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244,730 253,513 Amount to be amortised:
- Not later than one year 7,135 7,135 - Later than one year but not later than five years 28,540 28,540 - Later than five years 209,055 217,838 The leasehold and foreshore land cannot be disposed, charged or subleased without the prior consent of the Johor State Government.
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FOR tHE FINANcIAL YEAR ENDED 31 DEcEMBER 2013
14. GOODWILL ON ACQUISITION
Group
2013 2012 RM’000 RM’000
Net carrying amount:
At 1 January 62,783 –
Acquisition of business – 62,783
At 31 December 62,783 62,783
(a) Impairment testing of goodwill
Goodwill arising from business combinations has been allocated to a single cash-generating unit (“CGU”), which is the Group’s Offshore Segment for impairment testing.
Key assumptions used in value-in-use calculations
The recoverable amount of the CGU is determined based on value in use calculations using forecasts on Earnings Before Interests, Taxation, Depreciation and Amortisation (“EBITDA”) based on financial budgets approved by management covering a five-year period. EBITDA for the five-year period is estimated based on anticipated future projects and profitability trends of the Offshore Segment’s projects. EBITDA forecast beyond the five-year period are extrapolated based on the five-year average figures into perpetuity, assuming no growth and using a pre-tax discount rate of 9%.
The calculations of value in use for the CGU are most sensitive to the following assumptions:
(i) Budgeted gross margins
Gross margins are estimated based on completed projects and budgeted margins of identified future contracts.
(ii) Growth rates
The forecasted growth rates are based on published industry research and do not exceed the long-term average growth rate for the industries relevant to the CGUs.
Management believes that there will not be reasonable foreseeable changes in key assumptions that would cause the carrying value of the CGU to exceed its recoverable amount.
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15. INVESTMENT IN SUBSIDIARIES
Company
2013 2012 RM’000 RM’000
Unquoted shares in Malaysia, at cost 664,132 664,132 The subsidiaries, all of which are incorporated in Malaysia, are as follows:
% of ownership % of ownership interest held by interest held by non-controlling Name Principal activities the Group interest
2013 2012 2013 2012
Malaysia Marine and Heavy Engineering Sdn. Bhd. (“MMHE”)
Oil and gas engineering and construction works and
marine conversion and repair 100% 100% – – Malaysia Marine and Heavy
Engineering (Turkmenistan)
Sdn. Bhd. Dormant 100% 100% – – Subsidiaries of MMHE:
MMHE-SHI LNG Sdn. Bhd. Provision of repair services and dry docking of liquefied
natural gas carriers 70% 70% 30% 30% Techno Indah Sdn. Bhd. Sludge disposal management 100% 100% – –
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16. INVESTMENT IN JOINT VENTURES
Group Company
2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
Unquoted shares at cost 14,372 14,372 3,000 3,000 Share of post-acquisition reserves 6,224 19,919 – –
20,596 34,291 3,000 3,000 (a) Details of the Group’s joint ventures, all of which are incorporated in Malaysia, are as follows:
% of ownership
interest held by Accounting model Name the Group Nature of relationship applied
2013 2012
Technip MHB Hull Engineering
Sdn. Bhd. 50% 50% Note (i) Equity method MMHE-TPGM Sdn. Bhd. 60% 60% Note (ii) Equity method MMHE-ATB Sdn. Bhd. 40% 40% Note (iii) Equity method
(a) The above joint arrangements are structured via separate entities and provide the group with the rights to the net assets of the entities under the arrangements. Therefore these entities are classified as joint ventures of the Group.
These joint ventures have the same reporting period as the Group. No quoted market prices are available for the shares for Technip MHB Hull Engineering Sdn. Bhd., MMHE-TPGM Sdn. Bhd. and MMHE-ATB Sdn. Bhd. as these companies are private companies.
(i) Technip MHB Hull Engineering Sdn. Bhd. builds and develops hull engineering and engineering project management capacities. It provides its services as subcontractors to the Group’s projects as well as third parties.
(ii) MMHE-TPGM Sdn. Bhd. provides engineering, procurement, construction, installation and commissioning services for the Group’s activities in Turkmenistan.
(iii) MMHE-ATB Sdn. Bhd. is engaged in the manufacturing of pressure vessels and tube heat exchangers. It provides its services as subcontractors to the Group’s projects as well as third parties.
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16. INVESTMENT IN JOINT VENTURES (CONT’D.)
(b) As none of the Group’s joint ventures are individually material to the Group, the summarised financial information for the aggregated assets, liabilities and results of the joint ventures are as follows:
(i) Summarised statements of financial position
2013 2012 RM’000 RM’000
Non-current assets 24,284 22,537 Cash and cash equivalents 52,035 223,458 Other current assets 20,077 47,847 Total current assets 72,112 271,305
Total assets 96,396 293,842
Current liabilities (57,408) (227,715) Non-current liabilities (5,626) (9,130) Total liabilities (63,034) (236,845)
Net assets 33,362 56,997
(ii) Summarised statements of comprehensive income
2013 2012 RM’000 RM’000
Revenue 70,087 378,540
Depreciation and amortisation (936) (684)
Interest income 156 135
Interest expense (860) (659) Profit/(loss) before tax 6,923 (51,319) Income tax expense (4,208) (528) Profit/(loss) after tax 2,715 (51,847) Dividend received from joint ventures during the year 15,000 1,000 (c) The Group’s share of net assets is equivalent to the carrying value of the Group’s interest in joint ventures.
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17. JOINT OPERATION
Details of the Group’s joint operation is as follows:
% of ownership interest Accounting model Name held by the Group applied
2013 2012
Technip MMHE (Malikai) Joint Venture 50% – Proportionate consolidation method Technip MMHE (Malikai) Joint Venture is an unincorporated joint venture between the Company’s subsidiary, MMHE and Technip Geoproduction (M) Sdn. Bhd. to undertake engineering, procurement and construction services for the TLP Malikai Deepwater Project.
18. DEFERRED TAX
Group
2013 2012 RM’000 RM’000
At 1 January (9,315) 26,618
Recognised in profit or loss (Note 9) (51,893) (35,933) At 31 December (61,208) (9,315) Presented after appropriate offsetting as follows:
Group
2013 2012 RM’000 RM’000
Deferred tax assets (61,208) (9,315)
Deferred tax liabilities – –
(61,208) (9,315)
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18. DEFERRED TAX (CONT’D.)
The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows:
Deferred tax liabilities of the Group:
Property, plant and equipment RM’000
At 1 January 2013 46,565
Recognised in profit or loss 1,193
At 31 December 2013 47,758
At 1 January 2012 47,688
Recognised in profit or loss (1,123)
At 31 December 2012 46,565
Deferred tax assets of the Group:
Unutilised investment
Receivables Provisions tax allowance Others Total RM’000 RM’000 RM’000 RM’000 RM’000
At 1 January 2013 – (1,775) (45,314) (8,791) (55,880)
Recognised in profit or loss – 1,362 (54,064) (384) (53,086)
At 31 December 2013 – (413) (99,378) (9,175) (108,966)
At 1 January 2012 (1,304) (1,370) (8,384) (10,012) (21,070) Recognised in profit or loss 1,304 (405) (36,930) 1,221 (34,810) At 31 December 2012 – (1,775) (45,314) (8,791) (55,880) Malaysia Marine and Heavy engineering Holdings B er H ad
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18. DEFERRED TAX (CONT’D.)
Deferred tax assets have not been recognised in respect of the following items:
Group
2013 2012 RM’000 RM’000
Unutilised tax losses 15,440 13,752 Unabsorbed capital allowances 28,547 28,547 The unutilised 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. Deferred tax assets have not been recognised as they arise in a subsidiary with a recent history of losses.
19. TRADE AND OTHER RECEIVABLES
Group Company 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000 Non-current Loan to subsidiary – – 437,285 251,483 Current Trade receivables 513,750 550,874 – – Purchases of inventory and project
materials paid in advance and recharges
back to vendors 3,238 24,619 – – Due from:
– customers on contracts (Note 20) 1,883,506 1,465,419 – – – joint ventures 2,800 – – – – subsidiary – – 10,929 – Loan to subsidiary – – 253,757 71,843 Deposits 2,364 971 – – Prepayments 1,492 1 – – Staff loans 531 612 – – Dividend receivable 2,000 1,000 80,000 160,000 Accrued sales 15,031 51,534 – – Non-trade receivables 30,930 19,675 – – Insurance claims receivables 32,180 5,554 – – Other receivables 9,623 11,690 856 3,294
2,497,445 2,131,949 345,542 235,137 Less: Allowance for impairment losses
Trade receivables (16,610) (17,572) – – 2,480,835 2,114,377 345,542 235,137 ANNUAL REPORT 2013
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19. TRADE AND OTHER RECEIVABLES (CONT’D.)
Group Company
2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
Total trade and other receivables
(current and non-current) 2,480,835 2,114,377 782,827 486,620 Less: Prepayments (1,492) (1) – – Due from customers on contracts (1,883,506) (1,465,419) – – Add: Cash and cash equivalents (Note 21) 623,184 890,288 304,496 665,736 Total loans and receivables 1,219,021 1,539,245 1,087,323 1,152,356 Included in the trade receivables of the Group are amounts due from:
Group
2013 2012 RM’000 RM’000
(i) Immediate holding company 179,209 373,098 (ii) Other related companies
PETRONAS Carigali (Turkmenistan) Sdn. Bhd. 1,058 3,371 PETRONAS Carigali Sdn. Bhd. – 4,521 Malaysia Offshore Mobile Production. (L) Ltd. – 7,962 Kebabangan Petroleum Operating Company Sdn. Bhd. 30,023 47,000 (iii) Joint venture
MMHE-TPGM Sdn. Bhd. 8,117 47,085 Included in the amount due from customers on contracts of the Group are amounts in respect of projects for:
Group
2013 2012 RM’000 RM’000
(i) Immediate holding company 841,140 157,216 (ii) Other related companies
PETRONAS Carigali Sdn. Bhd. 111,175 155,409 Kebabangan Petroleum Operating Company Sdn. Bhd. 221,141 193,445
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19. TRADE AND OTHER RECEIVABLES (CONT’D.)
Credit terms of trade receivables for the Group range from 30 days to 45 days (2012: 30 days to 45 days). The amount due from immediate holding company, other related companies and joint ventures are unsecured, interest free and repayable on demand.
The loan to subsidiary is unsecured, bears interest of 4.05% per annum and repayable based on fixed quarterly repayments.
Further information on credit risk is disclosed in Note 31(b).
20. AMOUNT DUE FROM/(TO) CUSTOMERS ON CONTRACTS
Group
2013 2012 RM’000 RM’000
Aggregate costs incurred and recognised profits
(less recognised losses) to date 13,368,764 11,113,244 Less: Progress billings (11,494,723) (9,762,916)
1,874,041 1,350,328 Amounts due from customers on contracts (Note 19) 1,883,506 1,465,419 Amounts due to customers on contracts (Note 24) (9,465) (115,091)
1,874,041 1,350,328