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www.sumatec.com
SUMATEC RESOURCES BERHAD (428355-D)
Level 15-2, Bangunan Faber Imperial Court
Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia
Tel : 603-2692 4271
Fax : 603-2732 5388
SUMATEC RESOURCES BERHAD (4
28
35
5-D
) | ANNUAL REPORT 2014
SUMATEC RESOURCES BERHAD(428355-D)
ANNUALREPORT
2014
VISIONTHE leading Malaysian
Independent Oil & Gas
Operator focused on
developing proven oil
& gas assets.
MISSIONThrough innovation,
efficiency and safety
we will improve the
performance of the
Company's oil and
gas assets.
18th ANNUALGENERAL MEETINGwill be held at 10.30 am on Thursday 11 June 2015
at Bintang Ballroom, 5th Floor, Cititel Mid Valley
Mid Valley City, Lingkaran Syed Putra
59200 Kuala Lumpur
GOVERNANCEOVERVIEW
FINANCIALREVIEW
CONTENTS
OTHERINFORMATION
Code of Business
Conduct.........................02
About Us........................04
Corporate Values............05
Chairman’s Statement ...06
Chief Executive
Officer’s Review.............10
Five-Year
Financial Highlights........14
Board of Directors..........16
Board of
Directors’ Profile............18
Management
Team’s Profile................22
Corporate Information....25
Financial Calendar..........26
Corporate Structure........28
Statement on
Corporate Governance....29
Audit Committee Report...40
Statement on Risk
Management and
Internal Control..............46
Other Additional
Compliance Information...49
Statement on
Directors’ Responsibility...53
Financial Statements......55
Analysis of
Shareholdings..............133
Analysis of
Warrant Holdings..........136
List of Properties..........142
Share Price Chart.........143
Notice of Annual
General Meeting...........144
Proxy Form
SUMATEC RESOURCES BERHAD (428355-D)02 SUMATEC RESOURCES BERHAD (428355-D)02
BusinessSUMATEC will achieve high standards of efficiency by committing to:
Employees
committing to:
CODE OF BUSINESS CONDUCT
ANNUAL REPORT 2014 03ANNUAL REPORT 2014 03
Host Countries
Local Communities
committed to:
ANNUAL REPORT 2014
ABOUT
US....SUMATEC
RESOURCES
BERHAD(“SUMATEC” OR
“THE GROUP”)
WAS ESTABLISHED
IN 1979 AS A
SERVICE
PROVIDER IN THE
DOWNSTREAM
SECTOR OF THE
OIL AND GAS
INDUSTRY.
The Group, which completed its
financial and business restructuring
plan in November 2013, saw itself
entering the upstream sector via a
joint investment agreement with
Markmore Energy (Labuan) Limited
and CaspiOilGas LLP to develop the
Rakushechnoye Oil and Gas Field in
West Kazakhstan (“Rakushechnoye
Field”).
Rakushechnoye Field has a 2P Oil
and Gas reserve of 139.4 million
barrels of oil equivalent (as certified by
SRK Consulting (Australasia) Pty Ltd
in May 2014.)
In realising its vision to be a leading
Malaysian Independent Oil and Gas
operator, Sumatec will continue to
look for opportunities to acquire and
develop new and under-performing
oil and gas fields. Our target assets
will be mainly onshore, as this
reduces the capital cost of
infrastructure required. We will only
select the assets that provide
maximum return for shareholder
investment through short term
production enhancement and long
term sustainable production growth.
Sumatec Resources Berhad
(SUMATEC-1201) is listed on the
Main Market of Bursa Securities.
SUMATEC RESOURCES BERHAD (428355-D)04
ANNUAL REPORT 2014 05
CORPORATE VALUES
Safety. Efficiency. Innovation.
o Is it Safe - does it meet our HSE standards
o It will make the company more efficient and cost
effective
o The product, approach or method; proven or
leading technology should increase our ROI
Safety
o Indentify Risks & Hazards in all field operations
o Develop mitigation strategies and implement
procedures
Efficiency
Innovation
SUMATEC RESOURCES BERHAD (428355-D)06
DEAR VALUED SHAREHOLDERS,
Sumatec Resources Berhad (“Sumatec” or “our Company”) has delivered a positive
performance for its full financial year following the successful completion of its
business regularisation exercise at the end of 2013.
Tan Sri Abu Talib Bin OthmanChairman
CHAIRMAN’SSTATEMENT
ANNUAL REPORT 2014 07
REVENUE INCREASED TO
RM81.1 million
NET ASSET PER SHARE IMPROVED TO
17.5 sen
CHAIRMAN’S STATEMENTCONT’D
OPERATING LANDSCAPE
FINANCIAL PERFORMANCE
SUMATEC RESOURCES BERHAD (428355-D)08
CHAIRMAN’S STATEMENTCONT’D
Expanding Our FOOtprint in KazaKhstan
To further solidify our presence in Kazakhstan, our Company signed a Framework Agreement in July 2014, followed by a Share Purchase Agreement on 8 September 2014, with Abu Talib Abdul Rahman and Dr. Murat Safin for the proposed acquisition of 100% equity interest in Borneo Energy Oil and Gas Limited (Borneo Energy) for the initial price of USD350 million. Following from the drop in the oil price, the purchase consideration was revised down to USD290 million through a supplemental agreement signed on 9 January 2015.
Borneo Energy is a 100% beneficiary of the participating interest in Buzachi Neft LLP (“Buzachi”), an independent upstream oil and gas company involved in the exploration, production and trading of oil and natural gas. Buzachi currently has two 25-year subsoil use contracts, valid until November 2026, for the exploration and production of oil and gas in Karaturun Vostochnyi and Karaturun Morskoi fields ("Buzachi Fields") located on the Northern shore of Mangistau Oblast, Western Kazakhstan. The combined 2P certified reserves of the Buzachi Fields are 68.8 million barrels of oil.
This purchase is an important milestone that will pave the way towards Sumatec acquiring its first wholly-owned hydrocarbon asset. This is well in line with our Company’s corporate strategy of becoming a significant upstream oil and gas player in the global arena. Moreover, the additional oil produced by Buzachi will provide a source of stable and sustainable recurring income to our Company in the foreseeable future.
COrpOratE sOCial rEspOnsibility
Given that Sumatec is operating in the international arena and within a highly competitive and well-regulated industry, our Company strongly believes that sustainable business practices will lead to robust business growth.
The tenets of environment conservation and being “green” are important to our Company’s core business activities. So too are principles in relation to our employees’ health, safety and welfare.
As a progressive corporation, we aim to put in place processes or carry out initiatives that embraces the virtues of being a socially responsible corporate citizen comprehensively. As such, our commitment towards CSR will be in line with Bursa Malaysia’s framework that centres on four key pillars, namely Community, Environment, Marketplace and Workplace.
MOving FOrward
The United States Energy Information Administration (EIA) has projected that Brent crude oil price will average USD59 per barrel in 2015. The outlook could be even more positive since Brent price hit the high mark of USD68 in May 2015. 2016 is expected to see further strengthening of the oil prices to an average of USD75 per barrel.
Taking into account the price outlook in the short term, Sumatec reviewed its plans to ramp up production through workovers and side tracks in 2014 and new wells in 2015. The Company re-directed its capital expenditure to completing only workovers in 2014 and deferring all other capital outlays into 2015 with additional review prior to any further commitment of expenditure.
Construction of Beam Pump Foundation
Beam pump on well 115 operational with COG/SOGand contractors
ANNUAL REPORT 2014 09
CHAIRMAN’S STATEMENTCONT’D
ACKNOWLEDGEMENT
Tan Sri Abu Talib Othman
Cardwell Rig: Workover Program 2014
SUMATEC RESOURCES BERHAD (428355-D)10
Christopher Layton DaltonChief Executive Officer
CHIEFEXECUTIVEOFFICER’SREVIEW
DEAR SHAREHOLDERS,As Sumatec Resources Berhad continues to chart its course as an independent upstream oil
and gas player, the Company has remained committed towards ensuring that it builds a strong
foundation in terms of operations, processes and human capital to reap success in this highly
competitive oil and gas space.
I am confident that the investments we made in strategic and operational expansion during the
year have placed us in a much better position to deliver positive long term growth to our
shareholders and stakeholders at large.
ANNUAL REPORT 2014 11
CHIEF EXECUTIVE OFFICER’S REVIEWCONT’D
A DYNAMIC INDEPENDENT UPSTREAM
OIL AND GAS COMPANY
STRENGTHENING OUR FOUNDATIONTO SECURE OUR FUTURE
Coil tubing unit conduction N2 injection for artificial lift of well.
SUMATEC RESOURCES BERHAD (428355-D)12
CHIEF EXECUTIVE OFFICER’S REVIEWCONT’D
UNLOCKING THE VALUE OF OUR ASSETS
Surface network pipeline upgrading at central processing facility.
Central Processing Facility: Master Unit
ANNUAL REPORT 2014 13
CHIEF EXECUTIVE OFFICER’S REVIEWCONT’D
SET TO REACH GREATER HEIGHTS
Christopher Layton Dalton
SUMATEC RESOURCES BERHAD (428355-D)14
FINANCIAL HIGHLIGHTS
REVENUE
(RM’000)
81,117
0
1,543
175,017
214,725
2014
2013
2012
2011
2010
PFOFIT/(LOSS) AFTER TAXATION (“PAT”)
(RM’000)
48,904
64,259
(105,448)
(66,682)
(37,904)
2014
2013
2012
2011
2010
TOTAL ASSETS
(RM’000)
681,396
453,675
551,475
684,708
828,869
2014
2013
2012
2011
2010
NET ASSETS PER SHARE
(RM)
0.18
0.14
(0.31)
0.18
0.54
2014
2013
2012
2011
2010
SHAREHOLDERS’ EQUITY
(RM’000)
610,591
426,782
(137,831)
(38,096)
16,779
2014
2013
2012
2011
2010
BASIC EARNINGS/(LOSS) PER SHARE (sen)
1.50
12.58
(46.53)
(35.90)
(22.08)
2014
2013
2012
2011
2010
SUMATEC RESOURCES BERHAD (428355-D)14
ANNUAL REPORT 2014 15
FIVE-YEAR FINANCIAL HIGHLIGHTSCONT’D
2010 2011 2012 2013 2014
KEY FINANCIAL DATA
STATEMENT OF COMPREHENSIVE INCOME:
81,117
61,729
48,904
48,904
STATEMENT OF FINANCIAL POSITION:
487,577
610,591
681,396
610,561
22,635
1,384
RATIO ANALYSIS:
1.50
0.18
0.04
8
VALUATION:
714.0
Note:
NM : Not Meaningful
SUMATEC RESOURCES BERHAD (428355-D)16
1. Tan Sri Abu Talib bin Othman Independent Non-Executive Chairman
2. Wan Kamaruddin bin
Dato’ Biji Sura @ Wan Abdullah Non-Independent Non-Executive Director
3. Chan Yok Peng Non-Independent Non-Executive Director
4. Mohamad bin Ismail Independent Non-Executive Director
r
1
2
3
Chan Yok Peng
4
BOARD OF DIRECTORS
ANNUAL REPORT 2014 17
5. Datuk Che Mokhtar bin Che Ali Independent Non-Executive Director
6. Datuk Mohd Nasir bin Ahmad Independent Non-Executive Director
7. Michael Lim Hee Kiang Independent Non-Executive Director
8. Dato’ Ahmad Johari bin Tun Abdul Razak Independent Non-Executive Director
e Mokhtar bin Che Alit Non-Executive Director
7. Michael Lim Hee KiIndependent Non-Exec
khtar bin Che Ali 7 Michael Lim
67
8
5
BOARD OF DIRECTORSCONT’D
SUMATEC RESOURCES BERHAD (428355-D)18 SUMATEC RESOURCES BERHAD (428355-D)18
From left to right.
BOARD OF DIRECTORS’ PROFILE
Tan Sri Abu Talib bin OthmanIndependent Non-Executive Director
Age 77, Malaysian
Position in the Company
Qualification
Working Experiences
Directorship in Public Companies
Wan Kamaruddin bin
Dato’ Biji Sura @ Wan AbdullahNon-Independent Non-Executive Director
Age 59, Malaysian
Position in the Company
Qualification
Working Experiences
Directorship in Public Companies
ANNUAL REPORT 2014 19ANNUAL REPORT 2014 19
From left to right.
BOARD OF DIRECTORS’ PROFILECONT’D
Chan Yok PengNon-Independent Non-Executive Director
Age 63, Malaysian
Position in the Company
Qualification
Working Experiences
Directorship in Public Companies
Mohamad bin Ismail Independent Non-Executive Director
Age 64, Malaysian
Position in the Company
Qualification
Working Experiences
Directorship in Public Companies
SUMATEC RESOURCES BERHAD (428355-D)20 SUMATEC RESOURCES BERHAD (428355-D)20
From left to right.
BOARD OF DIRECTORS’ PROFILECONT’D
Datuk Che Mokhtar bin Che Ali Independent Non-Executive Director
Age 61, Malaysian
Position in the Company
Qualification
Working Experiences
Directorship in Public Companies
Datuk Mohd Nasir bin AhmadIndependent Non-Executive Director
Age 61, Malaysian
Position in the Company
Qualification
Working Experiences
Directorship in Public Companies
ANNUAL REPORT 2014 21ANNUAL REPORT 2014 21
From left to right.
BOARD OF DIRECTORS’ PROFILECONT’D
Michael Lim Hee KiangIndependent Non-Executive Director
Age 67, Malaysian
Position in the Company
Qualification
Working Experiences
Directorship in Public Companies
Dato’ Ahmad Johari bin Tun Abdul Razak Independent Non-Executive Director
Age 61, Malaysian
Position in the Company
Qualification
Working Experiences
Directorship in Public Companies
Notes:-
and/or major shareholder nor conflict of interest in business arrangement
involving the Company.
(10) years other than traffic offences, if any.
the Annual Report
SUMATEC RESOURCES BERHAD (428355-D)22
MANAGEMENT TEAMS’ PROFILE
Christopher Layton DaltonChief Executive Officer
Age 41, British
Position in the Company
Qualifications
Working Experiences
Notes:-
shareholders nor conflict of interest in business arrangement involving the
Company.
other than traffic offences, if any.
the Company ESOS as at 31 December 2014.
Roshidah binti AbdullahChief Financial Officer
Position in the Company
Qualifications
Working Experiences
ANNUAL REPORT 2014 23
MANAGEMENT TEAMS’ PROFILECONT’D
Zulkifly bin MohamadChief Operating Officer
Position in the Company
Qualification
Working Experiences
Samuel Elliot HarveyOperations Director
Position in the Company
Qualification
Working Experiences
SUMATEC RESOURCES BERHAD (428355-D)24
Bakhtiyar Jexenbiyev
Position in the Company
Qualifications
Working Experiences
MANAGEMENT TEAMS’ PROFILECONT’D
Timur Meirzhanovich UtebaevFacilities Manager
Position in the Company
Qualification
Working Experiences
BOARD OF DIRECTORS
Tan Sri Abu Talib bin OthmanIndependent Non-Executive Chairman
Wan Kamaruddin bin
Dato’ Biji Sura @ Wan AbdullahNon-Independent Non-Executive Director
Chan Yok PengNon-Independent Non-Executive Director
Mohamad bin IsmailIndependent Non-Executive Director
Datuk Che Mokhtar bin Che AliIndependent Non-Executive Director
Datuk Mohd Nasir bin AhmadIndependent Non-Executive Director
Michael Lim Hee KiangIndependent Non-Executive Director
Dato’ Ahmad Johari bin
Tun Abdul RazakIndependent Non-Executive Director
PRINCIPAL OFFICERS
Christopher Layton DaltonChief Executive Officer
Roshidah binti AbdullahChief Financial Officer
AUDIT COMMITTEE
Michael Lim Hee KiangChairman
Mohamad bin Ismail
Datuk Mohd Nasir bin Ahmad
REMUNERATION COMMITTEE
Tan Sri Abu Talib bin OthmanChairman
Michael Lim Hee Kiang
Chan Yok Peng
NOMINATION COMMITTEE
Tan Sri Abu Talib bin OthmanChairman
Datuk Che Mokhtar bin Che Ali
Michael Lim Hee Kiang
ESOS COMMITTEE
Datuk Mohd Nasir bin AhmadChairman
Datuk Che Mokhtar bin Che Ali
Chan Yok Peng
Christopher Layton Dalton
INVESTMENT COMMITTEE
Datuk Che Mokhtar bin Che AliChairman
Wan Kamaruddin bin
Dato’ Biji Sura @ Wan Abdullah
Mohamad bin Ismail
Christopher Layton Dalton
QHSE RISK COMMITTEE
Mohamad bin IsmailChairman
Wan Kamaruddin bin
Dato’ Biji Sura @ Wan Abdullah
Christopher Layton Dalton
COMPANY SECRETARIES
Lim Seck Wah(MAICSA 0799845)
M. Chandrasegaran a/l S. Murugasu(MAICSA 0781031)
REGISTERED OFFICE
Level 15–2
Bangunan Faber Imperial Court
Jalan Sultan Ismail
50250 Kuala Lumpur
Tel : 603-2692 4271
Fax : 603-2732 5388
email : [email protected]
PRINCIPAL PLACE OF BUSINESS
Suite 22.02, Level 22
The Gardens North Tower
Mid Valley City, Lingkaran Syed Putra
59200 Kuala Lumpur
SHARE REGISTRAR
Mega Corporate Services Sdn Bhd
Level 15–2
Bangunan Faber Imperial Court
Jalan Sultan Ismail
50250 Kuala Lumpur
Tel : 603-2692 4271
Fax : 603-2732 5388
e-mail : [email protected]
AUDITORS
Messrs SJ Grant Thornton
Chartered Accountants
Level 11
Bangunan Sheraton Imperial Court
Jalan Sultan Ismail
50250 Kuala Lumpur
SOLICITORS
Signum Law Firm
Shearn Delamore & Co.
Chua Associates
Bahari & Bahari
PRINCIPAL BANKERS
Alliance Bank Malaysia Berhad
Al-Rajhi Banking & Investment
Corporation ( Malaysia ) Berhad
CIMB Bank Berhad
Malayan Banking Berhad
STOCK EXCHANGE LISTING
Main Market
Bursa Malaysia Securities Berhad
Stock Name : SUMATEC
Stock Code : 1201
CORPORATEINFORMATION....
ANNUAL REPORT 2014 25
SUMATEC RESOURCES BERHAD (428355-D)26
GROUP STRUCTURE
FINANCIALCALENDAR
222MAY 20141st Quarter Ended 31 March 2014
ANNOUNCEMENT OF THEUNAUDITED CONSOLIDATED RESULTS:
288FEBRUARY 20144th Quarter Ended 31 Dec 2013
2727NOVEMBER 20143rd Quarter Ended 30 September 2014
244FEBRUARY 20154th Quarter Ended 31 December 2014
288AUGUST 20142nd Quarter Ended 30 June 2014
ANNUAL REPORT 2014 27
FINANCIALCALENDARCONT’D
300APRIL 2015Financial Year Ended 31 December 2014
SUBMISSION OF THEAUDITED FINANCIAL STATEMENTTO BURSA MALAYSIA:
NOTICE OF ANNUAL GENERAL MEETING AND ISSUANCE OFANNUAL REPORT:
111JUNE 201518th Annual General Meeting
200MAY 2015Financial Year Ended 31 December 2014
SUMATEC RESOURCES BERHAD (428355-D)28
100% SUMATEC CORPORATION SDN BHD
80% PERLIS BIO-POWER SDN BHD
100% SUMATEC PETROLEUM DEVELOPMENT SDN BHD
100% SUMATEC OIL AND GAS LLP
100% SUMATEC DEVELOPMENT SDN BHD
SUMATEC RESOURCES BERHAD
CORPORATE STRUCTURE
ANNUAL REPORT 2014 29
STATEMENT ON CORPORATE GOVERNANCE
I. ROLES AND RESPONSIBILITIES OF THE BOARD
The responsibilities of the Board include;
SUMATEC RESOURCES BERHAD (428355-D)30
STATEMENT ON CORPORATE GOVERNANCECONT’D
I. ROLES AND RESPONSIBILITIES OF THE BOARD
Matters specifically reserved for the Board include:
Code of Ethics and Conduct
ANNUAL REPORT 2014 31
STATEMENT ON CORPORATE GOVERNANCECONT’D
I. ROLES AND RESPONSIBILITIES OF THE BOARD
Promoting Sustainability
Access to Information
Company Secretaries
Board Charter
SUMATEC RESOURCES BERHAD (428355-D)32
II. BOARD STRENGTH AND EFFECTIVENESS
Composition of the Board
Audit Committee
Nomination Committee - Selection and Assessment of Directors
STATEMENT ON CORPORATE GOVERNANCECONT’D
ANNUAL REPORT 2014 33
II. BOARD STRENGTH AND EFFECTIVENESS
Appointment and Re-election of Directors
Remuneration Committee - Directors’ Remuneration
Non-Executive
Directors
(RM)
Total 656,150
STATEMENT ON CORPORATE GOVERNANCECONT’D
SUMATEC RESOURCES BERHAD (428355-D)34
II. BOARD STRENGTH AND EFFECTIVENESS
Remuneration Committee - Directors’ Remuneration
Non-Executive
Directors
ESOS Committee
SUMATEC RESOURCES BERHAD EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”)
As at 1 January 2014 Granted Lapsed Exercised
Balance Unexercised as
at 31 December 2014
STATEMENT ON CORPORATE GOVERNANCECONT’D
ANNUAL REPORT 2014 35
II. BOARD STRENGTH AND EFFECTIVENESS
Investment Committee
QHSE Risk Committee
III. INDEPENDENCE OF THE BOARD
STATEMENT ON CORPORATE GOVERNANCECONT’D
SUMATEC RESOURCES BERHAD (428355-D)36
IV. COMMITMENT OF DIRECTORS
Board Meetings and Attendance
Director Attendance %
Independent Non-Executive Director
Non-Independent Non-Executive Director
Non-Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
(appointed on 10 July 2014)
STATEMENT ON CORPORATE GOVERNANCECONT’D
ANNUAL REPORT 2014 37
IV. COMMITMENT OF DIRECTORS
Directors’ Training - Continuing Education Programmes
Director Name of Seminars / Training programmes attended
STATEMENT ON CORPORATE GOVERNANCECONT’D
SUMATEC RESOURCES BERHAD (428355-D)38
V. INTEGRITY IN FINANCIAL REPORTING
VI. RISK MANAGEMENT AND INTERNAL CONTROL
VII. WHISTLEBLOWING POLICY
VIII. TIMELY AND HIGH QUALITY DISCLOSURE
STATEMENT ON CORPORATE GOVERNANCECONT’D
ANNUAL REPORT 2014 39
IX. RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS
Shareholder participation at general meeting
Communication and engagement with shareholders
Investor and Media Relations
STATEMENT ON CORPORATE GOVERNANCECONT’D
SUMATEC RESOURCES BERHAD (428355-D)40
AUDIT COMMITTEE REPORT
1. COMPOSITION
Name Designation
2. MEETINGS
Name
Number of
Meetings Attended
%
attendance
ANNUAL REPORT 2014 41
AUDIT COMMITTEE REPORTCONT’D
3. SUMMARY OF ACTIVITIES
3. INTERNAL AUDIT FUNCTION
SUMATEC RESOURCES BERHAD (428355-D)42
AUDIT COMMITTEE REPORTCONT’D
4. TERMS OF REFERENCE
(i) Membership
(ii) Chairman
(iii) Quorum
(iv) Meetings and Minutes
ANNUAL REPORT 2014 43
4. TERMS OF REFERENCE
(iv) Meetings and Minutes
(v) Authority
(vi) Responsibilities and Duties
(a) Financial Reporting
AUDIT COMMITTEE REPORTCONT’D
SUMATEC RESOURCES BERHAD (428355-D)44
4. TERMS OF REFERENCE
(vi) Responsibilities and Duties
(b) External Audit
(c) Internal Audit
(d) Related Party Transactions
AUDIT COMMITTEE REPORTCONT’D
ANNUAL REPORT 2014 45
4. TERMS OF REFERENCE
(vi) Responsibilities and Duties
(e) Internal Control and Risk Management
(f) Reports
(g) Employees’ Share Option Scheme (“ESOS”)
(h) Other Matters
AUDIT COMMITTEE REPORTCONT’D
SUMATEC RESOURCES BERHAD (428355-D)46
STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
Board Responsibility
Risk Management
ANNUAL REPORT 2014 47
STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROLCONT’D
Code of Conduct
System of Internal Control
(i) Financial Reporting and Controls
(ii) Clear and Structured Organisational Reporting Lines
(iii) Policies and Procedures
(iv) Strategic Business Planning, Budgeting and Reporting
SUMATEC RESOURCES BERHAD (428355-D)48
STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROLCONT’D
System of Internal Control
(v) Closed Period Communication
(vi) Tender Award System
Assurance from Management
Conclusion
Review of This Statement
ANNUAL REPORT 2014 49
OTHER ADDITIONAL COMPLIANCE INFORMATION
MATERIAL CONTRACTS INVOLVING DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS
i. RECURRENT RELATED PARTY TRANSACTIONS
SUMATEC RESOURCES BERHAD (428355-D)50
OTHER ADDITIONAL COMPLIANCE INFORMATIONCONT’D
MATERIAL CONTRACTS INVOLVING DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS
II. OTHER RELATED PARTY TRANSACTIONS
ANNUAL REPORT 2014 51
MATERIAL CONTRACTS INVOLVING DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS
II. OTHER RELATED PARTY TRANSACTIONS
SHARE BUY-BACKS
OPTION, WARRANTS OR CONVERTIBLE LOAN SECURITIES
a. Warrants
b. Employee Share Options Scheme (“ESOS”)
DEPOSITORY RECEIPTS PROGRAMME
NON-AUDIT FEES
IMPOSITION OF SANCTIONS/PENALTIES
OTHER ADDITIONAL COMPLIANCE INFORMATIONCONT’D
SUMATEC RESOURCES BERHAD (428355-D)52
UPLIFTMENT OF PN17 STATUS
PROFIT ESTIMATES, FORECAST OR PROJECTIONS AND VARIATION IN RESULT
Forecast
Audited
Results Variance Explanation
RM’000 RM’000 RM’000
PROFIT GUARANTEE
STATUS OF UTILISATION OF PROCEEDS
Purpose Amount
RM’000
OTHER ADDITIONAL COMPLIANCE INFORMATIONCONT’D
ANNUAL REPORT 2014 53
STATEMENT OF DIRECTORS' RESPONSIBILITYFOR PREPARATION OF FINANCIAL STATEMENTS
FINANCIALSTATEMENTS
Directors’ Report.........................................................56
Statement by Directors and Statutory Declaration........62
Independent Auditors’ Report......................................63
Statements of Financial Position................................65
Statements of Profit or Lossand Other Comprehensive Income...............................67
Statements of Changes in Equity...............................69
Statements of Cash Flows..........................................71
Notes to the Financial Statements.............................74
SUMATEC RESOURCES BERHAD (428355-D)56
The Directors hereby submit their report together with the audited financial statements of the Group and of the Company
for the financial year ended 31 December 2014.
PRINCIPAL ACTIVITIES
The principal activities of the Company are that of investment holding and engaged in the upstream oil operation.
The principal activities of its subsidiary companies are disclosed in Note 4 to the Financial Statements.
There have been no significant changes in the nature of these activities during the financial year.
FINANCIAL RESULTS
Group Company
RM RM
Net profit for the financial year 48,903,849 3,025,668
Attributable to:
Owners of the Company 48,903,849 3,025,668
RESERVES AND PROVISIONS
There were no material transfers to or from reserves or provisions during the financial year except for those disclosed in
the financial statements.
DIVIDENDS
There were no dividends proposed, declared or paid by the Company since the end of the previous financial year.
DIRECTORS
The Directors in office since the date of the last report are:-
Tan Sri Abu Talib bin Othman
Datuk Che Mokhtar bin Che Ali
Datuk Mohd Nasir bin Ahmad
Wan Kamaruddin bin Dato’ Biji Sura @ Wan Abdullah
Chan Yok Peng
Mohamad bin Ismail
Michael Lim Hee Kiang
Dato’ Ahmad Johari bin Abdul Razak (appointed on 10.7.2014)
DIRECTORS' REPORT
ANNUAL REPORT 2014 57
DIRECTORS’ INTERESTS
According to the Register of Directors’ Shareholdings, the interests and deemed interests in the shares and options over
shares of the Company of those who were Directors as at year end are as follows:-
Number of ordinary shares of RM0.14 each
At
1.1.2014 Bought Sold
At
31.12.2014
Direct interest
Wan Kamaruddin bin Dato’ Biji Sura @ Wan Abdullah 700,000 - - 700,000
Dato’ Ahmad Johari bin Abdul Razak - 60,174,900 (21,000,000) 39,174,900
Deemed interest
Chan Yok Peng * 260,155,841 5,000,000 (79,672,662) 185,483,179
Number of Warrants B
At
1.1.2014 Bought Sold
At
31.12.2014
Deemed interest
Chan Yok Peng * 83,932,271 - - 83,932,271
* deemed interest by virtue of his shareholdings in Tekad Mulia Sdn. Bhd.
Other than those disclosed above, none of the other Directors in office at the end of the financial year held any interest in
the shares and options over shares of the Company or its related corporations during the financial year.
DIRECTORS’ BENEFITS
During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the object or
objects of enabling Directors of the Company to acquire benefits by means of the 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 (except
as disclosed in Notes 24 and 29 to the Financial Statements) by reason of a contract made by the Company or a related
corporation with the Director or with a firm of which the Director is a member, or with a company of which the Director has
a substantial financial interest.
ISSUE OF SHARES AND DEBENTURES
During the financial year, the Company issued:
(a) 89,000,000 ordinary shares of RM0.14 each arising from the exercise of employee share options at exercise price of
RM0.244 per share for a total cash consideration of RM21,716,000;
(b) 131,325 ordinary shares of RM0.14 each pursuant to the conversion of 131,325 warrants 2013/2028 at RM0.175 per
share for a total cash consideration of RM22,982; and
(c) 308,596,000 ordinary shares of RM0.14 each at RM0.38 per share via private placement to eligible investors for a
total cash consideration of RM117,266,480.
DIRECTORS' REPORTCONT’D
SUMATEC RESOURCES BERHAD (428355-D)58
ISSUE OF SHARES AND DEBENTURES (continued)
The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of
the Company.
There was no issuance of debentures during the financial year.
OPTIONS GRANTED OVER UNISSUED SHARES
No options were granted to any person to take up unissued share of the Company during the financial year apart from
the issue of options pursuant to the Employee Share Options Scheme (“ESOS”), Warrants 2011/2021 (“Warrants A”) and
Warrants 2013/2018 (“Warrants B”).
ESOS
The ESOS is governed by the by-laws which were approved by the shareholders at the Eighth Annual General Meeting
held on 24 June 2005. On 18 April 2007, the Company implemented ESOS after approvals were obtained from the
relevant authorities and was in force for a period of 5 years. The ESOS which originally expired on 17 April 2012, has been
extended for another 5 years to 16 April 2017.
The salient features and other terms of the ESOS are as follows:
(a) The ESOS Committee appointed by the Board of Directors to administer the ESOS, may from time to time grant
options to eligible employees of the Group to subscribe for new ordinary shares of RM0.14 each in the Company;
(b) The eligibility of a Director or employee of the Group to participate in the ESOS shall be at the discretion of the ESOS
Committee, who shall take into consideration factors such as years of service and performance track record;
(c) The total number of shares to be issued under ESOS shall not exceed in aggregate 15% of the issued and fully paid-
up share capital of the Company at any point of time during the tenure of the ESOS and out of which not more than
50% of the shares shall be allocated, in aggregate, to Directors and senior management. In addition, not more than
10% of the shares available under the ESOS shall be allocated to any individual Director or employee who, either
singly or collectively through his/her associates, holds 20% or more in the issued and paid-up share capital of the
Company;
(d) The option price shall not be at a discount of more than 10% from the 5-days weighted average market price of the
shares of the Company preceding the date of offer and shall in no event be less than the par value of the share of the
Company of RM0.14;
(e) The number of outstanding options to subscribe for shares or the option price or both may be adjusted following
any issue of additional shares by way of rights issues, bonus issues or other capitalisation issue carried out by the
Company while an option remains unexercised; and
(f) The new shares allotted upon any exercise of the option shall rank pari passu in all respects with the existing
ordinary shares of the Company except that the new shares so issued will not rank for any rights, dividends,
allotments and/or other distributions, the entitlement date of which is prior to the date of allotment of the new
ordinary shares.
DIRECTORS' REPORTCONT’D
ANNUAL REPORT 2014 59
OPTIONS GRANTED OVER UNISSUED SHARES (continued)
ESOS (continued)
As at 31 December 2014, the options offered to take up unissued ordinary shares of the Company of RM0.14 each and the
option prices are as follows:-
Number of option over ordinary shares of RM0.14 each
Grant date
Expiry
date
Option
price
At
1.1.2014 Granted Exercised Forfeited
At
31.12.2014
18.4.2007 16.4.2017 RM0.35 40,000 - - - 40,000
27.12.2013 16.4.2017 RM0.244 145,000,000 - (65,000,000) (15,400,000) 64,600,000
26.3.2014 16.4.2017 RM0.244 - 44,000,000 (24,000,000) - 20,000,000
During the financial year, eligible employees of the Group and the Company who have been granted with share options are
as follows:
Number of option over ordinary shares of RM0.14 each
At
1.1.2014 Granted Exercised Forfeited
At
31.12.2014
Albina Berisheva 600,000 - - - 600,000
Anelya Baitleuova 200,000 - - - 200,000
Aslan Tuleshev 800,000 - - - 800,000
Azamat Chukenov 300,000 - - - 300,000
Bakhityar R. Jexenbiyen 1,200,000 - - - 1,200,000
Chingis Nabiyev 15,000,000 - - (15,000,000) -
Christopher Layton Dalton - 44,000,000 (24,000,000) - 20,000,000
Faridah Binti Azmat 440,000 - - - 440,000
Jaafar Bin Jonid 100,000 - - - 100,000
Kaisar Kossayev 800,000 - - - 800,000
Kamala Kee Rudra 400,000 - - - 400,000
Lessya Kotovskaya 1,200,000 - - - 1,200,000
Looi Yow Cheong 600,000 - - - 600,000
Maimun Binti Ramli 400,000 - - (400,000) -
Mukanova Bayan-Slu 800,000 - - - 800,000
Norrida Binti Suli 200,000 - - - 200,000
Olzhas Saipolla 1,200,000 - - - 1,200,000
Peng Ng Leng 25,000,000 - (25,000,000) - -
Roshidah Binti Abdullah 40,000,000 - (20,000,000) - 20,000,000
Sagadiyev Bekzhan 300,000 - - - 300,000
Sam Elliot Harvey 12,000,000 - - - 12,000,000
Shobana MohanaSundram 1,200,000 - - - 1,200,000
Siti Salwa Binti Abd Hamid 400,000 - - - 400,000
Syahirah Akmal Binti Mahdom 400,000 - - - 400,000
Tubagus Reggie Rachman 1,400,000 - - - 1,400,000
Wan Ismail Bin Hamid 100,000 - - - 100,000
Zulkifly Bin Mohamad 40,000,000 - (20,000,000) - 20,000,000
145,040,000 44,000,000 (89,000,000) (15,400,000) 84,640,000
DIRECTORS' REPORTCONT’D
SUMATEC RESOURCES BERHAD (428355-D)60
OPTIONS GRANTED OVER UNISSUED SHARES (continued)
Warrants A and Warrants B
The details and salient terms of Warrants A and Warrants B are disclosed in Note 16 to the Financial Statements.
Details of Warrants B issued to Directors are disclosed in the section of Directors’ Interests in this report.
OTHER STATUTORY INFORMATION
Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps:-
(a) to ascertain that 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 all known bad debts had been written off and adequate allowance had
been made for doubtful debts; and
(b) to ensure that any current assets which were unlikely to be realised in the ordinary course of business including their
values as shown in the accounting records of the Group and of the Company have been written down to an amount
which they might be expected so to realise.
At the date of this report, the Directors are not aware of any circumstances:-
(a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the
financial statements of the Group and of the Company inadequate to any substantial extent; or
(b) which would render the values attributed to current assets in the financial statements of the Group and of the
Company misleading; or
(c) which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the
Group and of the Company misleading or inappropriate; or
(d) not otherwise dealt with in this report or the financial statements which would render any amount stated in the
financial statements misleading.
At the date of this report, there does not exist:-
(a) 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 liability of any other person; or
(b) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.
In the opinion of the Directors:-
(a) 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 their obligations as and when they fall due;
(b) the results of operations of the Group and of the Company during the financial year were not substantially affected
by any item, transaction or event of a material and unusual nature; and
(c) there has not arisen in the interval between the end of the financial year and the date of this report any item,
transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the
Group and of the Company for the financial year in which this report is made.
DIRECTORS' REPORTCONT’D
ANNUAL REPORT 2014 61
SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR AND AFTER THE REPORTING DATE
Significant events during the financial year and after the reporting date are disclosed in Note 35 to the Financial
Statements.
AUDITORS
The Auditors, Messrs SJ Grant Thornton, have expressed their willingness to continue in office.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors,
........................................................... )
TAN SRI ABU TALIB BIN OTHMAN )
)
)
)
)
)
) DIRECTORS
)
)
)
)
)
…………………………………...…….. )
CHAN YOK PENG )
Kuala Lumpur
23 April 2015
DIRECTORS' REPORTCONT’D
…………………………………………
OK PENG
mpur
..............................................
SRI ABU TALIB BIN OTHMA
SUMATEC RESOURCES BERHAD (428355-D)62
STATEMENT BY DIRECTORS
In the opinion of the Directors, the financial statements set out on pages 65 to 131 are drawn up in accordance with
Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the
Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the
Company as at 31 December 2014 and of their financial performance and cash flows for the financial year then ended.
In the opinion of the Directors, the supplementary information set out on page 132 has been compiled in accordance
with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context
of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of
Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors,
.................................................................... ....................................................................
TAN SRI ABU TALIB BIN OTHMAN CHAN YOK PENG
Kuala Lumpur
23 April 2015
STATUTORY DECLARATION
I, Roshidah Binti Abdullah, being the Officer primarily responsible for the financial management of Sumatec Resources
Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on
pages 65 to 131 and the supplementary information set out on page 132 are correct and I make this solemn declaration
conscientiously believing the same to be true and by virtue of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by )
the abovenamed at Kuala Lumpur in )
the Federal Territory this day of )
23 April 2015 ) ........................................................…………......
ROSHIDAH BINTI ABDULLAH
Before me:
Commissioner for Oaths
STATEMENT BY DIRECTORS AND STATUTORY DECLARATION
ectors,
............................ ...........
CHAN YOK PENG
.............................................
SRI ABU TALIB BIN OTHMA
ROS
fore me:
ioner for Oaths
f the Statutory Declara
................................. ....................... ................................................
SHIDAH BINTI ABDULSHIDAH BIN
ANNUAL REPORT 2014 63
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of Sumatec Resources Berhad, which comprise statements of financial position
as at 31 December 2014 of the Group and of the Company, statements of profit or loss and other comprehensive income,
statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then
ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 65 to 131.
Directors’ Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair
view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the
requirements of the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal controls
as the Directors determine are necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on audit. We conducted our audit
in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on our judgement, including the assessment of risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider
internal controls relevant to the entity’s preparation of financial statements that give a true and fair view in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation
of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company
as of 31 December 2014 and of their financial performance and cash flows for the financial year then ended in accordance
with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the
Companies Act, 1965 in Malaysia.
INDEPENDENT AUDITORS' REPORTTO THE MEMBERS OF SUMATEC RESOURCES BERHAD
SUMATEC RESOURCES BERHAD (428355-D)64
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 companies of which we have acted as auditors have been properly kept in accordance with the
provisions of the Act.
(b) We have considered the accounts and the auditors’ report of the subsidiary company of which we have not acted as
auditors, which are indicated in Note 4 to the Financial Statements.
(c) We are satisfied that the accounts of the subsidiary companies that have been consolidated with the Company’s
financial statements are in form and content appropriate and proper for the purposes of the preparation of the
financial statements of the Group and we have received satisfactory information and explanations required by us for
those purposes.
(d) The auditors’ reports on the accounts of the subsidiary companies did not contain any qualification or any adverse
comment under Section 174 (3) of the Act.
OTHER REPORTING RESPONSIBILITIES
The supplementary information set out on page 132 is disclosed to meet the requirement of Bursa Malaysia Securities
Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary
information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or
Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the
Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion,
the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive
of Bursa Malaysia Securities Berhad.
OTHER MATTERS
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies
Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of
this report.
........................................................……… ........................................................………
SJ GRANT THORNTON KHO KIM ENG
(NO. AF: 0737) (NO: 3137/10/16 (J))
CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANT
Kuala Lumpur
23 April 2015
INDEPENDENT AUDITORS' REPORTTO THE MEMBERS OF SUMATEC RESOURCES BERHADCONT’D
.................................
ENG
/10/16 (J))
.................................... ....................……
RANT THORNTOTOTOTOTOTOTOTOTOTOTOOOOOTOTOOOOTTTTTTT N
AF: 0737)
RTERED ACCCCCCCOCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC UNTANTS
a Lumpurrrrrrrr
ANNUAL REPORT 2014 65
Group Company
Note 2014 2013 2014 2013
RM RM RM RM
ASSETS
Non-current assets
Investment in subsidiary companies 4 - - 1,004,144 38,291
Investment in associate companies 5 - - - -
Other investments 6 1 33 - -
Property, plant and equipment 7 4,788,186 367,945 3,887,590 -
Intangible asset 8 301,869,381 302,100,000 301,869,381 302,100,000
Trade receivables 9 18,123,517 - 12,710,545 -
Other receivables 10 172,369,511 127,200,000 172,369,511 127,200,000
Total non-current assets 497,150,596 429,667,978 491,841,171 429,338,291
Current assets
Trade receivables 9 62,917,200 - 10,486,200 -
Other receivables 10 97,052,383 1,187,646 96,800,618 318,184
Amount due from subsidiary companies 11 - - 13,560,293 2,001,079
Amount due from associate companies 12 5,635,497 - 5,635,497 -
Tax recoverable 25,915 79,411 - -
Fixed deposits with a licensed bank 13 230,000 230,000 - -
Cash and bank balances 1,384,057 4,835,131 934,885 4,768,550
Total current assets 167,245,052 6,332,188 127,417,493 7,087,813
Non-current assets classified as held for sale 14 17,000,000 17,674,378 17,000,000 17,000,000
Total assets 681,395,648 453,674,544 636,258,664 453,426,104
EQUITY AND LIABILITIES
EQUITY
Equity attributable to owners of the Company:
Share capital 15 487,577,346 431,895,520 487,577,346 431,895,520
Other reserves 16 329,378,434 250,183,652 329,283,223 250,183,652
Accumulated losses (206,364,492) (255,297,233) (250,351,510) (253,406,070)
610,591,288 426,781,939 566,509,059 428,673,102
Non-controlling interests (30,770) (197,720) - -
Total equity 610,560,518 426,584,219 566,509,059 428,673,102
STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2014
SUMATEC RESOURCES BERHAD (428355-D)66
Group Company
Note 2014 2013 2014 2013
RM RM RM RM
LIABILITIES
Non-current liabilities
Finance lease payables 17 - 226,258 - -
Deferred tax liabilities 18 331,000 - 331,000 -
Other payables 19 37,880,636 - 37,880,636 -
Total non-current liabilities 38,211,636 226,258 38,211,636 -
Current liabilities
Trade payables 20 194,558 - - -
Other payables 19 9,293,439 9,137,617 8,402,472 7,753,002
Tax payable 500,000 - 500,000 -
Term loans 21 22,635,497 17,000,000 22,635,497 17,000,000
Short-term borrowing 22 - 601,636 - -
Finance lease payables 17 - 124,814 - -
Total current liabilities 32,623,494 26,864,067 31,537,969 24,753,002
Total liabilities 70,835,130 27,090,325 69,749,605 24,753,002
Total equity and liabilities 681,395,648 453,674,544 636,258,664 453,426,104
STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2014CONT’D
The accompanying notes form an integral part of the financial statements.
ANNUAL REPORT 2014 67
Group Company
Note 2014 2013 2014 2013
RM RM RM RM
Revenue 23 81,117,160 - 25,935,903 -
Direct cost (1,986,155) - (778,959) -
Other income 16,501,436 108,136,767 14,789,271 56,115,110
Staff costs 24 (17,284,324) (8,020,264) (9,821,625) (6,775,202)
Depreciation (388,451) (171,673) (301,726) -
Administrative expenses (8,128,314) (6,923,997) (7,067,990) (5,682,246)
Other expenses (478,953) (1,239,654) (1,872,306) (23,225,573)
Finance costs 25 (15,845,084) (8,496,289) (13,275,900) (8,281,750)
Profit before tax 53,507,315 83,284,890 7,606,668 12,150,339
Tax expenses 26 (4,603,466) (369,685) (4,581,000) -
Profit from continuing operations 48,903,849 82,915,205 3,025,668 12,150,339
Loss from discontinued operation - (18,655,752) - -
Net profit for the financial year 27 48,903,849 64,259,453 3,025,668 12,150,339
Other comprehensive income
Item that will be reclassified subsequently to
profit or loss
Foreign currency translation differences for
foreign operation 95,211 - - -
Item that will not be reclassified subsequently to
profit or loss
Realisation of revaluation reserve - 27,975 - -
Other comprehensive income for the financial
year 95,211 27,975 - -
Total comprehensive income for the financial
year 48,999,060 64,287,428 3,025,668 12,150,339
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
SUMATEC RESOURCES BERHAD (428355-D)68
Group
Note 2014 2013
RM RM
Profit for the financial year attributable to:
Owners of the Company
- continuing operations 48,903,849 83,112,925
- discontinued operation - (9,514,434)
Non-controlling interests - (9,339,038)
Net profit for the financial year 48,903,849 64,259,453
Total comprehensive income for the financial year attributable to:
Owners of the Company
- continuing operations 48,999,060 83,140,900
- discontinued operation - (9,514,434)
Non-controlling interests - (9,339,038)
Total comprehensive income for the financial year 48,999,060 64,287,428
Earnings per share 28
Basic earnings per share (sen):
Profit from continuing operations 1.50 14.21
Loss from discontinued operation - (1.63)
Total 1.50 12.58
Diluted earnings per share (sen):
Profit from continuing operations 1.39 13.49
Loss from discontinued operation - (1.54)
Total 1.39 11.95
The accompanying notes form an integral part of the financial statements.
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014CONT’D
ANNUAL REPORT 2014 69
Att
rib
utab
le t
o o
wne
rs o
f th
e C
om
pan
y
No
n-d
istr
ibut
able
D
istr
ibut
able
Sha
re
cap
ital
Sha
re
pre
miu
m
Rev
alua
tio
n
rese
rve
War
rant
s
rese
rve
Em
plo
yee
shar
e
op
tio
ns
rese
rve
Cap
ital
rese
rve
Fore
ign
curr
ency
tran
slat
ion
rese
rve
Acc
umul
ated
loss
esT
ota
l
No
n-
cont
rolli
ng
inte
rest
s
To
tal
equi
ty
RM
RM
RM
RM
RM
RM
RM
RM
RM
RM
RM
Gro
up
At
1 Ja
nuar
y 20
13 7
5,02
7,47
7 -
1
,286
,663
1
5,00
5,49
5 -
1
7,18
6,55
6 -
(2
46,3
36,9
40)
(137
,830
,749
) 7
0,51
9,65
3 (6
7,31
1,09
6)
Rea
lisat
ion
of r
eval
uatio
n re
serv
e -
-
(2
7,97
5) -
-
-
-
-
(2
7,97
5) -
(2
7,97
5)
Tota
l com
preh
ensi
ve in
com
e fo
r th
e
finan
cial
yea
r -
-
-
-
-
-
-
7
3,62
6,46
6 7
3,62
6,46
6 (9
,339
,038
) 6
4,28
7,42
8
Tra
nsac
tio
ns w
ith
ow
ners
:
Par
val
ue r
educ
tion
in s
hare
cap
ital
(45,
016,
486)
-
-
-
-
-
-
45,
016,
486
-
-
-
Issu
ance
of
shar
es40
1,26
2,39
7 10
0,31
5,59
9 -
-
-
-
-
-
5
01,5
77,9
96
-
501,
577,
996
Sha
re is
suan
ce e
xpen
ses
-
(14,
669,
806)
-
-
-
-
-
-
(14,
669,
806)
-
(14,
669,
806)
Exe
rcis
e of
ES
OS
621
,600
9
32,4
00
-
-
-
-
-
-
1,5
54,0
00
-
1,5
54,0
00
Con
vers
ion
of w
arra
nts
532
7
97
-
(532
) -
-
-
5
32
1,3
29
-
1,3
29
Em
ploy
ee s
hare
opt
ions
gra
nted
-
-
-
-
3,8
09,3
66
-
-
-
3,8
09,3
66
-
3,8
09,3
66
Issu
ance
of
war
rant
s -
-
-
1
27,6
03,7
77
-
-
-
(127
,603
,777
) -
-
-
Tota
l tra
nsac
tions
with
ow
ners
356
,868
,043
8
6,57
8,99
0 -
1
27,6
03,2
45
3,8
09,3
66
-
-
(82,
586,
759)
492
,272
,885
-
4
92,2
72,8
85
Aris
ing
from
dis
posa
l of
a su
bsid
iary
com
pany
-
-
(1,2
58,6
88)
-
-
-
-
-
(1,2
58,6
88)
(61,
378,
335)
(62,
637,
023)
At
31 D
ecem
ber
201
3 4
31,8
95,5
20
86,
578,
990
-
142
,608
,740
3
,809
,366
1
7,18
6,55
6 -
(2
55,2
97,2
33)
426
,781
,939
(1
97,7
20)
426
,584
,219
Oth
er c
ompr
ehen
sive
inco
me
for
the
finan
cial
yea
r -
-
-
-
-
-
9
5,21
1 -
9
5,21
1 -
9
5,21
1
Net
pro
fit f
or t
he fi
nanc
ial y
ear
-
-
-
-
-
-
-
48,
903,
849
48,
903,
849
-
48,
903,
849
Tota
l com
preh
ensi
ve in
com
e fo
r th
e
finan
cial
yea
r -
-
-
-
-
-
9
5,21
1 4
8,90
3,84
9 4
8,99
9,06
0 -
4
8,99
9,06
0
Tra
nsac
tio
ns w
ith
ow
ners
:
Priv
ate
plac
emen
t 4
3,20
3,44
0 7
4,06
3,04
1 -
-
-
-
-
-
1
17,2
66,4
81
-
117
,266
,481
Sha
re is
suan
ce e
xpen
ses
-
(10,
464,
803)
-
-
-
-
-
-
(10,
464,
803)
-
(10,
464,
803)
Exe
rcis
e of
ES
OS
12,
460,
000
9,2
56,0
00
-
-
-
-
-
-
21,
716,
000
-
21,
716,
000
Con
vers
ion
of w
arra
nts
18,
386
4,5
96
-
(28,
892)
-
-
-
28,
892
22,
982
-
22,
982
Em
ploy
ee s
hare
opt
ions
gra
nted
-
-
-
-
6,2
69,6
29
-
-
-
6,2
69,6
29
-
6,2
69,6
29
Tota
l tra
nsac
tions
with
ow
ners
55,
681,
826
72,
858,
834
-
(28,
892)
6,2
69,6
29
-
-
28,
892
134
,810
,289
-
1
34,8
10,2
89
Rea
lised
upo
n su
bsid
iary
com
pani
es
writ
ten
off
-
-
-
-
-
-
-
-
-
166
,950
1
66,9
50
Tran
sfer
red
to s
hare
pre
miu
m f
or
ES
OS
exe
rcis
ed -
5
,700
,100
-
-
(5
,700
,100
) -
-
-
-
-
-
At
31 D
ecem
ber
201
4 4
87,5
77,3
46
165
,137
,924
-
1
42,5
79,8
48
4,3
78,8
95
17,
186,
556
95,
211
(20
6,36
4,49
2) 6
10,5
91,2
88
(30
,770
) 6
10,5
60,5
18
STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
SUMATEC RESOURCES BERHAD (428355-D)70
Attributable to owners of the Company
Non-distributable Distributable
Share
capital
Share
premium
Warrants
reserve
Employee
share
options
reserve
Capital
reserve
Accumulated
losses
Total
equity
RM RM RM RM RM RM RM
Company
At 1 January 2013 75,027,477 - 15,005,495 - 17,186,556 (182,969,650) (75,750,122)
Total comprehensive income for the
financial year - - - - - 12,150,339 12,150,339
Transactions with owners:
Par value reduction in share capital (45,016,486) - - - - 45,016,486 -
Issuance of shares 401,262,397 100,315,599 - - - - 501,577,996
Share issuance expenses - (14,669,806) - - - - (14,669,806)
Exercise of ESOS 621,600 932,400 - - - - 1,554,000
Conversion of warrants 532 797 (532) - - 532 1,329
Employee share options granted - - - 3,809,366 - - 3,809,366
Issuance of warrants - - 127,603,777 - - (127,603,777) -
Total transactions with owners 356,868,043 86,578,990 127,603,245 3,809,366 - (82,586,759) 492,272,885
At 31 December 2013 431,895,520 86,578,990 142,608,740 3,809,366 17,186,556 (253,406,070) 428,673,102
Total comprehensive income for the
financial year - - - - - 3,025,668 3,025,668
Transactions with owners:
Private placement 43,203,440 74,063,041 - - - - 117,266,481
Share issuance expenses - (10,464,803) - - - - (10,464,803)
Exercise of ESOS 12,460,000 9,256,000 - - - - 21,716,000
Conversion of warrants 18,386 4,596 (28,892) - - 28,892 22,982
Employee share options granted - - - 6,269,629 - - 6,269,629
Total transactions with owners 55,681,826 72,858,834 (28,892) 6,269,629 - 28,892 134,810,289
Transferred to share premium for
ESOS exercised - 5,700,100 - (5,700,100) - - -
At 31 December 2014 487,577,346 165,137,924 142,579,848 4,378,895 17,186,556 (250,351,510) 566,509,059
STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014CONT’D
The accompanying notes form an integral part of the financial statements.
ANNUAL REPORT 2014 71
Group Company
2014 2013 2014 2013
RM RM RM RM
OPERATING ACTIVITIES
Profit before taxation
- continuing operations 53,507,315 83,284,890 7,606,668 12,150,339
- discontinued operation - (18,656,819) - -
53,507,315 64,628,071 7,606,668 12,150,339
Adjustments for:
Amortisation of intangible assets 230,619 - 230,619 -
Amount due from subsidiary companies written off - - 26,563 -
Bad debts written off 31,200 48,792 - 990,424
Depreciation 388,451 171,673 301,726 -
Gain from disposal of disposal group classified as held for
sale - (22,873,122) - -
Gain from disposal of a subsidiary company - (631,290) - -
Gain from disposal of property, plant and equipment (73,977) (10,596) - -
Impairment loss on amount due from subsidiary companies - - 14,914 22,206,329
Impairment loss on investment in a subsidiary company - - - 100
Impairment loss on property, plant and equipment
- discontinued operation - 24,149,840 - -
Loss from subsidiary companies written off 142,710 - - -
Interest expenses
- continuing operations 15,845,084 8,496,289 13,275,900 8,281,750
- discontinued operation - 14,280,155 - -
Interest income (8,242,144) (3) (8,242,144) (3)
Other investments written off 32 - - -
Property, plant and equipment written off 1,972 594,677 - 1
Reversal of provision for liquidated ascertained damages (609,137) - - -
Share options granted under ESOS 6,269,629 3,809,366 5,303,776 3,771,075
Unrealised (gain)/loss on foreign exchange (7,092,560) 2,822,993 (4,713,400) -
Waiver of amount due to associate company - (523) - -
Waiver of debts (135,858) (83,851,493) - (56,115,107)
Operating profit/ (loss) before working capital changes 60,263,336 11,634,829 13,804,622 (8,715,092)
Inventories - 1,159,813 - -
Receivables (131,641,487) (136,400,027) (74,706,276) (127,515,716)
Payables 41,622,336 12,430,057 41,189,427 5,979,664
Subsidiary company - - (6,850,016) -
Associate companies - 1,618 - -
Cash used in operations (29,755,815) (111,173,710) (26,562,243) (130,251,144)
Interest paid (21,825) (869,636) (10,023) (38,412)
Interest received 287,210 3 287,210 3
Tax (paid)/refund (3,718,970) 373,936 (3,750,000) -
Net cash used in operating activities (33,209,400) (111,669,407) (30,035,056) (130,289,553)
STATEMENTS OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
SUMATEC RESOURCES BERHAD (428355-D)72
Group Company
2014 2013 2014 2013
RM RM RM RM
INVESTING ACTIVITIES
Purchase of property, plant and equipment (Note A) (1,536,960) - (1,470,784) -
Purchase of intangible asset - (302,100,000) - (302,100,000)
Proceeds from disposal of subsidiary companies, net of
cash disposed (Note B) - 18,690,268 - 1,800,000
Proceeds from disposal of property, plant and and
equipment 193,183 10,600 - -
Deposit paid (96,510,000) - (96,510,000) -
Placement of fixed deposits - (230,000) - -
Advances to subsidiary companies - - (4,358,485) (5,715,082)
Net cash used in investing activities (97,853,777) (283,629,132) (102,339,269) (306,015,082)
FINANCING ACTIVITIES
Net proceeds from issuance of shares 128,540,660 442,867,751 128,540,660 442,867,751
Net repayment of borrowings (601,636) (17,806,465) - (1,800,000)
Repayment of finance lease payables (310,542) (85,355) - -
Interest paid (16,379) (9,852,371) - -
Net cash from financing activities 127,612,103 415,123,560 128,540,660 441,067,751
CASH AND CASH EQUIVALENTS
Net (decrease)/increase (3,451,074) 19,825,021 (3,833,665) 4,763,116
At beginning of financial year 4,835,131 (14,989,890) 4,768,550 5,434
At end of financial year 1,384,057 4,835,131 934,885 4,768,550
STATEMENTS OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014CONT’D
ANNUAL REPORT 2014 73
NOTES TO THE STATEMENTS OF CASH FLOWS:
A. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT
The Group and the Company acquired property, plant and equipment with aggregate cost of RM4,255,492 (2013:
Nil) and RM4,189,316 (2013: Nil) respectively of which RM2,718,532 (2013: Nil) and RM2,718,532 (2013: Nil)
respectively were acquired by means of advances from other payables. Cash payments of RM1,536,960 (2013: Nil)
and RM1,470,784 (2013: Nil) for the Group and the Company respectively were made to purchase the property, plant
and equipment.
B. DISPOSAL OF SUBSIDIARY COMPANIES
Group
2013
RM
Assets included in disposal group classified as held for sale 549,118,557
Liabilities included in disposal group classified as held for sale (459,798,904)
Net other liabilities disposed (32,949,942)
56,369,711
Non-controlling interests (61,378,335)
Amount due from subsidiary company written off 941,712
Fair value of remaining 49% equity interest in disposal group classified as held for sale (17,000,000)
Gain from disposal of disposal group classified as held for sale 22,873,122
Gain from disposal of a subsidiary company 631,290
Proceeds from disposal 2,437,500
Less: cash and cash equivalents disposed 16,252,768
Net cash inflows from disposal of subsidiary companies 18,690,268
STATEMENTS OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
CONT’D
The accompanying notes form an integral part of the financial statements.
SUMATEC RESOURCES BERHAD (428355-D)74
1. GENERAL INFORMATION
The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the
Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at Level 15-2,
Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur. The principal place of business of the
Company is located at Suite 22.02, Level 22, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra,
59200 Kuala Lumpur.
The principal activities of the Company are that of investment holding and engaged in the upstream oil operation.
The principal activities of its subsidiary companies are disclosed in Note 4 to the Financial Statements. There have
been no significant changes in the nature of these activities during the financial year.
The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the
Directors passed on 23 April 2015.
2. BASIS OF PREPARATION
2.1 Statement of compliance
The financial statements of the Group and of the Company have been prepared in accordance with Malaysian
Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRSs”) and the
requirements of the Companies Act, 1965 in Malaysia.
2.2 Basis of measurement
The financial statements of the Group and of the Company are prepared under the historical cost convention,
unless otherwise indicated in the summary of significant accounting policies.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and
services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value measurement is based on
the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal
market for the asset or liability, or in the absence of a principal market, in the most advantageous market for
the asset or liability. The principal or the most advantageous market must be accessible by the Group and the
Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use
when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant
that would use the asset in its highest and best use.
The Group and the Company use valuation techniques that are appropriate in the circumstances and for
which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and
minimising the use of unobservable inputs.
NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 2014 75
NOTES TO THE FINANCIAL STATEMENTSCONT’D
2. BASIS OF PREPARATION (continued)
2.3 Functional and presentation currency
The financial statements are presented in Ringgit Malaysia (“RM”) which is the Company’s functional currency
and all values are rounded to the nearest RM except stated otherwise.
2.4 Adoption of Amendments to MFRSs and IC Interpretations (“IC Int”)
Except for the changes below, the Group and the Company have consistently applied the accounting policies
set out in Note 3 to all years presented in these financial statements.
At the beginning of the current financial year, the Group and the Company adopted amendments to MFRS 132
and MFRS 136 which are mandatory for the financial periods beginning on or after 1 January 2014.
The nature and the impact of the amendments to standards which are prospectively applicable to the Group
and the Company are described below:
Amendments to MFRS 132 Offsetting Financial Assets and Financial Liabilities
The amendments to MFRS 132 clarify the requirements relating to the offset of financial assets and financial
liabilities. Specifically, the amendments clarify the meaning of “currently has a legally enforceable right of set-
off” and “simultaneous realisation and settlement”.
Amendments to MFRS 136 Recoverable Amount Disclosures for Non-Financial Assets
The amendments to MFRS 136 clarify that an entity is required to disclose the recoverable amount of an
asset or cash generating unit whenever an impairment loss has been recognised or reversed in the period.
In addition, the amendments introduced several new disclosures required to be made when the recoverable
amount of impaired assets is based on fair value less costs of disposal, including:
- Additional information about fair value measurement including the applicable level of the fair value
hierarchy and a description of any valuation techniques used and key assumptions made;
- The discount rates used if fair value less costs of disposal is measured using present value technique.
These additional disclosures are in line with the disclosure required by MFRS 13 Fair Value Measurements.
Initial application of the amendments to the standards did not have material impact to the financial statements.
SUMATEC RESOURCES BERHAD (428355-D)76
NOTES TO THE FINANCIAL STATEMENTSCONT’D
2. BASIS OF PREPARATION (continued)
2.5 Standards issued but not yet effective
The Group and the Company have not applied the following MFRSs that have been issued by the Malaysian
Accounting Standards Board (“MASB”) but are not yet effective for the Group and the Company:
Amendments to MFRSs effective 1 July 2014:
MFRS 119*# Defined Benefit Plans: Employee Contributions
Annual improvements to MFRSs, 2010-2012 cycle
Annual improvements to MFRSs, 2011-2013 cycle
MFRS effective 1 January 2016:
MFRS 14*# Regulatory Deferral Accounts
Amendments to MFRSs effective 1 January 2016:
MFRS 10* Consolidated Financial Statements: Sale or Contribution of Assets between an Investor and Joint Ventures and its Associate or Joint Venture
MFRS 10* Consolidated Financial Statements: Investment Entities – Applying the Consolidation Exception
MFRS 11*# Joint Arrangements: Accounting for Acquisitions of Interests in Joint Operations
MFRS 12* Disclosure of Interests in Other Entities
MFRS 101 Presentation of Financial Statements: Disclosure Initiative
MFRS 116*# Property, Plant and Equipment – Agriculture: Bearer Plant
MFRS 116 Property, plant and Equipment: Clarification of Acceptable Methods of Depreciation
MFRS 127 Consolidated and Separate Financial Statements: Equity Method in Separate Financial Statements
MFRS 128 Investment in Associates and Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
MFRS 128 Investments in Associates and Joint Ventures: Investment Entities – Applying the Consolidation Exception
MFRS 138 Intangible Assets: Clarification of Acceptable Methods of Amortisation
MFRS 141*# Agriculture: Agriculture – Bearer Plants
Annual Improvements 2012-2014 Cycle issued in November 2014
MFRS effective 1 January 2017:
MFRS 15 Revenue from Contracts with Customers
MFRS and Amendments to MFRS effective 1 January 2018:
MFRS 9 Financial Instruments (International Financial Reporting Standards (“IFRS”) 9 issued by International Accounting Standards Board (‘IASB”) in July 2014)
Amendments to MFRS 7 Financial Instruments – Disclosure: Mandatory effective date of MFRS 9 and transitional disclosures.
* Not applicable to the Company’s operations
# Not applicable to the Group’s operations
ANNUAL REPORT 2014 77
NOTES TO THE FINANCIAL STATEMENTSCONT’D
2. BASIS OF PREPARATION (continued)
2.5 Standards issued but not yet effective (continued)
The initial application of the above standards, amendments and interpretation are not expected to have any
financial impacts to the financial statements, except for:
MFRS 9 Financial Instruments
MFRS 9 addresses the classification, measurement and recognition of financial assets and financial liabilities.
It replaces the guidance in MFRS 139 Financial Instruments: Recognition and Measurement. MFRS 9 requires
financial assets to be classified into two measurement categories: fair value and amortised cost, determined
at initial recognition. The classification depends on the entity’s business model for managing its financial
instruments and the contractual cash flow characteristics of the instrument. Most of the requirements for
financial liabilities are retained, except for cases where the fair value option is taken, the part of a fair value
change due to an entity’s own risk is recorded in other comprehensive income rather than profit or loss, unless
this creates an accounting mismatch.
The adoption of MFRS 9 will result in a change in accounting policy. The Group and the Company are currently
examining the financial impact of adopting MFRS 9.
2.6 Significant accounting estimates and judgements
Estimates, assumptions concerning the future and judgements are made in the preparation of the financial
statements. They affect the application of the Group’s and the Company’s accounting policies and reported
amounts of assets, liabilities, income and expenses, and disclosures made. Estimates and underlying
assumptions are assessed on an on-going basis and are based on experience and relevant factors, including
expectations of future events that are believed to be reasonable under the circumstances. The actual results
may differ from the judgements, estimates and assumptions made by management, and will seldom equal the
estimated results.
2.6.1 Estimation uncertainty
Information about significant estimates and assumptions that have the most significant effect on
recognition and measurement of assets, liabilities, income and expenses are discussed below:
Useful lives of depreciable assets
Management estimates the useful lives of the property, plant and equipment to be within 5 to 50 years
and reviews the useful lives of depreciable assets at the end of each of the reporting date. As at 31
December 2014, management assesses that the useful lives represent the expected utility of the assets
to the Group and the Company. Actual results, however, may vary due to change in the expected level of
usage and technological development, which may result in adjustment to the Group’s and the Company’s
assets.
A 20% difference in the expected useful lives of the property, plant and equipment from the
management’s estimates would result in approximately 1% (2013: 1%) and 10% (2013: Nil) variance in
the Group’s and the Company’s profit for the financial year respectively.
SUMATEC RESOURCES BERHAD (428355-D)78
NOTES TO THE FINANCIAL STATEMENTSCONT’D
2. BASIS OF PREPARATION (continued)
2.6 Significant accounting estimates and judgements (continued)
2.6.1 Estimation uncertainty (continued)
Impairment of non-financial assets
An impairment loss is recognised for the amount by which the carrying amount of the asset or cash-
generating unit exceeds its recoverable amount. To determine the recoverable amount, management
estimates expected future cash flows from each asset or cash-generating unit and determines a suitable
interest rate in order to calculate the present value of those cash flows. In the process of measuring
expected future cash flows, management makes assumptions about future operating results. The actual
results may vary, and may cause significant adjustments to the Group’s and the Company’s assets within
the next financial year.
In most cases, determining the applicable discount rate involves estimating the appropriate adjustments
to market risk and to asset-specific risk factors.
Impairment of loans and receivables
The Group and the Company assess at the end of the reporting date whether there is any objective
evidence that a financial asset is impaired. To determine whether there is objective evidence of
impairment, the Group and the Company consider factors such as the probability of insolvency or
significant financial difficulties of the debtor and default or significant delay in payments.
Where there is objective evidence of impairment, the amount and timing of future cash flows are
estimated based on historical loss experience of assets with similar credit risk characteristics.
Income taxes/ deferred taxation
Significant judgement is involved in determining the Group’s and the Company’s 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 and the Company recognise tax liabilities
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 difference will impact the income tax and
deferred tax provisions in the period in which such determination is made.
Deferred tax assets are recognised for all unabsorbed business losses and unutilised capital allowances
to the extent that it is probable that taxable profit will be available against which the business losses
and capital allowances can be utilised. Significant management judgement is required to determine the
amount of deferred tax assets that can be recognised, based upon the likely timing and level of future
taxable profits together with future tax planning strategies.
ANNUAL REPORT 2014 79
NOTES TO THE FINANCIAL STATEMENTSCONT’D
2. BASIS OF PREPARATION (continued)
2.6 Significant accounting estimates and judgements (continued)
2.6.1 Estimation uncertainty (continued)
Employee share options
The Group and the Company measure the cost of equity-settled transactions with employees by
reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair
value for share-based payment transactions requires determining the most appropriate valuation model,
which is dependent on the terms and conditions of the grant. This estimate also requires determining the
most appropriate inputs to the valuation model including the expected life of the share options, volatility
and dividend yield and making assumptions about them.
The assumptions and model used for estimating fair value for share-based payment transactions,
sensitivity analysis and the carrying amounts are disclosed in Note 24 to the Financial Statements.
Fair value of financial instruments
Management uses valuation techniques in measuring the fair value of financial instruments where active
market quotes are not available. Details of the assumptions used are given in the notes regarding financial
assets and liabilities. In applying the valuation techniques, management makes maximum use of market
inputs, and uses estimates and assumptions that are, as far as possible, consistent with observable data
that market participants would use in pricing the instrument. Where applicable data is not observable,
management uses its best estimate about the assumptions that market participants would make. These
estimates may vary from the actual prices that would be achieved in an arm’s length transaction at the
end of the reporting date.
3. SIGNIFICANT ACCOUNTING POLICIES
The Group and the Company apply the significant accounting policies, as summarised below, consistently
throughout all periods presented in the financial statements.
3.1 Consolidation
3.1.1 Subsidiary companies
Subsidiary companies are entities controlled by the Group. Control exists when the Group is exposed,
or has rights, to variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity. Potential voting rights are considered when assessing control
only when such rights are substantive. Besides, the Group considers it has de facto power over an
investee when, despite not having the majority of voting rights, it has the current ability to direct the
activities of the investee that significantly affect the investee’s return.
Investment in subsidiary companies is stated at cost less any impairment losses in the Company’s
statement of financial position, unless the investment is classified as held for sale or distribution.
Upon the disposal of investment in a subsidiary company, the difference between the net disposal
proceeds and its carrying amount is included in profit or loss.
SUMATEC RESOURCES BERHAD (428355-D)80
NOTES TO THE FINANCIAL STATEMENTSCONT’D
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
3.1 Consolidation (continued)
3.1.2 Basis of consolidation
The Group’s financial statements consolidate the audited financial statements of the Company and all
of its subsidiary companies, which have been prepared in accordance with the Group’s accounting
policies. Amounts reported in the financial statements of subsidiary companies have been adjusted
where necessary to ensure consistency with the accounting policies adopted by the Group. The financial
statements of the Company and its subsidiary companies are all drawn up to the same reporting date.
All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-
group transactions are eliminated in full.
Subsidiary companies are consolidated from the date on which control is transferred to the Group and
are no longer consolidated from the date that control ceases.
Changes in the equity ownership interest in a subsidiary company that do not result in a loss of
control are accounted for as equity transactions. In such circumstances, the carrying amounts of the
controlling and non-controlling interests are adjusted to reflect the changes in their relative interests
in the subsidiary company. Any difference between the amount by which the non-controlling interest
is adjusted and the fair value of the consideration paid or received is recognised directly in equity and
attributed to the owners of the Company.
3.1.3 Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is
measured as the aggregate of the consideration transferred, measured at the fair value on acquisition
date and the amount of any non-controlling interest in the acquiree. For each business combination, the
Group elects whether it measures the non-controlling interest in the acquiree either at fair value or at the
proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are expensed
and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as at the acquisition date.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred
and the amount recognised for non-controlling interest over the net identifiable assets acquired and
liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary
company acquired, the difference is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the
purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition
date, allocated to each of the Group’s cash-generating units that are expected to benefit from the
combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those
units.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is
disposed of, the goodwill associated with the operation disposed of is included in the carrying amount
of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in
this circumstance is measured based on the relative values of the operation disposed of and the portion
of the cash-generating unit retained.
ANNUAL REPORT 2014 81
NOTES TO THE FINANCIAL STATEMENTSCONT’D
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
3.1 Consolidation (continued)
3.1.4 Loss of control
Upon the loss of control of a subsidiary company, the Group derecognises the assets and liabilities of
the subsidiary company, any non-controlling interests and the other components of equity related to the
subsidiary company. Any surplus or deficit arising on the loss of control is recognised in profit or loss.
If the Group retains any interest in the previous subsidiary company, then such interest is measured
at fair value at the date that control is lost. Subsequently, it is accounted for as an equity accounted
investee or as an available-for-sale financial asset depending on the level of influence retained.
3.1.5 Non-controlling interests
Non-controlling interests at the end of the reporting date, being the equity in a subsidiary company
not attributable directly or indirectly to the equity holders of the Company, are presented in the
consolidated statement of financial position and statement of changes in equity within equity, separately
from equity attributable to the owners of the Company. Non-controlling interests in the results of the
Group are presented in the consolidated statement of profit or loss and other comprehensive income
as an allocation of the profit or loss and the comprehensive income for the financial year between non-
controlling interests and the owners of the Company.
Losses applicable to the non-controlling interests in a subsidiary company are allocated to the non-
controlling interests even if that results in a deficit balance.
3.1.6 Associate companies
Associate companies are entities in which the Group has significant influence, but no control, over their
financial and operating policies.
The Group’s investment in its associate companies are accounted for using the equity method. Under
the equity method, investment in an associate company is carried in the statements of financial position
at cost plus post acquisition changes in the Group’s share of net assets of the associate company.
The share of the results of an associate company is reflected in profit or loss. In addition, any
change in other comprehensive income of those investees is presented as part of the Group’s other
comprehensive income. Where there has been a change recognised directly in the equity of an
associate company, the Group recognises and discloses its share of this change, when applicable, in
the statements of changes in equity. Unrealised gains and losses resulting from transactions between
the Group and the associate companies are eliminated to the extent of the interest in the associate
company.
When the Group’s share of losses exceeds its interest in an associate company, the carrying amount of
that interest including any long-term investment is reduced to zero, and the recognition of further losses
is discontinued except to the extent that the Group has an obligation or has made payments on behalf
of the associate company.
After application of the equity method, the Group determines whether it is necessary to recognise an
additional impairment loss on the Group’s investment in its associate companies. The Group determines
at the end of the reporting date whether there is any objective evidence that the investment in the
associate companies are impaired. If there is such evidence, the Group calculates the amount of
impairment as the difference between the recoverable amount of the investment in associate companies
and their carrying values and recognise the amount in the “share of profit of associate companies” in
profit or loss.
SUMATEC RESOURCES BERHAD (428355-D)82
NOTES TO THE FINANCIAL STATEMENTSCONT’D
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
3.1 Consolidation (continued)
3.1.6 Associate companies (continued)
Upon loss of significant influence over an associate company, the Group measures and recognises
any retaining investment at its fair value. Any difference between the carrying amount of the associate
company upon loss of significant influence and the fair value of the retained investment and proceeds
from disposal is recognised in profit or loss.
In the Company’s separate financial statements, investment in associate companies is stated at cost
less impairment losses. On disposal of such investment, the difference between net disposal proceeds
and their carrying amount is included in profit or loss.
3.2 Foreign currency translations
The Group’s consolidated financial statements are presented in RM, which is also the Company’s functional
currency.
3.2.1 Foreign currency transactions and balances
Transactions in foreign currencies are initially recorded at the functional currency rates prevailing at the
date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional
currency spot rate of exchange ruling at the reporting date.
All differences are taken to the profit or loss with the exception of all monetary items that forms part
of a net investment in a foreign operation. These are recognised in other comprehensive income until
the disposal of the net investment, at which time they are reclassified to profit or loss. Tax charges
and credits attributable to exchange differences on those monetary items are also recorded in other
comprehensive income.
3.2.2 Foreign operations
The assets and liabilities of operations denominated in functional currencies other than RM are
translated to RM at exchange rates at the end of the reporting date. The income and expenses of foreign
operations are translated to RM at exchange rates at the date of the transactions.
Foreign currency differences are recognised in other comprehensive income and accumulated in the
foreign currency translation reserve in equity. However, if the operation is a non-wholly-owned subsidiary
company, then the relevant proportionate share of the translation difference is allocated to the non-
controlling interests. When a foreign operation is disposed of, the cumulative amount in the foreign
currency translation reserve related to that foreign operation is reclassified to profit or loss as part of the
gain or loss on disposal.
When the Group disposes of only part of its interest in a subsidiary company that includes a foreign
operation, the relevant proportion of the cumulative amount in the foreign currency translation reserve
is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an
associate company that includes a foreign operation while retaining significant influence, the relevant
proportion of such cumulative amount is reclassified to profit or loss.
ANNUAL REPORT 2014 83
NOTES TO THE FINANCIAL STATEMENTSCONT’D
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
3.2 Foreign currency translations (continued)
3.2.2 Foreign operations (continued)
In the consolidated financial statements, when settlement of a monetary item receivable from or payable
to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and
losses arising from such a monetary item are considered to form part of a net investment in a foreign
operation and are recognised in other comprehensive income, and are presented in foreign currency
translation reserve in equity.
3.3 Property, plant and equipment
All property, plant and equipment are measured at cost less accumulated depreciation and less any impairment
losses. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is
probable that future economic benefits associated with the item will flow to the Group and the Company and
the cost of the item can be measured reliably.
Cost includes expenditures that are directly attributable to the acquisition of the assets and any other
costs directly attributable to bring the asset to working condition for its intended use. All other repair and
maintenance costs are recognised in profit or loss as incurred.
Depreciation is recognised on the straight line method in order to write off the cost of each asset to its residual
value over the estimated useful life. The property, plant and equipment are depreciated based on the estimated
useful lives of the assets at the following annual rates:
Leasehold land and buildings 2%
Computer equipment and software 20%
Motor vehicles 20%
Office equipment, furniture and fittings 10% - 20%
Renovation 10%
Capital work-in-progress consists of computer software and renovation under installation/construction for
intended use. The amount is stated at cost. Assets under installation/construction are not depreciated until they
are completed and ready for their intended use.
The residual values, useful lives and depreciation method are reviewed for impairment when events or
changes in circumstances indicate that the carrying amount may not be recoverable, or at least annually 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.
Property, plant and equipment are derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. Gains or losses arising on the disposal of property, plant and equipment are
determined as the difference between the disposal proceeds and the carrying amount of the assets and are
recognised in profit or loss.
3.4 Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the
arrangement at the inception date, whether fulfillment of the arrangement is dependent on the use of a specific
asset or the arrangement conveys a right to use the asset, even if that right is not explicitly specific in an
arrangement.
SUMATEC RESOURCES BERHAD (428355-D)84
NOTES TO THE FINANCIAL STATEMENTSCONT’D
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
3.4 Leases (continued)
3.4.1 Finance lease
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are
classified as finance lease. Upon initial recognition, the leased asset is measured at an amount equal to
the lower of its fair value and the present value of the minimum lease payments.
Minimum lease payments made under finance leases are apportioned between finance charges and
reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are recognised in finance costs in the profit or loss. Contingent lease payments
are accounted for by revising the minimum lease payments over the remaining term of the lease when
the lease adjustment is confirmed.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable
certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over
the shorter of the estimated useful life of the asset and the lease term.
3.4.2 Operating lease
Leases, where the Group does not assume substantially all the risks and rewards of ownership are
classified as operating leases and the leased assets are not recognised on the statements of financial
position.
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the
term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the
total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the
reporting year in which they incurred.
3.5 Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less accumulated amortisation and any accumulated impairment losses.
The useful life of intangible assets is assessed to be finite. Intangible assets with finite life are amortised based
on the unit of production method using total proved and probable reserves for capitalised acquisition costs
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 financial year end. Changes in the expected useful life or the expected pattern of consumption
of future economic benefits embodied in the asset is accounted for by changing the amortisation period or
method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on
intangible assets with finite useful life is recognised in the profit or loss in the expense category consistent with
the function of the intangible asset.
Gains or losses arising from derecognition of an intangible assets is measured as the difference between the
net disposal proceeds and the carrying amount of the asset and are recognised in the profit or loss when the
asset is derecognised.
ANNUAL REPORT 2014 85
NOTES TO THE FINANCIAL STATEMENTSCONT’D
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
3.6 Financial instruments
3.6.1 Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Group or the Company becomes a
party to the contractual provisions of the financial instrument.
Financial assets and financial liabilities are measured initially at fair values plus transactions costs,
except for financial assets and financial liabilities carried at fair values through profit or loss, which are
measured initially at fair values. Financial assets and financial liabilities are measured subsequently as
described below.
3.6.2 Financial assets - categorisation and subsequent measurement
For the purpose of subsequent measurement, financial assets other than those designated and effective
as hedging instruments are classified into the following categories upon initial recognition:
(a) financial assets at fair value through profit or loss;
(b) held-to-maturity investments;
(c) loans and receivables; and
(d) available-for-sale financial assets.
The category determines subsequent measurement and whether any resulting income and expense is
recognised in profit or loss or in other comprehensive income.
All financial assets except for those at fair values through profit or loss are subject to review for
impairment at least at the end of the reporting date. Financial assets are impaired when there is any
objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to
determine impairment are applied for each category of financial assets.
A financial asset or part of it is derecognised when the contractual rights to the cash flows from
the financial asset expire or when the rights to receive further cash flows from the asset have been
transferred to third party and substantially all the risks and rewards of ownership of the asset are also
transferred. On derecognition of a financial asset, the difference between the carrying amount and the
sum of the consideration received (including any new asset obtained less any new liability assumed) and
any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss.
At the reporting date, the Group and the Company have not designated any financial assets at fair value
through profit or loss and held-to-maturity investments. The Group and the Company carry only loans
and receivables and available-for-sale financial assets on their statements of financial position.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. After initial recognitions, these are measured at amortised cost using
the effective interest method, less provision for impairment. Discounting is omitted where the effect of
discounting is immaterial. Gains or losses are recognised in profit or loss when the loans and receivables
are derecognised or impaired, and through the amortisation process. The Group’s and the Company’s
cash and cash equivalents, trade and other receivables and amounts due from associate companies and
subsidiary companies fall into this category of financial instruments.
Loans and receivables are classified as current assets, except for those having maturity dates later than
12 months after the end of the reporting date which are classified as non-current.
SUMATEC RESOURCES BERHAD (428355-D)86
NOTES TO THE FINANCIAL STATEMENTSCONT’D
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
3.6 Financial instruments (continued)
3.6.2 Financial assets - categorisation and subsequent measurement (continued)
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets.
Available-for-sale financial assets are measured at fair value subsequent to the initial recognition. Gains and losses are recognised in other comprehensive income and reported within the available-for-sale reserve within equity, except for impairment losses and foreign exchange differences on monetary assets, which are recognised in profit or loss. When the asset is disposed of or is determined to be impaired the cumulative gain or loss recognised in other comprehensive income is reclassified from the equity reserve to profit or loss and presented as a reclassification adjustment within other comprehensive income.
Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost less impairment loss.
Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the end of the reporting date.
3.6.3 Financial liabilities - categorisation and subsequent measurement
After the initial recognition, financial liabilities are classified as:
(a) financial liabilities at fair value through profit or loss; (b) other liabilities measured at amortised cost using the effective interest method; and (c) financial guarantee contracts.
A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expired. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
At the reporting date, the Group and the Company carry only other liabilities measured at amortised cost on their statements of financial position.
Other liabilities measured at amortised cost
The Group’s and the Company’s other liabilities include borrowings, trade and other payables.
Other liabilities are subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group or the Company has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting date.
3.7 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, bank balances and highly liquid investments which are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value.
Cash and cash equivalents restricted to be used to settle a liability of 12 months or more after the end of the reporting date are classified as non-current asset.
ANNUAL REPORT 2014 87
NOTES TO THE FINANCIAL STATEMENTSCONT’D
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
3.8 Non-current assets or disposal group held for sale and discontinued operations
Non-current assets or disposal group comprising assets and liabilities, that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale.
A component of the Group is classified as discontinued operation when the criteria to be classified as held for sale have been met or it has been disposed of and such a component represents a separate major line of business or geographical area of operations, is part of a single co-ordinate major line of business or geographical area of operations or is a subsidiary company acquired exclusively with a view to resale.
Classification of the asset (or disposal group) as held for sale occurs only when the asset is available for immediate sale in its present condition subject only to terms that are usual and customary and the sale must be highly probable. Management must be committed to a plan to sell the assets which are expected to qualify for recognition as a completed sale within one year from the date of classification. Action required to complete the plan should indicate that it is unlikely that significant changes to the plan will be made or the plan will be withdrawn.
Immediately before classification as held for sale (or disposal group), the assets, or components of a disposal group, are remeasured in accordance with the Group’s accounting policies. Thereafter generally the assets, or disposal group, are measured at the lower of their carrying amount and fair value less costs to sell.
Liabilities are classified as held for sale and presented as such in the statements of financial position if they are directly associated with the disposal group.
Any impairment loss on a disposal group is first allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets and investment property, which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.
In the statements of profit or loss and other comprehensive income of the reporting year, and of the comparable period of the previous year, income and expenses from discontinued operations are reported separately from income and expenses from continuing operations, down to the level of profit after tax, even when the Group retains a non-controlling interest in the subsidiary after the sale. The resulting profit or loss (after tax) is reported separately in the statements of profit or loss and other comprehensive income.
Intangible assets and property, plant and equipment once classified as held for sale are not amortised or depreciated. In addition, equity accounting of equity accounted associates ceases once classified as held for sale.
3.9 Impairment of assets
3.9.1 Non-financial assets
The Group and the Company assess at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group and the Company estimate the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. 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.
SUMATEC RESOURCES BERHAD (428355-D)88
NOTES TO THE FINANCIAL STATEMENTSCONT’D
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
3.9 Impairment of assets (continued)
3.9.1 Non-financial assets (continued)
In determining fair value less costs to sell, recent market transactions are taken into account, if available.
If no such transactions can be identified, an appropriate valuation model is used. These calculations are
corroborated by valuation multiples, quoted share prices for publicly traded subsidiary companies or
other available fair value indicators.
The Group and the Company base its impairment calculation on detailed budgets and forecast
calculations which are prepared separately for each of the Group’s and the Company’s cash-generating
units to which the individual assets are allocated. These budgets and forecast calculations are generally
covering a period of five years. For longer periods, a long term growth rate is calculated and applied to
project future cash flows after the fifth year.
Impairment losses of continuing operations are recognised in the profit or loss in those expense
categories consistent with the function of the impaired asset.
For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any
indication that previously recognised impairment losses may no longer exist or may have decreased.
If such indication exists, the Group and the Company estimate the asset’s or cash-generating
unit’s recoverable amount. A previously recognised impairment loss is reversed only if there has
been a change in the assumptions used to determine the asset’s recoverable amount since the last
impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does
not exceed its recoverable amount, nor exceed the carrying amount that would have been determined,
net of depreciation, had no impairment loss been recognised for asset in prior years. Such reversal is
recognised in the profit or loss.
3.9.2 Financial assets
The Group and the Company assess at each reporting date whether there is any objective evidence
that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial
assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of
one or more events that has occurred after the initial recognition of the assets (an incurred “loss event”)
and that loss event has an impact on the estimated future cash flows of the financial asset or the group
of financial assets that can be reliably estimated. Evidence of impairment may include indications that
the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency
in interest or principal payments, the probability that they will enter bankruptcy or other financial
reorganisation and where observable data indicate that there is a measurable decrease in the estimated
future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
Financial assets carried at amortised cost
For financial assets carried at amortised cost, the Group and the Company first assess whether
objective evidence of impairment exists individually for financial assets that are individually significant,
or collectively for financial assets that are not individually significant. If the Group and the Company
determine that no objective evidence of impairment exists for an individually assessed financial asset,
whether significant or not, it includes the asset in a group of financial assets with similar credit risk
characteristics and collectively assesses them for impairment. Assets that are individually assessed for
impairment and for which an impairment loss is, or continue to be, recognised are not included in a
collective assessment of impairment.
ANNUAL REPORT 2014 89
NOTES TO THE FINANCIAL STATEMENTSCONT’D
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
3.9 Impairment of assets (continued)
3.9.2 Financial assets (continued)
Financial assets carried at amortised cost (continued)
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is
measured as the difference between the assets’ carrying amount and the present value of estimated
future cash flows (excluding future expected credit losses that have not yet been incurred). The present
value of the estimated future cash flows is discounted at the financial asset’s original effective interest
rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the
current effective interest rate.
The carrying amount of the asset is reduced through the use of an allowance account and the amount of
the loss is recognised in the profit or loss.
Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate
of interest used to discount the future cash flows for the purpose of measuring the impairment loss.
The interest income is recorded as part of finance income in the profit or loss. Loans together with
the associated allowance are written off when there is no realistic prospect of future recovery and all
collateral has been realised or has been transferred to the Group and the Company. If, in a subsequent
year, the amount of the estimated impairment loss increases or decreases because of an event
occurring after the impairment was recognised, the previously recognised impairment loss is increased
or reduced by adjusting the allowance account.
Available-for-sale financial assets
For available-for-sale financial assets, the Group and the Company assess at each reporting date
whether there is objective evidence that an investment or a group of investment is impaired.
In the case of equity investments classified as available-for-sale, objective evidence would include
a significant or prolonged decline in the fair value of the investment below its cost. “Significant”
is evaluated against the original cost of the investment and “prolonged” against the period in which
the fair value has been below its original cost. Where there is evidence of impairment, the cumulative
loss - measured as the difference between the acquisition cost and the current fair value, less any
impairment loss on that investment previously recognised in the profit or loss - is removed from other
comprehensive income and recognised in the profit or loss. Impairment losses on equity investments are
not reversed through profit or loss; increases in their fair value after impairments are recognised directly
in other comprehensive income.
3.10 Equity and reserves
An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the
Company after deducting all of its liabilities. Ordinary shares are equity instruments.
Share capital represents the nominal value of shares that have been issued.
Share premium includes any premium received on issue of share capital. Any transaction costs associated with
the issuing of shares are deducted from share premium, net of any related income tax benefits.
SUMATEC RESOURCES BERHAD (428355-D)90
NOTES TO THE FINANCIAL STATEMENTSCONT’D
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
3.10 Equity and reserves (continued)
The revaluation reserve within equity comprises gains or losses due to the revaluation of property, plant and
equipment.
The warrants reserve is valued based on the closing price of the first trading day of the warrant. The issuance
of the ordinary shares upon exercise of the warrants is treated as new subscription of ordinary shares for the
consideration equivalent to the exercise price of the warrants.
Capital reserve arose from capital reduction.
Foreign currency translation differences arising on the translation of the Group’s foreign entity is included in
foreign currency translation reserve.
Accumulated losses include all current and prior years’ accumulated losses.
All transactions with owners of the Company are recorded separately within equity.
3.11 Provisions
Provisions are recognised when there is a present legal or constructive obligation that can be estimated
reliably, as a result of a past event, when it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation. Provisions are not recognised for future operating losses.
Any reimbursement that the Group or the Company can be virtually certain to collect from a third party with
respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of
the related provision.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no
longer probable that an outflow of economic resources will be required to settle the obligation, the provisions
are reversed. Where the effect of the time of money is material, provisions are discounted using a current
pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the
increase in the provisions due to the passage of time is recognised as a finance cost.
3.12 Employee benefits
3.12.1 Short term employee benefits
Wages, salaries, bonuses and social security contributions are recognised as expenses in the financial
year in which the associated services are rendered by the employees of the Group and of the Company.
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,
and short term non-accumulating compensated absences such as sick leave are recognised when the
absences occurred.
A provision is made for the estimated liability for unutilised leave as a result of services rendered by
employees up to the end of the reporting year.
ANNUAL REPORT 2014 91
NOTES TO THE FINANCIAL STATEMENTSCONT’D
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
3.12 Employee benefits (continued)
3.12.2 Defined contribution plans
Defined contribution plans are post-employment benefit plans under which the Group and the Company
pay fixed contributions into independent entities of funds and will have no legal or constructive
obligation to pay further contribution if any of the funds do not hold sufficient assets to pay all employee
benefits relating to employee services in the current and preceding financial years.
Such contributions are recognised as expenses in the profit or loss as incurred. As required by law,
companies in Malaysia make such contributions to the Employees Provident Fund (“EPF”). Some of the
Group’s foreign subsidiary companies are also making contributions to their country’s statutory pension
schemes.
3.12.3 Employee Share Options Scheme
The Employee Share Options Scheme (“the Scheme”) allows the Group’s and the Company’s employees
to acquire shares of the Company. When the options are exercised, equity is increased by the amount of
the proceeds received.
The fair value of the employee services received in exchange for the grant of the share option is
recognised as an expense in the profit or loss over the vesting periods of the grant with a corresponding
increase in equity. The fair value of share options is measured at grant date, taking into account, if any,
the market vesting conditions upon which the options were granted but excluding impact of any non-
market vesting conditions. Non-market vesting conditions are included in assumptions about the number
of options that are expected to become exercisable on vesting date.
At each reporting date, the Group and the Company revise the estimates of the number of options that
are expected to become exercisable on vesting date. It recognises the impact of the revision of original
estimates, if any, in the profit or loss, and a corresponding adjustment to equity over the remaining
vesting period. The equity amount is recognised in the share option reserve until the option is exercised,
upon which it will be transferred to share premium, or until the option expires, upon which it will be
transferred directly to accumulated losses.
3.13 Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and
the Company and the revenue can be reliably measured. Revenue is measured at the fair value of consideration
received or receivable.
3.13.1 Oil and gas services
Revenue is recognised upon the performance or service rendered.
3.13.2 Rental income
Rental income is accounted for on a straight-line basis over the lease terms.
3.13.3 Interest income
Interest income is recognised as it accrues using the effective interest method in profit or loss.
SUMATEC RESOURCES BERHAD (428355-D)92
NOTES TO THE FINANCIAL STATEMENTSCONT’D
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
3.14 Borrowing costs
Borrowings costs are expensed in the year in which they incurred. Borrowings costs consist of interest and
other costs that the Group incurred in connection with the borrowing of funds.
3.15 Tax expenses
Tax expenses comprise current and deferred taxes. Current tax and deferred tax are recognised in profit or loss
except to the extent that they relates to items recognised directly in equity or other comprehensive income.
3.15.1 Current tax
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using
tax rates enacted or substantively enacted by the end of the reporting year, and any adjustment to tax
payable in respect of previous years.
3.15.2 Deferred tax
Deferred tax is recognised using the liability method, providing for temporary differences between the
carrying amounts of assets and liabilities in the statements of financial position and their tax bases.
Deferred tax is not recognised for the temporary differences arising from the initial recognition of
goodwill, and the initial recognition of assets or liabilities in a transaction that is not a business
combination and that does not affect the accounting or taxable profit. Deferred tax is measured at the
tax rates that are expected to be applied to the temporary differences when they reverse, based on the
laws that have been enacted or substantively enacted by the end of the reporting year.
The amount of deferred tax recognised is measured based on the expected manner of realisation or
settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively
enacted at the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax
liabilities and assets, and they relate to income taxes levied by the same tax authority on the same
taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a
net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be
available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the
reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will
be realised.
3.16 Operating segments
An operating segment is a component of the Group that engages in business activities from which it may
earn revenues and incur expenses, including revenue and expenses that relate to transactions with any of
the Group’s other components. All operating segments’ operating results are reviewed regularly by the chief
operating decision maker to make decisions about resources to be allocated to the segment and to assess its
performance, and for which discrete financial information is available.
ANNUAL REPORT 2014 93
NOTES TO THE FINANCIAL STATEMENTSCONT’D
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
3.17 Contingencies
Where it is not probable that an inflow or an outflow of economic benefits will be required, or the amount
cannot be estimated reliably, the asset or the obligation is not recognised in the statements of financial position
and is disclosed as a contingent asset or contingent liability, unless the probability of inflow or outflow of
economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence
or non-occurrence of one or more future events, are also disclosed as contingent assets or contingent liabilities
unless the probability of inflow or outflow of economic benefits is remote.
3.18 Related parties
A related party is a person or entity that is related to the Group. A related party transaction is a transfer of
resources, services or obligations between the Group and its related party, regardless of whether a price is
charged.
(a) A person or a close member of that person’s family is related to the Group if that person:
(i) has control or joint control over the Group; or
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group.
(b) An entity is related to the Group if any of the following conditions applies:
(i) the entity and the Group are members of the same group; or
(ii) one entity is an associate or joint venture of the other entity; or
(iii) both entities are joint ventures of the same third party; or
(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity; or
(v) the entity is a post-employment benefit plan for the benefits of employees of either the Group or an
entity related to the Group; or
(vi) the entity is controlled or jointly-controlled by a person identified in (a) above; or
(vii) a person identified in (a)(i) above has significant influence over the entity or is a member of the key
management personnel of the entity.
SUMATEC RESOURCES BERHAD (428355-D)94
NOTES TO THE FINANCIAL STATEMENTSCONT’D
4. INVESTMENT IN SUBSIDIARY COMPANIES
Company
2014 2013
RM RM
Investment costs:
At cost:
At 1 January 95,333,104 95,333,104
Subsidiary companies written off (253,104) -
At 31 December 95,080,000 95,333,104
Less: Impairment losses
At 1 January (95,333,104) (95,333,004)
Impairment loss recognised - (100)
Written off 253,104 -
At 31 December (95,080,000) (95,333,104)
- -
Contributions to subsidiary companies:
ESOS granted to employees of subsidiary companies 1,004,144 38,291
1,004,144 38,291
Details of the subsidiary companies are as follows:
Name of company Effective interest Principal activities
Country of
incorporation
2014 2013
% %
(a) Sumatec Corporation Sdn. Bhd. 100 100 Oil and gas field
development services
Malaysia
Held under Sumatec Corporation Sdn. Bhd.
(i) Calinex Sdn. Bhd. * - 100 Dormant Malaysia
(ii) Petroreka Sdn. Bhd. * - 100 Dormant Malaysia
(iii) Sumatec Fabricators Sdn. Bhd. * - 100 Dormant Malaysia
(iv) Sumatec Trackworks Sdn. Bhd. * - 100 Dormant Malaysia
(v) Sumatec Petroleum Development Sdn.
Bhd.
100 100 Dormant Malaysia
(vi) Sumatec Development Sdn. Bhd. 100 100 Dormant Malaysia
(vii) Vertirex Development Sdn. Bhd. * - 100 Dormant Malaysia
(viii) Sumatec Pte. Ltd. # * - 100 Dormant Singapore
(ix) Sumatec Thai Co. Ltd. # * - 74 Dormant Thailand
(x) Wailik Enterprise Sdn Bhd. # * - 70 Dormant Malaysia
ANNUAL REPORT 2014 95
NOTES TO THE FINANCIAL STATEMENTSCONT’D
4. INVESTMENT IN SUBSIDIARY COMPANIES (continued)
Name of company Effective interest Principal activities
Country of
incorporation
2014 2013
% %
(b) Tenaga Biomass Sdn. Bhd. * - 100 Dormant Malaysia
(c) North Malaysia Terminal Sdn. Bhd. * - 100 Dormant Malaysia
(d) Perlis Bio-Power Sdn. Bhd. 80 80 Dormant Malaysia
(e) IR Oilrigs Malaysia Sdn. Bhd. * - 51 Dormant Malaysia
(f) Landfill Rehab Sdn. Bhd. # * - 100 Dormant Malaysia
(g) Sumatec Oil & Gas Limited Liability Partnership # 100 100 Oil and gas field
development services
Kazakhstan
(h) Destaman Sdn. Bhd. # * - 100 Dormant Malaysia
Held under Destaman Sdn. Bhd.
Jabat Yakin Aluminium Sdn. Bhd. # * - 60 Dormant Malaysia
# Not audited by SJ Grant Thornton
* These subsidiary companies had been struck off during the year
5. INVESTMENT IN ASSOCIATE COMPANIES
Group
2014 2013
RM RM
Unquoted shares, at cost 375,540 375,540
Less: Impairment losses (375,540) (375,540)
- -
Details of associate companies are as follows:-
Name of company Effective interest Principal activities
Country of
incorporation
2014 2013
% %
(a) Adinin Sumatec JV Sdn. Bhd. # 50 50 Dormant Brunei
(b) ESE (Cambodia) Pte. Ltd.# 50 50 Dormant Republic of Cambodia
(c) Sumatec (Middle East) LLC # 49 49 Dormant United Arab Emirates
(d) Thai Polymix Co Ltd. # 49 49 Dormant Thailand
(e) UHP Engineering Sdn. Bhd.# 49 49 Dormant Malaysia
# Not audited by SJ Grant Thornton
SUMATEC RESOURCES BERHAD (428355-D)96
NOTES TO THE FINANCIAL STATEMENTSCONT’D
6. OTHER INVESTMENTS
Group Company
2014 2013 2014 2013
RM RM RM RM
Available-for-sale financial assets
At cost:
- Unquoted shares 228,033 228,033 - -
- Unquoted bonds 2,000,000 2,000,000 2,000,000 2,000,000
Written off (2,000,032) - (2,000,000) -
228,001 2,228,033 - 2,000,000
Less: Impairment losses
At 1 January (2,228,000) (2,228,000) (2,000,000) (2,000,000)
Written off 2,000,000 - 2,000,000 -
At 31 December (228,000) (2,228,000) - (2,000,000)
1 33 - -
7. PROPERTY, PLANT AND EQUIPMENT
Leasehold
land Buildings
Capital
work-in-
progress
Computer
equipment
and software
Motor
vehicles
Office
equipment,
furniture
and fittings Renovation Total
Group RM RM RM RM RM RM RM RM
Cost
At 1 January 2013 735,684 230,000 - 376,805 758,036 203,811 20,930 2,325,266
Disposals - - - (7,732) - (67,200) - (74,932)
Written off - - - - (150,600) - - (150,600)
Transferred to non-
current assets held
for sale (735,684) - - - - - - (735,684)
At 31 December 2013 - 230,000 - 369,073 607,436 136,611 20,930 1,364,050
Additions - - 1,081,954 3,100,562 - 72,976 - 4,255,492
Disposals - - - (19,283) (602,358) (19,260) - (640,901)
Written off - - - (167,827) - (73,172) - (240,999)
Transferred from non-
current assets held
for sale 735,684 - - - - - - 735,684
At 31 December 2014 735,684 230,000 1,081,954 3,282,525 5,078 117,155 20,930 5,473,326
ANNUAL REPORT 2014 97
NOTES TO THE FINANCIAL STATEMENTSCONT’D
7. PROPERTY, PLANT AND EQUIPMENT (continued)
Leasehold
land Buildings
Capital
work-in-
progress
Computer
equipment
and software
Motor
vehicles
Office
equipment,
furniture
and fittings Renovation Total
Group RM RM RM RM RM RM RM RM
Accumulated
depreciation
At 1 January 2013 49,045 46,000 - 348,340 459,062 190,531 18,287 1,111,265
Charge for the
financial year 12,261 4,600 - 27,137 120,472 5,110 2,093 171,673
Disposals - - - (7,730) - (67,198) - (74,928)
Written off - - - - (150,599) - - (150,599)
Transferred to non-
current assets held
for sale (61,306) - - - - - - (61,306)
At 31 December 2013 - 50,600 - 367,747 428,935 128,443 20,380 996,105
Charge for the
financial year - 4,600 - 302,323 60,236 20,748 544 388,451
Disposals - - - (19,281) (484,093) (18,322) - (521,696)
Written off - - - (167,787) - (71,239) - (239,026)
Transferred from non-
current assets held
for sale 61,306 - - - - - - 61,306
At 31 December 2014 61,306 55,200 - 483,002 5,078 59,630 20,924 685,140
Net carrying amount
At 31 December 2014 674,378 174,800 1,081,954 2,799,523 - 57,525 6 4,788,186
At 31 December 2013 - 179,400 - 1,326 178,501 8,168 550 367,945
SUMATEC RESOURCES BERHAD (428355-D)98
NOTES TO THE FINANCIAL STATEMENTSCONT’D
7. PROPERTY, PLANT AND EQUIPMENT (continued)
Capital work-
in-progress
Computer
equipment
and software
Motor
vehicles
Office
equipment,
furniture and
fittings Total
Company RM RM RM RM RM
Cost
At 1 January 2013 - - 150,600 - 150,600
Written off - - (150,600) - (150,600)
At 31 December 2013 - - - - -
Additions 1,081,954 3,100,562 - 6,800 4,189,316
At 31 December 2014 1,081,954 3,100,562 - 6,800 4,189,316
Accumulated depreciation
At 1 January 2013 - - 150,599 - 150,599
Written off - - (150,599) - (150,599)
At 31 December 2013 - - - - -
Charge for the financial year - 301,160 - 566 301,726
At 31 December 2014 - 301,160 - 566 301,726
Net carrying amount
At 31 December 2014 1,081,954 2,799,402 - 6,234 3,887,590
At 31 December 2013 - - - - -
(i) Net carrying amount of assets acquired under finance lease is:
Group
2014 2013
RM RM
Motor vehicles - 178,501
(ii) The titles to two apartment units of the Group with net carrying amount of RM174,800 (2013: RM179,400) have
yet to be issued by the relevant authorities.
(iii) The leasehold land of the Group with net carrying amount of RM674,378 (2013: Nil) is pledged to a bank as
securities for banking facility granted to a subsidiary company.
ANNUAL REPORT 2014 99
NOTES TO THE FINANCIAL STATEMENTSCONT’D
8. INTANGIBLE ASSET
Group and Company
2014 2013
RM RM
Development and extraction rights
At cost:
At 1 January 302,100,000 -
Additions - 302,100,000
At 31 December 302,100,000 302,100,000
Less: Accumulated amortisation
At 1 January - -
Amortisation for the year 230,619 -
At 31 December 230,619 -
At 31 December 301,869,381 302,100,000
On 8 March 2012, the Company entered into a joint investment agreement with Markmore Energy (Labuan) Limited
(“MELL”) and CaspiOil Gas LLP (“COG”), a wholly-owned subsidiary company of MELL, whereby the Company
acquired the rights to develop, extract and produce oil from Rakushechnoye Oil Field in Kazakhstan (“JIA”). The
development and extraction rights will be amortised based on the unit of production method using total proved and
probable oil reserves estimated to be recoverable from the existing oil and gas field based on the current subsurface
use contract.
MELL and COG are companies in which a major shareholder of the Company has control.
9. TRADE RECEIVABLES
Group Company
2014 2013 2014 2013
RM RM RM RM
Trade receivables 151,531,553 70,490,836 23,196,745 -
Less: Impairment losses
At 1 January (70,490,836) (70,988,826) - -
Written off - 497,990 - -
At 31 December (70,490,836) (70,490,836) - -
81,040,717 - 23,196,745 -
Less: non-current (18,123,517) - (12,710,545) -
Total 62,917,200 - 10,486,200 -
SUMATEC RESOURCES BERHAD (428355-D)100
NOTES TO THE FINANCIAL STATEMENTSCONT’D
9. TRADE RECEIVABLES (continued)
Trade credit terms generally extended by the Group range between 30 to 60 days (2013: 30 to 90 days). The non-
current portion of the trade receivables represents services provided by the Group and the Company under the JIA
and the Joint Investment Agency Agreement for which payments are not due within the 12 months after the end of
the current financial year, in line with the terms of the respective agreements.
Included in the abovementioned balances of the Group and of the Company are amount owing from 2 companies
(2013: Nil) and 1 company (2013: Nil) respectively in which a major shareholder of the Company has control.
10. OTHER RECEIVABLES
Group Company
2014 2013 2014 2013
RM RM RM RM
Non-current
Performance deposit 126,651,660 127,200,000 126,651,660 127,200,000
Other receivables 45,717,851 - 45,717,851 -
172,369,511 127,200,000 172,369,511 127,200,000
Current
Deposits 96,662,913 - 96,660,363 -
Other receivables 9,858,585 10,813,669 7,958,402 8,136,331
Less: Impairment losses
At 1 January (9,626,023) (9,626,023) (7,818,147) (7,818,147)
Written off 156,908 - - -
At 31 December (9,469,115) (9,626,023) (7,818,147) (7,818,147)
97,052,383 1,187,646 96,800,618 318,184
269,421,894 128,387,646 269,170,129 127,518,184
Performance deposit paid under the JIA is to be set off against future royalty payable calculated based on volume of
oil produced.
Non-current other receivables of the Group and the Company represent the advances provided to COG under the
Investment Agreement signed on 2 August 2013 pursuant to the JIA, which is non-interest bearing and repayment
will commence when COG’s production reaches cumulative 2 million barrels of crude oil.
Included in deposits is an amount of RM96,510,000 (2013: Nil) being refundable deposit paid for the proposed
acquisition of 100% equity interest in Borneo Energy Oil and Gas Ltd as disclosed in Note 35(e) to the Financial
Statements.
ANNUAL REPORT 2014 101
NOTES TO THE FINANCIAL STATEMENTSCONT’D
11. AMOUNT DUE FROM SUBSIDIARY COMPANIES
Company
2014 2013
RM RM
Amount due from subsidiary companies 83,598,152 73,601,749
Less: Impairment losses
At 1 January (71,600,670) (49,394,341)
Impairment loss recognised (14,914) (22,206,329)
Written off 1,577,725 -
At 31 December (70,037,859) (71,600,670)
13,560,293 2,001,079
Included in the abovementioned balances is an amount of RM2,164,743 (2013: Nil) which is trade in nature,
unsecured, interest free and carries a credit period of 30 days (2013: Nil).
Also included in the abovementioned balances are advances to subsidiary company amounting to RM6,710,277
(2013: RM2,001,079) which are unsecured, bear interest at 7% (2013: 7%) per annum and repayable by 31
December 2015.
The remaining amount due from subsidiary companies of RM4,685,273 (2013: Nil) are non-trade in nature,
unsecured, interest free and repayable on demand.
12. AMOUNT DUE FROM ASSOCIATE COMPANIES
Group Company
2014 2013 2014 2013
RM RM RM RM
Amount due from associate companies 7,469,630 1,834,133 5,635,497 -
Less: Impairment losses (1,834,133) (1,834,133) - -
5,635,497 - 5,635,497 -
The amount due from associate companies is non-trade in nature, unsecured, interest free and repayable on
demand.
13. FIXED DEPOSITS WITH A LICENSED BANK
The fixed deposits are pledged to a licensed bank for banking facilities granted to a subsidiary company.
SUMATEC RESOURCES BERHAD (428355-D)102
NOTES TO THE FINANCIAL STATEMENTSCONT’D
14. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE
Group Company
2014 2013 2014 2013
RM RM RM RM
Assets:
Property, plant and equipment - 674,378 - -
Investment in an associate company 17,000,000 17,000,000 17,000,000 17,000,000
17,000,000 17,674,378 17,000,000 17,000,000
(a) On 12 September 2013, Sumatec Corporation Sdn. Bhd. (“SCSB”), a wholly-owned subsidiary company of the
Company entered into a sale and purchase agreement with a third party for the disposal of its leasehold land
for a total cash consideration of RM3,000,000. Subsequently, the sale and purchase agreement was mutually
terminated by both parties.
On 13 October 2014, SCSB entered into a new sale and purchase agreement with another third party for the
disposal of the said leasehold land for a total cash consideration of RM3,000,000. The consent to transfer
was approved by the Land Office on 19 January 2015. On 31 March 2015, the purchaser notified SCSB of its
decision to abort the transaction and SCSB invoked its right to forfeit the 10% deposit paid by the purchaser.
Consequently, the leasehold land which was classified as held for sale in prior year has been reclassified to
property, plant and equipment.
The leasehold land is pledged to a bank as securities for banking facility granted to the subsidiary company.
(b) On 21 December 2012, the Company entered into a sale and purchase agreement with third parties to dispose
its 51% equity interest, representing 64,496,272 ordinary shares of Semua International Sdn. Bhd. (“SISB”) for
a total sales consideration of RM18,800,000, comprising its entire shipping division. The disposal is part of the
debt settlement scheme with the CLO bondholders.
The assets and liabilities of SISB Group have been presented on the statements of financial position as
disposal group classified as held for sale.
On 19 July 2013, the Company received RM1.8 million (“1st Tranche Consideration”), representing the disposal
value of 2% equity interest in SISB from the purchaser.
The 2nd Tranche Consideration of RM17 million, representing the disposal value of the remaining 49% equity
interest in SISB, together with interest thereon at the rate of 6% per annum (interest shall be payable half
yearly) shall be paid within 24 months, or earlier, from 31 January 2013, i.e. the date the last approval was
obtained from the CLO bondholders. However, the third parties are unable to fulfill the settlement obligation to
CLO bondholders during the financial year.
The Company has entered into preliminary negotiation with a potential buyer during the financial year, whereby
the Directors expect negotiation to be finalised and the sale to be completed in 2015.
The 49% equity interest in SISB is pledged to CLO bondholders as security for banking facility granted to the
Company.
ANNUAL REPORT 2014 103
NOTES TO THE FINANCIAL STATEMENTSCONT’D
15. SHARE CAPITAL
Group and Company
Number of shares Amount
Unit RM
Authorised:-
Ordinary shares of RM0.14 each
At 1 January 2013 2,142,857,143 300,000,000
Created during the financial year 5,000,000,000 700,000,000
At 31 December 2013/1 January 2014/31 December 2014 7,142,857,143 1,000,000,000
Issued and fully paid:-
Ordinary shares of RM0.35 each
At 1 January 2013 214,364,221 75,027,477
Capital reduction - (45,016,486)
Ordinary shares of RM0.14 each 214,364,221 30,010,991
Exercise of ESOS 4,440,000 621,600
Conversion of warrants 3,800 532
Issuance of shares pursuant to:
- Rights issue with warrants 2,270,612,731 317,885,782
- Issuance of shares 335,000,000 46,900,000
- Scheme of arrangements with creditors 260,547,248 36,476,615
At 31 December 2013 3,084,968,000 431,895,520
Exercise of ESOS 89,000,000 12,460,000
Conversion of warrants 131,325 18,386
Private placement 308,596,000 43,203,440
At 31 December 2014 3,482,695,325 487,577,346
The holders of the ordinary shares are entitled to receive dividends as and when declared by the Company. All
ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company’s residual
assets.
SUMATEC RESOURCES BERHAD (428355-D)104
NOTES TO THE FINANCIAL STATEMENTSCONT’D
16. OTHER RESERVES
Group Company
2014 2013 2014 2013
RM RM RM RM
Non-distributable:-
Share premium
At 1 January 86,578,990 - 86,578,990 -
Arising from issuance of ordinary shares 83,323,637 101,248,796 83,323,637 101,248,796
Transfer from employee share options reserve 5,700,100 - 5,700,100 -
Less: Share issuance expenses (10,464,803) (14,669,806) (10,464,803) (14,669,806)
At 31 December 165,137,924 86,578,990 165,137,924 86,578,990
Revaluation reserve
At 1 January - 1,286,663 - -
Realisation of revaluation on land and buildings - (27,975) - -
Disposal of a subsidiary company - (1,258,688) - -
At 31 December - - - -
Warrants reserve
At 1 January 142,608,740 15,005,495 142,608,740 15,005,495
Conversion of warrants (28,892) (532) (28,892) (532)
Issuance of warrants pursuant to rights issue - 127,603,777 - 127,603,777
At 31 December 142,579,848 142,608,740 142,579,848 142,608,740
Employee share options reserve
At 1 January 3,809,366 - 3,809,366 -
Employee share options 6,269,629 3,809,366 6,269,629 3,809,366
Exercise of ESOS (5,700,100) - (5,700,100) -
At 31 December 4,378,895 3,809,366 4,378,895 3,809,366
Capital reserve
At 1 January/31 December 17,186,556 17,186,556 17,186,556 17,186,556
Foreign currency translation reserve
At 1 January - - - -
Foreign currency translation 95,211 - - -
At 31 December 95,211 - - -
Total other reserves 329,378,434 250,183,652 329,283,223 250,183,652
ANNUAL REPORT 2014 105
NOTES TO THE FINANCIAL STATEMENTSCONT’D
16. OTHER RESERVES (continued)
Share premium
Share premium represents the excess of the consideration received over the nominal value of shares issued by the Company. Any transaction costs associated with the issuing of shares are deducted from share premium. It is not to be distributed by way of cash dividends and its utilisation shall be in a manner as set out in Section 60 (3) of the Companies Act, 1965.
Revaluation reserve
The revaluation reserve represents the surplus on the revaluation of certain land and buildings of the Group.
Warrants reserve
On 4 March 2011, the Company issued 107,182,110 Warrants A pursuant to the rights issue. Each Warrant A entitles the holder to subscribe for 1 new ordinary share at the exercise price of RM0.35 per share.
Warrants A were constituted under the Deed Poll dated 8 October 2010 and the Supplemental Deed Poll dated 23 February 2011 (“Deed Poll A”).
On 14 November 2013, the Company issued new shares and warrants pursuant to its rights issue with warrants exercise. Pursuant thereto, subject to adjustments in accordance with the Deed Poll A, the exercise price of the outstanding Warrants A was revised from RM0.35 to RM0.32 while an additional 11,574,887 Warrants A were listed and quoted on 21 November 2013.
None of the Warrants A were exercised during the financial year and Warrants A that remain unexercised as at 31 December 2014 are 118,753,197.
On 14 November 2013, the Company issued 567,653,083 Warrants B pursuant to the rights issue. Each Warrant B entitles the holder to subscribe for 1 new ordinary share at the exercise price of RM0.175 per share.
Warrants B were constituted under the Deed Poll dated 28 August 2013.
131,325 Warrants B were exercised during the financial year and Warrants B that remain unexercised as at 31 December 2014 are 567,521,758.
The warrants reserve arose from the allocation of fair value of Warrants A and Warrants B issued have been charged to accumulated losses.
The main features of the warrants are as follows:
(i) Each warrant entitles the registered holder at any time during the exercise period to subscribe for one new ordinary share of RM0.14 each in the Company at an exercise price of RM0.32 for Warrant A and RM0.175 for Warrant B.
(ii) The exercise price and the number of warrants are subject to adjustment in the event of alteration to the share capital of the Company in accordance with the provisions set out in the Deed Poll.
(iii) The warrants shall be exercisable at any time within the period commencing on and including the date of issue of the warrants until the last market day prior to the tenth anniversary for Warrant A and fifth anniversary for Warrant B of the respective dates of issue of the warrants.
(iv) All new ordinary shares to be issued arising from the exercise of the warrants shall rank pari passu in all respects with the then existing ordinary shares of the Company except that such new ordinary shares shall not be entitled to any dividends, rights, allotments and other distributions on or prior to the date of allotment of the
new ordinary shares arising from the exercise of the warrants.
SUMATEC RESOURCES BERHAD (428355-D)106
NOTES TO THE FINANCIAL STATEMENTSCONT’D
16. OTHER RESERVES (continued)
Employee share options reserve
Employee share options reserve represents the equity-settled share options granted to employees. The reserve is
made up of the cumulative value of services received from employees recorded over the vesting period commencing
from the grant date of equity-settled share options, and is reduced by the expiry or exercise of the share options.
Capital reserve
The capital reserve arose from the capital reduction in previous financial years which was used to offset
RM104,502,558 of the Company’s accumulated losses at the date when the reduction of share capital became
effective.
The remaining credit after off-setting amounting to RM17,186,556 was credited to the capital reserve of the Group
and of the Company.
Foreign currency translation reserve
The translation reserve represents exchange difference arising from the translation of the financial statements of
foreign operations whose functional currency is different from that of the Group’s presentation currency.
These reserves are not available for distribution as dividends.
17. FINANCE LEASE PAYABLES
Group
2014 2013
RM RM
Minimum lease payments
- within 1 year - 142,908
- after 1 year but not later than 5 years - 246,568
- 389,476
Future finance charges on finance lease payables - (38,404)
- 351,072
Present value of finance lease payables
- within 1 year - 124,814
- after 1 year but not later than 5 years - 226,258
- 351,072
The interest rates ranged from 3.40% to 4.55% per annum in the previous financial year.
ANNUAL REPORT 2014 107
NOTES TO THE FINANCIAL STATEMENTSCONT’D
18. DEFERRED TAX LIABILITIES
Group and Company
2014 2013
RM RM
At 1 January - -
Transferred from profit or loss (Note 26) 331,000 -
At 31 December 331,000 -
The deferred tax liabilities as at the end of the reporting date are made up of temporary differences arising from:-
Group and Company
2014 2013
RM RM
Property, plant and equipment 157,000 -
Other 174,000 -
331,000 -
As at reporting date, the deferred tax assets not recognised in the Group’s financial statements are made up of the
temporary differences arising from:-
Group
2014 2013
RM RM
Unabsorbed tax losses 70,529,000 117,148,000
Property, plant and equipment - (24,000)
Other (2,771,000) -
67,758,000 117,124,000
The potential deferred tax assets of the Group have not been recognised in respect of these items as it is anticipated
that the tax effects of such benefits will not be reversed in the near foreseeable future.
SUMATEC RESOURCES BERHAD (428355-D)108
NOTES TO THE FINANCIAL STATEMENTSCONT’D
19. OTHER PAYABLES
Group Company
2014 2013 2014 2013
RM RM RM RM
Non-current
Other payables 37,880,636 - 37,880,636 -
Current
Other payables and accruals 8,993,439 8,228,480 8,402,472 7,753,002
Deposits received 300,000 300,000 - -
Provision for liquidated ascertained damages on
projects:
At 1 January 609,137 609,137 - -
Reversed (609,137) - - -
At 31 December - 609,137 - -
9,293,439 9,137,617 8,402,472 7,753,002
47,174,075 9,137,617 46,283,108 7,753,002
Non-current payables of the Group and Company represent non-interest bearing advances, with no fixed term of
repayment provided from a company in which a major shareholder of the Company has control.
Included in other payables and accruals is an amount of RM2,394,073 (2013: Nil) being interest accrued on term
loans.
20. TRADE PAYABLES
Group
The normal trade credit terms granted by the trade payables range from 30 to 90 days (2013: 30 to 90 days).
ANNUAL REPORT 2014 109
NOTES TO THE FINANCIAL STATEMENTSCONT’D
21. TERM LOANS
Group and Company
2014 2013
RM RM
Secured:-
CLO loans
- repayable within 12 months 22,635,497 17,000,000
The CLO loans are secured by way of 49% equity interest in SISB.
Subsequent to the reporting date, the Company entered into a new settlement agreement with CLO Bondholders and
Trustee for the settlement of the term loans. The terms of the new settlement agreement are disclosed in Note 35(d)
to the Financial Statements.
The CLO loans carry interest at the rate of 6% (2013: between 8.10% and 10.13%) per annum.
22. SHORT-TERM BORROWING
Group
2014 2013
RM RM
Secured:-
Revolving credit - 601,636
The short-term borrowing of the Group were secured against first fixed legal charge over the Group’s landed
properties. The borrowing had been fully settled during the financial year.
The interest rates ranged from 8.00% to 8.60% per annum in the previous financial year.
23. REVENUE
Group Company
2014 2013 2014 2013
RM RM RM RM
Oil and gas income 81,117,160 - 23,771,160 -
Management service fee - - 2,164,743 -
81,117,160 - 25,935,903 -
SUMATEC RESOURCES BERHAD (428355-D)110
NOTES TO THE FINANCIAL STATEMENTSCONT’D
24. STAFF COSTS
Group Company
2014 2013 2014 2013
RM RM RM RM
Salaries, wages and other emoluments 10,059,785 2,934,370 3,656,088 2,514,281
Executive Directors’ remuneration (Note 29) - 723,472 - -
Non-executive Directors’ meeting allowance 187,000 - 187,000 -
Directors’ fees 469,150 119,833 469,150 119,833
Defined contribution plans and social security
contributions 185,665 85,765 92,516 47,165
Share options granted under ESOS 6,269,629 3,809,366 5,303,776 3,771,075
Other benefits 113,095 347,458 113,095 322,848
17,284,324 8,020,264 9,821,625 6,775,202
Employee Share Options Scheme
On 18 April 2007, the Company granted share options to qualified key management personnel and employees to
purchase shares in the Company under the ESOS approved by the shareholders of the Company on 24 June 2005
(“1st Tranche”). On 27 December 2013, the Company further granted share options to qualified senior management
and employees (“2nd Tranche”). Under the 2nd Tranche, holders of vested options are entitled to purchase the
Company’s shares at RM0.244 per share. Included in 2nd Tranche are share options granted to the Chief Executive
Officer of the Company (“CEO”) which were approved by shareholders on 26 March 2014.
The vesting conditions related to the grants of the 2nd Tranche ESOS options are as follows:
Employees entitled Vesting conditions
Outstanding number
of options
2014 2013
Option granted to senior
management
(“Grant I”)
Share price exceeds RM0.30 per share - 65,000,000
Option granted to senior
management and employees
(“Grant II”)
Achievement of the following:
- 3 consecutive months of production at 2,000
barrels per day; and
- Uplift from PN17
33,840,000 32,000,000
Option granted to senior
management and employees
(“Grant III”)
Achievement of the following:
- Cumulative 2 million barrels sold; and
- Profit on oil of USD35 per barrel
50,760,000 48,000,000
84,600,000 145,000,000
ANNUAL REPORT 2014 111
NOTES TO THE FINANCIAL STATEMENTSCONT’D
24. STAFF COSTS (continued)
A summary of the movements in the number of ESOS and the weighted average exercise prices (“WAEP”) is as
follow:
Group
2014 2013
Number of
share option WAEP
Number of
share option WAEP
RM RM
Outstanding at 1 January 145,040,000 0.244 5,730,000 0.350
Granted during the financial year 44,000,000 0.244 145,000,000 0.244
Forfeited during the financial year (15,400,000) 0.244 (1,250,000) 0.350
Exercised during the financial year (89,000,000) 0.244 (4,440,000) 0.350
Outstanding at 31 December 84,640,000 0.244 145,040,000 0.244
Exercisable at 31 December 40,000 65,040,000
The options outstanding at 31 December 2014 have exercise prices in the range of RM0.244 to RM0.35 (2013:
RM0.244 to RM0.35) and a weighted average contractual life of 2.3 years (2013: 3.3 years).
The fair value of services received in return for the share options granted is based on the fair value of share options
granted, measured using Lattice Trinomial and Binomial option-pricing models, with the following inputs:
Grant I to
CEO
Grant II & III
to CEO
Grant I
to senior
management
and
employees
Grant II &
III to senior
management
and
employees
RM RM RM RM
Fair value at grant date 0.0834 0.1294 0.0569 0.1294
Weighted average share price 0.30 0.30 0.271 0.271
Share price at grant date 0.30 0.30 0.280 0.280
Weighted average volatility 55% 55% 55% 55%
Expected weighted average option life 3 years 3 years 3.3 years 3.3 years
Sub-optimal exercise factor 1.30 N/A 1.30 N/A
Expected dividends 0% 0% 0% 0%
Risk-free interest rate
(based on Malaysian government bonds) 3.5% 3.5% 3.5% 3.5%
SUMATEC RESOURCES BERHAD (428355-D)112
NOTES TO THE FINANCIAL STATEMENTSCONT’D
25. FINANCE COSTS
Group Company
2014 2013 2014 2013
RM RM RM RM
Finance lease interest 16,379 24,768 - -
Unwinding discount on finance assets 13,412,807 - 10,871,804 -
Term loans interest 2,404,851 8,243,338 2,394,073 8,243,338
Other charges 11,047 228,183 10,023 38,412
15,845,084 8,496,289 13,275,900 8,281,750
26. TAX EXPENSES
Group Company
2014 2013 2014 2013
RM RM RM RM
Income tax attributable to continuing operations:
- current tax 4,261,000 - 4,250,000 -
- under provision of tax in prior years 11,466 369,685 - -
- deferred tax 331,000 - 331,000 -
4,603,466 369,685 4,581,000 -
Malaysian income tax is calculated at the statutory tax rate of 25% (2013: 25%) of the estimated assessable profits
for the financial year.
A reconciliation of income tax expense applicable to profit before tax at the statutory tax rate to income tax expense
at the effective tax rate of the Group and of the Company are as follows:-
Group Company
2014 2013 2014 2013
RM RM RM RM
Profit before taxation 53,507,315 83,284,890 7,606,668 12,150,339
Tax at statutory rate of 25% 13,376,829 20,821,223 1,901,667 3,037,585
Expenses not deductible for tax purposes 7,108,258 11,664,190 6,671,149 10,991,193
Income not subject to tax (3,551,487) (25,833,743) (3,991,816) (14,028,778)
Utilisation of deferred tax assets not recognised in
prior years (12,341,600) (6,651,670) - -
Under provision in prior years 11,466 369,685 - -
Tax at effective tax rate 4,603,466 369,685 4,581,000 -
ANNUAL REPORT 2014 113
NOTES TO THE FINANCIAL STATEMENTSCONT’D
26. TAX EXPENSES (continued)
The unabsorbed tax losses of the Group amounting to RM70,529,000 (2013: RM117,148,000) can be carried forward
to offset against future taxable profits.
However, the above amounts are subject to the approval of Inland Revenue Board of Malaysia.
27. NET PROFIT FOR THE FINANCIAL YEAR
Net profit for the financial year has been determined after charging/(crediting), amongst others, the following items:-
Group Company
2014 2013 2014 2013
RM RM RM RM
Charging/(crediting):-
Auditors’ remuneration
- statutory auditors 76,000 66,500 50,000 35,000
- other external auditors 244,101 33,266 - -
- other services 244,600 81,800 234,800 65,800
Amortisation of intangible assets 230,619 - 230,619 -
Amount due from subsidiary companies written off - - 26,563 -
Bad debts written off 31,200 48,792 - 990,424
Depreciation 388,451 171,673 301,726 -
Gain from disposal of disposal group classified as held
for sale - (22,873,122) - -
Gain from disposal of property, plant and equipment (73,977) (10,596) - -
Gain from disposal of a subsidiary company - (631,290) - -
(Gain)/loss on foreign exchange:
- realised (2,424) 58,318 (2,424) -
: continuing operations (2,424) - (2,424) -
: discontinued operation - 58,318 - -
- unrealised (7,092,560) 2,822,993 (4,713,400) -
: continuing operations (7,092,560) - (4,713,400) -
: discontinued operation - 2,822,993 - -
Impairment loss on investment in a subsidiary
company - - - 100
Impairment loss on amount due from subsidiary
companies - - 14,914 22,206,329
SUMATEC RESOURCES BERHAD (428355-D)114
NOTES TO THE FINANCIAL STATEMENTSCONT’D
27. NET PROFIT FOR THE FINANCIAL YEAR (continued)
Net profit for the financial year has been determined after charging/(crediting), amongst others, the following items
(continued):-
Group Company
2014 2013 2014 2013
RM RM RM RM
Charging/(crediting):- (continued)
Impairment loss on property, plant and equipment
: discontinued operation - 24,149,840 - -
Interest income
: deposit interest income (287,210) (3) (287,210) (3)
: unwinding discount on financial liabilities (7,954,934) - (7,954,934) -
Property, plant and equipment written off 1,972 594,677 - 1
: continuing operations 1,972 1 - 1
: discontinued operation - 594,676 - -
Loss from subsidiary companies written off 142,710 - - -
Other investments written off 32 - - -
Rental income (48,000) (48,000) - -
Rental of office equipment 594 - 594 -
Rental of premises 742,518 217,832 271,110 -
: continuing operations 742,518 - 271,110 -
: discontinued operation - 217,832 - -
Reversal of provision for liquidated ascertained
damages (609,137) - - -
Waiver of amount due to associate company - (523) - -
Waiver of debts (135,858) (83,851,493) - (56,115,107)
ANNUAL REPORT 2014 115
NOTES TO THE FINANCIAL STATEMENTSCONT’D
28. EARNINGS PER SHARE
Basic earnings per share
Basic earnings per ordinary share is calculated by dividing net profit for the financial year attributable to ordinary
equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year.
Group
2014 2013
RM RM
Profit from continuing operations attributable to ordinary equity holders of the
Company 48,903,849 83,112,925
Loss from discontinued operation attributable to ordinary equity holders of the
Company - (9,514,434)
Profit attributable to ordinary equity holders of the Company 48,903,849 73,598,491
Weighted average number of ordinary shares in issue (unit) 3,259,336,816 584,916,319
Basic earnings per share:
From continuing operations (sen) 1.50 14.21
From discontinued operation (sen) - (1.63)
1.50 12.58
Diluted earnings per share
For the purpose of calculating diluted earnings per share, the profit for the year attributable to ordinary equity holders
of the Company and the weighted average number of ordinary shares in issue during the financial year have been
adjusted for the dilutive effects of all potential ordinary shares, i.e., share options granted to employees and warrants.
Group
2014 2013
Weighted average number of ordinary shares in issue (unit) 3,259,336,816 584,916,319
Effect of warrants and ESOS (unit) 261,034,189 31,181,270
Weighted average number of ordinary shares (diluted) (unit) 3,520,371,005 616,097,589
Diluted earnings per share:
From continuing operations (sen) 1.39 13.49
From discontinued operation (sen) - (1.54)
1.39 11.95
SUMATEC RESOURCES BERHAD (428355-D)116
NOTES TO THE FINANCIAL STATEMENTSCONT’D
29. RELATED PARTY DISCLOSURES
(a) Related party transaction
Group Company
2014 2013 2014 2013
RM RM RM RM
Management service fee charged to a
subsidiary company - - 2,164,743 -
Oil and gas income charged to companies in
which a major shareholder of the Company
has control 81,117,160 - 23,771,160 -
Royalty expense charged by a company in
which a major shareholder of the Company
has control 548,340 - 548,340 -
Related party transactions have been entered into in the normal course of business under normal trade terms.
(b) Key management personnel compensation
The key management personnel compensation is as follows:
Group Company
2014 2013 2014 2013
RM RM RM RM
Executive Directors’ remuneration:
Short term employees benefits - 640,500 - -
Post-employment benefits - 82,972 - -
- 723,472 - -
Other key management personnel:
Short term employees benefits 4,859,709 2,337,916 2,729,537 2,337,916
Post-employment benefits 113,049 60,564 27,546 60,564
Share options granted under ESOS 5,130,456 3,754,158 5,130,456 3,754,158
10,103,214 6,152,638 7,887,539 6,152,638
10,103,214 6,876,110 7,887,539 6,152,638
Other key management personnel comprise persons other than the executive Directors of the Company, having
authority and responsibility for planning, directing and controlling the activities of the Company, either directly
or indirectly.
(c) Related party balances
The details of the terms and conditions of amounts due from/to related parties are disclosed in Notes 9, 10, 11,
12 and 19 to the Financial Statements respectively.
ANNUAL REPORT 2014 117
NOTES TO THE FINANCIAL STATEMENTSCONT’D
30. CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
Contingent liabilities
Group and Company
2014 2013
RM RM
Unsecured:-
Corporate guarantee granted to associate companies held for sale
(former subsidiary companies) 271,120,931 284,573,875
* The Board of Directors are of the opinion that the likelihood of the crystalisation of the above obligations
probably will not require any outflow of resources and thus no provision is required.
Capital commitments
Group and Company
2014 2013
RM RM
Capital expenditure
Authorised and contracted for:
- Property, plant and equipment 266,559 -
31. OPERATING SEGMENT
Business segments
For management purposes, the Group is organised into business units based on their services, which comprise the
following:
(i) Oil and gas : Provision of oil and gas field development services
(ii) Engineering and construction : Engineering, procurement, construction and commissioning
(iii) Shipping (Discontinued) : Shipping chartering services
(iv) Others : Investment holding
Management monitors the operating results of its business units separately for the purpose of decisions making
about resource allocation and performance assessment. Segment performance is evaluated based on operating
profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit
or loss in the consolidated financial statements.
Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with
third parties.
SUMATEC RESOURCES BERHAD (428355-D)118
NOTES TO THE FINANCIAL STATEMENTSCONT’D
31. OPERATING SEGMENT (continued)
Business segments (continued)
Note Oil and gas Others
Adjustments
and
elimination
Total as per
consolidated
financial
statements
RM RM RM RM
2014
Revenue
External revenue (i) 81,117,160 - - 81,117,160
Results
Interest income 8,242,144 - - 8,242,144
Finance cost (15,845,084) - - (15,845,084)
Depreciation and amortisation (619,070) - - (619,070)
Tax expenses (4,603,466) - - (4,603,466)
Other non-cash income/(expenses) (ii) 7,814,232 64,096 (142,710) 7,735,618
Segment profit (iii) 61,932,094 (10,427) (811,412) 61,110,255
Assets
Additions to non-current assets
(other than financial instruments) (iv) 4,255,492 - - 4,255,492
Note
Engineering
and
construction
Shipping
(Discontinued) Others
Adjustments
and
elimination
Total as per
consolidated
financial
statements
RM RM RM RM RM
2013
Revenue
External revenue (i),(v) - 80,147,924 - - 80,147,924
Results
Interest income - - 3 - 3
Finance cost (214,539) (14,280,155) (8,281,750) - (22,776,444)
Depreciation and
amortisation (171,673) - - - (171,673)
Tax (expense)/ income (369,685) 1,067 - - (368,618)
Other non-cash income/
(expenses) (ii) 29,124,988 (4,694,387) 32,918,253 22,401,868 79,750,722
Segment profit (iii) 25,778,035 (4,376,664) 20,432,089 45,571,052 87,404,512
Assets
Additions to non-current
assets (other than financial
instruments) (iv) - - 302,100,000 - 302,100,000
ANNUAL REPORT 2014 119
NOTES TO THE FINANCIAL STATEMENTSCONT’D
31. OPERATING SEGMENT (continued)
Business segments (continued)
Segment assets/liabilities
Segment assets/liabilities information is not presented to the Board of Directors and hence, no disclosure is made on
the segment asset/liabilities.
Notes to the operating segments are as follows:-
(i) Inter-segment revenues are eliminated on consolidation.
(ii) Other material non-cash income/(expenses) consist of the following items:
Group
2014 2013
RM RM
Bad debts written off (31,200) (48,792)
Gain on disposal of disposal group classified as held for sale - 22,873,122
Gain on disposal of a subsidiary company - 631,290
(Gain)/loss on disposal of property, plant and equipment 73,977 10,596
Impairment loss on property, plant and equipment - (24,149,840)
Loss from subsidiary companies written off (142,710) -
Other investments written off (32) -
Property, plant and equipment written off (1,972) (594,677)
Provision for liquidated ascertained damages no longer required 609,137 -
Waiver of debts 135,858 83,851,493
Waiver of amount due to associate company - 523
Unrealised loss/(gain) on foreign exchange 7,092,560 (2,822,993)
7,735,618 79,750,722
(iii) The following items are added to/(deducted from) segment profit to arrive at “net profit for the year” as
presented in the statements of profit or loss and other comprehensive income:
Group
2014 2013
RM RM
Segment profit 61,110,255 87,404,512
Interest income 8,242,144 3
Finance costs (15,845,084) (22,776,444)
Taxation (4,603,466) (368,618)
48,903,849 64,259,453
SUMATEC RESOURCES BERHAD (428355-D)120
NOTES TO THE FINANCIAL STATEMENTSCONT’D
31. OPERATING SEGMENT (continued)
Business segments (continued)
Segment assets/liabilities (continued)
Notes to the operating segments are as follows:- (continued)
(iv) Additions to non-current assets (other than financial instruments) consist of:
Group
2014 2013
RM RM
Intangible assets - 302,100,000
Property, plant and equipment 4,255,492 -
4,255,492 302,100,000
(v) The revenue relating to the shipping segment is presented separately in the statement of profit or loss and
other comprehensive income within one line item, “loss from discontinued operation”.
Geographical information
The Group’s revenue and non-current assets information based on geographical location are as follows:-
Revenue Non-current assets
2014 2013 2014 2013
RM RM RM RM
Malaysia 49,659,650 65,826,644 4,739,740 367,978
Singapore - 13,220,780 - -
Labuan - 1,100,500 - -
Kazakhstan 31,457,510 - 492,410,856 429,300,000
81,117,160 80,147,924 497,150,596 429,667,978
Information about major customers
The following are major customers with revenue more than 10% of the Group’s revenue:-
Revenue Segment
2014 2013
RM RM
2 major customers 81,117,160 - Oil and gas
3 major customers - 64,056,125 Shipping (discontinued)
ANNUAL REPORT 2014 121
NOTES TO THE FINANCIAL STATEMENTSCONT’D
32. MATERIAL LITIGATIONS
Save as disclosed below, the Group is not engaged in any litigations, claims or arbitration, either as plaintiff or defendant, which has or will have material effect on the financial position of the Group, and the Directors are not aware of any proceedings, pending or threatened, against the Company and/or any of the Company’s subsidiary companies or of any facts likely to give rise to any proceedings which might materially affect the position or business of the Group:
Sumatec Corporation Sdn. Bhd. (“SCSB”) vs Greentech Chemical Sdn. Bhd. (formerly known as Himpunan Sari Sdn. Bhd.) (“GCSB”)
SCSB filed a suit against GCSB in relation to GCSB’s call on a bank guarantee which was provided by SCSB pursuant to a contract for the design, engineering, procurement, construction works, start-up works, commissioning and performance testing of a 250,000 metric ton per year Biodiesel Facilities. In the injunction proceedings, SCSB sought declarations to the effect that GCSB has no right to call on the bank guarantee provided by SCSB of RM5.77 million. SCSB was successful in obtaining the injunction pending disposal of the main suit. Subsequently, parties entered into negotiations and arbitration.
SCSB had on 18 March 2014 presented a petition to wind-up GCSB for its failure to pay RM10,299,285.90 to SCSB as at 20 June 2012 pursuant to a turnkey engineering, procurement, construction and commissioning contract to build a biodiesel plant at the Telok Kalong Industrial Estate in Terengganu. The petition was heard on 17 June 2014 where the Court ordered GCSB to be wound up. SCSB’s solicitors will file in a proof of debt in due course.
33. FINANCIAL INSTRUMENTS
Financial risk management
The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. Financial risk management policies are established to ensure that adequate resources are available for the development of the Group’s business whilst managing its financial risks. The Group operates within clearly defined policies and procedures that are approved by the Board of Directors to ensure the effectiveness of the risk management process.
The main areas of financial risks faced by the Group and the Company and the policies in respect of the major areas of treasury activity are set out as follows:
(a) Credit risk
Credit risk is the risk of a financial loss to the Group and the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. It is the Group’s and the Company’s policy to enter into financial instrument with a diversity of creditworthy counterparties. The Group and the Company do not expect to incur material credit losses of its financial assets or other financial instruments.
The Group’s and the Company’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group and the Company provide services only to recognised and creditworthy third parties. It is the Group’s and the Company’s policy that all customers are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis to ensure that the Group’s or the Company’s exposure to bad debts is not significant.
The areas where the Group and the Company are exposed to credit risk are as follows:-
Receivables
As at the end of the reporting date, the maximum exposure to credit risk arising from receivables is limited to
the carrying amounts in the statements of financial position.
SUMATEC RESOURCES BERHAD (428355-D)122
NOTES TO THE FINANCIAL STATEMENTSCONT’D
33. FINANCIAL INSTRUMENTS (continued)
Financial risk management (continued)
(a) Credit risk (continued)
Receivables (continued)
With a credit policy in place to ensure that credit risk is monitored on an on-going basis, management has
taken reasonable steps to ensure that receivables that are past due but not impaired are stated at their
realisable values. The Group uses aging analysis to monitor the credit quality of the receivables. Any
receivables having significant balances past due more than credit terms granted are deemed to have higher
credit risk, and are monitored individually.
Group
2014 2013
RM % RM %
Trade receivables by country:
Malaysia 52,431,000 65 - -
Kazakhstan 28,609,717 35 - -
81,040,717 100 - -
Company
2014 2013
RM % RM %
Trade receivable by country:
Kazakhstan 23,196,745 100 - -
The Group’s and the Company’s trade receivables have significant credit risk exposure to two (2013: Nil) and
one (2013: Nil) major customers respectively.
The ageing analysis of trade receivables is as follows:
Gross
Individually
impaired Net
RM RM RM
Group
2014
Not past due 41,717,467 - 41,717,467
Past due 1 – 60 days - - -
Past due 61 – 120 days 13,107,750 - 13,107,750
Past due 121 – 365 days 26,215,500 - 26,215,500
Past due more than 1 year 70,490,836 (70,490,836) -
151,531,553 (70,490,836) 81,040,717
ANNUAL REPORT 2014 123
NOTES TO THE FINANCIAL STATEMENTSCONT’D
33. FINANCIAL INSTRUMENTS (continued)
Financial risk management (continued)
(a) Credit risk (continued)
Receivables (continued)
The ageing analysis of trade receivables is as follows: (continued)
Gross
Individually
impaired Net
RM RM RM
2013
Past due more than 1 year 70,490,836 (70,490,836) -
Company
2014
Not past due 23,196,745 - 23,196,745
Trade and other receivables that are neither past due nor impaired are creditworthy receivables with good
payment records with the Group and the Company. None of the Group’s and Company’s trade and other
receivables that are neither past due nor impaired have been renegotiated during the financial year.
The Group’s trade receivables of RM39,323,250 (2013: Nil) were past due but not impaired. These customers
have no recent history of default and the Directors expect they are recoverable.
Intercompany balances
The maximum exposure to credit risk is presented by their carrying amounts in the statements of financial
position.
The Company provides unsecured advances to associate companies and subsidiary companies and monitors
the results of the associate companies and subsidiary companies regularly.
As at the end of the reporting year, there was no indication that the net carrying amounts of the amounts due
from associate companies and subsidiary companies are not recoverable.
Cash and cash equivalents
The credit risk for cash and cash equivalents is considered negligible, since the counterparties are reputable
banks with high quality external credit ratings.
Financial guarantees
The maximum exposure to credit risk amounted to RM271,120,931 (2013: RM284,573,875), which represented
the outstanding balances in banking facilities of the associate companies as at the reporting date.
The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to
certain associate companies held for sale. The Company monitors on an on-going basis the results of the
associate companies and repayments made by such associate companies.
SUMATEC RESOURCES BERHAD (428355-D)124
NOTES TO THE FINANCIAL STATEMENTSCONT’D
33. FINANCIAL INSTRUMENTS (continued)
Financial risk management (continued)
(b) Liquidity and cash flow risks
Liquidity and cash flow risks are the risks that the Group and the Company will not be able to meet its financial
obligations as they fall due, due to shortage of funds.
In managing its exposures to liquidity and cash flow risks arising principally from its various payables, loans
and borrowings, the Group and the Company maintain a level of cash and cash equivalents and bank facilities
deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet
its liabilities as and when they fall due.
The Group and the Company aim to maintain a balance of sufficient cash and deposits and flexibility in funding
by keeping diverse sources of committed and uncommitted credit facilities from various banks.
The Group’s and the Company’s non-derivative financial liabilities which have contractual maturities are
summarised below:-
Maturity
Carrying
amount
Contractual
cash flows
Less than 1
year 2 to 5 years
RM RM RM RM
Group
2014
Secured:
Borrowings 22,635,497 22,635,497 22,635,497 -
Unsecured:
Trade payables 194,558 194,558 194,558 -
Other payables 47,174,075 55,129,009 9,293,439 45,835,570
70,004,130 77,959,064 32,123,494 45,835,570
2013
Secured:
Borrowings 17,601,636 17,612,414 17,612,414 -
Finance lease payables 351,072 389,476 142,908 246,568
Unsecured:
Other payables 9,137,617 9,137,617 9,137,617 -
27,090,325 27,139,507 26,892,939 246,568
ANNUAL REPORT 2014 125
NOTES TO THE FINANCIAL STATEMENTSCONT’D
33. FINANCIAL INSTRUMENTS (continued)
Financial risk management (continued)
(b) Liquidity and cash flow risks (continued)
The Group’s and the Company’s non-derivative financial liabilities which have contractual maturities are
summarised below:- (continued)
Maturity
Carrying
amount
Contractual
cash flows
Less than 1
year 2 to 5 years
RM RM RM RM
Company
2014
Secured:
Borrowings 22,635,497 22,635,497 22,635,497 -
Unsecured:
Other payables 46,283,108 54,238,042 8,402,472 45,835,570
68,918,605 76,873,539 31,037,969 45,835,570
2013
Secured:
Borrowings 17,000,000 17,000,000 17,000,000 -
Unsecured:
Other payables 7,753,002 7,753,002 7,753,002 -
24,753,002 24,753,002 24,753,002 -
(c) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates.
The Group and the Company are exposed to foreign currency risk on contract revenue and costs that are
denominated in a currency other than the functional currency of the Group and of the Company.
SUMATEC RESOURCES BERHAD (428355-D)126
NOTES TO THE FINANCIAL STATEMENTSCONT’D
33. FINANCIAL INSTRUMENTS (continued)
Financial risk management (continued)
(c) Foreign currency risk (continued)
The currency giving rise to this risk is primarily US Dollar (“USD”). The Group’s and the Company’s exposure to
foreign currency risk, based on carrying amounts as at the end of the reporting year is as follows:
Group Company
2014 2013 2014 2013
RM RM RM RM
Denominated in USD
Trade receivables 75,627,745 - 23,196,745 -
Other receivables 45,717,851 667,758 45,717,851 -
Amount due from a subsidiary company - - 8,875,020 2,001,079
Other payables (3,483,261) - (3,483,261) -
117,862,335 667,758 74,306,355 2,001,079
Foreign currency sensitivity analysis:
The following table demonstrates the sensitivity of the Group’s and the Company’s profit for the financial
year to a reasonably possible change in the USD against the functional currency of the Group, with all other
variables held constant:-
Profit for the year
Group Company
2014 2013 2014 2013
RM RM RM RM
USD/RM
- Strengthened 1% 1,178,623 6,678 743,064 20,011
- Weakened 1% (1,178,623) (6,678) (743,064) (20,011)
Exposure to foreign exchange rates varied during the financial year depending on the volume of overseas
transactions. Nonetheless, the analysis above is considered to be representative of the Group’s and the
Company’s exposure to foreign currency risk.
(d) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial
instruments will fluctuate because of changes in market interest rates.
The Group’s and Company’s fixed rate borrowings are exposed to a risk of change in their fair value due to
changes in interest rates. The Group’s and the Company’s variable rate borrowings are exposed to a risk of
change in cash flows due to changes in interest rates.
ANNUAL REPORT 2014 127
NOTES TO THE FINANCIAL STATEMENTSCONT’D
33. FINANCIAL INSTRUMENTS (continued)
Financial risk management (continued)
(d) Interest rate risk (continued)
The Group’s and the Company’s interest rate management objective is to manage the interest expenses
consistent with maintaining an acceptable level of exposure to interest rate fluctuation. In order to achieve this
objective, the Group and the Company target a mix of fixed and floating debts based on assessment of its
existing exposure and desired interest rate profile.
The interest rate profile of the Group’s and the Company’s significant interest-bearing financial instruments,
based on carrying amounts as at the reporting date were as follows:
Group Company
2014 2013 2014 2013
RM RM RM RM
Fixed rate instruments
Financial asset
Amount due from a subsidiary company - - 6,710,277 2,001,079
Financial liabilities
Borrowings 22,635,497 - 22,635,497 -
Finance lease payables - 351,072 - -
Floating rate instrument
Financial liability
Borrowings - 17,601,636 - 17,000,000
The Group and the Company do not account for any fixed rate financial assets and liabilities at fair value
through profit or loss. Therefore, a change in interest rates at the end of the reporting date would not affect
profit or loss.
The following table illustrates the sensitivity of profit to a reasonably possible change in interest rates of +/-
0.5%. These changes are considered to be reasonably possible based on observation of current market
conditions. The calculations are based on a change in the average market interest rate for each year, and
the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other
variables are held constant.
Profit for the year
Group Company
+0.5% -0.5% +0.5% -0.5%
RM RM RM RM
Floating rate instrument
2014 - - - -
2013 (88,008) 88,008 (85,000) 85,000
SUMATEC RESOURCES BERHAD (428355-D)128
NOTES TO THE FINANCIAL STATEMENTSCONT’D
33. FINANCIAL INSTRUMENTS (continued)
Financial risk management (continued)
(d) Interest rate risk (continued)
Fair values of financial instruments
The carrying amounts of financial assets of the Group and the Company at the reporting date approximate their
fair values except as set out below:-
Group
Carrying amount Fair value
RM RM
2014
Financial asset
Other investments
- Unquoted shares 1 *
2013
Financial asset
Other investments
- Unquoted shares 33 *
The carrying amounts of financial assets of the Group and the Company at the reporting date approximate their fair values due to their short term nature or that they are floating instrument that are re-priced to market interest rates on or near the reporting date or immaterial impact on discounting.
* It was not practicable to estimate the fair value of the Group’s investment in unquoted shares due to the lack of comparable quoted prices in active market. In addition, it is impracticable to use valuation technique to estimate the fair value reliably due to significant variability in the inputs of the valuation technique. The Group has no plans to dispose of its investment in unquoted shares in the near future.
Fair value hierarchy
No fair value hierarchy has been disclosed as the Group and the Company do not have financial instruments measured at fair value.
34. CAPITAL MANAGEMENT
The Group’s and the Company’s objective when managing capital is to maintain a strong capital base and safeguard the Group’s and the Company’s ability to continue as going concerns, so as to maintain investors, creditors and market confidence and to sustain future development of the business.
The Group and the Company set the amount of capital in proportion to its overall financing structure, i.e. equity and financial liabilities. The Group and the Company manage the capital structure and make adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group and the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debts.
There were no changes in the Group’s approach to capital management during the financial year.
ANNUAL REPORT 2014 129
NOTES TO THE FINANCIAL STATEMENTSCONT’D
35. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR AND AFTER THE REPORTING DATE
(a) Disposal of leasehold land
On 12 September 2013, Sumatec Corporation Sdn. Bhd. (“SCSB”), a wholly-owned subsidiary company of the
Company entered into a sale and purchase agreement with a third party for the disposal of its leasehold land
for a total cash consideration of RM3,000,000. Subsequently, the sale and purchase agreement was mutually
terminated by both parties.
On 13 October 2014, SCSB entered into a new sale and purchase agreement with another third party for the
disposal of the said leasehold land for a total cash consideration of RM3,000,000. The consent to transfer
was approved by the Land Office on 19 January 2015. On 31 March 2015, the purchaser notified SCSB of its
decision to abort the transaction and SCSB invoked its right to forfeit the 10% deposit paid by the purchaser.
(b) Proposed Private Placement
On 28 January 2014, the Company proposed to undertake a private placement of up to 308,596,000 new
ordinary shares (“Placement Shares”), representing ten percent (10%) of the issued and paid-up share capital
of the Company at that date.
The additional listing application for the Placement Shares was submitted to Bursa Malaysia Securities Berhad
on 29 January 2014.
Bursa Malaysia Securities Berhad has approved the additional listing on 21 July 2014.
The transaction was completed on 5 August 2014.
(c) Upliftment of PN17 Status
On 29 August 2014, the Company had regularised its financial condition and level of operation, complied with
paragraph 5.2 of Practice Note 17 (“PN17”) of the Main Market Listing Requirements of Bursa Securities and
ceased to trigger any of the criteria under paragraph 2.1 of PN17.
The upliftment of the Company from being classified as a PN17 company was effective on 2 September 2014.
(d) CLO Settlement Agreement
On 28 May 2013, the Company entered into a settlement agreement with Kerisma Berhad, CapOne Berhad,
Prima Uno Berhad (collectively known as “CLO Bondholders”), Malaysian Trustees Berhad (“Trustee”), Hoe
Leong Corporation Ltd (“HLCL”), Setinggi Holdings Limited (“Setinggi”) and Semua International Sdn. Bhd.
(“SISB”) in relation to the Global CLO Settlement (“CLO Settlement Agreement”).
Pursuant to the CLO Settlement Agreement, the outstanding principal amount of RM56.0 million of the debts
owing to the CLO Bondholders shall be repaid by the Company as follows:-
(i) RM18.8 million from the disposal of 51% equity interest in SISB. The details are disclosed in Note 14 to
the Financial Statements;
(ii) RM12.1 million as dividend payment, to the Trustee, pursuant to the Assignment of Dividends. The
amount had been assigned to SISB and SISB has paid RM5.9 million in prior year; and
(iii) New shares valued at RM25.1 million under the Scheme of Arrangement with Creditors, whereby each
share shall have a par value of RM0.14 and the issue price will be at RM0.175 per share, to the Trustee
for the benefit of the CLO Bondholders. The transaction had been completed in prior year.
SUMATEC RESOURCES BERHAD (428355-D)130
NOTES TO THE FINANCIAL STATEMENTSCONT’D
35. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR AND AFTER THE REPORTING DATE (continued)
(d) CLO Settlement Agreement (continued)
The CLO Bondholders agreed to waive any outstanding principal amount above RM56.0 million.
During the financial year, HLCL, Setinggi and SISB were unable to fulfill the settlement obligations. The
Company then entered into another settlement agreement with CLO Bondholders on 6 March 2015
(“Settlement Agreement”) to settle the total outstanding sum as follows:
(i) An upfront amount of RM2,451,608 (which is equivalents to 10% of the outstanding amount as at 15
August 2014) to be deposited with the Trustee by 15 January 2015;
(ii) Interest accruing on RM22,635,497 calculated at 6% per annum from 16 August 2014 until 31 December
2014, amounting to RM513,484, to be paid not later than 15 March 2015;
(iii) RM22,064,476 shall be paid by 30 April 2015; and
(iv) Interest accruing on RM22,635,497 calculated at 10% per annum, for the period commencing from 1
January 2015 until 30 April 2015 for the actual number of days elapsed between 1 January 2015 until the
date of actual payment of the amount, shall be paid by 30 April 2015.
(e) Proposals
The Company had on 11 July 2014 entered into a Framework Agreement with Abu Talib Bin Abdul Rahman
and Dr Murat Safin (“Vendors”) for the purpose of pursuing the proposed acquisition of 100% of the issued and
paid up capital in Borneo Energy Oil & Gas Ltd (“BORNEO”), comprising 100 ordinary shares of USD1.00 each
from the Vendors.
On 8 September 2014, the Company executed the share purchase agreement (“SPA”) with the Vendors for
a purchase price of USD350.0 million to be satisfied by a combination of cash and ordinary shares in the
Company (“Proposed Acquisition”).
In addition, under the terms of the SPA, the Company shall acquire BORNEO and Buzachi Neft LLP free from
all indebtedness and encumbrances (including but not limited to borrowings, trade payables and tax liabilities).
In conjunction with the Proposed Acquisition, the Board of the Company proposes to undertake the following:-
(i) Proposed renounceable rights issue of up to 2,298,582,440 new ordinary shares (“Rights Shares”)
together with up to 2,298,582,440 free detachable warrants (“Rights Warrants”) at an indicative issue price
of RM0.40 per Rights Share on the basis of one (1) Rights Share for every two (2) shares held together
with one (1) Rights Warrants for every one (1) Rights Shares subscribed (“Proposed Rights Issue with
Warrants”);
(ii) Proposed increase in the authorised share capital of the Company from RM1,000,000,000 comprising
7,142,857,143 ordinary shares to RM2,000,000,000 comprising 14,285,714,286 ordinary shares
(“Proposed IASC”); and
(iii) Proposed amendments to the Memorandum and/or Articles of Association of the Company to facilitate
the Proposed IASC (“Proposed Amendments”).
The listing application for the Proposed Acquisition and Proposed Rights Issue with Warrants has been
submitted to Bursa Malaysia Securities Berhad on 17 October 2014.
ANNUAL REPORT 2014 131
NOTES TO THE FINANCIAL STATEMENTSCONT’D
35. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR AND AFTER THE REPORTING DATE (continued)
(e) Proposals (continued)
Subsequently on 9 January 2015, the Company entered into a supplemental agreement with the Vendors to
reduce the purchase price for the Proposed Acquisition by USD60,000,000 to USD290,000,000 (“Supplemental
SPA”), to be satisfied entirely via the followings:
(i) Deposit of USD30,000,000 (approximately RM96,510,000), which was paid upon signing of the SPA on 8
September 2014;
(ii) Balance of cash payment of USD180,000,000 (approximately RM630,000,000); and
(iii) The remaining USD80,000,000 (approximately RM280,000,000) to be satisfied via the issuance of
1,217,391,305 new Sumatec Shares to the Vendors at an issue price of RM0.23 per share (“Consideration
Shares”).
The revised terms for the other proposals are as follows:-
(i) The Proposed Rights Issue with Warrants will be a renounceable rights issue of up to 5,517,521,495 new
Rights Shares together with up to 2,758,760,747 Rights Warrants at an indicative issue price of RM0.20
per Rights Share on the basis of six (6) Rights Share for every five (5) ordinary shares held together with
one (1) Rights Warrant for every two (2) Rights Shares subscribed; and
(ii) The Proposed IASC from RM1,000,000,000 comprising 7,142,857,143 ordinary shares to
RM5,000,000,000 comprising 35,714,285,714 ordinary shares.
On 23 February 2015, Bursa Securities had approved the followings:-
(i) Admission to the Official List of the Main Market of Bursa Securities and the listing and quotation for up
to 2,758,760,747 Rights Warrants to be issued together with the Rights Shares pursuant to the Proposed
Rights Issue with Warrants;
(ii) Listing of and quotation for:-
- 1,217,391,305 Consideration Shares to be issued pursuant to the Proposed Acquisition;
- Up to 5,517,521,495 new Rights Shares to be issued pursuant to the Proposed Rights Issue with
Warrants;
- Up to 2,758,760,747 new Sumatec Shares to be issued pursuant to the full exercise of the Rights
Warrants;
- Up to 1,379,173 additional Warrants A pursuant to the Rights Adjustments;
- Up to 6,591,070 additional Warrants B pursuant to the Rights Adjustments; and
- Up to 7,970,243 new Sumatec Shares to be issued pursuant to the full exercise of additional
Warrants A and additional Warrants B.
On 8 April 2015, the shareholders of the Company at the Company’s Extraordinary General Meeting approved
the Proposed Acquisition, Proposed Rights Issues with Warrants, Proposed IASC and Proposed Amendments.
SUMATEC RESOURCES BERHAD (428355-D)132
NOTES TO THE FINANCIAL STATEMENTSCONT’D
DISCLOSURE OF REALISED AND UNREALISED UNAPPROPRIATED PROFITS/ACCUMULATED LOSSES
With the purpose of improving transparency, Bursa Malaysia Securities Berhad had on 25 March 2010, and subsequently
on 20 December 2010, issued directive which require all listed corporations to disclose the breakdown of unappropriated
profits or accumulated losses into realised and unrealised on Group and Company basis in the annual audited financial
statements.
The breakdown of accumulated losses as at the reporting date has been prepared by the Directors in accordance with the
directive from Bursa Malaysia Securities Berhad stated above and the Guidance on Special Matter No. 1 –Determination
of Realised and Unrealised Profits or Losses in the Context of Disclosures pursuant to Bursa Malaysia Securities Berhad
Listing Requirements as required by the Malaysian Institute of Accountants are as follows:
Group
2014 2013
RM RM
Total accumulated losses of the Group
- Realised loss (288,522,885) (338,606,501)
- Unrealised gain/ (loss) 1,303,687 (609,137)
(287,219,198) (339,215,638)
Consolidation adjustments 80,854,706 83,918,405
(206,364,492) (255,297,233)
Company
2014 2013
RM RM
Total accumulated losses of the Company
- Realised loss (251,817,040) (253,406,070)
- Unrealised gain 1,465,530 -
(250,351,510) (253,406,070)
The disclosure of realised and unrealised above is solely for complying with the disclosure requirements stipulated in the
directive of Bursa Malaysia Securities Berhad and should not be applied for any other purposes.
ANNUAL REPORT 2014 133
SHAREHOLDINGS ANALYSIS BY SIZE OF SHAREHOLDINGS AS AT 10 APRIL 2015
Authorised Capital : RM5,000,000,000.00
Issued and fully paid-up capital : RM487,577,345.50
Class of shares : Ordinary shares of RM0.14 each
Voting Rights : One vote per ordinary share
Size of shareholdings
No. of
Shareholders
% of
Shareholders
No. of
Shares
% of
Shareholdings
<100 134 0.52 3,962 0.00
100 - 1,000 2,090 8.06 1,120,253 0.03
1,001 - 10,000 7,414 28.59 49,547,388 1.42
10,001 - 100,000 12,643 48.76 529,349,481 15.20
100,001 - < 5% issued shares 3,647 14.07 2,382,365,241 68.41
5% and above of issued shares 1 0.00 520,309,000 14.94
25,929 100.00 3,482,695,325 100.00
Substantial Shareholders
No. of shares held
Name
Direct
Interest %
Deemed
Interest %
Halim Bin Saad 807,040,000 23.17 46,000,000* 1.32
* Deemed interest by virtue of his substantial shareholding in Markmore Sdn Bhd
Directors’ Shareholdings
No. of shares held
Name
Direct
Interest %
Deemed
Interest %
Tan Sri Abu Talib Bin Othman - - - -
Datuk Mohd Nasir Bin Ahmad - - - -
Datuk Che Mokhtar Bin Che Ali - - - -
Michael Lim Hee Kiang - - - -
Mohamad Bin Ismail - - - -
Wan Kamaruddin Bin Dato’ Biji Sura @ Wan
Abdullah 200,000 0.01 - -
Chan Yok Peng - - 72,483,179* 2.08
Dato’ Ahmad Johari Bin Abdul Razak 39,174,900 1.12 - -
* Deemed interest by virtue of his substantial shareholding in Tekad Mulia Sdn Bhd
ANALYSIS OF SHAREHOLDINGS AS AT 10 APRIL 2015
SUMATEC RESOURCES BERHAD (428355-D)134
ANALYSIS OF SHAREHOLDINGS AS AT 10 APRIL 2015CONT’D
Directors’ Options Under Employee Share Option Scheme
Name
Number of
options
offered
Number
of options
exercised Option price
Tan Sri Abu Talib Bin Othman - - -
Datuk Mohd Nasir Bin Ahmad - - -
Datuk Che Mokhtar Bin Che Ali - - -
Michael Lim Hee Kiang - - -
Mohamad Bin Ismail - - -
Wan Kamaruddin Bin Dato’ Biji Sura @ Wan Abdullah - - -
Chan Yok Peng - - -
Dato’ Ahmad Johari Bin Abdul Razak - - -
30 LARGEST SHAREHOLDERS AS AT 10 APRIL 2015
No. Shareholders Shareholdings %
1. HALIM BIN SAAD 520,309,000 14.94
2. HSBC NOMINEES (TEMPATAN) SDN BHD
-COUTTS & CO LTD SG FOR HALIM BIN SAAD
70,000,000 2.01
3. MAYBANK NOMINEES (TEMPATAN) SDN BHD
-PLEDGED SECURITIES ACCOUNT FOR HALIM BIN SAAD
70,000,000 2.01
4. MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD
- PLEDGED SECURITIES ACCOUNT FOR HALIM BIN SAAD (MARGIN)
50,000,000 1.44
5. MAYBANK NOMINEES (TEMPATAN) SDN BHD
- PLEDGED SECURITIES ACCOUNT FOR HALIM BIN SAAD
50,000,000 1.44
6. MAYBANK NOMINEES (TEMPATAN) SDN BHD
- PLEDGED SECURITIES ACCOUNT FOR MARKMORE SDN BHD
46,000,000 1.32
7. M & A NOMINEE (TEMPATAN) SDN BHD
- PLEDGED SECURITIES ACCOUNT FOR TEKAD MULIA SDN BHD (M&A)
42,000,000 1.21
8. CIMSEC NOMINEES (TEMPATAN) SDN BHD
- CIMB BANK FOR AHMAD JOHARI BIN TUN ABDUL RAZAK (MY1678)
39,174,900 1.12
9. SITI HANIFAH BINTI S. ABDULLAH 38,500,000 1.11
10. MORNING PARADISE SDN BHD 36,000,000 1.03
11. M & A NOMINEE (TEMPATAN) SDN BHD
- GENTING UTAMA SDN BHD FOR HALIM BIN SAAD
27,731,000 0.80
12. MAYBANK NOMINEES (TEMPATAN) SDN BHD
-PLEDGED SECURITIES ACCOUNT FOR TEKAD MULIA SDN BHD
25,000,000 0.72
ANNUAL REPORT 2014 135
30 LARGEST SHAREHOLDERS AS AT 10 APRIL 2015 cont’d
No. Shareholders Shareholdings %
13. MAYBANK NOMINEES (TEMPATAN) SDN BHD
-PLEDGED SECURITIES ACCOUNT FOR INTER MERGER SDN. BHD.
21,000,000 0.60
14. ABDUL RASHID BIN ABDUL MANAF 20,000,000 0.57
15. M & A NOMINEE (TEMPATAN) SDN BHD
-INSAS CREDIT & LEASING SDN BHD FOR HALIM BIN SAAD
19,000,000 0.55
16. CIMSEC NOMINEES (TEMPATAN) SDN BHD
-CIMB FOR VERTICAL SOURCE SDN BHD (PB)
19,000,000 0.55
17. ABD RAHMAN BIN SOLTAN 16,449,900 0.47
18. BLUE OCEAN INTERGRATED SDN BHD 16,056,000 0.46
19. M & A NOMINEE (ASING) SDN BHD
-LANTAS MODAL SDN BHD FOR DALTON CHRISTOPHER LAYTON
15,000,000 0.43
20. UPSTREAM DOWNSTREAM PROCESS & SERVICES SDN. BHD. 13,277,000 0.38
21. PM NOMINEES (TEMPATAN) SDN BHD
-PLEDGED SECURITIES ACCOUNT FOR AZMAN BIN ISMAIL (A)
13,000,000 0.37
22. PELABURAN MARA BERHAD 13,000,000 0.37
23. TAN SOH GEK 12,165,000 0.35
24. KENANGA NOMINEES (TEMPATAN) SDN BHD
-PLEDGED SECURITIES ACCOUNT FOR LOH KIM KIONG
11,190,900 0.32
25. FARAH SUMIYATI BINTI WAGIMIN 11,020,000 0.32
26. MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD
-PLEDGED SECURITIES ACCOUNT FOR KRIZIK (MALAYSIA) SDN BHD
(MARGIN)
11,000,000 0.32
27. AHMAD KOMAROLAILI BIN ABU 10,195,680 0.29
28. TENGKU AB MALEK BIN TENGKU MOHAMED 9,800,000 0.28
29. LEE CHONG LOO 9,500,000 0.27
30. UOB KAY HIAN NOMINEES (ASING) SDN BHD
-EXEMPT AN FOR UOB KAY HIAN PTE LTD ( A/C CLIENTS )
9,350,200 0.27
TOTAL 1,264,719,580 36.31
ANALYSIS OF SHAREHOLDINGS AS AT 10 APRIL 2015
CONT’D
SUMATEC RESOURCES BERHAD (428355-D)136
ANALYSIS OF WARRANT HOLDINGS AS AT 10 APRIL 2015
SHAREHOLDINGS ANALYSIS BY SIZE OF WARRANT 2011/2021 ("WARRANTS A") HOLDINGS AS AT 10 APRIL 2015
No. Warrants in Issue : 118,753,197
Exercise Price of Warrants : RM0.32
Expiry Date of Warrants : 03/03/2021
No. of Warrant Holders : 2,970
Size of Holdings
No. of
Warrant
Holders
% of
Warrant
Holders
No. of
Warrant
Holding
% of
Warrant
Holding
<100 Warrant 428 14.41 21,291 0.02
100 - 1,000 Warrant 247 8.32 122,953 0.10
1,001 – 10,000 Warrant 886 29.83 4,422,006 3.72
10,001 – 100,000 Warrant 1,184 39.86 48,753,295 41.05
100,001 - < 5% issued Warrant 225 7.58 65,433,652 55.10
2,970 100.00 118,753,197 100.00
Directors’ Warrant 2011/2021 Holdings
No. of warrants held
Name
Direct
Interest %
Deemed
Interest %
Tan Sri Abu Talib Bin Othman - - - -
Datuk Mohd Nasir Bin Ahmad - - - -
Datuk Che Mokhtar Bin Che Ali - - - -
Michael Lim Hee Kiang - - - -
Mohamad Bin Ismail - - - -
Wan Kamaruddin Bin Dato’ Biji Sura @ Wan
Abdullah - - - -
Chan Yok Peng - - 59* ~
Dato’ Ahmad Johari Bin Abdul Razak - - - -
* Deemed interest by virtue of his substantial shareholding in Tekad Mulia Sdn Bhd
~ Negligible
ANNUAL REPORT 2014 137
ANALYSIS OF WARRANT HOLDINGS AS AT 10 APRIL 2015
CONT’D
30 LARGEST WARRANT 2011/2021 (“WARRANTS A”) HOLDERS AS AT 10 APRIL 2015
No. Warrant holders
Warrant
holding %
1. SOO YOKE MUN 2,600,000 2.19
2. TAN BOON HAR 2,219,131 1.87
3. YEO CHIN KIANG 1,750,000 1.47
4. TAN SOH GEK 1,730,440 1.46
5. LEE CHEE SENG 1,600,000 1.35
6. HO LI HUA 1,170,000 0.99
7. SIEW YAU WAI @ SIEW AH WHY 1,023,857 0.86
8. MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD
-PLEDGED SECURITIES ACCOUNT FOR SHARIMAN YUSUF BIN MOHAMED
ZAIN (REM 656)
1,000,000 0.84
9. LOK WEI SEONG 950,000 0.80
10. HISHAM BIN HUSSEIN 796,500 0.67
11. LAW CHUAN SZE 682,600 0.57
12. KENANGA NOMINEES (TEMPATAN) SDN BHD
-PLEDGED SECURITIES ACCOUNT FOR NAVINDERJEET SINGH A/L
GURMITSINGH
681,800 0.57
13. SIAH BOON PAH 667,100 0.56
14. LEE TIANG HENG 650,000 0.55
15. TAN CHAI HONG 650,000 0.55
16. CITIGROUP NOMINEES (TEMPATAN) SDN BHD
-PLEDGED SECURITIES ACCOUNT FOR KHOR THING THIAM (472926)
640,000 0.54
17. LEI YAK MING 600,100 0.51
18. YAP MUN HUAT 600,000 0.51
19. MAYBANK NOMINEES (TEMPATAN) SDN BHD
-SHAN KAMAHL BIN MOHAMMAD
600,000 0.51
20. SJ SEC NOMINEES (TEMPATAN) SDN BHD
-PLEDGED SECURITIES ACCOUNT FOR ANG CHENG HOE (SMT)
572,000 0.48
21. LIM KAN YEN 564,332 0.48
22. KWEK SIEW WAH 560,000 0.47
SUMATEC RESOURCES BERHAD (428355-D)138
ANALYSIS OF WARRANT HOLDINGS AS AT 10 APRIL 2015CONT’D
30 LARGEST WARRANT 2011/2021 (“WARRANTS A”) HOLDERS AS AT 10 APRIL 2015 cont’d
No. Warrant holders
Warrant
holding %
23. TAILAMI A/P PALANIANDY 554,000 0.47
24. AZLAN BIN YAHYA 500,000 0.42
25. AZMIR BIN OSMAN 500,000 0.42
26. SOO WENG SWAN 500,000 0.42
27. CHEW CHOONG SIAM 500,000 0.42
28. CIMSEC NOMINEES (TEMPATAN) SDN BHD
-PLEDGED SECURITIES ACCOUNT FOR MOHD NOOR AFANDAY BIN MOHD
JAYA (T INDAH-CL)
500,000 0.42
29. MAYBANK NOMINEES (TEMPATAN) SDN BHD
-PLEDGED SECURITIES ACCOUNT FOR SITI AZRINA BINTI ADANAN
500,000 0.42
30. AHMAD SUHAIMEE BIN MOHAMMED YASSIN 500,000 0.42
TOTAL 26,361,860 22.20
ANNUAL REPORT 2014 139
SHAREHOLDINGS ANALYSIS BY SIZE OF WARRANT 2013/2018 ("WARRANTS B") HOLDINGS AS AT 10 APRIL 2015
No. Warrants in Issue : 567,521,758
Exercise Price of Warrants : RM0.175
Expiry Date of Warrants : 13/11/2018
No. of Warrant Holders : 4,992
Size of Holdings
No. of
Warrant
Holders
% of
Warrant
Holders
No. of
Warrant
Holding
% of
Warrant
Holding
<100 Warrants 279 5.59 12,618 0.00
100 - 1,000 Warrants 304 6.09 132,902 0.02
1,001 – 10,000 Warrants 1,244 24.92 7,247,987 1.28
10,001 – 100,000 Warrants 2,461 49.30 102,135,758 18.00
100,001 - < 5% issued Warrant 702 14.06 273,582,622 48.21
5% and above of issued Warrant 2 0.04 184,409,871 32.49
4,992 100.00 567,521,758 100.00
Substantial Warrant 2013/2018 Holders
No. of warrants held
Name
Direct
Interest %
Deemed
Interest %
Halim Bin Saad 154,160,000 27.16 - -
Tekad Mulia Sdn Bhd 30,249,871 5.33 - -
Chan Yok Peng - - 30,249,871* 5.33
* Deemed interest by virtue of his substantial shareholdings in Tekad Mulia Sdn Bhd
Directors’ Warrant 2013/2018 Holdings
No. of warrants held
Name
Direct
Interest %
Deemed
Interest %
Tan Sri Abu Talib Bin Othman - - - -
Datuk Mohd Nasir Bin Ahmad - - - -
Datuk Che Mokhtar Bin Che Ali - - - -
Michael Lim Hee Kiang - - - -
Mohamad Bin Ismail - - - -
Wan Kamaruddin Bin Dato’ Biji Sura @ Wan
Abdullah - - - -
Chan Yok Peng - - 30,249,871* 5.33
Dato’ Ahmad Johari Bin Abdul Razak - - - -
* Deemed interest by virtue of his substantial shareholdings in Tekad Mulia Sdn Bhd
ANALYSIS OF WARRANT HOLDINGS AS AT 10 APRIL 2015
CONT’D
SUMATEC RESOURCES BERHAD (428355-D)140
30 LARGEST WARRANT 2013/2018 (“WARRANTS B”) HOLDERS AS AT 10 APRIL 2015
No. Warrant holders
Warrant
holding %
1. HALIM BIN SAAD 154,160,000 27.16
2. M & A NOMINEE (TEMPATAN) SDN BHD
FOR TEKAD MULIA SDN BHD
30,249,871 5.33
3. BLUE OCEAN INTERGRATED SDN BHD 15,514,000 2.73
4. BLUE OCEAN PREMIER SDN BHD 10,537,250 1.86
5. LANTAS MODAL SDN BHD 10,041,400 1.77
6. PAUZIAH BINTI MOHAMAD 7,040,300 1.24
7. LOONG DING TONG 2,800,000 0.49
8. SJ SEC NOMINEES (TEMPATAN) SDN BHD
-PLEDGED SECURITIES ACCOUNT FOR LEAN CHENG LIUNG (SMT)
2,400,000 0.42
9. WONG LAI FUN 2,150,000 0.38
10. PUBLIC NOMINEES (TEMPATAN) SDN BHD
-PLEDGED SECURITIES ACCOUNT FOR TEE KIM HEW (E-KLG/BTG)
2,070,000 0.36
11. LAU HONG SENG 2,000,000 0.35
12. LIM KING KING 2,000,000 0.35
13. LYE WEE KEN 2,000,000 0.35
14. SI THO YOKE MENG 2,000,000 0.35
15. CHAN HENG LOY 2,000,000 0.35
16. CHONG WENG SHIN 2,000,000 0.35
17. KENANGA NOMINEES (TEMPATAN) SDN BHD
-PLEDGED SECURITIES ACCOUNT FOR LOH KIM KIONG
1,967,650 0.35
18. CHANG HOCK TIEW 1,700,000 0.30
19. DB (MALAYSIA) NOMINEE (ASING) SDN BHD
- EXEMPT AN FOR BANK OF SINGAPORE LIMITED
1,603,100 0.28
20. ZILAN BIN ZAINAL ABIDIN 1,508,000 0.27
21. WANG SUI SANG 1,500,000 0.26
22. YONG CHEE FOONG 1,400,000 0.25
23. RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD
-PLEDGED SECURITIES ACCOUNT FOR TEO CHON SIN (MLK)
1,363,800 0.24
ANALYSIS OF WARRANT HOLDINGS AS AT 10 APRIL 2015CONT’D
ANNUAL REPORT 2014 141
30 LARGEST WARRANT 2013/2018 (“WARRANTS B”) HOLDERS AS AT 10 APRIL 2015 cont’d
No. Warrant holders
Warrant
holding %
24. WAN MOHD ZAID BIN SALLEH 1,300,000 0.23
25. RIDZA ABDOH BIN HAJI SALLEH 1,287,212 0.23
26. ANNE LOKE 1,245,100 0.22
27. RHB NOMINEES (TEMPATAN) SDN BHD
-PLEDGED SECURITIES ACCOUNT FOR LONG HENG BOCK
1,202,100 0.21
28. LEE KOK CHUAN 1,200,000 0.21
29. KHOO ENG YEOW 1,200,000 0.21
30. AFFIN HWANG INVESTMENT BANK BERHAD
-PDT (068-KGG) GOH KWONG GIAP
1,185,600 0.21
TOTAL 268,625,383 47.33
ANALYSIS OF WARRANT HOLDINGS AS AT 10 APRIL 2015
CONT’D
SUMATEC RESOURCES BERHAD (428355-D)142
LIST OF PROPERTIESAS AT 31 DECEMBER 2014
LOCATION
DESCRIPTION
(EXISTING USE) TENURE
LAND
AREA
APPROXIMATE
AGE OF
BUILDING
NET BOOK
VALUE @ 31
DECEMBER
2014
RM'000
DATE
OF LAST
VALUATION
1 Parcel No.
A4/2-47 & A4/2-48 C
2nd Floor, Block A4
Lot No. PT 9332
Title No. HS (D) 41817
Mukim and District of Klang
Selangor
2 units of
apartment
(unoccupied)
Leasehold
99 years
(strata title
not issued)
Parcel No.
A4/2-47
(82.43 sq
meters)
Parcel No.
A4/2-8 C
(86.17 sq
meters)
15 years 175 28.12.2002
2 Lot 10751
Kawasan Perindustrian
Bukit Tengah
Mukim Kertih
Kemaman, Terengganu
Industrial land Leasehold
60 years
expiring on
19.08.2069
10,840
sq meters
N/A 415 3.10.2013
3 Lot 10752
Kawasan Perindustrian
Bukit Tengah
Mukim Kertih
Kemaman, Terengganu
Industrial land Leasehold
60 years
expiring on
19.08.2069
6,810
sq meters
N/A 259 3.10.2013
ANNUAL REPORT 2014 143
SHARE PRICE CHART
PRICE RM DATE
Highest 0.61 19-Aug-14
Lowest 0.17 15-Dec-14
0
100
200
300
400
500
600
700
800
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15
Vo
lum
e (
Millio
ns)
Pri
ce
(R
M)
Transaction Volume (Million) Share Price (RM)
SUMATEC RESOURCES BERHAD (428355-D)144
NOTICE IS HEREBY GIVEN THAT the Eighteenth Annual General Meeting (“18th AGM”) of the Company will be held at
Bintang Ballroom, Level 5, Cititel Mid Valley, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur on Thursday, 11
June 2015 at 10.30 a.m for the following purposes:-
AGENDA
AS ORDINARY BUSINESS
1. To receive the Audited Financial Statements of the Company for the financial year ended
31 December 2014 together with the Reports of the Directors and Auditors thereon.
2. To re-appoint Tan Sri Abu Talib bin Othman who retires pursuant to Section 129(6) of the
Companies Act, 1965 as Director of the Company to hold office until the conclusion of the
next Annual General Meeting of the Company.
3. To re-elect the following Directors retiring in accordance with the relevant Articles of the
Company’s Articles of Association, and being eligible, offered themselves for re-election:-
(i) Dato’ Ahmad Johari bin Abdul Razak (Article 94)
(ii) Wan Kamaruddin bin Dato’ Biji Sura @ Wan Abdullah (Article 87.1)
(iii) Datuk Che Mokhtar bin Che Ali (Article 87.1)
4. To re-appoint Messrs SJ Grant Thornton as Auditors of the Company and to authorise the
Board of Directors to fix their remuneration.
AS SPECIAL BUSINESS
To consider and, if thought fit, pass the following resolutions, with or without
modifications:-
5. Authority to Issue Shares by the Company pursuant to Section 132D of the
Companies Act, 1965
“THAT pursuant to Section 132D of the Companies Act, 1965 and subject to the approvals
from the relevant governmental and/or regulatory authorities, the Directors be and are
hereby empowered to issue shares in the Company from time to 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 ten (10) per cent of the issued share capital of the Company for the time
being AND THAT the Directors be and are hereby empowered to obtain the approval from
Bursa Malaysia Securities Berhad for the listing and quotation of the additional shares so
issued AND THAT such authority shall continue in force until the conclusion of the
next Annual General Meeting of the Company.”
NOTICE OF ANNUAL GENERAL MEETING
Please refer to Notes
Ordinary Resolution 1
Ordinary Resolution 2
Ordinary Resolution 3
Ordinary Resolution 4
Ordinary Resolution 5
Ordinary Resolution 6
ANNUAL REPORT 2014 145
6. Proposed Renewal of Existing Shareholders’ Mandate for Recurrent Related Party
Transactions of a Revenue or Trading Nature (“Proposed Renewal of Existing
Shareholders’ Mandate”)
“THAT, subject to the provisions of the Main Market Listing Requirements of Bursa
Malaysia Securities Berhad, approval be given to the Company and/or its subsidiary
companies to enter into recurrent related party transactions of a revenue or trading
nature (“Recurrent Related Party Transactions”) as set out in Section 2.3 the Circular to
Shareholders dated 20 May 2015, subject to the following:-
(a) The Recurrent Related Party Transactions are undertaken in the ordinary course of
business which are necessary for the day-to-day operations on arm’s length basis,
on normal commercial terms which are not more favourable to the related party
than those generally available to the public and are not detrimental to the minority
shareholders of the Company; and
(b) disclosure is made in the annual report of the breakdown of the aggregate value of
transactions conducted during the financial year.
That such approval shall continue in force until:-
(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company in
2016 following this AGM at which the Proposed Renewal of Existing Shareholders’
Mandate is passed, at which time it will lapse unless the authority is renewed by a
resolution passed at the next AGM of the Company in 2016;
(b) The expiration of the period within which the next AGM of the Company in 2016 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) It is revoked or varied by resolution passed by shareholders of the Company in a
general meeting.
whichever is the earliest;
AND THAT the Directors of the Company be authorised to complete and do all such
acts and things (including executing all such documents as may be required) as they
may consider expedient or necessary to give effect to the Proposed Renewal of Existing
Shareholders’ Mandate”.
8. To transact any other business of which due notice shall have been given in accordance
with the Companies Act, 1965.
By Order of the Board
LIM SECK WAH (MAICSA NO. 0799845)
M. CHANDRANSEGARAN A/L S. MURUGASU (MAICSA NO.0781031)
Company Secretaries
Dated: 20 May 2015
Kuala Lumpur
Ordinary Resolution 7
NOTICE OF ANNUAL GENERAL MEETINGCONT’D
SUMATEC RESOURCES BERHAD (428355-D)146
Notes:-
1. Depositors whose names appear in the Record of Depositors as at 5 June 2015 shall be regarded as members of the Company entitled to attend, speak and vote at this AGM.
2. A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(a) and (b) of the Companies Act, 1965 shall not apply to the Company. Where a member appoints two (2) or more proxies to attend and vote at the meeting, the appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy.
3. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 (“SICDA”), it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds which is credited with ordinary shares of the Company. The appointment of two (2) proxies in respect of any particular securities account shall be invalid unless the authorised nominee specifies the proportion of its shareholding to be represented by each proxy.
4. Where a member of the Company is an exempt authorised nominee (“EAN”) as defined under the SICDA which holds ordinary shares in the Company for multiple beneficial owner in one securities account (“omnibus account”), there is no limit to the number of proxies which EAN may appoint in respect of each omnibus account it holds. EAN is advised to list down the names of proxies and the particulars of their NRIC (both new and old) and attach it to the Form of Proxy.
5. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if the appointer is a corporation, either under its common seal or under the hand of an attorney duly authorised.
6. Pursuant to paragraph 10.08(7A) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, voting in respect of the ordinary resolutions approving the Proposed Renewal of Existing Shareholders’ Mandate and/or Proposed New Shareholders’ Mandate shall be conducted by way of poll.
7. The instrument appointing a proxy and the power of attorney or other attorney (if any), under which it is signed or notarially certified copy thereof, shall be deposited at the Registered Office of the Company at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur not less than forty-eight (48) hours before the time set for holding the Meeting or any adjournment thereof.
Notes to the Agenda:-
Agenda 1
This agenda item is meant for discussion only as the provisions of Section 169(1) of the Companies Act, 1965 do not require shareholders to approve annual audited financial statements and hence it is not put forward for voting.
Agenda 2
The re-appointment of Tan Sri Abu Talib bin Othman, who has attained the age of 70 years, as Director of the Company to hold office until the conclusion of the next AGM of the Company shall take effect if the proposed resolution has been passed by a majority of not less than three-fourths (3/4) of such members as being entitled to vote in person or where proxies are allowed, by proxy, at this AGM.
Agenda 3
Dato’ Ahmad Johari bin Abdul Razak being appointed to the Board on 10 July 2014, which was subsequent to the last AGM, retires under Article 94. Wan Kamaruddin bin Dato’ Biji Sura @ Wan Abdullah and Datuk Che Mokhtar bin Che Ali retire by rotation under Article 87.1. The profile of directors seeking re-election are disclosed on pages 18, 20 and 21 of the Annual Report.
Agenda 5
The proposed Resolution 6 is to seek a renewal of the general mandate from the shareholders. The resolution if duly passed, is primarily to give authority to the Board of Directors to issue and allot shares at any time in their absolute discretion and for such purposes as they consider would be in the interest of the Company without convening a general meeting. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next AGM of the Company.
Pursuant to the shareholders mandate granted to the Directors at the 17th AGM of the Company, 308,596,000 new ordinary shares of RM0.14 each in the Company were issued at an issue price of RM0.38 per ordinary share on 4 August 2014. These shares were listed on the Bursa Malaysia Securities Berhad on 5 August 2014.
The details of utilization of the proceeds from the private placement exercise are disclosed on page 52 of this Annual Report.
The renewed authority if approved, will provide flexibility to the Company for any possible fund raising activities, including but not limited to further allotment of shares for the purpose of funding future project/investment, working capital and/or acquisitions.
Agenda 8
Details of the Recurrent Related Party Transactions under the Proposed Renewal of Shareholders’ Mandate are set out in the Circular to Shareholders dated 20 May 2015.
NOTICE OF ANNUAL GENERAL MEETINGCONT’D
SUMATEC RESOURCES BERHAD(Company No: 428355 D)
(Incorporated in Malaysia)
PROXY FORM
(Before completing this form please refer to the notes below)
I/We I/C No./Co. No./CDS A/C No.
(Full name in block letters)
of
(Full address)
being a member/members of SUMATEC RESOURCES BERHAD hereby appoint the following person(s):-
Name of proxy, NRIC No. & Address No. of shares or % of shares to be
represented by proxy
1.
2.
or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Eighteenth
Annual General Meeting of the Company to be held at Bintang Ballroom, Level 5, Cititel Mid Valley, Mid Valley City,
Lingkaran Syed Putra, 59200 Kuala Lumpur on Thursday, 11 June 2015 at 10.30 am. My/our proxy/proxies is to vote as
indicated below:-
FIRST PROXY SECOND PROXY
FOR AGAINST FOR AGAINST
ORDINARY BUSINESS
ORDINARY RESOLUTION
1. To re-elect Tan Sri Abu Talib bin Othman who is retiring pursuant to
Section 129(6)
2. To re-elect Dato’ Ahmad Johari bin Abdul Razak who is retiring
pursuant to Articles 94
3. To re-elect Encik Wan Kamaruddin bin Dato’ Biji Sura @ Wan
Abdullah who is retiring pursuant to Articles 87.1
4. To re-elect Datuk Che Mokhtar bin Che Ali who is retiring pursuant
to Articles 87.1
5. To re-appoint Messrs SJ Grant Thornton as Auditors of the
Company and to authorise the Board of Directors to fix their
remuneration
SPECIAL BUSINESS
ORDINARY RESOLUTION
6. Authority to Issue Shares by the Company pursuant to Section 132D
of the Companies Act, 1965
7. Proposed Renewal of Existing Shareholders’ Mandate for Recurrent
Related Party Transactions of a Revenue or Trading Nature
(Please indicate with a “ √ ” or “X” in the space provided how you wish your vote to be cast. If no instruction as to voting is given, the
proxy will vote or abstain from voting at his/her discretion. The first named proxy shall be entitled to vote on a show of hands).
Dated this day of 2015
Signature/Common Seal
No. of ordinary shares held
Notes:-
1. Depositors whose names appear in the Record of Depositors as at 5 June 2015 shall be regarded as members of the Company entitled to attend, speak and vote at this AGM.
2. A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies. A proxy may but need not a member of the Company and the provisions of Section 149(1)(a) and (b) of the Companies Act, 1965 shall not apply to the Company. Where a member appoints two (2) or more proxies to attend and vote at the meeting, the appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy.
3. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991(“SICDA”), it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds which is credited with ordinary shares of the Company. The appointment of two (2) proxies in respect of any particular securities account shall be invalid unless the authorised nominee specifies the proportion of its shareholding to be represented by each proxy.
4. Where a member of the Company is an exempt authorised nominee (“EAN”) as defined under the SICDA which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which EAN may appoint in respect of each omnibus account it holds. EAN is advised to list down the names of proxies and the particulars of their NRIC (both new and old) and attach it to this Form of Proxy.
5. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if the appointer is a corporation, either under its common seal or under the hand of an attorney duly authorised.
6. Pursuant to paragraph 10.08(7A) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, voting in respect of the ordinary resolutions approving the Proposed Renewal of Existing Shareholders’ Mandate and/or Proposed New Shareholders’ Mandate shall be conducted by way of poll.
7. The instrument appointing the proxy and the power of attorney or other authority (if any) under which it is signed or notarially certified copy thereof, shall be deposited at the Registered Office of the Company at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof.
Please Fold Here
Please Fold Here
AFFIXSTAMP
The Company Secretaries
SUMATEC RESOURCES BERHAD (428355-D)
Level 15-2, Bangunan Faber Imperial Court
Jalan Sultan Ismail
50250 Kuala Lumpur
Kuala Lumpur