STRICTLY PRIVATE AND CONFIDENTIAL
Serial No.
NNNNNNNNNN

UNITED GROWTH BERHAD
(Company No. 739648-W)

Islamic Medium Term Notes pursuant to an Islamic
Medium Term Notes Programme of RM2.2 billion under the Shariah principle of Musharakah

Joint Lead Arrangers and Joint Lead Managers

CIMB Investment Bank Berhad

HSBC Amanah Malaysia Berhad

(Company No: 18417-M)

(Company No: 807705-X)

13 June 2012

IMPORTANT NOTICE
Responsibility Statements
This Information Memorandum has been approved by the directors of United Growth Berhad (Company No: 739648-W)
(“UG” or “Issuer”) and UEM Group Berhad (Company No: 6551-K) (“UEM” or “Obligor”) and UG and UEM accept full responsibility for the accuracy of the information contained in this Information Memorandum. UG and UEM, after having made all reasonable enquiries, confirm that this Information Memorandum contains all information with respect to UG and
UEM which is material in the context of the Islamic medium term notes programme of RM2.2 billion (“Programme”) and the offering of the Islamic medium term notes (“Sukuk”) under the Programme. The opinions and intentions expressed in this
Information Memorandum in relation to UG and UEM are honestly held, have been reached after considering all relevant circumstances and are based on reasonable assumptions and there are no other facts in relation to UG and UEM or the
Programme the omission of which would, in the context of the Sukuk issue, make any statement in this Information
Memorandum misleading in any material respect and all reasonable enquiries have been made by UG and UEM to ascertain such facts and to verify the accuracy of all such information and statements. No representation or warranty, expressed or implied, is made such that the information remains unchanged in any respect as of any date or dates after those stated herein, with respect to any matter concerning UG and UEM or any statement made in this Information
Memorandum. UG, UEM and their respective board of directors accepts full responsibility for the information contained in this Information Memorandum.
Important Notice and General Statement of Disclaimer
This Information Memorandum is being furnished on a private and confidential basis solely for the purpose of enabling prospective investors to consider the purchase of the Sukuk to be issued pursuant to the Programme.
It is a condition to the first issuance of Sukuk under the Programme that the rating for the Sukuk is at least AA2 (or its equivalent) and it is a condition of each issuance of Sukuk under the Programme that the rating for the Programme is at least A1 (or its equivalent). A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the rating agency.
None of the information or data contained in this Information Memorandum has been independently verified by CIMB
Investment Bank Berhad (“CIMB”) and HSBC Amanah Malaysia Berhad (“HSBC”) as the Joint Lead Arrangers and Joint
Lead Managers of the Programme (“Joint Lead Arrangers/Joint Lead Managers”). Accordingly, no representation, warranty or undertaking, express or implied, is given or assumed by the Joint Lead Arrangers/Joint Lead Managers as to the authenticity, origin, validity, accuracy or completeness of such information and data or that the information or data remains unchanged in any respect after the relevant date shown in this Information Memorandum. The Joint Lead
Arrangers/Joint Lead Managers have not accepted and will not accept any responsibility for the information and data contained in this Information Memorandum or otherwise in relation to the Programme and shall not be liable for any consequences of reliance on any of the information or data in this Information Memorandum.
It is to be noted that although UG has sought the advice of the Joint Shariah Advisers (as defined herein) with regards to the conformity of the Programme with Shariah principles, no representation, warranty or undertaking, express or implied, is given by UG as to the status of the Programme’s compliance with Shariah principles and none of UG, UEM, the Joint Lead
Arrangers/Joint Lead Managers and/or the Joint Shariah Advisers shall be liable for any consequences of such reliance and/or assumption of any such compliance. Each recipient should perform and is deemed to have consulted its own professional advisers and obtained independent Shariah advice on whether each of the structure, the issue and the trading of the Sukuk is in compliance with Shariah principles. Any non-compliance with Shariah principles may have legal consequences. The information in this Information Memorandum supersedes all other information and material previously supplied (if any) to the recipients. By taking possession of this Information Memorandum, the recipients are acknowledging and agreeing and are deemed to have acknowledged and agreed that they will not rely on any previous information supplied. No person is authorised to give any information or data or to make any representation or warranty other than as contained in this
Information Memorandum and, if given or made, any such information, data, representation or warranty must not be relied upon as having been authorised by UG, UEM, the Joint Lead Arrangers/Joint Lead Managers or any other person.
This Information Memorandum has not been and will not be made to comply with the laws of any jurisdiction other than
Malaysia (“Foreign Jurisdiction”) and has not been and will not be lodged, registered or approved pursuant to or under any legislation of (or with or by any regulatory authorities or other relevant bodies of) any Foreign Jurisdiction and it does not constitute an issue, offer or sale of, or an invitation to subscribe or purchase the Sukuk or any other securities of any kind by any party in any Foreign Jurisdiction.
This Information Memorandum is not and is not intended to be a prospectus. Unless otherwise specified in this Information
Memorandum, the information contained in this Information Memorandum is current as at the date hereof.
The distribution or possession of this Information Memorandum in or from certain jurisdictions may be restricted or prohibited by law. Each recipient is required to seek appropriate professional advice regarding, and to observe, any such restriction or prohibition. Neither UG, UEM nor the Joint Lead Arrangers/Joint Lead Managers accepts any responsibility or liability to any person in relation to the distribution or possession of this Information Memorandum in or from any such
Foreign Jurisdiction.

By accepting delivery of this Information Memorandum, each recipient agrees to the terms upon which this Information
Memorandum is provided to such recipient as set out in this Information Memorandum, and further agrees and confirms that (a) it will keep confidential all of such information and data, (b) it is lawful for the recipient to subscribe for or purchase the Sukuk under all jurisdictions to which the recipient is subject, (c) the recipient has complied with all applicable laws in connection with such subscription or purchase of the Sukuk, (d) UG, UEM, the Joint Lead Arrangers/Joint Lead Managers and their respective directors, officers, employees and professional advisers are not and will not be in breach of the laws of any jurisdiction to which the recipient is subject as a result of such subscription or purchase of the Sukuk, and they shall not have any responsibility or liability in the event that such subscription or purchase of the Sukuk is or shall become unlawful, unenforceable, voidable or void, (e) it is aware that the Sukuk can only be offered, sold, transferred or otherwise disposed of directly or indirectly in accordance with the relevant selling restrictions and all applicable laws, (f) it has sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of subscribing or purchasing the Sukuk, and is able and is prepared to bear the economic and financial risks of investing in or holding the Sukuk, (g) it is subscribing or accepting the Sukuk for its own account, and (h) it is a person to whom an issue, offer or invitation to subscribe or purchase the Sukuk would constitute an excluded offer or excluded issue as specified in
Schedule 6 or Section 229(1)(b), and Schedule 7 or Section 230(1)(b) and Schedule 9 or Section 257(3) of the Capital
Markets and Services Act 2007 (“CMSA”) at issuance and Schedule 6 or Section 229(1)(b) and Schedule 9 or Section
257(3) of the CMSA thereafter. Each recipient is solely responsible for seeking all appropriate expert advice as to the laws of all jurisdictions to which it is subject. For the avoidance of doubt, this Information Memorandum shall not constitute an offer or invitation to subscribe or purchase the Sukuk in relation to any recipient who does not fall within item (h) above.
This Information Memorandum or any document delivered under or in relation to the issue, offer and sale of the Sukuk is not, and should not be construed as, a recommendation by UG and/or UEM and/or the Joint Lead Arrangers/Joint Lead
Managers to subscribe or purchase the Sukuk. This Information Memorandum is not a substitute for, and should not be regarded as, an independent evaluation and analysis and does not purport to be all-inclusive. Each recipient should perform and is deemed to have made its own independent investigation and analysis of UG, UEM, the Programme and all other relevant matters, and each recipient should consult its own professional advisers. All information and statements herein are subject to the detailed provisions of the respective agreements referred to herein and are qualified in their entirety by reference to such documents.
Neither the delivery of this Information Memorandum nor the offering, sale or delivery of any Sukuk shall in any circumstance imply that the information contained herein concerning the Issuer or the Obligor is correct at any time subsequent to the date hereof or that any other information supplied in connection with the Programme is correct as of any time subsequent to the date indicated in the document containing the same. Neither the Joint Lead Arrangers/Joint Lead
Managers nor any other advisers for the Programme undertakes to review the financial condition or affairs of UG and UEM or to advise any participants of the Programme or investor in any Sukuk of any information coming to their respective attention. This Information Memorandum includes forward-looking statements and reflects projections of future events which may or may not prove to be correct. All of these statements are based on estimates and assumptions made by UG, UEM and its advisers and although believed to be reasonable, are subject to risks and uncertainties that may cause actual events or future results to be materially different than expected or indicated by such statements and estimates, and no assurance can be given that any such statements or estimates will be realized. In light of these and other uncertainties, the inclusion of forward-looking statements in this Information Memorandum should not be regarded as a representation or warranty by UG,
UEM, its advisers or any other persons that the future events as anticipated by UG or UEM will occur. Any such statements are not guarantees of performance and involve risks and uncertainties many of which are beyond the control of UG and
UEM.
This Information Memorandum includes certain historical information, estimates, or reports thereon derived from sources mentioned in this Information Memorandum and other parties with respect to the Malaysian economy, the material businesses which UG and UEM operates and certain other matters. Such information, estimates, or reports have been included solely for illustrative purposes. No representation or warranty is made as to the accuracy or completeness of any information, estimates and/or reports thereon derived from such sources or from other third party sources.
Acknowledgement
Each of UG and UEM hereby acknowledges that it has authorised the Joint Lead Arrangers/Joint Lead Managers to circulate or distribute this Information Memorandum on its behalf in respect of or in connection with the proposed offer or invitation to subscribe for and issue of the Sukuk to prospective investors and that no further evidence of authorisation is required. Statements of Disclaimer by the Securities Commission Malaysia
A copy of this Information Memorandum will be deposited with the Securities Commission Malaysia (“SC”), which takes no responsibility for its contents.
The issue, offer or invitation in relation to the Sukuk in this Information Memorandum or otherwise are subject to the fulfilment of various conditions precedent including without limitation the approval of the SC.
An application for the approval of the SC in respect of the Programme has been made on 22 May 2009. The SC has approved the Programme on 24 June 2009 pursuant to the CMSA. Pursuant to the letter dated 8 April 2011 from the
SC, the SC had approved the extension of time for the first issuance of Sukuk under the Islamic MTN Programme to
24 June 2012. An application was made to and approval obtained from the SC on 5 June 2012 for revision of certain terms to the Programme. Please note that the approval of the SC shall not be taken to indicate that the SC recommends the subscription or purchase of the Sukuk.
The SC shall not be liable for any non-disclosure on the part of UG and UEM and assumes no responsibility for the correctness of any statements made or opinions or reports expressed in this Information Memorandum.
EACH SUKUK ISSUE UNDER THE PROGRAMME WILL CARRY DIFFERENT RISKS AND ALL INVESTORS SHOULD
EVALUATE EACH SUKUK ISSUE ON ITS MERITS. INVESTORS SHOULD RELY ON THEIR OWN EVALUATION TO
ASSESS THE MERITS AND RISKS OF THE INVESTMENT.
IT IS RECOMMENDED THAT PROSPECTIVE INVESTORS CONSULT THEIR FINANCIAL, LEGAL AND OTHER
ADVISERS BEFORE PURCHASING OR ACQUIRING OR SUBSCRIBING FOR THE SUKUK.
Documents Incorporated by Reference
The following documents published or issued from time to time after the date hereof shall be deemed to be incorporated in, and to form part of, this Information Memorandum:
(i)

the most recently published audited consolidated and non-consolidated annual financial statements and, if published later, the most recently published interim consolidated and non-consolidated financial statements (if any) of UG and
UEM; and

(ii)

all supplements or amendments to this Information Memorandum circulated by UG and UEM, if any, save that any statement contained herein or in a document which is deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purpose of this Information Memorandum to the extent that a statement contained in any such subsequent document which is deemed to be incorporated by reference herein modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Information
Memorandum.

UG and UEM will provide, without charge, to each person to whom a copy of this Information Memorandum has been delivered, upon the request of such person, a copy of any or all of the documents deemed to be incorporated herein by reference unless such documents have been modified or superseded as specified above. Requests for such documents should be directed to the Issuer at its offices set out at the end of this Information Memorandum.

CONFIDENTIALITY
To the recipient of this Information Memorandum:
This Information Memorandum and its contents are strictly confidential and are made strictly on the basis that they will remain confidential. Accordingly, this Information Memorandum and its contents, or any information, which is made available in connection with any further enquiries, must be held in complete confidence.
This Information Memorandum is submitted to prospective investors specifically in reference to the Programme and may not be reproduced or used, in whole or in part, for any purpose, nor furnished to any person other than those to whom copies have been sent by the Joint Lead Arrangers/Joint Lead Managers.
The recipient must return this Information Memorandum and all reproductions whether in whole or in part and any other information in connection therewith to the Joint Lead Arrangers/Joint Lead Managers promptly upon the Joint Lead
Arrangers/Joint Lead Managers’ request.

TABLE OF CONTENTS
PAGE
1

DEFINITIONS
SECTION 1.0

EXECUTIVE SUMMARY
1.1
The Issuer
1.2
Utilisation of Proceeds
1.3
Key Financial Highlights of UEM Group for financial years ended 31 December 2009 to 31 December 2011
1.4
Key Financial Highlights of UEM for financial years ended
31 December 2009 to 31 December 2011
1.5
Description of the Programme
1.6
Ratings

6
6
6
7

SECTION 2.0

SUMMARY OF PRINCIPAL TERMS AND CONDITIONS OF THE
PROGRAMME

9

SECTION 3.0

BACKGROUND INFORMATION ON THE OBLIGOR
3.1
Corporate History
3.2
Share Capital
3.3
Shareholders
3.4
Subsidiary Companies and Associated Companies
3.5
Profiles of Directors
3.6
The Management
3.7
Corporate Structure of the UEM Group
3.8
UEM Group Business Segments Overview

38
38
38
38
38
38
42
50
52

SECTION 4.0

BACKGROUND INFORMATION ON THE ISSUER
4.1
Corporate History
4.2
Share Capital
4.3
Shareholders
4.4
Business and Operations of the Issuer

67
67
67
67
67

SECTION 5.0

INVESTMENT CONSIDERATIONS
5.1
Risks relating to the Issuer
5.2
Risks relating to UEM
5.3
General Risks of UEM’s Subsidiaries, Joint Ventures and
Associated Companies
5.4
Risks relating to the Sukuk
5.5
Risks relating to the Assets
5.6
Forward-Looking Statements

68
68
68
78

SECTION 6.0

OTHER INFORMATION
6.1
Material Litigation
6.2
Material Contracts
6.3
Related Party Transactions
6.4
Contingent Liabilities

83
83
88
88
88

APPENDIX 1

DIRECTORS’ REPORT AND AUDITED FINANCIAL STATEMENTS
OF UEM FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011

92

APPENDIX 2

LETTERS OF OPINION FROM THE JOINT SHARIAH ADVISERS

93

7
8
8

79
81
82

DEFINITIONS
Unless the context otherwise requires, the following definitions shall apply for the purpose of this
Information Memorandum:
9MP

The Ninth Malaysia Plan.

Assets

A pool of Shariah-compliant shares or any other Shariah-compliant assets identified by the Registered and Beneficial Owner of the Assets.

BKE

The Butterworth-Kulim Highway.

BNDSB

Bandar Nusajaya Development Sdn Bhd (Company No. 252945-M).

BNM

Bank Negara Malaysia.

Bursa Malaysia

Bursa Malaysia Securities Berhad.

CIMA

Cement Industries of Malaysia Berhad (Company No. 11986-T).

CIMA Group

CIMA and its subsidiaries.

CIMB

CIMB Investment Bank Berhad (Company No. 18417-M).

CMSA

Capital Markets and Services Act, 2007 as amended from time to time.

Concession
Companies

Collectively,
(a)

PLUS;

(b)

ELITE;

(c)

KLBK;

(d)

LINKEDUA; and

(e)

PBSB.

ELITE

Expressway Lingkaran Tengah Sdn Bhd (Company No. 312805-M).

EPF

Employees Provident Fund Board.

Exercise Price

As described in paragraph 4 of the Principal Terms and Conditions of the
Programme.

Expressways

Collectively,
(a) the PLUS Expressways;
(b) the NSECL;
(c) the BKE;
(d) the Second Link; and
(e) the Penang Bridge.

Faber

Faber Group Berhad (Company No. 5067-M).

1

FSRA

the Shariah-compliant bank account designated as the “Finance Service
Reserve Account” to be opened and maintained by the Issuer in accordance with the terms set out in Section 2.0.

Government or GOM

The Government of Malaysia.

HSBC

HSBC Amanah Malaysia Berhad (Company No. 807705-X).

I-Mix

I-Mix Concrete Industries Sdn Bhd (Company No. 359366-T).

Initial Owner

UEM.

Issuer or UG

United Growth Berhad (Company No. 739648-W).

Joint Lead Arrangers
/ Joint Lead
Managers

CIMB and HSBC.

Joint Shariah
Advisers

CIMB (backed by CIMB Islamic Shariah Committee) and HSBC Amanah
Malaysia Berhad.

Khazanah

Khazanah Nasional Berhad (Company No. 275505-K).

KLBK

Konsortium Lebuh Raya Butterworth-Kulim (KLBK) Sdn Bhd (Company
No. 276969-H).

Kuad

Kuad Sdn Bhd (Company No 162455-T).

Kualiti Alam

Kualiti Alam Sdn Bhd (Company No. 230440-V).

Kuari Pati

Kuari Pati Sdn Bhd (Company No. 273844-M).

LBT

Losses before tax.

LRT

The Light Rail Transit System.

LINKEDUA

Linkedua (Malaysia) Berhad (Company No. 233673-W).

Management
Agreement

The agreement entered into between UEM, the Issuer and the Trustee, pursuant to which UEM will manage each Portfolio in accordance with the term thereof.

Material Subsidiaries

Collectively, PLUS Malaysia, PLUS Berhad, PEB, PT LMS, UEM Builders,
UEM Construction, PROPEL, UEM Land Holdings, Sunrise, BNDSB, UEM
Environment, Kualiti Alam, CIMA, NSCI and Opus.

MTNs

The Islamic medium term notes to be issued pursuant to the Programme, the nominal value of Sukuk outstanding which shall not exceed RM2.2 billion at any one time.

NKVE

The New Klang Valley Expressway, an expressway of approximately 35 km connecting the North Klang Straits By-Pass and Jalan Duta in Kuala
Lumpur.

Novation
Agreements

Collectively,
(i)

in respect of PLUS, the novation agreement dated 11 November
2011 made between the GOM, PLUS and PLUS Berhad;

(ii)

in respect of ELITE, the novation agreement dated 11 November
2011 made between the GOM, ELITE and PLUS Berhad;
2

(iii)

in respect of KLBK, the novation agreement dated 11 November
2011 made between the GOM, KLBK and PLUS Berhad;

(iv)

in respect of LINKEDUA, the novation agreement dated 11
November 2011 made between the GOM, LINKEDUA and PLUS
Berhad; and

(v)

in respect of PBSB, the novation agreement dated 11 November
2011 made between the GOM, PBSB and PLUS Berhad.

NSCI

Negeri Sembilan Cement Industries Sdn Bhd (Company No. 311414-H).

NSE

The North-South Expressway, an expressway of 772km long, extending the length of the west coast of Peninsular Malaysia from Bukit Kayu
Hitam, Kedah in the north to Johor Bahru, Johor in the south.

NSECL

The North South Expressway Central Link and the two interchanges at
Putrajaya, Salak Tinggi (now to be replaced by Ampar Tenang) and a
2.74km extension to the KLIA Expressway.

Obligor

UEM.

Opus

Opus Group Berhad (Company No. 291168-K).

Opus Group

Opus and its subsidiaries.

Opus IC

Opus International Consultants Limited (Company No. WN/478807).

PBSB

Penang Bridge Sdn Bhd (Company No. 360115-X).

PBT

Profit before tax.

PEB

PLUS Expressways Berhad (Company No. 570244-T).

Penang Bridge

The 13.5km bridge linking Penang Island to the mainland of Peninsular
Malaysia.

Pharmaniaga

Pharmaniaga Berhad (Company No. 467709-M).

PLUS

Projek Lebuhraya Utara-Selatan Berhad (Company No. 154158-H).

PLUS Berhad

Projek Lebuhraya Usahasama Berhad (Company No. 954700-A).

PLUS Expressways

The NSE, the NKVE, approximately 16 km section of the Federal Highway
Route 2 between Subang and Klang, and SPDH.

PLUS Malaysia

PLUS Malaysia Berhad (formerly known as PLUS Malaysia Sdn Bhd)
(Company No. 923639-A).

PLUS Malaysia
Acquisition

PLUS Malaysia’s acquisition of PEB’s local assets and liabilities, more particularly described in Section 3.8.1.

Portfolio

A pool of Shariah-compliant shares or any other Shariah-compliant assets identified by the Registered and Beneficial Owner of the Assets.

Portfolio Trustee

UEM.

Portfolio Unit

A fraction of the Portfolio Unit holder’s undivided interest in the Portfolio.

3

Programme

The Islamic medium term notes programme of RM2.2 billion under the
Shariah principle of Musharakah.

PROPEL

Projek Penyelenggaraan Lebuhraya Berhad (Company No. 171667-P).

PROPEL Group

PROPEL and its subsidiaries.

PT LMS

PT Lintas Marga Sedaya (Company No. 09.05.1.45.56533).

Purchase
Undertaking

An undertaking from the Obligor to the Issuer pursuant to which the
Obligor shall purchase the Portfolio Units from the Issuer at the Exercise
Price.

Rating Agency or
RAM

RAM Rating Services Berhad (Company No. 763588-T).

Registered and
Beneficial Owner

UEM.

RM and sen

Ringgit Malaysia and sen respectively.

RM mil

Ringgit Malaysia million.

SC

Securities Commission Malaysia.

Second Link

The Malaysia-Singapore Second Link.

SPV1

Pantai Panorama Sdn Bhd (Company No. 753604-V).

Sukuk

The Sukuk issued or to be issued by the Issuer pursuant to the
Programme.

Sukukholders

Several persons who are for the time being holders of the Sukuk.

Sunrise

Sunrise Berhad (Company No. 7685-V).

Supplemental
Concession
Agreements

Collectively,
(a)

the PLUS Supplemental Concession Agreement dated 11
November 2011;

(b)

the ELITE Supplemental Concession Agreement dated 11
November 2011;

(c)

the KLBK Supplemental Concession Agreement dated 11
November 2011;

(d)

the LINKEDUA Supplemental Concession Agreement dated 11
November 2011; and

(e)

the PBSB Supplemental Concession Agreement dated 11
November 2011.

Teras

Teras Teknologi Sdn Bhd (Company No. 316616-X).

TIME

TIME Engineering Berhad (Company No. 10039-P).

Touch ’n Go

Touch ‘n Go Sdn Bhd (Company No. 406400-X).

4

Transaction
Documents

The documents relating to the Programme.

Trustee

Universal Trustees (Malaysia) Berhad (Company No: 17540-D), in its capacity as trustee for the Sukuk.

UEM

UEM Group Berhad (Company No. 6551-K).

UEM Builders

UEM Builders Berhad (Company No. 29354-H).

UEM Builders Group

UEM Builders and its subsidiaries.

UEM Construction

UEM Construction Sdn Bhd (Company No. 147398-P).

UEM Environment

UEM Environment Sdn Bhd (Company No. 375705-V).

UEM Environment
Group

UEM Environment and its subsidiaries.

UEM Group

UEM and its subsidiaries and associated companies.

UEM Land

UEM Land Berhad (Company No. 90894-P).

UEM Land Holdings

UEM Land Holdings Berhad (Company No. 830144-W).

UG

United Growth Berhad (Company No. 739648-W).

Unipati

Unipati Concrete Sdn Bhd (Company No. 262571-H).

USD

United States Dollars.

5

SECTION 1.0
1.1

EXECUTIVE SUMMARY

The Issuer
UG was incorporated under the Companies Act, 1965 on 3 July 2006 under the name of
Syabas Estet Sdn Bhd. On 3 November 2006, the Issuer changed its name to United Growth
Sdn Bhd and was converted into a public company on 24 November 2006.
UG is a special purpose vehicle incorporated specifically for the issuance of the Sukuk, and has its registered address at 19-2 Mercu UEM, Jalan Stesen Sentral 5, Kuala Lumpur Sentral,
50470 Kuala Lumpur.
UG’s sole shareholder is UEM, which in turn is wholly-owned by Khazanah.
For further information on UG, please see “Section 4.0 – Background Information on the
Issuer” of this Information Memorandum.

1.2

Utilisation of Proceeds
The issue proceeds from the Programme shall be utilised for the following purposes:
By UG
To purchase the Portfolio Units from SPV1.
By SPV1
To purchase the Portfolio Units from the Initial Owner of the Portfolio Units.
By the Initial Owner of the Portfolio Units
(a)

for payment of fees and expenses incurred in connection with the Programme;

(b)

for general investment, refinancing of borrowings and working capital requirements of
UEM and its subsidiaries; and

(c)

for the initial funding of the FSRA .

Proceeds raised from the Programme will be utilised for Shariah-compliant purposes.

[The rest of this page has been left blank intentionally]

6

1.3

Key financial highlights of UEM Group for the financial years ended 31 December 2009 to 31 December 2011
For the year ended 31 December
2011(4)

2010(7)

2009(7)

Revenue (RM mil)

4,976

7,230

8,214

Gross profit (RM mil)

1,215

3,353

3,526

238

2,952

3,278

56

1,649

1,927

Total debt (RM mil)

3,788

14,853

14,413

Shareholders' funds (RM mil)

7,620

7,631

7,941

Gross margin (per cent)

24.42

46.37

42.92

4.79

40.84

39.91

0.39

1.21

1.18

Continuing Operations

(1)

OPBDIT (RM mil)

Pre-tax profit (RM mil)

OPBDIT margin (per cent)
Debt to equity ratio (x)

1.4

(2)

(3)

Key financial highlights of UEM for the financial years ended 31 December 2009 to 31
December 2011
For the year ended 31 December
(5)

2011

(6) (7)

2010

2009

(7)

Revenue (RM mil)

8,121

446

638

Gross profit (RM mil)

7,918

485

425

6,155

(531)

(6)

295

(545)

(6)

300

926

936

953

Shareholders’ funds (RM mil)

9,205

7,007

8,013

Gross margin (per cent)

97.50

108.74

66.49

75.79

(6)

46.16

0.13

0.12

(1)

OPBDIT (RM mil)

Pre-tax profit (RM mil)

6,134

Total debt (RM mil)

OPBDIT margin (per cent)
Debt to equity ratio (x)
(1)
(2)
(3)
(4)

(5)
(6)
(7)

(2)

(3)

0.10

(119.04)

OPBDIT means operating profit before amortisation, depreciation, interest and tax.
OPBDIT margin means OPBDIT/Revenue.
Debt to equity ratio means Total debt/Total equity.
Revenue and profit of UEM Group from continuing operations in 2011 have reduced significantly due to the absence of contribution from the local expressways.The results of local expressways (including PBSB) were classified as discontinued operations in 2011 in conjunction with the disposal of all local expressways’ assets and liabilities to PLUS Malaysia, pursuant to the PLUS Malaysia Acquisition.
The financials disclosed in 2011 includes the one-off overseas provisions of RM404 million.
Significant higher revenue and profit in 2011 was mainly due to a special dividend from PEB following the completion of the PLUS Malaysia Acquisition.
Loss in 2010 was mainly due to impairment loss on major investment.
The financial information in relation to financial years 2010 and 2009 has not been restated and are based on the audited financial statements of the respective years.

7

1.5

Description of the Programme
The Programme is an Islamic medium term notes programme under which the Issuer may issue medium term notes under the Shariah principle of Musharakah, the nominal value of outstanding medium term notes which shall not exceed RM2.2 billion at any one time. The tenure of the Programme is up to thirty (30) years from the date of the first issue under the
Programme. The tenure of the Sukuk may be between one (1) year to thirty (30) years provided that the Sukuk matures prior to the expiry of the Programme.
For the terms of the Programme, please see “Section 2.0 – Summary of the Principal Terms and Conditions of the Programme”.

1.6

Ratings
The Programme has been accorded a rating of AA2 by RAM vide its letter dated 11 June
2012.

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8

SECTION 2.0

SUMMARY OF PRINCIPAL TERMS AND CONDITIONS OF THE PROGRAMME

Words and expression used and defined in this Section 2.0 shall, in the event of inconsistency with the definition section of this Information Memorandum, only be applicable for this Section 2.0.
BACKGROUND INFORMATION
1.

Issuer
(i) Name

:

United Growth Berhad (“Issuer”).

(ii) Address

:

Correspondence Address
20-2, Mercu UEM
Jalan Stesen Sentral 5
Kuala Lumpur Sentral
50470 Kuala Lumpur
Registered Address
19-2, Mercu UEM
Jalan Stesen Sentral 5
Kuala Lumpur Sentral
50470 Kuala Lumpur

(iii) Business Registration No.

:

739648-W.

(iv) Date /Place of Incorporation

:

3 July 2006/Malaysia.

(v) Date of Listing (in case of a public listed company)

:

Not applicable.

(vi) Status

:

Resident-controlled company.
Bumiputra-controlled company.

(vii) Principal Activities

:

Investment holdings.

(viii) Board of Directors

:

Annuar Marzuki Bin Abdul Aziz.
Lila Azmin Binti Abdullah.

(viii) Structure of shareholding and name of shareholder or, in the case of public company, names of all major shareholders

Shareholder

No. of Ordinary
Shares

%

UEM Group
Berhad (“UEM”)

2

100

(ix) Authorised share capital

:

RM100,000 divided into 100,000 ordinary shares of
RM1.00 each.

Paid-up share capital

:

2 ordinary shares of RM1.00 each issued and fully paid up in cash.

9

PRINCIPAL TERMS AND CONDITIONS
2.

Names of parties involved in the proposed transaction
(where applicable)
(i)

Principal Adviser(s)/
Lead Arranger(s)

:

CIMB Investment Bank Berhad (“CIMB”) and HSBC
Amanah Malaysia Berhad (“HSBC”) (collectively, “Joint
Lead Arrangers”).

(ii)

Arranger(s)

:

Not applicable.

(iii)

Valuers

:

Not applicable.

(iv)

Solicitors

:

Messrs. Zaid Ibrahim & Co.

(v)

Financial Adviser

:

Not applicable.

(vi)

Technical Adviser

:

Not applicable.

(vii)

Guarantor

:

Not applicable.

(viii) Trustee

:

Universal Trustee (Malaysia) Berhad.

(ix)

Facility Agent

:

CIMB.

(x)

Primary Subscribers and amount subscribed
(where applicable)

:

The Primary Subscribers (if any) will be determined prior to each issuance of the Sukuk. For the avoidance of doubt, where applicable, there shall be at least two (2)
Primary Subscribers in respect of each issuance of
Sukuk, issued under the Islamic principle of
Musharakah.

(xi)

Underwriter(s) and amount underwritten

:

Not applicable.

(xii)

Shariah Adviser (where applicable) :

(i)
(ii)

CIMB (backed by CIMB Islamic
Committee); and
HSBC Amanah Malaysia Berhad
(collectively, “Joint Shariah Advisers”)

Shariah

(xiii) Central Depository

Bank Negara Malaysia (“BNM”).

(xiv) Paying Agent

:

BNM.

(xv) Reporting Accountant

:

Ernst & Young.

(xvi) Others (please specify)

:

(a)

HSBC and CIMB as Joint Lead Managers (“Joint
Lead Managers”).

(b)

3.

:

UEM as the Obligor, Registered and Beneficial
Owner of the Assets, Portfolio Trustee, Manager of the Portfolio and Initial Owner of the Portfolio
Units.

Islamic Principle Used

:

Musharakah (profit and loss sharing) or any other
Shariah principles to be advised.
Where:
(a) the current structure described in this Principal Terms and Conditions is amended so as to comply with any
10

future requirements of the Musharakah principle; or
(b) the Sukuk are proposed to be issued based on a
Shariah principle or principles other than
Musharakah; or
(c) the structure of the Islamic MTN Programme based on any Islamic principle (other than Musharakah) is amended so as to comply with the requirements of such Islamic principle, the prior approval from the Securities Commission
Malaysia (“SC”) and the Joint Shariah Advisers will be sought.
For avoidance of doubt, no approval of the
Sukukholders (as defined below) shall be required.
4.

Facility Description

:

The Islamic MTN Programme applies the underlying
Shariah contract of Musharakah, which is a partnership
(“Musharakah Venture”) between the Sukukholders (as defined below) to invest in the respective Portfolio Units
(as defined below) under the Portfolio (as defined below). Investors (“Sukukholders” or “Musharakah
Partners”), from time to time, shall enter into a
Musharakah by subscribing to the relevant Sukuk issued by the Issuer. The Sukuk shall comprise one or more series with different maturity dates (“Sukuk Series”).
“Portfolio Unit” is a fraction of the Portfolio Unit holder’s undivided interest in the Portfolio.
The Portfolio is a pool of Shariah-compliant shares or any other Shariah-compliant assets (“Assets”) identified by the Registered and Beneficial Owner of the Assets
(as defined in paragraph 2(xvi) of the Principal Terms and Conditions of the Proposal). The Assets shall be endorsed by the Joint Shariah Advisers.
The Registered and Beneficial Owner of the Assets shall make a declaration of trust on the Portfolio to be held by the Portfolio Trustee (as defined in paragraph 2(xvi) of the Principal Terms and Conditions of the Proposal) for the benefit of the holders of the Portfolio Units. On the date of such declaration of trust, the Initial Owner (as defined in paragraph 2(xvi) of the Principal Terms and
Conditions of the Proposal) of the Portfolio Units shall be the first holder of all the Portfolio Units.
For each issue of Sukuk, the Initial Owner of the
Portfolio Units will sell the Portfolio Units to Pantai
Panorama Sdn Bhd (“SPV1”). SPV1 shall subsequently sell the Portfolio Units to the Issuer (who purchases on behalf of the Musharakah Partners/Sukukholders). The
Issuer will fund the purchase of the Portfolio Units through the proceeds raised from the issuance of
Sukuk.
UEM, the Manager of the Portfolio, shall have the right to exchange the assets in the Portfolio with Qualified
Assets (as defined below) or purchase any of the assets forming the Portfolio pursuant to the Exchange
Agreement (defined as an agreement in the form set out
11

in the Management Agreement which allows the
Manager to substitute the assets under the Portfolio with
Qualified Assets) and/ or Deferred Payment Sale
Agreement (defined as the agreement governing the purchase of any of the assets forming the Portfolio by deferred payment terms). Qualified Assets shall mean assets which have been pre-approved by the Joint
Shariah Advisers. If these assets have not been preapproved by the Joint Shariah Advisers a specific endorsement from the Joint Shariah Advisers will be required. The Joint Shariah Advisers shall have the right to review such Qualified Assets upon occurrence of certain pre-agreed events (defined as events that include, where the Assets forming the Portfolio become non-Shariah compliant).
For each issue, the value of the Assets in the Portfolio, which is determined based on the value at cost to the
Portfolio, shall be at least equivalent to the nominal amount of the Sukuk to be issued plus the nominal amount of the Sukuk outstanding at that point in time.
For the avoidance of doubt, the total value (to be determined at cost to the Portfolio) of the Portfolio shall at all times be at least equivalent to the total nominal value of the Sukuk outstanding. In case of any exchange of Assets, the value of the new Assets to be injected into the Portfolio must be at least equivalent to the value of the Assets to be replaced (which shall be valued at cost to the Portfolio). As such, the value of the Portfolio shall remain at least at the same level before any exchange of
Asset.
The Sukuk represents the Sukukholders’ undivided proportionate interests/investments (through the Issuer) in the Portfolio Units. The Sukukholders will be entitled to the income from the Musharakah Venture.
Pursuant to the transaction documents, the Issuer (on behalf of the Sukukholders) will surrender its right to exercise the voting rights attached to the Shariahcompliant shares forming the Assets. Following such surrender, the Sukukholders shall have no voting rights in respect of such shares.
The Registered and
Beneficial Owner of the Assets shall then have the absolute discretion in exercising such voting rights without being obligated to take account of the interest of the Sukukholders.
The Sukukholders, as Musharakah Partners shall contribute their portion of the proceeds received pursuant to their subscription of the Sukuk
(“Musharakah Capital”) for the purpose of the
Musharakah Venture. The Issuer will apply the
Musharakah Capital to acquire the specific Portfolio
Units.
Any profit derived from the venture will be distributed to the Musharakah Partners based on a pre-agreed profit sharing ratio (according to their respective interest in the
Sukuk) while losses from the venture will be applied in
12

proportion to each Musharakah Partner’s Musharakah
Capital.
The parties agree that UEM as Manager of the Portfolio shall manage the Portfolio pursuant to the terms of a
Management Agreement which will provide for the appointment and responsibilities of UEM as manager in connection with the Portfolio. The responsibilities of
UEM as Manager of the Portfolio will include:
a.

the management of the Portfolio Units;

b.

distributing the dividend or distribution received pursuant to the Portfolio (“Income”) in accordance with the Management Agreement;

c.

paying any administrative fees payable for the maintenance of the Issuer and SPV1; and

d.

providing top up payment (without recourse to the
Portfolio Units) to ensure that the Sukukholders receive payment in full of the Expected Periodic
Distribution on the Periodic Distribution Date (“Top
Up Payment”).

Under the terms of the Management Agreement,
Income shall be applied in the following order of priority:
a.

first, towards accumulation in the Finance Service
Reserve Account (“FSRA”) (defined hereunder) up to an amount sufficient to meet the Minimum
Required Balance as prescribed in paragraph 27.6 of the Principal Terms and Conditions of the
Proposal;

b.

second, towards payment of all or any due and payable Portfolio Liabilities Amounts;

c.

third, to distribute to the Sukukholders to ensure payment of Periodic Distribution Amounts under the relevant Sukuk, in accordance with the
Management Agreement; and

d.

finally any remainder after payment of the amounts set out in (a), (b) and (c) above towards payment of a management fee to the Manager.

Portfolio Liabilities Amounts means any amount due to the Manager under the Management Agreement including the Top Up Payment provided by the Manager, administrative and regulatory fees incurred in managing and maintaining SPV1 and the Issuer and the amount of any costs and expenses properly incurred or suffered by the Manager in providing the services under the
Management Agreement.
The Obligor (as defined in paragraph 2 (xvi) of the
Principal Terms and Conditions of the Proposal) shall give an undertaking (“Purchase Undertaking”) to the
Issuer pursuant to which the Obligor shall purchase the
Portfolio Units from the Issuer at the Exercise Price (as defined below):
13

(a)

upon any Dissolution Event (as defined in paragraph 25 of the Principal Terms and
Conditions of the Proposal); or

(b)

maturity date
Sukuk; or

(c)

any early dissolution (“Early Dissolution”)
Sukuk.

of

the respective outstanding of the

The Exercise Price for the Portfolio Units shall be an amount equivalent to the Exercise Price Payable plus any outstanding Portfolio Liabilities Amounts. The
Obligor shall, without the prior written consent of the
Issuer, be entitled to deduct from the Exercise Price, an amount equal to the outstanding Portfolio Liabilities
Amounts payable by the Issuer to the Obligor (in its capacity as Manager) under the Management
Agreement. The Manager agrees that such deduction shall, to the extent it reduces the amount of such
Portfolio Liabilities Amount owed to the Manager, be a complete discharge of the Issuer's obligation to pay such amount of Portfolio Liabilities Amount to the Manager under the Management Agreement.
The Exercise Price Payable shall be calculated as follows: a) On Dissolution Event
The Exercise Price Payable shall equal to the
Dissolution Distribution Amount calculated based on the formula stated in Schedule 1.
b) On Scheduled Dissolution Date (i.e. maturity date of the respective outstanding Sukuk Series)
The Exercise Price Payable shall be equal to the
Scheduled Dissolution Amount (as defined below). The Scheduled Dissolution Amount shall mean the nominal amount of a series of Sukuk Series which is to be returned to the holders of such Sukuk on the
Scheduled Dissolution Date relating thereto plus accrued and unpaid Periodic Distribution Amount to such date.
For avoidance of doubt, there will not be any accrued and unpaid Periodic Distribution Amount for any Sukuk
Series with no Periodic Distribution.
c) On Early Dissolution
The Exercise Price Payable shall be equal to the
Early Dissolution Amount calculated based on the formula stated in Schedule 1.

14

Once the Purchase Undertaking is exercised the
Obligor shall purchase the Portfolio Units and when the Exercise Price Payable is paid, the following shall occur:
a. the Sukuk will expire and be cancelled; and
b. the Musharakah will be dissolved.
The Sukuk may be issued with or without periodic distribution (“Periodic Distribution”). In respect of
Sukuk with Periodic Distribution, income from the
Musharakah Venture of up to an amount equal to certain percentage (“Periodic Distribution Rate”) on the face amount of the Sukuk per annum, calculated on the basis of the actual number of days in the relevant period
(“Expected Periodic Distribution”) shall be distributed periodically (“Periodic Distribution Amount”). The
Periodic Distribution Amount shall be made semiannually in each year (each such date for distribution, a
“Periodic Distribution Date”) or, if applicable, upon the declaration of a Dissolution Event (“Dissolution
Declaration Date”). Should the income generated from the Musharakah Venture be insufficient for the Issuer to distribute the Expected Periodic Distribution on any
Periodic Distribution Date, the Manager of the Portfolio shall provide top up payment (without recourse to the
Portfolio Units) to ensure that the Sukukholders receive payment in full of the Expected Periodic Distribution on the Periodic Distribution Date.
Notwithstanding the Scheduled Dissolution Date of the
Sukuk, the Obligor may at its option and pursuant to the
Purchase Undertaking, purchase the Portfolio Units in relation to each Sukuk Series in whole but not in part from the Issuer subject to the following conditions:(a) the Obligor shall have given a prior written notice of not less than twenty one (21) days and not more than sixty (60) days to the Issuer and the Trustee; and (b) the purchase shall be on a Periodic Distribution
Date.
The Exercise Price Payable on Early Dissolution shall be equivalent to the amount calculated by the Facility Agent based on the formula stated in Schedule 1 (which calculation shall be final and binding on the
Sukukholders).
In the event of overdue payments of any amount pursuant to the Purchase Undertaking, the Obligor shall pay compensation (Ta’widh) to the Trustee on such overdue amounts at the rate and manner prescribed by the SC’s Shariah Advisory Council. The amount to be retained by each Musharakah Partner upon the payment of the Ta’widh by the Obligor shall be based on the relevant Shariah jurisdiction of each Musharakah
Partner.

15

The Obligor shall undertake to purchase the Portfolio
Units from the Issuer via the Purchase Undertaking.
Please refer to the diagram and explanatory notes in
Schedule 1 for an overview of the transaction structure.
5

Issue Size (RM)

:

Up to RM2,200,000,000.00 in nominal value. The nominal value of outstanding Sukuk issued under the
Islamic MTN Programme will not at any one time exceed
RM2,200,000,000.00.

6

Issue Price

:

The Sukuk shall be issued at par or at a discount and the issue price shall be calculated in accordance with the following rules issued by Malaysian Electronic
Clearing Corporation Sdn Bhd (“MyClear”): (1) the
Participation and Operation Rules for Payment
Securities Services (“MyClear Rules”) and (2) the
Operational Procedures for Securities Services
(“MyClear Procedures”), as amended or substituted from time to time (collectively, “MyClear Rules and
Procedures”).

7

Tenor of the Facility /Issue

:

Tenor of Facility: Thirty (30) years from the date of the first issue under the Islamic MTN Programme.
Tenor of Issue (of Sukuk): between one (1) year to thirty
(30) years provided that the Sukuk mature prior to the expiry of the Islamic MTN Programme.
Availability Period: The Sukuk may be issued at any time during the tenor of the Islamic MTN Programme, provided that the Sukuk mature prior to the expiry of the
Islamic MTN Programme.

8

Coupon/profit or equivalent rate (%) (please specify)

:

To be determined and agreed to prior to each issuance of Sukuk.

9

Coupon/profit Payment frequency and basis

:

Semi-annual.

10

Yield to Maturity (%)

:

To be determined at the time of issuance.

11

Security /Collateral (if any)

:

An assignment and charge over the FSRA.

12

Details on utilisation of proceeds :

The issue proceeds from the Islamic MTN Programme shall be utilised for the following purposes:

The profit will be calculated on actual/365 days basis.

By the Issuer
To purchase the Portfolio Units from SPV1.
By SPV1
To purchase Portfolio Units from the Initial Owner of the
Portfolio Units.
By the Initial Owner of the Portfolio Units
(a)
for payment of fees and expenses incurred in connection with the Islamic MTN Programme;
(b)

for general investment, refinancing of borrowings
16

and working capital requirements of UEM and its subsidiaries; and
(c)

initial funding of the FSRA.

Proceeds raised from the Islamic MTN Programme will be utilised for Shariah-compliant purposes.
13

Sinking Fund (if any)

14

:

Not applicable.

Rating
-

:

Rating of AA2.

15

Credit Rating Assigned
Name of Rating Agency

:

RAM Rating Services Berhad (“RAM”).

:

Each issue of the Sukuk shall be issued in accordance with (1) the MyClear Rules and (2) the MyClear
Procedures, or their replacement thereof applicable from time to time.

Form and Denomination

Each issue of the Sukuk shall be represented by a global certificate, which shall be in bearer form, to be deposited with BNM. Subject to the transaction documents, no physical delivery of the Sukuk will be permitted. The denomination of the Sukuk shall be
Ringgit Malaysia One thousand (RM1,000.00) or in multiples of Ringgit Malaysia One thousand
(RM1,000.00) at the time of issuance.
16

Mode of Issue

:

The Sukuk may be placed privately (on a bought deal or book build basis) via the Joint Lead Managers to selected investors at a yield to be agreed between the
Issuer and the investors. Such private placement shall be subject to terms and conditions to be agreed between the Issuer and the Joint Lead Managers.
Issuance of Sukuk under the Islamic MTN Programme shall be in accordance with the MyClear Rules and
Procedures subject to such exemptions (if any) granted from time to time.

17

Selling Restrictions

:

At issuance, the Sukuk may only be offered, sold, transferred or otherwise disposed of directly or indirectly to a person to whom an offer or invitation to subscribe the Sukuk and to whom the Sukuk are issued would fall within Schedule 6 or Section 229(1)(b), Schedule 7 or
Section 230(1)(b) of the Capital Markets and Services
Act 2007 (“CMSA”) and Schedule 9 or Section 257(3) of the CMSA.
Thereafter, the Sukuk may only be offered, sold, transferred or otherwise disposed directly or indirectly to a person to whom an offer or invitation to purchase the
Sukuk would fall within Schedule 6 or Section 229(1)(b) of the CMSA and Schedule 9 or Section 257(3) of the
CMSA.

17

18

Listing Status

:

The Sukuk will not be listed on Bursa Malaysia
Securities Berhad or any other stock exchange.

19

Minimum Level of
Subscription (RM or %)

:

The minimum level of subscription for each issue that is not issued on a bought deal basis (which shall be fully subscribed) under the Islamic MTN Programme shall be
5% of the size of a particular issue as determined by the face value of Sukuk so issued.

20

Other regulatory approvals required in relation to the issue, offer or invitation and whether or not obtained
(please specify)

:

Not applicable.

21

Identified Assets

:

Not applicable.

22

Purchase and Selling
Price/Rental (where applicable) :

Purchase and selling price are not relevant in a
Musharakah transaction.

23

Conditions Precedent

:

Conditions precedent to the establishment of the Islamic
MTN Programme shall include customary conditions precedent for transactions of this nature, including, but not limited to, the following (all have to be in form and substance acceptable to the Joint Lead Arrangers/Joint
Lead Managers):
A. Main Documentation
The transaction documents have been executed and, where applicable, stamped and presented for registration. B. Issuer and Obligor
1) Certified true copies of the Certificate of Incorporation, and the Memorandum and Articles of Association, of the Issuer and the Obligor.
2) Certified true copies of the latest Form 24 and Form
49 of the Issuer and the Obligor.
3) A certified true copy of board resolutions of the Issuer and the Obligor authorising, among others, the execution of the transaction documents.
4) A list of the Issuer’s and the Obligor’s authorised signatories and their respective specimen signatures.
5) A report of the relevant company search of the Issuer and the Obligor.
6) A report of the relevant winding up search or the relevant statutory declaration of the Issuer and the
Obligor.
C. General
1) The approval from the SC and, where applicable, all other regulatory authorities.
18

2) The Sukuk have received the requisite ratings.
3) Evidence that all transaction fees, costs and expenses payable prior to issue date will be paid in full. 4) Evidence that the FSRA has been opened as stipulated. 5) The Joint Lead Arrangers/Joint Lead Managers have received from their legal counsel a favourable legal opinion addressed to them and the Trustee advising with respect to, among others, the legality, validity and enforceability of the transaction documents and a confirmation addressed to the Joint Lead
Arrangers/Joint Lead Managers that all the conditions precedent have been fulfilled.
6) The written confirmation of Shariah compliance in relation to the Sukuk from the Joint Shariah
Advisers.
7) Such other conditions precedent as may be advised by the legal counsel of the Joint Lead
Arrangers/Joint Lead Managers and mutually agreed between the Issuer, Obligor and the Joint Lead
Arrangers/Joint Lead Managers.
(r)

Representations and
Warranties

:

Customary representations and warranties for programmes of this nature as agreed between the
Issuer and the Joint Lead Arrangers/Joint Lead
Managers, including but not limited to the following:
(i)

The Issuer and the Obligor are companies with limited liability duly incorporated and validly existing under the laws of Malaysia, have full power to carry on their respective business and to own their respective property and assets, and have full beneficial ownership of all their respective assets;

(ii)

the Memorandum and Articles of Association of the Issuer and the Obligor incorporate provisions which authorise, and all necessary corporate and other relevant actions have been taken to authorise the execution, delivery and performance of the transactions contemplated in the Transaction Documents in accordance with their terms, and all relevant consents and approvals of any administrative, governmental or other authority or body in Malaysia which are required to authorize the Issuer and the Obligor to execute and deliver and perform the transactions contemplated in the Transaction
Documents in accordance with their terms have been duly obtained and are in full force and effect; (iii)

neither the execution and delivery of any of the
Transaction Documents nor the performance of

19

any of the transactions contemplated by the
Transaction Documents did or does as at the date this representation and warranty is made or repeated (a) contravene or constitute a default under any provision contained in any agreement, instrument, law, ordinance, decree, judgment, order, rule, regulation, licence, permit or consent by which the Issuer and the Obligor or any of their respective assets are bound or which is applicable to the Issuer and the Obligor or any of their respective assets, (b) cause any limitation on the Issuer and the Obligor or cause the powers of their respective directors, whether imposed by or contained in their respective memorandum and articles of association or in any agreement, instrument, law, ordinance, decree, order, rule, regulation, judgment or otherwise, to be exceeded, or (c) cause the creation or imposition of any security interest or restriction of any nature on any of the Issuer’s and the Obligor’s assets;
(iv)

(v)

25

Events of Default

:

each of the Transaction Documents is or will when executed and/or issued, as the case may be, be in full force and effect and constitutes, or will when executed or issued, as the case may be, constitute, valid and legally binding obligations of the Issuer and the Obligor enforceable in accordance with its terms; and any other representations and warranties as may be advised by the legal counsel of the Joint
Lead Arrangers/Joint Lead Managers and mutually agreed between the Issuer, the Obligor and the Joint Lead Arrangers/Joint Lead
Managers.

Customary events of default (to be referred to as
“Dissolution Events”) shall apply and shall include, but are not limited to the following:
(i)

the Issuer or the Obligor fails to pay any amount due from it under any of the documents relating to the Islamic MTN Programme (“Transaction
Documents”) on the due date or, if so payable, on demand;

(ii)

any representation or warranty made or given by the Issuer or the Obligor under the Transaction
Documents or which is contained in any certificate, document or statement furnished at any time pursuant to the terms of the Sukuk and/or any of the Transaction Documents proves to have been incorrect or misleading in any material respect on or as of the date made or given or deemed made or given, and in the case of a failure which in the opinion of the
Trustee is capable of being remedied, the Issuer or the Obligor (where applicable) does not remedy the failure within a period of thirty (30) days after the Issuer or the Obligor (where
20

applicable) became aware or having been notified by the Trustee of the failure;
(iii)

the Issuer or the Obligor fails to observe or perform its obligations under any of the
Transaction Documents or the Sukuk or under any undertaking or arrangement entered into in connection therewith (other than in respect of a shortfall in the Minimum Required Balance), in each case which has a Material Adverse Effect
(as defined below) on the Issuer or the Obligor
(where applicable) other than an obligation of the type referred to in paragraphs (i) and (ii) above, and in the case of a failure which in the opinion of the Trustee is capable of being remedied, the Issuer or the Obligor (where applicable) does not remedy the failure within a period of thirty (30) days after the Issuer or the
Obligor (where applicable) became aware or having been notified by the Trustee of the failure; (iv)

there has been a breach by the Issuer or the
Obligor of any obligation under any of the
Issuer’s or the Obligor’s existing contractual obligations which will have a Material Adverse
Effect on the Issuer or the Obligor (where applicable) and, if in the opinion of the Trustee is capable of being remedied, the Issuer or the
Obligor (where applicable) does not remedy the breach within a period of thirty (30) days after the Issuer or the Obligor (where applicable) became aware or having been notified by the
Trustee of the breach;

(v)

any indebtedness for borrowed moneys of the
Issuer or the Obligor becomes due or payable or capable of being declared due or payable, prior to its stated maturity or any guarantee or similar obligations of the Issuer or the Obligor (where applicable) is not discharged at maturity or when called or the Issuer or the Obligor goes into default under, or commits a breach of, any agreement or instrument relating to any such indebtedness, guarantee or other obligations, and as a result of any of the foregoing, such indebtedness becomes due and payable prior to its stated maturity and such declaration of indebtedness being due or payable or such call on the guarantee or similar obligations is not discharged or disputed in good faith by the
Issuer or the Obligor in a court of competent jurisdiction within thirty (30) days from the date of such declaration or call or any security created to secure such indebtedness becomes enforceable and such enforcement is not discharged or disputed in good faith by the
Issuer or the Obligor in a court of competent jurisdiction within thirty (30) days from the date the Issuer or the Obligor is notified of such enforcement; 21

(vi)

an encumbrancer takes possession of, or a trustee, receiver, receiver and manager or similar officer is appointed in respect of any part of the business or assets of the Issuer or the whole or substantial part of the business or assets of the Obligor, or distress, legal process, sequestration or any form of execution is levied or enforced or sued out against the Issuer or the
Obligor, or any security interest which may for the time being affect any part of the business or assets of the Issuer or the whole or a substantial part of the Obligor’s assets becomes enforceable. For the purpose of this paragraph (vi), references to “substantial” shall mean such value equivalent to or more than 5% of the
Obligor’s net assets as reflected in its latest annual audited financial statements;

(vii)

the Issuer or the Obligor fails to satisfy any judgement passed against it by any court of competent jurisdiction and:
a)

no appeal against such judgement or an application for a stay of execution has been made to any appropriate appellate court within the time prescribed by law; or b)

in the event that an appeal as described in (a) above has been made, such appeal has been dismissed; or

c)

in the event that an application for a stay of execution as described in (a) above has been made, such application for a stay of execution has been dismissed and such dismissal has not been appealed against within the time prescribed by the relevant laws or rules;

(viii)

(a) any step is taken for the winding up, dissolution or liquidation of the Issuer or the
Obligor and such steps for the winding up, dissolution or liquidation is not challenged in good faith within fourteen (14) days, or (b) a resolution is passed for the winding up of the
Issuer or the Obligor, or (c) a petition for winding up is presented against the Issuer or the Obligor and the Issuer or the Obligor has not taken any action in good faith to set aside such petition within thirty (30) days from the date of service of such winding up petition, or (d) a winding up order has been made against the Issuer or the
Obligor and such order is not struck out or discharged within thirty (30) days;

(ix)

the Issuer or the Obligor convenes a meeting of its creditors or proposes or makes any

22

arrangement including any scheme of arrangement or composition or begins negotiations with its creditors, or takes any proceedings or other steps, with a view to a rescheduling or deferral of all or any part of its indebtedness or a moratorium is agreed or declared by a court of competent jurisdiction in respect of or affecting all or any part of its indebtedness or any assignment for the benefit of its creditors (other than for the purposes of and followed by a reconstruction previously approved in writing by the Trustee, unless during or following such reconstruction the Issuer or the
Obligor becomes or is declared to be insolvent) or where a scheme of arrangement under section 176 of the Companies Act 1965 has been instituted against the Issuer or the Obligor;
(x)

where there is a revocation, withholding, invalidation or modification of any license, authorisation, approval or consent which in the opinion of the Trustee will have a Material
Adverse Effect on the Issuer or the Obligor;

(xi)

the Issuer or the Obligor is deemed unable to pay any of its debts or becomes unable to pay any of its debts as they fall due or suspends or threatens to suspend making payments with respect to all or any class of its debts and the
Issuer or the Obligor has not taken any action in good faith to set aside such claims of debt payment within thirty (30) days from the date of service of such claims for debt payment;

(xii)

any creditor of the Issuer or the Obligor exercises a contractual right to take over the financial management of the Issuer or the
Obligor and such event in the opinion of the
Trustee will have a Material Adverse Effect on the Issuer or the Obligor;

(xiii)

the Issuer or the Obligor changes or threatens to change the nature or scope of a substantial part its business, or suspends or threatens to suspend or cease or threatens to ceases the operation of a substantial part of its business which it now conducts directly or indirectly and such change or suspension or cessation in the opinion of the Trustee will have a Material
Adverse Effect on the Issuer or the Obligor;

(xiv)

at any time any of the material provisions of the
Transaction Documents is or becomes illegal, void, voidable or unenforceable;

(xv)

the Issuer or the Obligor repudiates any of the
Transaction Documents or the Issuer or the
Obligor does or causes to be done any act or thing evidencing an intention to repudiate any of the Transaction Documents;

23

(xvi)

any of the assets, undertakings, rights or revenue of the Issuer or the Obligor are seized, expropriated or compulsorily acquired by or under the authority of any governmental body which in the opinion of the Trustee may have a
Material Adverse Effect on the Issuer or the
Obligor;

(xvii)

any event or events has or have occurred or a situation exists which gives reasonable grounds for the Trustee to believe that such event will have a Material Adverse Effect on the Issuer or the Obligor, and in the case of the occurrence of such event or situation which in the opinion of the Trustee is capable of being remedied, the
Issuer or the Obligor does not remedy it within a period of thirty (30) days after the Issuer or the
Obligor became aware or having been notified by the Trustee of the event or situation; or

(xviii)

such other events as may be advised by the legal counsel of the Joint Lead Arrangers/Joint
Lead Managers and mutually agreed between the Issuer, the Obligor and the Joint Lead
Arrangers/Joint Lead Managers.
Upon the occurrence of an Event of Default, the
Trustee may or shall (if directed to do so by a special resolution of the Sukukholders) declare that the Sukuk are immediately due and payable in accordance with the terms of the relevant
Transaction Documents. Thereafter, the Trustee may take proceedings against the Issuer or the
Obligor as it may think fit to enforce immediate payment of the Sukuk and/or the Purchase
Undertaking in accordance with the terms of the relevant Transaction Documents.

For the purposes of this submission, Material Adverse
Effect means any event or circumstances that may have a material adverse effect on (a) the business or condition (financial or otherwise) or results of the operations of the Issuer and/or Obligor; (b) the ability of the Issuer and/or the Obligor to perform any of their respective obligations under any of the Transaction
Documents to which it is a party.
26

Principal terms and conditions for warrants (where applicable) 27

Purchase Undertaking

Not applicable.

:

The Purchase Undertaking obligation is an obligation by the Obligor to purchase the Portfolio Units from the
Issuer at the Exercise Price upon occurrence of the situations under Item 4 of the PTC.

Other principal terms and conditions for the issue

27.1

:

In the event of overdue payments of any amount due pursuant to the Purchase Undertaking, the Obligor shall
24

pay compensation (Ta’widh) on such overdue amounts at the rate and manner prescribed by the Shariah
Advisory Council of the SC. The amount to be retained by each Musharakah Partner upon the payment of the
Ta’widh by the Obligor shall be based on the relevant
Shariah jurisdiction of each Musharakah partner.
27.2

Financial Covenant

:

Debt to Equity Ratio ("D:E Ratio")
The Obligor shall maintain an annual D:E Ratio not exceeding 1.0 time throughout the tenor of the Islamic
MTN Programme.
The D:E Ratio is the ratio of indebtedness of the Obligor represented by:
i)

the obligations of the Obligor under the
Purchase Undertaking (which is deemed to be an amount equivalent to the aggregate nominal value of all outstanding Sukuk); and

ii)

(1) all other indebtedness of the Obligor for borrowed monies (be it actual or contingent) for principal only, hire purchase obligations and/or finance lease obligations, (2) fair value of financial derivatives in connection with borrowed monies recognised by the Obligor in financial statements and (3) any other contingent liabilities of the Obligor calculated in accordance with the applicable accounting standards; but excluding (a) any inter company loans which are subordinated to the Sukuk, and
(b) any performance bonds/guarantees issued by the Obligor in respect of projects undertaken by the Obligor and/or its subsidiaries, and (c) the obligations of the Obligor in relation to the Sukuk
Al-Ijarah of up to RM200.0 million issued by
Diversified Venue Sdn Bhd

to the shareholders’ funds of the Obligor including, if any, preference equity, subordinated shareholders’ advances/loans and retained earnings/losses. For the avoidance of doubt, any litigation and claims to which the Obligor is a party is excluded from the definition above. The D:E Ratio shall be calculated on a yearly and half yearly basis and as and when such calculations are required to be made under the terms of the Transaction
Documents during the tenor of the Islamic MTN
Programme. In the case of D:E Ratio calculated on a yearly basis, such calculations shall be based on the latest audited financial statements of the Obligor and in the case of D:E Ratio calculated at any other times, the calculations shall be based on the latest management accounts of the Obligor. The calculations of the D:E
Ratio shall be duly confirmed by:
a)

in the case of D:E Ratio calculated based on audited financial statements, the Obligor’s external auditors;
25

b)

in the case of D:E Ratio calculated based on management accounts, by the authorised officers of the Obligor.

The Obligor shall arrange for the external auditor’s or the
Obligor’s authorized officer’s confirmation (as the case may be) to be forwarded to the Facility Agent for its distribution to the Trustee and the Rating Agency. For the avoidance of doubt, any double counting shall be disregarded. 27.3

Information Covenants

:

To include but not limited to the following:
(i)

the Issuer and the Obligor shall provide to the
Trustee on an annual basis, a certificate confirming that they have complied with all their respective obligations under the Transaction
Documents and the terms and conditions of the
Sukuk and that there does not exist or had not existed, from the date the Sukuk were issued or the date of the last certificate, as the case may be, any Event of Default, and if such is not the case, to specify the same;

(ii)

the Issuer and the Obligor shall deliver to the
Trustee the following:
(i)

(ii)

as soon as they become available (and in any event within ninety (90) days after the end of the first half of its financial year) copies of their respective unaudited half yearly consolidated financial statements for that period which shall contain the income statements and balance sheets of the
Issuer and the Obligor which are duly certified by any authorised officer(s);

(iii)

promptly, such additional financial or other information relating to the Issuer’s and the Obligor’s business and its operations as the Trustee may from time to time reasonably request; and

(iv)

26

as soon as they become available (and in any event within one hundred and eighty (180) days after the end of each of their respective financial years) copies of their respective consolidated financial statements for that year which shall contain the respective income statements and balance sheets of the
Issuer and the Obligor and which are audited by a firm of independent certified public accountants;

promptly, all notices or other documents received by the Issuer and the Obligor from any of their respective shareholders or creditors which contents

may materially and adversely affect the interests of the Sukukholders, and a copy of all documents dispatched by the
Issuer and the Obligor to their respective shareholders (or any class of them) in their capacity as shareholders or their respective creditors generally at the same time as these documents are dispatched to these shareholders or creditors, (iii)

(iv)

:

the Issuer shall promptly give notice to the
Trustee of the occurrence of any Event of
Default or any event which, upon the giving of notice and/or lapse of time and/or the issue of a certificate and/or the fulfilment of the relevant requirement as contemplated under the relevant transaction document would constitute an Event of Default (“Potential Event of Default”) forthwith upon becoming aware thereof, and it shall take all reasonable steps and/or such other steps as may reasonably be requested by the
Trustee to remedy and/or mitigate the effect of the Event of Default or the Potential Event of
Default; and

(vi)

Positive Covenants

the Issuer and the Obligor shall promptly notify the Trustee of any change in their respective condition (financial or otherwise) and of any litigation or other proceedings of any nature whatsoever being threatened or initiated against the Issuer and the Obligor before any court or tribunal or administrative agency, where such change in condition would have, or such litigation or other proceedings is likely to be adversely determined and would have, a
Material Adverse Effect on the Issuer and/or the
Obligor;

(v)

27.4

the Issuer and the Obligor shall promptly notify the Trustee of any change in their respective board of directors and/or substantial shareholders;

any other covenants as may be advised by the legal counsel of the Joint Lead Arrangers/Joint
Lead Managers and mutually agreed between the Issuer, the Obligor and the Joint Lead
Arrangers/Joint Lead Managers.

To include but not limited to the following:
(i)

The Issuer and the Obligor shall maintain in full force and effect all relevant authorisations, consents, rights, licences, approvals and permits
(governmental and otherwise) and will promptly obtain any further authorisations, consents, rights, licences, approvals and permits (governmental and otherwise) which is or may become necessary:

27

(a)

to enable them to own their respective assets, to carry on their respective business, where the absence of such authorizations, consents, rights, licences, approvals and permits will have a
Material Adverse Effect; or

(b)

for the Issuer and the Obligor to enter into or perform their respective obligations under the Transaction
Documents or to ensure the validity, enforceability, admissibility in evidence of the obligations of the Issuer and the
Obligor or the priority or rights of the financiers under the Transaction
Documents, provided that this shall not require the Issuer or the Obligor to obtain any authorizations, consents, rights, licences, approvals and permits
(governmental or otherwise) that are required to be obtained by the financiers,

and the Issuer and the Obligor shall comply with the same;
(ii)

The Issuer and the Obligor shall at all times on demand execute all such further documents and do all such further acts reasonably necessary at any time or times to give further effect to the terms and conditions of the Transaction
Documents;

(iii)

The Issuer and the Obligor shall exercise reasonable diligence in carrying out their respective business and affairs in a proper and efficient manner and in accordance with sound financial and commercial standards and practices; (iv)

The Issuer and the Obligor shall promptly perform and carry out all their respective obligations under all the Transaction Documents (including but not limited to redeeming the Sukuk on the relevant
Maturity Date(s) or any other date on which the
Sukuk are due and payable) and ensure that they shall immediately notify the Trustee in the event that they are unable to fulfil or comply with any of the provisions of the Transaction Documents;

(v)

The Issuer and the Obligor shall prepare their respective financial statements on a basis consistently applied in accordance with approved accounting standards in Malaysia and those financial statements shall give a true and fair view of the results of the operations of the Issuer and/or the Obligor for the period to which the financial statements are made up and shall disclose or provide against all material liabilities
(actual or contingent) of the Issuer and the
Obligor;

28

(vi)

(vii)

Negative Covenants

:

unless approved by or consented to by an ordinary resolution of the Sukukholders, the
Obligor shall remain a subsidiary of Khazanah
Nasional Berhad or such other like investment holding company controlled by the Government of
Malaysia throughout the tenor of the Islamic MTN
Programme; and

(viii)

27.5

the Issuer and the Obligor shall promptly comply with all applicable laws including the provisions of the CMSA and/or the Sukuk, circulars, conditions or guidelines issued by SC from time to time, provided that no breach of this clause will arise from the failure by the Issuer and/or the Obligor to comply with any such law or regulation if the failure does not have a Material Adverse Effect;

such other undertakings as may be advised by the legal counsel of the Joint Lead
Arrangers/Joint Lead Managers and mutually agreed between the Issuer, the Obligor and the
Joint Lead Arrangers/Joint Lead Managers.

To include but not limited to the following:
(i)

The Issuer and the Obligor shall not create or permit to exist any encumbrance, mortgages, charges (whether fixed or floating), pledges, liens, hypothecations, assignments by way of security, trust arrangements for the purpose of providing security or other security interest of any kind including, without limitation, title transfers and/or retention arrangements having a similar effect or any agreement to create any of the foregoing (“Security”), over any of their respective undertakings, revenues, assets, shares or properties (present or future), save for: (a)

any liens arising in the ordinary course of business or trading, by operation of law and not by way of contract;

(b)

in the case of the Issuer, the security interest over the FSRA as security for the Sukuk;

(c)

any Security granted by the Obligor over any asset securing financial indebtedness incurred by the Obligor to finance the acquisition of such asset provided that:
(A)

(B)

29

the principal amount of such financial indebtedness does not result in a breach of the D:E ratio; and the financiers with respect to such financial indebtedness of the Obligor have no recourse to

any member of the Obligor’s
Group in respect of that financial indebtedness; and
(d)

in the case of the Obligor, any security interest which secures up to RM1,000.0 million in aggregate value of the
Obligor’s borrowings (including trade lines and bank guarantee facilities) at any one time;

(ii)

the Issuer shall not create any borrowings save for the Islamic Sukuk issued under the Islamic
MTN Programme;

(iii)

the Issuer shall not dispose of any of its assets save as contemplated by the terms of the
Transaction Documents and the Obligor shall not dispose of any assets in excess of 5% of its
Net Assets (as reflected in its latest annual audited financial statement) in any financial year; (iv)

The Issuer and the Obligor shall not add, delete, amend or substitute their respective Memorandum or Articles of Association in a manner which may be materially prejudicial to the interests of the Sukukholders;

(v)

The Issuer and the Obligor shall not reduce or in any way whatsoever alter except increase, their respective authorised or paid-up share capital whether by varying the amount, structure or value thereof or the rights attached thereto or by converting any of their respective share capital into stock, or by consolidating, dividing or subdividing all or any of their respective shares;

(vi)

The Obligor shall not declare or pay any dividends or make any distribution whether income or capital in nature including principal and interest of any shareholders' loans and advances to its shareholders if :
(a)

(b)

(vii)

an Event of Default has occurred, is continuing and has not been waived, or if following such payment or distribution an Event of Default would occur; or the requirements with respect to the
FSRA and the D:E Ratio (as defined below) have not been met or will not be met after such payment or distribution;

The Issuer and the Obligor shall not enter into any agreement with their respective shareholders, subsidiaries or associated companies unless such agreement is entered into: (a)

30

in the ordinary course of business or

trading;
(b)

on an arms-length basis; and

(c)

will not have a Material Adverse Effect on the Issuer and/or the Obligor.

For the avoidance of doubt, any agreement between the Issuer or the Obligor and their respective subsidiaries where the terms and conditions do not have a Material Adverse Effect on the Issuer or the Obligor shall be deemed to be arms-length.
(viii)

(ix)

Finance Service Reserve
Account (“FSRA”)

:

the Issuer shall not lend any money to any party, other than to its directors, officers or employees as part of their terms of employment:

(x)

27.6

the Issuer and the Obligor shall not use the proceeds of the Sukuk except for the purposes set out in this submission;

such other undertakings as may be advised by the legal counsel of the Joint Lead
Arrangers/Joint Lead Managers and mutually agreed between the Issuer, the Obligor and the
Joint Lead Arrangers/Joint Lead Managers.

The Issuer shall open and maintain a FSRA operated under Shariah principles with a financial institution, which is acceptable to the Joint Lead Arrangers/Joint
Lead Managers and the FSRA shall be solely operated by the Trustee.
In respect of the Sukuk, the Issuer shall ensure that funds are progressively deposited into the FSRA until the balance held in the FSRA is at least equivalent to the aggregate of the outstanding Periodic Distribution
Amount and the nominal amount payable in respect of the Sukuk which will become due and payable in the next six (6) months (“Minimum Required Balance”), and in any event the FSRA shall have the Minimum
Required Balance three (3) months prior to the relevant maturity date(s). In the event that the balance held in the
FSRA exceeds the Minimum Required Balance, the excess shall be released to the Issuer.
The Issuer may only withdraw sums from the FSRA for the payment of the Periodic Distribution Amount and any other amount payable on maturity and other outstanding payments due under the Sukuk if at the time the relevant payments are due, the Issuer has insufficient funds to make full payments from its internally generated funds.
However, any shortfall arising from the withdrawals from the FSRA to pay the profits and redemption of the Sukuk and other payments due under the Sukuk must be topped up by the Issuer until the balance is equivalent to the Minimum Required Balance within thirty (30) days from the date of such withdrawal.
For the avoidance of doubt, non-compliance of the
31

Minimum Required Balance, in the case of a shortfall, shall not constitute a Dissolution Event.
Pending disbursements from the FSRA, all monies standing to the credit of the FSRA shall be managed by the Trustee. At the instruction of the Issuer, the Trustee may utilise such monies to make Permitted Investments, provided that such monies utilised for Permitted
Investments shall be remitted to the FSRA in a timely manner to meet any payment obligations of the Issuer when due and payable as permitted under the preceding paragraph. 27.7

Right to Make Permitted
Investments

:

Funds held in the FSRA shall be permitted to be invested in Permitted Investments by the Trustee upon instruction from the Issuer, provided that:
(i)

(ii)

Permitted Investments

:

such Permitted Investments are to be held and not traded; and

(iii)
27.8

such funds utilised for Permitted Investments
(as defined below) shall, where necessary, be remitted back to the FSRA in a timely manner to meet any payment obligations of the Issuer when due and payable;

such
Permitted
Investments denominated in Ringgit.

shall

be

Permitted Investments shall comprise Shariah-compliant investment products approved by the SC’s Shariah
Advisory Council, BNM’s National Shariah Advisory
Council and/or other recognised Shariah authorities. For the purposes of the Islamic MTN Programme, Permitted
Investments are as follows:
(a)

Mudharabah, wadiah and other deposits under
Shariah principles with licensed financial institutions in Malaysia; or

(b)

Islamic acceptance bills, bankers’ acceptance or certificates of deposits issued under Shariah principles by licensed financial institutions with a short-term rating of P1 (or its equivalent) and a minimum long-term rating of AA3 by RAM or AAby Malaysian Rating Corporation Berhad
(“MARC”); or

(c)

Treasury bills, money market instruments, and other instruments issued under Shariah principles by BNM or the Government of
Malaysia (“GOM”); or

(d)

Islamic securities issued by quasi Government or Government related entities under Shariah principles with a short-term rating of P1 (or its equivalent) and a minimum long-term rating of
AA3 by RAM or AA- by MARC or debt securities guaranteed by the GOM; or

(e)

Islamic
32

securities

issued

under

Shariah

principles by corporations with a short-term rating of P1 (or its equivalent) and a minimum long-term rating of AA3 by RAM or AA- by
MARC, or by financial institutions or guaranteed by licensed financial institutions with a shortterm rating of P1 (or its equivalent) or a minimum long-term rating of AA3 by RAM or AAby MARC.
27.9

Status

:

The Sukuk shall constitute trust obligations of the Issuer in relation to, and represent undivided beneficial interest in the Musharakah Venture and will rank pari passu, without any preference or priority with among themselves. The obligations of the Obligor under the Purchase
Undertaking will constitute direct, unsubordinated and unsecured obligations of the Obligor and will rank at all times pari passu, without discrimination, preference or priority with all other present and future unsubordinated and unsecured obligations of the Obligor other than obligations which are preferred solely by law or the
Transaction Documents.

27.10

Tender and Issue

:

The Sukuk may be issued in multiples of RM1,000.00, but subject to the MyClear Rules and Procedures and other standard conditions including, without limitation, the following:
(a)

a minimum issue size of RM5 million for each issue; and

(b)

the issue notice shall be given to the Facility
Agent at least seven (7) business days (for the first issue) or five (5) business days (for subsequent issues) prior to and excluding the date of proposed issue; and

(c)

the rating for the Islamic MTN Programme is at least A1 (or its equivalent);

(d)

in respect of the first issue, the rating of the
Sukuk is at least AA2 (or its equivalent) and in respect of each subsequent issue, such issue shall not result in the downgrade of any previous issues of Sukuk under the Islamic MTN
Programme.

27.11

Redemption

:

Unless previously redeemed or purchased and cancelled, the Sukuk will be redeemed by the Issuer at
100% of their nominal value on their respective maturity dates. 27.12

Repurchase and Cancellation

:

The Issuer or its subsidiaries or its agents may at any time purchase the Sukuk at any price in the open market or by private treaty, but these repurchased Sukuk shall be cancelled and cannot be reissued.

27.13

Taxation

:

All payments by the Issuer and the Obligor shall be made without withholding or deductions for or on account of any present or future tax, duty or charge of

33

whatsoever nature imposed or levied by or on behalf of
Malaysia or any other applicable jurisdictions, or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law. The
Issuer and the Obligor shall not be required to make any additional payments in respect of any withholding or deductions are required by law to be withheld or deducted. 27.14

Governing Laws

:

Laws of Malaysia.

27.15

Jurisdiction

:

The Issuer and the Obligor shall unconditionally and irrevocably submit to the non-exclusive jurisdiction of the courts of Malaysia.

34

Schedule 1

1)

Dissolution Distribution Amount (“DDA”) shall be calculated based on the following formula, rounded to two (“2”) decimal points:
1. in the case of Sukuk with Periodic Distribution:
An amount equivalent to the face value of the Sukuk plus any accrued or outstanding
Periodic Distribution;
2. in the case of Sukuk without Periodic Distribution:
DDA =

Face value of Sukuk

100

X

100

1 + (Original Yield / 2)

(N – 1)
183

Original Yield

the yield to maturity of respective Sukuk Series on issue date

N

2)

=
=

number of days between the Dissolution Declaration Date and the
Scheduled Dissolution Date, inclusive of both the said dates

Early Dissolution Amount (“EDA”) :
EDA = (PB x ERP)
100
Where:
EDA =
PB

=

ERP =

the amount payable on Early Dissolution Date
Aggregate Nominal Value/Face Value of the Sukuk Series to be redeemed
Early Redemption Price per RM100.00 (2 decimal places) subject to a minimum of
RM100.00 based on the formula set out below. For purposes of calculating the ERP, the following variables are used:
(i)

PDR : original Periodic Distribution Rate of the Sukuk Series expressed as a percentage; (ii)

Expected Yield: lower of (1) the original Periodic Distribution Rate of the
Sukuk Series; or (2) Reference MGS + a percentage to be determined later and agreed between the Issuer and the JLMs*.

(iii)

Reference MGS shall be the MGS rates for the tenure which is equal to the remaining tenure of the Sukuk Series and shall be determined from:(a)

the latest Consolidated Government Securities Rates (Conventional) published by BNM daily, two (2) Business Days prior to the call notice date; or if such is unavailable;

35

(b)

the arithmetic average of the mid-rates quoted by any five (5) principal dealers, two (2) Business Days prior to call notice date and/or in the case where the rate for a particular tenure is not available directly, then such rate shall be extrapolated on a linear basis using the available arithmetic average mid-rates;

PROVIDED THAT if the tenure of the Sukuk Series is not an integer, the
Reference MGS shall be arithmetic mean of the rates of the two nearest tenures derived from (a) or (b) above.

For Sukuk with Periodic Distribution:

ERP =

N

100
1 + (Expected Yield / 2)

(N – 1)

+

∑

k=1

100 x (PDR / 2)
1 + (Expected Yield / 2)

(k – 1)

N = number of Periodic Distribution Dates between Early Dissolution date (which shall fall on a
Periodic Distribution Date) and Maturity Date, inclusive of both the Early Dissolution date and
Maturity Date.
For Sukuk without Periodic Distribution:

ERP =

100
1 + (Expected Yield / 2)

(N – 1)

N = number of theoretical periodic distribution dates between Early Dissolution date (which shall fall on a Periodic Distribution Date) and Maturity Date, inclusive of both the Early
Dissolution date and Maturity Date, had the Sukuk been issued with Periodic Distributions.

*The percentage (spread) over the Reference MGS described in item (2)(ii) above shall be based on the table below:
The prevailing rating of the Sukuk at the time of the Obligor’s notice to the Issuer and the Trustee for Early Dissolution

Percentage
(Spread)

AAA

0.45%

AA1

0.55%

AA2

0.65%

36

On-going cashflows

At inception

1
UEM/PORTFOLI
O
TRUSTEE

Portfolio units Portfolio
SPV 1
Dividends / income

Portfolio units 4

2

UEM/Obligor

Manager of Portfolio

6

Investors

Issuer
Periodic
distribution

Sukukholders

Transaction

UEM pays Exercise
Price following
Issuer’s invocation of
Purchase Undertaking
Units

7

Issuer

3
Issuance
of Sukuk

UEM/Obligor
Dividends from
Portfolio Units and/or Top Up
Payment

5

Issuer

Funds

Redemption of Sukuk

Cash from Exercise Price used to pay redemption proceeds 8
Sukukholders

1. UEM shall make a declaration of trust on the Portfolio to be held by the Portfolio Trustee for the benefit of the Portfolio Units holders. The Portfolio is a pool of Shariah compliant shares or any other Shariah compliant asset identified by UEM. UEM, as the initial owner of the Portfolio
Units will sell the Portfolio Units to SPV 1 (Pantai Panorama Sdn Bhd).
2. SPV1 will subsequently sell the Portfolio Units to the Issuer.
3. The Sukukholders will enter into a Musharakah Venture which constitutes investments into the
Portfolio Units. The Sukukholders, as Musharakah Partners, shall contribute their portion of the capital for the Mushrakah Venture (“Musharakah Capital”) through the subscription of the
Sukuk. The Issuer will apply the Musharakah Capital to acquire the specific Portfolio Units.
The Sukuk represents the Sukukholders’ undivided proportionate interests/investments
(through the Issuer) in the Portfolio Units. The Sukukholders will be entitled to the income from the Musharakah Venture.
4. The parties agree that UEM, as the Manager of the Portfolio shall manage the Portfolio. UEM shall have the right to exchange the assets in the Portfolio with qualified assets or purchase any of the assets forming the Portfolio. Any income above the Periodic Distribution Amount shall be paid to UEM as management fee for its role as Manager of the Portfolio.
5. The Manager will distribute the dividend or distribution received pursuant to the Portfolio to the
Issuer as Periodic Distribution Amount to be paid to the Sukukholders. The Manager shall provide top-up payment should there be any shortfall between the return of the Portfolio and the Expected Periodic Distribution.
6. The Issuer would then distribute the Periodic Distribution Amount among the Sukukholders in proportion to the nominal amount of the respective Sukuk held by the Sukuholders.
7. UEM, as Obligor, will grant the Issuer a Purchase Undertaking which is exercisable (i) at maturity of the respective outstanding Sukuk, (ii) on a Dissolution Event, or (iii) on any Early
Dissolution of the Sukuk. When the Issuer invokes the Purchase Undertaking, UEM as
Obligor, shall purchase the Portfolio Units from the Issuer at the Exercise Price. The Exercise
Price for the Portfolio Units shall be an amount equal to the Exercise Price Payable plus any outstanding Portfolio Liabilities Amount. The Exercise Price Payable shall be calculated based on a pre-determined formula.
8. Once the Purchase Undertaking is exercised, the Obligor shall purchase the Portfolio Units and when the Exercise Price Payable is paid, the following shall occur:
a. the Sukuk will expire and be cancelled; and
b. the Musyarakah will be dissolved.

37

SECTION 3.0

3.1

BACKGROUND INFORMATION ON THE OBLIGOR

Corporate History
UEM was incorporated in Malaysia under the Companies Ordinances 1940-1946 on 10 March
1966 as United Engineers (Malaysia) Limited and on 15 April 1966 changed its name to United
Engineers (Malaysia) Sdn Bhd. On 3 June 1975, it was converted into a public company and was listed on the Kuala Lumpur Stock Exchange (“KLSE”) (now known as Bursa Malaysia) on
10 July 1975. It was subsequently de-listed from the Main Board of KLSE on 15 October 2001.
UEM changed its name to UEM Group Berhad on 23 January 2007.
UEM has been a wholly-owned subsidiary of Khazanah, an investment arm of the GOM, since
2001. UEM is an investment holding company, and since its inception over 40 years ago, the
UEM Group has evolved into a diversified conglomerate. As at 31 December 2011, UEM
Group's shareholders funds stood at RM7.6 billion with total assets at RM26.3 billion.
UEM Group is one of Malaysia’s largest conglomerates. It is principally engaged in expressways, engineering and construction, township and property development and asset and facility management.
As at 31 March 2012, UEM Group has more than 40 operating companies, including 4 public listed companies in Malaysia and 2 public listed companies overseas. With over 15,600 employees, UEM has a large pool of specialists and knowledge workers in many diverse areas.

3.2

Share Capital
The authorised, issued and paid up share capital of UEM as at 31 March 2012 are as follows:

Authorised
Issued and Paid-Up
3.3

No. of Ordinary
Shares
1,000,000,000
817,088,621

Par Value
(RM)
0.50
0.50

Amount
(RM)
500,000,000.00
408,544,310.50

Shareholders
UEM is wholly-owned by Khazanah.

3.4

Subsidiary Companies and Associated Companies
Please refer to the Audited Financial Statements of UEM for the year ended 31 December 2011
(attached as Appendix 1) for a list of subsidiaries and associated companies of UEM as at 31
December 2011.

3.5

Profiles of Directors
The directors of UEM and their respective profile as at 31 March 2012 are as follows:
TAN SRI DR AHMAD TAJUDDIN ALI
Non-Independent Non-Executive Chairman
Tan Sri Dr Ahmad Tajuddin Ali was appointed as Chairman of UEM on 1 April 2007.
Currently, he is also the Chairman of UEM Land Holdings, PEB and Linde Malaysia Holdings
Berhad (formerly known as Malaysian Oxygen Berhad). He also sits on the Boards of Bangi
Golf Berhad and a few other private limited companies.
Tan Sri Dr Tajuddin was previously the Director-General of Standards and Industrial Research
Institute of Malaysia (SIRIM), the Chairman and Chief Executive of Tenaga Nasional Berhad,
Chairman of UEM World Berhad, Zelan Berhad, Tricubes Berhad, Opus, Opus International
Limited and Sime Engineering Services Berhad and a director of Sime Darby Berhad.
38

An engineer by training, Tan Sri Dr Tajuddin graduated with First Class Honours in Mechanical
Engineering from King’s College, University of London in 1973 and obtained his doctorate in
Nuclear Engineering from Queen Mary College, University of London in 1977. He was conferred the Honorary Doctor of Science Degree by Universiti Putra Malaysia (UPM) in 2000, the
Honorary Doctor of Engineering Degree by Universiti Tenaga Nasional (UNITEN) in 2008. In
2009, he was conferred the Honorary Doctor of Science Degree by Universiti Malaysia
Terengganu (UMT). He is a graduate of the Harvard Business School’s Advanced Management
Programme.
Tan Sri Dr Tajuddin is a Registered Professional Engineer with the Board of Engineers
Malaysia, a Fellow of the Institution of Engineers Malaysia and a Fellow of the Asean Federation of Engineering Organisations (AFEO).
Tan Sri Dr Tajuddin is currently the Chairman of the Energy Commission Malaysia and the
President of the Academy of Sciences, Malaysia. He chairs the Malaysian Standards and
Accreditation Council and currently, a member of the Governing Council of the International
Institute of Applied Systems Analysis (IIASA) Vienna, Austria. Currently, he is also the JointChairman (Industry) of the Malaysian Industry-Government Group for High Technology (MIGHT) and a member of APEC Business Advisory Council (ABAC).
DATO’ MOHD IZZADDIN IDRIS
Group Managing Director/Chief Executive Officer
Dato' Izzaddin Idris was appointed Group Managing Director/Chief Executive Officer of UEM on
7 July 2009. He is also the Non-Executive Deputy Chairman of PEB.
Dato’ Izzaddin holds a Bachelor of Commerce Degree (First Class Honours in Finance) from
University of New South Wales, Australia and is a Fellow of CPA Australia and a member of
Malaysian Institute of Accountants (MIA). He has over 20 years of experience in the fields of investment banking, financial and general management and was previously the Chief Financial
Officer/Senior Vice President (Group Finance) of Tenaga Nasional Berhad, a position he held from September 2004 to June 2009.
He was formerly a Senior Vice President (Corporate Finance) of Southern Bank Berhad and the
Chief Financial Officer of Ranhill Berhad. He also held the position of Chief Operating Officer of
Malaysian Resources Corporation Berhad in the late 1990s. After graduating in June 1985,
Dato' Izzaddin served Malaysian International Merchant Bankers Berhad for almost 11 years which included a 3-year secondment in the late 1980s to Barclays de Zoete Wedd Limited, a
London-based investment bank and a subsidiary of Barclays Bank PLC then.
Dato’ Izzaddin currently sits on the Boards of UEM Land Holdings, PLUS Malaysia, PLUS
Berhad, PLUS, CIMA, TIME, Opus, UEM Builders and Faber and has served on the Boards of
Proton Holdings Berhad and Kumpulan Wang Persaraan (Diperbadankan).
DATO’ NOORAZMAN ABD AZIZ
Non-Independent Non-Executive Director
Dato’ Noorazman Abd Aziz was appointed to the Board of UEM on 15 November 2010. He also sits on the Board of PEB.
He is a practising member of the Association of Chartered Islamic Finance Professionals
(ACIFP). He holds a Bachelor of Science (Finance) Degree from Louisiana State University,
USA.
Dato’ Noorazman has vast experience in international finance, banking and financial markets especially in treasury, direct investment, corporate banking and finance such as offshore financing and capital markets.
Dato’ Noorazman joined Khazanah Nasional Berhad as Executive Director, Investment in May
2010 after having spent 2 ½ years as Managing Director of Fajr Capital Ltd, a Khazanah
39

investee company. Prior to this, he had exposures in international banking and finance through stints at Citigroup, Bank Islam Malaysia Berhad, Kuala Lumpur Stock Exchange and Labuan
Offshore Financial Services Authority (LOFSA).
ABDUL KADIR MD KASSIM
Independent Non-Executive Director
Abdul Kadir Md Kassim was appointed to the Board of UEM on 27 September 2001.
He is the Managing Partner of Messrs Kadir, Andri & Partners. He is currently the Chairman of
Time dotCom Berhad, UEM Builders and CIMA. He sits on the Board of UEM Land Holdings.
Kadir serves as Chairman of Exchange Committee of Labuan International Financial Exchange
Inc, as Chairman of Federation of Investment Managers Malaysia and is a member of the
Investment Panel of Tabung Haji and of the Corporate Debt Restructuring Committee. He is also a member of the Board of Directors of Danajamin Nasional Berhad.
Kadir served in the Malaysian Administrative and Diplomatic Service and in the Judicial and
Legal Service between 1966 and 1973, holding various positions. Abdul Kadir holds a Bachelor of Laws (Honours) degree from the University of Singapore.
TAN SRI DATO’ IR OMAR IBRAHIM
Independent Non-Executive Director
Tan Sri Omar was appointed to the Board of UEM on 21 February 2012.
Tan Sri Omar is a Professional Civil Engineer registered with the Board of Engineers Malaysia and a Fellow of the Institution of Engineers Malaysia and also of Academy of Science Malaysia.
He graduated from the University of Malaya in Civil Engineering and holds a Master of Science degree in Advanced Structures from University of Southampton, U.K.
He has spent more than three decades serving the government as a civil engineer in the Public
Works Department (PWD) Malaysia and during this tenure, he held various positions in the department. He began his career in the PWD after graduating from University of Malaya. After two postings, initially as a structural design engineer and later as a district engineer, he pursued a post-graduate study in Structural Engineering at the University of Southampton, U.K. Upon his return in 1973, he was appointed resident engineer for various projects, including Ipoh General
Hospital, and roads and bridges in various parts of Kuala Lumpur.
In September 1981, he was appointed Director of PWD Negeri Sembilan. From then on, he has risen in rank through the department, holding various senior positions such as Director of
Management, Director of Water Supply, and Deputy Director General. Finally, in June 1996, he was appointed to the top position as the Director General of Public Works Malaysia.
Upon retirement from the public service, he joined Kuala Lumpur City Center Bhd as its
Managing Director where he led the project management teams for the Putrajaya development as well as other projects in KLCC.
After KLCC, he worked as a consultant in SMHB Sdn Bhd, a civil engineering practice specialising in water supply engineering. He retired from SMHB Sdn Bhd in April 2009.
Tan Sri Omar has been the President of The Board of Engineers Malaysia, The Malaysian
Water Association (MWA) and Malaysian Structural Steel Association (MSSA) at various times from 1988 to 1999. At the international level, he has served as Chairman of the Water Supply
Association of Asia Pacific Region. He was also both an Executive Board Member and a
Scientific & Technical Council Member of the International Water Supply Association (now
International Water Association).
Tan Sri Omar has been a Council Member of Universiti Teknologi Malaysia, a member of the
Development Committee of Universiti Kebangsaan Malaysia, a Board Member of the Malaysian
Highway Authority and the Putrajaya Development Corporation. He was also a Board Member
40

of Construction Industry Development Board and was a Member of the Board of Trustee of
Construction Research Institute, Malaysia.
Tan Sri Omar is currently a Non-Executive Director of UEM Builders, Citibank Bhd, KLCC
(Holdings) Sdn Bhd, Cyberview Sdn Bhd, Megajana Sdn Bhd, Selia Selenggara Sdn Bhd,
Hampshire Aerospase Sdn Bhd, EKVE Sdn Bhd, PNB Commercial Sdn Bhd, I&P Permodalan
Harta Sdn Bhd and several other private limited companies. He is also a member of the Board of Governor of City University College of Science and Technology.
DATO’ SERI ISMAIL SHAHUDIN
Independent Non-Executive Director
Dato’ Seri Ismail Shahudin was appointed to the Board of UEM on 16 March 2009.
Dato’ Seri Ismail holds a Bachelor of Economics (Honours) Degree from University Malaya, majoring in Business Administration. Upon YBhg Dato’ Seri Ismail’s graduation in 1974, he joined ESSO Malaysia Berhad and served for five years in its Finance Division. He then joined
Citibank Malaysia in 1979 and served at the bank’s headquarters in New York in 1984 as part of the team in Asia Pacific Division. Upon his return to Malaysia, he was promoted to the position of Vice President & Group Head of the Public Sector and Financial Institutions Group in Citibank
Malaysia. In 1988, he served United Asian Bank Berhad as Deputy General Manager. In 1992, he joined Malayan Banking Berhad (“Maybank”) as General Manager of Corporate Banking and in 1997, he was appointed as Executive Director of Maybank. He left Maybank in 2002 to assume the position of Group Chief Executive Officer of MMC Corporation Berhad. He was then appointed to the Board of Bank Muamalat Malaysia Berhad and subsequently the chairmanship in March 2004 until his retirement in July 2008.
Currently, Dato’ Seri Ismail is the Chairman of Opus, PROPEL, UEM Environment and Kualiti
Alam. He is also serving the Boards of Malayan Banking Berhad, Nadayu Properties Berhad
(formerly known as Mutiara Goodyear Development Berhad), SMPC Corporation Berhad, EP
Manufacturing Berhad and Maybank Islamic Berhad.
ZAIVIJI ISMAIL ABDULLAH
Non-Independent Non-Executive Director
Zaiviji Ismail was appointed to the Board of UEM on 8 November 2011.
He is an Alumni Member of the Cranfield Institute of Technology, England and Associate
Member of Malaysian Alliance of Corporate Directors. He holds a Master of Business
Administration from Cranfield Institute of Technology, England.
Zaiviji has vast management experience providing fiscal, strategic and operational leadership in challenging situations.
He started his career with BNM from 1979 to 1983 and later joined Malaysia Building Society
Berhad in 1984 to 1989.
Zaiviji joined Shell Malaysia and had served in various positions in Malaysia for a period from
1990 to 2001. He was then posted to Oman to be the General Manager of the Retail Business in
Shell Oman Marketing in October 2001 to January 2004. In February 2004, he was again posted to Pakistan to be the General Manager of the Retail Business in Shell Pakistan Limited before taking on the Cluster General Manager’s role for both Oman and Pakistan. In August
2006, he was appointed Managing Director of Shell Pakistan Limited and at the same time was named the Chairman of Shell Companies in Pakistan.
From August 2006 and July 2011, Zaiviji sat on various Boards in Pakistan and one in Oman covering the energy, health and education sectors. This includes 4 public listed companies.
Zaiviji also served as the President of the Petroleum Institute of Pakistan from 2010 to June
2011.
st

In October 2010, Zaiviji won Pakistan’s 1 Global CEO Excellence Award.
41

Zaiviji is Khazanah’s Nominated Director on the Board of Uniquest Infra Ventures Private
Limited and effective 15 November 2011, he has been elected as the Company’s Chairman.
He is currently a Director of CIMA and PEB.
WONG SHU HSIEN
Non-Independent Non-Executive Director
Wong Shu Hsien, was appointed to the Board of UEM on 8 August 2011. Prior to this, she was the Alternate Director to Tan Sri Dato’ Azman Mokhtar from 15 November 2010 until the resignation of Tan Sri Dato’ Azman from the Board of UEM on 1 August 2011.
She holds a Degree in Economics from Cambridge University and a Masters in Economics from the London School of Economics.
Shu Hsien is a Chartered Financial Analyst. She joined Khazanah in February 2005 from
BinaFikir Sdn Bhd. Previously, she worked in a private equity firm called Emerging Markets
Partnership, the Principal Adviser to AIG Infrastructure Fund II. Prior to that, Shu Hsien worked as a research analyst. She is currently a Director of Investments at Khazanah.
She is also a Director of PLUS Malaysia and PLUS Berhad.
3.6

The Management
3.6.1

Senior Management
The senior management of UEM as at 31 March 2012 are set out below:
Name
Dato’ Mohd Izzaddin Idris
Annuar Marzuki Abdul Aziz
Dato’ Roslan Ibrahim
Tan Hwee Thian
Lila Azmin Abdullah
Harman Faiz Habib
Muhamad
Liza Mohd Noor
Rasidah Kasim

Position
Group Managing Director/Chief Executive Officer
Group Chief Financial Officer
Head, Business Development
Director, Secretarial
Head, Corporate Finance
Head, Legal
Group Chief Risk Officer, Risk Management
Head, Human Resource & Administration

The biographies of the senior management of UEM are set out below:
DATO' MOHD IZZADDIN IDRIS
Group Managing Director/Chief Executive Officer
Please refer to Dato' Mohd Izzaddin’s biography as set out in Section 3.5 "Profile of
Directors".
ANNUAR MARZUKI ABDUL AZIZ
Group Chief Financial Officer
Annuar Marzuki is the Group Chief Financial Officer of UEM. He is a Fellow of CPA
Australia and a Chartered Accountant of the Malaysian Institute of Accountants. He holds an Honours Degree in Accountancy and a Master Degree in Business
Administration (Finance) from the International Islamic University. He also holds a
Diploma in Comparative Law from the Institute of Islamic Studies.
Annuar started his career in the Audit & Business Advisory Services Division of
Pricewaterhouse in 1993 before moving to the Audit Department of UMW Corporation
42

Sdn Bhd, a conglomerate involved in the automotive, engineering and oil and gas industries. He joined the Internal Audit Department of Renong Berhad (now known as
UEM Land Berhad) in March 1995. A year later, he moved to the Corporate Finance
Department of Commerce International Merchant Bankers Berhad. Subsequently, in
March 1999, he joined the Corporate Finance Department of Renong Berhad.
In July 2003, Annuar was seconded to TIME as the General Manager of Corporate
Finance. In January 2004, he was transferred to UEM as the General Manager in the
Office of the Managing Director/Chief Executive Officer. Annuar Marzuki was appointed the Chief Financial Officer of PEB in June 2006 before being appointed to the current position on 1 September 2009.
He is currently a Director of Faber, TIME, PROPEL, UG and also holds directorship in several other private limited companies.
DATO’ ROSLAN IBRAHIM
Head, Business Development
Dato’ Roslan Ibrahim is the Head of Business Development Division of UEM. He graduated with a MBA in General Management from Heriot-Watt University in 2005 and a Bachelor of Science (Hons) in Civil Engineering from University College of Swansea in 1981.
Dato’ Roslan started as an Engineer with Lembaga Kemajuan Pahang Tenggara before joining Petronas Gas Berhad in 1983 where he was a sector leader in the Peninsular
Gas Utilisation Stage II (PGU II) pipeline project. He was seconded to Kuala Lumpur
City Centre Berhad in 1992 and was subsequently appointed Project Manager for
Tower 1 of the Petronas Twin Towers Project. In 1996, Dato’ Roslan joined PEREMBA
Construction Sdn Bhd as General Manager. He was the Chief Executive Officer of
MMC Engineering Group Berhad in January 2003 prior to its privatisation by MMC
Corporation Berhad. He joined IJM Corporation Berhad as General Manager, Business
Development from May 2004 to September 2005. Prior to joining UEM Group in 2005,
Dato’ Roslan was the Senior General Manager of Puncak Niaga Sdn Bhd.
TAN HWEE THIAN
Director, Secretarial
Tan Hwee Thian is the Director, Secretarial of UEM Group Management Sdn Bhd and the Joint Company Secretary of UEM. He is also the Joint Company Secretary of UEM
Land Holdings, PEB, PLUS Malaysia and some other companies in the UEM Group. He is a Fellow of the Association of Chartered Certified Accountants, United Kingdom, a member of the Malaysian Institute of Chartered Secretaries and Administrators and a
Chartered Accountant of the Malaysian Institute of Accountants (MIA).
He started his career with a public accounting firm and had also worked in a group of companies with diverse business interests spanning insurance, property development and management services. His work experience involved company secretarial, administration, share registration, auditing and accounting.
LILA AZMIN ABDULLAH
Head, Corporate Finance
Lila Azmin Abdullah is the Head of Corporate Finance of UEM. Lila graduated from
University of Warwick, England with a degree in Accounting and Financial Analysis
(BSc. Honours) and is a fellow member of the Association of Chartered Certified
Accountants (ACCA).
Prior to joining UEM in November 2009, she was the Vice President of Corporate
Finance at Axiata Group Berhad. Before that, she was heading the Project and
Corporate Finance Department at Malakoff Corporation Berhad. Her experience at
Malakoff also saw her being seconded to the Economic Planning Unit in 1999 to
43

2000 as part of the team investigating the restructuring of the power industry into energy based market. Prior to Malakoff, Lila was a management associate at Citibank
Berhad.
Lila currently sits on the Boards of CIMA, UG and several other private limited companies in UEM Group.
HARMAN FAIZ HABIB MUHAMAD
Head, Legal
Harman Faiz Habib Muhamad is Head of Legal of UEM. He holds a Degree in Bachelor of Laws (LLB) from International Islamic University Malaysia. He started his career as an advocate and solicitor at Messrs Mohd Khamil & Co and later joined the Projects
Division of Messrs Zaid Ibrahim & Co. Harman Faiz served as the Head of Legal
Services at Malakoff Corporation Berhad prior to joining UEM Group in November 2009.
Harman currently sits on the Boards of several private limited companies in UEM
Group.
LIZA MOHD NOOR
Group Chief Risk Officer, Risk Management
Liza Mohd Noor is the Group Chief Risk Officer, having joined UEM in June 2011.
Reporting to the Group Managing Director and the Audit Committee, the Group Risk
Management is principally responsible in ensuring that risk assessments and controls are more proactive, tactical and forward-looking and that risk considerations are assimilated in corporate decisions and business performance improvements. This is in line with the desire to strengthen the handling of opportunities and risks group-wide for purposes of enhancing the Group’s value, going beyond keeping scores and regulatory compliance. Prior to her present position, Liza was with the credit rating industry for twenty years and had served in several lead analyst and senior management positions in RAM before becoming its Chief Executive Officer in 2009. During the 1997/98 regional economic crisis, Liza had been seconded to the Corporate Debt-Restructuring Committee (or
CDRC) – a unit of BNM – where she had been principally involved in sector-wide restructuring schemes and the reorganisation of government and state-owned enterprises. Earlier in her career, Liza had stints with a merchant bank, Bumiputera Merchant
Bankers Berhad, where she had been mainly engaged in corporate-advisory work pertaining to Government privatisation programmes and an accounting firm, Coopers &
Lybrand Public Accountants, where she had been chiefly involved in corporate receivership and liquidation work.
RASIDAH KASIM
Head, Human Resource & Administration
Rasidah Kasim was appointed as the Head of Human Resource & Administration on 1
January 2011. She holds a Master of Science in Information Management (IT) and BA
(Hons) in Marketing (Minor in Finance) from University of Technology Mara (UiTM),
Shah Alam, Selangor. She also possesses Professional Diploma in Human Resource
Development from Institute of Personnel Development (IPD), UK and Diploma in
Human Resources, MIHRM.
She started her career as the Training Executive of New Straits Times Press Malaysia
Berhad (NSTP) in year 1988. She served in various positions in NSTP from 1988 to
March 1997 and her last position was the Head of Unit, Payroll & HR Research and
Data Management. She joined Padiberas Nasional Berhad (BERNAS) as Manager,
Human Resource Development & BERNAS Training Centre and was promoted to

44

Senior Manager, Human Resource Strategic Planning in 2000. Her job responsibility covers HR Strategic Planning, Organisational Development, HR Rationalisation and
Compensation & Benefits.
In 2004, she then moved to Cycle & Carriage Bintang Berhad (MNC – under
International Jardine Matheson) as Group Human Resource Manager. She left in
September 2005, taking up the offer as General Manager, Corporate Affairs & Human
Resources of Pembangunan Sumber Manusia Berhad (PSMB) – a Human Resource
Development Fund (HRDF) Manager under the Ministry of Human Resource. In addition to Human Resources, her portfolio was enlarged to cover HRDF Employer
Registration, Legal, Corporate Communication, ISO Management, Administration and
Building Acquisition. She was also the Quality Management Representative (QMR) for
ISO 9001 for PSMB.
She was headhunted as General Manager, Corporate Services of Konsortium
Transnasional Berhad (KTB) and its holding company, Nadicorp Berhad in year 2007.
Her job responsibility covers the overall spectrum of Human Resources, Building
Maintenance & Administration, Corporate Communication and Operation Services. She was also the Safety, Health & Environmental (SHE) officer for KTB and Nadicorp.
She joined the Group Human Resource department of UEM in January 2008 and has served various positions until her appointment to the current position.
3.6.2

Key Members of Management
The key members of the management of UEM Group companies as at 31 March 2012 are set out below:
Name
Dato’ Mohd Izzaddin Idris
Dato’ Noorizah Hj Abd
Hamid
Dato’ Wan Abdullah Wan
Ibrahim
Suhaimi Halim
Adnan Mohammad
Mohd Razin Ghazali
Azmanuddin Haq Ahmad
Nik Airina Nik Jaffar
Mohd Yusri Md Yusof

Position at UEM Group company
Group Managing Director/Chief Executive Officer,
UEM
Managing Director/Chief Executive Offier, PLUS
Malaysia/PLUS Berhad/PEB
Managing Director/Chief Executive Officer, UEM
Land Holdings
Managing Director, Asset & Facility Management
Managing Director, Faber
Managing Director, UEM Builders
Managing Director, UEM Environment
Managing Director, Opus
Managing Director, PROPEL

The biographies of the key members of management representing the UEM Group companies are set out below:
DATO' MOHD IZZADDIN IDRIS
Group Managing Director/Chief Executive Officer
Please refer to Dato' Mohd Izzaddin’s biography as set out in Section 3.5 "Profile of
Directors".
DATO’ NOORIZAH HJ ABD HAMID
Managing Director/Chief Executive Officer, PLUS Malaysia
Managing Director, PEB
Dato’ Noorizah Hj Abd Hamid was appointed to the Board of Directors of PEB and
PLUS Malaysia on 1 April 2007 and 29 November 2011, respectively. Prior to that, she was appointed as Managing Director of Faber from 17 March 2003 and Faber Hotels
45

Holdings Sdn Bhd from 3 August 2002. She holds a Master Degree in Business
Administration, majoring in Finance and Management and a Bachelor of Science
Degree in Business Administration from Central Michigan University, United States of
America.
Since joining the UEM Group in September 1991, she was attached to various companies in the group which includes Renong Bhd (now known as UEM Land
Berhad), HBN Management Sdn Bhd (now known as UEM Group Management Sdn
Bhd), PLUS and Faber.
Currently, she also sits on the Board of Commissioners of PT LMS, PEB’s subsidiary in
Indonesia; Board of Directors of PLUS BKSP Toll Limited, Indu Navayuga Infra Project
Private Limited and Jetpur-Somnath Tollways Limited, subsidiaries of PEB in India;
Board of Directors of PLUS Berhad, PLUS and KLBK.
She is also the Executive Director of ELITE, LINKEDUA and PLUS Helicopter Services
Sdn Bhd and Chairman of Teras.
DATO’ WAN ABDULLAH WAN IBRAHIM
Managing Director / Chief Executive Officer, UEM Land Holdings
Dato’ Wan Abdullah Wan Ibrahim was appointed to UEM Land Holdings on 15
September 2008. He joined UEM Land on 1 January 2006 as the Managing Director.
He is also the Managing Director of Sunrise. Prior to joining UEM Land, he was the
Group Chief Executive Officer of United Malayan Land Bhd, a property company listed on Bursa Malaysia. From 1996 to 2004, he was with Kumpulan Guthrie Berhad, where his last position held was as the Director of Property Division. In that capacity, he was tasked to lead the property development activities of the group, which covered three listed companies, namely, Kumpulan Guthrie Berhad, Highlands & Lowlands Berhad and Guthrie Ropel Berhad. He was also responsible for the conceptualization and submission of plans for the Guthrie Corridor Planned Communities that covered an area of 11,650 acres linked and accessed by the Guthrie Corridor Expressway.
Prior to this, Dato’ Wan spent 10 years with the Emkay Group of companies, whose core activity was property development, and has held several positions including Group
Executive Director. He holds a general degree in Business Administration (majoring in
Accounting) from the Bolton Institute of Technology, United Kingdom.
SUHAIMI HALIM
Managing Director, Asset & Facility Management
Suhaimi Halim was appointed as the Managing Director, Asset & Facility Management
Group of Companies in October 2010. He holds a Bachelor of Science (Hons) in Civil
Engineering from the University of Glasgow, Scotland. In 1988, he joined Pengurusan
Lebuhraya Berhad (now known as Opus International (M) Berhad) providing broad experience for the diversified operations of the UEM Group. Subsequently, in 1996, he was appointed Chief Operating Officer of Kinta Kellas Plc (now known as Opus
International Limited).
The following year, he assumed the position of Managing Director at LINKEDUA. He was then transferred to ELITE where he held the position of Managing Director from
May 2000 to July 2002. Thereafter, on 1 August 2002, he was appointed the Managing
Director of Kinta Kellas plc, which in 2005 changed its name to Opus International
Group plc. In 2007, through an Internal Reorganisation, Opus International Group plc
(now known as Opus International Limited) was replaced by Opus Group Berhad as the holding company where Suhaimi continues as its Managing Director until 2010.
Currently, he also sits on the Boards of Faber, Opus, PROPEL, UEM Environment and also holds directorship in several other private limited companies.

46

ADNAN MOHAMMAD
Managing Director, Faber
Adnan was appointed as Managing Director of Faber on 1 April 2007. He holds a
Bachelor of Business Administration (Finance) from University of Missouri, Kansas City,
United States of America, and a Diploma in Banking Studies from MARA Institute of
Technology. He is a member of the Malaysian Institute of Management.
He started his career with Malayan Banking Berhad and later served Bank Rakyat
Berhad in 1989 before moving to Bumiputera Merchant Bankers Berhad (now known as
CIMB Investment Bank Berhad) as a Corporate Banking Officer in 1990. He later left the banking industry and joined PLUS where he rose from Project Finance Assistant
Manager to Senior General Manager of Finance Division.
He has from 2001 to 2005 served in various capacities within the UEM Group, including
Managing Director of TIME dotNet Berhad, Chief Operating Officer of Intria Berhad
(now known as UEM Builders), Managing Director of Park May Berhad and Chief
Executive Officer of E-Idaman Sdn Bhd. Encik Adnan was the Chief Operating Officer of UEM Builders from April 2005 until his appointment to current position.
MOHD RAZIN GHAZALI
Managing Director, UEM Builders
Mohd Razin Ghazali was appointed as the Managing Director of UEM Builders on 1
December 2010. He holds a Bachelor of Science in Civil Engineering from the Old
Dominion University, Norfolk, USA. He is a member of the Board of Engineers
Malaysia.
He started his career with IJM Construction Sdn Bhd (“IJM”) immediately after graduating from Old Dominion University in 1988. He served in various positions in IJM for a period from 1989 to August 2004. He joined Ranhill Engineers & Constructors
Sdn Bhd as General Manager in August 2004 and in December 2005, he re-joined IJM as Country Director of IJM Construction (Pakistan) Pvt Ltd where he oversee the IT
Tower Project in Karachi and Goldcrest Development in Islamabad. He then moved to
MMC Saudi Arabia from July 2008 to July 2010 and served as the Director, Projects where he was the Head of Project & Programme Management Division for Jazan
Economic City Development in Saudi Arabia.
Mohd Razin was appointed as the Chief Operating Officer of UEM Builders from 1
August 2010 until his appointment to the current position.
AZMANUDDIN HAQ AHMAD
Managing Director, UEM Environment/Kualiti Alam
Azmanuddin Haq Ahmad is the Managing Director of UEM Environment and Kualiti
Alam. He also sits on the Board of UEM Environment Group of Companies namely
Kualiti Khidmat Alam Sdn Bhd, Kualiti Kitar Alam Sdn Bhd, E-Idaman Sdn Bhd,
Environment Idaman Sdn Bhd and Special Builders Sdn Bhd. He is also the Executive
Vice-Chairman of Abu Dhabi Kualiti Alam Environmental Services LLC based in Abu
Dhabi, United Arab Emirates.
Azmanuddin holds a BA (Honours) in Accounting and Financial Management from the
University of Sheffield, United Kingdom.
In view of UEM Environment’s active participation in preserving Malaysia’s environment,
Azmanuddin has been elected as the EXCO member of Business Council for
Sustainability & Responsibility (“BCSRM”) since 2005. He was also elected as the
Honorary Secretary General of BCSRM from 2007 to 2010. In May 2008, he was elected as a Council Member of Environmental Management and Research Association of Malaysia.

47

Azmanuddin joined the UEM Group as Assistant General Manager in the office of
Managing Director/Chief Executive Officer (“MD/CEO”) in November 2001.
Subsequently he was promoted to General Manager in May 2002. He was made the
Special Assistant to the Executive Vice-Chairman of Renong Berhad (now known as
UEM Land) in November 2002 and rose to the position of Director in the office of
MD/CEO of UEM in January 2003. He previously served on the Boards of CIMA and
Faber.
Prior to joining UEM Group, Azmanuddin had 8 years of experience as an Investment
Banker, specialising in Mergers & Acquisitions and Public Listings.
NIK AIRINA NIK JAFFAR
Managing Director, Opus
Nik Airina Nik Jaffar was appointed the Managing Director of Opus on 1 October 2010.
Nik Airina has been involved in various aspects of infrastructure development and management for more than 20 years. She obtained her Bachelor of Science Degree in
Civil Engineering from the University of Miami in 1985 and further pursued her Masters
Degree in Civil Engineering at the same university. She started her career as a Bridge
Engineer at Beiswenger, Hoch and Associates, an engineering consulting firm in Florida in 1995.
She joined Pengurusan Lebuhraya Berhad (now known as OPUS International (M)
Berhad) in 1989 where she was mainly involved in managing the implementation of the
NSE. Upon the completion of the NSE project, she moved to Pengurusan Lantas
Berhad (Lantas) and subsequently headed its Special Projects Division. At Lantas, she spearheaded the development and implementation of the Total Expressway
Maintenance Management System (TEMAN) for the NSE, and was involved in the development of various Infrastructure Project proposals including the Straits of Malacca
Crossing.
She joined PLUS in 2001 as the General Manager of the Planning and Development
Division and was subsequently appointed the Chief Operating Officer of PEB in 2006.
In PEB, she was involved in the Initial Public Offering exercise for its listing on the Main
Board of Bursa Malaysia as well as the integration of the NSE, NSECL and MalaysiaSingapore Second Crossing (MSSC) operations. She was responsible for overseeing the overall operations and maintenance of the approximately 1,000km of toll expressway under PEB, which constitutes almost 60% of Malaysia’s toll expressway network, as well as the technical and operational aspects of its domestic and international business expansion initiatives. She also led the company’s strategic programme on cost optimization and enhancement of operational efficiencies.
Nik Airina is Malaysia’s representative for the World Road Association’s (PIARC)
Technical Committee B2 on Road Network Operations and is a Fellow of the Chartered
Institution of Highways and Transportation (CIHT) UK. She also serves as the Vice
Chairman of the Institution of Highways and Transportation (Malaysia) and is the
Honorary Treasurer of the Intelligent Transport System Association of Malaysia.
MOHD YUSRI MD YUSOF
Managing Director, PROPEL
Mohd Yusri was appointed Managing Director of PROPEL on 1 March 2011. He holds a Bachelor of Arts (High Honours) in Public Administration from the Michigan State
University and a Master of Science in Business Leadership from University of
Northumbria, Newcastle UK. He is a member of the Institute of Internal Auditors
Malaysia and is a Certified Quality Assurance Practitioner.

48

He started his career in 1993 with stints in the internal audit functions within banking and financial services industry. He joined UEM Group in 2001 as Deputy Senior
Manager of Group Internal Audit, and was subsequently appointed to head the function in 2005. In 2008, he was appointed as the Head of Improvement & Assurance Services
Division of UEM, overseeing the internal audit and productivity & quality management functions. In December 2009, he was appointed as the Senior General Manager of
Corporate Performance of UEM.

[The rest of this page has been left blank intentionally]

49

50

Corporate Structure of the UEM
Corporate Structure of the UEM Group

Group

50

The corporate structure UEM Group as at 31 March 2012 March 2012
Thecorporate structure of the of the UEM Group as at 31 is as follows: is as follows:

3.7
3.7

The UEM Group’s businesses as presented in the preceeding chart are divided into four core and related businesses comprising Expressways, Engineering and Construction, Township and Property
Development, Asset and Facility Management and others.
Expressways
UEM, through its subsidiaries PLUS Berhad and PEB, provides world-class expressways development, management and operations services. PLUS Berhad is the largest toll concessionaire in Southeast Asia.
The NSE, a benchmark of the industry in Malaysia, includes operations of 772 kilometres of inter-urban expressways stretching north from the Thai border, and south to Singapore. Today, the operation of
UEM's local expressways is undertaken by PLUS Malaysia covering a total length of 986 kilometres.
PEB also owns another 303.8 kilometres of highways in India and Indonesia. To complement the
Expressways business, Teras, a wholly-owned subsidiary of PLUS Malaysia, is involved in transportation payment system. PLUS Malaysia also holds a minority interest in Touch ‘n Go, which conducts the smart-card business for tolled expressways.
Engineering and Construction
UEM Group is a renowned engineering and construction conglomerate recognised for its innovation and successful delivery of projects through UEM Builders Group. These projects include the Commonwealth
Games Village, the National Sports Complex, the LRT and various expressways in Malaysia. With a combined cement production capacity of over three million tonnes, CIMA supplies the nation’s projects with this essential building material. CIMA is the third largest cement manufacturer in Malaysia, with about 17% of the country's cement market share. In addition to cement manufacturing, CIMA is also involved in the supply of quarry materials, bituminous premix products and ready-mixed concrete.
Township and Property Development
UEM, through its property arm UEM Land Holdings, is the master developer of Nusajaya, the single largest fully integrated urban development in Southeast Asia, located in Iskandar Malaysia, a new economic growth area hatched under the 9MP. UEM Land Holdings’ wholly-owned subsidiary, Sunrise is the developer for the award-winning Mont’Kiara enclave, which is a residential suburb that incorporates high-end condominiums with quality finishing, amenities, and leisure facilities, international schools and commercial centers.
Asset and Facility Management
UEM, through its group of companies, namely, Faber, Kualiti Alam, Opus and PROPEL, provides various asset and facility management services. Opus has a reputable track record in delivering asset development and asset management services across the life of an asset i.e. through the phases of asset planning, design, construction, commissioning, operation and maintenance, rehabilitation and upgrading.
Faber, through its subsidiary Faber Medi-Serve Sdn Bhd, is widely acknowledged as one of Malaysia’s largest hospital support services company serving more than 400 hospitals and healthcare institutions in the States of Perlis, Kedah, Penang, Perak, Sarawak and Sabah. Kualiti Alam, a wholly-owned subsidiary of UEM Environment, is the operator of Malaysia’s first Integrated Scheduled Waste
Management Centre (WMC). The WMC treats and disposes of all 77 categories of scheduled wastes as listed in the Environmental Quality (Scheduled Wastes) Regulations 2005, except radioactive, pathological and explosive waste. PROPEL provides comprehensive infrastructure maintenance services for expressways and buildings.
Others
UEM’s involvement in the ICT division is through its investment in TIME.

51

Segmental breakdown of revenue from continuing operations
For the year ended 31 December
2011

2010

2009

RM mil

per cent

RM mil

per cent

RM mil

per cent

34

0.7

3,550

49.1

3,423

41.7

Engineering and Construction

2,036

40.9

1,712

23.7

1,775

21.6

Township and Property Development

1,703

34.2

470

6.5

403

4.9

Asset and Facility Management

1,696

34.1

1,656

22.9

1,570

19.1

8,876

178.4

75

1.0

1,894

23.1

(9,369)

(188.3)

(233)

(3.2)

(851)

(10.4)

4,976

100.0

7,230

100.0

8,214

100.0

Expressways

(1)

Others

(2)

Eliminations

Total Consolidated

Segmental breakdown of pre-tax profit from continuing operations
For the year ended 31 December
2011

2010

2009

RM mil

RM mil

RM mil

(49)

1,790

1,701

(249)

(269)

(38)

Township and Property Development

353

173

122

Asset and Facility Management

136

94

189

8,712

305

466

(8,847)

(444)

(513)

56

1,649

1,927

Expressways
Engineering and construction

(1)

Others

(2)

Eliminations

Total Consolidated
(1)
(2)

3.8

Includes investment income and ICT. The amount in 2011 includes a one-off special dividend from PEB following the completion of the PLUS Malaysia Acquisition.
Elimination of dividend income and inter-segment sales and interest charged by UEM.

UEM Group Business Segments Overview
The statement of this section is as at 31 March 2012 unless otherwise stated.
UEM Group's businesses are divided into the following business segments:
3.8.1

Expressways
UEM’s involvement in the construction, operation and maintenance of expressways is through PLUS Malaysia and PLUS Berhad for local expressways and through PEB for foreign expressways.
On 9 November 2010, EPF and UEM made a joint offer to PEB to undertake the privatization of PEB via PLUS Malaysia by acquiring PEB’s local assets and liabilities.
In addition, pursuant to a sale and purchase agreement dated 3 November 2011 entered into between PLUS Malaysia and UEM Builders, PLUS Malaysia acquired all of
UEM Builders’ equity interest in PBSB (both transactions are collectively referred to as

52

“PLUS Malaysia Acquisition”). The PLUS Malaysia Acquisition was completed on 29
November 2011.
Pursuant to the PLUS Malaysia Acquisition, each of the Concession Companies disposed of all its Malaysian assets, liabilities, business, undertakings and rights under its Concession Agreements to PLUS Berhad, which is a wholly-owned subsidiary of
PLUS Malaysia. PLUS Berhad issued RM30.6 billion in sukuk in January 2012 to fund the PLUS Malaysia Acquisition.
The Concession Companies have respectively entered into the Novation Agreements for the assignment of their respective rights and transfer their liabilities and obligations under the respective Concession Agreements to PLUS Berhad. PLUS Berhad has subsequently entered into the Supplemental Concession Agreements with the
Government.
As part of the PLUS Malaysia Acquisition, one special rights redeemable preference share of RM1.00 in the share capital of PLUS Berhad was issued to the Government.
PLUS Berhad now operates the Expressways in accordance with the Concession
Agreements and the Supplemental Concession Agreements.
All existing project agreements and contracts related to the Concessions (including the operation and maintenance contracts), takafuls/insurances, the permits and licenses, performance bonds and guarantees were transferred or novated from the Concession
Companies to PLUS Berhad to ensure that PLUS Berhad continues operating the
Expressways.
The foreign expressways business segment accounted for RM34 million, or approximately 0.7% of UEM Group’s total revenue.
Contribution from expressways segment to revenue and PBT of continuing operations of UEM Group have reduced significantly in 2011 mainly due to the classification of the results of all the expressways in Malaysia as discontinued operations in conjunction with
PLUS Malaysia Acquisition.
3.8.2

Engineering and Construction
UEM Group's engineering and construction business segment is made up of UEM
Builders and CIMA.
UEM Builders, a wholly-owned subsidiary of UEM, is an investment holding company for
UEM Group's engineering and construction business.
CIMA is the nation's third largest cement manufacturer. CIMA’s wholly-owned subsidiary, NSCI has two cement plants which are located at Bahau, Negeri Sembilan and Bukit Ketri, Perlis. Apart from cement manufacturing, CIMA is involved in the supply of quarry materials and bituminous premix products through its subsidiaries, Kuad and
Kuari Pati. CIMA is also involved in the ready-mixed concrete business through its subsidiaries, Unipati and I-Mix.
The engineering and construction segment saw its 2011 revenue increased by 14% to
RM1,918 million, against RM1,684 million recorded in 2010.
UEM Builders Group
UEM Builders Group is involved in infrastructure development, and is recognised for its experience in construction and project management and expertise in civil, structural, geotechnical, mechanical and electrical engineering.

53

Signature Projects
UEM Construction is a wholly-owned subsidiary of UEM Builders and is a leading integrated engineering and construction arm of UEM Builders. UEM Construction was the local lead member of the consortium which was awarded the design and build contract for the Satellite 'A' Building of the Kuala Lumpur International Airport (“KLIA”) at Sepang, which now serves as the international arrival and departure terminal for
KLIA. The construction of KLIA commenced in 1995 and was completed in 1998, on schedule and in time for the Commonwealth Games in 1998.
The building of the National Sports Complex and the Commonwealth Games Village commenced in 1994 and was completed in 1998, on a fast-track basis and in time for the Commonwealth Games. The Commonwealth Games Village accommodated more than 6,000 officials, participants and spectators during the Commonwealth Games.
UEM Construction was responsible for the construction of the fully automated
'driverless' LRT. This project commenced in 1994 and was completed in 1999. The LRT traverse the most congested part of the Kuala Lumpur city centre. Other recently completed projects of the UEM Builders Group include the development of Kota
Iskandar in Bandar Nusajaya, the Malaysia Agro Exposition Park Serdang which hosts the bi-annual Malaysia Agriculture, Horticulture and Agrotourism event, the construction of the new wing of the National Heart Institute and the widening of the Penang Bridge.
UEM Builders' current projects include:
(a)

Penang Second Crossing Bridge
On 4 June 2009, Jambatan Kedua Sdn Bhd awarded UEM Builders a contract for the design, construction and completion of the super structure of the Penang
Second Crossing Bridge with a value of RM1,550 million.
The scope of works of this project involves the following:
(1)
(2)
(3)
(4)

the whole of the superstructure works (deck works) including all bearing of the approach spans; asphaltic concrete deck pavement, road signage, road marking and related road furniture; the power supply up to the distribution board for the main navigation span street lighting, navigational lights and decorative lighting; and provision and construction of all necessary enabling works, including maintenance dredging for access of barges for deck precast segment erection, temporary works, road diversion and temporary access road for the proper and expeditious execution of the contract;

As of 31 March 2012, the project is 60.87% completed.
(b)

Pahang-Selangor Raw Water Transfer Project
The Pahang-Selangor Raw Water Transfer Project is a scheme to construct a tunnel to convey raw water from Pahang State to meet the anticipated water demand in the Selangor/Kuala Lumpur region.
The project was awarded to a consortium in which Japanese contractors
Shimizu Corp and Nishimatsu Construction Co Ltd each has an interest of 30%
– a majority of 60% – while IJM Corp Bhd and UEM Builders have 20% each.
The award of this first phase is valued at RM1.3 billion. The tunnel alignment starts near the town of Karak in the state of Pahang, cuts through the
Titiwangsa Range and ends near the town of Hulu Langat in the State of
Selangor. Both towns are easily accessible via existing paved roads.

54

This project, which is aimed at meeting the needs of water consumers in
Selangor, Kuala Lumpur and Putrajaya until 2025, is estimated to have an overall cost of about RM3.9 billion.
As of 31 March 2012, the project is 52.48% completed.
(c)

KLIA-2 Project
On 15 July 2010, the UEM Construction-Bina Puri Sdn Bhd JV was awarded the design, construction, commissioning and maintenance of the Main Terminal
Building, Satellite Building, Sky Bridge and Piers for the proposed development of the new KLIA-2 Terminal and the associated works at Kuala Lumpur
International Airport, Sepang. This project is valued at RM997.2 million.
This project which commenced on 16 August 2010 has achieved 37.16% completion as at 31 March 2012.

(d)

Mixed Development on Lot 166949, Nusajaya
UEM Construction was awarded a RM78.9 milllion mixed development project on Lot 166949, Bandar Nusajaya, Johor on 23 November 2011. The project comprises two blocks of six -storey service apartments, one -storey retail shop, one-storey retail shop and parking, swimming pool facilities and two-link bridges connecting the blocks.
This project commenced on 7 December 2011 and is 2.2% completed as at 31
March 2012.

(e)

Fabrication and Supply of Segmental Box Girders (Package A) for Kelana Jaya
Line Extension
On 24 December 2010, the UEM Builders-Intria Bina Sdn Bhd (“IBSB”) JV was awarded as the nominated sub-contractor for the fabrication and delivery of the segmental box girders (Package A) for the Kelana Jaya Line LRT extension.
The contract, valued at RM93.1 million, is 35.18% completed as at 31 March
2012.

(f)

Proposed Alor Pongsu Interchange and Toll Plaza
UEM Builders was awarded the contract for the construction of the proposed
Alor Pongsu Interchange and Toll Plaza on 19 January 2012. The contract is valued at RM43.6 million and is at its preliminary stage of progress.

Overseas Projects
Overseas projects contributed to about 11% of UEM Builders' consolidated turnover for the financial year ended 31 December 2011.
UEM Builders has expanded its operations overseas into Qatar and India. In Qatar, the construction of the 80 km stretch of the Salwa International Highway in Qatar was substantially completed in 2008. The estimated contract value of the total project is
Qatar Riyal 1,048 million. UEM Builders has also completed the design and construction of the 75,000-square metre campus for the College of Technology at Doha, Qatar for a contract sum of Qatar Riyal 333 million.
In India, UEM Construction through its wholly-owned subsidiary, UE Development India
Pvt. Ltd (“UEDI”), is involved in the construction of five packages of highway projects which are jointly undertaken with GMR Consortium and Essar Projects Ltd., its local partners in India.

55

UEM Builders has undertaken the rehabilitation and upgrading works on three stretches totalling 200 km of the NH-4 expressway from Tumkur to Haveri of the Western
Transport Corridor in Karnataka. UEM Builder's projects in India also include the upgrading and improvement of certain stretches of the existing state trunk roads totalling 127 km in Kerala and the upgrading and strengthening of a 72 km stretch of the existing NH-2 expressway from Etawah to Sikandra in Uttar Pradesh, which was completed in 2007.
On-going overseas projects
(a)

Brunei B4,000 Low Cost Housing Scheme
The Brunei Economic Development Board awarded the contract to build 4,000 houses within 48 months for the National Housing Scheme of Brunei
Darussalam to UEM Builders on 29 December 2009. The contract which is valued at BND388.3 million requires UEM Builders to build 4,000 units of houses at Mangkubau, Kampung Mentiri in Bandar Sri Begawan within 48 months. The project is 30.8% completed as at 31 March 2012.

(b)

Multi-Storied Rehab Building C2 & C3, Mumbai, India
On 26 January 2010, UEDI was awarded the contract for the Construction of the Multi-Storied Rehab Building C2 (building no. 12) and C3 (Building no. 14) of Cluster R-5 at Plot No CTS NO 27 (PT), 29 (PT) & 30 (PT), Golibar Road,
Santacruz (E), Mumbai, India valued at INR266.1 million. The project is 54.2% completed as at 31 March 2012.

(c)

Building and Engineering Works at Sushant Golf City, Lucknow, India
On 18 April 2008, UEM Builders - Ansal API Contract Pvt Ltd JV was awarded the contract for the construction, execution and completion of various buildings and/or engineering works at Sushant Golf City in Lucknow, India. The project consists of road works and storm drain works of a total length of 88km and two buildings of 106 units and 283 units. The total contract value is INR1,292 million. The project is 64% completed as at 31 March 2012.

(d)

Karnataka Dwelling Units, India
On 8 July 2011, the UEDI-Trigunaas JV was awarded the Construction of
Ground Floor Units in the Flood Affected Area in the North of Karnataka District
(Bellary, Bijapur, Bangalkote, Raichur and Koppala) Under Programme
“ASSARE” for the Execution of 2,708 Dwelling Units.
The contract is to construct 2,708 units of low cost housing of 250 sq meters each for the flood victims under the programme by the Karnataka Slum
Development Board. The total contract value is INR379.2 million and is 25.2% completed as at 31 March 2012.

Highway, tollway and bridge operations, maintenance and concession
UEM Construction provided its engineering and construction capabilities to the UEM
Group in the construction of the NSE traversing the entire length of peninsular west coast of Malaysia. The NSE connects major cities and towns in seven states along the west coast, with 73 interchanges, 411 bridges and overpasses, 18 rest and service areas, 46 lay-bys and over 60 toll plazas along the entire expressway. UEM
Construction also built the NSECL, which allows travellers on the NSE to by-pass the traffic congestion of Kuala Lumpur city, and provides a direct link to the KLIA.

56

UEM Construction was also the main contractor for the Second Link, and was involved in the building of a Customs, Immigration and Quarantine Complex, toll plazas, rest and service areas and other ancillary facilities.
Another one of UEM Construction's expressways projects is the Putrajaya Interchange and an ancillary 8.8 km dual two lane road, Putrajaya Link. The Putrajaya Interchange is a link between Cyberjaya, Putrajaya, the Government Administration Centre, and KLIA.
With 80 percent of its alignment on peat soils, engineering constraints had to be overcome to perform the construction as well as to meet the requirement to maintain the eco-system of the pristine natural environment. This was achieved through a minimum environment impact approach, with construction activities specifically designed to reduce earthworks and changes to the water courses in the area.
UEM Builders Group’s revenue increased from RM1,231 million in 2010 to RM2,211 million in 2011. UEM Builders Group recorded lower LBT of RM140 million in 2011 against LBT of RM523 million in 2010 in line with higher revenue, lower provisions for projects losses and higher share of profit from joint ventures, a marked improvement compared to 2010. As at 31 December 2011, UEM Builders Group had total assets of
RM3,155 million, a decrease of 6% from RM3,339 million in the previous year, the decrease was mainly due to the disposal of PBSB to PLUS Malaysia in December 2011.
CIMA Group
CIMA, a wholly-owned subsidiary of UEM is involved in the manufacturing, marketing, distribution and sale of cement and ready-mixed concrete. CIMA operates cement manufacturing plants in Bukit Ketri, Perlis and Bahau, Negeri Sembilan. Apart from cement manufacturing, CIMA is also involved in the supply of quarry materials and bituminous premix products.
With a combined cement production capacity of over three million tonnes per year,
CIMA supplies the nation’s projects with this essential building material. CIMA is the third largest cement manufacturer in Malaysia, with about 17% of the country's cement market share. Its key brands are “Blue Lion Cement”, “NS Cement” and “Twin Lion”.
CIMA is currently adding an additional line to its cement plant at Bahau. This is expected to be completed in the fourth quarter of 2013 and the total production will increase to approximately five million tonnes per year.
CIMA is the only cement manufacturer in Malaysia that produces Type 2 cement. CIMA has its own trading arm which co-ordinates the marketing, selling, distribution and customer-centred services under its brand names.
CIMA Group recorded a total revenue of RM1,090 million for the year ended 31
December 2011, an increase of 23% from RM884 million for the year ended 31
December 2010. CIMA Group’s PBT increased by 6%, from RM140 million in 2010 to
RM149 million in 2011. As at 31 December 2011, CIMA had total assets of RM1,571 million, an increase of 24% from RM1,264 million as at 31 December 2010.
3.8.3

Township and Property Development
UEM Group's property business is undertaken by UEM Land Holdings.
The township and property development business accounted for RM1,703 million, or approximately 34% of UEM's total revenue, and PBT of RM355 million for the year ended 31 December 2011.
UEM Land Holdings
UEM Land Holdings holds more than 7,461 acres of land in Nusajaya, located in the
South-west of Malaysia, within Iskandar Malaysia – one of the key economic growth engines identified under the 9MP.

57

UEM Land Holdings is the master developer of Nusajaya, positioned as a regional city located in the state of Johor, spanning a total land area of 23,875 acres at the heart of
Southeast Asia. Nusajaya will comprise a broad range of properties, including the Johor
State Government and the Malaysian Federal Government offices, industrial properties, healthcare properties, universities and other commercial, residential and mixed-use properties catering to a wide range of local, regional and international demand.
Nusajaya is also strategically located in the south-western tip of Peninsular Malaysia, with easy access to Singapore. Nusajaya recently emerged as the winner in the Master
Plan Category at the prestigious FIABCI Prix d’Excellence Awards 2012 held in St.
Petersburg, Russia.
Nusajaya forms part of the Iskandar Malaysia initiative which covers the logistic triangle of Senai Airport (to the north), Port of Tanjung Pelepas adjacent to Nusajaya (to the
South West) and the Johor Port in Pasir Gudang (to the South East) encompassing an area of approximately 2,217 square kilometres. The Iskandar Malaysia is planned by the
GOM to transform South Johor into a premier economic growth area. Its comprehensive development plan is intended to develop the region for gross domestic product enhancement, job creation, investments and upgrading of capabilities and benchmarking to global standards, whilst ensuring the development is done in a holistic manner. The following are the major on-going projects of UEM Land Holdings and its subsidiaries: (a)

East Ledang
Approximately 275 acres of high-end resort style and multi-award winning development based on a secured, gated and guarded concept complemented by 31 garden spaces, lakes and wetlands, clubhouse and low-density residentials of approximately 861 units. An additional 75 acres are reserved for future development which is expected to include international and private schools, approximately 300 commercial properties and approximately 1,300 condominium properties.
A clubhouse, Ledang Urban Retreat has been in operation since 2010, offering lifestyle amenities such as a spa, an Olympic sized pool, restaurants, a fully equipped gymnasium, karaoke facilities and meeting rooms.
Residential
Phase 1, comprising 139 units of superlink and semi-detached, was handed over in March 2010. Phase 2, comprising 140 units of semi-detached and bungalows, will be handed over soon. Phases 7 and 8 consisting of 145 units of superlink units and Phase 3A which consists of 36 units of bungalows, are currently under construction. Phase 3B consists of 37 units of bungalows and was launched in early 2012.
Apartment
Ujana Apartment which is located in East Ledang, is Nusajaya’s first executive apartments. It has 172 units with built up sizes ranging from 909 sq. ft. to 2,384 sq. ft.
Impiana Condominium which is located next to Ujana Apartment, was launched in 2011. It has 488 units, offering various apartment sizes from 610 sq. ft. to
2,200 sq. ft.

58

(b)

Nusa Idaman
Approximately 251 acres of a mid-market mixed development comprising approximately 2,400 units of residential and commercial properties, kindergarten, primary school, mosque, community hall, public field, recreation lake, petrol stations, landscaped parks and other facilities. More than 1,400 units of houses have been launched since March 2006.

(c)

Horizon Hills
Approximately 1,227 acres of mixed residential development and an 18-hole golf course with a clubhouse and other facilities developed under a 50:50 joint venture between UEM Land and Gamuda Berhad. Upon completion, it will comprise approximately 6,000 units comprising a mix of terraced, clustered, semi-detached, bungalow homes and condominiums. To-date, more than 1,700 units of houses have been launched since March 2007.

(d)

Kota Iskandar
Kota Iskandar is being developed by Cahaya Jauhar Sdn Bhd, a 60:40 joint venture between UEM Land and the Johor State Government.
Phase 1 consists of Dewan Undangan Negeri Johor, Menteri Besar Complex and State Secretary, two clusters of the State Government Office Complex and
Dataran Mahkota. Phase 2 and 3 consists of a mosque, four clusters of federal government offices complex and state government staff housing. Approximately
2,200 state government staff have moved into Kota Iskandar Phase 1. A further
3,000 federal government staff will move into the federal government offices complex, when completed.

(e)

Southern Industrial Logistic Clusters (“SiLC”)
SiLC comprises approximately 1,307 acres of thematic industrial park based on clustering concept comprising of three major clusters of advanced technologies, nutrition and health and logistics. It is located in the north-western part of
Nusajaya, within close proximity of two international airports, and five seaports in Johor and Singapore.
To-date, Phases 1, 2A and 2B totalling approximately 780 acres in gross land area have been completed and handed over to its purchasers. More than ten factories are already operating in SiLC while Bio-Xcell, a dedicated biotechnology park within SiLC, is currently under construction. Approximately
100 acres of net land area in Phase 2C, which is currently under construction, has been pre-sold to buyers. SiLC has achieved 100% increase in its selling price per square feet since launched in 2007.

(f)

Puteri Harbour
Approximately 688 acres of an integrated waterfront and marina development offering waterfront living, dining, entertainment, arts and culture with panoramic views of the Straits of Johor. Its development components include high-end residential, commercial and retail properties, resorts, hotels, offices and retail shops, food and beverage outlets, a convention centre, a 76-berth public marina and a 200-berth private marina and a mega-yacht berthing terminal, clubhouses and other amenities. Puteri Harbour is located adjacent to Kota
Iskandar and enjoys strategic location advantages such as accessibility to major highways and proximity to Kota Iskandar. In 2009, Puteri Harbour was named the Best Master Plan at the FIABCI Malaysian Property Awards 2009 and runner-up at FIABCI Prix d’Excellence Awards 2010.

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The facilities completed to-date include the clubhouse, the 76-berth public marina, and hardscape and softscape at the promenade. On-going constructions at Puteri Harbour include a Custom Immigration and Quarrantine
Port Clearance, an indoor theme park, a hotel and serviced apartments.
Imperia, a 35-storey condominium, was launched in September 2011 with more than 85% units sold at an average price of RM725.00 per sq. ft. More mixed developments and high-rise projects are expected to be launched in 2012.
(g)

Afiat Healthpark
Approximately 68 acres of development to meet the present gaps in the healthcare market and respond to increasing public demand for better healthcare services and facilities will cater to three distinct areas i.e. modern medicine, traditional and complementary medicine and wellness. It is centered around private hospitals supported by other health-related facilities.
Earthworks and infrastructures for Phase 1 (36 acres) have been completed. An
80-bedded Columbia Asia Hospital has been in operation since 2009.

UEM Land Holdings and a unit of Iskandar Investment Berhad are jointly developing a retail mall adjacent to Legoland.
UEM Land Holdings, through its subsidiary Symphony Hills Sdn Bhd, is also the developer of Symphony Hills in Cyberjaya. Symphony Hills was launched in August
2010 and it is a high-end gated community development. Symphony Hills has a total of
2,865 residential units of mixed landed and high rise strata and limited commercial components in the form of Small Office/Home Office (SOHO) units.
In 2011, UEM Land Holdings acquired approximately 450 acres of freehold land located in the growth region of Bangi-Semenyih.
UEM Land Holdings recorded total revenue of RM1,703 million for the year ended 31
December 2011, an increase of 262% from RM470 million for the year ended 31
December 2010. As at 31 December 2011, UEM Land Holdings had total assets of
RM7,749 million, an increase of 96% from RM3,971 million as at 31 December 2010.
Sunrise
UEM Land Holdings completed the acquisition of a 100% stake in Sunrise in February
2011. Sunrise’s business includes property development, property maintenance and property investment. Sunrise is ranked among the top ten property developers in the country in The Edge Malaysia’s Top Ten Property Developers Awards for nine consecutive years (2003 - 2011).
Sunrise is the first Malaysian developer to obtain the Singapore BCA Green Mark
Certified Award for residential development (11 Mont’Kiara). It also holds the Green
Mark Gold Award (provisional) for 28 Mont’Kiara and its planned Solaris on the Park mixed development. Sunrise is also a thrice winner of the FIABCI Malaysia Property
Award in 2011 (10 Mont'Kiara) 2005, 2001 and 1997 for Best Residential Development.
As a top property developer, Sunrise continues to acquire international recognition.
Arcoris Mont'Kiara, a mixed-use development, won the Best Commercial High Rise
Development Award for Asia Pacific and Malaysia, as well as the Mixed Use
Architecture (Highly Commended) Award for Malaysia at the Asia Pacific Property
Awards 2011 in association with Bloomberg Television.
28 Mont’Kiara was honoured with the World’s Best Property award by the International
Property Awards 2010 in association with Bloomberg Television. This is in addition to
28 Mont’Kiara winning the Best High-Rise Development at country and regional level.

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In 2009, 10 Mont’Kiara and 11 Mont’Kiara won CNBC Arabia TV’s Asia Pacific Property
Awards for Best High Rise Architecture and Best High Rise Development, respectively.
10 Mont’Kiara won an Honour Award for excelling in landscape architecture under the
Property Developer category in the Malaysia Landscape Award 2009. Readers of Liquid
Real Estate magazine also voted Sunrise as Malaysia’s Best Residential Developer in
2008, and is listed as one of Forbes Asia's “Best Under US$1 billion” turnover public listed companies in 2005.
Sunrise currently has projects in Mont’Kiara, Kuala Lumpur’s Golden Triangle, Kajang and Bukit Jelutong, Shah Alam. Its business operations extend to Canada.
3.8.4

Asset and Facility Management
The asset and facility management business contributed RM1,285 million or approximately 26% of UEM Group's total revenue, and RM136 million PBT for the year ended 31 December 2011.
Opus Group
UEM has a 96.4% shareholding in Opus. Through its subsidiaries, Opus provides asset development and asset management consultancy services in Malaysia and abroad. Its focus is based upon the Opus Group’s core strengths in the sectors of transportation
(roads, rail and transit), water, buildings, facilities and infrastructure. Opus currently has operations in New Zealand, Australia, the United Kingdom, Canada, Vietnam, Indonesia and India.
Opus currently holds a 62.42% stake in Opus IC, a listed company on the New Zealand
Exchange.
Opus IC is a major international infrastructure, maintenance and design consultancy in
New Zealand, and manages 65% of the length of Transit New Zealand’s state highway network and approximately 35% of the outsourced Local Authority Network
Maintenance Management (NMM) contracts.
In Australia, Opus operates from 18 offices in Western Australia, New South Wales,
Queensland and the Northern Territory while in the United Kingdom, Opus operates through a network of 12 offices. In addition to traditional engineering and architectural professional services, Opus also offers significant specialist capability in rail and maritime engineering.
In Canada and USA, Opus has offices located in Vancouver, Victoria, Abbotsford,
Smithers Prince George, Kelowna, Calgary, Fredericton and Detroit.
Domestically, Opus works closely with the UEM Group and has successfully projectmanaged the construction of the NSE, the Second Link, the KLIA, the National Sports
Complex and the LRT. All these projects have been successfully completed.

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Opus is currently involved in the following projects:
Project

Project description

Expected completion date

Electrified Double
Track between
Ipoh and Padang
Besar

Project management services for the development of the 329-kilometre double track electrified line from Ipoh to Padang Besar. The project includes the design and construction of dual metre gauge tracks, bridges, tunnels, gradeseparated crossings, stations, depots, yards and sidings, drainage, earthworks and related retaining structures, signaling, communication, related sub-systems and 25kV electrification system 2014

Network
Maintenance
Management

Network maintenance management for pavement, slopes, culverts, bridges and tunnels of the entire NSE, the NSECL and the Second
Link

2015

Total Asset
Management
Service for UEM
Group Corporate
Headquarters
(“Mercu UEM”) KL
Sentral, Kuala
Lumpur

Providing asset management service for the 29storey Mercu UEM which integrates aspects of property management and facilities management that cover the soft services (cleaning & security) and technical services (Mechanical and
Engineering and building element)

2014

Project Consultant for the Proposed
Kelana Jaya Light
Rail Transit Line and Ampang Light
Rail Transit Line
Extension

Project consultant for the Kelana Jaya Line
Extension Project and the Ampang Line
Extension Project with a total length at approximately 17 km consisting 13 stations and
17.7 km consisting 13 stations respectively with the last station integrated with the Kelana Jaya
Line

2015

The Opus Group’s revenue increased by 9% from RM971 million in 2010 to RM1,057 million in 2011. Opus Group’s PBT decreased slightly by 3%, from RM89 million in 2010 to RM87 million in 2011. As at 31 December 2011, the Opus Group had total assets of
RM838 million, an increase of 9% from RM773 million as at 31 December 2010.
PROPEL
PROPEL, a wholly-owned subsidiary of UEM Builders, has over the years built a solid reputation as Malaysia’s leading infrastructure maintenance specialist. With a strong track record and experience in highway maintenance, PROPEL today has diversified its clientele and expanded its scope of services into other industries which include among others, commercial buildings, power plants, airports, F1 race circuit, plantations and municipalities. PROPEL has a work force of 898 staff and machinery exceeding 350 units.
PROPEL’s range of services includes pavement rehabilitation, upgrading and maintenance; traffic and safety management; and civil, mechanical, electrical and electronic maintenance of highway infrastructure and facilities; and plant optimisation.
Selected major projects over the last 3 years include:

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Scope of Work
Pavement
Rehabilitation
&
Maintenance

Project/Experience
•
•
•
•
•

Traffic
Management

•
•
•
•

Civil
Maintenance

•
•
•
•
•
•
•

Mechanical,
Electrical &
Electronic
Maintenance

•
•
•
•
•
•
•

Plant
Optimisation

•

The runway and taxiway pavement evaluation and associated works for Kota Kinabalu International Airport, Sabah
The parking apron pavement evaluation at the Sultan Ismail
Petra Airport, Kota Bharu, Kelantan
Pavement rehabilitation and maintenance for the SenaiDesaru Expressway
Pavement rehabilitation and maintenance for Penang Bridge widening project
Routine maintenance and rehabilitation of pavement along the
NSE, ELITE, BKE and Penang Bridge
Highway traffic management during the Third Lane Widening project, NSE
Highway traffic management during the construction of the
Eastern Dispersal Link highway in Johor
Traffic management during the F1 Race and the Motor GP at
Sepang
Event traffic management during the ESPN Formula Drift at
Dataran Merdeka Kuala Lumpur
Proposed Motorcycle Bridge Between Supervision Building and Southbound side of Seremban Toll Plaza
Upgrading of bridge parapet railing and installation of guardrails along the NSE.
Maintenance of the Rest and Service Areas along the NSE,
ELITE, BKE and Penang Bridge
Maintenance of slope, drainage, culverts, bridges and other structures along the NSE, ELITE, BKE and Penang Bridge
Facilities management for 11 buildings at Flagship Zone,
Cyberjaya
Facilities management for Mercu UEM building, Stesen
Sentral Kuala Lumpur
Facilities management for Persada PLUS building, Subang
Ampang Line Extension Project: Construction, Completion and Commissioning of Telco Cable Works for Prasarana
Supply, Deliver, Install, Test & Commissioning Lighting
System (LED) At Linkedua
Menora Tunnel upgrading works (low voltage switch gear)
Maintenance of Telecommunication Equipment along the
NSE, NKVE, ELITE expressway & Federal Highway Route 2
Replacement of Copper Cable for Emergency Telephone
System for PLUS Malaysia Sdn Bhd
Maintenance of the mechanical, electrical and electronic facilities for 11 buildings at Flagship Zone, Cyberjaya
Maintenance of the mechanical, electrical and electronic facilities along the NSE, ELITE, BKE and Penang Bridge
Service provider to Malakoff Corporation Berhad, for the
Tanjung Bin Power plant in Johor.

PROPEL Group recorded total revenue of RM504 million for the year ended 31
December 2011, a decrease of 4% from RM525 million for the year ended 31
December 2010. PROPEL Group’s net profit increased by RM127.3 million, from net loss of RM101.7 million in 2010 to net profit of RM25.6 million in 2011.The net loss in
2010 was mainly due to the losses arising from delayed certification of claims for the project at Madinat Zayed and the surrounding areas for the Western Region Municipal
Council of Abu Dhabi, United Arab Emirates. As at 31 December 2011, PROPEL had

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total assets of RM223 million, a decrease of 14% from RM258 million as at 31
December 2010.
UEM Environment Group
UEM Environment is a wholly-owned subsidiary of UEM.
UEM Environment’s wholly-owned subsidiary, Kualiti Alam, owns and operates one of the most comprehensive scheduled waste management facilities in Southeast Asia.
Kualiti Alam has been given the rights to provide collection, transportation, analysis, treatment and safe waste disposal services in Peninsular Malaysia on a full commercial basis exclusively for a period of fifteen years ending on 28 February 2015.
Over the years, the UEM Environment Group has grown organically by expanding its services to include the mid and upstream activities of scheduled waste management such as remediation of contaminated sites, sludge management and tank cleaning, environmental management, services for waste water and sewage treatment plants, technical and consultancy services.
UEM Environment has diversified its operations into scheduled waste recycling and recovery via its wholly-owned subsidiary, Kualiti Kitar Alam Sdn Bhd. The operations of waste recycling and recovery complement the existing treatment and disposal facilities of Kualiti Alam.
In September 2011, Environment-Idaman Sdn Bhd (“Env-Idaman”), in which UEM
Environment holds an indirect 50% equity stake, entered into a concession agreement with GOM (“Env-Idaman Concession Agreement”) to undertake municipal solid waste and public cleansing management services in Kedah and Perlis for a period of 22 years.
Prior to the Env-Idaman Concession Agreement, Env-Idaman had already undertaken the services with the local authorities in Kedah and Perlis since 1 November 2009.
UEM Environment Group recorded a total revenue of RM155 million for the year ended
31 December 2011, a decrease of 34% from RM235 million for the year ended 31
December 2010. UEM Environment Group recorded LBT of RM1 million in 2011 against
PBT of RM57 million in 2010. As at 31 December 2011, UEM Environment Group had total assets of RM283 million, a decrease of 11% from RM318 million as at 31
December 2010.
Faber
Faber is an associate company of UEM where UEM holds an equity interest of 34.3%.
Faber Medi-Serve Sdn Bhd (“FMS”) is a wholly-owned subsidiary of Faber. FMS was awarded a 15-year concession in 1996 by the Ministry of Health to provide hospital support services (“HSS”) ranging from bio-medical engineering maintenance, facility engineering maintenance, linen and laundry, clinical waste management and cleaning services to GOM hospitals in the northern states of Perlis, Kedah, Penang and Perak, and the East Malaysian states of Sabah and Sarawak.
FMS is a wellness support services company providing hospital support and facility management services which are widely acknowledged to be the industry benchmark in
Malaysia. FMS currently provides HSS to 81 Government hospitals including 2 laboratories under the concession. In addition to the provision of HSS to Government hospitals, FMS also undertakes clinical waste management services for 820 private clinics as well as various private hospitals nationwide. The concession has ended in
October 2011 and pursuant to a letter dated 27 April 2012 received from the Public
Private Partnership Unit of the Prime Minister’s Department, FMS shall in the interim continue with the existing Concession until the signing of a new HSS Concession
Agreement for the privatisation of healthcare support services with the Ministry of
Health.

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Leveraging on FMS's experience in the concession sector, Faber through its wholly owned subsidiaries Faber Facilities Sdn Bhd (“FFSB”) and Faber L.L.C (“FLLC”) has made inroads into India sub-continent and the United Arab Emirates. FFSB has two subsidiaries in India, Faber Star Facilities Management Limited and Faber Sindoori
Management Services Private Limited. Emerging market in India with population of more than 1 billion has created potential market for these companies to expand its operation overseas.
Faber Development Holdings Sdn Bhd (“FDH”) is Faber group’s wholly-owned property development arm. FDH has differentiated itself from the competition over the years by focusing on niche property projects in prime locations. FDH is responsible for the popular and matured Taman Desa development in Kuala Lumpur. Another signature development is the rapidly growing Laman Rimbunan, a mixed development in Kepong,
Kuala Lumpur.
Faber Group recorded total revenue of RM880 million for the year ended 31 December
2011, marginally lower by 1% from RM889 million for the year ended 31 December
2010. Faber Group’s PBT decreased by 6%, from RM129 million in 2010 to RM122 million in 2011. As at 31 December 2011, Faber Group had total assets of RM1,103 million, higher by 11% from RM990 million as at 31 December 2010.
3.8.5

Others
In addition to being a holding company for the companies in the above-mentioned business segments, UEM also invests in other industries and companies.
This segment of UEM Group's other businesses accounted for RM36 million or approximately 0.7% of UEM's total revenue and loss of RM135 million for the year ended 31 December 2011.
TIME
UEM holds a 45.03% equity interest in TIME. TIME's principal activities include ICT infrastructure and development, communication solutions, business-to-business (“B2B”) e-commerce solutions and services, project management and consultancy services, supply of hardware and equipment and application development services. TIME's main clients are the GOM and the GOM agencies such as Royal Malaysian Customs and the
Ministry of Education.
Dagang Net Technologies Sdn Bhd (“DNT”), a 71.25% owned subsidiary of TIME, is one of Malaysia’s leading e-commerce service providers. DNT is principally engaged in the development, management and provision of B2B e-commerce and computerised transaction facilitation services. It is the country’s first and leading e-commerce service provider entrusted to provide the national electronic trade facilitation service. SMKDagang*Net, the Customs electronic data integration project, enables electronic exchange of data, submission of documents and transmission of messages for cargo clearance. TIME Systems Integrators Sdn Bhd ("TSI"), a wholly-owned subsidiary of TIME manages deployment of large scale ICT projects, with a particular niche expertise in nationwide deployment within a short time frame. TSI maintains a good business relationship with major brands in the ICT industry, which include IBM, DELL, Hewlett
Packard, NEC, Samsung, Apple and Acer.
Another wholly-owned subsidiary of TIME, TIME Quantum Technology Sdn Bhd
("TQT"), is principally engaged in the supply of business continuity facility services and provision of services such as consultancy for ICT projects, hardware and software maintenance, outsourcing of information technology requirements, information technology project management, system integration for information technology systems and turnkey project implementer. TQT with its partners was appointed by UEM Land

65

Holdings to conduct a project definition study to design the blueprint and master plan for an intelligent township in Nusajaya.
TIME recorded a total revenue of RM65 million for the year ended 31 December 2011 with a net profit of RM91.1 million. TIME had disposed its entire equity interest in TIME dotcom Berhad via a renounceable offer for sale to its shareholders.

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SECTION 4.0 BACKGROUND INFORMATION ON THE ISSUER

4.1

Corporate History
UG was incorporated under the Companies Act, 1965 on 3 July 2006 under the name of
Syabas Estet Sdn Bhd. On 3 November 2006, the Issuer changed its name to United Growth
Sdn Bhd and was converted into a public company on 24 November 2006.
UG is a special purpose vehicle incorporated specifically for the issuance of the Sukuk, and has its registered address at 19-2 Mercu UEM, Jalan Stesen Sentral 5, Kuala Lumpur Sentral,
50470 Kuala Lumpur.

4.2

Share Capital
As at 31 March 2012, the authorised share capital of the Issuer is RM100,000.00 divided into
100,000 ordinary shares of RM1.00 each and the paid-up capital of UG is RM2.00 divided into 2 ordinary shares of RM1.00 each.

4.3

Shareholders
UG’s sole shareholder is UEM, which in turn is wholly-owned by Khazanah.

4.4

Business and Operation of the Issuer
As UG is a special purpose vehicle, its principal activities are restricted to the following:
(a)

to issue conventional or Islamic debt securities and to secure the repayment or payment of such debt securities by mortgage, pledge, charge or lien against or assignment of or such other securities on all or any of UG’s properties or assets, present or future and to carry out such obligations set forth in the terms and conditions of such debt securities and do all such acts as may be required under the law, regulations or guidelines in relation to such debt securities; and

(b)

to sell, purchase, hold and deal with Shariah-compliant assets and/or units in a portfolio of Shariah-compliant assets, whether for itself or as agent and trustee for other parties and to carry out such obligations and of all such acts as may be required relating to such assets and /or units.

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SECTION 5.0 INVESTMENT CONSIDERATIONS
Prospective investors of the Sukuk should consider carefully all information set out in this Information
Memorandum and, in particular, the risks involved. The Sukuk are subject to certain risks that could adversely affect the business of the UEM Group. The following section does not purport to be complete or exhaustive. Prospective investors should undertake their own investigations and analysis on UG and
UEM, their businesses and risks associated with the Sukuk. Investors should also note that each Sukuk issuance under the Programme will carry different risks and all investors should evaluate each Sukuk issuance on its merits.
The information contained in this Information Memorandum includes forward-looking statements, which implies risks and uncertainties. UG’s and UEM’s actual results could differ materially from those anticipated in these forward-looking statements and/or otherwise projected as a result of certain factors, including but not limited to those set forth in this section.

5.1

Risks relating to the Issuer
The Issuer is a special purpose vehicle, incorporated with limited liability on 3 July 2006, and has no significant operating history.
The Issuer will not engage in any business activity other than the issuance of the Sukuk under the Programme, the acquisition of the Portfolio Unit, and other activities incidental or related to the foregoing as required under the Transaction Documents. The Issuer will have no material assets other than the beneficial interests in the Assets relating to each Sukuk series, including the right to receive payments from UEM under the Management Agreement and the Purchase
Undertaking.
The ability of the Issuer to pay amounts due on the Sukuk will primarily be dependent upon receipt by the Issuer from UEM of all amounts due under the Management Agreement and the
Purchase Undertaking (which in aggregate may not be sufficient to meet all claims under the
Sukuk and the Transaction Documents).

5.2

Risks relating to UEM
UEM is principally a holding company and is largely dependent upon its investment income, including income generated from its management of the Portfolio Units, dividends and distributions from its subsidiaries and associate companies and proceeds from divestments, in order to pay all amounts due under the Management Agreement and the Purchase Undertaking to the Issuer.
The ability of UEM’s subsidiaries and associated companies to pay dividends and distributions to their shareholders (including UEM) is subject to, among other things, the results of their operations and the funding requirements of such companies, the approval of their directors and shareholders, and applicable law and restrictions contained in debt instruments of such companies, if any. Historically, PEB has been a chief contributor of UEM’s dividend income at company level. After the PLUS Malaysia Acquisition, PLUS Berhad’s cashflow-generating ability is expected to weaken due to its heavy debt burden from its debt issuance, a 5-year toll rate freeze and a downward revision in the toll rates for the domestic expressways. PLUS Berhad is expected to resume dividend distributions after the financial year ending 31 December 2014.
Moreover, further issuances of equity interests by the subsidiaries and associated companies of
UEM could dilute the ownership interest of UEM in such companies.
Furthermore, UEM's rights to dividends and distributions with respect to shares comprised in the
Assets will be effectively subordinated to all existing and future obligations of its direct and

68

indirect subsidiaries and associated companies. All claims of creditors of these companies, including trade creditors, lenders and all other creditors will have priority as to the assets of such companies over the claims of UEM and its creditors, including any claims of the Issuer relating to amounts payable by UEM pursuant to the Management Agreement and the Purchase
Undertaking.
Business risks of UEM’s subsidiaries and associated companies
The ability of UEM’s subsidiaries and associated companies to pay dividends and distributions to their shareholders (including UEM) is dependent on the subsidiaries and associated companies’ ability to maintain profitable operations.
The UEM Group’s principal businesses are (i) expressways; (ii) engineering and construction;
(iii) township and property development and (iv) asset and facility management and other interests: (i)

Expressways
UEM Group’s involvement in the construction, operation and maintenance of expressways is via PLUS Malaysia for local highways and via PEB for foreign highways.
The risks to which these businesses are exposed to include:
(a)

Traffic volume
PLUS Malaysia will derive almost all of its revenue from the operation of the
Expressways which is derived from the number of vehicles using the
Expressways and the toll rates chargeable. The traffic volume on any particular
Expressway is to a large extent dependent on factors beyond the control of
PLUS Malaysia. Nonetheless the leading factor affecting traffic volume has historically generally been, and is expected to continue to be, the level of economic activity in particular along the corridors of the Expressways and the associated demand for transportation by road, particularly in the regions served by the particular Expressway. Other factors which have in the past affected traffic volumes on the Expressways and are expected to continue to do so, include but are not limited to, the following:
(1)

the level of commercial, industrial and residential developments in such corridors; (2)

the price of petrol and other fuel;

(3)

affordability of automobiles;

(4)

per capital ownership of automobiles;

(5)

development of alternative, competing roads or expressways;

(6)

alternative domestic and international transport modes such as rail, sea or air;

(7)

unhindered access to the Expressways via feeder roads and adjoining highways not operated by the Issuer;

(8)

PLUS Malaysia’s ability to maintain the Expressways; and

(9)

the prevailing toll rates.

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(b)

Competition
The Concession Agreements and the Supplemental Concession Agreements do not prevent the Government from awarding concessions for new roads which may compete with the Expressways. There are a number of road schemes that are either completed, already under construction, committed and well into the planning stage, that could lead to traffic being diverted away from the Expressways. The main completed road schemes, which may become significant competitors to the Expressways, are the Kajang-Seremban Highway, the Guthrie Corridor Expressway and the Maju Expressway. The existing northsouth trunk road and Federal Highway Route 1 may also become direct competitors in the event the Government upgrades and improves the roads.
Potential future significant competitors to the Expressways include the Penang
Second Bridge (which is expected to be completed in year 2013), the West
Coast Expressway and also the potential third bridge linking Malaysia and
Singapore.
Traffic volume on the Expressways is also affected by competition from alternative means of transport and such forms of transport include rail, air and sea. For example, the national rail network in Peninsular Malaysia is being upgraded to a dual-track system and a study is underway for the proposed
Kuala Lumpur-Singapore High Speed Rail. The existing Light Rail Transit
System in Klang Valley, the Express Rail Link connecting the Kuala Lumpur city centre and the Kuala Lumpur International Airport and the proposed Klang
Valley MY Rapid Transit may also affect traffic volume on the Expressways. In addition, the growth of low cost air travel within Malaysia, particularly between major population centres, could reduce traffic volume on the Expressways.

(c)

Toll Rates
Each of the Supplemental Concession Agreements establishes the agreed toll rates. However, the Government may impose and had in the past imposed toll rates lower than that agreed upon in the Supplemental Concession Agreements or Concession Agreements for various reasons, including economic difficulty and negative consumer perceptions. In situations where the Government imposes toll rates lower than that agreed upon in the Concession Agreements or the Supplemental Concession Agreements (as the case may be), the
Government shall compensate the concessionaire in accordance with the
Concession Agreements or the Supplemental Concession Agreements (as the case may be).

(d)

Toll Receipts
The revenue derived from toll receipts may be reduced by:
(1)

leakage through fraud or non-payment due to the lack of proper monitoring and control; and

(2)

technical problems in toll collection systems.

Nonetheless, the introduction of various electronic toll collection (“ETC”) products, namely, the “SmartTAG” and “Touch ‘n Go”, has increased the efficiency in collecting tolls and controlling leakages. The toll collection operations via ETC are dependent on the continued application of technology. If
PLUS Berhad:
(a)

experiences system failure or shut down with respect to the “SmartTAG” and “Touch ‘n Go” payment systems or any of its monitoring or database systems; or

(b)

is forced by the withdrawal of technology by existing suppliers to procure alternative technology,
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this may hinder PLUS Berhad’s ability to collect tolls efficiently and control leakage. Any such problem could result in loss of revenue and an increase in operating cost due to operational inefficiencies.
This is mitigated by the fact that toll collections can always be made in cash and that there are alternative electronic systems available in the market, although the replacement of the existing electronic systems may be costly.
(e)

Operation, Maintenance and Related Expenditure
The costs of operating and maintaining the Expressways and capital expenditure may increase due to external factors such as:
(1)

standards of maintenance or road safety applicable to the Expressways prescribed by the highway authorities may become more onerous;

(2)

restoration of the Expressways due to damage from natural disasters;

(3)

more extensive or frequent repairs or maintenance due to higher loading, traffic volume or environmental stress; and

(4)

increases in the cost of materials or supplies.

The need for repair or maintenance of the Expressways may also adversely affect traffic flow.
In view of the risks above, PLUS Berhad has taken insurance policies to cover the risk on material damage to its assets, loss of anticipated toll revenue as a direct result of physical loss or damage due to insured perils.
Based on the Concession Companies’ experience in expressways operation,
PLUS Berhad will also be able to reasonably plan the requirement of the
Expressways in terms of routine maintenance and repairs and hence project the operating and capital expenditure of the Expressways.
(f)

Unforeseen Events
The use of the Expressways may be interrupted or adversely affected by events such as traffic accidents, defective design and construction, tunnel collapse, road subsidence and labour disputes. These may result in a reduction in toll revenue and an increase in the costs of operating the Expressways and may also adversely affect public confidence in the Expressways. Insurance has been taken to cover the risk of material damage to assets and loss of anticipated toll revenue as a result of loss or damage from specific perils, as well as public liability, fidelity guarantee, employer’s liability, director’s and officer’s liability insurance policies. However, there is no assurance that insurance will cover all liabilities resulting from claims. There are specific insurance limits per incident, which may be insufficient to meet the actual costs and losses and this could adversely affect the operations and financial conditions of the operating subsidiary maintaining the particular Expressway.

(g)

Regulatory Risk
PLUS Malaysia’s operations will be subject to the jurisdiction of numerous governmental agencies with respect to regulatory matters such as the Federal
Roads (Private Management) Act 1984, the Road Transport Act 1987 and the rules and regulations of the MHA. These regulations and requirements may limit the PLUS Malaysia’s activities or result in high compliance costs. Any failure by
PLUS Malaysia to comply with such regulations could result in material penalties being imposed on PLUS Malaysia. No assurance can be given that any future changes to present regulation or any introduction of new regulation, or laws, by relevant authorities will not have a material adverse impact on the
PLUS Malaysia’s business.
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(h)

Termination of the Concessions
There is a risk that the Concession Agreements pursuant to which the various
Expressways are constructed, maintained and operated, may be terminated due to occurrence of default from either the concessionaire or the Government.
If the Government terminates any of the Concession Agreements (other than the PBSB Concession) due to the default of the Concession Company or if the
Concession Company terminates the Concessions due to the default of the
Government (other than due to force majeure) or the Government expropriates any of the Concessions or the Concession Company, the Government will pay to the concession lenders the aggregate amount owing to the concession lenders at the date of payment.

(i)

Project Risk
In relation to any expressway projects carried out (including the fourth lane widening project at the PLUS Expressways), there are risks of cost overrun, risks related to the construction work required as well as risk of a force majeure event occurring. Cost overruns incurred may be due to engineering requirements, adverse site conditions, increase in prices of the raw materials
(for example, bitumen and steel) and construction difficulties which are borne by the concessionaire.
Construction risks arising from factors such as shortages of construction materials, unavailability and inefficiency of equipment and labour, price increases, labour disputes, the non-performance or unsatisfactory performance of contractors and subcontractors, inclement weather, natural disasters, accidents, changes in Government policies or adverse economic, business and credit conditions, failure or postponement in the issuance or grant of licences, permits and approvals and unforeseen engineering and environmental problems may arise.
No assurance can be given that PLUS Berhad will not encounter significant construction difficulties and delays. However, it is anticipated that the terms of
PLUS Berhad’s construction contracts would allow PLUS Berhad to have recourse against the contractors involved, such as under the provision for performance bonds and liquidated and ascertained damages for any delays that may be caused by such contractors.

(ii)

Engineering and Construction
UEM Builders spearheads UEM Group’s engineering and construction division. This business line is subject to the following risks:
(a)

Sensitivity to Economic Downturn
The engineering and construction industry is dependent on business and economic cycles. A downturn in the economy would thus mean a corresponding decrease in the performance of the industry.
UEM Group has the advantage of business diversification to mitigate the risks associated with its construction activities in Malaysia. With overseas exposures via UEM Builders’ overseas projects and subsidiaries, it is thus not subjected to just one country’s economic cycle.
Additionally the exposure to economic cycles is mitigated by the stable businesses of PROPEL. PROPEL is principally involved in construction, maintenance and repair of civil, mechanical and electrical works of roads, infrastructure and expressways Further details of their principal activities are set
72

out at “Section 3.8: UEM Group Business Segments Overview” of this
Information Memorandum.
(b)

Business Risks including Dependence on Labour and Raw Materials
Business risks faced by the engineering and construction industry include construction material and labour shortages, price increases in the costs of labour and materials, equipment, fuel and electricity tariffs and the nonperformance or unsatisfactory performance of subcontractors. Other risks include inflation, interest rate and exchange rate fluctuations, adverse weather conditions, natural disasters, labour disputes, accidents and changes in
Government legislation and priorities.
However, UEM Group is managed by a skilled and experienced management team that has taken measures to manage and mitigate these risks, such as obtaining insurance and back-to-back performance bonds from subcontractors, human resource management and prudent financial policies.

(c)

Delay in Completion of Projects
External factors such as timely approvals of relevant regulatory authorities, reliability of contractors, availability of raw materials, equipment and labour and the availability of financing may cause delays in the completion of projects. This may result in liabilities, reduced efficiency and loss or reduced profit.
UEM Group seeks to avoid potential delays through, amongst other things, its project management, long-term relationships with reliable suppliers, subcontractors and effective human resource planning. In addition, it evaluates its partners and puts in place clear legal provisions to govern its sub-contracting arrangements. (d)

Competition
Competition within the industry may lead to erosion of margins and market share. However, UEM Group’s policies, procedures and controls seek to ensure that it secures contracts that offer reasonable margins. UEM Group will also continue to be selective in its projects, focusing on projects in which it has a competitive advantage. (e)

Risks from Overseas Projects
UEM Builders’ overseas projects in Brunei and India make up approximately
44% of its outstanding jobs and this gives rise to risks given the different operating and regulatory environment abroad including unfamiliarity with local culture and work attitudes. This is compounded by UEM Builders’ lack of track record in Brunei and issues faced in its previous projects overseas.
Going forward, UEM Builders has tendered for several jobs locally including various packages in relation to the LRT extension project.

(f)

Price Sensitivity
In relation to the manufacturing, marketing, distribution and sale of cement by the CIMA Group, the prices of its products are subject to fluctuations in response to the forces of demand and supply as well as subject to terms agreed among major manufacturers from time to time and revisions to the ceiling price of cement as dictated by the GOM. The prices of CIMA’s products are also heavily influenced by the climate of the construction sector.

73

CIMA and its subsidiaries face competition from local producers of cement.
Trade liberalisation under the Asean Free Trade Area Agreement may expose local cement players to greater competition from their regional counterparts thus driving down cement prices.
There may also be competition from suppliers of substitute materials, such as structural steel, which may be used in the construction sector in place of cement. (iii)

Township and Property Development
UEM Land Holdings is UEM Group’s main subsidiary involved in the township and property development division and faces the following risks:
(a)

Sensitivity to Economic Downturn
The property development industry is dependent on the general performance and growth of the economy of Malaysia, Singapore and other nearby regions.
The factors affecting the property development industry include changes in general economic conditions such as government regulations, taxation, inflation, interest rates, exchange rate of foreign currencies and changes in business conditions such as deterioration in market conditions, rising cost of raw materials and labour and shortage of supply of labour and building materials. (b)

Industry Life Cycle
Economic conditions can be cyclical. The dependence of the property industry on the performance of the general economy means there is no assurance that the properties currently under development or to be developed by UEM Land
Holdings and its subsidiaries will be saleable and profitable in the future.
In order to mitigate this risk, the management of UEM Land Holdings and its subsidiaries seek to implement development plans according to market demand and in a timely manner, as well as undertaking marketing initiatives to generate interest and demand.

(c)

Competition
There may be direct competition from property developers with projects in the vicinity of UEM Land Holdings’ land bank, particularly in Johor, which may necessitate the lowering of prices and consequently lower profit margins.
UEM Land Holdings and its subsidiaries aim to ensure that their projects will be favourably accepted by the market, by conducting detailed feasibility studies before embarking on any particular project.

(d)

Performance Risk
The performance and profitability of the future development projects to be carried out by UEM Land Holdings and its subsidiaries will also depend, to a certain extent, on the quality, pricing, performance and reliability of the contractors and consultants appointed to carry out the development.
UEM Land Holdings and its subsidiaries will seek to retain qualified and capable contractors and consultants to mitigate this risk.

74

(e)

Regulatory Risk
BNM’s recent tighter guidelines on responsible lending are seen as a dampener to this sector. Nevertheless, fundamental demand will remain supported by domestic economic growth and increased rural-urban migration.

(iv)

Asset and Facility Management
UEM’s involvement in asset and facility management is through its direct and indirect subsidiaries, namely UEM Environment, OPUS and PROPEL as well as through its associate company, Faber.
This business of UEM Environment faces the following risks:
(a)

Economic Development
Generally, the amount of waste sent to Kualiti Alam for treatment and disposal is directly proportional to developments in and growth of the manufacturing sector and thus, a decline in the manufacturing sector will lead to a decline in the business of Kualiti Alam.
However, the GOM’s support for the manufacturing sector and incentives such as tax incentives, foreign investment schemes, tariffs and emphasis on development of small and medium-scale industries development, aimed at encouraging the growth and development of the domestic manufacturing industry mitigates this risk.

(b)

Regulatory Authorities
Lenient regulatory policy and lax enforcement of rules and regulations affect
Kualiti Alam’s business, as small-and-medium scale industries may pursue lowcost or poor quality alternatives for waste disposal.
However, the increasing awareness of the importance of a clean environment should create more favourable business conditions for the waste management business. (c)

Competition from Recyclers
Recyclers provide competition for Kualiti Alam, particularly in light of the
Ministry of Housing and Local Government’s implementation of the ‘Waste
Management Strategy’ which prioritises recycling.
To mitigate this risk, Kualiti Kitar Alam Sdn Bhd, a wholly-owned subsidiary of
Kualiti Alam provides waste recycling and recovery services.

(d)

Relocation of electrical and electronic manufacturers
The relocation out of Malaysia of certain manufacturers due to lower labour costs elsewhere may contribute to the decline in the volume of industry waste and hence a decline in the business of Kualiti Alam.
However, development activities in the electronic and electrical and ICT industries, as well as innovations in the consumer electronics industry and auto-electronics offer opportunities for growth in the manufacturing sector which may in turn boost Kualiti Alam’s business opportunities.

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(e)

Environmental Issues
There are risks relating to the operations of the waste management centre at
Bukit Nanas, Negeri Sembilan, including the ineffective handling of scheduled waste, the workers’ exposure to harmful substances and the release of untreated products to the environment.

The business of Opus is subject to the following risks:
(a)

Sensitivity to the Economic Climate
The transportation, engineering and construction industry is sensitive to business and economic cycles. A downturn in the economy would thus mean a corresponding decrease in the performance of the industry.
Opus Group has the advantage of economic climate diversification to mitigate the risks associated with the economic climate in Malaysia. With overseas exposures via its subsidiaries in countries such as New Zealand, Canada and
United Kingdom, Vietnam, Indonesia and India, its business performance is not restricted to one country’s economic cycle.

(b)

Foreign exchange fluctuation
The Opus Group is exposed to movements in foreign exchange rates due to its operations in several countries. Opus records its financial results in Ringgit
Malaysia, thus any fluctuations in currency exchange rates will result in exchange gains or losses arising from transactions carried out in foreign currencies. Similarly, the Opus Group will also experience exchange gains or losses as a result of transactions of foreign currency denominated assets and liabilities as at the balance sheet dates.

The business of PROPEL is subject to the following risks:
(a)

Labour Intensive Business
The business of maintenance of highways is labour intensive. In the event
PROPEL is unable to obtain sufficient manpower for its maintenance operations, the business, financial condition, operational results and prospects of PROPEL could be adversely affected.

(b)

Competition
PROPEL’s business is highly competitive and the barriers to entry are relatively low and therefore PROPEL faces potential competition not only from existing competitors, but also from existing customers who are becoming more involved in the maintenance of expressways to reduce costs from outsourcing.

(v)

ICT
The UEM Group’s involvement in the ICT industry is mainly carried out via TIME and its subsidiaries and associate companies (collectively, the “TEB Group”) which risks are:
(a)

Regulatory Considerations
The TEB Group’s operations, including the renewal of a certain concession agreement and continued award of supply contracts by the GOM, are subject to the jurisdiction of numerous government agencies, in particular the Ministry of International Trade and Industry and the Ministry of Education.

76

Furthermore, some of the TEB Group’s services are subject to regulatory control which may result in compliance costs and failure to comply with these regulatory requirements could result in penalties being imposed and/or non renewal of concession agreement.
(b)

Technology Risks
The ICT industry is subject to rapid and significant changes in technology. The
TEB Group faces competition from entities providing other ICT technologies and services and may face threats from technologies being developed or to be developed in the future. Accordingly, there can be no assurance that technologies employed by the TEB Group will not become obsolete or be subject to competition from new technologies in the future.
Furthermore, a slow pick up of nationwide internet and broadband proliferation also affects some of the TEB Group’s businesses. If the nationwide internet and broadband proliferation does not continue to grow or growth is not in line with the TEB Group’s expectations, or if the internet and other online services do not become a viable commercial medium, the TEB Group’s business, results of operations and financial position could be materially affected.
On a different note, failure of the technology whether from inherent errors, malfunctioning of equipment, misuse of technology, breach of security of information or loss of integrity of information may adversely affect the efficiency of the TEB Group’s ICT services.

(c)

Competition
The ICT industry in Malaysia is highly competitive. While the potential for growth is strong, the existence of a large number of ICT providers has resulted in intense competition and this may prolong the gestation period and affect profitability thereafter. There can be no assurance that the TEB Group will continue to maintain or grow its market position.
In addition, with the advent of borderless e-commerce brought upon by the
Internet and the World Wide Web, large and well-funded players from other countries may extend their market reach to entice Malaysian users into using their ICT services.

(d)

Limited Operating History
Some companies in the TEB Group have limited operating history in their fields.
There are risks frequently encountered by companies in the early stages of development, particularly companies in the new and rapidly evolving ICT industry. These risks include but are not limited to the TEB Group’s ability to:
(1)
(2)

maintain and develop strategic relationships with business partners;

(3)

offer compelling ICT services and content; and

(4)

(e)

continue to develop and upgrade its technology;

promptly address the challenges faced by early stage, rapidly growing companies which do not have an experience or performance base to draw on.

Dependence on Suppliers
Operating units of the TEB Group have a certain level of dependency on the technical assistance, services and technological resources of third party ICT

77

vendors. Considerable short-term impact may be incurred by the TEB Group should any of these suppliers’ services underperform.
(f)

Others
The ICT industry also entails telecommunications and other normal commercial risks, some of which may be beyond the control of the TEB Group and could materially affect the TEB Group’s financial condition and results of operations.

5.3

General risks of UEM’s Subsidiaries, Joint Ventures and Associated Companies
Political, economic, social developments and regulatory considerations
The business, prospects, financial condition and results of operations of the UEM Group may be adversely affected by political, economic, social developments and regulatory conditions in
Malaysia and other jurisdictions in which the UEM Group operates. Political, economic, social and regulatory uncertainties include but are not limited to the risks of war, terrorism, riots, expropriation, nationalism, renegotiation or nullification of existing contracts, introduction of new regulations, changes in inflation, interest rates and methods of taxation.
Although measures may be taken by the UEM Group to address and/or mitigate such developments, no assurance can be given that such measures would be sufficient or effective in the circumstances.
Risks in investments overseas
The UEM Group is subject to risks of doing business in a global environment.
The UEM Group's international projects and businesses are subject to inherent political and business risks which have the potential to impair these projects from making dividends or other distributions, including uncertainties associated with the following:
(a)

economic and political instability;

(b)

currency exchange rates fluctuations;

(c)

currency repatriation exchange control regulations;

(d)

expropriation; and

(e)

unexpected changes in regulatory requirements.

If any of the above events occur with unfavourable effects, the UEM Group would experience an adverse effect on its financial condition and results of operations.
The UEM Group has overseas projects in countries in the Middle-East, Indonesia, and India, and intends to continue to expand its presence in other countries.
Operations in overseas countries and markets are subject to risks and uncertainties. Economic deterioration or political instability in these countries could adversely affect the UEM Group's financial condition and results of operations.
In many of the countries which the UEM Group operates, some of the industries in which the
UEM Group is involved in are state regulated. The UEM Group's ability to continue operations or to earn a profit from its operations in these countries could be negatively affected by changes in laws or regulations, such as the imposition of restrictions on foreign ownership, expropriation or repatriation of earnings, expropriation or nationalization of the UEM Group's assets. In addition, the countries in which UEM Group operates or in which the UEM Group seeks to expand its operations could impose high tariffs or increase taxes, which could result in increased barriers to entry.

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Foreign exchange risk
Exchange rate fluctuations could negatively affect UEM Group's financial condition and results of operations through the amount of its equity contributions to and distributions from its international projects. The UEM Group may not be able to offset these fluctuations by hedges or to enter into hedge contracts on terms acceptable to the UEM Group.
With the continuing expansion of UEM Group's operations overseas, some of the UEM Group's revenue, expenses and obligations are denominated in, or directly or indirectly linked to benchmarks denominated in foreign currency while the UEM Group's reporting currency is denominated in Ringgit Malaysia. Changes in the exchange rate policy may result in significantly higher domestic interest rates, liquidity shortages, capital or further exchange controls. While fluctuations in the exchange rate may not have a material impact on the UEM Group's foreign currency denominated cash flow, it may have a material impact on the reporting of its revenue, expenses and foreign currency denominated obligations, as they are required to be stated in
Ringgit Malaysia, as well as on financial and other covenants contained in the UEM Group’s indebtedness that are based upon such reported revenue, expenses and obligations.
Interest rate fluctuations risk
In addition to its internally generated funds, the UEM Group has a combination of fixed and floating rates credit facilities to meet its funding requirements. The interest rate of its floating rate credit facilities is pegged to the respective financier’s base lending rate or cost of funds.
There can be no assurance that the base lending rates or costs of funds of its financiers would maintain at the current level in the future. Any adverse change in the interest rate regime may affect the financial performance of the UEM Group.
Dependence on directors, senior management and key technical personnel
The UEM Group relies to a significant extent on the abilities of some of its directors, senior management and key technical personnel for its continuing success, business directions and effective implementation of business strategy. The loss of any of these members could adversely affect UEM Group’s ability to operate its business or to compete in the industry, and in turn, affect its financial performance and prospects. Further, the UEM Group’s future success will also depend upon its ability to attract new skilled personnel. However, the UEM Group expects to be able to source experienced personnel in the similar industry in which it operates.
In addition, the UEM Group has taken adequate steps to reduce its loss of key management personnel by developing succession plans for its key management personnel as well as by putting a structured organisation structure and operations management systems in place.
5.4

Risks Relating to the Sukuk
Performance of contractual obligations
The ability of the Issuer to make payments in respect of the Sukuk will depend upon the due performance by the other parties to the Transaction Documents of their obligations thereunder.
In particular, the Issuer relies on the Manager of the Portfolio to distribute income derived from the Portfolio (which the Issuer will distribute as expected periodic distribution) and the Obligor to pay the Exercise Price pursuant to the Purchase Undertaking (which the Issuer relies on the redeem the Sukuk).

79

There has been no prior public market for the Sukuk; the liquidity and market price of the Sukuk following the issue of a series of Sukuk may be volatile
There is no existing market for the Sukuk and there can be no assurances that a secondary market for the Sukuk will develop, or if a secondary market does develop, that it will provide
Sukukholders with liquidity of investment or that it will continue for the life of the Sukuk. The market value of the Sukuk may fluctuate. Consequently, any sale of the Sukuk by Sukukholders in any secondary market which may develop may be at prices that may be higher or lower than the initial offering price depending on many factors, including prevailing interest rates and the market for similar securities. Accordingly, no assurance can be given as to the liquidity of, or trading market for, the Sukuk and an investor in the Sukuk must be prepared to hold the Sukuk for an indefinite period of time or until their maturity, nor any assurance can be given as to the ability of the Sukukholders to sell their Sukuks, or the prices at which the Sukukholders would be able to sell their Sukuks.
The market value of the Sukuk may be subject to fluctuation
Trading prices of the Sukuk may be influenced by numerous factors, including the operating results and/or financial condition of UEM, political, economic, financial and any other factors that can affect the capital markets, the industry or UEM. Adverse economic developments could have a material adverse effect on the market value of the Sukuk.
An investment in the Sukuk is subject to interest rate risk
Sukukholders may suffer unforeseen losses due to fluctuations in interest rates. Although the
Sukuk are Islamic securities which do not pay interest, they are similar to fixed income securities and may therefore see their price fluctuate due to fluctuations in interest rates. Generally, a rise in interest rates may cause a fall in bond prices. The Sukuk may be similarly affected resulting in a capital loss for Sukukholders. Conversely, when interest rates fall, bond prices and the prices at which the Sukuk trade may rise. Sukukholders may enjoy a capital gain but profit received may be reinvested for lower returns.
An investment in the Sukuk is subject to inflation risk
Sukukholders may suffer erosion on the return of their investments due to inflation.
Sukukholders would have an anticipated rate of return based on expected inflation rates on the purchase of the Sukuk. An unexpected increase in inflation could reduce the actual return.
Suitability of investments
The Sukuk issued under the Programme may not be a suitable investment for all investors.
Each potential Sukukholder must determine the suitability of that investment in light of its own circumstances. In particular, each potential Sukukholder should:
(a)

have sufficient knowledge and experience to make a meaningful evaluation of the
Sukuk, the merits and risks of investing in the Sukuk and the information contained in this Information Memorandum;

(b)

have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Sukuk and the impact the Sukuk will have on its overall investment portfolio;

80

(c)

have sufficient financial resources and liquidity to bear all of the risks of an investment in the Sukuk, including where the currency of payment is different from the potential
Sukukholder's currency;

(d)

understand thoroughly the terms of the Sukuk and be familiar with the behaviour of any relevant indices and financial markets; and

(e)

be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic and other factors that may affect its investment and its ability to bear the applicable risks.

Rating of the Sukuk
It is a condition to the issuance of the Sukuk that the Sukuk is assigned, on issue, a “AA2” credit rating by RAM. A rating is not a recommendation to purchase, hold or sell the Sukuk. There is no assurance that the rating will remain in effect for any given period of time or that the rating will not be lowered or withdrawn entirely if the circumstances in the future so warrant. In the event that the rating initially assigned to the Sukuk is subsequently lowered or withdrawn for any reason, no person or entity will be obligated to provide any additional credit enhancement with respect to the Sukuk. Any reduction or withdrawal of a rating may have an adverse effect on the liquidity and market price of the Sukuk. Any reduction or withdrawal of a rating will not constitute a dissolution event nor an event obliging the Obligor to pay under the relevant purchase undertaking. There is no obligation on the part of the Issuer, the Obligor, the Joint Lead
Arrangers/Joint Lead Managers, the Trustee or any other person or entity to maintain or procure maintenance of any rating for the Sukuk.
5.5

Risks Relating to the Assets
The purchase price paid by the Issuer for the Portfolio Units may not reflect the current market value The purchase price payable by the Issuer to SPV1, and by SPV1 to UEM, for the purchase of the Portfolio Units is based on the value of the Assets at cost to the Portfolio, which is at least equivalent to the total nominal value of the Sukuk to be issued plus the nominal amount of the
Sukuk outstanding at that point in time. Accordingly, at the time of the issue date in respect of a
Sukuk Series, the current market value of the relevant Assets in the Portfolio may be higher or lower than the purchase price paid by SPV1 and the same purchase price paid by the Issuer.
The ability of the Issuer to pay amounts due in respect of the Sukuk will be primarily dependent upon UEM fulfilling its obligations to make Top Up Payments and to purchase the Portfolio Units at the applicable Exercise Price under the Purchase Undertaking and to indemnify the Issuer pursuant to the terms of the Programme. Such obligations of UEM however, are not tantamount to a legal guarantee from UEM for payments under the Sukuk.
Recourse to the Issuer and the Assets are limited
Each Sukuk issue represents a fraction of undivided interest in the Portfolio Units that ultimately represent a proportionate undivided interest in the specific portfolio of Assets related to that issue. In order to mitigate the investment risk or uncertainty of income, the Sukukholders rely on the Purchase Undertaking provided by UEM. As such, the transaction will carry the full faith and credit of UEM which has been accorded a credit rating of “AA2” by RAM.
Following the declaration of a dissolution event pursuant to the terms of the Programme, the sole rights of each of the Issuer, the Trustee and the Sukukholders of the relevant series of
Sukuk will be against UEM to pay the Exercise Price in respect of such series. The
Sukukholders will otherwise have no recourse to the Issuer or the Assets. The Issuer’s
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obligations are not secured by the Portfolio Units, the Assets or any other assets of the Issuer or
UEM. The Portfolio Units and the Assets are not intended to be security for the Sukuk.
The Issuer and SPV1 have not made searches and investigations relating to the Assets
The Issuer and SPV1 have not made or caused to be made or will not make or cause to be made on its behalf all the enquiries, searches and investigations in the underlying Assets which a prudent purchaser of the Portfolio Units would make and the Joint Lead Arrangers/Joint Lead
Managers and UEM have made no such enquiries, searches or investigations. Each of the
Issuer and SPV1 and other such parties will rely on the representations and warranties made by
UEM to be contained in the transaction documents.
No investigation or enquiry will be made and no due diligence will be conducted in respect of any Assets in the Portfolio. In particular, the precise terms of the Assets sold will not be known
(including whether there are any restrictions on transfer or any further obligations required to be performed by UEM and SPV1 to give effect to the transfer of the Assets). No steps will be taken to perfect any transfer of the Assets. Ultimately payments of amounts due in respect of the
Sukuk will be dependent on the performance of UEM in making payments under the Purchase
Undertaking.
Claims for Specific Enforcement
In the event that UEM fails to perform its obligations under the Purchase Undertaking then the potential remedies available to the Issuer include obtaining an order for specific enforcement of
UEM’s obligations or a claim for damages. There is no assurance that a court will provide an order for specific enforcement which is a discretionary remedy.
The amount of damages which a court may award in respect of a breach will depend upon a number of possible factors. No assurance is provided on the quantum of damages which a court may award in the event of a failure by UEM to perform its obligations set out in the Purchase
Undertaking.
5.6

Forward-Looking Statements
Certain statements in this Information Memorandum are based on historical data, which may not be reflective of the future results, and others are forward-looking in nature, which are subject to uncertainties and contingencies. All forward-looking statements are based on estimates and assumptions made by the Issuer and UEM, and although the Board of the Issuer and UEM believe that these forward-looking statements are reasonable, the statements are nevertheless subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied in such forward-looking statements. In light of these and other uncertainties, the inclusion of forward-looking statements in this Information Memorandum should not be regarded as a representation or warranty by the Issuer and UEM or its advisers or managers that the plans and objectives of the Issuer and UEM will be achieved.

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SECTION 6.0 OTHER INFORMATION
6.1

Material Litigation
Save as disclosed below, UEM and its Material Subsidiaries do not have any other material litigation or legal proceedings, as at 31 March 2012:
1.

UEM
Qatari Court of First Instance between Public Works Authority of Qatar
(“Ashghal”), UEM and other Defendants namely Parsons International Company
Limited (“PIL”) and Qatar Insurance Company (“QIC”) relating to Salwa
International Highway Project executed by UEM.
Nature of Claim
Ashghal seeks: (i) to obligate the Defendants (UEM, PIL and QIC) jointly to pay it an amount of QAR 1,171,822,343.87 for material and moral compensation for damages incurred in accordance with the reasons stated in the present case; (ii) to reserve its right to claim damages for project delay and any other damages; (iii) to obligate the second defendant (UEM) to pay the plaintiff i.e. Ashghal an amount of
QR10,958,769.77 for costs and expenses incurred by the Public Works Authority of
Qatar on account of the electrical works; (iv) to appoint a 3-expert panel to review the subject matter of the case and to determine the durability period of the subject road given the alleged defective design and the execution thereof; and (v) to obligate the
Defendants to pay the trial expenses.
UEM asserts in its counterclaim that it is Ashghal that has actually breached its obligations in that during the course of performing the construction works on the project, and on account of conduct of others on the project, including Ashghal, and circumstances beyond UEM’s control, UEM was caused to incur significant additional expenses and had to absorb significant losses. Specifically, UEM’s progress was delayed, its planned program and sequence of performing the specified works were disrupted, UEM encountered significant price escalation of materials, its contract scope was drastically modified and it was forced to finance much of the specified works because of unreasonable/unfair payment practices of Ashghal. As a consequence of these events, UEM claims it suffered losses/damages in excess of
QAR1,165,640,448.21, which UEM has filed as a counterclaim against Ashghal.
Status
The case has advanced with the Defendants filing their substantive pleadings and exchanging memorials, the case is still considered to be at an early stage in the proceedings. It will be subsequent to the appointment of court experts and the progression of meetings with UEM’s experts and counsel, that the case will advance in a more timely manner.

2.

PLUS Berhad

(i)

Kuala Lumpur High Court Suit No: S2-22-817-2008 between Pelantar Agresif (M)
Sdn Bhd and PLUS Berhad
Nature of Claim
Pelantar Agresif (M) Sdn Bhd alleged that PLUS Berhad had trespassed their land and illegally erected a unipole on their land and constructed motorcycle lane without
Pelantar Agresif (M) Sdn Bhd’s permission. PLUS Berhad’s defence – the erection of the unipole and the construction of motorcycle lane was approved by the Malaysia
Highway Authority (“MHA”) and Pejabat Tanah dan Galian Selangor as the land formed

83

part of the PLUS Berhad’s right of way. Approval was obtained prior to the erection of the unipole and the construction of the motocycle lane.
PLUS Berhad inititated third party proceedings to include MHA and Pengarah Tanah dan Galian Selangor but the court only allowed MHA to be included as a third party to this suit.
Amount of claim: 60% revenue received by PLUS Berhad from the unipole from 8
March 2001 to 7 March 2007 or alternatively RM2,592,000.00 being the current market rate for the advertising on a like unipole within the vicinity at approximately
RM360,000.00 per annum per face AND rental of part of the land amounting to approximately 3,787.17 square foot at RM4.00 per square foot per month for a total sum of RM1,090,704.96.
Status
This case is fixed for case management on 3 July 2012 and set for trial on 19 to 22
November 2012.
Note: We understand from the solicitors that the suit was originally filed against PLUS and the solicitors substituted the party to PLUS Berhad subsequent to the PLUS
Malaysia Acquisition.
(ii)

Material litigation of which PLUS Berhad will be substituted as defendant
(a)

Penang High Court Suit No: 22-172-03 (MT4) between Kim Seng
Enterprise Sdn Bhd (“Plaintiff”) and PLUS (“Defendant”)
Nature of Claim
The Plaintiff and the Defendant had entered into a Temporary Occupation
Agreement. The Defendant was given a licence to occupy the land for slope rehabilitation works. The Plaintiff is suing the Defendant for breach of contract.
The alleged breach is that the Defendant failed to produce As-Build drawings, failed to execute “final joint inspection”, failed to properly dispose of earth dug and failed to reimburse the Plaintiff according to the agreed scale. The amount claimed is RM1,958,211.10
Status
The appeal for this suit is fixed for hearing on 14 May 2012.

(b)

Shah Alam High Court Suit No: 22NVC-1206-10/2011 between Syarikat
Bekalan Air Negeri Sembilan Sdn Bhd (“Plaintiff”) and PLUS
(“Defendant”)
Nature of Claim
The parties are at dispute as to the quantum of the water supply bill for the rest and service area at KM7 of the Seremban-Port Dickson Highway. The Plaintiff is claiming for an amount based on the date when the water meter was installed and not the date PLUS took over the Seremban-Port Dickson
Highway. The amount of the claim is RM2,411,127.40.
Status
The Plaintiff has filed an application to amend the Statement of Claim and reply to the Statement of Defence and the case is fixed for hearing on 18 May 2012.

84

3.

UEM Construction

(i)

Arbitration between Biaxis (M) Sdn Bhd v UEM Construction (Land & Staging &
Package 3B)
Nature of Claim
This dispute between Biaxis (M) Sdn Bhd and UEM Construction relates to the widening works to the Penang Bridge. UEM Construction was appointed as main contractor by
PBSB and in turn UEM Construction appointed Biaxis (M) Sdn Bhd as its subcontractor to carry out the piling works. It should be noted that the works were divided into 3 separate packages and 3 separate letters of award was issued to Biaxis (M) Sdn Bhd for each of the packages. The relevant details of the letters of award are as follows:
1.

Land & Staging th Clause 3: That the commencement date of works is 15 June 2006 and the completion date is 30th November 2006.
Clause 4: The agreed contract sum is RM8,586,829.75.
Clause 17: That UEM Construction is entitled to impose liquidated damages of
RM3000.00 per day for each day the subcontract remains incomplete.
Total amount claimed for Land & Staging
Biaxis (M) Sdn Bhd: RM7,133,655.97
UEM Construction: RM2,431,127.00
2.

Package 3B
Clause 3: That the commencement date of the works is January 2007 and the completion date is January 2008. The contract period was for 12 months.
Clause 4: The agreed contract sum was RM52,235,982.60. This sum is a provisional sum and subject to re-measurement.
Clause 17: That UEM Construction is entitled to impose liquidated damages of
RM20,000 per day for each day that the subcontract works remain incomplete.
Total amount claimed for Package 3B
Biaxis (M) Sdn Bhd: RM29,327,441.10
UEM Construction: RM10,467,000.00

Status
Parties have proceeded to arbitration. The arbitration for Land & Staging Package was completed on 24 April 2012 whilst the Arbitration for Package 3B will commence on 13
August 2012.
(ii)

Arbitration between Perdanika Berhad v UEM Construction (Package 3A)
Nature of Claim
This dispute between Perdanika Berhad and UEM Construction relates to the widening works to the Penang Bridge. UEM Construction was appointed as main contractor by
PBSB and in turn UEM Construction appointed Perdanika Berhad as its subcontractor to carry out the piling works. It should be noted that the works were divided into 3 separate packages and 3 separate letters of award was issued to Perdanika Berhad for each of the packages. The relevant details of the letters of award are as follows: nd Clause 3: That the commencement date of the works is 2 July 2007 and the completion date is 31st January 2008 (pursuant to the amended Letter of Award dated th 5 September 2007). The contract period was for 6 months.

85

Clause 4: The agreed contract sum was RM25,000,000.00. This sum is a provisional sum and subject to re-measurement.
Clause 17: That UEM Construction is entitled to impose liquidated damages of
RM20,000.00 per day for each day that the subcontract works remain incomplete.
Total amount claimed for Package 3A
Perdanika Berhad: RM29,327,441.10
UEM Construction: RM10,467,000.00
Status
Parties have proceeded to arbitration. The arbitration for Package 3A will commence in
19 November 2012.
(iii)

Kuala Lumpur High Court Civil Division S-22-795-2009 between Tenaga Nasional
Berhad (Plaintiff) and UEM Construction (Defendant)
Nature of Claim
The Plaintiff is claiming for damage to its electric cable at the Tapak Projek Pembinaan
Uniramp at KM140.2, Lebuhraya Utara Selatan, Jalan Persuhaan Baru Nagasari, Prai, in relation to the Penang Bridge Widening Project.
Status
This matter has been fixed for case management on 30 April 2012.

(iv)

Kuala Lumpur High Court Summons No: S-22-476-2010 between Southern Steel
Sdn Bhd (Plaintiff), Tenaga Nasional Berhad (Defendant) and UEM Construction
(Third Party)
Nature of Claim
The Plaintiff has made a claim against the Defendant for General or Special Damages amounting to RM11,041,402.00 plus interest, as a result of loss of supply of electricity.
The Defendant is seeking an indemnity from UEM Construction amounting to
RM11,041,402.00 plus interest.
Status
This matter has been fixed for case management on 30 April 2012.

4.

Sunrise

(i)

Kuala Lumpur High Court Writ No. 22NCVC-388-03/2012 between Indah Water
Konsortium Sdn Bhd (“IWK”) and Sunrise
Nature of Claim
The IWK’s solicitor filed for RM832,960.50 being IWK charges and interest and costs.
Status
Sunrise Berhad has a counterclaim of approximately RM2.8 million. Messrs B H
Lawrence & Co. is of the opinion that Sunrise Berhad has a good defence in this case and a fair chance of recovery of the counterclaim. This matter is set for case management on 25th May 2012.

86

(ii)

st

Kuala Lumpur High Court Writ No. S6-22-1310-2004 (“1 Suit”) nd Kuala Lumpur High Court Civil Originating Summons No: S6-24-1760-2005 (“2
Suit”), collectively, between Uptown Properties Sdn Bhd and Sunrise
Nature of Claim st The 1 Suit was an injunction granted against Sunrise Berhad by refraining Sunrise
Berhad from encroaching onto Uptown Properties Sdn Bhd (“Uptown”). Besides,
Uptown is claiming for:
(a)
A permanent injunction against Sunrise Berhad from encroaching into Uptown’s lands; (b)
Damages for trespass;
(c)
Damages for nuisance; and
(d)
Aggravated or exemplary damages.
Uptown also applied for an interlocutory injunction against Sunrise, which consent order was successfully recorded. The consent order inter alia, states an injunction restraining
Sunrise from encroaching onto Uptown’s lands and a mandatory injunction directing
Sunrise to reinstate and rehabilitate the ground level of Uptown’s lands at their own cost. nd

Under the 2 Suit, Sunrise applied to set aside the consent order but was withdrawn by
Sunrise as one of its applications to apply for injunction to preserve the land was struck out by the court.
Status
The main suit has yet to be set down for trial. In the meantime, Sunrise is currently undertaking the necessary to comply with the consent order.
5.

BNDSB
Court of Appeal Appeal Civil No: J-02-2968-11/2011 between BNDSB (“Appellant”) and Tenaga Nasional Berhad (“Respondent”)
Nature of Claim
Dispute on the quantum of compensation to pay the Appellant as a result of the
Respondent making use of the Appellant’s land. The Appellant is claiming
RM9,118,700.00 (which was set-off from the Respondent) as well as RM28,786,273.00 being the shortfall of the compensation.
Status
The Appellant’s solicitor received the Notes of Evidence and Grounds of Judgment on 7
May 2012. The Record of Appeal has to be filed three (3) weeks from 7 May 2012.

6.

Kualiti Alam
Seremban High Court Suit No. 22-51-2005 between Khoo Ewe Choo (“Plaintiff”) and Kualiti Alam (“Defendant”)
Nature of Claim rd The Plaintiff’s claim is essentially for, inter alia, a declaration that the alleged 3
Contract contained in the Plaintiff’s letter of proposal of 12 July 2004 to the Defendant is in existence and enforceable until 12 July 2007, an injunction to restrain the Defendant from interfering, preventing, obstructing and/or intimidating the Plaintiff from carrying out its services of cleaning the contaminated drums and disposing off the same and alternatively, for damages. The Defendant contends, inter alia, that the Plaintiff’s
87

employment has been lawfully and validly terminated and that there has never been an rd acceptance of the alleged 3 Contract by the Defendant. The Defendant in return, also counterclaims RM1,740,562.68 for loss and damage suffered.
Upon the matter being fixed for trial on 21 February 2011 before the Honourable Justice
Zulkifli bin Bakar, High Court of Malaya at Seremban, the Court pronounced its decision on the matter on 28 February 2011 and ordered the Plaintiff’s claims be dismissed with costs. It was further ordered that costs to be taxed in the event parties are unable to agree on the costs.
Further, the Plaintiff filed an application for an interim injunction wherein the said application for an interim injunction was dismissed on 29 August 2005. The Plaintiff’s appeal to the Court of Appeal against the Court’s decision of 29 August 2005 was also dismissed with costs on 12 June 2006. The Plaintiff had also applied for an Erinford
Injunction wherein the said application was also dismissed on 6 October 2005.
Subsequently, the Company made applications for Assessment of Damages of the ex parte Injunction Orders dated 15 March 2005 and 2 September 2005 which were set aside on 29 August 2005 and 6 October 2005 respectively.
In the event the applications for Assessment of Damages are allowed by the Court, it is likely that the Company would be entitled to the sum prayed for or any part thereof as ordered by the Court. This will, of course, subject to the proof of the alleged loss and damages suffered by the Company arising from or in connection to the Ex-parte
Injunction Orders.
Status
Hearing of the Assessment of Damages is fixed on 10 May 2012. Parties are required to submit witness statement one week before the hearing date.
6.2

Material Contracts
Save as disclosed in the audited financial statements of UEM and the Material Subsidiaries for the financial year ended 31 December 2011, in the announcements made to Bursa Malaysia by the Material Subsidiaries which are listed on Bursa Malaysia and save for the contracts entered into pursuant to the PLUS Malaysia Acquisition, as at 31 March 2012, neither UEM nor any of its
Material Subsidiaries have entered into any contract which are or may be material (not being contracts entered into in the ordinary course of business) within the past three (3) years.

6.3

Related Party Transactions
Save as disclosed through the audited financial statements of UEM and the Material
Subsidiaries for the financial year ended 31 December 2011 and through the announcements made to Bursa Malaysia by the Material Subsidiaries which are listed on Bursa Malaysia, as at
31 March 2012, UEM and its Material Subsidiaries have not entered into any related party transactions outside its ordinary course of business.

6.4

Contingent Liabilities
As at 31 March 2012, the contingent liabilities of UEM, its Material Subsidiaries and subsidiaries of the Material Subsidiaries are as follows:
Contingent Liability
Bank performance bonds and guarantees
Litigations – Notes (i) and (ii)
Income tax assessment – Note (iii)

88

RM’000
510,202
255,318
78,670
844,190

(i)

A group of 38 Felcra settlers (the “Plaintiffs”) had collectively served an originating summons against Felcra Berhad (“Felcra”), District Land Administrator (“DLA”) and the
Johor State Government (“State Government”) (collectively the “Defendants”). The
Summons pertains to 198 acres of land previously owned by the State Government, developed by Felcra and subsequently alienated to BNDSB for the development of
Bandar Nusajaya.
The Plaintiffs sought, inter-alia, for the Defendants to pay an additional total sum of
RM54.0 million for the 198 acres and an acre of land to each Plaintiff.
On 12 January 2010, the High Court of Malaya (“High Court”) has made a decision against Felcra for breach of contract and dismissed the Plaintiffs' action against the
DLA and State Government. However, the Plaintiffs on 8 February 2010 filed a notice of appeal to the Court of Appeal to appeal against the decision of the High Court on the quantum against Felcra and the dismissal of the action against the DLA and the State
Government. The matter is now set for case management on 19 June 2012.
BNDSB is not directly involved in these litigations, but by virtue of the novation agreement entered into between BNDSB, UEM and the Johor State Authority on 2 Dec
1994 (“BNDSB Novation”), is responsible for the additional land cost of land alienated to it, which includes the amounts claimed by the Plaintiffs.

(ii)

There are a total of 50 cases referred to High Court involving claims against the State
Government for additional compensation by the previous landowners of lands acquired for the Second Malaysian Crossing Project.
After hearing the 50 cases, the High Court maintained the amount of compensation awarded by the DLA in 15 cases, and increased the amount of compensation in the remaining 35 cases. The parties involved however, made further appeals to the Court of Appeal for higher compensation. The Court of Appeal ordered that all land acquisition appeals to be transferred to the Federal Court.
Of these 50 cases:
(a)

1 has been heard and dismissed by the Court of Appeal;

(b)

4 have been heard and dismissed by the Federal Court;

(c)

2 have accepted an out-of-court settlement proposed by Johor State Legal
Advisor;

(d)

4 have withdrawn the case against DLA; and

(e)

2 have been heard and granted additional compensation amounting to RM19.5 million by the Federal Court.

The remaining 37 cases, which the plaintiffs are seeking compensation with a total amount of RM201.3 million, are pending hearing at the Federal Court.
BNDSB is not directly involved in these litigations but by virtue of the BNDSB Novation, is responsible for the additional land cost of land alienated to it, which includes the amounts claimed by the previous landowners.
To date, the hearing for the remaining 37 cases have not been fixed.
(iii)

(a)

On 3 October 2011, BNDSB received a notice of additional assessment from the IRB for additional tax and penalty of RM50.9 million and RM22.9 million respectively in respect of the year of assessment 2006. BNDSB has commenced the appeal process against the additional assessment and penalty. 89

No provision for income tax and tax penalty have been made by BNDSB in respect of the above amount as BNDSB believes that the grounds for the appeal are valid. The hearing date has been fixed on 19 July 2012.
(b)

Opus International (M) Berhad (“OIM”) received an additional assessment from the Inland Revenue Board for additional tax payable and tax penalties in respect of year of assessment 1999 in 2009, which would have resulted in an additional expense to the UEM Group and OIM of RM4.8 million. OIM is in the process of appeal against the additional assessment.
No provision for income tax and tax penalties have been made by OIM for this additional tax assessment and penalties as OIM believes that the grounds for the appeal are valid.

(iv)

In 2002, a principal of IBSB, a wholly-owned subsidiary of UEM Builders, imposed liquidated damages for late delivery of a multi-storey condominium that was completed on 15 July 2001. Not agreeing to the imposition of the liquidated ascertained damages
(“LAD”) and on the basis that the architect did not consider several material events in the subsidiary's extension of time (“EOT”) application, a notice of arbitration was issued on 6 August 2003 by IBSB and arbitration proceedings are ongoing.
Having considered the facts of the case, the solicitors are of the opinion that IBSB has a strong case in upholding its claims as well as resisting the claim for LAD by the principal. No provision in the financial statements has been made because the directors are of the opinion that there is sufficient documentary evidence for further EOT, potential recovery of loss and expense claims due to delay and disruption and additional claims arising from uncertified variation orders.
Hearing is ongoing with cross examination and re-examination of Mr. Mior Idaris (the respondent’s witnesses) concluded. Further hearings have been fixed on 18 to 20 July
2012.

(v)

On 18 May 2007, Horizon Hills Development Sdn Bhd (“Horizon Hills”) entered into the following: (a)

The issue of, offer for subscription or purchase of, or invitation to subscribe for or purchase of Islamic Securities of up to RM270 million nominal value by
Horizon Hills, comprising:
(1)
(2)

(b)

up to 12-year Islamic bank guarantee medium term notes programme of up to RM200 million in nominal value under the principle of
Murabahah (“HH IMTN Programme”); and up to 7-year Islamic commercial paper programme of up to RM70 million in nominal value under the principle of Murabahah.

A Kafalah (bank guarantee) facility of up to RM205 million to guarantee the nominal value of the HH IMTN Programme of up to RM200 million and one profit payment in respect of the HH IMTN Programme of up to RM5 million.

Items (a) and (b) above shall collectively be referred to as the “Facilities”.
In this respect, Nusajaya Greens Sdn Bhd had provided a third party charge over approximately 1,227 acres of land (“Charge”) in favour of the security trustee for the
Facilities. 817 acres out of the total 1,227 acres had been purchased and paid by
Horizon Hills. Save and except in the event of default on the Facilities, the Charge is not expected to have a financial impact to UEM Group.
(vi)

UEM appointed Qatar Meta Coat WLL (“QMC”) to carry out certain works for a project in Qatar. QMC was subsequently terminated for non-performance on 12 April 2006. In
2006, QMC filed a claim in Qatar Court against UEM for QR39.8 million (RM36.2 million) which comprised QR8.2 million (RM7.5 million) for works omitted, liquidation of
90

performance bond of QR1.6 million (RM1.5 million) and general damages of QR30 million (RM27.3 million). UEM has filed a counterclaim of QR30.4 million (RM27.7 million) for rectification works and other expenses against QMC.
The risks and rewards of this project which has been completed, have been assumed by UEM Construction, which was appointed as UEM’s subcontractor. The case was adjourned to allow the appointed expert conducting technical assessments on the claims to present his report. On 30 November 2010, the court gave judgment that UEM
Construction is to pay QMC QR6,606,619 only and all other claims of QMC be cancelled. UEM had appealed but the decision at appeal has been given in QMC’s favour although the application to amend the incorrect sum in the judgment has been allowed by the
Chief Judge.
In view of the court judgment and pending the outcome of the appeal, provision has been made in the financial statements of UEM Construction.
(vii)

Please refer to Item 1 at Section 6.1 “Material Litigation” for details of legal proceedings filed in the Courts of Qatar by the Director General of the Public Works Authority
(Plaintiff) against Parsons International Ltd. (the 1st Defendant), UEM (the 2nd
Defendant) and Qatar Insurance Company (the 3rd Defendant).

(viii)

On 4 August 2010, UEM Construction was served with 3 notices to arbitrate from
Messrs Tan Swee Im, P.Y. Hoh & Tai, the solicitors for both Biaxis (M) Sdn Bhd
("Biaxis") and Perdanika Berhad ("Perdanika"). Biaxis and Perdanika are the subcontractors of UEM Construction for offshore bore piling work for the widening of the existing Penang Bridge Low Level Viaduct from East Abutment to Pier 24E and from
Pier 24W to Pier 69W. Both parties appointed Dato’ Bill Davidson as the sole arbitrator.
The amount claimed by the claimants is RM67 million and UEM Construction's counterclaim is RM32 million.
The solicitors are of the view that UEM Construction has valid grounds and merit for defending the claim. The hearing is currently ongoing.

91

APPENDIX 1

DIRECTORS’ REPORT AND AUDITED FINANCIAL STATEMENTS OF UEM
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011

92

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
CONTENTS

Directors' report

PAGE

1-6

Statement by directors

7

Statutory declaration

7

Independent auditors' report

8 - 10

Income statements

11

Statements of comprehensive income

12

Statements of financial position

13 - 14

Statements of changes in equity

15 - 17

Statements of cash flows

18 - 21

Notes to the financial statements

22 - 230

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
DIRECTORS' REPORT
The Directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2011.

PRINCIPAL ACTIVITIES
The principal activities of the Company are:
- project design, management and contracting in the fields of civil, electrical and mechanical engineering; - undertaking of turnkey projects; and
- investment holding.
The Group is principally engaged in the following four core activities through its subsidiaries, associates and joint ventures:
(a) Expressways
Operation and maintenance of tolled expressways.
(b) Township and property development
Township and property development.
(c) Engineering and construction
Project design, management and contracting in the fields of civil, electrical and mechanical engineering, pavement construction, operation and manufacturing of cement, quarry products, premix, wetmix and stainless steel pipes and other engineering services.
(d) Asset and facility management
Asset development and asset management services, infrastructure maintenance and integrated facilities management, and environmental and waste management services.
Besides the core activities, the subsidiaries, associates and joint ventures are also engaged in the provision of information technology services.
There have been no significant changes in the nature of the principal activities during the financial year. 1

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
RESULTS
Group
RM'000
(Loss)/profit from continuing operations, net of tax
Profit from discontinued operations, net of tax

Company
RM'000
6,127,312
6,127,312

3,646,785
11,696,769
15,343,554

Attributable to:
Owners of the parent
Non-controlling interests

(70,176)
15,413,730
15,343,554

6,127,312
6,127,312

There were no material transfers to or from reserves or provisions during the financial year other than that disclosed in the financial statements.
In the opinion of the Directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature other than the effects arising from the privatisation of PLUS
Expressways Berhad ("PEB"), involving the disposal of PEB's local businesses and undertakings, including all local assets and liabilities of PEB ("local businesses") to PLUS Malaysia Sdn Bhd
("PMSB"), a joint venture entity owned by the Company and the Employees Provident Fund
Board ("EPF") and the recognition of dividend income declared by PEB as distribution of proceeds arising from the disposal, as disclosed in Notes 8, 17, 19 and 50(a) to the financial statements. DIVIDENDS
The amount of dividends paid and declared by the Company since 31 December 2010 were as follows: RM'000
In respect of financial year ended 31 December 2011:
Dividend paid:
A first interim single tier dividend of 24.7 sen per ordinary share of
RM0.50 each, paid on 25 August 2011

201,821

Dividend declared:
A special interim single tier dividend of RM3,800,000,000 declared on 28 December 2011, payable on 12 January 2012

3,800,000
4,001,821

No final dividend was proposed for the financial year ended 31 December 2011.

2

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
DIRECTORS
The names of the Directors of the Company in office since the date of the last report and at the date of this report are:
Tan Sri Dr Ahmad Tajuddin Ali
Dato' Mohd Izzaddin Idris
Dato' Noorazman Abd Aziz
Abdul Kadir Md Kassim
Tan Sri Dato' IR. Omar Bin Ibrahim
Dato' Seri Ismail Shahudin
Zaiviji Ismail Abdullah
Wong Shu Hsien

Tan Sri Dato' Azman Mokhtar

(Chairman)
(Group Managing Director / Chief Executive Officer)

(Appointed on 21 February 2012)
(Appointed on 8 November 2011)
(Ceased as alternate director to Tan Sri Dato' Azman
Mokhtar on 1 August 2011)
(Appointed on 8 August 2011)
(Resigned on 1 August 2011)

DIRECTORS' BENEFITS
Neither at the end of the financial year, nor at any time during the financial year, did there subsist any arrangement to which the Company was a party, whereby the Directors might acquire benefits by means of acquisition of shares in, or debentures of the Company or any other body corporate. Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the Directors or the fixed salary of a full-time employee of the Company as shown in Note 5 to the financial statements) by reason of a contract made by the Company or a related corporation with any Director, or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest, except as disclosed in Note 46 to the financial statements.

3

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
DIRECTORS' INTERESTS
According to the Register of Directors' Shareholdings to be kept under Section 134 of the
Companies Act, 1965 the interests of Directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year were as follows:
PLUS Expressways Berhad ("PEB"):

Direct Interest
Abdul Kadir Md Kassim
#

Number of Ordinary Shares of RM0.25 Each
1 January
31 December
2011
Acquired
Disposed
2011
40,000

-

#
(40,000)

-

Deemed disposal following the selective capital distribution by PEB on 23 December 2011

UEM Land Holdings Berhad:

Direct Interest
Dato' Seri Ismail Shahudin

Number of Ordinary Shares of RM0.50 Each
1 January
31 December
2011
Acquired
Disposed
2011
7,032

-

-

7,032

None of the other Directors in office at the end of the financial year had any interest in shares in the Company or its related corporations during the financial year.

OTHER STATUTORY INFORMATION
(a) Before the income statements, statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the Directors took reasonable steps:
(i)

to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and

(ii)

to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

4

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
OTHER STATUTORY INFORMATION (CONTD.)
(b) At the date of this report, the Directors are not aware of any circumstances, which would render: (i)

the amount 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; and

(ii)

the values attributed to current assets in the financial statements of the Group and of the Company misleading.

(c) At the date of this report, the Directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
(d) At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the Group and of the Company, which would render any amount stated in the financial statements misleading.
(e) At the date of this report, there does not exist:
(i)

(ii)

(f)

any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability in respect of the Group or of the Company, which has arisen since the end of the financial year.

In the opinion of the Directors:
(i)

no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and

(ii)

no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report, which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.

5

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
INCOME STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2011

Note
Continuing Operations
Revenue
Cost of sales
Gross profit
Other income
Distribution costs
General and administration expenses
Other expenses
Profit/(loss) from operations
Finance costs
Share of results of associates
Share of results of joint ventures
Profit/(loss) before income tax
Income tax
(Loss)/profit for the year from continuing operations
Discontinued Operations
Profit for the year from discontinued operations Profit/(loss) for the year

3
4

7

8

4,975,918
(3,760,657)
1,215,261
148,115
(180,108)
(769,074)
(289,712)
124,482
(195,159)
56,984
69,732
56,039
(126,215)
(70,176)

3,453,897
(2,627,898)
825,999
145,546
(138,378)
(608,173)
(361,471)
(136,477)
(153,559)
61,201
16,315
(212,520)
(72,185)
(284,705)

8,120,678
(203,135)
7,917,543
259,148
(74,775)
(1,913,767)
6,188,149
(54,120)
6,134,029
(6,717)
6,127,312

445,784
38,968
484,752
153,282
(66,307)
(1,062,866)
(491,139)
(54,303)
(545,442)
(15,588)
(561,030)

15,413,730
15,343,554

1,240,271
955,566

6,127,312

(561,030)

188,424
767,142
955,566

6,127,312
6,127,312

(561,030)
(561,030)

9

Basic earnings per share
Loss from continuing operations
Profit from discontinued operations Profit for the year

(18.7)

62.0
23.1

(21.0)

(39.1)

465.0
444.0
43

(38.9)

465.0
446.3

Diluted earnings per share
Loss from continuing operations
Profit from discontinued operations Profit for the year
Net dividend per share (sen)

Company
2011
2010
RM'000
RM'000

3,646,785
11,696,769
15,343,554

5
6
18

Attributable to:
Owners of the Parent
Non-controlling interests
Earnings per share attributable to owners of the parent (sen):

Group
2011
2010
RM'000
RM'000
(Restated)

62.0
22.9

489.8

56.4

The income statement for the year ended 31.12.2010 was restated due to the adoption of IC 12 as disclosed in Note 2.2(b) and reclassification of the local expressways' results as discontinued operations, as explained in Note 8.
The accompanying notes form an integral part of the financial statements.
11

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2011
Group
2011
2010
RM'000
RM'000
(Restated)
Profit/(loss) for the year
Foreign currency translation differences for foreign operations
Share of other comprehensive
(expense)/income of associates
Fair value of available-for-sale financial assets
Cash flow hedge
Transfer to profit or loss on disposal
Other comprehensive (expense)
/income for the year, net of tax

15,343,554

955,566

16,370

(30,722)

(116,934)

Company
2011
2010
RM'000
RM'000
6,127,312

(561,030)

1,413

710

115,841

-

-

78,441
9,823
(2,233)

2,321
23,721
3,945

60,991
9,823
-

(1,118)
23,721
-

(14,533)

115,106

72,227

23,313

Total comprehensive income
/(expense) for the year

15,329,021

1,070,672

6,199,539

(537,717)

Attributable to:
Owners of the Parent
Non-controlling interests

3,639,721
11,689,300

319,724
750,948

6,199,539
-

(537,717)
-

Total comprehensive income
/(expense) for the year

15,329,021

1,070,672

6,199,539

(537,717)

The accompanying notes form an integral part of the financial statements.

12

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
STATEMENTS OF FINANCIAL POSITION
AS AT 31 DECEMBER 2011

2011
RM'000

Group
2010
RM'000
(Restated)

1.1.2010
RM'000
(Restated)

10
11
12
13
14
15
16
17
18
19
20

1,768,984
468,340
2,874,187
524,465
2,003
1,059,877
7,842
452,899
415,138
238,711

1,541,153
12,677,799
1,927,758
46,016
2,390
798,513
19,480
518,639
206,550
181,473

1,799,765
12,620,830
1,976,051
38,960
5,535
1,014,682
35,113
317,344
211,786
191,873

85,802
1,341
5,124,090
138,690
1,734,000
226,533

89,057
628
6,551,279
187,656
-

21
22

204,379

68,766

142,577

243,000
-

244,422
-

23(a)
24

68,424

2,460,346
36,940

2,180,220
52,419

-

-

25

30,854
8,116,103

41,058
20,526,881

36,119
20,623,274

7,553,456

7,073,042

Note

Company
2011
2010
RM'000
RM'000

ASSETS
Non-current assets
Property, plant and equipment
Concession intangible assets
Land held for property development
Investment properties
Prepaid land lease payments
Goodwill
Other intangible assets
Investment in subsidiaries
Investment in associates
Investment in joint ventures
Other investments
Long term amount due from subsidiaries Long term receivables
Toll compensation recoverable from the Government
Deferred tax assets
Non-current cash, bank balances and deposits

Current assets
Property development costs
Inventories and work-in-progress
Receivables
Toll compensation recoverable from the Government
Amount due from the Government
Amount due from holding company
Amount due from subsidiaries
Amount due from associates
Short term investments
Derivative asset
Cash, bank balances and deposits

26
27
28

1,097,346
328,081
13,998,875

817,841
233,520
2,106,297

660,319
476,291
2,515,671

7,866,359

264,783

23(a)
23(b)
29
21
29
30
31
25

1,114
9,244
722,996
601
1,873,170
18,031,427

181,872
15,966
588
47,564
103,354
5,210,704
8,717,706

117,879
23,550
577
24,114
133,218
4,662,243
8,613,862

375,647
1,612
366,782
109,420
8,719,820

305,677
1,553
52,756
357,785
982,554

Assets held for sale and assets of disposal group classified as held for sale

8

111,692

1,096,941

191,227

-

335,950

26,259,222

30,341,528

29,428,363

16,273,276

8,391,546

TOTAL ASSETS

The statements of financial position as at 1.1.2010 and 31.12.2010 were restated due to the adoption of IC 12 as disclosed in Note 2.2(b).

13

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
STATEMENTS OF FINANCIAL POSITION
AS AT 31 DECEMBER 2011 (CONTD.)

2011
RM'000

Group
2010
RM'000
(Restated)

408,544
1,226,193
66,605
5,918,217
7,619,559

408,544
1,226,193
73,179
5,474,495
7,182,411

2,037,338
9,656,897

4,009,374
11,191,785

39

10,317

34
35
36
37
38

Note

1.1.2010
RM'000
(Restated)

Company
2011
2010
RM'000
RM'000

EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital
Share premium
Non-distributable reserves
Retained earnings
Shareholder's funds

32

408,544
1,226,193
3,039,870
4,530,428
9,205,035

408,544
1,226,193
2,967,643
2,404,937
7,007,317

3,564,214
10,879,862

9,205,035

7,007,317

443,204

244,567

-

-

29,736
1,438,852
2,658,193

47,488
5,951
75,288
40,740
12,785,786

49,127
10,528
76,001
43,789
12,936,724

-

-

-

38,096

38,096

-

-

41
31
24

70,176
423,014
4,630,288

107,018
990,635
14,534,206

35,308
915,954
14,350,094

856,068
70,176
8,109
934,353

829,049
107,018
8,109
944,176

39

137,042

210,826

271,360

-

-

34
35
36
37
40

5,579
29,692
6,900,058

5,103
7,788
5,482
1,900,385

4,540
6,920
3,194
2,396,528

2,058,588

163,294

23(d)
41
41
42

6,026
1,059,420
3,800,000
34,220
11,972,037

19,407
4,393
1,960,505
100,000
37,304
4,251,193

19,216
9,532
1,448,147
26,091
4,185,528

275,211
89
3,800,000
6,133,888

176,753
6
100,000
440,053

-

364,344

12,879

-

-

TOTAL LIABILITIES

16,602,325

19,149,743

18,548,501

7,068,241

1,384,229

TOTAL EQUITY AND LIABILITIES

26,259,222

30,341,528

29,428,363

16,273,276

8,391,546

33

Non-controlling interests
TOTAL EQUITY
Non-current liabilities
Provisions
Retirement benefit obligations and provision for employee entitlements Deferred income
Deferred liabilities
Deferred revenue
Long term borrowings
Long term amount due to the Government
Long term amount due to a subsidiary
Derivative liabilities
Deferred tax liabilities

Current liabilities
Provisions
Retirement benefit obligations and provision for employee entitlements Deferred income
Deferred liabilities
Deferred revenue
Payables
Amount received from the
Government for Additional
Works
Amount due to subsidiaries
Amount due to associates
Short term borrowings
Dividend payable
Tax payable

Liabilities of disposal group classified as held for sale

23(c)

8

The accompanying notes form an integral part of the financial statements.
14

408,544
1,226,193
(58,306)
5,739,217
7,315,648

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2011

Group

Noncontrolling interests Attributable to Owners of the Parent

Total equity Share capital RM'000

Non-distributable
Share
premium
Reserves
RM'000
RM'000

Retained earnings RM'000

Total
RM'000

RM'000

RM'000

408,544

1,226,193

73,179

5,922,892

7,630,808

4,669,667

12,300,475

Total comprehensive income

408,544
-

1,226,193
-

73,179
(7,064)

(448,397)
5,474,495
3,646,785

(448,397)
7,182,411
3,639,721

(660,293)
4,009,374
11,689,300

(1,108,690)
11,191,785
15,329,021

Net disposal, dilution and accretion of interest in subsidiaries
Acquisition of subsidiary
Dividends on ordinary shares
43
Dividends to non-controlling shareholders
At 31 December 2011

408,544

1,226,193

490
66,605

798,758
(4,001,821)
5,918,217

Note
At 1 January 2011
Effects of adopting IC 12

2.2(b)

15

799,248
(744,235)
55,013
4,500
4,500
(4,001,821)
(4,001,821)
- (12,921,601) (12,921,601)
7,619,559
2,037,338
9,656,897

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2011 (CONTD.)

Group

Attributable to Owners of the Parent

Total equity At 1 January 2010
2.2(b)

Total comprehensive income
Net disposal and dilution of interest in subsidiaries
Additional capital contribution
Acquisition of subsidiary
Share options granted
Dividends on ordinary shares
43
Dividends to non-controlling shareholders
At 31 December 2010

Share capital RM'000

Non-distributable
Share
premium
Reserves
RM'000
RM'000

Retained earnings RM'000

Total
RM'000

RM'000

RM'000

408,544

Note

Effects of adopting IC 12

Noncontrolling interests 1,226,193

(58,306)

6,134,108

7,710,539

4,131,896

11,842,435

408,544

1,226,193

(58,306)

(394,891)
5,739,217

(394,891)
7,315,648

(567,682)
3,564,214

(962,573)
10,879,862

-

-

131,300

188,424

319,724

750,948

1,070,672

408,544

1,226,193

185
73,179

8,007
(461,153)
5,474,495

8,007
185
(461,153)
7,182,411

(17,466)
222,734
43,047
111
(554,214)
4,009,374

(9,459)
222,734
43,047
296
(461,153)
(554,214)
11,191,785

The accompanying notes form an integral part of the financial statements.

16

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2011 (CONTD.)

Share capital RM'000
408,544
408,544

Note
At 1 January 2011
Total comprehensive income
Dividends
At 31 December 2011
At 1 January 2010
Total comprehensive income/(expense)
Dividends
At 31 December 2010

43

43

1,226,193
1,226,193

2,967,643
72,227
3,039,870

2,404,937
6,127,312
(4,001,821)
4,530,428

7,007,317
6,199,539
(4,001,821)
9,205,035

408,544
408,544

Company

Non-distributable
Share
premium
Reserves
RM'000
RM'000

1,226,193
1,226,193

2,944,330
23,313
2,967,643

3,427,120
(561,030)
(461,153)
2,404,937

8,006,187
(537,717)
(461,153)
7,007,317

The accompanying notes form an integral part of the financial statements.

17

Retained earnings RM'000

Total
RM'000

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2011

Note

OPERATING ACTIVITIES
Cash receipts from customers
- External
- Internal
Cash receipts from others
Cash payments to external suppliers
Cash payments to employees and for expenses
Cash used in operations
Net taxes paid
Net operating cash flows attributable to discontinued operations
Net cash generated from/(used in) operating activities

Group
2011
2010
RM'000
RM'000
(Restated)

Company
2011
2010
RM'000
RM'000

4,594,128
65,236
(3,341,844)

INVESTING ACTIVITIES
Dividends received
Interest income received
Proceeds from disposal of
- property, plant and equipment and intangible assets
- investment in associates
- investment properties
- long and short term investment
Deposit received from disposal of non-current asset held for sale
Disposal of subsidiaries, net of cash and cash equivalents disposed
17(c)
Payment for EES shares
Capital distribution from associate under liquidation
Acquisition of subsidiaries, net of cash and cash equivalents acquired
17(a)
Deferred consideration paid for subsidiaries acquired in prior years
Investment in existing subsidiaries

16,501
4,100
3,200
(6,526)

44,913
4,611
36,433
(64,276)

(1,369,420)
(51,900)
(124,232)
8

3,465,530
20,338
(2,622,409)
(1,074,738)
(211,279)
(115,020)

(68,984)
(51,709)
-

(66,124)
(44,443)
(28,569)

2,283,699

2,746,274

2,107,567

2,419,975

20,302
52,218

-

-

(51,709)

(73,012)

17,263
33,431

391,595
27,649

420,053
33,406

26,353
6,601
1,670

10,446
4,050
398
-

103
-

1,322
41,161
-

-

16,020

-

16,020

7,869,486
163,952
(16,068)

18

(172,706)
(33)

517,759
-

44,000
(33)

4,315

-

-

(73,472)

-

-

(297)
-

(469,972)

(116,242)

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2011 (CONTD.)

Note

INVESTING ACTIVITIES (CONTD.)
Concession intangible assets expenditure Investment in land held for property development Investment properties
Investment in associates
Investment in joint ventures
Net purchase of special investment funds
Purchase of other investments
Deposit paid on investment in joint ventures
Advance to joint venture and partners
Net repayment from / (advance to) subsidiaries Purchase of intangible assets
Purchase of property, plant and equipment
Net investing cash flows attributable to discontinued operations
8
Net cash generated from/(used in) investing activities

Group
2011
2010
RM'000
RM'000
(Restated)

Company
2011
2010
RM'000
RM'000

(9,190)

(46,782)

(295,225)
(3,229)
(11,671)
(34,698)

(22,695)
(1,766)
(18)
(13)

(27,208)

(660,593)
(165,603)
(25,500)
(629)

(50,000)
(113)
(20,270)

(307,592)
(165,603)
(25,500)
(255)

(50,000)
-

(3,681)

(2,463)

219,920
(1,104)

(53,368)
(463)

(397,045)

(147,828)

(1,617)

(992)

859,459

(10,696)

-

-

7,376,909

(463,229)

158,175

334,864

19

-

-

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2011 (CONTD.)

Note

FINANCING ACTIVITIES
Proceeds from issuance of shares to non-controlling shareholders
Proceeds from issuance of preference shares
Proceeds from borrowings
Interest paid
Dividends paid to shareholder of the
Company
Dividends paid to non-controlling sharehoders in subsidiaries
Advance to related parties
Redemption of debt securities
Repayment of borrowings
Repayment of hire purchase and lease payables
Net financing cash flows attributable to discontinued operations

Group
2011
2010
RM'000
RM'000
(Restated)

Company
2011
2010
RM'000
RM'000

549,505
2,382
880,718
(196,272)

(53,010)

(53,010)

(361,153)

(301,821)

(361,153)

(10,310)
(1,400)
(20,000)
(830,930)

(8,433)
(288,993)

-

-

(7,803)

Net cash used in financing activities

9,385
466,609
(134,453)

(301,821)

8

223,921

-

(8,141)

-

-

(13,011,334)

(1,052,692)

-

-

(12,947,265)

(1,153,950)

(354,831)

-

(414,163)

Transfer from/(to) non-current cash, bank balances and deposits

10,539

(6,541)

-

-

Effect of exchange rate changes

10,872

2,535

-

(1)

NET (DECREASE)/INCREASE IN CASH
AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT
END OF YEAR
(a)

(3,441,378)

798,790

(248,365)

(152,312)

5,219,243

4,420,453

357,785

510,097

1,777,865

5,219,243

109,420

357,785

20

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2011 (CONTD.)
(a) Cash and cash equivalents comprise the following:
Group
2011
RM'000

2010
RM'000

1,418,932
5,374
1,424,306

3,678,979
1,219,162
4,898,141

107,239
107,239

351,985
351,985

25

253,358
195,506
448,864
1,873,170

264,645
47,918
312,563
5,210,704

2,181
2,181
109,420

5,800
5,800
357,785

Cash and bank balances included in assets of disposal group classified as held for sale

8

-

107,478

-

-

Bank overdrafts

42

109,420

357,785

Note
Short term deposits
- Unrestricted
- Restricted
Cash and bank balances
- Unrestricted
- Restricted

(95,305)
1,777,865

(98,939)
5,219,243

The accompanying notes form an integral part of the financial statements.

21

Company
2011
2010
RM'000
RM'000

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011
1. CORPORATE INFORMATION
The principal activities of the Company are:
- project design, management and contracting in the fields of civil, electrical and mechanical engineering; - undertaking of turnkey projects; and
- investment holding.
The Group is principally engaged in the following four core activities through its subsidiaries, associates and joint ventures:
(a) Expressways
Operation and maintenance of tolled expressways.
(b) Township and property development
Township and property development.
(c) Engineering and construction
Project design, management and contracting in the fields of civil, electrical and mechanical engineering, pavement construction, operation and manufacturing of cement, quarry products, premix, wetmix and stainless steel pipes and other engineering services.
(d) Asset and facility management
Asset development and asset management services, infrastructure maintenance and integrated facilities management, and environmental and waste management services.
Besides the core activities, the subsidiaries, associates and joint ventures are also engaged in the provision of information technology services.
There have been no significant changes in the nature of the principal activities during the financial year.

22

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
1. CORPORATE INFORMATION (CONTD.)
The Company is a public limited liability company, incorporated and domiciled in Malaysia. The registered office and principal place of business is located at 19-2, Mercu UEM, Jalan Stesen
Sentral 5, Kuala Lumpur Sentral, 50470 Kuala Lumpur.
The holding company is Khazanah Nasional Berhad ("Khazanah"), a company incorporated in
Malaysia.
The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 29 February 2012.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of preparation
The financial statements of the Group and of the Company are prepared under the historical cost convention, unless otherwise disclosed in the accounting policies below, and comply with the Companies Act, 1965 and Financial Reporting Standards ("FRSs") in
Malaysia.
The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand (RM'000) except where otherwise indicated.
2.2 Changes in accounting policies
On 1 January 2011, the Group and the Company adopted the following new and amended
FRSs and IC interpretations mandatory for annual financial periods beginning on or after 1
July 2010:
Effective for the financial period beginning on or after
FRS 1: First-time Adoption of Financial Reporting Standards
FRS 3: Business Combinations (revised)
FRS 127: Consolidated and Separate Financial Statements
Amendments to FRS 5: Non-current Assets Held for Sale and
Discontinued Operations
Amendments to FRS 138: Intangible Assets
IC Interpretation 12: Service Concession Arrangements
IC Interpretation 16: Hedges of a Net Investment in a Foreign
Operation
IC Interpretation 17: Distributions of Non-cash Assets to Owners
23

1 July 2010
1 July 2010
1 July 2010
1 July 2010
1 July 2010
1 July 2010
1 July 2010
1 July 2010

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.2 Changes in accounting policies (Contd.)
Effective for the financial period beginning on or after
Amendments to IC Interpretation 9: Reassessment of Embedded
Derivatives
Amendments to FRS 132: Financial Instruments : Presentation Classification of Rights Issues
Amendments to FRS 1: Limited Exemption from Comparative FRS 7
Disclosures for First-time Adopters
Amendments to FRS 1: Additional Exemptions for First-time Adopters
Amendments to FRS 2: Share-based Payment
Amendments to FRS 2: Share-based Payment - Group Cash-settled
Share-based Payment Transactions
Amendments to FRS 7: Improving Disclosures about Financial
Instruments
Amendments to FRSs ‘Improvements to FRSs (2010)’
IC Interpretation 4: Determining Whether An Arrangement contains a
Lease
IC Interpretation 18: Transfers of Assets from Customers

1 July 2010
1 March 2010
1 January 2011
1 January 2011
1 July 2010
1 January 2011
1 January 2011
1 January 2011
1 January 2011
1 January 2011

The adoption of the above standards and interpretations does not have any significant impact to the financial statements of the Group and of the Company, except as described below: (a) FRS 127: Consolidated and Separate Financial Statements
This Standard supersedes the existing FRS 127 and replaces the current term
'minority interest' with a new term 'non-controlling interest' which is defined as the equity in a subsidiary that is not attributable, directly or indirectly, to a parent.
Accordingly, total comprehensive income shall be attributed to the owners of the parent and to the non-controlling interests, even if this results in a deficit balance to the noncontrolling interests.
Changes in the Group's ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. If the Group loses control of a subsidiary, any gains or losses are recognised in profit or loss and any investment retained in the former subsidiary shall be measured at its fair value at the date when control is lost.
24

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.2 Changes in accounting policies (Contd.)
(a) FRS 127: Consolidated and Separate Financial Statements (Contd.)
The Group re-phrased its minority interests as non-controlling interests and remeasured the non-controlling interests prospectively in accordance with the transitional provisions of the revised FRS 127.
The adoption of the revised FRS 127 did not have any impact on the Group's consolidated financial statements.
(b) IC Interpretation 12: Service Concession Arrangements
IC Interpretation 12: Service Concession Arrangements ("IC 12") provides guidance on the accounting by the operator of a service concession arrangement involving the provision of public sector services. Hence, IC 12 is applicable to all tolled expressways concession arrangements awarded to the subsidiaries of the Group.
Infrastructure within the scope of IC 12 is recognised as intangible assets of the operator as the contractual service arrangement does not convey the right to control the use of the public service infrastructure to the operator and instead, the operator receives a right to charge users for the use of the public service infrastructure.
Where the operator has contractual obligations to maintain the infrastructure to a specified level of serviceability or to restore the infrastructure to a specified condition, such contractual obligations to maintain or restore infrastructure, except for any upgrade element, shall be recognised and measured in accordance with FRS 137:
Provisions, Contingent Liabilities and Contingent Assets, ie. at the best estimate of the expenditure that would be required to settle the present obligation at the end of the reporting period.
The application of IC 12 has led to the change in the Group's accounting policies for the classification, recognition and measurement of service concession arrangements and maintenance obligations, as follows:
(i)

Change in classification and nature of Concession Intangible Assets
Prior to the adoption of IC 12, all the infrastructure costs incurred (which comprised capitalised expressway development expenditure, heavy repairs, other concession assets and capital work-in-progress) were classified as
Concession Assets, part of tangible assets of the Group, and were stated at cost less accumulated amortisation and impairment losses.

25

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.2 Changes in accounting policies (Contd.)
(b) IC Interpretation 12: Service Concession Arrangements (Contd.)
(i)

Change in classification and nature of Concession Intangible Assets
(Contd.)
Upon adoption of IC 12, only those infrastructure costs incurred that establish or vary the right of the Group in providing the public services are classified as
Concession Intangible Assets. These infrastructure costs are stated at cost less accumulated amortisation and impairment losses.

(ii)

Write off of heavy repairs and provisions for heavy repairs
Heavy repairs relate to costs incurred to repair bridges, slopes and embankments, rectification of settlements and pavement rehabilitation of medium and high traffic sections along the expressways.
Prior to the adoption of IC 12, the Group's heavy repairs were capitalised as part of tangible concession assets, and amortised on a straight line basis over
5-7 years. These heavy repairs did not establish the right to provide the public services, hence the carrying value are written off to retained earnings upon the adoption of IC 12.
In addition, provision for heavy repairs being the contractual obligations to maintain and restore the infrastructure to a specified standard of serviceability, is recognised and measured at the present value of estimated expenditures expected to be required to settle the present obligation at the reporting date.

In accordance with the transitional provisions of IC 12, the changes in accounting policies have been applied retrospectively and comparative figures have been restated accordingly. The financial impact arising from the adoption of this Interpretation is tabulated in the following page.

26

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.2 Changes in accounting policies (Contd.)
(b) IC Interpretation 12: Service Concession Arrangements (Contd.)
Increase/(Decrease)
As at
As at
31 December 31 December
2011*
2010
RM'000
RM'000
Statements of financial position - Group
Concession intangible assets
Deferred tax liabilities
Provision for heavy repairs
Retained earnings
Non-controlling interests

10,317
(3,867)
(6,450)

(804,267)
(326,704)
631,127
(448,397)
(660,293)

* The financial impact as at 31 December 2011 relates to overseas expressways controlled by the Group at the reporting date.
Increase/(Decrease)
2011
2010
RM'000
RM'000
Income statements - Group
Continuing Operations
Cost of sales
Loss for the year from continuing operations, net of tax Profit for the year

1,317

-

(1,317)

76,483
(17,074)

175,074
(39,274)

(59,409)

(135,800)

(59,409)

Discontinued Operations:
Cost of sales
Income tax
Profit for the year from discontinued operations, net of tax

-

(137,117)

(c) FRS 3: Business Combinations (revised)
The revised FRS 3 introduces a number of changes in the accounting for business combinations, loss of control and transactions with non-controlling interests occurring after 1 July 2010. These changes will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future reported results.
The adoption of the revised FRS 3 is applied to acquisitions that happen on or after 1
July 2010.
27

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.2 Changes in accounting policies (Contd.)
(d) Amendments to FRS 7: Improving Disclosures about Financial Instruments
The amended standard requires enhanced disclosure about fair value measurement and liquidity risk. Fair value measurements related to items recorded at fair value are to be disclosed by source of inputs using a three level fair value hierarchy (Level 1,
Level 2 and Level 3), by class, for all financial instruments recognised at fair value. A reconciliation between the beginning and ending balance for Level 3 fair value measurements is required. Any significant transfers between levels of the fair value hierarchy and the reasons for those transfers need to be disclosed. The amendments also clarify the requirements for liquidity risk disclosures with respect to derivative transactions and assets used for liquidity management. The fair value measurement disclosures are presented in Note 44(f). The liquidity risk disclosures are not significantly impacted by the amendments and are presented in Note 44(c).
2.3 Standards issued but not yet effective
The Group has not adopted the following standards and interpretations that have been issued but not yet effective:
Effective for the financial period beginning on or after
Amendments to IC Interpretation 14: Prepayments of a Minimum Funding
Requirement
IC Interpretation 19: Extinguishing Financial Liabilities with Equity
Instruments
FRS 124 : Related Party Disclosures (revised)
Amendments to FRS 1: Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters
Amendments to FRS 7: Disclosures - Transfers of Financial Assets
Amendments to FRS 112: Deferred tax - Recovery of Underlying Assets
Amendments to FRS 101: Presentation of Items of Other Comprehensive
Income
FRS 9: Financial Instruments
FRS 10: Consolidated Financial Statements
FRS 11: Joint Arrangements
FRS 12: Disclosures of Interest in Other Entities
FRS 13: Fair Value Measurements
FRS 119 2011: Employee Benefits

28

1 July 2011
1 July 2011
1 January 2012
1 January 2012
1 January 2012
1 January 2012
1 July 2012
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.3 Standards issued but not yet effective (Contd.)
Effective for the financial period beginning on or after
FRS 127 2011 : Separate Financial Statements
FRS 128 2011 : Investment in Associates and Joint Ventures

1 January 2013
1 January 2013

Malaysian Financial Reporting Standards (MFRS Framework)
On 19 November 2011, the Malaysian Accounting Standards Board (MASB) issued a new
MASB approved accounting framework, the MFRS Framework.
The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture (MFRS 141) and IC Interpretation 15 Agreements for
Construction of Real Estate (IC 15), including its parent, significant investor and venturer
(herein called ‘Transitioning Entities’).
Transitioning Entities will be allowed to defer adoption of the new MFRS Framework for an additional one year. Consequently, adoption of the MFRS Framework by Transitioning
Entities will be mandatory for annual periods beginning on or after 1 January 2013.
The Group falls within the scope of Transitioning Entities and have opted to defer adoption of the new MFRS Framework. Accordingly, the Group will be required to prepare financial statements using the MFRS Framework in its first MFRS financial statements for the year ending 31 December 2013. In presenting its first MFRS financial statements, the Group will be required to restate the comparative financial statements to amounts reflecting the application of MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits.
The Group is in the process of assessing the financial effects of the differences between the accounting standards under Financial Reporting Standards and under the MFRS
Framework. Accordingly, the consolidated financial performance and financial position as disclosed in these financial statements for the year ended 31 December 2011 could be different if prepared under the MFRS Framework.

29

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.3 Standards issued but not yet effective (Contd.)
2.4 Summary of significant accounting policies
(a) Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries and the Group's interest in associates and joint ventures as at the reporting date.
(i) Subsidiaries
Subsidiaries are entities over which the Group has equity interest and where it has power to exercise control over the financial and operating policies so as to obtain benefits therefrom.
Subsidiaries are consolidated from the date on which control is transferred to the
Group and are no longer consolidated from the date that control ceases. Subsidiaries are consolidated using the purchase method of accounting. The purchase method of accounting involves allocating the cost of the business combination to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition. The excess of the cost of acquisition over the Group’s share of net fair value of the identifiable assets, liabilities and contingent liabilities of acquired subsidiaries at the date of acquisition, is reflected in the financial statements as goodwill. If the cost of acquisition is less than the Group's share of net fair value of the assets, liabilities and contingent liabilities, the difference is recognised directly in the income statement.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.
Consistent accounting policies are applied to like transactions and events in similar circumstances. Intragroup transactions, balances and resulting unrealised gains are eliminated on consolidation and the consolidated financial statements reflect external transactions only. Unrealised losses are eliminated on consolidation unless cost cannot be recovered. The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Group’s share of its net fair value of the assets together with any balance of goodwill and exchange differences that were not previously recognised in the consolidated income statement.
30

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(a) Basis of consolidation (Contd.)
(ii) Associates
The Group treats associates as those enterprises in which it has an equity interest of between 20% and 50% and where it exercises significant influence through management and / or board participation. Significant influence is the power to participate in the financial and operating policy decisions of the associates but not control over these policies.
The Group's investments in associates are accounted for using the equity method.
Under the equity method, the investment in associates is measured in the statement of financial position at cost plus post-acquisition changes in the Group's share of net assets of the associates. Goodwill relating to associates is included in the carrying amount of the investment. Any excess of the Group's share of the net fair value of the associate's identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group's share of the associate's profit or loss for the period in which the investment is acquired.
Equity accounting is discontinued when the Group's share of losses and negative reserves in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, unless the Group has incurred obligations or guaranteed obligations in respect of the associate.
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 associates.
The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in income statement.
Unrealised gains on transactions between the Group and the associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are eliminated unless cost cannot be recovered.
(iii) Joint ventures
Joint ventures are contractual arrangements whereby two or more parties undertake an economic activity which is subject to joint control.

31

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(a) Basis of consolidation (Contd.)
(iii) Joint ventures (Contd.)
Investments in joint ventures are accounted for in the consolidated financial statements using the equity method of accounting based on the audited or management financial statements of the joint ventures. Under the equity method of accounting, the Group’s share of financial results of the joint ventures during the year is included in the consolidated income statement.
The Group’s interest in joint ventures is carried in the consolidated statement of financial position at cost plus the Group’s share of post-acquisition retained earnings / accumulated losses and reserves. Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint ventures. Unrealised losses are eliminated unless cost cannot be recovered.
(b) Investments in Subsidiaries, Associates and Joint Ventures
Investments in subsidiaries, associates and joint ventures at the individual company level are stated at cost less accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.4(s).
On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is charged or credited to the income statement.
(c) Statements of Cash Flows
The statements of cash flows classify movements in cash and cash equivalents according to operating, investing and financing activities.
The Group and the Company do not consider any of its assets other than short term deposits with licensed financial institutions, cash and bank balances reduced by bank overdrafts as meeting the definition of cash and cash equivalents.
(d) Property, Plant and Equipment, Depreciation and Leases
All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial year in which they are incurred.
32

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(d) Property, Plant and Equipment, Depreciation and Leases (Contd.)
Subsequent to recognition, property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.4(s).
Freehold land is not depreciated except for land held for scheduled waste treatment plant and disposal site in Port Dickson, Negeri Sembilan by Kualiti Alam Sdn Bhd ("Kualiti
Alam"), a wholly-owned subsidiary of UEM Environment Sdn Bhd ("UEM Environment").
Depreciation is provided on other property, plant and equipment on a straight line basis to write off the cost of each asset to its residual value over the estimated useful life as follows:
Freehold land held for scheduled waste treatment and disposal site
- until 2022
Leasehold land
- over leasehold period ranging from 50 to
99 years
Buildings
- from 20 to 50 years
Plant, machinery and others
- from 2 to 25 years
Capital work-in-progress is not depreciated until the asset is fully completed and brought into use.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the financial year the asset is derecognised.
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end.
Assets financed by hire purchase and lease arrangements that transfer substantially all risks and rewards of ownership to the Group are capitalised as property, plant and equipment and the corresponding obligations are treated as liabilities. These capitalised property, plant and equipment are depreciated on the same basis as owned assets.
Subsequently, minimum lease payments are apportioned between the finance charge and the reduction of lease liability. Finance charges are allocated to the income statement over the period of the agreements to give a constant periodic interest rate on the remaining balance of the liability at the end of each accounting period.
33

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(d) Property, Plant and Equipment, Depreciation and Leases (Contd.)
Leases of assets under which substantially all risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight line basis over the period of the lease. In the case of short term leasehold land, the upfront payment represents prepaid land lease payments. Following the initial recognition, prepaid land lease payments are measured at cost less accumulated amortisation and accumulated impairment losses. The prepaid land lease payments are amortised on a straight line basis over the lease term. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which the termination takes place.
(e) Concession Intangible Assets
Upon adoption of IC 12, Concession Assets are recognised as intangible assets to the extent that the Group has a right (a licence) to charge users of the public services, as explained in Note 2.2(b)(i).
As at the reporting date, the Group has the following Concession Intangible Assets:
Concession
Intangible Assets

Concession Companies

Concession Period

Overseas
Bhiwandi-Kalyan-Shil
Phata Highway, India

PLUS BKSP Toll Limited
("PLUS BKSP")

18 years to 2024

Cikampek-Palimanan Toll PT Lintas Marga Sedaya
Highway, Indonesia
("LMS")

35 years to 2041

Padalur-Trichy Highway,
India

25 years to 2031

Indu Navayuga Infra Project
Private Limited ("INIPPL")

The overseas Concession Intangible Assets in respect of Cimanggis-Cibitung Toll Road, had been disposed following the disposal of PT Cimanggis-Cibitung Tollways as disclosed in Note 8(b).

34

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(e) Concession Intangible Assets (Contd.)
The Group has joint control over the following local Concession Intangible Assets with
EPF, through a joint venture, PMSB following the disposal of the local businesses by PEB and disposal of PBSB by UEM Builders Berhad to the joint venture during the financial year as disclosed in Notes 17, 19 and 50(a).
Concession
Intangible Assets

Concession Companies

Concession Period

Projek Lebuhraya UtaraSelatan Berhad ("PLUS")

18 Mar 1988 to 31 Dec 2038

Linkedua

Linkedua (Malaysia) Berhad
("LINKEDUA")

27 Jul 1993 to 31 Dec 2038

Expressway Lingkaran
Tengah

Expressway Lingkaran
Tengah Sdn Bhd ("ELITE")

26 Apr 1994 to 31 Dec 2038

Penang Bridge

Penang Bridge Sdn Bhd
("PBSB")

30 Sep 1993 to 31 Dec 2038

Lebuhraya ButterworthKulim

Konsortium Lebuhraya
Butterworth-Kulim Sdn Bhd
("KLBK")

28 Jun 1994 to 31 Dec 2038

Local
Lebuhraya Utara-Selatan

On 11 November 2011, all the local concession subsidiaries of PEB respectively entered into novation agreements with the Government and Projek Lebuhraya Usahasama Berhad
("PLUS Berhad"), for the concession subsidiaries to novate all their rights, liabilities, benefits, interests, duties and obligations in the respective concession agreements to PLUS
Berhad. PLUS Berhad was incorporated on 27 July 2011, as a wholly-owned subsidiary of
PMSB, a joint venture owned by EPF and the Company, to undertake the consolidation of all local expressway concessionaires.
The novation agreements took effect on 12 January 2012, following the fulfillment of all conditions precedent.
As at the reporting date, the Group has 26% equity interest in Jetpur Somnath Tollways
Ltd, which is the concessionaire for Jetpur Somnath Highway in India, with a concession period of 30 years up to 2041.
35

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(e) Concession Intangible Assets (Contd.)
Concession Intangible Assets comprise Expressway Development Expenditure, Other
Concession Assets and Capital Work-In-Progress.
(i) Expressway Development Expenditure
Expressway development expenditure ("EDE") comprises development and upgrading expenditure (including interest charges relating to the financing of the development) incurred in connection with the Concession Assets.
EDE is stated at cost less accumulated amortisation and impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note
2.4(s). EDE is amortised over the concession period. The amortisation formula applied in the preparation of the financial statements to arrive at the annual amortisation charge for each financial year/period is as follows:
Toll revenue for the year/period
(Toll revenue for the year/period +
Projected total toll revenue for subsequent years/periods to end of concession period)

X

(Net book value of EDE brought forward +
Net additions for the year/period )

The projected total toll revenue is based on the latest available base case traffic volume projections prepared by independent traffic consultants multiplied by toll rate structures set out in the Concession and Novation Agreement. The traffic volume projection is independently reviewed on a periodic basis.
(ii) Other Concession Assets
Other concession assets comprise toll equipment, video surveillance equipment, telecommunication networks, centralised lighting, and toll operation computer hardware and software, and are stated at cost less accumulated amortisation and impairment loss. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.4(s).
The annual amortisation in respect of these assets is computed on a straight line basis over their estimated useful lives at the following rates:
Software and computers
Others

12.5% - 14.3%
10%
36

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(e) Concession Intangible Assets (Contd.)
(iii) Capital Work-In-Progress
Capital work-in-progress is not depreciated until the asset is fully completed and brought into use.
(f) Land Held for Property Development and Property Development Costs
Land held for property development consists of land where no development activity has been carried out or where development activities are not expected to be completed within the normal operating cycle.
Land held for property development is classified within non-current assets and is stated at cost less impairment losses. Cost consists of land and development expenditure and include borrowing costs relating to the financing of active development. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.4(s).
Profit on sale of land held for property development, including any infrastructure development, is recognised only when it is probable that the economic benefits associated with the transaction will flow to the Group.
Property development costs are those assets on which significant works have been undertaken and are expected to be completed within the normal operating cycle.
Property development costs are stated at cost. Cost consists of land and development expenditure. Development expenditure includes borrowing costs relating to the financing of the land and development.
Profit on sale of property development costs is recognised when the outcome of the contract can be reasonably estimated using the percentage of completion method to the extent of total sales value of units sold. The percentage of completion is based on total cost incurred to date over total estimated cost of the project. Provision is made for all foreseeable losses on property development costs.
The excess of revenue recognised in the income statement over billings to purchasers is classified as accrued billings within trade receivables and the excess of billings to purchasers over revenue recognised in income statement is classified as progress billings within trade payables.

37

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(g) Investment Properties
Investment properties consist of land, completed properties and properties under construction which are held either for capital appreciation or rental purpose or for both.
Investment properties are treated as long term investments and are measured initially at cost, including transaction costs. Following initial recognition, investment properties are carried at cost less accumulated depreciation and accumulated impairment losses.
Freehold land is not depreciated. Investment properties carried at cost are depreciated over the estimated economic useful lives ranging from 20 to 50 years. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.4(s).
Investment properties are derecognised when either they are disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from the disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in the income statement in the year of retirement or disposal.
(h) Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is the fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses.
The policy for the recognition and measurement of impairment losses is in accordance with
Note 2.4(s).
(i) Research and Development
Research and development costs are recognised as an expense except that costs incurred on individual development project are recognised as development asset to the extent that such expenditure is expected to generate future economic benefits.
Development costs are only recognised as an asset when it is probable that future economic benefits will be realised as a result of the specific expenditure and the costs can be measured reliably.

38

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(h) Intangible Assets (Contd.)
(i) Research and Development (Contd.)
Following the initial recognition of the development expenditure, the asset is carried at cost less accumulated amortisation and accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note
2.4(s). Any impairment losses are not written back even if there are changes to the circumstances or events that led to the impairment. These costs are derecognised when they are disposed of or when no future economic benefit is expected from the disposal. Development costs that have been capitalised are amortised over the period of expected future sales from the related project.
(ii) Computer Software
Acquired computer software and licenses are stated at cost. Following initial recognition, the asset is carried at cost less accumulated amortisation and accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.4(s). Costs are amortised over their estimated useful lives of 3 years.
(iii) Marketing and transportation rights
Marketing and transportation rights is in connection with the exclusive arrangement for the treatment and disposal of scheduled waste. The asset is carried at cost less accumulated amortisation and accumulated impairment losses. It is amortised on a straight line basis over the period of the exclusive arrangement. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.4(s).
(iv) Goodwill
Goodwill acquired in a business combination is capitalised as an asset and is initially measured at cost. Following the initial recognition, goodwill is measured at cost less accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.4(s). Any impairment losses recognised for goodwill shall not be reversed in a subsequent period.

39

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(h) Intangible Assets (Contd.)
(v) Brand
Brand represents the brand name of a product line acquired by the Group. Brand has an indefinite useful life. Brand is carried at cost less accumulated impairment losses and tested annually for impairment. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.4(s).
(i) Non-current Assets or Disposal Groups Held for Sale and Discontinued Operations
Non-current assets or disposal groups are classified as held for sale if they meet certain conditions and their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. The condition is regarded as met only when the assets or disposal groups are available for immediate sale in its present condition subject to terms that are usual and customary and the sale is highly probable.
Non-current assets or disposal groups held for sale are measured at the lower of carrying amount and fair value less costs to sell. Any differences are recognised in the income statement. A component of the Group is classified as a 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-ordinated major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale.
(j) Inventories and Work-In-Progress
(i) Inventories
Cost of inventories are assigned on a weighted average cost basis except for trading inventories and pharmaceutical raw materials which are determined on a First-In-FirstOut ("FIFO") basis and are valued on the basis of lower of cost and net realisable value after making allowance for obsolete and slow-moving inventories. Cost includes material, labour, a proportion of overhead expenses and all incidental costs incurred in bringing the inventories into store. Net realisable value represents the estimated selling price in the ordinary course of business less all estimated costs to completion and costs to be incurred in marketing, selling and distribution.
The amount of any write down to net realisable value and reversal of any write down is recognised in the income statement.
40

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(j) Inventories and Work-In-Progress (Contd.)
(i) Inventories (Contd.)
Developed properties held for sale are stated at the lower of cost and net realisable value. Cost is determined on the specific identification basis and includes cost of land, construction and appropriate development overheads.
(ii) Work-In-Progress
Work-in-progress and manufactured finished goods are stated at lower of cost and net realisable value. Cost is made up of material, labour and a proportion of overhead expenses. Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing, selling and distribution.
Allowance is made for all anticipated losses on work-in-progress.
(k) Amount Due from/(to) Customers on Construction and Consultancy Contracts
Profits on construction and consultancy contracts are recognised as soon as the outcome of the contracts can be estimated reliably. The Group uses the percentage of completion method to determine the appropriate amount to be recognised as contract revenue in a given period. The percentage of completion is measured by reference to surveys of work performed and on the proportion of contract costs incurred for work performed to date over the estimated total contract costs.
Where the outcome of a contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that is probable will be recoverable.
Contract costs are recognised as expenses in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
When costs incurred on construction and consultancy contracts plus recognised profits
(less recognised losses) exceeds progress billings, the balance is shown as amount due from customers on contracts. When progress billings exceed costs incurred plus recognised profits (less recognised losses), the balance is shown as amount due to customers on contracts.

41

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(l) Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset during the periods when activities necessary to prepare the asset for its intended use are in progress, are capitalised as a component of the cost of the asset. Such capitalisation ceases when substantially all activities necessary to prepare the asset for its intended use are complete.
When the carrying amount of an asset inclusive of capitalised borrowing costs if applicable, exceeds its recoverable amount, capitalisation is discontinued and such excess is written down or adjusted for an allowance for impairment, through an appropriate charge to the income statement.
(m) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of provision is the present value of the expenditure expected to be required to settle the obligation.
(n) Deferred Liabilities
Fees received from third parties as advance payments of future maintenance expenditure, in consideration for right-of-way access granted by PLUS, ELITE and KLBK were classified as deferred liabilities. Deferred liabilities were amortised over the period of the individual contracts. (o) Income Taxes
(i) Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.
42

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(o) Income Taxes (Contd.)
(ii) Deferred tax
Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all temporary differences, except where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, that at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
The carrying amount of deferred tax assets is reviewed at each financial year end and reduced to the extent that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each financial year end and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.
Deferred tax items are recognised in correlation to the underlying transaction in income statement, other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.
(p) Employee Benefits
(i) Short term benefits
Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the
Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.
43

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(p) Employee Benefits (Contd.)
(ii) Defined contribution plan
Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions 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 an expense in the income statement as incurred. As required by law, companies in
Malaysia make contributions to the state pension scheme, EPF. Some of the Group’s foreign subsidiaries also make contribution to their respective countries’ statutory pension schemes.
(iii) Defined benefit plans
Certain companies in the Group operate funded and unfunded defined benefit
Retirement Benefit Scheme ("the Scheme") for their eligible employees.
The Group’s obligations under the Scheme are determined based on actuarial valuation where the amount of benefit that employees have earned in return for their service in the current and prior years is estimated. That benefit is discounted using the
Projected Unit Credit Method in order to determine its present value. The fair value of plan assets for funded scheme is determined by discounting expected future cash flows. The discount rate is the market yield at the reporting date on high quality corporate bonds or government bonds.
Actuarial gains and losses are recognised as income or expense over the expected average remaining working lives of the participating employees when the cumulative unrecognised actuarial gains or losses for the Scheme exceed 10% of the higher of the present value of the defined benefit obligations and the fair value of the plan assets.
Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight line basis over the average period until the amended benefits become vested.
The amount recognised in the statement of financial position represents the present value of the defined benefit obligations adjusted for unrecognised transition liabilities and assets, unrecognised actuarial gains and losses and unrecognised past service costs, reduced by the fair value of the plan assets. Transition assets are fully recognised in the income statement in the year immediately following the valuation date whilst transition liabilities are expensed to the income statement over a period of 5 years. 44

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(p) Employee Benefits (Contd.)
(iv) Equity-settled share-based payment transactions with employees
The Employee Share Ownership Plan of Opus International Consultant Limited ("Opus
IC"), a subsidiary of Opus Group Berhad ("Opus"), and Long Term Incentive Plan and
Save As You Earn Plan of Costain Group PLC ("Costain"), an associate of UEM
Builders, allow their employees to acquire ordinary shares of their respective companies. The cost of equity-settled transactions with employees is measured by reference to the fair value of the options at the date at which they are granted. This cost is recognised in the income statement, together with a corresponding increase in equity, over the period in which the performance and / or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ("the vesting date").
No expense is recognised for awards that do not ultimately vest. Where vesting is conditional upon a market condition, it is treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied. (q) Employee Entitlements
A subsidiary of Opus makes provision for employees’ compensation for future leave in relation to the length of service rendered by employees and relates to rights which have been vested and unvested. These are computed based on pre-tax discount rates in arriving at their present values. Their tax effects are accounted for in accordance with the accounting policy on deferred tax. The effects on unwinding of the discount are charged as interest expense in the income statement. In addition, an independent actuarial calculation is made and any gain or loss is taken to the income statement.
(r) Foreign Currencies
The financial statements of the Group and of the Company are presented in Ringgit
Malaysia, which is the Company's functional and presentation currency. Each entity in the
Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

45

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(r) Foreign Currencies (Contd.)
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined.
Exchange differences arising on the settlement of monetary items, and on the translation of monetary items at the reporting date are included in the income statement for the period except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation, which are recognised initially in other comprehensive income and accumulated under exchange fluctuation reserve in equity until the disposal of the foreign operations, at which time they are recognised in income statement.
Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operation are recognised in income statement in the Company’s separate financial statements or the individual financial statements of the foreign operation, as appropriate.
Exchange differences arising on the translation of non-monetary items carried at fair value are included in income statement for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity.
(s) Impairment of Non-financial Assets
The carrying amounts of non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. Intangible assets with indefinite useful lives such as goodwill are tested for impairment annually at financial year-end or more frequently if events or changes in circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. The carrying value of development costs is reviewed for impairment annually when the asset is not yet in use or more frequently when an indication of impairment arises during the reporting year.

46

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(s) Impairment of Non-financial Assets (Contd.)
If any such indication exists, or when annual impairment testing for an asset is required, the asset's recoverable amount is estimated and impairment loss is recognised whenever the recoverable amount of the asset or a cash generating unit is less than its carrying amount.
The recoverable amount of an asset or a cash generating unit is the higher of its fair value less costs to sell and its value in use.
In assessing value in use, the estimated future cash flow expected to be generated by the asset are discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Impairment losses of continuing operations are recognised in the income statement in those expense categories consistent with the function of the impaired asset except for the impairment on a revalued asset where the impairment loss is recognised in other comprehensive income to the extent of the surplus credited from the previous revaluation for the same asset, with the excess of the impairment loss charged to the income statement. An impairment loss is reversed if there has been a change in estimates used to determine the recoverable amount.
An impairment loss is only reversed to the extent that the carrying amount of the assets does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment had been recognised.
All reversals of impairment losses are recognised as income immediately in the income statement except for the reversal of an impairment loss on a revalued asset where the reversal of the impairment loss is treated as a revaluation increase and credited to the revaluation reserve account of the same asset.
(t) Revenue Recognition
Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.
(i) Sales of goods and services
Revenue is recognised when the significant risks and rewards of ownership of the goods have been passed to the buyer. Revenue from services is recognised upon services rendered.

47

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(t) Revenue Recognition (Contd.)
(ii) Construction contracts, contracts for sale of land and property development costs (a)

Construction contracts
Revenue from construction contracts is accounted for by the percentage of completion method as described in Note 2.4(k) above.

(b)

Sale of land and completed properties
Revenue from sale of land and completed properties is recognised only when it is probable that the economic benefits associated with the transaction will flow to the Group.

(c)

Sale of development properties
Revenue from sale of development properties classified as property development costs is accounted for by the percentage of completion method as described in Note 2.4(f) above.

(iii) Toll collection and toll compensation
Toll collection revenue is recognised based on the net collection from tolls designated under the concession and novation agreements between the expressway companies and the Government.
Pursuant to the concession and novation agreements, the Government reserves its rights to restructure or to restrict the imposition of unit toll rate increases by the concession company. The Government shall compensate the concession company for any reduction in toll revenue as a consequence of such restructure or restriction imposed, subject to negotiation and other considerations that the Government may deem fit.
Toll compensation for any concession year is recognised in the financial statements as revenue when receipt is probable and the amount that is receivable can be measured reliably. (iv) Interest
Interest income is recognised using the effective interest method.
48

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(t) Revenue Recognition (Contd.)
(v) Dividend
Dividend income from investments in subsidiaries, associates and other investments are included in the income statement when the shareholders’ right to receive payment is established and no significant uncertainty exists with regard to its receipt.
(vi) Revenue on award credits
Revenue on award credits is recognised based on the number of award credits that has been redeemed in exchange for toll rebates, relative to the total number of award credits expected to be redeemed.
(u) Financial Instruments
Financial instruments are recognised in the financial statements when, and only when, the
Group or the Company becomes a party to the contractual provisions of the instrument.
(i) Financial Assets
Financial assets are recognised initially at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.
Financial assets are classified as either financial assets at fair value through profit or loss, financial assets held-to-maturity, loans and receivables or financial assets available-for-sale. The Group determines the classification of its financial assets after initial recognition and, where allowed and appropriate, re-evaluates this designation at each financial year-end.
(aa)

Financial assets at fair value through profit or loss
Financial assets classified as held for trading are categorised as financial assets at fair value through profit or loss. Financial assets are held for trading if they are acquired for the purpose of selling in the near term. Gains or losses on investments held for trading are recognised in income statement.
Derivatives are also classified as held for trading unless they are designated and effective hedging instruments. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative. Any gains or losses arising from changes in fair value on derivatives that do not qualify for hedge accounting are taken directly to income statement.
49

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(u) Financial Instruments (Contd.)
(i) Financial Assets (Contd.)
(bb)

Financial assets held-to-maturity
Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the expressed intention and ability to hold to maturity.
Investments that are intended to be held-to-maturity are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any discount or premium on acquisition, over the period to maturity. For investments carried at amortised cost, gains and losses are recognised in income statement when the investments are derecognised or impaired, as well as through the amortisation process. (cc)

Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in income statement when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

(dd)

Financial assets available-for-sale
Financial assets available-for-sale are non-derivative financial assets that are not classified as fair value through profit or loss, held-to-maturity or loans and receivables. After initial recognition, financial assets available-for-sale are measured at fair value with gains or losses being recognised in a reserve until the investment is sold, collected or otherwise disposed of or until the investment is determined to be impaired at which time the cumulative gain or loss previously reported in equity is included in the income statement.

50

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(u) Financial Instruments (Contd.)
(i) Financial Assets (Contd.)
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised where:
-

the rights to receive cash flows from the asset have expired;

-

the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass-through’ arrangement; or

-

the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or
(b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in income statement. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date, i.e the date that the Group and the
Company commit to purchase or sell the asset.
(ii) Financial Liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.
Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.
(aa)

Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.
51

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(u) Financial Instruments (Contd.)
(ii) Financial Liabilities (Contd.)
(aa)

Financial liabilities at fair value through profit or loss (Contd.)
Financial liabilities held for trading include derivatives entered into by the
Group and the Company that do not meet the hedge accounting criteria.
Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences.
The Group and the Company have not designated any financial liabilities as at fair value through profit or loss.

(bb)

Other financial liabilities
The Group’s and the Company's other financial liabilities include trade payables, other payables and loans and borrowings.
Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.
Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
For other financial liabilities, gains and losses are recognised in income statement when the liabilities are derecognised, and through the amortisation process. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

52

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(u) Financial Instruments (Contd.)
(ii) Financial Liabilities (Contd.)
Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in income statement.
(iii) Financial Guarantee Contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due. Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when due and the Group, as the issuer, is required to reimburse the holder for associated loss, the liability is measured at the higher of the best estimate of expenditure required to settle the present obligation at the reporting date and amount initially recognised less cumulative amortisation.

it is the the the (iv) Hedging
The Group uses cross currency interest rate swap to manage its exposure to foreign currency risk, interest rate risk and liquidity risk. The Group applies hedge accounting for certain hedging relationships which qualify for hedge accounting.

53

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(u) Financial Instruments (Contd.)
(iv) Hedging (Contd.)
For the purpose of hedge accounting, hedging relationship are classified as:
-

Fair value hedges, when hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment (except for foreign currency risk); or

-

Cash flow hedges, when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probably forecast transaction or the foreign currency risk in an unrecognised firm commitment; or

-

Hedges of a net investment in a foreign operation.

At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Hedges are expected to be highly effective and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.
Hedges which meet the strict criteria for hedge accounting are accounted for as follows: (aa)

Fair value hedge
Changes in the fair value of derivative hedging instrument that are designated and qualified as fair value hedges are recognised in income statement, together with any gain or loss on the hedged assets or liabilities that are attributable to the hedged risk.
The Group discontinues fair value hedge accounting if the hedging instrument expires or is sold, terminated or exercised, the hedge no longer meets the criteria for hedge accounting or the Group revokes the designation.

54

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(u) Financial Instruments (Contd.)
(iv) Hedging (Contd.)
(bb)

Cash flow hedge
The effective portion of the gain or loss on the hedging instrument is recognised directly in other comprehensive income, while the ineffective portion is recognised in income statement.
The cumulative gain or loss recognised in equity are recycled to the income statement in the periods in which the hedged item will affect the income statement. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When the forecast transaction is no longer expected to occur, the cumulative gain or loss recognised in equity is immediately transferred to the income statement.
The Group uses cross currency interest rate swap as hedge of its exposure to foreign currency risk, interest rate risk and liquidity risk in firm commitment.

(cc)

Hedges of a net investment
Hedges of a net investment in a foreign operation are accounted for similarly to cash flow hedges. Gains or losses relating to the effective portion are recognised in equity whilst those relating to the ineffective portion are recognised in income statement.
Gains and losses accumulated in the equity are recycled to the income statement when the foreign operation is partially disposed or sold.

(v) Impairment of Financial Assets
The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.

55

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(v) Impairment of Financial Assets
(i) Trade and other receivables and other financial assets carried at amortised costs
To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics.
Objective evidence of impairment for a portfolio of receivables could include the
Group’s and the Company's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.
If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in income statement.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date.
The amount of reversal is recognised in income statement.
(ii) Unquoted equity securities at cost
If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.
56

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(v) Impairment of Financial Assets (Contd.)
(iii) Financial assets available-for-sale
Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as financial assets available-for-sale are impaired.
If a financial asset available-for-sale is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in income statement, is transferred from equity to income statement.
Impairment losses on available-for-sale equity investments are not reversed in income statement in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in income statement if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in income statement.
(w) Amount Received from the Government for Additional Works
Monies received from the Government in advance for the Additional Works, are classified as "Amount received from the Government for Additional Works", which are utilised to pay the expenses incurred for the Additional Works as disclosed in Note 23(d).
(x) Deferred income
(i) Government Grants
Government grants are recognised initially at their fair values in the statement of financial position as deferred income where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. Grants that compensate the Group for expenses incurred are recognised as income over the periods necessary to match grant on a systematic basis to the costs that it is intended to compensate. Grants that compensate the Group for the cost of an asset are recognised as income on a systematic basis over the useful life of the asset.

57

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.4 Summary of significant accounting policies (Contd.)
(x) Deferred income (Contd.)
(ii) Customer Loyalty Programmes
Award credits supplied by the Group is a separately identifiable component of the sales transaction and represent rights granted to the customer. The Group recognises the consideration allocated to award credits as revenue when award credits are redeemed and the Group fulfils its obligations to supply awards.
(iii) Unrealised profit
During the current financial year, the Group completed the sale of its local concession businesses (expressways) to a joint venture as disclosed in Note 50(a). Profit from the sale of the local concession businesses by the subsidiary to the joint venture is eliminated to the extent of the Group's interests in the joint venture in accordance with the basis of consolidation as disclosed in Note 2.4(a) (iii).
Accordingly, the Group recognises the excess of the unrealised profit over the carrying value of the joint venture as deferred income. This deferred income will then be amortised or realised to profit or loss over the period when the underlying asset of the joint venture is realised or disposed.
2.5 Critical Judgements and Accounting Estimates
Judgements, estimates and assumptions concerning the future are made in the preparation of the financial statements. They affect the application of the Group’s accounting policies, reported amounts of assets, liabilities, income and expenses, and disclosures made. They 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. (a) Critical Judgements Made in Applying Accounting Policies
The following are the judgements made by management in the process of applying the
Group and the Company's accounting policies that have the most significant effect on the amounts recognised in the financial statements.

58

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.5 Critical Judgements and Accounting Estimates (Contd.)
(a) Critical Judgements Made in Applying Accounting Policies (Contd.)
(i)

Recognition of expected losses of construction contracts
Any expected loss on construction contract is recognised by the Group and the
Company as an expense immediately when it is probable that the total contract costs will exceed the total contract revenue, even though the project had yet to be completed. In determining the expected loss, the Group takes into account the total contract costs to be incurred to the completion of the project and the probability of claims to be approved by clients for specific items of cost escalation and variation order.

(ii)

Income Taxes
Judgement is involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group and the Company recognise liabilities for expected tax based on estimates.
Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the year in which such determination is made. As disclosed in Note 48(iii), Bandar Nusajaya Development Sdn Bhd ("BND"), a wholly-owned subsidiary of UEM Land Holdings Bhd ("ULHB"), and Opus
International (M) Bhd ("OIM"), a wholly-owned subsidiary of Opus, received additional assessment from the Inland Revenue Board ("IRB") for additional tax payable and tax penalties in respect of prior years of RM73.8 million and
RM4.8 million respectively. No provision for income tax and tax penalties are made as the Directors of the subsidiaries believe that the grounds for the appeal are valid.

(b) Key Sources of Estimation Uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

59

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.5 Critical Judgements and Accounting Estimates (Contd.)
(b) Key Sources of Estimation Uncertainty (Contd.)
(i)

Impairment of goodwill
The Group determines whether goodwill is impaired at least once annually.
This requires an estimation of the value-in-use of the cash generating units to which the goodwill is allocated. Estimating the value-in-use requires the Group to make an estimate of the expected future cash flows from the cash generating unit and also to apply a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of the Group’s goodwill as at 31 December 2011 was RM1,059.9 million (2010: RM798.5 million). Further details are disclosed in Note 15.

(ii)

Construction and consultancy contracts and property development
The Group recognises construction, consultancy contracts and property development revenue and expenses in the income statement using the percentage of completion method. The percentage of completion is determined by the proportion of costs incurred for the work performed to date over the estimated total costs.
Significant judgement is required in determining the percentage of completion, the extent of the costs incurred and the estimated total revenue and costs, as well as recoverability of the construction, consultancy and property development projects. In making the judgement, the Group evaluates based on past experience, external economic factors and by relying on the work of specialists. The revenue and costs recognised in respect of the above, are disclosed in
Note 26 and Note 28(iv).

60

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
2.5 Critical Judgements and Accounting Estimates (Contd.)
(b) Key Sources of Estimation Uncertainty (Contd.)
(iii)

Secured landfill accounting
The costs of a subsidiary's secured landfill include a provision for future estimated costs associated with the landfill intermediate and final capping activities necessary for the eventual closure of the landfill of approximately
RM6.4 million (2010: RM10.2 million). Capping involves the installation of liners and soil cover over areas of a landfill where total airspace capacity has been consumed. The capping obligations are accrued as part of the asset cost as airspace is consumed over the life of the landfill. The estimated future intermediate and final capping costs are based on the quantity of material required as estimated by a consultant and quoted prices for material and contractor costs. The Group estimates that the capacity of the landfill will reach its maximum in 2012, and hence, the costs of these assets are depreciated until 2012.
The actual cost incurred and the estimated future costs provision of secured landfill is depreciated on a straight line basis over the remaining useful life of the landfill.

3. REVENUE
Revenue consists of:
Group
2011
2010
RM'000
RM'000
(Restated)
Toll revenue
Construction contracts
Land and property development sales
Rendering of services
Sale of goods
Dividend income
Interest income
Rental income
Others

Company
2011
2010
RM'000
RM'000

34,331
897,559

24,361
587,466

13,705

1,622,297
1,302,801
1,070,024
5,398
29,990
13,518
4,975,918

451,006
1,352,362
1,030,349
3,389
148
4,816
3,453,897

8,331
8,098,642
8,120,678

61

(3,727)
6,000
443,511
445,784

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
3. REVENUE (Contd.)
Construction contracts represent revenue recognised on construction projects based on percentage of completion. Included under rendering of services are project management, provision of maintenance and repair services for roads and infrastructure of expressways, treatment and disposal of scheduled waste and provision of information technology services.
Sale of goods includes sale of cement and ready mixed concrete, quarry products, scrap metal and recycled products, net of trade discounts and volume rebates.
4. COST OF SALES
Cost of sales represents the cost of goods sold, cost of land and property development, services provided and cost of operations.
Segment information on revenue, results, total assets and liabilities of the Group is analysed in
Note 49.
5. PROFIT/(LOSS) FROM OPERATIONS

Note

Group
2011
2010
RM'000
RM'000
(Restated)

Company
2011
2010
RM'000
RM'000

Profit/(loss) from continuing operations is stated after charging/(crediting):
Amortisation of
- concession intangible assets
- prepaid land lease payments - other intangible assets Auditors' remuneration
- statutory audit
- under provision in prior year
- others
Write down of inventories
Depreciation of property, plant and equipment
Depreciation of investment properties

11

33,130

2,371

-

-

14

82

90

-

-

16

9,201

9,965

391

625

3,052

2,655

175

150

48
572
4,597

567
4,579

-

-

147,503

157,579

3,795

3,511

4,441

-

-

-

13

62

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
5. PROFIT/(LOSS) FROM OPERATIONS (CONTD.)

Note

Group
2011
2010
RM'000
RM'000
(Restated)

Company
2011
2010
RM'000
RM'000

Profit/(loss) from continuing operations is stated after charging/(crediting):
Property, plant and equipment - write-off
10
- impairment losses
10
Directors' remuneration
- fees payable to Directors
- fees payable to ultimate holding company
- other emoluments
Professional fees paid/ payable to a firm in which a Director has interest
Currency exchange (gain)/loss
- unrealised
- realised
Hire of plant and equipment
Allowance for/(write back of) impairment for receivables
Recognition/(write back) of expected losses
Provision for heavy repairs
Rental expense on land and buildings
Staff costs
(i)
Bad debts written off
Other intangible assets written off
Deferred expenditure written off
Gain on dilution of interest in subsidiaries
Goodwill impairment
15
Investments written off

1,087
1,171

467
-

1,171

4
-

1,074

1,086

582

593

93
1,935

95
1,465

93
1,826

95
1,357

581

293

45

-

1
-

-

(589)
22,746

(408)
(120)
20,150

152,312

144,077

110,293

(4,599)

258,466
1,223

224,717
1,317

189,430
-

(31,917)
-

45,072
920,226
849

35,983
738,444
7,001

3,031
35,008
1,055

2,382
28,109
7,233

4,500

33

-

-

5,294

-

5,294

-

1,710,437

50

18

63

(3,685)
37,612
-

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
5. PROFIT/(LOSS) FROM OPERATIONS (CONTD.)

Note

Group
2011
2010
RM'000
RM'000
(Restated)

Company
2011
2010
RM'000
RM'000

Profit/(loss) from continuing operations is stated after charging/(crediting):
Net impairment loss on
- subsidiaries
17
- associates
- joint ventures
Gain on disposal of
- property, plant and equipment - subsidiaries (including amount transferred from exchange fluctuation reserves)
- associates
- investment properties
Gain arising from member's voluntary liquidation of subsidiaries
Net gain on fair value changes in fair value through profit or loss investments
Interest income/bond profit (ii)
Dividend income
(iii)

52,037

(893)
51,198

20,843
48,966
-

(10,070)

(4,222)

(103)

(142)

(4,197)
(10,601)

(7,619)
(3)

(197,830)
-

(24,471)
(29,764)
-

(8)

(3)

(2,035)

(243)

(1,861)

(245)

(80,526)
(8,168)

(56,892)
(844)

(37,310)
(8,104,550)

(43,636)
(444,345)

-

1,008,074
-

-

The estimated monetary value of benefits-in-kind provided to Directors during the financial year amounted to approximately RM170,408 (2010: RM61,947).

64

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
5. PROFIT/(LOSS) FROM OPERATIONS (CONTD.)
(i) Staff costs
The staff costs incurred, including executive directors’ salaries, during the year are as follows: Note

Salaries and other emoluments Statutory contribution to
Employees Provident
Fund and social security Termination benefits
Employees entitlement and retirement benefits Cost of share options
Total staff costs

Group
2011
2010
RM'000
RM'000
(Restated)

Company
2011
2010
RM'000
RM'000

861,569

718,765

31,388

24,891

92,619
6,994

61,162
-

3,620
-

3,218
-

785
961,967

1,392
296
781,615

35,008

28,109

Less: capitalised to:
- land held for property development 12
- property development costs 26
- construction workin-progress
28(iv)
Staff costs charged to income statements

(2,603)

(2,067)

-

-

(3,532)

(4,186)

-

-

(35,606)
(41,741)

(36,918)
(43,171)

-

-

920,226

738,444

35,008

28,109

65

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
5. PROFIT/(LOSS) FROM OPERATIONS (CONTD.)
(ii) Interest income/bond profit

Note
Interest income/profit from:
- deposits with financial institutions - intercompany loan/ advances - unwinding of fair value adjustment on financial assets
- Others

Group
2011
2010
RM'000
RM'000

Company
2011
2010
RM'000
RM'000

51,150

37,531

9,449

14,405

-

-

24,397

29,037

15,630
13,746
80,526

17,066
2,295
56,892

3,464
37,310

194
43,636

(iii) Dividend income

Note
Gross dividend from:
Subsidiaries
- quoted in Malaysia
- unquoted in Malaysia
Associates (quoted in
Malaysia)
Investments available for sale
(quoted in Malaysia)
Investments at fair value through profit or loss (unquoted in Malaysia)

Group
2011
2010
RM'000
RM'000

Company
2011
2010
RM'000
RM'000

-

-

329,815
7,744,905 *

380,588
49,096

-

-

23,922

13,827

40

10

-

-

8,128
8,168

834
844

5,908
8,104,550

834
444,345

* The amount includes the special interim dividend declared by PEB after the delisting of its securities from Bursa Malaysia.

66

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
5. PROFIT/(LOSS) FROM OPERATIONS (CONTD.)
(iv) Key management personnel
Key management personnel are the persons who have authority and responsibility for planning, directing and controlling the activities of the Group or the Company either directly or indirectly.
The remuneration of key management personnel (included in staff costs) of the Group and of the Company during the year is as follows:
Group
2011
2010
RM'000
RM'000
(Restated)
Salaries and other emoluments Statutory contribution to
Employees Provident
Fund
Remuneration presented in discontinued operations Company
2011
2010
RM'000
RM'000

49,738

41,145

8,289

8,029

6,347
56,085

5,126
46,271

1,126
9,415

1,068
9,097

7,136
63,221

7,768
54,039

9,415

9,097

67

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
6. FINANCE COSTS

Note

Group
2011
2010
RM'000
RM'000
(Restated)

Company
2011
2010
RM'000
RM'000

Finance costs incurred and accrued during the year on:
- bonds/debt securities
- bank borrowings
- accretion of interest on liability component of RCPS
- others
Total finance costs

20,734
189,195

11,677
143,869

-

-

28,304
9,429
247,662

9,745
165,291

54,120
54,120

54,303
54,303

Less: finance costs capitalised in qualifying assets:
- capital work-in-progress
- property, plant and equipment 10(iv)
- concession intangible assets
11
- land held for property development 12
- property development costs 26
- construction workin-progress
28(iv)
Finance costs charged to income statements

(9,683)

(1,140)

-

-

(5,111)

(6,692)

-

-

(10,992)

-

-

-

(24,132)

-

-

-

-

-

54,120

54,303

(2,585)
(52,503)

(3,900)
(11,732)

195,159

153,559

68

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
7. INCOME TAX
Group
2011
2010
RM'000
RM'000
(Restated)
Current income tax:
Malaysian tax
Foreign tax

(129,033)
(23,883)

(76,705)
(25,074)

Over/(under) provision in prior years:
Malaysian tax
1,457
Foreign tax
4,076
(147,383)

(946)
(244)
(102,969)

Deferred tax:
Relating to origination and reversal of temporary differences
Over/(under) provision in prior years

Company
2011
2010
RM'000
RM'000

(7,110)

393
(6,717)

(46,173)
(1,288)
(47,461)

16,304

35,422

-

28,124

4,864
21,168

(4,638)
30,784

-

3,749
31,873

Income tax attributable to continuing operations

(126,215)

(72,185)

Income tax attributable to discontinued operations
(Note 8)

(533,282)

(463,911)

(659,497)

(536,096)

(6,717)

(6,717)

(15,588)

(15,588)

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2010: 25%) of the estimated assessable profit for the year. Income tax for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
Deferred tax is measured at the tax rates that are expected to apply to the year when the deferred tax asset is realised or the deferred tax liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.
The single tier tax system proposed in the Budget 2008 and subsequently gazetted on 28
December 2007 introduced the above system effective from year of assessment 2008. Under the single tier system, a company shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends paid, credited or distributed by the company will be exempted from tax in the hands of the shareholders. The Company has elected to pay dividends under the single tier system.

69

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
7. INCOME TAX (CONTD.)
A reconciliation of income tax expense applicable to profit/(loss) before income tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows:
Group
2011
2010
RM'000
RM'000
(Restated)
Profit/(loss) before income tax
- continuing operations
- discontinued operations

56,039
15,947,012
16,003,051

Taxation at Malaysian statutory tax rate of 25% (2010: 25%)
(4,000,763)
Effect of different tax rates
(2,959)
Expenses not deductible for tax purposes (137,982)
Income not subject to tax
3,449,144
Utilisation of previously unrecognised tax losses and unabsorbed capital allowances 20,395
Deferred tax assets not recognised during the year
(56,043)
Utilisation of tax incentives
2,293
Over/(under) provision in prior years in respect of continuing operations 10,397
Overprovision in prior years in respect of discontinued operations 23,663
Tax effect on share of associates/ joint ventures' profit attributable to owner of the parent
32,358
Tax expense for the year
(659,497)

70

Company
2011
2010
RM'000
RM'000

(212,520)
1,704,182
1,491,662

6,134,029
6,134,029

(545,442)
(545,442)

(372,916)
(3,653)

(1,533,507)
-

136,361
-

(210,472)
44,480

(530,857)
2,064,535

(263,894)
121,430

7,797
(47,560)
19,772

(5,828)

12,290

19,994
(536,096)

(7,281)
-

(11,946)
-

393

2,461

-

-

(6,717)

(15,588)

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
8. ASSETS HELD FOR SALE, DISCONTINUED OPERATIONS AND DISPOSAL GROUP
CLASSIFIED AS HELD FOR SALE ("AHFS")
(a) Pharmaniaga Berhad ("Pharmaniaga")
On 11 June 2010, the Company entered into a conditional share sale and purchase agreement ("SPA'') with Boustead Holdings Berhad to dispose its 86.8% equity interest in
Pharmaniaga for a sale consideration of RM534.0 million. A deposit of RM16.0 million was received in 2010.
The SPA was completed on 25 March 2011, following the fulfilment of all conditions precedent. (b) CCTW
On 28 July 2010, PEB entered into a conditional sale and purchase agreement with PT
Bakrie & Brothers Tbk to dispose its entire equity interest of 60% in CCTW for a total cash consideration of Rp57,823,830,725 (equivalent to approximately RM20.1 million).
The disposal was completed on 15 August 2011 following the fulfillment of all the conditions precedent.
(c) Disposal of all PEB's businesses and undertakings, including all assets and liabilities of
PEB in Malaysia to PMSB, a joint venture between the Company and EPF
On 29 November 2011, PEB's wholly-owned subsidiaries, namely PLUS, ELITE,
LINKEDUA, KLBK, Teras Teknologi Sdn Bhd ("Teras") and PLUS Helicopter Services Sdn
Bhd ("PHS") were disposed to PMSB following the completion of PEB's privatisation exercise as disclosed in Note 50(a).
(d) Disposal of PBSB to PMSB
On 23 December 2011, UEM Builders sold its entire 100% equity interest in PBSB to
PMSB for a total cash consideration of RM400 million.
The financial results of the above subsidiaries were classified as discontinued operations.

71

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
8. ASSETS HELD FOR SALE, DISCONTINUED OPERATIONS AND DISPOSAL GROUP
CLASSIFIED AS HELD FOR SALE ("AHFS") (CONTD.)
Results attributable to discontinued operations are as follows:
Group
2011
RM'000
4,241,375
(1,327,061)
297,361
(9,265)
(109,864)
(5,295)
(729,865)
2,715
2,360,101
(9,139)
13,596,050
15,947,012
(533,282)
15,413,730
(11,570,481)
3,843,249

2,283,699
859,459
(13,011,334)
(9,868,176)

Revenue
Cost of sales
Other income
Selling and distribution costs
General and administration expenses
Other operating expenses
Finance costs
Share of results of associate
Profit from discontinued entities
Goodwill impairment
Gain on disposal of discontinued subsidiaries
Profit before income tax from discontinued operations
Income tax (Note 7)
Profit for the year from discontinued operations
Profit attributable to non-controlling interests
Profit attributable to Owners of the Parent

2010
RM'000
(Restated)
4,904,026
(2,430,347)
257,326
(27,929)
(187,991)
(43,354)
(789,649)
2,460
1,684,542
(18,648)
38,288
1,704,182
(463,911)
1,240,271
(740,033)
500,238

2,746,274
(10,696)
(1,052,692)
1,682,886

Cash flows attributable to discontinued operations are as follows:
Operating cash flows
Investing cash flows
Financing cash flows
Total cash flows

72

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
8. ASSETS HELD FOR SALE, DISCONTINUED OPERATIONS AND DISPOSAL GROUP
CLASSIFIED AS HELD FOR SALE ("AHFS") (CONTD.)
The major classes of assets held for sale and assets and liabilities of the disposal group classified as held for sale on the statements of financial position are as follows:
Group
2011
2010
RM'000
RM'000
As at 31 December
Assets:
Property, plant and equipment Concession intangible assets
Prepaid land lease payments Goodwill
Deferred tax assets
Inventories and work-inprogress
Investment in subsidiaries
Investment in associates
Receivables
Tax recoverable
Short term investments
Cash and bank balances
Assets held for sale and assets of disposal group classified as held for sale
Liabilities:
Borrowings
Deferred tax liabilities
Payables
Tax payables
Liabilities of disposal group classified as held for sale
Net assets

Company
2011
RM'000

2010
RM'000

-

276,977
660

-

-

-

2,951
192,507
10,952

-

-

111,692
-

230,013
115,305
134,076
6,304
19,718
107,478

-

335,950
-

111,692

1,096,941

-

335,950

-

33,126
1,530
328,260
1,428

-

-

-

364,344

-

-

111,692

732,597

-

335,950

73

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
8. ASSETS HELD FOR SALE, DISCONTINUED OPERATIONS AND DISPOSAL GROUP
CLASSIFIED AS HELD FOR SALE ("AHFS") (CONTD.)
The major classes of assets held for sale and assets and liabilities of the disposal group classified as held for sale on the statements of financial position are as follows (Contd.):

Group
2011
2010
RM'000
RM'000
Reserve :
Share option reserves
Exchange fluctuation reserves Company
2011
RM'000

2010
RM'000

1,230

1,230

-

-

6,576
7,806

4,660
5,890

-

-

9. EARNINGS PER SHARE
(a) Basic earnings per share
Basic earnings per share amounts are calculated by dividing profit for the year net of tax, attributable to owners of the parent by the weighted average number of ordinary shares in issue during the financial year.
Group
2011
2010
RM'000
RM'000
(Restated)
(Loss)/profit net of tax attributable to owners of the parent from:
- continuing operations
(152,797)
(317,799)
- discontinued operations
3,799,582
506,223
Profit net of tax attributable to owners of the parent
3,646,785
188,424
Weighted average number of ordinary shares in issue ('000)
Basic earnings per share from: (sen)
- continuing operations
- discontinued operations

817,089

(18.7)
465.0
446.3

74

817,089

(38.9)
62.0
23.1

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
9. EARNINGS PER SHARE (CONTD.)
(b) Diluted earnings per share
For the purpose of calculating diluted earnings per share, the profit for the year net of tax, attributable to owners of the parent has been adjusted for the dilutive effects of the potential ordinary shares of the following subsidiaries:
(i) ULHB, in respect of the redeemable convertible preference shares ("RCPS") issued for the acquisition of Sunrise Berhad; and
(ii) Opus IC, in respect of the share options granted to its employees.
Group
2011
RM'000
Loss net of tax from continuing operations attributable to owners of the parent
Profit net of tax of subsidiaries from continuing operations attributable to non controlling interests arising from potential dilution of equity shareholding in subsidiaries upon exercise of options
Diluted profit net of tax from continuing operations attributable to owners of the parent

2010
RM'000
(Restated)

(152,797)

(317,799)

(18,611)

(1,899)

(171,408)

(319,698)

Profit net of tax from discontinued operations attributable to owners of the parent

3,799,582

506,223

Diluted profit net of tax for the year attributable to owners of the parent

3,628,174

186,525

817,089

817,089

Weighted average number of ordinary shares in issue ('000)
Diluted earnings per share from: (sen)
- continuing operations
- discontinued operations

(21.0)
465.0
444.0

75

(39.1)
62.0
22.9

6551-K
UEM Group Berhad
(Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2010 (CONTD.)
10. PROPERTY, PLANT AND EQUIPMENT
Group

Note

Net carrying amount at
1 January
Currency translation differences Acquisition of subsidiaries 17(a)
Additions
Disposals
Disposal of subsidiaries Write-off
Reclassified to AHFS
Reclassification
Impairment losses
Depreciation charge
Net carrying amount at
31 December

Plant, equipment, vehicles and others
RM'000

Capital work-inprogress RM'000

Total
2011
RM'000

Total
2010
RM'000

515,871

944,414

80,868

1,541,153

1,799,765

51

7,347

-

7,398

Land and buildings RM'000
(a)

(517)

30,270
56,656
(1,139)

54,731
73,166
(16,506)

287,173
-

85,001
416,995
(17,645)

942
200,072
(6,650)

(28,908)
(144)
(10,192)
(1,171)
(22,032)

(61,429)
(943)
69,888
(134,476)

(266)
(74,245)
-

(90,603)
(1,087)
(14,549)
(1,171)
(156,508)

(5,669)
(467)
(277,515)
1,884
(170,692)

539,262

936,192

293,530

1,768,984

1,541,153

656,945

2,758,718

293,530

3,709,193

-

(116,512)
(1,171)
539,262

(1,822,526)
936,192

293,530

(1,939,038)
(1,171)
1,768,984

-

615,435

2,773,469

80,868

-

3,469,772

(99,564)
515,871

(1,829,055)
944,414

80,868

-

(1,928,619)
1,541,153

-

-

At 31 December 2011
Cost
Accumulated depreciation Impairment losses
Net carrying amount
At 31 December 2010
Cost
Accumulated depreciation Net carrying amount
Depreciation charge for
2010

20,111

150,581

76

170,692

6551-K
UEM Group Berhad
(Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2010 (CONTD.)
10. PROPERTY, PLANT AND EQUIPMENT (CONTD.)
Group (Contd.)
(a) Land and buildings comprise the following:

Land
RM'000
Net carrying amount at 1 January
Currency translation differences
Acquisition of subsidiaries
Additions
Disposal of subsidiaries
Disposals
Write-off
Reclassified to AHFS
Reclassification
Impairment losses
Depreciation charge
Net carrying amount at
31 December

Buildings
RM'000

Total
2011
RM'000

Total
2010
RM'000

148,988
(5)
6,681
54,616
(26,139)
(82)
(1,171)
(2,918)

366,883
56
23,589
2,040
(2,769)
(1,139)
(62)
(10,192)
(19,114)

515,871
51
30,270
56,656
(28,908)
(1,139)
(144)
(10,192)
(1,171)
(22,032)

632,242
44
40
8,740
(2,904)
(167,356)
65,176
(20,111)

179,970

359,292

539,262

515,871

Cost
Accumulated depreciation
Accumulated impairment losses
Net carrying amount

208,920
(27,824)
(1,171)
179,925

448,025
(88,688)
359,337

656,945
(116,512)
(1,171)
539,262

At 31 December 2010
Cost
Accumulated depreciation
Net carrying amount

177,673
(28,685)
148,988

437,762
(70,879)
366,883

-

615,435
(99,564)
515,871

17,736

-

20,111

At 31 December 2011

Depreciation charge for
2010

2,375

77

-

6551-K
UEM Group Berhad
(Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2010 (CONTD.)
10. PROPERTY, PLANT AND EQUIPMENT (CONTD.)
Company

Land
RM'000

Net carrying amount at
1 January
Additions
Transfer
Disposals
Write-off (Note 5)
Impairment losses
(Note 5)
Depreciation charge
Net carrying amount at
31 December

Buildings
RM'000

Plant, machinery and others RM'000

12,573
-

70,438
-

6,046
1,617
94
-

89,057
1,617
94
-

92,920
1,049
(1,397)
(4)

(1,171)
(203)

(1,616)

(1,976)

(1,171)
(3,795)

(3,511)

11,199

68,822

5,781

85,802

89,057

15,630

80,825

31,588

128,043

-

(3,260)

(12,003)

(25,807)

(41,070)

-

(1,171)
11,199

68,822

5,781

(1,171)
85,802

-

15,630

80,826

39,077

-

135,533

(3,057)
12,573

(10,388)
70,438

(33,031)
6,046

-

(46,476)
89,057

1,619

1,689

-

3,511

Total
2011
RM'000

Total
2010
RM'000

At 31 December 2011
Cost
Accumulated depreciation Accumulated impairment losses
Net carrying amount
At 31 December 2010
Cost
Accumulated depreciation Net carrying amount
Depreciation charge for
2010

203

78

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
10. PROPERTY, PLANT AND EQUIPMENT (CONTD.)
(i) During the year,:
- the Company acquired property, plant and equipment with an aggregate cost of
RM1,617,000 (2010: RM1,049,000) all of which were acquired on cash basis; and
- the Group acquired property, plant and equipment with an aggregate cost of
RM407,312,000 (2010: RM198,932,000) of which RM399,357,000 (2010:
RM190,028,000) was acquired on cash basis and RM7,955,000 (2010: RM8,904,000) was acquired by means of finance lease and hire purchase arrangements.
(ii) Included in the current year depreciation charge of the Group is the amount of
RM6,878,000 (2010: RM5,169,000) capitalised in construction costs (Note 28(iv)). The total depreciation charged to the income statement is RM149,630,000 (2010: RM165,523,000), which include depreciation charge of RM2,127,000 (RM7,944,000) attributable to discontinued operations.
(iii) Included in the plant, equipment, vehicles and others of the Group are plant, machinery and motor vehicles that are under finance leases and hire purchase instalment plans with a total net carrying amount of RM23,916,000 (2010: RM21,940,000).
(iv) Included in the capital work-in-progress of the Group is CIMA's borrowing costs of
RM9,683,000 (2010: UEM Builders' borrowing costs of RM1,140,000) arising from financing entered into for the construction of assets.
11. CONCESSION INTANGIBLE ASSETS

Group

2011
Bhiwandi-Kalyan-Shil -Phata
Highway ("BKSP")
Padalur-Trichy Highway
("PTH")
Cikampek-Palimanan Toll
Highway ("CPTH") - Capital work-in-progress Accumulated
Cost amortisation
RM'000
RM'000

Net carrying amount
RM'000

Amortisation charge RM'000

168,962

30,180

138,782

29,543

235,179

5,069

230,110

3,587

99,448
503,589

35,249

99,448
468,340

33,130

79

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
11. CONCESSION INTANGIBLE ASSETS (CONTD.)

Group

Accumulated
Cost amortisation
RM'000
RM'000

Net carrying amount
RM'000

Amortisation charge RM'000

2010 (Restated)
PLUS
ELITE
LINKEDUA
Penang Bridge
KLBK
BKSP
PTH
CPTH - Capital work-in-progress 10,495,298
1,434,015
1,086,496
1,592,979
368,006
195,878
269,742

1,920,570
278,060
131,531
423,769
92,091
4,065
2,100

8,574,728
1,155,955
954,965
1,169,210
275,915
191,813
267,642

154,575
44,707
3,386
91,761
20,406
282
2,089

87,571
15,529,985

2,852,186

87,571
12,677,799

317,206

10,393,765
1,426,356
1,082,351
1,601,969
366,870
209,521

1,765,995
233,353
128,145
332,008
71,685
7,344

8,627,770
1,193,003
954,206
1,269,961
295,185
202,177

154,325
32,425
10,478
55,349
10,101
7,344

78,009

-

78,009

-

519
15,159,360

2,538,530

519
12,620,830

270,022

2009 (Restated)
PLUS
ELITE
LINKEDUA
Penang Bridge
KLBK
BKSP
CPTH - Capital work-in-progress Cimanggis-Cibitung Toll
Road - Capital work-in-progress Included in the capital work-in-progress are borrowing costs capitalised during the year of
RM5,111,000 (2010: RM6,692,000).

80

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
11. CONCESSION INTANGIBLE ASSETS (CONTD.)
2011
RM'000

Group
Cost
At 1 January (as previouly stated)
Effects of adopting IC 12
At 1 January (as restated)
Additions
Less: IC 12 adjustments
Additions (after IC 12 adjustment)

2010
RM'000
Restated

17,621,258
(2,091,273)
15,529,985
467,652
(255,942)
211,710

Net carrying amount at:
31 December 2011
31 December 2010 (as restated)
1 January 2010 (as restated)

275,973
(9,711)
(660)
(36,784)
15,529,985

(4,139,192)
1,287,006
(2,852,186)
(350,727)
207,832
(142,895)
2,955,775
4,057
(35,249)

Accumulated amortisation
At 1 January (as previouly stated)
Effects of adopting IC 12
At 1 January (as restated)
Charge for the year
Less: IC 12 adjustments
Charge for the year (after IC 12 adjustment)
Write off
Disposal of subsidiaries
Translation difference
At 31 December

17,006,879
(1,847,519)
15,159,360
385,561
(243,754)
141,807

(15,178,493)
(59,613)
503,589

Acquisition of subsidiary
Write off
Reversal
Reclass to AHFS
Disposal of subsidiaries
Translation difference
At 31 December

1.1.2010
RM'000
Restated

(3,627,601)
1,089,071
(2,538,530)
(515,141)
197,935
(317,206)
3,550
(2,852,186)

468,340
-

12,677,799
-

12,620,830

Included in the amortisation charge for the year is the amount related to local expressways of
RM109,765,000 (2010: RM314,835,000) which has been classified as discontinued operations, as disclosed in Note 8.

81

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
12. LAND HELD FOR PROPERTY DEVELOPMENT
Group
2011
RM'000
Freehold land
Cost
At 1 January
Addition
Acquisition of a subsidiary (Note 17(a))
Acquisition through the settlement of long term receivables
Transfer to property development costs (Note 26)
At 31 December

1,927,758
308,950
861,354
(223,875)
2,874,187

2010
RM'000

1,976,051
24,761
76,000
(149,054)
1,927,758

Land titles of the freehold land of approximately:
(a) 410 acres (2010: 474 acres) are subject to a third party charge as security for borrowings taken by a joint venture.
(b) 400 acres (2010: 685 acres) have been charged as security for the Islamic Term Financing taken by a subsidiary, as detailed in Note 38 J(xviii).
(c) 1,584 acres (2010: 1,584 acres) have been deposited by a subsidiary to the Company as security for the borrowing granted to the subsidiary as disclosed in Note 21(b).
(d) 272 acres have been charged as security for the term and bridging loans together with bank guarantees facilities taken by ULHB and its subsidiary, as detailed in Note 38 J(xix).
(e) 108 acres have been charged as security for the term loans and revolving credit facilities taken by certain subsidiaries, as detailed in Note 38 J(xx).
Included in the addition to the land held for property development of the Group during the financial year are as follows:
Group
2011
RM'000
Staff costs (Note 5(i))
Interest capitalised (Note 6)

2,603
10,992

82

2010
RM'000
2,067
-

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
12. LAND HELD FOR PROPERTY DEVELOPMENT (CONTD.)
Included in land held for property development of the Group are parcels of land committed through a Development Agreement dated 16 June 2005 entered into between Nusajaya
Greens Sdn Bhd ("NGSB"), a wholly-owned subsidiary of ULHB Group, and Horizon Hills
Development Sdn Bhd ("Horizon Hills"), a 50:50 joint venture company between UEM Land
Bhd ("UEM Land") and Gamuda Berhad ("Gamuda").
Pursuant the Development Agreement, a series of put and call options are granted between the parties for Horizon Hills to purchase 1,027 acres mixed development land and 200 acres of integrated golf course development land in Mukim Pulai, Daerah Johor Bahru, Negeri Johor
Darul Takzim for a total purchase consideration of RM391.39 million and to develop over a period of 15 years.
As at the reporting date, Horizon Hills has exercised options to purchase the following:

Financial Year
2005
2006
2007
2008
2009
2010
2011

Mixed
Development
Land
Acres
200.00
106.00
67.22
64.39
61.66
59.55
63.75
622.57

Golf
Course
Land
Acres
40.00
20.00
140.00
(5.34)
194.66

Total
Acres
240.00
126.00
207.22
64.39
61.66
54.21
63.75
817.23

13. INVESTMENT PROPERTIES
Group
Note
Cost
At 1 January
Addition from contra of debts
Acquisition of a subsidiary
Addition from subsequent expenditure
Transfer from property development costs
Disposal
At 31 December

17(a)
26

83

2011
RM'000
46,126
438,883
3,229
47,200
(6,607)
528,831

2010
RM'000
39,070
5,710
1,766
(420)
46,126

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
13. INVESTMENT PROPERTIES (CONTD.)
Group
Note

2011
RM'000

2010
RM'000

Accumulated depreciation
At 1 January
Depreciation charge (Note 5)
Disposal
At 31 December

(4,441)
185
(4,256)

Accumulated impairment
At 1 January / 31 December

(110)

-

(110)

Net carrying amount
At 31 December

524,465

46,016

Fair value

538,642

69,554

Investment properties comprise commercial properties, office lots, condominium units and landed properties.
On 3 August 2007, UEM Land, as the developer and Nusajaya Rise Sdn Bhd as the lessor, signed a lease agreement with Menara Burj Sdn Bhd ("MBSB") to lease a commercial property to MBSB for a period of four years, commencing on 1 November 2008. Under the lease agreement, MBSB is granted the option to purchase the commercial property at a price amounting to RM12,500,000. The carrying amount of investment property which is leased to
MBSB amounted to as follows:
Group
2011
RM'000
1,344
9,173
10,517

Freehold land
Building

84

2010
RM'000
1,344
9,173
10,517

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
14. PREPAID LAND LEASE PAYMENTS
Group
2011
RM'000
At 1 January
Disposal of a subsidiary
Reclassified to AHFS
Amortisation charge (Note 5)
Currency translation differences
At 31 December

2010
RM'000

2,390
(385)
(82)
80
2,003

5,535
(3,033)
(90)
(22)
2,390

15. GOODWILL
Group
Note
Cost
At 1 January
Acquisition of a subsidiary
Impairment
Reclassified to AHFS
Disposal of a subsidiary
Currency translation differences
At 31 December

17(a)
5

2011
RM'000

798,513
582,186
(321,705)
883
1,059,877

2010
RM'000

1,014,682
39,241
(37,612)
(211,155)
(3,775)
(2,868)
798,513

Goodwill has been allocated to the Group's cash generating units ("CGU") identified according to business segments as follows:
Group
2011
2010
RM'000
RM'000
Expressways
Township and property development
Engineering and construction
Asset and facility management

683,747
80,561
295,569
1,059,877

321,705
101,561
80,561
294,686
798,513

Goodwill is tested for impairment on an annual basis by comparing the carrying amount with the recoverable amount, which is based on market prices or value in use. The Directors are of the opinion that since all the CGU are to be held on a long term basis, value in use would best reflect its recoverable amount. The future cash flows are based on management’s five-year business plan, which is a reasonable estimate of future performance.
85

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
15. GOODWILL (CONTD.)
There remains a risk that due to unforeseen changes in the respective economies in which the CGU operate and/or global economic conditions, that the ability to achieve management’s business plan may be adversely affected. In calculating the value in use for each CGU, management has applied a discount rate ranging from 8% to 12% and a revenue growth rate for the period beyond five years of 5.0% to 8.0%.
The following describes each key assumption on which management has based its cash flow projections for the purposes of impairment testing of goodwill:
(a) The discount rate used reflected the management's estimate of return on capital employed required in the respective segments.
(b) The profit margin applied to the projections are based on the historical profit margin trend for the individual CGU or budgeted profit margin for predetermined projects obtained. (c) The cash flow projections are based on the assumption that a reasonable percentage of projects tendered and new products launched are successful, based on past experience. The ability to achieve the business plan targets is a key assumption in determining the recoverable amount for each CGU.
16. OTHER INTANGIBLE ASSETS
Group
Rights
RM'000
(i)

Cost
2011
At 1 January
Reclassified from property, plant and equipment
Additions
Write off
Arising from disposal of subsidiaries
Currency translation differences
At 31 December

Brand Software
RM'000
RM'000
(ii)

Total
RM'000

24,500

62,971

87,471

(24,500)
-

86

-

3,005
5,159
(315)
(19,038)
459
52,241

3,005
5,159
(24,815)
(19,038)
459
52,241

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2010 (CONTD.)
16. OTHER INTANGIBLE ASSETS (CONTD.)
Group (Contd.)

Rights
RM'000
(i)
Cost
2010
At 1 January
Reclassified to property, plant and equipment
Additions
Arising from acquisition of subsidiaries
Reclassified to AHFS
Write off
Arising from disposal of subsidiaries
Currency translation differences
At 31 December

Brand Software
RM'000
RM'000
(ii)

Total
RM'000

24,500

84,932

110,432

24,500

Accumulated amortisation
2011
At 1 January
Reclassified from property, plant and equipment
Amortisation charge
Write off
Arising from disposal of subsidiaries
Currency translation differences
At 31 December

1,000
(1,000)
-

(2,666)
3,878
98
(238)
(22,566)
(467)
62,971

(2,666)
3,878
98
(1,000)
(238)
(22,566)
(467)
87,471

(17,150)

(67,991)

-

(378)
(6,811)
225
13,840
(434)
(44,399)

(378)
(9,751)
20,315
13,840
(434)
(44,399)

(14,210)

-

(60,109)

(74,319)

(2,940)
(17,150)

Accumulated impairment losses
2010
At 1 January
Reclassified to AHFS

(50,841)

(2,940)
20,090
-

2010
At 1 January
Reclassified to property, plant and equipment
Amortisation charge
Write off
Arising from disposal of subsidiaries
Currency translation differences
At 31 December

-

-

782
(9,112)
205
17,083
310
(50,841)

782
(12,052)
205
17,083
310
(67,991)

87

(1,000)
1,000
-

-

(1,000)
1,000
-

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2010 (CONTD.)
16. OTHER INTANGIBLE ASSETS (CONTD.)
Group (Contd.)
Rights
RM'000
(i)
Net carrying amount:
At 31 December 2011
At 31 December 2010
(i)

Brand Software
RM'000
RM'000
(ii)

7,350

-

7,842
12,130

Total
RM'000

7,842
19,480

Marketing and transportation rights
These represent the exclusive arrangement for marketing and transportation rights acquired by Kualiti Khidmat Alam Sdn Bhd ("KKA"), in connection with the treatment and disposal of scheduled waste of Kualiti Alam, both are wholly-owned subsidiaries of
UEM Environment.
The Board of Directors of UEM Environment had on 3 October 2011 approved the reorganisation of the subsidiaries involving Kualiti Alam, KKA and Kualiti Kitar Alam Sdn
Bhd ("KKI"). Accordingly, the balance of the carrying value was written off.

(ii) Brand
This represents the rights and ownership of the brand name and intellectual properties, marketing and formulation of a range of natural skincare and bodycare products under the trademark "Botanique" acquired by Pharmaniaga Marketing Sdn Bhd, a whollyowned subsidiary of Pharmaniaga. In 2008, the directors conducted an impairment review of the brand and taking into consideration the lesser than expected sale performance of the products, an impairment of the entire sum of the brand was made.

Included in the current year amortisation charge of the Group are the following:

Amount capitalised in construction costs
Amount charged to income statements:
- continuing operations
- discontinued operations

88

Note
28(iv)
5

2011
RM'000
386

2010
RM'000
94

9,201
164
9,751

9,965
1,993
12,052

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
16. OTHER INTANGIBLE ASSETS (CONTD.)
Company
Software
2011
2010
RM'000
RM'000
Cost
At 1 January
Additions
At 31 December

5,382
1,104
6,486

4,915
467
5,382

(4,754)
(391)
(5,145)

(4,129)
(625)
(4,754)

Accumulated amortisation
At 1 January
Amortisation charge (Note 5)
At 31 December
Net carrying amount

1,341

628

17. INVESTMENT IN SUBSIDIARIES
Company
2011
2010
RM'000
RM'000
Shares at cost:
Quoted in Malaysia

2,155,157

3,117,819
980,796
4,098,615
(1,129,682)
2,968,933

Unquoted
- ordinary shares
- preference shares
Less : Accumulated impairment losses

Fair value adjustment on interest free amount due from subsidiary 4,038,983

2,982,128
635,349
3,617,477
(1,108,839)
2,508,638

6,551,279

6,799,185

89

3,658

5,124,090
Market value of quoted shares

-

15,558,053

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
17. INVESTMENT IN SUBSIDIARIES (CONTD.)
Analysed as follows:
Company
2011
2010
RM'000
RM'000

Note
At 1 January
Acquisitions during the year
Capitalisation of amount due from/advances to subsidiaries Capital injection to a subsidiary
Disposals during the year
Write off during the year
Reclassify to assets held for sale
Net impairment losses during the year
At 31 December

6,551,279
11,100

5
8
5

7,085,204
-

6,390
465,000
(178,399)
(1,710,437)
(20,843)
5,124,090

80,458
749,221
(19,530)
(50)
(335,950)
(1,008,074)
6,551,279

(a) Acquisitions during the year
(i) Acquisition of Sunrise Berhad ("Sunrise")
On 4 November 2010, CIMB Investment Band Berhad, on behalf of ULHB, served a notice of conditional take-over offer on the Board of Sunrise to notify of ULHB's intention to acquire all the ordinary shares of RM1.00 each in Sunrise (excluding treasury shares) not already owned by ULHB ("Offer Shares"), at an offer price of
RM2.80 per Offer Share to be satisfied in either of the following manner at the election of the holder of Offer Shares ("Holder"):
-

through the issuance of ordinary shares of RM0.50 each in ULHB at an issue price of RM2.10 ("Consideration Shares"), where the Holders will receive approximately 1.33 Consideration Shares for every 1 Offer Share surrendered
("Share Alternative"); or

-

through the issuance of RCPS of RM0.01 each in ULHB at an issue price of
RM1.00 ("Consideration RCPS"), where the Holders will receive 2.8
Consideration RCPS for every 1 Offer Share surrendered.

The acquisition of Sunrise was completed on 6 January 2011.

90

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
17. INVESTMENT IN SUBSIDIARIES (CONTD.)
(a) Acquisitions during the year (Contd.)
(i) Acquisition of Sunrise (Contd.)
The carrying amounts and fair values of the assets and liabilities recognised at the date of acquisition are as follows:
Carrying
Amount
Fair Value
RM'000
RM'000
Note
Property, plant and equipment
Land held for property development
Investment properties
Investment in associates
Investment in joint ventures
Property development costs
Inventories and work-in-progress
Receivables
Deferred tax assets
Financial assets available for sale
Cash and bank balances
Provisions
Payables
Borrowings
Deferred tax liabilities
Tax payable
Group's share of net assets

10
12
13

Goodwill on acquisition
Total cost of acquisition

15

26

24

39

24

Satisfied by:
Debts and equity securities at fair value

Cash consideration
Add: Cash and cash equivalent acquired
Cash flow on acquisitions, net of cash balances acquired

91

85,001
741,611
345,951
3,455
94,034
355,407
57,478
289,829
15,495
1,679
163,952
(56,697)
(320,283)
(741,807)
(7,293)
1,027,812

85,001
861,354
438,883
3,455
94,034
355,407
57,478
289,829
15,495
1,679
163,952
(56,697)
(320,283)
(741,807)
(138,281)
(7,293)
1,102,206
582,186
1,684,392

1,684,392
1,684,392
163,952
163,952

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
17. INVESTMENT IN SUBSIDIARIES (CONTD.)
(a) Acquisitions during the year (Contd.)
(i) Acquisition of Sunrise (Contd.)
The effect of the acquisitions on the financial results of the Group from the date of acquisition to 31 December 2011 is as follows:
RM'000
Revenue
Profit for the year from continuing operations

914,380
149,239

Had the acquisitions been completed on 1 January 2011, the Group's revenue and loss for the year from continuing operations would approximately be the same, as the date of completion was only 6 days later and the impact to the financial results was negligible. (ii) On 17 June 2011, Sunrise MS Pte Ltd ("Sunrise MS") was incorporated in the Republic of Singapore under the Companies Act, (Cap. 50). Sunrise MS is wholly-owned by
Sunrise.
(iii) On 22 June 2011, ULHB subscribed for 5,500,000 ordinary shares of RM1.00 per share in Nusajaya Lifestyle Sdn Bhd ("NLSB"), a newly incorporated company, for a total cash consideration of RM5,500,000. Pursuant to the completion of the acquisition,
NLSB became a 55% owned subsidiary of ULHB.
(b) Additional investment in subsidiaries
(i) On 18 January 2011, UEM Environment entered into a Shares Sale Agreement to acquire 50,000 shares of RM1.00 each in KKI, representing the balance 30% of the equity interest in KKI from its non-controlling interests for a cash consideration of
RM3,200,000.
(ii) On 1 May 2011, Cement Industries of Malaysia Berhad ("CIMA") acquired the remaining 30% equity interest in I-Mix Concrete Industries Sdn Bhd (“I-Mix”) not already owned for a cash consideration of RM7,908,660.
(iii) On 27 May 2011, UEM Builders issued 465,000,000 redeemable convertible preference shares of RM0.01 each at an issue price of RM1.00, which was fully subscribed by the
Company through cash injection and capitalisation of intercompany amounts due from
UEM Builders.

92

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
17. INVESTMENT IN SUBSIDIARIES (CONTD.)
(b) Additional investment in subsidiaries (Contd.)
(iv) On 30 June 2011, the Company acquired 1,500,000 share capital of RM1.00 each, representing the balance 30% equity interest in Forte Tech Solutions Sdn Bhd from
Pharmaniaga for a cash consideration of RM4,959,107.
(v) On 29 December 2011, the Company acquired a total of 326,501 ordinary shares of
RM0.25 each, representing 3.27% in PEB for a cash consideration of RM6,096,460.
Upon completion, the Group’s equity interest in PEB is 76.5%.
(c) Disposal, dilution or dissolution of subsidiaries
(i) The following inactive wholly-owned subsidiaries of the Company were dissolved on 10
February 2011 through Members' Voluntary Winding Up:
- Daiman Kiara Sdn Bhd
- Shangold Sdn Bhd
- Trinity Saga Sdn Bhd
(ii) On 25 March 2011, the Company's disposal of 86.8% equity interest in Pharmaniaga was completed as disclosed in Note 8(a).
(iii) The following inactive subsidiaries of ULHB, which were held through its wholly-owned subsidiary, UEM Land, have been struck off from the Schedule of the Registrar pursuant to Section 308 (4) of the Companies Act, 1965:
- Grand Influx Sdn Bhd on 16 June 2011
- Renong College Berhad on 23 August 2011
(iv) On 15 August 2011, PEB completed the disposal of its entire equity interest of 60% in
CCTW as disclosed in Note 8(b).
(v) On 29 November 2011, PEB's wholly-owned subsidiaries, namely PLUS, ELITE,
LINKEDUA, KLBK, Teras and PHS were disposed to PMSB following the completion of
PEB's privatisation exercise as disclosed in Note 50(a).
(vi) On 23 December 2011, UEM Builders sold its entire 100% equity interest in PBSB to
PMSB for a total cash consideration of RM400 million as disclosed in Note 50(a).
(vii) On 27 December 2011, the Company transferred 650,000 PEB shares to its wholly owned subsidiary, UEM Builders, for a total consideration of RM178,399,000.
(viii) During the year, UEM Land disposed its 100% equity interest in P.T Hardja Setia to an unrelated third party for a cash consideration of IDR18,000,000 (equivalent to
RM6,257,763).
93

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
17. INVESTMENT IN SUBSIDIARIES (CONTD.)
(c) Disposal, dilution or dissolution of subsidiaries (Contd.)
The value of the assets and liabilities disposed at the respective dates of disposals are as follows: 2011
2011
RM'000
RM'000
Total disposal proceeds
Property, plant and equipment
361,276
Concession intangible assets
12,223,406
Prepaid land lease payment
3,407
Other intangible assets
9,110
Investment in associates
12,761
Other investments
186,798
Toll compensation recoverable from the Government
3,282,125
Deferred tax assets
13,163
Inventories and work-in-progress
229,248
Receivables
379,667
Cash, bank balances and deposits
3,623,934
Payables
(661,198)
Amount received from the Government for
Additional Works
(19,967)
Borrowings
(11,860,263)
Provisions
(649,183)
Retirement benefit obligations
(19,286)
Deferred revenue and liabilities
(126,136)
Long term amount due to the Government
(38,096)
Tax payable
(59,335)
Deferred tax liabilities
(644,911)
Non-controlling interests
(528,508)
Net assets disposed
5,718,012
Attributable goodwill
505,073
Transfer from reserves on disposal/realisation
(2,022)
Total value of assets/liabilities disposed
6,221,063
Gain on disposal
Gain on disposal attributable to non-controlling interests
Gain on disposal attributable to Owners of the Parent
Unrealised gain
Realised gain on disposal attributable to Owners of the Parent
Unrealised gain
- Eliminated against the Group's interest in joint venture
- Excess, recognised as deferred income at Group

94

19(i)
35(i)

23,023,440

6,221,063
16,802,377
(10,470,883)
6,331,494
(3,202,122)
3,129,372

1,733,999
1,468,123
3,202,122

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
17. INVESTMENT IN SUBSIDIARIES (CONTD.)
(c) Disposal, dilution or dissolution of subsidiaries (Contd.)
2011
RM'000
Disposal proceeds settled by:
Cash consideration
Consideration receivable
Consideration received in prior year

11,493,420
11,514,000
16,020
23,023,440

Cash inflow arising from disposal:
Cash consideration
Less: Cash and cash equivalents of subsidiaries disposed
Cash inflow from disposal, net of cash and cash equivalents disposed

11,493,420
11,493,420

18. INVESTMENT IN ASSOCIATES

Note
Investment at cost
(i)
Amount due from associates *
Share of post-acquisition reserve Currency translation differences Gain on dilution
Transfer of negative goodwill to retained profits Premium on acquisition written off
Accumulated impairment losses Group
2011
2010
RM'000
RM'000

Company
2011
2010
RM'000
RM'000

499,846
3,753

492,086
-

353,869
-

353,869
-

(68,881)

2,482

-

-

(17,137)
44,833

(11,247)
44,833

-

-

55,177

55,177

-

-

-

-

(193)

(193)

(64,499)
452,899

(64,499)
518,639

(215,179)
138,690

(166,213)
187,656

Details of associates are disclosed in Note 52.
*

The Group views the non-trade amount due from associates as part of the Group's investment in associates.

95

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
18. INVESTMENT IN ASSOCIATES (CONTD.)
Group
2011
2010
RM'000
RM'000

Company
2011
2010
RM'000
RM'000

334,193

334,193

334,193

334,193

82,239
25,100
107,339

85,763
25,100
110,863

8,126
11,550
19,676

8,126
11,550
19,676

58,683

47,030

-

-

500,215

492,086

353,869

353,869

315,312

473,249

315,312

473,249

(i) Investment at cost
In Malaysia
Quoted shares, at cost
Unquoted shares, at cost
- ordinary shares
- preference shares
Outside Malaysia
Unquoted shares, at cost

Market value of quoted shares:
In Malaysia

(ii) The summarised financial statements of the associates, not adjusted for the proportion of ownership interest held by the Group, is as follows:
Group
2011
RM'000
1,979,442

Profit for the year
Current assets
Non-current assets
Current liabilities
Non-current liabilities

1,949,131

242,020

Revenue

2010
RM'000

244,729

3,414,522
2,086,029
(1,053,064)
(2,993,044)
1,454,443

96

3,333,068
2,610,363
(1,005,625)
(3,375,885)
1,561,921

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
18. INVESTMENT IN ASSOCIATES (CONTD.)
Group
2011
RM'000

2010
RM'000

1,231
55,753
56,984

34,532
26,669
61,201

(iii) Share of results of associates
Share of results for the year based on:
Audited financial statements
Management financial statements

(iv) On 27 January 2011, PEB acquired a 26% equity interest in Jetpur-Somnath Tollways
Limited for a total consideration of INR260,000 (approximately RM17,500).
(v) The Group's investment in an associate has been reclassified to non-current asset held for sale following a decision of the Board on 30 October 2009. Details of the investment is as follows: Group
2011
RM'000

Market value of quoted shares

97

308,235
(150,939)
(30)
96,119
(141,693)
111,692

308,235
(144,519)
(2,856)
96,119
(141,693)
115,286

127,500

Investment at cost
Share of post-acquisition reserve
Currency translation differences
Gain on dilution
Accumulated impairment losses
Reclassified to non-current assets held for sale

2010
RM'000

140,003

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
19. INVESTMENT IN JOINT VENTURES
Group
2011
RM'000

Share of post-acquisition reserves Exchange adjustments
Less: Accumulated impairment losses
(A)
Amount due from joint ventures (ii)

2010
RM'000

137,544

131,466

1,734,000

-

140,836
278,380

134,036
265,502

1,734,000

-

48,173
7,160
333,713

Unquoted shares, at cost (i)
Investment in unincorporated entities

Company
2011
RM'000

(13,489)
9,536
261,549

1,734,000

-

(107,036)
226,677

(54,999)
206,550

1,734,000

-

188,461
415,138

206,550

1,734,000

-

2010
RM'000

(i) Included in the cost is the Company's investment in PMSB, which is after the elimination of unrealised gain arising from PEB's disposal of local businesses to PMSB to the extent of the Group's interests in the joint venture. The excess of the unrealised profit over the carrying amount of the joint venture is recognised as deferred income as disclosed in Note
35(i).
(ii) Amount due from these joint ventures are unsecured, interest free and repayable on demand except for RM37,698,000 which bears an average interest of 5.8% per annum.
The Group views the non-trade amounts due from joint ventures as part of the Group's investment in joint ventures.
(A) The Group's aggregate share of the revenue, expenses, assets and liabilities of the joint ventures are as follows:

2011
RM'000

2010
RM'000

Revenue
Expenses, including finance costs and after tax

468,023
(398,291)
69,732

137,406
(121,091)
16,315

Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets

436,633
542,609
(492,413)
(260,152)
226,677

420,441
298,538
(200,683)
(311,746)
206,550

98

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
19. INVESTMENT IN JOINT VENTURES (CONTD.)
Details of the joint ventures are as follows:

Name of Joint Venture

Group's effective interest in Joint Ventures (%)
2011
2010

Principal activities

EXPRESSWAYS
PLUS Malaysia Sdn Bhd #

51

-

Investment holding and provision of expressway operation services

TOWNSHIP AND PROPERTY DEVELOPMENT
Haute Property Sdn Bhd
("Haute")

26

31

Property development

Horizon Hills Development
Sdn Bhd ("Horizon Hills")

33

39

Property development

Malaysian Bio-XCell
Sdn Bhd ("Bio-Xcell")

26

31

Development and operation of biotechnology park

Nusajaya Consolidated
Sdn Bhd ("NCSB")

33

39

Property development

Sime Darby Sunrise
Development Sdn Bhd

33

-

Property development

Sunrise MCL Land Sdn Bhd

33

-

Property development

# Based on the Shareholders' Agreement dated 28 October 2011 entered into between EPF,
PMSB and the Company, both EPF and the Company have joint and equitable participative rights in all board of directors and shareholders' matters of PMSB. Hence, the Company's investment in PMSB is accounted for as joint venture. PMSB owns 100% equity interest in
PLUS Berhad.

99

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
19. INVESTMENT IN JOINT VENTURES (CONTD.)

Name of Joint Venture

Group's effective interest in Joint Ventures (%)
2011
2010

Principal activities

ENGINEERING AND CONSTRUCTION
Local
Buildcast-Persys JV

70

70

Casting and supply of pre-cast segmental box girders for the Penang Second
Crossing Bridge

Prestige Packages (Perlis)
Sdn Bhd ("Prestige")

30

30

Manufacture and sale of cement bags

Road Builder (M) Sdn Bhd
- PATI Sdn Bhd JV

50

50

Construction and extension of roads

Shimizu-Nishimatsu-UEMBIJM JV

20

20

Water transfer tunnel and related works for PahangSelangor raw water transfer project. UEC - Hasrat Usaha
Sdn Bhd JV

70

70

Dormant

UEM - Sabah Economic
Development Corporation

70

70

Construction and engineering works

UEM - Sarawak
Economic Development
Corporation

70

70

Construction and engineering works

25

25

Construction and extension of roads

Overseas
B. Seenaiah & Co - Road
Builder (M) Sdn Bhd PATI JV

100

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
19. INVESTMENT IN JOINT VENTURES (CONTD.)

Name of Joint Venture

Group's effective interest in Joint Ventures (%)
2011
2010

Principal activities

ENGINEERING AND CONSTRUCTION (CONTD.)
Overseas (Cont'd)
GMR Tuni - Anakapalli
Expressways Pvt Ltd

26

26

Design, construction, management, operations and maintenance of the
Tuni-Anakapalli Section of the National Highway of India

GMR Tambaram Tindivanam
Expressways Pvt Ltd

26

26

Design, construction, management, operations and maintenance of the
Tambaram-Tindivanam
Section of the National
Highway of India

Hindustan Construction
Co Ltd- PATI JV

50

50

Construction and extension of roads

PATI - Bhagheeratha
Engineering Ltd JV

50

50

Construction and extension of roads

UEM - Essar

51

51

Construction and extension of roads

50

Investment holding, provision of project management and consultancy services in the field of solid waste management

ASSET AND FACILITY MANAGEMENT
E-Idaman Sdn Bhd

50

101

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
20. OTHER INVESTMENTS

Note

Group
2011
2010
RM'000
RM'000

Company
2011
2010
RM'000
RM'000

Available for sale investments:
Unquoted shares, at cost (i)
Less: Accumulated impairment losses

Quoted shares, at cost
(ii)
(Less)/Add:
Accumulated
impairment losses
Accumulated fair value adjustments 22,525

22,525

1,060

1,060

(22,525)
-

(22,525)
-

(1,060)
-

(1,060)
-

150,226

5,728

(93)

(93)

165,603

-

-

-

88,346
238,479

10,117
15,752

60,930
226,533

-

Unquoted bonds

-

115,489

-

-

Islamic structured products

-

50,000

-

-

232

232

-

-

238,711

181,473

226,533

-

238,479

15,752

226,533

-

Held to maturity investments:

Other non financial assets
Club membership

Market value of quoted shares
(i) Unquoted shares

A company with more than half of its voting power held by the Group but is not considered a subsidiary of the Group due to the absence of control and is in the process of being wound up is as follows:
Voting Power (%)
Company
2011
2010
UEM Genisys Sdn Bhd (“Genisys”)

51

102

51

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
20. OTHER INVESTMENTS (CONTD.)
(i) Unquoted shares (Contd.)
The Group ceased the consolidation of Genisys as the Company no longer has power to govern the operating and financial policies of Genisys. Therefore, the investment in
Genisys has been reclassified from investment in subsidiary to long term investment and the investment is stated at cost net of accumulated impairment loss.
(ii) Quoted shares
On 2 August 2011, the Company acquired a total of 312,458,851 ordinary shares of
RM1.00 each, representing 12.35% equity interest in TIME dotCom Berhad (“TdC”) from
TIME Engineering Berhad, an associate of the Company, for a cash consideration of
RM165,603,191.
21. AMOUNT DUE FROM SUBSIDIARIES
Company
2011
2010
RM'000
RM'000
Amount due from subsidiaries
Less: Allowance for impairment losses

628,748
(10,101)
618,647

385,748
(10,101)
375,647

Long term amount due from subsidiaries

327,300
(21,623)
305,677

243,000

Included under short term:
Amount due from subsidiaries
Less: Allowance for impairment losses

571,722
(21,623)
550,099

244,422

The amounts are interest free except for a total of RM354.1 million on which interest was charged at between 5.80% and 6.80% per annum (2010: RM519.3 million at between 6.30% and 6.80% per annum).
Included in the amount due from subsidiaries are:
(a) An amount due from PLUS of RM3.4 million, which was measured at its amortised cost as at 31 December 2010 upon adoption of FRS 139, had been restated to its original cost of
RM6.9 mil and reclassified from long term to short term as at 31 December 2011. Full settlement of the amount was subsequently made on 19 January 2012.
(b) An amount of RM243.0 million (2010: RM241.0 mil), being the principal amount of various tranches of term loan drawn down by ULHB, which bears interest at 6.5% per annum
(2010: 6.5% per annum) with the tenure ranging from 3 - 4 1/2 years. The term loan is secured over 1,584 acres of freehold land located at Johor Bahru deposited by ULHB pursuant to the terms and conditions of the loan agreement.
103

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
22. LONG TERM RECEIVABLES
Group
Note
Amount due from joint venture partners
Long term trade receivables

(i)
(ii)

Less: Allowance for impairment losses

2011
RM'000

2010
RM'000

89,198
204,379
293,577
(89,198)
204,379

89,198
68,766
157,964
(89,198)
68,766

(i) Advance to joint venture partner by PATI, a wholly-owned subsidiary of UEM Builders, for projects in India. The amount was fully impaired in 2010.
(ii) Included in trade receivables is an amount of RM51,002,000 (2010: RM48,115,000) which bears interest at 6% (2010: Nil) per annum.
23. AMOUNT RECOVERABLE/DUE FROM/DUE TO THE GOVERNMENT
Group
2011
RM'000
(a) Toll compensation recoverable from the Government
At 1 January
Accretion of interest arising from cumulative fair value adjustments Fair value adjustment on toll compensation revenue for the year
Net toll compensation revenue
Over provision of toll compensation in previous year
Compensation received / recognised
Set-off against toll revenue sharing
Set-off against income tax payable
Less: Disposal of subsidiaries (Note 17(c))
At 31 December
Less: Amount recoverable within 12 months
Amount recoverable after 12 months
(b) Short term amount due from the Government

104

2010
RM'000

2,642,218

2,298,099

99,771

92,805

24,201
1,114,144
(1,582)
(97,838)
(2,720)
(496,069)
(3,282,125)
-

(113,209)
885,332
(178,878)
(13,256)
(328,675)
2,642,218
(181,872)
2,460,346
15,966

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
23. AMOUNT RECOVERABLE/DUE FROM/DUE TO THE GOVERNMENT (CONTD.)
Group
2011
RM'000
-

(c) Long term amount due to the Government

2010
RM'000
38,096

(d) Amount received from the Government for Additional Works
Amount received from the Government
Add: Accumulated interest income
Less: Additional works expenditure
Less: Compensation for loss of interest income
Less: Disposal of subsidiaries (Note 17(c))

680,590
48,302
(705,553)
(3,372)
(19,967)
-

680,590
47,742
(705,553)
(3,372)
19,407

(a) The amount is in respect of toll compensation recoverable and the set-off of the toll sharing based on the toll compensation as described in Note 2.4(t)(iii).
(b) Pursuant to the Concession Agreement between PBSB and the Government dated 30
September 1993, the Government shall compensate PBSB for any reduction in toll revenue as a consequence of such restructure or restriction imposed, subject to negotiation and other consideration that the Government may deem fit.
(c) Under the SCA entered into on 9 January 1997 between the Government and ELITE,
ELITE undertook to implement the design, construction, maintenance, operation and management of three additional interchanges namely, Putrajaya Interchange, the proposed
Salak Tinggi Interchange (later relocated to Ampar Tenang and thereafter called the Ampar
Tenang Interchange) and Bandar Baru Nilai Interchange along the NSECL and an extension of the KLIA Expressway ("Additional Expressway").
To assist in the financing of the acquisition of the additional land required for the above mentioned Additional Expressway, the Government agreed to pay to third parties on behalf of ELITE, an amount in aggregate not exceeding RM120 million (referred to as the
"Reimbursable Land Cost"). The Reimbursable Land Cost is interest free and is repayable by ELITE to the Government in four equal instalments.

105

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
23. AMOUNT RECOVERABLE/DUE FROM/DUE TO THE GOVERNMENT (CONTD.)
(d) On 17 November 2007, PLUS executed the Proceeds Account Agreement with the
Government to formalise the rights, utilisation and administration of the amount received from the Government for the Additional Works of RM680.6 million and the interest earned therefrom. Pursuant to the Third SCA, the amount shall be utilised solely for the purposes of the Additional Works and together with the interest earned, have been deposited into the
Proceeds Account.
Following the completion of disposal of PEB's local businesses and PBSB to the joint venutre,
PMSB on 29 November 2011 and 23 December 2011 respectively, the Group ceased consolidation of all the relevant assets and liabilities, including the amount recoverable/due from/due to Government.
24. DEFERRED TAX ASSETS AND LIABILITIES
Group
2011
2010
RM'000
RM'000
(Restated)
At 1 January (as previously stated) Effects of adopting IC 12
At 1 January (as restated)
Recognised in income statement Effects of adopting IC 12
Recognised in equity
Acquisition of subsidiaries
(Note 17(a))
Disposal of subsidiaries
Reclassified as liabilities of disposal group classified as held for sale
Currency translation differences At 31 December

(1,280,399)
326,704
(953,695)

(1,150,965)
287,430
(863,535)

77,151
17,074
94,225
(14,318)
(122,786)
641,456

Company
2011
2010
RM'000
RM'000

528
(354,590)

106

(39,982)
(39,982)

(127,522)
39,274
(88,248)
-

-

31,873
31,873
-

(102)
522

-

-

(780)

-

(8,109)
(8,109)

-

-

(8,109)

(8,109)

(1,552)
(953,695)

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
24. DEFERRED TAX ASSETS AND LIABILITIES (CONTD.)
Group
2011
2010
RM'000
RM'000
(Restated)

Company
2011
2010
RM'000
RM'000

Presented after appropriate offsetting as follows:
At 1 January
Deferred tax assets
Deferred tax liabilities

At 31 December
Deferred tax assets
Deferred tax liabilities

36,940
(990,635)
(953,695)

52,419
(915,954)
(863,535)

(8,109)
(8,109)

39,982
39,982

68,424
(423,014)
(354,590)

36,940
(990,635)
(953,695)

(8,109)
(8,109)

(8,109)
(8,109)

The components and movements of deferred tax assets and liabilities during the financial year prior to offsetting.
Group
Deferred tax assets

Provisions
RM'000
2011
At 1 January (as previously stated) Effects of adopting IC 12
At 1 January (as restated)
Recognised in income statement Acquisition of subsidiaries
Disposal of subsidiaries
Currency translation differences At 31 December

Tax losses and unabsorbed capital allowance
RM'000

Others
RM'000

Total
RM'000

424,430
326,704
751,134

397,379
397,379

-

821,809
326,704
1,148,513

8,754
16,596
(712,928)

(24,712)
389
(233,708)

-

(15,958)
16,985
(946,636)

528
64,084

139,348

-

528
203,432

107

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
24. DEFERRED TAX ASSETS AND LIABILITIES (CONTD.)
Group (Contd.)
Deferred tax assets (Contd.)

Provisions
RM'000

Others
RM'000

Total
RM'000

363,721
287,430
651,151

565,708
565,708

469
469

929,898
287,430
1,217,328

106,438
(102)
(4,801)

(167,286)
(1,043)

(469)
-

(1,552)
751,134

2010 (Restated)
At 1 January (as previously stated) Effects of adopting IC 12
At 1 January (as restated)
Recognised in income statement Acquisition of subsidiaries
Reclassified as AHFS
Currency translation differences At 31 December

Tax losses and unabsorbed capital allowance
RM'000

397,379

-

(61,317)
(102)
(5,844)
(1,552)
1,148,513

Deferred tax liabilities
Accelerated
capital allowance RM'000
2011
At 1 January
Recognised in income statement
Recognised in equity
Acquisition of a subsidiary
Disposal of subsidiaries
At 31 December
2010
At 1 January
Recognised in income statement
Reclassified as liabilities of
Company
disposal group classified as held for sale
Disposal of subsidiaries
At 31 December

Timing difference on EDE
RM'000

Revaluation of land
RM'000

Interest capitalised RM'000

Others
RM'000

Total
RM'000

(263,408)

(1,527,067)

(150,217)

(151,242)

(10,274) (2,102,208)

29,942
105,471
(127,995)

44,446
1,482,621
-

24,368
(138,281)
(264,130)

11,466
(139,776)

(39)
(14,318)
(1,490)
(26,121)

(227,540)

(1,481,542)

(165,842)

(203,774)

(41,454)

(45,525)

15,625

52,532

5,064
522
(263,408)

(1,527,067)

(150,217)

(151,242)

108

110,183
(14,318)
(139,771)
1,588,092
(558,022)

(2,165) (2,080,863)
(8,109)

(26,931)

5,064
522
(10,274) (2,102,208)

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
24. DEFERRED TAX ASSETS AND LIABILITIES (CONTD.)
Company
Deferred tax liabilities - others
Note

At 1 January
Recognised in the income statement
At 31 December

7

2011
RM'000
(8,109)
(8,109)

2010
RM'000
(39,982)
31,873
(8,109)

Deferred tax assets have not been recognised in respect of the following items:

Unutilised tax losses
Unabsorbed capital allowances Other temporary differences

Group
2011
2010
RM'000
RM'000
(note a)
622,756
1,115,133
66,744
14,370
703,870

788,089
14,858
1,918,080

Company
2011
2010
RM'000
RM'000
(note a)
74,585
46,437
12,257
86,842

11,282
57,719

(a) The unutilised tax losses and unabsorbed capital allowances have been restated upon the finalisation of prior year's tax computation.
25. CASH, BANK BALANCES AND DEPOSITS
Group
2011
2010
RM'000
RM'000
Deposits with financial institutions Cash and bank balances
Included in current assets:
Deposits with financial institutions Cash and bank balances
Non-current cash, bank balances and deposits

Company
2011
2010
RM'000
RM'000

1,454,800
449,224
1,904,024

4,938,839
312,923
5,251,762

107,239
2,181
109,420

351,985
5,800
357,785

1,424,306
448,864
1,873,170

4,898,141
312,563
5,210,704

107,239
2,181
109,420

351,985
5,800
357,785

30,854

41,058

-

-

109

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
25. CASH, BANK BALANCES AND DEPOSITS (CONTD.)
Cash, bank balances and deposits in relation to the following are restricted amounts:
Group
2010
RM'000

21,058

20,480

1,418
1,942
6,436

1,418
466
6,081

30,854

5,811
6,802
41,058

3,937

476

195,506

44,465

1,437

1,397

-

1,981

-

1,199,358

200,880

Note

2011
RM'000

19,403
1,267,080

Non-current
Group
PEB's Escrow Account *
Security for bank guarantee facilities and bank facilities granted to:
- ULHB's subsidiaries
- PLUS BKSP
- UEM Builders and its subsidiary
Bank guarantee for projects of UEM Builders' subsidiaries Restricted reserves of PBSB

Current
Group
Security for bank guarantee facilities and bank facilities granted to CIMA's subsidiaries
Housing Development Accounts by ULHB group and Vistajati Holdings Sdn Bhd
Short term deposit pledged against a term
38H (xv)(a) loan of UEM Builders' subsidiary
Security for a performance bond and for certain services of ELITE
Restricted reserve for PLUS, LINKEDUA,
ELITE, KLBK and PBSB
Amount received from the Government for
Additional Works

*

The amount represents consideration for the Second Tranche Shares of 25% interest in
INIPPL, payable on the third anniversary of the commercial operation date.

110

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
25. CASH, BANK BALANCES AND DEPOSITS (CONTD.)
The average interest rates and maturities of deposits are disclosed as follows:
Group
2011
Interest rate
Maturity days

3.14%
1 - 365 days

2010

2.28%
1-365 days

Company
2011
3.15%
2-150 days

2010

2.74%
2-275 days

26. PROPERTY DEVELOPMENT COSTS
Group
2011
RM'000
At 1 January
Freehold land
Development costs
Reversal of cost arising from completed project

Acquisition of a subsidiary (Note 17(a))

320,928
958,029
1,278,957
(714,132)
564,825

2010
RM'000

263,175
698,302
961,477
(93,364)
868,113

355,407

869,433
869,433

Costs incurred during the year
Freehold land
Development costs
Costs recognised in income statement
At 1 January
Recognised in income statement
Reversal of cost arising from completed projects
At 31 December
Transfers from/(to)
Land held for property development (Note 12)
Property, plant and equipment
Investment properties (Note 13)
Inventories

At 31 December

-

7
261,783
261,790

(461,116)
(1,097,873)
714,132
(844,857)

223,875
11,922
(47,200)
(36,059)
152,538
1,097,346

111

(301,158)
(253,322)
93,364
(461,116)

149,054
149,054
817,841

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
26. PROPERTY DEVELOPMENT COSTS (CONTD.)
Included in costs incurred during the year are:
Group
2011
RM'000
3,532
24,132

Staff costs (Note 5(i))
Interest expense (Note 6)

2010
RM'000
4,186
-

As at the reporting date, freehold land and related development expenditure of RM206,506,386
(2010: Nil) is pledged as security for the borrowing facilities granted to ULHB Group, as detailed in Note 38(J)(xx).
27. INVENTORIES AND WORK-IN-PROGRESS
Group
2011
RM'000

28,914
40,997
24,003
91,671
100,971
286,556

At net realisable value
Consumables
Golf memberships*

*

24,584
20,718
24,015
9,696
120,333
582
199,928

9,164
32,361
328,081

At cost
Raw materials
Work-in-progress
Finished goods
Property held for sale
Consumables
Others

2010
RM'000

1,231
32,361
233,520

Under the terms of the Development Agreement dated 16 June 2005 between Horizon
Hills and NGSB, Horizon Hills shall settle part of the purchase consideration in the form of rights to club membership (golf and non-golf) which is to be issued by Horizon Hills Resort
Bhd, a wholly-owned subsidiary of Horizon Hills.

The cost of inventories and work-in-progress recognised as expenses during the year is
RM856,882,000 (2010: RM541,997,000).

112

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
28. RECEIVABLES
Group
2011
RM'000

2010
RM'000

1,593,078
98,105

1,314,188
125,591

173,880
57,878

134,045
103,464

341,887

22,507

-

-

(ii)

2,315,979

2,315,979

2,315,979

2,315,979

(iii)

11,621,919

75,484

-

-

(iv)

28,442
6,984
629,704
16,636,098

271,458
500,398
4,625,605

7,692,788
111,760
10,352,285

3,042
72,364
2,628,894

Note

Trade receivables
Retention sum
Accrued billing in respect of property development costs Amount due from a past director
Amount due from joint ventures Amount due from customers on construction and consultancy contracts
Dividend receivable
Other receivables

Company
2011
2010
RM'000
RM'000

(i)

(v)

Less : Allowance for impairment loss
Trade receivables
Retention sum
Amount due from a past director Project related expenses
Other receivables

(i)

(204,134)
(53,418)

(110,639)
-

(62,849)
(53,418)

(2,000)
-

(ii)

(2,315,979)
(3,076)
(60,616)
(2,637,223)

(2,315,979)
(3,076)
(89,614)
(2,519,308)

(2,315,979)
(53,680)
(2,485,926)

(2,315,979)
(46,132)
(2,364,111)

13,998,875

2,106,297

7,866,359

113

264,783

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
28. RECEIVABLES (CONTD.)
(i) Trade receivables
The ageing analysis of the trade receivables is as follows:
Group
Neither past due nor impaired
1 to 30 days past due not impaired
31 to 60 days past due not impaired
61 to 90 days past due not impaired
More than 91 days past due not impaired
Impaired

Company
Neither past due nor impaired
1 to 30 days past due not impaired
31 to 60 days past due not impaired
61 to 90 days past due not impaired
More than 91 days past due not impaired
Impaired

2011
RM'000
593,486
167,935
58,914
112,069
275,171
614,089
385,503
1,593,078

2010
RM'000
552,608
159,543
39,110
57,535
194,001
450,189
311,391
1,314,188

119
110,912
110,912
62,849
173,880

1,686
1,346
1,627
127,386
132,045
2,000
134,045

Receivables that are neither past due nor impaired
Receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group.
Receivables that are past due but not impaired
The Group and the Company have trade receivables that are related to customers with good track records with the Group or those with ongoing transactions, progressive payments and/or amounts owing by the Group.

114

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
28. RECEIVABLES (CONTD.)
(i) Trade receivables (Contd.)
Receivables that are impaired
The Group's receivables that are impaired are all individually impaired. There are no impairment arising from collective impairment.
The trade receivables that are impaired at the reporting date and the movement of the allowance accounts are as follows:
Group
Individually impaired
2011
2010
RM'000
RM'000
Receivables
Allowance for impairment

385,503
(204,134)
181,369

311,391
(110,639)
200,752

Company
Individually impaired
2011
2010
RM'000
RM'000
62,849
(62,849)
-

2,000
(2,000)
-

Movement in allowance for impairment losses on trade receivables:
Group
2011
2010
RM'000
RM'000
At 1 January
Net charge for the year
Written off
Reclassified to AHFS
Acquisition of subsidiaries Disposal of subsidiaries
Exchange differences
At 31 December

Company
2011
2010
RM'000
RM'000

(110,639)
(95,508)
3,048
-

(116,106)
(17,828)
16,576
5,164

(2,000)
(60,849)
-

(2,000)
-

(1,035)
(204,134)

(396)
1,707
244
(110,639)

(62,849)

(2,000)

Receivables that are individually determined to be impaired relate to debtors that are in dispute or significant difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

115

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
28. RECEIVABLES (CONTD.)
(ii) Amount due from a past director
On 11 December 2000, the Company exercised the Put Option granted by Tan Sri Dato'
Seri Halim bin Saad ("TSHS"), a past director of the Company in 1998 in respect of the
Company's investment in UEM Land. The cost of shares plus holding cost on the
720,959,000 UEM Land shares ("Put Option Shares"), representing 31.0% of the paid-up capital of UEM Land as at 11 December 2000 amounting to RM3,165,776,438 became the principal amount of debt due from TSHS and accrued interest at a rate of 9.4% per annum compounded semi-annually until full repayment.
The amount of RM3,165,776,438 repayable in 3 equal instalments of RM100 million each on 14 February 2001, 14 July 2001 and 14 December 2001 respectively and the balance including interest was to be paid on 14 May 2002. On 14 February 2001, the Company received the first instalment from TSHS and granted an extension of time for the second instalment to 12 September 2001.
On 12 September 2001, the Company announced that it had not received the second instalment payment from TSHS and considered TSHS to have defaulted. The Put Option agreement was terminated subsequently and a notice of termination was sent to TSHS on
21 November 2001. Resulting from the termination of the Put Option agreement, the
Company retained the UEM Land shares and forfeited the RM100 million first instalment for its own account by way of set-off and in part satisfaction of its claim for compensation.
As TSHS had failed to repay the outstanding amount as scheduled, the Directors had made a full provision of RM2,316.0 million on the net amount due from TSHS.
(iii) Amount due from joint ventures
Included in amount due from joint ventures are the following:
- An amount of RM11,513,999,681, being proceeds receivable from PMSB for PEB's disposal of its local assets and liabilities to PMSB as disclosed in Note 50(a). The amount was fully settled by the joint venture subsequently on 12 January 2012.
- An amount of RM3,090,000 (2010: RM1,000,000), which bears interest at 7.6% (2010:
7.3%) per annum.

116

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
28. RECEIVABLES (CONTD.)
(iv) Amount due from customers on construction and consultancy contracts

Group

1,570,212
(42,704)
1,527,508
(1,522,050)

1,517,038
(38,435)
1,478,603
(1,475,993)

(640,460)
(144,005)

(291,762)
(286,304)

(106,626)
(104,016)

271,458

(381,764)
(353,322)

(415,463)
(144,005)

(286,304)
(286,304)

(104,016)
(104,016)

1,728,163

13,705

247

1,455,389

13,705

247

98,105

Contract revenue recognised as revenue in the year
Contract costs recognised as an expense in the year
Retention sum receivable on construction contracts

8,235,752
308,542
8,544,294
(8,047,839)

1,591,294

40

7,931,965
271,629
8,203,594
(7,722,285)

1,956,407

Less : Progress billings
: Recognition of expected losses

2010
RM'000

28,442

Construction work-inprogress, at cost
Add : Attributable profit/(loss)

2010
RM'000

(834,631)
(353,322)

Note

Presented as follows:
Amount due from customers Amount due to customers Company
2011
2010
RM'000
RM'000

125,591

57,878

103,464

-

-

Included in construction work-in-progress of the Group and of the Company are:
- depreciation incurred - staff costs
- interest incurred
- amortisation charge

10(ii)
5(i)
6
16

6,878
35,606
2,585
386

117

5,169
36,918
3,900
94

-

-

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
28. RECEIVABLES (CONTD.)
(v) Other receivables
Group
Note

Project related expenses
Sundry debtors, prepayments and deposits
(a)
Tax recoverable
(b)

Company
2011
2010
RM'000
RM'000

2011
RM'000

2010
RM'000

6,168

4,725

-

-

510,021
113,515
629,704

376,435
119,238
500,398

89,265
22,495
111,760

61,851
10,513
72,364

(a) Included in sundry debtors are:
(i)

A promissory note of RM84 million, which is given by the State Secretary
Johor (Incorporation) to ULHB Group for the purchase of two parcels of land during the financial year. The salient terms of the promissory note are as follows: -

-

(ii)

The promissory note may be utilised by ULHB Group as payment for its future conversion and land alienation premium, quit rent, liability in lieu of fulfillment of the low cost housing requirements or bumiputera / foreign quota or any other contribution to social project funds; and
The promissory note may be prepaid in whole or in part at any time without premium or penalty.

An amount of RM52,511,576 incurred by the Company as a result of the encashment of performance guarantee ("PG") issued by the Company through a wholly-owned subsidiary, UEM Construction Sdn Bhd, on behalf of a joint venture partner in India, Essar Projects Limited ("Essar") in favour of National
Highway Authority of India (NHAI). The Company had on 21 January 2010 filed with the Arbitral Tribunal its claim against Essar under an indemnity given by Essar to the Company, for reimbursement and refund of bank guarantee, bank commissions, foreign exchange losses, interest and loss of reputation.
The next hearing of the Arbitral Tribunal is fixed on 14 and 15 April 2012.

(b) Included in the tax recoverable amount in prior year is an amount paid to the Inland
Revenue Board ("IRB") for disputed tax payable and tax penalties in respect of years of assessment 2003 and 2004 of UEM Land amounting to RM37.6 million. During the financial year, the amount of RM37.6 million was fully refunded to UEM Land by IRB.
29. AMOUNTS DUE FROM HOLDING COMPANY AND ASSOCIATES
The amounts are unsecured, interest free and repayable on demand.
118

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
30. SHORT TERM INVESTMENTS

Group

Company
2011
2010
RM'000
RM'000

2011
RM'000

2010
RM'000

125

125

-

-

(113)

(113)

-

-

(2)
10

(2)
10

-

-

719,353

50,834

364,133

50,834

1,084
720,437

245
51,079

909
365,042

245
51,079

6,947

6,942

5,405

5,405

(3,672)

(3,672)

(2,610)

(2,610)

(726)
2,549

(938)
2,332

(1,055)
1,740

(1,118)
1,677

-

49,933

-

-

722,996

103,354

366,782

52,756

2,559

2,342

1,740

1,677

720,437

51,079

365,042

51,079

Fair value through profit or loss investments: Quoted shares in Malaysia
At cost
Less: Accumulated impairment losses Accumulated fair value adjustments Unquoted unit trusts in Malaysia *
At cost
Add: Accumulated fair value adjustments Available for sale investments:
Quoted shares in Malaysia
At cost
Less: Accumulated impairment losses Accumulated fair value adjustments Held to maturity investments:
Islamic CP/Medium Term Notes

Market value of quoted shares
Fair value of unquoted unit trusts
*

Unquoted unit trusts represent special investment funds invested with licensed fund managers in the Funds approved by the Securities Commissions. The portfolio of investment authorised by the Board of Directors comprises only deposits in both Islamic and conventional instruments with financial institutions.
119

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
31. DERIVATIVES ASSETS AND LIABILITIES
Group
2011
2010
RM'000
RM'000

Company
2011
RM'000

2010
RM'000

Current
Forward exchange rate contract (i):
Contract/Notional amount

9,330

-

-

-

601

-

-

-

Contract/Notional amount

952,560

952,560

952,560

952,560

Asset/(liabilities)

(70,176)

(107,018)

(70,176)

(107,018)

Asset/(liabilities)
Non Current
Cross currency interest rate swap ("CCIRS") (ii):

(i) The forward exchange rate contract comprises a contract with Hong Kong and Shanghai
Bank Corporation Limited, comprising a 12 month contract for notional amount of RM9.3 million (CAD$3.0 million) to partially hedge the Group's acquisition of Opus DaytonKnight
Consulting Limited. The method and assumptions applied in determining the fair values of derivatives are disclosed in Note 44(f)(iv).
(ii) The Group and the Company use CCIRS to manage its exposure in foreign currency and interest rate fluctuation arising from the USD Term Loan as disclosed in Note 38N(xxvi), which is subject to a floating interest equal to LIBOR + 2.5% per annum (2010: LIBOR +
2.5% per annum).
The CCIRS was designated as a cash flow hedge with the same maturity terms of the USD
Term Loan, and was entered into for periods consistent with currency transaction and cash flow changes exposure. The CCIRS swapped the Group and the Company's obligation from a foreign currency term loan of USD270 million at floating interest rate, to a Ringgit
Malaysia term loan of RM952,560,000 at a fixed interest rate of 5.57% per annum.
The CCIRS was recognised on the statements of financial position separately from the
USD Term Loan, as financial derivative. During the year, the Group and the Company recognised a gain of RM36,842,000 (2010: loss of RM71,710,000) arising from the changes in fair value of the financial derivative. As the Group and the Company apply hedge accounting, the fair value changes have been recognised as other comprehensive income and offset against the retranslation differences arising from the USD Term Loan, with the remainder as cash flow hedge reserve. The method and assumptions applied in determining the fair value of derivatives are disclosed in Note 44(f)(iv).
120

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
32. SHARE CAPITAL
Number of shares of RM0.50 each
2011

2010

Amount
2011
RM'000

2010
RM'000

Authorised:
At 1 January / 31 December*

1,000,000,000

1,000,000,000

500,000

500,000

Issued and fully paid:
At 1 January / 31 December*

817,088,621

817,088,621

408,544

408,544

* No movement during the year.

33. NON-DISTRIBUTABLE RESERVES
Details of the non-distributable reserves are as follows:
Group
2011
2010
RM'000
RM'000

Company
2011
2010
RM'000
RM'000

(i) Capital redemption reserve
At 1 January
Transfer to profit or loss on disposal of subsidiaries
At 31 December

3,850

3,850

-

-

(3,850)
-

3,850

-

-

-

2,500,000

2,500,000

(ii) Merger relief reserve
At 1 January/
31 December*

-

(iii) Exchange fluctuation reserve
At 1 January
Currency translation differences Movement of reserves of associates
Realisation upon dilution of interest in subsidiaries
Transfer to profit or loss on disposal of subsidiaries
Reclassified to reserves related to assets classified as held for sale
At 31 December

(83,028)

(71,508)

2,358

1,648

23,659

(12,921)

1,413

710

121

(1,193)

-

-

549

-

-

-

-

3,802

-

-

3,771

2,358

(58,699)

* No movement during the year.
121

(1,208)
(83,028)

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
33. NON-DISTRIBUTABLE RESERVES (CONTD.)
Details of the non-distributable reserves are as follows (Contd.):
Group
2011
2010
RM'000
RM'000

Company
2011
2010
RM'000
RM'000

(iv) Revaluation reserve
At 1 January/
31 December*

3,384

3,384

3,386

3,386

-

-

100,956

100,956

-

-

345,568

345,568

386

201

-

-

-

-

-

185
386

-

-

-

-

(v) Non-distributable portion of
Bonus Issue capitalised from distributable reserves
At 1 January/
31 December*
(vi) Non-distributable gain arising from internal group reorganisation
At 1 January/
31 December*
(vii) Share option reserves
At 1 January
Realisation upon dilution of interest in subsidiaries
Recognised during the year
At 31 December
(viii) Reserves related to assets classified as held for sale
At 1 January
Arising during the year
Transfer to profit or loss on disposal of subsidiaries
Reclassified from exchange fluctuation reserve
At 31 December

(69)
317

5,890
88

6,137
(1,455)

1,828

-

-

-

7,806

1,208
5,890

-

-

* No movement during the year.

122

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
33. NON-DISTRIBUTABLE RESERVES (CONTD.)
Details of the non-distributable reserves are as follows (Contd.):
Group
2011
2010
RM'000
RM'000

Company
2011
2010
RM'000
RM'000

(ix) Fair value adjustment reserves At 1 January

126,204

6,858

(1,118)

78,440

2,321

60,991

Realisation upon dilution of interest in subsidiaries

10

-

-

-

Transfer to profit or loss on disposal of investment

(148)

-

-

-

(117,025)

-

-

-

117,025
126,204

59,873

(1,118)

Arising during the year

Share of associate's fair value gain transfer to profit or loss on disposal
Share of associate's fair value gain
At 31 December

87,481

(1,118)

(x) Cash flow hedge reserves
At 1 January

16,493

(7,228)

16,493

(7,228)

9,823

23,721

9,823

23,721

At 31 December

26,316

16,493

26,316

16,493

Total

66,605

73,179

3,039,870

2,967,643

Arising during the year

123

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
34. RETIREMENT
BENEFIT
ENTITLEMENTS

OBLIGATIONS

AND

PROVISION

FOR

EMPLOYEE

Group

Note

2011
At 1 January
Currency translation differences
Arising during the year
Disposal of subsidiaries
Payments made during the year
At 31 December
Included in current portion

Provision for employee entitlements RM'000
(a)

Provision for retirement benefits RM'000
(b)

Total
RM'000

18,294
1,506
1,131
(978)
19,953
(3,561)
16,392

2010
At 1 January
Currency translation differences
Arising during the year
Transfer to defined contribution plan
Payments made during the year
At 31 December
Included in current portion

52,591
1,542
2,689
(19,286)
(2,221)
35,315
(5,579)
29,736

18,253
(638)
1,660
(981)
18,294
(3,045)
15,249

17(c)

34,297
36
1,558
(19,286)
(1,243)
15,362
(2,018)
13,344

35,414
(737)
1,662
(627)
(1,415)
34,297
(2,058)
32,239

53,667
(1,375)
3,322
(627)
(2,396)
52,591
(5,103)
47,488

(a) Provision for employee entitlements comprises provision for long service leave and retirement leave entitlements in respect of eligible employees of a foreign subsidiary. The provisions are in respect of such entitlements that have vested and are made by reference to independent actuarial valuations.

124

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
34. RETIREMENT
BENEFIT
ENTITLEMENTS (CONTD.)

OBLIGATIONS

AND

PROVISION

FOR

EMPLOYEE

(b) Provision for retirement benefits mainly consists of provision from:
(i) CIMA
CIMA Group maintains a book reserve in respect of the liabilities based on the actuarial valuation conducted by the actuary in January 2010. The retirement plan is currently not funded and there are no physical assets set aside for the cost of the benefits.
The liabilities and costs relating to the benefit are provided as stipulated in the
Collective Agreement between certain companies in CIMA group and Cement Industry
Employees' Union. Under the scheme, eligible employees are entitled to retirement benefits varying between 66.7% to 100% of the last drawn monthly salary for each completed year of service upon reaching the retirement age of 55.
The retirement benefit is only payable to unionised employees who:
(a)
(b)
(c)
(d)

retire on attainment of age 55; or are medically boarded out; or die in service; or resign voluntarily after 10 years of company service

(ii) Opus
Opus International Consultants (UK) Limited, a subsidiary of Opus has a fully funded defined benefit pension fund ("Fund"). The Fund purchases an annuity at the time an employee becomes entitled to a pension. The Fund is valued on an annual basis by an independent actuary, Clerical Medical Investment Group Limited, taking into account gains and losses. The unfunded liability to the Fund was assessed by an independent actuary as at 31 December 2011 at GBP420,000 (2010: GBP640,000) and has been taken up as a liability by the subsidiary.
(iii) PEB Group
PLUS, ELITE and LINKEDUA operate an unfunded, defined benefit retirement benefit scheme ("Scheme") for their personnel whose employment contracts were transferred in 1988 from Malaysian Highway Authority, pursuant to the Concession Agreement.
Under the Scheme, eligible employees are entitle to retirement benefits in accordance with a pre-determined formula as follows:

125

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
34. RETIREMENT
BENEFIT
ENTITLEMENTS (CONTD.)

OBLIGATIONS

AND

PROVISION

FOR

EMPLOYEE

(b) Provision for retirement benefits mainly consists of provision from (Contd.):
(iii) PEB Group (Contd.)
Retirement benefits as at
31 December

*

. (2 X last drawn monthly basic salary
= X length of service with the subsidiary)
- EPF Offset *

Defined as total employer's contributions to the EPF, made at the statutory employer's contribution rate and accumulated EPF dividend.

On 29 November 2011, the above retirement benefit obligations were transferred to
PMSB Group (which hold all the local concession companies) following the completion of PEB's disposal of its local businesses to PMSB.
(iv) Kuad Sdn Bhd ("Kuad")
Kuad operates an unfunded defined benefit scheme for eligible employees under a collective agreement. Retirement benefits are provided for employees who have been in service for at lease five years and who have reached the age of 45. Provision for retirement benefits is made based on eligible employees' basic salary and the number of completed and remaining years of service.
Group
2011
RM'000

2010
RM'000

The amount recognised in the income statement are as follows:
Current service cost
Interest cost
Employer's contribution
Expected return on plan assets
Net actuarial gain recognised
Transitional assets/liabilities

2,798
3,318
(966)
(1,187)
(1,274)
2,689

126

3,820
3,470
(991)
(1,020)
(2,985)
1,028
3,322

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
34. RETIREMENT
BENEFIT
ENTITLEMENTS (CONTD.)

OBLIGATIONS

AND

PROVISION

FOR

EMPLOYEE

(b) Provision for retirement benefits mainly consists of provision from (Contd.):
Group
2011
RM'000
%

Principal actuarial assumptions used are:
Discount rate
Salary escalation
Expected gross return on cash and other assets
Expected return on group pension contract
EPF dividend rate
Price inflation

2010
RM'000
%

5.1 - 6.5
2.9 - 12.0
3.3
4.9
5.0
3.5

5.5 - 6.5
3.3 - 12.0
3.8
4.8
5.0
3.5

35. DEFERRED INCOME
Group

Unrealised profit RM'000
(i)

2011
Amount recognised / received
Accumulated realisation

Government grant RM'000
(ii)

Total
RM'000

1,468,123
(2,617)
1,465,506

1,498,123
(29,579)
1,468,544

29,692
1,435,814
1,465,506

Analysed as:
Realisable within 12 months
Realisable after 12 months

30,000
(26,962)
3,038

3,038
3,038

29,692
1,438,852
1,468,544

2010
Amount received
Accumulated realisation

-

127

30,000
(24,049)
5,951

-

Analysed as:
Realisable after 12 months

30,000
(24,049)
5,951

5,951
5,951

5,951
5,951

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
35. DEFERRED INCOME (Contd.)
(i) Unrealised profit
The deferred income is realised to profit or loss on the basis stated in Note 2.4(x)(iii).
(ii) Government grant
Government grant of RM30.0 million (2010: RM30.0 million) was received by MAVTRAC
Sdn Bhd ("MAVTRAC"), a wholly-owned subsidiary of the Company, as the start up costs of operations to develop a system that will enable MAVTRAC to be the approved provider of building materials for Government approved projects.

36. DEFERRED LIABILITIES
Deferred liabilities comprise fees received in advance for future maintenance expenditure to be incurred, in consideration for right-of-way access granted by PLUS, ELITE and KLBK, analysed as follows:
Group
2011
2010
RM'000
RM'000
Amount received in advance
Amount recognised

-

-

Analysed as:
Realisable within 12 months
Realisable after 12 months

124,630
(41,554)
83,076

7,788
75,288
83,076

On 29 November 2011, the above deferred liabilities were transferred to the joint venture,
PMSB following the completion of PEB's disposal of its local businesses to PMSB.

128

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
37. DEFERRED REVENUE
(a) Government compensation received in advance
Pursuant to the Concession Agreement between KLBK and the Government, the
Government reserves the right to restructure or to restrict the imposition of toll rate increase by KLBK. The Government shall compensate KLBK for any reduction in toll revenue as a consequence of such restructuring or restriction imposed, subject to negotiation and other consideration that the Government may deem fit.
The Government has compensated KLBK an amount of RM60.59 million for losses in toll collections as a consequence of the toll restructuring exercise with effect from 1 June 2005 until the end of the concession period on 27 June 2026. The compensation is initially recorded as Government compensation received in advance and subsequently recognised as revenue over the remaining concession period on the basis as stated in Note 2.4(t)(iii).
Group
2011
RM'000
-

Amount received in advance
Amount recognised

Analysed as:
Realisable within 12 months
Realisable after 12 months

2010
RM'000
60,590
(16,802)
43,788

-

3,048
40,740
43,788

(b) Consideration received for customer loyalty programme
Consideration received from the toll revenue that is allocated to the points issued under the
Group's customer loyalty programme that are expected to be redeemed but are still outstanding as at reporting date.
Group

Amount awarded
Amount redeemed
Deferred revenue realisable within 12 months

2011
RM'000
-

2010
RM'000
3,229
(795)
2,434

On 29 November 2011, the above deferred revenue was transferred to PMSB Group following the completion of PEB's disposal of its local businesses to PMSB.

129

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
38. LONG TERM BORROWINGS
Group
Note

2011
RM'000

2010
RM'000

SECURED
PEB
PLUS SPV Sukuk

(i)

-

1,429,054

PLUS
Senior Sukuk
Sukuk Series 1
Sukuk Series 2
Sukuk Series 3

(ii)
(iii)
(iv)
(v)

-

1,900,000
1,875,563
1,507,544
1,821,749
7,104,856

PLUS BKSP
Foreign term loan (INR)

(vi)

121,176

-

INIPPL
Foreign term loan (INR)

(vii)

161,219

184,933

LINKEDUA
Government Support Loan

(viii)

-

1,256,803

ELITE
Government Support Loan
Seafield Sukuk

(ix)
(x)

-

389,916
862,137
1,252,053

KLBK
BAIDS

(xi)

-

172,477

(xii)
(xiii)
(xiv)
(xv)(a)
(xxvii)

28,900
1,380
30,280

285,000
462,066
207,805
75,500
4,383
1,034,754

(xvii)

179,629

199,425

UEM Builders
BAIDS
Sukuk Istisna'
Government Loan
Term loan - Buildcast
Hire purchase and lease payables

Diversified Venue Sdn Bhd
Sukuk Al Ijarah

130

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
38. LONG TERM BORROWINGS (CONTD.)
Group
Note

2011
RM'000

2010
RM'000

SECURED (Contd.)
ULHB
Islamic term financing
Term and bridging loans
Term loan
Revolving credit
Bank overdraft

(xviii)
(xix)
(xx)
(xx)
(xx)

152,928
20,316
443,828
42,000
9,635
668,707

150,000
150,000

CIMA
Term Loan

(xxiii)

103,479

-

Opus
Hire purchase and lease payables

(xxvii)

5,902

6,203

Others
Hire purchase and lease payables

(xxvii)

7,281
1,277,673

3,791
12,794,349

(xv)(b)
(xvi)

308,744
1,541

318,566
2,117

ULHB
Redeemable Convertible Preference Shares
Murabahah MTN

(xxi)
(xxii)

388,440
200,000

-

Opus
Foreign term loan

(xxiv)

10,824

10,876

UEM Environment
Term loan - Kualiti Alam

(xxv)

34,498

40,248

UEM Dana (L) Limited
Foreign term loan (USD)

(xxvi)

856,068

829,049

3,077,788

13,995,205

UNSECURED
UEM Builders
Term loan - UEM Builders
Foreign term loan (INR)

Portion repayable within 12 months included under short term borrowings (Note 42)
Total long term borrowings

(419,595)
2,658,193

131

(1,209,419)
12,785,786

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
38. LONG TERM BORROWINGS (CONTD.)
A

PEB

(i) PLUS SPV Sukuk
The PLUS SPV Sukuk were constituted by a Trust Deed dated 13 June 2008 entered into by PLUS SPV Berhad as the Issuer and the Trustee for the holders of the PLUS SPV
Sukuk.
PEB through an independent special purpose company, PLUS SPV Berhad (whose shares are held by a share trustee for and on behalf of charitable organisations), had until
December 2010 issued RM1.8 billion nominal value PLUS SPV Sukuk under a medium term notes programme of up to RM4.0 billion nominal value PLUS SPV Sukuk based on the Islamic principle of Musyarakah to investors identified via a book-building process. The
PLUS SPV Sukuk were issued in 13 series, with maturities commencing from 2013 to
2019. The yield to maturity ranged from 5.55% to 7.55% per annum and was compounded semi-annually. The profit rate was 2.0% per annum and the profit was payable semiannually on each series of the PLUS SPV Sukuk.
On 29 November 2011, PLUS SPV Sukuk was transferred to PMSB following the completion of PEB's disposal of its local businesses to PMSB. The PLUS SPV Sukuk was subsequently fully redeemed by PMSB on 20 December 2011.

B

PLUS

(ii) Senior Sukuk
The Senior Sukuk was constituted by a Trust Deed dated 18 December 2007 entered into by PLUS and the Trustee for the holders of the Senior Sukuk. The Senior Sukuk was issued on 27 December 2007 with a nominal value of RM3,550 million under the Islamic principle of Musyarakah which is a contract of partnership in a venture. Under this structure, potential investors formed a Musyarakah among themselves to invest in the
Senior Sukuk.
The Senior Sukuk was issued in 10 series as primary sukuk with maturities commencing from 2008 to 2017. The expected return specified for each series of primary sukuk was represented by secondary sukuk. The face value of secondary sukuk were computed based on the expected return specified for each series of primary sukuk i.e. from 5.70% to
7.50% per annum. The secondary sukuk were redeemable every six months commencing
30 May 2008.

132

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
38. LONG TERM BORROWINGS (CONTD.)
B

PLUS (Contd.)

(iii) Zero Coupon Sukuk Series 1 ("Sukuk Series 1")
The Sukuk Series 1 were constituted by a Trust Deed dated 28 September 2006 entered into by PLUS and the Trustee for the holders of the Sukuk Series 1.
Sukuk Series 1 was issued on 10 October 2006 under the Islamic principle of Musyarakah with a nominal value of RM2,260 million via exchange for BBA Serial Bonds previously issued on 20 December 2002. Sukuk Series 1 were negotiable non-interest bearing secured Bonds in bearer form evidencing a promise by PLUS to pay stated sums on specified dates. The Sukuk Series 1 were issued in 12 series with tenures from 8.5 years to
14 years from the date of issue. The yield to maturity ranged from 5.75% to 6.95% per annum and was compounded semi-annually.
The Sukuk Series 1 entitled holders of the Sukuk Series 1 to a one-off payment of the
Exercise Price on the Maturity Date and Distribution on the Distribution Date.
(iv) Zero Coupon Sukuk Series 2 ("Sukuk Series 2")
The Sukuk Series 2 were constituted by a Trust Deed dated 28 September 2006 entered into by PLUS and the Trustee for the holders of the Sukuk Series 2.
Sukuk Series 2 was issued on 10 October 2006 under the Islamic principle of Musyarakah with a nominal value of RM2,410 million via exchange for Zero Serial BBA previously issued on 17 June 2005. Sukuk Series 2 were negotiable non-interest bearing secured
Bonds in bearer form evidencing a promise by PLUS to pay stated sums on specified dates. The Sukuk Series 2 were issued in 4 series with tenures from 11 years to 14 years from the date of issue. The yield to maturity ranged from 6.35% to 6.95% per annum and was compounded semi-annually.
The Sukuk Series 2 entitled holders of the Sukuk Series 2 to a one-off payment of the
Exercise Price on the Maturity Date and Distribution on the Distribution Date.

133

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
38. LONG TERM BORROWINGS (CONTD.)
B

PLUS (Contd.)

(v) Sukuk Musyarakah Medium Term Notes Programme of RM4,500.0 million nominal value ("Sukuk Series 3")
The Sukuk Series 3 were constituted by a Trust Deed dated 28 September 2006 entered into by PLUS and the Trustee for the holders of the Sukuk Series 3.
PLUS issued 2 tranches of Sukuk Series 3 under the Islamic principle of Musyarakah with a nominal value of RM1,375 million on 10 October 2006 with tenures of 14 years and 15 years from the date of issue. Further, PLUS had issued the third, fourth and fifth tranche with a nominal value of RM700 million RM600 million and RM1,000 million on 29 May 2008,
29 May 2009 and 31 May 2010 respectively. All three tranches were issued with a tenure of
14 years from the date of issue. Sukuk Series 3 were negotiable non-interest bearing secured Medium Term Notes ("MTNs") in bearer form evidencing a promise by PLUS to pay stated sums on specified dates.
The yield to maturity ranged from 5.90% to 6.52% per annum and was compounded semiannually.
There were two types of Sukuk Series 3 namely those MTNs with Periodic Payments and those MTNs without Periodic Payments provided that Sukuk Series 3 involving MTNs with
Periodic Payments may only be issued upon either (a) redemption in full of the Senior
Sukuk, the Sukuk Series 1 and the Sukuk Series 2; or (b) consent of the holders of the
Senior Sukuk, the Sukuk Series 1 and the Sukuk Series 2; or (c) from 30 June 2019 onwards, whichever earlier.
MTNs with Periodic Payments were entitled to Periodic Payments and a payment of the
Exercise Price.
MTNs without Periodic Payments were only be entitled to a one-off payment of the Exercise
Price on the Maturity Date and Distribution on the Distribution Date.
On 29 November 2011, PLUS together with all its borrowings were transferred to PMSB following the completion of PEB's disposal of its local businesses to PMSB.

134

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
38. LONG TERM BORROWINGS (CONTD.)
C

PLUS BKSP

(vi) Foreign term loan (INR)
PLUS BKSP has secured a term loan and additional term loan, denominated in Indian
Rupees, which bears interest rate of 12.25% and 13.25% per annum respectively. Both term loans are secured by future toll collection of PLUS BKSP, and have been refinanced with a INR192 crores Commercial Paper facility ("Commercial Paper") in October 2010.
The Commercial Paper has matured on 4 October 2011, as disclosed in Note 42 (iii).
On 29 September 2011, Senior Secured Term Loan Facility was issued with a nominal value of INR200 crores to refinance the expired Commercial Paper. This term loan is separated into INR120 crores and INR80 crores of facilities.
The term loan is constituted by Deed of Hypothecation, Rupee Facility Agreement, Security
Trustee Agreement and Deed of Guarantee and Indemnity.
The security arrangement for PLUS BKSP's Senior Secured Term Loan are as follows:
(a)

(a)

D

A first ranking pari passu charge with the Permitted Secured Creditor over all of the Borrower's movable assets other than the Excluded Asset, the Borrower
Account and the Current Assets (both present and future) in favour of the
Security Trustee in a form satisfactory to the Lender; and
The unconditional and irrevocable letter of credit issued by the Issuing Bank in favour of the Agent.

INIPPL

(vii) Foreign term loan (INR)
The Term Loan is constituted by a Common Rupee Loan Agreement dated 18 November
2006 entered into by INIPPL as the borrower, Canara Bank as the lender's agent, security trustee and the lenders.
The Loan is denominated in Indian Rupees amounting to INR266 crores and the interest rate is at 12.25% per annum.

135

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
38. LONG TERM BORROWINGS (CONTD.)
D

INIPPL (Contd.)

(vii) Foreign term loan (INR) (Contd.)
The Common Rupee Loan together with interest, additional interest, default interest, prepayment premium, upfront fees, costs, charges, expenses and other monies whatsoever stipulated and due to the lenders in accordance with the Common Rupee Loan
Agreement subject to the terms of the Concession Agreement shall be secured by:
(a)

a first ranking pari passu mortgage on all the borrower's immovable assets and first charge by way of hypothecation on all moveable assets (including but not limited to all current/non-current assets) both present and future;

(b)

a first ranking pari passu charge/assignment on all the intangible assets of the borrower including but not limited to the goodwill, rights, undertakings and uncalled capital both present and future;

(c)

a negative lien in respect of the shares held by the sponsors which shall not be less than 51% of the total issued and fully paid up equity of the borrower up to
36 months from commencement operation date and thereafter 26% of the shares subject to there being no outstanding event of default and conditions stipulated in 3.1.11 (i) of the Common Rupee Loan Agreement are satisfied;

(d)

a first ranking pari passu charge over all bank accounts for the borrower including without limitation, the Escrow Account (or any account in substitution thereof) and the Debt Service Reserve Account in all funds from time to time deposited therein and in all Permitted Investments or other securities representing all amounts credited to the Escrow Account and the Debt Service
Reserve Account and any other bank accounts of the borrower established pursuant to the project documents or otherwise;

(e)

a first ranking pari passu charge over/assignment of all project documents, all guarantees, performance guarantees or bonds, letters of credit that may provided by any party to any project document in favour of the borrower and clearances and all rights, titles, approvals, permits, clearances and interests and the borrower's right, title, interest, benefit and claim in, to or under the project documents and clearances;

(f)

a first ranking pari passu charge over/assignment of all the borrower's right, title, interest, benefit and claim of the borrower in, to or under the insurance contracts, insurance policies and the insurance proceeds;

136

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
38. LONG TERM BORROWINGS (CONTD.)
D

INIPPL (Contd.)

(vii) Foreign term loan (INR) (Contd.)
(g)

(h)

E

a first ranking pari passu charge/assignment of all receivable and revenues of the borrower from the project or otherwise; and an undertaking to provide equity/provide subordinated debt from the sponsors for any cost overrun, gap in financing and any delay in receipt of the grant from
National Highway Authority of India.

LINKEDUA

(viii) Government Support Loan ("GSL")
The GSL was scheduled to be repayable in 13 semi-annual instalments ranging from RM58 million to RM346 million commencing from 14 June 2014 and bears interest at a rate of 8% per annum.
On 29 November 2011, LINKEDUA together with the GSL were transferred to PMSB following the completion of PEB's disposal of its local businesses to PMSB.

F

ELITE

(ix) Government Support Loan ("GSL")
ELITE entered into an agreement on 15 December 2000 with the Government whereby the
Government provides financing up to a maximum of RM100 million, at an interest rate of
8% per annum capitalised on an annual basis.
The Government and ELITE entered into a Supplemental Loan Agreement ("SLA") and
Additional Government Loan Agreement ("AGLA") dated 15 January 2003, whereby the
Government agreed to waive ELITE's obligation to pay interest on the then existing
Government Loans with effect from 15 December 2000 to 31 December 2001 and to provide ELITE with an interest free term loan facility at a principal of RM300 million. It was also agreed that the aforesaid existing Government Loan shall be interest free with effect from 1 January 2002 to the final repayment date.
Pursuant to ELITE's SLA and AGLA, the Government Loan and Additional Government
Loan were scheduled to be repayable in full on 30 June 2015.

137

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
38. LONG TERM BORROWINGS (CONTD.)
F

ELITE (Contd.)

(x) Seafield Sukuk
The Seafield Sukuk was constituted by the Trust Deed dated 5 May 2009 entered into by
Seafield Capital Berhad ("Seafield") as the Issuer and Universal Trustee (Malaysia) Berhad, as the Trustee for the holders of the Seafield Sukuk.
On 27 May 2009, ELITE issued RM950 million nominal value Seafield Sukuk under the medium term notes programme of up to RM1.5 billion nominal value Seafield Sukuk based on the Islamic Principle of Musyarakah. The Seafield Sukuk were issued in 9 series with maturities commencing from 2018 to 2026.
The profit rate for the Seafield Sukuk ranged from 6.00% to 7.35% and were paid semiannually on each series of the Seafield Sukuk.
On 29 November 2011, ELITE together with its borrowings were transferred to PMSB following the completion of PEB's disposal of its local businesses to PMSB.
G

KLBK

(xi) BAIDS
The KLBK BAIDS were constituted pursuant to a Trust Deed between KLBK and Malaysian
Trustees Berhad dated 5 July 2005. KLBK issued RM247 million secured Primary BAIDS based on the Islamic financing principle of Bai Bithaman Ajil.
The Primary BAIDS comprised 25 series, with total proceeds of RM173.18 million and redemption value of RM247 million maturing annually from year 2006 to year 2022. The yield to maturity ranged from 4.00% to 9.00% per annum and was compounded semiannually. Attached to the Primary BAIDS were non-detachable Secondary BAIDS which represented the profit element attributable to the Primary BAIDS. The profit rate was 4.0% per annum and the profit was payable semi-annually on each series of the Primary BAIDS.
The Secondary BAIDS have a face value of RM119.54 million.
On 29 November 2011, KLBK together with the BAIDS were transferred to PMSB following the completion of PEB's disposal of its local businesses to PMSB.

138

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
38. LONG TERM BORROWINGS (CONTD.)
H

UEM Builders

(xii) BAIDS
On 14 August 2000, PBSB entered into a facility agreement with a financial institution to issue RM785 million nominal amount of Al-Bai’ Bithaman Ajil Islamic Debt Securities
(“BAIDS”) comprising nine tranches with maturities ranging from 5 years to 13 years from the date of the issue of the BAIDS.
Pursuant to the facility agreement and in accordance with the Syariah Principle of Al-Bai’
Bithaman Ajil, PBSB disposed of all its rights, title, benefit and interest under the
Concession Agreement dated 30 September 1993, and Novation Agreement dated 23
November 1995 to the financial institution for a total cash consideration of RM785 million
(“Purchase Price”). The same assets would be subsequently resold by the financial institution to PBSB for a total consideration of RM1,358,717,500 (“Selling Price”) which was equivalent to the Purchase Price and the Profit Portion. The Selling Price shall be repaid over 13 years.
The Selling Price was evidenced by the issuance of non-interest bearing BAIDS Notes which represented PBSB’s unconditional obligation to settle the Selling Price.
For each tranche, Primary Notes of certain value had been issued representing the nominal value of the BAIDS which shall all mature and be payable by PBSB at the end of the tenure of the relevant tranche. Each Primary Note was supported by a number of Secondary
Notes of a certain value, of six monthly maturities commencing from the date of first issue representing the Profit Portion of the Selling Price.
The BAIDS profit was accrued at a profit rate of an average of 8.35% per annum based on the nominal amount of the BAIDS from the date of issue.
On 23 December 2011, PBSB together with the BAIDS were transferred to PMSB following the completion of the disposal of PBSB by UEM Builders to PMSB.
(xiii) Redeemable Zero Coupon Serial Sukuk Istisna' ("Sukuk Istisna")
On 20 March 2006, PBSB entered into a Subscription Agreement with a financial institution to issue RM695 million nominal value redeemable zero coupon serial Sukuk Istisna’
(“Sukuk”).
The Sukuk was subsequently issued on 31 March 2006 in 6 tranches with tenures ranging from 8 years to 13 years and shall be redeemed in full at their respective face amount and maturity dates.

139

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
38. LONG TERM BORROWINGS (CONTD.)
H

UEM Builders (Contd.)

(xiii) Redeemable Zero Coupon Serial Sukuk Istisna' ("Sukuk Istisna") (Contd.)
The accretion cost for the Sukuk was accrued at an average rate of 6.95% per annum based on the discounted value of the Sukuk from the issue date.
On 23 December 2011, PBSB together with the Sukuk Istisna were transferred to PMSB following the completion of the disposal of PBSB by UEM Builders to PMSB.
(xiv) Government Loan
On 3 April 2008, PBSB entered into a Facility Agreement with the Government to obtain a
6% fixed rate term loan facility (''Government Loan'') for an amount of RM183 million for a tenure of 150 months. The first drawdown of RM97 million was received on 19 June 2008 and the final drawdown of RM86.1 million was received on April 2009.
The rate of interest payable on the outstanding amount of the Government Loan was the fixed rate of 6% per annum and was calculated on the basis of a year of 365 days and the number of actual days elapsed. All interest payable on the outstanding amount of the
Government Loan accruing from the first drawdown date to the final interest accrual date was capitalised on annual basis and added to outstanding amount and all amount capitalised shall therefore bear interest at the stipulated fixed rate.
The repayment of the Government Loan was made in seven scheduled payments with the first payment to be made on the date of the sixth month of the sixth anniversary of the first drawdown date that is on the 19 December 2014.
On 23 December 2011, PBSB together with the Government Loan were transferred to
PMSB following the completion of the disposal of PBSB by UEM Builders to PMSB.
(xv) Term Loan
(a) Buildcast Sdn Bhd ("Buildcast")
The term loan of RM28,900,000 (2010:RM75,500,000) was drawn down by Buildcast, a wholly-owned subsidiary of UEM Builders, at an average interest rate of 5.0% (2010:
4.9%) per annum, based on the financial institution's COF + 1.5% per annum. The term loan is secured over fixed and floating assets of Buildcast, assignment of all rights, titles and benefits under supply contract pledged on a leasehold land and short term deposits as disclosed in Note 25.

140

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
38. LONG TERM BORROWINGS (CONTD.)
H

UEM Builders (Contd.)

(xv) Term Loan (Contd.)
(b) UEM Builders
In June 2009, UEM Builders entered into a banking facility agreement to drawdown
RM300 million of term loan. The average interest rate is 5.75% (2010: 5.62%) per annum, based on the financial institution's cost of fund plus a spread of 2.5% per annum. UEM Builders made a repayment of RM200 million in January 2012.
In 2010, UEM Builders drew down another Term Loan facility with a financial institution.
The term loan is unsecured and is repayable within 24 months from the date of the first draw down in accordance with a repayment schedule. The average interest rate is
4.71% (2010:4.33%) per annum, based on the financial institution's cost of fund plus a spread of 1.4% per annum.
(xvi) Foreign Term Loan (INR)
The term loan bears an average interest rate of 13% (2010: 13%) per annum.

I

Diversified Venue Sdn Bhd ("DVSB")

(xvii) Sukuk Al Ijarah
DVSB, a wholly-owned subsidiary of First Impact Sdn Bhd, issued a total of RM200.0 million of Sukuk Al Ijarah. The maturity date and yield to maturity are detailed below:
Amount
RM million
Tranche 1
Tranche 2
Tranche 3

Yield to maturity (%)

20.0
60.0
120.0

4.64
5.35
6.10

Maturity
28 December 2011
30 September 2013
30 December 2013

The Sukuk were issued in connection with the purchase of the beneficial ownership in the land and building by DVSB from First Impact Sdn Bhd. First Impact Sdn Bhd pays lease rental to DVSB which will then be used to service the profits on Sukuk.

141

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
38. LONG TERM BORROWINGS (CONTD.)
I

Diversified Venue Sdn Bhd ("DVSB") (Contd.)

(xvii) Sukuk Al Ijarah (Contd.)
The Sukuk represent the undivided proportionate beneficial ownership of each sukuk holder in the land and building (including all the DVSB's rights, interest and benefit, present and future). All monies standing to credit of the Ijarah Service Reserve Account and each sale (the singular of Sukuk) will rank pari passu with all other Sukuk.
The Sukuk are secured against the land and building of First Impact Sdn Bhd.
The discount on the loan of RM1,022,400 issued on 30 December 2008 is amortised over a tenure of 5 years of the Sukuk. During the year, the amortised amount of RM203,711
(2010 : RM216,852) is computed at effective interest rate of 6.30% per annum.
The Sukuk Tranche 1 was fully settled in 2011.

J

ULHB

(xviii) Islamic Term Financing
In 2010, Kumpulan Wang Persaraan Diperbadankan ("KWAP") granted an Islamic Term
Financing Facility based on the Syariah Principle of Al-Bai Bithaman Ajil of RM300 million to
ULHB bearing a profit margin rate between 7.50% to 8.0% per annum.
ULHB had the first drawdown of RM150 million in September 2010, and the remaining
RM150 million undrawn was cancelled due to the variation of terms of the facility in the current financial year.
In line with the variation of facility terms, the security has been reduced to approximately
400 acres (2010: 685 acres) of freehold land titles in its subsidiaries and 10,576,416 shares in a subsidiary, BND that was previously charged for the facility has been fully released.

(xix) Term and Bridging Loans
During the financial year, UEM Land obtained the term and bridging loans together with bank guarantees facilities which are secured by a legal charge of land titles of approximately 272 acres of freehold land and 89,423,584 shares in a subsidiary, BND. The term and bridging loans bear an average interest rate of 6.82% per annum.

142

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
38. LONG TERM BORROWINGS (CONTD.)
J

ULHB (Contd.)

(xx) Term Loan, Revolving Credit and Bank Overdraft
The term loans, revolving credits and bank overdraft facilities obtained from various banks, taken by some subsidiaries of ULHB, bear interest rate of 4.50% to 4.57% per annum, are secured by certain land held for property development and property development costs, as disclosed in Notes 12 and 26.

(xxi) Redeemable Convertible Preference Shares ("RCPS")
As part settlement of the acquisition of Sunrise, ULHB had issued 837,093,777 RCPS of
RM0.01 per RCPS at an issue price of RM1.00 per RCPS.
The equity and liability component of the RCPS is computed as follows:
2011
RM'000
Fair value of 837,093,777 RCPS
Equity component
- Equity component, net of deferred tax
- Deferred tax liabilities

1,004,512
241,715
24,766
266,481
738,031

Liability component

The equity component of the RCPS is reflected in the consolidated financial position as part of the non-controlling interests. The conversion of the RCPS will result in a dilution of the
Group's interest in ULHB.
Liability
component
RM'000
Initial recognition
Conversion of RCPS
Interest expenses recognised in profit or loss
At 31 December

143

738,031
(377,895)
28,304
388,440

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
38. LONG TERM BORROWINGS (CONTD.)
J

ULHB (Contd.)

(xxi) Redeemable Convertible Preference Shares ("RCPS") (Contd.)
The salient terms of the RCPS are as follows:
(a) Conversion price of RM2.30 per RCPS.
(b) The RCPS mature on 7 January 2013.
(c) The RCPS can be converted at the option of the RCPS holders, into ULHB shares at any point in time after the Issue Date but before the Maturity Date with the following modes of conversion:
(i)

by tendering 1 RCPS with cash subscription of RM1.30 per RCPS for 1 ULHB share (Cash conversion); or

(ii)

by tendering such amount of RCPS that are equal to the conversion price for 1 new ULHB share (Non-cash conversion) computed as follows:
Issue price x No. of RCPS
Conversion price

(d) The RCPS can be redeemed at the option of the RCPS holders at RM1.00 each on the
Maturity date. Any outstanding RCPS which are not redeemed shall be mandatorily converted into ULHB shares using method (c)(ii).
(e) The RCPS shall carry no right to vote at any general meeting of the Company except with regard to:
-

any proposal to wind-up the Company; during the winding-up of the Company; any proposal that affects the rights of the RCPS holders; any proposal to reduce the Company's share capital; and any proposal for the disposal of the whole of the Company's property, business and undertaking.

(f) The RCPS shall rank pari passu amongst themselves but in priority to the holders of other class of shares except the Mandatory Convertible Redeemable Preference
Shares issued by ULHB to the Company.

144

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
38. LONG TERM BORROWINGS (CONTD.)
J

ULHB (Contd.)

(xxii) Murabahah Medium Term Note Programme
On 1 September 2005, Sunrise obtained approval from Securities Commission for an
Islamic Medium Term Note Programme ("IMTN Programme") with the aggregate nominal value of up to RM150 million. The facility amount was subsequently upsized to RM400 million on 18 December 2007. The tenure of IMTN Programme is up to 10 years from the date of the first issue under the IMTN Programme where the first issuance was made on 25
July 2006.
On 24 July 2009, Sunrise refinanced the first tranche of RM100 million IMTN through a term loan. The second tranche of RM100 million has been repaid on 15 April 2010.
The third and fourth tranche of RM100 million each was issued and to be matured on 18
February 2013 and 31 January 2014 respectively. The IMTN bears profit at the fixed rate of
4.90% and 4.55% per annum for the third and fourth tranche respectively.

K

CIMA

(xxiii) Term Loan
CIMA group had secured term loan facility to finance the expansion works by way of third party legal charge over CIMA’s land and first party legal charge over CIMA’s wholly owned subsidiary, Negeri Sembilan Cement Industries Sdn Bhd’s (“NSCI”) land, where the plants are sited. The term loan bears interest rates ranging from 4.65% to 4.72% per annum.

L

Opus

(xxiv) Foreign term loan
The term loan comprises a 48 months facility with HSBC Bank Canada for CAD$3.5 million.
The facility was drawn down on 15 November 2010 for part-funding of the acquisition of
Opus DaytonKnight Consultants Ltd. The loan is due for repayment on 15 November 2014 and is subject to a deed of negative pledge.
The interest rate is subject to movement in the lenders prime rate. The average interest rate is 6.90% (2010: 7.28%) per annum.

145

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
38. LONG TERM BORROWINGS (CONTD.)
M

UEM Environment

(xxv) Term Loans
Kualiti Alam
The term loan is unsecured with a negative pledge on Kualiti Alam's fixed and floating assets and bears interest at 1% per annum above the floating cost of funds of the financial institution with a repayment term of 8 years. The interest rates during the year range from
4.38% to 4.83% (2010: 3.55% to 4.41%) per annum.
The term loan is to be repaid semi-annually commencing 6 months after the full drawdown or the expiry of the 24 months availability period on 5 November 2009, whichever is the earlier. N

UEM Dana (L) Limited

(xxvi) Foreign Term Loan (USD)
On 28 August 2009, UEM Dana (L) Limited ("UEM Dana"), a wholly owned subsidiary of the Company, entered into a facility agreement to drawdown USD270 million with a floating interest rate of LIBOR +2.5% ("USD Term Loan"). UEM Dana then entered into a back to back arrangement with the Company to lend the amount to the Company.
The USD Term Loan was drawn down on 9 September 2009 with a 5-year tenure and repayment on 8 September 2014. On the same date, the Company entered into a cross currency interest rate swap with CIMB Bank Berhad and HSBC Bank Malaysia Berhad respectively to hedge against the fluctuation of USD and floating interest rate ("CCIRS") arising from the USD Team Loan.
As at 31 December 2011, the USD Term Loan was retranslated based on the closing exchange rate as at the reporting date, to RM856,068,000 (2010: RM829,049,000).

146

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
38. LONG TERM BORROWINGS (CONTD.)
N

UEM Dana (L) Limited (Contd.)

(xxvi) Foreign Term Loans (USD) (Contd.)
Changes in the carrying value of the USD Term Loan arising from retranslation differences, was recognised in the statements of comprehensive income by the Group and the Company to offset against the gain/loss arising from the changes in fair value of the financial derivative arising from the CCIRS in accordance with hedge accounting, as disclosed in Note 31.

O

Others

(xxvii) Hire Purchase and Lease Payables
Group
2011
RM'000

2010
RM'000

Within one year
Between one and five years

7,438
8,425
15,863

7,481
8,216
15,697

Future finance charges
Present value of finance lease liabilities

(1,300)
14,563

(1,320)
14,377

6,919
7,644
14,563

6,872
7,505
14,377

Note

Analysed as:
Due within 12 months
Due after 12 months

42

147

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
39. PROVISIONS

Group
Provision
for
Resettlement construction costs costs
RM'000
RM'000
2011
At 1 January (as previously stated)
Effect of adopting IC 12
At 1 January (as restated)
Acquisition of a subsidiary
(Note 17(a))
Provision for the year
Utilisation
Reversal
Disposal of subsidiaries
(Note 17(c))
At 31 December
Included in current portion

2010 (Restated)
At 1 January (as previously stated)
Effect of adopting IC 12
At 1 January (as restated)
Provision for the year
Utilisation
At 31 December
Included in current portion

Provision for customer rebates & maintenance RM'000

Provision for heavy repairs RM'000

Total
RM'000

16,284
16,284

6,619
6,619

-

631,127
631,127

22,903
631,127
654,030

(16,284)

12,251
84,607
(46,855)
-

44,446
62,421
(26,447)
-

253,507
(225,134)
-

56,697
400,535
(298,436)
(16,284)

-

56,622
(56,622)
-

80,420
(80,420)
-

(649,183)
10,317
10,317

(649,183)
147,359
(137,042)
10,317

16,183
16,183
101
16,284
(16,284)
-

8,189
8,189
2,552
(4,122)
6,619
(6,619)
-

-

491,555
491,555
389,382
(249,810)
631,127
(187,923)
443,204

24,372
491,555
515,927
392,035
(253,932)
654,030
(210,826)
443,204

148

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
39. PROVISIONS (Contd.)
(a) Resettlement costs
BND undertook to relocate certain settlers in Nusajaya. During the financial year, the provision had been reversed as it is less likely that an outflow of resources embodying economic benefits will be required to settle the obligation.
(b) Provision for construction costs
Provision for construction costs relates to estimated final claims by sub-contractors which have not been finalised.
(c) Provision for customer rebates and maintenance
Provision for customer rebates refers to cash vouchers given to customers to be utilised against future purchases of development under the Group. Provision for maintenance comprises maintenance costs for the benefit of property purchasers.
(d) Provision for heavy repairs
Provision for heavy repairs relates to expected future costs of repairs of bridges and embankments, rectification of settlements and pavement rehabilitation of medium and high traffic sections along the highways and is provided based on past experience of the level of repair and level of usage of the highways. Assumptions used to calculate the provision for heavy repairs were based on projected traffic volume prepared by independent traffic consultants. The traffic volume projection is independently reviewed on a periodic basis.
40. PAYABLES

Group

28(iv)

(i)

2011
RM'000

2010
RM'000

942,770

Note
Trade payables
Amount due to customers on construction and consultancy contracts
Amount due to joint ventures
Other creditors and accruals Company
2011
2010
RM'000
RM'000

755,833

24,788

19,884

381,764
-

415,463
3,624

286,304
-

104,016
-

5,575,524
6,900,058

725,465
1,900,385

1,747,496
2,058,588

39,394
163,294

149

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
40. PAYABLES (Contd.)
(i) Other creditors and accruals

Group
2011
RM'000
Sundry creditors
Accruals
Bonds expenditure payable
Employee benefits

2010
RM'000

5,326,274
155,269
93,981
5,575,524

371,119
252,975
30,027
71,344
725,465

Company
2011
2010
RM'000
RM'000
1,731,704
15,792
1,747,496

30,447
8,947
39,394

Included in sundry creditors are:
(a) PEB's special dividend payable to Khazanah and EPF of RM3,082.8 million following the completion of the disposal of PEB's local expressways to PMSB as disclosed in
Note 50(a).
(b) An amount of RM1,706.8 million representing subscription of the premium payable of
RM9.99 per RCPS in PMSB, which was called on 22 December 2011 and paid on 12
January 2012.
(c) An amount due to non-controlling shareholders of RM30.9 million arising from advances given by non-controlling shareholders of Sunrise's subsidiary for the acquisition of a piece of land. Based on a joint venture agreement, a subsidiary of
Sunrise and the non-controlling shareholder will jointly develop the piece of land. The amount is unsecured, interest-free and is expected to be repaid upon the completion of the development project on the land.
(d) An amount of RM99.5 million representing deposits placed by purchasers of properties in Canada which is restricted and will be released only upon the completion of the properties. 150

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
41. AMOUNTS DUE TO SUBSIDIARIES AND ASSOCIATES

Note
Amount due to subsidiaries

Company
2011
2010
RM'000
RM'000
1,131,279

275,211

Included in short term:
Amount due to subsidiaries
Included in long term:
Amount due to a subsidiary

38N(xxvi)

1,005,802

176,753

856,068

829,049

The amounts due to subsidiaries and associates are unsecured, interest free and repayable on demand except for an amount owed to a subsidiary of RM856.0 million on which interest was charged at 5.57% per annum (2010: RM829.0 million at 5.57% per annum).

42. SHORT TERM BORROWINGS
Group
Note

2011
RM'000

2010
RM'000

Secured
Bank overdrafts
Bankers' acceptance and revolving credit

(i)(a)
(ii)

89,730
8,957

90,147
4,000

Unsecured
Bank overdrafts
Bankers' acceptance and revolving credit
Commercial paper
Foreign term loan (INR)

(i)(b)
(ii)
(iii)
(iv)

5,575
535,563
639,825

8,792
514,049
131,844
2,254
751,086

151

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
42. SHORT TERM BORROWINGS (CONTD.)
Portion of long term borrowings repayable within 12 months (Note 38)
Note
Secured
- BAIDS
- Senior Sukuk
- Sukuk Series 1
- Revolving credit
- Term loans
- Foreign term loans (INR)
- Hire purchase and lease payables

124,316
825
125,141

419,595

1,209,419

1,059,420

Unsecured
- Term loan
- Foreign term loans (INR)

89,943
550,000
384,016
46,600
6,847
6,872
1,084,278

214,494
1,063
215,557

38O(xxvii)

7,000
28,900
161,219
6,919
204,038

1,960,505

(i) Bank overdrafts
(a) Bank overdrafts of a subsidiary of Opus are secured by a general lien over the subsidiary's assets. The average interest rate for the year is 4.12% (2010: 5.20%) per annum. Bank overdrafts of a subsidiary of CIMA are secured by way of the subsidiary’s short term fixed deposits of RM3,937,000 (2010: RM476,000) and the guarantee cover by
Credit Guarantee Corporation Malaysia Berhad as disclosed in Note 25. The interest rate for the year ranges from 7.05% to 8.10% (2010: 7.3%) per annum.
(b) The bank overdrafts of Sunrise bear interest at 7.35% (2010: 7.32%) per annum.
(ii) Bankers' acceptance and revolving credit
Bankers' acceptance and revolving credit bear interest at rates that vary according to the prevailing market rates ranging from 3.47% to 5.48% (2010: 3.71% to 4.75%) per annum.

152

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
42. SHORT TERM BORROWINGS (CONTD.)
(iii) Commercial paper
The commercial paper was issued by PLUS BKSP on 25 October 2010, with a nominal value of INR192 crores and a yield to maturity of 10.0% per annum, amounting to INR192 crore with proceeds amount of INR174.5 crores, and constituted by Letter of Offer, Deal
Confirmation Note and Issuing and Paying Agency Agreement entered into between PLUS
BKSP and Axis Bank, in its capacity as an Issuing and Paying Agent.
The commercial paper was issued to refinance the existing debts and fulfilling working capital requirement of PLUS BKSP. The commercial paper had matured on 4 October
2011.
On 29 September 2011, Senior Secured Term Loan Facility was issued with a nominal value of INR200 crores to refinance the expired Commercial Paper.
(iv) Foreign term loan
In 2010, the term loan carried interest rates ranging from 12.25% to 13.25% per annum.
The term loan had been fully settled during the year.
43. DIVIDENDS

Amount
2011
2010
RM'000
RM'000

Net dividend per ordinary share
2011
2010 sen sen

In respect of financial year ended
31 December 2011:
First interim single tier dividend of RM0.247 per share on
817,088,621 ordinary shares of RM0.50 each paid on
25 August 2011

201,821

-

24.7

-

Special interim single tier dividend of RM4.651 per share on
817,088,621 ordinary shares of RM0.50 each, declared on
28 December 2011, payable on 12 January 2012
3,800,000

-

465.1

-

153

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
43. DIVIDENDS (CONTD.)

Amount
2011
2010
RM'000
RM'000

Net dividend per ordinary share
2011
2010 sen sen

In respect of financial year ended
31 December 2010:
First interim single tier dividend of RM0.232 per share on
817,088,621 ordinary shares of RM0.50 each paid on
24 June 2010

-

189,564

-

23.2

Second interim single tier dividend of RM0.21 per share on 817,088,621 ordinary shares of RM0.50 each declared on
29 November and paid on
17 December 2010

-

171,589

-

21.0

Special interim single tier dividend of RM0.122 per share on
817,088,621 ordinary shares of RM0.50 each, declared on
29 November 2010 and paid on 31 March 2011

-

100,000

-

12.2

4,001,821

461,153

489.8

56.4

154

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
44. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT OBJECTIVES AND
POLICIES
The carrying amounts of financial assets and liabilities in the statement of financial position by the classes of financial instrument are as disclosed below:
Group
2011
2010
RM'000
RM'000
Assets
Financial assets at fair value through profit or loss:
Short term investments
Derivative assets

Financial assets held-to-maturity
Other investments
Short term investments

Company
2011
RM'000

720,447
601
721,048

365,042
365,042

-

Loans and receivables:
Cash and bank balances
1,904,024
Trade and other receivables 14,022,758
Amount due from subsidiaries Amount due from associates 12,997
Amount due from holding company 1,114
Long term amount due from joint ventures
188,461
Amount due from
Government
16,129,354
Financial asset available for sale
Other investments
Short term investments

238,479
2,549
241,028

155

51,089
51,089

165,489
49,933
215,422

2010
RM'000

51,079
51,079

-

-

-

5,251,762
2,001,824

109,420
7,842,042

357,785
252,564

-

618,647

550,099

47,564

1,612

1,553

588

-

-

-

-

-

2,658,184
9,959,922

8,571,721

1,162,001

15,752
2,332
18,084

226,533
1,740
228,273

1,677
1,677

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
44. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT OBJECTIVES AND
POLICIES (CONTD.)
Group
2011
2010
RM'000
RM'000
Liabilities
Financial liabilities at amortised costs:
Trade and other payables
Loans and borrowings
Amount due to subsidiaries Amount due to associates
Amount due to
Government
Dividend payable

Derivative liabilities

Company
2011
RM'000

2010
RM'000

6,759,758
3,717,613

1,876,970
14,746,291

2,058,588
-

163,294
-

6,026

4,393

1,131,279
89

1,005,802
6

3,800,000
14,283,397

57,503
100,000
16,785,157

3,800,000
6,989,956

100,000
1,269,102

70,176

107,018

70,176

107,018

The daily operations of the Group require the use of financial instruments. A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise.
Financial asset is any asset that is cash, a contractual right to receive cash or another financial asset, contractual right to exchange financial instruments from other enterprises under conditions that are potentially favourable or an equity instrument of another enterprise, whilst financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to other enterprises or to exchange financial instruments with another enterprise under conditions that are potentially unfavourable.
The use of financial instruments exposes the Group to financial risks which are categorised as credit, foreign currency, liquidity, cash flow, interest rate and market risks.
The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the respective companies businesses whilst managing their risks. Financial risk management is carried out through risk reviews, internal control systems and adherence to the Group financial risk management policies that are approved by the Board. The Group's overall risk management strategy seeks to minimise the adverse effects from the unpredictability of economy on the Group's financial performance.

156

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
44. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT OBJECTIVES AND
POLICIES (CONTD.)
It is the Group’s policy not to engage in speculative transactions. As and when the Group undertakes significant transactions with risk exposure, the Group evaluates its exposure and the necessity to hedge such exposure taking into consideration the availability and cost of such hedging instruments. The Group has elected to apply hedge accounting.
The risk management framework of the Group encompasses effective policies, objectives and clear lines of responsibilities and accountabilities. The framework provides clear guidelines on the following:
-

The overall Risk Management policy of the Group
The key objectives of Risk Management
The Risk Management Guilding Principles
The Group's Risk Appetite and how different magnitudes of risk exposures are to be managed and monitored
The risks which are unacceptable to the Group and to be avoided; and
The roles of the Board, the Management, the Risk Management Committee ("RMC"), the
Risk Owners and Risk Management Secretariat

In implementing this framework, a RMC comprising of the senior management from various functional responsibilities was set up to assist the Board of Directors in carrying out its responsibilities. The Group Managing Director/Chief Executive Officer is the Chairman of RMC.
The RMC will deliberate on significant risks faced by the Group and reports the results of these to Audit Committee which assists the Board of Directors in deliberating on the identified risks and ensuring the implementation of appropriate systems and controls to manage these risks.
The policies for controlling these risks when applicable are set out below:
(a) Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including investment securities, cash and bank balances and derivatives), the Group and the
Company minimise credit risk by dealing exclusively with high credit rating counterparties.
The Group controls its credit risk by the application of credit approvals, limits and monitoring procedures. Credit evaluations are performed on all customers requiring credit over a certain amount and strictly limiting the Group’s associations to business partners with high credit worthiness. Trade receivables are monitored on an ongoing basis.

157

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
44. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT OBJECTIVES AND
POLICIES (CONTD.)
(a) Credit risk (Contd.)
The Group's receivables are monitored on an ongoing basis and the status of major receivables are reported to the Board of Directors.
At the reporting date, the Group's and the Company's maximum exposure to credit risk is represented by:
-

the carrying amount of each financial asset in the statements of financial position

-

a nominal amount of RM180.0 million (2010: RM200.0 million) relating to corporate guarantees provided by the Company on subsidiaries' banking facilities

As at end of the reporting period, there was no indication that any subsidiary would default on repayment.
The Group and the Company determine concentrations of credit risk by monitoring through industry sector profile of its receivables, the credit risk concentration profile of the Group's trade receivables at the reporting date are as follows:
Group

Engineering and construction Township and property development Asset and Facility
Management
Others

2011
RM'000

% of total

2010
RM'000

% of total

953,458

60%

743,394

57%

455,897

29%

332,215

25%

175,995
7,728
1,593,078

11%
0%
100%

219,797
18,782
1,314,188

17%
1%
100%

173,880

100%

134,045

100%

Company
Engineering and construction 158

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
44. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT OBJECTIVES AND
POLICIES (CONTD.)
(b) 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 maintains a natural hedge, whenever possible, by borrowing in the currency of the country in which the property or investment is located or by borrowing in currencies that match the future revenue stream to be generated from its investments. Foreign exchange exposures in transactional currencies other than functional currencies of the operating entities are kept to an acceptable level and short-term imbalances are addressed by buying or selling foreign currencies at spot rates.
The table below shows the Group’s currency exposures, i.e. those transactional (or nonstructural) exposures that give rise to the net currency gains and losses recognised in the income statement. Such exposures comprise the monetary assets and monetary liabilities of the Group that are not denominated in the operating currency of the operating units involved. Functional currency of
Group Companies
2011
2010
RM'000
RM'000
+
+
83,065
95,733
(8,284)
9,374
+
+ 148,194
32,727
107,508
253,301

NZD
USD
Others

+ These amounts relate to inter-company balances which are denominated in a different currency to the functional currency of the operating unit involved and are included in the table above as they potentially give rise to currency gains and losses recognised in the income statement.
The following table demonstrates the sensitivity of the Group's profit after tax to a reasonably possible change in the following exchange rates against the respective functional currencies of the Group entities, with all other variables held constant.

159

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
44. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT OBJECTIVES AND
POLICIES (CONTD.)
(b) Foreign currency risk (Contd.)
Group
2011
RM'000
(309)
3,159
1,241
(14)

USD / RM (strengthened 5%)
NZD / RM (strengthened 5%)
ZAR / RM (strengthened 5%)
EURO / RM (strengthened 5%)
(c) Liquidity and cash flow risk

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds.
The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall prudent liquidity management, the Group endeavours to maintain sufficient level of cash or cash convertible investments to meet its working capital requirements. In addition, the Group’s objective is to maintain a balance of funding and flexibility through the use of credit facilities, short and long term borrowings. Short term flexibility is achieved through credit facilities and short term borrowings. As far as possible, the Group raises committed funding from both capital markets and financial institutions and prudently balances its portfolio with some short term funding so as to achieve overall cost effectiveness. (i) The maturity profile of the Group's and the Company's financial liabilities as at the reporting date based on contractual undiscounted repayment obligations is disclosed as follows:
Group
2011
2010
RM'000
RM'000
After five years
Term loans
Islamic debt securities
Amount due to
Government

Company
2011
RM'000

2010
RM'000

49,264
-

2,015,173
9,827,302

-

-

49,264

28,572
11,871,047

-

-

160

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
44. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT OBJECTIVES AND
POLICIES (CONTD.)
(c) Liquidity and cash flow risk (Contd.)
Group
2011
2010
RM'000
RM'000
Between two and five years
Term loans
1,923,126
Islamic debt securities
237,840
Bridging loans
25,858
Amount due to a subsidiary Amount due to
Government
Others
54,840
2,241,664
Between one and two years
Term loans
111,704
Islamic debt securities
180,000
RCPS
414,962
Others
6,592
713,258
On demand or within one year
Term loans
411,623
Islamic debt securities
Trade and other payables 6,759,758
Dividend payable
3,800,000
Others
660,286
11,631,667
14,635,853

161

Company
2011
RM'000

2010
RM'000

1,942,887
3,392,674
-

-

-

-

952,560

952,560

9,524
3,353
5,348,438

952,560

952,560

486,291
1,068,966
4,590
1,559,847

-

-

201,358
1,263,305

-

-

1,876,970
100,000
779,952
4,221,585

2,058,588
3,800,000
275,300
6,133,888

163,294
100,000
176,759
440,053

23,000,917

7,086,448

1,392,613

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
44. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT OBJECTIVES AND
POLICIES (CONTD.)
(c) Liquidity and cash flow risk (Contd.)
(ii) Cash flow hedge
As disclosed in Note 31, the Group has entered into a CCIRS to hedge the cash flow risk in relation to the fluctuation in USD and floating interest rate of the USD270 million loan (2010: USD270 million). The CCIRS has the same nominal value of USD270 million (2010: USD270 million) and is settled every quarterly, consistent with the interest repayment schedule of the loan interest.
During the year, a gain of RM9,823,000 (2010: RM23,721,000) was recognised under other comprehensive income.
(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 manages its interest rate exposures by maintaining a prudent mix of fixed and floating rate borrowings. The Group actively reviews its debt portfolio, taking into account the investment holding period and nature of its assets. This strategy allows it to capitalise on cheaper funding in a low interest rate environment and achieve a certain level of protection against rate hikes.
The interest profile of the financial assets and liabilities of the Group and of the Company as at 31 December is as follows:
Group
2011
2010
RM'000
RM'000

Company
2011
2010
RM'000
RM'000

Financial Assets
Fixed rate
Floating rate
Interest free

88,700
1,457,890
14,582,764
16,129,354

162

228,285
4,938,839
5,008,220
10,175,344

354,129
107,239
8,110,353
8,571,721

490,638
351,986
319,377
1,162,001

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
44. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT OBJECTIVES AND
POLICIES (CONTD.)
(d) Interest rate risk (Contd.)
Group
2011
2010
RM'000
RM'000

Company
2011
2010
RM'000
RM'000

Financial Liabilities
Fixed rate
Floating rate
Interest free

1,757,301
1,642,048
10,954,224
14,353,573

13,401,215
1,062,178
2,428,782
16,892,175

926,244
6,133,888
7,060,132

936,067
440,053
1,376,120

The weighted average interest/profit rates per annum on the financial assets and financial liabilities as at 31 December are as follows:
Group
2011
2010
% per annum % per annum

Company
2011
2010
% per annum % per annum

Financial Assets
Fixed rate
Floating rate

5.92
3.15

5.75
2.28

6.36
3.15

6.47
2.74

4.61
6.12

5.41
7.72
6.29

-

-

5.22
6.05
4.83
3.72
6.82

6.21
6.55
4.75
3.86
10.00
-

-

-

-

-

5.57

5.57

Financial Liabilities
Bank overdrafts
Government loans
Term loans
Hire purchase and lease payables Islamic debt securities
Revolving credit
Bankers' acceptance
Commercial paper
Bridging loans
Amount due to subsidiary At the reporting date, if the interest rates had been 50 basis points lower / higher, with all other variables held constant, the Group's profit after tax will be higher / lower by approximately RM69,000 as a result of lower / higher net interest expense (2010: lower / higher by approximately RM1,454,000 as a result of lower / higher net interest income).
163

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
44. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT OBJECTIVES AND
POLICIES (CONTD.)
(e) Market price risk
Market price risk is the risk that the fair value or future cash flows of the Group's financial instrument will fluctuate as a result of changes in market prices (other than interest or exchange rates). The Group's exposure to market price risk are minimal as the Group's investment in quoted equity instruments are small compare to its total assets.
(f) Fair values
The carrying amounts of cash and cash equivalents, short term receivables and payables and short term borrowings approximate fair values due to their short term nature. The fair values of other financial assets and liabilities approximate the carrying amounts shown in the statement of financial position, except for the following:
2011
Carrying amount Fair value
RM'000
RM'000
Group
Held-to-maturity investments - non current
- current
Borrowings
- PLUS SPV Sukuk*
- Senior Sukuk*
- Sukuk Series 1
- Sukuk Series 2
- Sukuk Series 3
- Seafield Sukuk*
- Sukuk Istisna'
- Sukuk Al-Ijarah
- PBSB BAIDS
- KLBK BAIDS*
- Government loans
Amount due to
Government

(179,629)
-

(187,218)
-

2010
Carrying
amount
RM'000

165,489
49,933

Fair value
RM'000

164,468
50,287

(1,433,561)
(1,911,734)
(1,875,563)
(1,507,544)
(1,821,749)
(867,705)
(462,066)
(199,425)
(285,000)
(176,730)
(1,854,524)

(1,590,800)
(2,047,820)
(2,016,876)
(1,788,930)
(2,136,700)
(1,099,453)
(536,322)
(209,140)
(317,671)
(210,910)
(1,819,892)

(38,096)

(37,509)

* The carrying amounts for PLUS SPV Sukuk, Senior Sukuk, Seafield Sukuk and KLBK
BAIDS are all inclusive of profit elements classified as sundry payables.

164

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
44. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT OBJECTIVES AND
POLICIES (CONTD.)
(f) Fair values (Contd.)
Determination of fair value
As stipulated in Amendments to FRS 7: Improving Disclosure about Financial Instruments, the Group and the Company are required to classify fair value measurement using a fair value hierarchy. The fair value hierarchy would have the following levels:
Level 1 -

the fair value is measured using quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 -

the fair value is measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices)

Level 3 -

the fair value is measured using inputs for the asset or liability that are not based on observable market data (unobservable inputs)

The following table presents the Group's other financial assets and financial liabilities that are measured at fair value as at 31 December 2011:
Group

Level 1
RM'000

Level 2
RM'000

Level 3
RM'000

Total
RM'000

Assets
Financial assets at fair value through profit or loss:
Investment in:
Quoted shares
Unquoted unit trusts

10
-

720,437

-

10
720,437

-

601

-

601

241,028
241,038

721,038

-

241,028
962,076

Derivative financial instruments: Forwars exchange rate contracts
Financial assets available for sale:
Investment in quoted shares Total assets

165

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
44. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT OBJECTIVES AND
POLICIES (CONTD.)
(f) Fair values (Contd.)
Determination of fair value
Group

Level 1
RM'000

Level 2
RM'000

Level 3
RM'000

Total
RM'000

Liabilities
Derivative financial instruments: Cross currency interest rate swap
Total liabilities
Company

Level 1
RM'000

70,176
70,176
Level 2
RM'000

Level 3
RM'000

70,176
70,176
Total
RM'000

Assets
Financial assets at fair value through profit or loss:
Investment in:
Unquoted unit trusts

-

365,042

-

365,042

228,273
228,273

365,042

-

228,273
593,315

-

70,176
70,176

-

70,176
70,176

Financial assets available for sale:
Investment in quoted shares Total assets
Liabilities
Derivative financial instruments: Cross currency interest rate swap
Total liabilities

(i) Amounts due from/(to) subsidiaries, related parties, joint ventures and associates
The fair values of these financial instruments are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.

166

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
44. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT OBJECTIVES AND
POLICIES (CONTD.)
(f) Fair values (Contd.)
Determination of fair value (Contd.)
(ii) Unquoted equity instruments
These investments are valued using valuation models which uses both observable and non-observable data. The non-observable inputs to the models include assumptions regarding the future financial performance of the investee, its risk profile, and economic assumptions regarding the industry and geographical jurisdiction in which the investee operates. (iii) Unquoted debt securities and corporate bonds
Fair value is estimated by using a discounted cash flow model based on various assumptions, including current and expected future credit losses, market rates of interest, prepayment rates and assumptions regarding market liquidity.
(iv) Derivatives
Cross currency interest rate swap contracts and forward exchange rate contracts are valued using a valuation technique with market observable inputs. The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates and interest rate curves.
(v) Financial guarantees
Fair value is determined based on probability weighted discounted cash flow method.
The probability has been estimated and assigned for the following key assumptions:
- The likelihood of the guaranteed party defaulting within the guaranteed period;
- The exposure on the portion that is not expected to be recovered due to the guaranteed party’s default;
- The estimated loss exposure if the party guaranteed were to default.

167

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
45. CAPITAL MANAGEMENT
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and acceptable capital ratios in order to support its business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions or expansion plans of the Group. The Group may adjust the capital structure by issuing new shares, returning capital to shareholders or adjusting dividend payment policies.
The Group monitors capital using gearing ratio. The Group's policy is to keep the gearing ratio at the level to achieve a corporate rating of at least AA2.
46. SIGNIFICANT RELATED PARTY TRANSACTIONS
In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties took place at terms agreed between the parties during the year:
Group
2011
2010
RM'000
RM'000
Disposal of PEB's local businesses to PMSB, a joint venture Company
2011
2010
RM'000
RM'000

22,063,279

-

-

-

400,000

-

-

-

Construction works performed for PLUS, ELITE, LINKEDUA,
PBSB and PLUS BKSP in respect of concession assets of which ownership is with the Government by UEM Builders group

53,464

33,163

-

-

Project management services performed for PLUS and PBSB in respect of concession assets of which ownership is with the Government by Opus

10,422

2,855

-

-

-

-

17,182

15,599

Disposal of PBSB by
UEM Builders to PMSB

Construction works performed for the Company by UEM Builders group 168

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
46. SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTD.)
Group

Company
2011
2010
RM'000
RM'000

2011
RM'000

2010
RM'000

Construction works performed by UEMC for:
- Faber Union Sdn Bhd, subsidiary of Faber Group
Bhd ("Faber")

1,536

-

-

-

Land sales by UEM Land group to joint ventures:
- Horizon Hills
- NCSB
- Bio-XCell

20,426
53,315

16,487
24,800
-

-

-

Land sales by UEM Land group to Medini Iskandar Malaysia
Sdn Bhd, a subsidiary of Khazanah

-

6,530

-

-

Management fees received
/receivable by UEM Land from:
- Themed Attractions and
Resorts Sdn Bhd
("Themed"), a subsidiary of Khazanah
- NCSB, a joint venture

1,275
738

1,275
-

-

-

Rental income received/receivable from TT dotCom by PLUS in respect of fibre optic telecommunications network and wayleave rights and other facilities, from TT dotCom
Sdn Bhd, an associate of Khazanah

5,766

17,945

-

-

169

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
46. SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTD.)
Group
2011
2010
RM'000
RM'000
Interest income from joint ventures:
- Haute
- NCSB

Company
2010
2010
RM'000
RM'000

4,883
67

-

-

1,189

862

-

-

2,570

2,665

-

-

870

1,018

-

-

-

235

-

-

3,875

81,410

-

-

Interest income receivable/received from subsidiaries

-

-

24,397

29,037

Supply of disinfectant range of products to Faber Medi-Serve
Sdn Bhd, a subsidiary of Faber, by Pharmaniaga

-

2,188

-

-

453

453

-

-

-

-

-

1,305

Service fee received/receivable by
Projek Penyelenggaraan Lebuhraya
Bhd ("Propel") from:
- TT dotCom an associate of Khazanah
- Setia Haruman, an associate
- Faber Facilities Sdn Bhd, a subsidiary of Faber
("Faber Facilities")
Commission received/receivable for sale of Touch 'n Go cards from an associate, TNG
Services provided to Faber
LLC, a subsidiary of Faber by Propel

Fees for corporate and administrative support services received/receivable from associates, Faber and
TIME Engineering Bhd ("TIME") by UEM Group Management
Sdn Bhd ("UEMGM")
IT outsourcing fees paid/payable to
Forte Tech Solutions Sdn Bhd

170

-

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
46. SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTD.)
Group
2011
2010
RM'000
RM'000
Purchase of paper bags from a joint venture, Prestige by CIMA
Provision of asset/project management services by Opus to:
- Tenaga Nasional Berhad, an associate of Khazanah
- STLR Sdn Bhd, a subsidiary of Khazanah
Fee from assignment of rights of highway maintenance to
Propel under the Master
Maintenance Agreement
Provision of technical, integrated facilities and management services to Opus and UEM Land by Faber Facilities
Pavement works and supply of quarry products from Semenyih
Quarry Sdn Bhd, an associate of UEM Builders, to UEM
Builders group
Utilities rental paid/payable in respect of telecommunication network to TT dotCom by PLUS, and Opus
Administrative fees paid/payable to:
- UEMGM
- TT dotCom, an associate of Khazanah

Company
2011
2010
RM'000
RM'000

14,827

12,602

-

-

-

717

-

-

-

1,154

-

-

-

-

6,000

6,000

7,574

5,116

-

-

-

2,164

-

-

662

434

-

-

4,637

3,437

-

600

-

-

171

-

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
46. SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTD.)
Group
2011
2010
RM'000
RM'000
Advance for capital expenditure and working capital, net of (repayment made by)/repayment to:
- UEM Land
- First Impact Sdn Bhd
- UEM Builders
- UEMGM
- Aquatrans Sdn Bhd
- Infrared Advanced
Technologies Sdn Bhd

Company
2011
2010
RM'000
RM'000

-

-

(66,000)
37,680
100,933
6,250
(1,802)

14,000
11,460
9,067
4,050
(3,752)

-

-

(2,000)

(1,500)

Lease rental received by UEM
Land from Menara Burj Sdn Bhd, a subsidiary of Khazanah

420

420

-

-

Provision for treatment and disposal of scheduled waste by
Kualiti Alam to Faber group

576

671

-

-

Nomination fees received/ receivable from UEMC on heavy repairs and pavement works of highway

-

-

2,331

-

Disposal of shares in PEB to UEM Builders

-

-

178,399

-

Commission on corporate guarantee for a project under
UEM Builders

-

-

1,378

-

Rental of building paid/payable to First Impact Sdn Bhd by:
- Khazanah
- UEM Group Berhad

3,261
-

5,000
-

4,630

4,630

Rental of building paid/payable for Serayin Sdn Bhd

-

-

49

49

172

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
46. SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTD.)
Group
2011
2010
RM'000
RM'000

Company
2011
2010
RM'000
RM'000

Insurance and brokerage fees paid/payable to BIB Insurance
Brokers Sdn Bhd, an associate of ULHB

28,129

14,822

988

397

Subscription of a renounceable rights issue of new ordinary shares in UEM Land

-

-

-

749,221

Settlement of term loan by
BND

-

-

-

632,980

Capital injection/capitalisation of amount due from subsidiaries to investments in ordinary shares and redeemable convertible preference shares
- UEM Builders
- Pati Sdn Bhd
- Serayin Sdn Bhd
- First Impact Sdn Bhd
- UEMGM
- Hartanah Lintasan Kedua

-

-

465,000
6,390
-

12,731
26,863
27,148
13,716

Professional fees paid/payable to a firm in which a Director has interest
Waiver of amount due from subsidiaries - UEM Leadership Centre
Sdn Bhd
- UEM Capital Sdn Bhd
- Trinity Saga Sdn Bhd
- Gapima Sdn Bhd
- Shangold Sdn Bhd
- Daiman Kiara Sdn Bhd

581

-

173

293

-

45

712
7
-

-

107,759
7,395
142
9

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
46. SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTD.)
Related parties refer to:
•
•
•
•
•

subsidiaries, associates and joint ventures of the Company and its subsidiaries
Khazanah, the holding company, its subsidiaries and associates
Directors and key management personnel having authority and representation for planning, directing and controlling the activities of the Company and their close family members enterprises owned by Directors enterprises that have a common member of its key management with the Company

The related party transactions have been entered into based on the following:
(i) Construction costs charged are based on market prices and conditions similar to those received from other major customers.
(ii) Project management fees, information technology services, administrative, consultancy and service fees charged to related parties were based on the nature and type of services performed. The Directors consider that charges are in line with the market prices.
(iii) Interest income arose from term loan and advances granted to its related parties.
(iv) The sale of products and rendering of services to / from subsidiaries, related companies, associates and joint ventures were made according to the negotiated prices and conditions offered to the major customers of the Group and of the Company.
(v) The Directors consider the rental income charged to related parties and rental payable to related parties was made according to market prices and conditions similar to those offered to an unrelated third party.

47. COMMITMENTS
(i) Capital and Other Commitments
Group
2011
2010
RM'000
RM'000
Authorised and contracted for
Authorised but not contracted for

Company
2011
2010
RM'000
RM'000

422,233

1,246,255

320,897

258,153

2,376,443
2,798,676

1,313,595
2,559,850

806,900
1,127,797

258,498
516,651

174

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
47. COMMITMENTS (CONTD.)
(i) Capital and Other Commitments (Contd.)
Group
2011
2010
RM'000
RM'000
Analysed as follows:
- Property, plant and equipment - Investments - Note (a)
- Capital expenditure and upgrading works for concession assets - Note (b)
- Advance to an associate - Financial contribution for education purposes

Company
2011
2010
RM'000
RM'000

874,428
1,036,970

1,431,636
254,379

30,716
1,044,081

21,119
455,532

817,328

816,885

-

-

16,950

16,950

-

-

53,000
2,798,676

40,000
2,559,850

53,000
1,127,797

40,000
516,651

(a) Investments:
Group
2011
2010
RM'000
RM'000
New investments
Additional investment in existing subsidiaries and associate
Financial assistance for existing subsidiary

Company
2011
2010
RM'000
RM'000

947,751

197,379

100,944

197,379

89,219

57,000

666,137

-

1,036,970

254,379

277,000
1,044,081

258,153
455,532

(b) Capital expenditure and upgrading works for concession assets mainly related to LMS' land acquisition and construction costs for the Cikampek-Palimanan Highway project.

175

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
47. COMMITMENTS (CONTD.)
(ii) Commitments under non-cancellable operating leases:
Land and Buildings
2011
2010
RM'000
RM'000
Group
- within one year
- in two to five years
- over five years

31,767
49,022
18,304
99,093

31,269
54,355
7,720
93,344

Others
2011
2010
RM'000
RM'000
11,458
15,928
5
27,391

11,157
14,548
25,705

48. CONTINGENT LIABILITIES AND FINANCIAL GUARANTEE
Group
2011
2010
RM'000
RM'000
Contingent liabilities - unsecured
Guarantees given to the
Government in respect of the novation of the Concession
Agreement to PLUS
Corporate guarantee given to a client of a subsidiary for due performance of construction project
Bank performance bonds and guarantees 589,763
Litigations - Note (i) and (ii)
255,318
Income tax assessment (iii)
78,670
923,751
Financial guarantee *
Corporate guarantee in respect of bank facilities/financing for subsidiaries

-

Company
2011
2010
RM'000
RM'000

125,000

-

125,000

-

142,256

139,448

635,122
255,318
42,474
1,057,914

128,177
270,433

110,836
375,284

-

180,000

200,000

* As at reporting date, no values are ascribed on corporate guarantees provided by the
Company to secure bank loans and other bank facilities granted to its subsidiaries where such loans and banking facilities are fully collateralised by charges over the property, plant and equipment and other assets of the subsidiaries and where the Directors regard the value of the credit enhancement provided by the corporate guarantees as minimal.
176

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
48. CONTINGENT LIABILITIES (CONTD.)
(i) A group of 38 Felcra settlers ("the Plaintiffs") had collectively served an originating summons against Felcra Berhad ("Felcra"), District Land Administrator ("DLA") and the
Johor State Government ("State Government") (collectively the "Defendants"). The
Summons pertain to 198 acres of land previously owned by the State Government, developed by Felcra and subsequently alienated to BND for the development of Bandar
Nusajaya.
The Plaintiffs sought, inter-alia, for the Defendants to pay an additional total sum of RM54.0 million for the 198 acres and an acre of land to each Plaintiff.
On 12 January 2010, the High Court of Malaya ("High Court") has made a decision against
Felcra for breach of contract and dismissed the Plaintiffs' action against the DLA and State
Government. However, the Plaintiffs on 8 February 2010 filed a notice of appeal to the
Court of Appeal to appeal against the decision of the High Court on the quantum against
Felcra and the dismissal of the action against the DLA and the State Government. The matter is now set for mention on 3 April 2012.
BND is not directly involved in these litigations, but by virtue of the Novation Agreement, is responsible for the additional land cost of land alienated to it, which includes the amounts claimed by the Plaintiffs.
(ii) There are a total of 50 cases referred to High Court involving claims against the State
Government for additional compensation by the previous landowners of lands acquired for the Second Malaysian Crossing Project.
After hearing the 50 cases, the High Court maintained the amount of compensation awarded by the DLA in 15 cases, and increased the amount of compensation in the remaining 35 cases. The parties involved however, made further appeals to the Court of
Appeal for higher compensation. The Court of Appeal ordered that all land acquisition appeals to be transferred to the Federal Court.
Of these 50 cases:
(a) 1 has been heard and dismissed by the Court of Appeal;
(b) 4 have been heard and dismissed by the Federal Court;
(c) 2 have accepted an out-of-court settlement proposed by the Johor State Legal Advisor;
(d) 4 have withdrawn the case against DLA; and
(e) 2 have been heard and granted additional compensation amounting to RM19.5 million by the Federal Court.
177

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
48. CONTINGENT LIABILITIES (CONTD.)
(ii) (Contd.)
The remaining 37 cases, which the plaintiffs are seeking compensation with a total amount of RM201.3 million, are pending hearing at the Federal Court.
BND is not directly involved in these litigations but by virtue of the Novation Agreement, is responsible for the additional land cost of land alienated to it, which includes the amounts claimed by the previous landowners.
To date, the hearing for the remaining 37 cases have not been fixed.
(iii) (a) On 3 October 2011, BND received a notice of additional assessment from the IRB for additional tax and penalty of RM50.9 million and RM22.9 million respectively in respect of the year of assessment 2006. BND has commenced the appeal process against the additional assessment and penalty.
No provision for income tax and tax penalty have been made by BND in respect of the above amount as BND believes that the grounds for the appeal are valid.
(b) OIM received an additional assessment from the IRB for additional tax payable and tax penalties in respect of year of assessment 1999 in 2009, which would have resulted in an additional expense to the Group and OIM of RM4.8 million. OIM is in the process of appeal against the additional assessment.
No provision for income tax and tax penalties have been made by OIM for this additional tax assessment and penalties as OIM believes that the grounds for the appeal are valid.
(iv) In 2002, a principal of Intria Bina Sdn Bhd ("IBSB"), a wholly-owned subsidiary of UEM
Builders, imposed liquidated damages for late delivery of a multi-storey condominium that was completed on 15 July 2001. Not agreeing to the imposition of the Liquidated
Ascertained Damages (LAD) and on the basis that the Architect did not consider several material events in the subsidiary's Extension of Time (EOT) application, a notice of arbitration was issued on 6 August 2003 by IBSB and arbitration proceedings are ongoing.

178

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
48. CONTINGENT LIABILITIES (CONTD.)
(iv) (Contd.)
Having considered the facts of the case, the solicitors are of the opinion that IBSB has a strong case in upholding its claims as well as resisting the claim for LAD by the principal.
No provision in the financial statements has been made because the directors are of the opinion that there is sufficient documentary evidence for further EOT, potential recovery of loss and expense claims due to delay and disruption and additional claims arising from uncertified variation orders.
Hearing is ongoing with the evidence for Mr. C.J Neo, the Cross Examination of Mr.Yew Bu
Hwa and further Examination in Chief of Mr. Mior Idaris (all Respondent’s witnesses) concluded. Further hearings have been fixed on 15-16 March 2012 and 24-26 April 2012.
(v) On 18 May 2007, Horizon Hills entered into the following:
(a) The issue of, offer for subscription or purchase of, or invitation to subscribe for or purchase of Islamic Securities of up to RM270 million nominal value by Horizon Hills, comprising: -

up to 12-year Islamic Bank Guarantee Medium-Term Notes Programme of up to RM200 million nominal value under the principles of Murabahah (“IMTN
Programme”); and

-

up to 7-year Islamic Commercial Papers Programme of up to RM70 million nominal value under the principles of Murabahah.

(b) A Kafalah (bank guarantee) facility of up to RM205 million to guarantee the nominal value of the IMTN Programme of up to RM200 million and one profit payment in respect of the IMTN Programme of up to RM5 million.
Collectively referred to “the Facilities”
In this respect, NGSB had provided a third party charge over approximately 1,227 acres of land in favour of the security trustee for the Facilities (“Charge”). 817 acres out of the total of 1,227 acres had been purchased and paid by Horizon Hills. Save and except in the event of a default on the Facilities, the Charge is not expected to have a financial impact to the
Group.

179

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
48. CONTINGENT LIABILITIES (CONTD.)
(vi) The Company appointed Qatar Meta Coat WLL (“QMC”) to carry out certain works for a project in Qatar. QMC was subsequently terminated for non-performance on 12 April 2006.
In 2006, QMC filed a claim in Qatar Court against the Company for QR39.8 million (RM36.2 million) which comprised QR8.2 million (RM7.5 million) for works omitted, liquidation of performance bond of QR1.6 million (RM1.5 million) and general damages of QR30 million
(RM27.3 million). The Company has filed a counterclaim of QR30.4 million (RM27.7 million) for rectification works and other expenses against QMC.
The risks and rewards of this project which has been completed, have been assumed by
UEMC, which was appointed as the Company's subcontractor. The case was adjourned to allow the Appointed Expert conducting technical assessments on the claims to present his report. On 30 November 2010, the Court gave judgment that UEMC is to pay QMC
QR6,606,619 only and all other claims of QMC be cancelled.
UEM had appealed but the decision at appeal has been given in QMC’s favour although the application to amend the incorrect sum in the judgment has been allowed by the Chief
Judge.
In view of the court judgment and pending the outcome of the appeal, provision has been made in the financial statements of UEMC.
(vii) On 10 February 2009, a legal proceedings filed in the Courts of Qatar by the Director
General of the Public Works Authority (Plaintiff) against Parsons International Ltd. (“PIL”, the 1st Defendant), UEM (the 2nd Defendant) and Qatar Insurance Company (“QIC”, the
3rd Defendant).
The legal action requested for a ruling to render the defendants jointly liable to settle in its benefit the amount of QR878.3 million as material and moral damage for the losses incurred as per the reasons detailed in the initiatory pleading, along with preserving the right of plaintiff to indemnity for delay in the project and any other damages. The Claims have been amended to become QR1,147.9 million (as amended on 23 February 2009).
The solicitors in Qatar have indicated that UEM has sufficient grounds in defending the action and currently the court proceedings are ongoing with UEM's lawyers filing the short memorial of defence, as well as the explanatory memorandum of the Counter Claim on 15
October 2009 for a claim of QR855.6 million, leaving the comprehensive memorial of defence for the next hearings. The Counter Claim has been amended to QR1,165.6 million on 29 December 2011. The Qatari Court has now fixed the next hearing date on 23 April
2012.

180

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
48. CONTINGENT LIABILITIES (CONTD.)
(viii) On 4 August 2010, UEMC was served with 3 Notices to Arbitrate from Messrs Tan Swee
Im, P.Y. Hoh & Tai, the solicitors for both Biaxis (M) Sdn Bhd ("Biaxis") and Perdanika Bhd
("Perdanika"). Biaxis and Perdanika are the subcontractor of UEMC for offshore bore piling work for the widening of the existing Penang Bridge Low Level Viaduct from East
Abutment to Pier 24E and from Pier 24W to Pier 69W. Both parties appointed Dato’ Bill
Davidson as the sole Arbitrator. The amount claimed by the Claimants is RM67 million and
UEMC's counter-claim is RM32 million.
The solicitors are of the view that UEMC has valid grounds and merit for defending the claim. The hearing is currently ongoing.

49. SEGMENT INFORMATION
The Group is principally engaged in the following activities:
(i)
(ii)
(iii)
(iv)
(v)

Expressways
Township & Property Development
Engineering & Construction
Asset & Facility Management
Others

181

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
49. SEGMENT INFORMATION (CONTD.)
Group - 2011

Expressways
Revenue
External revenue
Intersegment revenue
Total revenue
Results
Segment results
Other income
Finance costs
Share of results of associates/joint ventures
(Loss)/profit before income tax
Income tax
(Loss)/profit for the year from continuing operations
Profit for the year from discontinued operations
Profit for the year
Attributable to:
Owners of the parent
Non-controlling interests

Township &
Property
Development

Engineering &
Construction

34
34

1,703
1,703

1,918
118
2,036

Asset &
Facility
Management
RM million
1,285
411
1,696

Others

36
8,840
8,876

Total

4,976
9,369
14,345

Elimination

(9,369)
(9,369)

Group

4,976
4,976

(25)
4
(28)

293
67
(50)

(290)
27
(42)

119
18
(10)

8,726
32
(65)

8,823
148
(195)

(8,847)
-

(24)
148
(195)

(49)
-

43
353
(49)

56
(249)
(39)

9
136
(49)

19
8,712
(8)

127
8,903
(145)

(8,847)
19

127
56
(126)

(49)

304

(288)

87

8,704

8,758

(8,828)

(70)

15,413
15,364

304

(288)

87

1
8,705

15,414
24,172

(8,828)

15,414
15,344

3,792
11,572
15,364

208
96
304

(291)
3
(288)

64
23
87

8,702
3
8,705

12,475
11,697
24,172

(8,828)
(8,828)

3,647
11,697
15,344

182

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
49. SEGMENT INFORMATION (CONTD.)
Group - 2011
Township &
Property
Development

Engineering &
Construction

12,120

7,554

3,401

1,430

1,221

25,726

12
-

105
295

6
113

270
7

60
-

453
415

12,132

7,954

112
3,632

1,707

1,281

112
26,706

(629)

112
26,077
182
26,259

4,880

2,216

2,414

516

6,748

16,774

(629)

16,145
457
16,602

224

350

335

23

3

935

-

935

* 152

14

70

55

22

313

-

313

Expressways
Assets
Segment assets
Investment in:
- associates
- joint ventures
Assets held for sale and assets of disposal group classified as held for sale

Asset &
Facility
Management
RM million

Others

Total

Elimination

(629)
-

Income tax assets
Total assets
Liabilities
Segment liabilities
Income tax liabilities
Total liabilities

Other information
Additions to non-current assets
Depreciation and amortisation * Included amount disclosed in discontinued operations

183

Group

25,097
453
415

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
49. SEGMENT INFORMATION (CONTD.)
Group - 2010 (Restated)

Expressways
Revenue
External revenue
Intersegment revenue
Total revenue
Results
Segment results
Other income
Finance costs
Share of results of associates/joint ventures
(Loss)/profit before income tax
Income tax
(Loss)/profit for the year from continuing operations
Profit for the year from discontinued operations
Profit for the year
Attributable to:
Owners of the parent
Non-controlling interests

Township &
Property
Development

Engineering &
Construction

25
25

471
471

1,562
77
1,639

3
(37)

109
33
(2)

(304)
56
(39)

50
22
(9)

304
35
(67)

162
146
(154)

(444)
-

(282)
146
(154)

(34)
-

33
173
(8)

5
(282)
(35)

31
94
(43)

8
280
(12)

77
231
(98)

(444)
26

77
(213)
(72)

(34)

165

(317)

51

268

133

(418)

(285)

1,189
1,155

165

13
(304)

51

38
306

1,240
1,373

(418)

1,240
955

450
705
1,155

129
36
165

(305)
1
(304)

30
21
51

302
4
306

606
767
1,373

(418)
(418)

188
767
955

184

Asset &
Facility
Management
RM million
1,346
309
1,655

Others

50
420
470

Total

3,454
806
4,260

Elimination

(806)
(806)

Group

3,454
3,454

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
49. SEGMENT INFORMATION (CONTD.)
Group - 2010 (Restated)
Township &
Property
Development

Engineering &
Construction

19,807

3,978

2,472

1,459

1,372

29,088

10
-

87
101

6
106

267
-

149
-

519
207

32
19,849

4,166

115
2,699

1,726

950
2,471

1,097
30,911

(726)

1,097
30,185
156
30,341

13,636

681

2,214

579

1,374

18,484

(726)

17,758

13,636

681

2,214

579

364
1,738

364
18,848

(726)

147

36

147

29

5

364

-

364

* 326

5

69

72

28

500

-

500

Expressways
Assets
Segment assets
Investment in:
- associates
- joint ventures
Assets held for sale and assets of disposal group classified as held for sale

Asset &
Facility
Management
RM million

Others

Total

Elimination

(726)
-

Income tax assets
Total assets
Liabilities
Segment liabilities
Liabilities of disposal group classified as held for sale
Income tax liabilities
Total liabilities
Other information
Additions to non-current assets
Depreciation and amortisation * Included amount disclosed in discontinued operations

185

Group

28,362
519
207

364
18,122
1,028
19,150

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
50. SIGNIFICANT EVENTS DURING THE YEAR
(a) Privatisation of PEB by the Company involving the disposal of PEB's businesses and undertakings including assets and liabilities, and disposal of PBSB to PMSB, a joint venture owned by the Company and EPF
(i) Privatisation of PEB
On 15 October 2010, the Company and EPF, as the joint offerers, jointly served a letter to the Board of PEB, offered to acquire all the businesses and undertakings, including all assets and liabilities of PEB at an aggregate purchase consideration of
RM23 billion ("PEB's Disposal"), which represented a consideration of RM4.60 per ordinary share of RM0.25 each in PEB.
PMSB was subsequently incorporated by the Company on 29 November 2010 to undertake the privatisation of PEB, with the Company and EPF each holding 51% and
49% respectively in the entity. PMSB is jointly controlled by the Company and EPF under terms governed by the Shareholders' Agreement between the parties.
On 23 February 2011, PEB obtained its shareholders' approval during an adjourned
Extraordinary General Meeting on PEB's Disposal and the proposed distribution of proceeds arising therefrom.
The purchase consideration was subsequently adjusted to RM22.25 billion or RM4.45 per ordinary share following PEB's payment of interim single tier dividend of RM750 million or 15.0 sen per share to its shareholders on 29 July 2011.
On 4 November 2011, all conditions precedent pertaining to PEB's Disposal were duly fulfilled. On 11 November 2011, all the local concession subsidiaries of PEB respectively entered into novation agreements with the Government and PLUS Berhad, for the concession subsidiaries to novate all their rights, liabilities, benefits, interests, duties and obligations in the respective concession agreements to PLUS Berhad.
The novation agreements took effect on 12 January 2012, following the fulfilment of all conditions precedent.

186

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
50. SIGNIFICANT EVENTS DURING THE YEAR (CONTD.)
(a) Privatisation of PEB by the Company involving the disposal of PEB's businesses and undertakings including assets and liabilities, and disposal of PBSB to PMSB, a joint venture owned by the Company and EPF (Contd.)
(i) Privatisation of PEB (Contd.)
Pursuant to a letter served by PMSB to PEB on 29 November 2011, which was duly accepted and agreed by PEB, the parties agreed and confirmed that:
-

the completion of PEB's Disposal on 29 November 2011 ("Completion"); and

-

the sum of RM10,549,279,318.70 as part payment towards the Purchase
Consideration, shall be paid by PMSB to PEB in cash on Completion. The balance shall be an amount owing by PMSB to PEB.

Accordingly, all PEB's assets and liabilities in Malaysia ("Local Businesses"), including
PEB's interest in PLUS, ELITE, LINKEDUA, KLBK, PHS, Teras and Touch n' Go Sdn
Bhd were transferred to PMSB.
After the Completion, PEB distributed the cash proceeds from PEB's Disposal to the non-controlling shareholders, at RM4.45 per share, via the payment of special dividend and selective capital reduction (“SCR”) exercise (collectively, the "Distribution") on 19
December 2011.
Subsequent to the Distribution, PMSB and PEB mutually agreed that all the following international businesses at the value of RM186,721,000, were not to be acquired by
PMSB vide a letter dated 27 December 2011:
- PLUS Kalyan (Mauritius) Private Limited
- PLUS BKSP Toll Limited
- PT Lintas Marga Sedaya
- Indu Navayuga Infra Projects Private Limited
- PLUS Plaza (Mauritius) Private Limited
- PLUS Jetpur (Mauritius) Private Limited
- Jetpur-Somnath Tollways Limited
Accordingly, the purchase consideration for all the local businesses acquired by PMSB was reduced to RM22,813,279,000.
After taking into account PEB's interim single tier dividend of RM750 million paid on 29
July 2011, the net adjusted purchase consideration payable by PMSB to PEB was
RM22,063,279,000.

187

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
50. SIGNIFICANT EVENTS DURING THE YEAR (CONTD.)
(a) Privatisation of PEB by the Company involving the disposal of PEB's businesses and undertakings including assets and liabilities, and disposal of PBSB to PMSB, a joint venture owned by the Company and EPF (Contd.)
(i) Privatisation of PEB (Contd.)
Following the completion of Distribution on 19 December 2011, PEB's issued and paidup share capital was reduced from RM1,250,000,000 comprising 5,000,000,000 ordinary shares of RM0.25 each to RM2,500,000.00 comprising 10,000,000 ordinary shares of RM0.25 each, which were held by the remaining shareholders as follows:

- the Group
- EPF
- Khazanah

Number of PEB shares
7,322,540
2,350,959
326,501
10,000,000

Percentage
73.2%
23.5%
3.3%
100.0%

On 27 December 2011, PEB declared special interim dividend totalling
RM11,513,999,681.30 as distribution of proceeds from PEB's Disposal to its remaining shareholders. The special interim dividend was subsequently paid by PEB on 12
January 2012, upon its receipt of the balance of purchase consideration from PMSB.
On 29 December 2011, the Company acquired 326,501 ordinary shares of RM0.25 each, representing 3.3% equity interest in PEB from Khazanah for a cash consideration of RM6,096,459. Following the acquisition, the Group's equity interest in
PEB increased to 76.5%.
(ii) Disposal of PBSB
On 23 December 2011, PBSB was disposed by UEM Builders to PMSB for a consideration of RM400 million.
The net gain arising from PEB's Disposal and disposal of PBSB was RM13,601,216,000, recognised as part of gain on disposal in discontinued operations. The amount attributable to the Owners of the Parent was RM3,131,803,000, after the elimination of the unrealised gain, as disclosed in Note 2.4(x)(iii).
(b) Bangi land acquisition
UEM Land had on 30 December 2010 entered into a sale and purchase agreement with
Inch Kenneth Kajang Rubber Public Limited Company ("IncKen") to acquire a piece of land of 448.61 acres (19,541,452 sq. ft.) for a cash consideration of RM259.9 million or approximately RM13.30 per sq. ft. ("Proposed Acquisition").

188

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
50. SIGNIFICANT EVENTS DURING THE YEAR (CONTD.)
(b) Bangi land acquisition (Contd.)
The acquisition is subject to approvals to be obtained from the following parties:
(i) approval of IncKen's shareholders for the Proposed Acquisition; and
(ii) approval of the Estate Land Board for the Proposed Acquisition in accordance with
Section 214A of the National Land Code, 1965.
Pursuant to the receipt by IncKen of the approval from the Selangor State Land Board
("ELB") for the land acquisition as stated in the ELB certificate dated 10 October 2011, the acquisition was completed following the payment of the remaining purchase consideration of RM233.9 million to IncKen on 28 October 2011.
(c) Facilities and Maintenance Agreement
A Facilities and Maintenance Agreement dated 13 April 2011 was entered into between
Cahaya Jauhar Sdn Bhd, a 60:40 joint venture company between UEM Land and the Johor
State Government, and State Secretary Johor (Incorporated) ("JSSI") for the provision of management and maintenance services for Phase 1 of Kota Iskandar ("FMMA"). The annual fee under the FMMA for the first year is RM10.47 million and will be increased in the third year to RM15.8 million. The FMMA covers a period of 30 years with a review every 3 years.
(d) Shareholders' Agreement between ULHB and Iskandar Harta Holdings Sdn. Bhd.
("IHH")
A Shareholders' Agreement dated 9 June 2011 was entered into between ULHB and IHH, a wholly-owned subsidiary of Iskandar Investment Berhad for the development of 2 parcels of land measuring an aggregate of approximately 35 acres held under H. S. (D) 478904,
PTD 170657 ("Lot A3A") and H. S. (D) 478905, PTD 170658 ("Lot A3B"), both situated in
Mukim of Pulai, Johor Darul Takzim into a mixed development predominantly in the retail segment ("Retail Mall").
The Retail Mall is to be developed by NLSB, held by ULHB and IHH in the proportion of
55% and 45% respectively. On the same date, NLSB had entered into the Agreements to
Lease with IHH, being the registered owner of Lot A3A and Lot A3B, for the 99-year lease of Lot A3A and Lot A3B. On 22 June 2011, all the conditions precedent pertaining to the
Shareholders' Agreement and the Agreements to Lease have been fulfilled, and the payment for 10% of the Lease Consideration (equivalent to RM10.0 million) had been made by NLSB to IHH in accordance with the term of the Agreements to Lease.

189

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
50. SIGNIFICANT EVENTS DURING THE YEAR (CONTD.)
(e) Serviced Residence Management and Technical Advisory Agreements
Nusajaya Consolidated Sdn Bhd ("NCSB"), a 50:50 joint venture company with United
Malayan Land Berhad ("UML"), had on 25 October 2011, entered into a Serviced
Residence Management Agreement with Clear Dynamic Sdn Bhd, a wholly-owned subsidiary of NCSB and Ascott International Management (Malaysia) Sdn Bhd ("Ascott
Malaysia") for the management and operation of 204 units of waterfront boutique serviced residences known as Somerset Puteri Harbour located at Puteri Harbour, Nusajaya.
NCSB had also on even date entered into a Technical Advisory Agreement with Ascott
International Management (2001) Pte Ltd (Singapore) ("Ascott Singapore") for the procurement of technical advisory services on project planning and construction of
Somerset Puteri Harbour.
51. SIGNIFICANT EVENTS SUBSEQUENT TO REPORTING DATE
(a) Receipts of the balance consideration for PEB's Disposal
On 12 January 2012, PEB received the outstanding balance consideration of
RM11,513,999,681.30 from PMSB, following the issuance of RM30.6 billion nominal value sukuk by PLUS Berhad.
(b) Accquisition of remaining PEB shares from EPF
On 19 January 2012, the Company acquired 2,350,959 ordinary shares of RM0.25 each from EPF for a cash consideration of RM43,897,342. Following the acquisition, the Group holds 100% equity interest in PEB.
(c) Accquisition of Coffey Rail Pty Ltd by Opus IC
On 29 February 2012, Opus IC completed the acquisitions of the entire equity interests of an Australian engineering consultancy company, Coffey Rail Pty Ltd ("CRPL") and CRPL's related company, Asia Pacific Rail Pty Ltd for a total consideration of Australian Dollar 9.0 million (equivalent to RM29 million).

190

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES
The direct major subsidiaries and associates are grouped into the Group's four core businesses as follows:
Name of Company

Core business

PLUS Expressways Berhad ("PEB")

Expressways

UEM Land Holdings Berhad ("ULHB")

Township and Property Development

UEM Builders Berhad ("UEM Builders")

Engineering and Construction

Cement Industries Of Malaysia Berhad ("CIMA")

Engineering and Construction

Opus Group Berhad ("Opus")

Asset and Facility Management

UEM Environment Sdn Bhd ("UEM Environment")

Asset and Facility Management

Faber Group Berhad ("Faber")

Asset and Facility Management

Details of the subsidiaries and associates arranged according to core businesses are as follows: Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

EXPRESSWAYS
Subsidiary
PEB

Malaysia

76.5

38.5

Investment holding and provision of expressway operation services
To construct 48

Malaysia

{-}

100.0

Managing, maintaining and operating toll collection services of the Penang
In the
Bridge business of

Malaysia

45.0

45.0

Under compulsory windingup pursuant to Court Order

Subsidiary of UEM Builders
{ } Penang Bridge Sdn Bhd

Associate

*

Mekar Idaman Sdn Bhd

191

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

EXPRESSWAYS (CONTD.)
Subsidiaries of PEB

*

PT Lintas Marga Sedaya

Indonesia

42.1

21.2

Undertake the design, construction, management, financing, operation, maintenance and toll collection of the 116kilometre
CikampekPalimanan highway in
Indonesia

PLUS Kalyan (Mauritius)
Private Limited

Mauritius

76.5

38.5

Investment holding

PLUS Plaza (Mauritius)
Private Limited

Mauritius

76.5

38.5

Investment holding

PLUS Jetpur (Mauritius)
Private Limited

Mauritius

76.5

38.5

Investment holding

{ } Projek Lebuhraya UtaraSelatan Berhad

Malaysia

{-}

38.5

Undertake the construction, operation, maintenance and toll collection of the NSE, New
Klang Valley Expressway, a section of the Federal
Highway Route 2 and the
Seremban-Port
Dickson
Highway with a total length of 846-kilometres

192

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

EXPRESSWAYS (CONTD.)
Subsidiaries of PEB (Contd.)
{ } Expressway Lingkaran
Tengah Sdn Bhd

Malaysia

{-}

38.5

Undertake the construction, operation, maintenance and toll collection of the NSECL and extension of the KLIA
Expressway, with three additional interchanges along the NSECL, total length of 64-kilometres

{ } Linkedua (Malaysia) Berhad

Malaysia

{-}

38.5

Undertake the construction, operation, maintenance and toll collection of the 47kilometres
MalaysiaSingapore
Second
Crossing

{ } Konsortium Lebuhraya
Butterworth-Kulim (KLBK)
Sdn Bhd

Malaysia

{-}

38.5

Undertake the operation, maintenance, construction and toll collection of the 17 kilometre ButterworthKulim Highway

{ } PLUS Helicopter Services
Sdn Bhd

Malaysia

{-}

38.5

Provision of helicopter charter services

PT Cimanggis-Cibitung
Tollways

Indonesia

-

23.1

Undertake and implement the proposed
25.4
kilometre
Package
4Cimanggis-Cibitung
Toll
Road, Indonesia

193

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

EXPRESSWAYS (CONTD.)
Subsidiaries of PEB (Contd.)
{ } Teras Teknologi Sdn Bhd
("Teras")

Malaysia

{-}

38.5

Investment holding and the provision of information technology, facilities management, outsourcing, e-commerce service and internet related services

India

19.9

-

To carry on business of design, engineering, procurement, construction, maintenance, management, operations and toll collections and to augment the existing route from Km 0 to Km 127 on
Jetpur-Somnath section of
NH-8D in the State of
Gujarat, India by four laning on Design, Build,
Finance, Operate and
Transfer Basis.

Malaysia

{-}

7.7

Primarily involved in providing contactless means of fare payment services via a prepaid epayment card known as
Touch 'n Go

Associates of PEB
Jetpur-Somnath Tollways
Limited

{ } Touch 'N Go Sdn Bhd

194

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

EXPRESSWAYS (CONTD.)
Subsidiary of PLUS Kalyan (Mauritius) Private Limited
## *

PLUS BKSP Toll Limited

India

72.0

36.3

Undertake the construction, operation, maintenance and toll collection of the four laning of the
22-kilometre
Bhiwandi-Kalyan
Shil
Phata Highway in the
State of Maharashtra,
India

Subsidiary of PLUS Plaza (Mauritius) Private Limited
Indu Navayuga Infra Projects
Private Limited

India

37.5

18.9

Undertake the construction, operation, maintenance and toll collection of the four laning and strengthening of Padalur to Trichy section from KM285 to KM325 of
NH-45 in the state of Tamil
Nadu, India

{ } Teras Control Systems
Sdn Bhd

Malaysia

{-}

38.5

Supply, installation and maintenance of toll systems and equipment for expressway projects

{ } Myweb Online Sdn Bhd

Malaysia

{-}

38.5

Dormant

{ } Teras Research Sdn Bhd

Malaysia

{-}

38.5

Dormant

{ } Krishost.Com Sdn Bhd

Malaysia

{-}

38.5

Dormant

10.0

Deregistered

Subsidiaries of Teras

Associate of PLUS Jetpur (Mauritius) Private Limited
Jetpur-Somnath Highway
Limited

India
195

-

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

TOWNSHIP AND PROPERTY DEVELOPMENT
Subsidiary
Malaysia

65.0

77.1

Investment holding and property development

UEM Land Berhad
("UEM Land")

Malaysia

65.0

77.1

Project procurement and management, property development and strategic investment company

Nusajaya Resort Sdn Bhd

Malaysia

65.0

77.1

Proprietor management clubhouse

ULHB

Subsidiaries of ULHB

of

and a Nusajaya Lifestyle Sdn Bhd

Malaysia

35.7

-

Property development and investment

Sunrise Berhad

Malaysia

65.0

-

Property development and investment holding

Amra Resources Sdn Bhd

Malaysia

65.0

77.1

In members' liquidation Finwares Sdn Bhd

Malaysia

65.0

77.1

Investment holding

Cahaya Jauhar Sdn Bhd

Malaysia

39.0

46.3

Undertake the turnkey design and build contract for the development of the
Johor
State
New
Administrative Centre

Subsidiaries of UEM Land

196

voluntary

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

TOWNSHIP AND PROPERTY DEVELOPMENT (CONTD.)
Subsidiaries of UEM Land (Contd.)
Fleet Group Sdn Bhd

77.1

Investment holding

Malaysia

65.0

77.1

Investment holding, property development, land trading and an agent for its subsidiaries

Renong Nusantara Sdn Bhd

Malaysia

65.0

77.1

Investment holding

Renong Pacific Sdn Bhd

Malaysia

65.0

77.1

Investment holding

Renong Ventures Sdn Bhd

Malaysia

65.0

77.1

Investment holding

Renong Overseas
Corporation Sdn Bhd

Malaysia

65.0

77.1

Provision of reimbursable support services to UEM
Land Group

Marak Unggul Sdn Bhd

Malaysia

32.5

38.6

Dormant

Nusajaya Medical Park
Sdn Bhd

Malaysia

65.0

77.1

Construct, manage and/or operate specialised buildings for long term lease

Grand Influx Sdn Bhd

*

65.0

Bandar Nusajaya
Development Sdn Bhd
("BND")

*

Malaysia

Malaysia

-

77.1

Dissolved

Marina Management
Sdn Bhd

Malaysia

65.0

77.1

Marina management

197

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

TOWNSHIP AND PROPERTY DEVELOPMENT (CONTD.)
Subsidiaries of UEM Land (Contd.)
Hatibudi Nominees
(Tempatan) Sdn Bhd

Malaysia

65.0

77.1

Investment holding

Mahisa Sdn Bhd

Malaysia

65.0

77.1

Property development and undertaking construction contracts Nusajaya Development
Sdn Bhd

Malaysia

65.0

77.1

Property development

Nusajaya Hotels Sdn Bhd

Malaysia

65.0

77.1

Dormant

Projek Usahasama Transit
Ringan Automatik Sdn Bhd

Malaysia

65.0

77.1

In members' liquidation UEML-ZRE Reit Managers
Sdn Bhd

Malaysia

46.8

55.5

Promoter and manager for diversified real estate investment trust

Nusajaya Business Park
Sdn Bhd

Malaysia

65.0

77.1

Dormant

Malaysia

73.3

79.0

In members' voluntary liquidation ω OptixLab Sdn Bhd

Malaysia

82.5

88.6

Ceased operations

*

Setia Haruman Sdn Bhd

Malaysia

16.2

19.3

Property development and sale of land

*

Ekuiti Mahir Sdn Bhd

Malaysia

16.2

19.3

Property development

voluntary

Associates of UEM Land χ Probalance Sdn Bhd

198

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

TOWNSHIP AND PROPERTY DEVELOPMENT (CONTD.)
Subsidiary of Cahaya Jauhar Sdn Bhd
CJ Capital Sdn Bhd

Malaysia

39.0

46.3

Specific purposes of a fund raising exercise through issuance of private debt securities and/or sukuk

Subsidiaries of Fleet Group Sdn Bhd
Cantuman Bahagia Sdn Bhd

Malaysia

65.0

77.1

In members' liquidation Fibroceil Manufacturing
(Malaysia) Sdn Bhd

Malaysia

65.0

77.1

Investment holding

Jaguh Mutiara Sdn Bhd

Malaysia

65.0

77.1

In members' liquidation Nusajaya Industrial Park
Sdn Bhd

Malaysia

65.0

77.1

Property development

Nusajaya Gardens Sdn Bhd

Malaysia

65.0

77.1

Land trading investment holding

Nusajaya Greens Sdn Bhd

Malaysia

65.0

77.1

Property development, land trading and investment holding

Nusajaya Group Sdn Bhd

Malaysia

65.0

77.1

In members' liquidation voluntary

voluntary

Subsidiaries of BND

199

and

voluntary

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

TOWNSHIP AND PROPERTY DEVELOPMENT (CONTD.)
Subsidiaries of BND (Contd.)
Nusajaya Heights Sdn Bhd

Malaysia

65.0

77.1

Property development, land trading and investment holding

Symphony Hills Sdn Bhd

Malaysia

65.0

77.1

Propety development, land trading and investment holding Nusajaya Seaview Sdn Bhd

Malaysia

65.0

77.1

Land trading investment holding

Nusajaya Management
Services Sdn Bhd

Malaysia

65.0

77.1

Dormant

Nusajaya Rise Sdn Bhd

Malaysia

65.0

77.1

Property development, land trading and investment holding

Malaysia

75.5

84.0

Dormant

Malaysia

65.0

77.1

Property development

65.0

77.1

Investment holding

-

77.1

Agriculture, plantation, trading, mining and construction ++ Preferred Resources
Sdn Bhd
Nusajaya Land Sdn Bhd

and

Subsidiary of Renong Nusantara Sdn Bhd
P.T. Bias Permata

Indonesia

Subsidiary of P.T. Bias Permata
P.T. Hardja Setia

Indonesia

200

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

TOWNSHIP AND PROPERTY DEVELOPMENT (CONTD.)
Subsidiary of Renong Overseas Corporation Sdn Bhd

*

Renong Overseas
Corporation (S.A.)
(Proprietary) Limited

South Africa

65.0

77.1

Investment holding

Subsidiaries of Renong Overseas Corporation (S.A.) (Proprietary) Limited

*

R.O.C Management
Services (Proprietary) Limited

South Africa

65.0

77.1

Representation of holding company in South Africa

*

Roc-Union (Proprietary)
Limited

South Africa

52.2

62.0

Investment holding

62.0

Acquisition development of land

19.5

23.1

Insurance brokers, insurance consultants, commission agents and investment holding

32.5

-

Subsidiary of Roc-Union (Proprietary) Limited

*

Rocpoint (Proprietary)
Limited

South Africa

52.2

and

Associate of Hatibudi Nominees (Tempatan) Sdn Bhd

*

BIB Insurance Brokers Sdn
Bhd

Malaysia

Associate of Rocpoint (Proprietary) Limited

*

Durban Point Development
Company (Proprietary) Ltd.

South
Africa

201

Property development

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%

Principal activities

TOWNSHIP AND PROPERTY DEVELOPMENT (CONTD.)
Subsidiaries of Sunrise Berhad
Arcoris Sdn Bhd
(formerly known as Sunrise
Foster at Mont'Kiara Sdn
Bhd)

Malaysia

65.0

-

Property investment and development Ascot Assets Sdn Bhd

Malaysia

65.0

-

Property development

Aston Star Sdn Bhd

Malaysia

65.0

-

Property development construction

Aurora Tower at KLCC
Sdn Bhd

Malaysia

65.0

-

Property development

Cekap Kawal Sdn Bhd

Malaysia

65.0

-

Dormant

Ibarat Duta Sdn Bhd

Malaysia

40.3

-

Property development

Interior Design One Sdn Bhd

Malaysia

65.0

-

Dormant

Laser Tower Sdn Bhd

Malaysia

65.0

-

Property development

Lembah Suria Sdn Bhd

Malaysia

65.0

-

Property development

Lucky Bright Star Sdn Bhd

Malaysia

65.0

-

Property investment and development Milik Harta Sdn Bhd

Malaysia

65.0

-

Property development

New Planet Trading Sdn Bhd

Malaysia

65.0

-

Property investment and development 202

investment, and 6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

TOWNSHIP AND PROPERTY DEVELOPMENT (CONTD.)
Subsidiaries of Sunrise Berhad (Contd.)
Prinsip Eramaju Sdn Bhd

Malaysia

65.0

-

Property development

Saga Centennial Sdn Bhd

Malaysia

65.0

-

Dormant

SCM Property Services
Sdn Bhd

Malaysia

65.0

-

Provision of property management services

Solid Performance Sdn Bhd

Malaysia

65.0

-

Property development

Summer Suites Sdn Bhd
(formerly known as Summer
Lodge Sdn Bhd)

Malaysia

65.0

-

Property development

Sun Victory Sdn Bhd

Malaysia

65.0

-

Property investment and development Sunrise Alliance Sdn Bhd

Malaysia

65.0

-

Property development

Sunrise Benchmark Sdn Bhd

Malaysia

65.0

-

Property development

Sunrise Century Sdn Bhd

Malaysia

65.0

-

Property development

Sunrise dotCom Sdn Bhd

Malaysia

65.0

-

Dormant

Sunrise Hospitality and
Leisure Sdn Bhd

Malaysia

65.0

-

Provision of services to related projects

Sunrise Incubation Sdn Bhd

Malaysia

65.0

-

Dormant

Sunrise Innovations Sdn Bhd

Malaysia

65.0

-

Property development

203

ancillary property 6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

TOWNSHIP AND PROPERTY DEVELOPMENT (CONTD.)
Subsidiaries of Sunrise Berhad (Contd.)
Sunrise Landmark Sdn Bhd

Malaysia

65.0

-

Property development

Sunrise Mersing Sdn Bhd

Malaysia

65.0

-

Property development

Sunrise Millennium Sdn Bhd

Malaysia

65.0

-

Property development

Sunrise Oscar Sdn Bhd

Malaysia

65.0

-

Investment holding

Sunrise Overseas
Corporation Sdn Bhd

Malaysia

65.0

-

Investment holding and provision of management services Sunrise Paradigm Sdn Bhd

Malaysia

65.0

-

Property development

Sunrise Pioneer Sdn Bhd

Malaysia

65.0

-

Property investment

Sunrise Project Services
Sdn Bhd

Malaysia

65.0

-

Property development and project management for property development projects Sunrise Quality Sdn Bhd

Malaysia

65.0

-

Property development

Sunrise Region Sdn Bhd

Malaysia

65.0

-

Property development

Sunrise REIT Management
Sdn Bhd

Malaysia

65.0

-

Dormant

Sunrise Sovereign Sdn Bhd

Malaysia

65.0

-

Investment holding

British Virgin
Islands

65.0

-

Investment holding

Crescent Phase I Limited

204

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

TOWNSHIP AND PROPERTY DEVELOPMENT (CONTD.)
Subsidiaries of Sunrise Berhad (Contd.)
Crescent Phase II Limited

British Virgin
Islands

65.0

-

Investment holding

Global Associates
International Limited

British Virgin
Islands

65.0

-

Investment holding

Sunrise International
Development Ltd

Cayman
Islands

65.0

-

Investment holding

Sunrise Overseas (S) Pte Ltd

Singapore

65.0

-

Promotion and management services relating to the Group's properties in Malaysia

Sunrise MS Pte Ltd

Singapore

65.0

-

Provision of consultancy, advisory and technical services in relation to project management

65.0

-

Property investment

65.0

-

Provision of cooling plant facility services

-

Investment holding

Subsidiary of Sun Victory Sdn Bhd
Sunrise Assets Sdn Bhd

Malaysia

Subsidiary of Sunrise Oscar Sdn Bhd
Sunrise DCS Sdn Bhd

Malaysia

Subsidiary of Sunrise International Development Ltd
Sunrise Holdings S.àr.l.

Grand
Duchy of
Luxembourg

205

65.0

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

TOWNSHIP AND PROPERTY DEVELOPMENT (CONTD.)
Subsidiary of Sunrise Holdings S.àr.l.

*

Canada Sunrise
Development Corp.
(formerly known as Phileo
Development Corp)

British
Columbia
Canada

65.0

-

Property investment and development Subsidiary of Canada Sunrise Development Corp.

*

Canada Sunrise
Developments (Richmond)
Ltd
(formerly known as Phileo
Developments
(Richmond)
Ltd)

British
Columbia
Canada

65.0

-

Property investment and development Malaysia

32.5

-

Investment holding

Associate of Sunrise Berhad

*

Perfect Portfolio Sdn Bhd

ENGINEERING AND CONSTRUCTION
Subsidiaries
UEM Builders

*

Malaysia

100.0

100.0

Investment holding

CIMA

Malaysia

100.0

100.0

Provision of management services and investment holding Danzie Contracts Sdn Bhd

Malaysia

51.0

51.0

Construction and building works UEM Genisys Sdn Bhd

Malaysia

51.0

51.0

Under liquidation by Court
Order

206

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

ENGINEERING AND CONSTRUCTION (CONTD.)
Associate
~ * UE Construction (Phil.) Inc.

Philippines

40.0

40.0

Dormant

UEM Construction Sdn Bhd
("UEMC")

Malaysia

100.0

100.0

Contractors for the execution of construction and engineering works

Intria Bina Sdn Bhd

Malaysia

100.0

100.0

Civil engineering construction works

Hoto Stainless Steel
Industries Sdn Bhd

Malaysia

97.9

97.9

Manufacturing and sale of stainless steel pipes

Pati Sdn Bhd ("PATI")

Malaysia

100.0

100.0

Civil engineering works and building construction

Isle of Man,
United
Kingdom

100.0

100.0

Investment holding

Malaysia

100.0

100.0

Ceased operations

Subsidiaries of UEM Builders

York Place Limited

Total Trade Sdn Bhd

207

and

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

ENGINEERING AND CONSTRUCTION (CONTD.)
Subsidiaries of UEM Builders (Contd.)
Pearl Bridge Sdn Bhd

Malaysia

100.0

100.0

Dormant

Buildcast Sdn Bhd

Malaysia

100.0

100.0

Manufacturing of concrece product

Soil Centralab Sdn Bhd

Malaysia

100.0

100.0

Geotechnical investigation, instrumentation and pavement condition assessment works

IBS Iconsis Sdn Bhd

Malaysia

100.0

100.0

Industralised system Brunei

100.0

100.0

Civil engineering work and building construction

Intria Urus Sdn Bhd

Malaysia

100.0

100.0

Dormant

Pati Technologies Sdn Bhd

Malaysia

100.0

100.0

Ceased operations

Malaysia

75.5

84.0

Dormant

UEM Builders (Singapore)
Pte Ltd

Singapore

100.0

100.0

Civil engineering work and building construction

UEM (Mauritius) Co Ltd
("UEMM")

Republic of
Mauritius

100.0

100.0

Investment holding

UEM Construction (B)
Sdn Bhd

precast

building

Associate of UEM Builders
++ Preferred Resources
Sdn Bhd
Subsidiaries of UEMC

*

208

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

ENGINEERING AND CONSTRUCTION (CONTD.)
Associate of UEMC
United Engineers Malaysia
Construction LLC

Abu Dhabi

49.0

49.0

All kinds of building projects contracting, main roads and streets contracting and related works. Subsidiaries of UEMM

*

UE Development India Pvt
Ltd ("UEDI")

India

100.0

100.0

Construction maintenance expressways

works

and of *

Pati International (India)
Pvt Ltd

India

100.0

100.0

Construction engineering services

and

Ω* UEM Builders-Ansal API

India

60.0

60.0

Construction, execution and completion of various building and engineering works at Sushant Golf City,
Lucknow

Contracts Pvt Ltd

209

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

ENGINEERING AND CONSTRUCTION (CONTD.)
Subsidary of UEDI
# UEMC-Opus Contracts
Pvt Ltd

India

50.0

50.0

Building construction, civil contracts and engineering permanent construction, quarrying, premix supply and to undetake construction work in India and abroad

Malaysia

100.0

100.0

Ceased operations

Philippines

40.0

40.0

Dormant

Subsidiary of PATI
Pati Pave Sdn Bhd
Associate of PATI
~ Pati Philippines Inc.

Subsidiary of Pati International (India) Pvt Ltd

*

Rushil Construction (India)
Pvt Ltd

India

100.0

100.0

Dormant

Isle of Man,
United
Kingdom

93.0

93.0

Investment holding

Subsidiary of York Place Limited
Daedalus Projects Limited

210

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

ENGINEERING AND CONSTRUCTION (CONTD.)
Associate of York Place Limited

*

Costain Group PLC

United
Kingdom

21.4

21.8

Investment holding company with subsidiaries in civil engineering and construction Subsidiaries of CIMA

*

Perlis Paper Products
Sdn Bhd

Malaysia

100.0

100.0

Investment holding

*

Cimaco Readymix Sdn Bhd

Malaysia

100.0

100.0

Dormant

*

Wealth Resources Sdn Bhd

Malaysia

100.0

100.0

Investment in properties

*

Cimaco Edar Sdn Bhd

Malaysia

100.0

100.0

Dormant

*

Pemasaran Simen Negara
Sdn Bhd

Malaysia

100.0

100.0

Distribution and sale of cement *

Negeri Sembilan Cement
Industries Sdn Bhd

Malaysia

100.0

100.0

Manufacture and sale of cement *

Cimaco Quarry Sdn Bhd

Malaysia

100.0

100.0

Quarrying of limestone and its related activities

*

I-Mix Concrete Industries
Sdn Bhd

Malaysia

100.0

70.0

Production and sale of ready-mixed concrete

*

Unipati Concrete Sdn Bhd

Malaysia

100.0

100.0

Manufacturing and distribution of ready-mixed concrete *

Kuad Sdn Bhd

Malaysia

70.0

70.0

Quarry business and its related activities

211

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

ENGINEERING AND CONSTRUCTION (CONTD.)
Subsidiaries of CIMA (Contd.)
*€ Kuari Pati Sdn Bhd

Malaysia

100.0

100.0

Quarry operators and trading in quarry related products *€ Matang Pagar Sdn Bhd

Malaysia

80.0

80.0

Quarry operators

*€ Profitlite Holding Sdn Bhd

Malaysia

100.0

100.0

Dormant

Malaysia

100.0

-

Malaysia

73.3

79.0

In members' winding up

CIMA International (Labuan)
Limited

Invesment holding

Associate of CIMA χ Probalance Sdn Bhd

voluntary

Subsidiaries of Kuari Pati Sdn Bhd
*€ Pati Bukit Perak Sdn Bhd

Malaysia

100.0

100.0

Dormant

*€ Pati Nilai Quarry Sdn Bhd

Malaysia

70.0

70.0

Quarry operator

40.0

40.0

Quarry operator

62.0

Manufacture and distribution of ready-mixed concrete Associate of Kuari Pati Sdn Bhd
€ Semenyih Quarry Sdn Bhd

Malaysia

Associate of Pemasaran Simen Negara Sdn Bhd
†

Buildcon
=*

Cimaco Concrete

Malaysia

Sdn Bhd

212

49.6

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

ASSET AND FACILITY MANAGEMENT
Subsidiaries
Opus

Malaysia

96.4

96.4

Investment holding and provision of administrative support to its subsidiaries

UEM Environment

Malaysia

100.0

100.0

Investment holding

Malaysia

100.0

100.0

Construction, maintenance and repair of civil, mechanical and electrical works of roads, infrastructure, expressways and industrial cleaning services

Malaysia

34.3

34.3

Investment holding and provision of management services to its subsidiaries

Builders Credit & Leasing
Sdn Bhd

Malaysia

96.4

96.4

Investment holding

Opus International Limited

United
Kingdom

96.4

96.4

Dormant

Subsidiary of UEM Builders
Projek Penyelenggaraan
Lebuhraya Berhad ("Propel")

Associate
Faber

Subsidiaries of Opus

213

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

ASSET AND FACILITY MANAGEMENT (CONTD.)
Subsidiaries of Opus (Contd.)
Opus International (M)
Berhad

Malaysia

96.4

96.4

Management of the planning, design and construction of infrastructure projects and provision of facilities management services

Opus International (NZ)
Limited

New Zealand

96.4

96.4

Investment holding

Philippines

96.4

96.4

In liquidation

The British
Virgin
Islands

96.4

96.4

Investment holding

~ * PL Management International
Phils, Inc.
International Business
Link, Inc

Subsidiaries of Opus International (M) Berhad
Pengurusan Lantas Berhad

Malaysia

96.4

96.4

Provision of technical management support services for the planning, design and construction of projects Pengurusan LRT Sdn Bhd

Malaysia

96.4

96.4

Provision of project management services

214

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

ASSET AND FACILITY MANAGEMENT (CONTD.)
Subsidiaries of Opus International (M) Berhad (Contd.)
Opus Management Sdn Bhd

**

Opus International India
Pte Ltd

Malaysia

96.4

96.4

Management of the planning, design and construction of infrastructure projects and provision of facilities management services and provision of techical and administrative support services to related parties that are part of Opus
Group

India

96.4

96.4

Provision of asset development and asset management services

Subsidiary of Opus International (NZ) Limited
Opus International
Consultants Limited
("Opus IC")

New Zealand

58.8

60.2

Multidisciplinary infrastructure consultancy providing asset development and asset management solutions

Malaysia

58.8

60.2

Technical services New Zealand

58.8

60.2

Consultancy services

Singapore

58.8

60.2

Dormant

Subsidiaries of Opus IC
Opus International
Consultants Sdn Bhd
Opus International
Consultants (OPC) Limited
Opus International
Consultants (Pte) Limited

215

consultancy

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

ASSET AND FACILITY MANAGEMENT (CONTD.)
Subsidiaries of Opus IC (Contd.)
Opus International
Consultants Holdings (UK)
Limited

United
Kingdom

58.8

60.2

Holding company

Opus International
Consultants (PCA) Limited

New Zealand

58.8

60.2

Road infrastructure and other related design work, civil and building design related work

Opus International
Consultants (Canada) Limited

Canada

58.8

60.2

Engineering services Opus International
Consultants Pty Limited

Australia

58.8

60.2

Holding company

consultancy

Partnership of Opus International Consultants Pty Limited and Opus IC
+ Opus International
Consultants (a limited partnership) Australia

58.8

60.2

Holding company

New Zealand

30.3

30.3

Providing water services training New Zealand

15.2

15.2

Engineering services Associates of Opus IC
NZWETA

† Total Bridge Services

Subsidiaries of Opus International Consultants Holdings (UK) Limited
Evans Grant Group Limited

United
Kingdom

216

58.8

60.2

Dormant

consultancy

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

ASSET AND FACILITY MANAGEMENT (CONTD.)
Subsidiaries of Opus International Consultants Holdings (UK) Limited (Contd.)
Veryards Holdings Limited

United
Kingdom

58.8

60.2

Dormant

The Joynes Pike Group
Limited

United
Kingdom

58.8

60.2

Engineering services Opus HCL Limited

United
Kingdom

58.8

60.2

Dormant

Opus International
Consultants (Projects) Limited
(formerly known as Sub
Surface Engineering Limited)

United
Kingdom

58.8

60.2

Engineering services consultancy

Opus International
Consultants (UK) Limited

United
Kingdom

58.8

60.2

Engineering services consultancy

Subsidiaries of Evans Grant Group Limited
Evans Grant Opus Limited

United
Kingdom

58.8

60.2

Dormant

Evans Grant (Fareham)
Limited

United
Kingdom

58.8

60.2

Dormant

Evans Grant (Alton) Limited

United
Kingdom

58.8

60.2

Dormant

Office Network Engineering
Limited

United
Kingdom

58.8

60.2

Dormant

217

consultancy

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

ASSET AND FACILITY MANAGEMENT (CONTD.)
Subsidiaries of Opus International Consultants (Canada) Limited
Opus International
Consultants Inc

United States of America

58.8

60.2

Engineering services consultancy

Opus DaytonKnight
Consulting Limited

Canada

58.8

60.2

Engineering services consultancy

60.2

Dormant

Subsidiary of Opus International Consultants Sdn Bhd
Kejuruteraan Opus Sdn Bhd

Malaysia

58.8

Subsidiary of Opus International Consultants (PCA) Limited
Opus International
Consultants (NSW) Pty Limited

Australia

58.8

60.2

Engineering services consultancy

Subsidiary of Opus International Consultants, a limited partnership
Opus International
Consultants (Australia) Pty
Limited

Australia

58.8

60.2

Engineering services Subsidiary of Opus International Consultants (Australia) Pty Limited
Martin Findlater &
Associates Limited

Australia

218

58.8

60.2

Dormant

consultancy

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

ASSET AND FACILITY MANAGEMENT (CONTD.)
Subsidiaries of The Joynes Pike Group Limited
Opus Joynes Pike Limited

United
Kingdom

58.8

60.2

Civil and building design consultancy services

Tower Surveys Limited

United
Kingdom

58.8

60.2

Survey consultancy work

Structural Surveys Direct
Limited

United
Kingdom

58.8

60.2

Civil and building design consultancy services

58.8

60.2

Dormant

Subsidiary of Structural Surveys Direct Limited
Reach UK Limited

United
Kingdom

Subsidiaries of UEM Environment
Kualiti Alam Sdn Bhd

Malaysia

100.0

100.0

Undertake the collection, transportation, treatment and disposal of scheduled waste Kualiti Khidmat Alam
Sdn Bhd

Malaysia

100.0

100.0

Sole marketing agent for the purpose of providing services in relation to marketing, collecting, and transportation of scheduled waste

219

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

ASSET AND FACILITY MANAGEMENT (CONTD.)
Subsidiaries of UEM Environment (Contd.)
Kualiti Kitar Alam Sdn Bhd

100.0

70.0

Provision recycling services

Special Builders Sdn Bhd

*

Malaysia

Malaysia

100.0

100.0

Provision of end-life vehicle recycling, recovery and disposal services

United Arab
Emirates

49.0

49.0

Provision of environmental and waste management services Propel Malindo Sdn Bhd

Malaysia

100.0

100.0

In the process of winding up Aquatrans Sdn Bhd

Malaysia

100.0

100.0

Undertaking projects Abu Dhabi Kualiti Alam
Environmental Services LLC

of and waste recovery Subsidiaries of Propel

220

of

water

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

ASSET AND FACILITY MANAGEMENT (CONTD.)
Subsidiaries of Faber
Faber Hotels Holdings
Sdn Bhd

Malaysia

34.3

34.3

Investment holding

Faber Development Holdings
Sdn Bhd

Malaysia

34.3

34.3

Investment holding

@ Faber Medi-Serve Sdn Bhd

Malaysia

34.3

34.3

Provision of support services

Faber Haulage Sdn Bhd

Malaysia

34.3

34.3

In members' liquidation Renown Alliance Sdn Bhd

Malaysia

34.3

34.3

Investment holding

Faber Healthcare
Management Sdn Bhd

Malaysia

34.3

34.3

Investment holding

Merlion Credit Corporation
Bhd

Malaysia

34.3

34.3

Investment holding

United Arab
Emirates

25.7

25.7

Facilities management services in United Arab
Emirates

Intensive Quest Sdn Bhd

Malaysia

21.6

21.6

In members' liquidation TC Parking Sdn Bhd

Malaysia

34.3

34.3

Investment holding

Faber Facilities Sdn Bhd

Malaysia

34.3

34.3

Facilities maintenance and investment holding

Faber LLC

221

hospital

voluntary

voluntary

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

ASSET AND FACILITY MANAGEMENT (CONTD.)
Subsidiaries of Faber (Contd.)
Merlino Enterprises Sdn Bhd

Malaysia

34.3

34.3

In members' liquidation voluntary

Sate Yaki Sdn Bhd

Malaysia

20.6

20.6

In members' liquidation voluntary

voluntary

Subsidiaries of Faber Hotels Holdings Sdn Bhd
Merlin Tower Hotel Sdn Bhd

Malaysia

34.3

34.3

In members' liquidation Fraser's Hill Merlin Hotel
Sdn Bhd

Malaysia

-

17.5

Dissolved

Subsidiaries of Faber Development Holdings Sdn Bhd
Country View Development
Sdn Bhd

Malaysia

34.3

34.3

Property development

Faber Grandview
Development (Sabah)
Sdn Bhd

Malaysia

34.3

34.3

Property development

Faber Union Sdn Bhd

Malaysia

34.3

34.3

Property development

Faber Heights Management
Sdn Bhd

Malaysia

34.3

34.3

Property management

Mont Hill Sdn Bhd

Malaysia

34.3

34.3

In members' liquidation voluntary

Mutiara Unik (M) Sdn Bhd

Malaysia

34.3

34.3

In members' liquidation voluntary

Rimbunan Melati Sdn Bhd

Malaysia

18.9

18.9

Property development

222

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

ASSET AND FACILITY MANAGEMENT (CONTD.)
Subsidiary of Mutiara Unik (M) Sdn Bhd
Jiwa Unik Sdn Bhd

Malaysia

17.5

17.5

Dormant

Subsidiaries of Faber Medi-Serve Sdn Bhd
Healthtronics (M) Sdn Bhd

Malaysia

20.6

20.6

Provision of biomedical services and electronic engineering maintenance services Cermin Cahaya Sdn Bhd

Malaysia

34.3

34.3

Dormant

Fresh Linen Services
(Sarawak) Sdn Bhd

Malaysia

18.9

18.9

Provision of laundry processing activities

Fresh Linen Services
(Sabah) Sdn Bhd

Malaysia

20.6

20.6

Provision of laundry processing activities

20.6

20.6

In process of cancelling its registration Subsidiary of Healthtronics (M) Sdn Bhd
Healthtronics Inc.

Philippines

Subsidiaries of Faber Haulage Sdn Bhd
Firstgain Holdings Sdn Bhd

Malaysia

-

34.3

Dissolved

Hasil Lintang Sdn Bhd

Malaysia

-

34.3

Dissolved

17.5

Dormant

Subsidiary of Faber Healthcare Management Sdn Bhd
Sehat Technologies
Sdn Bhd

Malaysia

223

17.5

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

ASSET AND FACILITY MANAGEMENT (CONTD.)
Subsidiaries of Faber Facilities Sdn Bhd
Faber Facilities Management
Sdn Bhd

Malaysia

34.3

34.3

General Field Sdn Bhd

Malaysia

34.3

-

Dormant

Faber Facilities Solution
Sdn Bhd

Malaysia

-

34.3

Dissolved

Facilities maintenance

*

Faber Star Facilities
Management Limited

India

34.3

17.5

Facilities management in
India

*

Faber Sindoori Management
Services Private Limited

India

17.5

17.5

Facilities management in
India

South
Africa

34.3

34.3

Dormant

Daiman Kiara Sdn Bhd

Malaysia

-

100.0

Dissolved

First Impact Sdn Bhd

Malaysia

100.0

100.0

Investment property holding, provision of maintenance and other related activities of the office building owned by the Company

Subsidiary of Renown Alliance Sdn Bhd
Belaire Investments
(Proprietary) Ltd.
OTHERS
Subsidiaries

224

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

OTHERS (CONTD.)
Subsidiaries (Contd.)
Forte Tech Solutions
Sdn Bhd

Malaysia

100.0

96.0

Provision of information technology solutions and systems support services

Hartanah Lintasan Kedua
Sdn Bhd

Malaysia

100.0

100.0

Investment holding

Hydron (M) Sdn Bhd

Malaysia

100.0

100.0

Ceased operations Infrared Advanced
Technologies Sdn Bhd

Malaysia

75.0

75.0

Research, development design, manufacture, implementation, marketing, selling and supplying of electronic toll collection system Intralogic Sdn Bhd

Malaysia

100.0

100.0

Trading and services

MAVTRAC Sdn Bhd

Malaysia

100.0

100.0

Trading and services

Pharmaniaga Berhad

Malaysia

-

86.8

Investment holding

Serayin Sdn Bhd

Malaysia

100.0

100.0

Investment holding, trading and letting of properties

Shangold Sdn Bhd

Malaysia

-

100.0

Dissolved

Trinity Saga Sdn Bhd

Malaysia

-

100.0

Dissolved

UEM Academy Sdn Bhd

Malaysia

100.0

100.0

In member's liquidation 225

business

voluntary

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

OTHERS (CONTD.)
Subsidiaries (Contd.)
UEM Capital Sdn Bhd

Malaysia

100.0

100.0

In members' liquidation UEM Dana (L) Limited

Labuan

100.0

100.0

Investment holding

UEM Group Management
Sdn Bhd

Malaysia

100.0

100.0

Provision of corporate and administrative support services UEM International
(East Asia) Sdn Bhd

Malaysia

100.0

100.0

Investment holding

UEM International (Labuan)
Limited

Labuan

100.0

100.0

Investment holding

UEM International
(West Asia) Sdn Bhd

Malaysia

100.0

100.0

Investment holding

UEM Leadership Centre
Sdn Bhd

Malaysia

100.0

100.0

In members' liquidation voluntary

UEM Tech Sdn Bhd

Malaysia

100.0

100.0

In members' liquidation voluntary

United Growth Berhad

Malaysia

100.0

100.0

Investment holding

United Services &
Automotive Industries
Sdn Bhd

Malaysia

100.0

100.0

In members' liquidation Vistajati Holdings Sdn Bhd

Malaysia

100.0

100.0

Property development

226

voluntary

voluntary

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

OTHERS (CONTD.)
Associates

*

TIME Engineering Berhad
("TIME")

ω OptixLab Sdn Bhd
Puncak Vista Sdn Bhd

Malaysia

45.0

45.0

Investment holding information technology

Malaysia

82.5

88.6

Ceased operations

Malaysia

30.0

30.0

Under liquidation 100.0

100.0

in

Investment holding

compulsory

Subsidiary of First Impact Sdn Bhd
Diversified Venue Sdn Bhd

Malaysia

Subsidiaries of Pharmaniaga Berhad

*

Pharmaniaga Biovention
Sdn Bhd

Malaysia

-

86.8

Conduct biotechnology and pharmaceutical research activities, research and development centre for biotechnology pharmaceuticals products

*

Pharmaniaga Manufacturing
Berhad

Malaysia

-

86.8

Manufacture and sale of pharmaceutical products

*

Pharmaniaga LifeScience
Sdn Bhd

Malaysia

-

86.8

Manufacture and sale of pharmaceutical products

*

Pharmaniaga Logistics
Sdn Bhd

Malaysia

-

86.8

Purchase, storage and distribution of pharmaceutical and medical products to government hospitals and private institutions

*

Pharmaniaga Marketing
Sdn Bhd

Malaysia

-

86.8

Trading and marketing of pharmaceutical and medical products

227

6551-K
UEM Group Berhad
(Incorporated in Malaysia)

medical products
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

OTHERS (CONTD.)
Subsidiaries of Pharmaniaga Berhad (Contd.)

*

Insurgress Sdn Bhd

Malaysia

-

86.8

Dormant

*

Pharmaniaga Research
Centre Sdn Bhd

Malaysia

-

86.8

Conduct research and development of pharmaceutical products

*

Safire Pharmaceuticals (M)
Sdn Bhd

Malaysia

-

86.8

Ceased operations

*

Pharmaniaga International
Corporation Sdn Bhd

Malaysia

-

86.8

Investment holding company.
Temporarily
ceased operations

*

Pharmaniaga Pegasus
(Seychelles) Co Ltd

Republic of
Seychelles

-

86.8

Investment holding

-

42.5

Investment holding

-

86.8

Supply, trading and installation of medical and hospital equipment

Associates of Pharmaniaga Berhad

*

Pharmacare Asia Holdings
(Cayman) Limited

Cayman
Island

Subsidiary of Pharmaniaga Logistics Sdn Bhd

*

Pharmaniaga Biomedical
Sdn Bhd

Malaysia

Subsidiary of Pharmaniaga International Corporation Sdn Bhd

*

PT Millenium Pharmacon
International Tbk

Indonesia

228

-

47.7

Distribution and trading of pharmaceutical products, food supplements and diagnostic products in
Indonesia

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

Name of company

Group's effective interest Country of
2011
2010 incorporation %
%
Principal activities

OTHERS (CONTD.)
Subsidiary of UEM International (West Asia) Sdn Bhd
^ UEM Al-Dauliyyah LLC

Kingdom of
Saudi Arabia

100.0

100.0

Construction and maintenance management

Subsidiaries of TIME

*

Dagang Net Technologies
Sdn Bhd

Malaysia

32.1

32.1

Development, management and provisions of B2B ecommerce and computerised transaction facilitation services

*

TEB Systems Integrators
Sdn Bhd
(formerly known as TIME
Systems Integrators Sdn
Bhd)

Malaysia

45.0

45.0

Providing expertise in IT project management and consultancy, supply of
(ICT) hardware equipment, maintenance and assets management *

TIME Automation and
Management Services
Sdn Bhd ("TAMS")

Malaysia

45.0

45.0

Dormant

*

Toplink Advisory and
Management Services
Sdn Bhd

Malaysia

45.0

45.0

Dormant

*

TEB Quantum Technology
Sdn Bhd

Malaysia

45.0

45.0

Providing
IT
solution, cyber security, managed services and supply of computer hardware, software and peripherals

Malaysia

45.0

45.0

Dormant

Malaysia

82.5

88.6

In members' voluntary winding up

(formerly known as TIME
Quantum Technology Sdn
Bhd)
Subsidiary of TAMS

*

TIME Spectrum
Communication Sdn Bhd
Subsidiary of OptixLab
Apanac Sdn Bhd

229

6551-K
UEM Group Berhad
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2011 (CONTD.)
52. SUBSIDIARIES AND ASSOCIATES (CONTD.)

*

Subsidiaries and associates not audited by member firms of Ernst & Young Global.

†

Associates with financial year end other than 31 December.

{ } Following PEB's disposal of its local businesses and UEM Builders' disposal of PBSB to
PMSB, a 51% joint venture owned by the Company, the Group's interest in these companies are held through the joint venture. Accordingly, these companies ceased as subsidiaries or associate of the Group. χ The Group has a total of 73.3% shareholding in Probalance Sdn Bhd comprising 14.9% held via Serayin, 20.0% held by CIMA, 30.7% held by UEM Land, 2.4% held by Builders
Credit & Leasing Sdn Bhd and 5.3% held by TC Parking Sdn Bhd.

=

The Group has a total of 49.7% shareholding in Buildcon Cimaco Concrete Sdn Bhd comprising 37.3% and 12.4% held via Pemasaran Simen Negara Sdn Bhd and Cimaco
Readymix Sdn Bhd respectively, both are wholly-owned subsidiaries of CIMA.

~

Some of the shares in the company are held in trust by individuals.

ω

The Group has a total of 82.5% shareholding in OptixLab Sdn Bhd comprising 32.5% held via UEM Land and 50.0% held directly by UEM.

++ The Group has a total of 75.5% shareholding in Preferred Resources Sdn Bhd comprising 30.0% held via UEM Builders and 45.5% held via BND.
## The Group has a total of 72.0% shareholding in PLUS BKSP Toll Limited comprising
0.2% held by PEB and 71.80% held by PLUS Kalyan (Mauritis) Private Limited, a whollyowned subsidiary of PEB.
+

The Group has a total of 58.8% shareholding in Opus International Consultants, a
Limited Partnership, comprising 58.2% held by Opus International Consultants Limited and 0.6% held by Opus International Consultants Pty Ltd.

Ω

The Group has a total of 60.0% shareholding in UEM Builders - AnsalAPI Contracts Pvt
Ltd comprising 50.0% held via UEMM and 10.0% held via UEDI.

#

The Group has a total of 50% shareholding in UEMC Opus Contracts Pvt Ltd comprising
40% held via UEDI and 10% held via UEMC.

** The Group has a total of 96.4% shareholding in Opus International India Pte Limited, comprising 95.4% held by Opus International (M) Bhd and 0.96% held by Opus Group
Berhad.
^

The Group holds 100% of the equity in UEM Al-Dauliyyah LLC, comprising 90% held by
UEM International (West Asia) Sdn Bhd and 10% held directly by UEM.

@ The Group has a total of 34.3% shareholdings in Faber Medi-Serve Sdn Bhd, comprising 19.6% held by Faber Healthcare Management Sdn Bhd and 14.7% held by
Faber.
€

These subsidiaries and associate were transferred from UEM Builders to CIMA in 2011.
230

APPENDIX 2

LETTERS OF OPINION FROM THE JOINT SHARIAH ADVISERS

93

SHARIAH PRONOUNCEMENT
In the name of Allah, the Most Gracious, the Most Merciful
All praise is due to Allah, the Cherisher of the world, and peace and blessing upon
The Prophet of Allah, on his family and all his companions
UNITED GROWTH BERHAD
Proposed Islamic Medium Term Notes (“MTN”) Programme Of Up To RM2,200 Million In
Nominal Value (“Proposed Islamic MTN Programme”)
The CIMB Islamic Shariah Committee (the “Shariah Committee”) has reviewed the structure, mechanism and the documentation for the proposed issuance of the Proposed Islamic MTN
Programme by United Growth Berhad (the “Issuer”).
Except where defined herein, defined terms used in this Pronouncement have the meanings given to them in the term sheet prepared in connection with the Proposed Islamic MTN
Programme.
We have reviewed the proposed structure and the transactions entered into in respect of the
Proposed Islamic MTN Programme the principal features of which are as follows:
1.

Structure and Mechanism

The Proposed Islamic MTN Programme shall be issued based on the Shariah principle of
Musharakah.
1.1

Musharakah

The Proposed Islamic MTN Programme applies the underlying Shariah contract of Musharakah, which is a partnership (“Musharakah Venture”) between the Sukukholders (as defined below) to invest in the respective Portfolio Units (as defined below) under the Portfolio (as defined below).
Investors (“Sukukholders” or “Musharakah Partners”), from time to time, shall enter into a
Musharakah by subscribing to the relevant Sukuk issued by the Issuer. The Sukuk shall comprise one or more series with different maturity dates (“Sukuk Series”).
1.1.1

Portfolio Unit: Portfolio Unit is a fraction of the Portfolio Unit holder’s undivided interest in the Portfolio. The Portfolio is a pool of Shariah-compliant shares or any other Shariah-compliant assets (“Assets”) identified by the Registered and
Beneficial Owner of the Assets (as defined in paragraph 2(xvi) of the Principal
Terms and Conditions of the Proposal). The Assets shall be endorsed by the
Joint Shariah Advisers.
The Registered and Beneficial Owner of the Assets shall make a declaration of trust on the Portfolio to be held by the Portfolio Trustee (as defined in paragraph
2(xvi) of the Principal Terms and Conditions of the Proposal) for the benefit of the holders of the Portfolio Units. On the date of such declaration of trust, the Initial
Owner (as defined in paragraph 2(xvi) of the Principal Terms and Conditions of the Proposal) of the Portfolio Units shall be the first holder of all the Portfolio
Units.

CIMB Islamic Bank Berhad (671380-H)
34th Floor Menara Bumiputra-Commerce 11 Jalan Raja Laut
50350 Kuala Lumpur Malaysia / P.O. Box 10063 50704 Kuala Lumpur Malaysia
Telephone +60 3 2619 1188 Facsimile +60 3 2691 3245 www.cimb.com

1.1.2

Issuance of Sukuk: For each issue of Sukuk, the Initial Owner of the Portfolio
Units will sell the Portfolio Units to Pantai Panorama Sdn Bhd (“SPV1”). SPV1 shall subsequently sell the Portfolio Units to the Issuer (who purchases on behalf of the Musharakah Partners/Sukukholders). The Issuer will fund the purchase of the Portfolio Units through the proceeds raised from the issuance of Sukuk.
For each issue, the value of the Assets in the Portfolio, which is determined based on the value at cost to the Portfolio, shall be at least equivalent to the nominal amount of the Sukuk to be issued plus the nominal amount of the Sukuk outstanding at that point in time.
For the avoidance of doubt, the total value (to be determined at cost to the
Portfolio) of the Portfolio shall at all times be at least equivalent to the total nominal value of the Sukuk outstanding. In case of any exchange of Assets, the value of the new Assets to be injected into the Portfolio must be at least equivalent to the value of the Assets to be replaced (which shall be valued at cost to the Portfolio). As such, the value of the Portfolio shall remain at least at the same level before any exchange of Asset.

1.1.3

Manager of the Portfolio and Qualified Assets: UEM, the Manager of the
Portfolio, shall have the right to exchange the assets in the Portfolio with Qualified
Assets or purchase any of the assets forming the Portfolio pursuant to the
Exchange Agreement (defined as an agreement in the form set out in the
Management Agreement which allows the Manager to substitute the assets under the Portfolio with Qualified Assets) and/ or Deferred Payment Sale Agreement
(defined as the agreement governing the purchase of any of the assets forming the Portfolio by deferred payment terms).
Qualified Assets shall mean assets which have been pre-approved by the Joint
Shariah Advisers. If these assets have not been pre-approved by the Joint
Shariah Advisers a specific endorsement from the Joint Shariah Advisers will be required. The Joint Shariah Advisers shall have the right to review such Qualified
Assets upon occurrence of certain pre-agreed events (defined as events that include, where the Assets forming the Portfolio become non-Shariah compliant).
The parties agree that UEM as Manager of the Portfolio shall manage the
Portfolio pursuant to the terms of a Management Agreement which will provide for the appointment and responsibilities of UEM as manager in connection with the
Portfolio. The responsibilities of UEM as Manager of the Portfolio will include:
(a)

the management of the Portfolio Units;

(b)

distributing the dividend or distribution received pursuant to the Portfolio
(“Income”) in accordance with the Management Agreement;

(c)

paying any administrative fees payable for the maintenance of the Issuer and SPV1; and

(d)

providing top up payment (without recourse to the Portfolio Units) to ensure that the Sukukholders receive payment in full of the Expected
Periodic Distribution on the Periodic Distribution Date
(“Top Up
Payment”)

2

1.1.4

Sukuk: The Sukuk represents the Sukukholders’ undivided proportionate interests/investments (through the Issuer) in the Portfolio Units. The
Sukukholders will be entitled to the income from the Musharakah Venture.
Pursuant to the transaction documents, the Issuer (on behalf of the
Sukukholders) will surrender its right to exercise the voting rights attached to the
Shariah-compliant shares forming the Assets. Following such surrender, the
Sukukholders shall have no voting rights in respect of such shares. The
Registered and Beneficial Owner of the Assets shall then have the absolute discretion in exercising such voting rights without being obligated to take account of the interest of the Sukukholders.

1.1.5

Musharakah Capital: The Sukukholders, as Musharakah Partners shall contribute their portion of the proceeds received pursuant to their subscription of the Sukuk (“Musharakah Capital”) for the purpose of the Musharakah Venture.
The Issuer will apply the Musharakah Capital to acquire the specific Portfolio
Units.
Any profit derived from the venture will be distributed to the Musharakah Partners based on a pre-agreed profit sharing ratio (according to their respective interest in the Sukuk) while losses from the venture will be applied in proportion to each
Musharakah Partner’s Musharakah Capital.

1.1.6

Income Distribution: The Sukuk may be issued with or without periodic distribution (“Periodic Distribution”). In respect of Sukuk with Periodic Distribution, income from the Musharakah Venture of up to an amount equal to certain percentage (“Periodic Distribution Rate”) on the face amount of the Sukuk per annum, calculated on the basis of the actual number of days in the relevant period (“Expected Periodic Distribution”) shall be distributed periodically
(“Periodic Distribution Amount”). The Periodic Distribution Amount shall be made semi-annually in each year (each such date for distribution, a “Periodic
Distribution Date”) or, if applicable, upon the declaration of a Dissolution Event
(“Dissolution Declaration Date”). Should the income generated from the
Musharakah Venture be insufficient for the Issuer to distribute the Expected
Periodic Distribution on any Periodic Distribution Date, the Manager of the
Portfolio shall provide top up payment (without recourse to the Portfolio Units) to ensure that the Sukukholders receive payment in full of the Expected Periodic
Distribution on the Periodic Distribution Date.

1.1.7

Purchase Undertaking: The Purchase Undertaking obligation is an obligation by the Obligor to purchase the Portfolio Units from the Issuer at the Exercise Price upon occurrence of any Dissolution Event or maturity date of the respective outstanding Sukuk or any Early Dissolution.

2.

Important Highlights

2.1

Sukuk Musharakah is in line with Shari’a Standards No. 17 related to Investment Sukuk set by the Accounting and Auditing Organisation for Islamic Financial Institutions
(AAOIFI).

2.2

Assets: A pool of Shariah-compliant shares or any other Shariah-compliant assets
(“Assets”) identified by the Registered and Beneficial Owner of the Assets (as defined in paragraph 2(xvi) of the Principal Terms and Conditions of the Proposal). The Assets shall be endorsed by the Joint Shariah Advisers.

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2.3

Purchase Undertaking: The Purchase Undertaking is a unilateral promise based on the principle of Wa’ad and not a guarantee of capital. Furthermore, a separate sale and purchase agreement shall be executed to sell and/or purchase proportionate interest in the Portfolio to the Obligor based on formula mutually agreed by both parties. The permissibility of the purchase undertaking and/or sale undertaking at a pre-determined price or formula is further supported by the following arguments:(i)

(ii)

Fixing of price for a future sale transaction is a matter of mutual agreement
(Taraadhi) between the contracting parties i.e. buyer and seller. This practice is comparable to fixing of price practised in Bai’ al-Istijrar and Bai’ Bima Yanqathi’
Bihi Al-Si’r. Both parties in this transaction are taking the risk of price fluctuation.
In purchase undertaking, fixing of the underlying assets’ price shall expose the seller and buyer to the same risk. The seller may gain from the sale transaction if the market price of the underlying assets appreciated and equally, the buyer may loss if the market price of the underlying assets depreciated;

(iii)

The seller i.e. Sukukholders are not devoid of all risks as the performance of the
Purchase Undertaking are still subject to the operation of the Portfolio and the credit standing of the Obligor respectively; and

(iv)

2.4

Purchase undertaking in general is a promise to enter into sale and purchase transaction to be held in future to purchase the underlying asset of an investment.
Both parties must observe the essential elements of a sale contract together with its necessary conditions. Among others, the subject matter of sale i.e. underlying assets must exist. If the underlying assets are no longer exist due to loss or damage, the purchase undertaking will not have any effect as purchase of non existence (Bai’ al-Ma’dum) is prohibited by the Shariah. This will not happen in guarantee (Dhoman). Guarantee will continue to have its effect throughout the investment tenure regardless of the conditions of the underlying assets.
Furthermore if the guarantee is provided on the investment including the underlying assets, in the event of total or partial loss of the underlying assets, the guarantor needs to replace the underlying assets on its own account;

The principle of `Urf or common practice in the industry and the expectation of investing in fixed income instruments as long as they are free from riba, gharar and other prohibition which will render the contract invalid.

Details on Utilisation of Proceeds: The issue proceeds from the Islamic MTN
Programme shall be utilised for the following purposes:
2.4.1

By the Issuer:
To purchase the Portfolio Units from SPV1.

2.4.2

By SPV1:
To purchase Portfolio Units from the Initial Owner of the Portfolio Units.

2.4.3

By the Initial Owner of the Portfolio Units
(a)

For payment of fees and expenses incurred in connection with the Islamic
MTN Programme;

(b)

For general investment, refinancing of borrowings and working capital requirements of UEM and its subsidiaries; and

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(c)

Initial funding of the Finance Service Reserve Account (“FSRA”).

Proceeds raised from the Islamic MTN Programme will be utilised for Shariah-compliant purposes. 2.5

Compensation (Ta’widh): In the event of overdue payments of any amount due pursuant to the Purchase Undertaking, the Obligor shall pay compensation (Ta’widh) on such overdue amounts at the rate and manner prescribed by the Shariah Advisory
Council of the SC. The amount to be retained by each Musharakah Partner upon the payment of the Ta’widh by the Obligor shall be based on the relevant Shariah jurisdiction of each Musharakah partner.

3.

Documentation

3.1

The Shariah Committee has reviewed the Shariah aspects of the following documentation in respect of the Proposed Islamic IMTN Programme:
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.

Sukuk
Programme Agreement;
Trust Deed;
Securities Lodgment Form;
Portfolio Trust Deed;
Portfolio Unit Purchase Agreement;
SPV1 Portfolio Unit Purchase Agreement;
Musharakah Agreement;
Deed of Undertaking to Purchase;
Management Agreement;
Charge over FSRA;
Obligor Power of Attorney; and
Issuer Power of Attorney.

4.

Approval

4.1.

The Shariah Committee is of the view that, given the prevailing circumstances, the structure and mechanism as set out above are acceptable within the principles of
Shariah, the jurisdiction under which the Issuer of the Proposed Islamic IMTN
Programme and the Lead Arranger operate, and that the documents referred to in clause
3 above (the “Documents”) reflect the above structure and mechanism. The Shariah
Committee hereby approves the Documents for the Proposed Islamic IMTN Programme, subject to proper execution of the same.

4.2.

In arriving at the decision, the Shariah Committee also took into consideration of the following issues:
(a)

The legal constraints under which the Proposed Islamic MTN Programme is being developed;

(b)

The need to develop the Islamic finance industry, particularly in respect of the issuance of Islamic securities

(c)

The need to facilitate the increasing need of corporates and financiers to mobilise funds according to Shariah principles; and

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(d)

The prevailing conditions and affairs of the Ummah and the need to remove them from the shackles of riba.

And He Knows best.

On behalf of CIMB ISLAMIC SHARIAH COMMITTEE

ABDUL GHANI ENDUT
Head, Shariah Department
Group Islamic Banking Division
Dated : 8 June 2012

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THE ISSUER
United Growth Berhad
(Company No. 739648-W)
20-2, Mercu UEM
Jalan Stesen Sentral 5
Kuala Lumpur Sentral
50470 Kuala Lumpur
THE OBLIGOR
UEM Group Berhad
(Company No. 6551-K)
19-2 Mercu UEM
Jalan Stesen Sentral 5
Kuala Lumpur Sentral
50470 Kuala Lumpur

JOINT LEAD ARRANGERS AND JOINT LEAD MANAGERS
CIMB Investment Bank Berhad
(Company No. 18417-M) th 5 Floor, Bangunan CIMB
Jalan Semantan
Damansara Heights
50490 Kuala Lumpur

HSBC Amanah Malaysia Berhad
(Company No: 807705-X)
No. 2, Leboh Ampang
50100 Kuala Lumpur

TRUSTEE

REPORTING ACCOUNTANTS

Universal Trustee (Malaysia) Berhad
(Company No: 17540-D)
No. 1, Jalan Ampang (3rd Floor)
50450 Kuala Lumpur

Messrs. Ernst & Young
(Firm No: AF 0039)
Level 23A Menara Milenium
Jalan Damanlela
Pusat Bandar Damansara
50490 Kuala Lumpur

LEGAL COUNSEL TO THE JOINT LEAD
ARRANGERS AND JOINT LEAD MANAGERS

Messrs. Zaid Ibrahim & Co.
Level 19 Menara Milenium
Jalan Damanlela
Pusat Bandar Damansara
50490 Kuala Lumpur