Financial Statements Directors Report 44 Statement by Directors 49 Statutory Declaration 49 Independent Auditors Report 50 Statements of Comprehensive Income 52 Statements of Financial Position 53 Consolidated Statement of Changes in Equity 54 Statement of Changes in Equity 55 Statements of Cash Flows 56 Notes to the Financial Statements 58 Supplementary Information 105
Directors Report The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 March. Principal Activities The principal activities of the Company are investment holding and the provision of management services to the subsidiaries. The principal activities of the subsidiaries are to design, construct, operate and maintain Lebuhraya Damansara- Puchong (the Highway ) and to manage its toll operations as disclosed further in Note 35 to the financial statements, and investment holding. There has been no significant change in the nature of the principal activities during the financial year. Results Group Company Profit for the year 137,889 89,951 There was no material transfer to or from reserves or provisions during the financial year other than as disclosed in the financial statements. In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of material and unusual nature. Dividends The amounts of dividends declared and paid by the Company since 31 March were as follows: In respect of the financial year ended 31 March : First interim single tier dividend of 10 sen per share declared on 28 August and paid on 26 September 51,526 Second interim single tier dividend of 10 sen per share declared on 27 February and paid on 25 March 51,555 103,081 44 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Directors Report 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: Tan Sri Dato Ir (Dr) Wan Abdul Rahman bin Haji Wan Yaacob Ir Haji Yusoff bin Daud Dato Ir Chew Swee Hock Dato Haji Azmi bin Mat Nor Mr Saw Wah Theng Dato Ir Ha Tiing Tai (appointed w.e.f. 24.11.14) Ms Lee Choi Chew (appointed w.e.f. 27.11.14) Dato Lin Yun Ling (resigned w.e.f. 24.11.14) Tan Sri Dato Nasruddin bin Bahari (retired w.e.f. 28.8.14) Dato Ng Kee Leen (retired w.e.f. 28.8.14) Directors Benefits Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate, other than those arising from the share options granted under the Employee Share Option Scheme ( ESOS ). Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a full-time employee of the Company as disclosed in Note 7 to the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest, except as disclosed in Note 34 to the financial statements. Directors Interest According to the register of directors shareholdings, the interests of directors in office at the end of the financial year in shares and options over shares in the Company and its related corporations during the financial year were as follows: Number of ordinary shares of RM0.20 each 1 April / date of appointment Bought/ ESOS Exercised Sold 31 March The Company Direct Interest Tan Sri Dato Ir (Dr) Wan Abdul Rahman bin Haji Wan Yaacob 169,500 20,000 189,500 Ir Haji Yusoff bin Daud 200,000 (48,600) 151,400 Dato Ir Chew Swee Hock 149,500 20,000 169,500 Dato Haji Azmi bin Mat Nor 100,000 100,000 Mr Saw Wah Theng 100,000 100,000 Dato Ir Ha Tiing Tai 465,000 465,000 Indirect Interest Ir Haji Yusoff bin Daud * 328,499 328,499 Mr Saw Wah Theng ^ 90 90 Dato Ir Ha Tiing Tai ^ 14,202 14,202 * Deemed interest held through Irama Duta Sdn Bhd ^ Shares held by family member LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 45
Directors Report Directors Interest (cont d) Employee Share Option Scheme Grant date Option price RM Number of options over ordinary shares of RM0.20 each 1 April Granted Exercised 31 March The Company Tan Sri Dato Ir (Dr) Wan Abdul Rahman bin Haji Wan Yaacob 9 Apr 14 3.44 20,000 (20,000) Ir Haji Yusoff bin Daud 9 Apr 14 3.44 200,000 200,000 Dato Ir Chew Swee Hock 9 Apr 14 3.44 20,000 (20,000) Dato Haji Azmi bin Mat Nor 9 Apr 14 3.44 20,000 20,000 Mr Saw Wah Theng 9 Apr 14 3.44 20,000 20,000 Issue of Shares During the financial year, the issued and paid-up ordinary share capital of the Company was increased from RM103,029,524 to RM103,109,124 following the issuance of 398,000 new ordinary shares of RM0.20 each. The ordinary shares were issued for cash pursuant to the Employee Share Option Scheme at the issue prices of RM3.44 and RM3.46. The new ordinary shares issued ranked pari passu in all respects with the existing ordinary shares of the Company. Subsequent to the financial year, the issued and paid-up ordinary share capital of the Company was increased from RM103,109,124 to RM103,307,724 via the issuance of 993,000 new ordinary shares of RM0.20 each for cash pursuant to the Employee Share Option Scheme at the issue prices of RM3.44 and RM3.46. The new ordinary shares issued rank pari passu in all respects with the existing ordinary shares of the Company. Employee Share Option Scheme ( ESOS ) At the Annual General Meeting held on 27 August 2013, the shareholders of the Company approved the implementation of a new ESOS upon expiry of the previous ESOS. The new ESOS shall be in force for a period of 5 years expiring on 8 October 2018. The shareholders of the Company also approved the grant of options to all existing non-executive directors of the Company, up to 100,000 options each, to subscribe for such number of new ordinary shares of RM0.20 each in the Company under the ESOS, provided that: (i) not more than 50% of the ordinary shares of RM0.20 each in the Company available under the ESOS shall be allocated, in aggregate, to the directors and senior management of the Company; and (ii) not more than 10% of the ordinary shares of RM0.20 each in the Company available under the ESOS shall be allocated to the directors, if the directors, either singly or collectively through persons connected with them, hold 20% or more of the issued and paid-up capital of the Company. Pursuant to the ESOS, options to subscribe for 4,572,000 new ordinary shares had been granted to eligible employees and directors, and options to subscribe for 4,004,000 new ordinary shares of RM0.20 each remained unexercised as at 31 March. The movement of the options during the financial year in respect of ESOS and the salient features of ESOS are disclosed in Note 22 to the financial statements. 46 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Directors Report Directors Interest (cont d) Employee Share Option Scheme ( ESOS ) (cont d) The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose the names of option holders, other than directors, who have been granted options to subscribe for less than 64,000 ordinary shares of RM0.20 each. The names of option holders granted options to subscribe for 64,000 or more ordinary shares of RM0.20 each during the financial year are as follows: Name Sazally bin Saidi Richard Lim Kim Ong Francisco A/L Anthony Doss Yau Ti Sin Stephen Low Chee Weng Norhashima binti Mohamed Hassan Nor Azman bin Ishak Jane Khoo Ai Leng Oon Kam Lam Expiry date 8 Oct 2018 8 Oct 2018 8 Oct 2018 8 Oct 2018 8 Oct 2018 8 Oct 2018 8 Oct 2018 8 Oct 2018 8 Oct 2018 Number of share options granted 400,000 121,000 77,000 70,000 70,000 70,000 64,000 64,000 64,000 Details of options granted to directors are disclosed in the section on Directors Interests in this report. Other Statutory Information (a) Before the statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the directors took reasonable steps: (i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that there were no known bad debts and that no provision for doubtful debts was necessary; and (ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise. (b) At the date of this report, the directors are not aware of any circumstances which would render: (i) it necessary to write off any bad debts or to make any provision for doubtful debts in respect of these financial statements; and (ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading. (c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. (d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading. LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 47
Directors Report Other Statutory Information (cont d) (e) At the date of this report, there does not exist: (i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or (ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year. (f) In the opinion of the directors: (i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and (ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made. 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 28 May. Tan Sri Dato Ir (Dr) Wan Abdul Rahman bin Haji Wan Yaacob Chairman Ir Haji Yusoff bin Daud Executive Director 48 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Statement by Directors Pursuant to Section 169(15) of the Companies Act, 1965 We, Tan Sri Dato Ir (Dr) Wan Abdul Rahman bin Haji Wan Yaacob and Ir Haji Yusoff bin Daud, being two of the directors of Lingkaran Trans Kota Holdings Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 52 to 104 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 March and of their financial performance and cash flows for the year then ended. The information set out in Note 39 to the financial statements on page 105 has been prepared in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants. Signed on behalf of the Board in accordance with a resolution of the directors dated 28 May. Tan Sri Dato Ir (Dr) Wan Abdul Rahman bin Haji Wan Yaacob Chairman Ir Haji Yusoff bin Daud Executive Director Statutory Declaration Pursuant to Section 169(16) of the Companies Act, 1965 I, Richard Lim Kim Ong, the officer primarily responsible for the financial management of Lingkaran Trans Kota Holdings Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 52 to 105 are in my opinion correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by the abovenamed Richard Lim Kim Ong at Petaling Jaya in the state of Selangor Darul Ehsan on 28 May Richard Lim Kim Ong Before me, Commissioner for Oaths LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 49
Independent Auditors Report to the members of Lingkaran Trans Kota Holdings Berhad (Incorporated in Malaysia) Report on the Financial Statements We have audited the financial statements of Lingkaran Trans Kota Holdings Berhad, which comprise the statements of financial position as at 31 March of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 52 to 104. Directors Responsibility for the Financial Statements The directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal controls as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 March and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act, 1965 in Malaysia ( Act ), we also report the following: (a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries have been properly kept in accordance with the provisions of the Act. (b) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. (c) The auditors reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act. 50 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Independent Auditors Report to the members of Lingkaran Trans Kota Holdings Berhad (Incorporated in Malaysia) (cont d) Other Reporting Responsibilities The supplementary information set out in Note 39 on page 105 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants ( MIA Guidance ) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad. Other Matters This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. Ernst & Young AF: 0039 Chartered Accountants Abraham Verghese A/L T.V. Abraham No. 1664/10/16(J) Chartered Accountant Kuala Lumpur, Malaysia 28 May LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 51
Statements of Comprehensive Income For the year ended 31 March Note Group Company Revenue 4 380,733 373,932 101,052 61,783 Employee benefits expense 5 (24,376) (22,491) (2,116) (1,988) Maintenance expenses (26,022) (25,679) Depreciation and amortisation 12, 13 & 14 (62,646) (60,777) (6) (5) Other expenses (8,685) (9,014) (397) (450) (121,729) (117,961) (2,519) (2,443) 259,004 255,971 98,533 59,340 Other income 6 10,932 11,133 557 1,234 Finance costs 8 (83,722) (87,431) (8,786) (8,249) Share of results of an associate 741 (7,943) Profit before tax 9 186,955 171,730 90,304 52,325 Income tax expense 10 (49,066) (37,599) (353) (693) Profit for the year 137,889 134,131 89,951 51,632 Other comprehensive income Other comprehensive income not to be reclassified to profit or loss in subsequent periods: Re-measurement losses on defined benefit plan (577) (87) Income tax effect 118 Share of other comprehensive loss of an associate (83) Other comprehensive loss for the year, net of tax (542) (87) Total comprehensive income for the year, net of tax 137,889 133,589 89,951 51,545 Basic earnings per share attributable to equity holders of the Company (sen per share) 11(a) 26.76 26.09 Diluted earnings per share attributable to equity holders of the Company (sen per share) 11(b) 26.74 26.09 The accompanying accounting policies and explanatory information form an integral part of the financial statements. 52 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Statements of Financial Position As at 31 March Note Group Company Assets Non-current assets Highway development expenditure ( HDE ) 12 1,603,508 1,662,967 Plant and equipment 13 2,017 1,745 17 15 Other intangible assets Investments in subsidiaries Unquoted shares, at cost 14 15 1,243 796 50,461 50,461 Investment in an associate 16 172,027 171,286 392,928 392,928 1,778,795 1,836,794 443,406 443,404 Current assets Sundry receivables 17 69,196 67,731 161 163 Amount due from subsidiaries 18 281 258 Amount due from an associate 18 11,175 9,448 10,731 8,641 Tax recoverable 200 200 Investment securities 19 5,210 5,039 5,210 5,039 Cash and bank balances 20 329,427 354,422 7,020 11,504 415,208 436,640 23,603 25,605 Total assets 2,194,003 2,273,434 467,009 469,009 Equity and liabilities Equity attributable to equity holders of the Company Share capital 21 103,109 103,030 103,109 103,030 Share premium 73,190 71,756 73,190 71,756 Other reserve 22 1,445 1,445 Retained earnings 23 359,411 324,603 142,853 155,983 Total equity 537,155 499,389 320,597 330,769 Liabilities Non-current liabilities Provision for heavy repairs 24 22,785 26,205 Deferred revenue 25 22,518 24,080 Deferred tax liabilities 26 235,971 240,253 Borrowings 27 1,283,001 1,275,100 Amount due to a subsidiary 18 135,164 Retirement benefit obligations 28 2,132 1,884 411 365 1,566,407 1,567,522 411 135,529 Current liabilities Provision for land acquisition cost 29 1,145 Borrowings 27 114,200 Amount due to a subsidiary 18 145,476 2,236 Sundry payables 30 80,500 81,890 525 429 Income tax payable 9,941 9,288 46 90,441 206,523 146,001 2,711 Total liabilities 1,656,848 1,774,045 146,412 138,240 Total equity and liabilities 2,194,003 2,273,434 467,009 469,009 The accompanying accounting policies and explanatory information form an integral part of the financial statements. LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 53
Consolidated Statement of Changes in Equity For the year ended 31 March Note Share capital Non-distributable Share premium Other reserve Distributable Retained earnings Total equity Group At 1 April 2013 102,312 58,069 1,181 278,561 440,123 Total comprehensive income 133,589 133,589 Transactions with owners Issue of ordinary shares pursuant to ESOS 21 718 12,067 12,785 Share options granted under ESOS 22 439 439 Share options exercised 22 1,620 (1,620) Dividends 31 (87,547) (87,547) Total transactions with owners 718 13,687 (1,181) (87,547) (74,323) At 31 March 103,030 71,756 324,603 499,389 At 1 April 103,030 71,756 324,603 499,389 Total comprehensive income 137,889 137,889 Transactions with owners Issue of ordinary shares pursuant to ESOS 21 79 1,290 1,369 Share options granted under ESOS 22 1,589 1,589 Share options exercised 22 144 (144) Dividends 31 (103,081) (103,081) Total transactions with owners 79 1,434 1,445 (103,081) (100,123) At 31 March 103,109 73,190 1,445 359,411 537,155 The accompanying accounting policies and explanatory information form an integral part of the financial statements. 54 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Statement of Changes in Equity For the year ended 31 March Note Share capital Non-distributable Share premium Other reserve Distributable Retained earnings Total equity Company At 1 April 2013 102,312 58,069 1,181 191,985 353,547 Total comprehensive income 51,545 51,545 Transactions with owners Issue of ordinary shares pursuant to ESOS 21 718 12,067 12,785 Share options granted under ESOS 22 439 439 Share options exercised 22 1,620 (1,620) Dividends 31 (87,547) (87,547) Total transactions with owners 718 13,687 (1,181) (87,547) (74,323) At 31 March 103,030 71,756 155,983 330,769 At 1 April 103,030 71,756 155,983 330,769 Total comprehensive income 89,951 89,951 Transactions with owners Issue of ordinary shares pursuant to ESOS 21 79 1,290 1,369 Share options granted under ESOS 22 1,589 1,589 Share options exercised 22 144 (144) Dividends 31 (103,081) (103,081) Total transactions with owners 79 1,434 1,445 (103,081) (100,123) At 31 March 103,109 73,190 1,445 142,853 320,597 The accompanying accounting policies and explanatory information form an integral part of the financial statements. LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 55
Statements of Cash Flows For the year ended 31 March Group Company Cash flows from operating activities Profit before tax 186,955 171,730 90,304 52,325 Adjustments for: Amortisation of HDE 61,729 59,843 Amortisation of other intangible assets 165 132 Depreciation of plant and equipment 752 802 6 5 Plant and equipment written off 36 12 Other intangible assets written off 1 Gain on disposal of plant and equipment (112) (45) Share of results of an associate (741) 7,943 Deferred revenue recognised (1,562) (1,562) Interest income (4,944) (4,666) (358) (953) Distribution from investment securities (171) (155) (171) (155) Profit element and fees on financing activities 75,821 79,322 - Unwinding of discount 7,901 8,109 8,786 8,249 Profit sharing on Islamic investment (5,574) (5,532) (28) (126) Dividend income (100,000) (60,000) (Decrease)/increase in provision for short term accumulating compensated absences (21) 29 (27) 1 Provision for retirement benefits 248 227 46 42 Share options granted under ESOS 1,217 335 270 17 Provision for heavy repairs 8,203 7,565 Operating profit/(loss) before working capital changes 329,903 324,089 (1,172) (595) (Increase)/decrease in sundry receivables (1,490) (395) 1 (13) (Decrease)/increase in sundry payables (1,266) (6,771) 123 1 Increase in amount due to subsidiary 214 315 Increase in amount due from an associate (1,355) (1,941) (1,718) (1,436) Cash generated from/(used in) operations 325,792 314,982 (2,552) (1,728) Income tax paid (52,895) (50,905) (599) (752) Net cash generated from/(used in) operating activities 272,897 264,077 (3,151) (2,480) 56 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Statements of Cash Flows For the year ended 31 March (cont d) Group Company Cash flows from investing activities Payment for HDE (1,866) (1,761) Purchase of plant and equipment (1,060) (1,126) (8) (6) Purchase of other intangible assets (613) (174) Payment for heavy repairs (11,623) (219) Purchase of investment securities (171) (155) (171) (155) Payment for cost in relation to acquisition of land (20) Interest received 4,891 4,636 359 974 Profit sharing on Islamic investment received 5,652 5,411 28 127 Distributions received from investment securities 171 155 171 155 Dividends received from a subsidiary 100,000 60,000 Proceeds from disposal of plant and equipment 112 45 Net cash (used in)/generated from investing activities (4,507) 6,792 100,379 61,095 Cash flows from financing activities Proceeds from issuance of ordinary shares via exercise of ESOS 1,369 12,785 1,369 12,785 Profit element and fees on financing activities paid (77,473) (80,171) Dividends paid (103,081) (87,547) (103,081) (87,547) Repayment of reimbursable land cost (39,200) (29,400) Repayment of IMTN I (75,000) (40,000) Net cash used in financing activities (293,385) (224,333) (101,712) (74,762) Net (decrease)/increase in cash and cash equivalents (24,995) 46,536 (4,484) (16,147) Cash and cash equivalents at beginning of the year 354,422 307,886 11,504 27,651 Cash and cash equivalents at end of the year (Note 20) 329,427 354,422 7,020 11,504 The accompanying accounting policies and explanatory information form an integral part of the financial statements. LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 57
Notes to the Financial Statements 31 March 1. Corporate Information The Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at 2nd Floor, Kompleks Operasi Litrak, KM 19 Lebuhraya Damansara-Puchong, Bandar Sunway PJS 9, 47500 Petaling Jaya, Selangor Darul Ehsan. The principal activities of the Company are investment holding and the provision of management services to subsidiaries. The principal activities of the subsidiaries are to design, construct, operate and maintain Lebuhraya Damansara- Puchong (the Highway ) and to manage its toll operations based on the arrangement as elaborated further in Note 35, and investment holding. There have been no significant changes in the nature of the principal activities during the financial year. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 28 May. 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 Malaysian Financial Reporting Standards ( MFRS ), International Financial Reporting Standards ( IFRS ) and the requirements of the Companies Act, 1965 in Malaysia. The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below. The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand () except when otherwise indicated. 2.2 Changes in Accounting Policies The accounting policies adopted are consistent with those of the previous financial year except as follows: On 1 April, the Group and the Company adopted the following amended Malaysian Financial Reporting Standards (MFRSs) and IC Interpretation mandatory for annual financial periods beginning on or after 1 January : Effective for Annual Periods Beginning On or After 1 January : Amendments to MFRS 10, MFRS 12 and MFRS 127 Amendments to MFRS 132 Amendments to MFRS 136 Amendments to MFRS 139 IC Interpretation 21 Investment Entities Offsetting Financial Assets and Financial Liabilities Recoverable Amount Disclosures for Non-Financial Assets Novation of Derivatives and Continuation of Hedge Accounting Levies The adoption of the amended standards did not have any material effect on the financial performance or position of the Group and the Company. 58 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 2. Summary of Significant Accounting Policies (cont d) 2.3 MFRSs and Amendments to MFRSs Issued But Not Yet Effective At the date of authorisation of the audited financial statements, the following MFRSs and Amendments to MFRSs were issued but not yet effective and have not been applied by the Group and the Company: Effective for Annual Periods Beginning On or After 1 July : Amendments to MFRSs Amendments to MFRSs Amendments to MFRS 119 Annual improvements to MFRSs 2010 2012 Cycle Annual improvements to MFRSs 2011 2013 Cycle Defined Benefit Plans: Employee Contributions Effective for Annual Periods Beginning On or After 1 January 2016: Amendments to MFRS 11 Amendments to MFRS 116 and MFRS 138 Amendments to MFRS 127 Amendments to MFRS 10 and MFRS 128 Amendments to MFRSs Amendments to MFRS 101 Amendments to MFRS 10, MFRS 12 and MFRS 128 Amendments to MFRS 116 and MFRS 141 Accounting for Acquisitions of Interests in Joint Operations Clarification of Acceptable Methods of Depreciation and Amortisation Equity Method in Separate Financial Statements Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Annual Improvements to MFRSs 2012 Cycle Disclosure Initiative Investment Entities: Applying the Consolidation Exception Agriculture: Bearer Plants Effective for Annual Periods Beginning On or After 1 January 2017: MFRS 15 Revenue from Contracts with Customers Effective for Annual Periods Beginning On or After 1 January 2018: MFRS 9 Financial Instruments (IFRS 9 as issued by IASB in July ) The directors expect that the adoption of the above standards will have no material impact on the financial statements in the period of initial application except as discussed below. Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of Depreciation and Amortisation The amendments clarify that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through the use of an asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortise intangible assets. The amendments are effective prospectively for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments will be effective to the Group s financial statements ending 31 March 2017. LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 59
Notes to the Financial Statements 31 March 2. Summary of Significant Accounting Policies (cont d) 2.3 MFRSs and Amendments to MFRSs Issued But Not Yet Effective (cont d) MFRS 9 Financial Instruments In November, MASB issued the final version of MFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous versions of MFRS 9. The standard introduces new requirements for classification and measurement, impairment and hedge accounting. MFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory. The adoption of MFRS 9 will have an effect on the classification and measurement of the Group s financial assets, but no impact on the classification and measurement of the Group s financial liabilities. 2.4 Basis of Consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at and for the year ended 31 March of each year. The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. In preparing consolidated financial statements, all intercompany balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full. Subsidiaries are all entities over which the Group has control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has: power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); exposure, or rights, to variable returns from its involvement with the investee; and the ability to use its power over the investee to affect its returns. When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: the contractual arrangement with the other vote holders of the investee rights arising from other contractual arrangements the Group s voting rights and potential voting rights The Group re-assessed whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group losses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary. Acquisitions of subsidiaries are accounted for using the acquisition method of accounting. The identifiable assets acquired and the liabilities assumed are measured at their fair values at the acquisition date. Acquisition costs incurred are expensed and included in administrative expenses. The difference between these fair values and the fair value of the consideration (including the fair value of any pre-existing investment in the acquiree) is goodwill or a discount on acquisition. 60 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 2. Summary of Significant Accounting Policies (cont d) 2.4 Basis of Consolidation (cont d) Changes in the Group s equity interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their respective interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in shareholders equity. If the Group loses control over a subsidiary, it: derecognises the assets (including goodwill) and liabilities of the subsidiary derecognises the carrying amount of any non-controlling interests derecognises the cumulative translation differences recorded in equity recognises the fair value of the consideration received recognises the fair value of any investment retained recognises any surplus or deficit in profit or loss reclassifies the parent s share of components previously recognised in OCI to profit or loss or retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities In the Company s separate financial statements, investments in subsidiaries is accounted for at cost less any impairment charges. Dividends received from subsidiaries are recorded as a component of revenue in the Company s separate statement of comprehensive income. 2.5 Investment in An Associate An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies. An associate is equity accounted for from the date on which the investee becomes an associate. Under the equity method, the investment in an associate is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group s share of net assets of the associate since the acquisition date. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. The statement of comprehensive income reflects the Group s share of the results of operations of the associate. Any change in OCI of the investee is presented as part of the Group s OCI. In addition, when there is a change recognised directly in the equity of the associate, the Group recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the investment in the associate. The aggregate of the Group s share of profit or loss of an associate is shown on the face of the statement of comprehensive income outside operating profit and represents profit or loss after tax. The financial statements of the associate are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group. LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 61
Notes to the Financial Statements 31 March 2. Summary of Significant Accounting Policies (cont d) 2.5 Investment in An Associate (cont d) After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in an associate. The Group determines at each reporting date whether there is any objective evidence that the investment in an associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value. Impairment loss is recognised in profit or loss. Upon loss of significant influence over the associate, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss. In the Company s separate financial statements, investment in an associate is stated at cost less impairment losses. On disposal of such investment, the difference between net disposal proceeds and their carrying amounts is charged or credited to profit or loss. 2.6 Plant and Equipment All items of plant and equipment are initially recorded at cost. The cost of an item of plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Subsequent to recognition, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. When significant parts of plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets, at the following annual rates: Renovation 33 1/3% Furniture and fittings 20% Office equipment 20% Operation tools and equipment 20% to 33 1/3% Motor vehicles 20% Computer equipment 10% Assets under construction included in plant and equipment are not depreciated as these assets are not yet available for use. The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate. An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is derecognised. 62 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 2. Summary of Significant Accounting Policies (cont d) 2.7 Highway Development Expenditure ( HDE ) Highway development expenditure ( HDE ) is classified as intangible assets and is measured on initial recognition at cost. Following initial recognition, HDE is carried at cost less any accumulated amortisation and any accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.15. HDE comprises construction and development expenditure (including interest and fee charges relating to financing of the construction and development of the Highway) incurred by a subsidiary in connection with the Concession. Upon completion of construction works of the Highway and commencement of tolling operations, the cumulative actual expenditure incurred is amortised to profit or loss based on the following formula: (Cumulative Actual Toll Revenue to date) (Cumulative (Cumulative Actual Actual HDE) Accumulated Toll Revenue to date amortisation Less plus Projected Total at beginning Toll Revenue for the of the financial remaining concession year period) The projected total toll revenue of the Concession is derived based on the traffic volumes projected by an independent traffic consultant in a latest available projection study commissioned by a subsidiary, taking into account the toll rates as provided in the Concession Agreement. 2.8 Other Intangible Assets Other intangible assets acquired separately are measured initially at cost. Following initial recognition, other intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.15. The useful lives of other intangible assets are assessed to be either finite or indefinite. Other intangible assets with finite lives are amortised on a straight-line basis over the estimated economic useful lives and assessed for impairment whenever there is an indication that the other intangible asset may be impaired. The amortisation period and the amortisation method for an other intangible asset with a finite useful life are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on other intangible assets with finite lives is recognised in profit or loss. The following annual amortisation rate is applied: Computer software and licences 10% Gains or losses arising from derecognition of an other intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised. 2.9 Deferred Revenue Deferred revenue comprises fees received from third parties for the use of ancillary facilities along the Highway, which is recognised in profit or loss on a straight-line basis over the Concession Period. LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 63
Notes to the Financial Statements 31 March 2. Summary of Significant Accounting Policies (cont d) 2.10 Provision for Liabilities Provisions are recognised when the Group and the Company have a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. 2.11 Borrowing Costs Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use. All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds. 2.12 Income Taxes (a) Current Tax Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside 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 the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all temporary differences, except where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of taxable temporary differences associated with investments in subsidiaries and associate, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of deductible temporary differences associated with investments in subsidiaries and associate, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. 64 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 2. Summary of Significant Accounting Policies (cont d) 2.12 Income Taxes (cont d) (b) Deferred Tax (cont d) The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. 2.13 Fair Value Measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible to the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: (i) Level 1 unadjusted quoted market prices in active markets for identical assets or liabilities (ii) Level 2 inputs other than quoted market prices that are observable either directly or indirectly (iii) Level 3 input that is significant to the fair value measurement is unobservable LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 65
Notes to the Financial Statements 31 March 2. Summary of Significant Accounting Policies (cont d) 2.13 Fair Value Measurement (cont d) For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. 2.14 Revenue Recognition Revenue and other income are recognised to the extent that it is probable that the economic benefits will flow to the Group and the amount can be reliably measured. Revenue is measured at the fair value of consideration received or receivable. (i) Revenue (a) Toll Revenue Toll revenue includes toll collection and Government compensation. Toll collection is accounted for as and when toll is chargeable for the usage of the Highway. The amount of Government compensation are recognised in profit or loss for the year after taking into consideration the effects of the concession arrangement as disclosed in Note 35. (b) Dividend Income Dividend income is recognised when the right to receive payment is established. (c) Management Fees Management fees are recognised when services are rendered. (d) Licence Fee Licence fee from occupying the ancillary facilities along the Highway is recognised on an accrual basis. (e) Advertising Income Advertising income is recognised on an accrual basis. (ii) Other Income Interest Income Interest income is recognised on a time proportion that reflects the effective yield on the asset. 2.15 Impairment of Non-Financial Assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset s recoverable amount. An asset s recoverable amount is the higher of an asset s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units ( CGU )). 66 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 2. Summary of Significant Accounting Policies (cont d) 2.15 Impairment of Non-Financial Assets (cont d) In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis. Impairment losses are recognised in profit or loss in the period in which it arises. An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss. 2.16 Financial Assets Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss and loans and receivables. (a) Financial Assets at Fair Value Through Profit or Loss Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are financial assets acquired principally for the purpose of selling in the near term. Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income. Financial assets at fair value through profit or loss of the Group and of the Company comprising investment securities are classified as current as they are held primarily for trading purposes. (b) Loans and Receivables Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 67
Notes to the Financial Statements 31 March 2. Summary of Significant Accounting Policies (cont d) 2.16 Financial Assets (cont d) (b) Loans and Receivables (cont d) 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. Loans and receivables of the Group and the Company include sundry receivables, amount due from subsidiaries, amount due from an associate and cash and bank balances. The Group and the Company did not designate any financial assets at held to maturity or available-for-sale. A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received is recognised in profit or loss. 2.17 Impairment of Financial Assets The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. Objective evidence of impairment for a portfolio of receivables could include the Group s and the Company s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables. If any such evidence exists, the amount of impairment loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the financial asset s original effective interest rate. The impairment loss is recognised in profit or loss. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets. If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss. 2.18 Financial Liabilities Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial liabilities, within the scope of MFRS 139, are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. The Group and the Company did not designate any financial liabilities at fair value through profit or loss. The Group s and the Company s other financial liabilities include sundry payables, borrowings and amount due to a subsidiary. Sundry payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. 68 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 2. Summary of Significant Accounting Policies (cont d) 2.18 Financial Liabilities (cont d) Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Borrowings of the Group are as disclosed in Note 27. Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss. 2.19 Employee Benefits (a) Short Term Benefits Salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short term non-accumulating compensated absences such as sick leave are recognised when the absences occur. (b) Defined Contribution Plans The Group participates in the national pension schemes as defined by the laws of Malaysia. The Group makes contributions to the Employees Provident Fund in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed. (c) Defined Benefit Plans The Group operates an unfunded Retirement Benefit Scheme (the Scheme ) for eligible employees. The cost of providing benefits under the Scheme is determined using the projected unit credit cost method. Re-measurements, comprising actuarial gains and losses, are recognised immediately in the consolidated statement of financial position with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods. The Group and the Company recognise service costs comprising current service costs, past service costs and gains or losses on curtailments, non-routine settlements and net interest expense or income in profit or loss. (d) Share-Based Payments The Company s Employee Share Option Scheme ( ESOS ), an equity-settled, share-based compensation plan, allows the Group s eligible employees and directors to acquire ordinary shares of the Company. LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 69
Notes to the Financial Statements 31 March 2. Summary of Significant Accounting Policies (cont d) 2.19 Employee Benefits (cont d) (d) Share-Based Payments (cont d) The total fair value of share options granted to eligible employees and directors is recognised as an employee cost with a corresponding increase in the share option 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 vesting conditions upon which the options were granted but excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable on vesting date. At each reporting date, the Group revises its estimates of the number of options that are expected to become exercisable on vesting date. It recognises the impact of the revision of original estimates, if any, in the profit or loss, and a corresponding adjustment to equity over the remaining vesting period. The equity amount is recognised in the share option reserve until the option is exercised, upon which it will be transferred to share premium, or until the option expires, upon which it will be transferred directly to retained earnings. The proceeds received net of any directly attributable transaction costs are credited to equity when the options are exercised. 2.20 Cash and Cash Equivalents Cash and cash equivalents comprise cash at bank and on hand, demand deposits and short term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. 2.21 Share Capital and Share Issuance Expenses An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the Company after deducting all of its liabilities. Ordinary shares are equity instruments. Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Dividends on ordinary shares are recognised in equity in the period in which they are declared. 3. Significant Accounting Judgements and Estimates The preparation of the Group s and of the Company s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. Key Sources of Estimation Uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (a) Share-Based Payments The cost of providing share-based payments to employees and directors is charged to profit or loss. The cost is determined based on the fair value of the options and the number of options expected to vest. The fair value of each option is determined using the binomial tree model. Details of assumptions made in respect of the share-based payment scheme are disclosed in Note 22(e). 70 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 3. Significant Accounting Judgements and Estimates (cont d) Key Sources of Estimation Uncertainty (cont d) (b) Amortisation of Highway Development Expenditure ( HDE ) The cost of HDE is amortised over the Concession Period by applying the formula in Note 2.7. The denominator of the formula includes projected total toll revenue of the Concession and is based on the latest available base case traffic volume projections prepared by an independent traffic consultant multiplied by the toll rates in accordance with the concession arrangement as described under Note 35. The assumptions to arrive at the traffic volume projections take into consideration the growth rate based on current market and economical conditions. Changes in the expected traffic volume could impact future amortisation charges. At the reporting date, if projected total toll revenue for the remaining concession period had been 1% lower/higher, with all variables held constant, the Group s profit before tax would have been approximately RM3,970,000 (: RM3,632,000) lower/higher, arising mainly as a result of lower/higher expected traffic volume. (c) Investment in An Associate The investment in an associate, Sistem Penyuraian Trafik KL Barat Holdings Sdn Bhd ( SPRINT ), is made for long term strategic business purposes. At reporting date, management determine whether the carrying amount of the Group s and the Company s investment in SPRINT is impaired. This involves measuring the recoverable amounts which includes fair value less costs to sell and valuation techniques. Valuation techniques include the use of discounted cash flow analysis, considering the current market value indicators. These estimates provide reasonable approximations to the computation of recoverable amounts. In performing discounted cash flow analysis, discount rate and growth rates used reflect, amongst others, the maturity of the business development cycle as well as the industry growth potential. The discount rate applied to the cash flow projection is 12.4% (: 12.4%). The growth rates used to forecast the projected cash flows for the following year approximate the performance of SPRINT based on forecast by an independent professional valuer. Based on management s review, no impairment is required for the Group s and the Company s investment in SPRINT during the current financial year. (d) Provision for Heavy Repairs Provision for heavy repairs is made based on independent pavement condition assessment that estimates the future requirements for pavement resurfacing and other incidental costs. Changes to the expected level of usage and technological developments could impact future requirements for resurfacing, and therefore, the provision could be revised. LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 71
Notes to the Financial Statements 31 March 4. Revenue Group Company Toll revenue 375,827 368,953 Management fee charge to subsidiary 1,052 1,783 Advertising income 3,074 3,127 Licence fee (Note 25) 1,562 1,562 Dividend income from a subsidiary 100,000 60,000 Others 270 290 380,733 373,932 101,052 61,783 Included in toll revenue is an amount of RM89,997,000 (: RM88,192,000), representing a subsidiary s compensation claim from the Government for the imposition of toll rates lower than those as provided for in the Concession Agreement after taking into consideration the concession arrangement as described further in Note 35. 5. Employee Benefits Expense Group Company Salaries 14,688 13,762 1,535 1,508 (Decrease)/increase in provision for short term accumulating compensated absences (21) 29 (27) 1 Pension costs Defined contribution plans 1,932 1,821 124 135 Defined benefit plans (Note 28) 248 227 46 42 Share options granted under ESOS 1,217 335 270 17 Social security contributions 210 205 3 4 Other benefits 6,102 6,112 165 281 24,376 22,491 2,116 1,988 Included in employee benefits expense of the Group and the Company is executive director s remuneration (excluding benefits-in-kind) amounting to RM236,000 (: RM164,000) and RM236,000 (: RM164,000) respectively as described further in Note 7. 6. Other Income Group Company Interest income Fixed deposits 4,944 4,666 358 953 Profit sharing on Islamic investment 5,574 5,532 28 126 Distribution from investment securities 171 155 171 155 Others 243 780 10,932 11,133 557 1,234 72 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 7. Directors Remuneration Executive: Group Company Salaries and other emoluments 160 154 160 154 Pension costs defined benefit plans 4 10 4 10 Share options granted under ESOS 72 72 Total executive director s remuneration (excluding benefits-in-kind) (Note 5) 236 164 236 164 Estimated monetary value of benefits-in-kind 2 2 2 2 Total executive director s remuneration (including benefits-in-kind) 238 166 238 166 Non-executive: Fees 289 287 289 287 Other emoluments 68 68 68 68 Share options granted under ESOS 50 50 Total non-executive directors remuneration (excluding benefits-in-kind) (Note 9) 407 355 407 355 Estimated monetary value of benefits-in-kind 13 2 13 2 Total non-executive directors remuneration (including benefits-in-kind) 420 357 420 357 Total directors remuneration 658 523 658 523 Analysis excluding estimated monetary value of benefits-in-kind: Total executive director s remuneration (Note 5) 236 164 236 164 Total non-executive directors remuneration (Note 9) 407 355 407 355 Total directors remuneration (Note 34) 643 519 643 519 The number of directors of the Company whose total remuneration during the financial year fell within the following bands is analysed below: Number of directors Executive director: RM150,001 to RM200,000 1 RM200,001 to RM250,000 1 Non-executive directors: RM50,000 and below 6 4 RM50,001 to RM100,000 2 2 RM150,001 to RM200,000 RM200,001 to RM250,000 1 1 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 73
Notes to the Financial Statements 31 March 8. Finance Costs Group Company Profit element on IMTNs Unwinding of discount: IMTNs Intercompany loan Others 75,694 7,901 127 79,205 8,109 117 8,786 8,249 83,722 87,431 8,786 8,249 9. Profit Before Tax The following amounts have been included in arriving at profit before tax: Group Company Non-executive directors (Note 7) Fees 289 287 289 287 Other emoluments 68 68 68 68 Auditors remuneration Statutory audits current year 100 85 40 35 under provision in prior year 15 22 5 11 Other services 100 116 6 6 Amortisation of HDE (Note 12) 61,729 59,843 Amortisation of other intangible assets (Note 14) 165 132 Depreciation of plant and equipment (Note 13) 752 802 6 5 Plant and equipment written off 36 12 Other intangible assets written off 1 Provision for heavy repairs (Note 24) 8,203 7,565 Gain on disposal of plant and equipment (112) (45) Deferred revenue recognised (Note 25) (1,562) (1,562) 10. Income Tax Expense Group Company Current income tax: Malaysian income tax 53,328 54,407 353 692 Under provision in prior year 20 342 1 53,348 54,749 353 693 74 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 10. Income Tax Expense (cont d) Group Company Deferred tax (Note 26): Relating to origination and reversal of temporary differences (4,171) (6,844) Effects of reduction in statutory tax rate (10,301) Over provision in prior year (111) (5) (4,282) (17,150) Total income tax expense recognised in profit or loss 49,066 37,599 353 693 Deferred tax related to items recognised in OCI during the year: Re-measurement losses on defined benefit plan, representing total income tax recognised in OCI (118) Current income tax is calculated at the statutory tax rate of 25% (: 25%) of the estimated assessable profit for the year. The statutory tax rate will be reduced to 24% from the current year s rate of 25%, effective year of assessment 2016. The computation of deferred tax as at 31 March has reflected this change. A reconciliation of income tax expense applicable to profit before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows: Group Profit before tax 186,955 171,730 Taxation at Malaysian statutory tax rate of 25% (: 25%) 46,739 42,933 Adjustments: Effects of reduction in statutory tax rate (10,301) Income not subject to tax (24) (24) Expenses not deductible for tax purposes 2,627 2,668 Under provision of tax expense in prior year 20 342 Over provision of deferred tax in prior year (111) (5) Share of results of an associate (185) 1,986 Income tax expense for the year recognised in profit or loss 49,066 37,599 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 75
Notes to the Financial Statements 31 March 10. Income Tax Expense (cont d) Company Profit before tax 90,304 52,325 Taxation at Malaysian statutory tax rate of 25% (: 25%) 22,576 13,081 Adjustments: Income not subject to tax (25,000) (15,000) Expenses not deductible for tax purposes 2,777 2,611 Under provision of tax expense in prior year 1 Income tax expense for the year recognised in profit or loss 353 693 11. Earnings Per Share (a) Basic Basic earnings per share amounts are calculated by dividing the Group s profit for the year, net of tax, attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the financial year. Group Profit net of tax 137,889 134,131 000 000 Weighted average number of ordinary shares for basic earnings per share computation 515,265 514,037 Sen Sen Basic earnings per share 26.76 26.09 (b) Diluted Diluted earnings per share amounts are calculated by dividing the Group s profit for the year, net of tax, attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the financial year plus the weighted average number of ordinary shares that would be issued on the conversion of all outstanding ESOS into ordinary shares. The ESOS is deemed to have been converted into ordinary shares at the date of the issue of the ESOS. 76 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 11. Earnings Per Share (cont d) (b) Diluted (cont d) Group Profit net of tax 137,889 134,131 000 000 Weighted average number of ordinary shares for basic earnings per share computation 515,265 514,037 Effects of dilution: Exercise of ESOS 388 Weighted average number of ordinary shares for diluted earnings per share computation 515,653 514,037 Sen Sen Diluted earnings per share 26.74 26.09 There have been no other transactions involving ordinary shares or potential ordinary shares since the reporting date and before the completion of these financial statements other than as disclosed in Note 21. 12. Highway Development Expenditure ( HDE ) Group Cost At beginning of the year 2,161,142 2,160,128 Additions 2,270 1,014 At end of the year 2,163,412 2,161,142 Accumulated amortisation At beginning of the year 498,175 438,332 Amortisation for the year (Note 9) 61,729 59,843 At end of the year 559,904 498,175 Net carrying amount 1,603,508 1,662,967 The highway development expenditure of a subsidiary is pledged for the financing facilities as disclosed in Note 27. LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 77
Notes to the Financial Statements 31 March 13. Plant and Equipment Group At 31 March Cost Renovation Furniture and fittings Office equipment Operation tools and equipment Motor vehicles Computer equipment Total At 1 April 1,310 1,509 2,714 2,637 6,679 1,845 16,694 Additions 14 50 511 132 264 89 1,060 Disposals (145) (2) (363) (510) Written off (2) (12) (141) (89) (607) (851) At 31 March 1,322 1,547 2,939 2,678 6,580 1,327 16,393 Accumulated depreciation At 1 April 1,224 1,399 2,334 2,456 5,864 1,672 14,949 Charge for the year (Note 9) 48 48 222 48 300 86 752 Disposals (145) (2) (363) (510) Written off (1) (10) (140) (88) (576) (815) At 31 March 1,271 1,437 2,271 2,414 5,801 1,182 14,376 Net carrying amount 51 110 668 264 779 145 2,017 At 31 March Cost At 1 April 2013 1,184 1,466 2,601 2,491 6,219 1,864 15,825 Additions 126 70 249 154 520 7 1,126 Disposals (53) (60) (113) Written off (27) (83) (8) (26) (144) At 31 March 1,310 1,509 2,714 2,637 6,679 1,845 16,694 Accumulated depreciation At 1 April 2013 1,112 1,368 2,314 2,428 5,621 1,549 14,392 Charge for the year (Note 9) 112 53 154 36 303 144 802 Disposals (53) (60) (113) Written off (22) (81) (8) (21) (132) At 31 March 1,224 1,399 2,334 2,456 5,864 1,672 14,949 Net carrying amount 86 110 380 181 815 173 1,745 The plant and equipment of a subsidiary with a net carrying amount of RM1,999,000 (: RM1,730,000) are pledged for the financing facilities as disclosed in Note 27. 78 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 13. Plant and Equipment (cont'd) Furniture and fittings Office equipment Motor vehicles Total Company At 31 March Cost At 1 April 77 132 33 242 Additions 4 4 8 Written off (9) (9) At 31 March 81 127 33 241 Accumulated depreciation At 1 April 76 118 33 227 Charge for the year (Note 9) 1 5 6 Written off (9) (9) At 31 March 77 114 33 224 Net carrying amount 4 13 17 At 31 March Cost At 1 April 2013 77 137 33 247 Additions 6 6 Written off (11) (11) At 31 March 77 132 33 242 Accumulated depreciation At 1 April 2013 76 124 33 233 Charge for the year (Note 9) 5 5 Written off (11) (11) At 31 March 76 118 33 227 Net carrying amount 1 14 15 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 79
Notes to the Financial Statements 31 March 14. Other Intangible Assets Group Cost At beginning of the year 2,537 2,363 Additions 613 174 Written off (285) At end of the year 2,865 2,537 Accumulated amortisation At beginning of the year 1,741 1,609 Amortisation for the year (Note 9) 165 132 Written off (284) At end of the year 1,622 1,741 Net carrying amount 1,243 796 The other intangible assets relates to computer software and licenses. The other intangible assets of a subsidiary are pledged for the financing facilities as disclosed in Note 27. 15. Investments in Subsidiaries Company Unquoted shares, at cost 50,464 50,464 Less: Impairment losses (3) (3) 50,461 50,461 Details of the subsidiaries, which are incorporated in Malaysia, are shown below: Equity interest Name of company Principal activities % % Lingkaran Trans Kota Sdn Bhd Toll highway concession 100 100 Penyenggaraan Litrak Sdn Bhd Highway maintenance 100 100 Sukma Sinaran Sdn Bhd Investment holding 100 100 Midawasa Sdn Bhd Investment holding 100 100 ETC Links Sdn Bhd Rental of software and related equipment 100 100 Litrak Sdn Bhd Dormant 100 100 80 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 16. Investment in An Associate Group Company Unquoted shares, at cost ordinary shares 3,372 3,372 3,372 3,372 preference shares 389,556 389,556 389,556 389,556 Share of post-acquisition reserves (220,901) (221,642) 172,027 171,286 392,928 392,928 Details of the associate, which is incorporated in Malaysia, are shown below: Name of company Sistem Penyuraian Trafik KL Barat Holdings Sdn Bhd ( SPRINT ) Subsidiary of SPRINT: Sistem Penyuraian Trafik KL Barat Sdn Bhd Principal activities Investment holding and the provision of management services Design, construct, operate, manage and maintain the highway known as Western Kuala Lumpur Traffic Dispersal Scheme % Equity interest % 50 50 50 50 Summarised financial information of the associate is set out below. This represents the amounts in SPRINT s financial statements and not the Group s share of those amounts. (a) Summarised Statement of Comprehensive Income SPRINT Group Revenue 207,111 179,884 Profit/(loss) for the year 1,482 (15,887) Other comprehensive loss (165) Total comprehensive income/(loss) for the year 1,482 (16,052) (b) Summarised Statement of Financial Position SPRINT Group Total assets 1,894,370 1,890,750 Total liabilities 1,697,576 1,695,438 Net assets of SPRINT Group 196,794 195,312 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 81
Notes to the Financial Statements 31 March 16. Investment in An Associate (cont d) (c) Reconciliation of the Summarised Financial Information Presented Above to the Carrying Amount of the Group s Interest in SPRINT Group Net asset of SPRINT Group at 1 April 195,312 211,364 Profit/(loss) for the year 1,482 (15,887) Other comprehensive loss (165) Net assets of SPRINT Group at 31 March 196,794 195,312 Group s share of net assets 98,234 97,493 Goodwill 73,793 73,793 Carrying value of the Group s investment in SPRINT Group 172,027 171,286 Group s interest in SPRINT Group 50% 50% 17. Sundry Receivables Group Company Compensation claim receivable from the Government of Malaysia 67,969 66,293 Deposits 283 283 141 141 Prepayments 599 434 12 13 Others 345 721 8 9 Total sundry receivables 69,196 67,731 161 163 Less: Prepayments (599) (434) (12) (13) Add: Amount due from subsidiaries 281 258 Amount due from an associate 11,175 9,448 10,731 8,641 Cash and bank balances 329,427 354,422 7,020 11,504 Investment securities 5,210 5,039 5,210 5,039 Total financial assets 414,409 436,206 23,391 25,592 The Group has no significant concentration of credit risk that may arise from exposures to a single debtor or group of debtors, other than an amount due from the Government of Malaysia for imposing toll rates lower than those agreed upon amounting to RM67,969,000 (: RM66,293,000). 82 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 18. Amount Due From/(To) Subsidiaries and An Associate Current Group Company Amount due from subsidiaries 281 258 Amount due from an associate 11,175 9,448 10,731 8,641 Amount due to a subsidiary (1,526) (2,236) Loan from a subsidiary (143,950) Non-current Loan from a subsidiary (135,164) (a) Current Company Loan from a subsidiary 150,000 Less: Discount on loan from a subsidiary (70,136) Unwinding of discount 64,086 (6,050) 143,950 These amounts are unsecured, non-interest bearing and are repayable on demand except loan from a subsidiary. (b) Non-Current Company Loan from a subsidiary 150,000 Less: Discount on loan from a subsidiary (70,136) Unwinding of discount 55,300 (14,836) 135,164 Loan from a subsidiary is unsecured, non-interest bearing and is repayable in full at the end of tenth (10) year from date of intercompany loan agreement between the Company and that subsidiary on 24 November 2005. LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 83
Notes to the Financial Statements 31 March 19. Investment Securities Carrying amount Group and Company Market value of quoted investments Carrying amount Market value of quoted investments Fair value through profit or loss Investment securities (quoted in Malaysia) 5,210 5,210 5,039 5,039 Investment securities represent funds placed with licensed fund managers. The portfolio of securities managed by the fund managers comprise money market funds, commercial papers, government bonds and fixed deposits. 20. Cash and Bank Balances Group Company Licensed banks 177,127 218,449 3,951 3,087 Investment banks 123,333 100,125 2,967 8,318 Other financial institution 24,836 31,363 Deposits with licensed financial institutions 325,296 349,937 6,918 11,405 Cash on hand and at banks 4,131 4,485 102 99 Cash and cash equivalents 329,427 354,422 7,020 11,504 Cash and bank balances of a subsidiary are pledged for the financing facilities as disclosed in Note 27. The weighted average effective interest/profit rates and the average maturities of deposits at the reporting date were as follows: Weighted average effective interest/profit rates Group Company % % % % Licensed banks 3.44 3.08 3.53 3.14 Investment banks 3.59 3.10 3.50 3.10 Other financial institution 3.63 3.07 Average maturities Group Company Days Days Days Days Licensed banks 32 30 29 27 Investment banks 40 33 29 24 Other financial institution 33 17 84 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 21. Share Capital Authorised: Number of ordinary shares of RM0.20 each 000 000 Amount At beginning/end of the year 1,000,000 1,000,000 200,000 200,000 Issued and fully paid: At beginning/end of the year 515,148 511,561 103,030 102,312 Ordinary shares issued during the year pursuant to ESOS 398 3,587 79 718 At end of the year 515,546 515,148 103,109 103,030 During the financial year, the issued and paid-up ordinary share capital of the Company was increased from RM103,029,524 to RM103,109,124 following the issuance of 398,000 new ordinary shares of RM0.20 each. The ordinary shares were issued for cash pursuant to the ESOS at the issue prices of RM3.44 and RM3.46. The new ordinary shares issued ranked pari passu in all respects with the existing ordinary shares of the Company. 22. Other Reserve Group and Company Share option reserve At beginning of the year 1,181 Share options granted under ESOS 1,589 439 Share options exercised (144) (1,620) At end of the year 1,445 The share option reserve represents the equity-settled share options granted to eligible employees and directors. This reserve represents the cumulative value of services received from employees and directors recorded at grant of share options and is non-distributable. (a) Employee Share Option Scheme ( ESOS ) of the Company At the Annual General Meeting held on 27 August 2013, shareholders of the Company approved the implementation of a new ESOS upon expiry of the previous ESOS. The new ESOS shall be in force for a period of 5 years expiring on 8 October 2018. The shareholders of the Company also approved the grant of options to all existing non-executive directors of the Company, up to 100,000 options each, to subscribe for such number of new ordinary shares of RM0.20 each in the Company under the ESOS, provided that: (i) (ii) not more than 50% of the ordinary shares of RM0.20 each in the Company available under the ESOS shall be allocated, in aggregate, to the directors and senior management of the Company; and not more than 10% of the ordinary shares of RM0.20 each in the Company available under the ESOS shall be allocated to the directors, if the directors, either singly or collectively through persons connected with them, hold 20% or more of the issued and paid-up capital of the Company. LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 85
Notes to the Financial Statements 31 March 22. Other Reserve (cont d) (a) Employee Share Option Scheme ( ESOS ) of the Company (cont d) During the financial year, options to subscribe for 4,572,000 (: 1,212,000) new ordinary shares of RM0.20 each have been granted to eligible employees and directors pursuant to the ESOS. (b) Salient Features of the ESOS (i) (ii) (iii) (iv) (v) (vi) eligible persons are full time employees (including foreign employees and contract employees with a minimum three years contract of service) on the payroll of any company within the Group, full time executive directors (including foreign executive directors) and non-executive directors, who have served the Group for at least one year as at the date of offer. The selection of eligible persons for participation in the ESOS shall be at the absolute discretion of the ESOS Committee. the total number of shares to be offered under the ESOS shall not exceed 10% of the issued and paid-up share capital of the Company at any one time during the existence of the ESOS. the ESOS shall be in force for a period of 5 years upon expiration of the previous ESOS on 8 October 2013 and, upon the date of full compliance with all relevant requirements from Bursa Securities, subject however to any extension or renewal for a further period of not exceeding 5 years commencing from the day after the date of expiration of the original 5 years period as may be approved by the ESOS Committee. the options granted under the ESOS are not assignable. the subscription price under the ESOS shall be the weighted average market price of the shares as shown in the Daily Official List of the Bursa Malaysia Securities Berhad for the 5 market days immediately preceding the date of offer of the options with an allowance for a discount of not more than ten per cent (10%) therefrom, at the ESOS Committee s discretion or at par value of the share, whichever is higher. the aggregate number of shares to be offered to an eligible employee and director in accordance with the ESOS shall be determined at the discretion of the ESOS Committee after taking into consideration, amongst other factors, the position, performance, seniority and the length of service of the eligible employee and director subject to the maximum allowable allotment of shares for each eligible employee and director. (vii) the new ordinary shares allotted upon any exercise of options shall rank pari passu in all respects with the existing issued and paid-up ordinary shares of the Company (except that the new shares so issued will not rank for any dividends, rights, allotments and any other distributions declared, made or paid to shareholders if the relevant exercise date of the option falls after the closure date of business for determination of the above entitlements). (viii) the options vest upon grant. 86 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 22. Other Reserve (cont d) (c) Details of Share Options Outstanding at the End of the Year The following table illustrates the number and exercise prices of, and movements in, share options over ordinary shares of RM0.20 each of the Company during the year: 31 March Grant Date Expiry Date Number of Share Options over Ordinary Shares of RM0.20 each of the Company Grant Outstanding Movement During the Year Outstanding Exercisable Price at 1 April Granted Exercised Forfeited at 31 March at 31 March (RM) 000 000 000 000 000 000 09 Apr 14 08 Oct 18 3.44 4,472 (388) (166) 3,918 3,918 24 Sep 14 08 Oct 18 3.46 100 (10) (4) 86 86 4,572 (398) (170) 4,004 4,004 Weighted average exercise price (RM) 3.44 3.44 3.44 3.44 3.44 31 March Grant Date Expiry Date Grant Price Number of Share Options over Ordinary Shares of RM0.20 each of the Company Outstanding Movement During the Year Outstanding Exercisable at 1 April Granted Exercised Forfeited at 31 March at 31 March (RM) 000 000 000 000 000 000 28 Nov 03 08 Oct 13 1.65 2 (2) 18 Aug 04 08 Oct 13 1.43 12 Sep 05 08 Oct 13 1.42 18 Sep 07 08 Oct 13 2.50 18 Mar 08 08 Oct 13 2.37 5 (5) 31 Oct 08 08 Oct 13 1.46 4 (4) 01 Apr 09 08 Oct 13 1.85 30 Oct 09 08 Oct 13 2.51 120 (120) 29 Apr 10 08 Oct 13 2.67 11 (11) 11 Oct 10 08 Oct 13 3.05 136 (136) 01 Apr 11 08 Oct 13 3.16 24 (24) 14 Oct 11 08 Oct 13 3.15 406 (406) 12 Apr 12 08 Oct 13 3.60 433 (433) 17 Oct 12 08 Oct 13 3.60 1,295 (1,295) 02 Apr 13 08 Oct 13 3.86 1,212 (1,151) (61) 2,436 1,212 (3,587) (61) Weighted average exercise price (RM) 3.42 3.86 3.56 3.86 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 87
Notes to the Financial Statements 31 March 22. Other Reserve (cont d) (c) Details of Share Options Outstanding at the End of the Year (cont d) The options outstanding at the end of the financial year have a remaining contractual life of 3.5 years. (d) Share Options Exercised During the Year Options exercised during the financial year resulted in the issuance of 398,000 (: 3,587,000) ordinary shares of RM0.20 each of the Company at a weighted average price of RM3.44 (: RM3.56) each. The related weighted average share price at the date of exercise was RM3.87 (: RM4.34). (e) Fair Value of Share Options Granted During the Year The fair value of share options granted during the year was estimated by an external valuer using a binomial model, taking into account the terms and conditions upon which the options were granted. The fair value of share options measured at grant date and the assumptions are as follows: Fair value of share options at the following grant dates (RM): 24.09.14 0.40 09.04.14 0.36 02.04.13 0.38 Share price (RM) 3.80 3.86 4.23 Exercise price (RM) 3.44 3.46 3.86 Expected volatility (%) 17.0 18.0 20.0 Expected life (years) 3.50 0.50 Risk free rate (%) 3.24 3.39 2.90 Expected dividend yield (%) 4.0 4.0 The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily be the actual outcome. No other features of the option grant were incorporated into the measurement of fair value. 23. Retained Earnings The Company is able to distribute dividends out of its entire retained earnings as at 31 March under the single tier system. 24. Provision for Heavy Repairs Provision for heavy repairs relate to the estimated costs of the contractual obligations to maintain and restore the highway infrastructure to a specified standard of serviceability. Group At beginning of the year 26,205 18,859 Provision for the year (Note 9) 8,203 7,565 Utilised during the year (11,623) (219) At end of the year 22,785 26,205 88 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 25. Deferred Revenue Group Licence fee Licence fee received 47,900 47,900 Deferred revenue recognised to-date (25,382) (23,820) Balance unrecognised 22,518 24,080 Licence fee recognised as revenue during the year (Note 4) 1,562 1,562 26. Deferred Tax Liabilities Group At beginning of the year 240,253 257,521 Recognised in profit or loss (Note 10) (4,171) (6,844) Effects of reduction in statutory tax rate (10,301) Over provision in prior year (111) (5) Recognised in other comprehensive income (Note 10) (118) At end of the year 235,971 240,253 Presented after appropriate offsetting as follows: Deferred tax liabilities 258,341 262,757 Deferred tax assets (22,370) (22,504) 235,971 240,253 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 89
Notes to the Financial Statements 31 March 26. Deferred Tax Liabilities (cont d) The components and movements of deferred tax liabilities and assets of the Group during the financial year prior to offsetting are as follows: Deferred tax liabilites Deferred tax assets Group Plant and equipment Highway development expenditure Total Deferred revenue Provision for heavy repairs Sundry payables Retirement benefits obligation Borrowings Total Net deferred tax liabilities At 1 April 371 262,386 262,757 (5,779) (6,289) (95) (365) (9,976) (22,504) 240,253 Recognised in profit or loss (99) (4,317) (4,416) 375 821 (2) (48) (1,012) 134 (4,282) At 31 March 272 258,069 258,341 (5,404) (5,468) (97) (413) (10,988) (22,370) 235,971 At 1 April 2013 309 277,434 277,743 (6,410) (4,715) (91) (211) (8,795) (20,222) 257,521 Recognised in profit or loss 62 (15,048) (14,986) 631 (1,574) (4) (36) (1,181) (2,164) (17,150) Recognised in other comprehensive income (118) (118) (118) At 31 March 371 262,386 262,757 (5,779) (6,289) (95) (365) (9,976) (22,504) 240,253 90 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 27. Borrowings Group Current Secured: (i) IMTNs (Note 27(a)) 75,000 (ii) Reimbursable land cost (Note 27(c)) 39,200 Non-current Secured: 114,200 IMTNs (Note 27(a)) 1,330,000 1,330,000 Less: Unamortised discount (46,999) (54,900) 1,283,001 1,275,100 Amount repayable after 12 months 1,283,001 1,275,100 Total borrowings 1,283,001 1,389,300 The details of the borrowings are as follows: (a) The Sukuk Musyarakah Medium Term Notes ( IMTNs ) comprise IMTN I and IMTN II of RM1,145,000,000 and RM300,000,000 respectively. The IMTN I are constituted by a Sukuk Musyarakah Trust Deed dated 19 March 2008 made by a subsidiary and the Trustee for the holders of the IMTN I. The IMTN I are negotiable non-interest bearing secured Bonds in bearer form, evidencing a promise by the issuer to pay stated sum on specified dates. The IMTN I were issued in 10 series, with maturities from April 2013 to April 2023. The profit margin ranges from 4.6% to 6.0% per annum. The IMTN II are constituted by a Sukuk Musyarakah Trust Deed dated 19 March 2008 made by a subsidiary and the Trustee for the holders of the IMTN II. The IMTN II are negotiable non-interest bearing secured Bonds in bearer form, evidencing a promise by the issuer to pay stated sum on specified dates. The IMTN II were issued in 3 series, with maturities from April 2021 to April 2023. The profit margin ranges from 5.8% to 6.0% per annum. The IMTNs were issued to fully redeem its previously issued bonds (Senior BAIDS, Junior BAIDS, Bank Guaranteed Bonds, Murabahah CP/MTN and Fixed Rate Serial Bonds) and Redeemable Unsecured Loan Stock ( RULS ). (b) (c) The Sukuk Musyarakah Commercial Papers/Medium Term Notes ( ICP/MTN ) are constituted by a Sukuk Musyarakah Trust Deed dated 19 March 2008 made by a subsidiary and the Trustee for the holders of the ICP/MTN. ICP/MTN is available for issue commencing 15 April 2008 with face amount of RM100 million. The ICP/MTN has a tenure of seven (7) years from the date it is available for issue and its tender rates are based on prevailing market rates. As at 31 March, the ICP/MTN has not been drawndown. The reimbursable land cost relates to amount paid by the Government on behalf of a subsidiary for costs and expenses incurred in making the land available for the construction of the Highway. It is interest free and repayable in three annual instalments. The first and second instalments were paid on 15 August 2012 and 15 August 2013 respectively. The final instalment was paid on 15 August. LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 91
Notes to the Financial Statements 31 March 27. Borrowings (cont d) The details of the borrowings are as follows (cont d): The security arrangements in connection with the subsidiary s IMTNs, ICP/MTN and reimbursable land cost are as follows: (i) (ii) fixed and floating charge over the property, assets and rights of the subsidiary; and an assignment of the subsidiary s rights, interests and benefits in certain designated bank accounts and insurance policies. In addition, the subsidiary s IMTNs, ICP/MTN and reimbursable land cost are further secured by way of an assignment of the subsidiary s rights, interests and benefits in the Concession Agreement. Pursuant to the Total Priority Security Sharing Agreement dated 25 April 2008, the IMTNs, ICP/MTN and the reimbursable land cost shall rank pari passu amongst themselves. 28. Retirement Benefit Obligations The Group and the Company operate an unfunded Retirement Benefit Scheme (the Scheme ) for eligible employees. Under the Scheme, eligible employees are entitled to retirement benefits of 2.5% on the last drawn monthly basic salary for each completed months of service on attainment of the retirement age of 60 (: 60). The amounts recognised in the financial statements are as follows: Group Company Statements of financial position Present value of unfunded defined benefit obligations, net liability 2,132 1,884 411 365 Analysed as: Non-current: Later than 1 year but not later than 2 years 115 115 115 115 Later than 2 years but not later than 5 years 51 51 51 51 Later than 5 years 1,966 1,718 245 199 Statements of comprehensive income 2,132 1,884 411 365 Current service cost 150 141 27 25 Interest cost 98 86 19 17 Total, included in employee benefits expense (Note 5) 248 227 46 42 Other comprehensive income Re-measurement losses 577 87 92 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 28. Retirement Benefit Obligations (cont d) Movements in the net liability in the current year were as follows: Group Company At beginning of the year 1,884 1,080 365 236 Recognised in profit or loss 248 227 46 42 Recognised in other comprehensive income 577 87 At end of the year 2,132 1,884 411 365 Principal actuarial assumptions used: % % Discount rate 5.2 5.2 Expected rate of salary increases 6.0 6.0 The sensitivity analysis below has been determined based on reasonably possible changes of each significant assumption on the defined benefit obligations as of the end of the reporting period, with all other assumptions held constant: Increase/ (decrease) Group Company Discount rate +1% (146) (14) 1% 146 14 Expected rate of salary increases +1% 164 15 1% (164) (15) 29. Provision for Land Acquisition Cost Group At beginning of the year 1,145 1,165 Paid during the year (20) Reversal of provision (1,145) At end of the year 1,145 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 93
Notes to the Financial Statements 31 March 30. Sundry Payables Group Company Accrued financing cost and profit element of various borrowings 34,880 36,532 Amount due to other related parties 87 1 Retention sum 22,733 30,849 Accruals 22,800 14,508 525 429 Total sundry payables 80,500 81,890 525 429 Add: Borrowings 1,283,001 1,389,300 - Amount due to a subsidiary 145,476 137,400 Total financial liabilities carried at amortised costs 1,363,501 1,471,190 146,001 137,829 Amounts due to other related parties are non-interest bearing and are repayable on demand. These amounts are unsecured and are to be settled in cash. Further details on related party transactions are disclosed in Note 34. 31. Dividends Dividends in respect of year Dividends recognised in year Interim dividend for : 10 sen per share on 514,861,618 ordinary shares 51,486 51,486 Interim dividend for : 7 sen per share on 515,147,618 ordinary shares 36,061 36,061 Interim dividend for : 10 sen per share on 515,262,618 ordinary shares 51,526 51,526 Interim dividend for : 10 sen per share on 515,545,618 ordinary shares 51,555 51,555 103,081 87,547 103,081 87,547 94 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 32. Segment Information The Highway provides the largest contribution to the Group in terms of revenue, profit for the period and total assets. Hence, it is reported as a separate operating segment whilst the rest are reported as Others. The reportable operating segments of the Group are as follows: (i) (ii) highway tolling operations and highway maintenance; and others investment holding and dormant Except as indicated above, no operating segment has been aggregated to form the above reportable operating segments. The directors are of the opinion that all inter-segment transactions have been entered into in the normal course of business. The analysis of group operations are as follows: Revenue Highway Others Eliminations Consolidated Notes Revenue from external customers 380,733 373,932 380,733 373,932 Inter-segment revenue 101,052 61,783 (101,052) (61,783) A Total revenue 380,733 373,932 101,052 61,783 (101,052) (61,783) 380,733 373,932 Result Segment results 260,638 257,330 98,664 59,477 (99,884) (59,901) A 259,418 256,906 Interest/profit income 18,906 17,357 398 1,090 (8,786) (8,249) A 10,518 10,198 Profit from operations 279,544 274,687 99,062 60,567 (108,670) (68,150) 269,936 267,104 Finance costs (83,722) (87,431) (8,786) (8,249) 8,786 8,249 A (83,722) (87,431) Share of results of an associate 741 (7,943) 741 (7,943) Profit before tax 196,563 179,313 90,276 52,318 (99,884) (59,901) 186,955 171,730 Income tax expense (48,710) (36,903) (356) (696) (49,066) (37,599) Total comprehensive income for the year, net of tax 147,853 142,410 89,920 51,622 (99,884) (59,901) 137,889 134,131 Assets and liabilities Segment assets 2,146,234 2,216,405 74,250 76,272 (198,508) (190,529) B 2,021,976 2,102,148 Investment in an associate 172,027 171,286 172,027 171,286 Consolidated total assets 2,318,261 2,387,691 74,250 76,272 (198,508) (190,529) 2,194,003 2,273,434 Segment liabilities 1,656,127 1,773,410 146,438 138,257 (145,717) (137,622) B 1,656,848 1,774,045 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 95
Notes to the Financial Statements 31 March 32. Segment Information (cont d) Other information Highway Others Eliminations Consolidated Notes Capital expenditure 3,935 2,308 8 6 C 3,943 2,314 Depreciation 746 797 6 5 752 802 Amortisation 61,991 60,070 (97) (95) A 61,894 59,975 Other significant non-cash expenses: Plant and equipment written off 36 12 36 12 Share options granted under ESOS 947 318 270 17 1,217 335 Provision for short term accumulating compensated absences 6 28 (27) 1 (21) 29 Provision for retirement benefits 202 185 46 42 248 227 Provision for heavy repairs 8,203 7,565 8,203 7,565 Notes A B C Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements Inter-segment transactions are eliminated on consolidation. Inter-segment assets and liabilities are eliminated on consolidation. Capital expenditure consist of: Group Plant and equipment 1,060 1,126 Other intangible assets 613 174 Highway development expenditure 2,270 1,014 3,943 2,314 No analysis on revenue and results by geographical segments is prepared as the Group is primarily engaged in design, construct, operate and maintain Lebuhraya Damansara-Puchong (the Highway ) and to manage its toll operations in Malaysia. 96 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 33. Capital Commitments Group Capital expenditure Approved and contracted for: Highway development expenditure 187 290 Plant and equipment 98 98 285 388 34. Related Party Disclosures (a) Sale and Purchase of Services In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group, the Company and related parties took place at terms agreed between the parties during the financial year: Group Associate: ESOS expenses charged to an associate 372 104 Other related companies: (*) Other services rendered by other related companies 618 298 Company Subsidiaries: ESOS expenses charged to a subsidiary 947 318 Management fee charged to a subsidiary 1,052 1,783 (*) Other related companies refer to Gamuda Berhad and its associate. Gamuda Berhad is a substantial shareholder of the Company. Certain directors of the Company are also directors of the respective other related companies. Information regarding outstanding balances arising from related party transactions as at 31 March are disclosed in Note 18 and Note 30. LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 97
Notes to the Financial Statements 31 March 34. Related Party Disclosures (cont d) (b) Remunerations of Key Management Personnel The remuneration of directors and other members of key management during the year was as follows: Group Company Short term employee benefits 2,429 2,266 996 1,216 Pension costs: Defined contribution plans 199 182 59 80 Defined benefit plans 72 204 28 56 Share options granted under ESOS 458 130 188 3 3,158 2,782 1,271 1,355 Included in the total key management personnel are: Group Company Directors remuneration (Note 7) 643 519 643 519 Directors of the Group and the Company and other members of key management have been granted the following number of options under the Employee Share Option Scheme ( ESOS ): Group and Company 000 000 At beginning of the year 1,141 Granted 1,272 341 Exercised (134) (1,482) At end of the year 1,138 The share options were granted on the same terms and conditions as those offered to other employees of the Group. 35. Concession Arrangement On 23 April 1996, the Government of Malaysia (the Government ) awarded Lingkaran Trans Kota Sdn Bhd ( LITRAK ), a wholly-owned subsidiary of the Company, a concession to design, construct, operate and maintain Lebuhraya Damansara-Puchong ( LDP or the Highway ) for a period of 33 years ending 14 August 2029 ( Concession Period ). Under the Concession Agreement, the Government will make available the land required for the Highway, subject to reimbursement by LITRAK to acquire land of up to RM98 million. The Concession Agreement provides that LITRAK will collect and retain all traffic tolls and will be responsible for all operating and maintenance costs incurred during the Concession Period. The collection of toll revenue commenced on 25 January 1999 and the toll rates applicable to the Concession Period are specified in the Concession Agreement. 98 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 35. Concession Arrangement (cont d) The Government may reduce the toll rates by giving at least two months notice to LITRAK. Should the Government reduce the toll rate below the agreed rates, the Government shall compensate LITRAK for any reduction in toll collections based on the basis and the formula specified in the Concession Agreement. The Concession Agreement may be terminated by either the Government or LITRAK if either party fails to remedy its default within the period specified in the Concession Agreement. The Government may terminate the Concession Agreement by expropriation of the Concession Company or the Concession at any time by giving three months written notice to LITRAK. LITRAK shall hand over the Highway to the Government at the end of the Concession Period, in a well maintained condition and shall make good any defects thereto at LITRAK s own expense within one year after the date of handing over. Pursuant to the provisions of the Second Supplemental Concession Agreement executed between LITRAK and the Government on 4 September 2007 and via the Government Gazette No. P.U.(A) 443 dated 26 December 2006, the Government had revised the toll rates structure for LITRAK effective from 1 January 2007 to 31 December 2010 as follows: Class of vehicle Class 1 Class 2 Class 3 Class 4 Class 5 Revised toll rates (RM) 1.60 3.20 4.80 0.80 1.60 In consideration of LITRAK agreeing to the above revised toll rate structure, the Government has agreed to provide LITRAK, with a sum of RM150 million cash compensation (paid in two equal tranches within the calendar years of 2007 and 2008) and a one-year extension to the Concession Period (from 14 August 2029 extended to 14 August 2030). The toll rates were scheduled to revert to those in the Concession Agreement from 1 January 2011 onwards, but the Government has decided that the toll rate increase will be deferred until further notice. Based on past negotiations with the Government, the Group is, however, optimistic that terms of the Concession Agreement will be observed by all parties concerned. The Government shall be compensating LITRAK in accordance with the provisions of the Concession Agreement. LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 99
Notes to the Financial Statements 31 March 36. Fair Value of Financial Instruments The carrying amounts of the financial instruments of the Group and of the Company are a reasonable approximation of their fair value except for the following: Carrying amount Group Fair value Financial liabilities: At 31 March IMTN I (Note 27) (997,024) (1,057,001) IMTN II (Note 27) (285,977) (313,391) At 31 March IMTN I (Note 27) (1,065,648) (1,129,445) IMTN II (Note 27) (284,452) (311,294) Reimbursable land cost (Note 27) (39,200) (36,808) The following methods and assumptions are used to estimate the fair values of the following classes of financial instruments: (a) Cash and cash equivalents, sundry receivables, amount due from subsidiaries, amount due from an associate, sundry payables and amount due to subsidiaries (current) The carrying amounts approximate fair values due to the relatively short term maturity of these financial instruments. (b) Amount due to a subsidiary and borrowings The fair values of these financial instruments are estimated by discounting expected future cash flows at market incremental lending rate for similar types of borrowing at the reporting date. (c) Investment securities Fair value is determined directly by reference to the published market bid price at the reporting date. Unquoted investment in subsidiaries and an associate are not carried at fair value due to the lack of quoted market price and impracticality to estimate the fair value without excessive cost. Fair value hierarchy The fair value measurement hierarchies used to measure financial assets and financial liabilities carried at fair value in the statements of financial position are as follows: Level 1 unadjusted quoted market prices in active markets for identical assets or liabilities Level 2 inputs other than quoted market prices that are observable either directly or indirectly Level 3 inputs that are significant to the fair value measurement are unobservable As at reporting date, the Group s and the Company s fair value for investment securities is measured at Level 1 hierarchy whereas fair values for the borrowings are measured at Level 2 hierarchy. 100 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 37. Financial Risk Management Objectives and Policies The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include interest rate risk, liquidity risk, credit risk and market price risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. It is, and has been throughout the year under review, the Group s policy that no trading in derivative financial instruments shall be undertaken. The following sections provide details regarding the Group s and Company s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks. (a) Interest Rate Risk Interest/profit rate risk is the risk that the fair value or future cash flows of the Group s and the Company s financial instruments will fluctuate because of changes in market interest/profit rates. The Group obtains its external fundings through the issuance of IMTNs and reimbursable land cost provided by the Government. The profit element for IMTNs are based on fixed rates while the reimbursable land cost provided by the Government is interest free. The information relating to the interest rates, profit element and maturity dates of these borrowings are as disclosed in Note 27. The surplus funds are placed as fixed deposits or fixed rate overnight money market placements with licensed financial institutions. The interest/profit profile of financial liabilities of the Group and the Company are as follows: Group Company Fixed rate financial liabilities (Note (i)) 1,283,001 1,350,100 Financial liabilities on which no interest/profit is payable (Note (ii)) 45,620 84,558 525 429 Total financial liabilities at amortised costs 1,328,621 1,434,658 525 429 (i) (ii) fixed rate financial liabilities comprise the IMTNs as described further under Note 27. The weighted average interest rate/profit element of these instruments is 5.6% (: 5.6%). The rate is fixed up to maturity of the IMTNs. financial liabilities of which no interest/profit is payable primarily comprise the reimbursable land costs provided by the Government as described further in Note 27 and sundry payables. LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 101
Notes to the Financial Statements 31 March 37. Financial Risk Management Objectives and Policies (cont d) (a) Interest Rate Risk (cont d) The interest/profit profile of financial assets of the Group and the Company are as follows: Group Company Fixed rate financial assets * 325,296 349,937 6,918 11,405 Financial assets on which no interest/profit is earned ** 83,903 81,230 10,982 8,890 Total loans and receivables 409,199 431,167 17,900 20,295 * Fixed rate financial assets mainly comprise short term deposits and overnight money market placements placed with licensed financial institutions as described further in Note 20. ** Financial assets on which no interest/profit is earned comprise cash on hand and at banks, sundry receivables (exclude prepayments) and amount due from an associate. The Group has no exposure to significant interest rate risk as the fixed rate debts were entered into by the Group in order to minimise fluctuations in interest rates. (b) Liquidity Risk Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group s and the Company s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group and the Company manage the debt maturity profile as disclosed in the analysis below, operating cash flows and the availability of funding so as to ensure that refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group and the Company maintain sufficient levels of cash and cash convertible instrument to ensure sufficient cash being kept to meet debt service obligation and covenants, highway enhancement expenses, operating expenses and distribution to shareholders. In addition, the Group and the Company strive to maintain available banking facilities at a reasonable level to its overall debt position. Analysis of Financial Instruments by Remaining Contractual Maturities The table below summarises the maturity profile of the Group s and the Company s liabilities at the reporting date based on contractual undiscounted repayment obligations. 102 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 37. Financial Risk Management Objectives and Policies (cont d) (b) Liquidity Risk (cont d) Analysis of Financial Instruments by Remaining Contractual Maturities (cont d) On demand or within one year One to two years Two to five years More than five years Total Group Financial liabilities: Sundry payables 45,620 45,620 Borrowings Principal 70,000 470,000 790,000 1,330,000 Interest 75,557 73,769 183,760 92,500 425,586 Total undiscounted financial liabilities 121,177 143,769 653,760 882,500 1,801,206 Company Financial liabilities: Sundry payables 525 525 Loan from a subsidiary 150,000 150,000 Total undiscounted financial liabilities 150,525 150,525 On demand or within one year One to two years Two to five years More than five years Total Group Financial liabilities: Sundry payables 45,358 45,358 Borrowings Principal 114,200 320,000 1,010,000 1,444,200 Interest 77,346 75,557 205,169 144,860 502,932 Total undiscounted financial liabilities 236,904 75,557 525,169 1,154,860 1,992,490 Company Financial liabilities: Sundry payables 429 429 Loan from a subsidiary 150,000 150,000 Total undiscounted financial liabilities 429 150,000 150,429 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 103
Notes to the Financial Statements 31 March 37. Financial Risk Management Objectives and Policies (cont d) (c) Credit Risk The carrying amounts of sundry receivables and amount due from an associate represents the Group s maximum exposure to credit risk. The risk in relation to the amount due from the Government as compensation for the imposition of toll rates lower than those as provided for under the Concession Agreement is sovereign in nature. For other financial assets (including investment securities and cash and bank balances), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties. The Group and the Company do not have any significant exposure to a single counterparty nor do they have any major concentration of credit risk related to any financial instruments other than as disclosed in Note 17. (d) Market Price Risk Market price risk is the risk that the fair value or future cash flows of the Group s and the Company s financial instruments will fluctuate because of changes in market prices (other than interest). As at 31 March, the Group and the Company do not have significant market price exposure. 38. Capital Management The primary objective of the Group s capital management is to ensure that it maintains a strong credit rating and healthy capital 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. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, refinance existing borrowings, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 March and 31 March. The borrowings of the Group as mentioned in Note 27 is taken by a subsidiary of the Group. These borrowings are subjected to several financial covenants including maintaining a prescribed debt equity ratio of no more than 90:10 and finance service cover ratio of no less than 1.2 times. The subsidiary company has complied with these covenants during the reporting period. 104 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT
Notes to the Financial Statements 31 March 39. Supplementary Information Breakdown of Retained Earnings into Realised and Unrealised The breakdown of the retained earnings of the Group and of the Company as at 31 March into realised and unrealised earnings is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants. Group Company Total retained earnings of the Company and its subsidiaries Realised 841,258 142,853 Unrealised (258,756) 582,502 142,853 Total share of accumulated losses from an associate Realised (198,608) Unrealised (22,293) 361,601 142,853 Add: Consolidation adjustments (2,190) _ Retained earnings as per financial statements 359,411 142,853 Group Company Total retained earnings of the Company and its subsidiaries Realised 815,010 155,983 Unrealised (266,458) 548,552 155,983 Total share of accumulated losses from an associate Realised (200,190) Unrealised (21,453) 326,909 155,983 Add: Consolidation adjustments (2,306) Retained earnings as per financial statements 324,603 155,983 LINGKARAN TRANS KOTA HOLDINGS BERHAD (335382-V) ANNUAL REPORT 105
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Penyata Kewangan Laporan Pengarah 108 Penyata Para Pengarah 113 Akuan Berkanun 113 Laporan Juruaudit Bebas 114 Penyata Pendapatan Komprehensif 116 Penyata Kedudukan Kewangan 117 Penyata Perubahan Ekuiti Disatukan 118 Penyata Perubahan Ekuiti 119 Penyata Aliran Tunai 120 Nota-nota kepada Penyata Kewangan 122 Maklumat Tambahan 170