cont'd - KNM Steel Sdn Bhd

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KNM GROUP BERHAD I Annual Report 2012129Notes to the Financial Statements (cont’d)35. Subsequent events (Cont’d)35.2 On 21 October 2010, the Securities Commission (“SC”) approved the Company’s proposed issuance ofSukuk Programmes of up to RM1,500 million, comprising of Islamic Commercial Paper Programme ofup to RM400 million (“ICP Programme”) and Islamic Medium Term Note Programme of up to RM1,100million (“IMTN Programmes”). The ICP Programme shall have a tenure of up to 7 (seven) years andthe IMTN Programme shall have a tenure of up to 15 (fifteen) years from the date of the first issuanceunder the Sukuk Programmes.On 1 August 2012, the Company announced that it has obtained approval from SC vide their letter dated27 July 2012 to have its long-term rating for the IMTN Programme revised from AA-ID to A+ID; whilstits short term rating for the ICP Programme remains unchanged at MARC-1ID. Except for the abovelong-term rating revision, all other terms remain unchanged.The Securities Commission approval (the"Approval") to extend the proposed implementation of the SukukProgrammes lapsed on 20 April 2013. No commercial papers or medium term notes were issued by theCompany pursuant to the said Approval.35.3 Pursuant to KPS Inc’s Notice of Conversion on 20 March 2013, the principal sum of up to USD800,000which was granted as a loan for working capital line of credit by KPS Inc to KPS Technology & EngineeringLLC (“KPSLLC”) in respect of the Convertible Promissory Note dated 29 May 2009, was capitalised andconverted into Membership Interest in KPSLLC.Hence, effective 20 March, 2013, KNM’s effective new membership structure in KPSLLC arising fromthe conversion of the CPN increased from 60% to 77.78%.35.4 On 19 April 2013, KNM Group Berhad's wholly-owned subsidiary, KNM Process Systems Sdn. Bhd.(“KNMPS”) was served with a Petition for winding-up dated 15 April 2013 by Mission Biofuels Sdn. Bhd.(“Mission”) purportedly in respect of works done by KNM Process Systems Sdn. Bhd. pursuant to anEPCC-Engineering, Procurement, Construction and Commissioning Contract (“EPCC”) dated 25 July2007.The said Petition is fixed for hearing on 18 July 2013.Mission alleges that KNMPS is allegedly indebted to them for the sum of RM12.2 million together withinterest and cost being the alleged Liquidated Ascertained Damages claimed by Mission as a result ofKNMPS’s purported failure to achieve Final Performance Acceptance under the EPCC.KNMPS has previously filed various proceedings against Mission, for outstanding payments in excessof RM49.9 million being outstanding payments due and owing by Mission to KNMPS under the EPCCand, the Kuala Lumpur High Court on 25 October 2012, has by a Consent Order, ordered that Missiondeposit the sum of AUD4 million pending the resolution of KNMPS’s claim via arbitration as providedfor under the EPCC.As announced on 9 November 2012, KNM has also filed a winding up petition based on the insolvencyof Mission. The Shah Alam High Court had on 12 March 2013 dismissed KNMPS’s petition and KNMPShas appealed to the Court of Appeal against the decision.KNMPS therefore deems the present Petition by Mission against KNMPS as nothing but retaliatory innature.It is also relevant to note that Mission:-(a)(b)did not obtain any judgment from the Court on the amount which is allegedly due and owing tothem by KNMPS; normake a demand on KNMPS as prescribed under the Section 218(2)(a) of the Companies Actbefore proceeding with the filing of the said Petition.
130KNM GROUP BERHAD I Annual Report 2012Notes to the Financial Statements (cont’d)35. Subsequent events (Cont’d)In light of the above, KNMPS’s solicitors are of the opinion that Mission’s action in filing the said Petition is notonly frivolous and vexatious but is also tainted with malicious intent and a clear and blatant abuse of process.KNMPS has today filed and obtained an interim Injunction to restrain Mission from proceeding further with thePetition and will also be applying to strike-out the Petition as, among other things, an abuse of process.There is no impact to the Group arising from this Petition. As advised by its solicitors, KNMPS and the KNMGroup expressly reserves all rights to claim against Mission and/or its solicitors for damages arising from whatKNMPS deems a malicious prosecution and read in context, a clear and blatant abuse of process.36. Explanation of transition to MFRSAs stated in Note 1(a), these are the first financial statements of the Group and of the Company prepared inaccordance with MFRS.The accounting policies set out in Note 2 have been applied in preparing the financial statements of the Groupand of the Company for the financial year ended 31 December 2012. Adjusted corresponding comparativeinformation for the financial year ended 31 December 2011 and in the preparation of the opening MFRSstatement of financial position at 1 January 2011 (the Group’s date of transition to MFRS) was presented.The transition to MFRS does not have any significant financial impact to the financial statements of the Company.In preparing the opening consolidated statement of financial position at 1 January 2011, the Group has adjustedamounts reported previously in financial statements prepared in accordance with previous FRS. Explanation ofhow the transition from previous FRS to MFRS has affected the Group’s financial position, financial performanceand cash flows is set out as follows:36.1 Reconciliation of financial positionGroup 1.1.2011 31.12.2011Effect ofEffect oftransitiontransitionNote FRS to MFRS MFRS FRS to MFRS MFRSRM’000 RM’000 RM’000 RM’000 RM’000 RM’000AssetsProperty, plant andequipment 36.3 (a) 748,722 16,990 765,712 744,824 16,990 761,814Goodwill 36.3 (b) 798,974 (10,624) 788,350 798,507 (10,624) 787,883Other intangible assets 620,858 – 620,858 594,641 – 594,641Investments in associates 455 – 455 45 – 45Investment injointly-controlled entities 316 – 316 5,882 – 5,882Other investments 3,620 – 3,620 14,088 – 14,088Deferred tax assets 195,946 – 195,946 279,922 – 279,922Total non-current assets 2,368,891 6,366 2,375,257 2,437,909 6,366 2,444,275Inventories 69,063 – 69,063 72,120 – 72,120Current tax assets 55,224 – 55,224 30,969 – 30,969Trade and other receivables 718,406 – 718,406 953,858 – 953,858Derivative financial assets 16,331 – 16,331 20,584 – 20,584Cash and cash equivalents 296,237 – 296,237 416,429 – 416,429Total current assets 1,155,261 – 1,155,261 1,493,960 – 1,493,960Total assets 3,524,152 6,366 3,530,518 3,931,869 6,366 3,938,235
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