FAR570 Report Presentation ( Genting BHD) PDF

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FINANCIAL ACCOUNTING AND REPORTING 4 (FAR570)SEGMENTAL REPORTINGCOMPANY: GENTING BHDFACULTY : FACULTY OF ACCOUNTANCY (AC220)PREPARED BY : 1. NURLIYANA BINTI SAIFUL BAHARI (2020993029)2. NURUL AUNI PUTRI BINTI MOHD ZUKI (2020957891)3. NURUL SHAFIKA AIDA BINTI MAHAZAN (2020976787)4. SITI AMIRAH BINTI ...

Description

FINANCIAL ACCOUNTING AND REPORTING 4 (FAR570) SEGMENTAL REPORTING COMPANY: GENTING BHD

FACULTY

: FACULTY OF ACCOUNTANCY (AC220)

PREPARED BY

: 1. NURLIYANA BINTI SAIFUL BAHARI (2020993029) 2. NURUL AUNI PUTRI BINTI MOHD ZUKI (2020957891) 3. NURUL SHAFIKA AIDA BINTI MAHAZAN (2020976787) 4. SITI AMIRAH BINTI MOHD YUSOFF (2020957669)

GROUP

: D1AC2204B

PREPARED FOR

: DR NIK ZAM NIK WAN

SUBMISSION DATE

: 10th DECEMBER 2020

1

AKNOWLEDGEMENT Assalamualaikum w.b.t. First and foremost, we would like to thank Allah the almighty for giving us the strength and abilities to complete this assessment successfully. We would like to extend our deepest appreciations to our lecturer for all her guidance, advice, ideas and motivation for us until we finish reviewing this article. Thank you for always reminding us about the format and the deadlines. Without your attention and care, we are unable to finish this group assessment.

This task was assigned to us as one of the requirements for the subject Financial Accounting and Reporting (FAR570) therefore, we would like to express our appreciations to Universiti Teknologi MARA (UiTM) for including this assignment as a requirement for this subject. Through this assessment, we have gained a lot of knowledge that can be use not only to complete this task, but also in the future. We would also like to thank our classmates for helping us by providing some ideas and guidance for us to complete this assessment in time.

Special thanks to our parents and siblings that gave us some moral supports to complete this assessment. We also like to thank everyone who contributed anything that helped us to finish this task. Your kindness, support, idea, and guidance are much appreciated. Only Allah s.w.t. can repay.

2

TABLE OF CONTENT

CONTENT

PAGE

INTRODUCTION

4

COMPANY BACKGROUND

5

MANAGEMENT APPROACH

6-8

SEGMENTAL REPORT

9-12

CONCLUSION

13

REFERENCES

14

APPENDICES

15-16

3

INTRODUCTION Companies usually sell or produce more than one product, each of which is subject to its own market forces. Some products are profitable, and others are not. Some require more assets while others require less. Similarly, businesses operate in more than one geographic region with each having its own demographics, business cycle, etc. It is important to not let the company's management shroud under-performing products/markets in over-performing products/markets so as to portray a misleadingly everything-is-profitable picture. In financial reporting literature, such components of a company that generate their own revenues and incur expenses, that are reviewed separately by management from a decision-making perspective and for which separate financial information is available, are called operating segments. According to MFRS 8, an operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenue and expenses relating to transactions with other components of the same entity), whose activities are regularly reviewed by the entity’s chief operating decision maker (CODM) to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available. A company may have various operations or components but not all of them can be classified as an operating segment. An entity is required to disclose information about a segment separately if it meets any of three quantitative threshold test (10% threshold test) which are revenue, profit and assets. Information for operating segments that do not meet the 10% threshold requirements and are not classified as reportable segments is to be combined and disclosed under “all other segments” category. Another main quantitative threshold test is 75% threshold test. The combined external revenue of identified operating segments must be same or more than 75% of the company’s total external revenue. The main purpose of the preparation of this report is to review the company's key operational activities so that it can assist users of financial statements to better assess the nature and financial effects of the company's operations and to better understand the economic environment in which company operates.

4

1. COMPANY BACKGROUND Genting Berhad is principally an investment holding and management company. While the Company was incorporated in 1968 and listed in 1971, the Genting Group was founded in 1965 when its Founder, the late Tan Sri Lim Goh Tong started the journey to realise his vision of building a mountaintop resort in Malaysia. Today, the Genting Group comprises Genting Berhad and its listed companies; Genting Malaysia Berhad (Genting Malaysia), Genting Plantations Berhad (Genting Plantations) and Genting Singapore Limited (Genting Singapore), as well as its wholly owned unlisted subsidiaries Genting Energy Limited (Genting Energy) and Resorts World Las Vegas LLC (Resorts World Las Vegas). Led by Tan Sri Lim Kok Thay, the Group is involved in leisure and hospitality, oil palm plantations, power generation, oil and gas, property development, life sciences and biotechnology activities, with operations spanning across the globe, including in Malaysia (the Group’s country of origin), Singapore, Indonesia, India, China, the United States of America, the Bahamas, the United Kingdom and Egypt. In the core leisure and hospitality business, the Genting Group and its brand affiliates, market and offer a suite of products under a number of premier brands including Genting, Resorts World, Genting Grand, Genting Club, Crockfords, Maxims, Crystal Cruises, Dream Cruises and Star Cruises. The Genting Group also have tie ups with established names such as Universal Studios, Premium Outlets, Zouk, Hard Rock Hotel, Hilton and other renowned international brand partners. The company’s vision is “We are a leading multinational corporation committed to enhancing shareholder value and maintaining long-term sustainable growth in our core businesses”. Our missions are 1) Be responsive to the changing demands of our customers and excel in providing quality products and services. 2) Be committed to innovation and the adoption of new technology to achieve competitive advantage. 3) Pursue personnel policies which recognise and reward performance and contributions of employees and provide proper training, development and opportunities for career advancement. 4) Generate a fair return to our shareholders. 5) Be a responsible corporate citizen, committed to enhancing corporate governance and transparency, including undertaking social responsibility for the enhancement of the standard of living of the country.

5

2. MANAGEMENT APPROACH (i)

FACTORS TO CONSIDER TO HAVE A SEGMENT REPORTING

a) Nature of business of activities An entity may produce reports in which its business activities are presented in a variety of ways. If the chief operating decision maker uses more than one set of segment information, other factors may identify a single set of components as constituting an entity’s operating segments, including the nature of the business activities of each component, the existence of managers responsible for them, and information presented to the board of directors. b) Existence of managers responsible for the activities Generally, an operating segment has a segment manager who is directly accountable to and maintains regular contact with the chief operating decision maker to discuss operating activities, financial results, forecasts, or plans for the segment. The term ‘segment manager’ identifies a function, not necessarily a manager with a specific title. The chief operating decision maker also may be the segment manager for some operating segments. A single manager may be the segment manager for more than one operating segment. c) Information presented to the BOD The characteristics may apply to two or more overlapping sets of components for which managers are held responsible. That structure is sometimes referred to as a matrix form of organization. For example, in some entities, some managers are responsible for different product and service lines worldwide, whereas other managers are responsible for specific geographical areas. The chief operating decision maker regularly reviews the operating results of both sets of components, and financial information is available for both. As for our company, the nature of the business are leisure and hospitality, plantation, power, property, oil and gas also investments and others. For leisure and hospitality business, the Genting Group and its brand affiliates, market and offer a suite of products under the number of premier brands. Other than that, plantation business involved in oil palm plantations. Moreover, for power business, this segment of business related to electric supply and power. Next, for the property segment, it is related to investment. For oil and gas business, this segment involves in oil and gas exploration.

6

(ii)

TYPE OF SEGMENT Genting Berhad also provides our segmentation reports on the operation segments in

the annual report. According to MFRS 8, operating segments requires the entity to disclose information to enable users of its financial statements to evaluate the nature and financial effects of the business activities in which it engages and the economic environments in which it operates. Thus, Genting Berhad has provided the information regarding their geographical information along with its segment analysis. The operating segments are: 1. Leisure and hospitality

-

this segment includes the gaming section, hotels, food and beverages, theme parks, retail, entertainment and attractions, tours and travel related services, development and operation of integrated resorts and other support services.

2. Plantation

-

Involved mainly in oil palm plantations in Malaysia and Indonesia, palm oil milling and related activities.

3. Power

-

This segment involved in generation and supply of electric power.

4. Property

-

Involved in property development activities and property investment.

5. Oil and gas

-

This segment involved in oil and gas exploration, development and production activities.

6. Investments and others

-

This segment consists of all other immaterial segments including investments in equities.

7

(iii)

IDENTIFY

THE

CHIEF

OF

DECISION

MAKING

(CODM)

AND

ITS

RESPONSIBILITY The term ‘chief operating decision maker’ identifies a function, not necessarily a person with a specific title. That function is to allocate resources to and assess the performance of the operating segments of an entity. Often the chief operating decision maker of an entity is its chief executive officer (CEO) or chief operating officer (COO) or it could be the Senior Management team or might be the Board of Directors. The title or title of the person(s) identified as CODM is not relevant, as long as it is the person(s) responsible for making strategic decisions about the entity’s segments. Genting Berhad has Tan Sri Lim Kok Thay as the Chief of Executive Officer (CEO) as well as the Chairman of the company, Mr. Tan Kong Han as President and Chief Operating Officer (COO) and the other board of directors as the Chief of Decision Making of its company. The responsibility of the position is the CODM essentially controls the management committee, and thus, the CODM has control over the operating decisions made. A component of the entity that is regularly reviewed by the CODM is likely to be an operating segment. In practice, a key issue in identifying operating segments is the extent to which the operating results of business units are aggregated for the purpose of review by the CODM. The CODM will receive and review information about the operating results of individual business units as well as of groups of business units, and set of information will be used by CODM in order to make decisions and to assess performance. Besides that, Chief of Decision Making carried the duty to review the performance and in determining how resources should be allocated. For a component to be an operating segment, the financial information about the operating results of the component should be sufficiently detailed to enable the CODM to make decisions about resources to be allocated and to assess its performance.

8

3. SEGMENTAL REPORT Once operating segment have been identified, the next step need to be done is to test the segments with quantitative threshold test (10% threshold test). This is to identify which operating segments are reportable in financial statements. Operating segments that do not meet the 10% threshold requirements is to be combined and disclosed under “all other segments” category. The quantitative threshold test comprises of three tests which are revenue basis, profit basis or assets basis. For our report, we used the revenue basis. The segment is considered as reportable segment if it is 10% or more of the combined revenue of all operating segments. As accordance to the annual report of our company, below is the calculation using 10% threshold test to assess which of the operating statements is reportable or vice versa.

(i)

10% THRESHOLD TEST (REVENUE)

LEISURE &

PLANTATION

POWER

PROPERTY

OIL & GAS

INVESTMENT &

HOSPITALITY

(RM)

(RM)

(RM)

(RM)

OTHERS

(RM)

TOTAL

(RM)

INTERNAL

2290.9

687.27

458.18

458.18

458.18

229.09

4581.8

EXTERNAL

9163.6

2749.08

1832.72

1832.72

1832.72

916.36

18327.2

TOTAL

11454.5

3436.35

2290.9

2290.9

2290.9

1145.45

22909

10% TEST

50%

15%

10%

10%

10%

5%

REPORTABLE

REPORTABLE

REPORTABLE

REPORTABLE

REPORTABLE

NON-REPORTABLE

SEGMENT

SEGMENT

SEGMENT

SEGMENT

SEGMENT

SEGMENT

(REVENUE) CATEGORY (R/NR)

From the above result, there are five segments that are reportable for the annual report which are leisure & hospitality, plantation, power, property and oil & gas. While, investments and others segment is considered as non-reportable segment as it does not meet the 10% threshold test.

9

As for 75% threshold test, the external revenue that are reportable will be divided with total revenue to know whether it achieve the 75% or not. Below is the calculation of 75% threshold test (ii)

75% THRESHOLD TEST

OPERATING

TOTAL

INTERNAL

EXTERNAL

SEGMENT

REVENUE

REVENUE

REVENUE

LEISURE &

1145.45

2290.9

9163.6

PLANTATION

3436.35

687.27

2749.08

POWER

2290.9

458.18

1832.72

PROPERTY

2290.9

458.18

1832.72

OIL & GAS

2290.9

458.18

1832.72

INVESTMENT &

1145.45

229.09

916.36

22909

4581.8

18327.2

HOSPITALITY

OTHERS

External Revenue (Reportable Segment) _________________________________ Total Revenue =17410.84 ÷ 22909 =76% It is more than 75%. Therefore, the existence reportable segments which are leisure and hospitality, plantation, power, property and oil & gas will consider as reportable segments and no need to identify the additional segment in order to achieve 75% threshold.

10

(iii)

CONSTRUCT SEGMENTAL REPORT

Leisure & Hospitality

2019

Malaysia

Singapore

Plantation

UK &

US &

Egypt

Bahamas

1718.18

1718.18

Power Property O&G Others

Total

Oil Palm

Manu

Total

11454.5

1718.18

1718.18

3436.35

Total

REVENUE Total

4009.01

4009.01

2290.9

2290.9

2290.9

1145.

22909

45

Internal External

(1145.45)

2863.56

(2290.9)

(1145.45)

2863.56

1718.18

1718.18

9163.6

(343.64)

1374.54

(343.64)

1374.54

(687.27)

2749.08

(458.18)

1832.72

458.18)

(4581.8

(458.18

(229.0

)

9)

)

1832.7

1832.7

916.3

18327.

2

2

6

2

83.1

214.9

(157.9

7883

RESULT Adjusted

2651.3

3728.2

231.6

289.3

6900.4

330.5

58.4

388.9

453.6

)

EBITDA Net fv

0.2

0.2

53.5

53.5

37.4

37.4

gain on finance instrument Net fv gain on financial asset at FVTPL Net gain On changes in joint venture

138.7

138.7

Gain on

138.7

Disposal subsidiary 132.1

132.1

Net gain on disposal Investment property 5.9

5.9

Reversal

5.9

of impairment loss Impairment

(31.5)

(0.9)

(60.8)

(2.3)

(95.5)

(0.2)

(570.2)

(1180.4)

(200.3)

(248.2)

(2119.1)

(222.1)

(0.2)

(7.9)

(301)

(404.6)

(54.3)

(2631.9

loss Dep &

(11.1)

(233.2)

(12.3)

(22.6)

(110.4)

)

amortise

11

720.5

Interest income

(1097)

Finance cost 12.1

12.1

Share of

114.5

47.6

(52.9)

121.3

(11.8)

(32)

(122.2

(344.5)

result joint venture Share of

(31.6)

(31.6)

2.3

(107.5)

(224.3)

3.5

2.3

9.1

result in associates *Others

(86.7)

(21.5)

(8.6...