The Hock Seng Lee (HSL) Group is principally engaged in marine engineering and civil engineering, construction contractor as well as property development. There has been no significant change in the nature of these activities during the financial year. Recently, it has been the practice of the company to use Economic Value Added (EVA) as a tool to measure the quality of management performance.

For HSL Group, for the years 2020 and 2021 respectively, the risk premium rate was 5.0% in both years with the treasury bond rate of interest at 3.0% and 3.5% per annum. The Group borrowings cost on average was 6.5% and 7.5 % per annum, for 2020 and 2021 respectively. Assume that the corporation tax is maintained at 24 percent and ignore the assumptions made on the profit and cash flow levels of the company. Study the financial statements of the annual report of HSL Group Berhad, 2021 (page 36 to page 37) and answer the following questions;

 Determine the total invested capital, earnings before discounting for a capital charge, the weighted average cost of capital (WACC) and the economic value added (EVA) of Group HSL Berhad for 2020 & 2021 respectively. The company has consistently measured total assets based on total equity and interest-bearing liabilities. All market values are assumed to be the same as par value.

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FINANCIAL STATEMENTS Directors' interests in shares The interests of the Directors (including where applicable, the interests of their spouses or children who themselves are not Directors of the Company), in the shares of the Company and of its related corporations (other than wholly-owned subsidiaries) during and at the end of the financial year as recorded in the Register of Directors' Shareholdings are as follows: Number of ordinary shares- Sold Interest in the holding company, Hock Seng Lee Enterprise Sendirian Berhad Direct interests Dato Yu Chee Hoe Interests in the Company Dato Yu Chee Hoe: Direct interest Deemed interest Lau Kiing Kang: Direct interest # Deemed interest Lau Kiing Yiing: Direct interest Deemed interest A At 1.1.2021 8,322,351 19,326,853 321,267,207 2,892,569 399,513 287,150 411,160 Bought 10,143,700 104,269,114 281,800 At 31.12.2021 8,322,351 29,470,553 425,536,321 3,174,369 399,513 287,150 411,160 The Directors, by virtue of their interests in the ordinary shares of the Company, are also deemed interested in the 7,000,000 shares held in its subsidiary, HSL DMIA JV Sdn. Bhd. to the extent the Company has an interest. 427,740 shares held through Citigroup Nominees (Tempatan) Sdn. Bhd. and 29,042,813 shares held through Kenanga Nominess (Tempatan) Sdn. Bhd. # 24,969 shares held through CIMSEC Nominees (Tempatan) Sdn. Bhd. The other Directors holding office at 31 December 2021 did not have any interest in the shares of the Company and of its related corporations during and at the end of 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 benefits included in the aggregate amount of remuneration received or due and receivable by Directors including remuneration received as a full-time employee, where applicable) as shown in financial statements of the Company and/or of its related corporations disclosed as part of the key management personnel compensation (see Note 29) 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, other than certain Directors who have substantial financial interests in companies which traded with certain companies in the Group in the ordinary course of business as disclosed in Note 29 to the financial statements. 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. Issue of shares and debentures There were neither changes in the issued and paid-up capital of the Company, nor issuances of debentures by the Company, during the financial year. Options granted over unissued shares No options were granted to any person to take up unissued shares of the Company during the financial year. FINANCIAL STATEMENTS Directors' interests in shares The interests of the Directors (including where applicable, the interests of their spouses or children who themselves are not Directors of the Company), in the shares of the Company and of its related corporations (other than wholly-owned subsidiaries) during and at the end of the financial year as recorded in the Register of Directors' Shareholdings are as follows: Number of ordinary shares- Sold Interest in the holding company, Hock Seng Lee Enterprise Sendirian Berhad Direct interests Dato Yu Chee Hoe Interests in the Company Dato Yu Chee Hoe: Direct interest Deemed interest Lau Kiing Kang: Direct interest # Deemed interest Lau Kiing Yiing: Direct interest Deemed interest A At 1.1.2021 8,322,351 19,326,853 321,267,207 2,892,569 399,513 287,150 411,160 Bought 10,143,700 104,269,114 281,800 At 31.12.2021 8,322,351 29,470,553 425,536,321 3,174,369 399,513 287,150 411,160 The Directors, by virtue of their interests in the ordinary shares of the Company, are also deemed interested in the 7,000,000 shares held in its subsidiary, HSL DMIA JV Sdn. Bhd. to the extent the Company has an interest. 427,740 shares held through Citigroup Nominees (Tempatan) Sdn. Bhd. and 29,042,813 shares held through Kenanga Nominess (Tempatan) Sdn. Bhd. # 24,969 shares held through CIMSEC Nominees (Tempatan) Sdn. Bhd. The other Directors holding office at 31 December 2021 did not have any interest in the shares of the Company and of its related corporations during and at the end of 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 benefits included in the aggregate amount of remuneration received or due and receivable by Directors including remuneration received as a full-time employee, where applicable) as shown in financial statements of the Company and/or of its related corporations disclosed as part of the key management personnel compensation (see Note 29) 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, other than certain Directors who have substantial financial interests in companies which traded with certain companies in the Group in the ordinary course of business as disclosed in Note 29 to the financial statements. 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. Issue of shares and debentures There were neither changes in the issued and paid-up capital of the Company, nor issuances of debentures by the Company, during the financial year. Options granted over unissued shares No options were granted to any person to take up unissued shares of the Company during the financial year.

Answer rating: 100% (QA)

Hock Seng Lee Berhad HSLs origins date back to the early 1970s when two brothers of the YuYii family ... View the full answer