Plus Expressways Berhad 2008 Annual Report
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PLUS Expressways Berhad
Expanding Reach
Menara Korporat, Persada PLUS Persimpangan Bertingkat Subang KM15, Lebuhraya Baru Lembah Klang 47301 Petaling Jaya Selangor Darul Ehsan, Malaysia T +603 7801 6666/7666 4666 F +603 7801 6600/7666 4400
annual report 2008
PLUS EXPRESSWAYS BERHAD
www.plus.com.my
PLUS Expressways Berhad
annual report 2008
Expanding Reach Everyday, we are touching lives and connecting people. Our efforts at PLUS Expressways reflect the great responsibility of not only providing millions of road users optimum convenience and safety but to also ensure that it is coupled with the capacity to see your ambitions grow. Crucially, we continue to strive to extend this responsibility in everything we do. As the nation’s premier expressways operator, we are nurturing and developing people, communities and economies by continually expanding our reach, enabling you to go even further in realising your dreams.
7
th
Annual General Meeting Date
4 June 2009 Time
10.00 am Venue
Banquet Hall, Menara Korporat Persada PLUS, Persimpangan Bertingkat Subang KM15, Lebuhraya Baru Lembah Klang 47301 Petaling Jaya, Selangor Darul Ehsan Malaysia
exit 607
We remain committed to managing our expressways with utmost care and compassion. Designed for comfort and convenience, our rest areas help foster closer relationships and strengthen family ties.
exit 608
Expanding Reach
exit 233
We take the time to listen to our customers to gain a better understanding of their expectations. Their invaluable feedback enables us to constantly deliver new and improved services.
exit 254
Expanding Reach
exit 233
We fulfill our role by providing an efficient and sustainable network for your business needs. This is to enable you to realise your expectations the way you envisioned it.
exit 254
Expanding Reach
exit 125
Staying relevant and true as a caring organisation ensures our long-term sustainability. We continue to extend a helping hand to victims of natural disasters, highlighting our compassionate role towards communities beyond our expressways.
exit 128
Expanding Reach
Malaysia
We consistently deliver world-class standards in our performance. As a result of our endeavours, our success has gained recognition abroad, paving the way for us in India and Indonesia.
India
Expanding Reach
Indonesia
rationale The new PLUS visual identity consists of two elements: the logo or symbol in the blue stylised expressway design, and the green PLUS brand name in a distinctive font. Logo/Symbol: The PLUS new identity reflects the aspirational values of a world-class expressway operator. The logo or symbol in the form of a stylised expressway communicates the corporate thrust of efficiency, speed and modernism, where the deliberate lines of the logo continues into the PLUS name in one dynamic flow.
Vision Statement “To be a Premier Global Expressway Group”
Mission Statement “Providing Efficient and Safe Expressway Network that Enhances Quality of Life”
Rationale and Interpretation
Brand Name: The unique font of the PLUS name styled after the outline of an expressway is intentionally gentle to appeal to consumers as an organisation committed to customer needs and expectations. The design combines the strength of PLUS as the premier global expressway operator/group with the enduring community spirit of a caring organisation.
• O u r V i s i o n S t a t e m e n t emphasises the Group’s clear intent to be one of the leading and prestigious expressway groups in the world.
Corporate Colours: Blue was chosen to reflect the company’s membership within the UEM Group, while the familiar green in the PLUS name has been retained to connect to customers who already recognise PLUS as the country’s leading expressway operator.
• It is comprehensible and can be easily understood and embraced by the Group’s employees.
• It is a realistic reflection of the Group’s aspirations to move into the global market place.
• O u r M i s s i o n S t a t e m e n t encapsulates a balanced, double-edged strategy that outlines the role of the organisation in pursuing efficiency for stakeholders, with an emphasis on improving the quality of life for everyone. Ultimately, this balanced strategy will enhance the Group’s ability to achieve its desired Vision in the long run. • While toll road management will remain our core business, the Group shall also focus on non-toll related activities in its expansion plans with greater emphasis on environmental, safety and human aspects. • O u r V i s i o n a n d M i s s i o n Statements also underscore the Group’s continuing economic and social contributions to the nation.
Corporate and Work Values
Passion For Success
Teamwork
Our passion for success keeps us enthusiastic and drives us forward to excel in all that we undertake.
Teamwork enables us to tap the diverse synergies, talents, skills and experiences amongst us to deliver outstanding performance.
Integrity
Trustworthy
Sincerity
Integrity is embedded in all our actions and business activities.
By being trustworthy, we take responsibility for all that we do and say.
Sincerity underlines all our actions as we do it from our hearts.
Caring
Financial Prudence
By caring for all our stakeholders and the environment, we help to enrich lives and provide quality living.
Financial prudence is our management philosophy that creates enduring shareholder value and drives our long-term success.
7
PLUS Expressways Berhad Annual Report 2008
A clear understanding of our strengths and what it takes to be successful...
10 – 14
15 – 32
33 – 48
Structured for Expansion
Enriching Returns
Notice of Annual General Meeting
Company Profile
Five-Year Group Financial Highlights
Statement Accompanying the Notice of the Seventh Annual General Meeting
Awards and Recognition 2008
2008 Group Operational Highlights
2008 Corporate Events
Simplified Group Balance Sheet
Milestones for The Group
Group Quarterly Performance
Corporate Information
Group Financial Review
Group Corporate Structure
Statement of Value Added
Group Organisation Structure
Share Price & Volume Traded
Media Milestones – Corporate
Market Capitalisation
Financial Calendar
Media Milestones – Financial
91 – 102
103 – 114
115 – 139
Reaching Towards Excellence
Reaching Out
Expanding Good Practices
Towards More Impactful Corporate Social Responsibility
Statement of Corporate Governance
Review of Operations • Traffic Growth • Upgrading Projects • Maintenance of Assets • Road Safety and Traffic Management • Projects Under Development
Towards Effective Environmental Protection Towards Greater Customer Satisfaction Towards Greater Innovation Towards a High Performance Workforce Media Milestones – Corporate Social Responsibility
Enterprise Risk Management Code of Business Ethics Statement of Internal Control Audit Committee Report Management Control Policy
49 – 72
73 – 90
Our Collective Reach
Driving Expansion
Board of Directors
Chairman’s Statement
Profile of Board of Directors
Message from the Managing Director
Top Management Company Secretaries Heads of Overseas Subsidiaries Senior Management
140 – 233
234 – 244
Financial Statements
Other Information
Directors’ Report
Recurrent Related Party Transactions
Statement by Directors
Relationship with Related Parties
Statutory Declaration
Analysis of Shareholdings
Independent Auditors’ Report
List of Properties
Income Statements
Group Directory
Balance Sheets Statements of Changes in Equity Cash Flow Statements Notes to The Financial Statements
Form of Proxy
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the Seventh Annual General Meeting of the
7TH Annual
General Meeting
Company will be held at the Banquet Hall, Menara Korporat, Persada PLUS, Persimpangan Bertingkat Subang, KM15, Lebuhraya Baru Lembah Klang, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia on Thursday, 4 June 2009 at 10.00 am for the purpose of transacting the following businesses:
Agenda: As Ordinary Business 1
To receive the Audited Financial Statements for the year ended 31 December 2008 together with the Reports of the Directors and Auditors thereon.
2
To declare a single tier final dividend of 9.5 sen per ordinary share for the financial year ended 31 December 2008 as recommended by the Directors.
3
4
Resolution 1
To re-elect the following Directors retiring in accordance with Article 76 of the Company’s Articles of Association and who being eligible, have offered themselves for re-election: i
Tan Sri Dato’ Mohd Sheriff Mohd Kassim
Resolution 2
ii
Noorizah Hj Abd Hamid
Resolution 3
To re-elect the following Directors retiring in accordance with Article 83 of the Company’s Articles of Association and who being eligible, have offered themselves for re-election: i
Datuk Seri Panglima Mohd Annuar Zaini
Resolution 4
ii
Dato’ Seri Ismail Shahudin
Resolution 5
5
To approve the Directors’ remuneration.
Resolution 6
6
To re-appoint Messrs Ernst & Young as Auditors and to authorise the Directors to fix their remuneration.
Resolution 7
10
PLUS Expressways Berhad Annual Report 2008
Notice of Annual General Meeting
continued
As Special Business To consider and if thought fit, to pass the following as ordinary resolutions: 7
8
PROPOSED AUTHORITY TO ALLOT SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965 “THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby authorised to allot and issue shares in the Company at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued capital of the Company as at the date of this Annual General Meeting (“AGM”) and that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad and that such authority shall continue to be in force until the conclusion of the next AGM of the Company.”
Resolution 8
PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE “THAT pursuant to paragraph 10.09 of the Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given for the renewal of the Shareholders’ Mandate for the Company and/or its subsidiaries (“PLUS Expressways Group”) to enter into recurrent related party transactions of a revenue or trading nature, which are necessary for the day-to-day operations of the PLUS Expressways Group to be entered into by the PLUS Expressways Group provided such transactions are in the ordinary course of business and are on terms not more favourable to the related party than those generally available to the public, particulars of which are set out in Section 2.2 of the Circular to Shareholders of the Company dated 13 May 2009, AND THAT such approval conferred by the Shareholders’ Mandate shall continue to be in force until: (a) the conclusion of the next Annual General Meeting (“AGM”) of the Company following this AGM at which such mandate is passed, at which time it will lapse, unless by a resolution passed at such general meeting whereby the authority is renewed; (b) the expiration of the period within which the next AGM of the Company after the date is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (Act) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or (c) revoked or varied by resolution passed by the shareholders in a general meeting,
whichever is the earlier,
AND FURTHER THAT the Directors of the Company and/or any of them be and are/is (as the case may be) hereby authorised to complete and do all such acts and things (including executing such documents under the common seal in accordance with the provisions of the Articles of Association of the Company, as may be required) to give effect to the Proposed Renewal of Shareholders’ Mandate.”
11
Resolution 9
PLUS Expressways Berhad Annual Report 2008
Notice of Annual General Meeting
9
continued
PROPOSED NEW MANDATE FOR ADDITIONAL RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE “THAT pursuant to paragraph 10.09 of the Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given for the Shareholders’ Mandate for the Company and/or its subsidiaries (“PLUS Expressways Group”) to enter into additional recurrent related party transactions of a revenue or trading nature, which are necessary for the day-to-day operations of the PLUS Expressways Group to be entered into by the PLUS Expressways Group provided such transactions are in the ordinary course of business and are on terms not more favourable to the related party than those generally available to the public, particulars of which are set out in Section 2.3 of the Circular to Shareholders of the Company dated 13 May 2009, AND THAT such approval conferred by the Shareholders’ Mandate shall continue to be in force until: (a) the conclusion of the next Annual General Meeting (“AGM”) of the Company following this AGM at which such mandate is passed, at which time it will lapse, unless by a resolution passed at such general meeting whereby the authority is renewed; (b) the expiration of the period within which the next AGM of the Company after the date is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (Act) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or (c) revoked or varied by resolution passed by the shareholders in a general meeting,
whichever is the earlier,
AND FURTHER THAT the Directors of the Company and/or any of them be and are/is (as the case may be) hereby authorised to complete and do all such acts and things (including executing such documents under the common seal in accordance with the provisions of the Articles of Association of the Company, as may be required) to give effect to the Proposed Shareholders’ Mandate.”
Resolution 10
Notice of Dividend Entitlement and Payment NOTICE IS HEREBY GIVEN THAT subject to the approval of the shareholders at the Seventh Annual General Meeting to be held on Thursday, 4 June 2009, a single tier final dividend of 9.5 sen per ordinary share for the financial year ended 31 December 2008 will be paid on 2 July 2009 to Depositors whose names appear in the Record of Depositors on 11 June 2009. A Depositor shall qualify for entitlement only in respect of: (a) securities transferred to the Depositor’s securities account before 4.00 pm on 11 June 2009 in respect of transfers; and (b) securities bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad. BY ORDER OF THE BOARD
Tan Hwee Thian (MIA 1904) Mazyu Sherina Mohamed Yusof (LS 0008780) Company Secretaries Kuala Lumpur Dated: 13 May 2009 12
PLUS Expressways Berhad Annual Report 2008
Notice of Annual General Meeting
continued
NOTE 1 1 Every member is entitled to appoint a proxy or in the case of a corporation, to appoint a representative to attend and vote in his place. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 need not be complied with. 2
To be valid, the original form of proxy duly completed must be deposited at the Share Registrar’s office, Symphony Share Registrars Sdn Bhd, Level 26, Menara Multi-Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur not less than 48 hours before the time of holding the meeting.
3
The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if such appointor is a corporation, under its common seal or under the hand of its attorney.
4
A member holding one thousand (1,000) ordinary shares or less may appoint only one (1) proxy to attend and vote at a general meeting who shall represent all the shares held by such member. A member holding more than one thousand (1,000) ordinary shares may appoint up to ten (10) proxies to attend and vote at the same meeting and each proxy appointed shall represent a minimum of one thousand (1,000) ordinary shares. Where a member appoints one (1) or more proxies to attend and vote at the same meeting, such appointment(s) shall be invalid unless the member specifies the proportion of his shareholding to be represented by each proxy.
5 If the form of proxy is returned without any indication as to how the proxy shall vote, the proxy will vote or abstain as he deems fit. 6 If no name is inserted in the space provided for the name of your proxy, the Chairman of the Meeting will act as your proxy. NOTE 2 Resolution pursuant to Section 132D of the Companies Act, 1965. The proposed Resolution 8, if passed, would enable the Directors to issue up to a maximum of 10% of the issued share capital of the Company as at the date of this Annual General Meeting for such purposes as the Directors consider would be in the best interest of the Company. This authority unless revoked or varied by the Company at a General Meeting will expire at the next Annual General Meeting. NOTE 3 Resolutions pertaining to the Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions and Proposed New Mandate for Additional Recurrent Related Party Transactions of a Revenue or Trading Nature. For Resolutions 9 and 10, further information on the Recurrent Related Party Transactions are set out in the Circular to Shareholders of the Company dated 13 May 2009 which is despatched together with the Company’s 2008 Annual Report. NOTE 4 The following person has been designated to attend to shareholders’ requests: Name : Khalilah Dato’ Mohd Talha Designation : Head, Corporate Communications Department Contact No : +603 7666 4666
Statement Accompanying the Notice of the Seventh Annual General Meeting DIRECTORS WHO ARE SEEKING RE-ELECTION AT THE SEVENTH ANNUAL GENERAL MEETING OF THE COMPANY
The details of the four (4) Directors seeking re-election are set out in their respective profiles which appear on pages 52 to 64 of this Annual Report. The details of their interest in the securities of the Company are set out in the Analysis of Shareholdings on page 236 of this Annual Report.
13
PLUS Expressways Berhad Annual Report 2008
Financial Calendar
2008 26 February
Announcement of financial results for the 4th quarter and year ended 31 December 2007.
Announcement of Key Performance Indicators (“KPI”) for 2008-2010.
13 March
Completion of acquisition of Konsortium Lebuhraya Butterworth-Kulim (“KLBK”) Sdn Bhd.
27 May
Announcement of financial results for the 1st quarter ended 31 March 2008.
18 June
Sixth Annual General Meeting.
16 July
Payment of final tax exempt dividend of 8.0 sen per ordinary share for financial year ended 31 December 2007.
21 August
Announcement of financial results for the 2nd quarter ended 30 June 2008.
23 September
Payment of single tier interim dividend of 6.5 sen per ordinary share for financial year ended 31 December 2008.
17 November
Announcement of financial results for the 3rd quarter ended 30 September 2008.
30 December
Completion of subscription and issue of 60% shares in PT Cimanggis Cibitung Tollways, Indonesia.
2009
14
26 February
Announcement of financial results for the 4th quarter and year ended 31 December 2008.
Announcement of Key Performance Indicators (“KPI”) for 2009-2010.
PLUS Expressways Berhad Annual Report 2008
Corporate Framework
Structured for Expansion
Company Profile
Awards and Recognition 2008
2008 Corporate Events
Milestones for The Group
Corporate Information
Group Corporate Structure
Group Organisation Structure
Media Milestones – Corporate
15
16 18 20 26 28 29 30 32
PLUS Expressways Berhad Annual Report 2008
Company Profile
Who we are... PLUS Expressways Group is the largest toll expressway operator in South East Asia and one of the largest in the world in terms of market capitalisation.
Incorporated in Malaysia on 29 January 2002, PLUS Expressways Berhad (“PLUS Expressways”) made its debut on the Main Board of Bursa Malaysia on 17 July 2002. PLUS Expressways is involved in investment holding and the provision of expressway operation services. PLUS Expressways wholly owns Projek Lebuhraya Utara-Selatan Berhad, Expressway Lingkaran Tengah Sdn Bhd, Linkedua (Malaysia) Berhad, Konsortium Lebuhraya Butterworth-Kulim (“KLBK”) Sdn Bhd and is a substantial shareholder of PLUS BKSP Toll Limited, PT Lintas Marga Sedaya and PT Cimanggis Cibitung Tollways.
Domestic Operations PLUS
ELITE
LINKEDUA
KLBK
• North-South Expressway • New Klang Valley Expressway • Federal Highway Route 2 • Seremban-Port Dickson Highway
• North-South Expressway Central Link
• Malaysia-Singapore Second Crossing
• Butterworth-Kulim Expressway
Length 63 km
Length 47 km
Length 17 km
Concession Period April 1994 – May 2030 (36 Years)
Concession Period July 1993 – December 2038 (45 Years)
Concession Period June 1994 – June 2026 (32 Years)
Length 846 km Concession Period March 1988 – December 2038 (50 Years)
16
PLUS Expressways Berhad Annual Report 2008
Company Profile
Total length in operation: 973 km
Companies under PLUS Expressways Berhad:
Domestic 100% 100% 100% 100%
continued
Projek Lebuhraya Utara-Selatan Berhad (“PLUS”) Expressway Lingkaran Tengah Sdn Bhd (“ELITE”) Linkedua (Malaysia) Berhad (“LINKEDUA”) Konsortium Lebuhraya Butterworth-Kulim (KLBK) Sdn Bhd (“KLBK”)
Total assets: RM17 billion Total concessions: 6 toll concessions
International India 94.12%* PLUS BKSP Toll Limited (“PLUS BKSP”)
Toll Road Business: 21 years experience
Indonesia 55% PT Lintas Marga Sedaya (“LMS”) 60% PT Cimanggis Cibitung Tollways (“CCTW”) * PLUS Expressways holds 94.12% direct and indirect interest in PLUS BKSP via PLUS Kalyan (Mauritius) Private Limited.
BHIWANDI
JAKARTA JAVA ISLAND, INDONESIA
KALYAN
SHIL PHATA
JAKARTA CIKAMPEK
CIBITUNG CIMANGGIS PALIMANAN
International Ventures PLUS BKSP Toll Limited (“PLUS BKSP”) • Bhiwandi-Kalyan-Shil Phata Highway in Mumbai, India Length 22 km Status 99% complete. Toll collection anticipated in first half of 2009
PT Lintas Marga Sedaya (“LMS”) • Cikampek-Palimanan Expressway in West Java, Indonesia
PT CIMANGGIS CIBITUNG TOLLWAYS (“CCTW”) • Cimanggis-Cibitung Toll Road in Jakarta, West Java, Indonesia
Length 116 km
Length 25.4 km
Status Land acquisition in progress
Status Preliminary stage of development
17
PLUS Expressways Berhad Annual Report 2008
Awards and Recognition 2008
1
2
6 7
3
5 4
1.
The Brand Laureate Award – Best Brands, Infrastructure, Expressways
Not Shown in Picture: 1.
Sri Wijaya Award (Company contribution in support of progression and adoption of UEM Group’s corporate initiatives and activities) – UEM Group Annual Awards
2.
National Quality Award – Bronze Award under the category of R&R Highway Toilet Ministry of Housing and Local Government
Sri Cemerlang Award (Image & Perception Management) – UEM Group Annual Awards
3.
Sri Wira Award for Azidah Sahri, Section S5 (Best Employee, Non-Executive) – UEM Group Annual Awards
4.
The Brand Laureate Award – Branding, SMEs Best Supporter, Infrastructure
4.
5.
Corporate Governance Survey 2008 – Joint 14th place
Sri Mulia Award for Rene’e Aziz Ahmad, Maintenance Monitoring Department (Contribution of Employee to the Community) – UEM Group Annual Awards
6.
National Quality Award – Silver Award under the category of R&R Highway Toilet Ministry of Housing and Local Government
5.
Six Sigma Green Belt Certification – Johari Jivisol Abdullah, Maintenance Monitoring Department
6.
1st runner-up for Continual Improvement Competition (“CIC”) during UEM Excellence Conference 2008
7.
Champion in Improvement in Work Quality Competition (“KMK”) organised by Malaysian Highway Authority
2. 3.
7.
National Quality Award – Gold Award under the category of R&R Highway Toilet Ministry of Housing and Local Government
Sri Cemerlang Award (System & Process Improvement) – UEM Group Annual Awards
ACHIEVEMENTS IN
2008
18
PLUS Expressways Berhad Annual Report 2008
Awards and Recognition 2008
continued
2007
2005
2002-2003
1. Anugerah Sri Cemerlang – Productivity of Resources UEM Group Annual Awards
1. Most Accessible Directors and Senior Management 4th in Asia and first in Malaysia Euromoney Magazine Survey
1. Best Performing Company UEM Group Annual Awards
2. Anugerah Sri Cipta Early Fault Detection System UEM Group Annual Awards 3. Anugerah Sri Wira Fisor Md Rashid UEM Group Annual Awards 4.
Gold Award for Innovative & Creative Circle Convention Competition Team ‘Jati’ from Section S5
5. RAM Award of Distinction – Blueprint Awards for New Project Finance Benchmark Deal Issuance of Sukuk Musyarakah – RM9.17 billion 6. Champion in UEM Group MD/CEO Businesss Simulation Challenge 2006/2007 ‘Super PLUS Corporation’ – Syairul Irwan Rased, Shatri Ahmad, Zetty Bismaniza, Adila Mustapa
2006
2. Best Performing Company UEM Group Sri Cemerlang Award – UEM Group Annual Awards 2005 3. 4. 5.
2.
2.
Triple Gold Award during National Creative Circle Convention Team ‘Jati’ from Section S5
3. Sri Cemerlang Award Productivity of Resources UEM Group Annual Awards 4.
Gold Award during Regional Innovative and Creative Circle Convention Team ‘Jati’ from Section S5 and Team ‘Warisan’ of Section S3
5. UEM’s CEO Challenge Trophy and Best Presentation during UEM Continual Improvement Competition 2006 in conjunction with UEM Excellence Conference Team ‘Jati’ from Section S5 6. Champion in Continual Improvement Competition Team ‘Warisan’ of Section S3 7.
Best Toilet Design Tapah Rest and Service Area (South bound) Ministry of Housing and Local Government Award
Best Highway Concessionaire – Layby Management Northern Region Malaysian Highway Authority Award
3.
3.
Gold Award for Quality Improvement Competition during Mini Konvensyen QCC Wilayah Utara – Team ‘Maju’ from Toll Department – Team ‘Jati’ from Section S5 – Team ‘Graviti’ from Section N1 – Team ‘Dinamik’ from Section C2
4. Leader Road Concessionaire Sector United Engineers Malaysia Bhd Award
Winner for Quality Improvement Competition MHA Quality Day (QCC Team ‘Warisan’ of Section S3)
5. Achievement Award – Finance Asia 2002: Best Local Currency Bond Deal Islamic Bond
Certification
1. No. 1 in Corporate Governance Reporting Survey among top 100 companies listed on Bursa Malaysia
Johor Landscaping Competition 3rd place
Grade A Clean Premises All F&B outlets on NSE – Ministry of Health
2004
1.
Best Highway Concessionaire – RSA Management Northern Region Malaysian Highway Authority Award
2.
1. OHSAS 18001:2007 – Projek Lebuhraya Utara-Selatan Bhd Occupational Health and Safety Management System
2004 Pertubuhan Arkitek Malaysia (“PAM”) Award – Thematic identity and landscaping concept Senawang, Pedas Linggi, Tangkak and Kampung Bemban Laybys
2. ISO 9001:2000 – Operations, Research, Planning, Maintenance and Development Quality Management System
Winner for Quality Improvement Competition MHA Quality Day (QCC Team ‘Jati’ of Section S5)
3. ISO 9001:2000 – Finance and Support Services Quality Management System 4. ISO 14001:2004 Environmental Management System
4. Company Merit Award UEM Group Excellence Conference 2004 (EC 2004) 5.
Winner for Quality Improvement Competition UEM – Excellence Conference Award (QCC Team ‘Jati’ of Section S5)
PREVIOUS AWARDS
2002-2007 19
PLUS Expressways Berhad Annual Report 2008
2008 Corporate Events
11 Jan 2008
3 Apr 2008
Department heads perform at the PLUS Expressways 2007 Annual Dinner at Sheraton Subang Hotel
Participants receiving helmets for answering correctly at a “Respect Your Limits” safety seminar in Ipoh.
28 Jan 2008
1 & 2 Mac 2008
Drivers and operators of heavy vehicles listening intently to speakers at the “Respect Your Limits” safety seminar in Alor Setar
Fast and furious action during Round 1 of the PLUS Rotax Max Challenge 2008 at the Speedway PLUS Circuit
5 Apr 2008 Having fun while being grilled at an “It’s All About You” Appreciation Hi-Tea for loyal customers at Planet Hollywood
31 Jan 2008 A lion dance performance signaled the launch of “Respect Your Limits” safety campaign in conjunction with the 2008 Chinese New Year at Sungai Buloh OBR
29 Apr 2008
9 May 2008
Media representatives taking a closer look at one of the robots used for culvert inspections during a media tour to highlight structured expressway maintenance regime
PLUS FC team captain presenting a jersey to the PLUS Chairman for the team’s promotion to the Malaysian Super League at an appreciation dinner
20
PLUS Expressways Berhad Annual Report 2008
2008 Corporate Events
21
continued
PLUS Expressways Berhad Annual Report 2008
2008 Corporate Events
continued
6 Jun 2008
11 Jul 2008
The soft opening of the new Ipoh Utara Toll Plaza was officiated by the Works Minister
PLUS swept awards in various categories at the UEM Group Annual Awards Night
20-25 Jun 2008
11 Jul 2008
Grim determination on the faces of the PLUS HQ tug-of-war team as they battle for gold at the 2008 Inter-Region Games
PLUS personnel played a big role in the rear seatbelt-wearing advocacy programme
19 & 20 Jul 2008
19 & 20 Jul 2008
Staff and their children having a splashing time at the PLUS Family Day in Port Dickson
Go-kart drivers ready to pit their skills during Round 4 of the PLUS Asia Max Challenge at Speedway PLUS Circuit
23-26 Jul 2008
9 Aug 2008
The PLUS Sepak Takraw team displaying agility and acrobatic skills at the 2008 Sukan Kerja Raya in Melaka
Durian lovers flocked the Bukit Gantang Tropical Fruit Village (southbound) during a “Jom Makan Durian” festival
22
PLUS Expressways Berhad Annual Report 2008
2008 Corporate Events
23
continued
PLUS Expressways Berhad Annual Report 2008
2008 Corporate Events
continued
26 Aug 2008
29 Sep 2008
Speakers of the “Respect Your Limits” safety seminar in Kuala Terengganu educating a participant on the proper way of wearing a helmet
Launch of “Balik Kampung” safety campaign at the Sungai Besi Toll Plaza
23 Oct 2008
17 Nov 2008
18 Nov 2008
The unveiling of a new logo signalled a more dynamic era for PLUS
A ‘Doa Selamat’ ceremony was held at Persada PLUS as staff moved in to the permanent headquarters
The PLUS Travel Incentive Programme was unveiled by the Works Minister
4 Dec 2008
21-23 Nov 2008
The PLUS FC team achieved high media visibility in its journey to the Super League
The recently launched new PLUS logo made its international debut at the Malaysian leg of the A1 Grand Prix World Cup of Motor Sport series when it was telecast live to over 65 tv channels worldwide
17 Dec 2008 Local celebrities endorsing the PLUSMiles Loyalty Card at its launch ceremony in Sungai Buloh OBR
24
PLUS Expressways Berhad Annual Report 2008
2008 Corporate Events
25
continued
PLUS Expressways Berhad Annual Report 2008
26
PLUS Expressways Berhad Annual Report 2008
2004
2003
2002
Milestones for The Group
Milestones for The Group
continued
29 January 2002
7 October 2004
PLUS Expressways incorporated in Malaysia as a Public Company
Takeover of operation and maintenance services of Seremban – Port Dickson Highway (“SPDH”) by PLUS
31 MAY 2002
22 April 2005
PLUS issued RM5.1 billion Bai’ Bithaman Ajil Islamic Debt Securities
Third Supplemental Concession Agreement Signing Ceremony between the Government and PLUS
17 July 2002
17 JUNE 2005
Initial Public Listing of PLUS Expressways on the Kuala Lumpur Stock Exchange (now known as Bursa Malaysia Securities Berhad)
Issuance of RM2.41 billion nominal value zero coupon Serial Bai’ Bithaman Ajil Islamic Securities by PLUS
30 October 2002 Old Nilai Toll Plaza closed
Through a consortium, PLUS Expressways won the bid for the Bhiwandi-Kalyan-Shil Phata Highway in India
31 October 2002
10 OCTOBER 2006
New Nilai Interchange opened
11 DECEMBER 2002
Issuance of globally-syariah compliant Islamic securities under Musyarakah principle amounting to RM9.17 billion nominal value by PLUS
PLUS issued RM2.26 billion nominal value Bai’ Bithaman Ajil Serial Bonds
18 OCTOBER 2006
28 MAY 2003
16 MAY 2006
Soft opening of Pendang Interchange
1 NovEMBER 2006
First Annual General Meeting
1 September 2003 PLUS Expressways provided expressway operation and maintenance services to PLUS, ELITE and LINKEDUA
8 September 2003 The official opening of Kota Damansara Interchange
1 January 2004 PLUS Expressways provided expressway operation and maintenance services to Penang Bridge
1 March 2004 Senai Toll Plaza closed
Signing of Heads of Agreement between PT Baskhara Utama Sedaya and PLUS Expressways for proposed acquisition of 55% share capital in PT Lintas Marga Sedaya for proposed 116km Cikampek-Palimanan toll highway project
27 August 2007 PLUS Travel Time Advisory (“TTA”) introduced to the public
18 SEPTEMBER 2007 Through an unincorporated consortium, PLUS Expressways won the tender bid for the proposed 25.4km package 4 Cimanggis-Cibitung Toll Road project in Indonesia
18 DECEMBER 2007 Completion of acquisitions of entire issued and paid-up share capital of ELITE and LINKEDUA
2007
2006
2005
27
PLUS Expressways Berhad Annual Report 2008
Corporate Information
Board of Directors
Audit Committee Members
Registered Office
Tan Sri Dato’ Mohd Sheriff Mohd Kassim Chairman
Geh Cheng Hooi Chairman
Dato’ Ahmad Pardas Senin Non-Executive Deputy Chairman
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid
19-2 Mercu UEM Jalan Stesen Sentral 5 Kuala Lumpur Sentral 50470 Kuala Lumpur, Malaysia Tel : +603 2727 6868 Fax: +603 2727 2211
Datuk K. Ravindran
Quah Poh Keat Noorizah Hj Abd Hamid Managing Director Geh Cheng Hooi Senior Independent Non-Executive Director
Auditors Nomination Committee Members Tan Sri Dato’ Mohd Sheriff Mohd Kassim Chairman
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid Independent Non-Executive Director
Geh Cheng Hooi
Hassan Ja’afar Non-Independent Non-Executive Director
Remuneration Committee Members
Dato’ Mohamed Azman Yahya Non-Independent Non-Executive Director
Datuk K. Ravindran
Tan Sri Dato’ Mohd Sheriff Mohd Kassim Chairman Dato’ Ahmad Pardas Senin Hassan Ja’afar
Tan Sri Razali Ismail Independent Non-Executive Director
Datuk K. Ravindran
Datuk K. Ravindran Independent Non-Executive Director
Investment Committee Members
Quah Poh Keat Independent Non-Executive Director
Tan Sri Dato’ Mohd Sheriff Mohd Kassim Chairman
Abdul Farid Alias (resigned w.e.f. 31 December 2008) Non-Independent Non-Executive Director Datuk Seri Panglima Mohd Annuar Zaini (appointed w.e.f. 19 December 2008) Independent Non-Executive Director Dato’ Seri Ismail Shahudin (appointed w.e.f. 21 April 2009) Non-Independent Non-Executive Director
28
PLUS Expressways Berhad Annual Report 2008
Messrs Ernst & Young Chartered Accountants Level 23A, Menara Milenium Jalan Damanlela Pusat Bandar Damansara 50490 Kuala Lumpur P.O. Box 11040 50734 Kuala Lumpur, Malaysia Tel: +603 7495 8000 Fax: +603 2095 5332 www.ey.com
Head/Management Office Menara Korporat, Persada PLUS Persimpangan Bertingkat Subang KM15, Lebuhraya Baru Lembah Klang 47301 Petaling Jaya Selangor Darul Ehsan, Malaysia Tel: +603 7801 6666/7666 4666 Fax: +603 7801 6600/7666 4400 www.plus.com.my
Principal Bankers CIMB Bank Berhad Malayan Banking Berhad
Dato’ Ahmad Pardas Senin Dato’ Mohamed Azman Yahya
Share Registrar
Noorizah Hj Abd Hamid
Symphony Share Registrars Sdn Bhd Level 26, Menara Multi-Purpose Capital Square No. 8 Jalan Munshi Abdullah 50100 Kuala Lumpur, Malaysia Tel: +603 2721 2222 Fax: +603 2721 2530/31 www.symphony.com.my
Company Secretaries Tan Hwee Thian MIA 1904 Mazyu Sherina Mohamed Yusof LS 0008780
Stock Exchange Listing Main Board, Bursa Malaysia Securities Berhad
Group Corporate Structure as at 27 April 2009
Khazanah Nasional Berhad 100%
23.66% UEM Group Berhad 40.21%
Domestic Projek Lebuhraya Utara-Selatan Berhad 100% Expressway Lingkaran Tengah Sdn Bhd 100% Linkedua (Malaysia) Berhad 100% Konsortium Lebuhraya Butterworth-Kulim (KLBK) Sdn Bhd 100%
International PLUS BKSP Toll Limited (India) 94.12%* PT Lintas Marga Sedaya (Indonesia) 55% PT Cimanggis Cibitung Tollways (Indonesia) 60%
* PLUS Expressways Berhad holds 94.12% direct and indirect interest in PLUS BKSP via PLUS Kalyan (Mauritius) Private Limited.
29
PLUS Expressways Berhad Annual Report 2008
Group Organisation Structure
Managing Director
Chief Operating Officer
Operations Division Traffic Safety/Toll/Commercial Facilities/ Operations Security/Regional Operations/ Routine Maintenance Monitoring/ Toll System Monitoring
Maintenance & Development Division Concession Monitoring Support/ Electronics & Telecommunication Projects/ Projects Monitoring/Maintenance Monitoring
Research & Technical Support Division Database Management/Research
Planning & Quality Improvement Division Productivity & Quality Management/Planning
Chief Financial Officer
30
PLUS Expressways Berhad Annual Report 2008
Staff Support Services Division Human Resource/Human Capital Development/ Asset Management & Facilities
Group Organisation Structure
continued
Works Procurement Special Projects Corporate Affairs Accounting Treasury Risk Management Purchasing & Inventory Management Information System
Managing Director’s Office Business Development Corporate Communications Legal & Secretarial Support Customer Relationship & Marketing Internal Audit
31
PLUS Expressways Berhad Annual Report 2008
Media Milestones – Corporate Corporate News Clippings
32
PLUS Expressways Berhad Annual Report 2008
Financial Review
Enriching Returns
Five-Year Group Financial Highlights
2008 Group Operational Highlights
Simplified Group Balance Sheet
Group Quarterly Performance
Group Financial Review
Statement of Value Added
Share Price & Volume Traded
Market Capitalisation
Media Milestones – Financial
33
34 36 40 41 42 46 47 47 48
PLUS Expressways Berhad Annual Report 2008
Five-Year Group Financial Highlights
2008
2007
2006
2005
2004
2,237 2,968 2,448 1,516 1,079
1,820 2,282 2,187 1,308 1,248
1,691 2,091 1,977 1,108 1,105
1,664 1,671 1,788 1,071 1,064
1,499 1,650 1,500 774 768
17,021 10,473 11,324 1,250 5,678
15,893 10,080 10,543 1,250 5,340
12,588 7,315 8,070 1,250 4,518
12,008 6,968 7,846 1,250 4,161
10,783 7,063 7,285 1,250 3,498
22.9 82.5 19.6 6.6 1.8
7.7 86.7 25.3 8.8 1.9
1.6 84.0 25.5 9.0 1.6
11.0 97.0 27.8 9.3 1.7
3.9 82.2 23.4 7.2 2.0
Profitability (RM million) 1 2 3 4 5
Toll collection Revenue EBITDA* Profit before tax Profit attributable to equity holders
Key Balance Sheet Data (RM million) 1 2 3 4 5
Total assets Total borrowings & financial liabilities Total liabilities Share capital Shareholders’ equity
Financial Statistics
Profit Before Tax
5,678
5,340
4,518
1,516
1,308
1,108
774
2,237
(RM million)
2004 2005 2006 2007 2008
2004 2005 2006 2007 2008
2004 2005 2006 2007 2008
Dividend Per Share
Earnings Per Share
Net Assets Per Share
113.9
107.0
90.4
83.2
70.0
21.6
25.0
22.1
21.3
(sen)
15.4
16.0
14.0
(sen)
9.0
7.5
12.5
(sen)
34
Shareholders’ Equity
(RM million)
1,820
1,691
1,664
1,499
(RM million)
4,161
Toll Collection
3,498
Toll collection growth (%) EBITDA margin (%)* Return on average equity (%) Return on average assets (%) Debt/equity (Times)
1,071
1 2 3 4 5
PLUS Expressways Berhad Annual Report 2008 2004 2005 2006 2007 2008
2004 2005 2006 2007 2008
2004 2005 2006 2007 2008
Five-Year Group Financial Highlights
continued
2008
2007
2006
2005
2004
21.6 113.9
25.0 107.0
22.1 90.4
21.3 83.2
15.4 70.0
Share Information 1
Per share (sen) Earnings Net assets
2
Share price (RM) High Low Closing
3.28 2.53 2.98
3.44 2.78 3.28
3.12 2.57 2.81
3.42 2.67 3.06
2.89 2.16 2.80
3
Dividends Dividends (RM million) Dividend per share (sen) Dividend growth (%) Dividend payout ratio (%)
800^ 16.0^ 14 74^
700 14.0 12 56
625 12.5 39 57
450 9.0 20 42
375 7.5 7 49
Toll Collection
Profit Before Tax
(RM million)
5,678
5,340
4,518
4,161
3,498
1,516
1,308
1,108
2004 2005 2006 2007 2008
2004 2005 2006 2007 2008
2004 2005 2006 2007 2008
Dividend Per Share
Earnings Per Share
Net Assets Per Share
2004 2005 2006 2007 2008
70.0
2004 2005 2006 2007 2008
113.9
107.0
90.4
83.2
21.6
25.0
22.1
21.3
(sen)
15.4
16.0
14.0
(sen)
9.0
7.5
12.5
(sen)
1,071
774
2,237
1,820
1,691
1,499
^
(RM million)
2004-2007: Before deduction for notional tax on tax exempt dividends and notional interest on Government Support Loan pursuant to toll compensation arrangement per Second Supplemental Concession Agreement. 2008: No provision for notional tax on tax exempt dividends following election of single tier tax system in 2008. Includes single tier final dividend of RM475 million or 9.5 sen per share to be proposed at the forthcoming Seventh Annual General Meeting. 1,664
*
Shareholders’ Equity
(RM million)
2004 2005 2006 2007 2008
35
PLUS Expressways Berhad Annual Report 2008
2008 Group Operational Highlights
PLUS
2008
2007
2006
2005
2004
Traffic Volume Analysis 1
Traffic volume growth (%)
2
Total traffic volume (No. of vehicles)
3
Average daily traffic volume (No. of vehicles)
5.2%
7.7%
1.6%
0.8%
3.9%
376,531,093
367,666,873
342,424,316
337,472,380
332,519,383
1,028,773
1,007,307
938,149
924,582
908,523
Method of Payment (%) 1
Manual cash payments
51%
54%
57%
61%
64%
2
Electronic Toll Collection (“ETC”)
49%
46%
43%
39%
36%
Traffic Volume Growth
Traffic Volume
(in pcu-km)
(Number of vehicles in millions) 7.7% 333
337
342
2004
2005
2006
368
377
2007
2008
5.2% 3.9% 1.6% 0.8% 2004
2005
2006
2007
2008
Average Daily Traffic Volume
Method of Toll Payment
(Number of vehicles in thousands)
909
2004
36
925
2005
938
2006
1,007
2007
PLUS Expressways Berhad Annual Report 2008
1,029
2008
64%
61%
57%
54%
51%
36%
39%
43%
46%
49%
2004
2005
2006
2007
2008
Cash
Electronic
2008 Group Operational Highlights
ELITE
2008
2007
2006
2005
continued
2004
Traffic Volume Analysis 1
Traffic volume growth (%)
2
Total traffic volume (No. of vehicles)
3
Average daily traffic volume (No. of vehicles)
4.0%
6.0%
2.8%
8.3%
6.4%
64,878,032
61,436,481
57,951,567
56,437,362
50,262,278
177,262
168,319
158,771
154,623
137,329
Method of Payment (%) 1
Manual cash payments
45%
48%
51%
55%
60%
2
Electronic Toll Collection (“ETC”)
55%
52%
49%
45%
40%
Traffic Volume Growth
Traffic Volume
(in pcu-km)
(Number of vehicles in millions)
8.3% 6.4%
56
58
61
2005
2006
2007
50
6.0%
65
4.0% 2.8%
2004
2005
2006
2007
2008
Average Daily Traffic Volume
137
2004
155
2005
159
2006
2007
2008
Method of Toll Payment
(Number of vehicles in thousands) 168
2004
177
60%
55%
51%
48%
45%
40%
45%
49%
52%
55%
2004
2005
2006
2007
2008
2008
Cash
37
Electronic
PLUS Expressways Berhad Annual Report 2008
2008 Group Operational Highlights
continued
LINKedua
2008
2007
2006
2005
2004
Traffic Volume Analysis 1
Traffic volume growth (%)
2
Total traffic volume (No. of vehicles)
3
Average daily traffic volume (No. of vehicles)
19.6%
11.9%
4.4%
7.0%
13.5%
19,885,326
17,185,244
15,457,326
15,053,416
14,263,742
54,331
47,083
42,349
41,242
38,972
Method of Payment (%) 1
Manual cash payments
69%
75%
78%
82%
87%
2
Electronic Toll Collection (“ETC”)
31%
25%
22%
18%
13%
Traffic Volume Growth
Traffic Volume
(in pcu)
(Number of vehicles in millions) 20
19.6% 17 14
13.5%
15
15
2005
2006
11.9% 7.0% 4.4%
2004
2005
2006
2007
2008
Average Daily Traffic Volume 54
2004
38
41
2005
42
2006
2007
2008
Method of Toll Payment
(Number of vehicles in thousands)
39
2004
87%
82%
78%
75%
69%
18%
22%
25%
31%
13% 2004
2005
2006
2007
2008
47
2007
PLUS Expressways Berhad Annual Report 2008
2008
Cash
Electronic
2008 Group Operational Highlights
BKE
2008
2007
2006
2005
continued
2004
Traffic Volume Analysis 1
Traffic volume growth (%)
2
Total traffic volume (No. of vehicles)
3
Average daily traffic volume (No. of vehicles)
-1.9%
4.1%
4.0%
0.1%
8.7%
20,206,780
20,662,169
19,811,951
19,042,492
18,994,475
55,210
56,609
54,279
52,171
51,897
Method of Payment (%) 1
Manual cash payments
56%
60%
64%
68%
72%
2
Electronic Toll Collection (“ETC”)
44%
40%
36%
32%
28%
Traffic Volume Growth
Traffic Volume
(in pcu)
(Number of vehicles in millions)
8.7%
4.0%
2005
2006
2007
2008
2004
2005
2005
54
2006
57
2007
2006
2007
2008
Method of Toll Payment
(Number of vehicles in thousands) 52
2004
20
(1.9%)
Average Daily Traffic Volume 52
19
4.1%
0.1%
2004
21
20
19
55
72%
68%
64%
60%
56%
28%
32%
36%
40%
44%
2004
2005
2006
2007
2008
2008
Cash
39
Electronic
PLUS Expressways Berhad Annual Report 2008
Simplified Group Balance Sheet
Assets 2008 72.7%
Concession Assets
13.1%
Cash, Bank Balances and Short Term Deposit
11.8%
Toll Compensation Recoverable from Government
1.3%
Investments
0.5%
Property, Plant and Equipment, Prepaid Land Lease Payments and Intangible Assets
0.5%
Other Assets
0.1%
Tax and Deferred Tax Assets
Total Assets RM17,021 million
Liabilities and Shareholders’ Equity 2008
Total Liabilities and Shareholders’ Equity RM17,021 million
40
PLUS Expressways Berhad Annual Report 2008
61.5%
Financial Liabilities and Borrowings
26.0%
Reserves
7.3%
Share Capital
2.3%
Tax and Deferred Tax Liabilities
1.9%
Other Liabilities
0.8%
Payables
0.1%
Amount Received from Government for Additional Works
0.1%
Minority Interests
Group Quarterly Performance
2008 (RM million)
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Full Year
FINANCIAL PERFORMANCE Revenue Direct cost of operations
720 (199)
738 (220)
717 (229)
793 (232)
2,968 (880)
Finance and other income General and administration expenses Finance cost
521 41 (21) (157)
518 41 (20) (158)
488 37 (20) (164)
561 34 (19) (166)
2,088 153 (80) (645)
384 275 5.5 —
381 266 5.3 6.5
341 242 4.9 —
410 297 5.9 9.5^
1,516 1,080 21.6 16.0
Profit before tax Profit after tax Earnings per share (sen) Dividend per share (sen)
2007 (RM million)
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Full Year
Revenue Direct cost of operations
524 (163)
570 (161)
554 (166)
634 (186)
2,282 (676)
Finance and other income General and administration expenses Finance cost
361 32 (11) (115)
409 34 (11) (115)
388 29 (14) (111)
448 111 (13) (114)
1,606 206 (49) (455)
Profit before tax Profit after tax Earnings per share (sen) Dividend per share (sen)
267 259 5.2 —
317 310 6.2 6.0
292 286 5.7 —
432 393 7.9 8.0
1,308 1,248 25.0 14.0
FINANCIAL PERFORMANCE
^ To be proposed at the forthcoming Seventh Annual General Meeting.
41
PLUS Expressways Berhad Annual Report 2008
Group Financial Review
BreakdownofofToll TollCollection Collection Breakdown
INCOME STATEMENT Revenues
RM Million
2008
% 2007 Variance Change
Toll collection
2,237
1,821
416
23%
Net toll compensation
731
455
276
61%
Expressway operation service fee Total revenues
86%
9% 4%
0
6
-6
-100%
2,968
2,282
686
30%
1%
PLUS ELITE LINKEDUA
In 2008, consolidated revenues for the Group reached RM2,968 million, representing a growth of 30% from RM2,282 million in 2007. The main contributor to the growth was the first time consolidation of results from new subsidiaries namely, ELITE, LINKEDUA and KLBK with total revenue of RM324 million. The increase was also due to higher toll collection for PLUS by RM92 million on the back of a year-on-year traffic growth of 5.2%. Net toll compensation of RM731 million for 2008 consists of non-cash toll compensation of RM536 million and the remaining was compensation for non-toll rate increase in 2008. In 2008, higher non-cash toll compensation was recorded as compared to 2007 as there was no deduction for notional tax on tax exempt dividends in 2008 following the election of the single tier tax system effective January 2008.
KLBK
The analysis of toll collection by concession company shows that PLUS contributes the highest toll collection of 86%, followed by ELITE of 9%, LINKEDUA of 4% and KLBK of 1% for 2008.
Operating Costs
RM Million
2008
% 2007 Variance Change
Routine maintenance
228
201
-27
-13%
Management expenditure
348
268
-80
-30%
Depreciation & amortisation
383
257
-126
-49%
Total operating costs
959
726
-233
-32%
Consolidation of three new subsidiaries in 2008, increase in amortisation charges in correspondence to higher toll revenue and increase in management expenditure contributed to the higher operating costs in 2008.
42
PLUS Expressways Berhad Annual Report 2008
Group Financial Review
The breakdown of management expenditure is shown as follows:
BreakdownofofManagement ManagementExpenditure Expenditure Breakdown
2008
12%
continued
BALANCE SHEET Assets
RM Million
2008
% 2007 Variance Change
Non-current assets 10%
Concession assets Property, plant and equipment
7%
Investments
6%
Toll compensation recoverable from the Government
4%
57%
4%
Others
12,380
11,723
657
6%
48
45
3
7%
166
115
51
44%
1,910
1,393
517
37%
38
69
-31
-45%
2,234
2,418
-184
-8%
245
130
115
88%
17,021
15,893
1,128
7%
Current assets
Employee Costs
Deposits and cash
General Expenses
Others
Utilities Toll Consumables & Commission
Total assets
Professional Fees Repairs & Maintenance
In 2008, total assets reached RM17,021 million, 7% higher than 2007.
Advertising & Marketing
2007
11% 10%
8%
59%
5% 4%
The increase in concession assets by RM657 million was attributed to additional expressway capital expenditure of RM353 million and inclusion of KLBK’s concession assets of RM304 million. The increase in toll compensation recoverable from the Government is pursuant to toll compensation settlement arrangement as set out in PLUS’s Second Supplemental Concession Agreement.
3%
Significant costs under management expenditure are employee costs. At the end of 2008, there was 4,010 staff (2007: 3,478 staff) with 78% are frontliners for operational requirements. Continued corporate and debt refinancing exercises resulted in higher professional fees, while other costs were generally kept under control.
43
PLUS Expressways Berhad Annual Report 2008
Group Financial Review
continued
Concession assets which consist of expressway development expenditure, heavy repairs and toll equipment, make up more than 72% of total assets for the Group. The breakdown of concession assets is shown below.
Equity and Liabilities
2008
% 2007 Variance Change
1,250
1,250
0
0%
740
761
-21
-3%
Retained earnings
3,688
3,329
359
11%
Shareholders’ equity
5,678
5,340
338
6%
19
10
9
90%
5,697
5,350
347
6%
9,522
8,583
939
11%
573
121
452
>100%
Trade and sundry payables
139
153
-14
-9%
Short term financial liabilities and borrowings
951
1,497
-546
-36%
Others
139
189
-50
-26%
Total liabilities
11,324
10,543
781
7%
Total equity and liabilities
17,021
15,893
1,128
7%
RM Million Equity Share Capital
Breakdown BreakdownofofConcession ConcessionAssets Assets
Reserves
2008
91%
Minority interests Total equity Non-current liabilities 6% 1% 2%
Long term financial liabilities and borrowings Others
Expressway Development Expenditure Heavy Repairs Other Concession Assets Capital Work-In-Progress
2007
92%
Current liabilities
Change in reserves was mainly due to foreign exchange translation differences. 5% 1% 2%
44
PLUS Expressways Berhad Annual Report 2008
Retained earnings of RM3,688 million is after dividend distributions of RM725 million, made up of final tax exempt dividend for FY2007 of RM400 million and the single tier interim dividend for FY2008 of RM325 million.
Group Financial Review
The analysis of total debts is as follows: Net Debt RM Million
2008
2007
Financial Liabilities
8,589
7,689
1,464
1,383
420
1,008
Total financial liabilities and borrowings
10,473
10,080
Cash and cash equivalents
2,234
2,418
Net Debt
8,239
7,662
1.45
1.43
Borrowings Government loans
Net Debt/Equity (times)
The total financial liabilities as at end 2008 included KLBK’s BAIDS of RM176 million, as consolidated following the acquisition in March 2008. The additional financial liabilities during year 2008 are: • issuance of PLUS’s Sukuk Series 3 of RM700 million nominal value (RM308 million present value on issue date) in May 2008 to partially redeem PLUS Senior Sukuk; and • issuance of PLUS SPV Sukuk of RM1,055 million nominal value (RM762 million present value on issue date) under the RM4,000 million nominal value PLUS SPV Sukuk in June 2008 to partially refinance the bridging loan facility.
Debt Rating and Outlook Rating
Outlook
AA1
Stable
PLUS Senior Sukuk
AAA
Stable
PLUS Sukuk Series 1
AAA
Stable
PLUS Sukuk Series 2
AAA
Stable
PLUS Sukuk Series 3
AAA
Stable
PLUS Expressways Berhad PLUS SPV Sukuk
Rating
Outlook
AA2
Stable
AA3
Stable
ELITE ELITE BAIDS KLBK KLBK BAIDS
Other loans
continued
The above Islamic financial facilities are rated by a Malaysian rating agency, RAM Rating Services.
DIVIDENDS Since the announcement of KPI on dividend in 2006, PEB has consistently achieved the target minimum dividend growth of 12%. In 2008, with the payment of single tier interim dividend of 6.5 sen per share on 23 September 2008 and the recommended single tier final dividend of 9.5 sen per share to be approved by the shareholders at the forthcoming Annual General Meeting, the total dividend payout for FY2008 will be 16.0 sen per share or a total of RM800 million, representing a growth of 14.3% as compared to 14.0 sen per share payout in 2007. The payout also represents 74% of the Group’s net profit. PLUS Expressways will continue to deliver value to its shareholders and to achieve this, the Board has reviewed its dividend payout policy to be a minimum 70% of the Group’s net profit, subject to the availability of cashflows, after taking into consideration the debt servicing and financing commitments for the Group companies as well as future expansion plans. The effort continues to achieve the KPI on minimum dividend payout of 16 sen per share for FY2009, despite the many challenges in the current economic environment.
PLUS
45
PLUS Expressways Berhad Annual Report 2008
Statement of Value Added
Value added is a measure of wealth created. The following statement shows the Group’s value added for 2008 and 2007 and its distribution by way of payments to employees, government and shareholders, with the balance retained in the Group for reinvestment and future growth. 2008 RM million
2007 RM million
VALUE ADDED Revenue Other income Finance income Operating expenses Finance cost
2,968 57 96 (380) (645)
2,282 132 75 (310) (455)
Value added available for distribution
2,096
1,724
To Employees Employees cost
198
159
To Government Taxation
435
60
To Shareholders Dividend Minority interests
725 1
425 —
Retained for reinvestment and future growth Depreciation, amortisation, disposal & write-off Retained earnings
383 354
257 823
2,096
1,724
DISTRIBUTION
Total distributed
Distribution of Value Added 2008
2007 35.2%
62.7%
Depreciation, amortisation, disposal & write-off and retained earnings 34.6%
24.6%
Dividend and Minority interests 20.8%
3.5% Taxation
9.4%
9.2%
Employees cost
46
PLUS Expressways Berhad Annual Report 2008
47
31.12.2008
28.11.2008
31.10.2008
30.09.2008
29.08.2008
Volume
31.07.2008
30.06.2008
30.05.2008
30.04.2008
31.03.2008
29.02.2008
31.01.2008
31.12.2008
28.11.2008
31.10.2008
30.09.2008
29.08.2008
31.07.2008
30.06.2008
30.05.2008
30.04.2008
31.03.2008
29.02.2008
31.01.2008
Share Price & Volume Traded
Million shares RM
15 3.4
12 3.2
3.0
9 2.8
6 2.6
3 2.4
2.2
0 2.0
Closing
Market Capitalisation
RM’billion
17.0
16.0
15.0
14.0
13.0
12.0
Market Capitalisation
PLUS Expressways Berhad Annual Report 2008
Media Milestones – Financial Financial News Clippings
48
PLUS Expressways Berhad Annual Report 2008
Overview
Our Collective Reach
Board of Directors
Profile of Board of Directors
Top Management
Company Secretaries
Heads of Overseas Subsidiaries
Senior Management
49
50 52 66 68 68 70
PLUS Expressways Berhad Annual Report 2008
Board of Directors
Sitting:
Standing from Left to Right:
1
Tan Sri Dato’ Mohd Sheriff Mohd Kassim
1 2 3 4 5
50
PLUS Expressways Berhad Annual Report 2008
Geh Cheng Hooi Hassan Ja’afar Datuk K. Ravindran Dato’ Mohamed Azman Yahya Tan Sri Razali Ismail
Board of Directors
Sitting from Left to Right:
Standing from Left to Right:
1 2
1
Dato’ Ahmad Pardas Senin Noorizah Hj Abd Hamid
2 3 4 5
continued
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid Datuk Seri Panglima Mohd Annuar Zaini Quah Poh Keat Abdul Farid Alias Dato’ Seri Ismail Shahudin
51
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
Tan Sri Dato’ Mohd Sheriff Mohd Kassim Chairman Tan Sri Dato’ Mohd Sheriff Mohd Kassim, a Malaysian aged 69, is a Non-Independent Non-Executive Director and Chairman of PLUS Expressways Berhad. He was appointed as a Director of the Company on 29 January 2002 and was made Chairman on 7 February 2002. Tan Sri Dato’ Mohd Sheriff holds a B.A. (Honours) Economics degree from University of Malaya, a Diploma in Economic Development from Oxford University, United Kingdom and a M.A. Economics from Vanderbilt University, USA. He was the Managing Director of Khazanah Nasional Berhad from 1994 to August 2003 and previously sat on the Boards of UEM Group Berhad, RHB Bank Berhad, Renong Berhad and Silterra Malaysia Sdn Bhd. Prior to joining Khazanah Nasional Berhad, Tan Sri Dato’ Mohd Sheriff served as the Secretary General of Treasury, Ministry of Finance for 3 years. Tan Sri Dato’ Mohd Sheriff is also the Chairman of the Malaysian Institute of Economic Research, President of the Malaysian Economic Association and he serves as the Non-Executive Chairman of Manulife Holdings Berhad [formerly known as Manulife Insurance (Malaysia) Berhad], Intelligent Edge Technologies Berhad, Scientex Berhad and Standard Chartered Bank Malaysia Berhad. He also sits on the Board of Projek Lebuhraya UtaraSelatan Berhad, Konsortium Lebuhraya ButterworthKulim (KLBK) Sdn Bhd and Projek Penyelenggaraan Lebuhraya Berhad. Tan Sri Dato’ Mohd Sheriff is a Non-Executive Director nominated by Khazanah Nasional Berhad, a major shareholder of PLUS Expressways Berhad. He currently serves as Chairman of the Nomination Committee, the Remuneration Committee and the Investment Committee.
52
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Dato’ Ahmad Pardas Senin Deputy Chairman Dato’ Ahmad Pardas Senin, aged 56, was appointed as NonIndependent Non-Executive Deputy Chairman of PLUS Expressways Berhad on 1 July 2004. He currently holds directorships in UEM Group Berhad, UEM Land Holdings Berhad and Pharmaniaga Berhad. He is a Director of Universiti Teknologi Mara (“UiTM”) and the Chairman of The Malaysian Directors Academy (“MINDA”).
Managing Director of Renong Berhad, Managing Director of Time Engineering Berhad, Executive Director & CEO of Time dotCom Berhad, Managing Director of EPE Power Corporation Berhad (now renamed Ranhill Power Berhad). During 20032004, he was seconded as Executive Director and CEO of Silterra Malaysia Sdn Bhd.
Dato’ Ahmad Pardas is a Fellow of The Chartered Institute of Management Accountants (“FCMA”), a Chartered Member of the Malaysian Institute of Accountants (“MIA”) and a Member of the Institute of Internal Auditors, Inc. He is also a member of the Financial Reporting Foundation (“FRF”).
He has also served on the boards UEM Builders Berhad, Opus Group Berhad, Faber Group Berhad, Costain Group Plc. and The Malaysian Industry-Government Group for High Technology (“MIGHT”). Prior to joining the UEM Group, Dato’ Ahmad Pardas had more than 17 years service with the British-American Tobacco Group.
He has been with the UEM Group for more than seventeen years since 1992. During this period Dato’ Ahmad Pardas has served in various other positions in the UEM Group, including as the Managing Director/CEO of UEM World Berhad, Group
He is a Non-Executive Director nominated by UEM Group Berhad, a major shareholder of PLUS Expressways Berhad. Dato’ Ahmad Pardas serves as a member of the Remuneration Committee and the Investment Committee.
53
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Noorizah Hj Abd Hamid Managing Director Noorizah Hj Abd Hamid, a Malaysian aged 49, was appointed as the Managing Director of PLUS Expressways Berhad on 1 April 2007. Prior to that, she was the Managing Director of Faber Group Berhad (“Faber Group”) from 17 March 2003. She was also the Managing Director of Faber Hotels Holdings Sdn Bhd since 3 August 2002. She holds a Masters in Business Administration, majoring in Finance and Management and a Bachelor of Science in Business Administration from Central Michigan University, United States of America. Prior to joining Renong Berhad as the Manager of Group Corporate Affairs in September 1991, she was attached to various positions in finance and corporate advisory with Syarikat Pengurusan Kayu Kayan Terengganu Sdn Bhd, a subsidiary of the Terengganu State Development Corporation, Permodalan Nasional Berhad and Amanah Merchant Bank Berhad. In January 1992, she joined HBN Management Sdn Bhd and was later transferred to Projek Lebuhraya UtaraSelatan Berhad (“PLUS”) as a Senior Manager in the Treasury Department in January 1994. She was transferred back to HBN Management Sdn Bhd in January 1996 and appointed to the post of Senior Manager of Group Corporate Affairs. She was posted to PLUS as Senior General Manager, Finance in 1997 before assuming her designation as the Chief Operating Officer of Faber Group on 9 August 1999. During her tenure in Faber Group she has also been appointed as a Director of various subsidiary companies of Faber Group. She also sits on the Board of Commissioner of PT Lintas Marga Sedaya, a PLUS Expressways Berhad’s subsidiary in Indonesia, Board of Directors of PLUS BKSP Toll Limited, Board of Projek Lebuhraya Utara-Selatan Berhad and Board of Konsortium Lebuhraya Butterworth-Kulim (KLBK) Sdn Bhd. She is also the Executive Director of Expressway Lingkaran Tengah Sdn Bhd (“ELITE”) and Linkedua (Malaysia) Berhad effective from 13 February 2008.
54
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Geh Cheng Hooi Senior Independent Non-Executive Director Geh Cheng Hooi, a Malaysian aged 74, is the Senior Independent Non-Executive Director of PLUS Expressways Berhad. He was appointed a Director of the Company on 20 May 2002. After qualifying as a Chartered Accountant in the United Kingdom in 1959, he worked for Price Waterhouse, London as a qualified assistant in 1960/1961. Upon his return to Malaysia in 1961, he joined KPMG Peat Marwick (“KPMG”) and was admitted as a partner in KPMG in 1964. Geh retired as the Senior Partner in 1989.
Geh is a Fellow of the Institute of Chartered Accountants in England and Wales and a member of the Malaysian Institute of Certified Public Accountants (“MICPA”) and had served as Chairman and member of several of MICPA’s committees. He was the Chairman of the technical committee and was involved in the introduction of the International Accounting Standards (“IAS”) in Malaysia. Directorships held by him include Lingui Developments Berhad, Paramount Corporation Bhd, NCB Holdings Berhad, Malayan Flour Mills Bhd and Wawasan TKH Holdings Bhd. Geh serves as the Chairman of the Audit Committee and a member of the Nomination Committee.
55
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid Independent Non-Executive Director YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid, a Malaysian aged 87, is an Independent Non-Executive Director of PLUS Expressways Berhad. He was appointed as a Director of the Company on 11 March 2002. YM Professor DiRaja Ungku Abdul Aziz is an academician specialising in rural economics and mind training. He was the ViceChancellor of the University of Malaya from October 1968 to February 1988. He has received both national and international awards for his contributions to various fields. He holds directorships in several other private limited companies. He is the Chairman of Cosmopoint Sdn Bhd, a Distinguished Fellow of Institute of Strategic and International Studies Malaysia and the Malaysian Institute of Economic Research. YM Professor DiRaja Ungku Abdul Aziz serves as a member of the Audit Committee.
56
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Hassan Ja’afar Non-Independent Non-Executive Director Hassan Ja’afar, a Malaysian aged 62, is a Non-Independent Non-Executive Director of PLUS Expressways Berhad and was appointed as a Director of the Company on 18 March 2002. Hassan was the past Managing Director of BBMB Securities Sdn Bhd. He holds a Bachelor of Science Degree in Chemical Engineering from the University of New Brunswick, Canada. He was a project officer for the Economic Development Board of Singapore and the Development Bank of Singapore Limited from 1969 to 1974. He was an Investment Manager for Bank Pembangunan Malaysia Berhad from 1974 to 1978. From 1978 to 1990, he was the General Manager for Bapema Corporation Sdn Bhd. He was appointed as an Executive Director of UMBC Securities Sdn Bhd in 1990 and he served until 1994. He then became an Executive Director of CapitalCorp Securities Sdn Bhd until 1995. In 1995, he was appointed as the Executive Director of BBMB Securities Sdn Bhd.
He also sits on the Board of Commissioner of PT Lintas Marga Sedaya and PT Cimanggis Cibitung Tollways, PLUS Expressways Berhad’s subsidiaries in Indonesia and hold directorship in Projek Lebuhraya Utara-Selatan Berhad. Hassan is a Non-Executive Director nominated by Khazanah Nasional Berhad, a major shareholder of PLUS Expressways Berhad. He serves as a member of the Remuneration Committee.
57
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Dato’ Mohamed Azman Yahya Non-Independent Non-Executive Director Dato’ Mohamed Azman Yahya, a Malaysian aged 45, is a NonIndependent Non-Executive Director of PLUS Expressways Berhad. He was appointed as a Director of the Company on 3 May 2002. Dato’ Mohamed Azman graduated with first class honours degree in Economics from the London School of Economics and Political Science and is a member of the Institute of Chartered Accountants in England and Wales, the Malaysian Institute of Accountants and a fellow of the Malaysian Institute of Banks. He is the founder, Group Chief Executive and a Director of Symphony House Berhad, a listed outsourcing group. He is also the Executive Chairman of Bolton Berhad, a listed property group. He sits on the advisory panels for the Bursa Malaysia Securities Market Consultative Panel, the National Council for Scientific Research and Development, the National Innovation Council, the Special Taskforce to Facilitate Business (“Pemudah”) and the Malaysia Economic Council. He is the Chairman of Pharmaniaga Berhad and sits on the Boards of Malaysian Airline System Berhad, Scomi Group Berhad, Khazanah Nasional Berhad and several other private limited companies. Dato’ Mohamed Azman is a Non-Executive Director nominated by UEM Group Berhad, a major shareholder of PLUS Expressways Berhad. He was a member of the Audit Committee and currently serves as a member of the Investment Committee.
58
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Tan Sri Razali Ismail Independent Non-Executive Director Tan Sri Razali Ismail, a Malaysian aged 70, is an Independent Non-Executive Director of PLUS Expressways Berhad and was appointed to the Board on 6 May 2002. Tan Sri Razali Ismail retired from government in 1998 after a career in the Malaysian Diplomatic Service over 35 years. He was last appointed Malaysia’s Permanent Representative to the United Nations in New York. At the United Nations, Tan Sri Razali Ismail was involved in developing positions on issues such as development and sustainability, poverty and marginalisation, reforms in the United Nations, human rights and the environment. Tan Sri Razali Ismail was the Secretary-General’s Special Envoy for Myanmar for more than 5 years (April 2000-December 2005).
In Malaysia Tan Sri Razali Ismail is involved in IT and environmental industries and sits on the boards of companies including Leader Universal Holdings Berhad, Allianz General Insurance Malaysia Berhad and IRIS Corporation Bhd. He is the Pro-Chancellor of the University Science Malaysia, Chairman of the National Peace Volunteer Corp (“Yayasan Salam”) and the Malaysian Prime Minister’s Special Envoy to facilitate assistance for natural disaster victims. He is the President of World Wildlife Fund in Malaysia and advises on a government supported project on street and displaced children.
59
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Datuk K. Ravindran Independent Non-Executive Director Datuk K. Ravindran, a Malaysian aged 51, is an Independent NonExecutive Director of PLUS Expressways Berhad. He was appointed a Director of the Company on 6 May 2002. Datuk K. Ravindran is the Group Executive Director and co-founder of the ARA group of companies which has interests in infrastructure development, engineering, construction and transportation. Aided by a cohort of able colleagues, he was instrumental in developing the group into a multi-million ringgit company. Datuk K. Ravindran holds a Bachelor of Science Honours degree from the University of Madras, India. He has blended his corporate exertions with involvement in charitable causes, mainly in education. The main vehicle for the latter is the All-Malaysia Malayali Education Foundation (“AEF”) of which he is the President. He sits on the board of several private limited companies. Datuk K. Ravindran serves as a member of the Audit Committee, the Nomination Committee and the Remuneration Committee.
60
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Quah Poh Keat Independent Non-Executive Director Quah Poh Keat, a Malaysian aged 56, is an Independent NonExecutive Director of PLUS Expressways Berhad. He was appointed as a Director on 14 January 2008. He is also currently an Independent Non-Executive Director of IOI Corporation Bhd, IOI Properties Berhad, Telekom Malaysia Berhad, Lonpac Insurance Berhad, LPI Capital Berhad and Public Bank Bhd and some of its group companies. PK Quah was admitted as a member of the Malaysian Institute of Certified Public Accountants (“MICPA”) in 1976. He was also the best student for all three parts of the MICPA Examination and won many awards in the Institute of Management Accountants Examinations.
PK Quah is a Fellow of the Malaysian Institute of the Taxation, Member of the Malaysian Institute of Accountants, Member of the Malaysian Institute of Certified Public Accountants, Member of the Chartered Institute of Management Accountants and Fellow of the Association of Chartered Certified Accountants. He was the Senior Partner of KPMG (known in some practices as Managing Partner) from 1 October 2000 to 30 September 2007 and has vast experience in Audit and Taxation in both Malaysia and United Kingdom. He retired from KPMG Malaysia on 31 December 2007. He is a member of FMM Strategic Policies Committee and was a former Vice-President of the Malaysian Institute of Taxation. PK Quah serves as a member of the Audit Committee.
61
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Abdul Farid Alias Non-Independent Non-Executive Director Abdul Farid Alias, a Malaysian aged 41, was appointed the NonIndependent Non-Executive Director of PLUS Expressways Berhad on 27 February 2008. Abdul Farid Alias holds a Bachelor of Science in Accounting and minor in Economics from the Pennsylvania State University, United States and Masters in Business Administration from University of Denver, Colorado. He was a former Director, Investments of Khazanah Nasional Berhad. Prior to joining Khazanah Nasional Berhad, he was involved in the investment banking area whereby he was attached to some domestic and international merchant banks such as Aseambankers Malaysia, International Merchant Bankers Berhad, Schroders Malaysia and Jardine Fleming/JP Morgan. Abdul Farid was a former Director at UEM Group Berhad, UEM World Berhad, UEM Builders Berhad and a former member of the Board of Commissioners of PT Bank Lippo Tbk and PT Exelcomindo Pratama Tbk, both or which are listed on the Bursa Efek Indonesia. Abdul Farid resigned as a Director of PLUS Expressways Berhad with effect from 31 December 2008. Abdul Farid was a Non-Executive Director nominated by Khazanah Nasional Berhad, a major shareholder of PLUS Expressways Berhad.
62
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Datuk Seri Panglima Mohd Annuar Zaini Independent Non-Executive Director Datuk Seri Panglima Mohd Annuar Zaini, a Malaysian aged 58, is an Independent Non-Executive Director of PLUS Expressways Berhad. He was appointed as a Director on 19 December 2008. Datuk Seri Panglima Mohd Annuar Zaini holds a Masters of Arts in Law & Diplomacy from The Fletcher School of Laws & Diplomacy, Tufts University, USA; and a Bachelor of Arts with honours in Economics from University Kebangsaan Malaysia. He began his career in the government service as an Administrative and Diplomatic Officer in 1977. He served the Malaysian Government at various ministries and departments. In 1993, he was appointed General Manager of The Perak Foundation, a position he held until 1999 before he chose to take an optional retirement from the government service. He has been appointed the Chairman of Malaysian National News Agency (“BERNAMA”) since February 2004. Also in February 2004, HRH The Sultan of Perak consented his
appointment as Member of the Council of Elders to HRH Sultan of Perak. He is a Member of the Perak Council of Islamic Religion and Malay Customs. He is a Distinguished Fellow to Institute of Strategic and International Studies (“ISIS”) Malaysia, Fellow to Institut Sosial Malaysia, Member of the Advisory Board of the Public Complaints Bureau of the Prime Minister’s department and Member of the Economic Council Malaysia. He is a member of the Board of Directors of the University Malaya and Chairman of the Board, University Malaya Specialist Centre. He is the Chief Executive of Northern Corridor Implementation Authority since September 2008. He is also the Adjunct Professor of Northern Corridor Economic Region Research Centre, Universiti Utara Malaysia since December 2007. He holds directorships in Malaysian Airline System Berhad and several private limited companies.
63
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Dato’ Seri Ismail Shahudin Non-Independent Non-Executive Director Dato’ Seri Ismail Shahudin, a Malaysian aged 58 is a NonIndependent Non-Executive Director of PLUS Expressways Berhad. He was appointed as a Director of PLUS Expressways Berhad on 21 April 2009. Dato’ Seri Ismail Shahudin holds a Bachelor of Economics (Honours) degree from University Malaya, majoring in Bussiness Administration. Dato’ Seri Ismail Shahudin joined ESSO Malaysia Berhad, upon his graduation in 1974 and served for 5 years in its Finance Division. He then joined Citibank Malaysia in 1979 and served at the bank’s headquarters in New York in 1984 as part of the team in Asia Pacific Division. Upon his return to Malaysia, he was promoted to the position of Vice President & Group Head of the Public Sector and Financial Institutions Group in Citibank Malaysia. In 1988, he served United Asian Bank Berhad as Deputy General Manager. In 1992, he joined Malayan Banking Berhad as General Manager, Corporate Banking and became the Executive Director in 1997. In 2002 he left Malayan Banking Berhad to become the Group CEO of MMC Corporation Berhad. He was appointed to the Board of Bank Muamalat Malaysia Berhad and subsequently appointed as its Chairman in March 2004 until his retirement in July 2008. Dato’ Seri Ismail Shahudin currently sits on the Boards of UEM Group Berhad, Cement Industries of Malaysia Berhad (“CIMA”), Aseana Properties Limited (a company listed on the London Stock Exchange), SMPC Corporation Berhad, EP Manufacturing Berhad and several other private limited companies.
None of the Directors has: •
Any family relationship with any Director and/or major shareholder of PLUS Expressways Berhad
•
Any conflict of interest with PLUS Expressways Berhad
•
Any conviction for offences within the past 10 years other than traffic offences, if any
All of the Directors are Malaysians.
64
PLUS Expressways Berhad Annual Report 2008
Top Management
Noorizah Hj Abd Hamid (Centre) Nik Airina Nik Jaffar (Left) Annuar Marzuki Abdul Aziz (Right)
66
PLUS Expressways Berhad Annual Report 2008
Top Management
continued
Nik Airina Nik Jaffar
Annuar Marzuki Abdul Aziz
Chief Operating Officer
Chief Financial Officer
Nik Airina, a Malaysian aged 46, is the Chief Operating Officer of PLUS Expressways Berhad. Prior to her promotion as the Chief Operating Officer in June 2006, she was the Senior General Manager of the Company’s Planning and Development Division. She also sits on the Board of Konsortium Lebuhraya Butterworth-Kulim (KLBK) Sdn Bhd, Expressway Lingkaran Tengah Sdn Bhd and Linkedua (Malaysia) Berhad, the wholly owned subsidiaries of PLUS Expressways Berhad as well as TERAS Teknologi Sdn Bhd.
Annuar Marzuki Abdul Aziz, a Malaysian aged 38, is the Chief Financial Officer of PLUS Expressways Berhad. He sits on the Board of Konsortium Lebuhraya Butterworth-Kulim (KLBK) Sdn Bhd, Expressway Lingkaran Tengah Sdn Bhd and Linkedua (Malaysia) Berhad, the wholly owned subsidiaries of PLUS Expressways Berhad. He is a Certified Practising Accountant of CPA Australia and a Chartered Accountant of the Malaysian Institute of Accountants. He graduated with a Bachelor in Accountancy from the International Islamic University in 1993. In 2003, he graduated with a Masters of Business Administration (Finance) from the same university. He also holds a Diploma in Comparative Law from Institute of Islamic Studies.
Nik Airina has been in the highway industry for more than 20 years. She obtained her Bachelor of Science degree in Civil Engineering from the University of Miami in 1985 and further pursued her Masters Degree in Civil Engineering at the same university. She served at the university’s Civil Engineering Department before starting her career at Beiswenger, Hoch and Associates, an engineering consulting firm in Florida. She joined Pengurusan Lebuhraya Berhad (now known as OPUS International (M) Berhad) in 1989 where she was mainly involved in managing the implementation of the North-South Expressway (“NSE”) project. Upon the completion of the NSE project, she moved to Pengurusan Lantas Berhad and subsequently headed its Special Projects Division. She joined Projek Lebuhraya Utara-Selatan Berhad in 2001 as the General Manager of the Planning and Development Division. Nik Airina is Malaysia’s representative for the World Road Association’s (PIARC) Technical Committee on Road Network Operations and is a Fellow of the Institute of Highway and Transportation (IHT) UK. She serves as the Honorary Treasurer of Intelligent Transport System Malaysia and is on the committee of IHT Malaysia.
He started his career in the Audit & Business Advisory Services, Pricewaterhouse in 1993 before moving to the Audit Department of UMW Corporation Sdn Bhd, a conglomerate involved in the automotive, engineering and oil and gas industries. He joined Internal Audit Department of the then Renong Berhad (now part of the UEM Group) in March 1995. In March 1996 he moved to the Corporate Finance Department of what was then the Commerce International Merchant Bankers Berhad. Subsequently, in March 1999, he joined Corporate Finance Department, Renong Berhad. In July 2003, he was seconded to TIME Engineering Berhad as the General Manager, Corporate Finance. In January 2004, he transferred to United Engineers (Malaysia) Berhad (now known as UEM Group) as the General Manager, in the office of the Managing Director/Chief Executive Officer. He assumed the position of Chief Financial Officer of PLUS Expressways Berhad in June 2006.
67
PLUS Expressways Berhad Annual Report 2008
Company Secretaries continued Company Secretaries
Tan Hwee Thian, is the Director, Legal and Secretarial of UEM Group Management Sdn Bhd and the Joint Company Secretary of PLUS Expressways Berhad. He has been the Secretary of the Company since its incorporation on 29 January 2002. He is also the joint Company Secretary of UEM Group Berhad, UEM Land Holdings Berhad and other companies in the UEM Group. He is a Fellow of the Association of Chartered Certified Accountants, United Kingdom, a member of the Institute of Chartered Secretaries and Administrators, United Kingdom and a Chartered member of the Malaysian Institute of Accountants (“MIA”).
Tan Hwee Thian
Heads of Overseas Subsidiaries
From left to right: Azmee Nin Muhammad Fadzil Abdul Hamid
68
PLUS Expressways Berhad Annual Report 2008
Company Secretaries
continued
Mazyu Sherina is a Director of PT Lintas Marga Sedaya and PT Cimanggis Cibitung Tollways, both PLUS Expressways Berhad’s subsidiaries in Indonesia and the Joint Company Secretary of PLUS Expressways Berhad. She is also the Joint Company Secretary for Projek Lebuhraya Utara-Selatan Berhad, Expressway Lingkaran Tengah Sdn Bhd, Linkedua (Malaysia) Berhad and Konsortium Butterworth-Kulim (KLBK) Sdn Bhd.
Mazyu Sherina Mohamed Yusof
She was formerly the General Manager and head of the Legal and Secretarial Support Department of PLUS Expressways Berhad. Prior to joining PLUS Expressways Group, she was attached to Messrs. Abu Talib Shahrom.
Heads of Overseas Subsidiaries
continued
Azmee Nin
Muhammad Fadzil Abdul Hamid
Operations Director, PLUS BKSP
President Director, LMS
Azmee Nin, aged 46, is the Operations Director of PLUS BKSP Toll Limited (“PLUS BKSP”) in India. He graduated with Bachelor of Science in Building (Distinction) from Glasgow College of Technology, Building and Printing (now known as Caledonnian University) in 1990.
Muhammad Fadzil Abdul Hamid, aged 50, is the President Director of PT Lintas Marga Sedaya and PT Cimanggis Cibitung Tollways, PLUS Expressways Berhad’s subsidiaries in Indonesia. He is also a nominee of PLUS Expressways on the Board of Director of PLUS BKSP, and was formerly the Senior General Manager of the Business Development Department of PLUS Expressways Berhad.
He started his career with Ingeback (M) Sdn Bhd, a contractor, involved in construction of high rise building and houses around Kuala Lumpur. He joined Projek Lebuhraya UtaraSelatan Berhad in September 1991 and had served in various departments covering projects and operations until 2004. He was promoted as a General Manager overseeing Expressway Lingkaran Tengah Sdn Bhd and Linkedua (Malaysia) Berhad. In December 2007, he was promoted as Operations Director of PLUS BKSP in India.
Muhammad Fadzil graduated with Bachelor of Engineering degree in Civil Engineering from the University of New South Wales, Sydney in 1982. In 2002, he obtained a Masters degree in Business Administration (Finance) from University Putra Malaysia. From 1983 to 1996, Muhammad Fadzil worked as an Engineer at the Public Works Department following which he joined Linkedua (Malaysia) Berhad as a Contract Manager. In July 2000, he was transferred to Expressway Lingkaran Tengah Sdn Bhd as the General Manager of Operations and Engineering. In September 2003, he was transferred to PLUS Expressways as the Head of the Business Development Department.
69
PLUS Expressways Berhad Annual Report 2008
Senior Management
1
3
2
70
5
1
Mohamad Rosli Ahmad Managing Director’s Office/Business Development
2
Rene’e Aziz Ahmad Routine Maintenance Monitoring
3
Zul Hisham Hamzah Planning & Quality Improvement
4
Dr. Zainal Abidin Ahmad Research & Technical Support
5
Azman Abdul Shukor Works Procurement
4
PLUS Expressways Berhad Annual Report 2008
Senior Management
2 3
1
4
1
Zakaria Ahmad Zabidi Special Projects
2
Hassan Sahalan Staff Support Services
3
Khalilah Mohd Talha Corporate Communications
4
Ir Mohd Zulastri Mohd Amin Maintenance & Development
71
continued
PLUS Expressways Berhad Annual Report 2008
Senior Management
2
continued
3
1
72
PLUS Expressways Berhad Annual Report 2008
1
How Seet Meng Corporate Affairs
2
Azman Masbah Electronic & Telecommunication Projects
3
Mohammad Fuad Khusairi Operations
4
Othman Mohammad Accounting
4
Perspectives
Driving Expansion
74 82
Chairman’s Statement Message from the Managing Director
73
PLUS Expressways Berhad Annual Report 2008
Chairman’s Statement
Dear Shareholders, “I am pleased to present the 2008 Annual Report for PLUS Expressways Berhad (“PLUS Expressways” or “the Group”). 2008 was a good year for the Group. Despite a challenging operating environment aggravated by the global financial meltdown and volatile energy prices, we made strong strides forward on the operational and financial fronts to drive business expansion and deliver sound results.“
74
PLUS Expressways Berhad Annual Report 2008
Chairman’s Statement
Network expansion came by way of assimilating three new acquisitions, namely ELITE, LINKEDUA and KLBK, into our stable of expressways. On the overseas front, we made encouraging progress in India and Indonesia while exploring other opportunities elsewhere to expand our international footprint. All in all, it was a year which saw us building upon the growth momentum created in the preceding years to expand our reach and position as a premier global expressway group.
ROBUST NETWORK EXPANSION Network expansion through strategic acquisition has ranked high on our list of priorities these last few years. In December 2007, the Group acquired ELITE and LINKEDUA, while on 13 March 2008 we completed the acquisition of KLBK. KLBK holds a 32-year concession (ending in 2026) for the Butterworth-Kulim Expressway (“BKE”) which is a 17-kilometre dual two lane carriageway extending from Kulim in Kedah to Seberang Perai in Penang. As the BKE is linked to PLUS’s North-South Expressway, we expect to garner good operational synergies from this latest acquisition. The inclusion of ELITE’s North-South Expressway Central Link (“NSECL”), LINKEDUA’s Malaysia-Singapore Second Crossing (“MSSC”) and the BKE, has also effectively added another 651 lane-km or 17.9% to our existing 3,640 lane-km of
The recently completed Ipoh Selatan-Jelapang stretch
continued
expressways. The addition of these concessionaires to the Group’s stable underscores our strategy of securing solid assets to drive our network expansion and business growth. On top of this, our third lane widening project which was fully completed during the year, has given the Group an additional 284 lane-km or 7.8% resulting in a total asset base of 4,575 lane-km. I am pleased to report that these developments have registered 25.7% lane-km growth in 2008 thereby surpassing the year’s Headline Key Performance Indicator (“KPI”) target of 20% growth. The Group in essence owns 62% of Malaysian toll roads in operation to date.
STRONG FINANCIAL PERFORMANCE Effective 1 January 2008, the financial results of ELITE and LINKEDUA were incorporated into the Group’s results, while KLBK’s results were incorporated effective 1 March 2008. With our asset base broadened, the Group’s total toll collection for the financial year ended 31 December 2008 increased by 23% or RM416.5 million to RM2,237.0 million from RM1,820.5 million in the preceding year. The higher performance was primarily attributable to a higher toll collection of RM92.3 million for PLUS as well as contributions totalling RM324.2 million from ELITE, LINKEDUA and KLBK collectively. Enhancements to our expressway system and service improvements did much to attract more users onto our expressways. PLUS, ELITE and LINKEDUA, all experienced year-on-year traffic volume growth with the exception of KLBK that registered a marginal reduction in traffic volume. As a result of overall higher traffic volume and toll collection, the Group chalked up a healthy 30.1% or RM686.0 million increase in revenue, turning in RM2,968.0 million against RM2,282.0 million the year before. We registered profit before tax (“PBT”) of RM1,515.7 million in 2008, an increase of RM207.7 million or 15.9% over 2007’s PBT of RM1,308.0 million. The better performance was mainly due to RM62.8 million in profit contributions from the three new subsidiaries. In addition, higher traffic volume from PLUS also contributed to the improvement in PBT. However, Group profit after tax (“PAT”) declined by 13.4% or RM167.6 million to RM1,080.0 million against RM1,247.6 million in 2007. This was the consequence of the higher provision for deferred taxation in the year 2008.
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PLUS Expressways Berhad Annual Report 2008
continued
Under our agreement with the Malaysian Government, the rate of toll is to increase by 10% every three years for both PLUS and ELITE and by an average of 27% and 23% every five years for LINKEDUA and KLBK respectively. The last time an increase took place for PLUS was in 2005. While we were expecting a toll increase on 1 January 2008, in light of the slowing economy, the Government decided to defer this till the end of 2009 and will compensate PLUS in accordance with the Concession Agreement. Meanwhile, ELITE, LINKEDUA and KLBK, all obtained their toll increases in 2008. The Group was spared the vagaries of the marketplace in 2008. As a result, we outperformed the Kuala Lumpur Composite Index (“KLCI”) by 30%. The year saw our share price reaching a high of RM3.28 and a low of RM2.53 before closing at RM2.98 on 31 December 2008.
ENHANCED SHAREHOLDER VALUE The Board of Directors is pleased to recommend a single tier final dividend of 9.5 sen per ordinary share of RM0.25 each, subject to shareholders’ approval at the forthcoming Annual General Meeting. Together with the interim dividend of 6.5 sen per share paid on 23 September 2008, the total dividend payout for financial year 2008 will be 16 sen per share amounting to RM800 million. This marks the third consecutive year in which the Group has achieved its KPI commitment to ensure a minimum dividend growth of 12% for the financial year. The 16 sen per share payment represents a 14.3% growth from the 14 sen per share payout in financial year 2007 and a dividend payout of 74% of Group net profit. This translates to an attractive dividend yield of approximately 5.5%.
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Dividend Per Share (Sen)
16.0
The Group generated cash from operating activities of RM1,813.6 million, some 26.9% higher than 2007’s figure, with a cash balance of RM2,234.4 million as at 31 December 2008 after dividend payments of RM725 million.
14.0
Chairman’s Statement
2007 2008
Following the higher payout, the Board has reviewed the existing dividend payout policy (40% to 60% of Group net profit) and approved a revised payout policy of a minimum 70% of Group net profit. This is subject to the availability of cash flows after taking into consideration the Group’s debt servicing and financing commitments as well as any future expansion plans. Going forward, despite the dismal economic outlook, the Board remains committed to delivering returns to shareholders with a minimum targeted dividend payout of 16 sen per share for financial year 2009. With 64% of PLUS Expressways’ equity directly and indirectly held by Khazanah Nasional Berhad, the Malaysian Government’s investment arm, these profits flow back to the people of Malaysia through the Government. Our remaining shares, some 20%, are held by government-related institutional shareholders such as Kumpulan Wang Simpanan Pekerja (“KWSP” or “the EPF”), Permodalan Nasional Berhad (“PNB”), Kumpulan Wang Amanah Pencen (“KWAP”), Lembaga Tabung Angkatan Tentera (“LTAT”), Lembaga Tabung Haji (“LTH”) and Pertubuhan Keselamatan Sosial Malaysia (“PERKESO” or “SOCSO”), and the benefits they receive also flow back to the millions of their members.
Chairman’s Statement
Shareholding Breakdown
10% Foreign
Approximately 10% of the Group’s equity is held via foreign shareholding. The year 2008 saw us recording our highest ever level of foreign shareholding at 10.7% against an average of 8% in 2007. This reflects the confidence that foreign investors have in the Group.
6% Others
9% Other Government-Related Institutions
11% EPF
IMPROVEMENTS TO OPERATIONAL EFFICIENCY 40% UEM
24% Khazanah
continued
In 2008, the Group went all out to enhance operational efficiency throughout the length and breadth of the organisation. The completion of our new headquarters at Subang has effectively brought together the Group’s different operations under one roof, thus enabling the integration of resources. Enhanced capital management efforts, the e-bidding procurement system which promotes better transparency and cost management, innovative Six Sigma initiatives, and a more structured and proactive maintenance
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Chairman’s Statement
continued
regime, are beginning to produce tangible cost savings. As we continue to bring technological innovation and higher standards of excellence into play to enhance our operations, facilities and services, we are ensuring customer convenience and safety are being taken care of. Our efforts over 2008 would not have been possible without our team of around 4,000 dedicated employees. As a forwardlooking organisation, we are committed to optimising the skills-set of our employees and to ensuring they have an attractive career path to follow. To this end, we are implementing structured training and development programmes as well as providing our employees a conducive working environment, competitive compensation packages and long-term career development opportunities.
CONTINUED FOCUS ABROAD 2008 was the year in which we made good progress on the overseas front, particularly in India and Indonesia. In India, where we initially had some delays due to challenges in securing certain sections of land, I am happy to report that the work on the Bhiwandi-Kalyan-Shil Phata Highway (“BKSP Highway”) is substantially completed and we are targeting to have the project fully operational in the second quarter of 2009. The BKSP Highway is expected to start contributing towards the Group’s revenue this year. The completion of a new highway in India bodes well for the Group as we set our sights on other opportunities in that nation.
In Indonesia, land acquisition relating to the 116-kilometre Cikampek-Palimanan Toll Road project is progressing well and we are confident of achieving the key milestones within the targeted timeline. Currently, while we are in the midst of acquiring land, we are focusing our efforts on re-ascertaining the costs of the project and raising the additional funding required. The bankers and regulatory authorities are working with us to get the project moving and we hope to see some good progress this year. We have also been awarded the 25.4 km Cimanggis-Cibitung Toll Road project in West Java. Negotiations are currently underway between the consortium, PT Cimanggis Cibitung Tollways (“CCTW”), which we have an equity stake in, and the regulatory authorities to finalise the concession agreement. When this project takes off, it will increase our asset base, enhance shareholder value and strengthen our market position in Indonesia. India and Indonesia provide growth opportunities for us. While the global economy is undoubtedly slowing down, the governments of these two countries are determined to improve their highway infrastructure as quickly as possible to stimulate their economies.
EFFECTIVE CORPORATE GOVERNANCE MEASURES The Board is committed to upholding the tenets of integrity, transparency and accountability in all our business activities. Stringent internal and external controls are in place to ensure we employ good corporate governance practices. In the Corporate Governance Survey Report 2008 jointly conducted by the Minority Shareholder Watchdog Group and the University of Nottingham Malaysia Campus in November 2008, the Group was ranked 14th among 960 public listed companies for overall excellence in corporate governance. As a service-oriented organisation, it is imperative that our employees conduct themselves in a professional manner in all our dealings with our stakeholders. Our Code of Conduct governs the professional conduct of employees and outlines their responsibilities to the Group. The Code of Conduct also touches upon issues of confidentiality and conflicts of interest as well as sexual harassment.
The Bhiwandi-Kalyan-Shil Phata Highway will be fully operational in the second quarter 2009
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PLUS Expressways Berhad Annual Report 2008
Chairman’s Statement
continued
On 26 February 2009, the Group introduced the Whistle Blower Policy that provides a platform for employees to report instances of unethical behaviour, actual or suspected fraud or dishonesty, or a violation of the Group’s Code of Conduct or ethics policy. The Policy also includes protection for the whistleblowers from any reprisals. As a transparent organisation, we are committed to undertaking stakeholder engagement activities. This sees us interacting regularly and proactively sharing information with analysts, fund managers, government regulators and the media, among other groups. We conducted a total of 124 meetings with local and overseas-based investment analysts and institutional investors in the Asia Pacific region, the Eurozone and the United States.
IMPACTFUL CORPORATE RESPONSIBILITY INITIATIVES As a responsible corporate citizen that has been playing an active and integral part in nation building, PLUS Expressways remains committed to creating value and ensuring sustainable growth for our businesses, employees, customers, shareholders, partners and the communities and environment that we operate in. The year 2008 saw us implementing various corporate responsibility (“CR”) measures to elevate the well-being of our various stakeholders. We continued to focus on CR programmes that emphasised customer safety and comfort along our expressways as well as those that engaged with and impacted tangibly upon the communities in the vicinity of our expressways. We also continued to roll out educational programmes that inculcated good driving and motoring habits among the younger generation. More details of 2008’s CR efforts in the areas of the Workplace, Community, Marketplace and Environment can be found in 2009’s standalone CR Report.
Our community outreach programmes include contributions to orphanages, blood donation campaigns by our staff and community services
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Chairman’s Statement
continued
GOING FORWARD 2009 will indeed be a challenging year for PLUS Expressways Group given the recession in the global economy. Where the Government initially projected GDP growth of 3.5% for Malaysia in 2009, this has been revised downwards and is expected to be in the region of between -1.0% and 1.0% at the time of writing. Going forward, the Board expects that traffic volume will grow at a slower pace in 2009 despite the growth of 3.1% registered in the first quarter of 2009. We are confident that our strong financial position will help see us through these challenging economic times. However, we will not be resting on our laurels but will continue our ongoing efforts to enhance operational efficiency and realise cost savings wherever possible.
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As we move forward to implement our existing business strategies, we have set our sights on the following Headline KPI targets for the 2009 to 2010 period. In developing these Headline KPIs, we have taken into consideration the current business environment and future expansion plans with the ultimate aim of enhancing shareholder value: • 30% growth in terms of lane-kilometre length of expressways by the end of 2009 (base: 3,640 lane-km); • Minimum revenue growth of 5% for 2009 and 2010; and • Minimum dividend payout of 16 sen per share for 2009. Locally, the Group will continue to expand its existing expressways network and pursue potential value-accretive acquisitions. In the international arena, particularly in relation to our three highway projects in India and Indonesia, we are fully committed to implementing these projects while continuing to explore other strategic value-creating investments.
Chairman’s Statement
While toll operations will always remain the main part of our business, we are also open to developing other toll roadrelated business opportunities. For instance, we are looking to capitalise on our more than 20 years of toll management experience and expertise by selling our know-how for a feebased income. Rest assured that whatever new areas we choose to focus on, we will continue to keep a keen eye on our core toll expressways business. Moving forward into 2009, the Board is confident that the Group will be able to weather the challenges ahead.
ACKNOWLEDGEMENTS On behalf of the Board of Directors of PLUS Expressways, I wish to convey my sincere thanks to all stakeholders who played a part in helping the Group achieve yet another successful year. To our customers, a big thank you for your continued loyalty and support. To our business partners, suppliers and financiers, please accept my utmost appreciation for your support of the Group. To the Ministry of Works, the Malaysian Highway Authority, the Ministry of Finance, the Ministry of Transport, the Economic Planning Unit, the Royal Malaysian Police and other ministries and agencies who have worked with us directly or indirectly, thank you once again for your invaluable support and cooperation. To my esteemed colleagues on the Board, I would like to extend my gratitude for your wise counsel, astute financial insights and broad strategic thinking. The vision and clarity of this very mature and experienced team has been instrumental to the Group’s success. I would like to convey my sincere thanks to En Abdul Farid Alias, the nominee from Khazanah who served as a NonIndependent Non-Executive Director until 31 December 2008. I also take this opportunity to express my utmost appreciation to Dato’ Ahmad Pardas Senin, YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid, Tan Sri Razali Ismail and
continued
Mr Geh Cheng Hooi, who will be retiring from the Board and are not seeking re-election at the forthcoming Annual General Meeting. I thank these gentlemen for their invaluable contributions and counsel given to the Group. I am pleased to welcome two new members to the Board, namely Datuk Seri Panglima Mohd Annuar Zaini, who previously sat on the Boards of PROPEL, ELITE and LINKEDUA, and Dato’ Seri Ismail Shahudin, who has vast experience in the banking sector. I would like to pay special tribute to the Management team led by the Managing Director, Pn Noorizah Hj Abd Hamid, who has shown a very high level of professionalism in leading her team towards realising our vision of becoming a premier global expressways player. To the Group’s loyal employees, I would like to express my utmost appreciation for your worthy efforts, dedication and unrelenting commitment to excellence. We could not have got where we are today without each and every one of you. On our part, rest assured that the Group will endeavour to be an employer-of-choice, one that you will always be proud to be a part of. Last but not least, to our valued shareholders, I am truly appreciative of your support and confidence in us over the years. We always welcome your ideas and suggestions to help us move the Group forward. As we continue on our journey to success, rest assured that the Board will continue to adhere to the highest standards of corporate governance and ethical business practices to deliver value to you.
TAN SRI DATO’ MOHD SHERIFF MOHD KASSIM Chairman
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Message from the Managing Director Dear Shareholders, I am glad to report that PLUS Expressways Berhad (“PLUS Expressways” or “the Group”) successfully weathered the challenges of 2008 and turned in strong consolidated results on all fronts.
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Message from the Managing Director
continued
We continued to introduce new initiatives as we tapped into our five-point focus areas in the Group’s value creation strategy to drive business growth and profitability as well as expand our reach. Our efforts in enhancing operational efficiency and implementing cost savings initiatives throughout the Group also did much to bolster 2008’s performance. We have our dedicated staff and my colleagues on the management team to thank for the good results and for putting in place the elements that will tide us through the challenging period before us.
GROUP’S VALUE CREATION STRATEGY PLUS Expressways’ driving formula for success is based on UEM Group’s value creation strategy which focuses on Productivity of Resources, Expansion and Growth, People and Organisational Development, Systems and Processes Improvement, and Image and Perception Management. The Group’s value creation strategy calls for our people to effectively leverage on the Group’s diversity and shared values – teamwork, integrity, passion for success and sincerity of intent.
PRODUCTIVITY OF RESOURCES The Group endeavours to undertake value-creating capital management initiatives and effective cost control measures.
Better Capital Management As a Group, we focus on undertaking better capital management through various efforts including refinancing of our borrowings. This approach enables us to stretch our debt repayments and utilise available cash for business expansion and dividend payments. Our efforts during the year included the following: • On 29 May 2008, PLUS issued RM700 million nominal value (RM308 million present value on the issue date) zero coupon Sukuk Series 3 pursuant to the RM4,500 million nominal value of Sukuk Series 3 Medium Term Notes Programme to partially redeem the Senior Sukuk due in May 2008. The repayment of Sukuk Series 3 is stretched to 2022. • On 27 June 2008, PLUS Expressways via a special purpose vehicle company, established a RM4,000 million nominal value PLUS SPV Sukuk Medium Term Notes Programme to refinance bridging loans and for general investment purposes. Pursuant to this programme, RM1,055 million nominal value PLUS SPV Sukuk was issued on even date, providing total proceeds of RM762 million. Our success in obtaining financing at competitive cost is an apt reflection of the Group’s financial standing and credibility, especially in the midst of a difficult market environment.
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Message from the Managing Director
Slopes are inspected periodically to assess their condition for preventive and curative maintenance works
continued
Structured Maintenance Regime For long term preservation of assets and to achieve optimum maintenance expenditure, we continue to implement a structured maintenance regime that emphasises preventive maintenance. The regime includes extensive periodical condition assessment of our major assets to facilitate early intervention. In 2008, our maintenance activities focused on pavement structural overlays, enhancement of the slope monitoring system as well as structural strengthening of bridges and culverts. Extensive periodical inspections and corresponding preventive maintenance allow for a more proactive and long-term approach to maintenance works and asset preservation, resulting in optimum resource allocation.
Six Sigma Initiatives The Six Sigma Programme launched in 2007 continues to be one of the key continual improvement platforms that the Group has adopted to achieve our collective strategic goals. Besides enhancing our operational and financial efficiency in the way of productivity as well as system and process improvements, it also contributes to our human capital development. Twenty-two Six Sigma projects are currently ongoing, covering the core areas of expressway operations and maintenance. The financial benefit realised to date is almost RM10 million and we expect more benefits in the next few years as the projects get implemented.
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Message from the Managing Director
continued
EXPANSION AND GROWTH PLUS Expressways continues to expand and grow its expressways network and businesses in several areas. Lane Widening and Upgrading Works Our lane widening and upgrading efforts are aimed at expanding our existing network and improving the level of service to our customers, focusing on highimpact projects that maximise utilisation of available land reserves. In 2008, we completed the third lane widening of the Seremban-Ayer Keroh and Rawang-Slim River sections of the NSE, which added 284 lane-km to our existing network. The Sungai Petani South, Kota Damansara and Juru toll plazas were also upgraded during the year, with toll lane extension and electronic toll collection (“ETC”) lane channelisation implemented for better throughput. The project to facilitate non-stop travel along the Ipoh Selatan-Jelapang stretch of the NSE was implemented to separate local and mainline traffic for more efficient traffic distribution and to also increase mainline capacity.
The Putra Heights Toll Plaza opened on 19 February 2009
Linkages and Interchanges In our efforts to generate more traffic into our network, we are constantly looking at opportunities for potential new linkages and interchanges. In 2008, the Bandar Saujana Putra Interchange was opened along the North-South Expressway Central Link (“NSECL”), while the Putra Heights Interchange was opened in February 2009. Another interchange currently under construction is located along the Putrajaya Link of the NSECL which will feed in traffic from the surrounding developments. New interchanges under construction along LINKEDUA’s Malaysia-Singapore Second Crossing (“MSSC”) will connect to the Senai-Pasir Gudang-Desaru Expressway, the Johor State New Administrative Centre and Bandar Nusajaya Medical Park. When completed, these interchanges will facilitate more traffic into the MSSC. Our existing Pandan Interchange in Johor Bahru will be upgraded to connect to the new Customs, Immigration and Quarantine Complex (“CIQ”) at Bangunan Sultan Iskandar via the Eastern Dispersal Link. This will provide a direct connection between the NSE and our operations at the new CIQ Complex.
Other Expansion Opportunities During the year, we completed the acquisition of KLBK which added 68 lanekilometres of expressway to our network. Going forward, the Group will continue to focus on achieving lane-kilometre growth and exploring toll road and toll-related services opportunities. In meeting the KPI target of 30% growth (in terms of lanekilometre length) by the end of 2009, we achieved 25.7% growth in 2008 and are committed to attaining another 156 lane-kilometres. We are also exploring possible acquisitions or looking at taking over the operation and maintenance of other highways to realise this target.
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The Malaysia-Singapore Second Crossing
PLUS Expressways Berhad Annual Report 2008
Message from the Managing Director
continued
While we adopt an ongoing proactive approach in this area, we will only consider transactions that add value to the Group’s current portfolio.
Strategic Overseas Expansion On the overseas front, we continue to focus our efforts in implementing existing projects in India and Indonesia. We are placing a strong emphasis on these projects as they serve as a launching pad for further ventures in the region. In India, the BKSP Highway is expected to start contributing towards the Group’s revenue as we target to commence the toll collection in the second half of this year. Following delay in the handover of lands by the Maharashtra State Road Development Corporation (“MSRDC”) which led to a delay in the completion of the project, we have been granted an extension to the concession period. The land acquisition for the 116-kilometre Cikampek-Palimanan Toll Road project in Indonesia has progressed well. Following the increase in cost of construction materials, the Government of Indonesia has approved the revised project cost and the initial toll tariff. Accordingly, we are negotiating with the lenders for additional funding facilities for this project. We are also currently engaged in negotiations with the Government of Indonesia to finalise the concession agreement for our second project, the 25.4 km CimanggisCibitung Toll Road, which is expected to be concluded this year. Continuing with our efforts to expand abroad, we have individually and in joint venture with local partners, participated in the submission of tenders for highway projects in India. The year saw us entering into partnerships with local players to jointly participate in the tenders. We have been pre-qualified for several projects by the National Highway Authority of India. We are also actively seeking investment opportunities in completed toll roads and providing expressway operations and maintenance services.
PEOPLE AND ORGANISATIONAL DEVELOPMENT Our human capital is one of our most valued assets and the Group is committed to nurturing and retaining a highly-talented workforce through career development opportunities and providing competitive remuneration and attractive benefits.
Human Resources Initiatives In 2008, our Human Resources Department established new functional units to drive people and organisational development initiatives forward. The initiatives include development of our employee value proposition which emphasises performance, leadership qualities and participation in Group activities and initiatives. Top talent
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Message from the Managing Director
continued
retention remains one of our priorities. We continue to employ and build a competent workforce through a structured recruitment drive as well as strategic training and development programmes.
Training and Development The Group is committed to enhancing the skills of our employees through ongoing training programmes and development initiatives. Our frontline and operational employees attend external training courses as well as motivational reinforcement sessions at PLUS Training Centre, while our employees at executive and management levels undergo management and leadership development programmes at UEM Leadership Centre and UEM Academy. This year, the Group will also be embarking on a Personnel Exchange Programme with Central Nippon Expressway Company Limited which operates the expressways network in Central Japan. The collaboration, formalised in February 2009, will involve the exchange of technology and expertise in the areas of project and operations management as well as research and innovation.
Caring Employer As a caring employer, the Group is committed to creating a conducive and safe work environment to enhance operational efficiency and productivity. To this end, we have introduced a host of facilities at the Group’s new headquarters in Subang including training facilities, a sports complex, a gymnasium as well as a child development centre. Most of the facilities in the office complex are disabledfriendly.
SYSTEMS AND PROCESSES IMPROVEMENT Technological innovation plays a major role in ensuring that the systems and processes that we employ in our day-to-day expressway operations are rolled out in an effective and efficient manner. The year saw several new developments on this front aimed at increasing operational and cost efficiencies.
Procurement Improvement Initiatives The Group has implemented several procurement improvement initiatives with the objective of increasing efficiencies and transparencies in our procurement activities. The implementation of the e-bidding procurement system for major procurements has brought about tangible cost savings of over RM5.5 million to date and provided our employees with wider exposure in procurement best practices. Moving forward we will expand further into other procurement applications such as e-tender and e-registration.
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Continuous training and education for a progressive workforce
PLUS Expressways Berhad Annual Report 2008
Message from the Managing Director
continued
Leading-edge Traffic Monitoring Centre The newly opened Traffic Monitoring Centre (“TMC”) consolidates all our previously disparate regional communication centres under one roof. Equipped with advanced Intelligent Transport System technology, the TMC facilitates better communications and information dissemination thereby improving efficiency and service levels.
Research and Development In 2008, we established a dedicated Research & Technical Support Division (“RTSD”) to focus on technical research and innovation. The RTSD has been tasked with undertaking and coordinating research in new products and methods to improve operational and maintenance quality and efficiency through collaboration with relevant institutions and agencies.
IMAGE AND PERCEPTION MANAGEMENT The Group embarked on several brand and goodwill building initiatives to establish a stronger market presence and to reinforce our reputation as a leading expressways group. Traffic is monitored round-the-clock at the Traffic Monitoring Centre
New Visual Identity As the year 2008 marked the Group’s 20th anniversary, it was an opportune time to establish a fresh new brand identity. We launched a new visual identity to position PLUS Expressways as a highly efficient, dynamic and premier global expressways group. Our new visual identity will go a long way in helping us to portray our now enlarged Group as a unified entity with a wealth of knowledge, skills and experience. Customer Incentive Programmes In line with the Group’s move to become a more customer-centric organisation and in response to the Government’s call to give added value to highway users, we have launched a loyalty programme and several other incentives. The PLUSMiles Loyalty Programme was introduced to reward frequent and high usage ETC users. The PLUS Travel Incentive offers discounts to Class 1 vehicles during daily off-peak hours and additional discounts during off-peak hours on selected days of festive periods.
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Message from the Managing Director
continued
Our community outreach programmes encourage the spirit of volunteerism amongst staff
Impacting Communities We continue to achieve visibility as a respected and socially-responsible member of the community by undertaking corporate social responsibility initiatives that impact in a tangible manner on the communities around us. 2008 saw us continuing to roll out community and educational activities focusing on road safety. From the “Respect Your Limits” road safety campaign aimed at drivers and operators of heavy vehicles to publishing guidebooks on safe driving, our aim is to emphasise road safety awareness among different target groups including school children. Our Speedway PLUS Circuit promotes motorsport activities in a safe environment, making the sport more accessible to the masses as well as helping develop a whole generation of disciplined and skilled drivers. In addition, we have been supportive of the country’s motorsports development through our sponsorships of the A1 GP, A1 Team Malaysia and Rotax Max Challenge. We also engage with local communities through ‘gotong-royong’ activities and dialogues on health and safety issues. In support of the Government’s national objective in developing small scale Bumiputra contractors, we have launched the Mentor-Mentee Programme in November 2008. To date, 105 Class F contractors have registered in this programme.
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Message from the Managing Director
continued
GROWTH STRATEGIES As we move into a more challenging business environment, we will continue to put in place the strategies that will provide us a strong foundation for growth. Our key growth strategies are:
Secure New Toll Road Concessions This strategy calls for the Group to acquire existing toll road companies or secure new greenfield projects locally and internationally. Whilst we remain focused on India and Indonesia given the large growth potential in their infrastructure sectors, we will also explore opportunities that will expand our geographical scope in the region.
Expansion of existing network The expansion of our existing network, including lane widening, new linkages and bypasses along the current corridor, will contribute positively to long-term traffic growth.
Value-accretive investments or new business Besides our toll expressway businesses, the Group has plans to venture into other toll and non-toll related businesses. These include expanding the provision of operation and maintenance as well as traffic management services to other expressway companies.
Enhance operational and financial efficiencies We will intensify our efforts to improve operational and financial efficiencies through embarking on cost savings initiatives, undertaking effective capital management and enhancing service levels. As we pursue our growth strategies to ensure the success of our businesses, the Group will remain flexible and open to exploring new directions should the need arise. Going forward, the Management team is committed to delivering a respectable performance in 2009.
Noorizah Hj Abd Hamid Managing Director
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Message from the Managing Director
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!
91
Review of Operations
Business Review
Reaching Towards Excellence
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PLUS Expressways Berhad Annual Report 2008
Review of Operations Review of Operations
continued
The North-South Expressway
The North-South Expressway Central Link
The Malaysia-Singapore Second Crossing The Butterworth-Kulim Expressway
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Review of Operations
continued
TRAFFIC GROWTH Overall Traffic Growth In 2008, more vehicles travelled on our expressways resulting in overall higher traffic volume and toll collection. Continuous improvements to our expressway system and service levels have helped strengthen our position as the expressway of choice, hence attracting additional traffic into our network. PLUS, ELITE and LINKEDUA all experienced year-on-year traffic volume growth with the exception of KLBK. Generally the Group recorded higher traffic growth in the first half of 2008 with the highest recorded in May due to public holidays which coincided with weekends and school holidays. However, in the second half of 2008, traffic growth declined when fuel prices in Malaysia surged by 41% in June on the back of the unprecedented rise in global crude oil prices. The declining trend in traffic growth eventually stabilised as a result of several downward revisions to fuel prices over the subsequent months. The recovery was further strengthened by the impact of long school holidays and festive breaks in the last quarter of the year. Despite the above, PLUS recorded a 5.2% year-on-year traffic volume growth, while our three new subsidiaries, ELITE, LINKEDUA and KLBK, turned in traffic volume growth of 4.0%, 19.6% and -1.9% respectively.
Monthly Traffic Volume Growth 2008 (%) 35 30 25 20 15 10 5 0 -5 -10
Jan
Feb
Mar
PLUS
Apr
May
Jun
Jul
ELITE
Sep
Oct
LINKEDUA
PLUS
Traffic Growth
Aug
Nov
Dec
KLBK
ELITE
LINKEDUA
KLBK
2008
2007
2008
2008
2008
5.2%
7.7%
4.0%
19.6%
-1.9%
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Review of Operations
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Breakdown by Concessionaire
PLUS The traffic volume growth of 5.2% in 2008 is commendable given the sharp fuel price increase in June as well as the difficult economic conditions in the second-half of the year. Key factors contributing to the growth include the full completion of the third lane widening works from Rawang to Slim River and Seremban to Ayer Keroh where the traffic for these high-volume stretches recorded a strong growth of 7%. Ongoing developments of new townships such as Setia Alam and Kota Damansara also contributed to some localised traffic growth in 2008. The Pendang Interchange and the improved linkage to the NSE at Jitra in Kedah continued to draw additional traffic into the network. We anticipate that the new CIQ complex at Bangunan Sultan Iskandar, Johor Bahru which was opened to light vehicles and buses in December 2008, will improve the level of service due to an additional 27 lanes and full implementation of the ETC system which will provide a smoother passage from Singapore into Malaysia.
ELITE Traffic volume during the year recorded a healthy growth of 4.0% despite a toll rate increase of 10% effective 1 January 2008. Strong growth was recorded at Shah Alam, contributed by the developments along the Sg. Buloh-Shah Alam corridor. The Putrajaya Interchange also achieved encouraging growth, benefiting from a newly opened highway linkage constructed by third party. The opening of new interchanges such as Bandar Saujana Putra in March 2008 and Putra Heights in February 2009 is expected to be catalysts for traffic growth in the long term given the on-going development at these new townships.
LINKEDUA Notwithstanding an average toll rate increase of 27% effective 1 January 2008, traffic volume during the year increased by 19.60%. Strong growth was recorded at Perling Toll Plaza, contributed by the rapid development at Bandar Nusajaya as well as the completion of the upgrading works for the linkage from Johor Bahru. Increased cross-border travel at the Tanjung Kupang CIQ also contributed to the traffic growth.
KLBK Traffic volume dropped by 1.9% due to the 23% toll rate increase effective 1 January 2008. The sharp increase in fuel price in June as well as the difficult economic conditions in the second-half of the year also contributed to the drop in traffic.
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UPGRADING PROJECTS The Group continues to upgrade its infrastructure and facilities to enhance service levels and make our expressways the preferred mode of travel. In 2008, the Group invested approximately RM49 million in upgrading our Rest and Service Areas (“RSAs”), laybys, toll plazas and other facilities.
RSA and Layby Upgrades With creative development concepts, our RSAs and laybys are popular destinations on their own and continue to be convenient stopovers for travellers. During the year, we upgraded the Sungai Perak RSA (southbound), Dengkil RSA (northbound) and several laybys. Located adjacent to the historical Sungai Perak, the Sungai Perak RSA (southbound) features a unique “riverside” concept with innovative designs and additional facilities, set to attract users. A state agency proposal to build a jetty for scenic boatrides will help to enhance the RSA’s popularity as a tourist destination. The upgraded Dengkil RSA (northbound), the nearest stop from the Kuala Lumpur International Airport (“KLIA”), was officially launched by the Minister of Works in February 2009. Themed “Gateway to Cultural Diversity”, the new look RSA features modern architecture and a variety of outlets. Other works include upgrading of laybys at Rawang (southbound), Ladang Bikam (northbound), Sungai Bakap (northbound) and Behrang (north and southbound), where more restrooms, parking bays and mobile stalls were added to cater to increased level of patronage.
Toll Plaza and Toll Lane Extensions The Group continued carrying out level of service assessments of our toll plazas to identify upgrading requirements for smoother traffic flow. For 2008, Kota Damansara, Sg. Petani Selatan and Juru toll plazas were selected in view of their location within urban areas and high volume of traffic. At Kota Damansara, one mixed mode lane was extended to cater for both manual and ETC transactions. As a result, service levels and traffic flow at the toll plaza have improved. At Sg. Petani Selatan, we undertook pavement widening and associated works. The widening of the exit lane and relocation of the motorcycle track has facilitated traffic flow during peak periods. At Juru, the creation of semi-permanent staggered lanes catering to both cash and ETC transactions has improved service levels.
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The Variable Message Sign (“VMS”) provides real-time traffic information
The Sungai Perak RSA (southbound) has unique and innovative design features
Bridge inspection using Automatic Bridge Control equipment
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M&E and Telecommunication Projects To enhance operational efficiency, several mechanical and engineering (“M&E”) and telecommunication projects were implemented. In November 2008, we completed all works on the new Traffic Monitoring Centre (“TMC”) in our headquarters in Subang. The TMC, which is equipped with advanced ITS components such as Automatic Vehicle Detection System (“AVDS”), Variable Message Sign (“VMS”), and Closed-Circuit Television (“CCTV”), collates, processes as well as disseminates information, and is the nerve centre of our operations. The AVDS, together with the VMS, was installed along strategic stretches to automatically detect traffic volume and collect traffic data by way of traffic count, volume, speed and lane occupancy, as well as provide expressway users with realtime travel information. Apart from the above, we have also collaborated with the Government to implement projects which will enhance the level of service to our users. These included new street lighting along the Nilai-Seremban stretch of the NSE to help enhance visibility and the safety of road users as well as installation of new toll equipment at the new CIQ Complex in Bangunan Sultan Iskandar.
Ancillary Facilities We continue to implement various initiatives to increase the non-toll revenue of our ancillary facilities. This business segment generated revenue of RM18.48 million, a 33% increase in revenue over the preceding year’s RM17.72 million due to the inclusion of sub-license fees from ELITE and LINKEDUA stalls as well as several initiatives aimed at increasing commercial activities at the RSAs. These initiatives included extending the operating times of mobile vendors from a weekend only basis to a daily basis, encouraging short-term commercial promotional activities, securing new tenants for vacant premises, and introducing kiosks as a permanent retailing feature. We are currently exploring the possibility of implementing a point of sales (“POS”) system to streamline and systemise retail operations at the RSA. Apart from enhancing service levels, the POS system will allow for more effective monitoring and control of vendor pricing.
MAINTENANCE OF ASSETS Structured Maintenance Regime For optimum asset preservation, the Group undertakes asset management activities that are centred on a structured maintenance regime. This approach focuses on preventive maintenance to capture defects for early intervention. The structured regime involves the integration of activities such as network planning, network asset condition assessment, investigation of defects, detailed inspections and investigations by specialists, design and procurement, works implementation, information management as well as technical development and research.
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Pavement Maintenance Works In 2008, we implemented pavement structural overlay works for a total length of 220 lane-km. These works increased the structural capacity or strength of the existing pavements and restored their structural condition. The Group also carried out general maintenance works on pavements to a further 182 lane-km to improve their functional condition. Slope Monitoring Activities To ensure the safety and stability of slopes along the expressways, we undertook more than 6,000 periodical inspections in 2008. The results of these inspections were used to establish an appropriate maintenance programme for implementation. Our Real Time Monitoring System (“RTMS”) which utilises rain gauges, allows rainfall data to be automatically captured and transmitted to our Web-based Management System (“WBMS”) 24-hours a day, to facilitate early intervention for preventive maintenance of slopes. To date, 70 rain gauges have been installed at selected locations along the NSE and a conceptual study has been completed on the potential behaviour of rock and soil slopes in relation to rainfall and ground water fluctuation. Based on the study, plans are underway to implement real time monitoring of additional instrumentation in the form of piezometers. Meanwhile, the RTMS is also proposed to be extended to cover monitoring of identified flood prone areas.
Improved Materials In 2008, we continued to use the modified Stone Mastic Asphalt (“SMA”), a high performance pavement surfacing material, at selected locations. Compared to conventional pavement surfacing, the modified SMA is expected to prolong the life of the pavement and requires less maintenance thereby resulting in less disruption to operations and optimum expenditure in the long run.
ROAD SAFETY AND TRAFFIC MANAGEMENT We continue to enhance the safety and well being of our expressways users through various road safety and traffic management initiatives.
Road Safety Campaigns As part of our corporate responsibility efforts, we implemented several road safety campaigns in 2008. These included the nationwide “Respect Your Limits” campaign to foster safety awareness among drivers and operators of heavy vehicles. We continued to participate in other safety campaigns and exhibitions in collaboration with government agencies and third parties.
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Road Safety Audits PLUS Expressways undertakes periodical road safety audits to ensure our expressways and their related safety features are in accordance with established standards. As part of our improvement initiatives, the Group commissioned an independent certified auditor to conduct a road safety audit (Stage 5) starting with the Northern Region. We also appointed an international independent consultant, VicRoads International of Australia, to undertake safety inspection/assessment along the NSE emphasising on selected priority locations and benchmarking against international standards. The NSE was also assessed under the International Road Assessment Programme (“iRAP”) which is dedicated to promoting safer road design. The iRAP uses a 1 to 5 Star Rating as a basis to determine the safety of road infrastructure as it relates to the risks faced by each road user group. A 5-star rating represents the safest road infrastructure design for the prevailing speed environment, while a 1-star rating represents a road with relatively poor infrastructure design. Based on the assessment, PLUS Expressways received a mostly 4 to 5 star rating. In addition, periodical internal audit inspections are also carried out by the Group to ensure our operations and maintenance standards comply with established standards.
Road Safety Features In keeping with the Group’s emphasis on road safety, several improvement initiatives were undertaken along the expressways. To increase visibility and improve night time driving conditions, we installed additional warning signs, chevron signs, flashing amber lights, road studs and plastic delineator posts at selected locations, while existing concrete New Jersey Barriers located at the median along the Kuala Kangsar-Jelapang stretch were upgraded and strengthened in accordance with the new Road Engineering Association of Malaysia (“REAM”) design specifications. We also installed new guardrails as well as wire ropes and realigned the existing guardrail height at selected locations along the NSE. Road surfaces along certain stretches were treated with porous asphalt to improve surface condition during wet weather while whisper grip and rumble strips were applied to improve skid resistance. Speed limit signs, mainline signboards and approach signage were upgraded for better visibility and guidance. All in all, 2008’s road safety initiatives contributed to reducing the accident and fatality rate along our expressway to its lowest level in over a decade.
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PLUSRonda patrol teams attend to minor vehicle breakdowns and assist in traffic management
Traffic is closely monitored at the Traffic Monitoring Centre
During national emergencies, the PLUS helicopter unit is mobilised to assist in relief efforts
Emergency telephones are located at every 2km interval
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Accident and Fatality Rate (per 100 million vehicle km-traveled) 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Accident Rate
72
75
70
63
63
63
59
55
55
53
51
Fatality Rate
2.7
2.4
2.6
2.0
2.5
2.5
2.2
2.2
2.1
2.3
2.0
Accident and Fatality Rate (per 100 million vehicle km-traveled) 80 70 60 50 40 30 20 10 0
1998
1999
2000
Accident Rate
2001
2002
2003
2004
2005
2006
2007
2008
Fatality Rate
Traffic Management Efforts To better manage traffic flow along our expressways and ensure a hassle-free journey especially during festive periods, we continued to implement the following measures that have proven successful in the past: • The Travel Time Advisory (“TTA”), which recommends different journey start times to customers depending on their origin and destination. • The PLUS Mobile Alert (“PLUSMA”) which transmits traffic updates via short messaging service (“SMS”) to subscribers. • The Headquarters Reserve Unit (“HRU”) which was deployed to selected toll plazas and RSAs along the expressway to assist in traffic management.
PROJECTS UNDER DEVELOPMENT Currently, PLUS Expressways has three projects under development – two in Indonesia and one in India. These two countries hold tremendous growth potential given the anticipated traffic volume growth from the huge population base. The Group is fully committed to implementing these projects while exploring other strategic opportunities that will enlarge our international footprint.
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Bhiwandi-Kalyan-Shil Phata Highway, India PLUS BKSP Toll Limited (“PLUS BKSP”) was incorporated on 24 July 2006 in India as a special purpose vehicle to undertake the implementation of the 21.6 km BhiwandiKalyan-Shil Phata Highway (“BKSP”) project in the State of Maharashtra. The concession agreement, executed on 25 August 2006, which includes operating, maintaining and collecting tolls, was initially for 6 years and 8 months but has been extended to 7 years, 11 months and 5 days. The project involves the widening of the existing two-lane BKSP to four lanes, as well as pavement strengthening and improvement. The project was initially delayed due to challenges in securing certain sections of land required for construction. However, as at April 2009, construction has achieved 99.21% progress. The date of commencement of toll collection shall be determined upon the Maharashtra State Road Development Corporation (“MSRDC”) issuing a Provisional Completion Certificate. The Group will leverage on the BKSP project to explore other opportunities in India.
Cikampek-Palimanan Toll Road, Indonesia PLUS Expressways acquired a 55% stake in PT Lintas Marga Sedaya (“LMS”), the concessionaire for the 116 km Cikampek-Palimanan Toll Road, the longest section of the Trans Java Expressway. The concession is for 35 years from 13 July 2007. The design of the project was completed and approved by the regulatory authority, Badan Pengatur Jalan Tol (“BPJT”), in May 2008. As a result of the increase in the cost of certain major construction materials, the business plan was revised and approved by BPJT. We are currently actively pursuing the additional funding required for the project. Land acquisition by the Government of Indonesia is also ongoing and is expected to be completed within this year.
Cimanggis-Cibitung Toll Road, Indonesia On 18 September 2007, PLUS Expressways together with PT Bakrie & Brothers Tbk and PT Capitalinc Investment Tbk succeeded in the bid for the Cimanggis-Cibitung Toll Road. On 27 February 2008, a joint venture special purpose vehicle, namely PT Cimanggis-Cibitung Tollways (“CCTW”) was incorporated. PLUS Expressways holds a 60% equity stake in CCTW, making the company a foreign subsidiary of the Group. The 35-year concession involves the construction, operation and maintenance of the proposed 25.4 km Jakarta Outer Ring Road 2 (“JORR2”) on the outskirts of the Jakarta metropolitan area. CCTW is in negotiation with BPJT prior to the concession agreement being signed.
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Corporate Social Responsibility
Reaching Out
Towards More Impactful Corporate Social Responsibility
Towards Effective Environmental Protection
Towards a High Performance Workforce
106 108 110 112
114
Towards Greater Customer Satisfaction
104
Towards Greater Innovation
Media Milestones – Corporate Social Responsibility
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Towards More Impactful Corporate Social Responsibility Respect Your Limits
“Rebung Project”
Through the “Respect Your Limits” road safety campaign aimed at drivers and operators of heavy vehicles, we spread awareness on road safety nationwide. More than 1,000 drivers benefitted from seminars involving speakers from PLUS, Jabatan Keselamatan Jalan Raya (“JKJR”), the Malaysian Institute of Road Safety Research (“MIROS”) and Puspakom.
In collaboration with the Malaysian Institute of Integrity, we organised the “Rebung Project” that saw some 400 student leaders from MARA Junior Science Colleges (“MRSM”) nationwide undergoing integrity and teambuilding training with stall operators at PLUS RSAs and the Bukit Gantang Tropical Fruit Village. The participants were also involved in a half-day session on road safety awareness and ‘gotong-royong’ with the local communities.
Malays i a Z er o F a t al i t y Vision 2008 – 2010
As a responsible and progressive corporate citizen, PLUS Expressways is committed to elevating the quality of life of the communities we operate in. We subscribe to the principles of sustainable development and integrate social values within our business activities. In line with recommendations put forth in the GLC Silver Book, the Group’s Corporate Social Responsibility (“CSR”) programme for 2008 emphasised on two of the seven core areas prescribed – that of community involvement and education. Our community and educational initiatives in turn, focused on the cause of road safety awareness, an issue that the Group has long championed.
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In August 2008, we signed an MOU with JKJR to roll out safe driving programmes in support of Malaysia’s Zero Fatality Vision. Our collaborative efforts led us to implementing Zero Road Fatality Vision Intervention Programmes, advocating the use of helmets and rear seatbelts, and publishing guidebooks on safe driving for distribution to schools and the public at toll plazas. The first batch of 30,000 books was printed in June 2008 in both Bahasa Malaysia and English.
Supporting Motor sport The Group’s association with motor sport goes back a long way and it has proven to be an effective platform for reaching out to grassroot audiences. 2008 saw us sponsoring young local talents to represent Malaysia in the Rotax Max Challenge and Formula BMW events. We also undertook sponsorship of the A1 Team Malaysia and the A1GP race in Sepang to support the growing motor sports industry. In conjunction with the Formula PLUS Inter-School Go Kart Competition 2008 which was organised in Selangor to unearth new motor sport talents, some 120 school children aged 9 to 10 years old were selected from 60 schools in Selangor to undergo theory and practical training in preparation for the competition.
Towards More Impactful Corporate Social Responsibility
We have also invested in the Speedway PLUS Circuit. This has not only helped elevate motor sports activities in a safe environment and making the sport accessible to the masses, but it also enabled us to identify young talents and appoint them ambassadors of the sport as well as icons of road safety.
Impacting Communities The year under review also saw us impacting local communities through our support of special interest groups, orphanages, ‘gotong-royong’ activities and regular dialogues with villagers on health and safety issues. We were also involved in ‘korban’ and Ramadhan contributions as well as the sponsorship of mineral water to schools for their
sports day. These efforts have helped build goodwill with many communities and reduced incidents of stone throwing, vandalism and open burning near our expressways. PLUS Expressways also continues to provide opportunities for communities living near our expressway facilities to supplement their livelihood. By offering affordable rental rates and providing training on food preparation, hygiene and customer service, we are helping to grow many of the outlet operators at our RSAs into successful entrepreneurs.
continued
Rewarding Customers We have embarked on customer incentive programmes that offer discounts to users during off-peak hours and a loyalty programme that rewards frequent and high expressway usage. These initiatives reflect the Group’s appreciation of the many loyal users who choose to travel on our expressways especially during these trying times. PLUS Expressways will continue to look for opportunities to enrich and elevate the status of the communities we operate in.
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Towards Effective Environmental Protection
continued
Towards Effective Environmental Protection Structured Environmental Management System
Reducing Congestion and Pollution
PLUS Expressways’ Environmental Policy advocates business practices as well as products and services that are environmentally friendly and sustainable. To preserve the environment around us, we continue to establish comprehensive operational controls, utilise the appropriate technology as well as implement sustainable maintenance and construction activities. To help us comply with prevailing environmental regulations in Malaysia, we employ structured Environmental Management System that is systematically monitored.
As an organisation that cares for our customers and the environment, we are also committed to ensuring our environmental efforts to date are continuously improved upon. To reduce the effect of harmful vehicle exhaust emissions (in particular green house gas emissions), from the approximately one million vehicles that ply our expressways daily, we continue to promote the usage of electronic toll collection system as it minimises congestion at toll plazas. In 2008, our efforts to reduce congestion at toll plazas saw us achieving 48% of toll collection by electronic means via SmartTAG readers and Touch ‘n Go cards.
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With the completion of widening works from Seremban to Ayer Keroh and from Rawang to Slim River, the congestion at the mainline too has been minimised and exhaust emissions reduced. Modification works for through traffic between Ipoh Selatan and Jelapang, which were recently completed will also contribute towards a better environment.
M i n i m i s i n g P o te n t i a l Contamination Our maintenance of the toilets at our laybys and Rest and Service Areas (“RSAs”) has not only enhanced customers’ comfort levels but has also enabled us to improve the quality of wastewater discharged into the environment.
Towards Effective Environmental Protection
In 2008, we spent about RM1 million to upgrade our sewerage treatment plants thereby minimising the impact of effluent discharge. We also spent over RM7.1 million in maintaining these plants. We also ensured that all slopes were maintained to minimise sediment flow into natural water courses through on-foot and aerial inspections. The Group is always prepared to respond to any emergency that could potentially impact the environment. By implementing comprehensive
procedures and making continual improvement to processes and systems, we achieved approximately 93% emergency responses within 20 minutes. These early interventions minimised potential pollution of inland waters and soil.
Spreading Environmental Consciousness All the Group’s employees, stall operators and contractors are aware of the need to adhere to the requirements of our Environmental Management System as well as their responsibility to monitor and control all activities that
continued
impact upon the environment. As we encourage our employees to become active agents of sustainable and equitable development, we also inculcate a sense of environmental consciousness among our expressway customers and business partners. Going forward, we will focus on achieving the Group’s environmental improvement objectives and targets, while continuing to enhance our Environmental Management System and environmental protection practices.
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Towards Greater Customer Satisfaction PLUS Expressways is committed to ensuring the safety, comfort and convenience of our customers at all times. To this end, we continue to provide safe infrastructure, make continuous improvements to our expressway facilities and services, as well as ensure smooth traffic flow for a more enjoyable customer experience.
E leva t i n g Cus t o m er Satisfaction Levels In 2008, we took our customer service efforts up several notches with the establishment of a dedicated Customer Relationship and Marketing Department (“CRMD”). This unit has been tasked with elevating customer satisfaction levels by responding to complaints and enquiries in a more effective manner as well as through initiating more engaging customer-centric and marketing programmes.
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The CRMD is also responsible for monitoring customer-centric activities and launching new initiatives to ensure customer satisfaction and positive experiences. The CRMD analyses traffic patterns regularly and develops marketing programmes to attract traffic to the PLUS expressway network.
Cus t o m er Programmes
I n c e n t i ve
In line with the Group’s move to become a more customer-centric organisation and in response to the Government’s call to give added value to expressway users especially during the current economic period, the Group launched the PLUS Travel Incentive and PLUSMiles loyalty programme.
PLUS Travel Incentive The PLUS Travel Incentive (“PTI”) is a dynamic toll pricing mechanism that aims to help smoothen traffic flow during peak hours by offering discounts
Towards Greater Customer Satisfaction
during off-peak periods. This incentive programme rewards Class 1 users travelling the PLUS and ELITE expressways between 12 midnight and 7 am with a 10% toll discount. The PTI runs effectively from 1 January 2009 till 31 December 2010. An additional 10% discount will also be given to users during four main festive seasons for off-peak travel on any six selected days.
Incentive for Buses In response to the Government’s call to assist public transport operators in reducing their operating costs, toll charges for buses were reduced by 50% effective 15 September 2008 for a duration of two years.
PLUSMiles Loyalty Programme In appreciation of frequent and high usage electronic toll collection (“ETC”) users, we launched the PLUSMiles Loyalty Programme on 1 January 2009. This loyalty programme, the first-of-itskind in Malaysia, recognises and rewards PLUSMiles subscribers spending a minimum of RM200 a month with a 5% toll rebate. PLUSMiles cardholders are also entitled to a host of benefits including instant discounts and privileges from a growing number of participating merchant outlets.
continued
Going forward, PLUSMiles will enable us to better identify and understand customer needs so that we can implement focused marketing activities. As of mid-April 2009, there were over 20,000 PLUSMiles loyalty card users, underlining the success of this initiative.
Customer Requests
Responding to Customers
Customer Enquiries
The Group is continuously evaluating the effectiveness of our facilities and services through various channels. In 2008, we received feedback from our customers in the form of requests for assistance, enquiries, notifications, complaints and compliments, totaling approximately 96,000.
The PLUS toll free line responded to approximately 35,000 enquiries with 43% of this number enquiring about the status of traffic and the other 57% enquiring about the reasons for traffic congestion.
Our Traffic Monitoring Centre recorded more than 50,000 Vehicle Breakdown Assistance requests throughout 2008 with the highest number of requests relating to car breakdowns (68.4%), followed by lorry and trailer breakdowns at 9.2% and 8.1% respectively.
Customer Compliments Customer Complaints In 2008, the overall number of customer complaints dropped by 31% against 2007’s figure. In the Highway Service and Traffic Safety categories, the number of total complaints dropped by 88% mainly due to the successful completion of the Third Lane Widening project. In the area of traffic congestion at toll plazas, we managed to reduce complaints by 84%. Proactive measures are being taken in other areas to address complaints and elevate customer satisfaction levels.
The Group received 30 compliments in 2008 of which 57% was attributed to the quick response by PLUSRonda teams. Besides that, compliments were also received for expressway facilities, toll teller courtesy, traffic monitoring services and maintenance. The Group continues to enhance the management of customer feedback through the Customer Complaints Management System (“CCOMS”) to address our customers’ needs in a more structured and effective manner.
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In 2008, the Group continued to bring innovation into play on several fronts to enhance our operational efficiency, productivity and cost effectiveness as well as to ensure customer safety and comfort.
Our Database Management Department (“DMD”), now under the purview of the RTSD, is responsible for maintaining and further developing our Total Expressway Maintenance Management System (“TEMAN”) which uses Geographical Information Systembased (“GIS”) applications, making it more efficient and marketable.
Towards Greater Innovation R ese a r c h a n d T e c h n i c a l Support Division In order to remain competitive in a highly challenging operating environment, we established a dedicated Research & Technical Support Division (“RTSD”) to intensify our research efforts and to market the over two decades of expertise we have accumulated. The RTSD has been tasked with undertaking and coordinating research of new products and processes to enhance operational efficiency. Over the long term, research efforts will be expanded to other areas of our business to help establish PLUS Expressways as the market leader in highway services and products.
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Operational Innovation The PLUSRonda Mobile Reporting System (“PROMPTS”) was introduced to enhance the efficiency of real-time reporting between PLUSRonda, our Traffic Monitoring Centre (“TMC”) and other relevant departments. A fullyonline computerised system, PROMPTS simplifies and automates the existing PLUSRonda process flow and reporting. In order to facilitate more effective and efficient services for expressway customers, the integration of the TMC with the Region Communications Centres was carried out in 2008. This integration has improved our overall processes and reduced work duplication, enabling us to respond faster to any incidents along our expressways.
Towards Greater Innovation
The year also saw us rolling out the web-enabled Executive Information System (“EIS”) module of TEMAN. The EIS contains an executive summary of other sub-systems within TEMAN, relevant statistical and economic data as well as information on other expressways, locally and abroad. With this web-based system, our management now has a more effective way of retrieving records pertaining to expressway asset management and other relevant information to assist them in decision making. We also focused our efforts on developing a cost effective web-based Mini TEMAN application for use by smaller toll operators. Rolled out in the fourth quarter of 2008, this application underscores our new strategy of marketing our in-house system to other concessionaires. We have also successfully migrated our existing GIS database to the more advanced ArcSDE Geodatabase format. This will make the handling of the GIS data more efficient while enabling the management and analysis of remote sensing data as well as satellite images including digital elevation modelling.
continued
Cust o mer - f o c use d Innovation For the benefit of expressway users, the PLUS Mobile Alert (“PLUSMA”) which enabled the transmission of traffic updates via short messaging service (“SMS”), was activated during festive seasons. This service supplemented our existing PLUS Tollfree line, radio announcements and Variable Messaging System (“VMS”). To ensure the safety of expressway users, high friction course pavement surfacing and rumble strips with high quality skid resistance features were installed at selected areas. To eliminate incidences that may compromise safety, new anti-theft fastener guardrails and stronger Right-of-Way fencing were installed.
Recognition Our dedication to employing innovation was recognised when our As-built Drawings Archiving Management System (“ADAMS”) was acknowledged as one of the top innovative systems developed within the UEM Group. It is now being showcased at the UEM Innovative Centre in Petaling Jaya.
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Towards a High Performance Workforce
continued
Towards a High Performance Workforce The Group is committed to building a high performance workforce to drive the Group’s business growth and bring it to new heights of service and product excellence. We improved on existing human capital-related initiatives as well as embarked on new programmes to support the Group’s business strategy to be an Employer of Choice.
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Strengthening HR Efforts The many human capital development initiatives included a Group integrity plan, employee value proposition, top talent retention plan and reviews of employees’ salaries and benefits. We also focused our efforts on expanding our workforce through a structured recruitment drive and enhanced manpower development and planning strategies for domestic and overseas requirements. In addition, we embarked on cost saving measures and process improvement initiatives through employee involvement of Six Sigma projects. These projects helped promote
staff engagement through esprit-decorp and built a sustainable high performance work culture.
Managing Performance
E m p l o yee
In supporting the Group’s strategic business plan, we also introduced a performance management framework, with key performance indicators (“KPIs”) being integrated into our business and operational activities. Employees at every level and function are accountable for achieving prescribed performance targets aligned to and focused on the corporate KPIs.
E m p l o yee
Elevating Human Capital Development Initiatives
The importance of people and organisational development is spelt out in our Corporate Balanced Scorecard which places an emphasis on the development and retention of top talent. In this regard, the Group places emphasis on understanding the needs and expectations of the employees in order to effectively manage those expectations. An Employee Climate Survey was again conducted in 2008 whereby we successfully achieved an overall corporate score of 85%. Based on the detailed results of the survey, we will be able to design more effective career development programmes for our employees and improve productivity in the work environment.
The Group is committed to enhancing the Attitude, Skills and Knowledge (“ASK”) of our employees through ongoing training and development initiatives. To ensure higher standards of efficiency and productivity, we invested a significant amount on human capital development programmes and initiatives in 2008.
Managing Expectations
Besides external training courses, PLUS Training Centre provides specially designed programmes for our frontline and operational staff focusing on motivation, character building and skills reinforcement. In addition, the centre also conducts IT proficiency and Spoken English training programmes for non-executive staff.
In line with our strategy to create a bigger pool of potential leaders, our employees are provided with managerial and leadership development programmes to keep their skills abreast with the Group’s aspirations. To retain top management talent, implement succession planning and ensure a highperforming management and leadership team, we have collaborated closely with the UEM Group for leadership assessment and development programmes via a systematic and scientific management approach to support our business roadmap and strategies. All these initiatives have helped to narrow the employee competency and skill set gaps while forging a sense of belonging to the Group.
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Media Milestones – Corporate Social Responsibility Corporate Social Responsibility News Clippings
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Corporate Governance
Expanding Good Practices
Statement of Corporate Governance
Enterprise Risk Management
Code of Business Ethics
Statement of Internal Control
Audit Committee Report
Management Control Policy
116 128 131 132 135 139
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Statement of Corporate Governance
The Board of Directors (“Board”) of PLUS Expressways Berhad (“PLUS Expressways” or “the Company”) has always upheld a high standard of corporate governance to safeguard the interests of all stakeholders, which include customers, shareholders, employees, and the community.
The Board is fully dedicated to ensuring that the structure and procedures to support excellent corporate conduct will continue to exist, not only in their present form, but will continually be enhanced and fortified. This statement sets out the commitment of the Board towards good corporate governance principles and the extent to which it has complied with the best practices of the Code on Corporate Governance (Revised 2007) (Code) throughout the financial year ended 31 December 2008.
a
The Board of Directors
The Board PLUS Expressways is led and managed by an experienced Board comprising a mix of members with a wide range of experience and expertise in the relevant fields such as accounting, economics and management, sustainable development, business and banking. With their broad range of skills, experience and knowledge, they successfully direct and supervise PLUS Expressways Group’s (“the Group”) business activities.
As a team, the Board brings to bear independent and sound judgement on issues encompassing strategy, performance, resources and standards of conduct. The roles and functions of the Board as well as the differing roles of Executive Directors and Non-Executive Directors have been clearly defined.
Board Composition The Board has twelve (12) directors comprising one (1) Executive member and eleven (11) Non-Executive members, six (6) of whom are independent. A brief profile of each Director is set out on pages 52 to 64 of this Annual Report.
The Independent Non-Executive Directors are independent of management and free from any business relationships which could materially interfere with the exercise of their independent judgement. They play an important role in:
• • •
116 PLUS Expressways Berhad Annual Report 2008
Ensuring that the strategies proposed by the Management are analysed and deliberated. Representing the interests of not only the minority shareholders, but also of employees, customers, suppliers and other stakeholders. Providing an objective and independent view to the Board.
Statement of Corporate Governance
The Company has complied with the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) which requires at least two (2) Directors or one-third (1/3) of the Board, whichever is higher, to be independent and non-executive.
The Board’s composition is such that no individual or group of individuals dominates the Board’s decision making.
In accordance with the guidelines of the Code, Geh Cheng Hooi is the Senior Independent Non-Executive Director whose primary responsibility is to deal with concerns regarding the Company which are inappropriate to be dealt with by the Chairman or the Managing Director.
Roles of Chairman and Managing Director The roles of the Non-Independent Non-Executive Director and Chairman, Tan Sri Dato’ Mohd Sheriff Mohd Kassim and the Managing Director, Noorizah Hj Abd Hamid are separate with clear distinction of responsibilities between them.
The Chairman is responsible in ensuring the integrity and effectiveness of the relationship between Directors. The Managing Director is responsible for the implementation of broad policies approved by the board and she is obliged to report and discuss at board meetings all material matters currently or potentially affecting the Group and its performance, including all strategic projects and regulatory developments.
Conflict of Interest The Directors have a continuing responsibility to determine whether they have a potential or actual conflict of interest in relation to any matter, which comes before the Board. The Company and the Group have adopted a process whereby each Director is required to make written declarations whether they have any interest in transactions tabled at regular board meetings of the Group.
continued
Board Appointment Process The Company has in place formal and transparent procedures for the appointment of new Directors. These procedures ensure that all nominees to the Board are first considered by the Nominations and Remuneration Committee taking into account the required mix of skills and experience and other qualities, before making a recommendation to the Board and major shareholders.
Boards Appraisal Process Following the launch of the Green Book on Enhancing Board Effectiveness developed by the Putrajaya Committee on GLC High Performance for Government Linked companies in April 2006, YBhg Tan Sri Dato’ Mohd Sheriff Mohd Kassim, the Non-Executive Chairman of the Company, has been identified as the Leading Director to lead the board effectiveness assessment.
Board Responsibilities The Board retains full and effective control of the Company. This includes responsibilities in determining the Company’s overall strategic direction, the development and management of the Group’s businesses as well as reviewing the adequacy and effectiveness of the internal control system of the Company and the Group as a whole. The Board are also responsible in identifying principal risks and ensuring the implementation of the appropriate systems to manage these risks.
Key matters, such as approval of annual and interim financial results, material acquisitions and disposals, material agreements, major capital expenditures, budgets, the Key Performance Index, the Corporate Scorecard, long-term plans and succession planning for the top management are reserved for the Board’s deliberation and decision making.
117 PLUS Expressways Berhad Annual Report 2008
Statement of Corporate Governance
continued
The Board, as a whole, oversees responsibility for developing and revising the Group’s strategies. The Executive Director is responsible for making and implementing operational decisions generally based on the Discretionary Authority Limit (“DAL”) as approved by the Board. The Non-Executive Directors complement the skills and experience of the Executive Director by contributing their knowledge and experience of other businesses and sectors to the formulation of policies and decision making of the Company.
Fiduciary Duties of Directors The relationship between a Director and the Company is based on fiduciaries, whereby each Director is required to act bona fide in the best interests of the Company, as a whole. In this respect, the Directors are required to declare their respective shareholdings in the Company and related companies. Directors are also required to declare to the Board their interests in any contracts or proposed contracts with the Company or any of its related companies. The Directors will abstain from any decision making in relation to transactions in which they have an interest.
To further assist the Board in discharging its responsibilities more effectively; four (4) committees have been set up – Audit, Nominations, Remuneration and Investment Committees. Each committee has the authority to review specific issues delegated by the Board and to report to the Board with its recommendations. The ultimate responsibility for the final decision on all matters, however, lies with the Board.
118 PLUS Expressways Berhad Annual Report 2008
Number of Directorships in Other Companies Each Director of the Company holds not more than ten (10) directorships in public listed companies and not more than fifteen (15) directorships in non-listed companies as defined and in accordance with the Bursa Securities Listing Requirements. Compliance with the Bursa Securities Listing Requirements in this respect ensures that the Directors are able to commit sufficient time and resources to effectively discharge their responsibilities to the Company.
Board Meetings The Board met nine (9) times for the financial year ended 31 December 2008 where it deliberated on and considered various matters including but not limited to:
• • • • • •
The Group’s financial and operational performance, Major capital expenditure and investment opportunities, Internal controls and risk management, Budgets and dividends, Business plan and strategic direction of the Group, and Related party transactions.
Prior to Board meetings, the Board is furnished with sufficient and appropriate quality information from the Management and, where necessary, third party consultants are engaged to advise the Board on the matter to enable the Board to effectively discharge their responsibilities. All proceedings of the Board meetings are recorded.
Statement of Corporate Governance
continued
Details of each Director’s meeting attendance during the financial year ended 31 December 2008 are as follows: No.
Name of Director
Status
1
Tan Sri Dato’ Mohd Sheriff Mohd Kassim
Non-Independent Non-Executive Chairman
9/9
2
Dato’ Ahmad Pardas Senin
Non-Independent Non-Executive Deputy Chairman
8/9
3
Noorizah Hj Abd Hamid
Managing Director
9/9
4
Geh Cheng Hooi
Senior Independent Non-Executive Director
4/9
5
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid
Independent Non-Executive Director
8/9
6
Hassan Ja’afar
Non-Independent Non-Executive Director
9/9
7
Dato’ Mohamed Azman Yahya
Non-Independent Non-Executive Director
8/9
8
Tan Sri Razali Ismail
Independent Non-Executive Director
5/9
9
Datuk K. Ravindran
Independent Non-Executive Director
8/9
10
Quah Poh Keat
Independent Non-Executive Director
7/9
11
Abdul Farid Alias (Resigned w.e.f. 31 December 2008)
Non-Independent Non-Executive Director
5/9
12
Datuk Seri Panglima Mohd Annuar Zaini (Appointed w.e.f. 19 December 2008)
Independent Non-Executive Director
—
Access to Information and Advice The Board recognises that the decision making process is highly dependent on the reliability and completeness of information furnished to it. As such, the Board members have full and unrestricted access to information on the Group’s business and affairs, whether as a full Board or in their individual capacity, in discharging their duties. The Board receives timely advice on all relevant information about the Group.
Prior to Board meetings, the Directors receive the agenda and a full set of Board papers containing information relevant to the matters to be deliberated at the meeting. The Board papers are comprehensive and encompass both quantitative and qualitative factors to facilitate prudent and informed decision making. The minutes of
No. of Board Meetings Attended
the previous Board meeting are also circulated to the Directors and confirmed at each meeting. Minutes of the Board Meetings are maintained at the Registered Office of the Company.
All Directors also have full access to the advice and service of the Company Secretaries in the course of their duties. The Company Secretaries are responsible for ensuring that Board meeting procedures are adhered to at all times and that applicable rules and regulations are complied with. Where necessary, the Directors may obtain independent professional advice at the Company’s expense on specific issues to enable the Board to discharge their duties on the matters being deliberated.
119 PLUS Expressways Berhad Annual Report 2008
Statement of Corporate Governance
continued
Directors’ Training The Company acknowledges that continuous education is vital for Board members to gain insight into the state of the economy, technological development, latest regulatory developments and management strategies in relations to the Group’s core business.
Every Director of the Company undergoes continuous training. In year 2008, the Directors have attended training in relation to amongst others corporate governance, risk management, securities market regulation and directors’ duties and liabilities.
The training status of Directors as at 31 December 2008, are as follows: No.
Name of Director
No. of Training Attended
Remarks
1
Tan Sri Dato’ Mohd Sheriff Mohd Kassim
5
Attendance as participant at seminars/conference/ workshops
2
Dato’ Ahmad Pardas Senin
2
Attendance as participant at seminars/conference/ workshops
3
Noorizah Hj Abd Hamid
5
Attendance as participant at seminars/conference/ workshops
4
Geh Cheng Hooi
1
Attendance as participant at seminars/conference/ workshops
5
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid
1
Attendance as participant at seminars/conference/ workshops
6
Hassan Ja’afar
3
Attendance as participant at seminars/conference/ workshops
7
Dato’ Mohamed Azman Yahya
8
Attendance as moderator and/or participant at seminars/conference/workshops
8
Datuk K. Ravindran
2
Attendance as participant at seminars/conference/ workshops
9
Tan Sri Razali Ismail
2
Attendance as participant at seminars/conference/ workshops
10
Quah Poh Keat
5
Attendance as panelist and/or participant at seminars/conference/workshops
11
Abdul Farid Alias
4
Attendance as participant at seminars/conference/ workshops
12
Datuk Seri Panglima Mohd Annuar Zaini
3
Attendance as participant at seminars/conference/ workshops
120 PLUS Expressways Berhad Annual Report 2008
Statement of Corporate Governance
Re-election of Directors The Company’s Articles of Association provides that one-third (1/3) of the Directors in office for the time being, or if their number is not three (3) or a multiple of three (3), then the number nearest to one-third (1/3), are subject to retirement by rotation at each Annual General Meeting (“AGM”) and shall be eligible for re-election. The Directors longest in office since their last election shall retire from office at the forthcoming AGM and shall be eligible for re-election. Directors who are over 70 years of age are required to submit themselves for re-appointment and re-election annually in accordance with Section 129(2) and Section 129(6) of the Companies Act, 1965. Details of the Directors seeking re-election and re-appointment at the forthcoming AGM are disclosed in the Notice of the AGM on page 10 of this Annual Report.
b
Board Committees
The Board has delegated specific responsibilities to four (4) committees i.e. Audit Committee, Nominations Committee, Remuneration Committee and Investment Committee. These Committees have clearly defined terms of reference to assist and support the Board in its responsibility to oversee the Company’s operations and to make the necessary recommendations relating thereto for the Boards’ consideration. At all times, the ultimate responsibility for the final decision on all matters, lies with the Board. (i) Audit Committee The Audit Committee comprises the following members: Chairman Geh Cheng Hooi Senior Independent Non-Executive Director
continued
Members Datuk K. Ravindran Independent Non-Executive Director
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid Independent Non-Executive Director
Quah Poh Keat Independent Non-Executive Director
The Board has delegated certain responsibilities to the Audit Committee, which operates within clearly defined terms of reference. The terms of reference of the Audit Committee and their activities are set out on pages 135 to 138 of this Annual Report.
(ii) Nomination Committee The Nomination Committee consists exclusively of Non-Executive Directors, a majority of whom are independent. The members are as follows:
Chairman Tan Sri Dato’ Mohd Sheriff Mohd Kassim Non-Independent Non-Executive Chairman
Members Geh Cheng Hooi Senior Independent Non-Executive Director Datuk K. Ravindran Independent Non-Executive Director
The Managing Director and other members of the Board may attend the Nomination Committee meetings upon the invitation by its Chairman.
121 PLUS Expressways Berhad Annual Report 2008
Statement of Corporate Governance
The Nomination Committee is responsible for recommending to the Board the appointment of new directors and assessing the size, composition, relevance and the effectiveness of the Board and its other Committees. For good corporate governance, the Nomination Committee also recommends to the Board the appointment of the directors of the Company’s subsidiaries. The required mix of skills and experiences of directors, including core competencies which non-executive directors bring to the Board, are also reviewed annually by the Board in consultation with the Nomination Committee. The Nomination Committee has deliberated and recommended to the Board after considering the skills, knowledge, expertise, experience, professionalism and integrity of the new directors and in the case of the independent non-executive director, the Nomination Committee has evaluated on his ability to discharge his responsibilities as expected. The new directors recommended on 18 November 2008 are as follows:
• •
continued
Mohamad Rosli Ahmad as the new nominee director of PLUS BKSP Toll Limited, PLUS Expressways Berhad’s subsidiary in India; and
(iii) Remuneration Committee The members of the Remuneration Committee, consisting wholly of Non-Executive Directors, are as follows:
Members Dato’ Ahmad Pardas Senin Non-Independent Non-Executive Deputy Chairman Hassan Ja’afar Non-Independent Non-Executive Director Datuk K. Ravindran Independent Non-Executive Director
The Remuneration Committee is responsible for recommending to the Board the remuneration framework of the Executive Director and the senior management of the Company.
The broad policy for directors’ compensation is to provide a remuneration package necessary to attract, retain and motivate Directors of the quality required to manage the business of the Company and to align the interest of the Directors with those of the shareholders. Executive Director’s remuneration is linked to corporate and individual performances.
On 15 February 2008, the Remuneration Committee deliberated and recommended to the Board the fixed fees and meeting allowances for Board of Commissioners of PT Lintas Marga Sedaya, a whollyowned subsidiary of PLUS Expressways Berhad in Indonesia.
YBhg Datuk Seri Panglima Mohd Annuar Bin Zaini onto the Board as an independent nonexecutive director.
The Nomination Committee also deliberated and recommended to the Board for approval, the retirement and re-election of certain identified directors at the forthcoming AGM.
122 PLUS Expressways Berhad Annual Report 2008
Chairman Tan Sri Dato’ Mohd Sheriff Mohd Kassim Non-Independent Non-Executive Chairman
Statement of Corporate Governance
On 27 May 2008, the Remuneration Committee deliberated and recommended to the Board the proposed Payment of Bonus 2007 to the top management. On even date, the Remuneration Committee also deliberated on the proposed Payment of Bonus 2007 to Noorizah Hj Abd Hamid, the Managing Director of PLUS Expressways Berhad and YBhg Dato’ Idrose Mohamed, the former Managing Director of PLUS Expressways Berhad.
For the year under review, the Investment Committee deliberated on the Company’s participation in several tenders and request for qualification in relation to toll road projects in the Indian sub-continent and Indonesia. Other than India sub-continent and Indonesia, the Investment Committee also looked at the possibility and prospect of PLUS Expressways Berhad to invest in other part of the globe.
On 27 June 2008, the Remuneration Committee deliberated and recommended to the Board the proposed payment of ex-gratia to YBhg Dato’ Idrose Mohamed, the former Managing Director of PLUS Expressways Berhad.
On 11 January 2008, the Investment Committee deliberated in length and recommended to the Board for PLUS Expressways Berhad to accept the letter of offer from the Ministry of Works, Republic of Indonesia for the award of the concession for the Cimanggis-Cibitung Toll Road Project (“Project”) in Indonesia and further recommended to the Board for PLUS Expressways Berhad to enter into a Joint Venture Agreement with PT Bakrie & Brothers Tbk and PT Capitalinc for the formation of a new toll road concession company for the Project.
On 23 May 2008, the Investment Committee deliberated on the progress updates of the Cikampek- Palimanan Toll Road Project in Indonesia and recommended to the Board for the additional Shareholder’s Advance to meet the operational requirements of PT Lintas Marga Sedaya, its subsidiary in Indonesia. The Investment Committee on the same date deliberated and further recommended to the Board for the proposed additional injection by PLUS Expressways Berhad to PLUS BKSP Toll Limited, its subsidiary in India for the purpose of financing the balance of the outstanding construction works and operating cost.
On 23 December 2008, the Investment Committee deliberated on the proposal to submit bid for the Indore-Dewas project in India but decided not to proceed with the submission.
(iv) Investment Committee The Investment Committee comprises the following members:
Chairman Tan Sri Dato’ Mohd Sheriff Mohd Kassim Non-Independent Non-Executive Chairman
Members Dato’ Ahmad Pardas Senin Non-Independent Non-Executive Deputy Chairman Dato’ Mohamed Azman Yahya Non-Independent Non-Executive Director Noorizah Hj Abd Hamid Managing Director
continued
The Investment Committee is only allowed to make decisions in respect of investments in expressways related business in Malaysia and overseas at the tender/pre-qualification stage. In the event that the tender/pre-qualification are successful, further details on the investment will be presented to the Board for its final decision. Other types of investments which are not related to the expressways industry will be deliberated by the Investment Committee and recommended to the Board for final decision.
123 PLUS Expressways Berhad Annual Report 2008
Statement of Corporate Governance
continued
c Directors’ Remuneration
Other than the Managing Director, all Directors are paid a fixed fee and receive a meeting allowance for each Board or Committee meeting they attend. Directors’ remuneration is subject to approval by the shareholders. The Chairman is paid a higher fee compared to other Board members in recognition of his additional responsibilities.
The remuneration for the Deputy Chairman and Abdul Farid Alias are paid to UEM Group Berhad and Khazanah Nasional Berhad respectively. The Managing Director’s remuneration is contractual and reflects the Board’s recognition of her skills and experience in the industry. The level of remuneration of Non-Executive Directors commensurate with their experiences and level of responsibilities and is determined by the Board.
The details of the remuneration of the Directors, paid and payable, for the financial year ended 31 December 2008 are as follows: RM (’000)
No.
Name of Directors
Fees
Benefit in Kind
Total
1
Tan Sri Dato’ Mohd Sheriff Mohd Kassim
—
90
54
—
144
2
Dato’ Ahmad Pardas Senin
—
40
10
—
50
3
Noorizah Hj Abd Hamid
1,148*
—
35
84
1,267
4
Geh Cheng Hooi
—
72
6
—
78
5
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid
—
54
10
—
64
6
Hassan Ja’afar
—
39
10
—
49
7
Dato’ Mohamed Azman Yahya
—
40
10
—
50
8
Tan Sri Razali Ismail
—
40
5
—
45
9
Datuk K. Ravindran
—
54
11
—
65
10
Quah Poh Keat
—
52
10
—
62
11
Abdul Farid Alias (Resigned w.e.f. 31 December 2008)
—
33
5
—
38
12
Datuk Seri Panglima Mohd Annuar Zaini (Appointed w.e.f. 19 December 2008)
—
1
—
—
1
1,148
515
166
84
1,913
Total
Salary
Other Benefits & Emolument
* The amount is inclusive of salary, ex-gratia, bonus and EPF (employer’s contribution)
124 PLUS Expressways Berhad Annual Report 2008
Statement of Corporate Governance
d R e l a t i o n s h i p w i t h S h a re h o l d ers / Investors
The Company recognises the importance of effective communications with its shareholders, other stakeholders and the financial community on all major developments of the Group on a timely and accurate basis. The Company maintains a high level of disclosure and communications with its stakeholders through a number of readily accessible channels.
Annual Report and Annual General Meeting The annual report is the key channel of communication with shareholders and investors which incorporates comprehensive and sufficient details about financial results and activities of the Group throughout the year. As part of cost-saving initiatives and in support of the government’s effort to increase IT awareness among members of the public, the Group has initiated the despatch of annual reports in electronic form (“CD”) to shareholders. A summary of financial data, notice of AGM and other information is distributed together with the CD to shareholders. Shareholders may also request for printed copies of the complete annual report in either the English or Bahasa Malaysia versions. The Annual Report will also be made available on the Company’s website.
The AGM is the principal forum for dialogue and interaction between the shareholders and the Board of Directors and senior management. At the AGM, shareholders are briefed of the Group’s financial performance and significant operational developments for the financial year as well as the strategy and outlook for the Group. Shareholders’ participation is highly encouraged through the question and answer session on the Group’s financial and operational performance. A press conference is held immediately after the AGM where the Chairman and Managing Director are present to clarify and explain issues raised by the media. It is the Company’s policy to promote interaction with its shareholders in order to give the shareholders a fuller understanding of the Group’s affairs.
continued
Investors Relations Another important avenue of communication with the shareholders and investment community is through the investor relations activities. The Board recognises and acknowledges the importance of developing and maintaining regular contacts with the investment analysts, institutional investors and also potential investors to disseminate timely and relevant information. This is carried out through on-going external communications including meetings, discussions, emails and phone calls to provide an update of the Group’s performance and strategies as well as exchange of information concerning the Company.
From time to time, the Company holds briefing for the investment analysts and media for major corporate developments where the senior management will present the latest corporate proposal and provide the audience a better understanding of the subject matter. Teleconference sessions with analysts are also organised immediately after the announcement of the quarterly financial results to the Bursa Securities. These interactive sessions chaired by the Managing Director and attended by senior management members; provide key highlights and a comprehensive review of financial and operational performance as well as outlook for the Group.
In order to reach out to the global investment community, the Group conducts international road shows and actively participates in investors conferences organised by the major brokerage firms. In 2008, the Company took part in 6 investors’ conferences and road shows in Kuala Lumpur, Singapore, Hong Kong, Sydney, New York, London, Paris, Frankfurt, Stockholm and other major cities in Europe and United States of America.
While the Company endeavours to provide as much information as possible to its shareholders and other stakeholders, it is fully aware of the legal and regulatory framework governing the release of material and pricesensitive information. The Company will make every effort to attain a balance between working within such restrictions and ensuring material information is widely available as possible.
125 PLUS Expressways Berhad Annual Report 2008
Statement of Corporate Governance
continued
Website Information The Group’s website, www.plus.com.my is an excellent medium of communication and source of information to shareholders and the general public by providing comprehensive and up-to-date information on PLUS Expressways and all its subsidiaries. The website is being updated regularly to include all relevant financial and operational information on a timely basis.
The Directors have the overall responsibilities of maintaining a sound system of internal control to safeguard shareholders’ investment and the assets of the Group which include taking reasonable steps for the detection and prevention of fraud and other irregularities.
Statement on Internal Control The Statement on Internal Control is set out in pages 132 to 134 of the Annual Report. It provides an overview of the internal control structure of the Group.
Relationship with the Auditors An appropriate relationship is maintained with the Company’s Auditors through the Audit Committee and the Board of Directors. The Audit Committee has been explicitly accorded the power to communicate directly with both the external and internal auditors.
The Audit Committee meets with the external and internal auditors to discuss the audit plan, annual financial statements and their audit findings. The Audit Committee maintains a formal yet open and transparent relationship with the external auditors and is at liberty to request for a meeting at their discretion.
The details of the statutory audit, audit related and non audit fees paid/payable in 2008 to the external auditors are as follows:
e Accountability and Audit
In presenting the annual financial statements and announcement of the quarterly financial results to the shareholders, the Board aims to present a balanced and comprehensible assessment of the Group’s position and prospects. The Board is assisted by the Audit Committee to oversee the Group’s financial reporting processes and the quality of its financial reporting.
Director’s Responsibility Statement in respect of the Preparation of the Audited Financial Statements The Directors are required by the Companies Act, 1965 to ensure that the Group’s financial statements are prepared in accordance with applicable approved accounting standards and give a true and fair view of the state of affairs of the Group and the Company at the end of the financial year and of the results and cash flows of the Group and the Company for the financial year.
In the course of preparing the annual financial statements, the Directors have:
• • • •
Fees paid/payable:
Group (RM’000)
Company (RM’000)
adopted applicable accounting policies and applied them consistently;
Statutory Audit Services
549
60
made judgements and estimates that are prudent and reasonable;
Other Services
658
434
Total
1,207
494
ensured that all applicable accounting standards have been followed; and
The Audit Committee also met twice with the External Auditor without the presence of Management for the financial year 2008.
A full Audit Committee report is set out in pages 135 to 138 of this Annual Report.
prepared the financial statements on a going concern basis.
The Directors are responsible in ensuring that the Company keeps proper accounting records in accordance with the provisions of the Companies Act, 1965.
126 PLUS Expressways Berhad Annual Report 2008
Statement of Corporate Governance
Financial Reporting The Board aims to provide and present a balanced and meaningful assessment of the Company’s financial performance primarily through the annual financial statements and quarterly announcements of the results to the shareholders as well as the Chairman’s Statement and review of operations in the annual report.
continued
Sanctions and/or Penalties There were no sanctions and/or penalties imposed on the Company, Directors or management by the relevant regulatory authorities.
Share Buy-Backs There was no share buy-backs during the financial year ended 31 December 2008.
f Compliance Statement
For the financial year ended 31 December 2008, the Company has complied with the principles and best practices as set out in the Code.
Options, Warrants or Convertible Securities Exercised The Company has not issued any options, warrants or convertible securities in respect of the financial year ended 31 December 2008.
g Other Information
Material Contracts Other than those disclosed in the financial statements, there were no material contracts relating to any loans entered into by the Company and its subsidiary involving Directors and major shareholders’ interests.
Recurrent Related-Party Transcations (“RRPT”) Statement The Company had, during the last AGM held on 18 June 2008 obtained a general mandate from its shareholders to enable the Group in their ordinary course of business, to enter into recurrent transactions of a revenue or trading nature with related parties which are necessary for its day-to-day operations, on terms not more favourable to the related party other than those generally available to the public and are not to the detriment of the minority shareholders (RRPT Mandate).
The RRPT Mandate is valid until the conclusion of the forthcoming AGM of the Company to be held on 4 June 2009. Details of the recurrent related party transactions entered into pursuant to the RRPT Mandate for the year ended 31 December 2008 are set out in page 234 of this Annual Report.
American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) The Company has not sponsored any ADR or GDR programme for the financial year ended 31 December 2008.
Variation in Results The Company did not issue any profit forecast for the financial year ended 31 December 2008. As such, no commentary is made on variation in results.
Profit Guarantee The Company did not issue any profit guarantee for the financial year ended 31 December 2008.
Revaluation Policy The Company has not adopted a revaluation policy on landed properties.
Utilisation of Proceeds There was no capital raising exercise carried out by the Company for the financial year ended 31 December 2008.
127 PLUS Expressways Berhad Annual Report 2008
Enterprise Risk Management
By virtue of PLUS Expressways being an expressways concessionaire operator, our businesses have unique risks that are specific to our industry. We recognise the fact that these risks must be effectively managed to ensure the long-term growth and enhancement of shareholder value. As such, the Group adopts a comprehensive risk management framework that includes effective risk management policies, visible objectives, clear lines of responsibility and accountability as well as an efficient framework of procedures and reporting guidelines. Our risk management system is also linked to the Group’s internal control system, thus providing us an efficient and reliable decision making tool.
The 2009 Risk Register was approved by the Board of Directors in April 2009 for adoption by the Group.
Risk Management Policy The Group’s Risk Management Policy advocates that adequate and effective risk management processes and practices be set in place to enable us to achieve our business objectives. It also provides a reasonable assurance to the Board and other stakeholders of the adequacy of the state of internal control of the Group and our ability to increase shareholder value and confidence.
Key Objectives of the Policy Our Risk Management Policy aims to enhance the decision making process within the Group in order for our strategic objectives to be fulfilled. It also aims to optimise returns to shareholders while taking into account the interests of other stakeholders. The Policy ensures we undertake appropriate and timely responses to changes in the operating environment that may impact the Group’s ability to achieve its objectives. It seeks to improve the Group’s operating performance and to reduce the risk of material misstatement in official announcements and financial statements. It helps create a risk-attuned environment to safeguard the Group’s assets and helps us maintain our reputation. Finally, it ensures we are continuously in compliance with corporate governance best practices and the relevant laws including Bursa Malaysia’s Listing Requirements.
128 PLUS Expressways Berhad Annual Report 2008
Enterprise Risk Management
Risk Management Structure The following diagram outlines the risk management structure that is in place at PLUS Expressways.
PLUS Expressways Board of Directors
continued
Role of the Risk Management Steering Committee The Risk Management Steering Committee (“RMSC”) is chaired by the Managing Director. Its members are appointed from the senior management team and its covers all divisions and relevant departments. The RMSC is to review the validity of the identified risks and ensure that actions to mitigate the risks are being implemented. The RMSC is also responsible for the following activities:
PLUS Expressways Audit Committee
• Agreeing on the procedures and reporting formats of the risk management processes; • Reviewing the adequacy and effectiveness of the risk management framework;
Risk Management Steering Committee
• Undertaking regular “gap analysis” in order to identify gaps in internal controls; • Ensuring the Board and Management receive adequate and appropriate information for purposes of decision making and review respectively;
Risk Management Working Committee
Role of the Board of Directors The Board is tasked with sanctioning the Group’s risk management objectives and policy. It is to provide stewardship by identifying and acknowledging the principal risks identified by the Risk Management Steering Committee and ensuring the implementation of an appropriate system to manage these risks. The Board also reviews the adequacy and integrity of our internal controls and management information system to ensure compliance with the applicable laws, regulations, rules, directives and guidelines. The Board also considers the nature and extent of risk acceptable to the Group as well as evaluates the risk implications.
Role of the Audit Committee The Audit Committee’s role is to implement and support the overseeing function of the Board’s role in risk management. It reviews the Risk Management Steering Committee’s periodic reports as well as highlights any changes to the Group’s risk profile.
• Communicating and providing a reference point for dissemination and feedback on the Group risk management policy and procedures; • Commissioning, where required, special projects to investigate, develop or report on special aspects of the risk management processes of the Group; and • Presenting risk progress reports on risk management to the Audit Committee and Board.
Role of the Risk Management Working Committee (“RMWC”) The Risk Management Working Committee (“RMWC”) is chaired by a Risk Management Coordinator (Chairman) and its members include Heads of Divisions and Heads of Departments covering all areas. The RMWC is tasked with reviewing changes to risk, highlighting any new risk that may arise, and updating the risk register accordingly. It is responsible for the following activities: • Recommending procedures and reporting formats on the risk management process; • Preparing risk progress reports;
129 PLUS Expressways Berhad Annual Report 2008
Enterprise Risk Management
continued
• Preparing and recommending the risk management framework; • Communicating the extent and categories of risk for the Group to the RMSC;
• Discussing and recommending solutions on risk management issues and procedures that can be implemented or incorporated by any function of the Group to the RMSC.
• Considering new entries for the risk register from the time of the last review and updating entries of the last reported register;
Risk Management Process There are six steps within the risk management process. Within each stage, there are distinct decisive factors to consider before the next stage is reached:
Step 1: Determine policy, objectives and define risk • Corporate risk management policy • Key objective for risk management • Define risk • Acceptable appetite for risk
Step 6: Monitor and Review Risks • Frequent reviews • Strategy • Environment and organisation
Step 2: Risk Identification • Identify internal and external forces of risk • Recognise risk areas • Type of risks
Internal Control
Step 3: Risk Assessment • Likelihood • Impact • Overall risk rating matrix
Step 4: Risk Evaluation & Prioritisation • Identify acceptable or unacceptable risks • Prioritise risk for treatment
COMMUNICATION
Figure 1 Risk Management Framework Diagram
Step 5: Risk Management or Treatment • Accept • Avoid • Transfer • Reduce likelihood and/or impact
A structured framework approach to risk management that incorporates all the necessary steps was developed. These steps are depicted in Figure 1 above and described in the following pages.
Conclusion The Board is of the opinion that the Group’s Risk Management System is effective and functioning adequately, and that everyone in the Group has been made aware of and alert to the requirements of the system and its procedures. The Board has also found that all identified risks are being managed to an acceptable level, and that the system is proficient in helping to keep the Group in line with its long term goals and objective.
130 PLUS Expressways Berhad Annual Report 2008
Code of Business Ethics
The Group is committed to maintaining the highest standards of business ethics. As our employees serve the public in our daily operations, it is imperative that they conduct themselves in a manner that reflects the Company’s values. Responsible and transparent behaviour on the part of our employees also helps enhance the Group’s reputation while building goodwill with the public. To avoid any reputational risk, we have embarked on a series of initiatives that sets the foundation for strong ethical and responsible behaviour in our organisation.
Code of Conduct Our Code of Conduct (“the Code”) governs the professional conduct of our employees and outlines their responsibilities to the Group in performing their duties. The various policies and guidelines within the Code spell out the standards and ethics that all employees are expected to adhere to in the course of their work. It highlights the Group’s expectations of their professional conduct which includes good attendance, punctuality and appearance, and prohibits instances of alcohol and drug abuse as well as sexual harassment. The Code of Ethics within the Code covers issues pertaining to employee commitment and confidentiality, insubordination and inefficiency, public statements and appearances, and conflicts of interest. The Code of Ethics also touches upon issues such as gifts or favours, entertainment, personal solicitation and graft. The Code is designed to maintain discipline and order in the work place among employees of all levels. It also sets out the circumstances in which such employees would be deemed to have breached the Code and the disciplinary actions that can be taken against them.
Whistle Blower Policy A Whistle Blower Policy was introduced in 2009 to provide a platform for employees to report instances of unethical behaviour, actual or suspected fraud or dishonesty, or a violation of the Company’s Code of Conduct or Ethics Policy. The Whistle Blower Policy includes protection for the whistleblowers from any reprisals as a direct consequence of making such disclosures. It also covers the procedures for disclosure, investigation and the respective outcomes of such investigations. The Group expects its employees to act in the Group’s best interests and to maintain high principles and ethical values. The Group will not tolerate any irresponsible or unethical behaviour that would jeopardise its good standing and reputation.
131 PLUS Expressways Berhad Annual Report 2008
Statement of Internal Control
The Board of Directors (“Board”) acknowledges and believes in the importance of sound internal control and risk management practices to enable good corporate governance. Taking cognizance of the above, the Board assures that the said practices are implemented on Group wide basis including local and overseas subsidiaries. The Board is ultimately responsible for the overall system of internal control and risk management, which includes the establishment of an appropriate system as well as the review of its effectiveness and integrity. In view of the limitations inherent in any system of internal control, such a system is designed to mitigate rather than eliminate risks of failure to achieve corporate objectives. Accordingly, the system can provide only reasonable and not absolute assurance against material error, misstatements or loss. The systems of internal control covers, inter alia, risk management, financial, operational and compliance controls. Key elements of the Group’s internal control system, including the processes in place to review its adequacy, are as follows:
Organisational Structure The Group has a well-defined organisational structure that is aligned to its business and operational requirements and each strategic operating function is headed by a responsible Divisional Head. Clear lines of accountability and responsibility, approval, authorisation, and control procedures have been laid down and communicated throughout the Group.
Control Environment The internal control mechanism is embedded in the various work processes and procedures at appropriate levels in the Group. The work processes and procedures are documented in various Standard Operating Manuals. A structure for an organisation wide control has been established. Continuous efforts are undertaken by the heads of departments to review and update the manuals regularly or when it is deemed necessary.
Human Resource Management Formal appraisals guided by Key Performance Index (“KPI’s”) parameters provide a framework to translate and align the strategy of human capital development to the PLUS Expressways Berhad Group Strategic Plan and is being used as a performance measurement tool. The Company continued to emphasise on the talent and competencies of employees through the recruitment strategic tools and continuous training and development. Through the KPI’s parameters and Training Needs Analysis (“TNA”), employees’ competencies and gaps are being properly addressed and suitable training programme identified to expand on the competencies.
132 PLUS Expressways Berhad Annual Report 2008
Statement of Internal Control
Insurance and Physical Safeguards The Group undertakes adequate insurance and physical safeguard on assets in place to ensure that the assets are sufficiently covered against any mishap that will result in material losses to the Group.
Business Plan and Budget The Group undertakes a comprehensive business planning and budgeting process each year, to establish goals and targets against which performance is monitored on an ongoing basis. The Board participates in the review and approval of the Business Plan and Budget. A monthly reporting and review of financial results and forecast has been established and is consistently practised. The quarterly performance against budget is presented to the Board periodically.
Authority Levels The Group has documented its Discretionary Authority Limits (“DAL”) which clearly define the lines of authority and responsibility in making operational and commercial business decisions. Approving authorities cover various levels of management and includes the Board. The DAL is reviewed regularly and any amendments made to the DAL must be considered and approved by the Board.
Information and Communication While the management is responsible to ensure proper implementation of internal control procedures, the Board can request to review the state of internal controls as it deems necessary. The Board can request for information and clarification from management as well as to seek inputs from the Audit Committee, external and internal auditors, and other experts, and any resultant costs shall be borne by the Group.
Audit Committee The Audit Committee has been established by the Board since year 2002. The Audit Committee comprises four (4) members of the Board, all of whom are independent directors.
continued
Its terms of reference together with the Audit Committee Report are disclosed in pages 135 to 138 of this Annual Report.
Internal Audit Function The Internal Audit function is performed by the Internal Audit Department (“IAD” or “the Department”) of PLUS Expressways Berhad. The Audit Committee acknowledges that an independent and adequately resourced internal audit function is required to provide assurance on the effectiveness of the system of the internal control. In financial year 2003, an Internal Audit Charter which includes the structure to support Internal Audit Function’s independence, was approved by the Audit Committee. The IAD primarily acts as an assurance unit which reviews the effectiveness of the system of internal control, highlighting any areas for improvement and subsequently monitors the implementation of its recommendations. In discharging its responsibilities, IAD exercises impartiality, proficiency and professionalism. The IAD is guided by the Annual Internal Audit Plan which is approved by the Audit Committee on a yearly basis. The risk-based plan is developed to cover key operational and financial activities that are significant to the overall performance of the Group. The Department also conducts special audits on an ad-hoc basis based on specific requests either by the Audit Committee or the Senior Management. Besides that, the Department works closely with the External Auditors to resolve any control issues raised by the External Auditors. In year 2008, fourteen (14) audits out of fifteen (15) planned audits based on the 2008 Annual Internal Audit Plan have been finalised. The remainder one (1) audit was finalised in April 2009. All of the fourteen (14) completed internal audit reports have been presented to the Audit Committee. Audits undertaken by the Department during the year has covered the areas of operations, maintenance, financial, customer service and legal issues. There were no material or significant control weaknesses encountered after the completion of the audits. The Head of IAD is Abdullah Hashim who holds a Bachelor in Accounting from Universiti Malaya and a Master of Business Administration from London South Bank University. He is a Chartered Accountant of the Malaysian Institute of
133 PLUS Expressways Berhad Annual Report 2008
Statement of Internal Control
continued
Accountants and a Chartered Member of the Institute of Internal Auditors. He is also currently completing the final part of the Certified Internal Auditor qualification. Abdullah has tendered his resignation in December 2008 and serves his notice until 3 March 2009. Effective 1 March 2009, Mohd Halmi Mohd Hassan is the new Head of IAD. As at 31 December 2008, the Department consist of twelve (12) auditors including the Head of Department. The Department has a composite experience of 62 years in auditing and have a wide range of experience from relevant industries. The total cost incurred by the Department for 2008 was RM736,377. A Quality Assessment Review (“QAR”) has been conducted by the Institute of Internal Auditors Malaysia (“IIAM”) in August 2008 to assess the Department’s compliance to the International Standards for the Professional Practice of Internal Auditing (“Standards”). Based on the QAR report, the Department has complied with the relevant requirements of the Standards.
Revenue Assurance Department Revenue Assurance Department (“RAD”) objectives are to evaluate the effectiveness and efficiency of existing internal controls for toll operations, recommend enhancement to the internal controls where necessary and to minimise or eliminate the risk of internal toll fraud. In achieving the above objectives, RAD assesses and monitors the level of compliance to toll operations policy and procedures and conducts frequent spot checks at selected toll plazas. RAD conducts compliance audit on toll procedures by reviewing documentations on historical toll transactions. RAD also analyses traffic volume and toll collection using Computer Aided Audit Tools (“CAAT”) to identify any anomalies in toll transactions as a guide for selecting toll plazas for spot checks purposes. In the event of suspected fraudulent practices, RAD will initiate fraud investigations which include verification of toll transactions documentation as well as toll transactions validity using the Close Circuit Television (“CCTV”) image recordings of toll lanes.
134 PLUS Expressways Berhad Annual Report 2008
A summary of compliance audits, spot checks and fraud cases investigation performed by RAD in 2008 are as follows: Regions
Compliance Audits
Spot Checks
Fraud Cases
Northern
11
10
2
Central
14
23
1
Southern
13
15
3
Total
38
48
6
Compliance audits covered all plazas located along PLUS, ELITE, LINKEDUA and BKE expressways. Spot checks were conducted at selected toll plazas based on the plazas’ risk of fraudulent activities and whether their toll transactions displayed any anomalies. As at 31 December 2008, the total headcount for RAD stood at twenty (20) comprised of eleven (11) executives and nine (9) non-executives. The total cost incurred for 2008 was RM1,777,736. The Board confirms that the system of internal controls of PEB Group was in place during the financial year. The system is subject to regular review by the Board.
Management Control Policy On 27 February 2008, the Group has introduced the Management Control Policy that clarifies the responsibilities of the Management with regards to internal controls. This policy shall serve as a guideline to be implemented within the Group.
Review of the Statement by External Auditors The external auditors have reviewed this statement on Internal Control for the inclusion in the annual report of Plus Expressways Berhad for the year ended 31 December 2008 and reported to the Board that nothing has come to their attention that causes them to believe that the statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the system of internal controls.
Audit Committee Report
1
Members
Geh Cheng Hooi Chairman Senior Independent NonExecutive Director and a member of the Malaysian Institute of Certified Public Accountants (“MICPA”)
2 Constitution
The Audit Committee (“the Committee”) of PLUS Expressways Berhad (“PLUS Expressways” or “the Company”) was established by the Board of Directors (“Board”) on 22 May 2002.
3
Meetings
Five (5) meetings were held during the financial year ended 31 December 2008. Details of attendance of the members at the respective Audit Committee meetings were as follows:
Datuk K. Ravindran Member Independent Non-Executive Director
Name of Audit Committee Member
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid Member Independent Non-Executive Director Quah Poh Keat Member Independent Non-Executive Director and a member of the Malaysian Institute of Certified Public Accountants (MICPA) and the Malaysian Institute of Accountants (MIA)
No. of Meetings Attended
Geh Cheng Hooi
3/5
Datuk K. Ravindran
5/5
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid
4/5
Quah Poh Keat
5/5
Senior Management including the Managing Director, the Head of the Internal Audit Department and the representatives from the external auditors had participated in deliberations on relevant items at the Audit Committee meetings conducted during the year under review at the invitation of the Audit Committee.
4 Composition and Terms of Reference 4.1 Composition of the Audit Committee The Audit Committee shall be appointed by the Board from amongst its members. In selecting the Audit Committee, the following requirements must be fulfilled:
a
The Audit Committee must be composed of no fewer than three (3) members.
b
A majority of the Audit Committee must be Independent Directors.
c
At least one member of the Audit Committee must be a member of the Malaysian Institute of Accountants (“MIA”) or must possess any other equivalent qualifications recognised by the MIA.
135 PLUS Expressways Berhad Annual Report 2008
Audit Committee Report
continued
d No alternate director shall be appointed as a member of the Audit Committee. The members of the Audit Committee shall then elect a Chairman from amongst themselves who shall be an Independent Director. All members of the Audit Committee, including the Chairman, will hold office as long as they serve as Directors of the Company. The Board must review the performance of the Committee as a whole and each of its member’s performance at least once in every three (3) years to determine whether the Committee has carried out its duties in accordance with its terms of reference. 4.2 Secretaries of the Audit Committee (“Committee Secretaries”) The Company Secretaries of the Company or his/ her/their representative shall be the Secretaries of the Audit Committee. 4.3 Objectives of the Audit Committee The objective of the Audit Committee is to assist the Board in discharging its responsibilities by reviewing the adequacy and integrity of the Company’s and Group’s internal control systems and management of information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines.
Furthermore, the Audit Committee shall provide a line of communication between the Board and the external auditors. In addition, the Audit Committee needs to encourage high standards of corporate disclosure and transparency. The Audit Committee will endeavour to adopt certain practices aimed at maintaining appropriate standards of corporate responsibility, integrity and accountability to the Company’s shareholders.
136 PLUS Expressways Berhad Annual Report 2008
4.4 Duties and Responsibilities of the Audit Committee The following are the main duties and responsibilities of the Audit Committee: 4.4.1 Recommend to the Board the appointment and annual re-appointment of the external auditors and their audit fee, including nonaudit services, after taking into consideration the independence and objectivity of the external auditors and the cost effectiveness of their audit services. 4.4.2 Discuss with the external auditors before the audit commences the nature and scope of the audit, the audit plan and ensure co-ordination where more than one audit firm is involved. 4.4.3 Review the quarterly interim results and annual financial statements of PLUS Expressways and its subsidiaries (“Group”) prior to approval by the Board whilst ensuring that they are prepared in compliance with all relevant accounting standards and other relevant regulatory requirements and, are promptly published. 4.4.4 Discuss matters raised from the interim and final financial results and any matters the external auditors may wish to discuss in the absence of the Management, where necessary. 4.4.5 Review the external auditors’ management letter and management’s response. 4.4.6 Review whether assistance and co-operation are adequately and promptly given by the Group’s officers to the external and internal auditors. 4.4.7 Review the adequacy of the competency of the internal audit function and whether the Internal Audit Department (“IAD”) is adequately resourced and has an appropriate standing within the Group.
Audit Committee Report
4.4.8 Evaluate the adequacy of standards of internal controls and financial reporting of the Group. 4.4.9 Appraise the performance of the head of IAD and review the appraisals of senior staff members of IAD. 4.4.10 Approve any appointment or termination of the head of IAD and senior staff members of IAD and review any resignations of other staff members of IAD and provide resigning staff members an opportunity to submit reasons for resigning, where necessary. 4.4.11 Consider the major findings of internal audit investigations and the management’s response. 4.4.12 Review any related party transactions and conflict of interest situation that may arise within the Company or the Group and ensure that such transactions are undertaken at arm’s length, on normal commercial terms which are not more favourable to the related parties other than those generally available to the public and are not to the detriment of the minority shareholders of the Group and in the best interest of the Group. 4.4.13 Consider other issues as defined by the Board.
Explicit authority to investigate any matter within its terms of reference;
b
The resources required to perform its duties;
c
Full and unrestricted access to any information, records, properties and personnel of the Group;
d
Direct communication channels with the external auditors and person(s) carrying out the internal audit functions or activity (if any);
e
Be able to obtain independent professional or other advice and to invite third parties with relevant experience and expertise to attend and brief the Audit Committee during the meetings (if required);
f
The right to invite any other Director or employee of the Group to attend the Audit Committee meetings at its discretion;
g
Be able to convene meetings with external auditors without the presence of the executive board members, whenever deemed necessary; and
h
Where the Audit Committee is of the view that a matter reported by it to the Board of Directors has not been satisfactorily resolved resulting in a breach of the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Malaysia”), the Audit Committee must promptly report such matter to Bursa Malaysia.
4.6 Frequency of Meetings The Audit Committee shall hold a minimum of 4 meetings in a financial year. The number of Audit Committee meetings held in a financial year and the details of attendance of each individual member in respect of meetings held shall be disclosed annually.
The Audit Committee meetings shall be chaired by the Chairman of the Audit Committee or in the absence of the Chairman, another member who is an Independent Director nominated by the Audit Committee members. The quorum for the meeting of the Audit Committee shall be 2 members the majority of whom must be Independent Directors. The Chairman also has the discretion to call for additional meetings at any time, as he deems necessary.
The Audit Committee shall meet at least twice in a year with the external auditors without the presence of the management.
4.5 Powers of the Audit Committee In carrying out its duties and responsibilities, the Audit Committee shall have the following authorities: a
continued
137 PLUS Expressways Berhad Annual Report 2008
Audit Committee Report
continued
The Committee Secretaries or his/her/their representative shall attend each Audit Committee meeting and record the proceedings of the meetings.
5 Activities
9
10 Reviewed the assistance given by the employees in the Group to the external auditors.
In line with the terms of reference of the Audit Committee, the following activities were carried out by the Audit Committee during the financial year ended 31 December 2008, in discharging its functions: 1
Reviewed with the external auditors the results of the annual financial audit, the audited financial statements and the management letter.
Reviewed the Internal Audit Charter of the Internal Audit Department of the Group.
The meetings were appropriately structured through the use of agendas and Audit Committee Papers, which were distributed to members with sufficient notification.
6 Internal Audit Functions
The IAD of the Group supports the Audit Committee in discharging its duties and responsibilities, giving assurance that adequate, efficient and effective internal controls system is in place. The principal role of IAD is to undertake an independent, regular and systematic review of the system of internal controls so as to provide reasonable assurance that such a system continues to operate satisfactorily and effectively.
It is the responsibility of the IAD to provide the Audit Committee with independent and objective reports on the state of the internal controls of the various operating divisions within the Group, and the extent of compliance of the divisions with the Group’s established policies and procedures as well as relevant statutory requirements.
2
Reviewed the quarterly unaudited financial result and related announcements and recommended these to the Board for consideration and approval. The review is to ensure compliance with the Bursa Malaysia Listing Requirements, applicable accounting standards and other relevant legal and regulatory requirements.
3
Recommended for the Board’s consideration the re-appointment of external auditors and the audit fees.
4
Reviewed the scope of work and the audit plans of the external and internal auditors.
5
Reviewed the internal audit reports presented by IAD and discussed on management’s actions taken to improve the system of internal control and any outstanding matters.
Further details of the activities of the IAD are set out in Statement on Internal Control on pages 132 to 134.
Reviewed and recommended to the Board for consideration and approval the Risk Management Progress Reports.
7
External Auditors
The Audit Committee continues to monitor the performance of the external auditors to ensure that the external auditors are independent, objective and effective in carrying out their duties.
6
7
Reviewed the related party transactions and recommended to the Board for consideration and approval.
8
Met twice with the external auditors during the year, without the presence of the management.
138 PLUS Expressways Berhad Annual Report 2008
Management Control Policy
1.0 Management Control Policy
This document is intended to clarify the responsibilities of the Management with regards to internal controls.
2.0 Management Responsibilities 2.1 Management is charged with the responsibility for establishing a network of processes with the objective of controlling the operations of PLUS Expressways Group in a manner which provides the board of director’s reasonable assurance that: 2.1.1 Data and information published either internally or externally is accurate, reliable, and timely.
3.0 Key Control Activities 3.1 Controlling is a function of management and is an integral part of the overall process of managing operations. As such, it is the responsibility of managers at all levels of the organisation to: 3.1.1 Identify and evaluate the exposures to loss(es) which relate to their particular spheres of operations. 3.1.2 Specify and establish policies, plans, and operating standards, procedures, systems, and other disciplines to be used to minimise, mitigate, and/or limit the risks associated with the exposures identified.
2.1.2 The actions of directors, officers and employees are in compliance with the organisation’s policies, standards, plans and procedures, and all relevant laws and regulations.
3.1.3 Establish practical controlling processes that require and encourage directors, officers and employees to carry out their duties and responsibilities in a manner that achieves the control objectives outlined in the preceding paragraph.
2.1.3 The company’s resources (including its people, systems, data/information bases, and customer goodwill) are adequately protected.
3.1.4 Maintain the effectiveness of the controlling processes they have established and foster continuous improvement to these processes.
2.1.4 Resources are acquired economically and employed profitably; quality business processes and continuous improvement are emphasised.
3.1.5 Ensure that appropriate corrective actions are undertaken to effectively address internal control breakdowns identified by company’s officers and employee, Internal Audit function, external auditors, regulatory bodies or other outside advisors commissioned by the Management or the Board of Directors.
2.1.5 Quality business and operational processes are maintained, and continuous improvement initiatives are emphasised; and 2.1.6 The company’s plans, programs, goals, and objectives are achieved.
139 PLUS Expressways Berhad Annual Report 2008
141 Directors’ Report 146 Statement by Directors 146 Statutory Declaration 147 Independent Auditors’ Report 149 Income Statements 150 Balance Sheets 152 Statements of Changes in Equity 154 Cash Flow Statements 156 Notes to the Financial Statements
Directors’ Report
The Directors present their annual report together with the audited financial statements of the Group and of the Company for the year ended 31 December 2008.
PRINCIPAL ACTIVITIES The principal activities of the Company are investment holding and provision of expressway operation services. The Company is principally engaged in the highway concession services through its subsidiaries: (i) Projek Lebuhraya Utara-Selatan Berhad (“PLUS”); PLUS is involved in the operation and maintenance of a tolled expressway network comprising the North-South Expressway (“NSE”), the New Klang Valley Expressway (“NKVE”), a section of Federal Highway Route 2 (“FHR2”) between Subang and Klang, and the Seremban-Port Dickson Highway (“SPDH”) in Peninsular Malaysia. (ii) Expressway Lingkaran Tengah Sdn Bhd (“ELITE”); ELITE undertakes the operation, maintenance and toll collection of the North-South Expressway Central Link (“NSECL”). (iii) Linkedua (Malaysia) Berhad (“LINKEDUA”); LINKEDUA undertakes the operation, maintenance and toll collection of the Malaysia-Singapore Second Crossing (“MSSC”). (iv) Konsortium Lebuhraya Butterworth-Kulim (KLBK) Sdn Bhd (“KLBK”); KLBK is engaged in the operation, maintenance and toll collection of the Butterworth-Kulim Expressway (“BKE”). PEB has four foreign subsidiaries namely PLUS Kalyan (Mauritius) Private Limited (“PLUS Kalyan”) in Port Louis, Mauritius, PLUS BKSP Toll Limited (“PLUS BKSP”) in Kanpur, India, PT Lintas Marga Sedaya (“LMS”) in Indonesia and PT Cimanggis-Cibitung Tollways (“CCTW”) in Indonesia. Save and except for PLUS Kalyan, all its foreign subsidiaries are highway concessionaires on a build, operate and transfer basis (“BOT”). The principal activities of PLUS Kalyan is investment holding. There have been no significant changes in the nature of the principal activities during the financial year. The Company completed the acquisition of KLBK on 13 March 2008, and completed the subscription of 60% shares of CCTW, a company incorporated in Indonesia, on 27 December 2008, and the details are disclosed in Note 43 to the financial statements.
FINANCIAL RESULTS
GROUP RM’000
COMPANY RM’000
Profit before tax Income tax expense
1,515,702 (435,662)
809,015 1,184
Profit for the year
1,080,040
810,199
Attributable to: Equity holders of the Company Minority interests
1,079,333 707
810,199 —
1,080,040
810,199
141 PLUS Expressways Berhad Annual Report 2008
Directors’ Report
continued
FINANCIAL RESULTS (continued) There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the Statements of Changes in Equity. In the opinion of the Directors, the results of the operations of the Group and of the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature.
DIVIDENDS The amount of dividends paid by the Company since 31 December 2007 were as follows:
2008 RM’000
Final tax exempt dividend for the year ended 31 December 2007 of 8.0 sen per ordinary share declared on 18 June 2008 and paid on 16 July 2008
400,000
Interim single tier dividend for the year ended 31 December 2008 of 6.5 sen per ordinary share declared on 21 August 2008 and paid on 23 September 2008
325,000
725,000
At the forthcoming Annual General Meeting, a final single tier dividend in respect of the financial year ended 31 December 2008 of 9.5 sen per ordinary share of RM0.25 each, amounting to a total dividend payable of RM475 million will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend if approved by the shareholders, will be accounted for in shareholders’ equity as an appropriation of retained profits in the financial year ending 31 December 2009.
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' Mohd Sheriff bin Mohd Kassim Dato' Ahmad Pardas bin Senin Noorizah binti Hj Abd Hamid Geh Cheng Hooi YM Professor DiRaja Ungku Abdul Aziz bin Ungku Abdul Hamid Hassan bin Ja'afar Dato' Mohamed Azman bin Yahya Tan Sri Razali bin Ismail Datuk K. Ravindran s/o C. Kutty Krishnan Quah Poh Keat Datuk Seri Panglima Mohd Annuar bin Zaini (appointed with effect from 19 December 2008) Abdul Farid bin Alias (resigned with effect from 31 December 2008)
142 PLUS Expressways Berhad Annual Report 2008
Directors’ Report
continued
DIRECTORS (continued) In accordance with Article 76 of the Company’s Articles of Association, Tan Sri Dato’ Mohd Sheriff bin Mohd Kassim, Dato’ Ahmad Pardas bin Senin and Puan Noorizah binti Hj Abd Hamid shall retire at the forthcoming Annual General Meeting and being eligible, offer themselves for re-election. In accordance with Article 83 of the Company’s Articles of Association, Datuk Seri Panglima Mohd Annuar bin Zaini shall retire at the forthcoming Annual General Meeting and being eligible, offers himself for re-election. In accordance with Section 129(2) of the Companies Act 1965, YM Professor DiRaja Ungku Abdul Aziz bin Ungku Abdul Hamid, Geh Cheng Hooi and Tan Sri Razali bin Ismail having already attained the age of 70, shall vacate the office of Director of the Company. However, pursuant to Section 129(6), they may be re-appointed by resolutions passed by a majority of not less than three-fourth of such number of shareholders of the Company entitled to vote at a general meeting of the Company. The appointment to hold office shall be until the next Annual General Meeting of the Company. The resolutions to re-appoint them as Directors of the Company will be proposed at the forthcoming Annual General Meeting.
DIRECTORS’ BENEFITS Neither at the end of the financial year, nor at any time during the year, did there subsist any arrangement to which the Company was a party, whereby the Directors might acquire benefits by means of acquisition of shares in, or debentures of the Company or any other body corporate. Since the end of the previous financial year, no Director has received or become entitled to receive any benefits (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 10 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, required to be disclosed by Section 169(8) of the Companies Act 1965.
DIRECTORS’ INTEREST According to the register of Directors’ shareholdings to be kept under section 134 of the Companies Act, 1965, the interest of Directors in office at the end of the financial year in shares in the Company and its related corporation during the financial year were as follows: The Company Number of Ordinary Shares of RM0.25 each As at During the year As at 1/1/2008 Bought Sold 31/12/2008 Direct Interest Tan Sri Dato' Mohd Sheriff bin Mohd Kassim Dato' Ahmad Pardas bin Senin Noorizah binti Hj Abd Hamid Geh Cheng Hooi YM Professor DiRaja Ungku Abdul Aziz bin Ungku Abdul Hamid Hassan bin Ja'afar Dato' Mohamed Azman bin Yahya Tan Sri Razali bin Ismail Datuk K. Ravindran s/o C. Kutty Krishnan
60,000 20,000 20,000 40,000 40,000 40,000 40,000 40,000 40,000
— — — — — — — — —
— — — — — — — — —
60,000 20,000 20,000 40,000 40,000 40,000 40,000 40,000 40,000
143 PLUS Expressways Berhad Annual Report 2008
Directors’ Report
continued
DIRECTORS’ INTEREST (continued) UEM World Berhad Number of Ordinary Shares of RM1.00 each As at During the year As at 1/1/2008 Bought Accepted Sold 31/12/2008 Direct Interest Tan Sri Dato' Mohd Sheriff bin Mohd Kassim Dato' Ahmad Pardas bin Senin Noorizah binti Hj Abd Hamid
567,800 5,240,000 964,000
— — —
— (567,800)* 540,000ℓ (5,780,000)** 162,000ℓ (1,126,000)
— — —
ℓ In respect of UEM World Berhad's Employee Equity Scheme allocation under the performance scheme. UEM Land Holdings Berhad Number of Ordinary Shares of RM0.50 each As at During the year As at 1/1/2008 Bought Accepted Sold 31/12/2008 Direct Interest Tan Sri Dato’ Mohd Sheriff bin Mohd Kassim Dato’ Ahmad Pardas bin Senin
— —
— 1,250,000
666,000* 1,250,000**
— —
666,000 2,500,000
* 666,000 ordinary shares of RM0.50 each in UEM Land Holdings Berhad issued to replace the 567,800 UEM World Berhad shares held pursuant to the distribution of the dividend-in-specie by UEM World Berhad ** Include balance of 1,000,000 shares in UEM World Berhad which was exchanged for 1,250,000 ordinary shares of RM0.50 each in UEM Land Holdings Berhad arising from the distribution of the dividend-in-specie by UEM World Berhad
HOLDING COMPANY The Directors regard UEM Group Berhad (“UEM”), a company incorporated in Malaysia which owns 40.21% of the Company’s equity as at 31 December 2008, as the immediate holding company.
OTHER STATUTORY INFORMATION (a) Before the financial statements 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 allowance for doubtful debts and satisfied themselves that there were no known bad debts and that no allowance for doubtful debts is necessary; and
(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.
144 PLUS Expressways Berhad Annual Report 2008
Directors’ Report
continued
OTHER STATUTORY INFORMATION (continued) (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 debts or to make any allowance in respect of the financial statements of the Group and of the Company; and
(ii) the values attributed to current assets in the financial statements of the Group and of the Company misleading. (c) At the date of this report, the Directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets and 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 the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading. (e) As at the date of this report, there does not exist: (i)
any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or
(ii) any contingent liability in respect of the Group and of the Company which has arisen since the end of the financial year. (f)
In the opinion of the Directors: (i)
no contingent liability 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 and of the Company to meet its 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 Group and of the Company for the financial year in which this report is made.
SIGNIFICANT EVENTS Significant events during the year are disclosed in Note 43 to the financial statements.
AUDITORS The auditors, Ernst & Young, have expressed their willingness to accept reappointment.
Signed on behalf of the Board in accordance with a resolution of the Directors,
TAN SRI DATO' MOHD SHERIFF BIN MOHD KASSIM NOORIZAH BINTI HJ ABD HAMID Kuala Lumpur, Malaysia 26 February 2009
145 PLUS Expressways Berhad Annual Report 2008
STATEMENT BY DIRECTORS PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT 1965
We, TAN SRI DATO’ MOHD SHERIFF BIN MOHD KASSIM and NOORIZAH BINTI HJ ABD HAMID, being two of the Directors of PLUS EXPRESSWAYS BERHAD, do hereby state that in the opinion of the Directors, the financial statements set out on pages 149 to 233 are drawn up in accordance with the provisions of the Companies Act 1965 and applicable Financial Reporting Standards 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 December 2008 and of the results and the cash flows of the Group and of the Company for the year then ended.
Signed on behalf of the Board in accordance with a resolution of the Directors,
TAN SRI DATO’ MOHD SHERIFF BIN MOHD KASSIM NOORIZAH BINTI HJ ABD HAMID Kuala Lumpur, Malaysia 26 February 2009
STATUTORY DECLARATION PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT 1965
I, ANNUAR MARZUKI BIN ABDUL AZIZ, being the Officer primarily responsible for the financial management of PLUS EXPRESSWAYS BERHAD, do solemnly and sincerely declare that the financial statements set out on pages 149 to 233 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 ANNUAR MARZUKI BIN ABDUL AZIZ at Kuala Lumpur in the Federal Territory on 26 February 2009
Before me,
AISHAH BT SHAHUL HAMEED Commissioner for Oaths (No. W565)
146 PLUS Expressways Berhad Annual Report 2008
ANNUAR MARZUKI BIN ABDUL AZIZ
Independent Auditors’ Report to the members of PLUS EXPRESSWAYS BERHAD (Incorporated in Malaysia)
Report on the financial statements We have audited the financial statements of PLUS EXPRESSWAYS BERHAD, which comprise the balance sheets as at 31 December 2008 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 149 to 233.
Directors’ responsibility for the financial statements Directors are responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors’ responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit 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 whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the financial statements 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 have been properly drawn up in accordance with Financial Reporting Standards and 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 December 2008 and of their financial performance and cash flows of the Group and of the Company for the year then ended.
147 PLUS Expressways Berhad Annual Report 2008
Independent Auditors’ Report
continued
Report on other legal and regulatory requirements In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following: (a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiary have been properly kept in accordance with the provisions of the Act. (b) We have considered the accounts and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 19 to the financial statements. (c) We are satisfied that the accounts of the subsidiary that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. (d) The auditors’ reports on the accounts of the subsidiary were not subject to any qualification material to the consolidated financial statements and did not include any comment required to be made under Section 174(3) of the Act.
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 Ahmad Zahirudin bin Abdul Rahim AF: 0039 No. 2607/12/10 (J) Chartered Accountants Chartered Accountant Kuala Lumpur, Malaysia 26 February 2009
148 PLUS Expressways Berhad Annual Report 2008
INCOME STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008
Group Company Note 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 Continuing operations Revenue 5 Direct cost of operations
2,967,958 (879,509)
2,282,010 (676,312)
985,960 (97,875)
813,643 (78,374)
Gross profit Other income 6 General and administration expenses Other expenses Finance costs 7
2,088,449 152,040 (70,799) (8,789) (645,199)
1,605,698 206,214 (45,634) (3,614) (454,674)
888,085 4,030 (21,376) (5,190) (56,534)
735,269 3,035 (16,625) (1,172) (1,591)
Profit before tax Income tax expense
1,515,702 (435,662)
1,307,990 (60,342)
809,015 1,184
718,916 (20,995)
Profit for the year
1,080,040
1,247,648
810,199
697,921
Attributable to: Equity holders of the Company Minority interests
1,079,333 707
1,247,843 (195)
810,199 —
697,921 —
1,080,040
1,247,648
810,199
697,921
21.59
24.96
16.20
13.96
Interim tax exempt dividends per ordinary share in respect of the year (sen) 14
—
6.00
Earnings per share attributable to equity holders of the Company (sen)
8 12(a)
13
Interim single tier dividend per ordinary share in respect of the year (sen)
14
6.50
—
Final tax exempt dividend per ordinary share in respect of the year (sen)
14
—
8.00
Final single tier dividend per ordinary share in respect of the year (sen)
14
9.50*
—
* Proposed for shareholders’ approval at the forthcoming Annual General Meeting The accompanying notes form an integral part of the financial statements.
149 PLUS Expressways Berhad Annual Report 2008
Balance Sheets AS AT 31 DECEMBER 2008
Group Company Note 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
ASSETS Non-current assets Concession assets Property, plant and equipment Prepaid land lease payments Intangible assets Investments in subsidiaries Other investment Deferred tax assets Toll compensation recoverable from the Government Amount owing by subsidiary Long term deposits
12,380,531 47,855 27,269 3,667 — 165,925 7,154 1,909,498 — 483
11,723,486 45,487 27,550 2,824 — 115,244 37,667 1,392,650 — 547
— 13,682 98,635 1,632 2,284,361 — 4,898 — 85,378 —
— 11,314 99,652 1,085 2,180,800 — 1,293 — — —
14,542,382
13,345,455
2,488,586
2,294,144
Current assets Toll compensation recoverable from the Government 22 Inventories Sundry receivables, deposits and prepayments 23 Amount owing by related companies 24 Amount owing by subsidiaries 24 Tax recoverable Short term investments 25 Short term deposits with licensed banks 26 Cash and bank balances 26
104,269 27 57,153 13,806 — 5,575 63,389 2,209,124 25,306
— 49 58,363 8,194 — — 63,322 2,378,135 39,487
— 27 6,006 74 535,823 5,554 — 6,190 253
— 49 32,858 138 412,442 — — 4,770 296
2,478,649
2,547,550
553,927
450,553
TOTAL ASSETS
17,021,031
15,893,005
3,042,513
2,744,697
15 16 17 18 19 20 21 22 24 26
The accompanying notes form an integral part of the financial statements.
150 PLUS Expressways Berhad Annual Report 2008
Balance Sheets
continued
Group Company Note 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Share capital Capital reserve Merger reserve Other reserves Retained earnings
1,250,000 461,138 298,834 (20,312) 3,687,948
1,250,000 461,138 298,834 1,040 3,329,186
1,250,000 — — — 576,903
1,250,000 — — 2,037 488,920
Minority interests
5,677,608 19,344
5,340,198 9,510
1,826,903 —
1,740,957 —
Total equity
5,696,952
5,349,708
1,826,903
1,740,957
Non-current liabilities Long term financial liabilities 32 Long term borrowings 33(a) Amount due to Government 33(c) Amount owing to immediate holding company 24 Amount owing to subsidiary 24 Other long term payables Retirement benefits 36 Deferred liabilities 37 Deferred tax liabilities 21
7,965,604 1,551,694 38,096 6,885 — 59 14,071 125,737 388,239
7,096,256 1,486,683 38,096 6,885 — 65 12,822 51,441 11,494
776,174 — — — 86,850 — — — —
— — — — 88,850 — — — —
10,090,385
8,703,742
863,024
88,850
27,331 111,813 20,445 1,187 623,132 332,801 1,338 115,522 — 125
17,707 135,847 44,638 — 592,838 904,347 39,880 103,883 — 415
— 22,955 — — — 325,806 265 357 3,203 —
— 15,711 — — — 898,466 284 221 — 208
1,233,694
1,839,555
352,586
914,890
Total liabilities
11,324,079
10,543,297
1,215,610
1,003,740
TOTAL EQUITY AND LIABILITIES
17,021,031
15,893,005
3,042,513
2,744,697
27 28 29 30 31
Current liabilities Trade payables 38(a) Sundry payables and accruals 38(b) Amount received from the Government for Additional Works 39 Deferred liabilities 37 Short term financial liabilities 32 Short term borrowings 33(b) Amount owing to immediate holding company 24 Amount owing to related companies 24 Amount owing to subsidiaries 24 Tax payable 12(b)
The accompanying notes form an integral part of the financial statements.
151 PLUS Expressways Berhad Annual Report 2008
152 PLUS Expressways Berhad Annual Report 2008
461,138
— — —
— — — 1,250,000
— —
— —
— —
298,834
— — —
— —
— —
298,834
— — — —
—
— —
298,834
The accompanying notes form an integral part of the financial statements.
At 31 December 2008
Total recognised income and expense for the year Share option granted under EES Share option reserve transferred to retained earnings upon expiry of EES Issuance of share capital Dividends 14
— —
Foreign currency translation differences Profit for the year
461,138
— — — —
— — — — 1,250,000
—
— —
— —
—
461,138
1,250,000
At 31 December 2007
Total recognised income and expense for the year Share option granted under Employee Equity Scheme (“EES”) Issuance of share capital Acquisition of subsidiaries Dividends 14
At 1 January 2007 Foreign currency translation differences Profit for the year
(20,312)
(4,429) — —
(17,867) 944
(17,867) —
1,040
1,669 — — —
(2,306)
(2,306) —
1,677
3,687,948
4,429 — (725,000)
1,079,333 —
— 1,079,333
3,329,186
— — — (425,000)
1,247,843
— 1,247,843
2,506,343
5,677,608
— — (725,000)
1,061,466 944
(17,867) 1,079,333
5,340,198
1,669 — — (425,000)
1,245,537
(2,306) 1,247,843
4,517,992
19,344
— 11,840 —
(2,006) —
(2,713) 707
9,510
— 1,426 7,748 —
(159)
36 (195)
495
Retained Minority Earnings Total Interests RM’000 RM’000 RM’000 (Note 31)
Distributable
Merger Other Reserve Reserves RM’000 RM’000 (Note 29) (Note 30)
Non-Distributable Reserves
Share Capital Note Capital Reserve GROUP RM’000 RM’000 (Note 27) (Note 28)
Attributable to Equity Holders of the Company
5,696,952
— 11,840 (725,000)
1,059,460 944
(20,580) 1,080,040
5,349,708
1,669 1,426 7,748 (425,000)
1,245,378
(2,270) 1,247,648
4,518,487
Total RM’000
Statements of Changes in Equity
FOR THE YEAR ENDED 31 DECEMBER 2008
The accompanying notes form an integral part of the financial statements.
1,250,000
(2,784) —
— —
At 31 December 2008
2,037 — 747
1,250,000 — —
At 31 December 2007 Profit for the year Share option granted under EES Share option reserve transferred to retained earnings upon expiry of EES Dividends 14 —
576,903
2,784 (725,000)
488,920 810,199 —
215,999 697,921 — (425,000)
1,250,000 — — —
At 1 January 2007 Profit for the year Share option granted under EES Dividends 14 1,286 — 751 —
Retained Earnings RM’000 (Note 31)
Share Other Note Capital Reserves COMPANY RM’000 RM’000 (Note 27) (Note 30)
Non Distributable Distributable
1,826,903
— (725,000)
1,740,957 810,199 747
1,467,285 697,921 751 (425,000)
Total RM’000
Attributable to Equity Holders of the Company
Statements of Changes in Equity continued
153 PLUS Expressways Berhad Annual Report 2008
Cash Flow Statements FOR THE YEAR ENDED 31 DECEMBER 2008
Group Company Note 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Cash Flows from Operating Activities Toll collection Expressway operation services fees Receipts from expressway ancillary facilities Other income Future maintenance expenditure received Payments to contractors for routine maintenance Other operating expenses Taxes paid
2,323,484 — 16,053 39,165 14,048 (238,868) (328,863) (11,468)
1,825,614 5,919 11,017 47,053 1,756 (183,165) (273,418) (5,285)
— 101,234 — 1,204 — — (142,432) (8,184)
— 105,082 — 1,017 — — (126,187) (5,285)
Net cash generated from/(used in) operating activities
1,813,551
1,429,491
(48,178)
(25,373)
103,712 1,421 — 286,035
66,230 — — 258,000
2,891 645 810,000 —
1,820 — 425,000 —
1,364
13,802
—
—
Cash Flows from Investing Activities Profit element and interest income received Proceeds from disposal of property, plant and equipment Dividends received Proceeds from maturity of short term investments Fixed deposit interest earned on amount received from the Government for Additional Works 39 Acquisition of subsidiaries, net of cash and cash equivalents acquired 19(a) Investment in subsidiaries Purchase of property, plant and equipment Payment for leasehold land Purchase of computer softwares Purchase of investments Additional Works Concession assets
(72,680) — (10,637) — (2,032) (333,379) (322,609) (525,563)
(493,903) — (6,602) (7,719) (1,111) (364,810) (444,556) (375,808)
Net cash (used in)/generated from investing activities
(874,368)
(1,356,477)
154 PLUS Expressways Berhad Annual Report 2008
(120,600) (54,939) (5,517) (4,000) (962) — — —
(883,234) (29,306) (3,496) (7,719) (522) — — —
627,518
(497,457)
Cash Flow Statements
continued
Group Company Note 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Cash Flows from Financing Activities Proceeds from issuance of Islamic Sukuk Drawdown of borrowings Proceeds from minority shareholders in respect of additional capital injection during the year Advance received for share capital from minority shareholders Advance received from minority shareholders Redemption of Senior Sukuk/BAIDS Settlement of borrowings Dividends paid Interest paid Profit elements on Senior Sukuk, BAIDS and PLUS SPV Sukuk
1,069,751 190,556
— 974,490
761,611 188,426
— 896,874
4,440 17,483 156 (595,000) (760,051) (725,000) (32,196) (285,167)
2,110 9,374 — (550,000) — (425,000) (6) (248,425)
— — — — (760,051) (725,000) (32,196) (10,753)
— — — — — (425,000) — —
Net cash (used in)/generated from financing activities
(1,115,028)
(237,457)
(577,963)
471,874
Net (decrease)/increase in cash and cash equivalents Effects of foreign exchange rate changes Cash and cash equivalents at the beginning of the year
(175,845) (7,347) 2,417,622
(164,443) (2,444) 2,584,509
1,377 — 5,066
(50,956) — 56,022
Cash and cash equivalents at the end of the year
2,234,430
2,417,622
6,443
5,066
26
The accompanying notes form an integral part of the financial statements.
155 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements – 31 DECEMBER 2008
1
CORPORATE INFORMATION
PLUS Expressways Berhad (“the Company” or “PEB”) is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Board of the Bursa Malaysia Securities Berhad. The new registered office of the Company is located at 19-2, Mercu UEM, Jalan Stesen Sentral 5, Kuala Lumpur Sentral, 50470 Kuala Lumpur. Prior to January 2009, the registered office was at 2nd Floor, Bangunan MCOBA, 42, Jalan Syed Putra, 50460 Kuala Lumpur. The principal place of business is located at Menara Korporat, Persada PLUS, Persimpangan Bertingkat Subang, KM 15, Lebuhraya Baru Lembah Klang, 47301 Petaling Jaya, Selangor Darul Ehsan. Prior to November 2008, the Company principal place of business was at Level 12-17, Menara 1, Faber Towers, Jalan Desa Bahagia, Taman Desa, Off Jalan Klang Lama, 58100 Kuala Lumpur. The Directors regard UEM Group Berhad (“UEM”), which is incorporated in Malaysia and owns 40.21% of the Company’s equity as at 31 December 2008, as the immediate holding company. The ultimate holding company is Khazanah Nasional Berhad (“Khazanah”), which is incorporated in Malaysia. The principal activities of the Company are investment holding and provision of expressway operations services. The Company is principally engaged in the highway concession services through its subsidiaries: (i) Projek Lebuhraya Utara-Selatan Berhad (“PLUS”); PLUS is involved in the operation and maintenance of a tolled expressway network comprising the North-South Expressway (“NSE”), the New Klang Valley Expressway (“NKVE”), a section of Federal Highway Route 2 (“FHR2”) between Subang and Klang, and the Seremban-Port Dickson Highway (“SPDH”) in Peninsular Malaysia. (ii) Expressway Lingkaran Tengah Sdn Bhd (“ELITE”); ELITE undertakes the operation, maintenance and toll collection of the North-South Expressway Central Link (“NSECL”). (iii) Linkedua (Malaysia) Berhad (“LINKEDUA”); LINKEDUA undertakes the operation, maintenance and toll collection of the Malaysia-Singapore Second Crossing (“MSSC”). (iv) Konsortium Lebuhraya Butterworth-Kulim (KLBK) Sdn Bhd (“KLBK”); KLBK is engaged in the operation, maintenance and toll collection of the Butterworth-Kulim Expressway (“BKE”). PEB has four foreign subsidiaries namely PLUS Kalyan (Mauritius) Private Limited (“PLUS Kalyan”) in Port Louis, Mauritius, PLUS BKSP Toll Limited (“PLUS BKSP”) in Kanpur, India, PT Lintas Marga Sedaya (“LMS”) in Indonesia and PT Cimanggis Cibitung Tollways (“CCTW”) in Indonesia. Except for PLUS Kalyan, all its foreign subsidiaries are highway concessionaires on a build, operate and transfer basis (“BOT”). The principal activities of PLUS Kalyan is investment holding. The principal activities of all the subsidiaries are disclosed in Note 19 to the financial statements. There have been no significant changes in the nature of the principal activities during the financial year. The Company completed the acquisition of KLBK on 13 March 2008, and completed the subscription and issuance of 60% shares of CCTW, a company incorporated in Indonesia, on 27 December 2008 and the details are disclosed in Note 43 to the financial statements.
156 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
2 AWARD OF CONCESSIONS (a) PLUS The Government of Malaysia (“the Government”) and UEM entered into a Concession Agreement dated 18 March 1988 in connection with the NSE, the NKVE and the FHR2 projects for a Concession Period of 30 years, ending 31 May 2018.
Subsequently, UEM and PLUS entered into a Novation Agreement with the Government dated 20 January 1988 whereby, with the approval of the Government, UEM assigned its rights and transferred its liabilities and obligations under the Concession Agreement to PLUS.
On 8 July 1999, PLUS entered into a Supplemental Concession Agreement (“SCA”) with the Government whereby the toll rate structure was revised and toll revenue sharing arrangements were established between the parties. As a result of the revision in the toll rate structure the Concession Period was extended for another 12 years to end on 31 May 2030.
On 11 May 2002, PLUS entered into a Second Supplemental Concession Agreement (“SSCA”) with the Government whereby toll rate structure was further revised for the remaining Concession Period and toll compensation and setoff arrangements were established between the parties. The new toll rate structures are as follows: (i)
increase of Class 1 toll rate by 10% from 11.24 sen/km to 12.36 sen/km, which commenced from 1 January 2002 until 31 December 2004;
(ii) scheduled increases of Class 1 toll rate by 10% every 3 years thereafter.
The second 10% scheduled increase in toll rate from 12.36 sen/km to 13.60 sen/km took effect from 1 January 2005 until 31 December 2007. The third 10% scheduled increase in toll rate from 13.60 sen to 14.96 sen which was to take effect from 1 January 2008 has not been applied as yet. The Government has agreed to compensate in cash the differential toll rate based on actual traffic volume in 2008.
Toll rates for other classes of vehicles are determined based on pre-set factors by reference to rates applicable to Class 1 vehicles.
On 22 April 2005, PLUS entered into a Third Supplemental Concession Agreement (“TSCA”) (which took effect on 31 December 2004) with the Government which amongst others, sets out the settlement arrangement for the funding of the construction of third lanes along certain stretches of NSE and the construction of a non-stop through traffic between Ipoh Selatan Toll Plaza and Jelapang Toll Plaza (collectively referred to as “Additional Works”) and the compensation receivable from the Government for the closure of the Senai Toll Plaza (“Senai Compensation”). The settlement arrangement includes the takeover of SPDH, the set-off against the Government Support Loan (“GSL”) and the Additional Support Loan (“ASL”) and the extension of the Concession Period for another 8 years and 7 months to end on 31 December 2038. In addition, PLUS entered into a Proceeds Account Agreement to govern the cash pertaining to Additional Works as set out in Note 39.
Furthermore, the TSCA states that all rights and entitlement of PLUS in respect of the Senai-Johor Bahru section shall be reverted to and vested in the Government and PLUS will have no further liabilities and responsibilities in relation thereto following the closure of the Senai Toll Plaza effective 1 March 2004.
Details of the toll compensation arrangement pursuant to the SSCA, and the settlement arrangement pursuant to the TSCA are set out in Note 3, ‘Revised Toll Rates, Toll Compensation Arrangements and Settlement Arrangements’.
157 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
2 AWARD OF CONCESSIONS (continued) (b) ELITE The Government and UEM entered into a Concession Agreement dated 26 April 1994 in connection with the construction, operation and maintenance of the NSECL.
Subsequently, UEM and ELITE entered into a Novation Agreement with the Government on 27 July 1995 whereby, with the approval of the Government, UEM assigned its rights and transferred its liabilities and obligations under the Concession Agreement to ELITE.
On 9 January 1997, ELITE entered into a SCA with the Government whereby, amongst others, three additional interchanges along the NSECL Expressway and an extension of the KLIA Expressway.
On 23 March 2001, ELITE entered into a SSCA with the Government whereby, amongst others, the Concession Period was extended from 31 May 2018 to 31 May 2025.
On 10 January 2003, ELITE entered into a TSCA with the Government whereby, amongst others, toll rate structures were further revised and compensation arrangements were established between the parties, details of which is set out in Note 3(ii)(b).
(c) LINKEDUA The Government and UEM entered into a Concession Agreement dated 27 July 1993 in connection with the design, construction, management, operations and maintenance of the MSSC.
Subsequently, UEM and LINKEDUA entered into a Novation Agreement with the Government on 10 May 1994 whereby, UEM assigned its rights and transferred its liabilities and obligations under the Concession Agreement to LINKEDUA.
On 12 September 1994, LINKEDUA entered into a SCA with the Government to take into account the InterGovernment Agreement between the Government and the Government of Singapore on 22 March 1994 (“InterGovernment Agreement”) such that, the LINKEDUA Concession Agreement are consistent with the Government’s obligation under the Inter-Government Agreement relating to the works and rights in connection with the Malaysian side of the bridge and the Customs, Immigration & Quarantine Complex.
On 30 May 2000, LINKEDUA entered into a SSCA with the Government whereby, amongst others, the concession period was extended by 15 years to 31 December 2038. The toll rate structure was also revised. In addition, revenue sharing arrangements were established between the parties.
(d) KLBK The Government and KLBK entered into a Concession Agreement dated 28 June 1994 in connection with the design, construction, operation and maintenance of the BKE for a concession period of 32 years ending 27 June 2026.
On 4 June 2007, KLBK entered into a SCA with the Government to restructure the toll rate for Kubang Semang and Lunas Toll Plaza, commencing from 1 June 2005. The new agreed toll rates is applicable for the remaining concession years until the expiry of the concession period in 2026.
158 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
2 AWARD OF CONCESSIONS (continued) (e) PLUS BKSP The Company had on 16 May 2006, received a letter of acceptance from the Maharashtra State Road Development Corporation Limited (“MSRDC”) in relation to the tender bid jointly submitted by the Company and Concept Management Consulting Private Limited through an unincorporated consortium (“PEB-CMCL Consortium”) on 15 December 2005 for the proposed four-laning and improvement, operation and maintenance and toll collection of Bhiwandi-Kalyan-Shil Phata Highway (“BKSP Highway”) on a build, operate and transfer basis (“MSRDC Contract”). The concession period for the MSRDC Contract shall be approximately six years and eight months from the date of the proposed execution of the relevant Concession Agreement.
On 25 August 2006, PEB-CMCL Consortium, PLUS BKSP and MSRDC entered into a Concession Agreement to undertake the four-laning and improvement, operations and maintenance and toll collection of the BKSP Highway. Concurently, PEB-CMCL Consortium and PLUS BKSP entered into an Intra Group Agreement which provides for the transfer of all rights, benefits and obligations of PEB-CMCL Consortium to PLUS BKSP which in turn agreed to execute and complete the Project in compliance with the terms and conditions of the Concession Agreement. In accordance with the terms of the Concession Agreement, PLUS BKSP will design, engineer, construct and subsequently operate and maintain the BKSP Highway. PLUS BKSP is entitled to levy and collect toll from vehicles using the BKSP Highway upon commencement of highway operations. The initial concession period is for 6 years and 8 months from the date of the execution of the Concession Agreement.
Through letters from an independant consultant dated 29 May 2008, 7 August 2008 and 4 September 2008, MSRDC had approved extension of the concession period to 7 years and 11 months in consideration for the delay on its part in handing over the land for the construction of the BKSP Highway.
(f) LMS On 21 July 2006, LMS and the Government of the Republic of Indonesia entered into a Concession Agreement in which LMS was appointed as the concessionaire to undertake the design, construction, ownership, management, financing, operation, maintenance as well as toll collection of the 116-kilometre Cikampek-Palimanan toll highway (“Cikampek-Palimanan Highway”) on a build, operate and transfer basis. The concession period for the CikampekPalimanan Highway is 35 years.
On 13 July 2007, PEB had issued shares in the capital of LMS which represent 55% of the entire issued voting shares of LMS, making LMS a foreign subsidiary of PEB with effect from that date. The remaining 45% equity interest of LMS’s voting shares is held by its Indonesian partner, PT Baskhara Utama Sedaya (“BUS”).
(g) CCTW On 18 September 2007, the Company received a letter from the Minister of Public Works, Republic of Indonesia informing the success of the tender bid jointly submitted by the Company and its Indonesian partners, namely PT Bakrie & Brothers Tbk and PT Capitalinc Investment Tbk (formerly known as PT Global Financindo Tbk) (“Consortium”) for the proposed 25.4 kilometer Package 4-Cimanggis-Cibitung Toll Road on a Build, Operate and Transfer basis. The Cimanggis-Cibitung Toll Road forms part of the proposed Jakarta Outer Ring Road 2 and is located on the outskirts of the Jakarta metropolitan area. The concession shall be for a period of 35 years from the date of the proposed execution of the relevant Concession Agreement.
159 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
2 AWARD OF CONCESSIONS (continued) (g) CCTW (continued) On 15 January 2008, the Consortium executed a Joint Venture Agreement in relation to the Cimanggis-Cibitung Toll Road. The Joint Venture Agreement, provides for the incorporation of a joint venture special purpose vehicle to be known as PT Cimanggis Cibitung Tollway (“CCTW”) to enter into concession agreement for the implementation of the Cimanggis-Cibitung Toll Road with the Minister of Works, Republic of Indonesia.
On 27 December 2008, completion of the subscription of shares had taken place with the issuance of CCTW share certificates in accordance with the Articles of Association of CCTW. PEB had been issued with share certificates for 48,000,000 shares of IDR1,000 each representing 60% shareholding interest in CCTW, effectively making CCTW a foreign subsidiary of PEB.
3. REVISED TOLL RATES, TOLL COMPENSATION ARRANGEMENTS AND SETTLEMENT ARRANGEMENTS OF PLUS AND ELITE (i) PLUS (a) Revised Toll Rate Structures In consideration of PLUS agreeing to the revised toll rate structures applicable from 1 January 2002 (details of which are set out in Note 2(a) above) the Government agreed to the following: (i)
to waive PLUS’s obligation to pay the interest accrued to 1 January 2002 amounting to RM1,729.22 million on its GSL;
(ii) to waive PLUS’s obligation to pay interest on the remaining principal amount of RM750 million on the GSL, after (i) above; and (iii) to address the manner in which the Government would discharge its liability in respect of the amount of compensation due that would arise in each of the remaining Concession Years; such compensation would arise as the new toll rates which took effect from 1 January 2002 are lower than the toll rates contemplated in the SCA previously entered into; and the arrangements have been formalised through the SSCA, and in the manner described in (b) below, ‘Toll Compensation Arrangements’. (b) Toll Compensation Arrangements Under the toll compensation arrangements pursuant to the SSCA, compensation recoverable from the Government for the effects of imposing toll rates lower than those previously agreed shall be adjusted for the following: (i)
deduction for the notional tax on dividends that PLUS will declare and pay (if any) from the tax exempt profits earned during the five year tax-exempt period from 2002 to 2006;
(ii) deduction for interest that would have been payable to the Government on the GSL, had the Government not waived PLUS from its obligation to pay such interest; (iii) set-off of PLUS’s income tax liabilities against such compensation due to PLUS after the deductions referred to in (i) and (ii) above; and (iv) set-off of any Toll Sharing Amount due to the Government against the resultant from (iii) above.
160 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
3. REVISED TOLL RATES, TOLL COMPENSATION ARRANGEMENTS AND SETTLEMENT ARRANGEMENTS OF PLUS AND ELITE (continued) (i) PLUS (continued) (b) Toll Compensation Arrangements (continued) Under the SSCA, in any Concession Year after the tax-exempt period, if there is any tax amount owing by PLUS to the Government after taking into consideration the adjustments referred to in (i), (ii) and (iii) above, PLUS shall pay such tax amount owed by it to the Government in cash.
The SSCA provides that the payment of such tax amount shall not include any toll sharing to be paid to the Government (if applicable), which shall continue to be carried forward for utilisation against future toll compensation amounts. Upon expiry of the Concession Period, any amounts of tax payable and toll sharing amounts which have not been utilised under the compensation arrangements referred to above are to be paid by PLUS to the Government. However, if there are any amounts due from the Government upon expiry of the Concession Period, such amounts are to be unconditionally waived by PLUS.
In the event that the Government imposes a toll rate which is lower than the toll rates stated in the SSCA for any Concession Year, the SSCA provides that the amount of further compensation arising will be paid in full. Notwithstanding such compensation, the other toll compensation arrangements pursuant to the SSCA will remain in effect.
(c) Settlement Arrangements The TSCA sets out the settlement arrangement between the Government and PLUS for the funding of Additional Works estimated at RM1,042.48 million and Senai Compensation amounting to RM331.68 million, in the following manner: (a) Takeover of SPDH by PLUS at a value of RM50.27 million as part settlement for the Senai Compensation; (b) Set off against amount outstanding under the GSL and ASL amounting to RM962.00 million, comprising: (i)
RM281.41 million to settle the balance of the Senai Compensation; and
(ii) RM680.59 million to part settle the cost for the Additional Works; and (c) The balance of the cost for the Additional Works of RM361.89 million has been settled by the Government by way of extending the concession period for a further 8 years and 7 months, to end on 31 December 2038.
The key consequential changes under the TSCA in respect of the Toll Compensation Arrangements as per Note 3(b), as a result of the settlement arrangement are as follows: (i)
The toll compensation shall be calculated up to 31 May 2030 instead of the end of the Concession Period which has now been extended to 31 December 2038.
(ii) Interest that would have been payable to the Government as referred to in Note 3(i)(b)(ii) above, shall be equivalent to nil commencing from the year in which GSL and ASL are fully settled. (iii) The calculation of the toll compensation shall be calculated without taking into account SPDH’s traffic volume. (iv) Any toll compensation amount due from the Government as at 31 May 2030 shall continue to be deducted against the toll sharing for that concession year and each concession year thereafter.
161 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
3. REVISED TOLL RATES, TOLL COMPENSATION ARRANGEMENTS AND SETTLEMENT ARRANGEMENTS OF PLUS AND ELITE (continued) (ii) ELITE (a) Revised Toll Rate Structures Through the TSCA (as referred to in Note 2(b)), the new toll rate structures have been revised to increase by 10% every three years commencing 1 January 2002 until the expiry of the Concession Period. The toll rate had been increased from 12.36 sen per km to 13.60 sen per km effective from 1 January 2005. The next 10% toll rate increase had been implemented on 1 January 2008. (b) Toll Compensation Arrangements In consideration of ELITE agreeing to the revised toll rate structures as referred in the preceding paragraph, the Government agreed to the following: (i)
to provide ELITE with an interest-free term loan facility of up to the maximum principal amount of RM300 million and the loan shall be repaid in full at the repayment date disclosed in Note 33;
(ii) to waive all its rights to interest which has accrued on the existing Government Loan, of RM89.9 million, for the period from 15 December 2000 to 31 December 2001 and to charge no interest on the RM89.9 million loan for the period from 1 January 2002 up to the final repayment date of the loan; (iii) to an extension of the Concession Period for a further 5 years from 31 May 2025 to 31 May 2030; and (iv) to allow and authorise ELITE to collect and retain the levy on the extension of the KLIA Expressway throughout the Concession Period and to increase the levy by 10% every 3 years until the expiry of the Concession Period, of which the first increase was effected on 1 January 2002.
4
ELITE entered into an Additional Government Loan Agreement (“AGLA”) and a Supplemental Loan Agreement (“SLA”) with the Government on 15 January 2003 in respect of the RM300 million additional loan and the waiver of interest on the existing Government Loan, as described in (i) and (ii) above respectively.
SIGNIFICANT ACCOUNTING POLICIES 4.1 Basis of Accounting and Preparation of the Financial Statements The financial statements of the Group and of the Company comply with the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards in Malaysia. At the beginning of the current financial year, the Group and the Company had adopted new IC Interpretations which are mandatory for financial periods beginning on or after 1 July 2007 as described in Note 4.3. The financial statements of the Group and of the Company have also been prepared on a historical basis, unless otherwise stated in the accounting policies below.
The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand (RM’000) except when otherwise indicated.
162 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
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continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Summary of Significant Accounting Policies (a) Investment in Subsidiaries Subsidiaries are entities over which the Group has the ability to control the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity.
The Company’s investments in subsidiaries are stated at cost less impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 4.2(g).
On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is recognised in the income statement.
(b) Basis of Consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the balance sheet date. The financial statements of the subsidiaries are prepared for the same reporting date as the Company.
The merger method of accounting was used in consolidating the Company and PLUS in the year 2002 which meets the relevant criteria set out in the FRS 122 “Business Combination”, thus depicting the combination of these entities as if they had been in combination for the entire period.
For other subsidiaries, they are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. In preparing the consolidated financial statements, intragroup balances, transactions and unrealised gains or losses are eliminated in full. Uniform accounting policies are adopted in the consolidated financial statements for like transactions and events in similar circumstances.
Acquisitions of subsidiaries are accounted for using the purchase method. The purchase method of accounting involves allocating the cost of the acquisition to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the acquisition.
Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill. Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in the income statement.
Minority interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group. It is measured at the minorities’ share of the fair value of the subsidiaries’ identifiable assets and liabilities at the acquisition date and the minorities’ share of changes in the subsidiaries’ equity since then.
163 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
4
continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Summary of Significant Accounting Policies (continued) (c) Property, Plant and Equipment, and Depreciation Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 4.2(g).
Freehold land is not depreciated. Depreciation is provided for on a straight line basis over the estimated useful lives of the property, plant and equipment. The annual rates of depreciation are as follows:
Renovations Aircrafts Motor Vehicles Furniture and Fittings Office Equipment Computers Telecommunication System Operation Tools and Equipment Buildings
Upon disposal of an item of property, plant and equipment, the difference between the net disposal proceeds and the net carrying amount is recognised in the income statement.
The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.
10% 12% 20% 20% 20% 20% 20% 20% 2%
(d) Intangible Assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair values as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful lives of intangible assets are assessed to be either finite or indefinite. 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 intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each balance sheet date.
Intangible assets with indefinite useful lives are not amortised but tested for impairment annually or more frequently if the events or changes in circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. The useful life of an intangible asset with an indefinite life is also reviewed annually to determine whether the useful life assessment continues to be supportable.
164 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
4
continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Summary of Significant Accounting Policies (continued) (e) Leases A lease is recognised as a finance lease if it transfer substantially to the Group all the risks and rewards incidental to ownership. Leases that do not transfer substantially all the risks and rewards are classified as operating leases.
In the case of a lease of land, the minimum lease payments or the upfront payments made represent prepaid land lease payments and are amortised on a straight-line basis over the lease term.
(f) Concession Assets Items classified as Concession Assets comprise Expressway Development Expenditure, Heavy Repairs and Other Concession Assets. (i)
Expressway Development Expenditure Expressway Development Expenditure (“EDE”) comprises development and upgrading expenditure (including interest charges relating to financing of the development) incurred in connection with the Concession.
EDE is stated at cost less accumulated amortisation and impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 4.2(g).
EDE is amortised over the Concession Period. The amortisation formula applied in the preparation of the financial statements to arrive at the annual amortisation charge for each financial period is as follows:
Toll revenue for the year X [Actual toll revenue for the year + Projected total toll revenue for the subsequent years to the end of the concession period]
Toll revenue and projected total toll revenue include toll collection, toll compensation net of any notional tax on tax exempt dividend.
The projected total toll revenue is based on the latest available base case traffic projections prepared by independent traffic consultants multiplied by the toll rate structures described in Note 2.
The traffic volume projection is independently reviewed on a periodic basis.
[Net Book Value of EDE at beginning of the year + Additions for the year]
(ii) Heavy Repairs Heavy repairs relate to costs incurred to repair bridges, slopes and embankments, rectification of settlements and pavement rehabilitation of medium and high traffic sections along the Expressways. The costs of heavy repairs are amortised on a straight line basis over 5-7 years commencing from the date of incurrence, this being the anticipated economic life of such works.
165 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
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continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Summary of Significant Accounting Policies (continued) (f) Concession Assets (continued) (iii) Other Concession Assets Other Concession Assets comprise toll equipment, video surveillance equipment, telecommunication network, centralised lighting, and toll operation computer hardware and software, and are stated at cost less accumulated amortisation and impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 4.2(g). The annual amortisation in respect of these assets is computed on a straight line basis over their estimated useful lives at the following rates: Software and computers Others
% 12.5 10
(iv) Capital Work-In-Progress Capital work-in-progress is not depreciated until the asset is fully completed and brought into use. (g) Impairments For the purpose of impairment testing of these assets, recoverable amount is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, recoverable amount is determined for the cash-generating unit (CGU) to which the asset belongs to.
An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and 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.
An impairment loss is recognised in the income statement in the period in which it arises, unless the asset is carried at a revalued amount, in which case the impairment loss is accounted for as a revaluation decrease to the extent that the impairment loss does not exceed the amount held in the asset revaluation reserve for the same asset.
(h) Taxation Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date.
166 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
4
continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Summary of Significant Accounting Policies (continued) (h) Taxation (continued) Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.
Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill.
(i)
Provisions for Liabilities Provisions for liabilities are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.
(j)
Employee Benefits (i) Short term benefits Wages, 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. (ii) Defined contribution plans As required by law, companies in Malaysia make contributions to the Employees Provident Fund (“EPF”). Such contributions are recognised as an expense in the income statement as incurred.
167 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
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continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Summary of Significant Accounting Policies (continued) (j) Employee Benefits (continued) (iii) Defined benefit plans The Group operates an unfunded, defined benefit Retirement Benefit Scheme (“the Scheme”) for personnel whose employment contracts were transferred in 1988 from Malaysian Highway Authority, pursuant to the Concession Agreement. The Group’s obligation under the Scheme, calculated using the Projected Unit Credit Method, is determined based on actuarial computations by independent actuaries, through which the amount of benefit that employees have earned in return for their service in the current and prior years is estimated. That benefit is discounted in order to determine its present value. Actuarial gains and losses are recognised as income or expense over the expected average remaining working lives of the participating employees when the cumulative unrecognised actuarial gains or losses for the Scheme exceed 10% of the present value of the defined benefit obligation. Past service costs are recognised immediately to the extent that the benefits are already vested, and otherwise are amortised on a straightline basis over the average period until the amended benefits become vested.
The amount recognised in the balance sheet represents the present value of the defined benefit obligations adjusted for unrecognised actuarial gains and losses and unrecognised past service costs. Any asset resulting from this calculation is limited to the net total of any unrecognised actuarial losses and past service costs, and the present value of any economic benefits in the form of refunds or reductions in future contributions to the plan.
(iv) Share-based Compensation The UEM Employee Equity Scheme (“EES”), an equity-settled, share-based compensation plan, allows employees of UEM and UEM Group to acquire ordinary shares of UEM. The Company recognises the total fair value of the UEM share options granted to its employees 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 the UEM share options is measured at grant date by UEM, 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 balance sheet date, UEM revises its estimates of the number of options that are expected to become exercisable on vesting date. The Company recognises the impact of the revision of original estimates, if any, in the income statement, 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 or until the option expires, upon which it will be transferred directly to retained earnings.
(k) Deferred Liabilities Fees received from third parties as advance payments of future maintenance expenditure, in consideration for right-of-way access granted by PLUS and ELITE, are classified as deferred liabilities. Liabilities are amortised over the period of the individual contracts.
In addition, the deferred liabilities also comprise advance toll compensation received by KLBK from the Government where the amount is recognised as revenue over the remaining concession period, and rentals received in advance by KLBK which are for a period of 30 years beginning 1997 and are recognised equally in the income statement over the said period.
168 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
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continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Summary of Significant Accounting Policies (continued) (l) Foreign Currencies (i) Functional and Presentation Currency The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency. (ii) Foreign Currency Transactions In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Nonmonetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in the income statement for the period except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation. Exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in the income statement.
Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operation, regardless of the currency of the monetary item, are recognised in income statement in the Company’s financial statements or the individual financial statements of the foreign operation, as appropriate.
(iii) Foreign Operations The results and financial position of foreign operations that have a functional currency different from the presentation currency (RM) of the consolidated financial statements are translated into RM as follows: – Assets and liabilities for each balance sheet presented are translated at the closing rate prevailing at the balance sheet date; – Income and expenses for each income statement are translated at average exchange rates for the year, which approximates the exchange rates at the dates of the transactions; and – All resulting exchange differences are taken to the foreign currency translation reserve within equity.
Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the balance sheet date. Goodwill and fair value adjustments which arose on the acquisition of foreign subsidiaries before 1 January 2006 are deemed to be assets and liabilities of the parent company and are recorded in RM at the rates prevailing at the date of acquisition.
169 PLUS Expressways Berhad Annual Report 2008
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continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Summary of Significant Accounting Policies (continued) (m) Inventories Inventories are valued at the lower of cost and net realisable value. Cost is determined on the weighted average basis and comprises all expenditure incurred in bringing the inventories to their present location and condition. In arriving at net realisable value, due allowance is made for all obsolete and slow moving items. (n) Cash flow statement The cash flow statement, which is prepared using the direct method, classifies changes in cash and cash equivalents according to operating, investing and financing activities. The Group does not consider any of its assets other than deposits with licensed financial institutions and cash and bank balances to meet the definition of cash and cash equivalents. The use of the cash and cash equivalent balances in the subsidiary companies, however, is subject to the restrictions set out in Note 26, Note 32 and Note 35. (o) Revenue Recognition Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of revenue can be measured reliably. (i)
Toll Revenue Toll revenue is accounted for as and when toll is chargeable for the usage of the expressways.
(ii) Investment Income Investment income is recognised when the right to receive is established and no significant uncertainty exists as regard to its recovery. (iii) Revenue from Services Revenue from services rendered is recognised net of service taxes if applicable, and discounts as and when the services are performed. (iv) Toll Compensation Pursuant to the relevant Concession Agreements, the Government of Malaysia reserves the right to restructure or to restrict the imposition of unit toll rate increases, and in such event, the Government shall compensate the relevant concessionaire for any reduction in toll revenue, subject to negotiation and other considerations that the Government may deem fit. Toll compensation for any Concession Year is recognised in the financial statements as revenue when recovery is probable and the amount that is recoverable can be measured reliably. The amount of toll compensation accrued and recognised in the income statement for the year has been estimated after taking into consideration the effects of the arrangements described in Note 3(i)(b) and Note 3(ii)(b). (v) Interest Income Interest is recognised on a time proportion basis that reflects the effective yield on the asset. (vi) Dividend Income Dividend income is recognised when the right to receive payment is established.
170 PLUS Expressways Berhad Annual Report 2008
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continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Summary of Significant Accounting Policies (continued) (p) Financial Liabilities (i) Bai’ Bithaman Ajil Islamic Debt Securities (“BAIDS”) The BAIDS are bonds issued in accordance with the Islamic finance concept of Bai’ Bithaman Ajil. In accordance with such concept, the issuer assigned certain assets to a trustee, and repurchased them at the same price together with an agreed profit margin. The payment of the purchase price is deferred in accordance with the maturities of the BAIDS, whilst the profit element is paid half-yearly.
BAIDS are initially recognised at cost, being the fair value of the consideration received. After initial recognition, the profit element attributable to the BAIDS in each period is recognised as an expense at a constant rate to the maturity of each series respectively.
(ii) Sukuk Musyarakah with periodic payments The Sukuk Musyarakah (“Sukuk”) with periodic payments is issued under the Islamic principle of Musyarakah which is a contract of partnership in a venture.
The Sukuk is initially stated at cost, being the fair value of the consideration received. After initial recognition, the profit element attributable to the Sukuk in each period is recognised as an expense at a constant rate to its maturity.
(iii) Sukuk Musyarakah without periodic payments The Sukuk Musyarakah (“Sukuk”) without periodic payments is issued under the Islamic principle of Musyarakah which is a contract of partnership in a venture.
The Sukuk is initially stated at cost, being the fair value of the consideration received. The profit elements on the Sukuk are recognised as an expense and accreted to the principal amount at a constant rate to its maturity.
(q) Amount received from the Government for Additional Works Pursuant to the TSCA, monies received from the Government for the Additional Works, are classified as “Amount received from the Government for Additional Works”. With the execution of the Proceeds Account Agreement on 17 November 2006, the expenses incurred for the Additional Works have been offset against the amount received from the Government as disclosed in Note 39. (r) Financial Instruments Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instrument.
Financial instruments are classified as liabilities or equity in accordance with the substance of the respective contractual arrangements. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.
171 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
4
continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Summary of Significant Accounting Policies (continued) (r) Financial Instruments (continued) (i) Trade Payables Trade payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received. (ii) Interest-Bearing Borrowings Interest-bearing borrowings are recorded at the amount of proceeds received, net of transaction costs.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. The amount of borrowing costs eligible for capitalisation is determined by applying a capitalisation rate which is the weighted average of the borrowing costs applicable to the Group borrowings that are outstanding during the year, other than borrowings made specifically for the purpose of obtaining another qualifying asset. For borrowings made specifically for the purpose of obtaining a qualifying asset, the amount of borrowing cost eligible for capitalisation is the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of that borrowing.
All other borrowing costs are recognised as an expense in the income statement in the period in which they are incurred.
(iii) Equity Instruments Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared. (iv) Other Non-current Investment Non-current investments other than investments in subsidiaries, associates and jointly controlled entities are stated at cost less impairment losses. On disposal of an investment, the difference between net disposal proceeds and its carrying amount is recognised in the income statement. (v) Short Term Investments Short term investments in equity shares are stated at the lower of cost and market value whereas the investment in Islamic Commercial Papers/Medium Term Notes are stated at cost less amortised premium due to the relatively short term maturity of these financial instruments. (vi) Receivables Receivables are carried at anticipated realisable values. Bad debts are written off when identified. An estimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheet date.
Toll compensation recoverable from the Government is carried at anticipated realisable value after taking into consideration the effects of the arrangements described in Note 3(i)(b) and Note 3(ii)(b). An assessment of the recoverability of the amount is performed annually based on estimated recoverable amount persuant to the settlement arrangement as set out in Note 3(i)(b). Please see Note 4.2(o)(iv) for the recognition of toll compensation.
172 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
4
continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.3 Changes in Accounting Policies and Effects Arising from Adoption of New IC Interpretation On 1 January 2008, the Group and the Company adopted IC Interpretation 8: Scope of FRS 2, which is mandatory for financial periods beginning on or after 1 July 2007.
The adoption of the above IC Interpretation does not result in significant changes to the accounting policies and does not have a significant financial impact on the Group or Company.
4.4 New standards and interpretations that are not yet effective At the date of authorisation of these financial statements, the following new FRS and Interpretations were issued but not yet effective and have not been applied by the Group and the Company: FRS, Amendment to FRS and IC Interpretations
Effective for financial periods beginning on or after
FRS 7: Financial Instruments: Disclosures FRS 8: Operating Segments FRS 139: Financial Instruments: Recognition and Measurement IC Interpretation 9: Reassessment of Embedded Derivatives IC Interpretation 10: Interim Financial Reporting and Impairment
1 January 1 July 1 January 1 January 1 January
2010 2009 2010 2010 2010
The new FRS and IC Interpretations above are expected to have no significant impact on the financial statements of the Group and the Company upon their initial application except for changes in disclosures arising from the adoption of FRS 7 and FRS 8.
The Group and the Company are exempted from disclosing the possible impact, if any, to the financial statements upon the initial application of FRS 139.
4.5 Key Sources of Estimation Uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet 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. (i)
Share-based payments to employees The cost of providing share-based payments to employees is charged to the income statement over the vesting period of the related share options. The cost is 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 Trinomial option pricing model.
(ii) Amortisation of heavy repairs and other concession assets The cost of heavy repairs and other concession assets are amortised on a straight-line basis over their useful lives over 5 to 10 years. These are common life expectancies applied in the industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.
173 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
4
continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.5 Key Sources of Estimation Uncertainty (continued) (iii) Amortisation of Expressway Development Expenditure (“EDE”) The cost of EDE is amortised over the Concession Period by applying the formula in Note 4.2(f)(i) above. The denominator of the formula includes projected total toll revenue for subsequent years to year 2038 and is based on the latest available base case traffic volume projections prepared by independent traffic consultants multiplied by the toll rates as disclosed in Note 2(a) and 3(ii)(a). 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. (iv) Income Taxes Significant judgement is involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amount of taxation and deferred taxation at balance sheet date is disclosed in the balance sheet. (v) Toll Compensation Recoverable from Government Profit projections are used in determining adequacy of the future income tax payable for set-off against Toll Compensation Recoverable from Government as at balance sheet date. Profit projections are dependent on various assumptions amongst others traffic volume as mentioned in Note 4.5(iii) above. There are also judgement involved in determining the amount recoverable for set off against Note 4.5(iv) above. The carrying amount of Toll Compensation Recoverable from Government at balance sheet date is disclosed in the balance sheet.
5
REVENUE
Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 2,237,035
1,820,464
—
—
730,923 —
697,754 (242,260)
— —
— —
730,923
455,494
—
—
— —
6,052 —
100,960 885,000
97,832 715,811
Accrual for Government’s share of toll revenue
2,967,958 —
2,282,010 —
985,960 —
813,643 —
2,967,958
2,282,010
985,960
813,643
Toll revenue
Gross toll compensation revenue Less: Notional tax on tax exempt dividends
Net toll compensation revenue
Expressway operation service fees Dividend income from a subsidiary
174 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
5
REVENUE (continued)
Toll compensation revenue arose from revisions in toll rate structures as described in Note 2(a) to 2(d).
As referred to in Note 3(i)(b), the notional tax on tax exempt dividends is computed based on tax-exempt dividend declared by PLUS. There is no notional tax on tax exempt dividend for the year 2008 as PLUS did not pay any dividends from its tax exempt account in 2008.
Based on the terms of PLUS’s SCA, the toll revenue earned during the year is less than the threshold toll revenue and as such no accrual is made for the Government’s share of toll revenue.
6 OTHER INCOME
Other income comprises the following:
Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 Income from rental of facilities Income from rental of fibre optic telecommunications system and way leave rights Negative goodwill arising from acquisition of LINKEDUA Profit element from Islamic short term deposits Interest income from short term deposits Others
21,689
11,848
—
—
15,957 — 85,511 10,353 18,530
15,197 70,249 67,013 7,797 34,110
— — 191 2,699 1,140
— — 7 1,761 1,267
152,040
206,214
4,030
3,035
7 FINANCE COSTS
Finance costs for the year are as follows:
Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Profit elements on Islamic financial liabilities Other interest expense
532,898 112,301
453,077 1,597
25,373 31,161
— 1,591
645,199
454,674
56,534
1,591
175 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
8 PROFIT BEFORE TAX Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 Profit before tax is arrived at after charging/(crediting): Auditors’ remuneration – statutory audit fee – other services fee Depreciation of property, plant and equipment Intangible assets written off (Note 18) Property, plant and equipment written off (Note 16) Gain on disposal of property, plant and equipment Amortisation charge for concession assets (Note 15) Amortisation charge for prepaid land lease payments (Note 17) Amortisation charge for intangible assets (Note 18) Net book value of EDE written off (Note 16) Directors’ remuneration (Note 10) Provision for retirement benefits Rental of equipment Rental of premises Short term investment written off
9
549 658 7,230 16 167 (707) 374,437 281 1,490 — 2,770 1,462 368 2,463 34
288 304 5,676 — 29 (9) 250,162 282 1,153 1,447 1,742 1,396 445 2,774 505
60 434 2,115 — 87 (357) — 1,017 581 — 1,914 — 239 2,079 —
30 53 1,856 — 18 (15) — 1,017 440 — 1,510 — 280 2,544 —
EMPLOYEE COSTS
Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Employee emoluments Employee training/welfare
176 PLUS Expressways Berhad Annual Report 2008
190,708 7,090
152,870 5,652
76,238 3,663
62,285 2,147
197,798
158,522
79,901
64,432
Notes to The Financial Statements
continued
10 DIRECTORS’ REMUNERATION Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Executive: Salaries, bonus and other emoluments Benefits-in-kind
Non-Executive: Fees Other emoluments Director’s remuneration paid and payable to third party Director’s remuneration paid and payable to immediate holding company
1,183 84
946 68
1,183 84
946 68
869 245 78
416 170 65
404 115 78
289 96 65
311
77
50
46
2,770
1,742
1,914
1,510
11 KEY MANAGEMENT PERSONNEL REMUNERATION Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Short term benefits EES
4,957 547
2,157 946
1,914 233
1,510 894
5,504
3,103
2,147
2,404
Key management personnel is defined as the members of the boards of directors of the Company and its subsidiaries whereby the authority and responsibility for planning, directing and controlling the activities of the company, directly or indirectly lies.
177 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
12 INCOME TAX EXPENSE/CURRENT TAX PAYABLE a) Income tax expense Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Income tax: Malaysian income tax Foreign income tax Under provision in prior years
24,335 36 490
24,987 — 1,514
1,931 — 490
19,594 — 1,508
Subtotal
24,861
26,501
2,421
21,102
Deferred tax: Relating to origination and reversal of temporary differences Relating to change in tax rate Under/(over) provision in prior years
405,261 776 4,764
(55,119) (581) 89,541
(3,623) 49 (31)
(98) 108 (117)
Subtotal
410,801
33,841
(3,605)
(107)
Total
435,662
60,342
(1,184)
20,995
The reconciliation of the tax effects of accounting and taxable income are as follows:
Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 1,515,702
1,307,990
809,015
718,916
Tax at applicable statutory tax rate of 26% (2007: 27%) Tax effect of expenses that are not deductible in determining taxable profit Tax effect of income not subject to tax Tax effect of changes in tax rate Under provision of income tax expense in prior years Under/(over) provision of deferred tax in prior year Utilisation of capital allowances (Note (a)) Utilisation of previously unrecognised tax losses and unabsorbed capital allowances
394,083
353,157
210,344
194,107
36,508 — 776 490 4,764 —
35,844 — (581) 1,514 89,541 (228,826)
18,064 (230,100) 49 490 (31) —
2,847 (177,458) 108 1,508 (117) —
Tax expense
435,662
Profit before tax
178 PLUS Expressways Berhad Annual Report 2008
(958)
(190,307) 60,342
— (1,184)
— 20,995
Notes to The Financial Statements
continued
12 INCOME TAX EXPENSE/CURRENT TAX PAYABLE (continued) a) Income tax expense (continued) Note (a) In 2007, deferred tax assets in respect of temporary differences arising during the tax exempt period relating to qualifying expenditure incurred prior to and during the tax exempt period for 2002 to 2006 were not previously recognised as there was uncertainty as to whether the related capital allowances can be utilised for set-off against future taxable profits. These deferred tax assets were recognised in 2007 pursuant to the confirmation from the relevant authority that these can be utilised. b) Tax payable Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 19,398
21,619
—
208
(19,273)
(21,204)
—
—
415
—
208
Current tax payable before set off Set off against toll compensation recoverable from the Government (Note 22)
At 31 December
Following the expiry of PLUS’s exemption period, PLUS incurred income tax in the current year which is payable as at year end. The income tax payable is set off against the toll compensation recoverable from the Government in accordance with the SSCA as detailed out in Note 3(i)(b).
125
13 EARNINGS PER SHARE
Basic earnings per share has been calculated by dividing the profit for the year attributable to equity holders of the Company by the number of ordinary shares in issue during the financial year.
These amounts are tabulated as follows:
Group Company 2008 2007 2008
Profit for the year attributable to equity holders of the Company (RM’000)
Number of ordinary shares (‘000)
Basic earnings per share (sen)
2007
1,079,333
1,247,843
810,199
697,921
5,000,000
5,000,000
5,000,000
5,000,000
21.59
24.96
16.20
13.96
179 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
14 DIVIDENDS Dividend Amount per ordinary share 2008 2007 2008 2007 RM’000 RM’000 sen sen
Interim tax exempt dividend for the year ended 31 December 2007 of 6.0 sen per ordinary share declared on 27 August 2007 and paid on 28 September 2007
—
300,000
—
6.00
Final tax exempt dividend for the year ended 31 December 2007 of 8.0 sen per ordinary share declared on 18 June 2008 and paid on 16 July 2008
—
400,000
—
8.00
Interim single tier dividend for the year ended 31 December 2008 of 6.5 sen per ordinary share declared on 21 August 2008 and paid on 23 September 2008
325,000
—
6.50
—
Final single tier dividend for the year ended 31 December 2008 of 9.5 sen per ordinary share
475,000
—
9.50
—
800,000
700,000
16.00
14.00
At the forthcoming Annual General Meeting, a final single tier dividend in respect of the financial year ended 31 December 2008 of 9.5 sen per ordinary share of RM0.25 each, amounting to a total dividend payable of RM475 million will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend if approved by the shareholders, will be accounted for in shareholders’ equity as an appropriation of retained profits in the financial year ending 31 December 2009.
15 CONCESSION ASSETS
Concession assets consist of the following: – NSE, NKVE, FHR2, and SPDH maintained by PLUS; – NSECL and KLIA Expressway maintained by ELITE; – MSSC maintained by LINKEDUA; – BKE maintained by KLBK; – BKSP Highway in India under construction by PLUS BKSP; – Cikampek-Palimanan Highway in Indonesia undertaken by LMS; and – Cimanggis-Cibitung Toll Road in Indonesia undertaken by CCTW.
180 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
15 CONCESSION ASSETS (continued)
The breakdown of the concession assets according to highways are as follow:
Group Accumulated Net carrying 2008 Cost amortisation amount RM’000 RM’000 RM’000
Expressway Development Expenditure (“EDE”) – NSE, NKVE, FHR2, SPDH – NSECL and KLIA Expressway – MSSC – BKE
Heavy Repairs – NSE, NKVE, FHR2, SPDH – NSECL and KLIA Expressway – MSSC
9,555,915 1,788,040 1,104,557 347,812 12,796,324
1,185,044 143,463 82,067 56,720
8,370,871 1,644,577 1,022,490 291,092
1,467,294 11,329,030
1,457,093 104,696 22,184
822,954 48,314 4,066
634,139 56,382 18,118
1,583,973
875,334
708,639
488,206 83,462 36,472 17,687
406,571 67,123 36,472 4,864
81,635 16,339 — 12,823
625,827
515,030
110,797
174,877 56,770 418
— — —
174,877 56,770 418
232,065
—
232,065
15,238,189
Other Concession Assets – NSE, NKVE, FHR2, SPDH – NSECL and KLIA Expressway – MSSC – BKE
Capital Work-In-Progress – BKSP Highway – Cikampek-Palimanan Highway – Cimanggis-Cibitung Toll Road
2,857,658 12,380,531
181 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
15 CONCESSION ASSETS (continued) Group Accumulated Net carrying 2007 Cost amortisation amount RM’000 RM’000 RM’000
EDE – NSE, NKVE, FHR2, SPDH – NSECL and KLIA Expressway – MSSC
9,178,841 1,786,496 1,058,376
1,049,734 115,710 57,006
8,129,107 1,670,786 1,001,370
12,023,713
1,222,450
10,801,263
1,214,624 83,115 8,292
685,125 37,070 2,262
529,499 46,045 6,030
1,306,031
724,457
581,574
465,100 81,786 36,472
383,040 63,268 36,472
82,060 18,518 —
583,358
482,780
100,578
55,516 157,160 27,395
— — —
55,516 157,160 27,395
240,071
—
240,071
14,153,173
2,429,687
11,723,486
Heavy Repairs – NSE, NKVE, FHR2, SPDH – NSECL and KLIA Expressway – MSSC
Other Concession Assets – NSE, NKVE, FHR2, SPDH – NSECL and KLIA Expressway – MSSC
Capital Work-In-Progress – MSSC – BKSP Highway – Cikampek-Palimanan Highway
182 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
15 CONCESSION ASSETS (continued)
Details of Concession Assets as at 31 December 2008 and 31 December 2007 are as follows:
Other Capital Heavy Concession Work-In Group EDE Repairs Assets Progress RM’000 RM’000 RM’000 RM’000 Cost At 1 January 2008 Translation difference Additions Acquisition of subsidiary (Note 19(a)) Reclassification Transfer from property, plant & equipment (Note 16)
At 31 December 2008
Accumulated Amortisation At 1 January 2008 Charge for the year Acquisition of subsidiary (Note 19(a)) Transfer from property, plant & equipment (Note 16)
At 31 December 2008
Net Book Value at 31 December 2008 Cost At 1 January 2007 Translation difference Additions Acquisition of subsidiaries Written off
At 31 December 2007
Accumulated Amortisation At 1 January 2007 Charge for the year Acquisition of subsidiaries Written off
At 31 December 2007
Net Book Value at 31 December 2007
Total RM’000
12,023,713 — 370,209 347,812 54,590
1,306,031 — 271,280 — 6,662
583,358 — 25,183 — —
240,071 14,153,173 (26,881) (26,881) 80,127 746,799 — 347,812 (61,252) —
—
—
17,286
12,796,324
1,583,973
625,827
1,222,450 194,714 50,130
724,457 150,877 —
482,780 28,846 —
— — —
2,429,687 374,437 50,130
—
—
3,404
—
3,404
1,467,294
875,334
515,030
—
2,857,658
11,329,030
708,639
110,797
9,087,492 — 92,979 2,844,872 (1,630)
1,046,757 — 167,867 91,407 —
439,799 — 25,301 118,258 —
41,103 11,680 121,480 65,808 —
10,615,151 11,680 407,627 3,120,345 (1,630)
12,023,713
1,306,031
583,358
240,071
14,153,173
934,732 115,185 172,716 (183)
570,901 114,224 39,332 —
362,287 20,753 99,740 —
— — — —
1,867,920 250,162 311,788 (183)
1,222,450
724,457
482,780
—
2,429,687
10,801,263
581,574
100,578
240,071
11,723,486
—
17,286
232,065 15,238,189
232,065 12,380,531
183 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
16 PROPERTY, PLANT AND EQUIPMENT Furniture, Fittings, Telecommu nication Operation Group and Office Motor Tools and Freehold Equipment Aircrafts Vehicles Computers Equipment Buildings Land RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Cost At 1 January 2008 Additions Disposals Written off Acquisition of subsidiary (Note 19(a)) Transfer to concession assets (Note 15) Transfer to intangible assets (Note 18) Translation Difference
At 31 December 2008
Accumulated Depreciation At 1 January 2008 Charge for the year Disposals Written off Acquisition of subsidiary (Note 19(a)) Transfer to concession assets (Note 15) Transfer to intangible assets (Note 18) Translation Difference
30,892 3,373 — (9,834)
31,237 — — —
27,519 6,227 (4,504) (85)
25,100 764 — (6,350)
8,809 13 — (5,739)
1,074
—
751
1,073
—
—
—
—
(630)
—
—
(70)
—
(130)
Total RM’000
4,242 3 — —
279 — — —
128,078 10,380 (4,504) (22,008)
17,286
—
—
20,184
(17,286)
—
—
(17,286)
(729)
—
—
—
(1,359)
(10)
—
(21)
—
(231)
24,805
31,237
29,778
19,848
3,083
27,667 1,491 — (9,739)
11,061 2,298 — —
14,315 901 (3,790) (85)
20,418 2,084 — (6,281)
8,223 285 — (5,736)
921
—
610
906
—
—
—
—
(785)
—
—
(10)
—
(21)
4,224
279
113,254
906 171 — —
— — — —
82,590 7,230 (3,790) (21,841)
3,404
—
—
5,841
(3,404)
—
—
(3,404)
(402)
—
—
—
(1,187)
(2)
—
(7)
—
(40)
At 31 December 2008
19,545
13,359
11,930
16,723
2,772
1,070
—
65,399
Net Book Value at 31 December 2008
5,260
17,878
17,848
3,125
311
3,154
279
47,855
184 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
16 PROPERTY, PLANT AND EQUIPMENT (continued) Furniture, Fittings, Telecommu nication Operation Group and Office Motor Tools and Freehold Equipment Aircrafts Vehicles Computers Equipment Buildings Land RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Cost At 1 January 2007 Additions Disposals Written off Acquisition of subsidiaries Translation Difference
Total RM’000
25,901 1,022 — (1,388)
31,237 — — —
24,605 3,301 (182) (818)
22,715 1,493 — (1,333)
7,247 — — (220)
3,843 — — —
— — — —
115,548 5,816 (182) (3,759)
5,346
—
597
2,224
1,784
399
279
10,629
11
—
16
1
(2)
—
—
26
30,892
31,237
27,519
25,100
8,809
4,242
279
128,078
23,697 1,032 — (1,375)
8,764 2,297 — —
14,443 534 (141) (818)
17,850 1,803 — (1,315)
6,797 5 — (220)
697 131 — —
— — — —
72,248 5,802 (141) (3,728)
4,313
—
291
2,080
1,641
78
—
8,403
—
—
6
—
—
—
—
6
At 31 December 2007
27,667
11,061
14,315
20,418
8,223
906
—
82,590
Net Book Value at 31 December 2007
3,224
20,176
13,204
4,682
586
3,336
279
45,487
At 31 December 2007
Accumulated Depreciation At 1 January 2007 Charge for the year Disposals Written off Acquisition of subsidiaries Translation Difference
Included in the depreciation charged for the year is an amount of RM126,000 which is capitalised in concession assets.
185 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
16 PROPERTY, PLANT AND EQUIPMENT (continued) Furniture, Fittings, Telecommu- Operation nication and Motor Tools and Company Office Equipment Vehicles Computers Equipment RM’000 RM’000 RM’000 RM’000
Total RM’000
Cost At 1 January 2008 Additions Disposals Written off
1,363 1,712 — (492)
11,587 2,721 (470) —
6,408 412 — (124)
770 13 — (261)
20,128 4,858 (470) (877)
2,583
13,838
6,696
522
23,639
At 31 December 2008
Accumulated Depreciation At 1 January 2008 Charge for the year Disposals Written off
762 354 — (425)
3,679 348 (182) —
3,861 1,257 — (105)
512 156 — (260)
8,814 2,115 (182) (790)
691
3,845
5,013
408
9,957
Net Book Value at 31 December 2008
1,892
9,993
1,683
114
13,682
Cost At 1 January 2007 Additions Disposals Written off
1,109 275 — (21)
9,823 1,769 (5) —
5,696 748 — (36)
770 — — —
17,398 2,792 (5) (57)
1,363
11,587
6,408
770
20,128
Accumulated Depreciation At 1 January 2007 Charge for the year Disposals Written off
528 250 — (16)
3,418 262 (1) —
2,694 1,190 — (23)
358 154 — —
6,998 1,856 (1) (39)
762
3,679
3,861
512
8,814
601
7,908
2,547
258
11,314
At 31 December 2008
At 31 December 2007
At 31 December 2007
Net Book Value at 31 December 2007
186 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
17 PREPAID LAND LEASE PAYMENTS Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 Cost At 1 January/At 31 December
30,174
30,174
100,669
100,669
Accumulated Amortisation At 1 January Charge for the year
2,624 281
2,342 282
1,017 1,017
— 1,017
2,905
2,624
2,034
1,017
Net Book Value at 1 January
27,550
27,832
99,652
100,669
Net Book Value at 31 December
27,269
27,550
98,635
99,652
At 31 December
Prepaid land lease payments of the Company relate to transfer of leasehold land from a subsidiary at market value on 27 December 2007.
18 INTANGIBLE ASSETS Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 Cost At 1 January Additions Transfer from property, plant & equipment (Note 16) Written off
12,113 2,177 1,359 (2,188)
11,050 1,146 — (83)
2,504 1,128 — (29)
1,971 533 — —
13,461
12,113
3,603
2,504
At 31 December
187 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
18 INTANGIBLE ASSETS (continued) Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 Accumulated Amortisation At 1 January Charge for the year Transfer from property, plant & equipment (Note 16) Written off
9,289 1,490 1,187 (2,172)
8,219 1,153 — (83)
1,419 581 — (29)
9,794
9,289
1,971
1,419
Net Book Value at 1 January
2,824
2,831
1,085
992
Net Book Value at 31 December
3,667
2,824
1,632
1,085
At 31 December
979 440 — —
Intangible assets consists of computer software and licenses that do not form an integral part of the related hardwares.
19 INVESTMENTS IN SUBSIDIARIES Company 2008 2007 RM’000 RM’000
Unquoted shares at cost – In Malaysia Unquoted shares at cost – Outside Malaysia
188 PLUS Expressways Berhad Annual Report 2008
2,164,622 119,739
2,116,000 64,800
2,284,361
2,180,800
Notes to The Financial Statements
continued
19 INVESTMENTS IN SUBSIDIARIES (continued)
The subsidiaries are as follows: Effective Equity Interest Name
Principal Activity
2008
2007
Projek Lebuhraya Utara-Selatan Berhad
Operation and maintenance of the tolled NSE, NKVE, FHR2, and SPDH with a total length of 846 kilometres
100%
100%
Expressway Lingkaran Tengah Sdn Bhd
Operation, maintenance and toll collection of the 63-kilometre NSECL and KLIA Expressway
100%
100%
Linkedua (Malaysia) Berhad
Operation, maintenance and toll collection of the 44-kilometre MSSC
100%
100%
Konsortium Lebuhraya ButterworthKulim (KLBK) Sdn Bhd
Operation, maintenance and toll collection of the 17-kilometer BKE which is dual two lane carriageway from Kulim in Kedah to Seberang Perai in Penang
100%
—
PLUS Kalyan (Mauritius) Private Limited (Incorporated in Mauritius)
Investment holding
100%
100%
PLUS BKSP Toll Limited (Incorporated in India)
Four-laning and improvement, operation and maintenance and toll collection of the 21.6-kilometre BKSP Highway in India
94%
94%
PT Lintas Marga Sedaya (Incorporated in Indonesia)
Design, construction, management, financing, operation, maintenance and toll collection of the 116-kilometre Cikampek-Palimanan Highway in Indonesia
55%
55%
PT Cimanggis-Cibitung Tollways (Incorporated in Indonesia)
Construction, operation and maintenance of the proposed 25.4-kilometre Package 4 – CimanggisCibitung Toll Road, Indonesia
60%
—
Incorporated in Malaysia
Incorporated outside Malaysia
All companies are audited by member firms of Ernst & Young Global in the respective countries except for KLBK, LMS and CCTW which are audited by firms other than Ernst & Young.
189 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
19 INVESTMENTS IN SUBSIDIARIES (continued) (a) Acquisition of subsidiary On 13 March 2008, the Company acquired 100% equity interest in KLBK.
The fair value and carrying amount of assets acquired and liabilities assumed from the acquisition of KLBK are as follows:
Fair Value recognised Acquiree’s on carrying Note acquisition amount RM’000 RM’000 ASSETS Concession assets 15 Property, plant and equipment 16 Deferred tax assets 21 Sundry receivables, deposits and prepayments Short term deposits with licensed banks Cash and bank balances
TOTAL ASSETS
LIABILITIES Long term borrowings Deferred liabilities Sundry and trade payables Advance from previous holding company of KLBK 24 Tax payable
297,682 14,343 3,571 767 39,340 8,580
255,621 14,343 3,571 767 39,340 8,580
364,283
322,222
(172,825) (48,525) (8,857) (85,378) (76)
(172,825) (48,525) (8,857) (85,378) (76)
TOTAL LIABILITIES
(315,661)
(315,661)
Total net assets
48,622
6,561
Total cost of acquisition
48,622
190 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
19 INVESTMENTS IN SUBSIDIARIES (continued) (a) Acquisition of subsidiary (continued) The cash outflow on acquisition is as follows:
RM’000
Purchase consideration satisfied by cash (see note below)
134,000
Total cash outflow of the Company Cash and cash equivalents of subsidiary acquired
134,000 (47,920)
Net cash outflow of the Group Less: Deposit paid in previous year
86,080 (13,400)
Net cash outflow of the Group during the year
72,680
Note: The purchase consideration of RM134 million includes the full settlement of the shareholder’s advance owing by KLBK to Malaysia Mining Corporation Berhad, its previous holding company, amounting to RM85.378 million.
20 OTHER INVESTMENT Group 2008 2007 RM’000 RM’000
Unquoted private debt securities, at cost Add: Premium Less: Discount amortised
65,000 33 (9,108)
25,000 244 —
Structured products
55,925 110,000
25,244 90,000
Total other investment
165,925
115,244
Indicative market value of unquoted bonds
55,379
25,428
Structured products represent placements with maturity period of more than one year with licensed financial institutions.
191 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
21 DEFERRED TAXATION Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
At 1 January Recognised in the Income Statement Acquisition of subsidiary (Note 19(a)) Translation difference
26,173 (410,801) 3,571 (28)
71,508 (33,841) (11,494) —
1,293 3,605 — —
1,186 107 — —
At 31 December
(381,085)
26,173
4,898
1,293
Presented after appropriate offsetting as follows: Deferred tax assets Deferred tax liabilities
7,154 (388,239)
37,667 (11,494)
4,898 —
1,293 —
(381,085)
26,173
4,898
1,293
The components and movements of deferred tax assets and liabilities during the financial year prior to offsetting are as follows:
Deferred Tax Assets of the Group: Timing difference Unabsorbed on property, Unabsorbed capital plant and tax losses allowance equipment Provisions RM’000 RM’000 RM’000 RM’000
Total RM’000
At 1 January 2008 Recognised in the Income Statement Acquisition of subsidiary Translation difference
225,644 (6,371) 13,631 —
835,782 (343,611) — —
1,294 (144) — —
190,871 58,521 12,146 (28)
1,253,591 (291,605) 25,777 (28)
At 31 December 2008
232,904
492,171
1,150
261,510
987,735
At 1 January 2007 Recognised in the Income Statement Acquisition of subsidiary
178,389 (6,319) 53,574
1,007,065 (337,140) 165,857
(1,844) 3,138 —
(79,408) 269,751 528
1,104,202 (70,570) 219,959
At 31 December 2007
225,644
835,782
1,294
190,871
1,253,591
192 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
21 DEFERRED TAXATION (continued) Deferred Tax Liabilities of the Group: Timing difference on Unabsorbed Timing property, capital difference plant and allowance on EDE equipment RM’000 RM’000 RM’000
Total RM’000
At 1 January 2008 Recognised in the Income Statement Acquisition of subsidiary
— (1,227,336) (6,455) (112,782) 27,538 (49,744)
(82) (1,227,418) 41 (119,196) — (22,206)
At 31 December 2008
21,083
(1,389,862)
(41) (1,368,820)
At 1 January 2007 Recognised in the Income Statement Acquisition of subsidiaries
— — —
(1,032,694) 36,729 (231,371)
— — (82)
(1,032,694) 36,729 (231,453)
At 31 December 2007
—
(1,227,336)
(82)
(1,227,418)
Deferred tax assets have not been recognised in respect of the following items:
Group 2008 2007 RM’000 RM’000
Unused tax losses Unabsorbed capital allowances
505,796 657,950
491,559 599,288
1,163,746
1,090,847
The unused tax losses and unabsorbed capital allowances of the Group are available indefinitely for offsetting against future taxable profits of the respective entities within the Group, subject to no substantial change in shareholdings of those entities under the Income Tax Act, 1967 and guidelines issued by the tax authority.
193 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
21 DEFERRED TAXATION (continued) Deferred Tax Asset of the Company:
Timing difference on property, plant and equipment Provisions RM’000 RM’000
Total RM’000
At 1 January 2008 Recognised in the Income Statement
(1,952) (335)
3,245 3,940
1,293 3,605
At 31 December 2008
(2,287)
7,185
4,898
At 1 January 2007 Recognised in the Income Statement
(1,844) (108)
3,030 215
1,186 107
At 31 December 2007
(1,952)
3,245
1,293
22 TOLL COMPENSATION RECOVERABLE FROM THE GOVERNMENT Group 2008 2007 RM’000 RM’000 At 1 January Net toll compensation revenue Less: Compensation received/recognised Set off against income tax payable of PLUS (Note 12(b))
1,392,650 730,923 (90,533) (19,273)
At 31 December
2,013,767
1,392,650
Analysed as: Toll compensation recoverable within 12 months Toll compensation recoverable after 12 months
104,269 1,909,498
— 1,392,650
2,013,767
1,392,650
958,360 455,494 — (21,204)
The amount of toll compensation recoverable and the set-off of the toll sharing and income tax payable amounts are based on the toll compensation arrangements as described in Note 2(a) to 2(d) and Note 3(i)(b).
194 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
23 SUNDRY RECEIVABLES, DEPOSITS AND PREPAYMENTS Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 47,238 (353)
36,456 (329)
1,255 —
2,377 (7)
Deposits and prepayments
46,885 10,268
36,127 22,236
1,255 4,751
2,370 30,488
57,153
58,363
6,006
32,858
Sundry receivables Less: Allowance for doubtful debts
24 HOLDING, SUBSIDIARIES AND RELATED COMPANIES Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 Current Amount Amount Amount Amount Amount
by related companies (Note iii) by subsidiaries (Note ii) to the immediate holding company (Note i) to related companies (Note iii) to subsidiaries (Note ii)
13,806 — (1,338) (115,522) —
8,194 — (39,880) (103,883) —
74 535,823 (265) (357) (3,203)
138 412,442 (284) (221) —
Non-current Amount owing by subsidiary (Note ii) Amount owing to the immediate holding company (Note i) Amount owing to subsidiary (Note ii)
— (6,885) —
— (6,885) —
85,378 — (86,850)
— — (88,850)
owing owing owing owing owing
195 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
24 HOLDING, SUBSIDIARIES AND RELATED COMPANIES (continued)
The Directors regard UEM, which is incorporated in Malaysia and owns 40.21% of the Company’s equity as at 31 December 2008, as the immediate holding company. The ultimate holding company is Khazanah, which is incorporated in Malaysia. (i) Amount owing to immediate holding company Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 8,223 (6,885)
46,765 (6,885)
265 —
284 —
1,338
39,880
265
284
Amount owing to the immediate holding company Less: Repayable after twelve months
Repayable within twelve months
The amount owing to the immediate holding company is trade in nature except for RM264,720 (2007: RM283,778) which is non-trade in nature.
The amount owing is non-interest bearing. The long-term portion of the amount owing of RM6,884,880 (2007: RM6,884,880) is payable only after PLUS has repaid all amounts borrowed from financial institutions.
(ii) Subsidiaries The amount owing by/(to) subsidiaries are non-trade in nature, non-interest bearing and repayable on demand, except for an amount owing to PLUS of RM86,850,000 (2007: RM88,850,000) in respect of the transfer of leasehold land which is payable from 31 December 2008 until 31 December 2016 in nine fixed annual installments.
The non-current amount owing by subsidiary relates to the shareholder’s advance that was previously owed by KLBK to its previous holding company. Following the acquisition of KLBK, the shareholder’s advance is now an amount owing by the subsidiary to PEB (refer Note 19). The amount is not repayable within the next twelve months.
(iii) Related companies Related companies in these financial statements refer to members of Khazanah Nasional Berhad group of companies. The amounts owing by/(to) related companies are trade in nature, non-interest bearing and repayable on demand.
196 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
25 SHORT TERM INVESTMENTS Group 2008 2007 RM’000 RM’000 46 — (46)
46 (12) —
—
34
63,389 —
49,517 13,771
63,389
63,288
Total short term investments
63,389
63,322
Market value of quoted shares
—
34
Quoted shares, at cost Less: Accumulated impairment loss Less: Written off
Islamic Commercial Papers/Medium Term Notes Indonesia Central Bank Certificates (equivalent to IDR39.8 billion)
26 LONG TERM AND SHORT TERM DEPOSITS WITH LICENSED BANKS AND CASH AND BANK BALANCES Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 Current Islamic short term deposits (Note i)
Conventional short term deposits – Proceeds Account (Note ii) – Others (Note iii)
Cash and bank balances – Proceeds Account (Note ii) – Others
Total cash and cash equivalents
Non-current Long term deposits (Note iv)
1,910,218
2,201,656
—
—
20,438 278,468
83,023 93,456
— 6,190
— 4,770
2,209,124
2,378,135
6,190
4,770
3 25,303
25 39,462
— 253
— 296
25,306
39,487
253
296
2,234,430
2,417,622
6,443
5,066
483
547
—
—
197 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
26 LONG TERM AND SHORT TERM DEPOSITS WITH LICENSED BANKS AND CASH AND BANK BALANCES (continued) (i)
The use of the balances in PLUS, which include the minimum amounts of RM978.28 million (2007: RM961.84 million) held under the Finance Service Reserve Account and Maintenance Reserve Account pursuant to the Senior Sukuk agreement, is subject to certain covenants and restrictions as set out in Note 32 and Note 35.
Included in deposits placed with licensed banks is an amount of RM1.98 million (2007: RM1.93 million) which has been pledged as security for a performance bond by ELITE as set out in Note 35.
The use of the balances in ELITE, which include the minimum amounts of RM95.20 million (2007: RM57.50 million) held under the Finance Service Reserve Account pursuant to the BAIDS agreement, is subject to certain covenants and restrictions as set out in Note 32 and Note 35.
The use of the balances in KLBK which include the minimum amounts of RM5.24 million (2007: RM5.24 million) held under the Finance Service Reserve Account and Maintenance Reserve Account pursuant to the BAIDS agreement, is subject to certain covenants and restrictions as set out in Note 32 and Note 35.
(ii) This relates to the amount received from the Government of which shall be used in the manner as prescribed in the Proceeds Account Agreement of PLUS as set out in Note 39. (iii) Included in deposits placed with licensed banks is an amount of RM25.67 million (2007: RM3.46 million) which has been pledged as security for a performance bond by LMS. (iv) This relates to PLUS BKSP’s long term deposit placed with a licensed bank for purpose of obtaining performance guarantee for its project.
27 SHARE CAPITAL Group and Company 2008 2007 RM’000 RM’000 Authorised: 10,000,000,000 ordinary shares of RM0.25 each at beginning/end of the year
2,500,000
2,500,000
Issued and fully paid up: 5,000,000,000 ordinary shares of RM0.25 each at beginning/end of the year
1,250,000
1,250,000
198 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
28 CAPITAL RESERVE Group 2008 2007 RM’000 RM’000 Non-distributable: Capital redemption reserve Share premium
10,000 451,138
10,000 451,138
461,138
461,138
The Capital Redemption Reserve arose upon the redemption by PLUS of Redeemable Convertible Cumulative Preference Shares in 1999.
Share premium of the Group represents the premium arising from the rights issue and from the conversion of the Redeemable Convertible Bonds (“RCB”) as a result of a debt restructuring in 2002.
29 MERGER RESERVE
The difference between the nominal value of share of the Company issued as consideration and the nominal value of the shares acquired has been classified as a merger reserve. The merger reserve arose on 31 May 2002.
30 OTHER RESERVES
The breakdown and movement of other non-distributable reserves are as follows:
Capital Foreign contribution currency from translation holding Non-distributable: reserve company Group RM’000 RM’000 (a) (b)
At 1 January 2008 Foreign currency translation Share options granted under EES: recognised in income statement Transfer to retained earnings upon expiry of EES (Note 31)
(2,445) (17,867) — —
At 31 December 2008
(20,312)
3,485 — 944 (4,429) —
Total RM’000
1,040 (17,867) 944 (4,429) (20,312)
199 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
30 OTHER RESERVES (continued) Capital Foreign contribution currency from translation holding Non-distributable: reserve company Group RM’000 RM’000 (a) (b)
Total RM’000
At 1 January 2007 Foreign currency translation Share options granted under EES: recognised in income statement
(139) (2,306) —
1,816 — 1,669
1,677 (2,306) 1,669
At 31 December 2007
(2,445)
3,485
1,040
Capital contribution from holding company Company RM’000 2,037 747 (2,784)
At 1 January 2008 Share options granted under EES: recognised in income statement Transfer to retained earnings upon expiry of EES (Note 31)
At 31 December 2008
At 1 January 2007 Share options granted under EES: recognised in income statement
1,286 751
At 31 December 2007
2,037
The nature and purpose of each category of reserve are as follows:
—
(a) Foreign currency translation reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency. It is also used to record the exchange differences arising from monetary items which form part of the Group’s net investment in foreign operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation.
200 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
30 OTHER RESERVES (continued) (b) Capital contribution from holding company This represents the equity-settled share options granted to employees. It is made up of the cumulative value of services received from employees recorded on grant of share options under the Employee Equity Scheme of UEM for eligible employees of PEB as explained in Note 4.2(j)(iv).
The expenses arising from equity-settled share-based payment transactions that have been included in the employee costs for the Group is RM944,000 (2007: RM1,669,000) and for the Company is RM747,000 (2007: RM751,000).
Upon expiration of the Scheme on 22 October 2008, the amount recognised in the share option reserve was tranferred to retained earnings (refer Note 4.2 (j)(iv)).
31 RETAINED EARNINGS Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 3,329,186 4,429 1,079,333
2,506,343 — 1,247,843
488,920 2,784 810,199
215,999 — 697,921
Dividends
4,412,948 (725,000)
3,754,186 (425,000)
1,301,903 (725,000)
913,920 (425,000)
Balance at end of year
3,687,948
3,329,186
576,903
488,920
Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders (“single tier system”). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard the 108 balance and opt to pay dividends under the single tier system. The change in the tax legislation also provides for the 108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007.
The Company has elected for the irrevocable option to disregard the 108 balance as at 31 December 2008. Hence, the Company will be able to distribute dividends out of its entire retained earnings as at 31 December 2008 under the single tier system. The Company did not elect for the irrevocable option to disregard the 108 balance as at 31 December 2007.
In addition, as at 31 December 2008, PLUS has tax exempt profits available for distribution of approximately RM5,032 million (2007: RM5,032 million), subject to the agreement of the Inland Revenue Board.
201 PLUS Expressways Berhad Annual Report 2008
Balance at beginning of year Transfer from share option reserve (Note 30) Profit for the year
Notes to The Financial Statements
continued
32 LONG TERM AND SHORT TERM FINANCIAL LIABILITIES Group Company Note 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 Long Term Financial Liabilities PEB PLUS SPV Sukuk
(a)(i)
776,174
—
776,174
—
(a)(ii) (a)(iii) (a)(iv)
2,450,000 1,660,015 1,322,056
3,000,000 1,561,724 1,238,078
— — —
— — —
(a)(v)
950,154
592,425
—
—
ELITE BAIDS
(a)(vi)
635,859
704,029
—
—
KLBK BAIDS
(a)(vii)
171,346
—
—
—
7,965,604
7,096,256
776,174
—
PLUS Senior Sukuk Zero Coupon Sukuk Series 1 (“Sukuk Series 1”) Zero Coupon Sukuk Series 2 (“Sukuk Series 2”) Sukuk Musyarakah Medium Term Notes Programme of RM4,500 million nominal value (“Sukuk Series 3”)
At 31 December
Group Note 2008 2007 RM’000 RM’000 Short Term Financial Liabilities PLUS Senior Sukuk
(a)(ii)
550,000
550,000
ELITE BAIDS
(a)(vi)
68,169
42,838
KLBK BAIDS
(a)(vii)
4,963
—
623,132
592,838
At 31 December
202 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
32 LONG TERM AND SHORT TERM FINANCIAL LIABILITIES (continued) PEB (a)(i) PLUS SPV Sukuk Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 761,611 14,563
— —
761,611 14,563
— —
776,174
—
776,174
—
Repayable after 12 months
776,174
—
776,174
—
The PLUS SPV Sukuk are constituted by a Trust Deed dated 13 June 2008 entered into by PLUS SPV Berhad as the Issuer and the Trustee for the holders of the PLUS SPV Sukuk.
PEB through an independent special purpose company (whose shares are held by a share trustee for and on behalf of charitable organisations), PLUS SPV Berhad had on 27 June 2008 issued RM1.055 billion nominal value Sukuk under a medium term notes programme of up to RM4.0 billion nominal value Sukuk based on the Islamic principle of Musyarakah to investors identified via a book-building process. The PLUS SPV Sukuk were issued in 7 series, with maturities commencing from 2013 to 2019.
The profit rate is 2.0% per annum and the profit is payable semi-annually on each series of the PLUS SPV Sukuk.
The terms of the PLUS SPV Sukuk contain various covenants including the following:
PEB (the Obligor) shall maintain an annual Debt to Equity Ratio (“the D:E Ratio”) not exceeding 1.5 times throughout the tenure of the Sukuk Programme. The D:E Ratio is the ratio of indebtedness of the Obligor represented by:
Principal Accreted profit element
(i)
the obligations of the Obligor under the Purchase Undertaking (which is deemed to be an amount equivalent to the aggregate nominal value of all outstanding Sukuk, adjusted to be equivalent to the accreted value on the date the D:E Ratio is calculated);
(ii) all other indebtedness of the Obligor for borrowed monies (be it actual or contingent and whether Islamic or conventional) for principal only, hire purchase obligations, finance lease obligations, net exposure determined on a marked to market basis under any derivative instrument and obligations/contingent liabilities under guarantees/call or put options of the Obligor but excluding (a) any inter company loans which are subordinated to the Sukuk, (b) non-recourse indebtedness incurred by the Obligor’s subsidiaries and (c) any performance bonds/performance guarantees/shareholder undertakings in relation to cost overruns issued by the Obligor in respect of projects undertaken by the Obligor and/or its subsidiaries;
to the shareholders’ funds of the Obligor including, if any, preference equity, subordinated shareholders’ advances/ loans and retained earnings/losses less intangibles (if any).
203 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
32 LONG TERM AND SHORT TERM FINANCIAL LIABILITIES (continued) PEB (continued) (a)(i) PLUS SPV Sukuk (continued) The D:E Ratio shall be calculated on a yearly basis and as and when such calculations are required to be made under the terms of the transaction documents during the tenor of the Sukuk Programme. In the case of D:E Ratio calculated on a yearly basis, such calculations shall be based on the latest consolidated audited accounts of the Obligor and in the case of D:E Ratio calculated at any other times, the calculations shall be based on the latest consolidated management accounts of the Obligor.
The maturity profile of PLUS SPV Sukuk is analysed in Note 34, ‘Maturity Profile of Bonds and Borrowings’.
The relevant details of the security arrangements are stated in Note 35, ‘Security Arrangements of Borrowings and Bonds’.
PLUS (a)(ii) Senior Sukuk Group 2008 2007 RM’000 RM’000
Repayable within 12 months Repayable after 12 months
550,000 2,450,000
550,000 3,000,000
3,000,000
3,550,000
The Senior Sukuk is constituted by the Trust Deed dated 18 December 2007 entered into by PLUS and the Trustee for the holders of the Senior Sukuk.
The Senior Sukuk was issued on 27 December 2007 with a nominal value of RM3,550 million under the Islamic principle of Musyarakah which is a contract of partnership in a venture. Under this structure, potential investors formed a Musyarakah among themselves to invest in the Senior Sukuk.
The Senior Sukuk were issued in 10 series as primary sukuk with maturities commencing from 2008 to 2017. The expected return specified for each series of primary sukuk is represented by secondary sukuk. The face value of secondary sukuk are computed based on the expected return specified for each series of primary sukuk i.e. from 5.70% to 7.50% per annum. The secondary sukuk are redeemable every six months commencing 30 May 2008.
The proceeds of the Senior Sukuk was utilised to replace BAIDS of which RM3,550 million in nominal value was outstanding. Hence, no additional proceeds were raised from the issuance of the Senior Sukuk. The Senior Sukuk was issued at par to the face value, to the existing holders of the BAIDS in exchange for the surrender and cancellation by such holders of their respective BAIDS. The existing holders of the BAIDS were allotted with such amount of the nominal value of the Senior Sukuk which is equivalent to the amount of nominal value of the BAIDS as held by them at a certain cut off date.
204 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
32 LONG TERM AND SHORT TERM FINANCIAL LIABILITIES (continued) PLUS (continued) (a)(ii) Senior Sukuk (continued) The terms of the Senior Sukuk contain various covenants including the following: (i)
PLUS must maintain a Finance Service Coverage Ratio (“FSCR”) of at least 1.25 times on each calculation date, being 30 June and 31 December in each year. The FSCR shall be at least 2.25 times prior to any payment or declaration of dividend, or any advances;
(ii) PLUS must maintain a Finance Service Reserve Account (“FSRA”) at any time during the tenure of the Senior Sukuk which has a minimum balance equivalent to the next 12 months’ finance service due under the Senior Sukuk. The amount therein may be withdrawn to meet any payment under the Senior Sukuk, provided always that PLUS shall transfer monies into such account within 30 days from such withdrawal to maintain the minimum balance described above; and (iii) PLUS must maintain a Maintenance Reserve Account (“MRA”) at any time during the tenure of the Senior Sukuk which has a minimum balance equivalent to the projected capital expenditure of the Expressways for the next six months. Such capital expenditure shall exclude the total cost for the Additional Works of up to RM1,042.48 million. However, a minimum balance may be withdrawn to meet any payment of the projected capital expenditure for Expressways, subject always to the condition that PLUS shall transfer monies into the MRA within 30 days of such withdrawal to maintain the minimum balance described above.
The maturity profile of Senior Sukuk is analysed in Note 34, ‘Maturity Profile of Bonds and Borrowings’.
The relevant details of the security arrangements are stated in Note 35, ‘Security Arrangements of Borrowings and Bonds’.
(a)(iii) Sukuk Series 1 Group 2008 2007 RM’000 RM’000
Sukuk Series 1 Accreted profit element
1,148,930 511,085
1,148,930 412,794
1,660,015
1,561,724
The Sukuk Series 1 are constituted by a Trust Deed dated 28 September 2006 entered into by PLUS and the Trustee for the holders of the Sukuk Series 1.
Sukuk Series 1 was issued on 10 October 2006 under the Islamic principle of Musyarakah with a nominal value of RM2,260 million via exchange for BBA Serial Bonds previously issued on 20 December 2002. Sukuk Series 1 are negotiable non-interest bearing secured Bonds in bearer form evidencing a promise by PLUS to pay stated sums on specified dates. The Sukuk Series 1 are issued in 12 series with tenures from 8.5 years to 14 years from the date of issue. The profit margin ranges from 5.75% to 6.95% per annum and is compounded semi-annually.
205 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
32 LONG TERM AND SHORT TERM FINANCIAL LIABILITIES (continued) PLUS (continued) (a)(iii) Sukuk Series 1 (continued) The Sukuk Series 1 entitle holders of the Sukuk Series 1 to a one-off payment of the Exercise Price on the Maturity Date and Distribution on the Distribution Date.
The maturity profile of Sukuk Series 1 is analysed in Note 34, ‘Maturity Profile of Bonds and Borrowings’.
The relevant details of the security arrangements are stated in Note 35, ‘Security Arrangements of Borrowings and Bonds’.
The terms of the Trust Deed prescribes that in the event of default, the nominal amount outstanding of the Sukuk Series 1 will become immediately due and payable.
(a)(iv) Sukuk Series 2 Group 2008 2007 RM’000 RM’000
Sukuk Series 2 Accreted profit element
1,047,972 274,084
1,047,972 190,106
1,322,056
1,238,078
The Sukuk Series 2 are constituted by a Trust Deed dated 28 September 2006 entered into by PLUS and the Trustee for the holders of the Sukuk Series 2.
Sukuk Series 2 was issued on 10 October 2006 under the Islamic principle of Musyarakah with a nominal value of RM2,410 million via exchange for Zero Serial BBA previously issued on 17 June 2005. Sukuk Series 2 are negotiable non-interest bearing secured Bonds in bearer form evidencing a promise by PLUS to pay stated sums on specified dates. The Sukuk Series 2 are issued in 4 series with tenures from 11 years to 14 years from the date of issue. The profit margin ranges from 6.35% to 6.95% per annum and is compounded semi-annually.
The Sukuk Series 2 entitle holders of the Sukuk Series 2 to a one-off payment of the Exercise Price on the Maturity Date and Distribution on the Distribution Date.
The maturity profile of Sukuk Series 2 is analysed in Note 34, ‘Maturity Profile of Bonds and Borrowings’.
The relevant details of the security arrangements are stated in Note 35, ‘Security Arrangements of Borrowings and Bonds’.
The terms of the Trust Deed prescribes that in the event of default, the nominal amount outstanding of the Sukuk Series 2 will become immediately due and payable.
206 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
32 LONG TERM AND SHORT TERM FINANCIAL LIABILITIES (continued) PLUS (continued) (a)(v) Sukuk Series 3 Group 2008 2007 RM’000 RM’000
Sukuk Series 3 Accreted profit element
856,235 93,919
548,095 44,330
950,154
592,425
The Sukuk Series 3 are constituted by a Trust Deed dated 28 September 2006 entered into by PLUS and the Trustee for the holders of the Sukuk Series 3.
PLUS issued 2 tranches of Sukuk Series 3 under the Islamic principle of Musyarakah with a nominal value of RM1,375 million on 10 October 2006 with tenures of 14 years and 15 years from the date of issue. Further, PLUS has issued the third tranche with a nominal value of RM700 million on 29 May 2008 with a tenure of 14 years from the date of issue. Sukuk Series 3 are negotiable non-interest bearing secured Medium Term Notes (“MTNs”) in bearer form evidencing a promise by PLUS to pay stated sums on specified dates.
The profit margin ranges from 5.95% to 6.52% per annum and is compounded semi-annually.
There will be two (2) types of Sukuk Series 3 namely those MTNs with Periodic Payments and those MTNs without Periodic Payments provided that Sukuk Series 3 involving MTNs with Periodic Payments may only be issued upon either (a) redemption in full of the Senior Sukuk, the Sukuk Series 1 and the Sukuk Series 2; or (b) consent of the holders of the Senior Sukuk, the Sukuk Series 1 and the Sukuk Series 2; or (c) from 30 June 2019 onwards, whichever earlier.
MTNs with Periodic Payments will be entitled to Periodic Payments and a payment of the Exercise Price.
MTNs without Periodic Payments will only be entitled to a one-off payment of the Exercise Price on the Maturity Date and Distribution on the Distribution Date.
The maturity profile of Sukuk Series 3 is analysed in Note 34, ‘Maturity Profile of Bonds and Borrowings’.
The relevant details of the security arrangements are stated in Note 35, ‘Security Arrangements of Borrowings and Bonds’.
The terms of the Trust Deed prescribes that in the event of default, the nominal amount outstanding of the Sukuk Series 3 will become immediately due and payable.
207 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
32 LONG TERM AND SHORT TERM FINANCIAL LIABILITIES (continued)
ELITE (a)(vi) BAIDS Group 2008 2007 RM’000 RM’000 710,000 (5,972)
755,000 (8,133)
704,028
746,867
68,169 635,859
42,838 704,029
704,028
746,867
BAIDS Accreted profit element
Repayable within 12 months Repayable after 12 months
On 28 February 2003, ELITE issued an Islamic debt security, the BAIDS of RM800 million to investors, where part of the proceeds of the issuance of the BAIDS was used to repay an amount then owing to commercial lenders comprising banks or merchant banks, the Employees’ Provident Fund Board and Danaharta Urus Sdn Bhd (collectively known as “TL Facility Lenders”) under a Term Loan Facility Arrangement and commercial lenders who are discount houses and fund managers (collectively known as “Scheduled Creditors”) under a Scheduled Payment Arrangement.
The BAIDS are negotiable non-interest bearing secured Primary Bonds together with non-detachable Secondary Bonds. The Primary Bonds were issued in 10 tranches, with maturity commencing from 2006 to 2015.
Each tranche of the BAIDS is divided into a specific number of Primary Bonds in pre-determined face values to which are attached an appropriate number of Secondary Bonds, the face value of which represents the semiannual profit of the bonds. The Secondary Bonds are redeemable every six months after the issue date. The face value of the Secondary Bonds are computed on the profit margins specified for each tranche of the Primary Bonds, i.e. from 5.5% to 8.0% per annum.
The terms of BAIDS contain various covenants, including the following: (i)
ELITE must maintain a Finance Service Cover Ratio of at least 1.50 times at all times; and
(ii) ELITE must maintain a Finance Service Reserve Account (“FSRA”) during the tenure of the BAIDS, which has a minimum balance equivalent to the aggregate of the nominal value of the outstanding BAIDS due in the next 6 months. The amount therein may only be withdrawn to meet the payments due and owing under the BAIDS and permitted investments under the BAIDS agreement.
The maturity profile of BAIDS is analysed in Note 34, ‘Maturity Profile of Bonds and Borrowings’.
The relevant details of the security arrangements are stated in Note 35, ‘Security Arrangements of Borrowings and Bonds’.
The terms of the Trust Deed prescribes that in the event of default, the nominal amount of the BAIDS, that is the Cost Portion of the Sale Portion, and the profit element next due will become immediately due and payable.
208 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
32 LONG TERM AND SHORT TERM FINANCIAL LIABILITIES (continued) KLBK (a)(vii) BAIDS Group 2008 2007 RM’000 RM’000 163,176 13,133
— —
176,309
—
4,963 171,346
— —
176,309
—
BAIDS Accreted profit element
Repayable within 12 months Repayable after 12 months
The KLBK BAIDS are constituted pursuant to a Trust Deed between KLBK and Malaysian Trustees Berhad dated 5 July 2005. The Company issued RM247,000,000 secured Primary BAIDS based on the Islamic financing principle of Bai Bithaman Ajil.
The Primary BAIDS comprise 25 series, with total proceeds of RM173,176,140 and redemption value of RM247,000,000, maturing annually from year 2005 to year 2022. Attached to the Primary BAIDS are non-detachable Secondary BAIDS which represents the profit element attributable to the Primary BAIDS. The profit rate is 4.0% per annum and the profit is payable semi-annually on each series of the Primary BAIDS. The Secondary BAIDS have a face value of RM119,540,000.
The profit element on the Primary BAIDS is recognised as finance cost over the tenure of the Primary BAIDS’ series and is charged to the income statement as an expense in the financial year it is incurred.
The maturity period of BAIDS is analysed in Note 34, “Maturity Profit of Bonds and Borrowings”.
The relevant details of the security arrangements are stated in Note 35, ‘Security Arrangements of Borrowings and Bonds’.
33 LONG TERM AND SHORT TERM BORROWINGS AND AMOUNT DUE TO GOVERNMENT Group Company Note 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Long Term Borrowings Short Term Borrowings Amount due to Government
(a) (b) (c)
1,551,694 332,801 38,096
1,486,683 904,347 38,096
— 325,806 —
— 898,466 —
1,922,591
2,429,126
—
898,466
209 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
33 LONG TERM AND SHORT TERM BORROWINGS AND AMOUNT DUE TO GOVERNMENT (continued) Group Company Note 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 (a) Long Term Borrowings (Repayable after 12 months) ELITE Government Loans – Amount drawndown – Additional Government Loan
89,917 300,000
89,917 300,000
— —
— —
389,917
389,917
—
—
993,269 81,051
954,765 38,504
— —
— —
(a)(i)
LINKEDUA Government Loan – Principal and capitalised interest – Accrued interest
(a)(ii)
1,074,320
993,269
—
—
PLUS BKSP Term loan
(a)(iii)
87,457
103,497
—
—
1,551,694
1,486,683
—
—
6,995
5,881
—
—
PEB Bridging Loans – Bridging Loan 1 – Accrued interest
79,300 185
16,874 29
79,300 185
16,874 29
79,485
16,903
79,485
16,903
– Bridging Loan 2 – Accrued interest
245,949 372
880,000 1,563
245,949 372
880,000 1,563
246,321
881,563
246,321
881,563
Total Bridging Loans
325,806
898,466
325,806
898,466
Total Short Term Borrowings
332,801
904,347
325,806
898,466
38,096
38,096
—
—
Total Long Term Borrowings
(b) Short Term Borrowings (Repayable within 12 months) PLUS BKSP Term loan (a)(iii)
(c) ELITE Amount due to Government
210 PLUS Expressways Berhad Annual Report 2008
(b)(i)
(c)(i)
Notes to The Financial Statements
continued
33 LONG TERM AND SHORT TERM BORROWINGS AND AMOUNT DUE TO GOVERNMENT (continued)
ELITE (a)(i) Government Loans ELITE entered into an agreement on 15 December 2000 with the Government whereby the Government provides financing up to a maximum of RM100 million, at an interest rate of 8% per annum capitalised on an annual basis.
The Government and ELITE entered into a Supplemental Loan Agreement (“SLA”) and Additional Government Loan Agreement (“AGLA”) dated 15 January 2003, whereby the Government agreed to waive ELITE’s obligation to pay interest on the then existing Government Loans with effect from 15 December 2000 to 31 December 2001 and to provide ELITE with an interest free term loan facility at a principal of RM300 million. It was also agreed that the aforesaid existing Government Loan shall be interest free with effect from 1 January 2002 to the final repayment date.
Pursuant to ELITE’s SLA and AGLA, the Government Loan and Additional Government Loan are repayable in full on 30 June 2015 or on the BAIDS expected final maturity date of 28 February 2015, whichever earlier.
The maturity profile of the ELITE’s Government Loans is analysed in Note 34, ‘Maturity Profile of Bonds and Borrowings’.
The relevant details of the security arrangements are stated in Note 35, ‘Security Arrangements of Borrowings and Bonds’.
LINKEDUA (a)(ii) Government Loan LINKEDUA’s Government Loan is repayable in 13 semi-annual installments ranging from RM58 million to RM346 million commencing from 14 June 2014 and bears interest at rate of 8% per annum (2007: 8% per annum).
The maturity profile of the LINKEDUA’s Government Loan is analysed in Note 34, ‘Maturity Profile of Bonds and Borrowings’.
The relevant details of the security arrangements are stated in Note 35, ‘Security Arrangements of Borrowings and Bonds’.
PLUS BKSP (a)(iii) Term Loan The term loan is denominated in Indian Rupees, bears interest rate of 10.00% per annum and secured by future toll collection of PLUS BKSP.
The maturity profile of the borrowing is analysed in Note 34, ‘Maturity Profile of Bonds and Borrowings’.
The relevant details of the security arrangements are stated in Note 35, ‘Security Arrangements of Borrowings and Bonds’.
211 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
33 LONG TERM AND SHORT TERM BORROWINGS AND AMOUNT DUE TO GOVERNMENT (continued) PEB (b)(i) Bridging Loans PEB has entered into loan agreements with CIMB Bank for Bridging Term Loans 1 and 2 on 19 September 2007 and 13 December 2007 respectively. These Bridging Loans are interest bearing loans on clean basis and the facilities shall be repaid from the proceeds of the issuance of the PLUS SPV Sukuk. Bridging Loan 1 has a tenure of six (6) months from the date of the first drawdown of the loan with an option to extend for a further 6 months at the Lender’s discretion or upon first issuance of the PLUS SPV Sukuk, whilst Bridging Loan 2 has a tenure of three (3) months from the date of the first drawdown of the loans with an option to extend for a further 3 months at the Lender’s discretion or upon first issuance of the PLUS SPV Sukuk.
During the year Bridging Loan 2 has been partially repaid with an amount of RM760.05 million from the proceeds of the first issuance of the PLUS SPV Sukuk. Subsequently, both Bridging Loan 1 and 2 have been extended to 13 December and 18 December 2009 respectively.
The maturity profile of the borrowing is analysed in Note 34, ‘Maturity Profile of Bonds and Borrowings’.
ELITE (c)(i) Amount due to Government Under the Supplemental Concession Agreement entered on 9 January 1997 between the Government of Malaysia and ELITE, ELITE undertook to implement the design, construction, maintenance, operation and management of three additional interchanges namely the Putrajaya Interchange, the proposed Salak Tinggi Interchange (later relocated to Ampar Tenang and thereafter called the Ampar Tenang Interchange) and Bandar Baru Nilai Interchange along the NSECL Expressway, and an extension of the KLIA Expressway (“Additional Expressway”).
To assist in the financing of the acquisition of the additional land required of the above Additional Expressway, the Government of Malaysia agreed to pay to third parties on behalf of ELITE an amount in aggregate not exceeding RM120 million (referred to as the “Reimbursement Land Cost”). The Reimbursement Land Cost is interest free and is payable by ELITE to the Government in four equal installments, as follows:
Date of (i) On (ii) On (iii) On (iv) On
Repayment Percentage or before 31 December 2015 25% of Reimbursement or before 31 December 2016 25% of Reimbursement or before 31 December 2017 25% of Reimbursement or before 31 December 2018 25% of Reimbursement
Land Land Land Land
Cost Cost Cost Cost
As at 31 December 2008, the amount payable to the Government was RM38,095,662 (2007: RM38,095,662).
212 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
34 MATURITY PROFILE OF BONDS AND BORROWINGS
Amounts outstanding and repayable as at 31 December 2008 and 31 December 2007 of the Group are tabulated as follows:
Between 1 Within 1 and 2 Year Years Note RM’000 RM’000
Between 2 and 5 After 5 Years Years RM’000 RM’000
Total RM’000
31 December 2008 PEB PLUS SPV Sukuk Bridging Loans
32(a)(i) 33(b)(i)
— 325,806
— —
291,124 —
485,050 —
776,174 325,806
PLUS Senior Sukuk Sukuk Series 1 Sukuk Series 2 Sukuk Series 3
32(a)(ii) 32(a)(iii) 32(a)(iv) 32(a)(v)
550,000 — — —
1,100,000 342,691 — —
950,000 902,085 — —
400,000 415,239 1,322,056 950,154
3,000,000 1,660,015 1,322,056 950,154
32(a)(vi) 33(a)(i)
68,169 —
83,478 —
382,482 —
169,899 389,917
704,028 389,917
LINKEDUA Government Loan
33(a)(ii)
—
—
—
1,074,320
1,074,320
KLBK BAIDS
32(a)(vii)
4,963
7,769
15,592
147,985
176,309
PLUS BKSP Term loan
33(a)(iii)
6,995
14,424
71,542
1,491
94,452
955,933
1,548,362
2,612,825
ELITE BAIDS Government Loans
5,356,111 10,473,231
213 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
34 MATURITY PROFILE OF BONDS AND BORROWINGS (continued) Between 1 Within 1 and 2 Year Years Note RM’000 RM’000
Between 2 and 5 After 5 Years Years RM’000 RM’000
Total RM’000
31 December 2007 PEB Bridging Loans
33(b)(i)
898,466
—
—
—
898,466
PLUS Senior Sukuk Sukuk Series 1 Sukuk Series 2 Sukuk Series 3
32(a)(ii) 32(a)(iii) 32(a)(iv) 32(a)(v)
550,000 — — —
550,000 — — —
1,450,000 627,078 — —
1,000,000 934,646 1,238,078 592,425
3,550,000 1,561,724 1,238,078 592,425
32(a)(vi) 33(a)(i)
42,838 —
68,169 —
83,480 —
552,380 389,917
746,867 389,917
LINKEDUA Government Loan
33(a)(ii)
—
—
—
993,269
993,269
PLUS BKSP Term loan
33(a)(iii)
5,881
21,026
22,692
59,779
109,378
1,497,185
639,195
2,183,250
5,760,494
10,080,124
ELITE BAIDS Government Loans
35 SECURITY ARRANGEMENTS OF BORROWINGS AND BONDS
The security arrangements as at 31 December 2008 in connection with the Group’s borrowings and bonds are as follows: (i) Security arrangement for PLUS SPV Sukuk (a) A first ranking debenture incorporating a fixed and floating charge over all present and future assets of the Issuer; and (b) An assignment of the Issuer’s revenue and income including but not limited to any dividends and distributions, whether income or capital in nature.
214 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
35 SECURITY ARRANGEMENTS OF BORROWINGS AND BONDS (continued) (ii) Security arrangement for Senior Sukuk (a) An assignment and charge (ranking first in point of security) over the Toll Amounts, Credit Balances, Additional Project Accounts (save and except in respect of the Additional Toll Revenue Account, it would exclude the ELITE Amount) and PLUS Amount (except for Distribution Amount 1, Distribution Amount 2, Distribution Amount 3, Charged Amount 1, Charged Amount 2 and Charged Amount 3 and the monies in the Proceeds Account, Performance Bonds Proceeds Account, Distribution Account 1, Distribution Account 2, Distribution Account 3, Payment Account 1, Payment Account 2 and Payment Account 3 and all the credit balances therein) (“Assignment and Charge”). (b) An assignment (ranking first in point of security) of the rights over the Concession, Construction Guarantees (other than the Performance Bonds), Construction Contracts and Insurance. (c) A debenture over the fixed and floating assets of PLUS (other than those security interest already covered under (a) and (b) above, the Performance Bonds, the Performance Bonds Proceeds Account, the Proceeds Account, Distribution Account 1, Distribution Account 2, Distribution Account 3, Payment Account 1, Payment Account 2, Payment Account 3 and all the credit balances therein as well as the Charged Amount 1, Charged Amount 2 and Charged Amount 3). (d) An assignment (ranking first in point of security) over PLUS’ rights, title and interest in the Additional Project Agreements. (e) An assignment (ranking second in point of security after the Government) over the Performance Bonds and Performance Bonds Proceeds Account.
(hereinafter referred to as the “Security”)
The security documents shall all form part of the terms of the Senior Sukuk.
The Security Trustee shall hold the benefit of the Security for the Designated Debt financiers (as defined below) ranking pari passu amongst themselves subject to the following: (a) the security in respect of the Performance Bonds and Performance Bonds Proceeds Account shall rank second after the assignment of the same in favour of the Government; and (b) the security in respect of the FSRA (as hereinafter defined) shall rank as between the Designated Debt financiers as follows: (i)
ranking first, the Sukukholders; and
(ii) ranking second, the lenders of the Maintenance Bond Facility and Overdraft Facility (excluding the Trade Lines) which shall rank pari passu amongst themselves.
215 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
35 SECURITY ARRANGEMENTS OF BORROWINGS AND BONDS (continued) (ii) Security arrangement for Senior Sukuk (continued) The Distribution Account 1 (and all credit balances therein) and the Distribution Amount 1, and the Payment Account 1 (and all credit balances therein) and the Charged Amount 1 are excluded from the Security and is held for the benefit of/charged to the holders of the Sukuk Series 1 respectively.
The Proceeds Account and all credit balances in the Proceeds Account are excluded from the Security and are for the benefit of the Government.
The Distribution Account 2 (and all credit balances therein) and the Distribution Amount 2, and the Payment Account 2 (and all credit balances therein) and the Charged Amount 2 are excluded from the Security and is held for the benefit of/charged to the holders of the Sukuk Series 2 respectively.
The Distribution Account 3 (and all credit balances therein) and the Distribution Amount 3, and the Payment Account 3 (and all credit balances therein) and Charged Amount 3 are excluded from the Security and is held for the benefit of/charged to the holders of the Sukuk Series 3.
(iii) Security arrangements for Sukuk Series 1 (a) Assignment over the Sukuk Series 1 Charged Amounts; and (b) Charge over Payment Account 1.
The Sukuk Series 1 Security Account to receive the Sukuk Series 1 Charged Amounts shall be solely managed by the Sukuk Series 1 Trustee.
The Sukuk Series 1 Charged Amounts are the sum not exceeding RM400 million of the positive Cash Flow Proceeds per calendar year in respect of the period commencing 1 January 2011 to 31 December 2015 and RM260 million in respect of the period from 1 January 2016 to 31 December 2016.
Determination of the Cash Flow Proceeds shall be in the following manner: – Six months prior to and ending on the date falling 65 days before maturity date of the Sukuk Series 1 (the “Relevant Period”), PLUS shall determine the excess cash flow of PLUS (other than proceeds from the issuance of new shares by PLUS and excluding the FSRA and MRA) at the end of each Relevant Period after providing or payment, as the case may be, for the following: (i)
for PLUS’s budgeted operating and capital expenditure requirements for the following Relevant Period;
(ii) for such of the Maintenance Bond facility and Overdraft facility as remains outstanding; (iii) to the FSRA and MRA during the said Relevant Period; and (iv) in respect of the redemption of Senior Sukuk during the said Relevant Period.
216 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
35 SECURITY ARRANGEMENTS OF BORROWINGS AND BONDS (continued) (iv) Security arrangements for Sukuk Series 2 (a) Assignment over the Sukuk Series 2 Charged Amounts; and (b) Charge over Payment Account 2.
The Sukuk Series 2 Charged Amounts in relation to each series of the Sukuk Series 2 shall be deposited into the Sinking Fund Account within five (5) days after the certification of the Cash Flow Proceeds by the auditors (which shall be within thirty (30) days from the end of each Determination Period) and in any event not less than 30 days prior to the maturity date of the relevant series of the Sukuk Series 2.
Determination of the Cash Flow Proceeds shall be in the following manner: – PLUS shall determine its excess revenue and income (other than proceeds from the issuance of new shares by PLUS and excluding the FSRA and MRA) at the end of a Determination Period after providing or payment, as the case may be, for the following: (i)
for PLUS’s budgeted operating and capital expenditure requirements for the following Determination Period;
(ii) for such of the Maintenance Bond facility and Overdraft facility as remains outstanding; (iii) to the FSRA and MRA during the said Determination Period; (iv) in respect of the Senior Sukuk during the said Determination Period; and (v) in respect of the Sukuk Series 1 during the said Determination Period.
“Determination Period” means the period beginning six (6) months and 65 days prior to the maturity date of each tranches of the Sukuk Series 2 and ending on the date falling sixty five (65) days before the maturity date of that tranches of the Sukuk Series 2.
Tranches Sukuk Series 2 Maturity Date Charged Amounts (years from the (RM million) Issue date)
1 2 3 4
350.0 650.0 800.0 610.0
11 12 13 14
Total
The proceeds in the Sinking Fund Account shall be utilised towards redemption of the Sukuk Series 2 on their respective maturity dates. The Sinking Fund Account shall be operated solely by the Trustee.
2,410.0
217 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
35 SECURITY ARRANGEMENTS OF BORROWINGS AND BONDS (continued) (v) Security arrangements for Sukuk Series 3 (a) Assignment over the Sukuk Series 3 Charged Amounts; and (b) Charge over Payment Account 3.
The Sukuk Series 3 Charged Amounts in relation to each series of the Sukuk Series 3 shall be deposited into the Sinking Fund Account within five (5) days after the certification of the Cash Flow Proceeds by the auditors (which shall be within thirty (30) days from the end of each Determination Period) and in any event not less than 30 days prior to the maturity date of the relevant series of the Sukuk Series 3.
Determination of the Cash Flow Proceeds shall be in the following manner: – PLUS shall determine its excess revenue and income (other than proceeds from the issuance of new shares by PLUS and excluding the FSRA and MRA) at end of Determination Period after providing or payment, as the case may be, for the following: (i)
for PLUS’s budgeted operating and capital expenditure requirements for the following Determination Period;
(ii) for such of the Maintenance Bond facility and Overdraft facility as remains outstanding; (iii) to the FSRA and MRA during the said Determination Period; (iv) in respect of the Senior Sukuk during the said Determination Period; (v) in respect of the Sukuk Series 1 during the said Determination Period; and (vi) in respect of the Sukuk Series 2 during the said Determination Period.
“Determination Period” means the period beginning six (6) months and 65 days prior to the maturity date of each tranches of the Sukuk Series 3 and ending on the date falling sixty five (65) days before the maturity date of that tranches of the Sukuk Series 3.
Tranches Sukuk Series 3 Maturity Date Charged Amounts (years from the (RM million) Issue date)
1 2 3
Total
The proceeds in the Sinking Fund Account shall be utilised towards redemption of the Sukuk Series 3 on their respective maturity dates. The Sinking Fund Account shall be operated solely by the Trustee.
218 PLUS Expressways Berhad Annual Report 2008
675.0 700.0 700.0
14 15 14
2,075.0
Notes to The Financial Statements
continued
35 SECURITY ARRANGEMENTS OF BORROWINGS AND BONDS (CONT’D) (vi) Security arrangements for ELITE’s BAIDS, Government Loan and Additional Government Loan The security arrangements in connection with ELITE’s BAIDS, Government Loan and Additional Government Loan (collectively referred to as the “Secured Indebtedness”) are as follows: a)
By way of a first fixed charge, over the Credit Balances, Revenue Account, Additional Operating Account and Finance Service Account;
b)
By way of a first floating charge, over the Capex Account and Operations Account;
c)
An assignment of ELITE’s rights, title, benefits and interest in relation to the toll derived or arising under the Concession Agreement;
d)
An assignment of ELITE’s rights, title, benefits and interest under the Toll Revenue Collection Agreement made between ELITE and PLUS;
e)
A fixed and floating charge over ELITE’s present and future assets and undertakings;
f)
An assignment over the Insurances executed or to be executed by the ELITE; and
g)
An assignment of ELITE’s rights, title, benefits and interest under the Concession, Advertising Agreement, Maintenance Work Contract, Project Management Agreement, Maintenance Management & Technical Professional Service Agreement, Electrical, Electronic & Energised Systems Maintenance Agreement, Service Provider Agreement and the Performance Bond.
(hereinafter referred to as “the Security Documents”)
The Security Trustee shall hold the benefit of the Security Documents for the benefits of the Secured Indebtedness ranking amongst themselves in the following manner:
a)
ranking first, the Government Loans and the BAIDS shall rank pari passu among themselves; and
b)
ranking second, the Additional Government Loan
save and except for: a)
The Security in respect of ELITE’s Concession Agreement, Novation Agreement, SCA, SSCA, and TSCA, which shall be held by the Security Trustee only for the BAIDS.
b)
The Security in respect of the Performance Bonds shall rank in the following manner: • firstly, the Government Loans; and • secondly, the BAIDS.
219 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
35 SECURITY ARRANGEMENTS OF BORROWINGS AND BONDS (continued) (vii) Security arrangements for LINKEDUA’s Government Loan The security arrangements for LINKEDUA’s Government Loan are as follows: (a) an assignment and charge (ranking pari passu in point of security) of the rights over the Construction Contracts, Insurance and Performance Bonds; (b) charge over Security Account 3 and Security Account 5 (ranking pari passu in point of security) being the accounts maintained for the surplus cash flow for the purpose of Government Loan repayment and for the proceeds of any issuance of new shares respectively. (c) a charge over the Toll Amounts and the credit balances therein (ranking pari passu in point of security); and (d) a debenture over the fixed and floating assets of LINKEDUA (other than those security already covered under (a) and (b) above) ranking pari passu in point of security. (viii) Security arrangements for KLBK’s BAIDS The security arrangement for KLBK’s Primary BAIDS are as follows:
Security Under the Debenture (a) by way of first fixed charge: (i)
any freehold or leasehold property from time to time and at any time owned by KLBK;
(ii) all the goodwill of KLBK, any patents, trade marks, copyrights, registered designs and similar assets or rights from time to time and at any time owned by KLBK, and any uncalled capital from time to time and at any time of KLBK; and (iii) all book debts and other debts and all other amounts whatsoever from time to time and at any time due, owing or payable to KLBK, and the benefit of any Security Interests from time to time and at any time held by KLBK in respect of any such debts or amounts including such amounts as invested by KLBK from the amounts standing to the credit of any accounts charged to the Security Agent and any income derived thereon. (b) by way of first floating charge, the undertaking of KLBK and all its other property, assets, revenues and rights, whatsoever and wheresoever, both present and future (including any Permitted Investments not charged pursuant to (viii)(a) above).
Security under the Deed of Assignment (a) all its present and future rights under the Concession Agreement including all amounts from time to time and at any time payable to KLBK thereunder by the Government of Malaysia; (b) all its present and future rights, title and interest in and under the Insurance including all amounts whatsoever payable under the Insurance and all other rights accruing to KLBK thereunder including all claims and any returned premiums; (c) the right to pursue any action, proceeding, suit or arbitration arising in relation to any of the rights assigned to the Security Agent pursuant to this security and to enforce such rights in the name of the Security Agent or of KLBK.
220 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
35 SECURITY ARRANGEMENTS OF BORROWINGS AND BONDS (continued) (viii) Security arrangements for KLBK’s BAIDS (continued) Security under the Charge All its present and future rights, title and interest in and to: (a) the Proceeds; (b) the Designated Accounts; and (c) the Credit Balance.
36 RETIREMENT BENEFITS
PLUS and ELITE operate an unfunded, defined benefit Retirement Benefit Scheme (“the Scheme”) for their personnel whose employment contracts were transferred in 1988 from Malaysian Highway Authority, pursuant to the Concession Agreement. Under the Scheme, eligible employees are entitled to retirement benefits in accordance with a predetermined formula as follows:
Retirement Benefits as at 31 December = (2 X last drawn monthly basic salary X length of service with the company) – EPF Offset* * Defined as total employer’s contributions to the EPF, made at the statutory employer’s contribution rate and accumulated EPF dividend.
The amount recognised in the balance sheet are determined as follows:
Group 2008 2007 RM’000 RM’000
Present value of unfunded defined benefit obligations
The amount recognised in the income statement are as follows:
Current service cost Interest cost
13,714
12,845
685 738
729 667
1,423
1,396
221 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
36 RETIREMENT BENEFITS (continued)
Principal actuarial assumptions used
2008 %
2007 %
6.00 5.00 4.75 – 5.00
6.00 5.00 4.75 – 5.00
Discount rate Expected rate on salary increases EPF dividend rate
The Group valued its retirement benefits obligation in accordance with the actuarial valuation prepared by an independent actuary.
In the current year, RM1,403,783 and RM19,178 was charged to the direct cost of operations and general and administration expenses respectively. In 2007, RM1,321,639 and RM74,923 was charged to the direct cost of operations and general and administration expenses respectively.
Movement in the net liability were as follows:
Group 2008 2007 RM’000 RM’000
At 1 January Recognised in the income statement Acquisition of subsidiaries Contribution paid
12,822 1,423 — (174)
11,403 1,396 176 (153)
At 31 December
14,071
12,822
37 DEFERRED LIABILITIES
Deferred liabilities comprise fees received in advance for future maintenance expenditure to be incurred, in consideration for right-of-way access granted by PLUS and ELITE, and rentals received in advance and toll compensation received by KLBK, analysed as follows:
Group 2008 2007 RM’000 RM’000
Amounts received in advance Amounts recognised
222 PLUS Expressways Berhad Annual Report 2008
156,874 (29,950)
76,166 (24,725)
126,924
51,441
Notes to The Financial Statements
continued
37 DEFERRED LIABILITIES (continued) Group 2008 2007 RM’000 RM’000
Analysed as: Deferred liabilities realisable within 12 months Deferred liabilities realisable after 12 months
1,187 125,737
— 51,441
126,924
51,441
38 TRADE PAYABLES, SUNDRY PAYABLES AND ACCRUALS Group Company Note 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 27,331
17,707
—
—
Sundry payables and accruals Sundry payables Profit element payable on Senior Sukuk Profit element payable on ELITE’s BAIDS Profit element payable on KLBK’s BAIDS Accruals Others
13,520 17,778 15,865 4,345 59,648 657
27,190 20,422 16,668 — 66,185 5,382
1,841 — — — 20,814 300
1,592 — — — 13,851 268
111,813
135,847
22,955
15,711
(a) Trade payables
(b)
(i)
(i)
Trade payables are non-interest bearing and the normal trade credit terms granted to the Group range from 30 days to 60 days.
223 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
39 AMOUNT RECEIVED FROM THE GOVERNMENT FOR ADDITIONAL WORKS Group 2008 2007 RM’000 RM’000 Amount received from the Government Add: Cumulative interest income Less: Additional Works expenditure Compensation for loss of interest income
680,590 46,844 (703,618) (3,371)
680,590 45,479 (678,060) (3,371)
20,445
44,638
On 17 November 2007, PLUS had executed the Proceeds Account Agreement with the Government to formalise the rights, utilisation and administration of the amount received from the Government for the Additional Works of RM680.59 million and the interest earned therefrom. Pursuant to the TSCA, the amount shall be utilised solely for the purposes of the Additional Works and together with the interest earned, have been deposited into the Proceeds Account as disclosed in Note 26.
40 SIGNIFICANT RELATED PARTY TRANSACTIONS Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Dividend income received/receivable from PLUS
—
—
885,000
700,000
Management fees received for expressway operation services rendered by the Company to: – PLUS – LINKEDUA – ELITE
— — —
— 3,478 2,574
94,717 3,589 2,653
91,780 3,478 2,574
Amount received from UEM for settlement of Hartanah Loan following acquisition of LINKEDUA by PEB
—
18,152
—
—
224 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
40 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued) Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Expressways development expenditure works performed for PLUS by: – UEM 10,821 – a subsidiary of UEM, namely: – Teras Teknologi Sdn Bhd (“TERAS”) 12,140 – UEM Builders Berhad (“UEM Builders”) 82,009 – UEM Construction Sdn Bhd 135,433 – OPUS International (M) Bhd (“OPUS”) 625 – Projek Penyelenggaraan Lebuhraya Berhad (“PROPEL”) 98,450
Expressways development expenditure works performed for PLUS BKSP by: – UE Development India Pvt Ltd, a subsidiary of UEM Builders – TERAS, a subsidiary of UEM
26,297
—
—
12,173 20,575 52,641 1,055 90,218
— — — — —
— 261 — — —
710 1,932
80,765 2,488
— —
— —
Expressways development expenditure works performed for ELITE by: – PROPEL, a subsidiary of UEM 19,126 – TERAS, a subsidiary of UEM —
15,520 663
— —
— —
Expressways development expenditure works performed for LINKEDUA by subsidiaries of UEM, namely: – PROPEL – UEM Builders
18,595 2,098
929 22,660
— —
— —
Expressway maintenance expenditure paid/payable to: – subsidiaries of UEM, namely: – Teras Control Systems Sdn Bhd – TERAS – PROPEL
10,889 2,024 203,555
3,147 — 211,563
— — —
— — —
Income from training fees received/receivable from: – PLUS – LINKEDUA – ELITE – Penang Bridge Sdn Bhd, a subsidiary of UEM Builders
— — — —
— 32 24 1
1,251 51 64 —
373 32 24 1
225 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
40 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued) Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Additional Works performed for PLUS by: – UEM – a subsidiary of UEM, namely: – PEB – PROPEL – UEM Construction Sdn Bhd
—
39,834
—
—
— 135 220,428
— 858 427,407
— — —
106 — —
Project management fees paid/payable to OPUS, a subsidiary of UEM 5,522
8,820
—
—
19,146
15,490
—
—
2,956
3,183
2,956
2,952
455
124
193
100
2,043 208 680 809 181 175 192
1,773 2 275 139 — — —
290 208 661 719 181 — 192
206 — 275 125 — — —
Network maintenance management and technical services performed by OPUS, a subsidiary of UEM
Provision of information technology services by TERAS, a subsidiary of UEM
Corporate and administrative support services paid/payable to: – UEM – subsidiaries of UEM, namely: – UEM Group Management Sdn Bhd – TERAS – UEM Academy Sdn Bhd – UEM Leadership Centre Sdn Bhd – Forte Tech Solutions Sdn Bhd – PROPEL – OPUS
Amounts payable to UEM in respect of Director’s remuneration
311
77
50
46
Commission for sale of Touch ‘n Go received/receivable from Touch ‘n Go Sdn Bhd, a subsidiary of UEM
210
158
—
—
226 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
40 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued) Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Commission for toll collection via Touch ‘n Go paid/payable to Touch ‘n Go Sdn Bhd, a subsidiary of UEM
18,937
16,178
—
—
Lease rental income received/receivable in respect of fibre optic telecommunications network and wayleave rights from TT dotCom, an associated company of UEM through TIME Engineering
15,957
15,197
—
—
Utilities rental paid/payable in respect of telecommunications network from TT dotCom, an associated company of UEM through TIME Engineering
659
1,098
—
—
Income from rental of facilities received/receivable from – associated companies of UEM through TIME Engineering, namely: – TT dotCom – TIME Reach Sdn Bhd – subsidiaries of UEM, namely: – UEM Land Sdn Bhd – Touch ‘n Go Sdn Bhd
340 59
385 153
— —
— —
72 1,883
102 1,857
— —
— —
Professional fees paid/payable to Symphony Share Registrars Sdn Bhd, in which a director of the Company, Dato’ Mohamed Azman Yahya, has interest
43
108
43
108
227 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
41 CAPITAL COMMITMENTS Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Amounts authorised and contracted for – Additional Works – Others
Amounts authorised but not contracted for
191,400 362,072
330,856 539,611
— 340
— 53
553,472
870,467
340
53
93,763
195,639
—
—
42 FINANCIAL INSTRUMENTS, FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments consist of PLUS SPV Sukuk, Senior Sukuk, Sukuk Series 1, Sukuk Series 2, Sukuk Series 3, BAIDS, Government Loans, Reimbursable Land Cost, Overdraft Facility, Trade Facilities, Maintenance Bond Facilities, Bridging Loans, term loan, short term and long term investments and short term and long term deposits. The short term investments (excluding quoted shares), long term investments and short term deposits are investments of available cash flows from operations.
The Group has various other financial instruments such as trade and sundry payables that arise directly from operations, amount owing by/(to) subsidiaries, amount owing by/(to) related companies, amount owing by/(to) immediate holding company, and sundry receivables.
The following disclosures exclude sundry receivables, amount owing by/(to) subsidiaries, amount owing by/(to) related companies, amount owing by/(to) immediate holding company, toll compensation recoverable from the Government, amount received from the Government for Additional Works, Reimbursable Land Cost, trade and sundry payables.
The Group reviews and agrees policies for managing each of the risks summarised below: a) Interest Rate Risk The Group obtains its external financing through PLUS SPV Sukuk, Senior Sukuk, Sukuk Series 1, Sukuk Series 2, Sukuk Series 3, BAIDS, Government Loans, Overdraft Facility, Trade Facilities, Maintenance Bond Facilities, Bridging Loans and term loan. The Group’s profit element for PLUS SPV Sukuk, Senior Sukuk, Sukuk Series 1, Sukuk Series 2, Sukuk Series 3, BAIDS and interest on Government Loan and term loan are based on agreed fixed rates respectively, while the interest payable for Bridging Loans range from 4.47% to 4.80% per annum. Interest on the Overdraft Facilities is the margin of 0.75% per annum over the base lending rate.
Information relating to the Group’s interest rates and profit element on borrowings and bonds are disclosed in Notes 7, 32 and 33. Details of the remaining maturities of the Group’s financial liabilities are disclosed in Note 34.
228 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
42 FINANCIAL INSTRUMENTS, FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) a) Interest Rate Risk (continued) The interest/profit profile of the financial liabilities of the Group is as follows: Group 2008 2007 RM’000 RM’000
Floating rate financial liabilities Fixed rate financial liabilities Interest-free financial liabilities
325,806 9,757,508 389,917
898,466 8,791,741 389,917
10,473,231
10,080,124
The weighted average interest rate/profit element per annum and average period on the financial liabilities as at 31 December 2008 were as follows:
Group 2008
Weighted average interest rate/profit element (%) Floating rate Fixed rate
Average period (years) Floating rate Fixed rate Interest free
2007
4.26 6.85
4.63 6.78
1.0 7.6 6.2
0.2 7.8 7.2
The interest/profit profile of the financial assets of the Group is as follows:
Group 2008 2007 RM’000 RM’000
Fixed rate financial assets (Note i) Financial assets on which no interest is earned (Note ii)
2,438,921 25,306
2,557,214 39,487
2,464,227
2,596,701
229 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
42 FINANCIAL INSTRUMENTS, FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) a) Interest Rate Risk (continued) Note i Fixed rate financial assets mainly comprise short term investments (excluding quoted shares), long term investments, short term deposits and long term deposits, placed with licensed banks and corporate issuers.
The short term deposits and short term investments placed with the licensed banks and corporate issuers in Malaysia attracted interest/profit element during the year at rates ranging from 2.50% to 4.55% (2007: 2.65% to 4.07%) per annum whereas the profit obtained from long term investments in Malaysia was 7.99% (2007: 7.99%).
The short term and long term deposits of foreign subsidiaries placed with their respective local banks attracted interest rates ranging from 7.50% to 13.00% (2007: 7.00% to 7.50%) per annum.
The maturity dates for fixed rate financial assets during the period range between 1 day to 72 months (2007: 1 day to 72 months).
Note ii Financial assets on which no interest is earned comprise cash and bank balances.
b) Market Risk The Group holds investment in quoted shares and Commercial Paper/Securities/Medium Term Notes/Bond. The value of the securities is subject to fluctuations as a result of changes in market prices whether those changes are caused by factors specific to the individual security or its issuer or factors affecting all securities traded in the market. The investment in Commercial Paper/Securities/Medium Term Notes/Bond are held to maturity. c) Foreign Currency Risk There is no foreign currency financing obtained by the Group for the year ended 31 December 2008. d) Credit Risk Credit risks, or the risk of counterparties defaulting, are controlled by the application of credit limits and monitoring procedure. The Group has no significant concentrations of credit risk as the majority of its deposits are placed with various major financial institutions in Malaysia.
The toll compensation recoverable from the Government of Malaysia is not exposed to any credit risk to PLUS other than if there are any amounts due from the Government upon expiry of the Concession Period in 2038, which will be required to be unconditionally waived by PLUS, as disclosed in Note 3(i)(b). However, the toll compensation arrangement further provides that the parties may in good faith, make necessary adjustment or variation to the arrangement to restore PLUS’s position if there is any change in law that may prevent the parties from successfully implementing the toll compensation arrangement.
e) Liquidity Risk The Group’s objectives on liquidity are to maintain a balance between meeting debt service obligations and covenants, Expressway capital and operating expenditure and meeting shareholder distribution expectations.
230 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
42 FINANCIAL INSTRUMENTS, FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) f)
Maturity of Financial Liabilities The maturity profile of the financial liabilities is disclosed in Note 34.
Undrawn committed facilities available as at 31 December 2008 in respect of the financial liabilities comprise a bank overdraft facility of RM1 million (2007: RM51 million) and a bridging loan of RM130.70 million.
g) Fair Values The carrying amount of the financial assets and liabilities of the Group at the balance sheet date approximate their fair value except for the following: Group 2008 2007 Carrying Fair Carrying Fair Amount Value Amount Value Note RM’000 RM’000 RM’000 RM’000
PLUS SPV Sukuk Senior Sukuk Sukuk Series 1 Sukuk Series 2 Sukuk Series 3 ELITE’s BAIDS KLBK’s BAIDS
32(a)(i) (776,174) (836,020) 32(a)(ii) (3,017,778)* (3,195,310) 32(a)(iii) (1,660,015) (1,771,656) 32(a)(iv) (1,322,056) (1,475,100) 32(a)(v) (950,154) (990,710) 32(a)(vi) (719,893)** (758,112) 32(a)(vii) (171,346)*** (194,342)
— — (3,570,422)* (3,850,895) (1,561,725) (1,697,004) (1,238,079) (1,473,081) (592,425) (698,303) (763,534)** (829,327) — —
* inclusive of profit element approximately RM17.78 million (2007: RM20.42 million) in sundry payables. ** inclusive of profit element approximately RM15.87 million (2007: RM16.67 million) in sundry payables. *** inclusive of profit element approximately RM4.35 million (2007: nil) in sundry payables.
The following methods and assumptions are used to estimate the fair values of the following classes of financial instruments: (i)
Cash and Cash Equivalents, Islamic Commercial Papers/Medium Term Notes, Trade and Other Receivables/Payables and Intercompany Balances The carrying amounts approximate the fair value due to the relatively short term maturity of these financial instruments.
(ii) Marketable Securities The fair value of quoted shares is determined by reference to stock exchange quoted market bid price at the close of the business on the balance sheet date. (iii) Borrowings PLUS SPV Sukuk, Sukuk Series 1, 2 and 3 are estimated by discounting the expected future cash flows using the indicative market rates available for each of the series.
231 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
43 SIGNIFICANT EVENTS (i) Acquisitions of KLBK On 13 March 2008, PEB completed the acquisition of the entire issued and paid-up share capital of KLBK for a total cash consideration of RM134 million from MMC.
KLBK is the concessionaire for the BKE pursuant to a concession agreement dated 28 June 1994 (as supplemented from time to time) entered into between the Government of Malaysia and KLBK in connection with the design, construction, management, operation and maintenance of the BKE for a concession period of 32 years which expires in 2026. The BKE is a dual two lane carriageway and has a total length of approximately 17 kilometres from Kulim in Kedah to Seberang Perai in Penang.
(ii) Incorporation of CCTW On 27 December 2008, the Company was issued 48,000,000 shares of CCTW of IDR1,000 each representing 60% shareholding interest in CCTW, effectively making CCTW a foreign subsidiary of PEB.
The remaining 15% and 25% of CCTW are held by PT Bakrie & Brothers Tbk and PT Capitalinc Investment Tbk (formerly known as PT Global Financindo Tbk) respectively.
CCTW is incorporated in Indonesia as a limited liability foreign capital participation company to undertake and implement the 25.4-kilometre Package 4 Cimanggis-Cibitung Toll Road in Indonesia.
(iii) Issuance of RM700 million nominal value of Sukuk Series 3 On 29 May 2008, PLUS issued RM700 million nominal value (RM308 million present value on the issue date) of zero coupon Sukuk Series 3 pursuant to the RM4,500 million nominal value of Sukuk Series 3 medium term notes programme to partially redeem the Senior Sukuk in accordance with the Senior Sukuk trust deed. (iv) Issuance of RM4,000 million nominal value PLUS SPV Sukuk Medium Term Notes programme (“PLUS SPV Sukuk”) by PLUS SPV Berhad On 27 June 2008, the Company through an independent special purpose company, PLUS SPV Berhad (“PLUS SPV”), issued Islamic securities in accordance with the principle of Musyarakah amounting to RM1,055 million nominal value (RM762 million present value on the issue date) under the RM4,000 million nominal value of PLUS SPV Sukuk to partially refinance the bridging loan facility of RM1,006 million pursuant to a facility agreement dated 13 December 2007.
44 SEGMENTAL REPORTING (a) Reporting format The primary segment reporting format is determined to be geographical segments as the Group’s risks and rates of return are affected predominantly by differences in the countries operated. Secondary information is reported segmentally. The operating businesses are organised and managed separately according to the geographical areas, with each segment representing a strategic business unit that serves different markets.
232 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
44 SEGMENTAL REPORTING (continued) (b) Geographical segments The Group’s geographical segments are based on the location of the Group’s assets. Revenue disclosed in geographical segments are based on the geographical location of its business and customers. The Group’s two business segments operate in three geographical areas: (i)
Malaysia – the operations in this area are principally investment holding and provision of expressway operation services.
(ii) India and Mauritius – the operation in this area are investment holding and expressway operation services. (iii) Indonesia – the operation in this area is expressway operation services.
The following table provides an analysis of the Group’s carrying amount of segment assets and capital expenditure, analysed by geographical segments:
Malaysia India and Mauritius Indonesia
Segment Assets Capital Expenditure 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 16,709,562 180,870 117,870
15,654,468 12,226,322 168,844 175,643 32,026 57,357
3,412,706 105,026 27,831
17,008,302
15,855,338 12,459,322
3,545,563
(c) Business segments No business segmental analysis is prepared in the current and prior years as the Group is primarily engaged in the operation and maintenance of toll roads and expressways.
233 PLUS Expressways Berhad Annual Report 2008
Recurrent Related Party Transactions
On 18 June 2008, the PLUS Expressways Berhad Group sought approval for a shareholders’ mandate for the PLUS Expressways Berhad Group to renew and enter into new Recurrent Transactions (as defined in the Circular to Shareholders dated 26 May 2008) in their ordinary course of business with related parties (“Shareholders Mandate”) as defined in Chapter 10 of the Bursa Malaysia Securities Berhad Listing Requirement. The breakdown of the aggregate value received/receivable or paid/payable for the said Recurrent Transactions made from the date the Shareholders Mandate came into effect up to 31 December 2008 are as follows:RM 1.
Construction and other related works for the widening of certain stretches of the Expressway and the modification of the Expressway between Jelapang and Ipoh Selatan Toll Plaza (“Additional Works”) by UEM and its subsidiaries and associated companies for PLUS.
NIL
2.
Collaboration arrangements for the purpose of tendering for overseas and local projects by UEM and its subsidiaries and associated companies for PLUS Expressways.
NIL
3.
Provision of Operation Support Services and other transactions in relation to or arising therefrom.
4.
Provision of maintenance works in relation to the Expressways and its Ancillary Facilities.
5.
Construction and other related works in relation to Expressways, including the Ipoh-Lumut Road and Diamond Interchange and the proposed second exit to Ipoh City.
NIL
6.
Provision of IT related services, maintenance and upgrading works and supply of IT equipment and software, electrical and toll equipment spares in relation to the Expressways and Ancillary Facilities to PLUS Expressways Group.
6,692,670.00
7.
Provision of services in relation to Touch n’ Go cards and SmartTAG including the relevant accessories to PLUS Expressways Group.
1,602,308.39
8.
Grant of access to enter the Expressways and its Ancillary Facilities for carrying out of relevant works by UEM and its subsidiaries and associated companies for PLUS Expressways Group.
NIL
9.
Provision of IT related services including consultation and maintenance, supply of IT equipment and software and provision of Point of Sales System by TIME and its subsidiaries and associated companies for PLUS Expressways Berhad.
NIL
10. Provision of upgrading works in relation to the Expressways and its Ancillary Facilities by UEM Builders and its subsidiaries and associated companies for PLUS Expressways Group.
6,934,859.80
11. Grant of access by PLUS to Telekom to enter the Expressways and its Ancillary Facilities for the carrying out of relevant works in relation to telecommunication.
1,000.00
12. Grant of access by PLUS to TNB to enter the Expressways and its Ancillary Facilities for the carrying out of relevant works in relation to power supply.
64,000.00
13. Construction and other related works in relation to toll road projects in India to PLUS Expressways Group.
NIL
14. Construction and other related works in relation to toll road projects in Indonesia to PLUS Expressways Group.
NIL
234 PLUS Expressways Berhad Annual Report 2008
984,316.92 16,293,304.77
RELATIONSHIP WITH RELATED PARTIES
The relationship of the related parties as at 31 December 2008 is as follows:No. Names of Related Party
Relationship
1.
UEM and its subsidiaries and associated companies
UEM is a major shareholder of PLUS Expressways Berhad. UEM also has indirect interest in PLUS held through PLUS Expressways Berhad.
2.
PLUS BKSP Toll Limited (“PLUS BKSP”)
PLUS Expressways has direct and indirect interest in PLUS BKSP through its wholly-owned subsidiary, PLUS Kalyan (Mauritius) Private Limited.
3.
TIME and its subsidiaries and associated companies
UEM is a major shareholder of TIME. TIME being an associate company of UEM.
4.
UEM Builders and its subsidiaries and associated companies
UEM Builders Berhad is a wholly-owned subsidiary of UEM. UEM also has indirect interest in PROPEL held through UEM Builders Berhad.
5.
Telekom Malaysia Berhad (“Telekom”) and its subsidiaries
Khazanah is a major shareholder of Telekom. UEM is a whollyowned subsidiary of Khazanah.
6.
Tenaga Nasional Berhad (“TNB”) and its subsidiaries
Khazanah is a major shareholder of TNB.
235 PLUS Expressways Berhad Annual Report 2008
Analysis of Shareholdings AS AT 27 APRIL 2009
Authorised Capital Issued and Paid-Up Class of Shares No of Shareholders Voting Rights
: RM2,500,000,000.00 : RM1,250,000,000.00 : Ordinary Shares of 25 sen each : 24,069 : One Vote per Ordinary Share
Size of Holdings
No of Holders
%
No of Shares Held
%
578
2.40
17,976
0.00
12,538
52.09
11,977,973
0.24
1,001 to 10,000
9,437
39.21
33,991,195
0.68
10,001 to 100,000
1,056
4.39
30,621,794
0.61
456
1.89
1,197,057,733
23.94
4
0.02
3,726,333,329
74.53
24,069
100.00
5,000,000,000
100.00
Direct Holdings
%
Indirect Holdings
%
UEM Group Berhad
2,010,522,335
40.21
—
—
Khazanah Nasional Berhad
1,183,212,782
23.66
*2,010,522,335
40.21
533,738,212
10.67
—
—
Less than 100 100 to 1,000
100,001 to less than 5% of issued shares 5% and above of issued shares Total
Holders with Holdings of 5% and Above as at 27 April 2009: Name
Employees Provident Fund Board Note: * Held via UEM Group Berhad
236 PLUS Expressways Berhad Annual Report 2008
Analysis of Shareholdings
continued
Directors’ Direct and Indirect Interest in the Company and its Related Corporations as per the Register of Directors
No of Shares held
% of issued capital
Tan Sri Dato’ Mohd Sheriff Mohd Kassim
60,000
*
Dato’ Ahmad Pardas Senin
20,000
*
Noorizah Hj Abd Hamid
20,000
*
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid
40,000
*
Hassan Ja’afar
40,000
*
Datuk K Ravindran
40,000
*
Tan Sri Razali Ismail
40,000
*
Dato’ Mohamed Azman Yahya
40,000
*
Geh Cheng Hooi
40,000
*
Quah Poh Keat
NIL
NIL
Abdul Farid Alias
NIL
NIL
15,000
*
NIL
NIL
Name of Director
Datuk Seri Panglima Mohd Annuar Zaini Dato’ Seri Ismail Shahudin * less than 0.01%
In its Related Corporations Save for the following, none of the Directors of the Company has any interest, direct or indirect, in shares in its related corporations:
Name of Director
No of Shares held
% of issued capital
666,000*
0.02
2,500,000**
0.10
UEM Land Holdings Berhad Ordinary shares of RM0.50 each Tan Sri Dato’ Mohd Sheriff Mohd Kassim Dato’ Ahmad Pardas Senin
* 666,000 ordinary shares of RM0.50 each in UEM Land Holdings Berhad issued to replace the 567,800 UEM World Berhad shares held pursuant to the distribution of the dividend-in-specie by UEM World Berhad ** Include balance of 1,000,000 shares in UEM World Berhad which was exchanged for 1,250,000 ordinary shares of RM0.50 each in UEM Land Holdings Berhad arising from the distribution of the dividend-in-specie by UEM World Berhad
237 PLUS Expressways Berhad Annual Report 2008
Analysis of Shareholdings
continued
List of PLUS Expressways’ Top 30 Holders as at 27 April 2009 Name 1.
UEM Group Berhad
2.
Holdings
%
2,010,522,335
40.21
Khazanah Nasional Berhad Exempt An
750,913,103
15.02
3.
Employees Provident Fund Board
533,738,212
10.67
4.
Khazanah Nasional Berhad
432,299,679
8.65
5.
Amanah Raya Nominees (Tempatan) Sdn Bhd Skim Amanah Saham Bumiputera
199,487,400
3.99
6.
Kumpulan Wang Persaraan (Diperbadankan)
124,142,512
2.48
7.
Amanah Raya Nominees (Tempatan) Sdn Bhd Amanah Saham Wawasan 2020
50,603,200
1.01
8.
Pertubuhan Keselamatan Sosial
48,535,297
0.97
9.
Cartaban Nominees (Asing) Sdn Bhd SSBT Fund 4545 For Lazard Emerging Markets Portfolio
34,619,700
0.69
10. Valuecap Sdn Bhd
34,403,900
0.69
11. Amanah Raya Nominees (Tempatan) Sdn Bhd Amanah Saham Malaysia
24,938,900
0.50
12. Cartaban Nominees (Asing) Sdn Bhd State Street Australia Fund ATB1 For Platinum Asia Fund
23,217,800
0.46
13. Amanah Raya Nominees (Tempatan) Sdn Bhd Amanah Saham Didik
22,748,000
0.45
14. Malaysian Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad (PAR 1)
21,580,000
0.43
15. HSBC Nominees (Asing) Sdn Bhd Exempt An For J.P. Morgan Bank Luxembourg S.A.
18,730,600
0.37
16. Permodalan Nasional Berhad
16,955,400
0.34
17. Cartaban Nominees (Asing) Sdn Bhd Government of Singapore Investment Corporation Pte Ltd for Government of Singapore (C)
16,082,950
0.32
18. CITIGROUP Nominees (Tempatan) Sdn Bhd Exempt An For Prudential Fund Management Berhad
14,352,300
0.29
19. HSBC Nominees (Asing) Sdn Bhd Exempt An For The Bank of New York Mellon (Mellon Acct)
12,826,300
0.26
238 PLUS Expressways Berhad Annual Report 2008
Analysis of Shareholdings
Name
Holdings
continued
%
20. HSBC Nominees (Asing) Sdn Bhd Exempt An For JPMorgan Chase Bank, National Association (Norges Bank)
12,789,100
0.26
21. HSBC Nominees (Asing) Sdn Bhd Exempt An For JPMorgan Chase Bank, National Association (U.A.E.)
11,935,505
0.24
22. HSBC Nominees (Asing) Sdn Bhd BBH and Co Boston For Vanguard Emerging Markets Stock Index Fund
10,965,582
0.22
23. Mayban Nominees (Tempatan) Sdn Bhd Mayban Trustees Berhad For Public Ittikal Fund (N14011970240)
10,172,000
0.20
24. Amanah Raya Nominees (Tempatan) Sdn Bhd Public Islamic Dividend Fund
9,495,100
0.19
25. SBB Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board
9,051,100
0.18
26. Cartaban Nominees (Asing) Sdn Bhd State Street For IShares, Inc.
8,985,000
0.18
27. Mayban Nominees (Tempatan) Sdn Bhd Mayban Trustees Berhad For Public Regular Savings Fund (N14011940100)
8,550,000
0.17
28. HSBC Nominees (Asing) Sdn Bhd TNTC For Fidelity Southeast Asia Fund (FID INV TST)
8,299,500
0.17
29. HSBC Nominees (Asing) Sdn Bhd Exempt An For the HongKong And Shanghai Banking Corporation Limited (HBFS – I CLT ACCT)
8,090,100
0.16
30. HSBC Nominees (Asing) Sdn Bhd HSBC BK Plc For Veritas Asian Fund
7,743,500
0.15
239 PLUS Expressways Berhad Annual Report 2008
List of Properties AS AT 31 December 2008
Landed properties of the PLUS Expressways Group based on net book value as at 31 December 2008
No. Particulars/Address/Description
Age of Building
1.
Geran No 16214, Lot 42936 Mukim Batu, Daerah Kuala Lumpur State of Wilayah Persekutuan 14 Jalan 3/38B, Taman SPPK Segambut, Kuala Lumpur Double storey link house
16 years
2.
Geran No 16170, Lot 42886 Mukim Batu, Daerah Kuala Lumpur State of Wilayah Persekutuan 68 Jalan 3/38B, Taman SPPK Segambut, Kuala Lumpur Double storey intermediate terrace house
3.
Land Area and Tenure
Date of Acquisition/ Last Revaluation
Staff accommodation
195 sqm Freehold
28 November 1996 ^ Revaluation done on 21 March 2003
156
16 years
Staff accommodation
130 sqm Freehold
12 June 1996 ^ Revaluation done on 21 March 2003
156
PM 603 PT 31821 (formerly HSM 14621 PT 21106) Mukim Kapar, Daerah Klang State of Selangor No 87 Jalan Mahkota 2 Bandar Baru Klang, Selangor Double storey intermediate terrace house
14 years
Staff accommodation
130 sqm Leasehold of 99 years ending 8 May 2093
26 December 1995 ^ Revaluation done on 12 July 2003
153
4.
PM 621 PT 31839 (formerly HSM 14639 PT 21124) Mukim Kapar, Daerah Klang State of Selangor No 51 Jalan Mahkota 2 Bandar Baru Klang, Selangor Double storey intermediate terrace house
14 years
Staff accommodation
130 sqm Leasehold of 99 years ending 8 May 2093
26 December 1995 ^ Revaluation done on 12 July 2003
153
5.
PM 620 PT 31838 (formerly HSM 14638 PT 21123) Mukim Kapar, Daerah Klang State of Selangor No 53 Jalan Mahkota 2 Bandar Baru Klang, Selangor Double storey intermediate terrace house
14 years
Staff accommodation
130 sqm Leasehold of 99 years ending 8 May 2093
26 December 1995 ^ Revaluation done on 28 October 2004
153
6.
PM 604 PT 31822 (formerly HSM 14622 PT 21107) Mukim Kapar, Daerah Klang State of Selangor No 85 Jalan Mahkota 2 Bandar Baru Klang, Selangor Double storey intermediate terrace house
14 years
Staff accommodation
130 sqm Leasehold of 99 years ending 8 May 2093
26 December 1995 ^ Revaluation done on 12 July 2003
153
240 PLUS Expressways Berhad Annual Report 2008
Existing Use
Net Book Value as at 31 December 2008 (RM’000)
List of Properties
No. Particulars/Address/Description
Age of Building
7.
PN 7686, Lot 247 Seksyen 13 Bandar Shah Alam District of Petaling, State of Selangor No 15 Jalan Kayak 13/25 TTDI, Shah Alam, Selangor Double storey link house
10 years
8.
PN 7687, Lot 248 Seksyen 13 Bandar Shah Alam District of Petaling, State of Selangor No 17 Jalan Kayak 13/25 TTDI, Shah Alam, Selangor Double storey link house
9.
Existing Use
continued
Net Book Value as at 31 December 2008 (RM’000)
Land Area and Tenure
Date of Acquisition/ Last Revaluation
Staff accommodation
120.75 sqm Leasehold of 99 years ending 1 November 2092
16 December 1996 ^ Revaluation done on 31 March 2005
145
10 years
Staff accommodation
120.75 sqm Leasehold of 99 years ending 1 November 2092
16 February 1996 ^ Revaluation done on 5 July 2004
145
PN 7692, Lot 253 Seksyen 13 Bandar Shah Alam District of Petaling, State of Selangor No 27 Jalan Kayak 13/25 TTDI, Shah Alam, Selangor Double storey link house
10 years
Staff accommodation
120.75 sqm Leasehold of 99 years ending 28 December 2084
16 February 1996 ^ Revaluation done on 13 May 2004
145
10.
PN 7696, Lot 257 Seksyen 13 Bandar Shah Alam District of Petaling, State of Selangor No 35 Jalan Kayak 13/25 TTDI, Shah Alam, Selangor Double storey link house
10 years
Staff accommodation
120.75 sqm Leasehold of 99 years ending 1 November 2092
16 February 1996 ^ Revaluation done on 13 May 2004
145
11.
HSM 20930 PT No 15368, Lot 44171 Mukim and District of Petaling State of Selangor No 43 Jalan SR6/4 Taman Kuda Emas, Serdang Jaya Section 6, Selangor Double storey terrace house
15 years
Staff accommodation
1,430 sqf Leasehold ending 31 March 2092
5 January 1996 ^ Revaluation done on 13 May 2004
170
12.
HSM 20931 PT No 15369, Lot 44172 Mukim and District of Petaling State of Selangor No 41 Jalan SR6/4 Taman Kuda Emas, Serdang Jaya Section 6, Selangor Double storey terrace house
15 years
Staff accommodation
1,430 sqf Leasehold ending 31 March 2092
5 January 1996 ^ Revaluation done on 10 May 2004
170
241 PLUS Expressways Berhad Annual Report 2008
List of Properties
continued
No. Particulars/Address/Description
Age of Building
13.
HSM 20932 PT No 15370, Lot 44173 Mukim and District of Petaling State of Selangor No 39 Jalan SR6/4 Taman Kuda Emas, Serdang Jaya Section 6, Selangor Double storey terrace house
15 years
14.
HSD 113452 PT No 11539 (formerly HSD 44643 PT 11539) Mukim Damansara, State of Selangor 1303 Blok D, No 2 Jalan SS7/26 47301 Petaling Jaya Apartment unit
15.
Existing Use
Net Book Value as at 31 December 2008 (RM’000)
Land Area and Tenure
Date of Acquisition/ Last Revaluation
Staff accommodation
1,430 sqf Leasehold ending 31 March 2092
5 January 1996 ^ Revaluation done on 13 May 2004
170
13 years
Staff accommodation
1,076 sqf Leasehold of 99 years ending 13 April 2089
7 December 1995 ^ Revaluation done on 5 March 2003
134
HSD 113452 PT No 11539 (formerly HSD 44643 PT 11539) Mukim Damansara, State of Selangor 1508 Blok D, No 2 Jalan SS7/26 47301 Petaling Jaya Apartment unit
13 years
Staff accommodation
1,345 sqf Leasehold of 99 years ending 13 April 2089
7 December 1995 ^ Revaluation done on 24 April 2003
163
16.
HSM 6455 PT No 1451 Mukim Damansara Daerah Petaling, Negeri Selangor No 46 Jalan SS7/30 Taman Kelana Indah Kelana Jaya, Selangor Double storey intermediate terrace house
16 years
Staff accommodation
121 sqm 1 August 1996 Leasehold of ^ Revaluation done on 99 years ending 13 May 2004 27 September 2091
180
17.
HSM 6468 PT No 1464 Mukim Damansara Daerah Petaling, Negeri Selangor No 72 Jalan SS7/30 Taman Kelana Indah Kelana Jaya, Selangor Double storey terrace house
16 years
Staff accommodation
121 sqm 15 April 1997 Leasehold of ^ Revaluation done on 99 years ending 2 October 2006 27 September 2091
185
18.
Part of Mukim Gadek, Mukim Pegoh & Mukim Melaka Pindah District of Alor Gajah, State of Melaka Leasehold land
Not applicable Future commercial development
242 PLUS Expressways Berhad Annual Report 2008
338 acres Leasehold of 99 years ending August 2106
August 2007 ^ Revaluation done on 23 December 2006
27,269
List of Properties
No. Particulars/Address/Description
Age of Building
19.
HSD 116090 PTD No 32590 Mukim Pulai, District of Johor Bahru State of Johor No 33 Jalan Rawa 21 Taman Perling Johor Bahru Single storey terrace house
23 years
20.
HSD 116091 PTD No 32591 Mukim Pulai, District of Johor Bahru State of Johor No 35 Jalan Rawa 21 Taman Perling Johor Bahru Single storey terrace house
21.
22.
Existing Use
continued
Net Book Value as at 31 December 2008 (RM’000)
Land Area and Tenure
Date of Acquisition/ Last Revaluation
Staff accommodation
155.33 sqm Freehold (Bumiputra restricted)
1 November 1996 ^ Revaluation done on 3 January 2008
112
23 years
Staff accommodation
155.33 sqm Freehold (Bumiputra restricted)
1 November 1996 ^ Revaluation done on 3 January 2008
112
HSD 126310 PTD No 29026 Mukim Senai-Kulai, District of Johor Bahru, State of Johor No 1443 Jalan 1/10 Taman Senai Utama Single storey terrace house
11 years
Staff accommodation
1,540 sqf Freehold (Bumiputra restricted)
29 August 1996 ^ Revaluation done on 11 July 2007
87
HS(D) 202703 PTD 43538 & 43539 No 4 & 6, Jalan Hang Lekiu Taman Skudai Baru Skudai, Johor Bahru, Johor Mukim of Pulai Shoplot
15 years
Vacant
3,080 sqm Freehold
12 January 1993
406
Note: ^ Revaluation was done on the property by the Stamp Duty office/valuation office for the purpose of determining the stamp duty for transfer documents. The aforesaid properties provide accommodation to staff of Projek Lebuhraya Utara-Selatan Berhad who work at the toll plazas along the expressways.
243 PLUS Expressways Berhad Annual Report 2008
Group Directory
PLUS EXPRESSWAYS BERHAD Menara Korporat, Persada PLUS Persimpangan Bertingkat Subang KM15, Lebuhraya Baru Lembah Klang 47301 Petaling Jaya Selangor Darul Ehsan, Malaysia T +603 7801 6666/7666 4666 F +603 7801 6600/7666 4400 www.plus.com.my
KONSORTIUM LEBUHRAYA BUTTERWORTH-KULIM (KLBK) SDN BHD KM 6.5, Lebuhraya Butterworth-Kulim 13500 Permatang Pauh Seberang Perai, Pulau Pinang, Malaysia T +604 3977 807 F +604 3977 808
PLUS KALYAN (MAURITIUS) PRIVATE LIMITED PROJEK LEBUHRAYA UTARA-SELATAN BERHAD Menara Korporat, Persada PLUS Persimpangan Bertingkat Subang KM15, Lebuhraya Baru Lembah Klang 47301 Petaling Jaya Selangor Darul Ehsan, Malaysia T +603 7801 6666/7666 4666 F +603 7801 6600/7666 4400 www.plus.com.my
EXPRESSWAY LINGKARAN TENGAH SDN BHD Menara Korporat, Persada PLUS Persimpangan Bertingkat Subang KM15, Lebuhraya Baru Lembah Klang 47301 Petaling Jaya Selangor Darul Ehsan, Malaysia T +603 7801 6666/7666 4666 F +603 7801 6600/7666 4400 www.plus.com.my
LINKEDUA (MALAYSIA) BERHAD Menara Korporat, Persada PLUS Persimpangan Bertingkat Subang KM15, Lebuhraya Baru Lembah Klang 47301 Petaling Jaya Selangor Darul Ehsan, Malaysia T +603 7801 6666/7666 4666 F +603 7801 6600/7666 4400 www.plus.com.my
244 PLUS Expressways Berhad Annual Report 2008
c/o Multiconsult Limited Rogers House 5, President John Kennedy Street Port Louis, Mauritius T +230 405 2000 F +230 212 5265/+230 208 0572
PLUS BKSP TOLL LIMITED 413, B Wing, Shree Nand Dham 4th Floor, Sector 11, CBD Belapur Navi Mumbai 400 614 India T +91 2227573777 F +91 2227573767
PT LINTAS MARGA SEDAYA JI Cibitung II No.34 Kebayoran Baru Jakarta 12170 Indonesia T +62 21 7245870 F +62 21 7222436
PT CIMANGGIS CIBITUNG TOLLWAYS Wisma Bakrie 1 Lantai 17 Jl. HR. Rasuna Said Kav. B2 Jakarta 12920 Indonesia T +62 21 52920266 F +62 21 52920837
FORM OF PROXY
No. of Ordinary Shares Held CDS Account No.
I/We
(PLEASE USE BLOCK LETTERS)
of (full address)
being a member/members of PLUS EXPRESSWAYS BERHAD, hereby appoint
of or failing him, the Chairman of the Meeting as my/our proxy to vote for me/us and on my/our behalf at the Seventh Annual General Meeting of the Company to be held at the Banquet Hall, Menara Korporat, Persada PLUS, Persimpangan Bertingkat Subang, KM15, Lebuhraya Baru Lembah Klang, 47301 Petaling Jaya, Selangor Darul Ehsan on Thursday, 4 June 2009 at 10.00 a.m. My/Our proxy is to vote as indicated below: (Please indicate with an “3” or “7” in the boxes provided how you wish your vote to be cast. If you do not do so, the proxy will vote or abstain from voting at his discretion.) For Resolution 1
Against
To declare a single tier final dividend of 9.5 sen per ordinary share for the financial year ended 31 December 2008. To re-elect the following Directors retiring in accordance with Article 76 of the Company’s Articles of Association:
Resolution 2
i)
Tan Sri Dato’ Mohd Sheriff Mohd Kassim
Resolution 3
ii)
Noorizah Hj Abd Hamid
To re-elect the following Directors retiring in accordance with Article 83 of the Company’s Articles of Association: Resolution 4
i)
Datuk Seri Panglima Mohd Annuar Zaini
Resolution 5
ii)
Dato’ Seri Ismail Shahudin
Resolution 6
To approve the Directors’ remuneration.
Resolution 7
To re-appoint Messrs Ernst & Young as Auditors and to authorise the Directors to fix their remuneration.
Resolution 8
To empower Directors pursuant to Section 132D of the Companies Act 1965 to allot and issue shares.
Resolution 9
To approve the Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature.
Resolution 10
To approve the Proposed New Mandate for Additional Recurrent Related Party Transactions of a Revenue or Trading Nature.
Dated this _______________ day of ______________ 2009.
___________________________________ Signature/Seal
NOTES 1. Every member is entitled to appoint a proxy or in the case of a corporation, to appoint a representative to attend and vote in his place. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 need not be complied with. 2. To be valid, this original form of proxy duly completed must be deposited at the Share Registrar’s office, Symphony Share Registrars Sdn Bhd, Level 26, Menara Multi-Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur not less than 48 hours before the time of holding the meeting. 3. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if such appointor is a corporation, under its common seal or under the hand of its attorney. 4. A member holding one thousand (1,000) ordinary shares or less may appoint only one (1) proxy to attend and vote at a general meeting who shall represent all the shares held by such member. A member holding more than one thousand (1,000) ordinary shares may appoint up to ten (10) proxies to attend and vote at the same meeting and each proxy appointed shall represent a minimum of one thousand (1,000) ordinary shares. Where a member appoints one (1) or more proxies to attend and vote at the same meeting, such appointment(s) shall be invalid unless the member specifies the proportion of his shareholding to be represented by each proxy. 5. If this form of proxy is returned without any indication as to how the proxy shall vote, the proxy will vote or abstain as he deems fit. 6. If no name is inserted in the space provided for the name of your proxy, the Chairman of the Meeting will act as your proxy.
1st fold here
STAMP
The Share Registrar’s Office Symphony Share Registrars Sdn Bhd Level 26, Menara Multi-Purpose Capital Square No. 8, Jalan Munshi Abdullah 50100 Kuala Lumpur, Malaysia
Then fold here
Fold this flap for sealing
Expanding Reach
Menara Korporat, Persada PLUS Persimpangan Bertingkat Subang KM15, Lebuhraya Baru Lembah Klang 47301 Petaling Jaya Selangor Darul Ehsan, Malaysia T +603 7801 6666/7666 4666 F +603 7801 6600/7666 4400
annual report 2008
PLUS EXPRESSWAYS BERHAD
www.plus.com.my
PLUS Expressways Berhad
annual report 2008
Expanding Reach Everyday, we are touching lives and connecting people. Our efforts at PLUS Expressways reflect the great responsibility of not only providing millions of road users optimum convenience and safety but to also ensure that it is coupled with the capacity to see your ambitions grow. Crucially, we continue to strive to extend this responsibility in everything we do. As the nation’s premier expressways operator, we are nurturing and developing people, communities and economies by continually expanding our reach, enabling you to go even further in realising your dreams.
7
th
Annual General Meeting Date
4 June 2009 Time
10.00 am Venue
Banquet Hall, Menara Korporat Persada PLUS, Persimpangan Bertingkat Subang KM15, Lebuhraya Baru Lembah Klang 47301 Petaling Jaya, Selangor Darul Ehsan Malaysia
exit 607
We remain committed to managing our expressways with utmost care and compassion. Designed for comfort and convenience, our rest areas help foster closer relationships and strengthen family ties.
exit 608
Expanding Reach
exit 233
We take the time to listen to our customers to gain a better understanding of their expectations. Their invaluable feedback enables us to constantly deliver new and improved services.
exit 254
Expanding Reach
exit 233
We fulfill our role by providing an efficient and sustainable network for your business needs. This is to enable you to realise your expectations the way you envisioned it.
exit 254
Expanding Reach
exit 125
Staying relevant and true as a caring organisation ensures our long-term sustainability. We continue to extend a helping hand to victims of natural disasters, highlighting our compassionate role towards communities beyond our expressways.
exit 128
Expanding Reach
Malaysia
We consistently deliver world-class standards in our performance. As a result of our endeavours, our success has gained recognition abroad, paving the way for us in India and Indonesia.
India
Expanding Reach
Indonesia
rationale The new PLUS visual identity consists of two elements: the logo or symbol in the blue stylised expressway design, and the green PLUS brand name in a distinctive font. Logo/Symbol: The PLUS new identity reflects the aspirational values of a world-class expressway operator. The logo or symbol in the form of a stylised expressway communicates the corporate thrust of efficiency, speed and modernism, where the deliberate lines of the logo continues into the PLUS name in one dynamic flow.
Vision Statement “To be a Premier Global Expressway Group”
Mission Statement “Providing Efficient and Safe Expressway Network that Enhances Quality of Life”
Rationale and Interpretation
Brand Name: The unique font of the PLUS name styled after the outline of an expressway is intentionally gentle to appeal to consumers as an organisation committed to customer needs and expectations. The design combines the strength of PLUS as the premier global expressway operator/group with the enduring community spirit of a caring organisation.
• O u r V i s i o n S t a t e m e n t emphasises the Group’s clear intent to be one of the leading and prestigious expressway groups in the world.
Corporate Colours: Blue was chosen to reflect the company’s membership within the UEM Group, while the familiar green in the PLUS name has been retained to connect to customers who already recognise PLUS as the country’s leading expressway operator.
• It is comprehensible and can be easily understood and embraced by the Group’s employees.
• It is a realistic reflection of the Group’s aspirations to move into the global market place.
• O u r M i s s i o n S t a t e m e n t encapsulates a balanced, double-edged strategy that outlines the role of the organisation in pursuing efficiency for stakeholders, with an emphasis on improving the quality of life for everyone. Ultimately, this balanced strategy will enhance the Group’s ability to achieve its desired Vision in the long run. • While toll road management will remain our core business, the Group shall also focus on non-toll related activities in its expansion plans with greater emphasis on environmental, safety and human aspects. • O u r V i s i o n a n d M i s s i o n Statements also underscore the Group’s continuing economic and social contributions to the nation.
Corporate and Work Values
Passion For Success
Teamwork
Our passion for success keeps us enthusiastic and drives us forward to excel in all that we undertake.
Teamwork enables us to tap the diverse synergies, talents, skills and experiences amongst us to deliver outstanding performance.
Integrity
Trustworthy
Sincerity
Integrity is embedded in all our actions and business activities.
By being trustworthy, we take responsibility for all that we do and say.
Sincerity underlines all our actions as we do it from our hearts.
Caring
Financial Prudence
By caring for all our stakeholders and the environment, we help to enrich lives and provide quality living.
Financial prudence is our management philosophy that creates enduring shareholder value and drives our long-term success.
7
PLUS Expressways Berhad Annual Report 2008
A clear understanding of our strengths and what it takes to be successful...
10 – 14
15 – 32
33 – 48
Structured for Expansion
Enriching Returns
Notice of Annual General Meeting
Company Profile
Five-Year Group Financial Highlights
Statement Accompanying the Notice of the Seventh Annual General Meeting
Awards and Recognition 2008
2008 Group Operational Highlights
2008 Corporate Events
Simplified Group Balance Sheet
Milestones for The Group
Group Quarterly Performance
Corporate Information
Group Financial Review
Group Corporate Structure
Statement of Value Added
Group Organisation Structure
Share Price & Volume Traded
Media Milestones – Corporate
Market Capitalisation
Financial Calendar
Media Milestones – Financial
91 – 102
103 – 114
115 – 139
Reaching Towards Excellence
Reaching Out
Expanding Good Practices
Towards More Impactful Corporate Social Responsibility
Statement of Corporate Governance
Review of Operations • Traffic Growth • Upgrading Projects • Maintenance of Assets • Road Safety and Traffic Management • Projects Under Development
Towards Effective Environmental Protection Towards Greater Customer Satisfaction Towards Greater Innovation Towards a High Performance Workforce Media Milestones – Corporate Social Responsibility
Enterprise Risk Management Code of Business Ethics Statement of Internal Control Audit Committee Report Management Control Policy
49 – 72
73 – 90
Our Collective Reach
Driving Expansion
Board of Directors
Chairman’s Statement
Profile of Board of Directors
Message from the Managing Director
Top Management Company Secretaries Heads of Overseas Subsidiaries Senior Management
140 – 233
234 – 244
Financial Statements
Other Information
Directors’ Report
Recurrent Related Party Transactions
Statement by Directors
Relationship with Related Parties
Statutory Declaration
Analysis of Shareholdings
Independent Auditors’ Report
List of Properties
Income Statements
Group Directory
Balance Sheets Statements of Changes in Equity Cash Flow Statements Notes to The Financial Statements
Form of Proxy
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the Seventh Annual General Meeting of the
7TH Annual
General Meeting
Company will be held at the Banquet Hall, Menara Korporat, Persada PLUS, Persimpangan Bertingkat Subang, KM15, Lebuhraya Baru Lembah Klang, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia on Thursday, 4 June 2009 at 10.00 am for the purpose of transacting the following businesses:
Agenda: As Ordinary Business 1
To receive the Audited Financial Statements for the year ended 31 December 2008 together with the Reports of the Directors and Auditors thereon.
2
To declare a single tier final dividend of 9.5 sen per ordinary share for the financial year ended 31 December 2008 as recommended by the Directors.
3
4
Resolution 1
To re-elect the following Directors retiring in accordance with Article 76 of the Company’s Articles of Association and who being eligible, have offered themselves for re-election: i
Tan Sri Dato’ Mohd Sheriff Mohd Kassim
Resolution 2
ii
Noorizah Hj Abd Hamid
Resolution 3
To re-elect the following Directors retiring in accordance with Article 83 of the Company’s Articles of Association and who being eligible, have offered themselves for re-election: i
Datuk Seri Panglima Mohd Annuar Zaini
Resolution 4
ii
Dato’ Seri Ismail Shahudin
Resolution 5
5
To approve the Directors’ remuneration.
Resolution 6
6
To re-appoint Messrs Ernst & Young as Auditors and to authorise the Directors to fix their remuneration.
Resolution 7
10
PLUS Expressways Berhad Annual Report 2008
Notice of Annual General Meeting
continued
As Special Business To consider and if thought fit, to pass the following as ordinary resolutions: 7
8
PROPOSED AUTHORITY TO ALLOT SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965 “THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby authorised to allot and issue shares in the Company at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued capital of the Company as at the date of this Annual General Meeting (“AGM”) and that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad and that such authority shall continue to be in force until the conclusion of the next AGM of the Company.”
Resolution 8
PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE “THAT pursuant to paragraph 10.09 of the Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given for the renewal of the Shareholders’ Mandate for the Company and/or its subsidiaries (“PLUS Expressways Group”) to enter into recurrent related party transactions of a revenue or trading nature, which are necessary for the day-to-day operations of the PLUS Expressways Group to be entered into by the PLUS Expressways Group provided such transactions are in the ordinary course of business and are on terms not more favourable to the related party than those generally available to the public, particulars of which are set out in Section 2.2 of the Circular to Shareholders of the Company dated 13 May 2009, AND THAT such approval conferred by the Shareholders’ Mandate shall continue to be in force until: (a) the conclusion of the next Annual General Meeting (“AGM”) of the Company following this AGM at which such mandate is passed, at which time it will lapse, unless by a resolution passed at such general meeting whereby the authority is renewed; (b) the expiration of the period within which the next AGM of the Company after the date is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (Act) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or (c) revoked or varied by resolution passed by the shareholders in a general meeting,
whichever is the earlier,
AND FURTHER THAT the Directors of the Company and/or any of them be and are/is (as the case may be) hereby authorised to complete and do all such acts and things (including executing such documents under the common seal in accordance with the provisions of the Articles of Association of the Company, as may be required) to give effect to the Proposed Renewal of Shareholders’ Mandate.”
11
Resolution 9
PLUS Expressways Berhad Annual Report 2008
Notice of Annual General Meeting
9
continued
PROPOSED NEW MANDATE FOR ADDITIONAL RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE “THAT pursuant to paragraph 10.09 of the Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given for the Shareholders’ Mandate for the Company and/or its subsidiaries (“PLUS Expressways Group”) to enter into additional recurrent related party transactions of a revenue or trading nature, which are necessary for the day-to-day operations of the PLUS Expressways Group to be entered into by the PLUS Expressways Group provided such transactions are in the ordinary course of business and are on terms not more favourable to the related party than those generally available to the public, particulars of which are set out in Section 2.3 of the Circular to Shareholders of the Company dated 13 May 2009, AND THAT such approval conferred by the Shareholders’ Mandate shall continue to be in force until: (a) the conclusion of the next Annual General Meeting (“AGM”) of the Company following this AGM at which such mandate is passed, at which time it will lapse, unless by a resolution passed at such general meeting whereby the authority is renewed; (b) the expiration of the period within which the next AGM of the Company after the date is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (Act) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or (c) revoked or varied by resolution passed by the shareholders in a general meeting,
whichever is the earlier,
AND FURTHER THAT the Directors of the Company and/or any of them be and are/is (as the case may be) hereby authorised to complete and do all such acts and things (including executing such documents under the common seal in accordance with the provisions of the Articles of Association of the Company, as may be required) to give effect to the Proposed Shareholders’ Mandate.”
Resolution 10
Notice of Dividend Entitlement and Payment NOTICE IS HEREBY GIVEN THAT subject to the approval of the shareholders at the Seventh Annual General Meeting to be held on Thursday, 4 June 2009, a single tier final dividend of 9.5 sen per ordinary share for the financial year ended 31 December 2008 will be paid on 2 July 2009 to Depositors whose names appear in the Record of Depositors on 11 June 2009. A Depositor shall qualify for entitlement only in respect of: (a) securities transferred to the Depositor’s securities account before 4.00 pm on 11 June 2009 in respect of transfers; and (b) securities bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad. BY ORDER OF THE BOARD
Tan Hwee Thian (MIA 1904) Mazyu Sherina Mohamed Yusof (LS 0008780) Company Secretaries Kuala Lumpur Dated: 13 May 2009 12
PLUS Expressways Berhad Annual Report 2008
Notice of Annual General Meeting
continued
NOTE 1 1 Every member is entitled to appoint a proxy or in the case of a corporation, to appoint a representative to attend and vote in his place. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 need not be complied with. 2
To be valid, the original form of proxy duly completed must be deposited at the Share Registrar’s office, Symphony Share Registrars Sdn Bhd, Level 26, Menara Multi-Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur not less than 48 hours before the time of holding the meeting.
3
The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if such appointor is a corporation, under its common seal or under the hand of its attorney.
4
A member holding one thousand (1,000) ordinary shares or less may appoint only one (1) proxy to attend and vote at a general meeting who shall represent all the shares held by such member. A member holding more than one thousand (1,000) ordinary shares may appoint up to ten (10) proxies to attend and vote at the same meeting and each proxy appointed shall represent a minimum of one thousand (1,000) ordinary shares. Where a member appoints one (1) or more proxies to attend and vote at the same meeting, such appointment(s) shall be invalid unless the member specifies the proportion of his shareholding to be represented by each proxy.
5 If the form of proxy is returned without any indication as to how the proxy shall vote, the proxy will vote or abstain as he deems fit. 6 If no name is inserted in the space provided for the name of your proxy, the Chairman of the Meeting will act as your proxy. NOTE 2 Resolution pursuant to Section 132D of the Companies Act, 1965. The proposed Resolution 8, if passed, would enable the Directors to issue up to a maximum of 10% of the issued share capital of the Company as at the date of this Annual General Meeting for such purposes as the Directors consider would be in the best interest of the Company. This authority unless revoked or varied by the Company at a General Meeting will expire at the next Annual General Meeting. NOTE 3 Resolutions pertaining to the Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions and Proposed New Mandate for Additional Recurrent Related Party Transactions of a Revenue or Trading Nature. For Resolutions 9 and 10, further information on the Recurrent Related Party Transactions are set out in the Circular to Shareholders of the Company dated 13 May 2009 which is despatched together with the Company’s 2008 Annual Report. NOTE 4 The following person has been designated to attend to shareholders’ requests: Name : Khalilah Dato’ Mohd Talha Designation : Head, Corporate Communications Department Contact No : +603 7666 4666
Statement Accompanying the Notice of the Seventh Annual General Meeting DIRECTORS WHO ARE SEEKING RE-ELECTION AT THE SEVENTH ANNUAL GENERAL MEETING OF THE COMPANY
The details of the four (4) Directors seeking re-election are set out in their respective profiles which appear on pages 52 to 64 of this Annual Report. The details of their interest in the securities of the Company are set out in the Analysis of Shareholdings on page 236 of this Annual Report.
13
PLUS Expressways Berhad Annual Report 2008
Financial Calendar
2008 26 February
Announcement of financial results for the 4th quarter and year ended 31 December 2007.
Announcement of Key Performance Indicators (“KPI”) for 2008-2010.
13 March
Completion of acquisition of Konsortium Lebuhraya Butterworth-Kulim (“KLBK”) Sdn Bhd.
27 May
Announcement of financial results for the 1st quarter ended 31 March 2008.
18 June
Sixth Annual General Meeting.
16 July
Payment of final tax exempt dividend of 8.0 sen per ordinary share for financial year ended 31 December 2007.
21 August
Announcement of financial results for the 2nd quarter ended 30 June 2008.
23 September
Payment of single tier interim dividend of 6.5 sen per ordinary share for financial year ended 31 December 2008.
17 November
Announcement of financial results for the 3rd quarter ended 30 September 2008.
30 December
Completion of subscription and issue of 60% shares in PT Cimanggis Cibitung Tollways, Indonesia.
2009
14
26 February
Announcement of financial results for the 4th quarter and year ended 31 December 2008.
Announcement of Key Performance Indicators (“KPI”) for 2009-2010.
PLUS Expressways Berhad Annual Report 2008
Corporate Framework
Structured for Expansion
Company Profile
Awards and Recognition 2008
2008 Corporate Events
Milestones for The Group
Corporate Information
Group Corporate Structure
Group Organisation Structure
Media Milestones – Corporate
15
16 18 20 26 28 29 30 32
PLUS Expressways Berhad Annual Report 2008
Company Profile
Who we are... PLUS Expressways Group is the largest toll expressway operator in South East Asia and one of the largest in the world in terms of market capitalisation.
Incorporated in Malaysia on 29 January 2002, PLUS Expressways Berhad (“PLUS Expressways”) made its debut on the Main Board of Bursa Malaysia on 17 July 2002. PLUS Expressways is involved in investment holding and the provision of expressway operation services. PLUS Expressways wholly owns Projek Lebuhraya Utara-Selatan Berhad, Expressway Lingkaran Tengah Sdn Bhd, Linkedua (Malaysia) Berhad, Konsortium Lebuhraya Butterworth-Kulim (“KLBK”) Sdn Bhd and is a substantial shareholder of PLUS BKSP Toll Limited, PT Lintas Marga Sedaya and PT Cimanggis Cibitung Tollways.
Domestic Operations PLUS
ELITE
LINKEDUA
KLBK
• North-South Expressway • New Klang Valley Expressway • Federal Highway Route 2 • Seremban-Port Dickson Highway
• North-South Expressway Central Link
• Malaysia-Singapore Second Crossing
• Butterworth-Kulim Expressway
Length 63 km
Length 47 km
Length 17 km
Concession Period April 1994 – May 2030 (36 Years)
Concession Period July 1993 – December 2038 (45 Years)
Concession Period June 1994 – June 2026 (32 Years)
Length 846 km Concession Period March 1988 – December 2038 (50 Years)
16
PLUS Expressways Berhad Annual Report 2008
Company Profile
Total length in operation: 973 km
Companies under PLUS Expressways Berhad:
Domestic 100% 100% 100% 100%
continued
Projek Lebuhraya Utara-Selatan Berhad (“PLUS”) Expressway Lingkaran Tengah Sdn Bhd (“ELITE”) Linkedua (Malaysia) Berhad (“LINKEDUA”) Konsortium Lebuhraya Butterworth-Kulim (KLBK) Sdn Bhd (“KLBK”)
Total assets: RM17 billion Total concessions: 6 toll concessions
International India 94.12%* PLUS BKSP Toll Limited (“PLUS BKSP”)
Toll Road Business: 21 years experience
Indonesia 55% PT Lintas Marga Sedaya (“LMS”) 60% PT Cimanggis Cibitung Tollways (“CCTW”) * PLUS Expressways holds 94.12% direct and indirect interest in PLUS BKSP via PLUS Kalyan (Mauritius) Private Limited.
BHIWANDI
JAKARTA JAVA ISLAND, INDONESIA
KALYAN
SHIL PHATA
JAKARTA CIKAMPEK
CIBITUNG CIMANGGIS PALIMANAN
International Ventures PLUS BKSP Toll Limited (“PLUS BKSP”) • Bhiwandi-Kalyan-Shil Phata Highway in Mumbai, India Length 22 km Status 99% complete. Toll collection anticipated in first half of 2009
PT Lintas Marga Sedaya (“LMS”) • Cikampek-Palimanan Expressway in West Java, Indonesia
PT CIMANGGIS CIBITUNG TOLLWAYS (“CCTW”) • Cimanggis-Cibitung Toll Road in Jakarta, West Java, Indonesia
Length 116 km
Length 25.4 km
Status Land acquisition in progress
Status Preliminary stage of development
17
PLUS Expressways Berhad Annual Report 2008
Awards and Recognition 2008
1
2
6 7
3
5 4
1.
The Brand Laureate Award – Best Brands, Infrastructure, Expressways
Not Shown in Picture: 1.
Sri Wijaya Award (Company contribution in support of progression and adoption of UEM Group’s corporate initiatives and activities) – UEM Group Annual Awards
2.
National Quality Award – Bronze Award under the category of R&R Highway Toilet Ministry of Housing and Local Government
Sri Cemerlang Award (Image & Perception Management) – UEM Group Annual Awards
3.
Sri Wira Award for Azidah Sahri, Section S5 (Best Employee, Non-Executive) – UEM Group Annual Awards
4.
The Brand Laureate Award – Branding, SMEs Best Supporter, Infrastructure
4.
5.
Corporate Governance Survey 2008 – Joint 14th place
Sri Mulia Award for Rene’e Aziz Ahmad, Maintenance Monitoring Department (Contribution of Employee to the Community) – UEM Group Annual Awards
6.
National Quality Award – Silver Award under the category of R&R Highway Toilet Ministry of Housing and Local Government
5.
Six Sigma Green Belt Certification – Johari Jivisol Abdullah, Maintenance Monitoring Department
6.
1st runner-up for Continual Improvement Competition (“CIC”) during UEM Excellence Conference 2008
7.
Champion in Improvement in Work Quality Competition (“KMK”) organised by Malaysian Highway Authority
2. 3.
7.
National Quality Award – Gold Award under the category of R&R Highway Toilet Ministry of Housing and Local Government
Sri Cemerlang Award (System & Process Improvement) – UEM Group Annual Awards
ACHIEVEMENTS IN
2008
18
PLUS Expressways Berhad Annual Report 2008
Awards and Recognition 2008
continued
2007
2005
2002-2003
1. Anugerah Sri Cemerlang – Productivity of Resources UEM Group Annual Awards
1. Most Accessible Directors and Senior Management 4th in Asia and first in Malaysia Euromoney Magazine Survey
1. Best Performing Company UEM Group Annual Awards
2. Anugerah Sri Cipta Early Fault Detection System UEM Group Annual Awards 3. Anugerah Sri Wira Fisor Md Rashid UEM Group Annual Awards 4.
Gold Award for Innovative & Creative Circle Convention Competition Team ‘Jati’ from Section S5
5. RAM Award of Distinction – Blueprint Awards for New Project Finance Benchmark Deal Issuance of Sukuk Musyarakah – RM9.17 billion 6. Champion in UEM Group MD/CEO Businesss Simulation Challenge 2006/2007 ‘Super PLUS Corporation’ – Syairul Irwan Rased, Shatri Ahmad, Zetty Bismaniza, Adila Mustapa
2006
2. Best Performing Company UEM Group Sri Cemerlang Award – UEM Group Annual Awards 2005 3. 4. 5.
2.
2.
Triple Gold Award during National Creative Circle Convention Team ‘Jati’ from Section S5
3. Sri Cemerlang Award Productivity of Resources UEM Group Annual Awards 4.
Gold Award during Regional Innovative and Creative Circle Convention Team ‘Jati’ from Section S5 and Team ‘Warisan’ of Section S3
5. UEM’s CEO Challenge Trophy and Best Presentation during UEM Continual Improvement Competition 2006 in conjunction with UEM Excellence Conference Team ‘Jati’ from Section S5 6. Champion in Continual Improvement Competition Team ‘Warisan’ of Section S3 7.
Best Toilet Design Tapah Rest and Service Area (South bound) Ministry of Housing and Local Government Award
Best Highway Concessionaire – Layby Management Northern Region Malaysian Highway Authority Award
3.
3.
Gold Award for Quality Improvement Competition during Mini Konvensyen QCC Wilayah Utara – Team ‘Maju’ from Toll Department – Team ‘Jati’ from Section S5 – Team ‘Graviti’ from Section N1 – Team ‘Dinamik’ from Section C2
4. Leader Road Concessionaire Sector United Engineers Malaysia Bhd Award
Winner for Quality Improvement Competition MHA Quality Day (QCC Team ‘Warisan’ of Section S3)
5. Achievement Award – Finance Asia 2002: Best Local Currency Bond Deal Islamic Bond
Certification
1. No. 1 in Corporate Governance Reporting Survey among top 100 companies listed on Bursa Malaysia
Johor Landscaping Competition 3rd place
Grade A Clean Premises All F&B outlets on NSE – Ministry of Health
2004
1.
Best Highway Concessionaire – RSA Management Northern Region Malaysian Highway Authority Award
2.
1. OHSAS 18001:2007 – Projek Lebuhraya Utara-Selatan Bhd Occupational Health and Safety Management System
2004 Pertubuhan Arkitek Malaysia (“PAM”) Award – Thematic identity and landscaping concept Senawang, Pedas Linggi, Tangkak and Kampung Bemban Laybys
2. ISO 9001:2000 – Operations, Research, Planning, Maintenance and Development Quality Management System
Winner for Quality Improvement Competition MHA Quality Day (QCC Team ‘Jati’ of Section S5)
3. ISO 9001:2000 – Finance and Support Services Quality Management System 4. ISO 14001:2004 Environmental Management System
4. Company Merit Award UEM Group Excellence Conference 2004 (EC 2004) 5.
Winner for Quality Improvement Competition UEM – Excellence Conference Award (QCC Team ‘Jati’ of Section S5)
PREVIOUS AWARDS
2002-2007 19
PLUS Expressways Berhad Annual Report 2008
2008 Corporate Events
11 Jan 2008
3 Apr 2008
Department heads perform at the PLUS Expressways 2007 Annual Dinner at Sheraton Subang Hotel
Participants receiving helmets for answering correctly at a “Respect Your Limits” safety seminar in Ipoh.
28 Jan 2008
1 & 2 Mac 2008
Drivers and operators of heavy vehicles listening intently to speakers at the “Respect Your Limits” safety seminar in Alor Setar
Fast and furious action during Round 1 of the PLUS Rotax Max Challenge 2008 at the Speedway PLUS Circuit
5 Apr 2008 Having fun while being grilled at an “It’s All About You” Appreciation Hi-Tea for loyal customers at Planet Hollywood
31 Jan 2008 A lion dance performance signaled the launch of “Respect Your Limits” safety campaign in conjunction with the 2008 Chinese New Year at Sungai Buloh OBR
29 Apr 2008
9 May 2008
Media representatives taking a closer look at one of the robots used for culvert inspections during a media tour to highlight structured expressway maintenance regime
PLUS FC team captain presenting a jersey to the PLUS Chairman for the team’s promotion to the Malaysian Super League at an appreciation dinner
20
PLUS Expressways Berhad Annual Report 2008
2008 Corporate Events
21
continued
PLUS Expressways Berhad Annual Report 2008
2008 Corporate Events
continued
6 Jun 2008
11 Jul 2008
The soft opening of the new Ipoh Utara Toll Plaza was officiated by the Works Minister
PLUS swept awards in various categories at the UEM Group Annual Awards Night
20-25 Jun 2008
11 Jul 2008
Grim determination on the faces of the PLUS HQ tug-of-war team as they battle for gold at the 2008 Inter-Region Games
PLUS personnel played a big role in the rear seatbelt-wearing advocacy programme
19 & 20 Jul 2008
19 & 20 Jul 2008
Staff and their children having a splashing time at the PLUS Family Day in Port Dickson
Go-kart drivers ready to pit their skills during Round 4 of the PLUS Asia Max Challenge at Speedway PLUS Circuit
23-26 Jul 2008
9 Aug 2008
The PLUS Sepak Takraw team displaying agility and acrobatic skills at the 2008 Sukan Kerja Raya in Melaka
Durian lovers flocked the Bukit Gantang Tropical Fruit Village (southbound) during a “Jom Makan Durian” festival
22
PLUS Expressways Berhad Annual Report 2008
2008 Corporate Events
23
continued
PLUS Expressways Berhad Annual Report 2008
2008 Corporate Events
continued
26 Aug 2008
29 Sep 2008
Speakers of the “Respect Your Limits” safety seminar in Kuala Terengganu educating a participant on the proper way of wearing a helmet
Launch of “Balik Kampung” safety campaign at the Sungai Besi Toll Plaza
23 Oct 2008
17 Nov 2008
18 Nov 2008
The unveiling of a new logo signalled a more dynamic era for PLUS
A ‘Doa Selamat’ ceremony was held at Persada PLUS as staff moved in to the permanent headquarters
The PLUS Travel Incentive Programme was unveiled by the Works Minister
4 Dec 2008
21-23 Nov 2008
The PLUS FC team achieved high media visibility in its journey to the Super League
The recently launched new PLUS logo made its international debut at the Malaysian leg of the A1 Grand Prix World Cup of Motor Sport series when it was telecast live to over 65 tv channels worldwide
17 Dec 2008 Local celebrities endorsing the PLUSMiles Loyalty Card at its launch ceremony in Sungai Buloh OBR
24
PLUS Expressways Berhad Annual Report 2008
2008 Corporate Events
25
continued
PLUS Expressways Berhad Annual Report 2008
26
PLUS Expressways Berhad Annual Report 2008
2004
2003
2002
Milestones for The Group
Milestones for The Group
continued
29 January 2002
7 October 2004
PLUS Expressways incorporated in Malaysia as a Public Company
Takeover of operation and maintenance services of Seremban – Port Dickson Highway (“SPDH”) by PLUS
31 MAY 2002
22 April 2005
PLUS issued RM5.1 billion Bai’ Bithaman Ajil Islamic Debt Securities
Third Supplemental Concession Agreement Signing Ceremony between the Government and PLUS
17 July 2002
17 JUNE 2005
Initial Public Listing of PLUS Expressways on the Kuala Lumpur Stock Exchange (now known as Bursa Malaysia Securities Berhad)
Issuance of RM2.41 billion nominal value zero coupon Serial Bai’ Bithaman Ajil Islamic Securities by PLUS
30 October 2002 Old Nilai Toll Plaza closed
Through a consortium, PLUS Expressways won the bid for the Bhiwandi-Kalyan-Shil Phata Highway in India
31 October 2002
10 OCTOBER 2006
New Nilai Interchange opened
11 DECEMBER 2002
Issuance of globally-syariah compliant Islamic securities under Musyarakah principle amounting to RM9.17 billion nominal value by PLUS
PLUS issued RM2.26 billion nominal value Bai’ Bithaman Ajil Serial Bonds
18 OCTOBER 2006
28 MAY 2003
16 MAY 2006
Soft opening of Pendang Interchange
1 NovEMBER 2006
First Annual General Meeting
1 September 2003 PLUS Expressways provided expressway operation and maintenance services to PLUS, ELITE and LINKEDUA
8 September 2003 The official opening of Kota Damansara Interchange
1 January 2004 PLUS Expressways provided expressway operation and maintenance services to Penang Bridge
1 March 2004 Senai Toll Plaza closed
Signing of Heads of Agreement between PT Baskhara Utama Sedaya and PLUS Expressways for proposed acquisition of 55% share capital in PT Lintas Marga Sedaya for proposed 116km Cikampek-Palimanan toll highway project
27 August 2007 PLUS Travel Time Advisory (“TTA”) introduced to the public
18 SEPTEMBER 2007 Through an unincorporated consortium, PLUS Expressways won the tender bid for the proposed 25.4km package 4 Cimanggis-Cibitung Toll Road project in Indonesia
18 DECEMBER 2007 Completion of acquisitions of entire issued and paid-up share capital of ELITE and LINKEDUA
2007
2006
2005
27
PLUS Expressways Berhad Annual Report 2008
Corporate Information
Board of Directors
Audit Committee Members
Registered Office
Tan Sri Dato’ Mohd Sheriff Mohd Kassim Chairman
Geh Cheng Hooi Chairman
Dato’ Ahmad Pardas Senin Non-Executive Deputy Chairman
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid
19-2 Mercu UEM Jalan Stesen Sentral 5 Kuala Lumpur Sentral 50470 Kuala Lumpur, Malaysia Tel : +603 2727 6868 Fax: +603 2727 2211
Datuk K. Ravindran
Quah Poh Keat Noorizah Hj Abd Hamid Managing Director Geh Cheng Hooi Senior Independent Non-Executive Director
Auditors Nomination Committee Members Tan Sri Dato’ Mohd Sheriff Mohd Kassim Chairman
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid Independent Non-Executive Director
Geh Cheng Hooi
Hassan Ja’afar Non-Independent Non-Executive Director
Remuneration Committee Members
Dato’ Mohamed Azman Yahya Non-Independent Non-Executive Director
Datuk K. Ravindran
Tan Sri Dato’ Mohd Sheriff Mohd Kassim Chairman Dato’ Ahmad Pardas Senin Hassan Ja’afar
Tan Sri Razali Ismail Independent Non-Executive Director
Datuk K. Ravindran
Datuk K. Ravindran Independent Non-Executive Director
Investment Committee Members
Quah Poh Keat Independent Non-Executive Director
Tan Sri Dato’ Mohd Sheriff Mohd Kassim Chairman
Abdul Farid Alias (resigned w.e.f. 31 December 2008) Non-Independent Non-Executive Director Datuk Seri Panglima Mohd Annuar Zaini (appointed w.e.f. 19 December 2008) Independent Non-Executive Director Dato’ Seri Ismail Shahudin (appointed w.e.f. 21 April 2009) Non-Independent Non-Executive Director
28
PLUS Expressways Berhad Annual Report 2008
Messrs Ernst & Young Chartered Accountants Level 23A, Menara Milenium Jalan Damanlela Pusat Bandar Damansara 50490 Kuala Lumpur P.O. Box 11040 50734 Kuala Lumpur, Malaysia Tel: +603 7495 8000 Fax: +603 2095 5332 www.ey.com
Head/Management Office Menara Korporat, Persada PLUS Persimpangan Bertingkat Subang KM15, Lebuhraya Baru Lembah Klang 47301 Petaling Jaya Selangor Darul Ehsan, Malaysia Tel: +603 7801 6666/7666 4666 Fax: +603 7801 6600/7666 4400 www.plus.com.my
Principal Bankers CIMB Bank Berhad Malayan Banking Berhad
Dato’ Ahmad Pardas Senin Dato’ Mohamed Azman Yahya
Share Registrar
Noorizah Hj Abd Hamid
Symphony Share Registrars Sdn Bhd Level 26, Menara Multi-Purpose Capital Square No. 8 Jalan Munshi Abdullah 50100 Kuala Lumpur, Malaysia Tel: +603 2721 2222 Fax: +603 2721 2530/31 www.symphony.com.my
Company Secretaries Tan Hwee Thian MIA 1904 Mazyu Sherina Mohamed Yusof LS 0008780
Stock Exchange Listing Main Board, Bursa Malaysia Securities Berhad
Group Corporate Structure as at 27 April 2009
Khazanah Nasional Berhad 100%
23.66% UEM Group Berhad 40.21%
Domestic Projek Lebuhraya Utara-Selatan Berhad 100% Expressway Lingkaran Tengah Sdn Bhd 100% Linkedua (Malaysia) Berhad 100% Konsortium Lebuhraya Butterworth-Kulim (KLBK) Sdn Bhd 100%
International PLUS BKSP Toll Limited (India) 94.12%* PT Lintas Marga Sedaya (Indonesia) 55% PT Cimanggis Cibitung Tollways (Indonesia) 60%
* PLUS Expressways Berhad holds 94.12% direct and indirect interest in PLUS BKSP via PLUS Kalyan (Mauritius) Private Limited.
29
PLUS Expressways Berhad Annual Report 2008
Group Organisation Structure
Managing Director
Chief Operating Officer
Operations Division Traffic Safety/Toll/Commercial Facilities/ Operations Security/Regional Operations/ Routine Maintenance Monitoring/ Toll System Monitoring
Maintenance & Development Division Concession Monitoring Support/ Electronics & Telecommunication Projects/ Projects Monitoring/Maintenance Monitoring
Research & Technical Support Division Database Management/Research
Planning & Quality Improvement Division Productivity & Quality Management/Planning
Chief Financial Officer
30
PLUS Expressways Berhad Annual Report 2008
Staff Support Services Division Human Resource/Human Capital Development/ Asset Management & Facilities
Group Organisation Structure
continued
Works Procurement Special Projects Corporate Affairs Accounting Treasury Risk Management Purchasing & Inventory Management Information System
Managing Director’s Office Business Development Corporate Communications Legal & Secretarial Support Customer Relationship & Marketing Internal Audit
31
PLUS Expressways Berhad Annual Report 2008
Media Milestones – Corporate Corporate News Clippings
32
PLUS Expressways Berhad Annual Report 2008
Financial Review
Enriching Returns
Five-Year Group Financial Highlights
2008 Group Operational Highlights
Simplified Group Balance Sheet
Group Quarterly Performance
Group Financial Review
Statement of Value Added
Share Price & Volume Traded
Market Capitalisation
Media Milestones – Financial
33
34 36 40 41 42 46 47 47 48
PLUS Expressways Berhad Annual Report 2008
Five-Year Group Financial Highlights
2008
2007
2006
2005
2004
2,237 2,968 2,448 1,516 1,079
1,820 2,282 2,187 1,308 1,248
1,691 2,091 1,977 1,108 1,105
1,664 1,671 1,788 1,071 1,064
1,499 1,650 1,500 774 768
17,021 10,473 11,324 1,250 5,678
15,893 10,080 10,543 1,250 5,340
12,588 7,315 8,070 1,250 4,518
12,008 6,968 7,846 1,250 4,161
10,783 7,063 7,285 1,250 3,498
22.9 82.5 19.6 6.6 1.8
7.7 86.7 25.3 8.8 1.9
1.6 84.0 25.5 9.0 1.6
11.0 97.0 27.8 9.3 1.7
3.9 82.2 23.4 7.2 2.0
Profitability (RM million) 1 2 3 4 5
Toll collection Revenue EBITDA* Profit before tax Profit attributable to equity holders
Key Balance Sheet Data (RM million) 1 2 3 4 5
Total assets Total borrowings & financial liabilities Total liabilities Share capital Shareholders’ equity
Financial Statistics
Profit Before Tax
5,678
5,340
4,518
1,516
1,308
1,108
774
2,237
(RM million)
2004 2005 2006 2007 2008
2004 2005 2006 2007 2008
2004 2005 2006 2007 2008
Dividend Per Share
Earnings Per Share
Net Assets Per Share
113.9
107.0
90.4
83.2
70.0
21.6
25.0
22.1
21.3
(sen)
15.4
16.0
14.0
(sen)
9.0
7.5
12.5
(sen)
34
Shareholders’ Equity
(RM million)
1,820
1,691
1,664
1,499
(RM million)
4,161
Toll Collection
3,498
Toll collection growth (%) EBITDA margin (%)* Return on average equity (%) Return on average assets (%) Debt/equity (Times)
1,071
1 2 3 4 5
PLUS Expressways Berhad Annual Report 2008 2004 2005 2006 2007 2008
2004 2005 2006 2007 2008
2004 2005 2006 2007 2008
Five-Year Group Financial Highlights
continued
2008
2007
2006
2005
2004
21.6 113.9
25.0 107.0
22.1 90.4
21.3 83.2
15.4 70.0
Share Information 1
Per share (sen) Earnings Net assets
2
Share price (RM) High Low Closing
3.28 2.53 2.98
3.44 2.78 3.28
3.12 2.57 2.81
3.42 2.67 3.06
2.89 2.16 2.80
3
Dividends Dividends (RM million) Dividend per share (sen) Dividend growth (%) Dividend payout ratio (%)
800^ 16.0^ 14 74^
700 14.0 12 56
625 12.5 39 57
450 9.0 20 42
375 7.5 7 49
Toll Collection
Profit Before Tax
(RM million)
5,678
5,340
4,518
4,161
3,498
1,516
1,308
1,108
2004 2005 2006 2007 2008
2004 2005 2006 2007 2008
2004 2005 2006 2007 2008
Dividend Per Share
Earnings Per Share
Net Assets Per Share
2004 2005 2006 2007 2008
70.0
2004 2005 2006 2007 2008
113.9
107.0
90.4
83.2
21.6
25.0
22.1
21.3
(sen)
15.4
16.0
14.0
(sen)
9.0
7.5
12.5
(sen)
1,071
774
2,237
1,820
1,691
1,499
^
(RM million)
2004-2007: Before deduction for notional tax on tax exempt dividends and notional interest on Government Support Loan pursuant to toll compensation arrangement per Second Supplemental Concession Agreement. 2008: No provision for notional tax on tax exempt dividends following election of single tier tax system in 2008. Includes single tier final dividend of RM475 million or 9.5 sen per share to be proposed at the forthcoming Seventh Annual General Meeting. 1,664
*
Shareholders’ Equity
(RM million)
2004 2005 2006 2007 2008
35
PLUS Expressways Berhad Annual Report 2008
2008 Group Operational Highlights
PLUS
2008
2007
2006
2005
2004
Traffic Volume Analysis 1
Traffic volume growth (%)
2
Total traffic volume (No. of vehicles)
3
Average daily traffic volume (No. of vehicles)
5.2%
7.7%
1.6%
0.8%
3.9%
376,531,093
367,666,873
342,424,316
337,472,380
332,519,383
1,028,773
1,007,307
938,149
924,582
908,523
Method of Payment (%) 1
Manual cash payments
51%
54%
57%
61%
64%
2
Electronic Toll Collection (“ETC”)
49%
46%
43%
39%
36%
Traffic Volume Growth
Traffic Volume
(in pcu-km)
(Number of vehicles in millions) 7.7% 333
337
342
2004
2005
2006
368
377
2007
2008
5.2% 3.9% 1.6% 0.8% 2004
2005
2006
2007
2008
Average Daily Traffic Volume
Method of Toll Payment
(Number of vehicles in thousands)
909
2004
36
925
2005
938
2006
1,007
2007
PLUS Expressways Berhad Annual Report 2008
1,029
2008
64%
61%
57%
54%
51%
36%
39%
43%
46%
49%
2004
2005
2006
2007
2008
Cash
Electronic
2008 Group Operational Highlights
ELITE
2008
2007
2006
2005
continued
2004
Traffic Volume Analysis 1
Traffic volume growth (%)
2
Total traffic volume (No. of vehicles)
3
Average daily traffic volume (No. of vehicles)
4.0%
6.0%
2.8%
8.3%
6.4%
64,878,032
61,436,481
57,951,567
56,437,362
50,262,278
177,262
168,319
158,771
154,623
137,329
Method of Payment (%) 1
Manual cash payments
45%
48%
51%
55%
60%
2
Electronic Toll Collection (“ETC”)
55%
52%
49%
45%
40%
Traffic Volume Growth
Traffic Volume
(in pcu-km)
(Number of vehicles in millions)
8.3% 6.4%
56
58
61
2005
2006
2007
50
6.0%
65
4.0% 2.8%
2004
2005
2006
2007
2008
Average Daily Traffic Volume
137
2004
155
2005
159
2006
2007
2008
Method of Toll Payment
(Number of vehicles in thousands) 168
2004
177
60%
55%
51%
48%
45%
40%
45%
49%
52%
55%
2004
2005
2006
2007
2008
2008
Cash
37
Electronic
PLUS Expressways Berhad Annual Report 2008
2008 Group Operational Highlights
continued
LINKedua
2008
2007
2006
2005
2004
Traffic Volume Analysis 1
Traffic volume growth (%)
2
Total traffic volume (No. of vehicles)
3
Average daily traffic volume (No. of vehicles)
19.6%
11.9%
4.4%
7.0%
13.5%
19,885,326
17,185,244
15,457,326
15,053,416
14,263,742
54,331
47,083
42,349
41,242
38,972
Method of Payment (%) 1
Manual cash payments
69%
75%
78%
82%
87%
2
Electronic Toll Collection (“ETC”)
31%
25%
22%
18%
13%
Traffic Volume Growth
Traffic Volume
(in pcu)
(Number of vehicles in millions) 20
19.6% 17 14
13.5%
15
15
2005
2006
11.9% 7.0% 4.4%
2004
2005
2006
2007
2008
Average Daily Traffic Volume 54
2004
38
41
2005
42
2006
2007
2008
Method of Toll Payment
(Number of vehicles in thousands)
39
2004
87%
82%
78%
75%
69%
18%
22%
25%
31%
13% 2004
2005
2006
2007
2008
47
2007
PLUS Expressways Berhad Annual Report 2008
2008
Cash
Electronic
2008 Group Operational Highlights
BKE
2008
2007
2006
2005
continued
2004
Traffic Volume Analysis 1
Traffic volume growth (%)
2
Total traffic volume (No. of vehicles)
3
Average daily traffic volume (No. of vehicles)
-1.9%
4.1%
4.0%
0.1%
8.7%
20,206,780
20,662,169
19,811,951
19,042,492
18,994,475
55,210
56,609
54,279
52,171
51,897
Method of Payment (%) 1
Manual cash payments
56%
60%
64%
68%
72%
2
Electronic Toll Collection (“ETC”)
44%
40%
36%
32%
28%
Traffic Volume Growth
Traffic Volume
(in pcu)
(Number of vehicles in millions)
8.7%
4.0%
2005
2006
2007
2008
2004
2005
2005
54
2006
57
2007
2006
2007
2008
Method of Toll Payment
(Number of vehicles in thousands) 52
2004
20
(1.9%)
Average Daily Traffic Volume 52
19
4.1%
0.1%
2004
21
20
19
55
72%
68%
64%
60%
56%
28%
32%
36%
40%
44%
2004
2005
2006
2007
2008
2008
Cash
39
Electronic
PLUS Expressways Berhad Annual Report 2008
Simplified Group Balance Sheet
Assets 2008 72.7%
Concession Assets
13.1%
Cash, Bank Balances and Short Term Deposit
11.8%
Toll Compensation Recoverable from Government
1.3%
Investments
0.5%
Property, Plant and Equipment, Prepaid Land Lease Payments and Intangible Assets
0.5%
Other Assets
0.1%
Tax and Deferred Tax Assets
Total Assets RM17,021 million
Liabilities and Shareholders’ Equity 2008
Total Liabilities and Shareholders’ Equity RM17,021 million
40
PLUS Expressways Berhad Annual Report 2008
61.5%
Financial Liabilities and Borrowings
26.0%
Reserves
7.3%
Share Capital
2.3%
Tax and Deferred Tax Liabilities
1.9%
Other Liabilities
0.8%
Payables
0.1%
Amount Received from Government for Additional Works
0.1%
Minority Interests
Group Quarterly Performance
2008 (RM million)
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Full Year
FINANCIAL PERFORMANCE Revenue Direct cost of operations
720 (199)
738 (220)
717 (229)
793 (232)
2,968 (880)
Finance and other income General and administration expenses Finance cost
521 41 (21) (157)
518 41 (20) (158)
488 37 (20) (164)
561 34 (19) (166)
2,088 153 (80) (645)
384 275 5.5 —
381 266 5.3 6.5
341 242 4.9 —
410 297 5.9 9.5^
1,516 1,080 21.6 16.0
Profit before tax Profit after tax Earnings per share (sen) Dividend per share (sen)
2007 (RM million)
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Full Year
Revenue Direct cost of operations
524 (163)
570 (161)
554 (166)
634 (186)
2,282 (676)
Finance and other income General and administration expenses Finance cost
361 32 (11) (115)
409 34 (11) (115)
388 29 (14) (111)
448 111 (13) (114)
1,606 206 (49) (455)
Profit before tax Profit after tax Earnings per share (sen) Dividend per share (sen)
267 259 5.2 —
317 310 6.2 6.0
292 286 5.7 —
432 393 7.9 8.0
1,308 1,248 25.0 14.0
FINANCIAL PERFORMANCE
^ To be proposed at the forthcoming Seventh Annual General Meeting.
41
PLUS Expressways Berhad Annual Report 2008
Group Financial Review
BreakdownofofToll TollCollection Collection Breakdown
INCOME STATEMENT Revenues
RM Million
2008
% 2007 Variance Change
Toll collection
2,237
1,821
416
23%
Net toll compensation
731
455
276
61%
Expressway operation service fee Total revenues
86%
9% 4%
0
6
-6
-100%
2,968
2,282
686
30%
1%
PLUS ELITE LINKEDUA
In 2008, consolidated revenues for the Group reached RM2,968 million, representing a growth of 30% from RM2,282 million in 2007. The main contributor to the growth was the first time consolidation of results from new subsidiaries namely, ELITE, LINKEDUA and KLBK with total revenue of RM324 million. The increase was also due to higher toll collection for PLUS by RM92 million on the back of a year-on-year traffic growth of 5.2%. Net toll compensation of RM731 million for 2008 consists of non-cash toll compensation of RM536 million and the remaining was compensation for non-toll rate increase in 2008. In 2008, higher non-cash toll compensation was recorded as compared to 2007 as there was no deduction for notional tax on tax exempt dividends in 2008 following the election of the single tier tax system effective January 2008.
KLBK
The analysis of toll collection by concession company shows that PLUS contributes the highest toll collection of 86%, followed by ELITE of 9%, LINKEDUA of 4% and KLBK of 1% for 2008.
Operating Costs
RM Million
2008
% 2007 Variance Change
Routine maintenance
228
201
-27
-13%
Management expenditure
348
268
-80
-30%
Depreciation & amortisation
383
257
-126
-49%
Total operating costs
959
726
-233
-32%
Consolidation of three new subsidiaries in 2008, increase in amortisation charges in correspondence to higher toll revenue and increase in management expenditure contributed to the higher operating costs in 2008.
42
PLUS Expressways Berhad Annual Report 2008
Group Financial Review
The breakdown of management expenditure is shown as follows:
BreakdownofofManagement ManagementExpenditure Expenditure Breakdown
2008
12%
continued
BALANCE SHEET Assets
RM Million
2008
% 2007 Variance Change
Non-current assets 10%
Concession assets Property, plant and equipment
7%
Investments
6%
Toll compensation recoverable from the Government
4%
57%
4%
Others
12,380
11,723
657
6%
48
45
3
7%
166
115
51
44%
1,910
1,393
517
37%
38
69
-31
-45%
2,234
2,418
-184
-8%
245
130
115
88%
17,021
15,893
1,128
7%
Current assets
Employee Costs
Deposits and cash
General Expenses
Others
Utilities Toll Consumables & Commission
Total assets
Professional Fees Repairs & Maintenance
In 2008, total assets reached RM17,021 million, 7% higher than 2007.
Advertising & Marketing
2007
11% 10%
8%
59%
5% 4%
The increase in concession assets by RM657 million was attributed to additional expressway capital expenditure of RM353 million and inclusion of KLBK’s concession assets of RM304 million. The increase in toll compensation recoverable from the Government is pursuant to toll compensation settlement arrangement as set out in PLUS’s Second Supplemental Concession Agreement.
3%
Significant costs under management expenditure are employee costs. At the end of 2008, there was 4,010 staff (2007: 3,478 staff) with 78% are frontliners for operational requirements. Continued corporate and debt refinancing exercises resulted in higher professional fees, while other costs were generally kept under control.
43
PLUS Expressways Berhad Annual Report 2008
Group Financial Review
continued
Concession assets which consist of expressway development expenditure, heavy repairs and toll equipment, make up more than 72% of total assets for the Group. The breakdown of concession assets is shown below.
Equity and Liabilities
2008
% 2007 Variance Change
1,250
1,250
0
0%
740
761
-21
-3%
Retained earnings
3,688
3,329
359
11%
Shareholders’ equity
5,678
5,340
338
6%
19
10
9
90%
5,697
5,350
347
6%
9,522
8,583
939
11%
573
121
452
>100%
Trade and sundry payables
139
153
-14
-9%
Short term financial liabilities and borrowings
951
1,497
-546
-36%
Others
139
189
-50
-26%
Total liabilities
11,324
10,543
781
7%
Total equity and liabilities
17,021
15,893
1,128
7%
RM Million Equity Share Capital
Breakdown BreakdownofofConcession ConcessionAssets Assets
Reserves
2008
91%
Minority interests Total equity Non-current liabilities 6% 1% 2%
Long term financial liabilities and borrowings Others
Expressway Development Expenditure Heavy Repairs Other Concession Assets Capital Work-In-Progress
2007
92%
Current liabilities
Change in reserves was mainly due to foreign exchange translation differences. 5% 1% 2%
44
PLUS Expressways Berhad Annual Report 2008
Retained earnings of RM3,688 million is after dividend distributions of RM725 million, made up of final tax exempt dividend for FY2007 of RM400 million and the single tier interim dividend for FY2008 of RM325 million.
Group Financial Review
The analysis of total debts is as follows: Net Debt RM Million
2008
2007
Financial Liabilities
8,589
7,689
1,464
1,383
420
1,008
Total financial liabilities and borrowings
10,473
10,080
Cash and cash equivalents
2,234
2,418
Net Debt
8,239
7,662
1.45
1.43
Borrowings Government loans
Net Debt/Equity (times)
The total financial liabilities as at end 2008 included KLBK’s BAIDS of RM176 million, as consolidated following the acquisition in March 2008. The additional financial liabilities during year 2008 are: • issuance of PLUS’s Sukuk Series 3 of RM700 million nominal value (RM308 million present value on issue date) in May 2008 to partially redeem PLUS Senior Sukuk; and • issuance of PLUS SPV Sukuk of RM1,055 million nominal value (RM762 million present value on issue date) under the RM4,000 million nominal value PLUS SPV Sukuk in June 2008 to partially refinance the bridging loan facility.
Debt Rating and Outlook Rating
Outlook
AA1
Stable
PLUS Senior Sukuk
AAA
Stable
PLUS Sukuk Series 1
AAA
Stable
PLUS Sukuk Series 2
AAA
Stable
PLUS Sukuk Series 3
AAA
Stable
PLUS Expressways Berhad PLUS SPV Sukuk
Rating
Outlook
AA2
Stable
AA3
Stable
ELITE ELITE BAIDS KLBK KLBK BAIDS
Other loans
continued
The above Islamic financial facilities are rated by a Malaysian rating agency, RAM Rating Services.
DIVIDENDS Since the announcement of KPI on dividend in 2006, PEB has consistently achieved the target minimum dividend growth of 12%. In 2008, with the payment of single tier interim dividend of 6.5 sen per share on 23 September 2008 and the recommended single tier final dividend of 9.5 sen per share to be approved by the shareholders at the forthcoming Annual General Meeting, the total dividend payout for FY2008 will be 16.0 sen per share or a total of RM800 million, representing a growth of 14.3% as compared to 14.0 sen per share payout in 2007. The payout also represents 74% of the Group’s net profit. PLUS Expressways will continue to deliver value to its shareholders and to achieve this, the Board has reviewed its dividend payout policy to be a minimum 70% of the Group’s net profit, subject to the availability of cashflows, after taking into consideration the debt servicing and financing commitments for the Group companies as well as future expansion plans. The effort continues to achieve the KPI on minimum dividend payout of 16 sen per share for FY2009, despite the many challenges in the current economic environment.
PLUS
45
PLUS Expressways Berhad Annual Report 2008
Statement of Value Added
Value added is a measure of wealth created. The following statement shows the Group’s value added for 2008 and 2007 and its distribution by way of payments to employees, government and shareholders, with the balance retained in the Group for reinvestment and future growth. 2008 RM million
2007 RM million
VALUE ADDED Revenue Other income Finance income Operating expenses Finance cost
2,968 57 96 (380) (645)
2,282 132 75 (310) (455)
Value added available for distribution
2,096
1,724
To Employees Employees cost
198
159
To Government Taxation
435
60
To Shareholders Dividend Minority interests
725 1
425 —
Retained for reinvestment and future growth Depreciation, amortisation, disposal & write-off Retained earnings
383 354
257 823
2,096
1,724
DISTRIBUTION
Total distributed
Distribution of Value Added 2008
2007 35.2%
62.7%
Depreciation, amortisation, disposal & write-off and retained earnings 34.6%
24.6%
Dividend and Minority interests 20.8%
3.5% Taxation
9.4%
9.2%
Employees cost
46
PLUS Expressways Berhad Annual Report 2008
47
31.12.2008
28.11.2008
31.10.2008
30.09.2008
29.08.2008
Volume
31.07.2008
30.06.2008
30.05.2008
30.04.2008
31.03.2008
29.02.2008
31.01.2008
31.12.2008
28.11.2008
31.10.2008
30.09.2008
29.08.2008
31.07.2008
30.06.2008
30.05.2008
30.04.2008
31.03.2008
29.02.2008
31.01.2008
Share Price & Volume Traded
Million shares RM
15 3.4
12 3.2
3.0
9 2.8
6 2.6
3 2.4
2.2
0 2.0
Closing
Market Capitalisation
RM’billion
17.0
16.0
15.0
14.0
13.0
12.0
Market Capitalisation
PLUS Expressways Berhad Annual Report 2008
Media Milestones – Financial Financial News Clippings
48
PLUS Expressways Berhad Annual Report 2008
Overview
Our Collective Reach
Board of Directors
Profile of Board of Directors
Top Management
Company Secretaries
Heads of Overseas Subsidiaries
Senior Management
49
50 52 66 68 68 70
PLUS Expressways Berhad Annual Report 2008
Board of Directors
Sitting:
Standing from Left to Right:
1
Tan Sri Dato’ Mohd Sheriff Mohd Kassim
1 2 3 4 5
50
PLUS Expressways Berhad Annual Report 2008
Geh Cheng Hooi Hassan Ja’afar Datuk K. Ravindran Dato’ Mohamed Azman Yahya Tan Sri Razali Ismail
Board of Directors
Sitting from Left to Right:
Standing from Left to Right:
1 2
1
Dato’ Ahmad Pardas Senin Noorizah Hj Abd Hamid
2 3 4 5
continued
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid Datuk Seri Panglima Mohd Annuar Zaini Quah Poh Keat Abdul Farid Alias Dato’ Seri Ismail Shahudin
51
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
Tan Sri Dato’ Mohd Sheriff Mohd Kassim Chairman Tan Sri Dato’ Mohd Sheriff Mohd Kassim, a Malaysian aged 69, is a Non-Independent Non-Executive Director and Chairman of PLUS Expressways Berhad. He was appointed as a Director of the Company on 29 January 2002 and was made Chairman on 7 February 2002. Tan Sri Dato’ Mohd Sheriff holds a B.A. (Honours) Economics degree from University of Malaya, a Diploma in Economic Development from Oxford University, United Kingdom and a M.A. Economics from Vanderbilt University, USA. He was the Managing Director of Khazanah Nasional Berhad from 1994 to August 2003 and previously sat on the Boards of UEM Group Berhad, RHB Bank Berhad, Renong Berhad and Silterra Malaysia Sdn Bhd. Prior to joining Khazanah Nasional Berhad, Tan Sri Dato’ Mohd Sheriff served as the Secretary General of Treasury, Ministry of Finance for 3 years. Tan Sri Dato’ Mohd Sheriff is also the Chairman of the Malaysian Institute of Economic Research, President of the Malaysian Economic Association and he serves as the Non-Executive Chairman of Manulife Holdings Berhad [formerly known as Manulife Insurance (Malaysia) Berhad], Intelligent Edge Technologies Berhad, Scientex Berhad and Standard Chartered Bank Malaysia Berhad. He also sits on the Board of Projek Lebuhraya UtaraSelatan Berhad, Konsortium Lebuhraya ButterworthKulim (KLBK) Sdn Bhd and Projek Penyelenggaraan Lebuhraya Berhad. Tan Sri Dato’ Mohd Sheriff is a Non-Executive Director nominated by Khazanah Nasional Berhad, a major shareholder of PLUS Expressways Berhad. He currently serves as Chairman of the Nomination Committee, the Remuneration Committee and the Investment Committee.
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PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Dato’ Ahmad Pardas Senin Deputy Chairman Dato’ Ahmad Pardas Senin, aged 56, was appointed as NonIndependent Non-Executive Deputy Chairman of PLUS Expressways Berhad on 1 July 2004. He currently holds directorships in UEM Group Berhad, UEM Land Holdings Berhad and Pharmaniaga Berhad. He is a Director of Universiti Teknologi Mara (“UiTM”) and the Chairman of The Malaysian Directors Academy (“MINDA”).
Managing Director of Renong Berhad, Managing Director of Time Engineering Berhad, Executive Director & CEO of Time dotCom Berhad, Managing Director of EPE Power Corporation Berhad (now renamed Ranhill Power Berhad). During 20032004, he was seconded as Executive Director and CEO of Silterra Malaysia Sdn Bhd.
Dato’ Ahmad Pardas is a Fellow of The Chartered Institute of Management Accountants (“FCMA”), a Chartered Member of the Malaysian Institute of Accountants (“MIA”) and a Member of the Institute of Internal Auditors, Inc. He is also a member of the Financial Reporting Foundation (“FRF”).
He has also served on the boards UEM Builders Berhad, Opus Group Berhad, Faber Group Berhad, Costain Group Plc. and The Malaysian Industry-Government Group for High Technology (“MIGHT”). Prior to joining the UEM Group, Dato’ Ahmad Pardas had more than 17 years service with the British-American Tobacco Group.
He has been with the UEM Group for more than seventeen years since 1992. During this period Dato’ Ahmad Pardas has served in various other positions in the UEM Group, including as the Managing Director/CEO of UEM World Berhad, Group
He is a Non-Executive Director nominated by UEM Group Berhad, a major shareholder of PLUS Expressways Berhad. Dato’ Ahmad Pardas serves as a member of the Remuneration Committee and the Investment Committee.
53
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Noorizah Hj Abd Hamid Managing Director Noorizah Hj Abd Hamid, a Malaysian aged 49, was appointed as the Managing Director of PLUS Expressways Berhad on 1 April 2007. Prior to that, she was the Managing Director of Faber Group Berhad (“Faber Group”) from 17 March 2003. She was also the Managing Director of Faber Hotels Holdings Sdn Bhd since 3 August 2002. She holds a Masters in Business Administration, majoring in Finance and Management and a Bachelor of Science in Business Administration from Central Michigan University, United States of America. Prior to joining Renong Berhad as the Manager of Group Corporate Affairs in September 1991, she was attached to various positions in finance and corporate advisory with Syarikat Pengurusan Kayu Kayan Terengganu Sdn Bhd, a subsidiary of the Terengganu State Development Corporation, Permodalan Nasional Berhad and Amanah Merchant Bank Berhad. In January 1992, she joined HBN Management Sdn Bhd and was later transferred to Projek Lebuhraya UtaraSelatan Berhad (“PLUS”) as a Senior Manager in the Treasury Department in January 1994. She was transferred back to HBN Management Sdn Bhd in January 1996 and appointed to the post of Senior Manager of Group Corporate Affairs. She was posted to PLUS as Senior General Manager, Finance in 1997 before assuming her designation as the Chief Operating Officer of Faber Group on 9 August 1999. During her tenure in Faber Group she has also been appointed as a Director of various subsidiary companies of Faber Group. She also sits on the Board of Commissioner of PT Lintas Marga Sedaya, a PLUS Expressways Berhad’s subsidiary in Indonesia, Board of Directors of PLUS BKSP Toll Limited, Board of Projek Lebuhraya Utara-Selatan Berhad and Board of Konsortium Lebuhraya Butterworth-Kulim (KLBK) Sdn Bhd. She is also the Executive Director of Expressway Lingkaran Tengah Sdn Bhd (“ELITE”) and Linkedua (Malaysia) Berhad effective from 13 February 2008.
54
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Geh Cheng Hooi Senior Independent Non-Executive Director Geh Cheng Hooi, a Malaysian aged 74, is the Senior Independent Non-Executive Director of PLUS Expressways Berhad. He was appointed a Director of the Company on 20 May 2002. After qualifying as a Chartered Accountant in the United Kingdom in 1959, he worked for Price Waterhouse, London as a qualified assistant in 1960/1961. Upon his return to Malaysia in 1961, he joined KPMG Peat Marwick (“KPMG”) and was admitted as a partner in KPMG in 1964. Geh retired as the Senior Partner in 1989.
Geh is a Fellow of the Institute of Chartered Accountants in England and Wales and a member of the Malaysian Institute of Certified Public Accountants (“MICPA”) and had served as Chairman and member of several of MICPA’s committees. He was the Chairman of the technical committee and was involved in the introduction of the International Accounting Standards (“IAS”) in Malaysia. Directorships held by him include Lingui Developments Berhad, Paramount Corporation Bhd, NCB Holdings Berhad, Malayan Flour Mills Bhd and Wawasan TKH Holdings Bhd. Geh serves as the Chairman of the Audit Committee and a member of the Nomination Committee.
55
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid Independent Non-Executive Director YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid, a Malaysian aged 87, is an Independent Non-Executive Director of PLUS Expressways Berhad. He was appointed as a Director of the Company on 11 March 2002. YM Professor DiRaja Ungku Abdul Aziz is an academician specialising in rural economics and mind training. He was the ViceChancellor of the University of Malaya from October 1968 to February 1988. He has received both national and international awards for his contributions to various fields. He holds directorships in several other private limited companies. He is the Chairman of Cosmopoint Sdn Bhd, a Distinguished Fellow of Institute of Strategic and International Studies Malaysia and the Malaysian Institute of Economic Research. YM Professor DiRaja Ungku Abdul Aziz serves as a member of the Audit Committee.
56
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Hassan Ja’afar Non-Independent Non-Executive Director Hassan Ja’afar, a Malaysian aged 62, is a Non-Independent Non-Executive Director of PLUS Expressways Berhad and was appointed as a Director of the Company on 18 March 2002. Hassan was the past Managing Director of BBMB Securities Sdn Bhd. He holds a Bachelor of Science Degree in Chemical Engineering from the University of New Brunswick, Canada. He was a project officer for the Economic Development Board of Singapore and the Development Bank of Singapore Limited from 1969 to 1974. He was an Investment Manager for Bank Pembangunan Malaysia Berhad from 1974 to 1978. From 1978 to 1990, he was the General Manager for Bapema Corporation Sdn Bhd. He was appointed as an Executive Director of UMBC Securities Sdn Bhd in 1990 and he served until 1994. He then became an Executive Director of CapitalCorp Securities Sdn Bhd until 1995. In 1995, he was appointed as the Executive Director of BBMB Securities Sdn Bhd.
He also sits on the Board of Commissioner of PT Lintas Marga Sedaya and PT Cimanggis Cibitung Tollways, PLUS Expressways Berhad’s subsidiaries in Indonesia and hold directorship in Projek Lebuhraya Utara-Selatan Berhad. Hassan is a Non-Executive Director nominated by Khazanah Nasional Berhad, a major shareholder of PLUS Expressways Berhad. He serves as a member of the Remuneration Committee.
57
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Dato’ Mohamed Azman Yahya Non-Independent Non-Executive Director Dato’ Mohamed Azman Yahya, a Malaysian aged 45, is a NonIndependent Non-Executive Director of PLUS Expressways Berhad. He was appointed as a Director of the Company on 3 May 2002. Dato’ Mohamed Azman graduated with first class honours degree in Economics from the London School of Economics and Political Science and is a member of the Institute of Chartered Accountants in England and Wales, the Malaysian Institute of Accountants and a fellow of the Malaysian Institute of Banks. He is the founder, Group Chief Executive and a Director of Symphony House Berhad, a listed outsourcing group. He is also the Executive Chairman of Bolton Berhad, a listed property group. He sits on the advisory panels for the Bursa Malaysia Securities Market Consultative Panel, the National Council for Scientific Research and Development, the National Innovation Council, the Special Taskforce to Facilitate Business (“Pemudah”) and the Malaysia Economic Council. He is the Chairman of Pharmaniaga Berhad and sits on the Boards of Malaysian Airline System Berhad, Scomi Group Berhad, Khazanah Nasional Berhad and several other private limited companies. Dato’ Mohamed Azman is a Non-Executive Director nominated by UEM Group Berhad, a major shareholder of PLUS Expressways Berhad. He was a member of the Audit Committee and currently serves as a member of the Investment Committee.
58
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Tan Sri Razali Ismail Independent Non-Executive Director Tan Sri Razali Ismail, a Malaysian aged 70, is an Independent Non-Executive Director of PLUS Expressways Berhad and was appointed to the Board on 6 May 2002. Tan Sri Razali Ismail retired from government in 1998 after a career in the Malaysian Diplomatic Service over 35 years. He was last appointed Malaysia’s Permanent Representative to the United Nations in New York. At the United Nations, Tan Sri Razali Ismail was involved in developing positions on issues such as development and sustainability, poverty and marginalisation, reforms in the United Nations, human rights and the environment. Tan Sri Razali Ismail was the Secretary-General’s Special Envoy for Myanmar for more than 5 years (April 2000-December 2005).
In Malaysia Tan Sri Razali Ismail is involved in IT and environmental industries and sits on the boards of companies including Leader Universal Holdings Berhad, Allianz General Insurance Malaysia Berhad and IRIS Corporation Bhd. He is the Pro-Chancellor of the University Science Malaysia, Chairman of the National Peace Volunteer Corp (“Yayasan Salam”) and the Malaysian Prime Minister’s Special Envoy to facilitate assistance for natural disaster victims. He is the President of World Wildlife Fund in Malaysia and advises on a government supported project on street and displaced children.
59
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Datuk K. Ravindran Independent Non-Executive Director Datuk K. Ravindran, a Malaysian aged 51, is an Independent NonExecutive Director of PLUS Expressways Berhad. He was appointed a Director of the Company on 6 May 2002. Datuk K. Ravindran is the Group Executive Director and co-founder of the ARA group of companies which has interests in infrastructure development, engineering, construction and transportation. Aided by a cohort of able colleagues, he was instrumental in developing the group into a multi-million ringgit company. Datuk K. Ravindran holds a Bachelor of Science Honours degree from the University of Madras, India. He has blended his corporate exertions with involvement in charitable causes, mainly in education. The main vehicle for the latter is the All-Malaysia Malayali Education Foundation (“AEF”) of which he is the President. He sits on the board of several private limited companies. Datuk K. Ravindran serves as a member of the Audit Committee, the Nomination Committee and the Remuneration Committee.
60
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Quah Poh Keat Independent Non-Executive Director Quah Poh Keat, a Malaysian aged 56, is an Independent NonExecutive Director of PLUS Expressways Berhad. He was appointed as a Director on 14 January 2008. He is also currently an Independent Non-Executive Director of IOI Corporation Bhd, IOI Properties Berhad, Telekom Malaysia Berhad, Lonpac Insurance Berhad, LPI Capital Berhad and Public Bank Bhd and some of its group companies. PK Quah was admitted as a member of the Malaysian Institute of Certified Public Accountants (“MICPA”) in 1976. He was also the best student for all three parts of the MICPA Examination and won many awards in the Institute of Management Accountants Examinations.
PK Quah is a Fellow of the Malaysian Institute of the Taxation, Member of the Malaysian Institute of Accountants, Member of the Malaysian Institute of Certified Public Accountants, Member of the Chartered Institute of Management Accountants and Fellow of the Association of Chartered Certified Accountants. He was the Senior Partner of KPMG (known in some practices as Managing Partner) from 1 October 2000 to 30 September 2007 and has vast experience in Audit and Taxation in both Malaysia and United Kingdom. He retired from KPMG Malaysia on 31 December 2007. He is a member of FMM Strategic Policies Committee and was a former Vice-President of the Malaysian Institute of Taxation. PK Quah serves as a member of the Audit Committee.
61
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Abdul Farid Alias Non-Independent Non-Executive Director Abdul Farid Alias, a Malaysian aged 41, was appointed the NonIndependent Non-Executive Director of PLUS Expressways Berhad on 27 February 2008. Abdul Farid Alias holds a Bachelor of Science in Accounting and minor in Economics from the Pennsylvania State University, United States and Masters in Business Administration from University of Denver, Colorado. He was a former Director, Investments of Khazanah Nasional Berhad. Prior to joining Khazanah Nasional Berhad, he was involved in the investment banking area whereby he was attached to some domestic and international merchant banks such as Aseambankers Malaysia, International Merchant Bankers Berhad, Schroders Malaysia and Jardine Fleming/JP Morgan. Abdul Farid was a former Director at UEM Group Berhad, UEM World Berhad, UEM Builders Berhad and a former member of the Board of Commissioners of PT Bank Lippo Tbk and PT Exelcomindo Pratama Tbk, both or which are listed on the Bursa Efek Indonesia. Abdul Farid resigned as a Director of PLUS Expressways Berhad with effect from 31 December 2008. Abdul Farid was a Non-Executive Director nominated by Khazanah Nasional Berhad, a major shareholder of PLUS Expressways Berhad.
62
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Datuk Seri Panglima Mohd Annuar Zaini Independent Non-Executive Director Datuk Seri Panglima Mohd Annuar Zaini, a Malaysian aged 58, is an Independent Non-Executive Director of PLUS Expressways Berhad. He was appointed as a Director on 19 December 2008. Datuk Seri Panglima Mohd Annuar Zaini holds a Masters of Arts in Law & Diplomacy from The Fletcher School of Laws & Diplomacy, Tufts University, USA; and a Bachelor of Arts with honours in Economics from University Kebangsaan Malaysia. He began his career in the government service as an Administrative and Diplomatic Officer in 1977. He served the Malaysian Government at various ministries and departments. In 1993, he was appointed General Manager of The Perak Foundation, a position he held until 1999 before he chose to take an optional retirement from the government service. He has been appointed the Chairman of Malaysian National News Agency (“BERNAMA”) since February 2004. Also in February 2004, HRH The Sultan of Perak consented his
appointment as Member of the Council of Elders to HRH Sultan of Perak. He is a Member of the Perak Council of Islamic Religion and Malay Customs. He is a Distinguished Fellow to Institute of Strategic and International Studies (“ISIS”) Malaysia, Fellow to Institut Sosial Malaysia, Member of the Advisory Board of the Public Complaints Bureau of the Prime Minister’s department and Member of the Economic Council Malaysia. He is a member of the Board of Directors of the University Malaya and Chairman of the Board, University Malaya Specialist Centre. He is the Chief Executive of Northern Corridor Implementation Authority since September 2008. He is also the Adjunct Professor of Northern Corridor Economic Region Research Centre, Universiti Utara Malaysia since December 2007. He holds directorships in Malaysian Airline System Berhad and several private limited companies.
63
PLUS Expressways Berhad Annual Report 2008
Profile of Board of Directors
continued
Dato’ Seri Ismail Shahudin Non-Independent Non-Executive Director Dato’ Seri Ismail Shahudin, a Malaysian aged 58 is a NonIndependent Non-Executive Director of PLUS Expressways Berhad. He was appointed as a Director of PLUS Expressways Berhad on 21 April 2009. Dato’ Seri Ismail Shahudin holds a Bachelor of Economics (Honours) degree from University Malaya, majoring in Bussiness Administration. Dato’ Seri Ismail Shahudin joined ESSO Malaysia Berhad, upon his graduation in 1974 and served for 5 years in its Finance Division. He then joined Citibank Malaysia in 1979 and served at the bank’s headquarters in New York in 1984 as part of the team in Asia Pacific Division. Upon his return to Malaysia, he was promoted to the position of Vice President & Group Head of the Public Sector and Financial Institutions Group in Citibank Malaysia. In 1988, he served United Asian Bank Berhad as Deputy General Manager. In 1992, he joined Malayan Banking Berhad as General Manager, Corporate Banking and became the Executive Director in 1997. In 2002 he left Malayan Banking Berhad to become the Group CEO of MMC Corporation Berhad. He was appointed to the Board of Bank Muamalat Malaysia Berhad and subsequently appointed as its Chairman in March 2004 until his retirement in July 2008. Dato’ Seri Ismail Shahudin currently sits on the Boards of UEM Group Berhad, Cement Industries of Malaysia Berhad (“CIMA”), Aseana Properties Limited (a company listed on the London Stock Exchange), SMPC Corporation Berhad, EP Manufacturing Berhad and several other private limited companies.
None of the Directors has: •
Any family relationship with any Director and/or major shareholder of PLUS Expressways Berhad
•
Any conflict of interest with PLUS Expressways Berhad
•
Any conviction for offences within the past 10 years other than traffic offences, if any
All of the Directors are Malaysians.
64
PLUS Expressways Berhad Annual Report 2008
Top Management
Noorizah Hj Abd Hamid (Centre) Nik Airina Nik Jaffar (Left) Annuar Marzuki Abdul Aziz (Right)
66
PLUS Expressways Berhad Annual Report 2008
Top Management
continued
Nik Airina Nik Jaffar
Annuar Marzuki Abdul Aziz
Chief Operating Officer
Chief Financial Officer
Nik Airina, a Malaysian aged 46, is the Chief Operating Officer of PLUS Expressways Berhad. Prior to her promotion as the Chief Operating Officer in June 2006, she was the Senior General Manager of the Company’s Planning and Development Division. She also sits on the Board of Konsortium Lebuhraya Butterworth-Kulim (KLBK) Sdn Bhd, Expressway Lingkaran Tengah Sdn Bhd and Linkedua (Malaysia) Berhad, the wholly owned subsidiaries of PLUS Expressways Berhad as well as TERAS Teknologi Sdn Bhd.
Annuar Marzuki Abdul Aziz, a Malaysian aged 38, is the Chief Financial Officer of PLUS Expressways Berhad. He sits on the Board of Konsortium Lebuhraya Butterworth-Kulim (KLBK) Sdn Bhd, Expressway Lingkaran Tengah Sdn Bhd and Linkedua (Malaysia) Berhad, the wholly owned subsidiaries of PLUS Expressways Berhad. He is a Certified Practising Accountant of CPA Australia and a Chartered Accountant of the Malaysian Institute of Accountants. He graduated with a Bachelor in Accountancy from the International Islamic University in 1993. In 2003, he graduated with a Masters of Business Administration (Finance) from the same university. He also holds a Diploma in Comparative Law from Institute of Islamic Studies.
Nik Airina has been in the highway industry for more than 20 years. She obtained her Bachelor of Science degree in Civil Engineering from the University of Miami in 1985 and further pursued her Masters Degree in Civil Engineering at the same university. She served at the university’s Civil Engineering Department before starting her career at Beiswenger, Hoch and Associates, an engineering consulting firm in Florida. She joined Pengurusan Lebuhraya Berhad (now known as OPUS International (M) Berhad) in 1989 where she was mainly involved in managing the implementation of the North-South Expressway (“NSE”) project. Upon the completion of the NSE project, she moved to Pengurusan Lantas Berhad and subsequently headed its Special Projects Division. She joined Projek Lebuhraya Utara-Selatan Berhad in 2001 as the General Manager of the Planning and Development Division. Nik Airina is Malaysia’s representative for the World Road Association’s (PIARC) Technical Committee on Road Network Operations and is a Fellow of the Institute of Highway and Transportation (IHT) UK. She serves as the Honorary Treasurer of Intelligent Transport System Malaysia and is on the committee of IHT Malaysia.
He started his career in the Audit & Business Advisory Services, Pricewaterhouse in 1993 before moving to the Audit Department of UMW Corporation Sdn Bhd, a conglomerate involved in the automotive, engineering and oil and gas industries. He joined Internal Audit Department of the then Renong Berhad (now part of the UEM Group) in March 1995. In March 1996 he moved to the Corporate Finance Department of what was then the Commerce International Merchant Bankers Berhad. Subsequently, in March 1999, he joined Corporate Finance Department, Renong Berhad. In July 2003, he was seconded to TIME Engineering Berhad as the General Manager, Corporate Finance. In January 2004, he transferred to United Engineers (Malaysia) Berhad (now known as UEM Group) as the General Manager, in the office of the Managing Director/Chief Executive Officer. He assumed the position of Chief Financial Officer of PLUS Expressways Berhad in June 2006.
67
PLUS Expressways Berhad Annual Report 2008
Company Secretaries continued Company Secretaries
Tan Hwee Thian, is the Director, Legal and Secretarial of UEM Group Management Sdn Bhd and the Joint Company Secretary of PLUS Expressways Berhad. He has been the Secretary of the Company since its incorporation on 29 January 2002. He is also the joint Company Secretary of UEM Group Berhad, UEM Land Holdings Berhad and other companies in the UEM Group. He is a Fellow of the Association of Chartered Certified Accountants, United Kingdom, a member of the Institute of Chartered Secretaries and Administrators, United Kingdom and a Chartered member of the Malaysian Institute of Accountants (“MIA”).
Tan Hwee Thian
Heads of Overseas Subsidiaries
From left to right: Azmee Nin Muhammad Fadzil Abdul Hamid
68
PLUS Expressways Berhad Annual Report 2008
Company Secretaries
continued
Mazyu Sherina is a Director of PT Lintas Marga Sedaya and PT Cimanggis Cibitung Tollways, both PLUS Expressways Berhad’s subsidiaries in Indonesia and the Joint Company Secretary of PLUS Expressways Berhad. She is also the Joint Company Secretary for Projek Lebuhraya Utara-Selatan Berhad, Expressway Lingkaran Tengah Sdn Bhd, Linkedua (Malaysia) Berhad and Konsortium Butterworth-Kulim (KLBK) Sdn Bhd.
Mazyu Sherina Mohamed Yusof
She was formerly the General Manager and head of the Legal and Secretarial Support Department of PLUS Expressways Berhad. Prior to joining PLUS Expressways Group, she was attached to Messrs. Abu Talib Shahrom.
Heads of Overseas Subsidiaries
continued
Azmee Nin
Muhammad Fadzil Abdul Hamid
Operations Director, PLUS BKSP
President Director, LMS
Azmee Nin, aged 46, is the Operations Director of PLUS BKSP Toll Limited (“PLUS BKSP”) in India. He graduated with Bachelor of Science in Building (Distinction) from Glasgow College of Technology, Building and Printing (now known as Caledonnian University) in 1990.
Muhammad Fadzil Abdul Hamid, aged 50, is the President Director of PT Lintas Marga Sedaya and PT Cimanggis Cibitung Tollways, PLUS Expressways Berhad’s subsidiaries in Indonesia. He is also a nominee of PLUS Expressways on the Board of Director of PLUS BKSP, and was formerly the Senior General Manager of the Business Development Department of PLUS Expressways Berhad.
He started his career with Ingeback (M) Sdn Bhd, a contractor, involved in construction of high rise building and houses around Kuala Lumpur. He joined Projek Lebuhraya UtaraSelatan Berhad in September 1991 and had served in various departments covering projects and operations until 2004. He was promoted as a General Manager overseeing Expressway Lingkaran Tengah Sdn Bhd and Linkedua (Malaysia) Berhad. In December 2007, he was promoted as Operations Director of PLUS BKSP in India.
Muhammad Fadzil graduated with Bachelor of Engineering degree in Civil Engineering from the University of New South Wales, Sydney in 1982. In 2002, he obtained a Masters degree in Business Administration (Finance) from University Putra Malaysia. From 1983 to 1996, Muhammad Fadzil worked as an Engineer at the Public Works Department following which he joined Linkedua (Malaysia) Berhad as a Contract Manager. In July 2000, he was transferred to Expressway Lingkaran Tengah Sdn Bhd as the General Manager of Operations and Engineering. In September 2003, he was transferred to PLUS Expressways as the Head of the Business Development Department.
69
PLUS Expressways Berhad Annual Report 2008
Senior Management
1
3
2
70
5
1
Mohamad Rosli Ahmad Managing Director’s Office/Business Development
2
Rene’e Aziz Ahmad Routine Maintenance Monitoring
3
Zul Hisham Hamzah Planning & Quality Improvement
4
Dr. Zainal Abidin Ahmad Research & Technical Support
5
Azman Abdul Shukor Works Procurement
4
PLUS Expressways Berhad Annual Report 2008
Senior Management
2 3
1
4
1
Zakaria Ahmad Zabidi Special Projects
2
Hassan Sahalan Staff Support Services
3
Khalilah Mohd Talha Corporate Communications
4
Ir Mohd Zulastri Mohd Amin Maintenance & Development
71
continued
PLUS Expressways Berhad Annual Report 2008
Senior Management
2
continued
3
1
72
PLUS Expressways Berhad Annual Report 2008
1
How Seet Meng Corporate Affairs
2
Azman Masbah Electronic & Telecommunication Projects
3
Mohammad Fuad Khusairi Operations
4
Othman Mohammad Accounting
4
Perspectives
Driving Expansion
74 82
Chairman’s Statement Message from the Managing Director
73
PLUS Expressways Berhad Annual Report 2008
Chairman’s Statement
Dear Shareholders, “I am pleased to present the 2008 Annual Report for PLUS Expressways Berhad (“PLUS Expressways” or “the Group”). 2008 was a good year for the Group. Despite a challenging operating environment aggravated by the global financial meltdown and volatile energy prices, we made strong strides forward on the operational and financial fronts to drive business expansion and deliver sound results.“
74
PLUS Expressways Berhad Annual Report 2008
Chairman’s Statement
Network expansion came by way of assimilating three new acquisitions, namely ELITE, LINKEDUA and KLBK, into our stable of expressways. On the overseas front, we made encouraging progress in India and Indonesia while exploring other opportunities elsewhere to expand our international footprint. All in all, it was a year which saw us building upon the growth momentum created in the preceding years to expand our reach and position as a premier global expressway group.
ROBUST NETWORK EXPANSION Network expansion through strategic acquisition has ranked high on our list of priorities these last few years. In December 2007, the Group acquired ELITE and LINKEDUA, while on 13 March 2008 we completed the acquisition of KLBK. KLBK holds a 32-year concession (ending in 2026) for the Butterworth-Kulim Expressway (“BKE”) which is a 17-kilometre dual two lane carriageway extending from Kulim in Kedah to Seberang Perai in Penang. As the BKE is linked to PLUS’s North-South Expressway, we expect to garner good operational synergies from this latest acquisition. The inclusion of ELITE’s North-South Expressway Central Link (“NSECL”), LINKEDUA’s Malaysia-Singapore Second Crossing (“MSSC”) and the BKE, has also effectively added another 651 lane-km or 17.9% to our existing 3,640 lane-km of
The recently completed Ipoh Selatan-Jelapang stretch
continued
expressways. The addition of these concessionaires to the Group’s stable underscores our strategy of securing solid assets to drive our network expansion and business growth. On top of this, our third lane widening project which was fully completed during the year, has given the Group an additional 284 lane-km or 7.8% resulting in a total asset base of 4,575 lane-km. I am pleased to report that these developments have registered 25.7% lane-km growth in 2008 thereby surpassing the year’s Headline Key Performance Indicator (“KPI”) target of 20% growth. The Group in essence owns 62% of Malaysian toll roads in operation to date.
STRONG FINANCIAL PERFORMANCE Effective 1 January 2008, the financial results of ELITE and LINKEDUA were incorporated into the Group’s results, while KLBK’s results were incorporated effective 1 March 2008. With our asset base broadened, the Group’s total toll collection for the financial year ended 31 December 2008 increased by 23% or RM416.5 million to RM2,237.0 million from RM1,820.5 million in the preceding year. The higher performance was primarily attributable to a higher toll collection of RM92.3 million for PLUS as well as contributions totalling RM324.2 million from ELITE, LINKEDUA and KLBK collectively. Enhancements to our expressway system and service improvements did much to attract more users onto our expressways. PLUS, ELITE and LINKEDUA, all experienced year-on-year traffic volume growth with the exception of KLBK that registered a marginal reduction in traffic volume. As a result of overall higher traffic volume and toll collection, the Group chalked up a healthy 30.1% or RM686.0 million increase in revenue, turning in RM2,968.0 million against RM2,282.0 million the year before. We registered profit before tax (“PBT”) of RM1,515.7 million in 2008, an increase of RM207.7 million or 15.9% over 2007’s PBT of RM1,308.0 million. The better performance was mainly due to RM62.8 million in profit contributions from the three new subsidiaries. In addition, higher traffic volume from PLUS also contributed to the improvement in PBT. However, Group profit after tax (“PAT”) declined by 13.4% or RM167.6 million to RM1,080.0 million against RM1,247.6 million in 2007. This was the consequence of the higher provision for deferred taxation in the year 2008.
75
PLUS Expressways Berhad Annual Report 2008
continued
Under our agreement with the Malaysian Government, the rate of toll is to increase by 10% every three years for both PLUS and ELITE and by an average of 27% and 23% every five years for LINKEDUA and KLBK respectively. The last time an increase took place for PLUS was in 2005. While we were expecting a toll increase on 1 January 2008, in light of the slowing economy, the Government decided to defer this till the end of 2009 and will compensate PLUS in accordance with the Concession Agreement. Meanwhile, ELITE, LINKEDUA and KLBK, all obtained their toll increases in 2008. The Group was spared the vagaries of the marketplace in 2008. As a result, we outperformed the Kuala Lumpur Composite Index (“KLCI”) by 30%. The year saw our share price reaching a high of RM3.28 and a low of RM2.53 before closing at RM2.98 on 31 December 2008.
ENHANCED SHAREHOLDER VALUE The Board of Directors is pleased to recommend a single tier final dividend of 9.5 sen per ordinary share of RM0.25 each, subject to shareholders’ approval at the forthcoming Annual General Meeting. Together with the interim dividend of 6.5 sen per share paid on 23 September 2008, the total dividend payout for financial year 2008 will be 16 sen per share amounting to RM800 million. This marks the third consecutive year in which the Group has achieved its KPI commitment to ensure a minimum dividend growth of 12% for the financial year. The 16 sen per share payment represents a 14.3% growth from the 14 sen per share payout in financial year 2007 and a dividend payout of 74% of Group net profit. This translates to an attractive dividend yield of approximately 5.5%.
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Dividend Per Share (Sen)
16.0
The Group generated cash from operating activities of RM1,813.6 million, some 26.9% higher than 2007’s figure, with a cash balance of RM2,234.4 million as at 31 December 2008 after dividend payments of RM725 million.
14.0
Chairman’s Statement
2007 2008
Following the higher payout, the Board has reviewed the existing dividend payout policy (40% to 60% of Group net profit) and approved a revised payout policy of a minimum 70% of Group net profit. This is subject to the availability of cash flows after taking into consideration the Group’s debt servicing and financing commitments as well as any future expansion plans. Going forward, despite the dismal economic outlook, the Board remains committed to delivering returns to shareholders with a minimum targeted dividend payout of 16 sen per share for financial year 2009. With 64% of PLUS Expressways’ equity directly and indirectly held by Khazanah Nasional Berhad, the Malaysian Government’s investment arm, these profits flow back to the people of Malaysia through the Government. Our remaining shares, some 20%, are held by government-related institutional shareholders such as Kumpulan Wang Simpanan Pekerja (“KWSP” or “the EPF”), Permodalan Nasional Berhad (“PNB”), Kumpulan Wang Amanah Pencen (“KWAP”), Lembaga Tabung Angkatan Tentera (“LTAT”), Lembaga Tabung Haji (“LTH”) and Pertubuhan Keselamatan Sosial Malaysia (“PERKESO” or “SOCSO”), and the benefits they receive also flow back to the millions of their members.
Chairman’s Statement
Shareholding Breakdown
10% Foreign
Approximately 10% of the Group’s equity is held via foreign shareholding. The year 2008 saw us recording our highest ever level of foreign shareholding at 10.7% against an average of 8% in 2007. This reflects the confidence that foreign investors have in the Group.
6% Others
9% Other Government-Related Institutions
11% EPF
IMPROVEMENTS TO OPERATIONAL EFFICIENCY 40% UEM
24% Khazanah
continued
In 2008, the Group went all out to enhance operational efficiency throughout the length and breadth of the organisation. The completion of our new headquarters at Subang has effectively brought together the Group’s different operations under one roof, thus enabling the integration of resources. Enhanced capital management efforts, the e-bidding procurement system which promotes better transparency and cost management, innovative Six Sigma initiatives, and a more structured and proactive maintenance
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Chairman’s Statement
continued
regime, are beginning to produce tangible cost savings. As we continue to bring technological innovation and higher standards of excellence into play to enhance our operations, facilities and services, we are ensuring customer convenience and safety are being taken care of. Our efforts over 2008 would not have been possible without our team of around 4,000 dedicated employees. As a forwardlooking organisation, we are committed to optimising the skills-set of our employees and to ensuring they have an attractive career path to follow. To this end, we are implementing structured training and development programmes as well as providing our employees a conducive working environment, competitive compensation packages and long-term career development opportunities.
CONTINUED FOCUS ABROAD 2008 was the year in which we made good progress on the overseas front, particularly in India and Indonesia. In India, where we initially had some delays due to challenges in securing certain sections of land, I am happy to report that the work on the Bhiwandi-Kalyan-Shil Phata Highway (“BKSP Highway”) is substantially completed and we are targeting to have the project fully operational in the second quarter of 2009. The BKSP Highway is expected to start contributing towards the Group’s revenue this year. The completion of a new highway in India bodes well for the Group as we set our sights on other opportunities in that nation.
In Indonesia, land acquisition relating to the 116-kilometre Cikampek-Palimanan Toll Road project is progressing well and we are confident of achieving the key milestones within the targeted timeline. Currently, while we are in the midst of acquiring land, we are focusing our efforts on re-ascertaining the costs of the project and raising the additional funding required. The bankers and regulatory authorities are working with us to get the project moving and we hope to see some good progress this year. We have also been awarded the 25.4 km Cimanggis-Cibitung Toll Road project in West Java. Negotiations are currently underway between the consortium, PT Cimanggis Cibitung Tollways (“CCTW”), which we have an equity stake in, and the regulatory authorities to finalise the concession agreement. When this project takes off, it will increase our asset base, enhance shareholder value and strengthen our market position in Indonesia. India and Indonesia provide growth opportunities for us. While the global economy is undoubtedly slowing down, the governments of these two countries are determined to improve their highway infrastructure as quickly as possible to stimulate their economies.
EFFECTIVE CORPORATE GOVERNANCE MEASURES The Board is committed to upholding the tenets of integrity, transparency and accountability in all our business activities. Stringent internal and external controls are in place to ensure we employ good corporate governance practices. In the Corporate Governance Survey Report 2008 jointly conducted by the Minority Shareholder Watchdog Group and the University of Nottingham Malaysia Campus in November 2008, the Group was ranked 14th among 960 public listed companies for overall excellence in corporate governance. As a service-oriented organisation, it is imperative that our employees conduct themselves in a professional manner in all our dealings with our stakeholders. Our Code of Conduct governs the professional conduct of employees and outlines their responsibilities to the Group. The Code of Conduct also touches upon issues of confidentiality and conflicts of interest as well as sexual harassment.
The Bhiwandi-Kalyan-Shil Phata Highway will be fully operational in the second quarter 2009
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Chairman’s Statement
continued
On 26 February 2009, the Group introduced the Whistle Blower Policy that provides a platform for employees to report instances of unethical behaviour, actual or suspected fraud or dishonesty, or a violation of the Group’s Code of Conduct or ethics policy. The Policy also includes protection for the whistleblowers from any reprisals. As a transparent organisation, we are committed to undertaking stakeholder engagement activities. This sees us interacting regularly and proactively sharing information with analysts, fund managers, government regulators and the media, among other groups. We conducted a total of 124 meetings with local and overseas-based investment analysts and institutional investors in the Asia Pacific region, the Eurozone and the United States.
IMPACTFUL CORPORATE RESPONSIBILITY INITIATIVES As a responsible corporate citizen that has been playing an active and integral part in nation building, PLUS Expressways remains committed to creating value and ensuring sustainable growth for our businesses, employees, customers, shareholders, partners and the communities and environment that we operate in. The year 2008 saw us implementing various corporate responsibility (“CR”) measures to elevate the well-being of our various stakeholders. We continued to focus on CR programmes that emphasised customer safety and comfort along our expressways as well as those that engaged with and impacted tangibly upon the communities in the vicinity of our expressways. We also continued to roll out educational programmes that inculcated good driving and motoring habits among the younger generation. More details of 2008’s CR efforts in the areas of the Workplace, Community, Marketplace and Environment can be found in 2009’s standalone CR Report.
Our community outreach programmes include contributions to orphanages, blood donation campaigns by our staff and community services
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Chairman’s Statement
continued
GOING FORWARD 2009 will indeed be a challenging year for PLUS Expressways Group given the recession in the global economy. Where the Government initially projected GDP growth of 3.5% for Malaysia in 2009, this has been revised downwards and is expected to be in the region of between -1.0% and 1.0% at the time of writing. Going forward, the Board expects that traffic volume will grow at a slower pace in 2009 despite the growth of 3.1% registered in the first quarter of 2009. We are confident that our strong financial position will help see us through these challenging economic times. However, we will not be resting on our laurels but will continue our ongoing efforts to enhance operational efficiency and realise cost savings wherever possible.
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As we move forward to implement our existing business strategies, we have set our sights on the following Headline KPI targets for the 2009 to 2010 period. In developing these Headline KPIs, we have taken into consideration the current business environment and future expansion plans with the ultimate aim of enhancing shareholder value: • 30% growth in terms of lane-kilometre length of expressways by the end of 2009 (base: 3,640 lane-km); • Minimum revenue growth of 5% for 2009 and 2010; and • Minimum dividend payout of 16 sen per share for 2009. Locally, the Group will continue to expand its existing expressways network and pursue potential value-accretive acquisitions. In the international arena, particularly in relation to our three highway projects in India and Indonesia, we are fully committed to implementing these projects while continuing to explore other strategic value-creating investments.
Chairman’s Statement
While toll operations will always remain the main part of our business, we are also open to developing other toll roadrelated business opportunities. For instance, we are looking to capitalise on our more than 20 years of toll management experience and expertise by selling our know-how for a feebased income. Rest assured that whatever new areas we choose to focus on, we will continue to keep a keen eye on our core toll expressways business. Moving forward into 2009, the Board is confident that the Group will be able to weather the challenges ahead.
ACKNOWLEDGEMENTS On behalf of the Board of Directors of PLUS Expressways, I wish to convey my sincere thanks to all stakeholders who played a part in helping the Group achieve yet another successful year. To our customers, a big thank you for your continued loyalty and support. To our business partners, suppliers and financiers, please accept my utmost appreciation for your support of the Group. To the Ministry of Works, the Malaysian Highway Authority, the Ministry of Finance, the Ministry of Transport, the Economic Planning Unit, the Royal Malaysian Police and other ministries and agencies who have worked with us directly or indirectly, thank you once again for your invaluable support and cooperation. To my esteemed colleagues on the Board, I would like to extend my gratitude for your wise counsel, astute financial insights and broad strategic thinking. The vision and clarity of this very mature and experienced team has been instrumental to the Group’s success. I would like to convey my sincere thanks to En Abdul Farid Alias, the nominee from Khazanah who served as a NonIndependent Non-Executive Director until 31 December 2008. I also take this opportunity to express my utmost appreciation to Dato’ Ahmad Pardas Senin, YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid, Tan Sri Razali Ismail and
continued
Mr Geh Cheng Hooi, who will be retiring from the Board and are not seeking re-election at the forthcoming Annual General Meeting. I thank these gentlemen for their invaluable contributions and counsel given to the Group. I am pleased to welcome two new members to the Board, namely Datuk Seri Panglima Mohd Annuar Zaini, who previously sat on the Boards of PROPEL, ELITE and LINKEDUA, and Dato’ Seri Ismail Shahudin, who has vast experience in the banking sector. I would like to pay special tribute to the Management team led by the Managing Director, Pn Noorizah Hj Abd Hamid, who has shown a very high level of professionalism in leading her team towards realising our vision of becoming a premier global expressways player. To the Group’s loyal employees, I would like to express my utmost appreciation for your worthy efforts, dedication and unrelenting commitment to excellence. We could not have got where we are today without each and every one of you. On our part, rest assured that the Group will endeavour to be an employer-of-choice, one that you will always be proud to be a part of. Last but not least, to our valued shareholders, I am truly appreciative of your support and confidence in us over the years. We always welcome your ideas and suggestions to help us move the Group forward. As we continue on our journey to success, rest assured that the Board will continue to adhere to the highest standards of corporate governance and ethical business practices to deliver value to you.
TAN SRI DATO’ MOHD SHERIFF MOHD KASSIM Chairman
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Message from the Managing Director Dear Shareholders, I am glad to report that PLUS Expressways Berhad (“PLUS Expressways” or “the Group”) successfully weathered the challenges of 2008 and turned in strong consolidated results on all fronts.
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Message from the Managing Director
continued
We continued to introduce new initiatives as we tapped into our five-point focus areas in the Group’s value creation strategy to drive business growth and profitability as well as expand our reach. Our efforts in enhancing operational efficiency and implementing cost savings initiatives throughout the Group also did much to bolster 2008’s performance. We have our dedicated staff and my colleagues on the management team to thank for the good results and for putting in place the elements that will tide us through the challenging period before us.
GROUP’S VALUE CREATION STRATEGY PLUS Expressways’ driving formula for success is based on UEM Group’s value creation strategy which focuses on Productivity of Resources, Expansion and Growth, People and Organisational Development, Systems and Processes Improvement, and Image and Perception Management. The Group’s value creation strategy calls for our people to effectively leverage on the Group’s diversity and shared values – teamwork, integrity, passion for success and sincerity of intent.
PRODUCTIVITY OF RESOURCES The Group endeavours to undertake value-creating capital management initiatives and effective cost control measures.
Better Capital Management As a Group, we focus on undertaking better capital management through various efforts including refinancing of our borrowings. This approach enables us to stretch our debt repayments and utilise available cash for business expansion and dividend payments. Our efforts during the year included the following: • On 29 May 2008, PLUS issued RM700 million nominal value (RM308 million present value on the issue date) zero coupon Sukuk Series 3 pursuant to the RM4,500 million nominal value of Sukuk Series 3 Medium Term Notes Programme to partially redeem the Senior Sukuk due in May 2008. The repayment of Sukuk Series 3 is stretched to 2022. • On 27 June 2008, PLUS Expressways via a special purpose vehicle company, established a RM4,000 million nominal value PLUS SPV Sukuk Medium Term Notes Programme to refinance bridging loans and for general investment purposes. Pursuant to this programme, RM1,055 million nominal value PLUS SPV Sukuk was issued on even date, providing total proceeds of RM762 million. Our success in obtaining financing at competitive cost is an apt reflection of the Group’s financial standing and credibility, especially in the midst of a difficult market environment.
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Message from the Managing Director
Slopes are inspected periodically to assess their condition for preventive and curative maintenance works
continued
Structured Maintenance Regime For long term preservation of assets and to achieve optimum maintenance expenditure, we continue to implement a structured maintenance regime that emphasises preventive maintenance. The regime includes extensive periodical condition assessment of our major assets to facilitate early intervention. In 2008, our maintenance activities focused on pavement structural overlays, enhancement of the slope monitoring system as well as structural strengthening of bridges and culverts. Extensive periodical inspections and corresponding preventive maintenance allow for a more proactive and long-term approach to maintenance works and asset preservation, resulting in optimum resource allocation.
Six Sigma Initiatives The Six Sigma Programme launched in 2007 continues to be one of the key continual improvement platforms that the Group has adopted to achieve our collective strategic goals. Besides enhancing our operational and financial efficiency in the way of productivity as well as system and process improvements, it also contributes to our human capital development. Twenty-two Six Sigma projects are currently ongoing, covering the core areas of expressway operations and maintenance. The financial benefit realised to date is almost RM10 million and we expect more benefits in the next few years as the projects get implemented.
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Message from the Managing Director
continued
EXPANSION AND GROWTH PLUS Expressways continues to expand and grow its expressways network and businesses in several areas. Lane Widening and Upgrading Works Our lane widening and upgrading efforts are aimed at expanding our existing network and improving the level of service to our customers, focusing on highimpact projects that maximise utilisation of available land reserves. In 2008, we completed the third lane widening of the Seremban-Ayer Keroh and Rawang-Slim River sections of the NSE, which added 284 lane-km to our existing network. The Sungai Petani South, Kota Damansara and Juru toll plazas were also upgraded during the year, with toll lane extension and electronic toll collection (“ETC”) lane channelisation implemented for better throughput. The project to facilitate non-stop travel along the Ipoh Selatan-Jelapang stretch of the NSE was implemented to separate local and mainline traffic for more efficient traffic distribution and to also increase mainline capacity.
The Putra Heights Toll Plaza opened on 19 February 2009
Linkages and Interchanges In our efforts to generate more traffic into our network, we are constantly looking at opportunities for potential new linkages and interchanges. In 2008, the Bandar Saujana Putra Interchange was opened along the North-South Expressway Central Link (“NSECL”), while the Putra Heights Interchange was opened in February 2009. Another interchange currently under construction is located along the Putrajaya Link of the NSECL which will feed in traffic from the surrounding developments. New interchanges under construction along LINKEDUA’s Malaysia-Singapore Second Crossing (“MSSC”) will connect to the Senai-Pasir Gudang-Desaru Expressway, the Johor State New Administrative Centre and Bandar Nusajaya Medical Park. When completed, these interchanges will facilitate more traffic into the MSSC. Our existing Pandan Interchange in Johor Bahru will be upgraded to connect to the new Customs, Immigration and Quarantine Complex (“CIQ”) at Bangunan Sultan Iskandar via the Eastern Dispersal Link. This will provide a direct connection between the NSE and our operations at the new CIQ Complex.
Other Expansion Opportunities During the year, we completed the acquisition of KLBK which added 68 lanekilometres of expressway to our network. Going forward, the Group will continue to focus on achieving lane-kilometre growth and exploring toll road and toll-related services opportunities. In meeting the KPI target of 30% growth (in terms of lanekilometre length) by the end of 2009, we achieved 25.7% growth in 2008 and are committed to attaining another 156 lane-kilometres. We are also exploring possible acquisitions or looking at taking over the operation and maintenance of other highways to realise this target.
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The Malaysia-Singapore Second Crossing
PLUS Expressways Berhad Annual Report 2008
Message from the Managing Director
continued
While we adopt an ongoing proactive approach in this area, we will only consider transactions that add value to the Group’s current portfolio.
Strategic Overseas Expansion On the overseas front, we continue to focus our efforts in implementing existing projects in India and Indonesia. We are placing a strong emphasis on these projects as they serve as a launching pad for further ventures in the region. In India, the BKSP Highway is expected to start contributing towards the Group’s revenue as we target to commence the toll collection in the second half of this year. Following delay in the handover of lands by the Maharashtra State Road Development Corporation (“MSRDC”) which led to a delay in the completion of the project, we have been granted an extension to the concession period. The land acquisition for the 116-kilometre Cikampek-Palimanan Toll Road project in Indonesia has progressed well. Following the increase in cost of construction materials, the Government of Indonesia has approved the revised project cost and the initial toll tariff. Accordingly, we are negotiating with the lenders for additional funding facilities for this project. We are also currently engaged in negotiations with the Government of Indonesia to finalise the concession agreement for our second project, the 25.4 km CimanggisCibitung Toll Road, which is expected to be concluded this year. Continuing with our efforts to expand abroad, we have individually and in joint venture with local partners, participated in the submission of tenders for highway projects in India. The year saw us entering into partnerships with local players to jointly participate in the tenders. We have been pre-qualified for several projects by the National Highway Authority of India. We are also actively seeking investment opportunities in completed toll roads and providing expressway operations and maintenance services.
PEOPLE AND ORGANISATIONAL DEVELOPMENT Our human capital is one of our most valued assets and the Group is committed to nurturing and retaining a highly-talented workforce through career development opportunities and providing competitive remuneration and attractive benefits.
Human Resources Initiatives In 2008, our Human Resources Department established new functional units to drive people and organisational development initiatives forward. The initiatives include development of our employee value proposition which emphasises performance, leadership qualities and participation in Group activities and initiatives. Top talent
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Message from the Managing Director
continued
retention remains one of our priorities. We continue to employ and build a competent workforce through a structured recruitment drive as well as strategic training and development programmes.
Training and Development The Group is committed to enhancing the skills of our employees through ongoing training programmes and development initiatives. Our frontline and operational employees attend external training courses as well as motivational reinforcement sessions at PLUS Training Centre, while our employees at executive and management levels undergo management and leadership development programmes at UEM Leadership Centre and UEM Academy. This year, the Group will also be embarking on a Personnel Exchange Programme with Central Nippon Expressway Company Limited which operates the expressways network in Central Japan. The collaboration, formalised in February 2009, will involve the exchange of technology and expertise in the areas of project and operations management as well as research and innovation.
Caring Employer As a caring employer, the Group is committed to creating a conducive and safe work environment to enhance operational efficiency and productivity. To this end, we have introduced a host of facilities at the Group’s new headquarters in Subang including training facilities, a sports complex, a gymnasium as well as a child development centre. Most of the facilities in the office complex are disabledfriendly.
SYSTEMS AND PROCESSES IMPROVEMENT Technological innovation plays a major role in ensuring that the systems and processes that we employ in our day-to-day expressway operations are rolled out in an effective and efficient manner. The year saw several new developments on this front aimed at increasing operational and cost efficiencies.
Procurement Improvement Initiatives The Group has implemented several procurement improvement initiatives with the objective of increasing efficiencies and transparencies in our procurement activities. The implementation of the e-bidding procurement system for major procurements has brought about tangible cost savings of over RM5.5 million to date and provided our employees with wider exposure in procurement best practices. Moving forward we will expand further into other procurement applications such as e-tender and e-registration.
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Continuous training and education for a progressive workforce
PLUS Expressways Berhad Annual Report 2008
Message from the Managing Director
continued
Leading-edge Traffic Monitoring Centre The newly opened Traffic Monitoring Centre (“TMC”) consolidates all our previously disparate regional communication centres under one roof. Equipped with advanced Intelligent Transport System technology, the TMC facilitates better communications and information dissemination thereby improving efficiency and service levels.
Research and Development In 2008, we established a dedicated Research & Technical Support Division (“RTSD”) to focus on technical research and innovation. The RTSD has been tasked with undertaking and coordinating research in new products and methods to improve operational and maintenance quality and efficiency through collaboration with relevant institutions and agencies.
IMAGE AND PERCEPTION MANAGEMENT The Group embarked on several brand and goodwill building initiatives to establish a stronger market presence and to reinforce our reputation as a leading expressways group. Traffic is monitored round-the-clock at the Traffic Monitoring Centre
New Visual Identity As the year 2008 marked the Group’s 20th anniversary, it was an opportune time to establish a fresh new brand identity. We launched a new visual identity to position PLUS Expressways as a highly efficient, dynamic and premier global expressways group. Our new visual identity will go a long way in helping us to portray our now enlarged Group as a unified entity with a wealth of knowledge, skills and experience. Customer Incentive Programmes In line with the Group’s move to become a more customer-centric organisation and in response to the Government’s call to give added value to highway users, we have launched a loyalty programme and several other incentives. The PLUSMiles Loyalty Programme was introduced to reward frequent and high usage ETC users. The PLUS Travel Incentive offers discounts to Class 1 vehicles during daily off-peak hours and additional discounts during off-peak hours on selected days of festive periods.
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Message from the Managing Director
continued
Our community outreach programmes encourage the spirit of volunteerism amongst staff
Impacting Communities We continue to achieve visibility as a respected and socially-responsible member of the community by undertaking corporate social responsibility initiatives that impact in a tangible manner on the communities around us. 2008 saw us continuing to roll out community and educational activities focusing on road safety. From the “Respect Your Limits” road safety campaign aimed at drivers and operators of heavy vehicles to publishing guidebooks on safe driving, our aim is to emphasise road safety awareness among different target groups including school children. Our Speedway PLUS Circuit promotes motorsport activities in a safe environment, making the sport more accessible to the masses as well as helping develop a whole generation of disciplined and skilled drivers. In addition, we have been supportive of the country’s motorsports development through our sponsorships of the A1 GP, A1 Team Malaysia and Rotax Max Challenge. We also engage with local communities through ‘gotong-royong’ activities and dialogues on health and safety issues. In support of the Government’s national objective in developing small scale Bumiputra contractors, we have launched the Mentor-Mentee Programme in November 2008. To date, 105 Class F contractors have registered in this programme.
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Message from the Managing Director
continued
GROWTH STRATEGIES As we move into a more challenging business environment, we will continue to put in place the strategies that will provide us a strong foundation for growth. Our key growth strategies are:
Secure New Toll Road Concessions This strategy calls for the Group to acquire existing toll road companies or secure new greenfield projects locally and internationally. Whilst we remain focused on India and Indonesia given the large growth potential in their infrastructure sectors, we will also explore opportunities that will expand our geographical scope in the region.
Expansion of existing network The expansion of our existing network, including lane widening, new linkages and bypasses along the current corridor, will contribute positively to long-term traffic growth.
Value-accretive investments or new business Besides our toll expressway businesses, the Group has plans to venture into other toll and non-toll related businesses. These include expanding the provision of operation and maintenance as well as traffic management services to other expressway companies.
Enhance operational and financial efficiencies We will intensify our efforts to improve operational and financial efficiencies through embarking on cost savings initiatives, undertaking effective capital management and enhancing service levels. As we pursue our growth strategies to ensure the success of our businesses, the Group will remain flexible and open to exploring new directions should the need arise. Going forward, the Management team is committed to delivering a respectable performance in 2009.
Noorizah Hj Abd Hamid Managing Director
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!
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Review of Operations
Business Review
Reaching Towards Excellence
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Review of Operations Review of Operations
continued
The North-South Expressway
The North-South Expressway Central Link
The Malaysia-Singapore Second Crossing The Butterworth-Kulim Expressway
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Review of Operations
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TRAFFIC GROWTH Overall Traffic Growth In 2008, more vehicles travelled on our expressways resulting in overall higher traffic volume and toll collection. Continuous improvements to our expressway system and service levels have helped strengthen our position as the expressway of choice, hence attracting additional traffic into our network. PLUS, ELITE and LINKEDUA all experienced year-on-year traffic volume growth with the exception of KLBK. Generally the Group recorded higher traffic growth in the first half of 2008 with the highest recorded in May due to public holidays which coincided with weekends and school holidays. However, in the second half of 2008, traffic growth declined when fuel prices in Malaysia surged by 41% in June on the back of the unprecedented rise in global crude oil prices. The declining trend in traffic growth eventually stabilised as a result of several downward revisions to fuel prices over the subsequent months. The recovery was further strengthened by the impact of long school holidays and festive breaks in the last quarter of the year. Despite the above, PLUS recorded a 5.2% year-on-year traffic volume growth, while our three new subsidiaries, ELITE, LINKEDUA and KLBK, turned in traffic volume growth of 4.0%, 19.6% and -1.9% respectively.
Monthly Traffic Volume Growth 2008 (%) 35 30 25 20 15 10 5 0 -5 -10
Jan
Feb
Mar
PLUS
Apr
May
Jun
Jul
ELITE
Sep
Oct
LINKEDUA
PLUS
Traffic Growth
Aug
Nov
Dec
KLBK
ELITE
LINKEDUA
KLBK
2008
2007
2008
2008
2008
5.2%
7.7%
4.0%
19.6%
-1.9%
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Review of Operations
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Breakdown by Concessionaire
PLUS The traffic volume growth of 5.2% in 2008 is commendable given the sharp fuel price increase in June as well as the difficult economic conditions in the second-half of the year. Key factors contributing to the growth include the full completion of the third lane widening works from Rawang to Slim River and Seremban to Ayer Keroh where the traffic for these high-volume stretches recorded a strong growth of 7%. Ongoing developments of new townships such as Setia Alam and Kota Damansara also contributed to some localised traffic growth in 2008. The Pendang Interchange and the improved linkage to the NSE at Jitra in Kedah continued to draw additional traffic into the network. We anticipate that the new CIQ complex at Bangunan Sultan Iskandar, Johor Bahru which was opened to light vehicles and buses in December 2008, will improve the level of service due to an additional 27 lanes and full implementation of the ETC system which will provide a smoother passage from Singapore into Malaysia.
ELITE Traffic volume during the year recorded a healthy growth of 4.0% despite a toll rate increase of 10% effective 1 January 2008. Strong growth was recorded at Shah Alam, contributed by the developments along the Sg. Buloh-Shah Alam corridor. The Putrajaya Interchange also achieved encouraging growth, benefiting from a newly opened highway linkage constructed by third party. The opening of new interchanges such as Bandar Saujana Putra in March 2008 and Putra Heights in February 2009 is expected to be catalysts for traffic growth in the long term given the on-going development at these new townships.
LINKEDUA Notwithstanding an average toll rate increase of 27% effective 1 January 2008, traffic volume during the year increased by 19.60%. Strong growth was recorded at Perling Toll Plaza, contributed by the rapid development at Bandar Nusajaya as well as the completion of the upgrading works for the linkage from Johor Bahru. Increased cross-border travel at the Tanjung Kupang CIQ also contributed to the traffic growth.
KLBK Traffic volume dropped by 1.9% due to the 23% toll rate increase effective 1 January 2008. The sharp increase in fuel price in June as well as the difficult economic conditions in the second-half of the year also contributed to the drop in traffic.
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Review of Operations
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UPGRADING PROJECTS The Group continues to upgrade its infrastructure and facilities to enhance service levels and make our expressways the preferred mode of travel. In 2008, the Group invested approximately RM49 million in upgrading our Rest and Service Areas (“RSAs”), laybys, toll plazas and other facilities.
RSA and Layby Upgrades With creative development concepts, our RSAs and laybys are popular destinations on their own and continue to be convenient stopovers for travellers. During the year, we upgraded the Sungai Perak RSA (southbound), Dengkil RSA (northbound) and several laybys. Located adjacent to the historical Sungai Perak, the Sungai Perak RSA (southbound) features a unique “riverside” concept with innovative designs and additional facilities, set to attract users. A state agency proposal to build a jetty for scenic boatrides will help to enhance the RSA’s popularity as a tourist destination. The upgraded Dengkil RSA (northbound), the nearest stop from the Kuala Lumpur International Airport (“KLIA”), was officially launched by the Minister of Works in February 2009. Themed “Gateway to Cultural Diversity”, the new look RSA features modern architecture and a variety of outlets. Other works include upgrading of laybys at Rawang (southbound), Ladang Bikam (northbound), Sungai Bakap (northbound) and Behrang (north and southbound), where more restrooms, parking bays and mobile stalls were added to cater to increased level of patronage.
Toll Plaza and Toll Lane Extensions The Group continued carrying out level of service assessments of our toll plazas to identify upgrading requirements for smoother traffic flow. For 2008, Kota Damansara, Sg. Petani Selatan and Juru toll plazas were selected in view of their location within urban areas and high volume of traffic. At Kota Damansara, one mixed mode lane was extended to cater for both manual and ETC transactions. As a result, service levels and traffic flow at the toll plaza have improved. At Sg. Petani Selatan, we undertook pavement widening and associated works. The widening of the exit lane and relocation of the motorcycle track has facilitated traffic flow during peak periods. At Juru, the creation of semi-permanent staggered lanes catering to both cash and ETC transactions has improved service levels.
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continued
The Variable Message Sign (“VMS”) provides real-time traffic information
The Sungai Perak RSA (southbound) has unique and innovative design features
Bridge inspection using Automatic Bridge Control equipment
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M&E and Telecommunication Projects To enhance operational efficiency, several mechanical and engineering (“M&E”) and telecommunication projects were implemented. In November 2008, we completed all works on the new Traffic Monitoring Centre (“TMC”) in our headquarters in Subang. The TMC, which is equipped with advanced ITS components such as Automatic Vehicle Detection System (“AVDS”), Variable Message Sign (“VMS”), and Closed-Circuit Television (“CCTV”), collates, processes as well as disseminates information, and is the nerve centre of our operations. The AVDS, together with the VMS, was installed along strategic stretches to automatically detect traffic volume and collect traffic data by way of traffic count, volume, speed and lane occupancy, as well as provide expressway users with realtime travel information. Apart from the above, we have also collaborated with the Government to implement projects which will enhance the level of service to our users. These included new street lighting along the Nilai-Seremban stretch of the NSE to help enhance visibility and the safety of road users as well as installation of new toll equipment at the new CIQ Complex in Bangunan Sultan Iskandar.
Ancillary Facilities We continue to implement various initiatives to increase the non-toll revenue of our ancillary facilities. This business segment generated revenue of RM18.48 million, a 33% increase in revenue over the preceding year’s RM17.72 million due to the inclusion of sub-license fees from ELITE and LINKEDUA stalls as well as several initiatives aimed at increasing commercial activities at the RSAs. These initiatives included extending the operating times of mobile vendors from a weekend only basis to a daily basis, encouraging short-term commercial promotional activities, securing new tenants for vacant premises, and introducing kiosks as a permanent retailing feature. We are currently exploring the possibility of implementing a point of sales (“POS”) system to streamline and systemise retail operations at the RSA. Apart from enhancing service levels, the POS system will allow for more effective monitoring and control of vendor pricing.
MAINTENANCE OF ASSETS Structured Maintenance Regime For optimum asset preservation, the Group undertakes asset management activities that are centred on a structured maintenance regime. This approach focuses on preventive maintenance to capture defects for early intervention. The structured regime involves the integration of activities such as network planning, network asset condition assessment, investigation of defects, detailed inspections and investigations by specialists, design and procurement, works implementation, information management as well as technical development and research.
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Pavement Maintenance Works In 2008, we implemented pavement structural overlay works for a total length of 220 lane-km. These works increased the structural capacity or strength of the existing pavements and restored their structural condition. The Group also carried out general maintenance works on pavements to a further 182 lane-km to improve their functional condition. Slope Monitoring Activities To ensure the safety and stability of slopes along the expressways, we undertook more than 6,000 periodical inspections in 2008. The results of these inspections were used to establish an appropriate maintenance programme for implementation. Our Real Time Monitoring System (“RTMS”) which utilises rain gauges, allows rainfall data to be automatically captured and transmitted to our Web-based Management System (“WBMS”) 24-hours a day, to facilitate early intervention for preventive maintenance of slopes. To date, 70 rain gauges have been installed at selected locations along the NSE and a conceptual study has been completed on the potential behaviour of rock and soil slopes in relation to rainfall and ground water fluctuation. Based on the study, plans are underway to implement real time monitoring of additional instrumentation in the form of piezometers. Meanwhile, the RTMS is also proposed to be extended to cover monitoring of identified flood prone areas.
Improved Materials In 2008, we continued to use the modified Stone Mastic Asphalt (“SMA”), a high performance pavement surfacing material, at selected locations. Compared to conventional pavement surfacing, the modified SMA is expected to prolong the life of the pavement and requires less maintenance thereby resulting in less disruption to operations and optimum expenditure in the long run.
ROAD SAFETY AND TRAFFIC MANAGEMENT We continue to enhance the safety and well being of our expressways users through various road safety and traffic management initiatives.
Road Safety Campaigns As part of our corporate responsibility efforts, we implemented several road safety campaigns in 2008. These included the nationwide “Respect Your Limits” campaign to foster safety awareness among drivers and operators of heavy vehicles. We continued to participate in other safety campaigns and exhibitions in collaboration with government agencies and third parties.
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Road Safety Audits PLUS Expressways undertakes periodical road safety audits to ensure our expressways and their related safety features are in accordance with established standards. As part of our improvement initiatives, the Group commissioned an independent certified auditor to conduct a road safety audit (Stage 5) starting with the Northern Region. We also appointed an international independent consultant, VicRoads International of Australia, to undertake safety inspection/assessment along the NSE emphasising on selected priority locations and benchmarking against international standards. The NSE was also assessed under the International Road Assessment Programme (“iRAP”) which is dedicated to promoting safer road design. The iRAP uses a 1 to 5 Star Rating as a basis to determine the safety of road infrastructure as it relates to the risks faced by each road user group. A 5-star rating represents the safest road infrastructure design for the prevailing speed environment, while a 1-star rating represents a road with relatively poor infrastructure design. Based on the assessment, PLUS Expressways received a mostly 4 to 5 star rating. In addition, periodical internal audit inspections are also carried out by the Group to ensure our operations and maintenance standards comply with established standards.
Road Safety Features In keeping with the Group’s emphasis on road safety, several improvement initiatives were undertaken along the expressways. To increase visibility and improve night time driving conditions, we installed additional warning signs, chevron signs, flashing amber lights, road studs and plastic delineator posts at selected locations, while existing concrete New Jersey Barriers located at the median along the Kuala Kangsar-Jelapang stretch were upgraded and strengthened in accordance with the new Road Engineering Association of Malaysia (“REAM”) design specifications. We also installed new guardrails as well as wire ropes and realigned the existing guardrail height at selected locations along the NSE. Road surfaces along certain stretches were treated with porous asphalt to improve surface condition during wet weather while whisper grip and rumble strips were applied to improve skid resistance. Speed limit signs, mainline signboards and approach signage were upgraded for better visibility and guidance. All in all, 2008’s road safety initiatives contributed to reducing the accident and fatality rate along our expressway to its lowest level in over a decade.
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PLUSRonda patrol teams attend to minor vehicle breakdowns and assist in traffic management
Traffic is closely monitored at the Traffic Monitoring Centre
During national emergencies, the PLUS helicopter unit is mobilised to assist in relief efforts
Emergency telephones are located at every 2km interval
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Accident and Fatality Rate (per 100 million vehicle km-traveled) 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Accident Rate
72
75
70
63
63
63
59
55
55
53
51
Fatality Rate
2.7
2.4
2.6
2.0
2.5
2.5
2.2
2.2
2.1
2.3
2.0
Accident and Fatality Rate (per 100 million vehicle km-traveled) 80 70 60 50 40 30 20 10 0
1998
1999
2000
Accident Rate
2001
2002
2003
2004
2005
2006
2007
2008
Fatality Rate
Traffic Management Efforts To better manage traffic flow along our expressways and ensure a hassle-free journey especially during festive periods, we continued to implement the following measures that have proven successful in the past: • The Travel Time Advisory (“TTA”), which recommends different journey start times to customers depending on their origin and destination. • The PLUS Mobile Alert (“PLUSMA”) which transmits traffic updates via short messaging service (“SMS”) to subscribers. • The Headquarters Reserve Unit (“HRU”) which was deployed to selected toll plazas and RSAs along the expressway to assist in traffic management.
PROJECTS UNDER DEVELOPMENT Currently, PLUS Expressways has three projects under development – two in Indonesia and one in India. These two countries hold tremendous growth potential given the anticipated traffic volume growth from the huge population base. The Group is fully committed to implementing these projects while exploring other strategic opportunities that will enlarge our international footprint.
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Bhiwandi-Kalyan-Shil Phata Highway, India PLUS BKSP Toll Limited (“PLUS BKSP”) was incorporated on 24 July 2006 in India as a special purpose vehicle to undertake the implementation of the 21.6 km BhiwandiKalyan-Shil Phata Highway (“BKSP”) project in the State of Maharashtra. The concession agreement, executed on 25 August 2006, which includes operating, maintaining and collecting tolls, was initially for 6 years and 8 months but has been extended to 7 years, 11 months and 5 days. The project involves the widening of the existing two-lane BKSP to four lanes, as well as pavement strengthening and improvement. The project was initially delayed due to challenges in securing certain sections of land required for construction. However, as at April 2009, construction has achieved 99.21% progress. The date of commencement of toll collection shall be determined upon the Maharashtra State Road Development Corporation (“MSRDC”) issuing a Provisional Completion Certificate. The Group will leverage on the BKSP project to explore other opportunities in India.
Cikampek-Palimanan Toll Road, Indonesia PLUS Expressways acquired a 55% stake in PT Lintas Marga Sedaya (“LMS”), the concessionaire for the 116 km Cikampek-Palimanan Toll Road, the longest section of the Trans Java Expressway. The concession is for 35 years from 13 July 2007. The design of the project was completed and approved by the regulatory authority, Badan Pengatur Jalan Tol (“BPJT”), in May 2008. As a result of the increase in the cost of certain major construction materials, the business plan was revised and approved by BPJT. We are currently actively pursuing the additional funding required for the project. Land acquisition by the Government of Indonesia is also ongoing and is expected to be completed within this year.
Cimanggis-Cibitung Toll Road, Indonesia On 18 September 2007, PLUS Expressways together with PT Bakrie & Brothers Tbk and PT Capitalinc Investment Tbk succeeded in the bid for the Cimanggis-Cibitung Toll Road. On 27 February 2008, a joint venture special purpose vehicle, namely PT Cimanggis-Cibitung Tollways (“CCTW”) was incorporated. PLUS Expressways holds a 60% equity stake in CCTW, making the company a foreign subsidiary of the Group. The 35-year concession involves the construction, operation and maintenance of the proposed 25.4 km Jakarta Outer Ring Road 2 (“JORR2”) on the outskirts of the Jakarta metropolitan area. CCTW is in negotiation with BPJT prior to the concession agreement being signed.
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Corporate Social Responsibility
Reaching Out
Towards More Impactful Corporate Social Responsibility
Towards Effective Environmental Protection
Towards a High Performance Workforce
106 108 110 112
114
Towards Greater Customer Satisfaction
104
Towards Greater Innovation
Media Milestones – Corporate Social Responsibility
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Towards More Impactful Corporate Social Responsibility Respect Your Limits
“Rebung Project”
Through the “Respect Your Limits” road safety campaign aimed at drivers and operators of heavy vehicles, we spread awareness on road safety nationwide. More than 1,000 drivers benefitted from seminars involving speakers from PLUS, Jabatan Keselamatan Jalan Raya (“JKJR”), the Malaysian Institute of Road Safety Research (“MIROS”) and Puspakom.
In collaboration with the Malaysian Institute of Integrity, we organised the “Rebung Project” that saw some 400 student leaders from MARA Junior Science Colleges (“MRSM”) nationwide undergoing integrity and teambuilding training with stall operators at PLUS RSAs and the Bukit Gantang Tropical Fruit Village. The participants were also involved in a half-day session on road safety awareness and ‘gotong-royong’ with the local communities.
Malays i a Z er o F a t al i t y Vision 2008 – 2010
As a responsible and progressive corporate citizen, PLUS Expressways is committed to elevating the quality of life of the communities we operate in. We subscribe to the principles of sustainable development and integrate social values within our business activities. In line with recommendations put forth in the GLC Silver Book, the Group’s Corporate Social Responsibility (“CSR”) programme for 2008 emphasised on two of the seven core areas prescribed – that of community involvement and education. Our community and educational initiatives in turn, focused on the cause of road safety awareness, an issue that the Group has long championed.
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In August 2008, we signed an MOU with JKJR to roll out safe driving programmes in support of Malaysia’s Zero Fatality Vision. Our collaborative efforts led us to implementing Zero Road Fatality Vision Intervention Programmes, advocating the use of helmets and rear seatbelts, and publishing guidebooks on safe driving for distribution to schools and the public at toll plazas. The first batch of 30,000 books was printed in June 2008 in both Bahasa Malaysia and English.
Supporting Motor sport The Group’s association with motor sport goes back a long way and it has proven to be an effective platform for reaching out to grassroot audiences. 2008 saw us sponsoring young local talents to represent Malaysia in the Rotax Max Challenge and Formula BMW events. We also undertook sponsorship of the A1 Team Malaysia and the A1GP race in Sepang to support the growing motor sports industry. In conjunction with the Formula PLUS Inter-School Go Kart Competition 2008 which was organised in Selangor to unearth new motor sport talents, some 120 school children aged 9 to 10 years old were selected from 60 schools in Selangor to undergo theory and practical training in preparation for the competition.
Towards More Impactful Corporate Social Responsibility
We have also invested in the Speedway PLUS Circuit. This has not only helped elevate motor sports activities in a safe environment and making the sport accessible to the masses, but it also enabled us to identify young talents and appoint them ambassadors of the sport as well as icons of road safety.
Impacting Communities The year under review also saw us impacting local communities through our support of special interest groups, orphanages, ‘gotong-royong’ activities and regular dialogues with villagers on health and safety issues. We were also involved in ‘korban’ and Ramadhan contributions as well as the sponsorship of mineral water to schools for their
sports day. These efforts have helped build goodwill with many communities and reduced incidents of stone throwing, vandalism and open burning near our expressways. PLUS Expressways also continues to provide opportunities for communities living near our expressway facilities to supplement their livelihood. By offering affordable rental rates and providing training on food preparation, hygiene and customer service, we are helping to grow many of the outlet operators at our RSAs into successful entrepreneurs.
continued
Rewarding Customers We have embarked on customer incentive programmes that offer discounts to users during off-peak hours and a loyalty programme that rewards frequent and high expressway usage. These initiatives reflect the Group’s appreciation of the many loyal users who choose to travel on our expressways especially during these trying times. PLUS Expressways will continue to look for opportunities to enrich and elevate the status of the communities we operate in.
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Towards Effective Environmental Protection
continued
Towards Effective Environmental Protection Structured Environmental Management System
Reducing Congestion and Pollution
PLUS Expressways’ Environmental Policy advocates business practices as well as products and services that are environmentally friendly and sustainable. To preserve the environment around us, we continue to establish comprehensive operational controls, utilise the appropriate technology as well as implement sustainable maintenance and construction activities. To help us comply with prevailing environmental regulations in Malaysia, we employ structured Environmental Management System that is systematically monitored.
As an organisation that cares for our customers and the environment, we are also committed to ensuring our environmental efforts to date are continuously improved upon. To reduce the effect of harmful vehicle exhaust emissions (in particular green house gas emissions), from the approximately one million vehicles that ply our expressways daily, we continue to promote the usage of electronic toll collection system as it minimises congestion at toll plazas. In 2008, our efforts to reduce congestion at toll plazas saw us achieving 48% of toll collection by electronic means via SmartTAG readers and Touch ‘n Go cards.
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With the completion of widening works from Seremban to Ayer Keroh and from Rawang to Slim River, the congestion at the mainline too has been minimised and exhaust emissions reduced. Modification works for through traffic between Ipoh Selatan and Jelapang, which were recently completed will also contribute towards a better environment.
M i n i m i s i n g P o te n t i a l Contamination Our maintenance of the toilets at our laybys and Rest and Service Areas (“RSAs”) has not only enhanced customers’ comfort levels but has also enabled us to improve the quality of wastewater discharged into the environment.
Towards Effective Environmental Protection
In 2008, we spent about RM1 million to upgrade our sewerage treatment plants thereby minimising the impact of effluent discharge. We also spent over RM7.1 million in maintaining these plants. We also ensured that all slopes were maintained to minimise sediment flow into natural water courses through on-foot and aerial inspections. The Group is always prepared to respond to any emergency that could potentially impact the environment. By implementing comprehensive
procedures and making continual improvement to processes and systems, we achieved approximately 93% emergency responses within 20 minutes. These early interventions minimised potential pollution of inland waters and soil.
Spreading Environmental Consciousness All the Group’s employees, stall operators and contractors are aware of the need to adhere to the requirements of our Environmental Management System as well as their responsibility to monitor and control all activities that
continued
impact upon the environment. As we encourage our employees to become active agents of sustainable and equitable development, we also inculcate a sense of environmental consciousness among our expressway customers and business partners. Going forward, we will focus on achieving the Group’s environmental improvement objectives and targets, while continuing to enhance our Environmental Management System and environmental protection practices.
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Towards Greater Customer Satisfaction PLUS Expressways is committed to ensuring the safety, comfort and convenience of our customers at all times. To this end, we continue to provide safe infrastructure, make continuous improvements to our expressway facilities and services, as well as ensure smooth traffic flow for a more enjoyable customer experience.
E leva t i n g Cus t o m er Satisfaction Levels In 2008, we took our customer service efforts up several notches with the establishment of a dedicated Customer Relationship and Marketing Department (“CRMD”). This unit has been tasked with elevating customer satisfaction levels by responding to complaints and enquiries in a more effective manner as well as through initiating more engaging customer-centric and marketing programmes.
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The CRMD is also responsible for monitoring customer-centric activities and launching new initiatives to ensure customer satisfaction and positive experiences. The CRMD analyses traffic patterns regularly and develops marketing programmes to attract traffic to the PLUS expressway network.
Cus t o m er Programmes
I n c e n t i ve
In line with the Group’s move to become a more customer-centric organisation and in response to the Government’s call to give added value to expressway users especially during the current economic period, the Group launched the PLUS Travel Incentive and PLUSMiles loyalty programme.
PLUS Travel Incentive The PLUS Travel Incentive (“PTI”) is a dynamic toll pricing mechanism that aims to help smoothen traffic flow during peak hours by offering discounts
Towards Greater Customer Satisfaction
during off-peak periods. This incentive programme rewards Class 1 users travelling the PLUS and ELITE expressways between 12 midnight and 7 am with a 10% toll discount. The PTI runs effectively from 1 January 2009 till 31 December 2010. An additional 10% discount will also be given to users during four main festive seasons for off-peak travel on any six selected days.
Incentive for Buses In response to the Government’s call to assist public transport operators in reducing their operating costs, toll charges for buses were reduced by 50% effective 15 September 2008 for a duration of two years.
PLUSMiles Loyalty Programme In appreciation of frequent and high usage electronic toll collection (“ETC”) users, we launched the PLUSMiles Loyalty Programme on 1 January 2009. This loyalty programme, the first-of-itskind in Malaysia, recognises and rewards PLUSMiles subscribers spending a minimum of RM200 a month with a 5% toll rebate. PLUSMiles cardholders are also entitled to a host of benefits including instant discounts and privileges from a growing number of participating merchant outlets.
continued
Going forward, PLUSMiles will enable us to better identify and understand customer needs so that we can implement focused marketing activities. As of mid-April 2009, there were over 20,000 PLUSMiles loyalty card users, underlining the success of this initiative.
Customer Requests
Responding to Customers
Customer Enquiries
The Group is continuously evaluating the effectiveness of our facilities and services through various channels. In 2008, we received feedback from our customers in the form of requests for assistance, enquiries, notifications, complaints and compliments, totaling approximately 96,000.
The PLUS toll free line responded to approximately 35,000 enquiries with 43% of this number enquiring about the status of traffic and the other 57% enquiring about the reasons for traffic congestion.
Our Traffic Monitoring Centre recorded more than 50,000 Vehicle Breakdown Assistance requests throughout 2008 with the highest number of requests relating to car breakdowns (68.4%), followed by lorry and trailer breakdowns at 9.2% and 8.1% respectively.
Customer Compliments Customer Complaints In 2008, the overall number of customer complaints dropped by 31% against 2007’s figure. In the Highway Service and Traffic Safety categories, the number of total complaints dropped by 88% mainly due to the successful completion of the Third Lane Widening project. In the area of traffic congestion at toll plazas, we managed to reduce complaints by 84%. Proactive measures are being taken in other areas to address complaints and elevate customer satisfaction levels.
The Group received 30 compliments in 2008 of which 57% was attributed to the quick response by PLUSRonda teams. Besides that, compliments were also received for expressway facilities, toll teller courtesy, traffic monitoring services and maintenance. The Group continues to enhance the management of customer feedback through the Customer Complaints Management System (“CCOMS”) to address our customers’ needs in a more structured and effective manner.
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In 2008, the Group continued to bring innovation into play on several fronts to enhance our operational efficiency, productivity and cost effectiveness as well as to ensure customer safety and comfort.
Our Database Management Department (“DMD”), now under the purview of the RTSD, is responsible for maintaining and further developing our Total Expressway Maintenance Management System (“TEMAN”) which uses Geographical Information Systembased (“GIS”) applications, making it more efficient and marketable.
Towards Greater Innovation R ese a r c h a n d T e c h n i c a l Support Division In order to remain competitive in a highly challenging operating environment, we established a dedicated Research & Technical Support Division (“RTSD”) to intensify our research efforts and to market the over two decades of expertise we have accumulated. The RTSD has been tasked with undertaking and coordinating research of new products and processes to enhance operational efficiency. Over the long term, research efforts will be expanded to other areas of our business to help establish PLUS Expressways as the market leader in highway services and products.
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Operational Innovation The PLUSRonda Mobile Reporting System (“PROMPTS”) was introduced to enhance the efficiency of real-time reporting between PLUSRonda, our Traffic Monitoring Centre (“TMC”) and other relevant departments. A fullyonline computerised system, PROMPTS simplifies and automates the existing PLUSRonda process flow and reporting. In order to facilitate more effective and efficient services for expressway customers, the integration of the TMC with the Region Communications Centres was carried out in 2008. This integration has improved our overall processes and reduced work duplication, enabling us to respond faster to any incidents along our expressways.
Towards Greater Innovation
The year also saw us rolling out the web-enabled Executive Information System (“EIS”) module of TEMAN. The EIS contains an executive summary of other sub-systems within TEMAN, relevant statistical and economic data as well as information on other expressways, locally and abroad. With this web-based system, our management now has a more effective way of retrieving records pertaining to expressway asset management and other relevant information to assist them in decision making. We also focused our efforts on developing a cost effective web-based Mini TEMAN application for use by smaller toll operators. Rolled out in the fourth quarter of 2008, this application underscores our new strategy of marketing our in-house system to other concessionaires. We have also successfully migrated our existing GIS database to the more advanced ArcSDE Geodatabase format. This will make the handling of the GIS data more efficient while enabling the management and analysis of remote sensing data as well as satellite images including digital elevation modelling.
continued
Cust o mer - f o c use d Innovation For the benefit of expressway users, the PLUS Mobile Alert (“PLUSMA”) which enabled the transmission of traffic updates via short messaging service (“SMS”), was activated during festive seasons. This service supplemented our existing PLUS Tollfree line, radio announcements and Variable Messaging System (“VMS”). To ensure the safety of expressway users, high friction course pavement surfacing and rumble strips with high quality skid resistance features were installed at selected areas. To eliminate incidences that may compromise safety, new anti-theft fastener guardrails and stronger Right-of-Way fencing were installed.
Recognition Our dedication to employing innovation was recognised when our As-built Drawings Archiving Management System (“ADAMS”) was acknowledged as one of the top innovative systems developed within the UEM Group. It is now being showcased at the UEM Innovative Centre in Petaling Jaya.
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Towards a High Performance Workforce
continued
Towards a High Performance Workforce The Group is committed to building a high performance workforce to drive the Group’s business growth and bring it to new heights of service and product excellence. We improved on existing human capital-related initiatives as well as embarked on new programmes to support the Group’s business strategy to be an Employer of Choice.
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Strengthening HR Efforts The many human capital development initiatives included a Group integrity plan, employee value proposition, top talent retention plan and reviews of employees’ salaries and benefits. We also focused our efforts on expanding our workforce through a structured recruitment drive and enhanced manpower development and planning strategies for domestic and overseas requirements. In addition, we embarked on cost saving measures and process improvement initiatives through employee involvement of Six Sigma projects. These projects helped promote
staff engagement through esprit-decorp and built a sustainable high performance work culture.
Managing Performance
E m p l o yee
In supporting the Group’s strategic business plan, we also introduced a performance management framework, with key performance indicators (“KPIs”) being integrated into our business and operational activities. Employees at every level and function are accountable for achieving prescribed performance targets aligned to and focused on the corporate KPIs.
E m p l o yee
Elevating Human Capital Development Initiatives
The importance of people and organisational development is spelt out in our Corporate Balanced Scorecard which places an emphasis on the development and retention of top talent. In this regard, the Group places emphasis on understanding the needs and expectations of the employees in order to effectively manage those expectations. An Employee Climate Survey was again conducted in 2008 whereby we successfully achieved an overall corporate score of 85%. Based on the detailed results of the survey, we will be able to design more effective career development programmes for our employees and improve productivity in the work environment.
The Group is committed to enhancing the Attitude, Skills and Knowledge (“ASK”) of our employees through ongoing training and development initiatives. To ensure higher standards of efficiency and productivity, we invested a significant amount on human capital development programmes and initiatives in 2008.
Managing Expectations
Besides external training courses, PLUS Training Centre provides specially designed programmes for our frontline and operational staff focusing on motivation, character building and skills reinforcement. In addition, the centre also conducts IT proficiency and Spoken English training programmes for non-executive staff.
In line with our strategy to create a bigger pool of potential leaders, our employees are provided with managerial and leadership development programmes to keep their skills abreast with the Group’s aspirations. To retain top management talent, implement succession planning and ensure a highperforming management and leadership team, we have collaborated closely with the UEM Group for leadership assessment and development programmes via a systematic and scientific management approach to support our business roadmap and strategies. All these initiatives have helped to narrow the employee competency and skill set gaps while forging a sense of belonging to the Group.
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Media Milestones – Corporate Social Responsibility Corporate Social Responsibility News Clippings
114 PLUS Expressways Berhad Annual Report 2008
Corporate Governance
Expanding Good Practices
Statement of Corporate Governance
Enterprise Risk Management
Code of Business Ethics
Statement of Internal Control
Audit Committee Report
Management Control Policy
116 128 131 132 135 139
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Statement of Corporate Governance
The Board of Directors (“Board”) of PLUS Expressways Berhad (“PLUS Expressways” or “the Company”) has always upheld a high standard of corporate governance to safeguard the interests of all stakeholders, which include customers, shareholders, employees, and the community.
The Board is fully dedicated to ensuring that the structure and procedures to support excellent corporate conduct will continue to exist, not only in their present form, but will continually be enhanced and fortified. This statement sets out the commitment of the Board towards good corporate governance principles and the extent to which it has complied with the best practices of the Code on Corporate Governance (Revised 2007) (Code) throughout the financial year ended 31 December 2008.
a
The Board of Directors
The Board PLUS Expressways is led and managed by an experienced Board comprising a mix of members with a wide range of experience and expertise in the relevant fields such as accounting, economics and management, sustainable development, business and banking. With their broad range of skills, experience and knowledge, they successfully direct and supervise PLUS Expressways Group’s (“the Group”) business activities.
As a team, the Board brings to bear independent and sound judgement on issues encompassing strategy, performance, resources and standards of conduct. The roles and functions of the Board as well as the differing roles of Executive Directors and Non-Executive Directors have been clearly defined.
Board Composition The Board has twelve (12) directors comprising one (1) Executive member and eleven (11) Non-Executive members, six (6) of whom are independent. A brief profile of each Director is set out on pages 52 to 64 of this Annual Report.
The Independent Non-Executive Directors are independent of management and free from any business relationships which could materially interfere with the exercise of their independent judgement. They play an important role in:
• • •
116 PLUS Expressways Berhad Annual Report 2008
Ensuring that the strategies proposed by the Management are analysed and deliberated. Representing the interests of not only the minority shareholders, but also of employees, customers, suppliers and other stakeholders. Providing an objective and independent view to the Board.
Statement of Corporate Governance
The Company has complied with the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) which requires at least two (2) Directors or one-third (1/3) of the Board, whichever is higher, to be independent and non-executive.
The Board’s composition is such that no individual or group of individuals dominates the Board’s decision making.
In accordance with the guidelines of the Code, Geh Cheng Hooi is the Senior Independent Non-Executive Director whose primary responsibility is to deal with concerns regarding the Company which are inappropriate to be dealt with by the Chairman or the Managing Director.
Roles of Chairman and Managing Director The roles of the Non-Independent Non-Executive Director and Chairman, Tan Sri Dato’ Mohd Sheriff Mohd Kassim and the Managing Director, Noorizah Hj Abd Hamid are separate with clear distinction of responsibilities between them.
The Chairman is responsible in ensuring the integrity and effectiveness of the relationship between Directors. The Managing Director is responsible for the implementation of broad policies approved by the board and she is obliged to report and discuss at board meetings all material matters currently or potentially affecting the Group and its performance, including all strategic projects and regulatory developments.
Conflict of Interest The Directors have a continuing responsibility to determine whether they have a potential or actual conflict of interest in relation to any matter, which comes before the Board. The Company and the Group have adopted a process whereby each Director is required to make written declarations whether they have any interest in transactions tabled at regular board meetings of the Group.
continued
Board Appointment Process The Company has in place formal and transparent procedures for the appointment of new Directors. These procedures ensure that all nominees to the Board are first considered by the Nominations and Remuneration Committee taking into account the required mix of skills and experience and other qualities, before making a recommendation to the Board and major shareholders.
Boards Appraisal Process Following the launch of the Green Book on Enhancing Board Effectiveness developed by the Putrajaya Committee on GLC High Performance for Government Linked companies in April 2006, YBhg Tan Sri Dato’ Mohd Sheriff Mohd Kassim, the Non-Executive Chairman of the Company, has been identified as the Leading Director to lead the board effectiveness assessment.
Board Responsibilities The Board retains full and effective control of the Company. This includes responsibilities in determining the Company’s overall strategic direction, the development and management of the Group’s businesses as well as reviewing the adequacy and effectiveness of the internal control system of the Company and the Group as a whole. The Board are also responsible in identifying principal risks and ensuring the implementation of the appropriate systems to manage these risks.
Key matters, such as approval of annual and interim financial results, material acquisitions and disposals, material agreements, major capital expenditures, budgets, the Key Performance Index, the Corporate Scorecard, long-term plans and succession planning for the top management are reserved for the Board’s deliberation and decision making.
117 PLUS Expressways Berhad Annual Report 2008
Statement of Corporate Governance
continued
The Board, as a whole, oversees responsibility for developing and revising the Group’s strategies. The Executive Director is responsible for making and implementing operational decisions generally based on the Discretionary Authority Limit (“DAL”) as approved by the Board. The Non-Executive Directors complement the skills and experience of the Executive Director by contributing their knowledge and experience of other businesses and sectors to the formulation of policies and decision making of the Company.
Fiduciary Duties of Directors The relationship between a Director and the Company is based on fiduciaries, whereby each Director is required to act bona fide in the best interests of the Company, as a whole. In this respect, the Directors are required to declare their respective shareholdings in the Company and related companies. Directors are also required to declare to the Board their interests in any contracts or proposed contracts with the Company or any of its related companies. The Directors will abstain from any decision making in relation to transactions in which they have an interest.
To further assist the Board in discharging its responsibilities more effectively; four (4) committees have been set up – Audit, Nominations, Remuneration and Investment Committees. Each committee has the authority to review specific issues delegated by the Board and to report to the Board with its recommendations. The ultimate responsibility for the final decision on all matters, however, lies with the Board.
118 PLUS Expressways Berhad Annual Report 2008
Number of Directorships in Other Companies Each Director of the Company holds not more than ten (10) directorships in public listed companies and not more than fifteen (15) directorships in non-listed companies as defined and in accordance with the Bursa Securities Listing Requirements. Compliance with the Bursa Securities Listing Requirements in this respect ensures that the Directors are able to commit sufficient time and resources to effectively discharge their responsibilities to the Company.
Board Meetings The Board met nine (9) times for the financial year ended 31 December 2008 where it deliberated on and considered various matters including but not limited to:
• • • • • •
The Group’s financial and operational performance, Major capital expenditure and investment opportunities, Internal controls and risk management, Budgets and dividends, Business plan and strategic direction of the Group, and Related party transactions.
Prior to Board meetings, the Board is furnished with sufficient and appropriate quality information from the Management and, where necessary, third party consultants are engaged to advise the Board on the matter to enable the Board to effectively discharge their responsibilities. All proceedings of the Board meetings are recorded.
Statement of Corporate Governance
continued
Details of each Director’s meeting attendance during the financial year ended 31 December 2008 are as follows: No.
Name of Director
Status
1
Tan Sri Dato’ Mohd Sheriff Mohd Kassim
Non-Independent Non-Executive Chairman
9/9
2
Dato’ Ahmad Pardas Senin
Non-Independent Non-Executive Deputy Chairman
8/9
3
Noorizah Hj Abd Hamid
Managing Director
9/9
4
Geh Cheng Hooi
Senior Independent Non-Executive Director
4/9
5
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid
Independent Non-Executive Director
8/9
6
Hassan Ja’afar
Non-Independent Non-Executive Director
9/9
7
Dato’ Mohamed Azman Yahya
Non-Independent Non-Executive Director
8/9
8
Tan Sri Razali Ismail
Independent Non-Executive Director
5/9
9
Datuk K. Ravindran
Independent Non-Executive Director
8/9
10
Quah Poh Keat
Independent Non-Executive Director
7/9
11
Abdul Farid Alias (Resigned w.e.f. 31 December 2008)
Non-Independent Non-Executive Director
5/9
12
Datuk Seri Panglima Mohd Annuar Zaini (Appointed w.e.f. 19 December 2008)
Independent Non-Executive Director
—
Access to Information and Advice The Board recognises that the decision making process is highly dependent on the reliability and completeness of information furnished to it. As such, the Board members have full and unrestricted access to information on the Group’s business and affairs, whether as a full Board or in their individual capacity, in discharging their duties. The Board receives timely advice on all relevant information about the Group.
Prior to Board meetings, the Directors receive the agenda and a full set of Board papers containing information relevant to the matters to be deliberated at the meeting. The Board papers are comprehensive and encompass both quantitative and qualitative factors to facilitate prudent and informed decision making. The minutes of
No. of Board Meetings Attended
the previous Board meeting are also circulated to the Directors and confirmed at each meeting. Minutes of the Board Meetings are maintained at the Registered Office of the Company.
All Directors also have full access to the advice and service of the Company Secretaries in the course of their duties. The Company Secretaries are responsible for ensuring that Board meeting procedures are adhered to at all times and that applicable rules and regulations are complied with. Where necessary, the Directors may obtain independent professional advice at the Company’s expense on specific issues to enable the Board to discharge their duties on the matters being deliberated.
119 PLUS Expressways Berhad Annual Report 2008
Statement of Corporate Governance
continued
Directors’ Training The Company acknowledges that continuous education is vital for Board members to gain insight into the state of the economy, technological development, latest regulatory developments and management strategies in relations to the Group’s core business.
Every Director of the Company undergoes continuous training. In year 2008, the Directors have attended training in relation to amongst others corporate governance, risk management, securities market regulation and directors’ duties and liabilities.
The training status of Directors as at 31 December 2008, are as follows: No.
Name of Director
No. of Training Attended
Remarks
1
Tan Sri Dato’ Mohd Sheriff Mohd Kassim
5
Attendance as participant at seminars/conference/ workshops
2
Dato’ Ahmad Pardas Senin
2
Attendance as participant at seminars/conference/ workshops
3
Noorizah Hj Abd Hamid
5
Attendance as participant at seminars/conference/ workshops
4
Geh Cheng Hooi
1
Attendance as participant at seminars/conference/ workshops
5
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid
1
Attendance as participant at seminars/conference/ workshops
6
Hassan Ja’afar
3
Attendance as participant at seminars/conference/ workshops
7
Dato’ Mohamed Azman Yahya
8
Attendance as moderator and/or participant at seminars/conference/workshops
8
Datuk K. Ravindran
2
Attendance as participant at seminars/conference/ workshops
9
Tan Sri Razali Ismail
2
Attendance as participant at seminars/conference/ workshops
10
Quah Poh Keat
5
Attendance as panelist and/or participant at seminars/conference/workshops
11
Abdul Farid Alias
4
Attendance as participant at seminars/conference/ workshops
12
Datuk Seri Panglima Mohd Annuar Zaini
3
Attendance as participant at seminars/conference/ workshops
120 PLUS Expressways Berhad Annual Report 2008
Statement of Corporate Governance
Re-election of Directors The Company’s Articles of Association provides that one-third (1/3) of the Directors in office for the time being, or if their number is not three (3) or a multiple of three (3), then the number nearest to one-third (1/3), are subject to retirement by rotation at each Annual General Meeting (“AGM”) and shall be eligible for re-election. The Directors longest in office since their last election shall retire from office at the forthcoming AGM and shall be eligible for re-election. Directors who are over 70 years of age are required to submit themselves for re-appointment and re-election annually in accordance with Section 129(2) and Section 129(6) of the Companies Act, 1965. Details of the Directors seeking re-election and re-appointment at the forthcoming AGM are disclosed in the Notice of the AGM on page 10 of this Annual Report.
b
Board Committees
The Board has delegated specific responsibilities to four (4) committees i.e. Audit Committee, Nominations Committee, Remuneration Committee and Investment Committee. These Committees have clearly defined terms of reference to assist and support the Board in its responsibility to oversee the Company’s operations and to make the necessary recommendations relating thereto for the Boards’ consideration. At all times, the ultimate responsibility for the final decision on all matters, lies with the Board. (i) Audit Committee The Audit Committee comprises the following members: Chairman Geh Cheng Hooi Senior Independent Non-Executive Director
continued
Members Datuk K. Ravindran Independent Non-Executive Director
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid Independent Non-Executive Director
Quah Poh Keat Independent Non-Executive Director
The Board has delegated certain responsibilities to the Audit Committee, which operates within clearly defined terms of reference. The terms of reference of the Audit Committee and their activities are set out on pages 135 to 138 of this Annual Report.
(ii) Nomination Committee The Nomination Committee consists exclusively of Non-Executive Directors, a majority of whom are independent. The members are as follows:
Chairman Tan Sri Dato’ Mohd Sheriff Mohd Kassim Non-Independent Non-Executive Chairman
Members Geh Cheng Hooi Senior Independent Non-Executive Director Datuk K. Ravindran Independent Non-Executive Director
The Managing Director and other members of the Board may attend the Nomination Committee meetings upon the invitation by its Chairman.
121 PLUS Expressways Berhad Annual Report 2008
Statement of Corporate Governance
The Nomination Committee is responsible for recommending to the Board the appointment of new directors and assessing the size, composition, relevance and the effectiveness of the Board and its other Committees. For good corporate governance, the Nomination Committee also recommends to the Board the appointment of the directors of the Company’s subsidiaries. The required mix of skills and experiences of directors, including core competencies which non-executive directors bring to the Board, are also reviewed annually by the Board in consultation with the Nomination Committee. The Nomination Committee has deliberated and recommended to the Board after considering the skills, knowledge, expertise, experience, professionalism and integrity of the new directors and in the case of the independent non-executive director, the Nomination Committee has evaluated on his ability to discharge his responsibilities as expected. The new directors recommended on 18 November 2008 are as follows:
• •
continued
Mohamad Rosli Ahmad as the new nominee director of PLUS BKSP Toll Limited, PLUS Expressways Berhad’s subsidiary in India; and
(iii) Remuneration Committee The members of the Remuneration Committee, consisting wholly of Non-Executive Directors, are as follows:
Members Dato’ Ahmad Pardas Senin Non-Independent Non-Executive Deputy Chairman Hassan Ja’afar Non-Independent Non-Executive Director Datuk K. Ravindran Independent Non-Executive Director
The Remuneration Committee is responsible for recommending to the Board the remuneration framework of the Executive Director and the senior management of the Company.
The broad policy for directors’ compensation is to provide a remuneration package necessary to attract, retain and motivate Directors of the quality required to manage the business of the Company and to align the interest of the Directors with those of the shareholders. Executive Director’s remuneration is linked to corporate and individual performances.
On 15 February 2008, the Remuneration Committee deliberated and recommended to the Board the fixed fees and meeting allowances for Board of Commissioners of PT Lintas Marga Sedaya, a whollyowned subsidiary of PLUS Expressways Berhad in Indonesia.
YBhg Datuk Seri Panglima Mohd Annuar Bin Zaini onto the Board as an independent nonexecutive director.
The Nomination Committee also deliberated and recommended to the Board for approval, the retirement and re-election of certain identified directors at the forthcoming AGM.
122 PLUS Expressways Berhad Annual Report 2008
Chairman Tan Sri Dato’ Mohd Sheriff Mohd Kassim Non-Independent Non-Executive Chairman
Statement of Corporate Governance
On 27 May 2008, the Remuneration Committee deliberated and recommended to the Board the proposed Payment of Bonus 2007 to the top management. On even date, the Remuneration Committee also deliberated on the proposed Payment of Bonus 2007 to Noorizah Hj Abd Hamid, the Managing Director of PLUS Expressways Berhad and YBhg Dato’ Idrose Mohamed, the former Managing Director of PLUS Expressways Berhad.
For the year under review, the Investment Committee deliberated on the Company’s participation in several tenders and request for qualification in relation to toll road projects in the Indian sub-continent and Indonesia. Other than India sub-continent and Indonesia, the Investment Committee also looked at the possibility and prospect of PLUS Expressways Berhad to invest in other part of the globe.
On 27 June 2008, the Remuneration Committee deliberated and recommended to the Board the proposed payment of ex-gratia to YBhg Dato’ Idrose Mohamed, the former Managing Director of PLUS Expressways Berhad.
On 11 January 2008, the Investment Committee deliberated in length and recommended to the Board for PLUS Expressways Berhad to accept the letter of offer from the Ministry of Works, Republic of Indonesia for the award of the concession for the Cimanggis-Cibitung Toll Road Project (“Project”) in Indonesia and further recommended to the Board for PLUS Expressways Berhad to enter into a Joint Venture Agreement with PT Bakrie & Brothers Tbk and PT Capitalinc for the formation of a new toll road concession company for the Project.
On 23 May 2008, the Investment Committee deliberated on the progress updates of the Cikampek- Palimanan Toll Road Project in Indonesia and recommended to the Board for the additional Shareholder’s Advance to meet the operational requirements of PT Lintas Marga Sedaya, its subsidiary in Indonesia. The Investment Committee on the same date deliberated and further recommended to the Board for the proposed additional injection by PLUS Expressways Berhad to PLUS BKSP Toll Limited, its subsidiary in India for the purpose of financing the balance of the outstanding construction works and operating cost.
On 23 December 2008, the Investment Committee deliberated on the proposal to submit bid for the Indore-Dewas project in India but decided not to proceed with the submission.
(iv) Investment Committee The Investment Committee comprises the following members:
Chairman Tan Sri Dato’ Mohd Sheriff Mohd Kassim Non-Independent Non-Executive Chairman
Members Dato’ Ahmad Pardas Senin Non-Independent Non-Executive Deputy Chairman Dato’ Mohamed Azman Yahya Non-Independent Non-Executive Director Noorizah Hj Abd Hamid Managing Director
continued
The Investment Committee is only allowed to make decisions in respect of investments in expressways related business in Malaysia and overseas at the tender/pre-qualification stage. In the event that the tender/pre-qualification are successful, further details on the investment will be presented to the Board for its final decision. Other types of investments which are not related to the expressways industry will be deliberated by the Investment Committee and recommended to the Board for final decision.
123 PLUS Expressways Berhad Annual Report 2008
Statement of Corporate Governance
continued
c Directors’ Remuneration
Other than the Managing Director, all Directors are paid a fixed fee and receive a meeting allowance for each Board or Committee meeting they attend. Directors’ remuneration is subject to approval by the shareholders. The Chairman is paid a higher fee compared to other Board members in recognition of his additional responsibilities.
The remuneration for the Deputy Chairman and Abdul Farid Alias are paid to UEM Group Berhad and Khazanah Nasional Berhad respectively. The Managing Director’s remuneration is contractual and reflects the Board’s recognition of her skills and experience in the industry. The level of remuneration of Non-Executive Directors commensurate with their experiences and level of responsibilities and is determined by the Board.
The details of the remuneration of the Directors, paid and payable, for the financial year ended 31 December 2008 are as follows: RM (’000)
No.
Name of Directors
Fees
Benefit in Kind
Total
1
Tan Sri Dato’ Mohd Sheriff Mohd Kassim
—
90
54
—
144
2
Dato’ Ahmad Pardas Senin
—
40
10
—
50
3
Noorizah Hj Abd Hamid
1,148*
—
35
84
1,267
4
Geh Cheng Hooi
—
72
6
—
78
5
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid
—
54
10
—
64
6
Hassan Ja’afar
—
39
10
—
49
7
Dato’ Mohamed Azman Yahya
—
40
10
—
50
8
Tan Sri Razali Ismail
—
40
5
—
45
9
Datuk K. Ravindran
—
54
11
—
65
10
Quah Poh Keat
—
52
10
—
62
11
Abdul Farid Alias (Resigned w.e.f. 31 December 2008)
—
33
5
—
38
12
Datuk Seri Panglima Mohd Annuar Zaini (Appointed w.e.f. 19 December 2008)
—
1
—
—
1
1,148
515
166
84
1,913
Total
Salary
Other Benefits & Emolument
* The amount is inclusive of salary, ex-gratia, bonus and EPF (employer’s contribution)
124 PLUS Expressways Berhad Annual Report 2008
Statement of Corporate Governance
d R e l a t i o n s h i p w i t h S h a re h o l d ers / Investors
The Company recognises the importance of effective communications with its shareholders, other stakeholders and the financial community on all major developments of the Group on a timely and accurate basis. The Company maintains a high level of disclosure and communications with its stakeholders through a number of readily accessible channels.
Annual Report and Annual General Meeting The annual report is the key channel of communication with shareholders and investors which incorporates comprehensive and sufficient details about financial results and activities of the Group throughout the year. As part of cost-saving initiatives and in support of the government’s effort to increase IT awareness among members of the public, the Group has initiated the despatch of annual reports in electronic form (“CD”) to shareholders. A summary of financial data, notice of AGM and other information is distributed together with the CD to shareholders. Shareholders may also request for printed copies of the complete annual report in either the English or Bahasa Malaysia versions. The Annual Report will also be made available on the Company’s website.
The AGM is the principal forum for dialogue and interaction between the shareholders and the Board of Directors and senior management. At the AGM, shareholders are briefed of the Group’s financial performance and significant operational developments for the financial year as well as the strategy and outlook for the Group. Shareholders’ participation is highly encouraged through the question and answer session on the Group’s financial and operational performance. A press conference is held immediately after the AGM where the Chairman and Managing Director are present to clarify and explain issues raised by the media. It is the Company’s policy to promote interaction with its shareholders in order to give the shareholders a fuller understanding of the Group’s affairs.
continued
Investors Relations Another important avenue of communication with the shareholders and investment community is through the investor relations activities. The Board recognises and acknowledges the importance of developing and maintaining regular contacts with the investment analysts, institutional investors and also potential investors to disseminate timely and relevant information. This is carried out through on-going external communications including meetings, discussions, emails and phone calls to provide an update of the Group’s performance and strategies as well as exchange of information concerning the Company.
From time to time, the Company holds briefing for the investment analysts and media for major corporate developments where the senior management will present the latest corporate proposal and provide the audience a better understanding of the subject matter. Teleconference sessions with analysts are also organised immediately after the announcement of the quarterly financial results to the Bursa Securities. These interactive sessions chaired by the Managing Director and attended by senior management members; provide key highlights and a comprehensive review of financial and operational performance as well as outlook for the Group.
In order to reach out to the global investment community, the Group conducts international road shows and actively participates in investors conferences organised by the major brokerage firms. In 2008, the Company took part in 6 investors’ conferences and road shows in Kuala Lumpur, Singapore, Hong Kong, Sydney, New York, London, Paris, Frankfurt, Stockholm and other major cities in Europe and United States of America.
While the Company endeavours to provide as much information as possible to its shareholders and other stakeholders, it is fully aware of the legal and regulatory framework governing the release of material and pricesensitive information. The Company will make every effort to attain a balance between working within such restrictions and ensuring material information is widely available as possible.
125 PLUS Expressways Berhad Annual Report 2008
Statement of Corporate Governance
continued
Website Information The Group’s website, www.plus.com.my is an excellent medium of communication and source of information to shareholders and the general public by providing comprehensive and up-to-date information on PLUS Expressways and all its subsidiaries. The website is being updated regularly to include all relevant financial and operational information on a timely basis.
The Directors have the overall responsibilities of maintaining a sound system of internal control to safeguard shareholders’ investment and the assets of the Group which include taking reasonable steps for the detection and prevention of fraud and other irregularities.
Statement on Internal Control The Statement on Internal Control is set out in pages 132 to 134 of the Annual Report. It provides an overview of the internal control structure of the Group.
Relationship with the Auditors An appropriate relationship is maintained with the Company’s Auditors through the Audit Committee and the Board of Directors. The Audit Committee has been explicitly accorded the power to communicate directly with both the external and internal auditors.
The Audit Committee meets with the external and internal auditors to discuss the audit plan, annual financial statements and their audit findings. The Audit Committee maintains a formal yet open and transparent relationship with the external auditors and is at liberty to request for a meeting at their discretion.
The details of the statutory audit, audit related and non audit fees paid/payable in 2008 to the external auditors are as follows:
e Accountability and Audit
In presenting the annual financial statements and announcement of the quarterly financial results to the shareholders, the Board aims to present a balanced and comprehensible assessment of the Group’s position and prospects. The Board is assisted by the Audit Committee to oversee the Group’s financial reporting processes and the quality of its financial reporting.
Director’s Responsibility Statement in respect of the Preparation of the Audited Financial Statements The Directors are required by the Companies Act, 1965 to ensure that the Group’s financial statements are prepared in accordance with applicable approved accounting standards and give a true and fair view of the state of affairs of the Group and the Company at the end of the financial year and of the results and cash flows of the Group and the Company for the financial year.
In the course of preparing the annual financial statements, the Directors have:
• • • •
Fees paid/payable:
Group (RM’000)
Company (RM’000)
adopted applicable accounting policies and applied them consistently;
Statutory Audit Services
549
60
made judgements and estimates that are prudent and reasonable;
Other Services
658
434
Total
1,207
494
ensured that all applicable accounting standards have been followed; and
The Audit Committee also met twice with the External Auditor without the presence of Management for the financial year 2008.
A full Audit Committee report is set out in pages 135 to 138 of this Annual Report.
prepared the financial statements on a going concern basis.
The Directors are responsible in ensuring that the Company keeps proper accounting records in accordance with the provisions of the Companies Act, 1965.
126 PLUS Expressways Berhad Annual Report 2008
Statement of Corporate Governance
Financial Reporting The Board aims to provide and present a balanced and meaningful assessment of the Company’s financial performance primarily through the annual financial statements and quarterly announcements of the results to the shareholders as well as the Chairman’s Statement and review of operations in the annual report.
continued
Sanctions and/or Penalties There were no sanctions and/or penalties imposed on the Company, Directors or management by the relevant regulatory authorities.
Share Buy-Backs There was no share buy-backs during the financial year ended 31 December 2008.
f Compliance Statement
For the financial year ended 31 December 2008, the Company has complied with the principles and best practices as set out in the Code.
Options, Warrants or Convertible Securities Exercised The Company has not issued any options, warrants or convertible securities in respect of the financial year ended 31 December 2008.
g Other Information
Material Contracts Other than those disclosed in the financial statements, there were no material contracts relating to any loans entered into by the Company and its subsidiary involving Directors and major shareholders’ interests.
Recurrent Related-Party Transcations (“RRPT”) Statement The Company had, during the last AGM held on 18 June 2008 obtained a general mandate from its shareholders to enable the Group in their ordinary course of business, to enter into recurrent transactions of a revenue or trading nature with related parties which are necessary for its day-to-day operations, on terms not more favourable to the related party other than those generally available to the public and are not to the detriment of the minority shareholders (RRPT Mandate).
The RRPT Mandate is valid until the conclusion of the forthcoming AGM of the Company to be held on 4 June 2009. Details of the recurrent related party transactions entered into pursuant to the RRPT Mandate for the year ended 31 December 2008 are set out in page 234 of this Annual Report.
American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) The Company has not sponsored any ADR or GDR programme for the financial year ended 31 December 2008.
Variation in Results The Company did not issue any profit forecast for the financial year ended 31 December 2008. As such, no commentary is made on variation in results.
Profit Guarantee The Company did not issue any profit guarantee for the financial year ended 31 December 2008.
Revaluation Policy The Company has not adopted a revaluation policy on landed properties.
Utilisation of Proceeds There was no capital raising exercise carried out by the Company for the financial year ended 31 December 2008.
127 PLUS Expressways Berhad Annual Report 2008
Enterprise Risk Management
By virtue of PLUS Expressways being an expressways concessionaire operator, our businesses have unique risks that are specific to our industry. We recognise the fact that these risks must be effectively managed to ensure the long-term growth and enhancement of shareholder value. As such, the Group adopts a comprehensive risk management framework that includes effective risk management policies, visible objectives, clear lines of responsibility and accountability as well as an efficient framework of procedures and reporting guidelines. Our risk management system is also linked to the Group’s internal control system, thus providing us an efficient and reliable decision making tool.
The 2009 Risk Register was approved by the Board of Directors in April 2009 for adoption by the Group.
Risk Management Policy The Group’s Risk Management Policy advocates that adequate and effective risk management processes and practices be set in place to enable us to achieve our business objectives. It also provides a reasonable assurance to the Board and other stakeholders of the adequacy of the state of internal control of the Group and our ability to increase shareholder value and confidence.
Key Objectives of the Policy Our Risk Management Policy aims to enhance the decision making process within the Group in order for our strategic objectives to be fulfilled. It also aims to optimise returns to shareholders while taking into account the interests of other stakeholders. The Policy ensures we undertake appropriate and timely responses to changes in the operating environment that may impact the Group’s ability to achieve its objectives. It seeks to improve the Group’s operating performance and to reduce the risk of material misstatement in official announcements and financial statements. It helps create a risk-attuned environment to safeguard the Group’s assets and helps us maintain our reputation. Finally, it ensures we are continuously in compliance with corporate governance best practices and the relevant laws including Bursa Malaysia’s Listing Requirements.
128 PLUS Expressways Berhad Annual Report 2008
Enterprise Risk Management
Risk Management Structure The following diagram outlines the risk management structure that is in place at PLUS Expressways.
PLUS Expressways Board of Directors
continued
Role of the Risk Management Steering Committee The Risk Management Steering Committee (“RMSC”) is chaired by the Managing Director. Its members are appointed from the senior management team and its covers all divisions and relevant departments. The RMSC is to review the validity of the identified risks and ensure that actions to mitigate the risks are being implemented. The RMSC is also responsible for the following activities:
PLUS Expressways Audit Committee
• Agreeing on the procedures and reporting formats of the risk management processes; • Reviewing the adequacy and effectiveness of the risk management framework;
Risk Management Steering Committee
• Undertaking regular “gap analysis” in order to identify gaps in internal controls; • Ensuring the Board and Management receive adequate and appropriate information for purposes of decision making and review respectively;
Risk Management Working Committee
Role of the Board of Directors The Board is tasked with sanctioning the Group’s risk management objectives and policy. It is to provide stewardship by identifying and acknowledging the principal risks identified by the Risk Management Steering Committee and ensuring the implementation of an appropriate system to manage these risks. The Board also reviews the adequacy and integrity of our internal controls and management information system to ensure compliance with the applicable laws, regulations, rules, directives and guidelines. The Board also considers the nature and extent of risk acceptable to the Group as well as evaluates the risk implications.
Role of the Audit Committee The Audit Committee’s role is to implement and support the overseeing function of the Board’s role in risk management. It reviews the Risk Management Steering Committee’s periodic reports as well as highlights any changes to the Group’s risk profile.
• Communicating and providing a reference point for dissemination and feedback on the Group risk management policy and procedures; • Commissioning, where required, special projects to investigate, develop or report on special aspects of the risk management processes of the Group; and • Presenting risk progress reports on risk management to the Audit Committee and Board.
Role of the Risk Management Working Committee (“RMWC”) The Risk Management Working Committee (“RMWC”) is chaired by a Risk Management Coordinator (Chairman) and its members include Heads of Divisions and Heads of Departments covering all areas. The RMWC is tasked with reviewing changes to risk, highlighting any new risk that may arise, and updating the risk register accordingly. It is responsible for the following activities: • Recommending procedures and reporting formats on the risk management process; • Preparing risk progress reports;
129 PLUS Expressways Berhad Annual Report 2008
Enterprise Risk Management
continued
• Preparing and recommending the risk management framework; • Communicating the extent and categories of risk for the Group to the RMSC;
• Discussing and recommending solutions on risk management issues and procedures that can be implemented or incorporated by any function of the Group to the RMSC.
• Considering new entries for the risk register from the time of the last review and updating entries of the last reported register;
Risk Management Process There are six steps within the risk management process. Within each stage, there are distinct decisive factors to consider before the next stage is reached:
Step 1: Determine policy, objectives and define risk • Corporate risk management policy • Key objective for risk management • Define risk • Acceptable appetite for risk
Step 6: Monitor and Review Risks • Frequent reviews • Strategy • Environment and organisation
Step 2: Risk Identification • Identify internal and external forces of risk • Recognise risk areas • Type of risks
Internal Control
Step 3: Risk Assessment • Likelihood • Impact • Overall risk rating matrix
Step 4: Risk Evaluation & Prioritisation • Identify acceptable or unacceptable risks • Prioritise risk for treatment
COMMUNICATION
Figure 1 Risk Management Framework Diagram
Step 5: Risk Management or Treatment • Accept • Avoid • Transfer • Reduce likelihood and/or impact
A structured framework approach to risk management that incorporates all the necessary steps was developed. These steps are depicted in Figure 1 above and described in the following pages.
Conclusion The Board is of the opinion that the Group’s Risk Management System is effective and functioning adequately, and that everyone in the Group has been made aware of and alert to the requirements of the system and its procedures. The Board has also found that all identified risks are being managed to an acceptable level, and that the system is proficient in helping to keep the Group in line with its long term goals and objective.
130 PLUS Expressways Berhad Annual Report 2008
Code of Business Ethics
The Group is committed to maintaining the highest standards of business ethics. As our employees serve the public in our daily operations, it is imperative that they conduct themselves in a manner that reflects the Company’s values. Responsible and transparent behaviour on the part of our employees also helps enhance the Group’s reputation while building goodwill with the public. To avoid any reputational risk, we have embarked on a series of initiatives that sets the foundation for strong ethical and responsible behaviour in our organisation.
Code of Conduct Our Code of Conduct (“the Code”) governs the professional conduct of our employees and outlines their responsibilities to the Group in performing their duties. The various policies and guidelines within the Code spell out the standards and ethics that all employees are expected to adhere to in the course of their work. It highlights the Group’s expectations of their professional conduct which includes good attendance, punctuality and appearance, and prohibits instances of alcohol and drug abuse as well as sexual harassment. The Code of Ethics within the Code covers issues pertaining to employee commitment and confidentiality, insubordination and inefficiency, public statements and appearances, and conflicts of interest. The Code of Ethics also touches upon issues such as gifts or favours, entertainment, personal solicitation and graft. The Code is designed to maintain discipline and order in the work place among employees of all levels. It also sets out the circumstances in which such employees would be deemed to have breached the Code and the disciplinary actions that can be taken against them.
Whistle Blower Policy A Whistle Blower Policy was introduced in 2009 to provide a platform for employees to report instances of unethical behaviour, actual or suspected fraud or dishonesty, or a violation of the Company’s Code of Conduct or Ethics Policy. The Whistle Blower Policy includes protection for the whistleblowers from any reprisals as a direct consequence of making such disclosures. It also covers the procedures for disclosure, investigation and the respective outcomes of such investigations. The Group expects its employees to act in the Group’s best interests and to maintain high principles and ethical values. The Group will not tolerate any irresponsible or unethical behaviour that would jeopardise its good standing and reputation.
131 PLUS Expressways Berhad Annual Report 2008
Statement of Internal Control
The Board of Directors (“Board”) acknowledges and believes in the importance of sound internal control and risk management practices to enable good corporate governance. Taking cognizance of the above, the Board assures that the said practices are implemented on Group wide basis including local and overseas subsidiaries. The Board is ultimately responsible for the overall system of internal control and risk management, which includes the establishment of an appropriate system as well as the review of its effectiveness and integrity. In view of the limitations inherent in any system of internal control, such a system is designed to mitigate rather than eliminate risks of failure to achieve corporate objectives. Accordingly, the system can provide only reasonable and not absolute assurance against material error, misstatements or loss. The systems of internal control covers, inter alia, risk management, financial, operational and compliance controls. Key elements of the Group’s internal control system, including the processes in place to review its adequacy, are as follows:
Organisational Structure The Group has a well-defined organisational structure that is aligned to its business and operational requirements and each strategic operating function is headed by a responsible Divisional Head. Clear lines of accountability and responsibility, approval, authorisation, and control procedures have been laid down and communicated throughout the Group.
Control Environment The internal control mechanism is embedded in the various work processes and procedures at appropriate levels in the Group. The work processes and procedures are documented in various Standard Operating Manuals. A structure for an organisation wide control has been established. Continuous efforts are undertaken by the heads of departments to review and update the manuals regularly or when it is deemed necessary.
Human Resource Management Formal appraisals guided by Key Performance Index (“KPI’s”) parameters provide a framework to translate and align the strategy of human capital development to the PLUS Expressways Berhad Group Strategic Plan and is being used as a performance measurement tool. The Company continued to emphasise on the talent and competencies of employees through the recruitment strategic tools and continuous training and development. Through the KPI’s parameters and Training Needs Analysis (“TNA”), employees’ competencies and gaps are being properly addressed and suitable training programme identified to expand on the competencies.
132 PLUS Expressways Berhad Annual Report 2008
Statement of Internal Control
Insurance and Physical Safeguards The Group undertakes adequate insurance and physical safeguard on assets in place to ensure that the assets are sufficiently covered against any mishap that will result in material losses to the Group.
Business Plan and Budget The Group undertakes a comprehensive business planning and budgeting process each year, to establish goals and targets against which performance is monitored on an ongoing basis. The Board participates in the review and approval of the Business Plan and Budget. A monthly reporting and review of financial results and forecast has been established and is consistently practised. The quarterly performance against budget is presented to the Board periodically.
Authority Levels The Group has documented its Discretionary Authority Limits (“DAL”) which clearly define the lines of authority and responsibility in making operational and commercial business decisions. Approving authorities cover various levels of management and includes the Board. The DAL is reviewed regularly and any amendments made to the DAL must be considered and approved by the Board.
Information and Communication While the management is responsible to ensure proper implementation of internal control procedures, the Board can request to review the state of internal controls as it deems necessary. The Board can request for information and clarification from management as well as to seek inputs from the Audit Committee, external and internal auditors, and other experts, and any resultant costs shall be borne by the Group.
Audit Committee The Audit Committee has been established by the Board since year 2002. The Audit Committee comprises four (4) members of the Board, all of whom are independent directors.
continued
Its terms of reference together with the Audit Committee Report are disclosed in pages 135 to 138 of this Annual Report.
Internal Audit Function The Internal Audit function is performed by the Internal Audit Department (“IAD” or “the Department”) of PLUS Expressways Berhad. The Audit Committee acknowledges that an independent and adequately resourced internal audit function is required to provide assurance on the effectiveness of the system of the internal control. In financial year 2003, an Internal Audit Charter which includes the structure to support Internal Audit Function’s independence, was approved by the Audit Committee. The IAD primarily acts as an assurance unit which reviews the effectiveness of the system of internal control, highlighting any areas for improvement and subsequently monitors the implementation of its recommendations. In discharging its responsibilities, IAD exercises impartiality, proficiency and professionalism. The IAD is guided by the Annual Internal Audit Plan which is approved by the Audit Committee on a yearly basis. The risk-based plan is developed to cover key operational and financial activities that are significant to the overall performance of the Group. The Department also conducts special audits on an ad-hoc basis based on specific requests either by the Audit Committee or the Senior Management. Besides that, the Department works closely with the External Auditors to resolve any control issues raised by the External Auditors. In year 2008, fourteen (14) audits out of fifteen (15) planned audits based on the 2008 Annual Internal Audit Plan have been finalised. The remainder one (1) audit was finalised in April 2009. All of the fourteen (14) completed internal audit reports have been presented to the Audit Committee. Audits undertaken by the Department during the year has covered the areas of operations, maintenance, financial, customer service and legal issues. There were no material or significant control weaknesses encountered after the completion of the audits. The Head of IAD is Abdullah Hashim who holds a Bachelor in Accounting from Universiti Malaya and a Master of Business Administration from London South Bank University. He is a Chartered Accountant of the Malaysian Institute of
133 PLUS Expressways Berhad Annual Report 2008
Statement of Internal Control
continued
Accountants and a Chartered Member of the Institute of Internal Auditors. He is also currently completing the final part of the Certified Internal Auditor qualification. Abdullah has tendered his resignation in December 2008 and serves his notice until 3 March 2009. Effective 1 March 2009, Mohd Halmi Mohd Hassan is the new Head of IAD. As at 31 December 2008, the Department consist of twelve (12) auditors including the Head of Department. The Department has a composite experience of 62 years in auditing and have a wide range of experience from relevant industries. The total cost incurred by the Department for 2008 was RM736,377. A Quality Assessment Review (“QAR”) has been conducted by the Institute of Internal Auditors Malaysia (“IIAM”) in August 2008 to assess the Department’s compliance to the International Standards for the Professional Practice of Internal Auditing (“Standards”). Based on the QAR report, the Department has complied with the relevant requirements of the Standards.
Revenue Assurance Department Revenue Assurance Department (“RAD”) objectives are to evaluate the effectiveness and efficiency of existing internal controls for toll operations, recommend enhancement to the internal controls where necessary and to minimise or eliminate the risk of internal toll fraud. In achieving the above objectives, RAD assesses and monitors the level of compliance to toll operations policy and procedures and conducts frequent spot checks at selected toll plazas. RAD conducts compliance audit on toll procedures by reviewing documentations on historical toll transactions. RAD also analyses traffic volume and toll collection using Computer Aided Audit Tools (“CAAT”) to identify any anomalies in toll transactions as a guide for selecting toll plazas for spot checks purposes. In the event of suspected fraudulent practices, RAD will initiate fraud investigations which include verification of toll transactions documentation as well as toll transactions validity using the Close Circuit Television (“CCTV”) image recordings of toll lanes.
134 PLUS Expressways Berhad Annual Report 2008
A summary of compliance audits, spot checks and fraud cases investigation performed by RAD in 2008 are as follows: Regions
Compliance Audits
Spot Checks
Fraud Cases
Northern
11
10
2
Central
14
23
1
Southern
13
15
3
Total
38
48
6
Compliance audits covered all plazas located along PLUS, ELITE, LINKEDUA and BKE expressways. Spot checks were conducted at selected toll plazas based on the plazas’ risk of fraudulent activities and whether their toll transactions displayed any anomalies. As at 31 December 2008, the total headcount for RAD stood at twenty (20) comprised of eleven (11) executives and nine (9) non-executives. The total cost incurred for 2008 was RM1,777,736. The Board confirms that the system of internal controls of PEB Group was in place during the financial year. The system is subject to regular review by the Board.
Management Control Policy On 27 February 2008, the Group has introduced the Management Control Policy that clarifies the responsibilities of the Management with regards to internal controls. This policy shall serve as a guideline to be implemented within the Group.
Review of the Statement by External Auditors The external auditors have reviewed this statement on Internal Control for the inclusion in the annual report of Plus Expressways Berhad for the year ended 31 December 2008 and reported to the Board that nothing has come to their attention that causes them to believe that the statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the system of internal controls.
Audit Committee Report
1
Members
Geh Cheng Hooi Chairman Senior Independent NonExecutive Director and a member of the Malaysian Institute of Certified Public Accountants (“MICPA”)
2 Constitution
The Audit Committee (“the Committee”) of PLUS Expressways Berhad (“PLUS Expressways” or “the Company”) was established by the Board of Directors (“Board”) on 22 May 2002.
3
Meetings
Five (5) meetings were held during the financial year ended 31 December 2008. Details of attendance of the members at the respective Audit Committee meetings were as follows:
Datuk K. Ravindran Member Independent Non-Executive Director
Name of Audit Committee Member
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid Member Independent Non-Executive Director Quah Poh Keat Member Independent Non-Executive Director and a member of the Malaysian Institute of Certified Public Accountants (MICPA) and the Malaysian Institute of Accountants (MIA)
No. of Meetings Attended
Geh Cheng Hooi
3/5
Datuk K. Ravindran
5/5
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid
4/5
Quah Poh Keat
5/5
Senior Management including the Managing Director, the Head of the Internal Audit Department and the representatives from the external auditors had participated in deliberations on relevant items at the Audit Committee meetings conducted during the year under review at the invitation of the Audit Committee.
4 Composition and Terms of Reference 4.1 Composition of the Audit Committee The Audit Committee shall be appointed by the Board from amongst its members. In selecting the Audit Committee, the following requirements must be fulfilled:
a
The Audit Committee must be composed of no fewer than three (3) members.
b
A majority of the Audit Committee must be Independent Directors.
c
At least one member of the Audit Committee must be a member of the Malaysian Institute of Accountants (“MIA”) or must possess any other equivalent qualifications recognised by the MIA.
135 PLUS Expressways Berhad Annual Report 2008
Audit Committee Report
continued
d No alternate director shall be appointed as a member of the Audit Committee. The members of the Audit Committee shall then elect a Chairman from amongst themselves who shall be an Independent Director. All members of the Audit Committee, including the Chairman, will hold office as long as they serve as Directors of the Company. The Board must review the performance of the Committee as a whole and each of its member’s performance at least once in every three (3) years to determine whether the Committee has carried out its duties in accordance with its terms of reference. 4.2 Secretaries of the Audit Committee (“Committee Secretaries”) The Company Secretaries of the Company or his/ her/their representative shall be the Secretaries of the Audit Committee. 4.3 Objectives of the Audit Committee The objective of the Audit Committee is to assist the Board in discharging its responsibilities by reviewing the adequacy and integrity of the Company’s and Group’s internal control systems and management of information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines.
Furthermore, the Audit Committee shall provide a line of communication between the Board and the external auditors. In addition, the Audit Committee needs to encourage high standards of corporate disclosure and transparency. The Audit Committee will endeavour to adopt certain practices aimed at maintaining appropriate standards of corporate responsibility, integrity and accountability to the Company’s shareholders.
136 PLUS Expressways Berhad Annual Report 2008
4.4 Duties and Responsibilities of the Audit Committee The following are the main duties and responsibilities of the Audit Committee: 4.4.1 Recommend to the Board the appointment and annual re-appointment of the external auditors and their audit fee, including nonaudit services, after taking into consideration the independence and objectivity of the external auditors and the cost effectiveness of their audit services. 4.4.2 Discuss with the external auditors before the audit commences the nature and scope of the audit, the audit plan and ensure co-ordination where more than one audit firm is involved. 4.4.3 Review the quarterly interim results and annual financial statements of PLUS Expressways and its subsidiaries (“Group”) prior to approval by the Board whilst ensuring that they are prepared in compliance with all relevant accounting standards and other relevant regulatory requirements and, are promptly published. 4.4.4 Discuss matters raised from the interim and final financial results and any matters the external auditors may wish to discuss in the absence of the Management, where necessary. 4.4.5 Review the external auditors’ management letter and management’s response. 4.4.6 Review whether assistance and co-operation are adequately and promptly given by the Group’s officers to the external and internal auditors. 4.4.7 Review the adequacy of the competency of the internal audit function and whether the Internal Audit Department (“IAD”) is adequately resourced and has an appropriate standing within the Group.
Audit Committee Report
4.4.8 Evaluate the adequacy of standards of internal controls and financial reporting of the Group. 4.4.9 Appraise the performance of the head of IAD and review the appraisals of senior staff members of IAD. 4.4.10 Approve any appointment or termination of the head of IAD and senior staff members of IAD and review any resignations of other staff members of IAD and provide resigning staff members an opportunity to submit reasons for resigning, where necessary. 4.4.11 Consider the major findings of internal audit investigations and the management’s response. 4.4.12 Review any related party transactions and conflict of interest situation that may arise within the Company or the Group and ensure that such transactions are undertaken at arm’s length, on normal commercial terms which are not more favourable to the related parties other than those generally available to the public and are not to the detriment of the minority shareholders of the Group and in the best interest of the Group. 4.4.13 Consider other issues as defined by the Board.
Explicit authority to investigate any matter within its terms of reference;
b
The resources required to perform its duties;
c
Full and unrestricted access to any information, records, properties and personnel of the Group;
d
Direct communication channels with the external auditors and person(s) carrying out the internal audit functions or activity (if any);
e
Be able to obtain independent professional or other advice and to invite third parties with relevant experience and expertise to attend and brief the Audit Committee during the meetings (if required);
f
The right to invite any other Director or employee of the Group to attend the Audit Committee meetings at its discretion;
g
Be able to convene meetings with external auditors without the presence of the executive board members, whenever deemed necessary; and
h
Where the Audit Committee is of the view that a matter reported by it to the Board of Directors has not been satisfactorily resolved resulting in a breach of the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Malaysia”), the Audit Committee must promptly report such matter to Bursa Malaysia.
4.6 Frequency of Meetings The Audit Committee shall hold a minimum of 4 meetings in a financial year. The number of Audit Committee meetings held in a financial year and the details of attendance of each individual member in respect of meetings held shall be disclosed annually.
The Audit Committee meetings shall be chaired by the Chairman of the Audit Committee or in the absence of the Chairman, another member who is an Independent Director nominated by the Audit Committee members. The quorum for the meeting of the Audit Committee shall be 2 members the majority of whom must be Independent Directors. The Chairman also has the discretion to call for additional meetings at any time, as he deems necessary.
The Audit Committee shall meet at least twice in a year with the external auditors without the presence of the management.
4.5 Powers of the Audit Committee In carrying out its duties and responsibilities, the Audit Committee shall have the following authorities: a
continued
137 PLUS Expressways Berhad Annual Report 2008
Audit Committee Report
continued
The Committee Secretaries or his/her/their representative shall attend each Audit Committee meeting and record the proceedings of the meetings.
5 Activities
9
10 Reviewed the assistance given by the employees in the Group to the external auditors.
In line with the terms of reference of the Audit Committee, the following activities were carried out by the Audit Committee during the financial year ended 31 December 2008, in discharging its functions: 1
Reviewed with the external auditors the results of the annual financial audit, the audited financial statements and the management letter.
Reviewed the Internal Audit Charter of the Internal Audit Department of the Group.
The meetings were appropriately structured through the use of agendas and Audit Committee Papers, which were distributed to members with sufficient notification.
6 Internal Audit Functions
The IAD of the Group supports the Audit Committee in discharging its duties and responsibilities, giving assurance that adequate, efficient and effective internal controls system is in place. The principal role of IAD is to undertake an independent, regular and systematic review of the system of internal controls so as to provide reasonable assurance that such a system continues to operate satisfactorily and effectively.
It is the responsibility of the IAD to provide the Audit Committee with independent and objective reports on the state of the internal controls of the various operating divisions within the Group, and the extent of compliance of the divisions with the Group’s established policies and procedures as well as relevant statutory requirements.
2
Reviewed the quarterly unaudited financial result and related announcements and recommended these to the Board for consideration and approval. The review is to ensure compliance with the Bursa Malaysia Listing Requirements, applicable accounting standards and other relevant legal and regulatory requirements.
3
Recommended for the Board’s consideration the re-appointment of external auditors and the audit fees.
4
Reviewed the scope of work and the audit plans of the external and internal auditors.
5
Reviewed the internal audit reports presented by IAD and discussed on management’s actions taken to improve the system of internal control and any outstanding matters.
Further details of the activities of the IAD are set out in Statement on Internal Control on pages 132 to 134.
Reviewed and recommended to the Board for consideration and approval the Risk Management Progress Reports.
7
External Auditors
The Audit Committee continues to monitor the performance of the external auditors to ensure that the external auditors are independent, objective and effective in carrying out their duties.
6
7
Reviewed the related party transactions and recommended to the Board for consideration and approval.
8
Met twice with the external auditors during the year, without the presence of the management.
138 PLUS Expressways Berhad Annual Report 2008
Management Control Policy
1.0 Management Control Policy
This document is intended to clarify the responsibilities of the Management with regards to internal controls.
2.0 Management Responsibilities 2.1 Management is charged with the responsibility for establishing a network of processes with the objective of controlling the operations of PLUS Expressways Group in a manner which provides the board of director’s reasonable assurance that: 2.1.1 Data and information published either internally or externally is accurate, reliable, and timely.
3.0 Key Control Activities 3.1 Controlling is a function of management and is an integral part of the overall process of managing operations. As such, it is the responsibility of managers at all levels of the organisation to: 3.1.1 Identify and evaluate the exposures to loss(es) which relate to their particular spheres of operations. 3.1.2 Specify and establish policies, plans, and operating standards, procedures, systems, and other disciplines to be used to minimise, mitigate, and/or limit the risks associated with the exposures identified.
2.1.2 The actions of directors, officers and employees are in compliance with the organisation’s policies, standards, plans and procedures, and all relevant laws and regulations.
3.1.3 Establish practical controlling processes that require and encourage directors, officers and employees to carry out their duties and responsibilities in a manner that achieves the control objectives outlined in the preceding paragraph.
2.1.3 The company’s resources (including its people, systems, data/information bases, and customer goodwill) are adequately protected.
3.1.4 Maintain the effectiveness of the controlling processes they have established and foster continuous improvement to these processes.
2.1.4 Resources are acquired economically and employed profitably; quality business processes and continuous improvement are emphasised.
3.1.5 Ensure that appropriate corrective actions are undertaken to effectively address internal control breakdowns identified by company’s officers and employee, Internal Audit function, external auditors, regulatory bodies or other outside advisors commissioned by the Management or the Board of Directors.
2.1.5 Quality business and operational processes are maintained, and continuous improvement initiatives are emphasised; and 2.1.6 The company’s plans, programs, goals, and objectives are achieved.
139 PLUS Expressways Berhad Annual Report 2008
141 Directors’ Report 146 Statement by Directors 146 Statutory Declaration 147 Independent Auditors’ Report 149 Income Statements 150 Balance Sheets 152 Statements of Changes in Equity 154 Cash Flow Statements 156 Notes to the Financial Statements
Directors’ Report
The Directors present their annual report together with the audited financial statements of the Group and of the Company for the year ended 31 December 2008.
PRINCIPAL ACTIVITIES The principal activities of the Company are investment holding and provision of expressway operation services. The Company is principally engaged in the highway concession services through its subsidiaries: (i) Projek Lebuhraya Utara-Selatan Berhad (“PLUS”); PLUS is involved in the operation and maintenance of a tolled expressway network comprising the North-South Expressway (“NSE”), the New Klang Valley Expressway (“NKVE”), a section of Federal Highway Route 2 (“FHR2”) between Subang and Klang, and the Seremban-Port Dickson Highway (“SPDH”) in Peninsular Malaysia. (ii) Expressway Lingkaran Tengah Sdn Bhd (“ELITE”); ELITE undertakes the operation, maintenance and toll collection of the North-South Expressway Central Link (“NSECL”). (iii) Linkedua (Malaysia) Berhad (“LINKEDUA”); LINKEDUA undertakes the operation, maintenance and toll collection of the Malaysia-Singapore Second Crossing (“MSSC”). (iv) Konsortium Lebuhraya Butterworth-Kulim (KLBK) Sdn Bhd (“KLBK”); KLBK is engaged in the operation, maintenance and toll collection of the Butterworth-Kulim Expressway (“BKE”). PEB has four foreign subsidiaries namely PLUS Kalyan (Mauritius) Private Limited (“PLUS Kalyan”) in Port Louis, Mauritius, PLUS BKSP Toll Limited (“PLUS BKSP”) in Kanpur, India, PT Lintas Marga Sedaya (“LMS”) in Indonesia and PT Cimanggis-Cibitung Tollways (“CCTW”) in Indonesia. Save and except for PLUS Kalyan, all its foreign subsidiaries are highway concessionaires on a build, operate and transfer basis (“BOT”). The principal activities of PLUS Kalyan is investment holding. There have been no significant changes in the nature of the principal activities during the financial year. The Company completed the acquisition of KLBK on 13 March 2008, and completed the subscription of 60% shares of CCTW, a company incorporated in Indonesia, on 27 December 2008, and the details are disclosed in Note 43 to the financial statements.
FINANCIAL RESULTS
GROUP RM’000
COMPANY RM’000
Profit before tax Income tax expense
1,515,702 (435,662)
809,015 1,184
Profit for the year
1,080,040
810,199
Attributable to: Equity holders of the Company Minority interests
1,079,333 707
810,199 —
1,080,040
810,199
141 PLUS Expressways Berhad Annual Report 2008
Directors’ Report
continued
FINANCIAL RESULTS (continued) There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the Statements of Changes in Equity. In the opinion of the Directors, the results of the operations of the Group and of the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature.
DIVIDENDS The amount of dividends paid by the Company since 31 December 2007 were as follows:
2008 RM’000
Final tax exempt dividend for the year ended 31 December 2007 of 8.0 sen per ordinary share declared on 18 June 2008 and paid on 16 July 2008
400,000
Interim single tier dividend for the year ended 31 December 2008 of 6.5 sen per ordinary share declared on 21 August 2008 and paid on 23 September 2008
325,000
725,000
At the forthcoming Annual General Meeting, a final single tier dividend in respect of the financial year ended 31 December 2008 of 9.5 sen per ordinary share of RM0.25 each, amounting to a total dividend payable of RM475 million will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend if approved by the shareholders, will be accounted for in shareholders’ equity as an appropriation of retained profits in the financial year ending 31 December 2009.
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' Mohd Sheriff bin Mohd Kassim Dato' Ahmad Pardas bin Senin Noorizah binti Hj Abd Hamid Geh Cheng Hooi YM Professor DiRaja Ungku Abdul Aziz bin Ungku Abdul Hamid Hassan bin Ja'afar Dato' Mohamed Azman bin Yahya Tan Sri Razali bin Ismail Datuk K. Ravindran s/o C. Kutty Krishnan Quah Poh Keat Datuk Seri Panglima Mohd Annuar bin Zaini (appointed with effect from 19 December 2008) Abdul Farid bin Alias (resigned with effect from 31 December 2008)
142 PLUS Expressways Berhad Annual Report 2008
Directors’ Report
continued
DIRECTORS (continued) In accordance with Article 76 of the Company’s Articles of Association, Tan Sri Dato’ Mohd Sheriff bin Mohd Kassim, Dato’ Ahmad Pardas bin Senin and Puan Noorizah binti Hj Abd Hamid shall retire at the forthcoming Annual General Meeting and being eligible, offer themselves for re-election. In accordance with Article 83 of the Company’s Articles of Association, Datuk Seri Panglima Mohd Annuar bin Zaini shall retire at the forthcoming Annual General Meeting and being eligible, offers himself for re-election. In accordance with Section 129(2) of the Companies Act 1965, YM Professor DiRaja Ungku Abdul Aziz bin Ungku Abdul Hamid, Geh Cheng Hooi and Tan Sri Razali bin Ismail having already attained the age of 70, shall vacate the office of Director of the Company. However, pursuant to Section 129(6), they may be re-appointed by resolutions passed by a majority of not less than three-fourth of such number of shareholders of the Company entitled to vote at a general meeting of the Company. The appointment to hold office shall be until the next Annual General Meeting of the Company. The resolutions to re-appoint them as Directors of the Company will be proposed at the forthcoming Annual General Meeting.
DIRECTORS’ BENEFITS Neither at the end of the financial year, nor at any time during the year, did there subsist any arrangement to which the Company was a party, whereby the Directors might acquire benefits by means of acquisition of shares in, or debentures of the Company or any other body corporate. Since the end of the previous financial year, no Director has received or become entitled to receive any benefits (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 10 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, required to be disclosed by Section 169(8) of the Companies Act 1965.
DIRECTORS’ INTEREST According to the register of Directors’ shareholdings to be kept under section 134 of the Companies Act, 1965, the interest of Directors in office at the end of the financial year in shares in the Company and its related corporation during the financial year were as follows: The Company Number of Ordinary Shares of RM0.25 each As at During the year As at 1/1/2008 Bought Sold 31/12/2008 Direct Interest Tan Sri Dato' Mohd Sheriff bin Mohd Kassim Dato' Ahmad Pardas bin Senin Noorizah binti Hj Abd Hamid Geh Cheng Hooi YM Professor DiRaja Ungku Abdul Aziz bin Ungku Abdul Hamid Hassan bin Ja'afar Dato' Mohamed Azman bin Yahya Tan Sri Razali bin Ismail Datuk K. Ravindran s/o C. Kutty Krishnan
60,000 20,000 20,000 40,000 40,000 40,000 40,000 40,000 40,000
— — — — — — — — —
— — — — — — — — —
60,000 20,000 20,000 40,000 40,000 40,000 40,000 40,000 40,000
143 PLUS Expressways Berhad Annual Report 2008
Directors’ Report
continued
DIRECTORS’ INTEREST (continued) UEM World Berhad Number of Ordinary Shares of RM1.00 each As at During the year As at 1/1/2008 Bought Accepted Sold 31/12/2008 Direct Interest Tan Sri Dato' Mohd Sheriff bin Mohd Kassim Dato' Ahmad Pardas bin Senin Noorizah binti Hj Abd Hamid
567,800 5,240,000 964,000
— — —
— (567,800)* 540,000ℓ (5,780,000)** 162,000ℓ (1,126,000)
— — —
ℓ In respect of UEM World Berhad's Employee Equity Scheme allocation under the performance scheme. UEM Land Holdings Berhad Number of Ordinary Shares of RM0.50 each As at During the year As at 1/1/2008 Bought Accepted Sold 31/12/2008 Direct Interest Tan Sri Dato’ Mohd Sheriff bin Mohd Kassim Dato’ Ahmad Pardas bin Senin
— —
— 1,250,000
666,000* 1,250,000**
— —
666,000 2,500,000
* 666,000 ordinary shares of RM0.50 each in UEM Land Holdings Berhad issued to replace the 567,800 UEM World Berhad shares held pursuant to the distribution of the dividend-in-specie by UEM World Berhad ** Include balance of 1,000,000 shares in UEM World Berhad which was exchanged for 1,250,000 ordinary shares of RM0.50 each in UEM Land Holdings Berhad arising from the distribution of the dividend-in-specie by UEM World Berhad
HOLDING COMPANY The Directors regard UEM Group Berhad (“UEM”), a company incorporated in Malaysia which owns 40.21% of the Company’s equity as at 31 December 2008, as the immediate holding company.
OTHER STATUTORY INFORMATION (a) Before the financial statements 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 allowance for doubtful debts and satisfied themselves that there were no known bad debts and that no allowance for doubtful debts is necessary; and
(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.
144 PLUS Expressways Berhad Annual Report 2008
Directors’ Report
continued
OTHER STATUTORY INFORMATION (continued) (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 debts or to make any allowance in respect of the financial statements of the Group and of the Company; and
(ii) the values attributed to current assets in the financial statements of the Group and of the Company misleading. (c) At the date of this report, the Directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets and 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 the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading. (e) As at the date of this report, there does not exist: (i)
any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or
(ii) any contingent liability in respect of the Group and of the Company which has arisen since the end of the financial year. (f)
In the opinion of the Directors: (i)
no contingent liability 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 and of the Company to meet its 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 Group and of the Company for the financial year in which this report is made.
SIGNIFICANT EVENTS Significant events during the year are disclosed in Note 43 to the financial statements.
AUDITORS The auditors, Ernst & Young, have expressed their willingness to accept reappointment.
Signed on behalf of the Board in accordance with a resolution of the Directors,
TAN SRI DATO' MOHD SHERIFF BIN MOHD KASSIM NOORIZAH BINTI HJ ABD HAMID Kuala Lumpur, Malaysia 26 February 2009
145 PLUS Expressways Berhad Annual Report 2008
STATEMENT BY DIRECTORS PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT 1965
We, TAN SRI DATO’ MOHD SHERIFF BIN MOHD KASSIM and NOORIZAH BINTI HJ ABD HAMID, being two of the Directors of PLUS EXPRESSWAYS BERHAD, do hereby state that in the opinion of the Directors, the financial statements set out on pages 149 to 233 are drawn up in accordance with the provisions of the Companies Act 1965 and applicable Financial Reporting Standards 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 December 2008 and of the results and the cash flows of the Group and of the Company for the year then ended.
Signed on behalf of the Board in accordance with a resolution of the Directors,
TAN SRI DATO’ MOHD SHERIFF BIN MOHD KASSIM NOORIZAH BINTI HJ ABD HAMID Kuala Lumpur, Malaysia 26 February 2009
STATUTORY DECLARATION PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT 1965
I, ANNUAR MARZUKI BIN ABDUL AZIZ, being the Officer primarily responsible for the financial management of PLUS EXPRESSWAYS BERHAD, do solemnly and sincerely declare that the financial statements set out on pages 149 to 233 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 ANNUAR MARZUKI BIN ABDUL AZIZ at Kuala Lumpur in the Federal Territory on 26 February 2009
Before me,
AISHAH BT SHAHUL HAMEED Commissioner for Oaths (No. W565)
146 PLUS Expressways Berhad Annual Report 2008
ANNUAR MARZUKI BIN ABDUL AZIZ
Independent Auditors’ Report to the members of PLUS EXPRESSWAYS BERHAD (Incorporated in Malaysia)
Report on the financial statements We have audited the financial statements of PLUS EXPRESSWAYS BERHAD, which comprise the balance sheets as at 31 December 2008 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 149 to 233.
Directors’ responsibility for the financial statements Directors are responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors’ responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit 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 whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the financial statements 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 have been properly drawn up in accordance with Financial Reporting Standards and 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 December 2008 and of their financial performance and cash flows of the Group and of the Company for the year then ended.
147 PLUS Expressways Berhad Annual Report 2008
Independent Auditors’ Report
continued
Report on other legal and regulatory requirements In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following: (a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiary have been properly kept in accordance with the provisions of the Act. (b) We have considered the accounts and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 19 to the financial statements. (c) We are satisfied that the accounts of the subsidiary that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. (d) The auditors’ reports on the accounts of the subsidiary were not subject to any qualification material to the consolidated financial statements and did not include any comment required to be made under Section 174(3) of the Act.
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 Ahmad Zahirudin bin Abdul Rahim AF: 0039 No. 2607/12/10 (J) Chartered Accountants Chartered Accountant Kuala Lumpur, Malaysia 26 February 2009
148 PLUS Expressways Berhad Annual Report 2008
INCOME STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008
Group Company Note 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 Continuing operations Revenue 5 Direct cost of operations
2,967,958 (879,509)
2,282,010 (676,312)
985,960 (97,875)
813,643 (78,374)
Gross profit Other income 6 General and administration expenses Other expenses Finance costs 7
2,088,449 152,040 (70,799) (8,789) (645,199)
1,605,698 206,214 (45,634) (3,614) (454,674)
888,085 4,030 (21,376) (5,190) (56,534)
735,269 3,035 (16,625) (1,172) (1,591)
Profit before tax Income tax expense
1,515,702 (435,662)
1,307,990 (60,342)
809,015 1,184
718,916 (20,995)
Profit for the year
1,080,040
1,247,648
810,199
697,921
Attributable to: Equity holders of the Company Minority interests
1,079,333 707
1,247,843 (195)
810,199 —
697,921 —
1,080,040
1,247,648
810,199
697,921
21.59
24.96
16.20
13.96
Interim tax exempt dividends per ordinary share in respect of the year (sen) 14
—
6.00
Earnings per share attributable to equity holders of the Company (sen)
8 12(a)
13
Interim single tier dividend per ordinary share in respect of the year (sen)
14
6.50
—
Final tax exempt dividend per ordinary share in respect of the year (sen)
14
—
8.00
Final single tier dividend per ordinary share in respect of the year (sen)
14
9.50*
—
* Proposed for shareholders’ approval at the forthcoming Annual General Meeting The accompanying notes form an integral part of the financial statements.
149 PLUS Expressways Berhad Annual Report 2008
Balance Sheets AS AT 31 DECEMBER 2008
Group Company Note 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
ASSETS Non-current assets Concession assets Property, plant and equipment Prepaid land lease payments Intangible assets Investments in subsidiaries Other investment Deferred tax assets Toll compensation recoverable from the Government Amount owing by subsidiary Long term deposits
12,380,531 47,855 27,269 3,667 — 165,925 7,154 1,909,498 — 483
11,723,486 45,487 27,550 2,824 — 115,244 37,667 1,392,650 — 547
— 13,682 98,635 1,632 2,284,361 — 4,898 — 85,378 —
— 11,314 99,652 1,085 2,180,800 — 1,293 — — —
14,542,382
13,345,455
2,488,586
2,294,144
Current assets Toll compensation recoverable from the Government 22 Inventories Sundry receivables, deposits and prepayments 23 Amount owing by related companies 24 Amount owing by subsidiaries 24 Tax recoverable Short term investments 25 Short term deposits with licensed banks 26 Cash and bank balances 26
104,269 27 57,153 13,806 — 5,575 63,389 2,209,124 25,306
— 49 58,363 8,194 — — 63,322 2,378,135 39,487
— 27 6,006 74 535,823 5,554 — 6,190 253
— 49 32,858 138 412,442 — — 4,770 296
2,478,649
2,547,550
553,927
450,553
TOTAL ASSETS
17,021,031
15,893,005
3,042,513
2,744,697
15 16 17 18 19 20 21 22 24 26
The accompanying notes form an integral part of the financial statements.
150 PLUS Expressways Berhad Annual Report 2008
Balance Sheets
continued
Group Company Note 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Share capital Capital reserve Merger reserve Other reserves Retained earnings
1,250,000 461,138 298,834 (20,312) 3,687,948
1,250,000 461,138 298,834 1,040 3,329,186
1,250,000 — — — 576,903
1,250,000 — — 2,037 488,920
Minority interests
5,677,608 19,344
5,340,198 9,510
1,826,903 —
1,740,957 —
Total equity
5,696,952
5,349,708
1,826,903
1,740,957
Non-current liabilities Long term financial liabilities 32 Long term borrowings 33(a) Amount due to Government 33(c) Amount owing to immediate holding company 24 Amount owing to subsidiary 24 Other long term payables Retirement benefits 36 Deferred liabilities 37 Deferred tax liabilities 21
7,965,604 1,551,694 38,096 6,885 — 59 14,071 125,737 388,239
7,096,256 1,486,683 38,096 6,885 — 65 12,822 51,441 11,494
776,174 — — — 86,850 — — — —
— — — — 88,850 — — — —
10,090,385
8,703,742
863,024
88,850
27,331 111,813 20,445 1,187 623,132 332,801 1,338 115,522 — 125
17,707 135,847 44,638 — 592,838 904,347 39,880 103,883 — 415
— 22,955 — — — 325,806 265 357 3,203 —
— 15,711 — — — 898,466 284 221 — 208
1,233,694
1,839,555
352,586
914,890
Total liabilities
11,324,079
10,543,297
1,215,610
1,003,740
TOTAL EQUITY AND LIABILITIES
17,021,031
15,893,005
3,042,513
2,744,697
27 28 29 30 31
Current liabilities Trade payables 38(a) Sundry payables and accruals 38(b) Amount received from the Government for Additional Works 39 Deferred liabilities 37 Short term financial liabilities 32 Short term borrowings 33(b) Amount owing to immediate holding company 24 Amount owing to related companies 24 Amount owing to subsidiaries 24 Tax payable 12(b)
The accompanying notes form an integral part of the financial statements.
151 PLUS Expressways Berhad Annual Report 2008
152 PLUS Expressways Berhad Annual Report 2008
461,138
— — —
— — — 1,250,000
— —
— —
— —
298,834
— — —
— —
— —
298,834
— — — —
—
— —
298,834
The accompanying notes form an integral part of the financial statements.
At 31 December 2008
Total recognised income and expense for the year Share option granted under EES Share option reserve transferred to retained earnings upon expiry of EES Issuance of share capital Dividends 14
— —
Foreign currency translation differences Profit for the year
461,138
— — — —
— — — — 1,250,000
—
— —
— —
—
461,138
1,250,000
At 31 December 2007
Total recognised income and expense for the year Share option granted under Employee Equity Scheme (“EES”) Issuance of share capital Acquisition of subsidiaries Dividends 14
At 1 January 2007 Foreign currency translation differences Profit for the year
(20,312)
(4,429) — —
(17,867) 944
(17,867) —
1,040
1,669 — — —
(2,306)
(2,306) —
1,677
3,687,948
4,429 — (725,000)
1,079,333 —
— 1,079,333
3,329,186
— — — (425,000)
1,247,843
— 1,247,843
2,506,343
5,677,608
— — (725,000)
1,061,466 944
(17,867) 1,079,333
5,340,198
1,669 — — (425,000)
1,245,537
(2,306) 1,247,843
4,517,992
19,344
— 11,840 —
(2,006) —
(2,713) 707
9,510
— 1,426 7,748 —
(159)
36 (195)
495
Retained Minority Earnings Total Interests RM’000 RM’000 RM’000 (Note 31)
Distributable
Merger Other Reserve Reserves RM’000 RM’000 (Note 29) (Note 30)
Non-Distributable Reserves
Share Capital Note Capital Reserve GROUP RM’000 RM’000 (Note 27) (Note 28)
Attributable to Equity Holders of the Company
5,696,952
— 11,840 (725,000)
1,059,460 944
(20,580) 1,080,040
5,349,708
1,669 1,426 7,748 (425,000)
1,245,378
(2,270) 1,247,648
4,518,487
Total RM’000
Statements of Changes in Equity
FOR THE YEAR ENDED 31 DECEMBER 2008
The accompanying notes form an integral part of the financial statements.
1,250,000
(2,784) —
— —
At 31 December 2008
2,037 — 747
1,250,000 — —
At 31 December 2007 Profit for the year Share option granted under EES Share option reserve transferred to retained earnings upon expiry of EES Dividends 14 —
576,903
2,784 (725,000)
488,920 810,199 —
215,999 697,921 — (425,000)
1,250,000 — — —
At 1 January 2007 Profit for the year Share option granted under EES Dividends 14 1,286 — 751 —
Retained Earnings RM’000 (Note 31)
Share Other Note Capital Reserves COMPANY RM’000 RM’000 (Note 27) (Note 30)
Non Distributable Distributable
1,826,903
— (725,000)
1,740,957 810,199 747
1,467,285 697,921 751 (425,000)
Total RM’000
Attributable to Equity Holders of the Company
Statements of Changes in Equity continued
153 PLUS Expressways Berhad Annual Report 2008
Cash Flow Statements FOR THE YEAR ENDED 31 DECEMBER 2008
Group Company Note 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Cash Flows from Operating Activities Toll collection Expressway operation services fees Receipts from expressway ancillary facilities Other income Future maintenance expenditure received Payments to contractors for routine maintenance Other operating expenses Taxes paid
2,323,484 — 16,053 39,165 14,048 (238,868) (328,863) (11,468)
1,825,614 5,919 11,017 47,053 1,756 (183,165) (273,418) (5,285)
— 101,234 — 1,204 — — (142,432) (8,184)
— 105,082 — 1,017 — — (126,187) (5,285)
Net cash generated from/(used in) operating activities
1,813,551
1,429,491
(48,178)
(25,373)
103,712 1,421 — 286,035
66,230 — — 258,000
2,891 645 810,000 —
1,820 — 425,000 —
1,364
13,802
—
—
Cash Flows from Investing Activities Profit element and interest income received Proceeds from disposal of property, plant and equipment Dividends received Proceeds from maturity of short term investments Fixed deposit interest earned on amount received from the Government for Additional Works 39 Acquisition of subsidiaries, net of cash and cash equivalents acquired 19(a) Investment in subsidiaries Purchase of property, plant and equipment Payment for leasehold land Purchase of computer softwares Purchase of investments Additional Works Concession assets
(72,680) — (10,637) — (2,032) (333,379) (322,609) (525,563)
(493,903) — (6,602) (7,719) (1,111) (364,810) (444,556) (375,808)
Net cash (used in)/generated from investing activities
(874,368)
(1,356,477)
154 PLUS Expressways Berhad Annual Report 2008
(120,600) (54,939) (5,517) (4,000) (962) — — —
(883,234) (29,306) (3,496) (7,719) (522) — — —
627,518
(497,457)
Cash Flow Statements
continued
Group Company Note 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Cash Flows from Financing Activities Proceeds from issuance of Islamic Sukuk Drawdown of borrowings Proceeds from minority shareholders in respect of additional capital injection during the year Advance received for share capital from minority shareholders Advance received from minority shareholders Redemption of Senior Sukuk/BAIDS Settlement of borrowings Dividends paid Interest paid Profit elements on Senior Sukuk, BAIDS and PLUS SPV Sukuk
1,069,751 190,556
— 974,490
761,611 188,426
— 896,874
4,440 17,483 156 (595,000) (760,051) (725,000) (32,196) (285,167)
2,110 9,374 — (550,000) — (425,000) (6) (248,425)
— — — — (760,051) (725,000) (32,196) (10,753)
— — — — — (425,000) — —
Net cash (used in)/generated from financing activities
(1,115,028)
(237,457)
(577,963)
471,874
Net (decrease)/increase in cash and cash equivalents Effects of foreign exchange rate changes Cash and cash equivalents at the beginning of the year
(175,845) (7,347) 2,417,622
(164,443) (2,444) 2,584,509
1,377 — 5,066
(50,956) — 56,022
Cash and cash equivalents at the end of the year
2,234,430
2,417,622
6,443
5,066
26
The accompanying notes form an integral part of the financial statements.
155 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements – 31 DECEMBER 2008
1
CORPORATE INFORMATION
PLUS Expressways Berhad (“the Company” or “PEB”) is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Board of the Bursa Malaysia Securities Berhad. The new registered office of the Company is located at 19-2, Mercu UEM, Jalan Stesen Sentral 5, Kuala Lumpur Sentral, 50470 Kuala Lumpur. Prior to January 2009, the registered office was at 2nd Floor, Bangunan MCOBA, 42, Jalan Syed Putra, 50460 Kuala Lumpur. The principal place of business is located at Menara Korporat, Persada PLUS, Persimpangan Bertingkat Subang, KM 15, Lebuhraya Baru Lembah Klang, 47301 Petaling Jaya, Selangor Darul Ehsan. Prior to November 2008, the Company principal place of business was at Level 12-17, Menara 1, Faber Towers, Jalan Desa Bahagia, Taman Desa, Off Jalan Klang Lama, 58100 Kuala Lumpur. The Directors regard UEM Group Berhad (“UEM”), which is incorporated in Malaysia and owns 40.21% of the Company’s equity as at 31 December 2008, as the immediate holding company. The ultimate holding company is Khazanah Nasional Berhad (“Khazanah”), which is incorporated in Malaysia. The principal activities of the Company are investment holding and provision of expressway operations services. The Company is principally engaged in the highway concession services through its subsidiaries: (i) Projek Lebuhraya Utara-Selatan Berhad (“PLUS”); PLUS is involved in the operation and maintenance of a tolled expressway network comprising the North-South Expressway (“NSE”), the New Klang Valley Expressway (“NKVE”), a section of Federal Highway Route 2 (“FHR2”) between Subang and Klang, and the Seremban-Port Dickson Highway (“SPDH”) in Peninsular Malaysia. (ii) Expressway Lingkaran Tengah Sdn Bhd (“ELITE”); ELITE undertakes the operation, maintenance and toll collection of the North-South Expressway Central Link (“NSECL”). (iii) Linkedua (Malaysia) Berhad (“LINKEDUA”); LINKEDUA undertakes the operation, maintenance and toll collection of the Malaysia-Singapore Second Crossing (“MSSC”). (iv) Konsortium Lebuhraya Butterworth-Kulim (KLBK) Sdn Bhd (“KLBK”); KLBK is engaged in the operation, maintenance and toll collection of the Butterworth-Kulim Expressway (“BKE”). PEB has four foreign subsidiaries namely PLUS Kalyan (Mauritius) Private Limited (“PLUS Kalyan”) in Port Louis, Mauritius, PLUS BKSP Toll Limited (“PLUS BKSP”) in Kanpur, India, PT Lintas Marga Sedaya (“LMS”) in Indonesia and PT Cimanggis Cibitung Tollways (“CCTW”) in Indonesia. Except for PLUS Kalyan, all its foreign subsidiaries are highway concessionaires on a build, operate and transfer basis (“BOT”). The principal activities of PLUS Kalyan is investment holding. The principal activities of all the subsidiaries are disclosed in Note 19 to the financial statements. There have been no significant changes in the nature of the principal activities during the financial year. The Company completed the acquisition of KLBK on 13 March 2008, and completed the subscription and issuance of 60% shares of CCTW, a company incorporated in Indonesia, on 27 December 2008 and the details are disclosed in Note 43 to the financial statements.
156 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
2 AWARD OF CONCESSIONS (a) PLUS The Government of Malaysia (“the Government”) and UEM entered into a Concession Agreement dated 18 March 1988 in connection with the NSE, the NKVE and the FHR2 projects for a Concession Period of 30 years, ending 31 May 2018.
Subsequently, UEM and PLUS entered into a Novation Agreement with the Government dated 20 January 1988 whereby, with the approval of the Government, UEM assigned its rights and transferred its liabilities and obligations under the Concession Agreement to PLUS.
On 8 July 1999, PLUS entered into a Supplemental Concession Agreement (“SCA”) with the Government whereby the toll rate structure was revised and toll revenue sharing arrangements were established between the parties. As a result of the revision in the toll rate structure the Concession Period was extended for another 12 years to end on 31 May 2030.
On 11 May 2002, PLUS entered into a Second Supplemental Concession Agreement (“SSCA”) with the Government whereby toll rate structure was further revised for the remaining Concession Period and toll compensation and setoff arrangements were established between the parties. The new toll rate structures are as follows: (i)
increase of Class 1 toll rate by 10% from 11.24 sen/km to 12.36 sen/km, which commenced from 1 January 2002 until 31 December 2004;
(ii) scheduled increases of Class 1 toll rate by 10% every 3 years thereafter.
The second 10% scheduled increase in toll rate from 12.36 sen/km to 13.60 sen/km took effect from 1 January 2005 until 31 December 2007. The third 10% scheduled increase in toll rate from 13.60 sen to 14.96 sen which was to take effect from 1 January 2008 has not been applied as yet. The Government has agreed to compensate in cash the differential toll rate based on actual traffic volume in 2008.
Toll rates for other classes of vehicles are determined based on pre-set factors by reference to rates applicable to Class 1 vehicles.
On 22 April 2005, PLUS entered into a Third Supplemental Concession Agreement (“TSCA”) (which took effect on 31 December 2004) with the Government which amongst others, sets out the settlement arrangement for the funding of the construction of third lanes along certain stretches of NSE and the construction of a non-stop through traffic between Ipoh Selatan Toll Plaza and Jelapang Toll Plaza (collectively referred to as “Additional Works”) and the compensation receivable from the Government for the closure of the Senai Toll Plaza (“Senai Compensation”). The settlement arrangement includes the takeover of SPDH, the set-off against the Government Support Loan (“GSL”) and the Additional Support Loan (“ASL”) and the extension of the Concession Period for another 8 years and 7 months to end on 31 December 2038. In addition, PLUS entered into a Proceeds Account Agreement to govern the cash pertaining to Additional Works as set out in Note 39.
Furthermore, the TSCA states that all rights and entitlement of PLUS in respect of the Senai-Johor Bahru section shall be reverted to and vested in the Government and PLUS will have no further liabilities and responsibilities in relation thereto following the closure of the Senai Toll Plaza effective 1 March 2004.
Details of the toll compensation arrangement pursuant to the SSCA, and the settlement arrangement pursuant to the TSCA are set out in Note 3, ‘Revised Toll Rates, Toll Compensation Arrangements and Settlement Arrangements’.
157 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
2 AWARD OF CONCESSIONS (continued) (b) ELITE The Government and UEM entered into a Concession Agreement dated 26 April 1994 in connection with the construction, operation and maintenance of the NSECL.
Subsequently, UEM and ELITE entered into a Novation Agreement with the Government on 27 July 1995 whereby, with the approval of the Government, UEM assigned its rights and transferred its liabilities and obligations under the Concession Agreement to ELITE.
On 9 January 1997, ELITE entered into a SCA with the Government whereby, amongst others, three additional interchanges along the NSECL Expressway and an extension of the KLIA Expressway.
On 23 March 2001, ELITE entered into a SSCA with the Government whereby, amongst others, the Concession Period was extended from 31 May 2018 to 31 May 2025.
On 10 January 2003, ELITE entered into a TSCA with the Government whereby, amongst others, toll rate structures were further revised and compensation arrangements were established between the parties, details of which is set out in Note 3(ii)(b).
(c) LINKEDUA The Government and UEM entered into a Concession Agreement dated 27 July 1993 in connection with the design, construction, management, operations and maintenance of the MSSC.
Subsequently, UEM and LINKEDUA entered into a Novation Agreement with the Government on 10 May 1994 whereby, UEM assigned its rights and transferred its liabilities and obligations under the Concession Agreement to LINKEDUA.
On 12 September 1994, LINKEDUA entered into a SCA with the Government to take into account the InterGovernment Agreement between the Government and the Government of Singapore on 22 March 1994 (“InterGovernment Agreement”) such that, the LINKEDUA Concession Agreement are consistent with the Government’s obligation under the Inter-Government Agreement relating to the works and rights in connection with the Malaysian side of the bridge and the Customs, Immigration & Quarantine Complex.
On 30 May 2000, LINKEDUA entered into a SSCA with the Government whereby, amongst others, the concession period was extended by 15 years to 31 December 2038. The toll rate structure was also revised. In addition, revenue sharing arrangements were established between the parties.
(d) KLBK The Government and KLBK entered into a Concession Agreement dated 28 June 1994 in connection with the design, construction, operation and maintenance of the BKE for a concession period of 32 years ending 27 June 2026.
On 4 June 2007, KLBK entered into a SCA with the Government to restructure the toll rate for Kubang Semang and Lunas Toll Plaza, commencing from 1 June 2005. The new agreed toll rates is applicable for the remaining concession years until the expiry of the concession period in 2026.
158 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
2 AWARD OF CONCESSIONS (continued) (e) PLUS BKSP The Company had on 16 May 2006, received a letter of acceptance from the Maharashtra State Road Development Corporation Limited (“MSRDC”) in relation to the tender bid jointly submitted by the Company and Concept Management Consulting Private Limited through an unincorporated consortium (“PEB-CMCL Consortium”) on 15 December 2005 for the proposed four-laning and improvement, operation and maintenance and toll collection of Bhiwandi-Kalyan-Shil Phata Highway (“BKSP Highway”) on a build, operate and transfer basis (“MSRDC Contract”). The concession period for the MSRDC Contract shall be approximately six years and eight months from the date of the proposed execution of the relevant Concession Agreement.
On 25 August 2006, PEB-CMCL Consortium, PLUS BKSP and MSRDC entered into a Concession Agreement to undertake the four-laning and improvement, operations and maintenance and toll collection of the BKSP Highway. Concurently, PEB-CMCL Consortium and PLUS BKSP entered into an Intra Group Agreement which provides for the transfer of all rights, benefits and obligations of PEB-CMCL Consortium to PLUS BKSP which in turn agreed to execute and complete the Project in compliance with the terms and conditions of the Concession Agreement. In accordance with the terms of the Concession Agreement, PLUS BKSP will design, engineer, construct and subsequently operate and maintain the BKSP Highway. PLUS BKSP is entitled to levy and collect toll from vehicles using the BKSP Highway upon commencement of highway operations. The initial concession period is for 6 years and 8 months from the date of the execution of the Concession Agreement.
Through letters from an independant consultant dated 29 May 2008, 7 August 2008 and 4 September 2008, MSRDC had approved extension of the concession period to 7 years and 11 months in consideration for the delay on its part in handing over the land for the construction of the BKSP Highway.
(f) LMS On 21 July 2006, LMS and the Government of the Republic of Indonesia entered into a Concession Agreement in which LMS was appointed as the concessionaire to undertake the design, construction, ownership, management, financing, operation, maintenance as well as toll collection of the 116-kilometre Cikampek-Palimanan toll highway (“Cikampek-Palimanan Highway”) on a build, operate and transfer basis. The concession period for the CikampekPalimanan Highway is 35 years.
On 13 July 2007, PEB had issued shares in the capital of LMS which represent 55% of the entire issued voting shares of LMS, making LMS a foreign subsidiary of PEB with effect from that date. The remaining 45% equity interest of LMS’s voting shares is held by its Indonesian partner, PT Baskhara Utama Sedaya (“BUS”).
(g) CCTW On 18 September 2007, the Company received a letter from the Minister of Public Works, Republic of Indonesia informing the success of the tender bid jointly submitted by the Company and its Indonesian partners, namely PT Bakrie & Brothers Tbk and PT Capitalinc Investment Tbk (formerly known as PT Global Financindo Tbk) (“Consortium”) for the proposed 25.4 kilometer Package 4-Cimanggis-Cibitung Toll Road on a Build, Operate and Transfer basis. The Cimanggis-Cibitung Toll Road forms part of the proposed Jakarta Outer Ring Road 2 and is located on the outskirts of the Jakarta metropolitan area. The concession shall be for a period of 35 years from the date of the proposed execution of the relevant Concession Agreement.
159 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
2 AWARD OF CONCESSIONS (continued) (g) CCTW (continued) On 15 January 2008, the Consortium executed a Joint Venture Agreement in relation to the Cimanggis-Cibitung Toll Road. The Joint Venture Agreement, provides for the incorporation of a joint venture special purpose vehicle to be known as PT Cimanggis Cibitung Tollway (“CCTW”) to enter into concession agreement for the implementation of the Cimanggis-Cibitung Toll Road with the Minister of Works, Republic of Indonesia.
On 27 December 2008, completion of the subscription of shares had taken place with the issuance of CCTW share certificates in accordance with the Articles of Association of CCTW. PEB had been issued with share certificates for 48,000,000 shares of IDR1,000 each representing 60% shareholding interest in CCTW, effectively making CCTW a foreign subsidiary of PEB.
3. REVISED TOLL RATES, TOLL COMPENSATION ARRANGEMENTS AND SETTLEMENT ARRANGEMENTS OF PLUS AND ELITE (i) PLUS (a) Revised Toll Rate Structures In consideration of PLUS agreeing to the revised toll rate structures applicable from 1 January 2002 (details of which are set out in Note 2(a) above) the Government agreed to the following: (i)
to waive PLUS’s obligation to pay the interest accrued to 1 January 2002 amounting to RM1,729.22 million on its GSL;
(ii) to waive PLUS’s obligation to pay interest on the remaining principal amount of RM750 million on the GSL, after (i) above; and (iii) to address the manner in which the Government would discharge its liability in respect of the amount of compensation due that would arise in each of the remaining Concession Years; such compensation would arise as the new toll rates which took effect from 1 January 2002 are lower than the toll rates contemplated in the SCA previously entered into; and the arrangements have been formalised through the SSCA, and in the manner described in (b) below, ‘Toll Compensation Arrangements’. (b) Toll Compensation Arrangements Under the toll compensation arrangements pursuant to the SSCA, compensation recoverable from the Government for the effects of imposing toll rates lower than those previously agreed shall be adjusted for the following: (i)
deduction for the notional tax on dividends that PLUS will declare and pay (if any) from the tax exempt profits earned during the five year tax-exempt period from 2002 to 2006;
(ii) deduction for interest that would have been payable to the Government on the GSL, had the Government not waived PLUS from its obligation to pay such interest; (iii) set-off of PLUS’s income tax liabilities against such compensation due to PLUS after the deductions referred to in (i) and (ii) above; and (iv) set-off of any Toll Sharing Amount due to the Government against the resultant from (iii) above.
160 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
3. REVISED TOLL RATES, TOLL COMPENSATION ARRANGEMENTS AND SETTLEMENT ARRANGEMENTS OF PLUS AND ELITE (continued) (i) PLUS (continued) (b) Toll Compensation Arrangements (continued) Under the SSCA, in any Concession Year after the tax-exempt period, if there is any tax amount owing by PLUS to the Government after taking into consideration the adjustments referred to in (i), (ii) and (iii) above, PLUS shall pay such tax amount owed by it to the Government in cash.
The SSCA provides that the payment of such tax amount shall not include any toll sharing to be paid to the Government (if applicable), which shall continue to be carried forward for utilisation against future toll compensation amounts. Upon expiry of the Concession Period, any amounts of tax payable and toll sharing amounts which have not been utilised under the compensation arrangements referred to above are to be paid by PLUS to the Government. However, if there are any amounts due from the Government upon expiry of the Concession Period, such amounts are to be unconditionally waived by PLUS.
In the event that the Government imposes a toll rate which is lower than the toll rates stated in the SSCA for any Concession Year, the SSCA provides that the amount of further compensation arising will be paid in full. Notwithstanding such compensation, the other toll compensation arrangements pursuant to the SSCA will remain in effect.
(c) Settlement Arrangements The TSCA sets out the settlement arrangement between the Government and PLUS for the funding of Additional Works estimated at RM1,042.48 million and Senai Compensation amounting to RM331.68 million, in the following manner: (a) Takeover of SPDH by PLUS at a value of RM50.27 million as part settlement for the Senai Compensation; (b) Set off against amount outstanding under the GSL and ASL amounting to RM962.00 million, comprising: (i)
RM281.41 million to settle the balance of the Senai Compensation; and
(ii) RM680.59 million to part settle the cost for the Additional Works; and (c) The balance of the cost for the Additional Works of RM361.89 million has been settled by the Government by way of extending the concession period for a further 8 years and 7 months, to end on 31 December 2038.
The key consequential changes under the TSCA in respect of the Toll Compensation Arrangements as per Note 3(b), as a result of the settlement arrangement are as follows: (i)
The toll compensation shall be calculated up to 31 May 2030 instead of the end of the Concession Period which has now been extended to 31 December 2038.
(ii) Interest that would have been payable to the Government as referred to in Note 3(i)(b)(ii) above, shall be equivalent to nil commencing from the year in which GSL and ASL are fully settled. (iii) The calculation of the toll compensation shall be calculated without taking into account SPDH’s traffic volume. (iv) Any toll compensation amount due from the Government as at 31 May 2030 shall continue to be deducted against the toll sharing for that concession year and each concession year thereafter.
161 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
3. REVISED TOLL RATES, TOLL COMPENSATION ARRANGEMENTS AND SETTLEMENT ARRANGEMENTS OF PLUS AND ELITE (continued) (ii) ELITE (a) Revised Toll Rate Structures Through the TSCA (as referred to in Note 2(b)), the new toll rate structures have been revised to increase by 10% every three years commencing 1 January 2002 until the expiry of the Concession Period. The toll rate had been increased from 12.36 sen per km to 13.60 sen per km effective from 1 January 2005. The next 10% toll rate increase had been implemented on 1 January 2008. (b) Toll Compensation Arrangements In consideration of ELITE agreeing to the revised toll rate structures as referred in the preceding paragraph, the Government agreed to the following: (i)
to provide ELITE with an interest-free term loan facility of up to the maximum principal amount of RM300 million and the loan shall be repaid in full at the repayment date disclosed in Note 33;
(ii) to waive all its rights to interest which has accrued on the existing Government Loan, of RM89.9 million, for the period from 15 December 2000 to 31 December 2001 and to charge no interest on the RM89.9 million loan for the period from 1 January 2002 up to the final repayment date of the loan; (iii) to an extension of the Concession Period for a further 5 years from 31 May 2025 to 31 May 2030; and (iv) to allow and authorise ELITE to collect and retain the levy on the extension of the KLIA Expressway throughout the Concession Period and to increase the levy by 10% every 3 years until the expiry of the Concession Period, of which the first increase was effected on 1 January 2002.
4
ELITE entered into an Additional Government Loan Agreement (“AGLA”) and a Supplemental Loan Agreement (“SLA”) with the Government on 15 January 2003 in respect of the RM300 million additional loan and the waiver of interest on the existing Government Loan, as described in (i) and (ii) above respectively.
SIGNIFICANT ACCOUNTING POLICIES 4.1 Basis of Accounting and Preparation of the Financial Statements The financial statements of the Group and of the Company comply with the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards in Malaysia. At the beginning of the current financial year, the Group and the Company had adopted new IC Interpretations which are mandatory for financial periods beginning on or after 1 July 2007 as described in Note 4.3. The financial statements of the Group and of the Company have also been prepared on a historical basis, unless otherwise stated in the accounting policies below.
The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand (RM’000) except when otherwise indicated.
162 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
4
continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Summary of Significant Accounting Policies (a) Investment in Subsidiaries Subsidiaries are entities over which the Group has the ability to control the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity.
The Company’s investments in subsidiaries are stated at cost less impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 4.2(g).
On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is recognised in the income statement.
(b) Basis of Consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the balance sheet date. The financial statements of the subsidiaries are prepared for the same reporting date as the Company.
The merger method of accounting was used in consolidating the Company and PLUS in the year 2002 which meets the relevant criteria set out in the FRS 122 “Business Combination”, thus depicting the combination of these entities as if they had been in combination for the entire period.
For other subsidiaries, they are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. In preparing the consolidated financial statements, intragroup balances, transactions and unrealised gains or losses are eliminated in full. Uniform accounting policies are adopted in the consolidated financial statements for like transactions and events in similar circumstances.
Acquisitions of subsidiaries are accounted for using the purchase method. The purchase method of accounting involves allocating the cost of the acquisition to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the acquisition.
Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill. Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in the income statement.
Minority interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group. It is measured at the minorities’ share of the fair value of the subsidiaries’ identifiable assets and liabilities at the acquisition date and the minorities’ share of changes in the subsidiaries’ equity since then.
163 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
4
continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Summary of Significant Accounting Policies (continued) (c) Property, Plant and Equipment, and Depreciation Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 4.2(g).
Freehold land is not depreciated. Depreciation is provided for on a straight line basis over the estimated useful lives of the property, plant and equipment. The annual rates of depreciation are as follows:
Renovations Aircrafts Motor Vehicles Furniture and Fittings Office Equipment Computers Telecommunication System Operation Tools and Equipment Buildings
Upon disposal of an item of property, plant and equipment, the difference between the net disposal proceeds and the net carrying amount is recognised in the income statement.
The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.
10% 12% 20% 20% 20% 20% 20% 20% 2%
(d) Intangible Assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair values as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful lives of intangible assets are assessed to be either finite or indefinite. 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 intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each balance sheet date.
Intangible assets with indefinite useful lives are not amortised but tested for impairment annually or more frequently if the events or changes in circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. The useful life of an intangible asset with an indefinite life is also reviewed annually to determine whether the useful life assessment continues to be supportable.
164 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
4
continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Summary of Significant Accounting Policies (continued) (e) Leases A lease is recognised as a finance lease if it transfer substantially to the Group all the risks and rewards incidental to ownership. Leases that do not transfer substantially all the risks and rewards are classified as operating leases.
In the case of a lease of land, the minimum lease payments or the upfront payments made represent prepaid land lease payments and are amortised on a straight-line basis over the lease term.
(f) Concession Assets Items classified as Concession Assets comprise Expressway Development Expenditure, Heavy Repairs and Other Concession Assets. (i)
Expressway Development Expenditure Expressway Development Expenditure (“EDE”) comprises development and upgrading expenditure (including interest charges relating to financing of the development) incurred in connection with the Concession.
EDE is stated at cost less accumulated amortisation and impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 4.2(g).
EDE is amortised over the Concession Period. The amortisation formula applied in the preparation of the financial statements to arrive at the annual amortisation charge for each financial period is as follows:
Toll revenue for the year X [Actual toll revenue for the year + Projected total toll revenue for the subsequent years to the end of the concession period]
Toll revenue and projected total toll revenue include toll collection, toll compensation net of any notional tax on tax exempt dividend.
The projected total toll revenue is based on the latest available base case traffic projections prepared by independent traffic consultants multiplied by the toll rate structures described in Note 2.
The traffic volume projection is independently reviewed on a periodic basis.
[Net Book Value of EDE at beginning of the year + Additions for the year]
(ii) Heavy Repairs Heavy repairs relate to costs incurred to repair bridges, slopes and embankments, rectification of settlements and pavement rehabilitation of medium and high traffic sections along the Expressways. The costs of heavy repairs are amortised on a straight line basis over 5-7 years commencing from the date of incurrence, this being the anticipated economic life of such works.
165 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
4
continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Summary of Significant Accounting Policies (continued) (f) Concession Assets (continued) (iii) Other Concession Assets Other Concession Assets comprise toll equipment, video surveillance equipment, telecommunication network, centralised lighting, and toll operation computer hardware and software, and are stated at cost less accumulated amortisation and impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 4.2(g). The annual amortisation in respect of these assets is computed on a straight line basis over their estimated useful lives at the following rates: Software and computers Others
% 12.5 10
(iv) Capital Work-In-Progress Capital work-in-progress is not depreciated until the asset is fully completed and brought into use. (g) Impairments For the purpose of impairment testing of these assets, recoverable amount is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, recoverable amount is determined for the cash-generating unit (CGU) to which the asset belongs to.
An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and 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.
An impairment loss is recognised in the income statement in the period in which it arises, unless the asset is carried at a revalued amount, in which case the impairment loss is accounted for as a revaluation decrease to the extent that the impairment loss does not exceed the amount held in the asset revaluation reserve for the same asset.
(h) Taxation Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date.
166 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
4
continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Summary of Significant Accounting Policies (continued) (h) Taxation (continued) Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.
Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill.
(i)
Provisions for Liabilities Provisions for liabilities are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.
(j)
Employee Benefits (i) Short term benefits Wages, 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. (ii) Defined contribution plans As required by law, companies in Malaysia make contributions to the Employees Provident Fund (“EPF”). Such contributions are recognised as an expense in the income statement as incurred.
167 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
4
continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Summary of Significant Accounting Policies (continued) (j) Employee Benefits (continued) (iii) Defined benefit plans The Group operates an unfunded, defined benefit Retirement Benefit Scheme (“the Scheme”) for personnel whose employment contracts were transferred in 1988 from Malaysian Highway Authority, pursuant to the Concession Agreement. The Group’s obligation under the Scheme, calculated using the Projected Unit Credit Method, is determined based on actuarial computations by independent actuaries, through which the amount of benefit that employees have earned in return for their service in the current and prior years is estimated. That benefit is discounted in order to determine its present value. Actuarial gains and losses are recognised as income or expense over the expected average remaining working lives of the participating employees when the cumulative unrecognised actuarial gains or losses for the Scheme exceed 10% of the present value of the defined benefit obligation. Past service costs are recognised immediately to the extent that the benefits are already vested, and otherwise are amortised on a straightline basis over the average period until the amended benefits become vested.
The amount recognised in the balance sheet represents the present value of the defined benefit obligations adjusted for unrecognised actuarial gains and losses and unrecognised past service costs. Any asset resulting from this calculation is limited to the net total of any unrecognised actuarial losses and past service costs, and the present value of any economic benefits in the form of refunds or reductions in future contributions to the plan.
(iv) Share-based Compensation The UEM Employee Equity Scheme (“EES”), an equity-settled, share-based compensation plan, allows employees of UEM and UEM Group to acquire ordinary shares of UEM. The Company recognises the total fair value of the UEM share options granted to its employees 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 the UEM share options is measured at grant date by UEM, 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 balance sheet date, UEM revises its estimates of the number of options that are expected to become exercisable on vesting date. The Company recognises the impact of the revision of original estimates, if any, in the income statement, 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 or until the option expires, upon which it will be transferred directly to retained earnings.
(k) Deferred Liabilities Fees received from third parties as advance payments of future maintenance expenditure, in consideration for right-of-way access granted by PLUS and ELITE, are classified as deferred liabilities. Liabilities are amortised over the period of the individual contracts.
In addition, the deferred liabilities also comprise advance toll compensation received by KLBK from the Government where the amount is recognised as revenue over the remaining concession period, and rentals received in advance by KLBK which are for a period of 30 years beginning 1997 and are recognised equally in the income statement over the said period.
168 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
4
continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Summary of Significant Accounting Policies (continued) (l) Foreign Currencies (i) Functional and Presentation Currency The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency. (ii) Foreign Currency Transactions In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Nonmonetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in the income statement for the period except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation. Exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in the income statement.
Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operation, regardless of the currency of the monetary item, are recognised in income statement in the Company’s financial statements or the individual financial statements of the foreign operation, as appropriate.
(iii) Foreign Operations The results and financial position of foreign operations that have a functional currency different from the presentation currency (RM) of the consolidated financial statements are translated into RM as follows: – Assets and liabilities for each balance sheet presented are translated at the closing rate prevailing at the balance sheet date; – Income and expenses for each income statement are translated at average exchange rates for the year, which approximates the exchange rates at the dates of the transactions; and – All resulting exchange differences are taken to the foreign currency translation reserve within equity.
Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the balance sheet date. Goodwill and fair value adjustments which arose on the acquisition of foreign subsidiaries before 1 January 2006 are deemed to be assets and liabilities of the parent company and are recorded in RM at the rates prevailing at the date of acquisition.
169 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
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continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Summary of Significant Accounting Policies (continued) (m) Inventories Inventories are valued at the lower of cost and net realisable value. Cost is determined on the weighted average basis and comprises all expenditure incurred in bringing the inventories to their present location and condition. In arriving at net realisable value, due allowance is made for all obsolete and slow moving items. (n) Cash flow statement The cash flow statement, which is prepared using the direct method, classifies changes in cash and cash equivalents according to operating, investing and financing activities. The Group does not consider any of its assets other than deposits with licensed financial institutions and cash and bank balances to meet the definition of cash and cash equivalents. The use of the cash and cash equivalent balances in the subsidiary companies, however, is subject to the restrictions set out in Note 26, Note 32 and Note 35. (o) Revenue Recognition Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of revenue can be measured reliably. (i)
Toll Revenue Toll revenue is accounted for as and when toll is chargeable for the usage of the expressways.
(ii) Investment Income Investment income is recognised when the right to receive is established and no significant uncertainty exists as regard to its recovery. (iii) Revenue from Services Revenue from services rendered is recognised net of service taxes if applicable, and discounts as and when the services are performed. (iv) Toll Compensation Pursuant to the relevant Concession Agreements, the Government of Malaysia reserves the right to restructure or to restrict the imposition of unit toll rate increases, and in such event, the Government shall compensate the relevant concessionaire for any reduction in toll revenue, subject to negotiation and other considerations that the Government may deem fit. Toll compensation for any Concession Year is recognised in the financial statements as revenue when recovery is probable and the amount that is recoverable can be measured reliably. The amount of toll compensation accrued and recognised in the income statement for the year has been estimated after taking into consideration the effects of the arrangements described in Note 3(i)(b) and Note 3(ii)(b). (v) Interest Income Interest is recognised on a time proportion basis that reflects the effective yield on the asset. (vi) Dividend Income Dividend income is recognised when the right to receive payment is established.
170 PLUS Expressways Berhad Annual Report 2008
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continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Summary of Significant Accounting Policies (continued) (p) Financial Liabilities (i) Bai’ Bithaman Ajil Islamic Debt Securities (“BAIDS”) The BAIDS are bonds issued in accordance with the Islamic finance concept of Bai’ Bithaman Ajil. In accordance with such concept, the issuer assigned certain assets to a trustee, and repurchased them at the same price together with an agreed profit margin. The payment of the purchase price is deferred in accordance with the maturities of the BAIDS, whilst the profit element is paid half-yearly.
BAIDS are initially recognised at cost, being the fair value of the consideration received. After initial recognition, the profit element attributable to the BAIDS in each period is recognised as an expense at a constant rate to the maturity of each series respectively.
(ii) Sukuk Musyarakah with periodic payments The Sukuk Musyarakah (“Sukuk”) with periodic payments is issued under the Islamic principle of Musyarakah which is a contract of partnership in a venture.
The Sukuk is initially stated at cost, being the fair value of the consideration received. After initial recognition, the profit element attributable to the Sukuk in each period is recognised as an expense at a constant rate to its maturity.
(iii) Sukuk Musyarakah without periodic payments The Sukuk Musyarakah (“Sukuk”) without periodic payments is issued under the Islamic principle of Musyarakah which is a contract of partnership in a venture.
The Sukuk is initially stated at cost, being the fair value of the consideration received. The profit elements on the Sukuk are recognised as an expense and accreted to the principal amount at a constant rate to its maturity.
(q) Amount received from the Government for Additional Works Pursuant to the TSCA, monies received from the Government for the Additional Works, are classified as “Amount received from the Government for Additional Works”. With the execution of the Proceeds Account Agreement on 17 November 2006, the expenses incurred for the Additional Works have been offset against the amount received from the Government as disclosed in Note 39. (r) Financial Instruments Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instrument.
Financial instruments are classified as liabilities or equity in accordance with the substance of the respective contractual arrangements. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.
171 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
4
continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Summary of Significant Accounting Policies (continued) (r) Financial Instruments (continued) (i) Trade Payables Trade payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received. (ii) Interest-Bearing Borrowings Interest-bearing borrowings are recorded at the amount of proceeds received, net of transaction costs.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. The amount of borrowing costs eligible for capitalisation is determined by applying a capitalisation rate which is the weighted average of the borrowing costs applicable to the Group borrowings that are outstanding during the year, other than borrowings made specifically for the purpose of obtaining another qualifying asset. For borrowings made specifically for the purpose of obtaining a qualifying asset, the amount of borrowing cost eligible for capitalisation is the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of that borrowing.
All other borrowing costs are recognised as an expense in the income statement in the period in which they are incurred.
(iii) Equity Instruments Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared. (iv) Other Non-current Investment Non-current investments other than investments in subsidiaries, associates and jointly controlled entities are stated at cost less impairment losses. On disposal of an investment, the difference between net disposal proceeds and its carrying amount is recognised in the income statement. (v) Short Term Investments Short term investments in equity shares are stated at the lower of cost and market value whereas the investment in Islamic Commercial Papers/Medium Term Notes are stated at cost less amortised premium due to the relatively short term maturity of these financial instruments. (vi) Receivables Receivables are carried at anticipated realisable values. Bad debts are written off when identified. An estimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheet date.
Toll compensation recoverable from the Government is carried at anticipated realisable value after taking into consideration the effects of the arrangements described in Note 3(i)(b) and Note 3(ii)(b). An assessment of the recoverability of the amount is performed annually based on estimated recoverable amount persuant to the settlement arrangement as set out in Note 3(i)(b). Please see Note 4.2(o)(iv) for the recognition of toll compensation.
172 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
4
continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.3 Changes in Accounting Policies and Effects Arising from Adoption of New IC Interpretation On 1 January 2008, the Group and the Company adopted IC Interpretation 8: Scope of FRS 2, which is mandatory for financial periods beginning on or after 1 July 2007.
The adoption of the above IC Interpretation does not result in significant changes to the accounting policies and does not have a significant financial impact on the Group or Company.
4.4 New standards and interpretations that are not yet effective At the date of authorisation of these financial statements, the following new FRS and Interpretations were issued but not yet effective and have not been applied by the Group and the Company: FRS, Amendment to FRS and IC Interpretations
Effective for financial periods beginning on or after
FRS 7: Financial Instruments: Disclosures FRS 8: Operating Segments FRS 139: Financial Instruments: Recognition and Measurement IC Interpretation 9: Reassessment of Embedded Derivatives IC Interpretation 10: Interim Financial Reporting and Impairment
1 January 1 July 1 January 1 January 1 January
2010 2009 2010 2010 2010
The new FRS and IC Interpretations above are expected to have no significant impact on the financial statements of the Group and the Company upon their initial application except for changes in disclosures arising from the adoption of FRS 7 and FRS 8.
The Group and the Company are exempted from disclosing the possible impact, if any, to the financial statements upon the initial application of FRS 139.
4.5 Key Sources of Estimation Uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet 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. (i)
Share-based payments to employees The cost of providing share-based payments to employees is charged to the income statement over the vesting period of the related share options. The cost is 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 Trinomial option pricing model.
(ii) Amortisation of heavy repairs and other concession assets The cost of heavy repairs and other concession assets are amortised on a straight-line basis over their useful lives over 5 to 10 years. These are common life expectancies applied in the industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.
173 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
4
continued
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.5 Key Sources of Estimation Uncertainty (continued) (iii) Amortisation of Expressway Development Expenditure (“EDE”) The cost of EDE is amortised over the Concession Period by applying the formula in Note 4.2(f)(i) above. The denominator of the formula includes projected total toll revenue for subsequent years to year 2038 and is based on the latest available base case traffic volume projections prepared by independent traffic consultants multiplied by the toll rates as disclosed in Note 2(a) and 3(ii)(a). 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. (iv) Income Taxes Significant judgement is involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amount of taxation and deferred taxation at balance sheet date is disclosed in the balance sheet. (v) Toll Compensation Recoverable from Government Profit projections are used in determining adequacy of the future income tax payable for set-off against Toll Compensation Recoverable from Government as at balance sheet date. Profit projections are dependent on various assumptions amongst others traffic volume as mentioned in Note 4.5(iii) above. There are also judgement involved in determining the amount recoverable for set off against Note 4.5(iv) above. The carrying amount of Toll Compensation Recoverable from Government at balance sheet date is disclosed in the balance sheet.
5
REVENUE
Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 2,237,035
1,820,464
—
—
730,923 —
697,754 (242,260)
— —
— —
730,923
455,494
—
—
— —
6,052 —
100,960 885,000
97,832 715,811
Accrual for Government’s share of toll revenue
2,967,958 —
2,282,010 —
985,960 —
813,643 —
2,967,958
2,282,010
985,960
813,643
Toll revenue
Gross toll compensation revenue Less: Notional tax on tax exempt dividends
Net toll compensation revenue
Expressway operation service fees Dividend income from a subsidiary
174 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
5
REVENUE (continued)
Toll compensation revenue arose from revisions in toll rate structures as described in Note 2(a) to 2(d).
As referred to in Note 3(i)(b), the notional tax on tax exempt dividends is computed based on tax-exempt dividend declared by PLUS. There is no notional tax on tax exempt dividend for the year 2008 as PLUS did not pay any dividends from its tax exempt account in 2008.
Based on the terms of PLUS’s SCA, the toll revenue earned during the year is less than the threshold toll revenue and as such no accrual is made for the Government’s share of toll revenue.
6 OTHER INCOME
Other income comprises the following:
Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 Income from rental of facilities Income from rental of fibre optic telecommunications system and way leave rights Negative goodwill arising from acquisition of LINKEDUA Profit element from Islamic short term deposits Interest income from short term deposits Others
21,689
11,848
—
—
15,957 — 85,511 10,353 18,530
15,197 70,249 67,013 7,797 34,110
— — 191 2,699 1,140
— — 7 1,761 1,267
152,040
206,214
4,030
3,035
7 FINANCE COSTS
Finance costs for the year are as follows:
Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Profit elements on Islamic financial liabilities Other interest expense
532,898 112,301
453,077 1,597
25,373 31,161
— 1,591
645,199
454,674
56,534
1,591
175 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
8 PROFIT BEFORE TAX Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 Profit before tax is arrived at after charging/(crediting): Auditors’ remuneration – statutory audit fee – other services fee Depreciation of property, plant and equipment Intangible assets written off (Note 18) Property, plant and equipment written off (Note 16) Gain on disposal of property, plant and equipment Amortisation charge for concession assets (Note 15) Amortisation charge for prepaid land lease payments (Note 17) Amortisation charge for intangible assets (Note 18) Net book value of EDE written off (Note 16) Directors’ remuneration (Note 10) Provision for retirement benefits Rental of equipment Rental of premises Short term investment written off
9
549 658 7,230 16 167 (707) 374,437 281 1,490 — 2,770 1,462 368 2,463 34
288 304 5,676 — 29 (9) 250,162 282 1,153 1,447 1,742 1,396 445 2,774 505
60 434 2,115 — 87 (357) — 1,017 581 — 1,914 — 239 2,079 —
30 53 1,856 — 18 (15) — 1,017 440 — 1,510 — 280 2,544 —
EMPLOYEE COSTS
Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Employee emoluments Employee training/welfare
176 PLUS Expressways Berhad Annual Report 2008
190,708 7,090
152,870 5,652
76,238 3,663
62,285 2,147
197,798
158,522
79,901
64,432
Notes to The Financial Statements
continued
10 DIRECTORS’ REMUNERATION Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Executive: Salaries, bonus and other emoluments Benefits-in-kind
Non-Executive: Fees Other emoluments Director’s remuneration paid and payable to third party Director’s remuneration paid and payable to immediate holding company
1,183 84
946 68
1,183 84
946 68
869 245 78
416 170 65
404 115 78
289 96 65
311
77
50
46
2,770
1,742
1,914
1,510
11 KEY MANAGEMENT PERSONNEL REMUNERATION Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Short term benefits EES
4,957 547
2,157 946
1,914 233
1,510 894
5,504
3,103
2,147
2,404
Key management personnel is defined as the members of the boards of directors of the Company and its subsidiaries whereby the authority and responsibility for planning, directing and controlling the activities of the company, directly or indirectly lies.
177 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
12 INCOME TAX EXPENSE/CURRENT TAX PAYABLE a) Income tax expense Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Income tax: Malaysian income tax Foreign income tax Under provision in prior years
24,335 36 490
24,987 — 1,514
1,931 — 490
19,594 — 1,508
Subtotal
24,861
26,501
2,421
21,102
Deferred tax: Relating to origination and reversal of temporary differences Relating to change in tax rate Under/(over) provision in prior years
405,261 776 4,764
(55,119) (581) 89,541
(3,623) 49 (31)
(98) 108 (117)
Subtotal
410,801
33,841
(3,605)
(107)
Total
435,662
60,342
(1,184)
20,995
The reconciliation of the tax effects of accounting and taxable income are as follows:
Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 1,515,702
1,307,990
809,015
718,916
Tax at applicable statutory tax rate of 26% (2007: 27%) Tax effect of expenses that are not deductible in determining taxable profit Tax effect of income not subject to tax Tax effect of changes in tax rate Under provision of income tax expense in prior years Under/(over) provision of deferred tax in prior year Utilisation of capital allowances (Note (a)) Utilisation of previously unrecognised tax losses and unabsorbed capital allowances
394,083
353,157
210,344
194,107
36,508 — 776 490 4,764 —
35,844 — (581) 1,514 89,541 (228,826)
18,064 (230,100) 49 490 (31) —
2,847 (177,458) 108 1,508 (117) —
Tax expense
435,662
Profit before tax
178 PLUS Expressways Berhad Annual Report 2008
(958)
(190,307) 60,342
— (1,184)
— 20,995
Notes to The Financial Statements
continued
12 INCOME TAX EXPENSE/CURRENT TAX PAYABLE (continued) a) Income tax expense (continued) Note (a) In 2007, deferred tax assets in respect of temporary differences arising during the tax exempt period relating to qualifying expenditure incurred prior to and during the tax exempt period for 2002 to 2006 were not previously recognised as there was uncertainty as to whether the related capital allowances can be utilised for set-off against future taxable profits. These deferred tax assets were recognised in 2007 pursuant to the confirmation from the relevant authority that these can be utilised. b) Tax payable Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 19,398
21,619
—
208
(19,273)
(21,204)
—
—
415
—
208
Current tax payable before set off Set off against toll compensation recoverable from the Government (Note 22)
At 31 December
Following the expiry of PLUS’s exemption period, PLUS incurred income tax in the current year which is payable as at year end. The income tax payable is set off against the toll compensation recoverable from the Government in accordance with the SSCA as detailed out in Note 3(i)(b).
125
13 EARNINGS PER SHARE
Basic earnings per share has been calculated by dividing the profit for the year attributable to equity holders of the Company by the number of ordinary shares in issue during the financial year.
These amounts are tabulated as follows:
Group Company 2008 2007 2008
Profit for the year attributable to equity holders of the Company (RM’000)
Number of ordinary shares (‘000)
Basic earnings per share (sen)
2007
1,079,333
1,247,843
810,199
697,921
5,000,000
5,000,000
5,000,000
5,000,000
21.59
24.96
16.20
13.96
179 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
14 DIVIDENDS Dividend Amount per ordinary share 2008 2007 2008 2007 RM’000 RM’000 sen sen
Interim tax exempt dividend for the year ended 31 December 2007 of 6.0 sen per ordinary share declared on 27 August 2007 and paid on 28 September 2007
—
300,000
—
6.00
Final tax exempt dividend for the year ended 31 December 2007 of 8.0 sen per ordinary share declared on 18 June 2008 and paid on 16 July 2008
—
400,000
—
8.00
Interim single tier dividend for the year ended 31 December 2008 of 6.5 sen per ordinary share declared on 21 August 2008 and paid on 23 September 2008
325,000
—
6.50
—
Final single tier dividend for the year ended 31 December 2008 of 9.5 sen per ordinary share
475,000
—
9.50
—
800,000
700,000
16.00
14.00
At the forthcoming Annual General Meeting, a final single tier dividend in respect of the financial year ended 31 December 2008 of 9.5 sen per ordinary share of RM0.25 each, amounting to a total dividend payable of RM475 million will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend if approved by the shareholders, will be accounted for in shareholders’ equity as an appropriation of retained profits in the financial year ending 31 December 2009.
15 CONCESSION ASSETS
Concession assets consist of the following: – NSE, NKVE, FHR2, and SPDH maintained by PLUS; – NSECL and KLIA Expressway maintained by ELITE; – MSSC maintained by LINKEDUA; – BKE maintained by KLBK; – BKSP Highway in India under construction by PLUS BKSP; – Cikampek-Palimanan Highway in Indonesia undertaken by LMS; and – Cimanggis-Cibitung Toll Road in Indonesia undertaken by CCTW.
180 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
15 CONCESSION ASSETS (continued)
The breakdown of the concession assets according to highways are as follow:
Group Accumulated Net carrying 2008 Cost amortisation amount RM’000 RM’000 RM’000
Expressway Development Expenditure (“EDE”) – NSE, NKVE, FHR2, SPDH – NSECL and KLIA Expressway – MSSC – BKE
Heavy Repairs – NSE, NKVE, FHR2, SPDH – NSECL and KLIA Expressway – MSSC
9,555,915 1,788,040 1,104,557 347,812 12,796,324
1,185,044 143,463 82,067 56,720
8,370,871 1,644,577 1,022,490 291,092
1,467,294 11,329,030
1,457,093 104,696 22,184
822,954 48,314 4,066
634,139 56,382 18,118
1,583,973
875,334
708,639
488,206 83,462 36,472 17,687
406,571 67,123 36,472 4,864
81,635 16,339 — 12,823
625,827
515,030
110,797
174,877 56,770 418
— — —
174,877 56,770 418
232,065
—
232,065
15,238,189
Other Concession Assets – NSE, NKVE, FHR2, SPDH – NSECL and KLIA Expressway – MSSC – BKE
Capital Work-In-Progress – BKSP Highway – Cikampek-Palimanan Highway – Cimanggis-Cibitung Toll Road
2,857,658 12,380,531
181 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
15 CONCESSION ASSETS (continued) Group Accumulated Net carrying 2007 Cost amortisation amount RM’000 RM’000 RM’000
EDE – NSE, NKVE, FHR2, SPDH – NSECL and KLIA Expressway – MSSC
9,178,841 1,786,496 1,058,376
1,049,734 115,710 57,006
8,129,107 1,670,786 1,001,370
12,023,713
1,222,450
10,801,263
1,214,624 83,115 8,292
685,125 37,070 2,262
529,499 46,045 6,030
1,306,031
724,457
581,574
465,100 81,786 36,472
383,040 63,268 36,472
82,060 18,518 —
583,358
482,780
100,578
55,516 157,160 27,395
— — —
55,516 157,160 27,395
240,071
—
240,071
14,153,173
2,429,687
11,723,486
Heavy Repairs – NSE, NKVE, FHR2, SPDH – NSECL and KLIA Expressway – MSSC
Other Concession Assets – NSE, NKVE, FHR2, SPDH – NSECL and KLIA Expressway – MSSC
Capital Work-In-Progress – MSSC – BKSP Highway – Cikampek-Palimanan Highway
182 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
15 CONCESSION ASSETS (continued)
Details of Concession Assets as at 31 December 2008 and 31 December 2007 are as follows:
Other Capital Heavy Concession Work-In Group EDE Repairs Assets Progress RM’000 RM’000 RM’000 RM’000 Cost At 1 January 2008 Translation difference Additions Acquisition of subsidiary (Note 19(a)) Reclassification Transfer from property, plant & equipment (Note 16)
At 31 December 2008
Accumulated Amortisation At 1 January 2008 Charge for the year Acquisition of subsidiary (Note 19(a)) Transfer from property, plant & equipment (Note 16)
At 31 December 2008
Net Book Value at 31 December 2008 Cost At 1 January 2007 Translation difference Additions Acquisition of subsidiaries Written off
At 31 December 2007
Accumulated Amortisation At 1 January 2007 Charge for the year Acquisition of subsidiaries Written off
At 31 December 2007
Net Book Value at 31 December 2007
Total RM’000
12,023,713 — 370,209 347,812 54,590
1,306,031 — 271,280 — 6,662
583,358 — 25,183 — —
240,071 14,153,173 (26,881) (26,881) 80,127 746,799 — 347,812 (61,252) —
—
—
17,286
12,796,324
1,583,973
625,827
1,222,450 194,714 50,130
724,457 150,877 —
482,780 28,846 —
— — —
2,429,687 374,437 50,130
—
—
3,404
—
3,404
1,467,294
875,334
515,030
—
2,857,658
11,329,030
708,639
110,797
9,087,492 — 92,979 2,844,872 (1,630)
1,046,757 — 167,867 91,407 —
439,799 — 25,301 118,258 —
41,103 11,680 121,480 65,808 —
10,615,151 11,680 407,627 3,120,345 (1,630)
12,023,713
1,306,031
583,358
240,071
14,153,173
934,732 115,185 172,716 (183)
570,901 114,224 39,332 —
362,287 20,753 99,740 —
— — — —
1,867,920 250,162 311,788 (183)
1,222,450
724,457
482,780
—
2,429,687
10,801,263
581,574
100,578
240,071
11,723,486
—
17,286
232,065 15,238,189
232,065 12,380,531
183 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
16 PROPERTY, PLANT AND EQUIPMENT Furniture, Fittings, Telecommu nication Operation Group and Office Motor Tools and Freehold Equipment Aircrafts Vehicles Computers Equipment Buildings Land RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Cost At 1 January 2008 Additions Disposals Written off Acquisition of subsidiary (Note 19(a)) Transfer to concession assets (Note 15) Transfer to intangible assets (Note 18) Translation Difference
At 31 December 2008
Accumulated Depreciation At 1 January 2008 Charge for the year Disposals Written off Acquisition of subsidiary (Note 19(a)) Transfer to concession assets (Note 15) Transfer to intangible assets (Note 18) Translation Difference
30,892 3,373 — (9,834)
31,237 — — —
27,519 6,227 (4,504) (85)
25,100 764 — (6,350)
8,809 13 — (5,739)
1,074
—
751
1,073
—
—
—
—
(630)
—
—
(70)
—
(130)
Total RM’000
4,242 3 — —
279 — — —
128,078 10,380 (4,504) (22,008)
17,286
—
—
20,184
(17,286)
—
—
(17,286)
(729)
—
—
—
(1,359)
(10)
—
(21)
—
(231)
24,805
31,237
29,778
19,848
3,083
27,667 1,491 — (9,739)
11,061 2,298 — —
14,315 901 (3,790) (85)
20,418 2,084 — (6,281)
8,223 285 — (5,736)
921
—
610
906
—
—
—
—
(785)
—
—
(10)
—
(21)
4,224
279
113,254
906 171 — —
— — — —
82,590 7,230 (3,790) (21,841)
3,404
—
—
5,841
(3,404)
—
—
(3,404)
(402)
—
—
—
(1,187)
(2)
—
(7)
—
(40)
At 31 December 2008
19,545
13,359
11,930
16,723
2,772
1,070
—
65,399
Net Book Value at 31 December 2008
5,260
17,878
17,848
3,125
311
3,154
279
47,855
184 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
16 PROPERTY, PLANT AND EQUIPMENT (continued) Furniture, Fittings, Telecommu nication Operation Group and Office Motor Tools and Freehold Equipment Aircrafts Vehicles Computers Equipment Buildings Land RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Cost At 1 January 2007 Additions Disposals Written off Acquisition of subsidiaries Translation Difference
Total RM’000
25,901 1,022 — (1,388)
31,237 — — —
24,605 3,301 (182) (818)
22,715 1,493 — (1,333)
7,247 — — (220)
3,843 — — —
— — — —
115,548 5,816 (182) (3,759)
5,346
—
597
2,224
1,784
399
279
10,629
11
—
16
1
(2)
—
—
26
30,892
31,237
27,519
25,100
8,809
4,242
279
128,078
23,697 1,032 — (1,375)
8,764 2,297 — —
14,443 534 (141) (818)
17,850 1,803 — (1,315)
6,797 5 — (220)
697 131 — —
— — — —
72,248 5,802 (141) (3,728)
4,313
—
291
2,080
1,641
78
—
8,403
—
—
6
—
—
—
—
6
At 31 December 2007
27,667
11,061
14,315
20,418
8,223
906
—
82,590
Net Book Value at 31 December 2007
3,224
20,176
13,204
4,682
586
3,336
279
45,487
At 31 December 2007
Accumulated Depreciation At 1 January 2007 Charge for the year Disposals Written off Acquisition of subsidiaries Translation Difference
Included in the depreciation charged for the year is an amount of RM126,000 which is capitalised in concession assets.
185 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
16 PROPERTY, PLANT AND EQUIPMENT (continued) Furniture, Fittings, Telecommu- Operation nication and Motor Tools and Company Office Equipment Vehicles Computers Equipment RM’000 RM’000 RM’000 RM’000
Total RM’000
Cost At 1 January 2008 Additions Disposals Written off
1,363 1,712 — (492)
11,587 2,721 (470) —
6,408 412 — (124)
770 13 — (261)
20,128 4,858 (470) (877)
2,583
13,838
6,696
522
23,639
At 31 December 2008
Accumulated Depreciation At 1 January 2008 Charge for the year Disposals Written off
762 354 — (425)
3,679 348 (182) —
3,861 1,257 — (105)
512 156 — (260)
8,814 2,115 (182) (790)
691
3,845
5,013
408
9,957
Net Book Value at 31 December 2008
1,892
9,993
1,683
114
13,682
Cost At 1 January 2007 Additions Disposals Written off
1,109 275 — (21)
9,823 1,769 (5) —
5,696 748 — (36)
770 — — —
17,398 2,792 (5) (57)
1,363
11,587
6,408
770
20,128
Accumulated Depreciation At 1 January 2007 Charge for the year Disposals Written off
528 250 — (16)
3,418 262 (1) —
2,694 1,190 — (23)
358 154 — —
6,998 1,856 (1) (39)
762
3,679
3,861
512
8,814
601
7,908
2,547
258
11,314
At 31 December 2008
At 31 December 2007
At 31 December 2007
Net Book Value at 31 December 2007
186 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
17 PREPAID LAND LEASE PAYMENTS Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 Cost At 1 January/At 31 December
30,174
30,174
100,669
100,669
Accumulated Amortisation At 1 January Charge for the year
2,624 281
2,342 282
1,017 1,017
— 1,017
2,905
2,624
2,034
1,017
Net Book Value at 1 January
27,550
27,832
99,652
100,669
Net Book Value at 31 December
27,269
27,550
98,635
99,652
At 31 December
Prepaid land lease payments of the Company relate to transfer of leasehold land from a subsidiary at market value on 27 December 2007.
18 INTANGIBLE ASSETS Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 Cost At 1 January Additions Transfer from property, plant & equipment (Note 16) Written off
12,113 2,177 1,359 (2,188)
11,050 1,146 — (83)
2,504 1,128 — (29)
1,971 533 — —
13,461
12,113
3,603
2,504
At 31 December
187 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
18 INTANGIBLE ASSETS (continued) Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 Accumulated Amortisation At 1 January Charge for the year Transfer from property, plant & equipment (Note 16) Written off
9,289 1,490 1,187 (2,172)
8,219 1,153 — (83)
1,419 581 — (29)
9,794
9,289
1,971
1,419
Net Book Value at 1 January
2,824
2,831
1,085
992
Net Book Value at 31 December
3,667
2,824
1,632
1,085
At 31 December
979 440 — —
Intangible assets consists of computer software and licenses that do not form an integral part of the related hardwares.
19 INVESTMENTS IN SUBSIDIARIES Company 2008 2007 RM’000 RM’000
Unquoted shares at cost – In Malaysia Unquoted shares at cost – Outside Malaysia
188 PLUS Expressways Berhad Annual Report 2008
2,164,622 119,739
2,116,000 64,800
2,284,361
2,180,800
Notes to The Financial Statements
continued
19 INVESTMENTS IN SUBSIDIARIES (continued)
The subsidiaries are as follows: Effective Equity Interest Name
Principal Activity
2008
2007
Projek Lebuhraya Utara-Selatan Berhad
Operation and maintenance of the tolled NSE, NKVE, FHR2, and SPDH with a total length of 846 kilometres
100%
100%
Expressway Lingkaran Tengah Sdn Bhd
Operation, maintenance and toll collection of the 63-kilometre NSECL and KLIA Expressway
100%
100%
Linkedua (Malaysia) Berhad
Operation, maintenance and toll collection of the 44-kilometre MSSC
100%
100%
Konsortium Lebuhraya ButterworthKulim (KLBK) Sdn Bhd
Operation, maintenance and toll collection of the 17-kilometer BKE which is dual two lane carriageway from Kulim in Kedah to Seberang Perai in Penang
100%
—
PLUS Kalyan (Mauritius) Private Limited (Incorporated in Mauritius)
Investment holding
100%
100%
PLUS BKSP Toll Limited (Incorporated in India)
Four-laning and improvement, operation and maintenance and toll collection of the 21.6-kilometre BKSP Highway in India
94%
94%
PT Lintas Marga Sedaya (Incorporated in Indonesia)
Design, construction, management, financing, operation, maintenance and toll collection of the 116-kilometre Cikampek-Palimanan Highway in Indonesia
55%
55%
PT Cimanggis-Cibitung Tollways (Incorporated in Indonesia)
Construction, operation and maintenance of the proposed 25.4-kilometre Package 4 – CimanggisCibitung Toll Road, Indonesia
60%
—
Incorporated in Malaysia
Incorporated outside Malaysia
All companies are audited by member firms of Ernst & Young Global in the respective countries except for KLBK, LMS and CCTW which are audited by firms other than Ernst & Young.
189 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
19 INVESTMENTS IN SUBSIDIARIES (continued) (a) Acquisition of subsidiary On 13 March 2008, the Company acquired 100% equity interest in KLBK.
The fair value and carrying amount of assets acquired and liabilities assumed from the acquisition of KLBK are as follows:
Fair Value recognised Acquiree’s on carrying Note acquisition amount RM’000 RM’000 ASSETS Concession assets 15 Property, plant and equipment 16 Deferred tax assets 21 Sundry receivables, deposits and prepayments Short term deposits with licensed banks Cash and bank balances
TOTAL ASSETS
LIABILITIES Long term borrowings Deferred liabilities Sundry and trade payables Advance from previous holding company of KLBK 24 Tax payable
297,682 14,343 3,571 767 39,340 8,580
255,621 14,343 3,571 767 39,340 8,580
364,283
322,222
(172,825) (48,525) (8,857) (85,378) (76)
(172,825) (48,525) (8,857) (85,378) (76)
TOTAL LIABILITIES
(315,661)
(315,661)
Total net assets
48,622
6,561
Total cost of acquisition
48,622
190 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
19 INVESTMENTS IN SUBSIDIARIES (continued) (a) Acquisition of subsidiary (continued) The cash outflow on acquisition is as follows:
RM’000
Purchase consideration satisfied by cash (see note below)
134,000
Total cash outflow of the Company Cash and cash equivalents of subsidiary acquired
134,000 (47,920)
Net cash outflow of the Group Less: Deposit paid in previous year
86,080 (13,400)
Net cash outflow of the Group during the year
72,680
Note: The purchase consideration of RM134 million includes the full settlement of the shareholder’s advance owing by KLBK to Malaysia Mining Corporation Berhad, its previous holding company, amounting to RM85.378 million.
20 OTHER INVESTMENT Group 2008 2007 RM’000 RM’000
Unquoted private debt securities, at cost Add: Premium Less: Discount amortised
65,000 33 (9,108)
25,000 244 —
Structured products
55,925 110,000
25,244 90,000
Total other investment
165,925
115,244
Indicative market value of unquoted bonds
55,379
25,428
Structured products represent placements with maturity period of more than one year with licensed financial institutions.
191 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
21 DEFERRED TAXATION Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
At 1 January Recognised in the Income Statement Acquisition of subsidiary (Note 19(a)) Translation difference
26,173 (410,801) 3,571 (28)
71,508 (33,841) (11,494) —
1,293 3,605 — —
1,186 107 — —
At 31 December
(381,085)
26,173
4,898
1,293
Presented after appropriate offsetting as follows: Deferred tax assets Deferred tax liabilities
7,154 (388,239)
37,667 (11,494)
4,898 —
1,293 —
(381,085)
26,173
4,898
1,293
The components and movements of deferred tax assets and liabilities during the financial year prior to offsetting are as follows:
Deferred Tax Assets of the Group: Timing difference Unabsorbed on property, Unabsorbed capital plant and tax losses allowance equipment Provisions RM’000 RM’000 RM’000 RM’000
Total RM’000
At 1 January 2008 Recognised in the Income Statement Acquisition of subsidiary Translation difference
225,644 (6,371) 13,631 —
835,782 (343,611) — —
1,294 (144) — —
190,871 58,521 12,146 (28)
1,253,591 (291,605) 25,777 (28)
At 31 December 2008
232,904
492,171
1,150
261,510
987,735
At 1 January 2007 Recognised in the Income Statement Acquisition of subsidiary
178,389 (6,319) 53,574
1,007,065 (337,140) 165,857
(1,844) 3,138 —
(79,408) 269,751 528
1,104,202 (70,570) 219,959
At 31 December 2007
225,644
835,782
1,294
190,871
1,253,591
192 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
21 DEFERRED TAXATION (continued) Deferred Tax Liabilities of the Group: Timing difference on Unabsorbed Timing property, capital difference plant and allowance on EDE equipment RM’000 RM’000 RM’000
Total RM’000
At 1 January 2008 Recognised in the Income Statement Acquisition of subsidiary
— (1,227,336) (6,455) (112,782) 27,538 (49,744)
(82) (1,227,418) 41 (119,196) — (22,206)
At 31 December 2008
21,083
(1,389,862)
(41) (1,368,820)
At 1 January 2007 Recognised in the Income Statement Acquisition of subsidiaries
— — —
(1,032,694) 36,729 (231,371)
— — (82)
(1,032,694) 36,729 (231,453)
At 31 December 2007
—
(1,227,336)
(82)
(1,227,418)
Deferred tax assets have not been recognised in respect of the following items:
Group 2008 2007 RM’000 RM’000
Unused tax losses Unabsorbed capital allowances
505,796 657,950
491,559 599,288
1,163,746
1,090,847
The unused tax losses and unabsorbed capital allowances of the Group are available indefinitely for offsetting against future taxable profits of the respective entities within the Group, subject to no substantial change in shareholdings of those entities under the Income Tax Act, 1967 and guidelines issued by the tax authority.
193 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
21 DEFERRED TAXATION (continued) Deferred Tax Asset of the Company:
Timing difference on property, plant and equipment Provisions RM’000 RM’000
Total RM’000
At 1 January 2008 Recognised in the Income Statement
(1,952) (335)
3,245 3,940
1,293 3,605
At 31 December 2008
(2,287)
7,185
4,898
At 1 January 2007 Recognised in the Income Statement
(1,844) (108)
3,030 215
1,186 107
At 31 December 2007
(1,952)
3,245
1,293
22 TOLL COMPENSATION RECOVERABLE FROM THE GOVERNMENT Group 2008 2007 RM’000 RM’000 At 1 January Net toll compensation revenue Less: Compensation received/recognised Set off against income tax payable of PLUS (Note 12(b))
1,392,650 730,923 (90,533) (19,273)
At 31 December
2,013,767
1,392,650
Analysed as: Toll compensation recoverable within 12 months Toll compensation recoverable after 12 months
104,269 1,909,498
— 1,392,650
2,013,767
1,392,650
958,360 455,494 — (21,204)
The amount of toll compensation recoverable and the set-off of the toll sharing and income tax payable amounts are based on the toll compensation arrangements as described in Note 2(a) to 2(d) and Note 3(i)(b).
194 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
23 SUNDRY RECEIVABLES, DEPOSITS AND PREPAYMENTS Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 47,238 (353)
36,456 (329)
1,255 —
2,377 (7)
Deposits and prepayments
46,885 10,268
36,127 22,236
1,255 4,751
2,370 30,488
57,153
58,363
6,006
32,858
Sundry receivables Less: Allowance for doubtful debts
24 HOLDING, SUBSIDIARIES AND RELATED COMPANIES Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 Current Amount Amount Amount Amount Amount
by related companies (Note iii) by subsidiaries (Note ii) to the immediate holding company (Note i) to related companies (Note iii) to subsidiaries (Note ii)
13,806 — (1,338) (115,522) —
8,194 — (39,880) (103,883) —
74 535,823 (265) (357) (3,203)
138 412,442 (284) (221) —
Non-current Amount owing by subsidiary (Note ii) Amount owing to the immediate holding company (Note i) Amount owing to subsidiary (Note ii)
— (6,885) —
— (6,885) —
85,378 — (86,850)
— — (88,850)
owing owing owing owing owing
195 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
24 HOLDING, SUBSIDIARIES AND RELATED COMPANIES (continued)
The Directors regard UEM, which is incorporated in Malaysia and owns 40.21% of the Company’s equity as at 31 December 2008, as the immediate holding company. The ultimate holding company is Khazanah, which is incorporated in Malaysia. (i) Amount owing to immediate holding company Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 8,223 (6,885)
46,765 (6,885)
265 —
284 —
1,338
39,880
265
284
Amount owing to the immediate holding company Less: Repayable after twelve months
Repayable within twelve months
The amount owing to the immediate holding company is trade in nature except for RM264,720 (2007: RM283,778) which is non-trade in nature.
The amount owing is non-interest bearing. The long-term portion of the amount owing of RM6,884,880 (2007: RM6,884,880) is payable only after PLUS has repaid all amounts borrowed from financial institutions.
(ii) Subsidiaries The amount owing by/(to) subsidiaries are non-trade in nature, non-interest bearing and repayable on demand, except for an amount owing to PLUS of RM86,850,000 (2007: RM88,850,000) in respect of the transfer of leasehold land which is payable from 31 December 2008 until 31 December 2016 in nine fixed annual installments.
The non-current amount owing by subsidiary relates to the shareholder’s advance that was previously owed by KLBK to its previous holding company. Following the acquisition of KLBK, the shareholder’s advance is now an amount owing by the subsidiary to PEB (refer Note 19). The amount is not repayable within the next twelve months.
(iii) Related companies Related companies in these financial statements refer to members of Khazanah Nasional Berhad group of companies. The amounts owing by/(to) related companies are trade in nature, non-interest bearing and repayable on demand.
196 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
25 SHORT TERM INVESTMENTS Group 2008 2007 RM’000 RM’000 46 — (46)
46 (12) —
—
34
63,389 —
49,517 13,771
63,389
63,288
Total short term investments
63,389
63,322
Market value of quoted shares
—
34
Quoted shares, at cost Less: Accumulated impairment loss Less: Written off
Islamic Commercial Papers/Medium Term Notes Indonesia Central Bank Certificates (equivalent to IDR39.8 billion)
26 LONG TERM AND SHORT TERM DEPOSITS WITH LICENSED BANKS AND CASH AND BANK BALANCES Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 Current Islamic short term deposits (Note i)
Conventional short term deposits – Proceeds Account (Note ii) – Others (Note iii)
Cash and bank balances – Proceeds Account (Note ii) – Others
Total cash and cash equivalents
Non-current Long term deposits (Note iv)
1,910,218
2,201,656
—
—
20,438 278,468
83,023 93,456
— 6,190
— 4,770
2,209,124
2,378,135
6,190
4,770
3 25,303
25 39,462
— 253
— 296
25,306
39,487
253
296
2,234,430
2,417,622
6,443
5,066
483
547
—
—
197 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
26 LONG TERM AND SHORT TERM DEPOSITS WITH LICENSED BANKS AND CASH AND BANK BALANCES (continued) (i)
The use of the balances in PLUS, which include the minimum amounts of RM978.28 million (2007: RM961.84 million) held under the Finance Service Reserve Account and Maintenance Reserve Account pursuant to the Senior Sukuk agreement, is subject to certain covenants and restrictions as set out in Note 32 and Note 35.
Included in deposits placed with licensed banks is an amount of RM1.98 million (2007: RM1.93 million) which has been pledged as security for a performance bond by ELITE as set out in Note 35.
The use of the balances in ELITE, which include the minimum amounts of RM95.20 million (2007: RM57.50 million) held under the Finance Service Reserve Account pursuant to the BAIDS agreement, is subject to certain covenants and restrictions as set out in Note 32 and Note 35.
The use of the balances in KLBK which include the minimum amounts of RM5.24 million (2007: RM5.24 million) held under the Finance Service Reserve Account and Maintenance Reserve Account pursuant to the BAIDS agreement, is subject to certain covenants and restrictions as set out in Note 32 and Note 35.
(ii) This relates to the amount received from the Government of which shall be used in the manner as prescribed in the Proceeds Account Agreement of PLUS as set out in Note 39. (iii) Included in deposits placed with licensed banks is an amount of RM25.67 million (2007: RM3.46 million) which has been pledged as security for a performance bond by LMS. (iv) This relates to PLUS BKSP’s long term deposit placed with a licensed bank for purpose of obtaining performance guarantee for its project.
27 SHARE CAPITAL Group and Company 2008 2007 RM’000 RM’000 Authorised: 10,000,000,000 ordinary shares of RM0.25 each at beginning/end of the year
2,500,000
2,500,000
Issued and fully paid up: 5,000,000,000 ordinary shares of RM0.25 each at beginning/end of the year
1,250,000
1,250,000
198 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
28 CAPITAL RESERVE Group 2008 2007 RM’000 RM’000 Non-distributable: Capital redemption reserve Share premium
10,000 451,138
10,000 451,138
461,138
461,138
The Capital Redemption Reserve arose upon the redemption by PLUS of Redeemable Convertible Cumulative Preference Shares in 1999.
Share premium of the Group represents the premium arising from the rights issue and from the conversion of the Redeemable Convertible Bonds (“RCB”) as a result of a debt restructuring in 2002.
29 MERGER RESERVE
The difference between the nominal value of share of the Company issued as consideration and the nominal value of the shares acquired has been classified as a merger reserve. The merger reserve arose on 31 May 2002.
30 OTHER RESERVES
The breakdown and movement of other non-distributable reserves are as follows:
Capital Foreign contribution currency from translation holding Non-distributable: reserve company Group RM’000 RM’000 (a) (b)
At 1 January 2008 Foreign currency translation Share options granted under EES: recognised in income statement Transfer to retained earnings upon expiry of EES (Note 31)
(2,445) (17,867) — —
At 31 December 2008
(20,312)
3,485 — 944 (4,429) —
Total RM’000
1,040 (17,867) 944 (4,429) (20,312)
199 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
30 OTHER RESERVES (continued) Capital Foreign contribution currency from translation holding Non-distributable: reserve company Group RM’000 RM’000 (a) (b)
Total RM’000
At 1 January 2007 Foreign currency translation Share options granted under EES: recognised in income statement
(139) (2,306) —
1,816 — 1,669
1,677 (2,306) 1,669
At 31 December 2007
(2,445)
3,485
1,040
Capital contribution from holding company Company RM’000 2,037 747 (2,784)
At 1 January 2008 Share options granted under EES: recognised in income statement Transfer to retained earnings upon expiry of EES (Note 31)
At 31 December 2008
At 1 January 2007 Share options granted under EES: recognised in income statement
1,286 751
At 31 December 2007
2,037
The nature and purpose of each category of reserve are as follows:
—
(a) Foreign currency translation reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency. It is also used to record the exchange differences arising from monetary items which form part of the Group’s net investment in foreign operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation.
200 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
30 OTHER RESERVES (continued) (b) Capital contribution from holding company This represents the equity-settled share options granted to employees. It is made up of the cumulative value of services received from employees recorded on grant of share options under the Employee Equity Scheme of UEM for eligible employees of PEB as explained in Note 4.2(j)(iv).
The expenses arising from equity-settled share-based payment transactions that have been included in the employee costs for the Group is RM944,000 (2007: RM1,669,000) and for the Company is RM747,000 (2007: RM751,000).
Upon expiration of the Scheme on 22 October 2008, the amount recognised in the share option reserve was tranferred to retained earnings (refer Note 4.2 (j)(iv)).
31 RETAINED EARNINGS Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 3,329,186 4,429 1,079,333
2,506,343 — 1,247,843
488,920 2,784 810,199
215,999 — 697,921
Dividends
4,412,948 (725,000)
3,754,186 (425,000)
1,301,903 (725,000)
913,920 (425,000)
Balance at end of year
3,687,948
3,329,186
576,903
488,920
Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders (“single tier system”). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard the 108 balance and opt to pay dividends under the single tier system. The change in the tax legislation also provides for the 108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007.
The Company has elected for the irrevocable option to disregard the 108 balance as at 31 December 2008. Hence, the Company will be able to distribute dividends out of its entire retained earnings as at 31 December 2008 under the single tier system. The Company did not elect for the irrevocable option to disregard the 108 balance as at 31 December 2007.
In addition, as at 31 December 2008, PLUS has tax exempt profits available for distribution of approximately RM5,032 million (2007: RM5,032 million), subject to the agreement of the Inland Revenue Board.
201 PLUS Expressways Berhad Annual Report 2008
Balance at beginning of year Transfer from share option reserve (Note 30) Profit for the year
Notes to The Financial Statements
continued
32 LONG TERM AND SHORT TERM FINANCIAL LIABILITIES Group Company Note 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 Long Term Financial Liabilities PEB PLUS SPV Sukuk
(a)(i)
776,174
—
776,174
—
(a)(ii) (a)(iii) (a)(iv)
2,450,000 1,660,015 1,322,056
3,000,000 1,561,724 1,238,078
— — —
— — —
(a)(v)
950,154
592,425
—
—
ELITE BAIDS
(a)(vi)
635,859
704,029
—
—
KLBK BAIDS
(a)(vii)
171,346
—
—
—
7,965,604
7,096,256
776,174
—
PLUS Senior Sukuk Zero Coupon Sukuk Series 1 (“Sukuk Series 1”) Zero Coupon Sukuk Series 2 (“Sukuk Series 2”) Sukuk Musyarakah Medium Term Notes Programme of RM4,500 million nominal value (“Sukuk Series 3”)
At 31 December
Group Note 2008 2007 RM’000 RM’000 Short Term Financial Liabilities PLUS Senior Sukuk
(a)(ii)
550,000
550,000
ELITE BAIDS
(a)(vi)
68,169
42,838
KLBK BAIDS
(a)(vii)
4,963
—
623,132
592,838
At 31 December
202 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
32 LONG TERM AND SHORT TERM FINANCIAL LIABILITIES (continued) PEB (a)(i) PLUS SPV Sukuk Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 761,611 14,563
— —
761,611 14,563
— —
776,174
—
776,174
—
Repayable after 12 months
776,174
—
776,174
—
The PLUS SPV Sukuk are constituted by a Trust Deed dated 13 June 2008 entered into by PLUS SPV Berhad as the Issuer and the Trustee for the holders of the PLUS SPV Sukuk.
PEB through an independent special purpose company (whose shares are held by a share trustee for and on behalf of charitable organisations), PLUS SPV Berhad had on 27 June 2008 issued RM1.055 billion nominal value Sukuk under a medium term notes programme of up to RM4.0 billion nominal value Sukuk based on the Islamic principle of Musyarakah to investors identified via a book-building process. The PLUS SPV Sukuk were issued in 7 series, with maturities commencing from 2013 to 2019.
The profit rate is 2.0% per annum and the profit is payable semi-annually on each series of the PLUS SPV Sukuk.
The terms of the PLUS SPV Sukuk contain various covenants including the following:
PEB (the Obligor) shall maintain an annual Debt to Equity Ratio (“the D:E Ratio”) not exceeding 1.5 times throughout the tenure of the Sukuk Programme. The D:E Ratio is the ratio of indebtedness of the Obligor represented by:
Principal Accreted profit element
(i)
the obligations of the Obligor under the Purchase Undertaking (which is deemed to be an amount equivalent to the aggregate nominal value of all outstanding Sukuk, adjusted to be equivalent to the accreted value on the date the D:E Ratio is calculated);
(ii) all other indebtedness of the Obligor for borrowed monies (be it actual or contingent and whether Islamic or conventional) for principal only, hire purchase obligations, finance lease obligations, net exposure determined on a marked to market basis under any derivative instrument and obligations/contingent liabilities under guarantees/call or put options of the Obligor but excluding (a) any inter company loans which are subordinated to the Sukuk, (b) non-recourse indebtedness incurred by the Obligor’s subsidiaries and (c) any performance bonds/performance guarantees/shareholder undertakings in relation to cost overruns issued by the Obligor in respect of projects undertaken by the Obligor and/or its subsidiaries;
to the shareholders’ funds of the Obligor including, if any, preference equity, subordinated shareholders’ advances/ loans and retained earnings/losses less intangibles (if any).
203 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
32 LONG TERM AND SHORT TERM FINANCIAL LIABILITIES (continued) PEB (continued) (a)(i) PLUS SPV Sukuk (continued) The D:E Ratio shall be calculated on a yearly basis and as and when such calculations are required to be made under the terms of the transaction documents during the tenor of the Sukuk Programme. In the case of D:E Ratio calculated on a yearly basis, such calculations shall be based on the latest consolidated audited accounts of the Obligor and in the case of D:E Ratio calculated at any other times, the calculations shall be based on the latest consolidated management accounts of the Obligor.
The maturity profile of PLUS SPV Sukuk is analysed in Note 34, ‘Maturity Profile of Bonds and Borrowings’.
The relevant details of the security arrangements are stated in Note 35, ‘Security Arrangements of Borrowings and Bonds’.
PLUS (a)(ii) Senior Sukuk Group 2008 2007 RM’000 RM’000
Repayable within 12 months Repayable after 12 months
550,000 2,450,000
550,000 3,000,000
3,000,000
3,550,000
The Senior Sukuk is constituted by the Trust Deed dated 18 December 2007 entered into by PLUS and the Trustee for the holders of the Senior Sukuk.
The Senior Sukuk was issued on 27 December 2007 with a nominal value of RM3,550 million under the Islamic principle of Musyarakah which is a contract of partnership in a venture. Under this structure, potential investors formed a Musyarakah among themselves to invest in the Senior Sukuk.
The Senior Sukuk were issued in 10 series as primary sukuk with maturities commencing from 2008 to 2017. The expected return specified for each series of primary sukuk is represented by secondary sukuk. The face value of secondary sukuk are computed based on the expected return specified for each series of primary sukuk i.e. from 5.70% to 7.50% per annum. The secondary sukuk are redeemable every six months commencing 30 May 2008.
The proceeds of the Senior Sukuk was utilised to replace BAIDS of which RM3,550 million in nominal value was outstanding. Hence, no additional proceeds were raised from the issuance of the Senior Sukuk. The Senior Sukuk was issued at par to the face value, to the existing holders of the BAIDS in exchange for the surrender and cancellation by such holders of their respective BAIDS. The existing holders of the BAIDS were allotted with such amount of the nominal value of the Senior Sukuk which is equivalent to the amount of nominal value of the BAIDS as held by them at a certain cut off date.
204 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
32 LONG TERM AND SHORT TERM FINANCIAL LIABILITIES (continued) PLUS (continued) (a)(ii) Senior Sukuk (continued) The terms of the Senior Sukuk contain various covenants including the following: (i)
PLUS must maintain a Finance Service Coverage Ratio (“FSCR”) of at least 1.25 times on each calculation date, being 30 June and 31 December in each year. The FSCR shall be at least 2.25 times prior to any payment or declaration of dividend, or any advances;
(ii) PLUS must maintain a Finance Service Reserve Account (“FSRA”) at any time during the tenure of the Senior Sukuk which has a minimum balance equivalent to the next 12 months’ finance service due under the Senior Sukuk. The amount therein may be withdrawn to meet any payment under the Senior Sukuk, provided always that PLUS shall transfer monies into such account within 30 days from such withdrawal to maintain the minimum balance described above; and (iii) PLUS must maintain a Maintenance Reserve Account (“MRA”) at any time during the tenure of the Senior Sukuk which has a minimum balance equivalent to the projected capital expenditure of the Expressways for the next six months. Such capital expenditure shall exclude the total cost for the Additional Works of up to RM1,042.48 million. However, a minimum balance may be withdrawn to meet any payment of the projected capital expenditure for Expressways, subject always to the condition that PLUS shall transfer monies into the MRA within 30 days of such withdrawal to maintain the minimum balance described above.
The maturity profile of Senior Sukuk is analysed in Note 34, ‘Maturity Profile of Bonds and Borrowings’.
The relevant details of the security arrangements are stated in Note 35, ‘Security Arrangements of Borrowings and Bonds’.
(a)(iii) Sukuk Series 1 Group 2008 2007 RM’000 RM’000
Sukuk Series 1 Accreted profit element
1,148,930 511,085
1,148,930 412,794
1,660,015
1,561,724
The Sukuk Series 1 are constituted by a Trust Deed dated 28 September 2006 entered into by PLUS and the Trustee for the holders of the Sukuk Series 1.
Sukuk Series 1 was issued on 10 October 2006 under the Islamic principle of Musyarakah with a nominal value of RM2,260 million via exchange for BBA Serial Bonds previously issued on 20 December 2002. Sukuk Series 1 are negotiable non-interest bearing secured Bonds in bearer form evidencing a promise by PLUS to pay stated sums on specified dates. The Sukuk Series 1 are issued in 12 series with tenures from 8.5 years to 14 years from the date of issue. The profit margin ranges from 5.75% to 6.95% per annum and is compounded semi-annually.
205 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
32 LONG TERM AND SHORT TERM FINANCIAL LIABILITIES (continued) PLUS (continued) (a)(iii) Sukuk Series 1 (continued) The Sukuk Series 1 entitle holders of the Sukuk Series 1 to a one-off payment of the Exercise Price on the Maturity Date and Distribution on the Distribution Date.
The maturity profile of Sukuk Series 1 is analysed in Note 34, ‘Maturity Profile of Bonds and Borrowings’.
The relevant details of the security arrangements are stated in Note 35, ‘Security Arrangements of Borrowings and Bonds’.
The terms of the Trust Deed prescribes that in the event of default, the nominal amount outstanding of the Sukuk Series 1 will become immediately due and payable.
(a)(iv) Sukuk Series 2 Group 2008 2007 RM’000 RM’000
Sukuk Series 2 Accreted profit element
1,047,972 274,084
1,047,972 190,106
1,322,056
1,238,078
The Sukuk Series 2 are constituted by a Trust Deed dated 28 September 2006 entered into by PLUS and the Trustee for the holders of the Sukuk Series 2.
Sukuk Series 2 was issued on 10 October 2006 under the Islamic principle of Musyarakah with a nominal value of RM2,410 million via exchange for Zero Serial BBA previously issued on 17 June 2005. Sukuk Series 2 are negotiable non-interest bearing secured Bonds in bearer form evidencing a promise by PLUS to pay stated sums on specified dates. The Sukuk Series 2 are issued in 4 series with tenures from 11 years to 14 years from the date of issue. The profit margin ranges from 6.35% to 6.95% per annum and is compounded semi-annually.
The Sukuk Series 2 entitle holders of the Sukuk Series 2 to a one-off payment of the Exercise Price on the Maturity Date and Distribution on the Distribution Date.
The maturity profile of Sukuk Series 2 is analysed in Note 34, ‘Maturity Profile of Bonds and Borrowings’.
The relevant details of the security arrangements are stated in Note 35, ‘Security Arrangements of Borrowings and Bonds’.
The terms of the Trust Deed prescribes that in the event of default, the nominal amount outstanding of the Sukuk Series 2 will become immediately due and payable.
206 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
32 LONG TERM AND SHORT TERM FINANCIAL LIABILITIES (continued) PLUS (continued) (a)(v) Sukuk Series 3 Group 2008 2007 RM’000 RM’000
Sukuk Series 3 Accreted profit element
856,235 93,919
548,095 44,330
950,154
592,425
The Sukuk Series 3 are constituted by a Trust Deed dated 28 September 2006 entered into by PLUS and the Trustee for the holders of the Sukuk Series 3.
PLUS issued 2 tranches of Sukuk Series 3 under the Islamic principle of Musyarakah with a nominal value of RM1,375 million on 10 October 2006 with tenures of 14 years and 15 years from the date of issue. Further, PLUS has issued the third tranche with a nominal value of RM700 million on 29 May 2008 with a tenure of 14 years from the date of issue. Sukuk Series 3 are negotiable non-interest bearing secured Medium Term Notes (“MTNs”) in bearer form evidencing a promise by PLUS to pay stated sums on specified dates.
The profit margin ranges from 5.95% to 6.52% per annum and is compounded semi-annually.
There will be two (2) types of Sukuk Series 3 namely those MTNs with Periodic Payments and those MTNs without Periodic Payments provided that Sukuk Series 3 involving MTNs with Periodic Payments may only be issued upon either (a) redemption in full of the Senior Sukuk, the Sukuk Series 1 and the Sukuk Series 2; or (b) consent of the holders of the Senior Sukuk, the Sukuk Series 1 and the Sukuk Series 2; or (c) from 30 June 2019 onwards, whichever earlier.
MTNs with Periodic Payments will be entitled to Periodic Payments and a payment of the Exercise Price.
MTNs without Periodic Payments will only be entitled to a one-off payment of the Exercise Price on the Maturity Date and Distribution on the Distribution Date.
The maturity profile of Sukuk Series 3 is analysed in Note 34, ‘Maturity Profile of Bonds and Borrowings’.
The relevant details of the security arrangements are stated in Note 35, ‘Security Arrangements of Borrowings and Bonds’.
The terms of the Trust Deed prescribes that in the event of default, the nominal amount outstanding of the Sukuk Series 3 will become immediately due and payable.
207 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
32 LONG TERM AND SHORT TERM FINANCIAL LIABILITIES (continued)
ELITE (a)(vi) BAIDS Group 2008 2007 RM’000 RM’000 710,000 (5,972)
755,000 (8,133)
704,028
746,867
68,169 635,859
42,838 704,029
704,028
746,867
BAIDS Accreted profit element
Repayable within 12 months Repayable after 12 months
On 28 February 2003, ELITE issued an Islamic debt security, the BAIDS of RM800 million to investors, where part of the proceeds of the issuance of the BAIDS was used to repay an amount then owing to commercial lenders comprising banks or merchant banks, the Employees’ Provident Fund Board and Danaharta Urus Sdn Bhd (collectively known as “TL Facility Lenders”) under a Term Loan Facility Arrangement and commercial lenders who are discount houses and fund managers (collectively known as “Scheduled Creditors”) under a Scheduled Payment Arrangement.
The BAIDS are negotiable non-interest bearing secured Primary Bonds together with non-detachable Secondary Bonds. The Primary Bonds were issued in 10 tranches, with maturity commencing from 2006 to 2015.
Each tranche of the BAIDS is divided into a specific number of Primary Bonds in pre-determined face values to which are attached an appropriate number of Secondary Bonds, the face value of which represents the semiannual profit of the bonds. The Secondary Bonds are redeemable every six months after the issue date. The face value of the Secondary Bonds are computed on the profit margins specified for each tranche of the Primary Bonds, i.e. from 5.5% to 8.0% per annum.
The terms of BAIDS contain various covenants, including the following: (i)
ELITE must maintain a Finance Service Cover Ratio of at least 1.50 times at all times; and
(ii) ELITE must maintain a Finance Service Reserve Account (“FSRA”) during the tenure of the BAIDS, which has a minimum balance equivalent to the aggregate of the nominal value of the outstanding BAIDS due in the next 6 months. The amount therein may only be withdrawn to meet the payments due and owing under the BAIDS and permitted investments under the BAIDS agreement.
The maturity profile of BAIDS is analysed in Note 34, ‘Maturity Profile of Bonds and Borrowings’.
The relevant details of the security arrangements are stated in Note 35, ‘Security Arrangements of Borrowings and Bonds’.
The terms of the Trust Deed prescribes that in the event of default, the nominal amount of the BAIDS, that is the Cost Portion of the Sale Portion, and the profit element next due will become immediately due and payable.
208 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
32 LONG TERM AND SHORT TERM FINANCIAL LIABILITIES (continued) KLBK (a)(vii) BAIDS Group 2008 2007 RM’000 RM’000 163,176 13,133
— —
176,309
—
4,963 171,346
— —
176,309
—
BAIDS Accreted profit element
Repayable within 12 months Repayable after 12 months
The KLBK BAIDS are constituted pursuant to a Trust Deed between KLBK and Malaysian Trustees Berhad dated 5 July 2005. The Company issued RM247,000,000 secured Primary BAIDS based on the Islamic financing principle of Bai Bithaman Ajil.
The Primary BAIDS comprise 25 series, with total proceeds of RM173,176,140 and redemption value of RM247,000,000, maturing annually from year 2005 to year 2022. Attached to the Primary BAIDS are non-detachable Secondary BAIDS which represents the profit element attributable to the Primary BAIDS. The profit rate is 4.0% per annum and the profit is payable semi-annually on each series of the Primary BAIDS. The Secondary BAIDS have a face value of RM119,540,000.
The profit element on the Primary BAIDS is recognised as finance cost over the tenure of the Primary BAIDS’ series and is charged to the income statement as an expense in the financial year it is incurred.
The maturity period of BAIDS is analysed in Note 34, “Maturity Profit of Bonds and Borrowings”.
The relevant details of the security arrangements are stated in Note 35, ‘Security Arrangements of Borrowings and Bonds’.
33 LONG TERM AND SHORT TERM BORROWINGS AND AMOUNT DUE TO GOVERNMENT Group Company Note 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Long Term Borrowings Short Term Borrowings Amount due to Government
(a) (b) (c)
1,551,694 332,801 38,096
1,486,683 904,347 38,096
— 325,806 —
— 898,466 —
1,922,591
2,429,126
—
898,466
209 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
33 LONG TERM AND SHORT TERM BORROWINGS AND AMOUNT DUE TO GOVERNMENT (continued) Group Company Note 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 (a) Long Term Borrowings (Repayable after 12 months) ELITE Government Loans – Amount drawndown – Additional Government Loan
89,917 300,000
89,917 300,000
— —
— —
389,917
389,917
—
—
993,269 81,051
954,765 38,504
— —
— —
(a)(i)
LINKEDUA Government Loan – Principal and capitalised interest – Accrued interest
(a)(ii)
1,074,320
993,269
—
—
PLUS BKSP Term loan
(a)(iii)
87,457
103,497
—
—
1,551,694
1,486,683
—
—
6,995
5,881
—
—
PEB Bridging Loans – Bridging Loan 1 – Accrued interest
79,300 185
16,874 29
79,300 185
16,874 29
79,485
16,903
79,485
16,903
– Bridging Loan 2 – Accrued interest
245,949 372
880,000 1,563
245,949 372
880,000 1,563
246,321
881,563
246,321
881,563
Total Bridging Loans
325,806
898,466
325,806
898,466
Total Short Term Borrowings
332,801
904,347
325,806
898,466
38,096
38,096
—
—
Total Long Term Borrowings
(b) Short Term Borrowings (Repayable within 12 months) PLUS BKSP Term loan (a)(iii)
(c) ELITE Amount due to Government
210 PLUS Expressways Berhad Annual Report 2008
(b)(i)
(c)(i)
Notes to The Financial Statements
continued
33 LONG TERM AND SHORT TERM BORROWINGS AND AMOUNT DUE TO GOVERNMENT (continued)
ELITE (a)(i) Government Loans ELITE entered into an agreement on 15 December 2000 with the Government whereby the Government provides financing up to a maximum of RM100 million, at an interest rate of 8% per annum capitalised on an annual basis.
The Government and ELITE entered into a Supplemental Loan Agreement (“SLA”) and Additional Government Loan Agreement (“AGLA”) dated 15 January 2003, whereby the Government agreed to waive ELITE’s obligation to pay interest on the then existing Government Loans with effect from 15 December 2000 to 31 December 2001 and to provide ELITE with an interest free term loan facility at a principal of RM300 million. It was also agreed that the aforesaid existing Government Loan shall be interest free with effect from 1 January 2002 to the final repayment date.
Pursuant to ELITE’s SLA and AGLA, the Government Loan and Additional Government Loan are repayable in full on 30 June 2015 or on the BAIDS expected final maturity date of 28 February 2015, whichever earlier.
The maturity profile of the ELITE’s Government Loans is analysed in Note 34, ‘Maturity Profile of Bonds and Borrowings’.
The relevant details of the security arrangements are stated in Note 35, ‘Security Arrangements of Borrowings and Bonds’.
LINKEDUA (a)(ii) Government Loan LINKEDUA’s Government Loan is repayable in 13 semi-annual installments ranging from RM58 million to RM346 million commencing from 14 June 2014 and bears interest at rate of 8% per annum (2007: 8% per annum).
The maturity profile of the LINKEDUA’s Government Loan is analysed in Note 34, ‘Maturity Profile of Bonds and Borrowings’.
The relevant details of the security arrangements are stated in Note 35, ‘Security Arrangements of Borrowings and Bonds’.
PLUS BKSP (a)(iii) Term Loan The term loan is denominated in Indian Rupees, bears interest rate of 10.00% per annum and secured by future toll collection of PLUS BKSP.
The maturity profile of the borrowing is analysed in Note 34, ‘Maturity Profile of Bonds and Borrowings’.
The relevant details of the security arrangements are stated in Note 35, ‘Security Arrangements of Borrowings and Bonds’.
211 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
33 LONG TERM AND SHORT TERM BORROWINGS AND AMOUNT DUE TO GOVERNMENT (continued) PEB (b)(i) Bridging Loans PEB has entered into loan agreements with CIMB Bank for Bridging Term Loans 1 and 2 on 19 September 2007 and 13 December 2007 respectively. These Bridging Loans are interest bearing loans on clean basis and the facilities shall be repaid from the proceeds of the issuance of the PLUS SPV Sukuk. Bridging Loan 1 has a tenure of six (6) months from the date of the first drawdown of the loan with an option to extend for a further 6 months at the Lender’s discretion or upon first issuance of the PLUS SPV Sukuk, whilst Bridging Loan 2 has a tenure of three (3) months from the date of the first drawdown of the loans with an option to extend for a further 3 months at the Lender’s discretion or upon first issuance of the PLUS SPV Sukuk.
During the year Bridging Loan 2 has been partially repaid with an amount of RM760.05 million from the proceeds of the first issuance of the PLUS SPV Sukuk. Subsequently, both Bridging Loan 1 and 2 have been extended to 13 December and 18 December 2009 respectively.
The maturity profile of the borrowing is analysed in Note 34, ‘Maturity Profile of Bonds and Borrowings’.
ELITE (c)(i) Amount due to Government Under the Supplemental Concession Agreement entered on 9 January 1997 between the Government of Malaysia and ELITE, ELITE undertook to implement the design, construction, maintenance, operation and management of three additional interchanges namely the Putrajaya Interchange, the proposed Salak Tinggi Interchange (later relocated to Ampar Tenang and thereafter called the Ampar Tenang Interchange) and Bandar Baru Nilai Interchange along the NSECL Expressway, and an extension of the KLIA Expressway (“Additional Expressway”).
To assist in the financing of the acquisition of the additional land required of the above Additional Expressway, the Government of Malaysia agreed to pay to third parties on behalf of ELITE an amount in aggregate not exceeding RM120 million (referred to as the “Reimbursement Land Cost”). The Reimbursement Land Cost is interest free and is payable by ELITE to the Government in four equal installments, as follows:
Date of (i) On (ii) On (iii) On (iv) On
Repayment Percentage or before 31 December 2015 25% of Reimbursement or before 31 December 2016 25% of Reimbursement or before 31 December 2017 25% of Reimbursement or before 31 December 2018 25% of Reimbursement
Land Land Land Land
Cost Cost Cost Cost
As at 31 December 2008, the amount payable to the Government was RM38,095,662 (2007: RM38,095,662).
212 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
34 MATURITY PROFILE OF BONDS AND BORROWINGS
Amounts outstanding and repayable as at 31 December 2008 and 31 December 2007 of the Group are tabulated as follows:
Between 1 Within 1 and 2 Year Years Note RM’000 RM’000
Between 2 and 5 After 5 Years Years RM’000 RM’000
Total RM’000
31 December 2008 PEB PLUS SPV Sukuk Bridging Loans
32(a)(i) 33(b)(i)
— 325,806
— —
291,124 —
485,050 —
776,174 325,806
PLUS Senior Sukuk Sukuk Series 1 Sukuk Series 2 Sukuk Series 3
32(a)(ii) 32(a)(iii) 32(a)(iv) 32(a)(v)
550,000 — — —
1,100,000 342,691 — —
950,000 902,085 — —
400,000 415,239 1,322,056 950,154
3,000,000 1,660,015 1,322,056 950,154
32(a)(vi) 33(a)(i)
68,169 —
83,478 —
382,482 —
169,899 389,917
704,028 389,917
LINKEDUA Government Loan
33(a)(ii)
—
—
—
1,074,320
1,074,320
KLBK BAIDS
32(a)(vii)
4,963
7,769
15,592
147,985
176,309
PLUS BKSP Term loan
33(a)(iii)
6,995
14,424
71,542
1,491
94,452
955,933
1,548,362
2,612,825
ELITE BAIDS Government Loans
5,356,111 10,473,231
213 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
34 MATURITY PROFILE OF BONDS AND BORROWINGS (continued) Between 1 Within 1 and 2 Year Years Note RM’000 RM’000
Between 2 and 5 After 5 Years Years RM’000 RM’000
Total RM’000
31 December 2007 PEB Bridging Loans
33(b)(i)
898,466
—
—
—
898,466
PLUS Senior Sukuk Sukuk Series 1 Sukuk Series 2 Sukuk Series 3
32(a)(ii) 32(a)(iii) 32(a)(iv) 32(a)(v)
550,000 — — —
550,000 — — —
1,450,000 627,078 — —
1,000,000 934,646 1,238,078 592,425
3,550,000 1,561,724 1,238,078 592,425
32(a)(vi) 33(a)(i)
42,838 —
68,169 —
83,480 —
552,380 389,917
746,867 389,917
LINKEDUA Government Loan
33(a)(ii)
—
—
—
993,269
993,269
PLUS BKSP Term loan
33(a)(iii)
5,881
21,026
22,692
59,779
109,378
1,497,185
639,195
2,183,250
5,760,494
10,080,124
ELITE BAIDS Government Loans
35 SECURITY ARRANGEMENTS OF BORROWINGS AND BONDS
The security arrangements as at 31 December 2008 in connection with the Group’s borrowings and bonds are as follows: (i) Security arrangement for PLUS SPV Sukuk (a) A first ranking debenture incorporating a fixed and floating charge over all present and future assets of the Issuer; and (b) An assignment of the Issuer’s revenue and income including but not limited to any dividends and distributions, whether income or capital in nature.
214 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
35 SECURITY ARRANGEMENTS OF BORROWINGS AND BONDS (continued) (ii) Security arrangement for Senior Sukuk (a) An assignment and charge (ranking first in point of security) over the Toll Amounts, Credit Balances, Additional Project Accounts (save and except in respect of the Additional Toll Revenue Account, it would exclude the ELITE Amount) and PLUS Amount (except for Distribution Amount 1, Distribution Amount 2, Distribution Amount 3, Charged Amount 1, Charged Amount 2 and Charged Amount 3 and the monies in the Proceeds Account, Performance Bonds Proceeds Account, Distribution Account 1, Distribution Account 2, Distribution Account 3, Payment Account 1, Payment Account 2 and Payment Account 3 and all the credit balances therein) (“Assignment and Charge”). (b) An assignment (ranking first in point of security) of the rights over the Concession, Construction Guarantees (other than the Performance Bonds), Construction Contracts and Insurance. (c) A debenture over the fixed and floating assets of PLUS (other than those security interest already covered under (a) and (b) above, the Performance Bonds, the Performance Bonds Proceeds Account, the Proceeds Account, Distribution Account 1, Distribution Account 2, Distribution Account 3, Payment Account 1, Payment Account 2, Payment Account 3 and all the credit balances therein as well as the Charged Amount 1, Charged Amount 2 and Charged Amount 3). (d) An assignment (ranking first in point of security) over PLUS’ rights, title and interest in the Additional Project Agreements. (e) An assignment (ranking second in point of security after the Government) over the Performance Bonds and Performance Bonds Proceeds Account.
(hereinafter referred to as the “Security”)
The security documents shall all form part of the terms of the Senior Sukuk.
The Security Trustee shall hold the benefit of the Security for the Designated Debt financiers (as defined below) ranking pari passu amongst themselves subject to the following: (a) the security in respect of the Performance Bonds and Performance Bonds Proceeds Account shall rank second after the assignment of the same in favour of the Government; and (b) the security in respect of the FSRA (as hereinafter defined) shall rank as between the Designated Debt financiers as follows: (i)
ranking first, the Sukukholders; and
(ii) ranking second, the lenders of the Maintenance Bond Facility and Overdraft Facility (excluding the Trade Lines) which shall rank pari passu amongst themselves.
215 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
35 SECURITY ARRANGEMENTS OF BORROWINGS AND BONDS (continued) (ii) Security arrangement for Senior Sukuk (continued) The Distribution Account 1 (and all credit balances therein) and the Distribution Amount 1, and the Payment Account 1 (and all credit balances therein) and the Charged Amount 1 are excluded from the Security and is held for the benefit of/charged to the holders of the Sukuk Series 1 respectively.
The Proceeds Account and all credit balances in the Proceeds Account are excluded from the Security and are for the benefit of the Government.
The Distribution Account 2 (and all credit balances therein) and the Distribution Amount 2, and the Payment Account 2 (and all credit balances therein) and the Charged Amount 2 are excluded from the Security and is held for the benefit of/charged to the holders of the Sukuk Series 2 respectively.
The Distribution Account 3 (and all credit balances therein) and the Distribution Amount 3, and the Payment Account 3 (and all credit balances therein) and Charged Amount 3 are excluded from the Security and is held for the benefit of/charged to the holders of the Sukuk Series 3.
(iii) Security arrangements for Sukuk Series 1 (a) Assignment over the Sukuk Series 1 Charged Amounts; and (b) Charge over Payment Account 1.
The Sukuk Series 1 Security Account to receive the Sukuk Series 1 Charged Amounts shall be solely managed by the Sukuk Series 1 Trustee.
The Sukuk Series 1 Charged Amounts are the sum not exceeding RM400 million of the positive Cash Flow Proceeds per calendar year in respect of the period commencing 1 January 2011 to 31 December 2015 and RM260 million in respect of the period from 1 January 2016 to 31 December 2016.
Determination of the Cash Flow Proceeds shall be in the following manner: – Six months prior to and ending on the date falling 65 days before maturity date of the Sukuk Series 1 (the “Relevant Period”), PLUS shall determine the excess cash flow of PLUS (other than proceeds from the issuance of new shares by PLUS and excluding the FSRA and MRA) at the end of each Relevant Period after providing or payment, as the case may be, for the following: (i)
for PLUS’s budgeted operating and capital expenditure requirements for the following Relevant Period;
(ii) for such of the Maintenance Bond facility and Overdraft facility as remains outstanding; (iii) to the FSRA and MRA during the said Relevant Period; and (iv) in respect of the redemption of Senior Sukuk during the said Relevant Period.
216 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
35 SECURITY ARRANGEMENTS OF BORROWINGS AND BONDS (continued) (iv) Security arrangements for Sukuk Series 2 (a) Assignment over the Sukuk Series 2 Charged Amounts; and (b) Charge over Payment Account 2.
The Sukuk Series 2 Charged Amounts in relation to each series of the Sukuk Series 2 shall be deposited into the Sinking Fund Account within five (5) days after the certification of the Cash Flow Proceeds by the auditors (which shall be within thirty (30) days from the end of each Determination Period) and in any event not less than 30 days prior to the maturity date of the relevant series of the Sukuk Series 2.
Determination of the Cash Flow Proceeds shall be in the following manner: – PLUS shall determine its excess revenue and income (other than proceeds from the issuance of new shares by PLUS and excluding the FSRA and MRA) at the end of a Determination Period after providing or payment, as the case may be, for the following: (i)
for PLUS’s budgeted operating and capital expenditure requirements for the following Determination Period;
(ii) for such of the Maintenance Bond facility and Overdraft facility as remains outstanding; (iii) to the FSRA and MRA during the said Determination Period; (iv) in respect of the Senior Sukuk during the said Determination Period; and (v) in respect of the Sukuk Series 1 during the said Determination Period.
“Determination Period” means the period beginning six (6) months and 65 days prior to the maturity date of each tranches of the Sukuk Series 2 and ending on the date falling sixty five (65) days before the maturity date of that tranches of the Sukuk Series 2.
Tranches Sukuk Series 2 Maturity Date Charged Amounts (years from the (RM million) Issue date)
1 2 3 4
350.0 650.0 800.0 610.0
11 12 13 14
Total
The proceeds in the Sinking Fund Account shall be utilised towards redemption of the Sukuk Series 2 on their respective maturity dates. The Sinking Fund Account shall be operated solely by the Trustee.
2,410.0
217 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
35 SECURITY ARRANGEMENTS OF BORROWINGS AND BONDS (continued) (v) Security arrangements for Sukuk Series 3 (a) Assignment over the Sukuk Series 3 Charged Amounts; and (b) Charge over Payment Account 3.
The Sukuk Series 3 Charged Amounts in relation to each series of the Sukuk Series 3 shall be deposited into the Sinking Fund Account within five (5) days after the certification of the Cash Flow Proceeds by the auditors (which shall be within thirty (30) days from the end of each Determination Period) and in any event not less than 30 days prior to the maturity date of the relevant series of the Sukuk Series 3.
Determination of the Cash Flow Proceeds shall be in the following manner: – PLUS shall determine its excess revenue and income (other than proceeds from the issuance of new shares by PLUS and excluding the FSRA and MRA) at end of Determination Period after providing or payment, as the case may be, for the following: (i)
for PLUS’s budgeted operating and capital expenditure requirements for the following Determination Period;
(ii) for such of the Maintenance Bond facility and Overdraft facility as remains outstanding; (iii) to the FSRA and MRA during the said Determination Period; (iv) in respect of the Senior Sukuk during the said Determination Period; (v) in respect of the Sukuk Series 1 during the said Determination Period; and (vi) in respect of the Sukuk Series 2 during the said Determination Period.
“Determination Period” means the period beginning six (6) months and 65 days prior to the maturity date of each tranches of the Sukuk Series 3 and ending on the date falling sixty five (65) days before the maturity date of that tranches of the Sukuk Series 3.
Tranches Sukuk Series 3 Maturity Date Charged Amounts (years from the (RM million) Issue date)
1 2 3
Total
The proceeds in the Sinking Fund Account shall be utilised towards redemption of the Sukuk Series 3 on their respective maturity dates. The Sinking Fund Account shall be operated solely by the Trustee.
218 PLUS Expressways Berhad Annual Report 2008
675.0 700.0 700.0
14 15 14
2,075.0
Notes to The Financial Statements
continued
35 SECURITY ARRANGEMENTS OF BORROWINGS AND BONDS (CONT’D) (vi) Security arrangements for ELITE’s BAIDS, Government Loan and Additional Government Loan The security arrangements in connection with ELITE’s BAIDS, Government Loan and Additional Government Loan (collectively referred to as the “Secured Indebtedness”) are as follows: a)
By way of a first fixed charge, over the Credit Balances, Revenue Account, Additional Operating Account and Finance Service Account;
b)
By way of a first floating charge, over the Capex Account and Operations Account;
c)
An assignment of ELITE’s rights, title, benefits and interest in relation to the toll derived or arising under the Concession Agreement;
d)
An assignment of ELITE’s rights, title, benefits and interest under the Toll Revenue Collection Agreement made between ELITE and PLUS;
e)
A fixed and floating charge over ELITE’s present and future assets and undertakings;
f)
An assignment over the Insurances executed or to be executed by the ELITE; and
g)
An assignment of ELITE’s rights, title, benefits and interest under the Concession, Advertising Agreement, Maintenance Work Contract, Project Management Agreement, Maintenance Management & Technical Professional Service Agreement, Electrical, Electronic & Energised Systems Maintenance Agreement, Service Provider Agreement and the Performance Bond.
(hereinafter referred to as “the Security Documents”)
The Security Trustee shall hold the benefit of the Security Documents for the benefits of the Secured Indebtedness ranking amongst themselves in the following manner:
a)
ranking first, the Government Loans and the BAIDS shall rank pari passu among themselves; and
b)
ranking second, the Additional Government Loan
save and except for: a)
The Security in respect of ELITE’s Concession Agreement, Novation Agreement, SCA, SSCA, and TSCA, which shall be held by the Security Trustee only for the BAIDS.
b)
The Security in respect of the Performance Bonds shall rank in the following manner: • firstly, the Government Loans; and • secondly, the BAIDS.
219 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
35 SECURITY ARRANGEMENTS OF BORROWINGS AND BONDS (continued) (vii) Security arrangements for LINKEDUA’s Government Loan The security arrangements for LINKEDUA’s Government Loan are as follows: (a) an assignment and charge (ranking pari passu in point of security) of the rights over the Construction Contracts, Insurance and Performance Bonds; (b) charge over Security Account 3 and Security Account 5 (ranking pari passu in point of security) being the accounts maintained for the surplus cash flow for the purpose of Government Loan repayment and for the proceeds of any issuance of new shares respectively. (c) a charge over the Toll Amounts and the credit balances therein (ranking pari passu in point of security); and (d) a debenture over the fixed and floating assets of LINKEDUA (other than those security already covered under (a) and (b) above) ranking pari passu in point of security. (viii) Security arrangements for KLBK’s BAIDS The security arrangement for KLBK’s Primary BAIDS are as follows:
Security Under the Debenture (a) by way of first fixed charge: (i)
any freehold or leasehold property from time to time and at any time owned by KLBK;
(ii) all the goodwill of KLBK, any patents, trade marks, copyrights, registered designs and similar assets or rights from time to time and at any time owned by KLBK, and any uncalled capital from time to time and at any time of KLBK; and (iii) all book debts and other debts and all other amounts whatsoever from time to time and at any time due, owing or payable to KLBK, and the benefit of any Security Interests from time to time and at any time held by KLBK in respect of any such debts or amounts including such amounts as invested by KLBK from the amounts standing to the credit of any accounts charged to the Security Agent and any income derived thereon. (b) by way of first floating charge, the undertaking of KLBK and all its other property, assets, revenues and rights, whatsoever and wheresoever, both present and future (including any Permitted Investments not charged pursuant to (viii)(a) above).
Security under the Deed of Assignment (a) all its present and future rights under the Concession Agreement including all amounts from time to time and at any time payable to KLBK thereunder by the Government of Malaysia; (b) all its present and future rights, title and interest in and under the Insurance including all amounts whatsoever payable under the Insurance and all other rights accruing to KLBK thereunder including all claims and any returned premiums; (c) the right to pursue any action, proceeding, suit or arbitration arising in relation to any of the rights assigned to the Security Agent pursuant to this security and to enforce such rights in the name of the Security Agent or of KLBK.
220 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
35 SECURITY ARRANGEMENTS OF BORROWINGS AND BONDS (continued) (viii) Security arrangements for KLBK’s BAIDS (continued) Security under the Charge All its present and future rights, title and interest in and to: (a) the Proceeds; (b) the Designated Accounts; and (c) the Credit Balance.
36 RETIREMENT BENEFITS
PLUS and ELITE operate an unfunded, defined benefit Retirement Benefit Scheme (“the Scheme”) for their personnel whose employment contracts were transferred in 1988 from Malaysian Highway Authority, pursuant to the Concession Agreement. Under the Scheme, eligible employees are entitled to retirement benefits in accordance with a predetermined formula as follows:
Retirement Benefits as at 31 December = (2 X last drawn monthly basic salary X length of service with the company) – EPF Offset* * Defined as total employer’s contributions to the EPF, made at the statutory employer’s contribution rate and accumulated EPF dividend.
The amount recognised in the balance sheet are determined as follows:
Group 2008 2007 RM’000 RM’000
Present value of unfunded defined benefit obligations
The amount recognised in the income statement are as follows:
Current service cost Interest cost
13,714
12,845
685 738
729 667
1,423
1,396
221 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
36 RETIREMENT BENEFITS (continued)
Principal actuarial assumptions used
2008 %
2007 %
6.00 5.00 4.75 – 5.00
6.00 5.00 4.75 – 5.00
Discount rate Expected rate on salary increases EPF dividend rate
The Group valued its retirement benefits obligation in accordance with the actuarial valuation prepared by an independent actuary.
In the current year, RM1,403,783 and RM19,178 was charged to the direct cost of operations and general and administration expenses respectively. In 2007, RM1,321,639 and RM74,923 was charged to the direct cost of operations and general and administration expenses respectively.
Movement in the net liability were as follows:
Group 2008 2007 RM’000 RM’000
At 1 January Recognised in the income statement Acquisition of subsidiaries Contribution paid
12,822 1,423 — (174)
11,403 1,396 176 (153)
At 31 December
14,071
12,822
37 DEFERRED LIABILITIES
Deferred liabilities comprise fees received in advance for future maintenance expenditure to be incurred, in consideration for right-of-way access granted by PLUS and ELITE, and rentals received in advance and toll compensation received by KLBK, analysed as follows:
Group 2008 2007 RM’000 RM’000
Amounts received in advance Amounts recognised
222 PLUS Expressways Berhad Annual Report 2008
156,874 (29,950)
76,166 (24,725)
126,924
51,441
Notes to The Financial Statements
continued
37 DEFERRED LIABILITIES (continued) Group 2008 2007 RM’000 RM’000
Analysed as: Deferred liabilities realisable within 12 months Deferred liabilities realisable after 12 months
1,187 125,737
— 51,441
126,924
51,441
38 TRADE PAYABLES, SUNDRY PAYABLES AND ACCRUALS Group Company Note 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 27,331
17,707
—
—
Sundry payables and accruals Sundry payables Profit element payable on Senior Sukuk Profit element payable on ELITE’s BAIDS Profit element payable on KLBK’s BAIDS Accruals Others
13,520 17,778 15,865 4,345 59,648 657
27,190 20,422 16,668 — 66,185 5,382
1,841 — — — 20,814 300
1,592 — — — 13,851 268
111,813
135,847
22,955
15,711
(a) Trade payables
(b)
(i)
(i)
Trade payables are non-interest bearing and the normal trade credit terms granted to the Group range from 30 days to 60 days.
223 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
39 AMOUNT RECEIVED FROM THE GOVERNMENT FOR ADDITIONAL WORKS Group 2008 2007 RM’000 RM’000 Amount received from the Government Add: Cumulative interest income Less: Additional Works expenditure Compensation for loss of interest income
680,590 46,844 (703,618) (3,371)
680,590 45,479 (678,060) (3,371)
20,445
44,638
On 17 November 2007, PLUS had executed the Proceeds Account Agreement with the Government to formalise the rights, utilisation and administration of the amount received from the Government for the Additional Works of RM680.59 million and the interest earned therefrom. Pursuant to the TSCA, the amount shall be utilised solely for the purposes of the Additional Works and together with the interest earned, have been deposited into the Proceeds Account as disclosed in Note 26.
40 SIGNIFICANT RELATED PARTY TRANSACTIONS Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Dividend income received/receivable from PLUS
—
—
885,000
700,000
Management fees received for expressway operation services rendered by the Company to: – PLUS – LINKEDUA – ELITE
— — —
— 3,478 2,574
94,717 3,589 2,653
91,780 3,478 2,574
Amount received from UEM for settlement of Hartanah Loan following acquisition of LINKEDUA by PEB
—
18,152
—
—
224 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
40 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued) Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Expressways development expenditure works performed for PLUS by: – UEM 10,821 – a subsidiary of UEM, namely: – Teras Teknologi Sdn Bhd (“TERAS”) 12,140 – UEM Builders Berhad (“UEM Builders”) 82,009 – UEM Construction Sdn Bhd 135,433 – OPUS International (M) Bhd (“OPUS”) 625 – Projek Penyelenggaraan Lebuhraya Berhad (“PROPEL”) 98,450
Expressways development expenditure works performed for PLUS BKSP by: – UE Development India Pvt Ltd, a subsidiary of UEM Builders – TERAS, a subsidiary of UEM
26,297
—
—
12,173 20,575 52,641 1,055 90,218
— — — — —
— 261 — — —
710 1,932
80,765 2,488
— —
— —
Expressways development expenditure works performed for ELITE by: – PROPEL, a subsidiary of UEM 19,126 – TERAS, a subsidiary of UEM —
15,520 663
— —
— —
Expressways development expenditure works performed for LINKEDUA by subsidiaries of UEM, namely: – PROPEL – UEM Builders
18,595 2,098
929 22,660
— —
— —
Expressway maintenance expenditure paid/payable to: – subsidiaries of UEM, namely: – Teras Control Systems Sdn Bhd – TERAS – PROPEL
10,889 2,024 203,555
3,147 — 211,563
— — —
— — —
Income from training fees received/receivable from: – PLUS – LINKEDUA – ELITE – Penang Bridge Sdn Bhd, a subsidiary of UEM Builders
— — — —
— 32 24 1
1,251 51 64 —
373 32 24 1
225 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
40 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued) Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Additional Works performed for PLUS by: – UEM – a subsidiary of UEM, namely: – PEB – PROPEL – UEM Construction Sdn Bhd
—
39,834
—
—
— 135 220,428
— 858 427,407
— — —
106 — —
Project management fees paid/payable to OPUS, a subsidiary of UEM 5,522
8,820
—
—
19,146
15,490
—
—
2,956
3,183
2,956
2,952
455
124
193
100
2,043 208 680 809 181 175 192
1,773 2 275 139 — — —
290 208 661 719 181 — 192
206 — 275 125 — — —
Network maintenance management and technical services performed by OPUS, a subsidiary of UEM
Provision of information technology services by TERAS, a subsidiary of UEM
Corporate and administrative support services paid/payable to: – UEM – subsidiaries of UEM, namely: – UEM Group Management Sdn Bhd – TERAS – UEM Academy Sdn Bhd – UEM Leadership Centre Sdn Bhd – Forte Tech Solutions Sdn Bhd – PROPEL – OPUS
Amounts payable to UEM in respect of Director’s remuneration
311
77
50
46
Commission for sale of Touch ‘n Go received/receivable from Touch ‘n Go Sdn Bhd, a subsidiary of UEM
210
158
—
—
226 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
40 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued) Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Commission for toll collection via Touch ‘n Go paid/payable to Touch ‘n Go Sdn Bhd, a subsidiary of UEM
18,937
16,178
—
—
Lease rental income received/receivable in respect of fibre optic telecommunications network and wayleave rights from TT dotCom, an associated company of UEM through TIME Engineering
15,957
15,197
—
—
Utilities rental paid/payable in respect of telecommunications network from TT dotCom, an associated company of UEM through TIME Engineering
659
1,098
—
—
Income from rental of facilities received/receivable from – associated companies of UEM through TIME Engineering, namely: – TT dotCom – TIME Reach Sdn Bhd – subsidiaries of UEM, namely: – UEM Land Sdn Bhd – Touch ‘n Go Sdn Bhd
340 59
385 153
— —
— —
72 1,883
102 1,857
— —
— —
Professional fees paid/payable to Symphony Share Registrars Sdn Bhd, in which a director of the Company, Dato’ Mohamed Azman Yahya, has interest
43
108
43
108
227 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
41 CAPITAL COMMITMENTS Group Company 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000
Amounts authorised and contracted for – Additional Works – Others
Amounts authorised but not contracted for
191,400 362,072
330,856 539,611
— 340
— 53
553,472
870,467
340
53
93,763
195,639
—
—
42 FINANCIAL INSTRUMENTS, FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments consist of PLUS SPV Sukuk, Senior Sukuk, Sukuk Series 1, Sukuk Series 2, Sukuk Series 3, BAIDS, Government Loans, Reimbursable Land Cost, Overdraft Facility, Trade Facilities, Maintenance Bond Facilities, Bridging Loans, term loan, short term and long term investments and short term and long term deposits. The short term investments (excluding quoted shares), long term investments and short term deposits are investments of available cash flows from operations.
The Group has various other financial instruments such as trade and sundry payables that arise directly from operations, amount owing by/(to) subsidiaries, amount owing by/(to) related companies, amount owing by/(to) immediate holding company, and sundry receivables.
The following disclosures exclude sundry receivables, amount owing by/(to) subsidiaries, amount owing by/(to) related companies, amount owing by/(to) immediate holding company, toll compensation recoverable from the Government, amount received from the Government for Additional Works, Reimbursable Land Cost, trade and sundry payables.
The Group reviews and agrees policies for managing each of the risks summarised below: a) Interest Rate Risk The Group obtains its external financing through PLUS SPV Sukuk, Senior Sukuk, Sukuk Series 1, Sukuk Series 2, Sukuk Series 3, BAIDS, Government Loans, Overdraft Facility, Trade Facilities, Maintenance Bond Facilities, Bridging Loans and term loan. The Group’s profit element for PLUS SPV Sukuk, Senior Sukuk, Sukuk Series 1, Sukuk Series 2, Sukuk Series 3, BAIDS and interest on Government Loan and term loan are based on agreed fixed rates respectively, while the interest payable for Bridging Loans range from 4.47% to 4.80% per annum. Interest on the Overdraft Facilities is the margin of 0.75% per annum over the base lending rate.
Information relating to the Group’s interest rates and profit element on borrowings and bonds are disclosed in Notes 7, 32 and 33. Details of the remaining maturities of the Group’s financial liabilities are disclosed in Note 34.
228 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
42 FINANCIAL INSTRUMENTS, FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) a) Interest Rate Risk (continued) The interest/profit profile of the financial liabilities of the Group is as follows: Group 2008 2007 RM’000 RM’000
Floating rate financial liabilities Fixed rate financial liabilities Interest-free financial liabilities
325,806 9,757,508 389,917
898,466 8,791,741 389,917
10,473,231
10,080,124
The weighted average interest rate/profit element per annum and average period on the financial liabilities as at 31 December 2008 were as follows:
Group 2008
Weighted average interest rate/profit element (%) Floating rate Fixed rate
Average period (years) Floating rate Fixed rate Interest free
2007
4.26 6.85
4.63 6.78
1.0 7.6 6.2
0.2 7.8 7.2
The interest/profit profile of the financial assets of the Group is as follows:
Group 2008 2007 RM’000 RM’000
Fixed rate financial assets (Note i) Financial assets on which no interest is earned (Note ii)
2,438,921 25,306
2,557,214 39,487
2,464,227
2,596,701
229 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
42 FINANCIAL INSTRUMENTS, FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) a) Interest Rate Risk (continued) Note i Fixed rate financial assets mainly comprise short term investments (excluding quoted shares), long term investments, short term deposits and long term deposits, placed with licensed banks and corporate issuers.
The short term deposits and short term investments placed with the licensed banks and corporate issuers in Malaysia attracted interest/profit element during the year at rates ranging from 2.50% to 4.55% (2007: 2.65% to 4.07%) per annum whereas the profit obtained from long term investments in Malaysia was 7.99% (2007: 7.99%).
The short term and long term deposits of foreign subsidiaries placed with their respective local banks attracted interest rates ranging from 7.50% to 13.00% (2007: 7.00% to 7.50%) per annum.
The maturity dates for fixed rate financial assets during the period range between 1 day to 72 months (2007: 1 day to 72 months).
Note ii Financial assets on which no interest is earned comprise cash and bank balances.
b) Market Risk The Group holds investment in quoted shares and Commercial Paper/Securities/Medium Term Notes/Bond. The value of the securities is subject to fluctuations as a result of changes in market prices whether those changes are caused by factors specific to the individual security or its issuer or factors affecting all securities traded in the market. The investment in Commercial Paper/Securities/Medium Term Notes/Bond are held to maturity. c) Foreign Currency Risk There is no foreign currency financing obtained by the Group for the year ended 31 December 2008. d) Credit Risk Credit risks, or the risk of counterparties defaulting, are controlled by the application of credit limits and monitoring procedure. The Group has no significant concentrations of credit risk as the majority of its deposits are placed with various major financial institutions in Malaysia.
The toll compensation recoverable from the Government of Malaysia is not exposed to any credit risk to PLUS other than if there are any amounts due from the Government upon expiry of the Concession Period in 2038, which will be required to be unconditionally waived by PLUS, as disclosed in Note 3(i)(b). However, the toll compensation arrangement further provides that the parties may in good faith, make necessary adjustment or variation to the arrangement to restore PLUS’s position if there is any change in law that may prevent the parties from successfully implementing the toll compensation arrangement.
e) Liquidity Risk The Group’s objectives on liquidity are to maintain a balance between meeting debt service obligations and covenants, Expressway capital and operating expenditure and meeting shareholder distribution expectations.
230 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
42 FINANCIAL INSTRUMENTS, FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) f)
Maturity of Financial Liabilities The maturity profile of the financial liabilities is disclosed in Note 34.
Undrawn committed facilities available as at 31 December 2008 in respect of the financial liabilities comprise a bank overdraft facility of RM1 million (2007: RM51 million) and a bridging loan of RM130.70 million.
g) Fair Values The carrying amount of the financial assets and liabilities of the Group at the balance sheet date approximate their fair value except for the following: Group 2008 2007 Carrying Fair Carrying Fair Amount Value Amount Value Note RM’000 RM’000 RM’000 RM’000
PLUS SPV Sukuk Senior Sukuk Sukuk Series 1 Sukuk Series 2 Sukuk Series 3 ELITE’s BAIDS KLBK’s BAIDS
32(a)(i) (776,174) (836,020) 32(a)(ii) (3,017,778)* (3,195,310) 32(a)(iii) (1,660,015) (1,771,656) 32(a)(iv) (1,322,056) (1,475,100) 32(a)(v) (950,154) (990,710) 32(a)(vi) (719,893)** (758,112) 32(a)(vii) (171,346)*** (194,342)
— — (3,570,422)* (3,850,895) (1,561,725) (1,697,004) (1,238,079) (1,473,081) (592,425) (698,303) (763,534)** (829,327) — —
* inclusive of profit element approximately RM17.78 million (2007: RM20.42 million) in sundry payables. ** inclusive of profit element approximately RM15.87 million (2007: RM16.67 million) in sundry payables. *** inclusive of profit element approximately RM4.35 million (2007: nil) in sundry payables.
The following methods and assumptions are used to estimate the fair values of the following classes of financial instruments: (i)
Cash and Cash Equivalents, Islamic Commercial Papers/Medium Term Notes, Trade and Other Receivables/Payables and Intercompany Balances The carrying amounts approximate the fair value due to the relatively short term maturity of these financial instruments.
(ii) Marketable Securities The fair value of quoted shares is determined by reference to stock exchange quoted market bid price at the close of the business on the balance sheet date. (iii) Borrowings PLUS SPV Sukuk, Sukuk Series 1, 2 and 3 are estimated by discounting the expected future cash flows using the indicative market rates available for each of the series.
231 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
43 SIGNIFICANT EVENTS (i) Acquisitions of KLBK On 13 March 2008, PEB completed the acquisition of the entire issued and paid-up share capital of KLBK for a total cash consideration of RM134 million from MMC.
KLBK is the concessionaire for the BKE pursuant to a concession agreement dated 28 June 1994 (as supplemented from time to time) entered into between the Government of Malaysia and KLBK in connection with the design, construction, management, operation and maintenance of the BKE for a concession period of 32 years which expires in 2026. The BKE is a dual two lane carriageway and has a total length of approximately 17 kilometres from Kulim in Kedah to Seberang Perai in Penang.
(ii) Incorporation of CCTW On 27 December 2008, the Company was issued 48,000,000 shares of CCTW of IDR1,000 each representing 60% shareholding interest in CCTW, effectively making CCTW a foreign subsidiary of PEB.
The remaining 15% and 25% of CCTW are held by PT Bakrie & Brothers Tbk and PT Capitalinc Investment Tbk (formerly known as PT Global Financindo Tbk) respectively.
CCTW is incorporated in Indonesia as a limited liability foreign capital participation company to undertake and implement the 25.4-kilometre Package 4 Cimanggis-Cibitung Toll Road in Indonesia.
(iii) Issuance of RM700 million nominal value of Sukuk Series 3 On 29 May 2008, PLUS issued RM700 million nominal value (RM308 million present value on the issue date) of zero coupon Sukuk Series 3 pursuant to the RM4,500 million nominal value of Sukuk Series 3 medium term notes programme to partially redeem the Senior Sukuk in accordance with the Senior Sukuk trust deed. (iv) Issuance of RM4,000 million nominal value PLUS SPV Sukuk Medium Term Notes programme (“PLUS SPV Sukuk”) by PLUS SPV Berhad On 27 June 2008, the Company through an independent special purpose company, PLUS SPV Berhad (“PLUS SPV”), issued Islamic securities in accordance with the principle of Musyarakah amounting to RM1,055 million nominal value (RM762 million present value on the issue date) under the RM4,000 million nominal value of PLUS SPV Sukuk to partially refinance the bridging loan facility of RM1,006 million pursuant to a facility agreement dated 13 December 2007.
44 SEGMENTAL REPORTING (a) Reporting format The primary segment reporting format is determined to be geographical segments as the Group’s risks and rates of return are affected predominantly by differences in the countries operated. Secondary information is reported segmentally. The operating businesses are organised and managed separately according to the geographical areas, with each segment representing a strategic business unit that serves different markets.
232 PLUS Expressways Berhad Annual Report 2008
Notes to The Financial Statements
continued
44 SEGMENTAL REPORTING (continued) (b) Geographical segments The Group’s geographical segments are based on the location of the Group’s assets. Revenue disclosed in geographical segments are based on the geographical location of its business and customers. The Group’s two business segments operate in three geographical areas: (i)
Malaysia – the operations in this area are principally investment holding and provision of expressway operation services.
(ii) India and Mauritius – the operation in this area are investment holding and expressway operation services. (iii) Indonesia – the operation in this area is expressway operation services.
The following table provides an analysis of the Group’s carrying amount of segment assets and capital expenditure, analysed by geographical segments:
Malaysia India and Mauritius Indonesia
Segment Assets Capital Expenditure 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 16,709,562 180,870 117,870
15,654,468 12,226,322 168,844 175,643 32,026 57,357
3,412,706 105,026 27,831
17,008,302
15,855,338 12,459,322
3,545,563
(c) Business segments No business segmental analysis is prepared in the current and prior years as the Group is primarily engaged in the operation and maintenance of toll roads and expressways.
233 PLUS Expressways Berhad Annual Report 2008
Recurrent Related Party Transactions
On 18 June 2008, the PLUS Expressways Berhad Group sought approval for a shareholders’ mandate for the PLUS Expressways Berhad Group to renew and enter into new Recurrent Transactions (as defined in the Circular to Shareholders dated 26 May 2008) in their ordinary course of business with related parties (“Shareholders Mandate”) as defined in Chapter 10 of the Bursa Malaysia Securities Berhad Listing Requirement. The breakdown of the aggregate value received/receivable or paid/payable for the said Recurrent Transactions made from the date the Shareholders Mandate came into effect up to 31 December 2008 are as follows:RM 1.
Construction and other related works for the widening of certain stretches of the Expressway and the modification of the Expressway between Jelapang and Ipoh Selatan Toll Plaza (“Additional Works”) by UEM and its subsidiaries and associated companies for PLUS.
NIL
2.
Collaboration arrangements for the purpose of tendering for overseas and local projects by UEM and its subsidiaries and associated companies for PLUS Expressways.
NIL
3.
Provision of Operation Support Services and other transactions in relation to or arising therefrom.
4.
Provision of maintenance works in relation to the Expressways and its Ancillary Facilities.
5.
Construction and other related works in relation to Expressways, including the Ipoh-Lumut Road and Diamond Interchange and the proposed second exit to Ipoh City.
NIL
6.
Provision of IT related services, maintenance and upgrading works and supply of IT equipment and software, electrical and toll equipment spares in relation to the Expressways and Ancillary Facilities to PLUS Expressways Group.
6,692,670.00
7.
Provision of services in relation to Touch n’ Go cards and SmartTAG including the relevant accessories to PLUS Expressways Group.
1,602,308.39
8.
Grant of access to enter the Expressways and its Ancillary Facilities for carrying out of relevant works by UEM and its subsidiaries and associated companies for PLUS Expressways Group.
NIL
9.
Provision of IT related services including consultation and maintenance, supply of IT equipment and software and provision of Point of Sales System by TIME and its subsidiaries and associated companies for PLUS Expressways Berhad.
NIL
10. Provision of upgrading works in relation to the Expressways and its Ancillary Facilities by UEM Builders and its subsidiaries and associated companies for PLUS Expressways Group.
6,934,859.80
11. Grant of access by PLUS to Telekom to enter the Expressways and its Ancillary Facilities for the carrying out of relevant works in relation to telecommunication.
1,000.00
12. Grant of access by PLUS to TNB to enter the Expressways and its Ancillary Facilities for the carrying out of relevant works in relation to power supply.
64,000.00
13. Construction and other related works in relation to toll road projects in India to PLUS Expressways Group.
NIL
14. Construction and other related works in relation to toll road projects in Indonesia to PLUS Expressways Group.
NIL
234 PLUS Expressways Berhad Annual Report 2008
984,316.92 16,293,304.77
RELATIONSHIP WITH RELATED PARTIES
The relationship of the related parties as at 31 December 2008 is as follows:No. Names of Related Party
Relationship
1.
UEM and its subsidiaries and associated companies
UEM is a major shareholder of PLUS Expressways Berhad. UEM also has indirect interest in PLUS held through PLUS Expressways Berhad.
2.
PLUS BKSP Toll Limited (“PLUS BKSP”)
PLUS Expressways has direct and indirect interest in PLUS BKSP through its wholly-owned subsidiary, PLUS Kalyan (Mauritius) Private Limited.
3.
TIME and its subsidiaries and associated companies
UEM is a major shareholder of TIME. TIME being an associate company of UEM.
4.
UEM Builders and its subsidiaries and associated companies
UEM Builders Berhad is a wholly-owned subsidiary of UEM. UEM also has indirect interest in PROPEL held through UEM Builders Berhad.
5.
Telekom Malaysia Berhad (“Telekom”) and its subsidiaries
Khazanah is a major shareholder of Telekom. UEM is a whollyowned subsidiary of Khazanah.
6.
Tenaga Nasional Berhad (“TNB”) and its subsidiaries
Khazanah is a major shareholder of TNB.
235 PLUS Expressways Berhad Annual Report 2008
Analysis of Shareholdings AS AT 27 APRIL 2009
Authorised Capital Issued and Paid-Up Class of Shares No of Shareholders Voting Rights
: RM2,500,000,000.00 : RM1,250,000,000.00 : Ordinary Shares of 25 sen each : 24,069 : One Vote per Ordinary Share
Size of Holdings
No of Holders
%
No of Shares Held
%
578
2.40
17,976
0.00
12,538
52.09
11,977,973
0.24
1,001 to 10,000
9,437
39.21
33,991,195
0.68
10,001 to 100,000
1,056
4.39
30,621,794
0.61
456
1.89
1,197,057,733
23.94
4
0.02
3,726,333,329
74.53
24,069
100.00
5,000,000,000
100.00
Direct Holdings
%
Indirect Holdings
%
UEM Group Berhad
2,010,522,335
40.21
—
—
Khazanah Nasional Berhad
1,183,212,782
23.66
*2,010,522,335
40.21
533,738,212
10.67
—
—
Less than 100 100 to 1,000
100,001 to less than 5% of issued shares 5% and above of issued shares Total
Holders with Holdings of 5% and Above as at 27 April 2009: Name
Employees Provident Fund Board Note: * Held via UEM Group Berhad
236 PLUS Expressways Berhad Annual Report 2008
Analysis of Shareholdings
continued
Directors’ Direct and Indirect Interest in the Company and its Related Corporations as per the Register of Directors
No of Shares held
% of issued capital
Tan Sri Dato’ Mohd Sheriff Mohd Kassim
60,000
*
Dato’ Ahmad Pardas Senin
20,000
*
Noorizah Hj Abd Hamid
20,000
*
YM Professor DiRaja Ungku Abdul Aziz Ungku Abdul Hamid
40,000
*
Hassan Ja’afar
40,000
*
Datuk K Ravindran
40,000
*
Tan Sri Razali Ismail
40,000
*
Dato’ Mohamed Azman Yahya
40,000
*
Geh Cheng Hooi
40,000
*
Quah Poh Keat
NIL
NIL
Abdul Farid Alias
NIL
NIL
15,000
*
NIL
NIL
Name of Director
Datuk Seri Panglima Mohd Annuar Zaini Dato’ Seri Ismail Shahudin * less than 0.01%
In its Related Corporations Save for the following, none of the Directors of the Company has any interest, direct or indirect, in shares in its related corporations:
Name of Director
No of Shares held
% of issued capital
666,000*
0.02
2,500,000**
0.10
UEM Land Holdings Berhad Ordinary shares of RM0.50 each Tan Sri Dato’ Mohd Sheriff Mohd Kassim Dato’ Ahmad Pardas Senin
* 666,000 ordinary shares of RM0.50 each in UEM Land Holdings Berhad issued to replace the 567,800 UEM World Berhad shares held pursuant to the distribution of the dividend-in-specie by UEM World Berhad ** Include balance of 1,000,000 shares in UEM World Berhad which was exchanged for 1,250,000 ordinary shares of RM0.50 each in UEM Land Holdings Berhad arising from the distribution of the dividend-in-specie by UEM World Berhad
237 PLUS Expressways Berhad Annual Report 2008
Analysis of Shareholdings
continued
List of PLUS Expressways’ Top 30 Holders as at 27 April 2009 Name 1.
UEM Group Berhad
2.
Holdings
%
2,010,522,335
40.21
Khazanah Nasional Berhad Exempt An
750,913,103
15.02
3.
Employees Provident Fund Board
533,738,212
10.67
4.
Khazanah Nasional Berhad
432,299,679
8.65
5.
Amanah Raya Nominees (Tempatan) Sdn Bhd Skim Amanah Saham Bumiputera
199,487,400
3.99
6.
Kumpulan Wang Persaraan (Diperbadankan)
124,142,512
2.48
7.
Amanah Raya Nominees (Tempatan) Sdn Bhd Amanah Saham Wawasan 2020
50,603,200
1.01
8.
Pertubuhan Keselamatan Sosial
48,535,297
0.97
9.
Cartaban Nominees (Asing) Sdn Bhd SSBT Fund 4545 For Lazard Emerging Markets Portfolio
34,619,700
0.69
10. Valuecap Sdn Bhd
34,403,900
0.69
11. Amanah Raya Nominees (Tempatan) Sdn Bhd Amanah Saham Malaysia
24,938,900
0.50
12. Cartaban Nominees (Asing) Sdn Bhd State Street Australia Fund ATB1 For Platinum Asia Fund
23,217,800
0.46
13. Amanah Raya Nominees (Tempatan) Sdn Bhd Amanah Saham Didik
22,748,000
0.45
14. Malaysian Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad (PAR 1)
21,580,000
0.43
15. HSBC Nominees (Asing) Sdn Bhd Exempt An For J.P. Morgan Bank Luxembourg S.A.
18,730,600
0.37
16. Permodalan Nasional Berhad
16,955,400
0.34
17. Cartaban Nominees (Asing) Sdn Bhd Government of Singapore Investment Corporation Pte Ltd for Government of Singapore (C)
16,082,950
0.32
18. CITIGROUP Nominees (Tempatan) Sdn Bhd Exempt An For Prudential Fund Management Berhad
14,352,300
0.29
19. HSBC Nominees (Asing) Sdn Bhd Exempt An For The Bank of New York Mellon (Mellon Acct)
12,826,300
0.26
238 PLUS Expressways Berhad Annual Report 2008
Analysis of Shareholdings
Name
Holdings
continued
%
20. HSBC Nominees (Asing) Sdn Bhd Exempt An For JPMorgan Chase Bank, National Association (Norges Bank)
12,789,100
0.26
21. HSBC Nominees (Asing) Sdn Bhd Exempt An For JPMorgan Chase Bank, National Association (U.A.E.)
11,935,505
0.24
22. HSBC Nominees (Asing) Sdn Bhd BBH and Co Boston For Vanguard Emerging Markets Stock Index Fund
10,965,582
0.22
23. Mayban Nominees (Tempatan) Sdn Bhd Mayban Trustees Berhad For Public Ittikal Fund (N14011970240)
10,172,000
0.20
24. Amanah Raya Nominees (Tempatan) Sdn Bhd Public Islamic Dividend Fund
9,495,100
0.19
25. SBB Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board
9,051,100
0.18
26. Cartaban Nominees (Asing) Sdn Bhd State Street For IShares, Inc.
8,985,000
0.18
27. Mayban Nominees (Tempatan) Sdn Bhd Mayban Trustees Berhad For Public Regular Savings Fund (N14011940100)
8,550,000
0.17
28. HSBC Nominees (Asing) Sdn Bhd TNTC For Fidelity Southeast Asia Fund (FID INV TST)
8,299,500
0.17
29. HSBC Nominees (Asing) Sdn Bhd Exempt An For the HongKong And Shanghai Banking Corporation Limited (HBFS – I CLT ACCT)
8,090,100
0.16
30. HSBC Nominees (Asing) Sdn Bhd HSBC BK Plc For Veritas Asian Fund
7,743,500
0.15
239 PLUS Expressways Berhad Annual Report 2008
List of Properties AS AT 31 December 2008
Landed properties of the PLUS Expressways Group based on net book value as at 31 December 2008
No. Particulars/Address/Description
Age of Building
1.
Geran No 16214, Lot 42936 Mukim Batu, Daerah Kuala Lumpur State of Wilayah Persekutuan 14 Jalan 3/38B, Taman SPPK Segambut, Kuala Lumpur Double storey link house
16 years
2.
Geran No 16170, Lot 42886 Mukim Batu, Daerah Kuala Lumpur State of Wilayah Persekutuan 68 Jalan 3/38B, Taman SPPK Segambut, Kuala Lumpur Double storey intermediate terrace house
3.
Land Area and Tenure
Date of Acquisition/ Last Revaluation
Staff accommodation
195 sqm Freehold
28 November 1996 ^ Revaluation done on 21 March 2003
156
16 years
Staff accommodation
130 sqm Freehold
12 June 1996 ^ Revaluation done on 21 March 2003
156
PM 603 PT 31821 (formerly HSM 14621 PT 21106) Mukim Kapar, Daerah Klang State of Selangor No 87 Jalan Mahkota 2 Bandar Baru Klang, Selangor Double storey intermediate terrace house
14 years
Staff accommodation
130 sqm Leasehold of 99 years ending 8 May 2093
26 December 1995 ^ Revaluation done on 12 July 2003
153
4.
PM 621 PT 31839 (formerly HSM 14639 PT 21124) Mukim Kapar, Daerah Klang State of Selangor No 51 Jalan Mahkota 2 Bandar Baru Klang, Selangor Double storey intermediate terrace house
14 years
Staff accommodation
130 sqm Leasehold of 99 years ending 8 May 2093
26 December 1995 ^ Revaluation done on 12 July 2003
153
5.
PM 620 PT 31838 (formerly HSM 14638 PT 21123) Mukim Kapar, Daerah Klang State of Selangor No 53 Jalan Mahkota 2 Bandar Baru Klang, Selangor Double storey intermediate terrace house
14 years
Staff accommodation
130 sqm Leasehold of 99 years ending 8 May 2093
26 December 1995 ^ Revaluation done on 28 October 2004
153
6.
PM 604 PT 31822 (formerly HSM 14622 PT 21107) Mukim Kapar, Daerah Klang State of Selangor No 85 Jalan Mahkota 2 Bandar Baru Klang, Selangor Double storey intermediate terrace house
14 years
Staff accommodation
130 sqm Leasehold of 99 years ending 8 May 2093
26 December 1995 ^ Revaluation done on 12 July 2003
153
240 PLUS Expressways Berhad Annual Report 2008
Existing Use
Net Book Value as at 31 December 2008 (RM’000)
List of Properties
No. Particulars/Address/Description
Age of Building
7.
PN 7686, Lot 247 Seksyen 13 Bandar Shah Alam District of Petaling, State of Selangor No 15 Jalan Kayak 13/25 TTDI, Shah Alam, Selangor Double storey link house
10 years
8.
PN 7687, Lot 248 Seksyen 13 Bandar Shah Alam District of Petaling, State of Selangor No 17 Jalan Kayak 13/25 TTDI, Shah Alam, Selangor Double storey link house
9.
Existing Use
continued
Net Book Value as at 31 December 2008 (RM’000)
Land Area and Tenure
Date of Acquisition/ Last Revaluation
Staff accommodation
120.75 sqm Leasehold of 99 years ending 1 November 2092
16 December 1996 ^ Revaluation done on 31 March 2005
145
10 years
Staff accommodation
120.75 sqm Leasehold of 99 years ending 1 November 2092
16 February 1996 ^ Revaluation done on 5 July 2004
145
PN 7692, Lot 253 Seksyen 13 Bandar Shah Alam District of Petaling, State of Selangor No 27 Jalan Kayak 13/25 TTDI, Shah Alam, Selangor Double storey link house
10 years
Staff accommodation
120.75 sqm Leasehold of 99 years ending 28 December 2084
16 February 1996 ^ Revaluation done on 13 May 2004
145
10.
PN 7696, Lot 257 Seksyen 13 Bandar Shah Alam District of Petaling, State of Selangor No 35 Jalan Kayak 13/25 TTDI, Shah Alam, Selangor Double storey link house
10 years
Staff accommodation
120.75 sqm Leasehold of 99 years ending 1 November 2092
16 February 1996 ^ Revaluation done on 13 May 2004
145
11.
HSM 20930 PT No 15368, Lot 44171 Mukim and District of Petaling State of Selangor No 43 Jalan SR6/4 Taman Kuda Emas, Serdang Jaya Section 6, Selangor Double storey terrace house
15 years
Staff accommodation
1,430 sqf Leasehold ending 31 March 2092
5 January 1996 ^ Revaluation done on 13 May 2004
170
12.
HSM 20931 PT No 15369, Lot 44172 Mukim and District of Petaling State of Selangor No 41 Jalan SR6/4 Taman Kuda Emas, Serdang Jaya Section 6, Selangor Double storey terrace house
15 years
Staff accommodation
1,430 sqf Leasehold ending 31 March 2092
5 January 1996 ^ Revaluation done on 10 May 2004
170
241 PLUS Expressways Berhad Annual Report 2008
List of Properties
continued
No. Particulars/Address/Description
Age of Building
13.
HSM 20932 PT No 15370, Lot 44173 Mukim and District of Petaling State of Selangor No 39 Jalan SR6/4 Taman Kuda Emas, Serdang Jaya Section 6, Selangor Double storey terrace house
15 years
14.
HSD 113452 PT No 11539 (formerly HSD 44643 PT 11539) Mukim Damansara, State of Selangor 1303 Blok D, No 2 Jalan SS7/26 47301 Petaling Jaya Apartment unit
15.
Existing Use
Net Book Value as at 31 December 2008 (RM’000)
Land Area and Tenure
Date of Acquisition/ Last Revaluation
Staff accommodation
1,430 sqf Leasehold ending 31 March 2092
5 January 1996 ^ Revaluation done on 13 May 2004
170
13 years
Staff accommodation
1,076 sqf Leasehold of 99 years ending 13 April 2089
7 December 1995 ^ Revaluation done on 5 March 2003
134
HSD 113452 PT No 11539 (formerly HSD 44643 PT 11539) Mukim Damansara, State of Selangor 1508 Blok D, No 2 Jalan SS7/26 47301 Petaling Jaya Apartment unit
13 years
Staff accommodation
1,345 sqf Leasehold of 99 years ending 13 April 2089
7 December 1995 ^ Revaluation done on 24 April 2003
163
16.
HSM 6455 PT No 1451 Mukim Damansara Daerah Petaling, Negeri Selangor No 46 Jalan SS7/30 Taman Kelana Indah Kelana Jaya, Selangor Double storey intermediate terrace house
16 years
Staff accommodation
121 sqm 1 August 1996 Leasehold of ^ Revaluation done on 99 years ending 13 May 2004 27 September 2091
180
17.
HSM 6468 PT No 1464 Mukim Damansara Daerah Petaling, Negeri Selangor No 72 Jalan SS7/30 Taman Kelana Indah Kelana Jaya, Selangor Double storey terrace house
16 years
Staff accommodation
121 sqm 15 April 1997 Leasehold of ^ Revaluation done on 99 years ending 2 October 2006 27 September 2091
185
18.
Part of Mukim Gadek, Mukim Pegoh & Mukim Melaka Pindah District of Alor Gajah, State of Melaka Leasehold land
Not applicable Future commercial development
242 PLUS Expressways Berhad Annual Report 2008
338 acres Leasehold of 99 years ending August 2106
August 2007 ^ Revaluation done on 23 December 2006
27,269
List of Properties
No. Particulars/Address/Description
Age of Building
19.
HSD 116090 PTD No 32590 Mukim Pulai, District of Johor Bahru State of Johor No 33 Jalan Rawa 21 Taman Perling Johor Bahru Single storey terrace house
23 years
20.
HSD 116091 PTD No 32591 Mukim Pulai, District of Johor Bahru State of Johor No 35 Jalan Rawa 21 Taman Perling Johor Bahru Single storey terrace house
21.
22.
Existing Use
continued
Net Book Value as at 31 December 2008 (RM’000)
Land Area and Tenure
Date of Acquisition/ Last Revaluation
Staff accommodation
155.33 sqm Freehold (Bumiputra restricted)
1 November 1996 ^ Revaluation done on 3 January 2008
112
23 years
Staff accommodation
155.33 sqm Freehold (Bumiputra restricted)
1 November 1996 ^ Revaluation done on 3 January 2008
112
HSD 126310 PTD No 29026 Mukim Senai-Kulai, District of Johor Bahru, State of Johor No 1443 Jalan 1/10 Taman Senai Utama Single storey terrace house
11 years
Staff accommodation
1,540 sqf Freehold (Bumiputra restricted)
29 August 1996 ^ Revaluation done on 11 July 2007
87
HS(D) 202703 PTD 43538 & 43539 No 4 & 6, Jalan Hang Lekiu Taman Skudai Baru Skudai, Johor Bahru, Johor Mukim of Pulai Shoplot
15 years
Vacant
3,080 sqm Freehold
12 January 1993
406
Note: ^ Revaluation was done on the property by the Stamp Duty office/valuation office for the purpose of determining the stamp duty for transfer documents. The aforesaid properties provide accommodation to staff of Projek Lebuhraya Utara-Selatan Berhad who work at the toll plazas along the expressways.
243 PLUS Expressways Berhad Annual Report 2008
Group Directory
PLUS EXPRESSWAYS BERHAD Menara Korporat, Persada PLUS Persimpangan Bertingkat Subang KM15, Lebuhraya Baru Lembah Klang 47301 Petaling Jaya Selangor Darul Ehsan, Malaysia T +603 7801 6666/7666 4666 F +603 7801 6600/7666 4400 www.plus.com.my
KONSORTIUM LEBUHRAYA BUTTERWORTH-KULIM (KLBK) SDN BHD KM 6.5, Lebuhraya Butterworth-Kulim 13500 Permatang Pauh Seberang Perai, Pulau Pinang, Malaysia T +604 3977 807 F +604 3977 808
PLUS KALYAN (MAURITIUS) PRIVATE LIMITED PROJEK LEBUHRAYA UTARA-SELATAN BERHAD Menara Korporat, Persada PLUS Persimpangan Bertingkat Subang KM15, Lebuhraya Baru Lembah Klang 47301 Petaling Jaya Selangor Darul Ehsan, Malaysia T +603 7801 6666/7666 4666 F +603 7801 6600/7666 4400 www.plus.com.my
EXPRESSWAY LINGKARAN TENGAH SDN BHD Menara Korporat, Persada PLUS Persimpangan Bertingkat Subang KM15, Lebuhraya Baru Lembah Klang 47301 Petaling Jaya Selangor Darul Ehsan, Malaysia T +603 7801 6666/7666 4666 F +603 7801 6600/7666 4400 www.plus.com.my
LINKEDUA (MALAYSIA) BERHAD Menara Korporat, Persada PLUS Persimpangan Bertingkat Subang KM15, Lebuhraya Baru Lembah Klang 47301 Petaling Jaya Selangor Darul Ehsan, Malaysia T +603 7801 6666/7666 4666 F +603 7801 6600/7666 4400 www.plus.com.my
244 PLUS Expressways Berhad Annual Report 2008
c/o Multiconsult Limited Rogers House 5, President John Kennedy Street Port Louis, Mauritius T +230 405 2000 F +230 212 5265/+230 208 0572
PLUS BKSP TOLL LIMITED 413, B Wing, Shree Nand Dham 4th Floor, Sector 11, CBD Belapur Navi Mumbai 400 614 India T +91 2227573777 F +91 2227573767
PT LINTAS MARGA SEDAYA JI Cibitung II No.34 Kebayoran Baru Jakarta 12170 Indonesia T +62 21 7245870 F +62 21 7222436
PT CIMANGGIS CIBITUNG TOLLWAYS Wisma Bakrie 1 Lantai 17 Jl. HR. Rasuna Said Kav. B2 Jakarta 12920 Indonesia T +62 21 52920266 F +62 21 52920837
FORM OF PROXY
No. of Ordinary Shares Held CDS Account No.
I/We
(PLEASE USE BLOCK LETTERS)
of (full address)
being a member/members of PLUS EXPRESSWAYS BERHAD, hereby appoint
of or failing him, the Chairman of the Meeting as my/our proxy to vote for me/us and on my/our behalf at the Seventh Annual General Meeting of the Company to be held at the Banquet Hall, Menara Korporat, Persada PLUS, Persimpangan Bertingkat Subang, KM15, Lebuhraya Baru Lembah Klang, 47301 Petaling Jaya, Selangor Darul Ehsan on Thursday, 4 June 2009 at 10.00 a.m. My/Our proxy is to vote as indicated below: (Please indicate with an “3” or “7” in the boxes provided how you wish your vote to be cast. If you do not do so, the proxy will vote or abstain from voting at his discretion.) For Resolution 1
Against
To declare a single tier final dividend of 9.5 sen per ordinary share for the financial year ended 31 December 2008. To re-elect the following Directors retiring in accordance with Article 76 of the Company’s Articles of Association:
Resolution 2
i)
Tan Sri Dato’ Mohd Sheriff Mohd Kassim
Resolution 3
ii)
Noorizah Hj Abd Hamid
To re-elect the following Directors retiring in accordance with Article 83 of the Company’s Articles of Association: Resolution 4
i)
Datuk Seri Panglima Mohd Annuar Zaini
Resolution 5
ii)
Dato’ Seri Ismail Shahudin
Resolution 6
To approve the Directors’ remuneration.
Resolution 7
To re-appoint Messrs Ernst & Young as Auditors and to authorise the Directors to fix their remuneration.
Resolution 8
To empower Directors pursuant to Section 132D of the Companies Act 1965 to allot and issue shares.
Resolution 9
To approve the Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature.
Resolution 10
To approve the Proposed New Mandate for Additional Recurrent Related Party Transactions of a Revenue or Trading Nature.
Dated this _______________ day of ______________ 2009.
___________________________________ Signature/Seal
NOTES 1. Every member is entitled to appoint a proxy or in the case of a corporation, to appoint a representative to attend and vote in his place. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 need not be complied with. 2. To be valid, this original form of proxy duly completed must be deposited at the Share Registrar’s office, Symphony Share Registrars Sdn Bhd, Level 26, Menara Multi-Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur not less than 48 hours before the time of holding the meeting. 3. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if such appointor is a corporation, under its common seal or under the hand of its attorney. 4. A member holding one thousand (1,000) ordinary shares or less may appoint only one (1) proxy to attend and vote at a general meeting who shall represent all the shares held by such member. A member holding more than one thousand (1,000) ordinary shares may appoint up to ten (10) proxies to attend and vote at the same meeting and each proxy appointed shall represent a minimum of one thousand (1,000) ordinary shares. Where a member appoints one (1) or more proxies to attend and vote at the same meeting, such appointment(s) shall be invalid unless the member specifies the proportion of his shareholding to be represented by each proxy. 5. If this form of proxy is returned without any indication as to how the proxy shall vote, the proxy will vote or abstain as he deems fit. 6. If no name is inserted in the space provided for the name of your proxy, the Chairman of the Meeting will act as your proxy.
1st fold here
STAMP
The Share Registrar’s Office Symphony Share Registrars Sdn Bhd Level 26, Menara Multi-Purpose Capital Square No. 8, Jalan Munshi Abdullah 50100 Kuala Lumpur, Malaysia
Then fold here
Fold this flap for sealing
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