MUHIBBAH-AR 2013

139 Pages·2014·2.38 MB·English

ANNUAL REPORT
(cid:135) (cid:135)
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Company No.: 12737-K
Board Of Directors
Tan Sri Zakaria bin Abdul Hamid (Chairman, Independent Non-Executive Director)
Mac Ngan Boon @ Mac Yin Boon ( Group Managing Director)
Ooi Sen Eng (Executive Director)
Mac Chung Jin (Executive Director/Deputy Chief Executive Officer)
Lee Poh Kwee (Group Finance Director)
Abd Hamid bin Ibrahim (Independent Non-Executive Director)
Sobri bin Abu (Independent Non-Executive Director)
Dato’ Mohamad Kamarudin bin Hassan (Independent Non-Executive Director)
Mazlan bin Abdul Hamid (Non-Independent Non-Executive Director)
Corporate Information
Audit Committee Share Registrar
Tan Sri Zakaria bin Abdul Hamid (Chairman) Tricor Investor Services Sdn Bhd
Sobri bin Abu Level 17, The Gardens North Tower
Dato’ Mohamad Kamarudin bin Hassan Mid Valley City, Lingkaran Syed Putra
59200 Kuala Lumpur, Malaysia
Company Secretaries Tel : [phone] Fax: [phone]
Lim Suak Guak (MIA 19689)
Catherine Mah Suik Ching (LS 01302) Stock Exchange Listing
Muhibbah Engineering (M) Bhd
Registered Office Main Market of Bursa Malaysia Securities Berhad
Lot 579 & 586, 2nd Mile, Jalan Batu Tiga Lama Stock Name: Muhibah
41300 Klang, Selangor Darul Ehsan, Malaysia Bursa Stock Code: 5703
Tel: [phone] Fax: [phone] Bloomberg Stock Code: MUHI MK
Listing Date: 25 February 1994
Auditors
Crowe Horwath (Firm No. AF1018) Favelle Favco Berhad
Chartered Accountants Main Market of Bursa Malaysia Securities Berhad
Level 16, Tower C, Megan Avenue II Stock Name: Favco
12, Jalan Yap Kwan Seng Bursa Stock Code: 7229
50450 Kuala Lumpur, Malaysia Bloomberg Stock Code: FFB MK
Listing Date: 15 August 2006
Principal Bankers
Affin Bank Berhad Investor Relations
Ambank (Malaysia) Berhad Tel: [phone] Fax: [phone]
Bank Islam Malaysia Berhad Email: [email protected]
Bank Muamalat Malaysia Berhad
Bank of Tokyo – Mitsubishi UFJ Website
Hong Leong Bank Berhad www.muhibbah.com
HSBC Bank Malaysia Berhad www.favellefavco.com
Kuwait Finance House (Malaysia) Berhad
Malayan Banking Berhad
OCBC Bank (Malaysia) Berhad
RHB Bank Berhad
Standard Chartered Bank Malaysia Berhad
United Overseas Bank (Malaysia) Berhad
Copyright 2013. Petroliam Nasional Berhad (PETRONAS)
LNG Regasification Facilities Project for PETRONAS in Malacca, Malaysia
Contents
Notice of Annual General Meeting .......... 02 Audit Committee Report .......................................... 32
Group Financial Highlights ..................... 07 Statement on Risk Management &
Internal Control ....................................................... 37
Chairman’s Statement .............................. 08
Financial Statements ................................................ 39
Core Divisions ......................................... 16
Group Properties .....................................................128
Profile of Directors .................................. 17
Analysis of Shareholdings & Warrantholdings .......129
Other Information .................................... 21
Proxy Form ............................................................. 135
Statement on Corporate Governance ....... 24
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the Forty-First Annual General Meeting of Muhibbah
Engineering (M) Bhd will be held at Concorde Hotel Shah Alam, Concorde II, Level 2, No. 3, Jalan
Tengku Ampuan Zabedah C9/C, 40100 Shah Alam, Selangor Darul Ehsan on Thursday, 26 June 2014
at 3.30 p.m. for the following purposes :-
Agenda
As Ordinary Business
1. To receive the Audited Financial Statements for the financial year ended 31 December 2013 Please refer to
and the Reports of the Directors and Auditors thereon. Note (a)

2. To approve the declaration of a first and final tax exempt dividend of 9% (4.50 sen) per Resolution 1
ordinary share of RM0.50 each in respect of the financial year ended 31 December 2013.
3. To re-elect the following Directors who retires pursuant to Article 85 of the Company’s
Articles of Association :-
(i) Sobri bin Abu; Resolution 2
(ii) Mac Chung Jin; Resolution 3
(iii) Lee Poh Kwee; Resolution 4
(iv) Mazlan bin Abdul Hamid; and Resolution 5
(v) Dato’ Mohamad Kamarudin bin Hassan Resolution 6
4. To consider and, if thought fit, to re-appoint the following Directors who retire pursuant to
Section 129(2) of the Companies Act, 1965 and in accordance with Section 129(6) of the
Companies Act, 1965 be re-appointed to hold office until the conclusion of the next Annual
General Meeting :-
(i) Tan Sri Zakaria bin Abdul Hamid; Resolution 7
(ii) Mac Ngan Boon @ Mac Yin Boon; and Resolution 8
(iii) Ooi Sen Eng Resolution 9

5. To re-appoint Messrs. Crowe Horwath as the Company’s Auditors for the ensuing year and to Resolution 10
authorise the Directors to fix their remuneration.
As Special Business
To consider and, if thought fit, to pass with or without modifications, the following resolutions :-
Ordinary Resolution
6.
Continuation of Terms of Office as Independent Director
“THAT pursuant to the Recommendation 3.3 of the Malaysian Code on Corporate Governance Resolution 11
2012 (“MCCG 2012”), approval be and is hereby given to Tan Sri Zakaria bin Abdul Hamid,
who has served as an Independent Non-Executive Director of the Company for a cumulative
term of more than nine (9) years, to continue to act as an Independent Non-Executive Director
of the Company.”
2 Muhibbah Engineering (M) Bhd. and its subsidiaries
Company No. 12737-K (Incorporated in Malaysia)
Ordinary Resolution
7.
Authority for Directors to issue and allot shares in the Company pursuant to Section Resolution 12
132D of the Companies Act, 1965
“ THAT pursuant to Section 132D of the Companies Act, 1965, and subject always to approval
of the relevant authorities, the Directors be and are hereby empowered to issue and allot shares
in the Company, from time to time to such persons 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 to be issued pursuant to this resolution does not exceed 10% of the
issued share capital of the Company for the time being and that such authority shall continue
in force until the conclusion of the next Annual General Meeting of the Company AND THAT
the Directors be and are also empowered to obtain the approval for the listing of and quotation
for the additional shares on Bursa Malaysia Securities Berhad.”
Ordinary Resolution
8.
Proposed Renewal of Authority for Share Buy-Back Resolution 13

“THAT subject to the requirements of the Main Market Listing Requirements of Bursa
Malaysia Securities Berhad (“Bursa Securities”), Companies Act, 1965 (“the Act”), and the
Articles of Association of the Company, the Company be and is hereby authorised to purchase
such number of ordinary shares of RM0.50 each in the Company through Bursa Securities
(“Proposed Share Buy-Back”), as may be determined by the Directors of the Company from
time to time upon such terms and conditions as the Directors may deem fit and expedient in
the interest of the Company provided that :-
(i) the aggregate number of ordinary shares purchased and/or held by the Company as
treasury shares shall not exceed ten percent (10%) of the issued and paid-up ordinary
share capital of the Company at any point in time;
(ii) the funds allocated by the Company for the Proposed Share Buy-Back shall not exceed
the aggregate retained profits and share premium accounts of the Company; and
(iii) the authority conferred by this resolution shall continue to be in force until :-
(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company
following the general meeting at which this resolution was passed, at which time
it shall lapse, unless by ordinary resolution passed at that meeting, the authority is
renewed, whether unconditionally or subject to conditions; or
(b) the expiration of the period within which the next AGM of the Company is required
to be held pursuant to Section 143(1) of the Act (but shall not extend to such
extension as may be allowed pursuant to Section 143(2) of the Act); or
(c) revoked or varied by an ordinary resolution passed by the shareholders of the
Company in a general meeting,
whichever occurs first.
3
Annual Report 2013
Notice of Annual General Meeting
(continued)
THAT the Directors of the Company be and are hereby authorised to deal with the shares
purchased in the following manner :-
(a) cancel all the shares so purchased; and/or
(b) retain the shares so purchased as treasury shares, for distribution as share dividends to the
shareholders and/or resell on the market of Bursa Securities; and/or
(c) retain part thereof as treasury shares and cancel the remainder.

AND THAT the Directors of the Company be and are hereby authorised to give effect to the
Proposed Share Buy-Back with full power to assent to any modifications and/or amendments
as may be required by the relevant authorities.”
Ordinary Resolution
9.
Proposed Renewal of the Existing Shareholders’ Mandate and Proposed New Resolution 14
Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or
Trading Nature
“THAT subject to the Main Market Listing Requirements of Bursa Securities, approval be
and is hereby given for the Renewal of the Existing Shareholders’ Mandate for the Company
and/or its subsidiaries to enter into recurrent related party transactions of a revenue or trading
nature with the related parties as set out in 2.1.2 of the Circular to Shareholders (“Circular”)
dated 4 June 2014 provided that such transactions are undertaken in the ordinary course of
business, at arm’s length basis and on normal commercial terms which are not more favourable
to the related parties than those generally available to the public and are not detrimental to the
interests of the minority shareholders of the Company; and
THAT a New Shareholders’ Mandate be and is hereby granted for the Company and/or its
subsidiaries to enter into additional recurrent related party transactions of a revenue or trading
nature with related parties which are necessary for the day to day operations and on normal
commercial terms not more favourable to the related parties than those generally available to
the public and are not to the detriment of the minority shareholders as set out in Section 2.1.2
of the Circular dated 4 June 2014;
(collectively known as the “Proposed Shareholders’ Mandate”)

THAT the Proposed Shareholders’ Mandate conferred by this resolution shall continue to be
in force until :-
a) the conclusion of the next AGM of the Company at which time it will lapse, unless by a
resolution passed at the next AGM, the Proposed Shareholders’ Mandate is renewed; or
b) the expiration of the period within which the next AGM of the Company is required to be
held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may
be allowed pursuant to Section 143(2) of the Act); or
c) revoked or varied by a resolution passed by the Company’s shareholders in a general
meeting,
whichever is the earliest.
4 Muhibbah Engineering (M) Bhd. and its subsidiaries
Company No. 12737-K (Incorporated in Malaysia)
AND THAT the Directors of the Company be and are hereby authorised to take all steps and
to do all such acts and deeds as they may consider expedient or necessary to give effect to the
Proposed Shareholders’ Mandate.”

10. To transact any other business of which due notice shall have been given.
FURTHER NOTICE IS HEREBY GIVEN THAT for the purpose of determining who shall be entitled to attend this
meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to make available to the Company
pursuant to Article 58(d) of the Articles of Association of the Company and Paragraph 7.16(2) of the Main Market
Listing Requirements of Bursa Securities, a Record of Depositors as at 18 June 2014 and only a Depositor whose name
appears on such Record of Depositors shall be entitled to attend this meeting or appoint proxies to attend and/or vote
on his/her behalf.
Notes :-
(a) The Audited Financial Statements in Agenda 1 is intended for discussion only as the provision of the Section
169(1) of the Act does not require a formal approval of the members and hence is not put for voting.
(b) A member entitled to attend and vote at this meeting is entitled to appoint a proxy/proxies to attend and vote
in his/her stead. A proxy may but need not be a member of the Company. There shall be no restriction as to the
qualification of the proxy and the provision of Section 149(1)(b) of the Act shall not apply to the Company.
(c) A member shall not be entitled to appoint more than two (2) proxies to attend, speak and vote at the same meeting
and where a member appoints two (2) proxies, such appointment shall be invalid unless he/she specifies the
proportion of his/her shareholdings to be represented by each proxy. Each proxy appointed, shall represent a
minimum of one hundred (100) shares.
(d) The instrument appointing a proxy shall be in writing under the hand of the appointor or his/her attorney duly
authorised in writing or if the appointor is a corporation, either under its Common Seal or under the hand of an
officer or attorney duly authorised.
(e) The duly completed Form of Proxy must be deposited at the Share Registrar’s Office, Tricor Investor Services Sdn
Bhd, Level 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, Malaysia,
at least forty-eight (48) hours before the time set for the holding of the Meeting or any adjournment thereof.
Explanatory Notes on Special Business
1. Resolution pertaining to the Continuation of Terms of Office as Independent Director
For Resolution 11, in line with the Recommendation 3.1 of the MCCG 2012, the Board had conducted an assessment
of independence of Tan Sri Zakaria bin Abdul Hamid (“Tan Sri Zakaria”), who has served as an Independent Non-
Executive Director of the Company for a cumulative terms of more than nine (9) years, and recommended him to
continue to act as Independent Non-Executive Director of the Company.
Tan Sri Zakaria fulfills the Independent Director criteria set out in the Main Market Listing Requirements of Bursa
Malaysia Securities Berhad, and therefore, is able to bring independent and objective judgement to the Board. His
vast experience in the government service sectors together with the long service and association with the Company
enable him to contribute actively and effectively during deliberations at Board meetings.
5
Annual Report 2013
Notice of Annual General Meeting
(continued)
2. Resolution pertaining to the Authority for Directors to issue and allot shares in the Company pursuant to
Section 132D of the Companies Act, 1965
For Resolution 12, Authority for Directors to issue and allot shares in the Company pursuant to Section 132D of
the Companies Act, 1965 if passed will give the Directors of the Company from the date of the above meeting,
authority allot and issue ordinary shares from the unissued capital of the Company for such purposes as the
Directors consider would be in the interest of the Company. The purposes of this general mandate is for possible
fund raising exercise but not limited to further placing of the shares for purpose of funding investment(s), working
capital and/or acquisitions at any time to such persons in their absolute discretion without convening a general
meeting as it would be both costs and time-consuming to organise a general meeting. This authorization will expire
at the conclusion of the next Annual General Meeting of the Company.
3. Resolution pertaining to the Proposed Renewal of Authority for Share Buy-Back
For Resolution 13, the detailed information on the Proposed Renewal of Authority for Share Buy-Back Authority
is set out in the Statement/Circular to Shareholders dated 4 June 2014 which is despatched together with the
Company’s Annual Report 2013.
4. Resolution pertaining to the Proposed Renewal of Existing Shareholders’ Mandate and Proposed New
Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature
(“Proposed Shareholders’ Mandate”)
For Resolution 14, the detailed information on the Proposed Shareholders’ Mandate is set out in Statement/Circular
to Shareholders dated 4 June 2014 which is despatched together with the Company’s Annual Report 2013.
Notice of Dividend Entitlement and Payment Date
NOTICE IS HEREBY GIVEN THAT a first and final tax exempt Dividend of 9% (4.50 sen) per ordinary share of
RM0.50 each of the financial year ended 31 December 2013, if approved by the shareholders at the forthcoming Forty-
First Annual General Meeting, will be paid on 25 August 2014 to Depositors whose names appear in the Record of
Depositors at the close of business on 15 August 2014.
A Depositor shall qualify for entitlement to the dividend only in respect of :-
a) Shares transferred into the Depositor’s securities account before 4.00 p.m. on 15 August 2014 in respect of ordinary
transfers; and
b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa
Malaysia Securities Berhad.
BY ORDER OF THE BOARD
LIM SUAK GUAK (MIA 19689)
CATHERINE MAH SUIK CHING (LS 01302)
Company Secretaries
Selangor Darul Ehsan
4 June 2014
6 Muhibbah Engineering (M) Bhd. and its subsidiaries
Company No. 12737-K (Incorporated in Malaysia)
Group Financial Highlights
2009 2010 2011 2012 2013
Turnover (RM’000) 2,252,049 1,768,884 2,026,366 2,625,525 1,936,401
Profit Before Tax (RM’000) 72,484 53,277 111,716 (34,977) 132,570
Profit After Tax Before Non-controlling
Interest (RM’000) 33,187 46,284 82,532 (61,083) 116,215
Profit After Tax and Non-controlling
Interest (RM’000) 16,982 32,944 63,772 (93,241) 86,379
Total Equity Attributable to
Owners of the Company (RM’000) 425,549 451,514 515,393 454,055 562,656
Share Capital (RM’000) 198,685 199,196 204,107 204,124 211,214
Basic Earnings Per Ordinary
Share Attributable to Owners
of the Company (Sen) 4.30 8.32 15.85 (22.94) 20.98
Net Assets Per Ordinary Share
Attributable to Owners of
the Company (RM) 1.08 1.14 1.27 1.12 1.34
RM Million RM Million RM Million RM
150 210 580 1.40
560
125 175 1.30
540
100 140 1.20
520
75 105 500 1.10
50 70 480 1.00
460
25 35 0.90
440
0 0 0.80
420
-25 -35 400 0.70
-50 -70 0 0
09 10 11 12 13 09 10 11 12 13 09 10 11 12 13 09 10 11 12 13
Profit Before Tax Profit After Tax Before Total Equity Attributable Net Assets Per Ordinary
Non-controlling Interest to Owners of the Company Share Attributable to
Owners of the Company
7
Annual Report 2013
Chairman’s Statement
On behalf of the Board of Directors of Muhibbah Engineering
(M) Bhd (“the Board”), I am pleased to present the Annual
Report and the audited financial statements of Muhibbah
Engineering (M) Bhd (“the Company” or “Muhibbah”) and its
subsidiary companies (“the Muhibbah Group” or “Group”) for
the financial year ended 31 December 2013.
Overview
The Group successfully recovered with a Group profit after tax
of RM116.2 million for the current year as compared to a loss
after tax of RM61.1 million in 2012, which was consequent
to the Group making full provisions for the balance amount of
receivables due from the Asia Petroleum Hub project for the
year ended 31 December 2012.
The Group reported a lower turnover of approximately
RM1.94 billion (2012: RM2.63 billion) primarily due to
completion of major projects in 2013. However, our crane
and concession divisions reported higher revenues and strong
financial performances due to a robust oil and gas market, and
Tan Sri Zakaria bin Abdul Hamid our airports concession, a higher turnover.
(Chairman, Independent Non-Executive Director)
The key highlight in 2013 was the award of a licence to
Muhibbah by Petroliam Nasional Bhd (“PETRONAS”) for
Multipurpose Wharf and Associated Facilities at Container Terminal 4 for Northport Project in Malaysia
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