). Thereserve is made up of the cumulative value of services received from employees recorded over the vesting periodcommencing from the grant date of equity-settled share options, and is reduced by the expiry or exercise of theshare options.
(b) Foreign currency translation reserve
The foreign currency translation reserve represents exchange differences arising from the translation of thefinancial statements of foreign operations whose functional currencies are different from that of the Group’spresentation currency.
116
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
26. Retained earnings
Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with theFinance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividendpaid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of theshareholders ("single tier system"). However, there is a transitional period of six years, expiring on 31 December 2013,to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also havean irrevocable option to disregard the 108 balance and opt to pay dividends under the single tier system. The change inthe tax legislation also provides for the 108 balance to be locked-in as at 31 December 2007 in accordance with Section39 of the Finance Act 2007.
The Company did not elect for the irrevocable option to disregard the 108 balance. Accordingly, during the transitionalperiod, the Company may utilise the credit in the 108 balance as at 31 December 2010 and 2009 to distribute cashdividend payments to ordinary shareholdings as defined under the Finance Act 2007.
As at 31 December 2010, the 108 balance of the Company is nil (2009: RM540,168). Hence, the Company may distributedividends out of its entire retained earnings as at 31 December 2010 under the single tier system.
27. Borrowings
Group Company2010 2009 2010 2009
RM RM RM RM
Short term borrowings
Secured:Bank overdrafts (Note 23) 4,586,157 1,876,192 - -Term loans 2,042,327 2,717,547 - -MCP/MMTN 96,920,629 96,763,123 96,920,629 96,763,123Sukuk Ijarah MTN 80,000,000 30,000,000 80,000,000 30,000,000Hire purchase and finance
lease liabilities (Note 28) 5,300,077 772,293 28,288 26,763
188,849,190 132,129,155 176,948,917 126,789,886
Unsecured:Revolving credits 45,000,000 25,000,000 - -
233,849,190 157,129,155 176,948,917 126,789,886
Long term borrowings
Secured:Term loans 28,016,153 29,089,387 - -Sukuk Ijarah MTN 390,000,000 445,000,000 390,000,000 445,000,000Hire purchase and finance
lease liabilities (Note 28) 17,148,627 12,227,055 116,754 145,042
435,164,780 486,316,442 390,116,754 445,145,042
117
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
27. Borrowings (cont’d.)
Group Company2010 2009 2010 2009
RM RM RM RM
Total borrowings
Bank overdrafts (Note 23) 4,586,157 1,876,192 - -Revolving credits 45,000,000 25,000,000 - -Term loans 30,058,480 31,806,934 - -MCP/MMTN 96,920,629 96,763,123 96,920,629 96,763,123Sukuk Ijarah MTN 470,000,000 475,000,000 470,000,000 475,000,000Hire purchase and finance lease
liabilities (Note 28) 22,448,704 12,999,348 145,042 171,805
669,013,970 643,445,597 567,065,671 571,934,928
Maturity of borrowings (excluding hire purchase and finance lease liabilities):
Group2010 2009
RM RM
Not later than 1 year 228,549,157 156,356,862Later than 1 year not later than 2 years 32,164,718 82,018,199Later than 2 years not later than 5 years 269,896,926 162,475,819Later than 5 years 115,954,465 229,595,369
646,565,266 630,446,249
The weighted average effective interest rates at the balance sheet date for borrowings, excluding hire purchase andfinance lease liabilities of the Group, are as follows:
Group2010 2009
% %
Bank overdrafts 6.65 7.05Revolving credits 4.68 4.34Term loans 6.50 6.50MCP/MMTN 4.15 5.02Sukuk Ijarah MTN 4.96 4.34
Bank overdrafts:
The secured bank overdrafts of the Group are secured by deposits with licensed banks of the Group as disclosed in Note 23.
118
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
27. Borrowings (cont’d.)
Term loans:
The term loans of the Group are secured by the following:
(a) First legal charge over the vessels and leasehold building of certain subsidiaries as disclosed in Note 12;
(b) 1st preferred statutory mortgage on vessels of certain subsidiaries;
(c) Legal assignments of charter proceeds of certain subsidiaries;
(d) Debentures incorporating fixed and floating asset of certain subsidiaries;
(e) Corporate guarantees by the Company;
(f) Assignment of the insurance policy for vessels of certain subsidiaries.
MCP/MMTN and Sukuk Ijarah MTN Facility
The MCP/MMTN and Sukuk Ijarah MTN are secured by:
(i) a first legal charge over the designated accounts as defined in the Trust Deed;
(ii) third party second fixed legal charge over each of the Ijarah Assets/MCP/MMTN and Sukuk Ijarah MTN assets andassignment of all insurance thereon and charter contracts.
The features of the MCP/MMTN and Sukuk Ijarah MTN issued are as follows:
(i) The MCP/MMTN and Sukuk Ijarah MTN have a maximum principal limit of RM600,000,000.
The MCP/MMTN and Sukuk Ijarah MTN were constituted by a Trust Deed Program Agreement dated 6 July 2007between the Company and the financial institutions concerned in relation to finance the purchase of beneficialinterest in the Ijarah Assets (Syariah Compliant) from subsidiaries.
(ii) The MCP/MMTN are issued at a discount with yield to maturity ranging from 3.78% to 3.85% per annum. The SukukIjarah MTN are issued with yield to maturity ranging from 4.58% to 5.63% per annum (2009: 4.58% to 5.63% per annum).
The amounts recognised in respect of the MCP/MMTN is analysed as follows:
Group and Company2010 2009
RM RM
MCP/MMTNNominal value 100,000,000 100,000,000Less: Discount (7,368,802) (4,714,547)
Net proceeds from issuance of MCP/MMTN 92,631,198 95,285,453Amortisation of discount 4,289,431 1,477,670
Total amount included within borrowings 96,920,629 96,763,123
Other information on financial risks of borrowings are disclosed in Note 38.
119
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
28. Hire purchase and finance lease liabilities
Group Company2010 2009 2010 2009
RM RM RM RM
Future minimum lease payments:
Not later than 1 year 6,385,067 854,915 34,704 34,704Later than 1 year and not later than 2 years 6,230,505 1,162,453 34,704 34,704Later than 2 years and not later than 5 years 11,782,276 1,129,390 92,546 104,112Later than 5 years 607,963 10,318,998 - 23,138
Total future minimum lease payments 25,005,811 13,465,756 161,954 196,658Less: Future finance charges (2,557,107) (466,408) (16,912) (24,853)
Present value of finance lease liabilities (Note 27) 22,448,704 12,999,348 145,042 171,805
Analysis of present value offinance lease liabilities:
Not later than 1 year 5,300,077 772,293 28,288 26,763Later than 1 year and not later than 2 years 5,177,401 1,008,220 29,812 28,287
Later than 5 years 480,863 10,228,913 - 22,745
22,448,704 12,999,348 145,042 171,805
Less: Amount due within 12 months (Note 27) (5,300,077) (772,293) (28,288) (26,763)
Amount due after 12 months (Note 27) 17,148,627 12,227,055 116,754 145,042
The Group's and the Company's hire purchase and finance lease liabilities bears weighted average effective interest ratesof 9.38% (2009: 8.45%) per annum and 7.44% (2009: 7.44%) respectively .
Other information on financial risks of hire purchase and finance lease liabilities are disclosed in Note 38.
29. Deferred taxation
Group2010 2009
RM RM
At 1 January 77,511,121 66,396,703Recognised in income statement (Note 9) (6,411,496) 11,072,396Exchange differences (154,086) 42,022
At 31 December 70,945,539 77,511,121
Presented after appropriate offsetting as follows:
Deferred tax liabilities 70,945,539 77,511,121
alam maritim 2010 :Layout 1 5/13/11 5:52 PM Page 119
120
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
29. Deferred taxation (cont’d.)
The components and movements prior to offsetting of deferred tax liabilities and assets of the Group during the financialyear are as follows:
Deferred tax liabilities of the Group:
Acceleratedcapital
allowancesRM
At 1 January 2010 80,519,978Recognised in income statement 10,829,845Exchange differences (344,709)
At 31 December 2010 91,005,114
At 1 January 2009 71,610,177Recognised in income statement 8,891,269Exchange differences 18,532
At 31 December 2009 80,519,978
Deferred tax assets of the Group:
Unutilised taxlosses and
unabsorbedProvision for capital
doubtful debts allowances TotalRM RM RM
At 1 January 2010 (1,611,568) (1,423,582) (3,035,150)Recognised in income statement (25,416) (17,215,925) (17,241,341)Exchange differences 23,035 193,881 216,916
At 31 December 2010 (1,613,949) (18,445,626) (20,059,575)
At 1 January 2009 (126,042) (5,087,432) (5,213,474)Recognised in income statement (1,485,414) 3,666,541 2,181,127Exchange differences (112) (2,691) (2,803)
At 31 December 2009 (1,611,568) (1,423,582) (3,035,150)
Deferred tax assets have not been recognised in respect of the following items:
Group2010 2009
RM RM
Unutilised tax losses 89,041 78,278
The unutilised tax losses of the Group are available indefinitely for offsetting against future taxable profits of therespective entities within the Group, subject to no substantial change in shareholdings of those entities under the IncomeTax Act, 1967 and guidelines issued by the tax authority. Deferred tax assets is not recognised in respect of these lossesas they arise in Group companies with a history of losses.
121
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
30. Trade payables
Trade payables of the Group are non-interest bearing and the normal trade credit terms granted to the Group rangesfrom 30 to 60 days (2009: 30 to 60 days).
31. Other payables
Group Company2010 2009 2010 2009
RM RM RM RM
Amount due to related parties:- Jointly controlled entities 16,571,492 18,929,903 - -- Associates 17,831,431 54,883,579 - -
34,402,923 73,813,482 - -
Due to vendors of vessels - 24,133,830 - -Accrued expenses 13,422,399 16,233,538 10,948,267 11,713,192Deposits from customers 85,055 1,445,145 - -Sundry payables 3,845,949 1,421,112 409,260 5,000
51,756,326 117,047,107 11,357,527 11,718,192
Other information on financial risks of other payables are disclosed in Note 38.
32. Employee benefits
Employee share options scheme ("ESOS")
The AMRB Employee Share Options Scheme ("ESOS") is governed by the bye-laws approved by the shareholders at anExtraordinary General Meeting held on 5 June 2006. The ESOS was implemented on 20 July 2006 and is to be in forcefor a period of 5 years from the date of implementation.
(a) The number of shares comprised in the options to be offered under the ESOS shall not exceed 15% of the issuedand paid-up share capital of the Company at any point of time. Upon completion of the Initial Public Offering ("IPO")on 20 July 2006, the total number of new shares to be issued pursuant to the ESOS is 24,350,412.
(b) When options are granted before the Company is listed on Bursa Malaysia Securities ("Initial Grant"), the exerciseprice shall be on a step-up basis starting with a price equivalent to the IPO price of RM1.65 and shall increase onthe third year and fifth year commencing from the date of acceptance of the options as follows:
Exercise PeriodYear 1 Year 2 Year 3 Year 4 Year 5
Exercise price RM1.65 RM1.65 RM1.82 RM1.82 RM2.00
(c) Where the options are granted on or after the Company is listed on Bursa Malaysia Securities ("Subsequent Grant"),the exercise price shall be at the higher of the following:
(i) the weighted average market price of the shares for the five market days immediately preceding the date atwhich options are granted subject to a discount of up to 10%; or
(ii) the par value of the shares.
122
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
32. Employee benefits (cont’d.)
Employee share options scheme ("ESOS") (cont’d.)
(d) All eligible directors and employees will only be allowed to exercise the options subject to the following limits:
Exercise PeriodYear 1 Year 2 Year 3 Year 4 Year 5
Maximum percentage 5% 10% 20% 30% 35%of options exercisable
(e) The new shares to be allotted upon any exercise of any option granted shall rank pari passu in all respects withthe existing shares provided always that the new shares so allotted will not be entitled to any dividends, rights,allotments and/or any distributions declared, made or paid to shareholders which record date thereof precedes thedate of allotment of the new shares and shall be subject to all provisions of the Articles of the Company.
(f) In the event of any alteration in the capital structure of the Company, whether by way of issue of new shares creditedas fully paid up from capitalisation of profit or reserve, capitalisation issues, rights issues, reduction, subdivisionor consolidation of capital or any other variation of capital:
(i) the Exercise Price; and/or
(ii) the number of new shares comprised in the Option so far as unexercised;
shall be adjusted accordingly.
The following table illustrates the number and movements in share option during the year:
Number of share options
Outstanding Movement during the year Outstanding Exercisable
at Bonus at at1 January Granted Exercised issue Exercised 31 December 31 December
2010
2009 Options 1,238,000 - (3,000) 617,500 (121,500) 1,731,000 1,731,0002008 Options 2,296,000 - - 1,148,000 - 3,444,000 3,444,0002007 Options 2,354,251 - (6,500) 1,173,875 (227,375) 3,294,251 3,294,2512006 Options 32,082,001 - (1,479,100) 15,301,451 (18,088,038) 27,816,314 27,816,314
2009
2009 Options - 1,250,000 (12,000) - - 1,238,000 363,0002008 Options 2,296,000 - - - - 2,296,000 1,470,0002007 Options 2,828,388 - (474,137) - - 2,354,251 1,107,8132006 Options 45,736,976 - (13,654,975) - - 32,082,001 10,596,595
123
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
32. Employee benefits (cont’d.)
Employee share options scheme ("ESOS") (cont’d.)
(i) Details of share options outstanding at the end of the year:
Weighted averageexercise price
RM Exercise period
20102006 Options 0.66 20.07.2006 - 19.07.20112007 Options 1.47 20.07.2007 - 19.07.20112009 Options 1.79 20.07.2009 - 19.07.20112010 Options 1.27 20.07.2010 - 19.07.2011
20092006 Options 0.66 20.07.2006 - 19.07.20112007 Options 1.47 20.07.2007 - 19.07.20112009 Options 1.79 20.07.2009 - 19.07.20112010 Options 1.27 20.07.2010 - 19.07.2011
(ii) Share options exercised during the financial year
As disclosed in Note 24, options exercised during the financial year resulted in the issuance of 19,925,463 (2009:14,141,112) ordinary shares at the exercise price between RM0.44 and RM1.40 (2009: RM0.60 and RM1.59) each.The related weighted average share price at the date of exercise was RM1.16 (2009: RM1.37).
(iii) Fair value of share options granted during the previous financial year
The fair value of the share options granted is estimated at the grant date internally using a Black Scholes OptionValuation model, taking into account the terms and conditions upon which the options were granted. The fair valueof the share options measured at grant date and the assumptions are as follows:
Options grantedon 19.7.2009
Fair value of share options at the grant date 0.19Weighted average share price (RM) 1.37Exercise price (RM) 1.27Expected volatility (%) 23.53Expected life (years) 1.50Risk free interest rate (%) 2.85Expected dividend yield (%) 0.37
The expected life of the options is based on historical data and not necessarily indicative of exercise patterns thatmay occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends,which may also not necessarily be the actual outcome. No other features of the option grant were incorporated intothe measurement of the fair value.
124
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
33. Operating lease arrangements
(a) The Group as lessee
The Group has entered into non-cancellable operating lease agreements for the use of office premise. Leases ofthe premise have an average life of between 1 and 5 years. These leases have renewal but no purchase optionincluded in the contracts. There are no restrictions placed upon the Group by entering into these leases.
The future aggregate lease payments under non-cancellable operating leases contracted for as at the balancesheet date but not recognised as liabilities are as follows:
2010 2009RM RM
Future rental payments:Not later than 1 year 1,275,661 1,939,047Later than 1 year and not later than 5 years 1,411,236 470,845
2,686,897 2,409,892
The lease payments recognised in profit or loss during the financial year are disclosed in Note 8.
(b) The Group as lessor
The Group has entered into non-cancellable operating lease agreements on its vessels. These leases haveremaining non-cancellable lease terms of between 0.5 to 13 years. All leases include a clause to enable upwardrevision of the charter hire charge on an annual basis based on prevailing market conditions.
The future lease payments receivable under non-cancellable operating leases contracted for as at the balancesheet date but not recognised as receivables, are as follows:
2010 2009RM RM
Not later than 1 year 93,131,053 96,243,398Later than 1 year and not later than 5 years 117,524,453 155,055,965Later than 5 years 59,662,647 68,593,138
270,318,153 319,892,501
Charter hire revenue earned from chartering the Group's vessels are recognised as revenue during the financialyear is disclosed in Note 4.
34. Capital commitments
Group2010 2009
RM RM
Capital expenditureApproved and contracted for
Purchase of vessels 101,821,500 271,104,680Purchase of diving equipment - 26,898,025
125
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
35. Contingent liabilities
Company2010 2009
RM RM
Unsecured:
Corporate guarantees given to banks for credit facilitiesgranted to subsidiaries 159,148,500 159,148,500
36. Related party disclosures
(a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had thefollowing transactions with related parties during the financial year.
Note 2010 2009RM RM
Group
Jointly controlled entities:Charter hire of vessels (i) 15,463,635 -Vessel management fees (ii) 2,624,546 7,467,320
Associates:Vessel management fees from associates 3,515,144 6,265,441Transfer of vessels to associates 254,150,360 124,646,000
Company
Subsidiaries:Dividend income from subsidiaries - 1,713,250ESOS costs charged to subsidiaries 519,467 2,210,220
(i) The charter hire expense and mobilisation fees paid to jointly controlled entities were made according to thepublished prices and conditions offered by these related parties to their major customers, except that a longercredit period of up to six months is normally granted.
(ii) The vessel management fees received from jointly controlled entities were made according to the publishedprices and conditions offered by these related parties to their major customers, except that a longer creditperiod of up to six months is normally granted.
Information regarding outstanding balances arising from related party transactions as at 31 December 2010are disclosed in Note 18.
The directors are of the opinion that the transactions have been entered into in the normal course of businessand have been established on terms and conditions that are not materially different from that obtainable intransactions with unrelated parties.
126
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
36. Related party disclosures (cont’d.)
(b) Compensation of key management personnel
The remuneration of directors and other members of key management during the year as follows:
Group Company2010 2009 2010 2009
RM RM RM RM
Short term employee benefits 6,554,947 5,395,365 246,965 242,828Contributions to defined
contribution plan - EPF 469,190 684,496 - -
(b) Compensation of key management personnel
Included in the total key management personnel compensation are:
Group Company2010 2009 2010 2009
RM RM RM RM
Directors' remuneration (Note 6) 4,255,422 3,803,878 231,965 233,928
In aggregate, executive directors of the Group and the Company and other members of key management havebeen granted a number of options under the ESOS as follows:
Group and Company2010 2009
RM RM
At 1 January 28,362,313 38,627,275Granted - 450,000Exercised (195,000) -Bonus issue 41,003,307 -Exercised (14,188,011) (10,714,962)
At 31 December 54,982,609 28,362,313
127
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
37. Fair value of financial instruments
Group Company2010 2010
Carrying Fair Carrying Fairamount value amount value
RM RM RM RM
Financial assets:
Due from subsidiaries - - 390,000,000 389,446,810
Financial liabilities:Loans and borrowings (non-current)- Obligations under finance leases (17,148,627) (17,239,654) (116,754) (136,476)- Sukuk Ijarah MTN (390,000,000) (389,446,810) (390,000,000) (389,446,810)- Fixed rate term loans (28,016,153) (23,899,543) - -
Group Company2009 2009
Carrying Fair Carrying Fairamount value amount value
RM RM RM RM
Financial assets:
Due from subsidiaries - - 445,000,000 440,271,726
Financial liabilities:Loans and borrowings (non-current)- Obligations under finance leases (12,227,055) (11,763,334) (145,042) (136,476)- Sukuk Ijarah MTN (445,000,000) (440,271,726) (445,000,000) (440,271,726)- Fixed rate term loans (29,089,387) (25,858,550) - -
It is not practical to estimate the fair values of the investment in subsidiaries due principally to the lack of quoted marketprices and the inability to estimate fair values without incurring excessive costs.
The carrying amounts of receivables, cash and bank balances and payables for the Group and the Company approximatetheir fair values due to their short term maturity.
The methods and assumptions used by management to determine fair values of financial instruments other than thosewhose carrying amounts reasonably approximate their fair value are as follows:
(i) Borrowings and finance lease payable
The fair value of borrowings is determined by discounting the expected future cash flows based on current ratesfor similar types of borrowings and leasing arrangements.
128
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
38. Financial risk management objectives and policies
The Group and the Company are exposed to financial risks arising from their operations and the use of financialinstruments. The key financial risks include credit risk, liquidity risk, interest rate risk and foreign currency risk.
The Board of Directors reviews and agrees policies and procedures for the management of these risks, which areexecuted by the various process owners. The Risk Management Committee provides independent oversight to theeffectiveness of the risk management process.
It is the Group’s policy that no derivatives shall be undertaken except for the use as hedging instruments whereappropriate and cost-efficient. The Group and the Company do not apply hedge accounting.
The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financialrisks and the objectives, policies and processes for the management of these risks.
(a) Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default onits obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and otherreceivables. For other financial assets (including cash and bank balances), the Group and the Company minimisecredit risk by dealing exclusively with high credit rating counterparties.
The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased creditrisk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy thatall customers who wish to trade on credit terms are subject to credit verification and evaluation procedures. Inaddition, trade receivable balances are monitored on an ongoing basis in view of reducing the Group’s exposure tobad debts.
Exposure to credit risk
At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by:
- The carrying amount of each class of financial assets recognised in the statements of financial position; and
- A nominal amount of RM45,000,000 relating to corporate guarantee provided by the Company to banks on asubsidiary’s bank loans.
At the reporting date, approximately:
- 26% of the Group’s trade receivables were due from 5 major customers who are located in Malaysia;
- 52% of the Group’s trade and other receivables were due from related parties.
Financial assets that are neither past due nor impaired
Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note 20.Deposits with banks and other financial institutions that are neither past due or impaired are placed with reputablefinancial institutions with high credit ratings.
Financial assets that are either past due or impaired
Information regarding financial assets that are either past due or impaired is disclosed in Note 20.
129
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
38. Financial risk management objectives and policies (cont’d.)
(b) Liquidity risk
Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations dueto shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatchesof maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balancebetween continuity of funding and flexibility through the use of stand-by credit facilities.
The Group’s and the Company’s liquidity risk management policy is that not more than 40% of loans and borrowings(including overdrafts) should mature in the next one year period, and to maintain sufficient liquid financial assetsand stand-by credit facilities with three different banks. At the reporting date, approximately 31% of the Group’sloans and borrowings (Note 27) will mature in less than one year based on the carrying amount reflected in thefinancial statements. About 27% of the Company’s loans and borrowings will mature in less than one year at thereporting date.
Analysis of financial instruments by remaining contractual maturities
The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting datebased on contractual undiscounted repayment obligations.
2010On demand or One to five Over five
within 1 year years years TotalRM RM RM RM
Financial liabilities:
Group
Trade and other payables 80,380,873 - - 80,380,873Loans and borrowings 241,212,580 418,198,003 46,767,317 706,177,900
Total undiscounted financial liabilities 321,593,453 418,198,003 46,767,317 786,558,773
Company
Trade and other payables 11,357,527 - - 11,357,527Loans and borrowings 178,056,917 374,284,750 45,276,667 597,618,334
Total undiscounted financial liabilities 189,414,444 374,284,750 45,276,667 608,975,861
(c) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financialinstruments will fluctuate because of changes in market interest rates.
The Group’s and the Company’s exposure to interest rate risk arises primarily from their loans and borrowings. TheGroup does not hedge its interest rate but ensures that it has obtained borrowings at competitive interest ratesunder the most favourable terms and conditions.
The Group’s policy is to manage interest cost using a mix of fixed and floating rate debts. At the reporting date,approximately 89% of the Group’s borrowings are at fixed rates of interest.
130
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
38. Financial risk management objectives and policies (cont’d.)
(c) Interest rate risk (cont’d.)
Sensitivity analysis for interest rate risk
At the reporting date, if interest rates had been 10 basis points lower/higher, with all other variables held constant,the Group’s profit before tax would have been RM61,000 higher/lower, arising mainly as a result of lower/higherinterest expense on floating rate loans and borrowings. The assumed movement in basis points for interest ratesensitivity analysis is based on the currently observable market environment.
Sources of interest rate risk
Interest rate risk arises on interest-bearing financial instruments recognised in the statement of financial positionon the loans and borrowings.
(d) Foreign currency risk
Interest rate risk is the risk that the fair value or future cash flows of the financial instrument will fluctuate becauseof changes in foreign exchange rates.
The Group has transactional currency exposures arising from sales or purchases that are denominated in acurrency other than the respective currencies of Group’s entities, primarily RM, United States Dollar (“USD”) ,Singapore Dollar (“SGD”) and Rupiah (“IDR”). The foreign currencies in which these transactions are denominatedare mainly US Dollars (“USD”).
Approximately 3% of the Group’s sales are denominated in foreign currencies whilst almost 20% of cost aredenominated in the respective functional currencies of the Group’s entities. The Group’s trade receivable and tradepayable balances at the reporting date have similar exposure.
Sensitivity analysis for foreign currency risk
The following table demonstrates the sensitivity of the Group's profit before tax to a reasonably possible change inthe USD, SGD and IDR exchange rates against the respective functional currencies of the Group entities, with allother variables held constant.
Group2010
RM'000
Financial assets
USD/RM - strengthened 3% (277)- weakened 3% 277
SGD/RM - strengthened 3% (319)- weakened 3% 319
Financial liabilities
USD/RM - strengthened 3% (325)- weakened 3% 325
SGD/RM - strengthened 3% (658)- weakened 3% 658
IDR/RM - strengthened 3% 11- weakened 3% (11)
131
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
39. Capital management
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthycapital ratios in order to support its business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. Tomaintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital toshareholders or issue new shares. No changes were made in the objectives, policies or processes during the yearsended 31 December 2010 and 31 December 2009.
The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group’spolicy is to keep the gearing ratio between 50% to 75%. The Group includes within net debt, loans and borrowings, tradeand other payables, less cash and bank balances. Capital includes equity attributable to the owners of the parent lessthe fair value adjustment reserve, if any.
Group Company2010 2009 2010 2009
RM RM RM RM
Loans and borrowings 669,013,970 643,445,597 567,065,671 571,934,928Trade and other payables 80,380,873 145,972,993 11,357,527 11,718,192Less: Cash and bank balances (167,010,472) (193,045,345) (88,319,606) (77,001,774)
Net debt 582,384,371 596,373,245 490,103,592 506,651,346
Equity attributable to the owners ofthe parent, representing total capital 465,024,491 476,472,759 227,698,179 220,123,741
Capital and net debt 1,047,408,862 1,072,846,004 717,801,771 726,775,087
Gearing ratio 55.6% 55.6% 68.3% 69.7%
40. Subsequent event
On 15 April 2011, the Group entered into a joint venture agreement with Yayasan Sabah Shipping Sdn. Bhd. ("YSS") toventure and participate in the economic and commercial activities in Sabah, particularly in the oil and gas industry.
41. Segmental information
(a) Reporting format
The primary segment reporting format is determined to be business segments as the Group’s risks and rates ofreturn are affected predominantly by differences in the products and services produced. The operating businessesare organised and managed separately according to the nature of the products and services provided, with eachsegment representing a strategic business unit that offers different products and serves different markets.
(b) Business segments
The Group comprises the following two main business segments:
- Offshore supply vessels and services
Provision of vessels for charter hire, assisting seismic operators in seismic survey related activities,transportation of crew and supplies, towing and mooring of rigs offshore, anchor-handling services and othersupport, repair and maintenance services for the oil and gas industry.
132
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
41. Segmental information (cont’d.)
(b) Business segments (cont’d.)
- Underwater services
Provision of offshore facilities construction and installation services such as marine construction relatedservices, sub-sea engineering services and offshore pipeline construction related services and designing,manufacturing and operating of remotely operated vehicles ("ROVs").
Other business segments include investment holding and provision of transportation, ship forwarding and agentand ship chandelling to the subsidiaries, none of which are of a sufficient size to be reported separately.
The directors are of the opinion that all inter-segment transactions have been entered into in the normal courseof business and have been established on terms and conditions that are not materially different from thoseobtainable in transactions with unrelated parties.
(c) Geographical segments
Segmental reporting by geographical segments has not been prepared as the Group's operations are carried outpredominantly in Malaysia.
(d) Allocation basis and transfer pricing
Segment results, assets and liabilities include items directly attributable to a segment as well as those that canbe allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, liabilities and expenses.
Transfer prices between business segments are set on an arm’s length basis in a manner similar to transactionswith third parties. Segment revenue, expenses and results include transfers between business segments. Thesetransfers are eliminated on consolidation.
Offshoresupport vessel Underwater
and services services Others Eliminations TotalRM RM RM RM RM
31 December 2010
RevenueSales to external customers 198,766,412 42,888,963 536,448 - 242,191,823Inter segment sales 1,071,941 4,913,048 4,283,045 (10,268,034) -
Total revenue 199,838,353 47,802,011 4,819,493 (10,268,034) 242,191,823
ResultsSegment results (1,880,518) 4,960,375 31,748 (2,049,916) 1,061,689Finance costs (30,530,262) (680,969) (17,498) - (31,228,729)Share of results of associates - - - (296,298) (296,298)Share of results of jointly
controlled entities - - - 12,347,732 12,347,732
Loss before tax (32,410,780) 4,279,406 14,250 10,001,518 (18,115,606)Income tax benefit 5,166,701
Loss for the year (12,948,905)
133
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
41. Segmental information (cont’d.)
(d) Allocation basis and transfer pricing (cont’d.)
Offshoresupport vessel Underwater
and services services Others Eliminations TotalRM RM RM RM RM
31 December 2010
AssetsSegment assets 589,968,819 80,555,024 1,743,358 7,962,590 680,229,791Investment in associates 56,911,582 - - (2,004,381) 54,907,201Investment in jointly
controlled entities 36,798,709 - - 43,882,196 80,680,905Intangible assets - 313,584 - 1,377,508 1,691,092Unallocated assets 518,762,433 44,759,852 707,347,097 (792,587,436) 478,281,946
Total assets 1,202,441,543 125,628,460 709,090,455 (741,369,523) 1,295,790,935
LiabilitiesSegment liabilities 94,376,931 18,361,915 390,264,697 3,106,775 506,110,318Unallocated liabilities 845,526,709 71,756,470 191,092,592 (791,200,383) 317,175,388
Total liabilities 939,903,640 90,118,385 581,357,289 (788,093,608) 823,285,706
Other segment information:Capital expenditure 617,432,100 85,358,642 1,909,752 8,642,115 713,342,609Depreciation 27,504,334 5,738,308 147,380 679,524 34,069,546Other significant
non-cash expenses:Provision for doubtful debts 28,020,284 - - - 28,020,284Share options granted
under ESOS 450,427 51,252 17,788 - 519,467
31 December 2009
RevenueSales to external customers 215,256,189 131,795,575 1,865,368 - 348,917,132Inter segment sales 7,935,358 15,157,071 1,713,250 (24,805,679) -
Total revenue 223,191,547 146,952,646 3,578,618 (24,805,679) 348,917,132
ResultsSegment results 103,410,476 22,937,778 (11,578) (14,432,206) 111,904,470Finance costs (24,425,576) (1,427,464) (21,797) - (25,874,837)Share of results of associates 3,283,674 - - - 3,283,674Share of results of jointly
controlled entities 23,211,091 - - - 23,211,091
Profit before tax 112,524,398Income tax expense (17,157,646)
Profit for the year 95,366,752
134
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
41. Segmental information (cont’d.)
(d) Allocation basis and transfer pricing (cont’d.)
Offshoresupport vessel Underwater
and services services Others Eliminations TotalRM RM RM RM RM
31 December 2009
AssetsSegment assets 721,338,964 58,426,440 407,842 8,642,516 788,815,762Investment in an associate 24,894,933 - - (2,668,986) 22,225,947Investment in jointly
controlled entities 14,066,252 - - 31,534,462 45,600,714Intangible assets - 427,910 - 1,422,263 1,850,173Unallocated assets 520,104,321 93,342,864 703,227,408 (820,741,709) 495,932,884
Total assets 1,280,404,470 152,197,214 703,635,250 (781,811,454) 1,354,425,480
LiabilitiesSegment liabilities 103,371,960 11,823,233 445,355,714 3,276,656 563,827,563Unallocated liabilities 876,929,990 109,192,416 140,057,929 (819,354,657) 306,825,678
Total liabilities 980,301,950 121,015,649 585,413,643 (816,078,001) 870,653,241
Other segment information:Capital expenditure 732,770,823 62,094,711 513,856 10,026,285 805,405,674Depreciation 27,206,527 3,938,904 55,586 679,524 31,880,541Other significant
non-cash expenses:Provision for doubtful debts 5,955,676 3,079,857 - - 9,035,533Share options granted
under ESOS 1,830,053 273,969 198,126 - 2,302,148
135
Annual Report 2010
Notes to the Financial StatementsFor the financial year ended 31 December 2010 (cont’d.)
42. Supplementary information – breakdown of retained profits into realised and unrealised
The breakdown of the retained profits of the Group and of the Company as at 31 December 2010 into realised andunrealised profits is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised andUnrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad ListingRequirements, as issued by the Malaysian Institute of Accountants.
Group CompanyRM RM
Total retained profits of the Company and its subsidiaries- realised 298,161,393 5,332,524- unrealised (41,248,325) -
256,913,068 5,332,524Total share of retained profits from associates:- realised 2,278,317 -- unrealised 132,956 -
Total share of retained profits from jointly controlled entities:- realised 40,911,716 -- unrealised 2,970,479 -
303,206,536 5,332,524
Less: consolidation adjustments (55,065,346) -
Retained profits as per financial statements 248,141,190 5,332,524
136
ALAM MARITIM RESOURCES BERHAD (700849-K)
ANALYSIS OF SHAREHOLDINGS
TotalName of Directors Shareholdings %
1. Dato’ Capt Ahmad Sufian @ Qurnain Bin Abdul Rashid 900,000 0.114
2. Azmi Bin Ahmad 150 0.000
Cimsec Nominees (Tempatan) Sdn Bhd 33,111 0.004CIMB Bank for Azmi Bin Ahmad (MY0354)
3. Shaharuddin Bin Warno @ Rahmad 1,015,498 0.129
4. Mohd Abd Rahman Bin Mohd Hashim - -
Cimsec Nominees (Tempatan) Sdn Bhd 120,000 0.015CIMB Bank for Mohd Abd Rahman Bin Mohd Hashim (MY0964)
5. Ab Razak Bin Hashim 112 0.000
6. Fina Norhizah Binti Haji Baharu Zaman - -
7. Dato’ Haji Wahab Bin Haji Ibrahim 1,500 0.000
8. Ahmad Hassanudin Bin Ahmad Kamaluddin - -
Cimsec Nominees (Tempatan) Sdn Bhd 1,875 0.000Pledged Securities Account for Ahmad Hassanuddin Bin Ahmad Kamaluddin
9. Siti Zubaidah Binti Abdul Ghani 230,625 0.029
10. Safiah Binti Samat 123,750 0.015
Total 2,426,621 0.309
137
Annual Report 2010
Analysis of Shareholdings(cont’d.)
ANALYSIS BY SIZE OF HOLDINGS AS AT 29 APRIL 2011
SIZE OF HOLDINGS NO. OF HOLDERS % NO. OF SHARES %
1 - 99 87 1,618 4,805 0.000100 - 1,000 264 4.912 203,617 0.0251,001 - 10,000 3,495 65.035 18,889,245 2.41110,001 - 100,000 1,338 24.897 41,292,400 5.269100,001 - 39,183,129 (*) 187 3.479 268,533,510 34.26639,183,130 AND ABOVE (**) 3 0.055 454,729,035 58.026
Total 5,374 100.000 783,662,612 100.000
Remark : * - Less than 5% of Issued Shares** - 5% and above of Issued Shares
INFORMATION ON SUBSTANTIAL HOLDERS' HOLDINGS AS AT 29 APRIL 2011
No. Name Holdings %
1 SAR VENTURE HOLDINGS (M) SDN. BHD. 269,860,896 34.435
2 SAR VENTURE HOLDINGS (M) SDN. BHD. 112,306,239 14.330
3 LEMBAGA TABUNG HAJI 72,561,900 9.259
Total 454,729,035 58.024
138
ALAM MARITIM RESOURCES BERHAD (700849-K)
Analysis of Shareholdings(cont’d.)
LIST OF TOP 30 HOLDERS AS AT 29/04/2011(Without aggregating securities from different securities accounts belonging to the same registered holder)
No. Name Holdings %
1 SAR VENTURE HOLDINGS (M) SDN. BHD. 269,860,896 34.435
2 SAR VENTURE HOLDINGS (M) SDN. BHD. 112,306,239 14.330
3 LEMBAGA TABUNG HAJI 72,561,900 9.259
4 AMANAHRAYA TRUSTEES BERHAD 30,076,050 3.837SKIM AMANAH SAHAM BUMIPUTERA
5 AMANAHRAYA TRUSTEES BERHAD 29,090,550 3.712AMANAH SAHAM WAWASAN 2020
6 HSBC NOMINEES (TEMPATAN) SDN BHD 25,950,573 3.311EXEMPT AN FOR CREDIT SUISSE (SG BR-TST-TEMP)
7 AMANAHRAYA TRUSTEES BERHAD 19,569,350 2.497PUBLIC ISLAMIC SELECT TREASURES FUND
8 AMANAHRAYA TRUSTEES BERHAD 9,947,600 1.269PUBLIC ISLAMIC OPPORTUNITIES FUND
9 MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD 9,764,286 1.245GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD (DR)
10 HSBC NOMINEES (ASING) SDN BHD 8,491,050 1.083EXEMPT AN FOR JPMORGAN CHASE BANK, NATIONAL ASSOCIATION (NORGES BK NLEND)
11 MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD 7,524,786 0.960GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD (LGF)
12 AMANAHRAYA TRUSTEES BERHAD 7,404,400 0.944AMANAH SAHAM DIDIK
13 MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD 7,132,086 0.910GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD (LPF)
14 KOPERASI PERMODALAN FELDA MALAYSIA BERHAD 7,000,000 0.893
15 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 4,696,550 0.599EXEMPT AN FOR AMERICAN INTERNATIONAL ASSURANCE BERHAD
139
Annual Report 2010
Analysis of Shareholdings(cont’d.)
No. Name Holdings %
16 HDM NOMINEES (ASING) SDN BHD 4,500,000 0.574PHILLIP SECURITIES PTE LTD FOR HING YIH PEIR
17 UNIVERSAL TRUSTEE (MALAYSIA) BERHAD 3,750,000 0.478CIMB ISLAMIC SMALL CAP FUND
18 AMANAHRAYA TRUSTEES BERHAD 3,537,200 0.451PUBLIC ISLAMIC ALPHA-40 GROWTH FUND
19 MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD 2,812,500 0.358GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD (LSF)
20 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 2,800,000 0.357EMPLOYEES PROVIDENT FUND BOARD (AMUNDI)
21 RHB NOMINEES (TEMPATAN) SDN BHD 2,256,500 0.287RHB INVESTMENT MANAGEMENT SDN BHD FOR KUMPULAN WANG PERSARAAN (DIPERBADANKAN)
22 BANK KERJASAMA RAKYAT MALAYSIA 2,230,200 0.284BERHAD AS BENEFICIAL OWNER
23 AMANAHRAYA TRUSTEES BERHAD 2,134,400 0.272PUBLIC ISLAMIC EQUITY FUND
24 MAYBAN NOMINEES (TEMPATAN) SDN BHD 2,100,000 0.267MAYBAN TRUSTEES BERHAD FOR CIMB-PRINCIPAL SMALL CAP FUND (240218)
25 CITIGROUP NOMINEES (ASING) SDN BHD 2,075,700 0.264CBNY FOR DIMENSIONAL EMERGING MARKETS VALUE FUND
26 AMANAH RAYA BERHAD 2,075,000 0.264KUMPULAN WANG BERSAMA SYARIAH
27 DUSHYANTHI PERERA 1,990,000 0.253
28 FORUM VEST SDN. BHD. 1,941,450 0.247
29 KOPERASI PERMODALAN FELDA MALAYSIA BERHAD 1,724,200 0.220
30 UBS SECURITIES MALAYSIA SDN BHD 1,722,100 0.219EXEMPT AN CLR FOR CIMB-PRINCIPAL ASSET
MANAGEMENT BERHAD
SUMMARY
TOTAL NO. OF HOLDERS : 30
TOTAL HOLDINGS : 659,025,566
TOTAL PERCENTAGE (%) : 84.095
140
ALAM MARITIM RESOURCES BERHAD (700849-K)
NOTICE OF SIXTH ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the Sixth Annual General Meeting of Alam Maritim Resources Berhad will be held onWednesday, 15 June 2011 at 10.00 a.m., at Ballroom 1, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, 60000 KualaLumpur, for the transaction of the following business:
AGENDA
ORDINARY BUSINESS
1. To receive the audited Financial Statements for the financial year ended 31 December 2010and the Reports of the Directors and Auditors thereon.
2. To re-elect Puan Fina Norhizah binti Haji Baharu Zaman who retire in accordance withArticle 100 of the Company’s Articles of Association, and who, being eligible offer herself forre-election.
3. To re-elect the following Directors who retire by rotation in accordance with Article 94 ofthe Company’s Articles of Association, and who, being eligible offer themselves for re-election:
i. Encik Shaharuddin bin Warno @ Rahmad; and
ii. Encik Ahmad Hassanudin bin Ahmad Kamaluddin.
4. To appoint Messrs Ernst & Young as Auditors of the Company for the financial year ending31 December 2011 and to authorise the Directors to determine their remuneration.
SPECIAL BUSINESS
To consider and if thought fit, pass the following resolutions:
5. Authority for the Directors to issue shares pursuant to Section 132D of the Companies Act1965 (“the Act”). [Ordinary Resolution]
“THAT pursuant to Section 132D of the Act, the Articles of Association of the Company andsubject to the approvals of the relevant regulatory authorities, the Directors be and arehereby empowered to issue shares of the Company from time to time until the conclusionof the next Annual General Meeting, upon such terms and conditions and for such purposesas the Directors may, in their absolute discretion, deem fit provided that the aggregatenumber of shares to be issued pursuant to this resolution does not exceed 10% of the issuedand paid-up share capital of the Company for the time being.
AND THAT the Directors be empowered to take all steps as they may deem necessary orexpedient in order to implement, finalise and give full effect to the aforesaid authority.”
6. Proposed renewal of authority for the Company to purchase its own shares of up to 10% ofthe issued and paid-up capital of the Company. [Ordinary Resolution]
"THAT subject to Section 67A of the Companies Act 1965 (“the Act”) and Part IIIA of theCompanies Regulations 1966, the provisions of the Memorandum and Articles ofAssociations of the Company, the Main Market Listing Requirements (“MMLR”) of BursaMalaysia Securities Berhad ("Bursa Malaysia Securities"), and the approvals of the relevantregulatory authorities, the Directors of the Company be and are hereby authorised to makepurchase(s) of ordinary shares of RM0.25 each in the Company’s issued and paid-up sharecapital on Bursa Malaysia Securities subject to the following:
(Resolution 1)
(Resolution 2)
(Resolution 3)
(Resolution 4)
(Resolution 5)
(Resolution 6)
(Resolution 7)
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Annual Report 2010
Notice of Sixth Annual General Meeting(cont’d.)
i the maximum number of shares which may be purchased and/or held by the Companyshall be equivalent to 10% of the issued and paid-up share capital of the Company(“Shares”) for the time being;
ii the maximum fund to be allocated by the Company for the purpose of purchasing theShares shall not exceed the aggregate retained profits and share premium account ofthe Company;
iii the authority conferred by this resolution will commence immediately upon passingof this ordinary resolution and, unless renewed by an ordinary resolution passed bythe shareholders of the Company in general meeting, will expire:
(a) at the conclusion of the next Annual General Meeting (“AGM”) of the Company,unless earlier revoked or varied by an ordinary resolution of the shareholders ofthe Company in a general meeting; or
(b) upon the expiration of the period within which the next AGM is required by thelaw to be held;
whichever occurs first, but not so as to prejudice the completion of the purchase(s) bythe Company before the aforesaid expiry date and in any event, in accordance with theprovisions of the MMLR of Bursa Malaysia Securities or any other relevant authority; and
iv upon completion of the purchase(s) of the Shares by the Company, the Directors of theCompany be and are hereby authorised to deal with the Shares in the followingmanner:
(a) cancel the Shares so purchased; or
(b) retain the Shares so purchased as treasury shares; or
(c) retain part of the Shares so purchased as treasury shares and cancel theremainder; or
(d) distribute the treasury shares as share dividends to shareholders and/or resellthem on Bursa Malaysia Securities and/or cancel all orpart of them; or
in any other manner as prescribed by the Act, rules, regulations and guidelinespursuant to the Act and the requirements of Bursa Malaysia Securities and any otherrelevant authority for the time being in force;
AND THAT the Directors of the Company be and are hereby authorised to take all steps asare necessary or expedient to implement or to effect the purchase(s) of the Shares with fullpower to assent to any conditions, modifications, variations and/or amendments as may beimposed by the relevant authorities and to take all such steps as they may deem necessaryor expedient in order to implement, finalise and give full effect to the aforesaid authority.”
7. To transact any other business of which due notice shall be given in accordance with theCompanies Act 1965 and the Company’s Articles of Association.
BY ORDER OF THE BOARD
Haniza binti Sabaran (FCIS)Company Secretary
Kuala Lumpur20 May 2011
142
ALAM MARITIM RESOURCES BERHAD (700849-K)
Notice of Sixth Annual General Meeting(cont’d.)
Notes:
1. A proxy need not be a member.
2. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorisedin writing or, if the appointer is a corporation, either under Seal or under the hand of an officer or attorney dulyauthorised.
3. Except where Article 87 of the Company’s Articles of Association applies, where two (2) proxies are appointed, theappointment shall be invalid unless the proportion of shares to be represented by each proxy is specified.
4. The instrument appointing proxies must be deposited at the registered office of the Company not less than forty-eight(48) hours before the time for holding the meeting.
5. At the Sixth AGM, the resolution on ordinary business in respect of the approval on payment of Non-Executive Directors’Remuneration will not be tabled since the necessary approval for payment of Directors’ Remuneration not exceedingRM300,000 for ensuing financial year(s) were duly obtained at the Fourth AGM. Kindly refer to the Audited FinancialStatements for the year ended 31 December 2010 for details on Non-Executive Directors’ Remuneration.
6. Explanatory Notes on Special Business:-
i Authority to issue shares pursuant to Section 132D of the Companies Act 1965.
The proposed Ordinary Resolution, if passed will give Directors of the Company, authority to allot and issue sharesin the Company up to an amount not exceeding 10% of the total issued share capital of the Company for the timebeing, for such purposes as the Directors consider would be in the best interest of the Company. This authority,unless revoked or varied by the shareholders of the Company in general meeting will expire at the conclusion ofthe next Annual General Meeting.
ii Proposed renewal of authority for the Company to purchase its own shares.
The proposed Ordinary Resolution, if passed, is to empower the Directors to purchase the Company’s shares of upto 10% of the issued and paid-up capital of the Company by utilising the retained profits and the share premiumreserve of the Company.
Further information on the proposed Resolution 7 is set out in the Statement to shareholders dated 20 May 2011,circulated together with the Company’s 2010 Annual Report.
STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETINGPursuant to Paragraph 8.27 (2) of the Listing Requirements of Bursa Malaysia Securities Berhad
The details of Directors who are standing for re-election are as set out on pages 25, 26 and 27 of this Annual Report and theDirectors’ interest in the securities of the Company or its subsidiaries are disclosed on page 136 of this Annual Report.
I/We .................................................................................................................................................................................................(Block Letters)
of .....................................................................................................................................................................................................being a member of ALAM MARITIM RESOURCES BERHAD hereby appoint :-
Name/CDS Account No NRIC/Passport No No of shares %
Proxy 1 .............................................. .................................... ............................ ...................... or failing him/her
Proxy 2 .............................................. .................................... ............................ ...................... or failing him/her
Total ............................ 100
THE CHAIRMAN OF THE MEETING as my/our* proxy(ies) to vote for me/us* and on my/our* behalf at the Sixth Annual GeneralMeeting of the Company to be held at 10.00 a.m. on Wednesday, 15 June 2011 at Ballroom 1, Sime Darby Convention Centre,1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur, and at any adjournment thereof, in the manner indicated below:
No Resolutions For Against
1 To receive the Audited Financial Statement for the financial year ended 31 December 2010 and the Reports of Directors and Auditors thereon
2 To re-elect Puan Fina Norhizah binti Haji Baharu Zaman pursuant to Article 100
3 To re-elect Encik Shaharuddin bin Warno @ Rahmad pursuant to Article 94
4 To re-elect Encik Ahmad Hassanudin bin Ahmad Kamaluddin pursuant to Article 94
5 To appoint Messrs Ernst & Young as Auditors of the Company for the financial year ending 31 December 2011
6 To approve the Ordinary Resolution pursuant to Section 132D of the Companies Act 1965
7 To approve the Ordinary Resolution on proposed renewal of authority for the Companyto purchase its own shares
Please indicate with a check mark (“ ”) in the appropriate box against the resolution how you wish your proxy to vote. Inthe absence of specific instructions, the proxy will vote or abstain at his/her discretion.
Date Signature/Common Seal of Shareholder
Notes:
1. A proxy need not be a member.2. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or, if the
appointer is a corporation, either under Seal or under the hand of an officer or attorney duly authorised.3. Except where Article 87 of the Company’s Articles of Association applies, where two (2) proxies are appointed, the appointment shall be invalid
unless the proportion of shares to be represented by each proxy is specified.4. The instrument appointing proxies must be deposited at the registered office of the Company not less than forty-eight (48) hours before the time
for holding the meeting.
* Delete whichever is inapplicable.
Form of Proxy No. of Shares
CDS Account No.
NRIC/Company No.
Tel & Fax No.
THE COMPANY SECRETARY
ALAM MARITIM RESOURCES BERHAD
38F, Level 3, Jalan Radin Anum
Bandar Baru Sri Petaling
57000 Kuala Lumpur
MALAYSIA
STAMP
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