Contentsintranet4.ktmb.com.my/ktmb/uploads/files/portal_dokumen/...Contents Rationale KTMB has provided new Electric Train Services (ETS) and Six Car Set (SCS) services using modern

Contents

Rationale

KTMB has provided new Electric Train Services (ETS) and

Six Car Set (SCS) services using modern technology and

continuous improvement. It is focused on providing comfort

to the passenger.

Corporate Information

Board of Directors

Statement On Corporate Governance

Statement On Internal Control

Statement On Risk Management

03

04

10

17

19

Audit Committee Report

Chairman’s Statement

Review of Operation

Corporate Calendar

Financial Statements

22

27

34

40

45

KTMB’s MissionBe the preferred land transportation system by providing safe, efficient and reliable integrated rail services for people and goods.

We will:• Becompetitiveandresponsivetomarketneeds.• Achieveourgoalsthroughahighlytrainedandmotivatedworkforceusingmodern

technology and process innovation.• Providereasonableprofitandlongtermgrowthtoshareholders.

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Corporate Information

Chairman

Y.B. Dato’ Sri Ir. Mohd Zin bin Mohamed

President

Datuk Elias bin Kadir

Directors

Pn. Norazura binti Tadzim

Pn. Ruhaizah binti Mohamed Rashid

En. Selvarajoo a/l Manikam

Dato’ Sri Zakaria bin Hj. Bahari

Tn. Hj. Rosli bin Abdullah

En. Harun bin Hj. Johari

Datuk Kamaruzaman bin Hj. Mohd Noor

Sr. Ahmad Zainuddin bin Hj. Jamaluddin

Registered Office

Ibu Pejabat Korporat KTM Berhad Jalan Sultan Hishamuddin

50621 Kuala Lumpur

Malaysia

Tel : +603 2263 1111

www.ktmb.com.my

Auditors

Deloitte KassimChan

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Board Of Directors

Y.BRS. PUAN NORAZURA BINTI TADZIM

Non-Independent Non-Executive Director

Y.Brs. Puan Norazura binti Tadzim, was appointed to the Board

on 1 July 2011. Y. Brs. Puan Norazura’s present position is

the Principal Assistant Secretary at the Investment, Minister of

Finance Incorporated and Privatisation Section of the Ministry

of Finance. She attended 13 out of the 15 Board meetings held

during the financial year. She has no family relationship with

any director. She has no conflict of interest with KTMB and has

never been charged for any offence.

Y.B. Dato’ Sri Ir. Mohd Zin bin Mohamed, was appointed to

the Board as its Non-Executive Chairman on 1 October 2009.

Y.B. Dato’ Sri Ir. Mohd Zin was a former Cabinet Minister holding

the portfolio of Minister of Works. He attended 14 out of the 15

Board meetings held during the financial year. He has no family

relationship with any director. He has no conflict of interest with

KTMB and has never been charged for any offence.

Y.BHG. DATUK ELIAS BIN KADIR

President

Y.Bhg. Datuk Elias Kadir, was appointed to the Board on

2 May 2012. He was formerly the Chief Executive Officer of

Multimodal Freight Sdn. Bhd. Since his appointment, he has

attended 10 out 10 Board meetings held during the financial

year. He has no family relationship with any director. He has no

conflict of interest with KTMB and has never been charged for

any offence.

Y.B. DATO’ SRI IR. MOHD ZIN BIN MOHAMED

Chairman of the Board

Board Of Directors

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Y.BRS. PUAN RUHAIZAH BINTI MOHAMED RASHID


Y. Brs. Puan Ruhaizah binti Mohamed Rashid, was appointed

to the Board on 9 November 2011. At present, Y. Brs. Puan

Ruhaizah is the Deputy Secretary General (Planning) at the

Ministry of Transport. She attended 12 out of the 15 Board

meetings held during the financial year. She has no family

relationship with any director. She has no conflict of interest

with KTMB and has never been charged for any offence.

Y.BRS. ENCIK SELVARAJOO A/L MANIKAM


Y.Brs. Encik Selvarajoo a/l Manikam, was appointed to the

Board on 16 December 2009. Y. Brs. Encik Selvarajoo is

currently a Director at the Economic Council Secretariat of

the Economic Planning Unit. He attended 13 out of the 15

Board meetings held during the financial year. He has no family



Y.BHG. DATO’ SRI ZAKARIA BIN HJ. BAHARI

Independent Non-Executive Director

Y.Bhg. Dato’ Sri Zakaria bin Hj. Bahari, was appointed to the

Board on 25 February 2010. He was formerly the Secretary

General of the Ministry of Transport. He attended 11 out of the

15 Board meetings held during the financial year. He has no

family relationship with any director. He has no conflict of interest

with KTMB and has never been charged for any offence.

Y.BRS. TUAN HAJI ROSLI BIN ABDULLAH


Y.Brs. Tuan Haji Rosli bin Abdullah, was appointed to the

Board on 20 July 2010. He was formerly the Chief Executive

Officer/Registrar of the Malaysian Institute of Accountants.

He attended 14 out of the 15 Board meetings held during the

financial year. He has no family relationship with any director.

He has no conflict of interest with KTMB and has never been

charged for any offence.

Board Of Directors

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Y.BRS. ENCIK HARUN BIN HJ. JOHARI


Y.Brs. Encik Harun bin Hj. Johari, was appointed to the

Board on 20 July 2010. At present, Y. Brs. Encik Harun is

the Managing Director/Group Chief Executive Officer at the

Malaysian Agrifood Corporation Berhad and Cold Chain

Network (M) Sdn. Bhd. He attended 11 out of the 15 Board

meetings held during the financial year. He has no family




Y.Bhg. Datuk Kamaruzaman bin Hj. Mohd Noor, was appointed

to the Board on 12 September 2011. He was formerly the

Deputy Secretary General (Planning) at the Ministry of Transport.

He attended all 15 Board meetings held during the financial

year. He has no family relationship with any director. He has no

conflict of interest with KTMB and has never been charged for

any offence.

Y.BRS. SR. AHMAD ZAINUDDIN BIN HJ. JAMALUDDIN


Y.Brs. Sr. Ahmad Zainuddin bin Hj. Jamaluddin, was appointed

to the Board on 27 April 2012. He was formerly an Executive

Director at DK Binajaya Sdn. Bhd. Since his appointment,

he has attended 9 out of 10 Board meetings held during the

financial year. He has no family relationship with any director.

He has no conflict of interest with KTMB and has never been

charged for any offence.

Board Of Directors

Y.BHG. DATUK KAMARUZAMAN BIN HJ. MOHD NOOR

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The Board recognizes the importance of corporate governance

in discharging its responsibilities, protecting and enhancing

shareholders’ value through promoting and practising high

standards of corporate governance throughout the Group. The

Board adopts and applies the principles and best practices as

governed by the Malaysian Code on Corporate Governance

2012 (“Code”) and the ‘Green Book’ on Enhancing Board

Effectiveness set by the Putrajaya Committee on GLC High

Performance.

The following statements set out the Group’s compliance

with the principles of the Code:-

A. DIRECTORS

(i) The Board

The Group recognises the important role played by

the Board in the stewardship of the Group’s direction

and operations, and ultimately, the enhancement

of long-term shareholders’ value. To fulfill this role,

the Board is responsible for the overall corporate

governance of the Group, including its strategic

direction, establishing goals for management and

monitoring the achievement of these goals.

(ii) Board Balance

The current Board has ten (10) members comprising

one (1) Non-Executive Chairman, one (1) Managing

Director/President, three (3) Non-Independent Non-

Executive Directors and 5 (five) Independent Non-

Executive Directors.

The Board comprises professionals drawn from

various backgrounds, bringing in-depth and diversity

in experience, expertise and perspectives to the

Group’s business operations. The Board is satisfied

that the current Board composition fairly reflects the

interests of the shareholders in the Company. The

profiles of the members of the Board are set out in

this Annual Report on pages 4 - 9.


Together with the Managing Director/President who

has in-depth knowledge of the Group’s business,

the Board is constituted of individuals who are

committed to business integrity and professionalism

in all its activities. The Board supports the highest

standards of corporate governance and the

development of best practices for the Group.

(iii) Supply of Information

The Directors whether as full Board or in their

individual capacity, have full and unrestricted

access to all information within the Group and direct

access to the advice and services of the Secretary

who is responsible for ensuring that Board meeting

procedures are followed and that applicable rules

and regulations are complied with. At each meeting

of the Board, the Secretary appraises the Board on

the Group’s compliance obligations and highlights

non-compliances with legal, regulatory and statutory

rules and guidelines, if any.

The notices of meetings and board papers are

distributed to the Directors prior to Board meetings

to provide Directors with sufficient time to deliberate

on issues to be raised at the Board meetings. All

proceedings and resolution passed at each meeting

are properly minuted and filed by the Secretary.

The Directors are also regularly updated and advised

on new regulations, guidelines or directives issued

by the relevant regulatory authorities, if any.

The Board also avails itself of independent

professional advice as and when necessary in

furtherance of their duties, at the Company’s

expense. Additionally, the Board invites the senior

management to brief the Board from time to time on

matters being deliberated, as they are able to help

bring insight into these matters.

(iv) Appointments to the Board

The Board believes that the current composition

of the Board comprises the required mix of skills

and core competencies required for the Board to

discharge its duties effectively.

The Board delegated to the Nomination and

Remuneration Committee the responsibility of

recommending the appointment of new Directors.

New appointees will be considered and evaluated

by the Board and the Secretary will ensure that all

appointments are properly made, and that legal and

regulatory obligations are met.

The Nomination and Remuneration Committee also

annually reviews the effectiveness of the Board as

a whole, its committees and the contribution of

each individual Director, as well as the President.

The Nomination and Remuneration Committee will

ensure that all assessments and evaluations carried

out are properly documented and filed.

(v) Re-election of Directors

In accordance with the Company’s Articles of

Association, one-third (1/3) of the Directors, shall

retire from office, at least once in three (3) years. The

retiring Directors can offer themselves for re-election.

The Directors who are appointed during the financial

year are subject to re-election by shareholders at

the next Annual General Meeting held following their

appointments. Directors over seventy (70) years

of age are required to submit themselves for re-

appointment annually in accordance with section

129(6) of the Companies Act, 1965.

For the forthcoming Annual General Meeting,

Selvarajoo a/l Manikam, Norazura binti Tadzim

and Ruhaizah binti Mohamed Rashid will retire by

rotation pursuant to Article 104 and being eligible,

offer them for re-election.

(vi) Meetings

The Board meets regularly on a monthly basis or as

and when required. There were fifteen (15) meetings

held during the financial year and the attendance

record is as follows:-

Meetings Attended

Dato’ Sri Ir. Mohd Zin bin Mohamed

14/15

Datuk Elias bin Kadir * 10/10

Pn. Norazura binti Tadzim 13/15


12/15

En. Selvarajoo a/l Manikam 13/15

Dato’ Sri Zakaria bin Hj. Bahari 11/15

Datuk Kamaruzaman bin Hj. Mohd Noor

15/15

Tn. Hj. Rosli bin Abdullah 14/15

En. Harun bin Hj. Johari 11/15

Sr. Ahmad Zainuddin bin Hj. Jamaluddin **

9/10

Pn. Jamela binti Mohd Syed *** 0/2

Dr. Aminuddin bin Adnan **** 5/5

Note:-* Appointed on 2 May 2012** Appointed on 27 April 2012*** Resigned on 24 February 2012**** Resigned on 30 April 2012

(vii) Directors’ Training

The Directors are encouraged to attend any relevant

training program to further enhance their knowledge

to enable them to discharge their responsibilities

more effectively.


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B. DIRECTORS’ REMUNERATION

The Minister of Finance Incorporated as the Special

Shareholder of the Company determines the

remuneration of the Managing Director/President

and the Non-Executive Directors.

The details of the remuneration of the Directors of

the Company for the financial year under review are

set out in this Annual Report on pages 95 - 96.

The Board of Directors is of the view that the

disclosure of remuneration by appropriate

components and bands is sufficient to meet the

objective of the Code.

C. BOARD COMMITTEES

The Board of Directors delegates certain of its

governance responsibilities to the following Board

Committees, which operate within clearly defined

terms of reference, to assist the Board in discharging

its responsibilities:-

(i) Audit Committee

The Audit Committee Report for the financial year

under review is set out in this Annual Report on

pages 22 - 26.

(ii) Board Procurement Committee (“BPC”)

Formerly known as Tender Committee ‘A’ (“TCA”),

the committee is now called the BPC with effect

from 11 September 2012.

(a) Composition

The BPC comprises at least three (3)

members, made up of both independent

non-executive Directors and non-

independent non-executive Directors.

The Board shall appoint the Chairman and

members of the BPC.

(b) Responsibilities

The responsibilities of the BPC shall be as

follows:-

• recommend to the Board on award of

direct negotiation above RM500,000 up

to RM300 million;


open tender above RM100 million up to

RM300 million;


restricted tender above RM50 million up

to RM300 million;

• approve emergency purchase above

RM5 million;

• approve open tender procurement

exercises for value of RM20 million to

RM100 million;

• approve restricted tender procurement

exercises for value of RM5 million to

RM50 million;

• approve open tender variation orders

(“VO”) up to 10% or RM2 million of

the original contract sum above RM20

million to RM100 million whichever is

lower;

• approverestrictedtenderVOupto10%

or RM2 million of the original contract

sum above RM5 million to RM50 million

whichever is lower; and

• approve extension of time for supply,

works and services within 4 - 6 month.

(c) Meetings

There were nine (9) meetings held during the

financial year and the attendance record is

as follows:-

Meetings Attended

Datuk Kamaruzaman bin Hj. Mohd Noor (Chairman)

9/9


Sr. Ahmad Zainuddin bin Hj. Jamaluddin *

4/4

Note:-

* Appointed on 11 September 2012

(iii) Nomination and Remuneration Committee

(“NRC”)

(a) Composition

The NRC shall comprise of at least three (3)

Directors, exclusively non- executive and the

majority of which are independent.

(b) Responsibilities

The responsibilities of the NRC shall be as

follows:-

• reviewindividualremunerationpackages

for all Directors including the Chairman

and recommend to the Board on; (i) all

elements of the remuneration packages

including the terms of employment,

reward structure and fringe benefits;

and (ii) annual increments and ex-gratia

payments for Executive Directors;

• ensure that ExecutiveDirectors abstain

from the deliberations and voting on

decisions in respect of their remuneration

package;

• endorse remuneration packages for

senior management (all staff at the

Heads of Department level and above)

and make recommendation to the Board

to do so similarly;

• recommendtotheBoardonappropriate

board size and ensure that any director

term limits within the Articles of

Association are adhered to, including:

(i) at every Annual General Meeting, 1/3

of the Board retires; or (ii) every Director

retires at least once in 3 years;

• reviewannuallytheBoard’smixofskills

and experiences to ensure it is in line

with the Company’s requirements;

• coordinates evaluation process of

Directors and the collective Board

including the Board of the subsidiary

companies;

• proactively maintains a pipeline of

potential appointees to the Board and/or

committees;

• oversee the development of the

Company’s future leaders and

human capital and make appropriate

recommendations to the Board;


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• review any proposed change to the

organisation structure of the Company

(main chart) and make appropriate


• review any proposed change in

compensation structure or personnel

policies including terms and conditions

of employment for Executives and

Non-Executives and make appropriate


• reviewanyproposalfortherecruitment,

promotion, salary increment and

resignation (optional retirement) of

the President and all Senior Vice

Presidents and make the appropriate


• reviewanyproposalforretrenchmentor

voluntary separation exercise and make

the appropriate recommendations to the

Board;

• reviewanyproposal for thepaymentof

bonus or salary review and make the

appropriate recommendations to the

Board; and

• review any proposal for an increase in

the total number of approved positions

within the Company and make the

appropriate recommendations to the

Board.

(c) Authority

The NRC shall have the authority to do the

following:-

• access to the full company records,

properties and personnel;

• obtain independent professional advice

and expertise necessary to perform its

duties; and

• access to advice and services of the

Company Secretary.

(d) Meetings

There were five (5) meetings held during the

financial year and the attendance record is

as follows:-

Meetings Attended

Dato’ Sri Zakaria bin Hj. Bahari (Chairman)

5/5


5/5


(iv) Risk Management Committee

The Risk Management Committee Report for the

financial year under review is set out in this Annual

Report on pages 19 - 20.

E. SHAREHOLDERS

(i) Dialogue between Companies and

Shareholders

The Group recognizes the importance of keeping

shareholders informed of the Group’s business

and corporate developments. Such information

is disseminated via the Group’s annual report and

quarterly performance reports. The Group also

maintains a website at www.ktmb.com.my to

enable easy and convenient access to up-to date

information relating to the Group.

(ii) Annual General Meeting (“AGM”)

Shareholders are notified of the meeting twenty one

(21) days before the meeting.

F. ACCOUNTABILITY AND AUDIT

(i) Financial Reporting

It is the Board’s responsibility to ensure that the

financial statements are prepared in accordance

with the Companies Act 1965 and the applicable

approved accounting standards in Malaysia so

as to present a balanced and fair assessment of

the Group’s financial position and prospects. The

Directors are also responsible for keeping proper

accounting records, safeguarding the assets of the

Group and taking reasonable steps to prevent and

enable detection of fraud and other irregularities.

In preparing the financial statements, the Directors

have taken the necessary steps and actions as

follows:-

(a) selecting suitable accounting policies and

applying them consistently;

(b) stating whether applicable accounting

standards have been followed;

(c) making judgements and estimates that are

reasonable and prudent; and

(d) preparing the financial statements on a going

concern basis, having made reasonable

enquiries and assessments on the resources

of the Group on its ability to continue further

business in the foreseeable future.

(ii) Internal Control

The Board has the overall responsibility for

maintaining a system of internal controls, which

provides reasonable assessments of effective

and efficient operations, internal controls and

compliance with laws and regulations.

(iii) Relationship with Auditors

The Board has established a transparent

relationship with the external auditors through the

Audit Committee, which has been accorded the

authority to communicate directly with the external

auditors. The external auditors in turn are able to

highlight matters requiring the attention of the

Board effectively to the Audit Committee in terms

of compliance with the accounting standards and

other related regulatory requirements.

G. DIRECTORS’ RESPONSIBILITY STATEMENT IN

RESPECT OF FINANCIAL STATEMENTS

The Directors are required to prepare the financial

statements for each financial year that give a true and fair

view of the state of affairs of the Group and of the Company

at the end of the financial year, and of the results and cash

flow of the Group and of the Company for the financial year

then ended.

The Directors consider that, in preparing the financial

statements for the financial year ended 31 December

2012, the Group has used appropriate accounting policies

and applied them consistently and made judgments and

estimates that are reasonable and prudent. The Directors

also consider that all applicable approved accounting

standards have been followed and confirm that the financial

statements have been prepared on a going concern basis.

The Directors are responsible for ensuring that the Group

and the Company keep accounting records that disclose


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reasonable accuracy at any time of the financial position

of the Group and of the Company and which enable

them to ensure that the financial statements comply with

the provisions of the Companies Act 1965 and Financial

Reporting Standards in Malaysia.


The Malaysian Code on Corporate Governance issued in

March 2012 sets out as a principle that the Board of a company

should establish a sound risk management framework and

internal control system.

The Board is pleased to present the Statement on Internal

Control, which outlines the nature and scope of internal controls

of the Company during the financial year under review, and up

to the date of this Annual Report.

Board Responsibility

The Board is responsible for overseeing the adequacy,

integrity and effectiveness of risk management and the internal

control system that are essential facets of effective corporate

governance in order to safeguard shareholders’ investments

and the Company’s assets. However, such systems are

designed to manage rather than eliminate the risk failure to

achieve business objectives. In addition, it should be noted

that the systems could only provide reasonable assurance

against material misstatement or loss or the occurrence of

unforeseeable circumstances.

The Board has delegated its role to committees at the Board

level that have primary risk management and internal control

oversight responsibilities:

• Board Audit Committee – with oversight over the

effectiveness of the governance, risk management and

internal control processes.

• BoardRiskManagementCommittee –with oversight

over risk management.

Management assists the Board in identifying, evaluating,

monitoring and reporting of risks and internal control, taking

appropriate and timely corrective actions as needed, and

providing assurance to the Board that the Company’s

risk management and internal control system is operating

adequately and effectively, in all material aspects.

Risk Management

In order to achieve a sound system of risk management and

internal control, the Board and Management are responsible

to ensure the risk management and control framework is

embedded into the culture, processes and structures of the

Company. The framework is responsive to changes in the

business environment and clearly communicated to all levels.

The Board strongly believes that prudent risk management

is vital for business sustainability and the enhancement of

shareholder’s value.

Internal Control

In view of the importance of maintaining a sound internal

control system, the Board has extended the responsibilities

of determining the quality, adequacy and effectiveness of

the Company’s control environment to the Audit Committee.

The Internal Audit Department reports directly to the Audit

Committee. The Head of Internal Audit Department has

the relevant qualifications and is responsible for providing

assurance to the Board that the internal controls are operating

effectively. Internal auditors carry out their functions according

to the standards set by recognised professional bodies.

Internal auditors also perform regular reviews and appraisals

of the effectiveness of the governance, risk management and

internal controls processes within the Group. Major findings are

then reported upwards to the Board, where appropriate, for

remedial measures and corrective actions to be taken.

Other Key Elements of the Control Process

The Board is committed to maintain a strong internal control

structure for the proper conduct of the Group’s business

activity. The key elements include:

• An organisational structure with defined lines of

responsibility and delegation of authority together with

a hierarchical structure of reporting and accountability;


A. Introduction

The Board believes that an effective risk management

framework is essential to the Company in its quest

to achieve its corporate objectives, especially on the

enhancement of shareholders’ value in today’s rapidly

changing market environment.

With this in mind, the Board has established a dedicated

Board Committee known as the Risk Management

Committee (“RMC”) to develop and oversee the

implementation of an enterprise-wide risk management

framework in the Company.

B. Risk Management Committee (“RMC”)

The Terms of Reference of the RMC are as set out below:-

(i) Purpose

The RMC shall assist the Board in:

(a) assessing and providing oversight to

management relating to the identification

and evaluation of major risks involved

in the Company’s business operations,

technology and network operations,

finance and accounting, legal compliance,

environmental impact, personnel policy,

treasury, capital budgeting or any other

areas that could create significant risks

to the Company’s results, reputation or

capacity to serve customers; and

(b) reviewing and evaluating the Company’s

actions to mitigate and manage risks.

In discharging its role, the RMC is empowered to investigate

any matter brought to its attention with access to all books,

records, facilities and personnel of the Company. The RMC

has the power to retain outside counsel, risk management

consultants or other experts and will receive adequate

funding from the Company to engage such advisors. The

Committee is also empowered to delegate its authorities,

functions and tasks in carrying out risk management

activities.

(ii) Committee Membership

The RMC shall consist of three (3) or more members,

each of whom is determined by the Board.

Each member of the RMC should have experience

in the identification, evaluation or control of risk.

At least one (1) member of the RMC should

have significant railway operating or technology

experience. Additionally, as a qualification for

continued membership of the RMC, members of

the RMC are encouraged to participate in related

trainings as provided or approved by the Board.

The Board shall appoint the Chairman of the RMC.

The Chairman shall be responsible for scheduling

and presiding over RMC meetings, preparing

agendas and determining the information needs of

the RMC. The Chairman should expect to devote

significant time to the work of the RMC.

(iii) Committee Meetings

The RMC shall meet on a regularly scheduled basis

at least four (4) times per year, or more frequently as

circumstances dictate.

The RMC may request that any officer or other

employee of the Company or the Company’s outside

counsel or other advisor attend any meeting of the

RMC or meet with any members of, or consultants

to, the RMC.

There were three (3) meetings held during the

Statement On Risk Management 18

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• Internal policies and procedures that are regularly

updated to reflect changing risks or resolve operational

deficiencies including clearly defined limits of authority;

• Adetailedbudgetprocesswhichrequiresallbusiness

units to prepare budget and business plan on an annual

basis;

• Review of key business variable and the monitoring

of the achievement of the Group’s performance on a

quarterly basis by the Board and the Audit Committee;

• Periodicexaminationofbusinessprocessandsystem

internal control by the Internal Audit Department which,

regularly submits its reports to the Audit Committee;

• Adequateinsuranceandphysicalsafeguardsonmajor

assets are in place to ensure assets of the Group are

sufficiently covered;

• A code of ethics for all employeeswhich defines the

ethical standards and conduct at work; and

• Maintenanceofproperaccountingrecords,consistent

application of appropriate accounting policies

supported by reasonable and prudent judgments and

estimates, and preparation of the financial statements

in accordance with the provisions of the Companies

Act 1965, applicable approved accounting standards in

Malaysia and other regulatory provisions.

Conclusion

For the financial year under review, the Board is satisfied that

the systems of risk management and internal control were

effective and have not resulted in any material loss, contingency

or uncertainty.

The Group internal control system does not apply to its

associated company and joint ventures, as the Board does

not have any direct control over their operations. Nonetheless,

the Company’s interests are served through the review of

management accounts received.

The Board and Management recognise that the development

of internal control system is an ongoing process and maintains

an ongoing commitment to strengthen the existing internal

control environment of the Group.


financial year and the attendance record is as

follows:-

Meetings Attended

Datuk Kamaruzaman bin Hj. Mohd Noor (Chairman)

3/3


2/3

Dr. Aminuddin bin Adnan * 1/1

En. Afzar bin Zakariya 2/3

Note:-

* Resigned on 30 April 2012

(iv) Key Responsibilities

The following responsibilities are set forth as a guide

with the understanding that the RMC may diverge

as appropriate given the circumstances. The RMC

is authorised to carry out these and such other

responsibilities assigned by the Board from time to

time and take any actions reasonably related to the

mandate of the RMC. The RMC may delegate any

of its responsibilities assigned by the Board.

To fulfil its purpose, the Committee shall:

(a) review and evaluate management’s

identification of all major risks to the business

and their relative weight;

(b) assess the adequacy of management’s

risk assessment, its plans for risk control or

mitigation and disclosure;

(c) review the Company’s disclosure of risks;

(d) review, assess and discuss with the Board:

(i) any significant risks or exposures; (ii) the

steps management has taken to minimise

such risks or exposures; (iii) and Company’s

underlying policies with respect to the risk

assessment and risk management;

(e) consult from time to time with the Board

on issues relating to responsibilities of the

Committee;

(f) conduct an annual self-evaluation of the

performance of the RMC, including its

effectiveness and compliance with its Terms

of Reference;

(g) review and re-assess the adequacy of its

Terms of Reference and amend as the RMC

deems appropriate; and

(h) report regularly to the Board on RMC

findings, recommendations and any other

matters the RMC deems appropriate or at

the Board’s requests and maintain minutes

or other records of RMC meetings and

activities.

Statement On Risk Management

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AuditCommitteeReport

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The Board of Directors is pleased to present the Audit

Committee (AC) Report for the financial period ended 31

December 2012.

MEMBERSHIP

The AC shall be appointed by the Board of Directors and shall

consist of five (5) Non-Executive Directors, a majority of whom

is Independent. The Chairman of the Committee shall be an

Independent Non-Executive Director.

The Board shall review the term of office of the members of the

Committee once every five (5) years.

COMPOSITION AND ATTENDANCE

The AC comprises the directors listed below:

Directors Designation

Tn. Hj. Rosli bin Abdullah Chairman

Pn. Norazura binti Tadzim Member

En. Selvarajoo a/l Manikam Member

Dato’ Sri Zakaria bin Hj. Bahari Member

Pn. Hajjah Jamela binti Mohd Syed (Resigned on 25 February 2012)

Member

Sr. Ahmad Zainuddin bin Hj. Jamaluddin (Appointed on 27 April 2012)

Member

During the financial year 2012, AC held ten (10) meetings.

i) 19Jan2012–57thACMeeting

ii) 17Feb2012–58thACMeeting

iii) 17April2012–59thACMeeting

iv) 17May2012–60thACMeeting

v) 08June2012–SpecialACMeeting

vi) 12Jul2012–61stACMeeting

vii) 30Aug2012–62ndACMeeting

viii)21Sept2012–SpecialACMeeting


ix) 29Nov2012–63rdACMeeting

x) 18Dec2012–SpecialACMeeting

Details of the members’ attendance are as follows:

Directors

Number of

meetings

attended



En. Selvarajoo a/l Manikam 8/10

Dato’ Sri Zakaria bin Hj. Bahari 8/10

Sr. Ahmad Zainuddin bin Hj. Jamaluddin 7/7

Pn. Hajjah Jamela binti Mohd Syed 1/2

TERMS OF REFERENCE OF THE AUDIT COMMITTEE

1 Authority

1.1 The Committee shall have the authority to

investigate any activity of the Company and its

subsidiaries and to request for any information it

considers as relevant to its activities.

1.2 All employees are directed to co-operate with

the Committee and to be present at its meetings,

if required, to assist it in its work by providing all

necessary information and explanation.

1.3 The Committee shall have direct access to the

Company’s External and Internal Auditors and

provide a link between these Auditors and the

Board.

1.4 It is also authorised to obtain such independent

professional advice it considers necessary to

investigate any activity within its Terms of Reference.


1.5 A circular resolution in writing signed by a majority of

the members for the time being or their alternates,

not being less than three (3) members shall be

as valid and effectual as if it had been passed

by a meeting of the Committee duly called and

constituted. Any such resolution may consist of

several documents in like form each signed by one

(1) or more members.

2 Scopes and Function

In its role to ensure proper management of the business

operations in compliance with statutory obligations,

policies, procedures, regulations and prudent business

practices, the Committee is responsible to the Board of

Directors for the following:

2.1 To consider and recommend to the Board, the

appointment of the External Auditor, the audit fee

and any question of resignation or dismissal.

2.2 To review with the External Auditor, before the audit

commences, the nature and scope of the audit and

their audit plan.

2.3 To review and report to the Board the quarterly

and year-end financial statements of the Company,

focusing on:

a) Any changes in accounting policies and

practices;

b) Significant adjustments arising from the audit;

c) The going concern assumption; and

d) Compliance with accounting standards and

other legal requirements.

2.4 To discuss problems and reservations arising

from the interim and final audits and any matter

the External Auditor may wish to discuss, in the

absence of the Management, if necessary.

2.5 To review the External Auditor’s management letter

and Management’s response.

2.6 To review in respect of the Internal Audit Department:

a) The adequacy of the scope, functions and

resources of the internal audit function and that

it has the necessary authority to carry out its

work;

b) The internal audit programmed and results of

the internal audit process and where necessary

to ensure that the appropriate action is taken

on the recommendations of the internal audit

function;

c) Any appraisal or assessment of the performance

of members of the Internal Audit and to review

the annual Performance Management System

of Internal Audit staff;

d) Appraise and recommend any training/course,

be it internal or external, which in its opinion

beneficial for the enhancement of members of

the Internal Audit;

e) Consider the adequacy of Internal Audit

function’s structure and organisation, as well as

appraise and recommend recruitment, transfers,

appointments and promotions of members of

the Internal Audit which is to be subsequently

endorsed by the Nomination and Remuneration

Committee;

f) Appraise and recommend the annual salary

increments of members of the Internal Audit in

accordance with the Company policy; and

g) Be informed of resignations of Internal Audit

staff members and provide the resigning staff

member an opportunity to submit his reasons

for resigning.

2.7 To review and report to the Board on the adequacy

and the integrity of the Company’s internal control

systems and management information systems,

including systems for compliance with applicable

laws, rules, directives and guidelines.

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2.8 To propose to the Board the best practices on

disclosure in financial results and annual reports of

the Company in line with the principles set out in the

Malaysian Code of Corporate Governance, other

applicable laws, rules, directives and guidelines.

2.9 To propose that Management has in place an

adequate system of risk management.

2.10 To consider any related party transactions that may

arise within the Company or its subsidiaries.

2.11 To consider the major findings of internal

investigations and Management’s response.

2.12 To consider and examine other matters as defined

by the Board.

3 Meetings

3.1 Meetings shall be held at least four (4) times a year,

although additional meetings may be called at the

Chairman’s discretion. Notice of Meetings shall be

circulated to the members one (1) week in advance.

3.2 The quorum necessary for the transaction of

business of the Audit Committee Meeting may be

fixed by the members and unless so shall be two (2).

3.3 The Head of Finance, the Head of Internal Audit and

a representative of the External Auditor may attend

meetings by invitation.

3.4 Questions arising at any meeting shall be decided

by a majority of votes, each member having one

vote and in case of equality of votes the Chairman

shall have a second or casting vote. Save that where

two members form a quorum, the Chairman of a

meeting at which only such a quorum is present,

or that which only two (2) members are competent

to vote on the question of issue, shall not have a

casting vote.

3.5 The External Auditor may request a meeting if

they consider necessary. Upon the request of the

auditor, the Chairman of the Audit Committee shall

convene a meeting of the Committee to consider

any matter the auditor believes should be brought

to the attention of the Directors.

3.6 The Company Secretary shall be the Secretary of

the Committee.

INTERNAL AUDIT CHARTER

Purpose

To establish the scope and activities of the Internal Audit

function within the organisation consistent with The Institute

of Internal Auditor’s Standards for the Professional Practice of

Internal Auditing.

Nature

Internal auditing is an independent, objective assurance and

consulting activity designed to add value and improve an

organization’s operations. It helps an organization accomplish

its objectives by bringing a systematic, disciplined approach to

evaluate and improve the effectiveness of risk management,

control, and governance processes.

Objective

The objective of Internal Audit is to assist the Board, Audit

Committee and Management in the effective discharge of

their responsibilities in establishing cost-effective controls,

assessing risks, recommending measures to mitigate those

risks and assuring proper governance process. In this regard,

Internal Auditors furnish Management with independent

analysis, appraisals, counsel and information on the activities

they review.

The Internal Audit activity should monitor and evaluate the

effectiveness of the organisation’s risk management, control

and governance systems encompassing the:

a) Reliability and integrity of financial and operational

information;

b) Effectiveness and efficiency of operations;

c) Safeguarding of assets; and

d) Compliance with laws, regulations and contracts.

Responsibility and Authority

1. The responsibilities of Internal Audit within the organisation

are established by this Charter in accordance with

prescribed Auditing Standards.

2. Internal Audit has the authority to access records,

personnel and physical properties at any location relevant

to the performance of engagements. It is expected

that departments or activities under review will provide

every possible assistance to facilitate the progress of the

engagement.

3. The Head of Internal Audit has direct communication with

the Board, Audit Committee, or other appropriate governing

authority. The Head of Internal Audit will submit to the Audit

Committee an annual engagement work schedule including

of staffing plan and financial budget for approval. The Audit

Committee will receive all final audit reports. Each year a

report of Internal Audit activities will be presented to the

Audit Committee and the Board for their information.

4. In order to ensure adequate audit coverage and to minimise

duplicate efforts, all audit effort will be co-ordinated. To this

end, the Head of Internal Audit will co-ordinate its audit

work with that of the External Auditors.

5. In accordance with Auditing Standards, Internal Audit

has no direct responsibility for or authority over any of the

activities reviewed. An Internal Audit review and appraisal,

therefore, does not in any way relieve managers in the

organisation from their regular responsibilities assigned to

them.

Independence

Independence is essential to the effectiveness of Internal Audit

function. This independence is achieved through organisational

status and objectivity.

a) Organisational Status

The Head of Internal Audit reports functionally to

the Audit Committee, or Board of Directors, and

administratively to the President of the Company. This

reporting relationship is to promote independence and

to ensure broad audit coverage, adequate consideration

of engagement communications and appropriate action

on engagement recommendations.

b) Individual Objectivity

The Internal Auditor’s objectivity is not adversely

affected when the auditor recommends standards of

control for systems or reviews procedures before they

are implemented. The auditor’s objectivity is considered

to be impaired if the auditor designs, installs, drafts

procedures for, or operates such systems.

Code of Ethics – Principles

Internal auditors are applying and uphold the following

principles:

1. Integrity

The integrity of internal auditors establishes trust and thus

provides the basis for reliance on their judgment.

2. Objectivity

Internal auditors exhibit the highest level of professional

objectivity in gathering, evaluating, and communicating

information about the activity or process being examined.


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Internal auditors make a balanced assessment of all the

relevant circumstances and are not unduly influenced by

their own interests or by others in forming judgments.

3. Confidentiality

Internal auditors respect the value and ownership of

information they receive and do not disclose information

without appropriate authority unless there is a legal or

professional obligation to do so.

4. Competency

Internal auditors apply the knowledge, skills, and experience

needed in the performance of internal audit services.

Rules of Conduct

1. Integrity

Internal auditors:

1.1 Perform their work with honesty, diligence, and

responsibility.

1.2 Observe the law and make disclosures expected by

the law and the profession.

1.3 Not knowingly be a party to any illegal activity,

or engage in acts that are discreditable to the

profession of internal auditing or to the organization.

1.4 Respect and contribute to the legitimate and ethical

objectives of the organization.

2. Objectivity

Internal auditors:

2.1 Not participate in any activity or relationship that

may impair or be presumed to impair their unbiased

assessment. This participation includes those

activities or relationships that may be in conflict with

the interests of the organization.

2.2 Not accept anything that may impair or be presumed

to impair their professional judgment.

2.3 Disclose all material facts known to them that, if

not disclosed, may distort the reporting of activities

under review.

3. Confidentiality

Internal auditors:

3.1 Prudent in the use and protection of information

acquired in the course of their duties.

3.2 Not use information for any personal gain or in

any manner that would be contrary to the law or

detrimental to the legitimate and ethical objectives

of the organization.

4. Competency

Internal auditors:

4.1 Engage only in those services for which they have

the necessary knowledge, skills, and experience.

4.2 Perform internal audit services in accordance with

the International Standards for the Professional

Practice of Internal Auditing (Standards).

4.3 Continually improve their proficiency and the

effectiveness and quality of their services.



CHAIRMAN OF THE BOARD

On behalf of the Board of Directors and the Management

of KTMB, it gives me great pleasure to present the Annual

Report and Audited Financial Statement for the financial

year ended 31 December 2012.

OVERVIEW

Financial Results

There had been mixed growth and declines for the period

under review.

Total revenue from the core businesses increased slightly

from RM352.6 million in 2011 to RM361.0 million in 2012.

There was a business improvement in the ETS services

due to increase in the number of passengers.

KTMBlossesincreasedfromRM119.9milliontoRM283.9

million, despite management efforts to increase revenue,

reduce expenditure and improve efficiency.

At the Group level, KTMB net losses had also increased

from RM103.4 million to RM240.1 million mainly due

to higher operating cost and loss of business in the

Commuter and Intercity segment.

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CORE BUSINESSES

The rail operating business is an essential and integral

component of the service industry, which has great potential for

further growth. KTMB has always been the nations established

player in the land transportation sector, moving passengers and

goods throughout the railway network in Peninsular Malaysia.

Our rail network strategically links the industrial growth centres

in the hinterland to the sea ports such as Pelabuhan Pulau

Pinang, Pelabuhan Klang, Pelabuhan Pasir Gudang and

Pelabuhan Tanjung Pelepas. It also serves as the backbone

for Landbridge services that connect cross-border movements

of cargo between Malaysia and Thailand. Complementing the

rapid development of other modes of transportation, such as

road, sea and air, KTMB continues to focus on providing safe,

efficient and reliable rail services for passengers and goods.

In this connection, during the year, KTMB has proactively

pursued strategies in the following core business areas:

KTM Komuter

The year 2012 saw the transformation of KTM Komuter through

the provision of better quality of service, with the acceptance of

38electrictrainsfromChinabetterknownasMyKomuterSix

Car Set (SCS).

Through the initiative under the National Key Result Areas

(NKRA) by the Government, a total of RM1.9 billion was

allocatedtopurchase38newSCSthatwillhelp improvethe

quality of the commuter services.

MyKomuter can accommodate more than 1,000 passengers

at any one time and has facilities such as intercoms, LCD

information display, Dynamic Route Map, Priority Seating Zone,

two Ladies’ Coaches, CCTV and Wheel Chair area.

KTMB is optimistic that with MyKomuter, passenger’s waiting

time will be shortened from 30 minutes to 15 minutes and

will double the daily commuter service users from 95,000 to

200,000 a day in the near future.

KTM Intercity

For the year ended 2012, the ETS had shown greater

improvement overall since the service was introduced in August

2010. The 2012 revenue had shown an increase of 33.5% from

RM23.9 million to RM31.9 million. The number of passengers

also increased to 33.3% from 0.9 million in 2011 to 1.2 million

in 2012. KTM Intercity is expecting an increase in revenue and

ridership should the level of service especially in the area of

punctuality can be improved.

KTM IntercitycontributedRM81.6million toKTMB’s revenue

in2012compared toRM91.8million in2011whichshowed

a decrease of 11.1%. The number of passengers for the year

2012 recorded a ridership of 3.1 million compared to 3.7 million

in 2011 which is a 16.2% reduction. The decrease in revenue

and ridership was influenced by a series of incidents throughout

the year as well as the effect of the closure of Tanjung Pagar

station in Singapore.

Cargo Services

Revenue from Cargo Services continued to show growth of

1.8%toRM127.4millioncomparedtoRM125.2millioninthe

previous year.

Containerized and cement traffic remained the Cargo Services

major commodity. Containerized traffic brought in RM46.8

million while cement traffic contributed RM44.5 million.

Most of the containerized traffic revenue originated from the

transportation of the South Thai Cargo (STC) from Padang

Besar to North Butterworth Container Terminal.

Traditional commodity such as sugar recorded RM10.7 million

while revenue from the fertilizer train contributed RM3.9 million.

To cover the losses of the Singapore service sector, KTMB had

developed a new cargo terminal at Gelang Patah station. The

terminal was opened for operations in the first quarter of 2012

andcontributedRM3.8millionintermsofrevenueforKTMB.

KTMB continues to provide customers with a viable and

competitive cargo services in the most cost-effective manner.

Capitalising on its established rail infrastructure, KTMB planned

to capture significant market share of the cargo and haulage

businesses, especially in the transportation of commodities

such as containerised cargo, cement and sugar.


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THE WAY FORWARD

KTMB will continue its efforts to become a viable business

entity at the operational level and increase its efficiency.

Towards this end, KTMB will continue to manage its core

businesses effectively, improve cost-effectiveness and monitor

performance in line with our “Ontime Everytime” tagline.

Prospect and Challenges

We are confident that all the three Strategic Business Units

(SBU) have the potential to perform well in 2013 with increased

volume and improved revenue. The Government’s focus on

encouraging the public to utilise public transport would also

escalate the demand for rail services in the coming years.

The challenge for KTMB is to expeditiously prepare itself in

terms of hardware, software and personnel to cater for the

growing expectations and increasing demands. In this context,

KTMB would continue to accord priority to the development of

human capital so as to ensure the company is a reliable and

cost effective rail transport operator.

ACKNOWLEDGEMENT

On behalf of the Board of Directors, we would like to express

our appreciation to the Management and staff, for their services

rendered during the year and also to thank all of KTMB’s valued

customers for their continued patronage and support.

We would also like to record our appreciation to the

Railwaymen’s Union of Malaya (RUM) and Senior Officers

Association (SOA) for their continued support and cooperation.

The year 2013 will mark a new chapter in the history of KTMB.

It is hoped that the staff at all levels will continue to give their full

support and dedication to the company in meeting the future

challenges ahead.

Lastly, we would like to take this opportunity to express our

gratitude to the Ministry of Finance, the Land Public Transport

Commission, the Ministry of Transport and the Railway Asset

Corporation for their guidance, invaluable assistance and

support in the past year.


Chairman

Keretapi Tanah Melayu Berhad


ReviewofOperations

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Review of Operations

The year 2012 had been a very promising and progressive

period for KTMB. KTMB contributed in a big way to the national

transportation agenda.

In the area of rail transportation, KTMB has undertaken many

mega railway projects with the assistance of the Government

that will bring long term development both in terms of economic

growth as well as significant improvement in rail transportation

both in passengers and cargo services.

In terms of passenger conveyance, KTMB has over the years

through Government funding introduced new services i.e.

Electric Train Service (ETS) and Six Car Sets (SCS) Commuter

services to improve the frequency of trains to fulfill the demand

from the general public.

ETS with 5 sets of 6-car coaches was introduced to provide

frequent services between Ipoh and Kuala Lumpur. When it

started in 2010 it was only providing 10 services a day with

an average of 1,000 passengers daily, but over the last three

(3) years the passenger load has increased tremendously and

today we are transporting approximately 4,000 passengers

between Ipoh- Kuala Lumpur and vice versa. The ETS services

has also been increased to 18 services daily from Monday

to Thursday and 22 services from Friday to Sunday, which

resulted in 33.3% increase in ridership from 0.9 million in 2011

to 1.2 million passengers in 2012. With the completion of the

electrified double track in certain areas by 2013 and 2014,

the coverage of ETS will be all the way to Gemas and Padang

Besar. KTMB is in the process of buying new ETS sets to

increase the frequency and reach of its services to more areas

by 2016.

Another major milestone in 2012 is the introduction of KTMB’s

SCS to fulfill the ever growing demand for efficient public

transport in theKlangValley.KTMBhas introduced38 units

of SCS to service the Klang Valley transport needs. With the

introduction of the new services KTMB is able to provide

efficient and comfortable commuter services to the Klang Valley

passengers. It also reduced the waiting time from 30 minutes

to 15 minutes in 2012 during the peak hours. Punctuality

of commuter services also increased in 2012. KTMB also

introduced additional services i.e. 24 hours services during

special occasions like New Year, Chinese New Year and

Thaipusam and also additional services during school holidays

and Hari Raya celebrations.

Cargo business has also significantly contributed to the revenue

ofKTMBwithanincreaseof1.8%initsrevenuefromRM125.2

million in 2011 to RM127.4 million in 2012.

KTMB also took another major step in safety and security

by placing our own auxiliary police personnel on commuter

services to ensure safety of the passenger. To ensure safer

and uninterrupted travel on train, KTMB also continued its

awareness program to educate the people living along the

track.

KTMB also stressed the importance of obtaining international

certification in work processes, resulting in the Commuter

DepotinSentulachievingISO9001:2008certificationin2012.

One of the major factors in KTMB’s success is the well trained

and dedicated work force totaling 5,490 i.e. 531 executive

and 4,959 non-executive. Towards maintaining this excellent

record, KTMB embarked on a wider scale of training program in

year 2012 in line with the Government Transformation Program.

In the year 2012, a total of 3,334 employees attended

training in various disciplines such as train operations, rolling

stock maintenance, overhead line maintenance, track safety,

signaling & communication systems and maintenance,

occupational safety and health at workplace, computer system

applications, customer service, leadership, team building and

other management aspects.

KTMB had earlier initiated the development of the National

Occupational Skills Standards (NOSS) in 11 different categories

together with the other rail operators in Malaysia. All NOSS were

approved and endorsed by the Skills Development Department

under the Ministry of Human Resources. Following this, KTMB

had moved on and initiated the implementation of the National

Dual Training System/Sistem Latihan Dual Nasional (SLDN)

with the aim of certifying the competency of its skilled workers.

A total of 1,250 employees are currently undergoing the SLDN

program which is expected to be completed and certified in

the year 2014. With the availability of certified skilled workers

at various levels, the next milestone for KTMB is to open the

program to other local and international rail operators.

KTMB is also collaborating with the Malaysian Industry-

Government Group for High Technology (MiGHT) to assist

Malaysia in reducing the shortage of skilled workers within the

rail industries and also becoming the Rail Center of Excellence

in the South East Asia region.

KTMB has intensified its marketing through the mainstream

media and has used the media effectively by disseminating

its various offering to the general public. One of the major

promotions in 2012 was the 50% discount for Malaysian

citizens who are earning below RM 3,000 which started on

Review of Operation

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1 November 2012 and will end on 31 October 2013. The

response has been tremendous with 140,000 subscribing to

the Kad Komuter 1Malaysia so far.

KTM Komuter also offered the following promotions from

March to September 2012 i.e. distributed 100,000 vouchers

worth RM2 to the public to be used on commuter travel, 50%

discounted fare on weekly ticket, as well as free rides for

students, disabled persons and senior citizens. KTMB also

embarked on distributing free newspapers to the commuters

in the Klang Valley area. KTMB has also conducted many

familiarization trips for media especially on the new SCS

services. KTMB being a social-minded transporter has also

offered different kinds of discounts to senior citizens, school

children as well as disabled persons. The Ladies Coach, which

was introduced in 2010, received a major boost when the new

SCS introduced additional coaches i.e. from one dedicated

coach to two dedicated coaches.

As rail is a catalyst in the development of the economy of the

country, there are many on-going projects, which are being

undertaken by KTMB through Government funding. The major

and far most important is the double tracking project from

Seremban - Gemas and Ipoh - Padang Besar which is being

undertaken and on-going at the moment. Both of the projects

are expected to be completed in 2013 and 2014 respectively.

KTMB also replaced one of the oldest tunnel in the country i.e.

Bukit Berapit tunnel with the stage opening of its new tunnel 3

km in length on 22 April 2013. The year 2013 will also see the

opening of Bukit Merah Marine Viaduct. Rembau will also have

a brand new station, which is expected to be opened in 2013.

To achieve the targets outlined in the National Key Result Area

(NKRA) in improving urban public transport for the railway

sector, the Government has approved 6 projects amounting to

a total cost of RM299.7 million.

As of 31 December 2012, the Upgrading of Bandar Tasik Selatan

Station and Provision of Universal Facilities at ten commuter

stations have been completed, whereas Provision of CCTV and

Passenger Information System (PIS) and Construction of EMU

Depot at Seremban are expected to complete by June 2013

and December 2013 respectively.

Meanwhile, two projects namely the Remodelling of the

Signalling System between Port Klang Junction - Batu Junction

and Provision of Automatic Fare Collection (AFC) system at the

commuter stations are on-going and is expected to complete

by 2014.

In line with KTMB’s efforts to meet the increasing demand for

passenger and cargo services, the existing capacity of rolling

stock will be upgraded. Pursuant to this, the Government

has allocatedRM528.6million under the 10thMalaysiaPlan

for the upgrading of rolling stock. Besides, procurement

of 12 units of new passenger coaches (Air Conditioned

Second Class Coaches/ASC), 2 units of Air Conditioned

Buffet Coaches (ABC) and 2 units of Power Generating Car

(PGC) have been implemented under the Kumpulan Wang

Amanah Pengangkutan Awam (KWAPA) allocation. The testing

and commissioning works on these coaches and PGC is in

progress and the delivery in stages is expected to start in June

2013.

Major integration works are also taking place currently to

integrate KTMB stations with other rail operators i.e. Subang

Jaya (LRT), Sungai Buloh (MRT), Kajang (MRT) and KL Sentral

(MRT). All these integration works will provide seamless travel

for the people.

With substantial amount of money spent on developing rail

infrastructure, the volume of both passengers and cargo is

expected to increase 5 folds in the near future, which will result

in tremendous increase in revenue for KTMB.

Review of Operation

With significant amount of investment in the electrified double

track, KTMB will contribute in the reduction of carbon emission

by replacing the current fleet of diesel locomotives with

additional 10 ETS sets to be purchased in the near future.

Corporate Calendar

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2012

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6 March 2012

MyKomuter trial run with members of media (KL Sentral

Station–KajangStation–KLSentralStation)atKLSentral

Station.

8 March 2012

The Launching of MyKomuter by Y.A.B. Tan Sri Muhyiddin

Yassin, Deputy Prime Minister of Malaysia at KL Sentral

Station.

31 March 2012

Media Briefing on MyKomuter at KTMB Headquarters.

19 January 2012

Goodies distribution to passengers in conjunction of Chinese

New Year Celebration at KL Sentral Station.

31 January 2012

Media briefing at Batu Caves Station on additional Komuter

services for Thaipusam celebrations at Batu Caves Station.

23 February 2012

International Railway Standards. A seminar jointly organized

by KTMB and Railway International Standards Centre, Japan

and officiated by Y.B Tan Sri Dato’ Seri Syed Hamid bin Syed

Jaafar Albar, Chairman of SPAD at InterContinental Hotel,

Kuala Lumpur.

Corporate Calendar

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Corporate Calendar

24 April 2012

Y.B. Dato’ Sri Kong Cho Ha, Minister of Transport Site Visit to

the new Bahau Station.

9 May 2012

KTM Berhad Labour Day celebrations at KTMB Headquarters.

21 May 2012

ETS the official transportation for Indian Hockey Players

in conjunction of Sultan Azlan Shah Cup 2012 Hockey

Tournament at Stadium Azlan Shah, Ipoh, Perak.

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2012

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21 June 2012

Groundbreaking Ceremony of KTMB EMU Seremban Depot

by Y.B Dato’ Sri Kong Cho Ha, Minister of Transport at

Seremban Station.

3 July 2012

Visit by the Minister of Transport, Y.B Dato’ Sri Kong Cho Ha

to the multi-storey car park at Serdang Station.

23 August 2012

Study visit to KTMB by the Governor’s Bureau of the State

Railway of Thailand.

13 September 2012

MyKomuter Fun Ride with school children from Seremban to

Kuala Lumpur.

14 September 2012

RecognitionCeremonyofISO9001:2008Certificate,EMU

Sentul Depot.

24 – 28 September 2012

33rd Joint Conference between KTMB -SRT in Pattaya,

Thailand.

10 October 2012

Handover Ceremony of Emergency Response Plan Manual

between JBPM / KTMB and ERP at Taman Wahyu Station.

18 October 2012

Press Conference on Komuter 1Malaysia Card at KL Sentral

Station.

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Corporate Calendar

31 October 2012

MyKomuter Familiarization Trip (Phase 2) with members of

media at KL Sentral Station.

4 November 2012

Study visit by Switzerland Delegates at Train Control &

Command Centre (TCCC), KL Sentral.

14 November 2012

Study visit to KTMB by the East Japan Railway Company (1st

Group).

27 November 2012

Study visit to KTMB by the East Japan Railway Company (2nd

Group).

3-7 December 2012

ASEAN Railways CEOs’ (ARCEOs’) Conference in Yangon,

Myanmar.

29 December 2012

The first time ever in Komuter history, a wedding reception

was held at Sentul Station. The newly-wed took a ride on

MyKomuter to Sentul Station. The coverage of the wedding

ceremony is to make known that KTMB offer space for such

activities.

29-30 December 2012

KTMB participated in Sayangi Selangor Carnival at I-City,

Shah Alam.

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Financial Statements

Directors’ Report

Independent Auditors’ Report

Statements Of Comprehensive Income

Statements Of Financial Position

Statements Of Changes In Equity

Statements Of Cash Flows

Notes To The Financial Stetements

Statements By Directors

Declaration By The Officer Primarily Responsible For

The Financial Management Of The Company

46

50

53

55

59

61

65

156

157

Contents

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The Directors of KERETAPI TANAH MELAYU BERHAD hereby submit their report and the audited financial statements of the

Group and of the Company for the financial year ended 31 December 2012.

Principal Activities

The principal activities of the Company are railway transportation operations and the provision of related railway services in Peninsular

Malaysia and Singapore. The Company operates these activities pursuant to a licence issued by the Ministry of Transport.

The principal activities of its subsidiaries are described in Note 13 of the financial statements.

There have been no significant changes in the nature of these activities during the financial year.

Results Of Operations

The results of operations of the Group and of the Company for the financial year are as follows:

Loss for the financial year attributable to:

Owners of the Company

Non-controlling interest

In the opinion of the directors, the results of operations of the Group and of the Company during the financial year have not been

substantially affected by any item, transaction or event of a material and unusual nature.

Dividends

No dividend has been paid or declared by the Company since the end of the previous financial year. The directors do not recommend

any dividend payment in respect of the current financial year.

Reserves And Provisions

There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial

statements.

Issue Of Shares And Debentures

As approved by the shareholders in the Extraordinary General Meeting (“EGM”) held on 30 October 2012, the authorised share

capital of the Company was increased from RM1,000,000,000 to RM2,000,000,000 by the creation of an additional 1,000,000,000

new ordinary shares of RM1 each.

Directors’ Report

The Company

RM’000

(283,950)

-

(283,950)

The Group

RM’000

(240,156)

16

(240,140)

KERETAPI TANAH MELAYU BERHAD (Incorporated in Malaysia)

During the financial year, the paid up share capital of the Company was increased from RM902,559,000 to RM1,137,459,000 by

way of issuance of 234,900,000 ordinary shares of RM1 each at RM1 per ordinary share for working capital purposes. The new

ordinary shares issued rank pari passu with the then existing ordinary shares of the Company.

The Company has not issued any debentures during the financial year.

Share Options

No options have been granted by the Company to any parties during the financial period to take up unissued shares of the

Company.

No shares have been issued during the financial period by virtue of the exercise of any option to take up unissued shares of the

Company. As at the end of the financial period, there were no unissued shares of the Company under options.

Other Statutory Information

Before the statements of comprehensive income and statements of financial position of the Group and of the Company were made

out, the directors took reasonable steps:

(a) 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 had satisfied themselves that there were no known bad debts and that adequate allowance had been

made for doubtful debts; and

(b) to ensure that any current assets which were unlikely to realise their book value in the ordinary course of business had been

written down to their estimated realisable values.

Asof 31December 2012, theGroup and theCompany have a capital deficiency ofRM983,022,000 andRM1,205,226,000

respectively as a result of losses incurred in the current and prior financial years. As mentioned in Note 3 to the Financial Statements,

the financial statements of the Group and of the Company have been prepared on the basis of accounting principles applicable to a

going-concern which presumes that the Group and the Company will continue to receive financial support from Minister of Finance

(Incorporated) to enable the Group and the Company to operate as a going-concern in the foreseeable future. The appropriateness

of the application of going-concern as a basis of preparation of the financial statements of the Group and of the Company is

dependent on the continued financial support from Minister of Finance (Incorporated).

Other than as mentioned in the preceding paragraph, at the date of this report, the Directors are not aware of any circumstances:

(a) which would render it necessary to write off any bad debts or the amount of the allowance for doubtful debts in the financial

statements of the Group and of the Company inadequate to any substantial extent; or

(b) which would render the values attributed to the current assets in the financial statements of the Group and of the Company

misleading; or

Directors’ Report

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(c) which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and

of the Company misleading or inappropriate; or

(d) not otherwise dealt with in this report or financial statements which would render any amount stated in the financial

statements of the Group and of the Company misleading.

At the date of this report, there does not exist:

(a) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which

secures the liabilities of any other person; or

(b) any contingent liability in respect of the Group and of the Company which has arisen since the end of the financial year.

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, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the

Company to meet their obligations as and when they fall due.

In the opinion of the Directors, 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 operations of the Group and

of the Company for the financial year in which this report is made.

Directors

The following directors served on the Board of the Company since the date of the last report:

Dato’ Sri Ir. Mohd Zin bin Mohamed

Selvarajoo a/l Manikam

Dato’ Sri Zakaria bin Bahari

Rosli bin Abdullah

Harun bin Johari

Ruhaizah binti Mohamed Rashid

Sr. Ahmad Zainuddin bin Jamaluddin

Datuk Elias bin Kadir

Norazura binti Tadzim

Datuk Kamaruzaman bin Mohd Noor

In accordance with Article 104 of the Company’s Articles of Association, Selvarajoo a/l Manikam, Norazura binti Tadzim and

Ruhaizah binti Mohamed Rashid retire by rotation at the forthcoming Annual General Meeting and, being eligible, offer themselves

for re-election.

Directors’ Interests

None of the Directors holding office at 31 December 2012 had any interest in the ordinary shares of the Company and of its related

corporations during the financial year.

Directors’ Benefits

Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit

(other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the

financial statements or the fixed salary of a full time employee of the Company or of related corporations) by reason of a contract

made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company

in which the Director has a substantial financial interest.

There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company

to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Holding Company

The Company is a subsidiary of Minister of Finance (Incorporated), a body corporate incorporated pursuant to the Minister of

Finance(Incorporated)Act,1957(Revised1989).

Auditors

The auditors, Messrs. Deloitte KassimChan, have expressed their willingness to continue in office.

Signed on behalf of the Board

in accordance with a resolution of the Directors,

________________________________________

DATO’ SRI IR. MOHD ZIN BIN MOHAMED

________________________________________

DATUK ELIAS BIN KADIR

Kuala Lumpur

16 May 2013

Directors’ Report

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Report on the Financial Statements

We have audited the financial statements of KERETAPI TANAH MELAYU BERHAD, which comprise the statements of financial

position of the Group and of the Company as of 31 December 2012 and the statements of comprehensive income, statements

of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of

significant accounting policies and other explanatory information, as set out on pages 53 to 155.

Directors’ Responsibility for the Financial Statements

The directors of the Group and the Company are responsible for the preparation of these financial statements so as to give a true

and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the

requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors

determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to

fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance

with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and

perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.

The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of

the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control

relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that

are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal

control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting

estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence that we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as

of 31 December 2012 and of their financial performance and cash flows for the year then ended in accordance with Malaysian

Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in

Malaysia.

Emphasis of Matters

Asof 31December 2012, theGroup and theCompany have a capital deficiency ofRM983,022,000 andRM1,205,226,000

respectively as a result of losses incurred in the current and prior financial years. As mentioned in Note 3 to the Financial Statements,

Independent Auditors’ ReportTo The Members Of KERETAPI TANAH MELAYU BERHAD

(Incorporated in Malaysia)

the financial statements of the Group and of the Company have been prepared on the basis of accounting principles applicable to a

going-concern which presumes that the Group and the Company will continue to receive financial support from Minister of Finance

(Incorporated) to enable the Group and the Company to operate as a going-concern in the foreseeable future. The appropriateness

of the application of going-concern as a basis of preparation of the financial statements of the Group and of the Company is

dependent on the continued financial support from Minister of Finance (Incorporated).

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report that:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its

subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act;

(b) We have considered the financial statements and auditors’ reports of the subsidiaries of which we have not acted as

auditors, as mentioned in Note 13 to the Financial Statements, being financial statements that have been included in the

financial statements of the Group;

(c) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company’s financial statements

are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group

and we have received satisfactory information and explanations as required by us for these purposes; and

(d) The audit reports on the accounts of the subsidiaries were not subject to any qualification and did not include any adverse

comment made under Section 174 (3) of the Act.

Other Matters

1. As stated in Note 2 to the financial statements, the Company adopted Malaysian Financial Reporting Standards on 1

January 2012 with a transition date of 1 January 2011. These standards were applied retrospectively by directors to the

comparative information in these financial statements, including the statement of financial position as at 31 December

2011 and 1 January 2011, and the statement of comprehensive income, statement of changes in equity and statement

of cash flows for the year ended 31 December 2011 and related disclosures. The application of these Standards have not

affected the comparative information as previously reported in accordance with Financial Reporting Standards. We were

not engaged to report on these comparative information which is now presented in accordance with Malaysian Financial

Reporting Standards and hence, it is unaudited. Our responsibilities as part of our audit of the financial statements of the

Company for the year ended 31 December 2012 have, in these circumstances, included obtaining sufficient appropriate

audit evidence that the opening balances as at 1 January 2012 do not contain misstatements that materially affect the

financial position as of 31 December 2012 and financial performance and cash flows for the year then ended.

2. This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies

Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this

report.

Independent Auditors’ Report

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3. The financial statements of the Company for the year ended 31 December 2011 were audited by another firm of auditors

whosereportdated28June2012expressedanunmodifiedopiniononthosestatements.

DELOITTE KASSIMCHAN

AF 0080

Chartered Accountants

KAMARUL BAHARIN BIN TENGKU ZAINAL ABIDIN

Partner - 2903/11/13 (J)

Chartered Accountant

16 May 2013

Independent Auditors’ Report Statements Of Comprehensive IncomeFor The Year Ended 31 December 2012

Revenue 5 454,671 440,963 360,988 352,560

Cost of services (533,414) (494,814) (466,358) (427,142)

Gross loss (78,743) (53,851) (105,370) (74,582)

Other operating income 103,120 75,977 95,077 79,929

Administrative expenses (59,943) (54,580) (43,206) (35,803)

Other operating expenses (203,030) (79,747) (193,368) (73,612)

Results from operating activities (238,596) (112,201) (246,867) (104,068)

Finance income 1,272 2,255 545 1,384

Finance costs 6 (29,675) (17,823) (29,269) (17,237)

Operating loss (266,999) (127,769) (275,591) (119,921)

Share of profit of equity- accounted investees, net of tax 35,006 24,106 - -

Loss before tax 7 (231,993) (103,663) (275,591) (119,921)

Income tax (expense)/credit 10 (8,147) 210 (8,359) -

Loss for the year (240,140) (103,453) (283,950) (119,921)

Other comprehensive income

Foreign currency translation differences of foreign operations (21) (33) - -

Other comprehensive loss for the year, net of tax (21) (33) - -

Total comprehensive loss for the year (240,161) (103,486) (283,950) (119,921)

The Group The Company

Note

2012

RM’000

2011

RM’000

2012

RM’000

2011

RM’000


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

Loss attributable to:

Owners of the Company (240,156) (103,463) (283,950) (119,921)

Non-controlling interest 16 10 - -

Loss for the year (240,140) (103,453) (283,950) (119,921)

Total comprehensive loss attributable to:

Owners of the Company (240,177) (103,496) (283,950) (119,921)

Non-controlling interest 16 10 - -

Total comprehensive loss for the year (240,161) (103,486) (283,950) (119,921)


Note

2012

RM’000

2011

RM’000

2012

RM’000

2011

RM’000

Statements Of Comprehensive Income Statements Of Financial PositionAs Of 31 December 2012


ASSETS

Non-current Assets

Property, plant and equipment 11 148,646 269,980 277,830

Investment properties 12 2,035 2,092 2,149

Investments in associates 14 157,831 145,545 135,212

Other investment 15 140 170 170

Long-term receivables 16 - - 69,216

Deferred tax assets 17 - 3,107 498

Total Non-current Assets 308,652 420,894 485,075

Current Assets

Inventories 18 48,950 42,303 45,428

Trade and other receivables 19 201,042 87,987 84,112

Deposits and prepayments 19 28,925 4,339 5,786

Tax recoverable 3,094 10,007 9,842

Cash and bank balances 20 26,093 40,438 87,723

308,104 185,074 232,891

Non-current assets classified as held for sale 21 5,507 - -

Total Current Assets 313,611 185,074 232,891

Total Assets 622,263 605,968 717,966

EQUITY AND LIABILITIES

Capital and Reserves

Share capital 22 1,137,459 902,559 882,559

Redeemable Cumulative Convertible Preference Shares (“RCCPS”) 23 50,583 50,583 50,583

The Group

Note

31.12.2012

RM’000

31.12.2011

RM’000

1.1.2011

RM’000

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Reserves 24 (303) (282) (249)

Accumulated losses (2,170,857) (1,930,701) (1,827,238)

Equity attributable to owners of the Company (983,118) (977,841) (894,345)

Non-controlling interests 96 80 70

Capital deficiency (983,022) (977,761) (894,275)

Non-current Liabilities

Loans and borrowings 25 1,172,666 1,153,593 1,142,195

Redeemable Convertible Cumulative Preference Shares (“RCCPS”) 23 17,976 16,814 15,697

Deferred tax liabilities 17 1,442 3,190 1,371

Deferred gain 26 - - 69,216

Government grants 27 284 362 38,852

Provisions 28 4,934 5,756 6,578

Retirement benefit obligations 29 90,392 85,486 92,196

Total Non-current Liabilities 1,287,694 1,265,201 1,366,105

Current Liabilities

Trade and other payables 30 166,346 144,683 146,736

Loans and borrowings 25 140,501 161,000 88,917

Provisions 28 822 822 822


Current tax liabilities 43 2,144 2,377

Total Current Liabilities 317,591 318,528 246,136

Total Liabilities 1,605,285 1,583,729 1,612,241

Total Equity and Liabilities 622,263 605,968 717,966

The Group

Note

31.12.2012

RM’000

31.12.2011

RM’000

1.1.2011

RM’000


ASSETS

Non-current Assets

Property, plant and equipment 11 126,551 250,079 257,887

Investments in subsidiaries 13 6,649 6,649 6,649

Investments in associates 14 25,830 25,830 25,830

Other investment 15 140 170 170

Total Non-current Assets 159,170 282,728 290,536

Current Assets

Inventories 18 48,950 42,303 45,428

Trade and other receivables 19 182,043 70,779 69,230

Deposits and prepayments 19 24,833 2,618 4,570

Tax recoverable 907 9,277 9,177

Cash and bank balances 20 1,988 7,623 53,583

Total Current Assets 258,721 132,600 181,988

Total Assets 417,891 415,328 472,524

EQUITY AND LIABILITIES

Capital and Reserves

Share capital 22 1,137,459 902,559 882,559

Redeemable Cumulative Convertible Preference Shares (“RCCPS”) 23 50,583 50,583 50,583

Accumulated losses (2,393,268) (2,109,318) (1,989,397)

Capital deficiency (1,205,226) (1,156,176) (1,056,255)

The Company

Note

31.12.2012

RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Statements Of Financial PositionAs Of 31 December 2012


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The Company

Note

31.12.2012

RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Non-current Liabilities

Loans and borrowings 25 1,168,192 1,149,184 1,138,861

Redeemable Convertible Cumulative

Preference Shares (“RCCPS”) 23 17,976 16,814 15,697

Government grants 27 285 362 38,852

Provisions 28 4,934 5,756 6,578


Total Non-current Liabilities 1,281,779 1,257,602 1,292,184

Current Liabilities

Trade and other payables 30 190,761 144,783 145,305

Loans and borrowings 25 139,876 158,418 83,184

Provisions 28 822 822 822


Total Current Liabilities 341,338 313,902 236,595

Total Liabilities 1,623,117 1,571,504 1,528,779

Total Equity and Liabilities 417,891 415,328 472,524



The Group Note

Share Capital

RM’000

RCCPS - EquityRM’000

Non - distributable

Reserves - Other

ReservesRM’000

Accumulatedlosses

RM’000

Attributable to Equity Holders

of the Company

RM’000

Non-Controlling

InterestsRM’000

NetRM’000

Balance as of 1 January 2011 882,559 50,583 (249) (1,827,238) (894,345) 70 (894,275)

Total comprehensive loss for the year - - (33) (103,463) (103,496) 10 (103,486)

Issue of ordinary shares for cash 22 20,000 - - - 20,000 - 20,000

Balance as of 31 December 2011/ 1 January 2012 902,559 50,583 (282) (1,930,701) (977,841) 80 (977,761)

Total comprehensive loss for the year - - (21) (240,156) (240,177) 16 (240,161)

Issue of ordinary shares for cash 22 234,900 - - - 234,900 - 234,900

Balance as of 31 December 2012 1,137,459 50,583 (303) (2,170,857) (983,118) 96 (983,022)

Statement Of Changes In EquityFor The Year Ended 31 December 2012


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Balance as of 1 January 2011 882,559 50,583 (1,989,397) (1,056,255)

Total comprehensive loss for the year - - (119,921) (119,921)

Issue of ordinary shares for cash 22 20,000 - - 20,000

Balance as of 31 December 2011/ 1 January 2012 902,559 50,583 (2,109,318) (1,156,176)

Total comprehensive loss for the year - - (283,950) (283,950)

Issue of ordinary shares for cash 22 234,900 - - 234,900

Balance as of 31 December 2012 1,137,459 50,583 (2,393,268) (1,205,226)

The Company Note

Share

Capital

RM’000

RCCPS -

Equity

RM’000

Accumulated

losses

RM’000

Net

RM’000


Statement Of Changes In Equity Statements Of Cash FlowsFor The Year Ended 31 December 2012


CASH FLOWS FROM OPERATING

ACTIVITIES

Loss before tax (231,993) (103,663) (275,591) (119,921)

Adjustments for:

Depreciation of property, plant and equipment 96,581 91,686 90,552 87,957

Depreciation of investment property 57 57 - -

Impairment loss on property, plant and equipment 84,643 20,600 84,643 20,600

Finance costs 29,675 19,487 29,269 18,901

Increase in liability for defined benefit plans 16,408 13,848 16,408 13,848

Allowance for doubtful debts of trade and other receivables 3,394 3,332 2,522 1,984

Property, plant and equipment written off 910 2,174 910 2,174

Provision for inventory 205 - 205 -

Amortisation of Government grants (78) (78) (78) (78)

Finance income (1,272) (2,255) (545) (1,384)

Gain on disposal of property, plant and equipment (25,892) (1,265) (578) (1,198)

Reversal of allowance of doubtful debts of trade and other receivables (4,006) (3,808) (3,327) (2,004)

Share of results of associates (35,006) (24,106) - -

Claims from the Government for uneconomic services (40,827) (28,820) (40,827) (28,820)

Dividend income:

- associated company - - (22,720) (13,773)

- subsidiaries - - (1,756) (1,109)

Impairment loss on other investment 30 - 30 -

Operating Loss Before changes in Working Capital (107,171) (12,811) (120,883) (22,823)


2012

RM’000

2011

RM’000

2012

RM’000

2011

RM’000

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(Increase)/Decrease in:

Trade and other receivables (7,897) (2,052) (11,837) 323

Inventories (6,852) 3,125 (6,852) 3,125

Increase/(Decrease) in:

Trade and other payables 32,807 8,271 33,979 9,802

Cash Used In Operations (89,113) (3,467) (105,593) (9,573)

Interest paid (9,620) (18,370) (9,099) (17,784)

Income tax paid (10,283) (878) - -

Retirement benefits paid (11,502) (17,963) (11,502) (17,963)

Housing loan interest paid (823) (823) (823) (823)

Claims for uneconomic services received 30,002 28,820 30,002 28,820

Net Cash Used In Operating Activities (91,339) (12,681) (97,015) (17,323)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment (ii) (54,114) (111,072) (53,242) (107,051)

Proceeds from disposal of property, plant and

equipment 3,080 5,727 1,243 5,326

Interest received 1,272 2,255 545 1,384

Dividends income:

- associates 22,720 13,773 22,720 13,773

- subsidiaries - - 2,756 1,109

Net Cash Used In Investing Activities (27,042) (89,317) (25,978) (85,459)


Note

2012

RM’000

2011

RM’000

2012

RM’000

2011

RM’000

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance ofordinary shares 124,900 20,000 124,900 20,000

Proceeds from short-term borrowings 10,116 73,624 10,000 75,234

Advances from subsidiaries - - 11,000 -

Repayment of short-term borrowings (30,959) - (28,542) -

Increase in deposits pledged (341) - - -

Utilisation of stimulus package from Government - (38,412) - (38,412)

Net Cash From Financing Activities 103,716 55,212 117,358 56,822

NET DECREASE IN CASH AND CASH EQUIVALENTS (14,665) (46,786) (5,635) (45,960)

Effects of foreign exchange rate changes (21) (33) - -

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 40,438 87,257 7,623 53,583

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR (i) 26,093 40,438 1,988 7,623



Note

2012

RM’000

2011

RM’000

2012

RM’000

2011

RM’000

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Deposits place with

Licensed banks 20,894 28,319 - -

Financial institutions 350 - - -

21,244 28,319 - -

Less: Deposits pledged with licensed banks (341) - - -

20,903 28,319 - -

Cash and bank balances 5,190 12,119 1,988 7,623

26,093 40,438 1,988 7,623


2012

RM’000

2011

RM’000

2012

RM’000

2011

RM’000

(i) Cash and cash equivalents

Cash and cash equivalents included in the statements of cash flows comprise the following statements of financial position

amounts:

(ii) Purchase of Property, plant and equipment

Duringthefinancialyear,theGroup’sadditionsofproperty,plantandequipmentwithanaggregatecostofRM61,824,000

(2011:RM111,072,000)ofwhichRM7,185,000(2011:RMNil)werereceivedfromDevelopmentAgreementasexplainedin

Note 21 and RM525,000 (2011: RMNil) were acquired by the mean of hire-purchase.



1. GENERAL INFORMATION

Keretapi Tanah Melayu Berhad is a public limited liability company, incorporated and domiciled in Malaysia. Save and except

for one (1) ordinary share owned by the Federal Land Commissioner, all of the equity of the Company is owned by the

Ministry of Finance (Incorporated), a body corporate established in Malaysia.

The principal activities of the Company are railway transportation operations and the provision of related railway services in

Peninsular Malaysia and Singapore. The Company operates these activities pursuant to a licence issued by the Ministry of

Transport. The principal activities of its subsidiaries are described in Note 13. There have been no significant changes in the

nature of these activities during the financial year.

The registered office and principal place of business of the Company is located at Tingkat 1, Ibu Pejabat Korporat KTMB,

Jalan Sultan Hishamuddin, 50621 Kuala Lumpur.

The financial statements of the Group and of the Company were authorised by the Board of Directors for issuance on

16 May 2013.

2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial

Reporting Standards (“MFRSs”), International Financial Reporting Standards and the provisions of the Companies Act,

1965 in Malaysia.

Adoption of Malaysian Financial Reporting Standards

The Group’s and the Company’s financial statements for the financial year ended 31 December 2012 have been prepared

in accordance with MFRSs for the first time. In the previous financial years, these financial statements were prepared in

accordance with Financial Reporting Standards (“FRSs”).

The transition to MFRSs is accounted for in accordance with MFRS 1: First-time Adoption of Malaysian Financial Reporting

Standards, with 1 January 2011 as the date of transition. The adoption of MFRSs has not affected the amounts reported on

the financial statements of the Group and of the Company as the restatement has no effect on the net results for the current

and previous financial years. There is also no effect on retained earnings. Consequently, reconciliations of its equity reported

in accordance with FRSs to its equity in accordance with MFRSs for the date of transition to MFRSs in the Group’s and the

Company’s most recent annual financial statements are not being presented.

MFRSs and IC Interpretations (“IC Ints.”) Issued but Not Yet Effective

At the date of authorisation for issue of these financial statements, the new and revised Standards and IC Interpretations

which were in issue but not yet effective and not early adopted by the Group and the Company are as listed below:

Notes To The Financial StatementsFor The Year Ended 31 December 2012


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MFRS 7 Financial Instruments: Disclosures [Amendments relating to Mandatory Effective Date of MFRS 9 and

Transition Disclosures (IFRS 9 issued by International Accounting Standards Board (“IASB”) in November

2009 and October 2010 respectively)]2

MFRS 7 Financial Instruments: Disclosures (Amendments relating to Disclosures - Offsetting Financial Assets and

Liabilities)1

MFRS 9 Financial Instruments (IFRS 9 issued by IASB in October 2009)3

MFRS 9 Financial Instruments (IFRS 9 issued by IASB in November 2010)3

MFRS 10 Consolidated Financial Statements1

MFRS 10 Consolidated Financial Statements (Amendments relating to Transition Guidance)1

MFRS 11 Joint Arrangements1

MFRS 11 Joint Arrangements (Amendments relating to Transition Guidance)1

MFRS 12 Disclosure of Interests in Other Entities1

MFRS 12 Disclosure of Interests in Other Entities (Amendments relating to Transition Guidance)1

MFRS 13 Fair Value Measurement1

MFRS 101 Presentation of Financial Statements (Amendments relating to Presentation of Items of Other

Comprehensive Income)4

MFRS 119 Employee Benefits (IAS 19 as amended by IASB in June 2011)1

MFRS 127 Separate Financial Statements (IAS 27 as amended by IASB in May 2011)1

MFRS128 InvestmentsinAssociatesandJointVentures(IAS28asamendedbyIASBinMay2011)1

MFRS 132 Financial Instruments: Presentation (Amendments relating to Offsetting Financial Assets and Financial

Liabilities)5

IC Int. 20 Stripping Costs in the Production Phase of a Surface Mine1

Amendments to MFRSs contained in the document entitled Annual Improvements 2009 - 2011 Cycle issued in July 20121

1 Effective immediately on issuance date of 1 March, 2012

2 Effective for annual periods beginning on or after 1 January, 2013

3 Effective for annual periods beginning on or after 1 January, 2015 instead of 1 January, 2013 immediately upon the

issuance of Amendments to MFRS 9 (IFRS 9 issued by IASB in November 2009 and October 2010 respectively) and

MFRS 7 relating to “Mandatory Effective Date of MFRS 9 and Transition Disclosures” on 1 March, 2012

4 Effective for annual periods beginning on or after 1 July, 2012

5 Effective for annual periods beginning on or after 1 January, 2014

The directors anticipate that the abovementioned Standards and IC Interpretations will be adopted in the annual financial

statements of the Group and of the Company when they become effective and that the adoption of these Standards and

IC Interpretations will have no material impact on the financial statements of the Company in the period of initial application.

A brief description of the significant new MFRSs and Amendments to MFRSs that have been issued and may applicable to

the Group and the Company is set out below:

Notes To The Financial Statements

Amendments to MFRS 7 and MFRS 132: Offsetting Financial Assets and Financial Liabilities and the related

disclosures

The amendments to MFRS 132 clarify existing application issues relating to the offset of the financial assets and financial

liabilities requirements. Specifically, the amendments clarify the meaning of “currently has a legally enforceable right of set-

off” and “simultaneous realisation and settlement”.

The amendments to MFRS 7 introduce new disclosure requirements relating to rights of offset and related arrangements for

financial instruments under an enforceable master netting agreements or similar arrangements. Both MFRS 132 and MFRS

7 require retrospective application upon adoption.

MFRS 9 and Amendments relating to Mandatory Effective Date of MFRS 9 and Transition Disclosures

MFRS 9 (IFRS 9 issued by IASB in November 2009) introduces new requirements for the classification and measurement

of financial assets. MFRS 9 (IFRS 9 issued by IASB in October 2010) includes the requirements for the classification and

measurement of financial liabilities and for derecognition.

The amendments to MFRS 9 (IFRS 9 issued by IASB in November 2009 and October 2010 respectively) (“MFRS 9”)

relating to “Mandatory Effective Date of MFRS 9 and Transition Disclosures” which became immediately effective on the

issuance date of 1 March 2012 amended the mandatory effective date of MFRS 9 to annual periods beginning on or after 1

January 2015 instead of on or after 1 January 2013, with earlier application still permitted as well as modified the relief from

restating prior periods. MFRS 7 which was also amended in tandem with the issuance of the aforementioned amendments

introduces new disclosure requirements that are either permitted or required on the basis of the entity’s date of adoption

and whether the entity chooses to restate prior periods.

Key requirements of MFRS 9 are described as follows:

(a) All recognised financial assets that are within the scope of MFRS 139 Financial Instruments: Recognition and

Measurement to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are

held within a business model whose objective is to collect the contractual cash flows, and that have contractual

cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at

amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are

measured at their fair values at the end of subsequent accounting periods. In addition, under MFRS 9, entities may

make an irrecoverable election to present subsequent changes in the fair value of equity instrument (that is not held

for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss.

(b) With regard to the measurement of financial liabilities designated as at fair value through profit or loss, MFRS 9

requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit

risk of that liability, is presented in other comprehensive income, unless the recognition of the effects of changes in

the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or

loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or

loss. Previously, under FRS 139, the entire amount of the change in the fair value of the financial liability designated

as at fair value through profit or loss was presented in profit or loss.

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MFRS 10, MFRS 11, MFRS 12, MFRS 127 and MFRS 128

In November 2011, a package of five Standards on consolidation, joint arrangements, associates and disclosures was

issued,includingMFRS10,MFRS11,MFRS12,MFRS127(IAS27asamendedbyIASBinMay2011)andMFRS128

(IAS28asamendedbyIASBinMay2011).

Key requirements of these five Standards are described below.

MFRS 10 replaces the parts of MFRS 127 Consolidated and Separate Financial Statements that deal with consolidated

financial statements. IC Int. 112 Consolidation - Special Purpose Entities will be withdrawn upon effective date of MFRS 10.

Under MFRS 10, there is only one basis for consolidation, which is control. In addition, MFRS 10 includes a new definition

of control that contains three elements: (a) power over an investee, (b) exposure, or rights, to variable returns from its

involvement with the investee, and (c) the ability to use its power over the investee to affect the amount of the investor’s

returns. Extensive guidance has been added in MFRS 10 to deal with complex scenarios.

MFRS 11 replaces MFRS 131 Interests in Joint Ventures. MFRS 11 deals with how a joint arrangement of which two or

more parties have joint control should be classified. IC Int. 113 Jointly Controlled Entities - Non-monetary Contributions

by Venturers will be withdrawn upon the effective date of MFRS 11. Under MFRS 11, joint arrangements are classified as

joint operations or joint ventures, depending on the rights and obligations of the parties to the arrangements. In contrast,

under MFRS 131, there are three types of joint arrangements: jointly controlled entities, jointly controlled assets and jointly

controlled operations. In addition, joint ventures under MFRS 11 are required to be accounted for using the equity method of

accounting, whereas jointly controlled entities under MFRS 131 can be accounted for using the equity method of accounting

or proportionate consolidation.

MFRS 12 is a disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements,

associates and/or unconsolidated structured entities. In general, the disclosure requirements in MFRS 12 are more extensive

than those in the current standards.

In July 2012, the amendments to MFRS 10, MFRS 11 and MFRS 12 were issued to clarify certain transitional guidance on

the application of these MFRSs for the first time.

MFRS 13

MFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements.

The Standard defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value

measurements. The scope of MFRS 13 is broad; it applies to both financial instrument items and non-financial instrument

items for which other IFRSs require or permit fair value measurements and disclosures about fair value measurements,

except in specified circumstances. In general, the disclosure requirements in MFRS 13 are more extensive than those

required in the current standards. For example, quantitative and qualitative disclosures based on the three-level fair value

hierarchy currently required for financial instruments only under MFRS 7 Financial Instruments: Disclosures will be extended

by MFRS 13 to cover all assets and liabilities within its scope.


Amendments to MFRS 101: Presentation of Items of Other Comprehensive Income

The amendments to MFRS 101 retain the option to present profit or loss and other comprehensive income in either a single

statement or in two separate but consecutive statements. However, the amendments to MFRS 101 require additional

disclosures to be made in the other comprehensive income section such that items of other comprehensive income are

grouped into two categories: (a) items that will not be reclassified subsequently to profit or loss; and (b) items that will be

reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive

incomeisrequiredtobeallocatedonthesamebasis–theamendmentsdonotchangetheoptiontopresentitemsofother

comprehensive income either before tax or net of tax.

The amendments also introduce new terminology for the statement of comprehensive income and income statement.

Under the amendments to MFRS 101, the “statement of comprehensive income” is renamed “statement of profit or loss

and other comprehensive income” and the “income statement” is renamed the “statement of profit or loss”.

The amendments will be applied retrospectively upon adoption and hence, the presentation of items of other comprehensive

income will be modified accordingly to reflect the changes. Other than the abovementioned presentation changes, the

application of the amendments to MFRS 101 would not result in any impact on profit or loss, other comprehensive income

and total comprehensive income.

MFRS 119 (IAS 19 as amended by IASB in June 2011)

The amendments to MFRS 119 change the accounting for defined benefit plans and termination benefits. The most

significant change relates to the accounting for changes in defined benefit obligations and plan assets. The amendments

require the recognition of changes in defined benefit obligations and in fair value of plan assets when they occur, and

hence eliminate the ‘corridor approach’ permitted under the previous version of MFRS 119 and accelerate the recognition

of past service costs. The amendments require all actuarial gains and losses to be recognised immediately through other

comprehensive income in order for the net pension asset or liability recognised in the consolidated statement of financial

position to reflect the full value of the plan deficit or surplus. Further, the interest cost and expected return on plan assets

used in the previous version of MFRS 119 are replaced with a “net-interest” amount, which is calculated by applying the

discount rate to the net defined benefit liability or asset.

The amendments to MFRS 119 require retrospective application.

Amendments to MFRSs: Annual Improvements 2009 - 2011 Cycle

The Annual Improvements 2009 – 2011 Cycle include a number of amendments to various MFRSs. The amendments to

MFRSs include:

• AmendmentstoMFRS101Presentation of Financial Statements

• AmendmentstoMFRS116Property, Plant and equipment; and

• AmendmentstoMFRS132Financial Instruments: Presentation

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Amendments to MFRS 101

MFRS 101 requires an entity that changes accounting policies retrospectively, or makes a retrospective restatement of

reclassification to present a statement of financial position as at the beginning of the preceding period (third statement of

financial position). The amendments to MFRS 101 clarify that an equity is required to present a third statement of financial

position only when the retrospective application, restatement or reclassification has a material effect on the information

in the third statement of financial position and that related notes are not required to accompany the third statement of

financial position. Hence, the adoption of the amendments when it becomes effective will affect the presentation of the third

statement of financial position and related notes in the future periods.


The amendments to MFRS 116 clarify that spare parts, stand-by equipment and servicing equipment should be classified

as property, plant and equipment when they meet the definition of property, plant and equipment in MFRS 116 and as

inventory otherwise.


The amendments to MFRS 132 clarify that income tax relating to distribution to holders of an equity instrument and to

transaction costs of an equity transaction should be accounted for in accordance with MFRS 112 Income Taxes.

3. SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The financial statements of the Company have been prepared under the historical cost convention. Historical cost is

generally based on the fair value of the consideration involved in exchange for assets and liabilities.

Asof31December2012,theGroupandtheCompanyhaveacapitaldeficiencyofRM983,022,000andRM1,205,226,000

respectively as a result of losses incurred in the current and prior financial years. The financial statements of the Group

and of the Company have been prepared on the basis of accounting principles applicable to a going-concern which

presumes that the Group and the Company will continue to receive financial support from its holding company, Minister of

Finance (Incorporated) to enable the Group and the Company to operate as a going-concern in the foreseeable future. The

appropriateness of the application of going-concern as a basis of preparation of the financial statements of the Group and

of the Company is dependent on the continued financial support from Minister of Finance (Incorporated).

Basis of Consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the end

of financial reporting period. Control is achieved where the Company has the power to govern the financial and operating

policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed during the year are included in the consolidated statement of comprehensive

income from the effective date of acquisition and up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into

line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. The interests of non-

controlling shareholders may be initially measured either at fair value or at the non-controlling interests’ proportionate share

of the fair value of the acquiree’s identifiable net assets. The choice of measurement basis is made on an acquisition-

by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those

interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive

income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group’s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions.

The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their

relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted

at the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the

Company.

Where the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i)

the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous

carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. Amounts

previously recognised in other comprehensive income in relation to the subsidiary are accounted for in the same manner as

would be required if the relevant assets or liabilities were disposed of. The fair value of any investment retained in the former

subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under

MFRS 139 Financial Instruments : Recognition and Measurement or, when applicable, the cost on initial recognition of an

investment in an associate or jointly controlled entity.

Business Combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each

acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or

assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are

recognised in profit or loss as incurred.

Where applicable, the consideration for the acquisition includes any asset of liability resulting from a contingent consideration

arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the

cost of acquisition where they qualify as measurement period adjustments. All other subsequent changes in the fair value of

contingent consideration classified as an asset or liability are accounted for in accordance with relevant MFRSs. Changes

in the fair value of contingent consideration classified as equity are not recognised.


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Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are

remeasured to fair value at the acquisition date and the resulting gain or loss, if any, is recognised in profit or loss. Amounts

arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive

income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.

The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under MFRS 3

(revised) are recognised at their fair value at the acquisition date, except that:

• deferredtaxassetsorliabilitiesandliabilitiesorassetsrelatedtoemployeebenefitarrangementsarerecognisedand

measured in accordance with MFRS 112 Income Taxes and MFRS 119 Employee Benefits respectively;

• liabilitiesorequityinstrumentsrelatedtothereplacementbytheGroupofanacquiree’sshare-basedpaymentawards

are measured in accordance with MFRS 2 Share-based Payment; and

• assets(ordisposalgroups)thatareclassifiedasheldforsaleinaccordancewithMFRS5Non-currentAssetsHeldfor

Sale and Discontinued Operations are measured in accordance with that Standard.

If the initial accounting for a business combination is incomplete by end of the reporting period in which the combination

occurs, the Group reports provisional amounts for the items of which the accounting is incomplete. Those provisional

amounts are adjusted during the measurement period, or additional assets or liabilities are recognised, to reflect new

information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have

affected the amounts recognised as of that date.

The measurement period is the period from the date of acquisition to the date the Group obtains complete information

about facts and circumstances that existed as of the acquisition date, and is subject to a maximum of one year.

Investments in Subsidiaries

Subsidiaries are entities over which the Group has the ability to control the financial and operating policies so as to obtain

benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible

are considered when assessing whether the Group has such power over another entity.

In the Company’s separate financial statements, investments in subsidiaries are stated at cost less accumulated impairment

losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is

included in profit or loss.

Investment in Associates

Associates are entities in which the Group has significant influence and that is neither a subsidiary nor an interest in a joint

venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but

not in control or joint control over those policies.

Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting.

Under the equity method, the investment in associates is carried in the consolidated statement of financial position at cost

adjusted for post-acquisition changes in the Group’s share of net assets of the associates. The Group’s share of the net

profit or loss of the associates is recognised in the consolidated statement of comprehensive income.

Where there has been a change recognised directly in the equity of the associates, the Group recognises its share of such

changes. In applying the equity method, unrealised gains and losses on transactions between the Group and the associates

are eliminated to the extent of the Group’s interest in the associates. After application of the equity method, the Group

determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment

in the associates. The associates are equity accounted for from the date the Group obtains significant influence until the

date the Group ceases to have significant influence over the associates.

Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. 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 recognised immediately in profit or loss.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any long-term

interests that, in substance, form part of the Group’s net investment in the associates, the Group does not recognise further

losses, unless it has incurred obligations or made payments on behalf of the associate.

The most recent available annual financial statements of the associates are used by the Group in applying the equity

method. Where the dates of the financial statements used are not coterminous with those of the Group, the share of

results is arrived at from the last annual financial statements available and management financial statements to the end of

the accounting period. Uniform accounting policies are adopted for like transactions and events in similar circumstances.

In the Company’s separate financial statements, investments in associates are stated at cost less accumulated impairment

losses.

On disposal of such investments, the difference between net disposal proceeds and their carrying amount is included in

profit or loss.

Goodwill on Consolidation

Goodwill arising on the acquisition of subsidiary represents the excess of cost of the acquisition over the Group’s interest in

the fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities, and is initially recognised as an asset at

cost and subsequently measured at cost less any accumulated impairment losses.

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (“CGU”) expected

to benefit from the synergies of the combination. CGUs to which goodwill has been allocated are tested for impairment

annually, or more frequently when there is an indication that the unit may be impaired.


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If the recoverable amount of the CGU is less than the carrying amount of the unit, the impairment loss is allocated first to

reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro-rata basis

of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent

period.

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the gain or loss on

disposal.

Foreign Currencies

(i) Functional and Presentation Currency

The individual financial statements of each entity in the Group are measured using the currency of the primary

economic environment in which the entity operates (“the functional currency”). The consolidated financial statements

are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency.

(ii) Foreign Currency Transactions

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s

functional currency (foreign currencies) are recorded in the functional currencies using the exchange rates prevailing

at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign

currencies are translated at the rates prevailing at the end of the reporting period. Non-monetary items carried at

fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair

value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are

not retranslated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are

included in profit or loss for the period except for exchange differences arising on monetary items that form part of

the Group’s net investment in foreign operations. Exchange differences arising on monetary items that form part of

the Group’s net investment in foreign operations, where that monetary item is denominated in either the functional

currency of the reporting entity or the foreign operations, are initially taken directly to the foreign currency translation

reserve within equity until the disposal of the foreign operations, at which time they are recognised in profit or loss.

Exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations,

where that monetary item is denominated in a currency other than the functional currency of either the reporting

entity or the foreign operations, are recognised in profit or loss for the period. Exchange differences arising on

monetary items that form part of the Company’s net investment in foreign operations, regardless of the currency of

the monetary item, are recognised in profit or loss in the Company’s 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 profit or

loss 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 other comprehensive income. Exchange differences arising from such

non-monetary items are also recognised directly in other comprehensive income.

(iii) Foreign Operations

The results and financial position of foreign operations that have a functional currency different from the presentation

currency (Ringgit Malaysia “RM”) of the consolidated financial statements are translated into RM as follows:

- Assets and liabilities for each statement of financial position presented are translated at the closing rate

prevailing at the end of the reporting period;

- Income and expenses for each statement of comprehensive income are translated at average exchange

rates for the year, which approximates the exchange rates at the dates of the transactions; and

- Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January,

2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency

of the foreign operations and translated at the closing rate at the end of the reporting period. Goodwill and

fair value adjustments which arose on the acquisition of foreign subsidiaries before 1 January, 2006 are

deemed to be assets and liabilities of the Company and are recorded in RM at the rates prevailing at the date

of acquisition.

Financial Instruments

(i) Initial recognition and measurement

A financial asset or financial liability is recognised in the statement of financial position when, and only when, the

Group becomes a party to the contractual provisions of the instrument.

A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair

value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial

instrument.

(ii) Financial instrument categories and subsequent measurement

The Group categorises financial instruments as follows:

Financial assets

Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or

loss’ (FVTPL), ‘held to maturity’ investments, ‘available-for-sale’ (AFS) financial assets and ‘loans and receivables’.

The classification depends on the nature and purpose of the financial assets and is determined at the time of initial

recognition.


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Effective Interest Method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating

interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future

cash receipts through the expected life of the financial assets, or (where appropriate) a shorter period, to the net

carrying amount on initial recognition.

Income is recognised on an effective interest basis for debt instruments other than those financial assets classified

as at FVTPL.

(i) Financial Assets At FVTPL

Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated

as at FVTPL.

A financial asset is classified as held for trading if:

• ithasbeenacquiredprincipallyforthepurposeofsellingitinthenearterm;or

• oninitialrecognitionitispartofaportfolioofidentifiedfinancialinstrumentsthattheGroupmanages

together and has a recent actual pattern of short-term profit-taking; or

• itisaderivativethatisnotdesignatedandeffectiveasahedginginstrument.

A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial

recognition if:

• suchdesignationeliminatesorsignificantlyreducesmeasurementorrecognitioninconsistencythat

would otherwise arise; or

• thefinancialasset formspartofagroupoffinancialassetsorfinancial liabilitiesorboth,which is

managed and its performance is evaluated on a fair value basis, in accordance with the Group’s

documented risk management or investment strategies, and information about the grouping is

provided internally on that basis; or

• itformspartofacontractcontainingoneormoreembeddedderivatives,andMFRS139Financial

Instruments: Recognition and Measurement permits the entire combined contract (asset or liability)

to be designated as at FVTPL.

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement

recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or

interest earned on the financial asset and is included in the “other operating income and expenses” line item

in the statements of comprehensive income.

(ii) Held-to-maturity Investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and

fixed maturity dates that the Group has the positive intent and ability to hold to maturity. Subsequent to initial

recognition, held-to-maturity investments are measured at amortised cost using the effective interest method

less any impairment, with revenue recognised on an effective yield basis.

(iii) AFS Financial Assets

AFS financial assets are non-derivatives that are either designated as available-for-sale or are not classified

as loans and receivables, held-to-maturity investment or financial assets at FVTPL. All AFS assets are

measured at fair value at the end of the reporting period. Gains and losses arising from changes in fair value

are recognised in other comprehensive income and accumulated in the investments revaluation reserve,

with the exception of impairment losses, interest calculated using the effective interest method, and foreign

exchange gains and losses on monetary assets, which are recognised in profit or loss. Where the investment

is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the

investment revaluation reserve is reclassified to profit or loss.

AFS equity investments that do not have a quoted market price in an active market and whose fair value

cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such

unquoted equity investments are measured at cost less any identified impairment losses at the end of the

reporting period.

Dividends on AFS equity instruments are recognised in profit or loss when the Group’s right to receive the

dividends is established.

The fair value of AFS monetary assets denominated in that foreign currency is determined in that foreign

currency and translated at the spot rate at the end of the reporting period. The foreign exchange gains and

losses that are recognised in profit or loss are determined based on the amortised cost of the monetary

asset. Other foreign exchange gains and losses are recognised in other comprehensive income.

(iv) Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not

quoted in an active market. Loans and receivables are measured at amortised cost using the effective

interest method, less any impairment. Interest income is recognised by applying the effective interest rate,

except for short-term receivables when the recognition of interest would be immaterial.

Financial liabilities

Financial liabilities are initially measured at fair value, net of transaction costs. It is subsequently measured at

amortised cost using the effective interest method, with the interest expense recognised on an effective yield basis.


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The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating

interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated

future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period to the

net carrying amount on initial recognition.

(i) Financial Liabilities at FVTPL

Financial liabilities are classified as FVTPL when the financial liability is either held for trading or it is designated

as at FVTPL.

A financial liability is classified as held for trading if:

• ithasbeenacquiredprincipallyforthepurposeofrepurchasinginthenearterm;or

• oninitialrecognitionitispartofaportfolioofidentifiedfinancialinstrumentsthattheGroupmanages

together and has a recent actual pattern of short-term profit-taking; or

• itisaderivativethatisnotdesignatedandeffectiveasahedginginstrument.

A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial

recognition if:

• suchdesignationeliminatesorsignificantreducesameasurementorrecognitioninconsistencythat

would otherwise arise; or

• thefinancial liabilityformspartofagroupoffinancialassetsorfinancial liabilitiesorboth,whichis

managed and its performance is evaluated on a fair value basis, in accordance with the Group’s

documented risk management or investment strategy, and information about the grouping is provided

internally on that basis; or

• it formspartofacontractcontainingoneormoreembeddedderivatives,andFRS139Financial

Instruments: Recognition and Measurement permits the entire combined contract (asset or liability)

to be designated as at FVTPL.

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement

recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest

paid on the financial liability and is included in the ‘other gains and losses’ line item in the statements of

comprehensive income.

(ii) Other Financial Liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method,

with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of

allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts

estimated future cash payments through the expected life of the financial liability, or (where appropriate) a

shorter period, to the net carrying amount on initial recognition.

Derecognition

A financial asset or part of it is derecognised when, and only when, the contractual rights to the cash flows

from the financial asset expire or the financial asset is transferred to another party without retaining control or

substantially all risks and rewards of the assets. On derecognition of a financial asset, the difference between

the carrying amount and the sum of the consideration received (including any new asset obtained less any

new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in

profit or loss.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract

is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the

carrying amount of the financial liability extinguished or transferred to another party and the consideration

paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

Property, Plant and Equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less any accumulated depreciation and any accumulated

impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly

attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing

the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost

of materials and direct labour.

For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs.

Cost also may include transfers from other comprehensive income of any gain or loss on qualifying cash flow

hedges of foreign currency purchases of property, plant and equipment. Purchased software that is integral to the

functionality of the related equipment is capitalised as part of that equipment.

The cost of property, plant and equipment recognised as a result of a business combination is based on fair value

at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged

between knowledgeable willing parties in an arm’s length transaction after proper marketing wherein the parties had

each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment

is based on the quoted market prices for similar items when available and replacement cost when appropriate.


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When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for

as separate items (major components) of property, plant and equipment.

The gains or losses on disposal of an item of property, plant and equipment are determined by comparing the

proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within

“other income” or “other expenses” respectively in profit or loss.

(ii) Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the

item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost

can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day

servicing of property, plant and equipment are recognised in the profit or loss as incurred.

(iii) Depreciation

Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted

for cost, less its residual value.

Depreciation is recognised in the profit or loss on a straight-line basis over the estimated useful lives of each part of

an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their

useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold

land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are

ready for their intended use.

The estimated useful lives for the current and comparative periods are as follows:

Buildings 50 years

Plantandmachinery 8years

Container yards 20 years

Infrastructure 10 years

Rolling stocks 20 - 30 years

Coaches 20 years

Railandroadvehicles 8years

Computer 5 years

Office equipment 5 years

Furniture and fittings 5 years

Renovation 10 years

Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate at end of the

financial year.

Assets held for sale

Non-current assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.

Leases

(i) Finance lease

Leases are classified as finance lease whenever the terms of the lease transfer substantially all the risks and rewards

of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present

value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to

the lessor is included in the statement of finance position as a finance lease obligation.

Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve

a constant rate of interest on the remaining balance of the liabilities. Finance charges are charged directly against

income, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance

with the Group’s general policy on borrowing costs.

(ii) Operating lease

Leases, where the Group does not assume substantially all the risks and rewards of the ownership are classified as

operating leases and, the leased assets are not recognised on the Group’s statement of financial position.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the

lease unless another systematic basis is more representative of the time pattern in which economic benefits from the

leased asset are consumed. Lease incentives received are recognised in profit or loss as an integral part of the total

lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in

which they are incurred.

Inventories

Inventories comprising of spare parts, fuels and other consumables which are not intended for resale, are stated at original

purchase price plus costs incurred in bringing them to their existing location and condition less any allowance for obsolete

inventories. Allowance is made for obsolete, slow-moving and defective inventories.

Statements of Cash Flows

The Group and the Company adopt the indirect method in the preparation of the statements of cash flows.


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Cash and cash equivalents, which comprise deposits with licensed banks and other financial institutions, cash on hand

and at bank, are short-term, highly liquid investments and are readily convertible to cash with insignificant risks of changes

in value.

Impairment

(i) Financial assets

All financial assets (except for investments in subsidiaries and associates) are assessed at each reporting date

whether there is any objective evidence of impairment as a result of one or more events having an impact on the

estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not

recognised. For an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective

evidence of impairment.

An impairment loss in respect of loans and receivables is recognised in profit or loss and is measured as the

difference between the asset’s carrying amount and the present value of estimated future cash flows discounted

at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an

allowance account.

An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured

as the difference between the asset’s acquisition cost (net of any principal repayment and amortisation) and the

asset’s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an

available-for-sale financial asset has been recognised in the other comprehensive income, the cumulative loss in

other comprehensive income is reclassified from equity to profit or loss.

An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and

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.

Impairment losses recognised in profit or loss for an investment in an equity instrument is not reversed through profit

or loss.

If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related

to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to

the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the

impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised

in profit or loss.

(ii) Other assets

The carrying amounts of other assets (except for inventories, deferred tax asset and assets arising from employee

benefits) are reviewed at the end of each reporting period to determine whether there is any indication of impairment.

If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill, and intangible assets

that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each period

at the same time.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates

cash inflows from continuing use that are largely independent of the cash inflows of other assets (known as cash-

generating unit). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated

to a cash-generating unit or a group of cash-generating units that are expected to benefit from the synergies of the

combination.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less

costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a

pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to

the asset or cash-generating unit.

An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its

estimated recoverable amount.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units

are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit or the group

of cash-generating units and then to reduce the carrying amount of the other assets in the cash-generating unit (or

a group of cash-generating units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised

in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased

or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine

the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the

extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined,

net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are

credited to profit or loss in the financial year in which the reversals are recognised.

Equity instruments

Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.

(i) Issue expenses

Costs directly attributable to issue of instruments classified as equity are recognised as a deduction from equity.

(ii) Preference share capital

Preference share capital is classified as equity if it is non-redeemable, or is redeemable but only at the Group’s

option, and any dividends are discretionary. Dividends thereon are recognised as distributions within equity.


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Preference share capital is classified as financial liability if it is redeemable on a specific date or at the option of the

equity holders, or if dividend payments are not discretionary. Dividends thereon are recognised as interest expense

in profit or loss as accrued.

Employee Benefits

(i) Short term employee benefits

Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are

measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the

Group and the Company has a present legal or constructive obligation to pay this amount as a result of past service

provided by the employee and the obligation can be estimated reliably.

(ii) Defined contribution plan

The Group’s contributions to statutory pension funds are charged to profit or loss in the year to which they relate.

Once the contributions have been paid, the Group has no further payment obligations.

(iii) Defined benefit plans

The Group’s net obligation in respect of defined benefit retirement plans is calculated separately for each plan by

estimating the amount of future benefit that employees have earned in return for their service in the current and

prior periods; that benefit is discounted to determine its present value. Any unrecognised past service costs and

the fair value of any plan assets are deducted. The discount rate is the yield at the end of the reporting period on

high quality corporate bonds that have maturity dates approximating the terms of the Group’s obligations and that

are denominated in the same currency in which the benefits are expected to be paid. The calculation is performed

annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the

Group, the recognised asset is limited to the net total of any unrecognised past service costs and the present value

of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to

the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum funding

requirements that apply to any plan in the Group. An economic benefit is available to the Group if it is realisable

during the life of the plan, or any settlement of the plan liabilities.

When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees

is recognised in profit or loss on a straight-line basis over the average period until the benefits become vested. To

the extent that the benefits vest immediately, the expense is recognised immediately in profit or loss.

The Group recognises all actuarial gains and losses arising from defined benefit plans in other comprehensive

income and all expenses related to defined benefit plans in personnel expenses in profit or loss.

The Group recognises gains and losses on the curtailment or settlement of a defined benefit plan when the

curtailment or settlement occurs. The gain or loss on curtailment comprises any resulting change in the fair value of

plan assets, change in the present value of defined benefit obligation and any related actuarial gains and losses and

past service cost that had not previously been recognised.

(iv) Termination benefits

Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic

possibility of withdrawal, to a formal detailed plan to terminate employment before the normal retirement date.

Termination benefits for voluntary redundancies are recognised as expenses if the Group has made an offer

encouraging voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances

can be estimated reliably. If benefits are payable more than 12 months after the reporting period, then they are

discounted to their present value.

Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be

estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions

are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of

the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

Contingent liabilities

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably,

the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible

obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are

also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

Revenue and other income

(i) Services

Revenue from services rendered is recognised in profit and loss net of discounts as and when the services are

performed. If it is probable that discounts will be given and the amount can be measured reliably, then the discount

is recognised as a reduction of revenue.

(ii) Claims from the Government for uneconomic services

Claims for uneconomic services are recognised on an accrual basis and is based on an annual budget submitted

to the Government of Malaysia.


86K

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RT 2012

(iii) Rental income

Rental income from property is recognised in profit or loss on a straight-line basis over the term of the lease. Lease

incentives granted are recognised as an integral part of the total rental income, over the term of the lease. Rental

income from subleased property is recognised as other income.

(iv) Interest income

Interest income is recognised as it accrues using the effective interest method in profit or loss.

(v) Dividend income

Dividend income is recognised in profit or loss on the date that the Group’s or the Company’s right to receive

payment is established, which in the case of quoted securities is the ex-dividend date.

(vi) Management fee

Management fees are recognised in profit or loss when management services are rendered.

(vii) Government grants

Government grants that compensate the Group for the cost of an asset are recognised initially as deferred income

at fair value when there is reasonable assurance that they will be received and that the Group will comply with the

conditions associated with the grant and are then recognised in profit or loss as other income on a systematic basis

over the useful life of the asset.

Grants that compensate the Group for expenses incurred are recognised in profit or loss as other income on a

systematic basis in the same periods in which the expenses are recognised.

Borrowing costs

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are

recognised in profit or loss using the effective interest method.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets

that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the

cost of those assets.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset

is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended

use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities

necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying

assets is deducted from the borrowing costs eligible for capitalisation.

Income Tax

Income tax comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that

it relates to a business combination or items recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted

by the end of the reporting period, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of

assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the initial

recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor

taxable profit nor loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences

when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and

they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they

intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which

the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are

reduced to the extent that it is no longer probable that the related tax benefit will be realised.

A tax incentive that is not a tax base of an asset is recognised as a reduction of tax expense in profit or loss as and when it

is granted and claimed. Any unutilised portion of the tax incentive is recognised as a deferred tax asset to the extent that it

is probable that future taxable profits will be available against which the unutilised tax incentive can be utilised.

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

(i) Critical judgments in applying the Company’s accounting policies

In the process of applying the Company’s accounting policies, which are described in Note 3, management is of the

opinion that there are no instances of application of judgement which are expected to have a significant effect on the

amounts recognised in the financial statements.


88K

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(ii) Key sources of estimation uncertainty

Management believes that there are no key assumptions made concerning the future, and other key sources of

estimation uncertainty at the end of each reporting period, that have a significant risk of causing a material adjustment

to the carrying amounts of assets and liabilities within the next financial year other than as follows:

Impairment of property, plant and equipment

The Group has assessed, based on certain impairment indications, that several of its assets may be impaired or

impairment in previous financial years may be reversible. The recoverable amounts of the assets were determined

based on value-in-use calculations. Based on these calculations, an impairment loss of RM84,643,000 were

recognised for the financial year ended 31 December 2012 as shown in Note 11.

Allowance for doubtful debts

Allowance for doubtful debts is made based on the evaluation of collectability and aging analysis of accounts and

on management’s estimate. A considerable amount of judgement is required in assessing the ultimate realisation

of these receivables, including the creditworthiness and the past collection history of each customer. If the financial

conditions of the customers with which the Group deals were to deteriorate, resulting in an impairment of their ability

to make payments, additional allowance may be required.

5. REVENUE

Freight and haulage services 198,945 192,913 127,383 125,186

Passenger services 81,204 91,781 81,204 91,781

Commuter services 79,309 82,824 79,309 82,824

Electric train services 31,886 23,939 31,886 23,939

Parcel and mail services 22,500 20,686 379 10

Claims from the Government for uneconomic services 40,827 28,820 40,827 28,820

454,671 440,963 360,988 352,560

Interest expense of financial liabilities that are not at fair value through profit or loss:

- Term loans 19,008 10,324 19,008 10,324

- Bank borrowings 9,505 6,371 9,402 6,019

- Al Bai Bithaman Ajil financing 177 234 - -

- RCCPS 570 570 570 570

- Others 415 324 289 324

29,675 17,823 29,269 17,237


2012

RM’000

2011

RM’000

2012

RM’000

2011

RM’000


2012

RM’000

2011

RM’000

2012

RM’000

2011

RM’000

6. FINANCE COSTS


90K

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T 20

1291

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RT 2012

7. LOSS BEFORE TAX

Loss before tax is arrived at after charging (crediting)/charging :

Depreciation of property, plant and equipment (Note 11) 96,581 91,686 90,552 87,957

Impairment loss on property, plant and equipment

(Note 11) 84,643 20,600 84,643 20,600

Lease rental of locomotives 19,809 20,224 19,809 20,224

Allowance for doubtful debts of trade and other

receivables 3,394 3,332 2,522 1,984

Property, plant and equipment written off 910 2,174 910 2,174

Rental of premises 793 31 163 31

Hire of plant and equipment 411 6,213 411 460

Auditor’s remuneration 364 421 240 242

Director’s fees 100 76 96 74

Depreciation of investment properties (Note 12) 57 57 - -

Impairment loss on other investment 30 - 30 -

Provision for inventory 205 - 205 -

Net unrealised gain on foreign exchange (33) (33) - -

Reversal of provision of bonus (64) - - -

Amortisation of Government grant (78) (78) (78) (78)

Finance income

- loan stock (490) (490) (490) (490)

- fixed deposits (752) (1,732) (17) (861)

- staff loans (30) (33) (30) (33)

Hiring of machines (1,807) (1,228) (1,807) (1,228)

Gain on disposal of property, plant and equipment * (25,892) (1,265) (578) (1,198)


2012

RM’000

2011

RM’000

2012

RM’000

2011

RM’000


2012

RM’000

2011

RM’000

2012

RM’000

2011

RM’000

* Included in this income is recognition of sale of land by KTMB (Prai) Sdn Bhd, a subsidiary of Keretapi Tanah Melayu Berhad

“KTMB” to Prima Prai Sdn Bhd, based on developmental agreement signed on 15 September 1995. The development

projectwasconcludedandfullsettlementhasbeenmadeon28March2011.DetailofthearrangementexplainedinNote

21.

** Included in rental income from third parties is income from property rental that was derecognised in financial year 2011

amountingtoRM20,094,989duetouncertaintyintheownershipofthesaidincome.

In 2011, the Auditor General has audited Railway Assets Corporation “RAC” financial statements and in their opinion that

RAC is the rightful owner of the land and building. RAC was established in 1992 under Railway Act 1991 with the main

purpose of taking over all assets and liabilities of KTMB.

Due to this, there is no recognition of income from property rental in KTMB’s financial statements for year ended

31 December 2011.

In 2012, a decision was reached between RAC and KTMB whereby KTMB able to recognise the income from property

rental up to agreed cut-off date and thereafter the management of rental income from properties will be managed by RAC.

Reversal of allowance for doubtful debts of trade and

other receivables (4,006) (3,808) (3,327) (2,004)

Rental income from third parties** (38,056) (4,174) (37,946) (1,737)

Claims from the Government for uneconomic services (40,827) (28,820) (40,827) (28,820)

Dividend income

- associates - - (22,720) (13,773)

- subsidiaries - - (1,756) (1,109)

Management fees from subsidiaries - - (288) (288)


(Continued)

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1293

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8. EMPLOYEE BENEFITS

Wages and salaries 132,409 129,568 119,295 115,224

Bonus 2,149 1,963 - -

Incentives 12,022 12,697 - -

Director’s remuneration:

Directors of the Company

- salaries 487 490 487 490

- other emoluments 239 94 239 94

Directors of subsidiaries

- salaries 18 18 - -

- other emoluments 2 6 - -

Employees Provident Funds 19,195 17,702 17,403 15,888

Increase in liability for defined benefit plan (Note 29) 16,408 13,848 16,408 13,848

Provision for housing loan interest 26 42 26 42

Other benefits 80,427 65,194 76,808 63,829

263,382 241,622 230,666 209,415


2012

RM’000

2011

RM’000

2012

RM’000

2011

RM’000

The Government of Malaysia issued a directive to all corporatised entities that with effect from July 1994, the difference

between the commercial and subsidised rates of interest pertaining to staff housing loans, had to be settled by the

corporatisedentities concerned. Theoutstandingclaimsagainst theCompanyas referred to inNote28amounted to

RM5,756,000(2011:RM6,578,000).

2012 Remuneration received from the Group

The GroupSalary

RM’000

Fees

RM’000

Ex- Gratia

RM’000

Other

Emoluments

RM’000

Benefits -

in - kind

RM’000

Total

RM’000

Executive Directors

Datuk Elias bin Kadir 319 - 13 63 24 419

Dr Aminuddin bin Adnan (resigned on 30.04.2012) 168 - 21 142 - 331

Ch’ng Seong Keng 18 - - 2 - 20

505 - 34 207 24 770

Non-Executive Directors

Dato’ Sri’ Ir. Mohd Zin bin Mohamed - 96 - 63 36 195

Selvarajoo a/l Manikam - 9 - 25 - 34

Dato’ Sri Zakaria bin Bahari - 9 - 34 - 43

Rosli bin Abdullah - 9 - 38 - 47

Harun bin Johari - 9 - 16 - 25

Ruhaizah binti Mohamed Rashid - 1 - 24 - 25

Sr. Ahmad Zainuddin bin Jamaluddin - - - 31 - 31

Norazura binti Tadzim - 5 - 34 - 39

Datuk Kamaruzaman bin Mohd Noor - 7 - 37 - 44

Jamela binti Mohd Syed (resigned on 25.02.2012) - 9 - 1 - 10

9. KEY MANAGEMENT PERSONNEL COMPENSATION


94K

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1295

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The GroupSalary

RM’000

Fees

RM’000

Ex- Gratia

RM’000

Other

Emoluments

RM’000

Benefits -

in - kind

RM’000

Total

RM’000

Abd Rahim bin Daud (resigned on 02.03.2011) - 2 - - - 2

Nik Roslini binti Raja Ismail (resigned on 30.06.2011) - 5 - - - 5

Datuk Elias bin Kadir (resigned on 30.06.2011) - 5 - - - 5

- 166 - 303 36 505

Total Directors’ Remuneration 505 166 34 510 60 1,275

Other key management personnel:

Short-term employee benefits 3,317 - 399 306 - 4,022

Employee Provident Funds - - - 408 - 408

3,317 - 399 714 - 4,430

Other key management personnel comprises persons other than the Directors of Group entities, having authority and

responsibility for planning, directing and controlling the activities of the entity either directly or indirectly.

2012 Remuneration received from the Company

The CompanySalary

RM’000

Fees

RM’000

Ex- Gratia

RM’000

Other

Emoluments

RM’000

Benefits -

in - kind

RM’000

Total

RM’000


Executive Directors

Datuk Elias bin Kadir 319 - 13 63 24 419

Dr Aminuddin bin Adnan (resigned on 30.04.2012) 168 - 21 142 - 331

487 - 34 205 24 750







Ruhaizah binti Mohamed Rashid - 1 - 24 - 25

Sr. Ahmad Zainuddin bin Jamaluddin - - - 26 - 26

Norazura binti Tadzim - 5 - 34 - 39

Datuk Kamaruzaman bin Mohd Noor - 7 - 37 - 44

Jamela binti Mohd Syed (resigned on 25.02.2012) - 9 - 1 - 10

96K

ER

ETA

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DA

NN

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L R

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T 20

1297

KE

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U B

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Remuneration received from the Company

Salary

RM’000

Fees

RM’000

Ex- Gratia

RM’000

Other

Emoluments

RM’000

Benefits -

in - kind

RM’000

Total

RM’000


Nik Roslini binti Raja Ismail (resigned on 30.06.2011) - 5 - - - 5

Datuk Elias bin Kadir (resigned on 30.06.2011) - 5 - - - 5

- 166 - 290 36 492

Total Directors’ Remuneration 487 166 34 495 60 1,242


Short-term employee benefits 2,866 - 234 282 - 3,382


2,866 - 234 632 - 3,732




The GroupSalary

RM’000

Fees

RM’000

Ex- Gratia

RM’000

Other

Emoluments

RM’000

Benefits -

in - kind

RM’000

Total

RM’000


Executive Directors

Dr Aminuddin bin Adnan 490 - - 94 12 596

Ch’ng Seong Keng 18 - - 6 - 24

508 - - 100 12 620







Puan Sri Dato’ Aida Boey binti Abdullah - 4 - - - 4

Ruhaizah binti Mohamed Rashid - - - 1 - 1

Norazura binti Tadzim - - - 6 - 6

Dato’ Othman bin Abd Razak - 1 - - - 1

Dato’ Mani Usilappan - 1 - - - 1

Datuk Kamaruzaman bin Mohd Noor - - - 6 - 6

Dr Kader bin Sultan Md Ismail - 4 - - - 4

Jamela binti Mohd Syed - 8 - 8 - 16

Datuk Elias bin Kadir (resigned on 30.06.2011) - 4 - 5 - 9

98K

ER

ETA

PI T

AN

AH

ME

LAY

U B

ER

HA

DA

NN

UA

L R

EP

OR

T 20

1299

KE

RE

TAP

I TAN

AH

ME

LAY

U B

ER

HA

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NN

UA

L RE

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Remuneration received from the Group

Salary

RM’000

Fees

RM’000

Ex- Gratia

RM’000

Other

Emoluments

RM’000

Benefits -

in - kind

RM’000

Total

RM’000


Nik Roslini binti Raja Ismail (resigned on 30.06.2011) - 9 - 5 - 14

- 125 - 84 19 228

Total Directors’ Remuneration 508 125 - 184 31 848


Short-term employee benefits 3,357 - - 204 - 3,561


3,357 - - 660 - 4,017



2011 Remuneration received from the Company

The CompanySalary

RM’000

Fees

RM’000

Ex- Gratia

RM’000

Other

Emoluments

RM’000

Benefits -

in - kind

RM’000

Total

RM’000


Executive Directors

Dr Aminuddin bin Adnan 490 - - 94 12 596

490 - - 94 12 596







Puan Sri Dato’ Aida Boey binti Abdullah - 4 - - - 4

Ruhaizah binti Mohamed Rashid - - - 1 - 1

Norazura binti Tadzim - - - 6 - 6

Dato’ Othman bin Abd Razak - 1 - - - 1

Dato’ Mani Usilappan - 1 - - - 1

Datuk Kamaruzaman bin Mohd Noor - - - 6 - 6

Dr Kader bin Sultan Md Ismail - 4 - - - 4

Jamela binti Mohd Syed - 8 - 8 - 16

Datuk Elias bin Kadir (resigned on 30.06.2011) - 4 - 5 - 9

100

KE

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TAP

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AD

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RT

2012

101K

ER

ETA

PI TA

NA

H M

ELA

YU

BE

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AD

AN

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Remuneration received from the Company

Salary

RM’000

Fees

RM’000

Ex- Gratia

RM’000

Other

Emoluments

RM’000

Benefits -

in - kind

RM’000

Total

RM’000


Nik Roslini binti Raja Ismail (resigned on 30.06.2011) - 9 - 5 - 14

- 125 - 80 19 224

Total Directors’ Remuneration 490 125 - 174 31 820


Short-term employee benefits 3,060 - - 204 - 3,264


3,060 - - 599 - 3,659




10. INCOME TAX EXPENSE/(CREDIT)

Major components of income tax expense/(credit) include:

Estimated tax payable:

Current year 552 2,391 - -

Under/(Over)provision in prior years 6,236 (1,811) 8,359 -

6,788 580 8,359 -

Deferred tax expense (Note 17):

Current year (1,175) (571) - -

Under/(Over)provision in prior years 2,534 (219) - -

1,359 (790) - -

8,147 (210) 8,359 -


2012

RM’000

2011

RM’000

2012

RM’000

2011

RM’000

102

KE

RE

TAP

I TA

NA

H M

ELA

YU

BE

RH

AD

AN

NU

AL

RE

PO

RT

2012

103K

ER

ETA

PI TA

NA

H M

ELA

YU

BE

RH

AD

AN

NU

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EP

OR

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Loss before tax (231,993) (103,663) (275,591) (119,921)

Tax at statutory tax rate of 25% (57,998) (25,916) (68,898) (29,980)

Share of tax of associates (9,949) (5,715) - -

Tax effects of:

Non-deductible expenses 33,549 3,188 24,972 2,874

Non-taxable income (12,871) - (6,382) -

Deferred tax asset not recognised during the year 50,308 30,263 50,308 27,106

Adjusted of loss under Section 44A of Income Tax Act,

1967-Group relief for Companies (3,662) - - -

Under/(Over)provision of current tax in prior year 6,236 (1,811) 8,359 -

Under/(Over)provision of deferred tax in prior years 2,534 (219) - -

8,147 (210) 8,359 -


2012

RM’000

2011

RM’000

2012

RM’000

2011

RM’000


11. PROPERTY, PLANT AND EQUIPMENT

The Group

Freehold land and buildings

RM’000

Plant and machinery,

infrastructure, container

yards, rolling stocks and

rail vehiclesRM’000

Computer, road

vehicles, office

equipment, furniture and

fittings and renovation

RM’000

Under construction

RM’000Total

RM’000

Cost

As of 1 January 2011 12,953 1,408,494 112,006 49,605 1,583,058

Additions 103 88,811 7,300 14,858 111,072

Disposals - (2,207) (7,382) - (9,589)

Reclassification - 13,363 20,541 (33,904) -

Write-offs (68) (903) (3,153) - (4,124)

As of 31 December 2011/

1 January 2012

12,988 1,507,558 129,312 30,559 1,680,417

Additions 7,568 804 5,139 48,313 61,824

Disposals (450) (4,711) (1,923) - (7,084)

Reclassification - 58,888 416 (59,304) -

Write-offs - (7,243) - - (7,243)

As of 31 December 2012 20,106 1,555,296 132,944 19,568 1,727,914

A reconciliation of income tax expense applicable to profit before tax at the statutory income tax rate to income tax expense

at the effective income tax rate of the Company is as follows:

104

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2012

105K

ER

ETA

PI TA

NA

H M

ELA

YU

BE

RH

AD

AN

NU

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EP

OR

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Accumulated depreciation

As of 1 January 2011 2,446 812,199 90,083 - 904,728

Depreciation for the year 204 78,719 12,763 - 91,686

Disposals - (75) (5,052) - (5,127)

Write-offs (2) (368) (1,580) - (1,950)


1 January 2012

2,648 890,475 96,214 - 989,337

Depreciation for the year 2,247 84,986 9,348 - 96,581

Disposals (190) (4,265) (1,605) - (6,060)

Write-offs - (6,333) - - (6,333)

As of 31 December 2012 4,705 964,863 103,957 - 1,073,525

The Group


RM’000





Computer, road

vehicles, office



RM’000

Under construction

RM’000Total

RM’000


Accumulated impairment loss

As of 1 January 2011 1,740 385,970 12,790 - 400,500

Impairment loss for the year - 20,600 - - 20,600


1 January 2012

1,740 406,570 12,790 - 421,100


As of 31 December 2012 1,740 491,213 12,790 - 505,743

Net book value

As of 1 January 2011 8,767 210,325 9,133 49,605 277,830

As of 31 December 2011 8,600 210,513 20,308 30,559 269,980

As of 31 December 2012 13,661 99,220 16,197 19,568 148,646

The Group


RM’000





Computer, road

vehicles, office



RM’000

Under construction

RM’000Total

RM’000

106

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TAP

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PO

RT

2012

107K

ER

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NA

H M

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Cost

As of 1 January 2011 3,305 1,307,709 97,754 49,605 1,458,373

Additions 103 88,811 3,279 14,858 107,051

Disposals - (2,207) (2,553) - (4,760)

Reclassification - 13,363 20,541 (33,904) -

Write-offs (68) (903) (3,153) - (4,124)


1 January 2012

3,340 1,406,773 115,868 30,559 1,556,540

Additions 440 607 3,882 48,313 53,242

Disposals - (4,610) (889) - (5,499)

Reclassification - 58,888 416 (59,304) -

Write-offs - (7,243) - - (7,243)

As of 31 December 2012 3,780 1,454,415 119,277 19,568 1,597,040

The Company


RM’000





Computer, road

vehicles, office



RM’000

Under construction

RM’000Total

RM’000



As of 1 January 2011 1,027 719,169 79,790 - 799,986


Disposals - (75) (557) - (632)

Write-offs (2) (368) (1,580) - (1,950)


1 January 2012

1,093 797,445 86,823 - 885,361


Disposals (1) (4,206) (627) - (4,834)

Write-offs - (6,333) - - (6,333)

As of 31 December 2012 1,166 869,259 94,321 - 964,746

The Company


RM’000





Computer, road

vehicles, office



RM’000

Under construction

RM’000Total

RM’000

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Accumulated impairment losses

As of 1 January 2011 1,740 385,970 12,790 - 400,500

Impairment loss for year - 20,600 - - 20,600


1 January 2012

1,740 406,570 12,790 - 421,100


As of 31 December 2012 1,740 491,213 12,790 - 505,743

Net book value

As of 1 January 2011 538 202,570 5,174 49,605 257,887

As of 31 December 2011 507 202,758 16,255 30,559 250,079

As of 31 December 2012 874 93,943 12,166 19,568 126,551

The Company


RM’000





Computer, road

vehicles, office



RM’000

Under construction

RM’000Total

RM’000


(a) The Group’s freehold land and buildings comprise:

As of 1 January 2011

Freehold land 3 - 3

Buildings 12,950 4,186 8,764

12,953 4,186 8,767

As of 31 December 2011

Freehold land 3 - 3

Buildings 12,985 4,388 8,597

12,988 4,388 8,600

As of 31 December 2012

Freehold land 3 - 3

Buildings 20,103 6,445 13,658

20,106 6,445 13,661

The Group

Cost

RM’000

Accumulated

depreciation and

impairment

RM’000

Net book value

RM’000

(b) The Company has been granted the exclusive use and occupation of parcels of railway land and other property,

plant and equipments vested in the Railway Assets Corporation by the Government of Malaysia.

(c) Prime movers, trailers and side loaders of a subsidiary with a net book value of RM3,075,601 (31 December 2011:

RM5,326,209)and (1January2011:RM5,891,136)werepledgedtobanks forbanking facilitiesgrantedto that

subsidiary as referred to in Note 25.

(d) Buildings of a subsidiary with a net book value of RM5,903,463 (31 December 2011: RM6,242,617) and (1 January

2011:RM6,378,301)havebeenpledgedtobanksforbankingfacilitiesgrantedtothatsubsidiaryasdisclosedin

Note 25.

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(e) Included in property, plant and equipment of the Group and the Company are assets acquired under Government

grants, as disclosed in Note 27, costing:

31.12.2012

RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Plant and machinery, infrastructure, rolling stocks, trailers, prime movers and rail vehicles 1,165 1,165 1,165

The Group and the Company

31.12.2012

RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Other operating expenses

- Cargo services (11,284) 7,701 119,525- Intercity services 10,646 8,067 107,730- Commuter services 85,281 4,832 38,371

84,643 20,600 265,626

(f) Measurement of the recoverable amount of cash generating units (“CGU”)

Impairment losses have been recognised in the following line items of the statement of comprehensive income:

Following continuing significant operating losses, an impairment test was conducted by management to determine

whether the recoverable amount of property, plant and equipment used in operations exceed its carrying amount.

For the purpose of the impairment test, the property, plant and equipment were divided into three (3) independent

cash generating units (“CGUs”):

i) Cargo services

ii) Intercity services

iii) Commuter services


The value in use was determined by discounting the future cash flows generated from the continuing use of the cash

generating unit and was based on the following key assumptions:

• Cashflowswereprojectedbasedonhistoricalinformation,actualoperatingresultsandavailablemanagement

budgets/forecast covering a five-year period.

• Revenuegrowthwasprojectedasfollows:

(i) For Cargo Services : the growth for year 2013 is based on average monthly trends for the past three

yearsand6%perannumgrowthrateforyear2014–2017,(31December2011:acontinuous10%

- 20% per annum growth rate) and (1 January 2011: a continuous 10% per annum growth rate).

(ii) For Intercity Services : 22% per annum growth in 2013, 13% per annum growth rate for 2014, 5%

growthrateforyear2015–2017,(31December2011and1January2011:acontinuous5%per

annum growth rate).

(iii) For Commuter, revenue is projected based on average train set available.

• Railwayoperatingexpenseswereprojectedbasedon11%escalationrateperannumforCargo

(31 December 2011 and 1 January 2011: 3% per annum escalation rate).

• Personnelexpenseswereprojectedbasedon5%annualincrementandsalaryadjustmentof8%forevery3

years(31December2011and1January2011:3.5%annualincrementandsalaryadjustmentof8%every

3 years).

• Fuelcostisassumedtobebasedonfixedsubsidisedpricefortheentirecashflowsperiod.

• Ticketpricesareassumedtobefixedbasedon2012prices.

• Management assumes the annual uneconomic service claim from the Government of Malaysia will be

available throughout the period of the cash flows.

• Apre-taxdiscountrateof6.6%perannum(31December2011and1January2011:6.6%)wasappliedin

determining the recoverable amount.

The values assigned to the key assumptions represent management’s assessment of future trends and are based

on external sources and historical data.

During the year, the carrying amount of the above CGUs have been fully impaired as of 31 December 2012. The

management is of the opinion that the remaining amount with net carrying amount of RM126,551,000 has no

indication that these assets are impaired.

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12. INVESTMENT PROPERTIES

The GroupBuildings

RM’000Total

RM’000

Cost

As of 1 January 2011/31 December 2011/1 January 2012/

31 December 2012 2,846 2,846


As of 1 January 2011 (697) (697)

Depreciation for the year (57) (57)

As of 31 December 2011/1 January 2012 (754) (754)

Depreciation for the year (57) (57)

As of 31 December 2012 (811) (811)

Net book value

As of 1 January 2011 (2,149) (2,149)

As of 31December 2011 (2,092) (2,092)

As of 31December 2012 (2,035) (2,035)

13. INVESTMENTS IN SUBSIDIARIES

The Company31.12.2012

RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Unquoted shares at cost 6,849 6,849 6,849

Less: Accumulated impairment losses (200) (200) (200)

6,649 6,649 6,649

Details of the Company’s subsidiaries are as follows:

Name of SubsidiariesCountry of

Incorporated Principal ActivitiesEffective Equity

Interest

2012%

2011%

Held by the Company

Multimodal Freight Sdn. Bhd. Malaysia Provision of haulage freight forwarding and related services

100 100

KTM Distribution Sdn. Bhd. Malaysia Management of warehouses, office space and the provision of parcel and courier services

100 100

KTMB (Car Park) Sdn. Bhd. Malaysia Car park operator 100 100

KTMB Catering Services Sdn. Bhd. Malaysia Dormant - Caterers and proprietor of restaurants

100 100

KTMB (Sentul) Sdn. Bhd. Malaysia Property investment 100 100

KTMB Consultancy Services Sdn. Bhd.

Malaysia Dormant - Provision of railway consultancy services

100 100

KTMB (Brickfields) Sdn. Bhd. Malaysia Dormant - Property investment

100 100

ET Sdn. Bhd. Malaysia Dormant - Property investment

100 100

KTMB (Sungei Petani) Sdn. Bhd. Malaysia Dormant - Property investment

100 100

KTMB Heritage Hotel Sdn. Bhd. Malaysia Dormant - Operator of hotels,restaurants and cafes and related services

100 100

KTMB (Prai) Sdn. Bhd. Malaysia Property investment 100 100

Held through subsidiaries

MMF Logistics Pte. Ltd.# Singapore Dormant - Provision of freight forwarding services

100 100

Syarikat Pengangkutan Rel Utara Sdn. Bhd.#

Malaysia Provision of freight forwarding services 63 63

Kiriman Ekspres Sdn. Bhd. Malaysia Dormant - Provision of door to door parcel delivery services

100 100

KTMB Parking Pte. Ltd.# Singapore Car park operator 100 100

KTMB (Railway Village) Sdn. Bhd. Malaysia Property investment 100 100

# The financial statements of these companies were examined by auditors other than the auditors of the Company.


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14. INVESTMENTS IN ASSOCIATES

The Group31.12.2012

RM’000

31.12.2011

RM’000

1.1.2011

RM’000


Unquoted loan stocks at cost 7,000 7,000 7,000

28,255 28,255 28,255

Share of post-acquisition reserves 129,601 117,315 106,982

157,856 145,570 135,237


At 31 December 157,831 145,545 135,212


RM’000

31.12.2011

RM’000

1.1.2011

RM’000


Unquoted loan stocks at cost 7,000 7,000 7,000

25,855 25,855 25,855


At 31 December 25,830 25,830 25,830


Details of the associates, which are all incorporated in Malaysia, are as follows:

Name of Associates Principal ActivitiesEffective Equity

Interest

2012%

2011%

Held by the Company

Fiberail Sdn. Bhd. Provision of services to install, manage, operate and maintain an optical fibre telecommunication system

36 36

Ipoh Cargo Terminal Sdn.Bhd. Inland clearance depot operator 30 30

Syarikat Perjalanan Terus Butterworth Kuala Lumpur Sdn. Bhd. @

Dormant- Provision of bus services

25 25

Rail Tech Industries Sdn. Bhd. # Dormant- Manufacture of rolling stock, repair and maintenance services

26 26

Admiral Cove Development Sdn. Bhd. Property and resort development 20 20

Kuala Lumpur Sentral Sdn. Bhd. Property development 26 26

Admiral Hill Hotel Sdn. Bhd. Hotel resort and related tourist development 20 20

Held through a subsidiary:

Sentul Raya Sdn. Bhd. Property development 30 30

@ Currently under liquidation.

# In 1994, the Company acquired a 50% equity interest in Rail Tech Industries Sdn. Bhd. (“RTI”), a company

incorporated in Malaysia for a cash consideration of RM1; In accordance with the joint venture and shareholder’s

agreements entered into with UMW Corporation Sdn. Bhd., it was the intention of both parties that the proportion of

the shareholding in RTI for the Company and UMW Corporation Sdn. Bhd. shall at all times be 26:74 respectively.

Hence, the results of RTI have been equity accounted based on the 26% shareholding.

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The summarised financial statements of the associates are as follows:

31.12.2012

RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Assets and liabilities

Current assets 297,158 294,301 279,725

Non-current assets 1,260,783 1,355,969 1,300,804

Total assets 1,577,941 1,650,270 1,580,529

Current liabilities 584,696 656,699 605,441

Non-current liabilities 348,714 340,454 398,683

Total liabilities 933,410 997,153 1,004,124

Results

Revenue 266,469 257,959 307,373

Profit for the year 104,597 67,307 43,844

15. OTHER INVESTMENTS

Shares Unquoted

The Group31.12.2012

RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Non-current

Available-for-sale financial assets 355 355 355

Less: Impairment loss (215) (185) (185)

Total assets 140 170 170

16. LONG TERM RECEIVABLE

The long term receivable represented the non-cash consideration of the phased development, construction and completion

of the Railway Village to be satisfied by its associate, Sentul Raya Sdn. Bhd. (“SRSB”) (refer to Note 14).

The Company received a letter from SRSB dated 24 December 2007 indicating that approval from relevant authorities

on the development of the Railway Village has only been granted on 14 August 2007. In view of the delays in obtaining

approval from the relevant authorities, the Company, KTMB (Sentul) Sdn. Bhd. and SRSB have mutually agreed that the

completion date of the Railway Village project is to be delayed.

In 2011, the Group decided that as the recognition of the long term receivable and the corresponding deferred gain (refer

to Note 26) is pending on the successful completion of the Railway Village (the progress of which is not wholly within the

control of the Group), the amount should only be disclosed as a contingent asset and not recorded in the statement of

financial position. The long term receivable and the corresponding gain will be recorded upon the completion of the Railway

Village.

17. DEFERRED TAX ASSETS AND LIABILITIES


2012

RM’000

2011

RM’000

2012

RM’000

2011

RM’000

At beginning of year (83) (873) - -

Transfer to/(from) profit or loss (Note 10) (1,359) 790 - -

At end of year (1,442) (83) - -

Certain deferred tax assets and liabilities have been offset in accordance with the Group’s accounting policy. The following

is an analysis of the deferred tax balances (after offset) for statements of financial position purposes:


2012

RM’000

2011

RM’000

2012

RM’000

2011

RM’000

Deferred tax assets 2,327 3,107 - -

Deferred tax liabilities (3,769) (3,190) - -

(1,442) (83) - -


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Deferred tax assets/(liabilities) provided in the financial statements are in respect of the tax effects of the following:


2012

RM’000

2011

RM’000

2012

RM’000

2011

RM’000

Deferred tax assets

Temporarily differences arising from provisions 2,309 3,107 - -

Unabsorbed capital allowances 18 - - -

2,327 3,107 - -


2012

RM’000

2011

RM’000

2012

RM’000

2011

RM’000

Deferred tax liabilities

Temporarily differences arising from property, plant

and equipment (3,769) (3,190) - -

As mentioned in Note 3, the tax effects of deductible temporary differences, unused tax losses and unused tax credits

which would give rise to deferred tax assets are recognised to the extent that it is probable that future taxable profits will

be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

As of 31 December 2012, the estimated amount of temporary differences arising from trade receivables, unused tax losses,

unabsorbed capital allowances, the tax effects of which are not recognised in the financial statements due to uncertainty

of their realisation, is as follows:

The Group and The Company

2012

RM’000

2011

RM’000

Temporary difference arising from:

Property, plant and equipment 449,858 475,781Trade and other receivables (35,380) (36,558)Inventories (13,296) (13,092)Retirement benefits obligations (100,271) (95,365)Provision (5,756) (6,578)

Unused tax losses (822,498) (706,025)Unabsorbed capital allowances (1,148,106) (1,092,379)

(1,675,449) (1,474,216)

18. INVENTORIES

The Group and The Company31.12.2012

RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Spare parts 45,207 39,591 42,889

Fuel 2,036 1,800 1,035

Others 1,707 912 1,504

48,950 42,303 45,428

19. TRADE AND OTHER RECEIVABLES

The Group31.12.2012

RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Trade

Trade receivables 51,440 50,738 47,887

Less : Allowance for doubtful debts (12,516) (12,225) (12,701)

38,924 38,513 35,186

Amounts due from associates 1,353 1,227 1,526

Less : Allowance for doubtful debts (373) (373) (373)

980 854 1,153

39,904 39,367 36,339

Non-trade

Amount due from Government of Malaysia 148,769 26,770 31,294


147,817 25,818 30,342

Other receivables 36,746 48,886 31,251


3,730 14,967 9,736


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RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Amount due from associates 18,685 16,929 16,789


9,591 7,835 7,695

161,138 48,620 47,773

201,042 87,987 84,112

Deposits and prepayment consist of:

The Group31.12.2012

RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Refundable deposits 298 316 1,317

Prepayment 28,627 4,023 4,469

28,925 4,339 5,786


RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Trade

Trade receivables 17,442 19,478 18,143


15,077 17,212 15,483

Amounts due from subsidiaries 2,038 876 1,263



980 854 1,153

18,095 18,942 17,899

Non-trade

Amount due from Government of Malaysia 148,769 26,770 31,294


147,817 25,818 30,342

Other receivables 39,055 50,873 33,426


6,039 16,954 11,911

Amounts due from subsidiaries 1,174 1,583 2,056


822 1,230 1,704



9,270 7,835 7,374

182,043 70,779 69,230


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Deposits and prepayments consist of:


RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Refundable deposits 138 185 262

Prepayment 24,695 2,433 4,308

24,833 2,618 4,570

Amount due from subsidiaries and associates

Included in the amount due from subsidiaries and associates are freight and haulage services that are subject to normal

trade terms. The amount is repayable within a fixed term of 30 days.

The other amount due from subsidiaries and associates which arises mainly from payment on behalf are non-trade in

nature, unsecured, interest free and repayable on demand.

Amount due from Government of Malaysia

The amount due from Government of Malaysia which arises mainly from receivables for subscription of shares and payment

on behalf are non-trade in nature, unsecured, interest free and repayable on demand.

20. CASH AND BANK BALANCES

The Group31.12.2012

RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Deposits placed with:

Licensed banks 20,553 28,319 52,259

Financial institutions 350 - 2,056

Cash and bank balances 5,190 12,119 33,408

26,093 40,438 87,723


RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Deposits placed with licensed banks - - 34,000


1,988 7,623 53,583

Deposits with financial institutions earn an average interest at 3.30% (3.20% in 31 December 2011 and 3.20% in 1 January

2011) per annum and have an average maturity period of 31 days to 240 days (31 days to 240 days in 31 December 2011

and 31 days to 240 days in 1 January 2011).

21. ASSETS HELD FOR SALE

The Group31.12.2012

RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Assets held for sale 5,507 - -

KTMB (Prai) Sdn Bhd, a subsidiary of the Company has received 33 units of condominiums and apartments from Prima

Prai Sdn Bhd (“Developer”) as part of the consideration of sale of land in Prai, Penang. Based on the agreement, dated

15 September 1995, KTMB (Prai) will receive cash consideration of RM11,143,970, staff quarters and office space with the

valueequivalenttoRM7,128,000andRM5,200,000respectively.Duetofinancialtheconstraint,theDeveloperwasunable

to build the office space and in exchange transferred 33 units of condominiums and apartments in Prai with the equivalent

value.

Management had decided that the 33 units of condominiums and apartments are to be disposed off and accordingly, have

been classified as asset held for sale.


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22. SHARE CAPITAL


RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Authorised:

Ordinary shares of RM1 each:

At beginning of year 994,300 994,300 994,300

Issued during the year 1,000,000 - -

At end of year 1,994,300 994,300 994,300

10% Redeemable Cumulative Convertible

Preference Shares (“RCCPS”) of RM0.10 each 5,700 5,700 5,700

Special rights redeemable preference share of RM1 * * *

2,000,000 1,000,000 1,000,000

Issued and fully paid:

Ordinary shares of RM1 each:

At beginning of year 902,559 882,559 852,559

Issued during the year 234,900 20,000 30,000

Special rights redeemable preference share of RM1 * * *

At end of year 1,137,459 902,559 882,559

* Consists of 1 special rights redeemable preference share of RM1 each.

As approved by the shareholders in the Extraordinary General Meeting (“EGM”) held on 30 October 2012, the authorised

share capital of the Company was increased from RM1,000,000,000 to RM2,000,000,000 by creation of an additional

1,000,000,000 new ordinary shares of RM1 each.

During the financial year, the issued paid up share capital of the Company was increased from RM902,559,000 to

RM1,137,459,000 by way of issuance of 234,900,000 ordinary share of RM1 each at RM1 per ordinary share for working

capital purposes. The new ordinary shares issued rank pari passu with the then existing ordinary shares of the Company.

Special Rights Redeemable Preference Share (“Special Share”)

The Special Share enables the Government of Malaysia through the Minister of Finance Incorporated to ensure that certain

major decisions affecting the operations of the Company are consistent with Government policies. The Special Shareholder,

which may only be the Government or any representative or person acting on its behalf, is entitled to receive notices of

meetings but not to vote at such meetings of the Company. However, the Special Shareholder is entitled to attend and

speak at such meetings.

The Special Shareholder has the right to appoint any person, but not more than six at any time, to be Government-

appointed Directors.

The Special Shareholder has the right to require the Company to redeem the Special Share at par at any time by serving

written notice upon the Company and delivering the relevant share certificate.

The Special Shareholder shall be entitled to repayment of the capital paid up on the Special Share in priority to any

repayment of capital to any other members.

The Special Shareholder does not have any right to participate in the capital or profits of the Company.

Certain matters which vary the rights attached to the Special Share can only be effective with the consent in writing of the

Special Shareholder, in particular matters relating to the creation and issuance of additional shares which carry different

voting rights, the dissolution of the Company, substantial disposal of assets, amalgamations, mergers and takeovers.

23. REEDEMABLE CONVERTIBLE CUMULATIVE PREFERENCE SHARES (“RCCPS”)


RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Issued and fully paid:

RCCPS of RM0.10 each 5,700 5,700 5,700

The 10% Redeemable Convertible Cumulative Preference Shares (“RCCPS”) are issued at a premium of RM0.90 each per

share pursuant to the Subscription Agreement dated 26 July 1999 with the following salient features:

(i) A tenure of thirty years with a fixed preference dividend of 10% per annum (the “Fixed Dividend”) on the nominal

value of the Preference Shares.

(ii) The Fixed Dividend is to be cumulative and paid out of the profits available for distribution in respect of each financial

year. Any amounts remaining unpaid shall be accumulated and be paid in the following year(s) and the preference

shareholdershallbeentitledtoimposelatepaymentchargesof8%perannumontheunpaidamountoftheFixed

Dividend or an option to convert the aggregate of the amount equal to any arrears or accrual to the Fixed Dividend

andinterestof8%imposedthereonintofullypaidordinaryshares,and

(iii) The Preference Shares shall be convertible into ordinary shares on the basis of one new ordinary share for one

Preference Share and will be redeemable at RM1.05 for each Preference Share upon maturity at the end of the

thirtieth anniversary.


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The proceeds received from the issue of the RCCPS have been segregated between the liability component and the equity

component. The fair value of the liability component is estimated based on the present value of the dividend obligation whilst

the equity component represents the fair value of the conversion option. The RCCPS are accounted for in the statements

of financial position of the Group and of the Company as follows:


RM’000

31.12.2011

RM’000

1.1.2011

RM’000

57,000,000 RCCPS of RM0.10 each 5,700 5,700 5,700

RCCPS share premium 51,300 51,300 51,300

Liability component at initial recognition (6,417) (6,417) (6,417)

Equity components 50,583 50,583 50,583

RCCPS - liability component movement

At 1 January - Fair value recognised as liability

component 16,814 15,697 6,417

Interest accrued - opening balance adjustment - - 8,208

Interest accrued - recognised in profit or loss

(Note 6) 570 570 570

Penalty on late payment of interest 592 547 502

Total interest payable 1,162 1,117 9,280

At 31 December 17,976 16,814 15,697

24. RESERVES

Exchange fluctuation reserve

The exchange fluctuation reserve is used to record exchange differences arising from the translation of the financial

statements of foreign operations whose functional currencies are different from that of the Group’s functional currency. It is

also used to record the exchange differences arising from monetary items which form part of the Group’s net investment in

foreign operations, regardless of the currency of the monetary items.

25. LOANS AND BORROWINGS

The Group31.12.2012

RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Unsecured

Term loan 1* 156,546 153,220 151,167

Term loan 2* 560,924 550,862 540,927

Term loan 3* 116,444 113,525 111,841

Term loan 4* 28,970 28,588 28,400

Term loan 5* 305,308 302,989 306,526

1,168,192 1,149,184 1,138,861

Bank overdraft 49,876 80,491 42,594

Revolving credits 90,000 80,000 40,590

1,308,068 1,309,675 1,222,045

Secured

Al Bai Bithaman Ajil Loan IX (“ABBA IX”) 2,865 2,939 2,991

Al Bai Bithaman Ajil Loan X (“ABBA X”) 581 595 610

Al Bai Bithaman Ajil Loan VIII (“ABBA VIII”) - - 827

Hire-purchase payables 1,653 1,384 -

Bank overdraft - - 4,639

5,099 4,918 9,067

1,313,167 1,314,593 1,231,112


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The Group31.12.2012

RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Current

Unsecured

Bank overdraft 49,876 80,491 42,594


Secured

Hire purchase payables 358 242 -

Al Bai Bithaman Ajil Loan IX (“ABBA IX”) 222 222 222

Al Bai Bithaman Ajil Loan X (“ABBA X”) 45 45 45

Bank overdraft - - 4,639

Al Bai Bithaman Ajil Loan VIII (“ABBA VIII”) - - 827

Total current portion 140,501 161,000 88,917

Total non-current portion 1,172,666 1,153,593 1,142,195

The Company

Unsecured

Term loan 1* 156,546 153,220 151,167

Term loan 2* 560,924 550,862 540,927

Term loan 3* 116,444 113,525 111,841

Term loan 4* 28,970 28,588 28,400

Term loan 5* 305,308 302,989 306,526

1,168,192 1,149,184 1,138,861

Bank overdraft 49,876 78,418 42,594


1,308,068 1,307,602 1,222,045


RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Current

Unsecured

Bank overdraft 49,876 78,418 42,594


Total current portion 139,876 158,418 83,184

Total non-current portion 1,168,192 1,149,184 1,138,861

* Refer to loan from the Government of Malaysia

Security

The Islamic term financing and term loan facilities of a subsidiaries are secured by way of the following:

(i) ABBA IX and ABBA X are secured first fixed charges of a subsidiary’s buildings, ownership claim over the buildings

amountingRM5,903,463(31December2011:RM6,242,617and1January2011:RM6,378,301)asdisclosedin

Note 11.

(ii) Bank overdraft of a subsidiary is secured by an ownership claim over certain prime movers and trailers as disclosed

in Note 11.

26. DEFERRED GAIN

On 11 September 1995, a subsidiary, KTMB (Sentul) Sdn. Bhd. (“KSSB”), entered into a sale and purchase agreement with

its associate, Sentul Raya Sdn. Bhd. (“SRSB”) for the transfer of parcels of land (referred to as the “Mixed Development Site”)

for the purpose of an integrated development incorporating commercial complexes and buildings, residential buildings,

entertainment and tourist facilities. The Company had procured the Government of Malaysia to revoke the reservation status

of the land and approval had been obtained for the alienation of the said parcels of land.

On 30 December 1995, the Company together with KSSB entered into a Joint Venture Agreement (as amended by various

supplementary agreements in 2000 and 2001) (“JVA”) with Taiping Consolidated Berhad (“TCB”) (now known as YTL Land

& Development Berhad), the holding company of SRSB, for the purpose of carrying out the following via SRSB:

a) the construction of the Railway Village; and

b) the development and construction of the Mixed Development Project.


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The consideration for the transfer of the Mixed Development Site and the minimum return pursuant to the JVA to be derived

by the Company based on KSSB’s shareholding in SRSB comprised the following:

a) cash consideration of RM36,400,000 of which RM4,000,000 was refundable;

b) payment in kind to KSSB by way of phased development, construction and completion of the Railway Village (which

is to comprise apartments and certain infrastructures, facilities and amenities to be constructed on the freehold

land belonging to KSSB’s wholly owned subsidiary) by SRSB by the end of financial year 2007 at its sole cost

and expense of which the total project costs there-of was at 21 December 2000, estimated to be not less than

RM69,216,000; and

c) payment of share of actual profit of SRSB.

The above consideration and minimum return are conditional upon completing of the transfer of entire Mixed Development

Site to SRSB. The transfer of the Mixed Development Site to SRSB had been completed in 2011.

The long term receivable and the corresponding gain will be recorded upon the completion of the Railway Village (refer to

Note 15).

27. GOVERNMENT GRANTS


RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Plant and equipment

As of 1 January 362 440 518

Amortisation (78) (78) (78)

As of 31 December 284 362 440

Other

As of 1 January - 38,412 -

Additions - - 62,238

Utilisation - (38,412) (23,826)

As of 31 December - - 38,412

Total 284 362 38,852

28. PROVISIONS


RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Government claims

As of 1 January 6,578 7,400 9,223

Provisions used during the year (822) (822) (822)

Reversal of provisions during the year - - (1,001)

As of 31 December 5,756 6,578 7,400

Non-current 4,934 5,756 6,578

Current 822 822 822

As of 31 December 5,756 6,578 7,400

The entire provision was in respect of claims by the Government of Malaysia on the difference between the commercial and

subsidisedrateofinterest,pertainingtostaffloans(Note8).

29. RETIREMENT BENEFIT OBLIGATIONS


RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Present value of unfunded obligations 132,545 130,020 114,505

Unrecognised actuarial losses (32,274) (34,655) (15,025)

Total retirement benefits 100,271 95,365 99,480

Non-current 93,955 85,486 92,196

Current 6,316 9,879 7,284

Total retirement benefits 100,271 95,365 99,480

The Group operates an unfunded, defined benefit Retirement Benefit Scheme (“the Scheme”) for its eligible employees. The

Group’s obligation under the Scheme is determined based on the latest actuarial valuation by an independent actuary dated

5 April 2013. Under the Scheme, eligible employees are entitled to retirement benefits varying between 50% and 100% of

their final salary on attainment of the retirement age of 56.


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133K

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All confirmed permanent employees (both executives and non-executives) hired on or prior to 31 July 1997 are entitled to

retirement benefits as follows:

Years of Service (YOS) Retirement Benefits

Up to 5 years 0.50 x YOS x SAL

More than 5 years and up to 10 years 0.75 x YOS x SAL

More than 10 years 1.00 x YOS x SAL

Yearsofservice(YOS)–servicefrom1August1992

Finalmonthlysalary(SAL)–lastdrawnmonthlybasicsalary

Movement in the present value of the defined benefit obligations


RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Defined benefit obligations as of 1 January 95,365 99,480 91,173

Benefits paid by the plan (11,502) (17,963) (5,233)

Current service costs and interest 16,408 13,848 13,540

Defined benefit obligations as of 31 December 100,271 95,365 99,480

Expense recognised in the profit or loss


RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Current service costs 7,296 6,800 6,723

Interest on obligation 7,415 6,718 6,395

Actuarial losses 1,697 330 422

16,408 13,848 13,540

The expense is recognised in the following line items in the profit or loss:


RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Other operating expenses 16,408 13,848 13,540

Actuarial assumptions

Principal actuarial assumptions at the end of the reporting period (expressed as weighted averages):


%

31.12.2011

%

1.1.2011

%

Discount rate 6.0 6.0 6.2

Expected rate of salary increase

- Executive 6.0 6.0 6.0

- Non executive 6.0 6.0 6.0

30. TRADE AND OTHER PAYABLES

The Group31.12.2012

RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Trade

Trade payables 93,762 73,725 58,736

Non-trade

Amount due to associates 7,974 7,974 7,974

Accrued expenses 21,799 12,445 10,340

Other payables 33,499 34,173 46,983

Unearned revenue 1,754 1,994 2,402

Deposits 6,498 13,410 20,301

Interest payable 1,060 962 -

72,584 70,958 88,000

166,346 144,683 146,736


134

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135K

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RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Trade

Trade payables 90,449 65,986 51,318

Non-trade

Amount due to subsidiaries 46,927 33,585 32,986

Amount due to associates 7,974 7,974 7,974

Accrued expenses 11,985 10,638 5,197

Other payables 24,114 10,261 33,627

Unearned revenue 1,754 1,994 2,402

Deposits 6,498 13,382 11,801

Interest payable 1,060 963 -

100,312 78,797 93,987

190,761 144,783 145,305

Trade payables are non-interest bearing and the normal trade credit terms granted to the Group and the Company is up to

90 days (2011: 90 days).

Amount due to subsidiaries and associates

Amounts due from subsidiaries and associates arose mainly from advances given and collections made on behalf, which

are non-trade in nature, unsecured, interest-free and repayable on demand.

31. RELATED PARTIES

Identity of related parties

For the purposes of these financial statements, parties are considered to be related to the Group or the Company if the

Group or the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party

in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to

common control or common significant influence. Related parties may be individuals or other entities.

Key management personnel are defined as those persons having authority and responsibility for planning, directing and

controlling the activities of the Group either directly or indirectly. The key management personnel includes all the Directors

of the Group, and certain members of senior management of the Group.

The significant related party transactions of the Group and the Company, other than key management personnel

compensation (see Note 9), are as follows:

The Company2012

RM’000

2011

RM’000

Subsidiary companies

Multimodal Freight Sdn Bhd

Freight services revenue (4,212) (3,027)

Management fee (120) (120)

Dividend income (945) (840)

Freight services cost 12,036 10,749

KTM Distribution Sdn Bhd

Management fees (120) (120)

Dividend income (811) -

KTMB (Car Park) Sdn Bhd

Management fees (48) (48)

Dividend income - (50)

The Group and The Company2012

RM’000

2011

RM’000

Related parties

Fiberail Sdn Bhd

Dividend income (22,720) (13,773)

Wayleave income (4,757) (4,757)

Ipoh Cargo Terminal Sdn Bhd

Freight services revenue (5,210) (4,660)

Equipment storage (340) (340)

Kuala Lumpur Sentral Sdn Bhd

Interest income (490) (490)


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137K

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32. FINANCIAL INSTRUMENTS

32.1 Capital Management

The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability

to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future

development of the business.

32.2 Categories of financial instruments

Group31.12.2012

RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Financial Assets

Available-for-sale:

Other investment 140 170 170

Loans and receivables:

Trade and other receivables 201,042 87,987 84,112

Refundable deposits 298 316 1,371


227,573 128,911 173,322

Financial Liabilities

Amortised cost:

Loans and borrowings 1,313,167 1,314,593 1,231,112

Redeemable Convertible Cumulative Preference

Shares 17,976 16,814 15,697

Trade and other payables 166,346 144,683 146,736

1,497,489 1,476,090 1,393,545


RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Financial Assets

Available-for-sale:

Other investment 140 170 170

Loans and receivables:

Trade and other receivables 182,043 70,799 69,230

Refundable deposits 138 185 262


184,309 78,757 123,245

Financial Liabilities

Amortised cost:

Loans and borrowings 1,308,068 1,307,602 1,222,045

Redeemable Convertible Cumulative Preference

Shares 17,976 16,814 15,697

Trade and other payables 190,761 144,783 145,305

1,516,805 1,469,199 1,383,047

32.3 Financial risk management

The Group has exposure to the following risks from its use of financial instruments:

• Creditrisk

• Liquidityrisk

• Marketrisk

32.3.1 Credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument

fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its

receivables from customers and investment securities.

Receivables

Risk management objectives, policies and processes for managing the risk

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing

basis.


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Exposure to credit risk, credit quality and collateral

As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is

represented by the carrying amounts in the statement of financial position.

Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired

are measured at their realisable values. A significant portion of these receivables are regular customers

that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality

of the receivables. Any receivables having significant balances past due more than 90 days, which are

deemed to have higher credit risk, are monitored individually.

Credit risks, or the risk of counterparties defaulting, are controlled by the application of credit approvals,

limits and monitoring procedures. Credit risks are minimised and monitored by limiting the Group’s

associations to business partners with high creditworthiness. Trade receivables are monitored on an

ongoing basis via Group management reporting procedures.

The credit risk of the Group’s other financial assets, which comprise cash and cash equivalents and

non-current investments, arises from default of the counterparty, with a maximum exposure equal to the

carrying amount of these financial assets.

The Group does not have any significant exposure to any individual customer or counterparty nor does it

have any major concentration of credit risk related to any financial instruments.

The ageing of trade receivables of the Group as at the end of the reporting period was:

The GroupGross

RM’000

Individual

impairment

RM’000

Net

RM’000

31.12.2012

Not past due 1,123 - 1,123

Past due 1 - 30 days 13,933 - 13,933

Past due 31 - 60 days 10,185 - 10,185

Past due more than 90 days 27,552 (12,889) 14,663

52,793 (12,889) 39,904

31.12.2011

Not past due 2,790 - 2,790

Past due 1 - 30 days 12,342 - 12,342

Past due 31 - 60 days 13,710 - 13,710


51,965 (12,598) 39,367

1.1.2011

Not past due 2,963 - 2,963

Past due 1 - 30 days 11,523 - 11,523

Past due 31 - 60 days 11,757 (65) 11,692


49,413 (13,074) 36,339


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141K

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The ageing of trade receivables of the Company as at the end of the reporting period was:

The CompanyGross

RM’000

Individual

impairment

RM’000

Net

RM’000

31.12.2012

Not past due 260 - 260

Past due 1 - 30 days 7,150 - 7,150

Past due 31 - 60 days 5,377 - 5,377


20,833 (2,738) 18,095

31.12.2011


Past due 1 - 30 days 6,728 - 6,728

Past due 31 - 60 days 6,269 - 6,269


21,581 (2,639) 18,942

1.1.2011


Past due 1 - 30 days 5,798 - 5,798

Past due 31 - 60 days 5,233 (4) 5,229


20,932 (3,033) 17,899

The movements in the allowance for doubtful debts during the financial year were:


2012

RM’000

2011

RM’000

2012

RM’000

2011

RM’000

At 1 January (12,598) (13,074) (2,639) (3,033)Reclass to subsidiaries - - - 374Allowance for doubtful debts (3,024) (3,332) (798) (1,984)Reversal of allowance of doubtful

debts 2,733 3,808 699 2,004

At 31 December (12,889) (12,598) (2,738) (2,639)

Investments and other financial assets


Investments are allowed only in liquid securities and only with counterparties that have a credit rating

equal to or better than the Group. Transactions involving derivative financial instruments are with approved

financial institutions.

32.3.2 Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.

The Group’s exposure to liquidity risk arises principally from its various payables, loans and borrowings.


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143K

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Maturity analysis

The table below summarises the maturity profile of the Company’s financial liabilities as at the end of the reporting period based

on undiscounted contractual payments:

The Group

CarryingamountRM’000

Contractualinterest rate

%

Contractualcash flows

RM’000

Under 1 year

RM’0001 - 2 year

RM’0002 - 5 year

RM’000

More than 5 yearsRM’000

31.12.2012

Term loan 1 - unsecured* 156,546 8.00 197,593 - - 29,639 167,954

Term loan 2 - unsecured* 560,924 8.00 708,951 - - - 708,951




Hire - purchase payables 1,653 3.46 1,653 352 386 915 -Al Bai Bithaman Ajil Loan

IX - secured 2,865 4.05 3,915 222 444 666 2,583Al Bai Bithaman Ajil Loan

X - secured 581 4.05 799 45 90 134 530Redeemable Convertible

Cumulative Preference

Shares 17,976 8.00 24,885 - - - 24,885

Revolving credits 90,000 4.25 91,060 91,060 - - -

Bank overdraft 49,876 8.00 56,091 56,091 - - -

Trade and other payables 166,346 - 166,346 166,346 - - -

1,497,489 1,777,978 314,116 920 63,199 1,399,743


The Group



%


RM’000

Under 1 year

RM’0001 - 2 year

RM’0002 - 5 year

RM’000


31.12.2011






Hire - purchase payables 1,384 3.00 1,384 242 325 817 -Al Bai Bithaman Ajil Loan

IX - secured 2,939 4.05 4,349 222 222 666 3,239Al Bai Bithaman Ajil Loan

X - secured 595 4.05 889 45 45 134 665Redeemable Convertible

Cumulative Preference

Shares 16,814 8.00 24,885 - - - 24,885


Bank overdraft 80,491 8.00 86,916 86,916 - - -

Trade and other payables 144,683 144,683 144,683 - - -

1,476,090 1,779,735 315,508 592 63,101 1,400,534





144

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145K

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The Group



%


RM’000

Under 1 year

RM’0001 - 2 year

RM’0002 - 5 year

RM’000


1.1.2011





Term loan 5 - unsecured* 306,526 4.00 345,215 - - - 345,215Al Bai Bithaman Ajil Loan VIII - secured 827 7.00 836 836 - - -Al Bai Bithaman Ajil Loan IX - secured 2,991 9.55 9,142 2,909 2,757 2,441 1,035Al Bai Bithaman Ajil Loan X - secured 610 9.55 1,868 593 563 500 212Redeemable Convertible Cumulative Preference Shares 15,697 8.00 24,977 - - - 24,977


Bank overdraft - secured 4,639 8.00 4,639 4,639 - - -

- unsecured 42,594 7.80 42,594 42,594 - - -


1,393,545 1,704,612 238,897 3,320 39,847 1,422,548




The Company



%


RM’000

Under 1 year

RM’0001 - 2 year

RM’0002 - 5 year

RM’000


31.12.2012





Term loan 5 - unsecured* 305,308 4.00 345,215 - - - 345,215Redeemable Convertible Cumulative Preference Shares 17,976 8.00 24,885 - - - 24,885


Bank overdraft 49,876 8.00 56,091 56,091 - - -


1,516,805 1,796,026 337,912 - 61,484 1,396,630





146

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147K

ER

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The Company



%


RM’000

Under 1 year

RM’0001 - 2 year

RM’0002 - 5 year

RM’000


31.12.2011







Bank overdraft 78,418 8.00 84,691 84,691 - - -

Trade and other payables 144,783 144,783 144,783 - - -

1,469,199 1,770,988 312,784 - 61,484 1,396,630




The Company



%


RM’000

Under 1 year

RM’0001 - 2 year

RM’0002 - 5 year

RM’000


1.1.2011







Bank overdraft 42,594 7.80 42,594 42,594 -


1,383,047 1,686,696 228,489 - 36,906 1,421,301





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149K

ER

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32.3.3 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and

other prices will affect the Group’s financial position or cash flows.

Currency risk


The Group is exposed to transactional currency risk primarily through sales and purchases that are

denominated in currency other than the functional currency of the operations to which they relate. The

currencies giving rise to this risk are primarily United States Dollar, Singapore Dollar and Thai Baht.

Foreign exchange exposures in transactional currencies other than functional currencies of the operating

entities are kept to an acceptable level.

Exposure to foreign currency risk

The Group’s exposure to foreign currency (a currency which is other than the currency of the Group

entities) risk, based on carrying amounts as at the end of the reporting period was:

Denominated in

The GroupUSD

RM’000

SGD

RM’000

THB

RM’000

31.12.2012

Trade receivables - 822 -

Cash and cash equivalents - 579 -

Trade payables (3,080) - (4,579)

Exposure in the statement of financial position (3,080) 1,401 (4,579)

31.12.2011



Trade payables (1,547) (30) (2,792)


Denominated in

The GroupUSD

RM’000

SGD

RM’000

THB

RM’000

1.1.2011


Cash and cash equivalents - 1,415 -

Trade payables (1,806) (2,159) (1,912)

Exposure in the statement of financial position (1,806) 210 (1,912)

Denominated in

The CompanyUSD

RM’000

SGD

RM’000

THB

RM’000

31.12.2012





31.12.2011





1.1.2011


Cash and cash equivalents - 1,415 -

Trade payables (1,806) (2,159) (1,912)

Exposure in the statement of financial position (1,806) 210 (1,912)


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Currency risk sensitivity analysis

The exposure to currency risk of foreign exchange is not material and hence, sensitivity analysis is not

presented.

Interest rate risk

The Group’s investments in fixed rate instruments and its fixed rate borrowings are exposed to a risk

of change in their fair value due to changes in interest rates. The Group’s variable rate borrowings

are exposed to a risk of change in cash flows due to changes in interest rates. Investments in equity

securities and short term receivables and payables are not significantly exposed to interest rate risk.


Cash flow interest rate risk is the risk that the future flows of a financial instrument will fluctuate because

of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial

instrument will fluctuate due to changes in market interest rates. As the Group has no significant interest-

bearing financial assets, the Group’s income and operating cash flows are substantially independent of

changes in market interest rates. The Group’s interest-bearing financial assets are mainly short term in

nature and have been mostly placed in fixed deposits.

The Group’s interest rate risk arises primarily from interest-bearing borrowings. Borrowings at floating

rates expose the Group to cash flow interest rate risk. Borrowings obtained at fixed rates expose the

Group to fair value interest rate risk. The Group manages its interest rate exposure by maintaining a mix

of fixed and floating rate borrowings.


Exposure to interest rate risk

The interest rate profile of the Group’s and the Company’s significant interest-bearing financial instruments,

based on carrying amounts as at the end of the reporting period was:

The Group31.12.2012

RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Fixed rate instruments

Financial assets 20,903 28,319 54,315

Financial liabilities (1,173,291) (1,154,102) (1,143,289)

(1,152,388) (1,125,783) (1,088,974)

Floating rate instruments

Financial liabilities (139,876) (160,491) (87,823)


RM’000

31.12.2011

RM’000

1.1.2011

RM’000

Fixed rate instruments

Financial assets - - 34,000Financial liabilities (1,168,192) (1,149,184) (1,138,861)

(1,168,192) (1,149,184) (1,104,861)Floating rate instruments

Financial liabilities (139,876) (158,418) (83,184)

Interest rate risk sensitivity analysis

(a) Fair value sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial assets and liabilities at fair value through

profit or loss, and the Group does not designate derivatives as hedging instruments under a fair

value hedged accounting model. Therefore, a change in interest rates at the end of the reporting

period would not affect profit or loss.

(b) Cash flow sensitivity analysis for variable rate instruments

It is estimated that a change of 1% in interest rates at the end of the reporting period would have

increased/(decreased) post-tax profit or loss of the Group and of the Company by RM1,320,000

(2011: RM1,203,700) and RM1,305,000 (2011: RM1,188,100) respectively. This analysis

assumes that all other variables, in particular interest rates, remain constant.

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32.4 Fair value of financial instruments

The carrying amounts of cash and cash equivalents, trade and other receivables, short term receivables and

payables and short term borrowings approximate fair values due to the relatively short term nature of these financial

instruments.

The fair values of other financial assets and liabilities, together with the carrying amounts shown in the statement of

financial position, are as follows:


Carrying

amount

RM’000

Fair value

RM’000

Carrying

amount

RM’000

Fair value

RM’000

31.12.2012

Financial assets

Other investments 140 * 140 *

Amount due from subsidiaries - - 2,860 #

Amount due from associates 10,571 # 10,571 #

Amount due from Government

of Malaysia 147,817 # 147,817 #


Loans and borrowings 1,171,638 1,171,638 1,168,192 1,168,192

Redeemable Convertible Cumulative

Preference Shares 17,976 17,976 17,976 17,976

Amount due to subsidiaries - - 46,927 #

Amount due to associates 7,924 # 7,974 #

31.12.2011

Financial assets

Other investments 170 * 170 *Amount due from subsidiaries - - 2,106 #Amount due from associates 8,689 # 8,689 #Amount due from Government

of Malaysia 25,818 # 25,818 #


Loans and borrowings 1,152,718 1,152,718 1,149,184 1,149,184Redeemable Convertible Cumulative

Preference Shares 16,814 16,814 16,814 16,814Amount due to subsidiaries - - 33,585 #


Carrying

amount

RM’000

Fair value

RM’000

Carrying

amount

RM’000

Fair value

RM’000

1.1.2011

Financial assets

Other investments 170 * 170 *Long term receivables 69,216 * - -Amount due from subsidiaries - - 2,967 #Amount due from associates 8,848 # 8,527 #Amount due from Government of

Malaysia 30,342 # 30,342 #


Loans and borrowings 1,143,289 1,143,289 1,138,861 1,138,861Redeemable Convertible Cumulative

Preference Shares 15,697 15,697 15,697 15,697Amount due to subsidiaries - - 32,986 #

* It is not practicable to estimate the fair value of the Group’s and the Company’s unquoted shares and

long term receivables because of the lack of quoted market prices and the inability to estimate fair value

without incurring excessive costs. However, the Group and the Company do not anticipate the carrying

amounts recorded at the end of the reporting period to be significantly different from the values that would

be eventually received.

# It is not practicable to estimate the fair value of the amounts due to/from related parties and Government of

Malaysia due principally to the inability to estimate the settlement date without incurring excessive costs as

these amounts lack a fixed repayment term. However, the Group and the Company do not anticipate the

carrying amounts recorded at the end of the reporting period to be significantly different from the values that

would be eventually received or settled.

The methods and assumptions used by the management to determine fair values of financial instruments other than

those whose carrying amounts reasonably approximate their fair values are as follows:

Loans and borrowings

Fair value has been determined using discounted estimated cash flows. The discount rates used are the current

market incremental lending rates for similar type of lending, borrowing and leasing arrangements.


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32.4.1 Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method. The different

levels have been defined as follows:

• Level1: Quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities.

• Level2: InputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheasset

or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level3: Inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(unobservable

inputs).

Level 1

RM’000

Level 2

RM’000

Level 3

RM’000

Total

RM’000

The Group

31.12.2012

Financial assets

Other investment

Unquoted company - - 140 140

31.12.2011

Financial assets

Other investment


1.1.2011

Financial assets

Other investment


33. CAPITAL COMMITMENTS


2012

RM’000

2011

RM’000

2012

RM’000

2011

RM’000

Capital expenditure Property, plant and equipment

Approved and contracted for 82,216 112,935 79,172 110,428Approved but not contracted for 274,865 205,232 261,024 188,932

357,081 318,167 340,196 299,360

Lease obligations on rental of locomotive:

2011 - 1,959 - 1,9592012 3,080 8,493 3,080 8,4932013 9,227 - 9,227 -

34. JOINT VENTURE ARRANGEMENT

On18April 1996,Keretapi TanahMelayuBerhad (“KTMB”) entered into a Joint VentureAgreement (as amendedby

the supplementary agreement dated 19 February 2003) with Malaysian Resources Corporation Berhad (“MRCB”) and

Pembinaan Redzai Sdn Bhd (“PRSB”) to set out the mutual rights and obligations as shareholders in Kuala Lumpur Sentral

Sdn Bhd (“KLSSB”).

On18April1997,KLSSBentered intoaConcessionAgreement (asamendedby thesupplementaryagreementdated

10 March 1999) with the Government of Malaysia and Syarikat Tanah dan Harta Sdn Bhd to undertake the obligation to

construct a new railway central station on the Kuala Lumpur Brickfields railway yard (“KL Sentral Project”) in exchange for

being granted title to the surrounding commercial development lands.

MRCB guarantees to KTMB that the return to KTMB’s investment in the KL Sentral Project shall not be less than Ringgit

Malaysia One Hundred and Fifteen Million (RM115,000,000) only (“KTMB’s Return”), which shall be paid by KLSSB

by 31 December 2012 or within sixty (60) days upon completion of the KL Sentral Project, whichever shall be the earlier

(“Payment Date”). KTMB’s Return will be paid less any dividend and capital repayment that have already been distributed

to KTMB by KLSSB.

MRCB further guarantees that if the amount paid to KTMB by KLSSB by the Payment Date shall be less than KTMB’s

Return, MRCB shall pay to KTMB in cash the difference between the amount of cash received by KTMB and the amount

equivalent to KTMB’s Return (“the Deficit”) within sixty (60) days after the Payment Date.

As of 31 December 2012, KTMB decided, the recognition of KTMB’s Return amount should only be disclosed as a contingent

asset and not recorded in the statement of financial position upon the certainty of the receipt obtained from relevant party.


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The Directors of KERETAPI TANAH MELAYU BERHAD state that, in their opinion, the accompanying financial statements are drawn

up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements

of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company

as of 31 December 2012 and of the financial performance and the cash flows of the Group and of the Company for the year ended

on that date.

Signed on behalf of the Board

in accordance with a resolution of the directors,

________________________________________

DATO’ SRI IR. MOHD ZIN BIN MOHAMED

_______________________________________

DATUK ELIAS BIN KADIR

16 May 2013

Statement By Directors


Declaration By The OfficerPrimarily Responsible For The Financial Management Of The Company


I, HAZALINA BINTI ABDUL RAHMAN, being the Officer primarily responsible for the financial management of KERETAPI TANAH

MELAYU BERHAD, do solemnly and sincerely declare that the accompanying financial statements are, in my opinion, correct

and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory

Declarations Act, 1960.

__________________________________

HAZALINA BINTI ABDUL RAHMAN

Subscribed and solemnly declared by the abovenamed HAZALINA BINTI ABDUL RAHMAN at KUALA LUMPUR on this 16th day

of May 2013.

Before me,

__________________________________

COMMISSIONER FOR OATHS

Documents

Contentsintranet4.ktmb.com.my/ktmb/uploads/files/portal_dokumen/...Contents Rationale KTMB has provided new Electric Train Services (ETS) and Six Car Set (SCS) services using modern