Notice of Annual General Meeting 2
Statement Accompanying Notice ofAnnual General Meeting 5
Corporate Information 6
Profile of the Board of Directors 7
Executive Deputy Chairman's Statement 10
Audit Committee Report 13
Statement on Corporate Governance 15
Statement on Internal Control 20
Directors' Responsibility Statement 22
Additional Compliance Information 23
Financial Statements 25
Analysis of Shareholdings 109
List of Thirty Largest Shareholders 110
List of Properties Held by PSCI Group 112
Appendix 1
Proxy Form
Contents
22 3
NOTICE IS HEREBY GIVEN THAT the Thirty-Fifth Annual General Meeting of the Company will be held at 4th Floor, Menara Boustead, Jalan Raja Chulan, 50200 Kuala Lumpur on Wednesday, 27 June 2007 at 10.00 a.m. to transact the following businesses: -
AGENDA 1. Toreceive theAuditedFinancialStatements for thefinancial yearended31December2006and theReportsof
DirectorsandAuditorsthereon. (Ordinary Resolution 1)
2. ToapprovethepaymentofDirectors’Feesfortheyearended31December2006. (Ordinary Resolution 2)
3. To re-elect the following Directors retiring in accordance with Article 103 of the Company’s Articles ofAssociation:-
(i) TuanHajiMohdNoordinBinAbdullah (Ordinary Resolution 3) (ii)EncikIdrisBinZakaria (Ordinary Resolution 4)
4. Tore-appointMessrsErnst&YoungasAuditorsoftheCompanyandauthorisetheDirectorstodeterminetheirremuneration. (Ordinary Resolution 5)
5. As Special Business to consider and if thought fit, to pass the following Ordinary Resolution, with or withoutmodifications:-
ORDINARY RESOLUTION – AUTHORITY TO ISSUE SHARES “THATsubjectalwaystotheCompaniesAct,1965andtheapprovalsoftherelevantauthorities,theDirectorsbeand
areherebyempowered,pursuanttoSection132DoftheCompaniesAct,1965,toissueandtoallotsharesintheCompanyfromtimetotimeatsuchprice,uponsuchtermsandconditions,forsuchpurposesandtosuchpersonorpersonswhomsoeverastheDirectorsmayintheirabsolutediscretiondeemfitprovidedthattheaggregatenumberofsharesissuedpursuanttothisResolutiondoesnotexceed10%oftheissuedsharecapitaloftheCompanyforthetimebeingandthatsuchauthorityshallcontinueinforceuntiltheconclusionofthenextAnnualGeneralMeetingoftheCompany.” (Ordinary Resolution 6)
6. As Special Business to consider and if thought fit, to pass the following Ordinary Resolution, with or withoutmodifications:-
ORDINARY RESOLUTION - PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE AND PROPOSED ADDITIONAL SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE
“THAT,subjecttotheCompaniesAct,1965(“Act”),theMemorandumandArticlesofAssociationoftheCompanyand
theListingRequirementsoftheBursaMalaysiaSecuritiesBerhad,approvalbeandisherebygiventotheCompanyand itsSubsidiariestoenter intoall transactions involvingtheRelatedPartiesasspecified inSection2.3of theCirculartoShareholdersdated1June2007providedthatsuchtransactionsare:-
(i) recurrenttransactionsofarevenueortradingnature;(ii) necessaryfortheday-to-dayoperations;(iii)carriedoutintheordinarycourseofbusinessonnormalcommercialtermswhicharenotmorefavourableto
theRelatedPartiesthanthosegenerallyavailabletothepublic;and(iv)arenottothedetrimentoftheshareholders.
ANDTHATsuchapprovalshallcontinuetobeinforceuntil:-
(a) theconclusionofthenextAnnualGeneralMeeting(“AGM”)oftheCompany,atwhichtimeitwilllapse,unlessbyaresolutionpassedatthesaidAGM,suchauthorityisrenewed;
(b) theexpirationoftheperiodwithinwhichthenextAGMoftheCompanyisrequiredtobeheldpursuanttoSection143(1)oftheAct(butshallnotextendtosuchextensionasmaybeallowedpursuanttoSection143(2)oftheAct);or
(c) revokedorvariedbyaresolutionpassedbytheshareholdersinaGeneralMeeting;
whicheveristheearlier.
NoticeofAnnualGeneralMeeting
22 3
AND FURTHER THAT the Directors of the Company be authorised to complete and do all such acts and things(includingexecutingallsuchdocumentsasmayberequired)astheymayconsiderexpedientornecessarytogiveeffecttotheMandate." (Ordinary Resolution 7)
7. As Special Business to consider and if thought fit, to pass the following Special Resolution, with or withoutmodifications:-
SPECIAL RESOLUTION - PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION
“THATthedraftArticlesofAssociationcontainedinAppendixIoftheAnnualReport2006,beandisherebyapprovedandadoptedastheArticlesofAssociationoftheCompanyinsubstitutionforandtotheexclusionoftheexistingArticlesofAssociation.” (Special Resolution 1)
8. As Special Business to consider and if thought fit, to pass the following Special Resolution, with or withoutmodifications:-
SPECIAL RESOLUTION - PROPOSED CHANGE OF COMPANY’S NAME
“THATthenameoftheCompanybechangedfrom“PSCIndustriesBhd”to“BousteadHeavyIndustriesCorporationBhd”witheffect fromthedateof issuanceofCertificateof IncorporationonChangeofNamebytheCompaniesCommissionofMalaysiaandthatthenameoftheCompanywhereveritappearsintheMemorandumandArticlesofAssociationbeamendedaccordingly.
ANDTHATtheDirectorsoftheCompanybeandareherebyauthorisedtocarryoutallthenecessaryformalitiesineffectingthechangeofname.” (Special Resolution 2)
9. Totransactanyotherbusinessofwhichduenoticeshallhavebeenreceived.
BYORDEROFTHEBOARD
DAVIDLOOKEANBENGKANGSHEWMENGSEOWFEISANSecretaries
KualaLumpurDate:1June2007
NOTES:-
1. AmemberoftheCompanyentitledtoattendandvoteatthemeetingisentitledtoappointaproxytoattendandvoteinhisstead.AproxyneednotbeamemberoftheCompany.
2. Theinstrumentappointingaproxyshallbeinwritingunderthehandoftheappointerorofhisattorneydulyauthorisedinwriting.IftheappointerisaCorporation,theFormofProxymustbeexecutedunderitsCommonSealorunderthehandof itsofficerorattorneydulyauthorised.
3. TheinstrumentappointingaproxymustbedepositedattheRegisteredOfficeoftheCompany,17thFloor,MenaraBoustead,69JalanRajaChulan,50200KualaLumpurnotlessthanforty-eighthoursbeforethetimeappointedforholdingthemeeting.
NoticeofAnnualGeneralMeeting NoticeofAnnualGeneralMeeting
�� 5
4. ExplanatorynotesonSpecialBusiness:
OrdinaryResolution6
TheproposedOrdinaryResolution6,ifpassed,willempowertheDirectorsoftheCompanytoissueandallotnotmorethan10%oftheissuedsharecapitaloftheCompanysubjecttotheapprovalsofalltherelevantauthoritiesandforsuchpurposesastheDirectorsconsiderwouldbeintheinterestoftheCompany.
Thisauthorisationwill,unlessrevokedorvariedby theCompany inageneralmeeting,expireat thenextAnnualGeneralMeetingof theCompany.
OrdinaryResolution7
TheproposedOrdinaryResolution7,ifpassed,willenabletheCompanyand/oritsSubsidiariestoenterintorecurrenttransactionsinvolvingtheinterestsofRelatedParties,whichareofarevenueortradingnatureandnecessaryfortheGroup’sday-to-dayoperations,subjecttothetransactionsbeingcarriedoutintheordinarycourseofbusinessandontermsnottothedetrimentoftheminorityshareholdersoftheCompany.
SpecialResolution1
TheproposedSpecialResolution1,ifpassed,willamendtheArticlesofAssociationoftheCompanybyadoptinganewArticlesofAssociationassetoutinAppendix“1”oftheAnnualReport2006.
SpecialResolution2
The proposed Special Resolution 2, if passed, will change the Company’s name from PSC Industries Bhd to “Boustead Heavy IndustriesCorporationBhd.”
NoticeofAnnualGeneralMeeting
�� 5
DIRECTORS STANDING FOR RE-ELECTION
NamesofDirectorswhoarestandingforre-electionasinOrdinaryResolutions3and4oftheNoticeofAnnualGeneralMeetingare:-
(i) TuanHajiMohdNoordinBinAbdullah(ii) EncikIdrisBinZakaria
FurtherdetailsoftheaboveDirectorsaresetoutintheDirectors'Profileonpage9oftheAnnualReport.
BOARD MEETINGS
Therewereeight(8)BoardMeetingsheldduringthefinancialyearended31December2006.ThemeetingswereheldattheConferenceRoom,17thFloor,MenaraBoustead,JalanRajaChulan,50200KualaLumpurandtheattendanceofthedirectorsissetoutonpage16oftheAnnualReport.
PLACE, DATE AND TIME OF THE 2007 ANNUAL GENERAL MEETING
TheThirty-FifthAnnualGeneralMeetingwillbeheldat4thFloor,MenaraBoustead,JalanRajaChulan,50200KualaLumpuronWednesday,27June2007at10.00a.m.
StatementAccompanyingTheNoticeofAnnualGeneralMeeting
�
BOARD OF DIRECTORS
Y. Bhg. Laksamana Madya (Rtd) Dato’ Seri
Ahmad Ramli Bin Haji Mohd Nor
ExecutiveDeputyChairman/
GroupManagingDirector
Y. Bhg. Datuk Azzat Bin Kamaludin
Non-IndependentNon-ExecutiveDirector
En. Ishak Bin Osman
Non-IndependentNon-ExecutiveDirector
Mr. David William Berry
IndependentNon-ExecutiveDirector
En. Idris Bin Zakaria
IndependentNon-ExecutiveDirector
Tn. Hj. Mohd Noordin Bin Abdullah
IndependentNon-ExecutiveDirector
SECRETARIES
DavidLooKeanBeng
KangShewMeng
SeowFeiSan
AUDITORS
Ernst&Young
Level23A,MenaraMilenium
JalanDamanlela
PusatBandarDamansara
50490KualaLumpur
Tel.No :03-74958000
Fax.No:03-20959076
REGISTERED OFFICE
17thFloor,MenaraBoustead
69JalanRajaChulan
50200KualaLumpur
Tel.No :03-20316516
Fax.No:03-20265978
PRINCIPAL PLACE OF BUSINESS
17thFloor,MenaraBoustead
69JalanRajaChulan
50200KualaLumpur
Tel.No :03-20787770
Fax.No:03-20787768
REGISTRAR
EpsilonRegistrationServicesSdnBhd
312,3rdFloor,BlockC
KelanaSquare
17JalanSS7/26
47301PetalingJaya
SelangorDarulEhsan
Tel.No :03-78062116
Fax.No:03-78061261
PRINCIPAL BANKERS
AffinBankBerhad
RHBBankBerhad
MalayanBankingBerhad
STOCK EXCHANGE LISTING
BursaMalaysiaSecuritiesBerhad
MainBoard
CorporateInformation
He was appointed to the Board on 17 August 2005.
He graduated from the Brittania Royal Naval College
Dartmouth, United Kingdom, Indonesia Naval Staff
College, United States Naval War College and Naval
Post-Graduate School in Monterey. He also holds a
Masters Degree in Public Administration from the
Harvard University, United States. He retired as
the Chief of the Royal Malaysian Navy in 1999.
Current directorships in public companies include,
Affin Bank Berhad, Muhibbah Engineering Berhad,
Comintel Corporation Berhad and Favelle Favco
Berhad.
He does not have any family relationship with
any Director and/or major shareholders of PSC
Industries Berhad (PSCI), nor any personal
interest in any business arrangement involving the
Company.
Profile ofThe Board of Directors
Y. BHG. LAKSAMANA MADYA (RTD) DATO’ SERIAHMAD RAMLI BINHAJI MOHD NORExecutive Deputy Chairman/Group Managing Director 63 years of age, Malaysian
7
�� 9
ProfileofTheBoardofDirectors
HewasappointedtotheBoardon17August2005.HeisamemberoftheAuditCommittee.
Heisalawyerbyprofession,andisapartnerofthelawfirmofAzzat&Izzat. He graduated from the University of Cambridge with degrees inLawandinInternationalLawin1969andwasadmittedasaBarrister-at-LawoftheMiddleTemple,Londonin1970.PriortobeingadmittedasanadvocateandsolicitoroftheHighCourtofMalayain1979,heservedasanAdministrativeandDiplomaticOfficerwiththeMinistryofForeignAffairsMalaysia in various capacities. He is also presently a Director of AffinHoldings Berhad, Boustead Holdings Berhad, KPJ Healthcare Berhad,Pulai Springs Resort Berhad, Celcom (Malaysia) Berhad, VisdynamicsHoldingsBerhadandseveralotherprivatelimitedcompanies.Heservedas a member of the Securities Commission from 1 March 1993 to 21March1999.
He does not have any family relationship with any Director and/ormajorshareholdersofPSCI,noranypersonal interest inanybusinessarrangement involving the Company, other than the rendering ofprofessionalservicesto theGroupwhich iscarriedout in theordinarycourseofbusinessofAzzat&Izzat,ofwhichheisapartner.
HewasappointedtotheBoardon23February2006.HeisamemberoftheAuditCommittee.
HefirstarrivedinMalaysiain1980astheChiefExecutiveofCharteredMerchantBankers(nowknownasAffinMerchantBank).Inacareerinfinancialservicesspanningover30years,hehasacquiredexperienceincommercialandmerchantbankingaswellasinvestmentmanagementandventurecapital.
From2002to2004,heservedasExecutiveDirectorandCEOofCahyaMataSarawakBerhad,adiversifiedpubliccompanylistedonBursaMalaysiaSecuritiesBerhad.Heiswell-versedincorporateaffairsandgovernanceissues and today, is active as Managing Director – Governance atColumbusCircleGovernanceSdnBhd,aspecialistfirmprovidingadviceandcounseltocompaniesintheareasofcorporategovernance,investorrelations,financialcommunications,riskmanagement,internalcontrolsandcorporate/financialstrategy.Between1990and2002,heservedasaNon-ExecutiveDirectorofBousteadHoldingsBerhad.HeisamemberoftheBoardofGovernorsofMalaysianInstituteofCorporateGovernance.
He does not have any family relationship with any Director and/ormajorshareholdersofPSCI,noranypersonal interest inanybusinessarrangementinvolvingtheCompany.
Y. BHG. DATUKAZZAT BINKAMALUDINNon-IndependentNon-Executive Director 62 years of age,Malaysian
MR. DAVID WILLIAM BERRYIndependentNon-Executive Director59 years of age, New Zealander and Permanent Resident of Malaysia
�� 9
He was appointed to the Board on 22 January 1998 as the ExecutiveDirector-Operations.Hewasre-designatedasNon-ExecutiveDirectorofPSCIon1September2006.
HegraduatedfromUniversityofMalayawithadegreeinEconomics(Hons)majoringinAccountancyandholdsaMasterofBusinessAdministrationin Finance from Leuven University, Belgium. He started his workingcareerintheMinistryofFinance,MalaysiaandheldvariouspositionsintheMinistryduringhiseleven(11)yearswiththeGovernment.
He joined Amanah Merchant Bank Berhad as Senior Manager ProjectFinancein1982andwassubsequentlypromotedtobeGeneralManagerBanking & Advisory Service in 1984. In 1987, he moved to KumpulanKewangan Berhad (KKB), the holding company of Amanah MerchantBankasaSeniorGeneralManager-Operation.DuringhisserviceswithKKB,hesatonvariousBoardsnamely,AmanahMerchantBank,MalaysiaDiscount Bhd, Amanah International Insurance Bhd, Malaysia CreditFinanceBhdandKKIndustriesBhd.
In1989,heassumedtheManagingDirector’spositioninMalaysiaCreditFinanceBhd.HedoesnothaveanyfamilyrelationshipwithanyDirectorand/or major shareholders of PSCI, nor any personal interest in anybusinessarrangementinvolvingtheCompany.
Hewasappointed to theBoardon8July1998.He isamemberof theAudit,RemunerationandNominationCommittees.
He holds a diploma in Automobile Engineering, Japan. He establishedhimself in the automobile sector for thirty (30) years and has servedcompanysuchasUMWToyota,Malaysia.HeisaDirectorofseveralprivatecompaniesandwasaDirectorofActacorpBerhad.Hewasalsoamemberof the Kuala Lumpur Dewan Bandaraya Advisory Council. He does nothaveanyfamilyrelationshipwithanyDirectorand/ormajorshareholdersofPSCI,noranypersonalinterestinanybusinessarrangementinvolvingtheCompany.
HewasappointedtotheBoardon12December2001.HeistheChairmanoftheAudit,RemunerationandNominationCommittees.
HeholdsaDiplomainBritishBankingfromCityofLondonCollege.Hehasmorethanthirty(30)yearsofexperienceinthebankingsector.DuringhisemploymentwithBankBumiputraMalaysiaBerhad,hehadtheprivilegetoserveastheHeadofCreditRecoveryandComplianceDivision,Retail&IslamicBankingDivision,AreaManagerofRegionalOfficeinWilayahPersekutuan/Selangor and Regional Office Johor/Melaka and also astheGeneralManagerofKualaLumpurmainbranch.Hedoesnothaveany family relationshipwithanyDirectorand/ormajorshareholdersofPSCI,noranypersonal interest inanybusinessarrangement involvingtheCompany.
EN. ISHAK BINOSMANNon-ExecutiveNon Independant Director 60 years of age,Malaysian
EN. IDRIS BIN ZAKARIAIndependentNon-Executive Director62 years of age, Malaysian
TN. HJ. MOHD NOORDIN BIN ABDULLAHIndependentNon-Executive Director66 years of age, Malaysian
ProfileofTheBoardofDirectors
11
Dear Shareholder,
I am pleased to present our annual report in a year where the previous business and financial predicament that we
faced has finally turned a corner. With the achievements of our debt restructuring and regularisation exercise over
the past year, we are well poised to steer the Group and Company towards achieving profitability and a sustainable
viability.
Given our status as a Practice Note (“PN”) 17 company and our dire financial position, our major focus in the year
has been the restructuring and regularisation of the Group.
On 1 December 2005, the Company had announced that it was an affected listed issuer under PN 17 with the
prospect of imminent delisting from Bursa Malaysia Securities Berhad. To avoid delisting and ensuing liquidation,
the Company proposed a comprehensive Debt Restructuring Scheme to the creditor banks entailing a significant
waiver of outstanding debt. On 21 December 2006, the Group successfully submitted the Debt Restructuring and
Regulatisation Plan to Securities Commission (“SC”).
Subsequent to the submission, the Company achieved several significant milestones, including approvals from SC,
relevant shareholders and scheme creditors.
Y.Bhg.LaksamanaMadya(Rtd)Dato’SeriAhmadRamliBinHajiMohdNor
Executive Deputy Chairman's Statement
10
11
We are close to concluding the regularisation, the final hurdle of obtaining Court approvals and the issue of new shares
are expected to be completed soon. The speed at which this debt restructuring has proceeded is in no small measure
attributable to the efficient and effective project management and the guidance provided by the Directors of PSCI.
With that positive and prospective background, I am pleased to present to you our annual report for the year ended 31
December 2006. This report provides a review of key developments that have taken place during the year, which I hope,
will offer you a better understanding of the course the Group has pursued, and its prospects ahead.
Financial Review
The financial position of the Group has inevitably deteriorated largely due to the impairment of property, plant and
equipment of RM37 million. Further, the Group recorded a lower turnover of RM80 million in 2006 compared to RM171
million in the previous year. Nevertheless, net loss at RM94 million was significantly lower compared to RM533 million
in 2005.
Consequently, loss per share was lower at 54 sen during the year under review compared to last year’s loss per share
of 306 sen.
The concluded debt regularisation and restructuring exercise will resolve about RM595 million owed to creditor
banks and substantially reduce accumulated losses of RM771 million as at 31 August 2006. Essentially, the exercise
addressed the Group’s total debt of RM595 million and the full and final settlement in the sum of RM144,007,607 was
proposed and accepted. This amount was settled by the issuance of 144,007,607 Settlement Shares to be allotted to
then renounced entirely by the scheme creditors for cash consideration of RM1.00 per share.
In addition to that, a rights issue entailing RM69.6 million was raised to be utilised as working capital for the Group.
The restructuring exercise will reduce the company’s accumulated losses as at 31 August 2006 from RM771 million
to RM172 million and improve the shareholders’ funds position from a negative RM535 million to a positive of RM67
million. This is indeed a desirable consequence as it provides positive affirmation of the Group’s solvency and a
significant first step towards share value enhancement.
Review of Operations
PSCI intends to continue to leverage on our expertise and niche in maritime, oil and gas as well as commercial shipping
to grow our business. We are strongly positioned to benefit from the growing importance of emerging markets as
globalisation changes the patterns of the economics. Additionally, the increased number of projects and spending
under the Ninth Malaysia Plan augurs well for the Group’s prospects. We have previously been handicapped by a weak
financial position which impaired our ability to raise funding to secure and finance such contracts. This situation will
change with our successful debt restructuring and PSCI is well poised to take advantage of the impending prospects.
We believe that with positive shareholder funds and the Group's rebranding exercise, financial institutions will be
much more supportive. This will enable us to pursue the substantial opportunities which are now before us.
Our core focus has been to sustain the technical capability within the Group. We are pleased that despite the difficulties
faced, the Company has managed to retain most of its core employees, who are well qualified and experienced to
ensure the deliverability of all terms specified in such contracts which can be quite technical in nature.
ExecutiveDeputyChairman'sStatement
Y.Bhg.LaksamanaMadya(Rtd)Dato’SeriAhmadRamliBinHajiMohdNor
10
ExecutiveDeputyChairman'sStatement
12
We are already experiencing some measure of success in the year under review, i.e. despite the difficulties, the Group
successfully handed over two Offshore Patrol Vessels to Tentera Laut DiRaja Malaysia and we are on track to launch the
third and fourth vessels for further testing and fitting in 2007 prior to completion and delivery in 2009.
We are pleased also that in the first quarter of 2007, the Group secured a USD42 million contract with Gagasan Carriers
Sdn Bhd for the construction and sale of three chemical tankers. Further, the Group’s associate company, Boustead
Naval Shipyard Sdn Bhd (formerly known as PSC-Naval Dockyard Sdn Bhd), was awarded a RM41 million contract by
Tanjung Kapal Services Sdn Bhd in 2006, a wholly-owned subsidiary of Tanjung Offshore Berhad. The contract involves
the engineering, construction, testing and delivery of an anchor handling tug supply vessel. We are confident that this
segment of the business will continue to have a direct and indirect contribution to the Group’s profitability.
At this point I would like to recognise and thank the Securities Commission and Bursa Malaysia Securities Berhad
for their efficiency and guidance in our restructuring exercise, the Creditor Banks for their patience and support, our
Board, staff and consultants for their relentless dedication and commitment. Finally, and certainly not lastly, to our
loyal shareholders for their continued confidence in us.
Terima kasih.
Laksamana Madya (Rtd) Dato’ Seri Ahmad Ramli Bin Haji Mohd Nor
Executive Deputy Chairman
COMPOSITION OF MEMBERS
ChairmanTn.Hj.MohdNoordinBinAbdullah(Chairman,IndependentNon-ExecutiveDirector)
MembersY.Bhg.DatukAzzatBinKamaludin(Non-IndependentNon-ExecutiveDirector)Mr.DavidWilliamBerry(IndependentNon-ExecutiveDirector)En.IdrisBinZakaria(IndependentNon-ExecutiveDirector)
MEMBERSHIP
The Audit Committee shall be appointed by the Board from amongst the directors of the Company and shall number not less than three (3) members, a majority of whom shall be Independent Non-Executive Directors. The members of the Audit Committee shall elect a Chairman from amongst themselves who is an Independent Non-Executive Director.
The terms of office and performance of the Committee and each of its members shall be reviewed by the Board no less than once every three (3) years.
AUTHORITY
The Committee is authorised by the Board to investigate any activity within its terms of reference and shall have unrestricted access to any information it requires from any employees and all employees are directed to co-operate with any request made by the Committee. The Committee is also authorised by the Board to obtain external legal or other independent professional advice as necessary.
The Committee shall have direct access to the internal and external auditors and be able to convene meetings with external auditors excluding the attendance of the executive members of the Committee, whenever necessary.
DUTIES AND RESPONSIBILITY
The duties of the Committee shall be:-
• To consider the appointment, resignation and dismissal of external auditors and the audit fee.
• To discuss with the external auditors, prior to the commencement of audit, the nature and scope of audit and to ensure co-ordination of audit where more than one audit firm is involved.
• To review the quarterly announcements to the Bursa Malaysia Securities Berhad and year end annual financial statements before submission to the Board.
• To discuss problems and reservations arising from the interim and final external audits, and any matters the external auditors may wish to discuss (in the absence of management, where necessary).
• To review the external auditors’ management letter and management’s response.
• To do the following in respect of the internal audit function:-
- review the adequacy of scope, functions and resources of the internal audit function and that it has the necessary authority to carry out its work.
- review internal audit programme.- ensure co-ordination of external audit with internal audit.- consider the major findings of internal audit investigations and management’s response, and ensure that
appropriate actions are taken on the recommendations of the internal audit function.
AuditCommitteeReportExecutiveDeputyChairman'sStatement
12 13
AuditCommitteeReport
1�
• To monitor related party transactions entered into by the Company and the Group, and to ensure that the Directors report such transactions as necessary in accordance with the Bursa Malaysia Securities Berhad’s Listing Requirements.
• To review the effectiveness of internal control systems.
• To perform any other such function as may be agreed to by the Audit Committee and the Board.
MEETINGS AND MINUTES
Meetings shall be held not less than four times a year, or more frequently when necessary. The presence of internal and external auditors will be requested if required. Other Board members and employees may attend meetings upon the invitation of the Audit Committee. The external auditors may request a meeting if they consider it necessary. Written notice of the meeting together with the agenda shall be given to the members of the Committee and where applicable, the external auditors.
The Secretary to the Audit Committee shall be the Company Secretary. Minutes of each meeting shall be distributed to each member of the Board. The Chairman of the Committee shall report on each meeting to the Board.
During the financial year ended 31 December 200�, there were five (5) Audit Committee meetings held. The details of attendance of the Committee members are as follows:-
SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE
NAME OF DIRECTORS INDEPENDENT ATTENDANCE OF MEETINGS
Tn.Hj.MohdNoordinBinAbdullah Yes 4/5
Y.Bhg.DatukAzzatBinKamaludin No 5/5
Mr.DavidWilliamBerry# Yes 4/4
En.IdrisBinZakaria Yes 5/5
Notes:-#Appointedon23February2006.
During the financial year ended 31 December 200�, the activities undertaken by the Audit Committee included the following:
1. Reviewing the quarterly financial statements before announcements to the Bursa Malaysia Securities Berhad.
2. Reviewing the year-end financial statements together with external auditors’ management letter in relation to the audit and accounting issues arising from the audit and management’s response.
3. Discussing and reviewing the external auditors’ scope of work, audit plan and procedures.
�. Discussing and reviewing the state of internal control in the Company.
INTERNAL AUDIT FUNCTION
The Internal Audit Division is responsible for providing independent assessments for adequate, efficient and effective internal control systems to anticipate potential risks exposures over key business processes within the Group.
The Code
TheBoardofDirectorsiscommittedtoensuringthehigheststandardsofcorporategovernancearepractisedthroughouttheGroupasafundamentalpartofdischargingitsresponsibilitiestoprotectandenhanceshareholdersvalueandthefinancialperformanceofPSCI.
BOARD OF DIRECTORS
Composition of the Board
TheBoardcurrentlyhas6members,comprising1ExecutiveDirectorand5Non-ExecutiveDirectors,3ofwhomareIndependentDirectors.NoindividualdominatestheBoard’sdecisionmakingandthenumberofDirectorsreflectsfairlytheinvestmentoftheshareholders.TheBoardalsofulfillstherequirementofhavingatleastone-thirdofitsmembersasIndependentNon-ExecutiveDirectors.
Y.Bhg.LaksamanaMadya(Rtd)Dato’SeriAhmadRamliBinHajiMohdNorleadstheBoardasExecutiveDeputyChairmanandGroupManagingDirectoroftheCompany.Together,theDirectorsbringawiderangeofbusiness;commercialandfinancialexperiencerelevanttothedirectionoftheGroup.
TheBoardcontinuestogivecloseconsiderationtomaintainingabalanceinitssize,compositionandspreadofexperienceand expertise. This balance enables the Board to provide effective leadership as well as independent judgement onbusinessdecisions,takingintoaccountthelongterminterestsoftheGroup’sshareholders,customers,suppliersandotherbusinessassociates.
TheprofileofthemembersoftheBoardisalsoprovidedonpages7to9inthisAnnualReport.
InaccordancewiththerequirementoftheMalaysianCodeonCorporateGovernance,Tn.Hj.MohdNoordinBinAbdullahhas been appointed as the Senior Independent Non-Executive Director to be available to deal with concerns of theshareholdersoftheCompany.
Board Responsibilities
ThereisnoseparatedivisionofresponsibilitiesbetweentheExecutiveDeputyChairmanandGroupManagingDirectoroftheCompanytoensurethatthereisabalanceofpowerandauthority.However,thepresenceofIndependentNon-ExecutiveDirectorsofthecalibrenecessarytoexecutesufficientweightintheBoarddecisionscreatesabalanceinthedecisionmakingprocesses,andboththeBoardandtheAuditCommitteeareworkingtowardsensuringfullcompliancewiththePrinciplesandBestPracticesoftheCode.Nevertheless,theultimateresponsibilityforthefinaldecisiononallmatterslieswiththeBoardofDirectors.
AneffectiveBoardleadsandcontrolstheGroup.ThisentailsreviewingandadoptingstrategicplansfortheCompany,setting direction, overseeing the conduct of the business and managing the Company. Key matters such as theregularisation plans to address the Group’s PN17 status, approval of annual and quarterly results, acquisitions anddisposals,capitalexpenditures,budgets,materialcontractsandbusinessengagements,successionplanning for topmanagementarereservedfortheBoard.
TheBoardisassistedbyvariouscommittees,whichoverseestheday-to-dayoperationsoftheGroupincludingreviewofmonthlyperformance,budgets,capitalinvestmentproposalsandmanyotheroperatingissuesarisingoutoftheordinarycourseofbusiness.
TheBoardhasalsodelegatedcertainresponsibilitiestootherBoardcommittees,whichoperatewithinclearlydefinedterms of reference. Standing committees of the Board include the Audit Committee, the Nomination Committee,the Remuneration Committee and the EXCO Committee. The responsibilities of the Nomination Committee and the
CorporateGovernance
1� 15
CorporateGovernance
RemunerationCommitteehavebeendelegatedbytheBoardtoanExecutiveCommitteetoexpeditetheregularisationplansandtooverseeallaspectsoftheGroup’soperations.TheBoardfullyintendstoreinstatetherespectivecommitteesfollowingthecompletionofitsPN17regularisationplans.
Board Meetings
Boardmeetingsareheldatquarterlyintervalswithadditionalmeetingsconvenedforparticularmatters,whennecessary.AllDirectorsare fullybriefed inadvanceofBoardmeetingson thematters tobediscussedandhaveaccess toanyfurtherinformationtheymayrequire.TheBoardmay,wheneverrequired,setupcommitteesdelegatedwithspecificpowersandresponsibilities.
TheDirectorshaveaccesstotheadviceandservicesoftheCompanySecretaries,whoareresponsibleforensuringtheBoardmeetingprocedures,arefollowedandthatapplicablerulesandregulationsarecompliedwith.
TheMemorandumandArticlesofAssociationoftheCompanyprovidesfortheChairmantohavethecastingvoteintheeventanequalityofvotesarisesoveranissueinquestion.
TheBoardmetforatotalofeight(8)timesduringthefinancialyearended31December2006andtheattendanceofeachDirectorisstatedinthetablebelow:-
Name of Director Status of Directorship Independent Attendance of Meetings
Y.Bhg.LaksamanaMadya ExecutiveDeputy No 8/8(Rtd)Dato’SeriAhmadRamli Chairman/GroupBinHajiMohdNor ManagingDirector
Y.Bhg.DatukAzzat Non-Independent No 8/8BinKamaludin Non-ExecutiveDirector
Mr.DavidWilliamBerry+ Independent Yes 6/6 Non-ExecutiveDirector
En.IshakBinOsman Non-Independent No 8/8 Non-ExecutiveDirector
En.IdrisBinZakaria Independent Yes 8/8 Non-ExecutiveDirector
Tn.Hj.MohdNoordin Independent Yes 5/8BinAbdullah Non-ExecutiveDirector
Notes:-+ Appointedon23February2006.
Supply of Information
PriortotheBoardMeeting,anagendaandaBoardreportwillbeissuedtoallDirectorsfortheirreview.ThisisissuedinsufficienttimetoenabletheDirectorstoobtainfurtherexplanation,wherenecessary,inordertobeproperlybriefedbeforethemeeting.TheBoardreportcontainsrelevantinformationonthebusinessofthemeeting.
The Board has approved a procedure to take independent professional advice in appropriate circumstances, at theCompany’sexpense.Before incurringsuchprofessional fees, theDirectorconcernedmustconsultwith theExecutiveDeputyChairmanoftheBoardorwithtwootherDirectors,oneofwhomisNon-Executive.
Directorshaveaccesstoall informationwithintheCompany,whetherasafullBoardorintheir individualcapacity, infurtheranceoftheirduties.
DirectorsalsohaveaccesstotheadviceandservicesoftheCompanySecretarieswhoareresponsibleforensuringthatBoardproceduresareadheredto.
1�
CorporateGovernance
Appointment and re-election of Directors
InaccordancewiththeCompany’sArticlesofAssociation,allnewlyappointedDirectorsshallretirefromofficebutshallbeeligible forre-electionat thenextAnnualGeneralMeetingsubsequent to theirappointment.TheArticles furtherprovidethatatleastonethirdoftheremainingDirectorsbesubjecttore-electionbyrotationateachAnnualGeneralMeeting.
BOARD COMMITTEES
Audit Committee
TheAuditCommitteereviewsissuesofaccountingpolicyandpresentationforexternalfinancialreporting,monitorstheworkoftheinternalauditfunctionandensuresanobjectiveandprofessionalrelationshipismaintainedwithexternalauditors.TheCommitteehasfullaccesstoboththeinternalandexternalauditorswho,inturn,haveaccessatalltimestotheChairmanoftheCommittee.
ThereportoftheAuditCommitteeissetoutonpages13&14oftheAnnualReport.
Nomination Committee (currently suspended)
TheBoardhasestablishedaNominationCommitteeconsistingofthefollowingIndependentNon-ExecutiveDirectors:-
Chairman : Tn.Hj.MohdNoordinBinAbdullahMember : En.IdrisBinZakaria
ThefunctionsoftheNominationCommitteeshallbeto:-
• Recommendcandidatesforalldirectorships.
• RecommendappointmentstoBoardCommittees.
• Annuallyreviewtherequiredmixofskillsandexperienceandotherqualities, includingcorecompetencies,whichNon-ExecutiveDirectorsshouldbringtotheBoard.
TheDirectorshavedirectaccesstotheadviceandservicesoftheGroup’sCompanySecretarieswhoareresponsibleforensuringthatallappointmentsareproperlymadeandallnecessaryinformationisobtainedfromDirectors,bothfortheCompany’sownrecordsandforthepurposesofmeetingtherequirementsoftheCompaniesAct1965,theListingRequirementsoftheBursaMalaysiaSecuritiesBerhadandotherregulatoryrequirements.
On appointment, Directors will receive information on the Company which include financial, corporate business andregulatory information. Information will be regularly updated through meetings or written circulars. Directors areencouraged to attend training courses at the Company’s expense to keep abreast with development in the marketplace.
All Directors of the Company have attended the Mandatory Accreditation Programme conducted by the ApprovedOrganiser.TheDirectorswillcontinuetoundergootherrelevanttrainingprogrammestofurtherenhancetheirknowledgeonacontinuousbasisincompliancewithPracticeNoteNo.15/2003oftheListingRequirementsoftheBursaMalaysiaSecuritiesBerhadontheContinuingEducationProgramme.
1� 17
1�1� 19
CorporateGovernance
Remuneration Committee (currently suspended)
The Board has established a Remuneration Committee consisting of the following Independent Non-ExecutiveDirectors:-
Chairman : Tn.Hj.MohdNoordinBinAbdullahMembers : En.IdrisBinZakariaThetermsofreferenceapprovedfortheCommitteeareto:-
• ReviewandrecommendthegeneralremunerationpolicyoftheGroup.• RecommendtotheBoardtheremunerationofanyExecutiveDirectorinallitsforms,drawingfromoutsideadviceas
necessaryandtoreviewannuallythecompensationofDirectors.• RemunerationpackagesofNon-ExecutiveDirectorsandNon-ExecutiveChairmanareamatterfortheBoardasa
wholeandtheindividualsconcernedarerequiredtoabstainfromdiscussionoftheirownremuneration.
Thepolicyof theRemunerationCommittee is to rewardemployeescompetitively, taking intoaccountperformance,marketcomparisonsandcompetitivepressureintheindustry.Thecomponentpartsofremunerationarestructuredsoastolinkrewardstocorporateandindividualperformance,inthecaseofanyExecutiveDirector.InthecaseofNon-ExecutiveDirectors,thelevelofremunerationreflectstheexperienceandlevelofresponsibilitiesundertakenbytheparticularNon-ExecutiveDirectorsconcerned.
AsummaryoftheremunerationoftheDirectorsforthefinancialyearended31December2006,distinguishingbetweenExecutiveandNon-ExecutiveDirectorsinaggregate,withcategorisationintoappropriatecomponentsandthenumberofDirectorswhoseremunerationfallsintoeachsuccessivebandareasfollows:-
Executive Non-Executive Directors Directors Total (RM) (RM) (RM)
Fees 12,000 65,234 77,234
Salary - 304,000 304,000
EPF - 39,360 39,360
Allowance 6,500 72,445 78,945
Benefitinkind - 23,467 23,467
Total 18,500 504,506 523,006
Directors’ Remuneration
Executive Non-Executive Total Directors Directors
RM0–RM50,000 1 3 4
RM50,001–RM100,000 - 1 1
RM400,001–RM450,000 - 1 1
Total 1 5 6
IncludedintheNon-ExecutiveDirectorscategoryarethedetailsinrespectofaDirectorwhowasre-designatedfromanExecutiveDirectortoNon-ExecutiveDirectoron1September2006:
- Salary,EPFandallowanceofRM371,895andbenefitinkindofRM23,467incurredfortheperiodfrom1January2006to31August2006.
- Directors'remunerationrangefromRM400,001toRM450,000.
1�1� 19
INVESTORS AND SHAREHOLDERS RELATIONSHIP
TheAnnualGeneralMeeting istheprincipalforumfordialoguewiththeshareholders.NoticeoftheAnnualGeneralMeetingandAnnualReportsaresentouttoshareholdersatleasttwenty-one(21)daysbeforethedateofthemeeting.
AteachAnnualGeneralMeeting,theBoardencouragesshareholderstoparticipateinthequestionandanswersessionpertainingtothebusinessactivitiesoftheGroup.TheExecutiveDeputyChairmanandwhereappropriate,theChairmanoftheAuditCommitteeisavailabletorespondtoshareholders’questionsduringthemeeting.Whereappropriate,theChairman will undertake to provide a written answer to any significant question, which cannot be readily answeredduringthemeeting.
ACCOUNTABILITY AND AUDIT
Financial Reporting
Inpresentingtheannualfinancialstatementsandquarterlyannouncementsofresultstotheshareholders,theBoardaimstopresentabalancedandunderstandableassessmentoftheGroup’spositionandprospects.
Before the financial statements are drawn up, the Directors take all necessary steps to ensure that the Group hasusedalltheapplicableaccountingpoliciesconsistently,andthatthepoliciesaresupportedbyreasonableandprudentjudgementsandestimates.Allaccountingstandards,whichtheBoardconsiderstobeapplicable,arefollowed,subjecttoanyexplanationsandmaterialdeparturesdisclosedinthenotestothefinancialstatements.
TheroleoftheAuditCommitteeinthereviewandreportingofthefinancialinformationoftheGroupisoutlinedintheReportoftheAuditCommitteeintheAnnualReport.
Relationship with the Auditors
TheBoardhasestablisheda formalandtransparentrelationshipwith theauditors.Theappointmentof theexternalauditorsissubjecttotheapprovalofshareholdersattheAnnualGeneralMeetingwhilsttheirremunerationisdeterminedbytheBoard.TherolesofboththeexternalandinternalauditorsarefurtherdescribedintheAuditCommitteeReport.
Statement of Internal Control
TheinformationontheGroup’ssystemofInternalControlispresentedinthestatementonInternalControlintheAnnualReport.
CorporateGovernance
StatementonInternalControl
20
The Board of Directors (“the Board”) is committed to maintaining a sound system of internal control to safeguardshareholders’investmentandtheGroup’sassets.
TheBoard ispleasedtoprovidethefollowingStatementonInternalControlwhichoutlinesthenatureandscopeofinternalcontrolsoftheGroupduringtheyearpursuanttoParagraph15.27(b)oftheListingRequirementsoftheBursaMalaysiaSecuritiesBerhad.
RESPONSIBILITY
TheBoardaffirmsitsoverallresponsibilityfortheGroup’ssystemsofinternalcontrolandforreviewingtheadequacyandeffectivenessoftheGroup’sinternalcontrolsystemsandmanagementinformationsystems,includingsystemsforcompliancewithapplicablelaws,regulations,rules,directivesandguidelines.Thereviewcoversfinancial,operationalandcompliancecontrolsoftheGroup.Inviewoftheinherentlimitationsinanysystemofinternalcontrols,thesystemisdesignedtomanageratherthaneliminatetheriskoffailuretoachieveitscorporateobjectives.Accordingly,itcanonlyprovidereasonablebutnotabsoluteassuranceagainstmisstatementorloss.
The Board has delegated certain responsibilities to other Board committees, which operate within clearly definedtermsofreference.StandingcommitteesoftheBoardincludetheAuditCommittee,theNominationCommitteeandRemunerationCommittee.
Duringthefinancialyear,theresponsibilitiesoftheNominationCommitteeandRemunerationCommitteehavebeensuspended due to its lack of resources under its current PN17 status. The Board delegated its responsibility to anExecutiveCommitteeoftheBoard,whichoverseesallaspectsoftheGroup’soperationsandespeciallytoexpeditetheregularisationplanstoitsPN17status.TheBoardfully intendstoreinstatetherespectivecommitteesfollowingthecompletionofitsPN17regularisationplans.
INTERNAL CONTROL
WhilsttheBoardmaintainsfullcontrolanddirectionoverappropriatestrategic,financial,organisationalandcomplianceissues, it has delegated to executive management the implementation of the systems of internal control within anestablishedframework.
ThekeyelementsoftheGroup’sinternalcontrolsystemsincludethefollowing:-
• The role played by the Group Managing Director as the channel of communication between the Board and themanagement.TheGroupManagingDirectorwhoisempoweredtomanagethebusinessoftheGroupimplementstheBoard’sexpectationsofthesystemsofinternalcontrol.
• TheGroupManagingDirector, togetherwiththerespectivemanagementteam,attendedtovariousmanagementand operations meetings, and review financial and operations reports, in order to monitor the performance andprofitabilityoftheGroup’sbusinesses.TheGroupManagingDirectorandthemanagementteampractiseanopendoorpolicywherebymattersarisingarepromptlyandeffectivelydealtwithdrawingontheexperienceandknowledgeofemployeesthroughouttheGroup.
• TheGrouphasclearlydefinedorganisationalstructuresanddelegationsofresponsibilitiesandauthorisationslimitsatvariousmanagementlevels.
• The Group also has in place various support functions, which are centralised at Head Office. These compriseSecretarial,Legal,HumanResource,FinanceandTreasury. Thesesupportfunctionsmaintainconsistencyinthesetting and application of policies and procedures relating to these functions, and reduce duplication of efforts,therebyprovidingsynergytotheGroup.
• Themanagementofkeyoperatingsubsidiarycompaniesareresponsiblefor:-
- theconductandperformanceoftheirrespectivebusinessunit;- identificationandevaluationofsignificantrisksapplicabletotheirrespectiveareaofbusinesstogetherwiththe
designandoperationofsuitableinternalcontrols;- ensuringthataneffectivesystemofinternalcontrolsisinplace;- meeting defined reporting deadlines and ensuring compliance with policies, procedure and regulatory
requirement.
StatementonInternalControl
20
StatementonInternalControl
21
• Detailed budgeting process whereby key operating subsidiary companies prepare budgets for the coming year,whichareapprovedattheoperatinglevel.Actualperformancecomparedwithbudgetisreviewedperiodicallywithexplanationsofmajorvariances.
• Corporate values and code of conduct, which emphasise on ethical behaviour are set out in Group’s EmployeeHandbook.
AstheGroupisinPN17,theinternalauditfunctionhasbeenminimalastheBoardandtheAuditCommitteehavefocusedontheProposedRestructuringPlantoregularisethefinancialpositionoftheGroup.
Theexternalauditorsareengagedtoexpressanopiniononthefinancialstatements.Theyreviewandtestthesystemsofinternalcontrolandthedatacontainedinthefinancialstatementstotheextentnecessarytoexpresstheirauditopinion.FindingsarisingfromtheauditarediscussedwithmanagementandmaterialfindingsreportedtotheAuditCommittee.
The effectiveness of the Group’s system of internal controls will continue to be reviewed and updated by the BoardthroughtheAuditCommitteewhichinlinewiththechangesintheoperatingenvironment.TheBoardisoftheviewthatthecurrentsystemofinternalcontrolisinplacethroughouttheGroupandsufficienttosafeguardtheGroup’sinterest.
ThisstatementismadeinaccordancewitharesolutionoftheBoardofDirectorsdated25April2007.
StatementofDirectors’ResponsibilityinRelationtoTheFinancialStatementsandOtherInformation
TheDirectorsarerequiredbytheCompaniesAct,1965topreparefinancialstatementsforeachyearwhichgiveatrueandfairviewofthestateofaffairsoftheGroupandoftheCompanyattheendofthefinancialyearandoftheirresultsandcashflowsforthefinancialyearthenended.
Inpreparingthesefinancialstatements,theDirectorshave:-
• adoptedsuitableaccountingpoliciesandapplyingthemconsistently;
• madejudgementsandestimatesthatareprudentandreasonable;
• ensured applicable accounting standards have been followed, subject to any material departures disclosed andexplainedinthefinancialstatements;and
• preparedthefinancialstatementsonthegoingconcernbasis,unlessitisinappropriatetopresumethattheGroupandtheCompanywillcontinueinbusiness.
The Directors are responsible for ensuring that the Company keeps proper accounting records which disclose withreasonableaccuracyatanytimethefinancialpositionoftheGroupandoftheCompanyandwhichenablethemtoensurethatthefinancialstatementscomplywiththeCompaniesAct,1965.TheDirectorshaveoverallresponsibilityfortakingsuchstepsthatarereasonablyopentothemtosafeguardtheassetsoftheGroupandtheCompanytopreventanddetectfraudandotherirregularities.
22
AdditionalComplianceInformation
SANCTIONS AND/OR PENALTIES
Therewerenopublicsanctionsand/orpenaltiesimposedontheCompanyanditssubsidiaries,directorsandmanagementbyanyregulatorybodiesduringthefinancialyearended31December2006.
REVALUATION POLICY ON LANDED PROPERTIES
TheGroup’slandedpropertiesclassifiedunderproperty,plantandequipmentarenotrevalued,butarereviewedateachbalancesheetdate todetermine if there isany indicationof impairment.These landedpropertiesarestatedatcostlessaccumulateddepreciationandimpairment.Forlandedpropertiesclassifiedas investmentproperties, theGroupassessesthefairvalueattheendofeachfinancialyearandthechangeinfairvalueistakenasgainsorlossesintheincomestatements.
NON-AUDIT FEES
The amount of non-audit fees paid to the external auditors by the Group and by the Company for the financial yearamountedtoRM290,000andRM250,000respectively.
SHARE BUY-BACKS
TheCompanydidnotmakeanysharebuy-backduringthefinancialyear.
OPTIONS AND WARRANTS
Nooptionsandwarrantswereexercisedduringthefinancialyear.
AMERICAN DEPOSITORY RECEIPT (“ADR”) OR GLOBAL DEPOSITORY RECEIPT (“GDR”)
TheCompanydidnotsponsoranyADRorGDRprogrammeduringthefinancialyear.
VARIATION IN RESULTS
Therewasnomaterialvariationbetweentheauditedresults forthefinancialyearended31December2006andtheunauditedresultspreviouslyreleasedforthefinancialquarterended31December2006.
PROFIT GUARANTEE
TheCompanydidnotmakeanyarrangementduringthefinancialyearwhichrequiresprofitguarantee.
MATERIAL CONTRACTS
On6November2006,aswhollyownedsubsidiary,PSCAssetHoldingsSdnBhdhadenteredintoaSales&PurchaseagreementwithBousteadHoldingsBerhad,asubstantialshareholderoftheCompany,todisposeofthreepiecesoflandtogetherwithbuildingserectedthereon,knownasMenaraPSCIforacashconsiderationofRM54million("ProposedDisposal").TheProposedDisposalwascompletedon27April2007.
TherewerenoothermaterialcontractsenteredintobytheCompanyanditssubsidiarycompanies,involvingdirectorsandsubstantialshareholdersduringthefinancialyear.
22 23
AdditionalComplianceInformation
RECURRENT RELATED PARTY TRANSACTIONS
AttheAnnualGeneralMeetingheldon15June2006,theCompanyobtainedShareholders’MandatetoallowtheGrouptoenterintorecurrentrelatedpartytransactionsofarevenueortradingnature.
In accordance with Section 4.1.5 of Practice Note No. 12/2001 of the Bursa Malaysia Securities Berhad ListingRequirements,thedetailsofrecurrentrelatedpartytransactionsconductedduringthefinancialyearended31December2006pursuanttotheShareholders'Mandatearedisclosedasfollows:-
Related party Interested Director/ Nature of transactions Value of Interested Major transactions Shareholder RM’000
BousteadNaval Dato’Seri EquipmentrentalbyPenang 41ShipyardSdnBhd AhmadRamliBin Shipbuilding&Construction(formerlyknown HajiMohdNor SdnBhdasPSC-NavalDockyard DatukAzzatBin WorksubcontractedtoPenang 6,895SdnBhd) Kamaludin Shipbuilding&Construction SdnBhd BousteadHoldings Berhad Workshoprental/telephone 255 chargeschargedtoNaval LembagaTabung AndDefenceCommunication AngkatanTentera SystemSdnBhd WorksubcontractedtoNavalAnd 960 DefenceCommunicationSystem SdnBhd WorksubcontractedtoAeromarine 686 MaintenanceServicesSdnBhd Worksubcontractedto 896 AtlasDefenceTechnology SdnBhd Purchasesofequipment& 26,952 machineryfromDominion Defence&IndustriesSdnBhd
MessrsAzzat DatukAzzatBin Provisionoflegalservicesto 139&Izzat Kamaludin PSCIndustriesBerhadgroup
2�
25
25
Financial Statements
Directors' Report 26
Statements by Directorsand Statutory Declaration 29
Report of The Auditors 30
Income Statements 32
Balance Sheets 33
Statements of Changes in Equity 34
Cash Flow Statements 37
Notes to The Financial Statements 40
25
DIRECTORS' REPORT
TheDirectorsherebysubmittheirreporttogetherwiththeauditedfinancialstatementsoftheGroupandoftheCompanyforthefinancialyearended31December2006.
PRINCIPAL ACTIVITIES
TheprincipalactivitiesoftheCompanyareinvestmentholding,propertyholdinganddevelopment.
TheprincipalactivitiesofthesubsidiarycompaniesaredescribedinNote22tothefinancialstatements.
There have been no significant changes in the nature of the principal activities of the Company and its subsidiarycompaniesduringthefinancialyear.
RESULTS
Group Company RM’000 RM’000
Lossfortheyear (93,257) (52,757)
Attributableto: ShareholdersoftheCompany (94,218) (52,757)Minorityinterests 961 -
(93,257) (52,757)
Therewerenomaterialtransferstoorfromreservesorprovisionsduringthefinancialyearotherthanasdisclosedinthefinancialstatements.
IntheopinionoftheDirectors,theresultsoftheoperationsoftheGroupandoftheCompanyduringthefinancialyearwerenotsubstantiallyaffectedbyanyitem,transactionoreventofamaterialandunusualnatureotherthanasdisclosedinthefinancialstatements.
DIVIDENDS
NodividendhasbeenpaidordeclaredbytheCompanysincetheendofthepreviousfinancialyear.
TheDirectorsdonotrecommendthepaymentofanydividendforthecurrentfinancialyear.
DIRECTORS
ThenamesoftheDirectorsoftheCompanyinofficesincethedateofthelastreportandatthedateofthisreportare:
LaksamanaMadya(Rtd)Dato’Seri (ExecutiveDeputyChairman/GroupManagingDirector/AhmadRamliBinHajiMohdNor ChiefExecutive)
DatukAzzatBinKamaludin (NonIndependentNon-ExecutiveDirector)
IshakBinOsman (ExecutiveDirector–Operations;redesignate toNon-ExecutiveDirectoron01.09.2006)
IdrisBinZakaria (IndependentNon-ExecutiveDirector)
MohdNoordinBinAbdullah (IndependentNon-ExecutiveDirector)
DavidWilliamBerry (IndependentNon-ExecutiveDirector)
DIRECTORS’ BENEFITS
Neitherattheendofthefinancialyear,noratanytimeduringthatyear,didtheresubsistanyarrangementtowhichtheCompanywasaparty,wherebytheDirectorsmightacquirebenefitsbymeansofacquisitionofsharesinordebentures,oftheCompanyoranyotherbodycorporate.
Directors'Report
2�
27
Directors'ReportDirectors'Report
DIRECTORS’ BENEFITS (CONT'D)
Sincetheendofthepreviousfinancialyear,noDirectorhasreceivedorbecomeentitledtoreceiveabenefit(otherthanbenefitsincludedintheaggregateamountofemolumentsreceivedordueandreceivablebytheDirectorsorthefixedsalaryofafull-timeemployeeoftheCompanyasshowninNote13tothefinancialstatements)byreasonofacontractmadebytheCompanyorarelatedcorporationwithanyDirectororwithafirmofwhichtheDirectorisamember,orwithacompanyinwhichtheDirectorhasasubstantialfinancialinterest,exceptasdisclosedinNote42tothefinancialstatements.
DIRECTORS’ INTERESTS
AccordingtotheregisterofDirectors’shareholdings,theinterestofDirectorsinofficeattheendofthefinancialyearinsharesoftheCompanyanditsrelatedcorporationsduringthefinancialyearwereasfollows:-
Number of Ordinary Shares of RM1 Each At AtThe Company 1.1.2006 Bought Sold 31.12.2006LaksamanaMadya(Rtd)Dato’SeriAhmadRamliBinHajiMohdNor 1,000 - - 1,000
MohdNoordinBinAbdullah 100 - - 100
Related corporations
Boustead Properties BerhadDatukAzzatBinKamaludin 5,000 - - 5,000
Affin Holdings BerhadDatukAzzatBinKamaludin 110,000 - - 110,000
Number of Warrants (W2/W3) (in units) At At 1.1.2006 Bought Sold 31.12.2006Affin Holdings Berhad DatukAzzatBinKamaludin 22,500 - - 22,500
Noneof theDirectors inofficeat theendof thefinancialyearhadany interest in theCompanyduring thefinancialyear.
ISSUE OF SHARES AND DEBENTURES
There were no changes in the issued and paid up capital of the Company during the financial year. There were nodebenturesissuedduringthefinancialyear.OTHER STATUTORY INFORMATION
(a) BeforetheincomestatementsandbalancesheetsoftheGroupandoftheCompanyweremadeout,theDirectorstookreasonablesteps:-
(i) toascertainthatproperactionhadbeentakeninrelationtothewritingoffofbaddebtsandthemakingofprovisionfordoubtfuldebtsandsatisfiedthemselvesthatallknownbaddebtshadbeenwrittenoffandthatadequateprovisionhadbeenmadefordoubtfuldebts;and
(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accountingrecordsintheordinarycourseofbusinesshadbeenwrittendowntoanamountwhichtheymightbeexpectedsotorealise.
2� 27
2�2� 29
OTHER STATUTORY INFORMATION (CONT'D)
(b) Atthedateofthisreport,theDirectorsarenotawareofanycircumstanceswhichwouldrender:-
(i) the amount written off for bad debts or the amount of the provision for doubtful debts inadequate to anysubstantialextent;and
(ii) the values attributed to the current assets in the financial statements of the Group and of the Companymisleading.
(c) Atthedateof thisreport,except fortheeffectsarisingfromthe implementationof theProposedRestructuringSchemeasdisclosedinNote6tothefinancialstatements,theDirectorsarenotawareofanyothercircumstanceswhichhavearisenwhichwouldrenderadherencetotheexistingmethodofvaluationofassetsorliabilitiesoftheGroupandoftheCompanymisleadingorinappropriate.
(d) Atthedateofthisreport,theDirectorsarenotawareofanycircumstancesnototherwisedealtwithinthisreportorthefinancialstatementsoftheGroupandoftheCompanywhichwouldrenderanyamountstatedinthefinancialstatementsmisleading.
(e) Asatthedateofthisreport,theredoesnotexist:(i) anychargeontheassetsoftheGrouporoftheCompanywhichhasarisensincetheendofthefinancialyear
whichsecurestheliabilitiesofanyotherperson;or
(ii) anycontingentliabilityoftheGrouporoftheCompanywhichhasarisensincetheendofthefinancialyear.
(f) IntheopinionoftheDirectors:
(i) nocontingentorotherliabilityhasbecomeenforceableorislikelytobecomeenforceablewithintheperiodoftwelvemonthsaftertheendofthefinancialyearwhichwillormayaffecttheabilityoftheGrouporoftheCompanytomeettheirobligationswhentheyfalldue;and
(ii) except for the effects arising from the change in accounting policies and from the implementation of theProposed Restructuring Scheme as disclosed in the notes to the financial statement, the results of theoperations of the Group and the Company for the financial year ended 31 December 2006 have not beensubstantiallyaffectedbyanyitem,transactionoreventofamaterialandunusualnaturenorhasanysuchitemtransactionoreventoccurredintheintervalbetweentheendofthatfinancialyearandthedateofthisreport.
SIGNIFICANT EVENTS
SignificanteventsduringthefinancialyeararedisclosedinNote45tothefinancialstatements.
SUBSEQUENT EVENTS
DetailsofsubsequenteventsduringthefinancialyeararedisclosedinNote46tothefinancialstatements.
AUDITORS
Theauditors,Ernst&Young,haveexpressedtheirwillingnesstocontinueinoffice.
SignedonbehalfoftheBoardinaccordancewitharesolutionoftheDirectorsdated25April2007.
Laksamana Madya (Rtd) Dato' Seri Datuk Azzat Bin KamaludinAhmad Ramli Bin Haji Mohd Nor
Directors'Report
2�2� 29
Directors'Report
29
StatementbyDirectors
STATEMENT BY DIRECTORSPURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965
We,LaksamanaMadya(Rtd)Dato’SeriAhmadRamliBinHajiMohdNorandDatukAzzatBinKamaludin,beingtwooftheDirectorsofPSCIndustriesBerhad,doherebystatethat,intheopinionoftheDirectors,theaccompanyingfinancialstatementssetoutonpages32to108aredrawnupinaccordancewiththeprovisionsoftheCompaniesAct,1965andapplicableMASBApprovedAccountingStandardsinMalaysiaForEntitiesOtherThanPrivateEntitiesandsoastogiveatrueandfairviewofthefinancialpositionoftheGroupandoftheCompanyasat31December2006,andoftheresultsandthecashflowsoftheGroupandoftheCompanyforthefinancialyearthenended.
SignedonbehalfoftheBoardinaccordancewitharesolutionoftheDirectorsdated25April2007.
Laksamana Madya (Rtd) Dato' Seri Datuk Azzat Bin KamaludinAhmad Ramli Bin Haji Mohd Nor
STATUTORY DECLARATIONPURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965
I,PeramjeetSinghA/LGianSingh,beingtheofficerprimarilyresponsibleforthefinancialmanagementofPSCIndustriesBerhad,dosolemlyandsincerelydeclarethattheaccompanyingfinancialstatementssetoutonpages32to108areinmyopinioncorrect,andImakethissolemndeclarationconscientiouslybelievingthesametobetrueandbyvirtueoftheprovisionsoftheStatutoryDeclarationsAct,1960.
Subscribed and solemnly declared by theabovenamedPeramjeetSinghA/LGianSinghatKualaLumpurintheFederalTerritoryon25April2007.Beforeme,SohAhKau(No.W315)
CommissionerforOathsKualaLumpur
Peramjeet Singh A/L Gian Singh
3030 31
30
Wehaveauditedtheaccompanyingfinancialstatementssetoutonpages32to108.ThesefinancialstatementsaretheresponsibilityoftheCompany’sDirectors.
Itisourresponsibilitytoformanindependentopinion,basedonouraudit,onthefinancialstatementsandtoreportouropiniontoyou,asabody,inaccordancewithSection174oftheCompaniesAct,1965andfornootherpurpose.Wedonotassumeresponsibilitytoanyotherpersonforthecontentofthisreport.
WehaveconductedourauditinaccordancewithapplicableApprovedStandardsonAuditinginMalaysia.Thosestandardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsarefreeofmaterialmisstatement.Anauditincludesexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresinthefinancialstatements.AnauditalsoincludesassessingoftheaccountingprinciplesusedandsignificantestimatesmadebytheDirectors,aswellasevaluatingtheoverallpresentationofthefinancialstatements.Webelievethatourauditprovidesareasonablebasisforouropinion.
Inouropinion:
(a) thefinancialstatementshavebeenproperlydrawnupinaccordancewiththeprovisionsoftheCompaniesAct,1965andapplicableMASBApprovedAccountingStandardsinMalaysiaforEntitiesOtherThanPrivateEntitiessoastogiveatrueandfairviewof:
(i) thefinancialpositionoftheGroupandoftheCompanyasat31December2006andoftheresultsandthecashflowsoftheGroupandoftheCompanyforthefinancialyearthenended;and
(ii) themattersrequiredbySection169oftheCompaniesAct,1965tobedealtwithinthefinancialstatements;and
(b) the accounting and other records and the registers required by the Act, to be kept by the Company have beenproperlykeptinaccordancewiththeprovisionsoftheAct.
Wehaveconsideredthefinancialstatementsandtheauditors’reportsthereonofthesubsidiariesofwhichwehavenotactedasauditors,asindicatedinNote22tothefinancialstatements,beingfinancialstatementsthathavebeenincludedintheconsolidatedfinancialstatements.
WearesatisfiedthatthefinancialstatementsofthesubsidiariesthathavebeenconsolidatedwiththefinancialstatementsoftheCompanyareinformandcontentappropriateandproperforthepurposesofthepreparationoftheconsolidatedfinancialstatementsandwehavereceivedsatisfactoryinformationandexplanationsrequiredbyusforthosepurposes.
Theauditors’reportsonthefinancialstatementsof thesubsidiarieswerenotsubject toanyqualificationotherthanemphasisofmatterasdisclosedinNote22tothefinancialstatementsanddidnotincludeanycommentrequiredtobemadeunderSection174(3)oftheAct.
Withoutqualifyingouropinion,wedrawyourattentiontoNote2tothefinancialstatementsthat:-
(i) the Company is an affected issuer under PN17/2005 vide its announcement to Bursa Malaysia on 1 December2005;
(ii) theGroupandtheCompanyhaveincurredanetlossofRM93.2millionandRM52.7millionrespectivelyfortheyearended31December2006and,asofthatdate,theGroup’sandtheCompany’scurrentliabilitiesexceededitscurrentassetsbyRM593.2millionandRM270.9millionrespectively;
(iii) theGroupandtheCompanyhavedefaultedintheirrepaymentofloanandotherbankborrowingfacilitiesamountingtoRM588.5millionandRM254.7millionrespectivelyasat31December2006;
(iv) on17October2006,theHighCourtofMalayahadgrantedtotheCompanyanditssubsidiary,PenangShipbuilding&ConstructionSdnBhd(“PSC”)anorderpursuanttoSections176(1)and176(10)oftheCompaniesAct,1965uponapplicationmadebytheCompanyandPSC,assetoutinNote45tothefinancialstatements;and
(v) theBoardofDirectorsoftheCompanyhasproposedtoimplementtheProposedRestructuringScheme(“Proposal”)asdetailedinNote6tothefinancialstatements.TheProposalwassubmittedtoSecuritiesCommissionforapprovalon21December2006.TheProposalwasapprovedbyrelevantauthorities,shareholdersandschemecreditorsassetoutinNote46tothefinancialstatements.
The ability of the Group and the Company to continue as a going concern is dependent on the successfulimplementationoftheproposedrestructuringschemeandtheimplementationoftheturnaroundplanstoreturntheGrouptoprofitibality.
ReportofTheAuditorstoTheMembersofPSCIndustriesBerhad
3030 31
ReportofTheAuditorstoTheMembersofPSCIndustriesBerhad
ThefinancialstatementshavebeenpreparedontheassumptionthattheGroupandtheCompanyaregoingconcerns,anddonot includeanyadjustmentsrelating to theamountsandclassificationofassetsand liabilities thatmightbenecessaryshouldtherelevantimplementationoftherestructuringschemebedelayedorisnotforthcoming.
Ernst & Young Habibah Bte Abdul No.AF0039 No.1210/05/08(J)CharteredAccountants Partner
KualaLumpur,Malaysia25April2007
IncomeStatements
For the year ended 31 December 2006
Group Company
Restated Restated
Note 2006 2005 2006 2005
RM'000 RM'000 RM'000 RM'000
Revenue 7 80,476 170,963 334 993
Costofsales 8 (65,645) (166,262) - -
Gross profit 14,831 4,701 334 993
Otherincome 9 17,259 1,369,133 1,107 16
Distributionexpenses (183) (100) - -
Administrationexpenses (31,539) (101,203) (1,188) (1,452)
Otherexpenses (50,168) (1,790,910) (39,250) (419,116)
Operating loss (49,800) (518,379) (38,997) (419,559)
Financecosts 10 (40,104) (101,026) (13,760) (21,197)
Shareoflossinassociate
companies (10) (59) - -
Loss before tax 11 (89,914) (619,464) (52,757) (440,756)
Incometaxexpense 14 (3,343) (235) - 8,056
Loss for the year (93,257) (619,699) (52,757) (432,700)
Attributable to:
EquityholdersoftheCompany (94,218) (533,490) (52,757) (432,700)
Minorityinterests 961 (86,209) - -
(93,257) (619,699) (52,757) (432,700)
Losspershareattributabletoequity
holdersoftheCompany(sen) 15 (54) (306)
Dividendspershare(sen)-gross 16 - -
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
32
BalanceSheets
As at 31 December 2006
Group Company
Note 2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
ASSETS
Non-current assets Property,plantandequipment 17 49,601 86,450 - 247 Investmentproperties 18 6,500 89,686 - 2,566 Intangibleassets 19 - 15 - - Investmentsinsubsidiarycompanies 22 - - 8,685 36,141 Investmentsinassociatecompanies 23 - 10 - - Otherinvestments 24 26 505 - 445
56,127 176,666 8,685 39,399
Current assets Inventories 25 2,135 2,879 - - Tradeandotherreceivables 26 64,997 91,794 3,089 6,089 Duefromcustomersoncontracts 27 4,283 3,887 - - Taxrecoverable - - 160 170 Cashandbankbalances 28 17,670 17,550 26 40
89,085 116,110 3,275 6,299
Non-currentassetsheldforsale 29 57,100 - 3,100 -
146,185 116,110 6,375 6,299
TOTAL ASSETS 202,312 292,776 15,060 45,698
EQUITY AND LIABILITIES
Equity attributable to equity holders of the Company Sharecapital 30 174,083 174,083 174,083 174,083 Otherreserves 31 61,722 72,642 70,243 70,243 Accumulatedlosses (779,946) (669,949) (506,563) (453,806)
Totalshareholder'sdeficit (544,141) (423,224) (262,237) (209,480) Minorityinterests 32 6,074 5,316 - -
Total equity (538,067) (417,908) (262,237) (209,480)
Non-current liabilities Borrowings 33 201 607 - 68 Deferredtaxation 38 823 533 - -
1,024 1,140 - 68
Current liabilities Borrowings 33 589,779 586,258 254,756 241,039 Tradeandotherpayables 36 145,172 120,528 22,541 14,071 Duetocustomeroncontracts 27 374 211 - - Taxpayable 4,030 2,547 - -
739,355 709,544 277,297 255,110
Total liabilities 740,379 710,684 277,297 255,178
TOTAL EQUITY AND LIABILITIES 202,312 292,776 15,060 45,698
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
32 33
ConsolidatedStatementsofChangesinEquity
For the year ended 31 December 2006
Att
ribu
tabl
e to
Equ
ity
Hol
ders
of t
he C
ompa
ny
N
on-d
istr
ibut
able
Exch
ange
Sh
are
Shar
e R
eval
uati
on
fluc
tuat
ion
Acc
umul
ated
Min
orit
y To
tal
capi
tal
prem
ium
re
serv
e re
serv
e lo
sses
To
tal
inte
rest
s eq
uity
Not
e R
M’0
00
RM
’000
R
M’0
00
RM
’000
R
M’0
00
RM
’000
R
M’0
00
RM
’000
At 1
Jan
uary
200
5
As
prev
ious
lys
tate
d
174,
083
70,2
43
-(8
,422
)(1
31,6
00)
104,
304
91,9
08
196,
212
Pri
ory
ear
adju
stm
ents
47
-
-10
,841
-
(4,8
59)
5,98
2-
5,98
2
At 1
Jan
uary
200
5 (r
esta
ted)
174,
083
70,2
43
10,8
41
(8,4
22)
(136
,459
)11
0,28
691
,908
20
2,19
4
Fore
ign
curr
ency
tran
slat
ion
-
Gro
up
-
--
(20)
-
(20)
(1
2)
(32)
Div
iden
dsp
aid
tom
inor
ity
in
tere
sts
-
--
--
-(1
28)
(128
)
Dis
posa
lofs
ubsi
diar
yco
mpa
ny
-
--
--
-(2
43)
(243
)
Net
exp
ense
rec
ogni
sed
di
rect
lyin
equ
ity
-
--
(20)
-
(20)
(3
83)
(403
)
Loss
for
the
year
:
A
spr
evio
usly
sta
ted
-
--
-(5
48,6
90)
(548
,690
)(8
6,20
9)
(634
,899
)
P
rior
yea
rad
just
men
ts
47
--
--
15,2
00
15,2
00
-15
,200
Loss
for
the
year
(res
tate
d)
-
--
-(5
33,4
90)
(533
,490
)(8
6,20
9)
(619
,699
)
Tota
lrec
ogni
sed
inco
me
and
ex
pens
efo
rth
eye
ar
-
--
-(5
33,4
90)
(533
,490
)(8
6,20
9)
(619
,699
)
At 3
1 D
ecem
ber
2005
(res
tate
d)
17
4,08
370
,243
10
,841
(8
,442
)(6
69,9
49)
(423
,224
)5,
316
(417
,908
)
3�
ConsolidatedStatementsofChangesinEquity
ConsolidatedStatementsofChangesinEquity
Att
ribu
tabl
e to
Equ
ity
Hol
ders
of t
he C
ompa
ny
N
on-d
istr
ibut
able
Exch
ange
Sh
are
Shar
e R
eval
uati
on
fluc
tuat
ion
Acc
umul
ated
Min
orit
y To
tal
capi
tal
prem
ium
re
serv
e re
serv
e lo
sses
To
tal
inte
rest
s eq
uity
Not
e R
M’0
00
RM
’000
R
M’0
00
RM
’000
R
M’0
00
RM
’000
R
M’0
00
RM
’000
At 1
Jan
uary
200
6 (r
esta
ted)
As
prev
ious
lys
tate
d
174,
083
70,2
43
10,8
41
(8,4
22)
(669
,949
)(4
23,2
24)
5,31
6(4
17,9
08)
Effe
cts
ofa
dopt
ing
FRS
140
47
--
(10,
841)
-
(15,
779)
(2
6,62
0)
-(2
6,62
0)
At 1
Jan
uary
200
6 (r
esta
ted)
174,
083
70,2
43
-(8
,422
)(6
85,7
28)
(449
,844
)5,
316
(444
,528
)
Fore
ign
curr
ency
tran
slat
ion
-
Gro
up
-
--
(79)
-
(79)
(5
3)
(132
)D
ivid
ends
pai
dto
min
ority
in
tere
sts
-
--
--
-(1
50)
(150
)
Net
exp
ense
rec
ogni
sed
di
rect
lyin
equ
ity
-
--
(79)
-
(79)
(2
03)
(282
)Lo
ssfo
rth
eye
ar
-
--
-(9
4,21
8)
(94,
218)
96
1(9
3,25
7)
Tota
lrec
ogni
sed
inco
me
and
ex
pens
efo
rth
eye
ar
-
--
-(9
4,21
8)
(94,
218)
96
1(9
3,25
7)
At 3
1 D
ecem
ber
2006
(res
tate
d)
17
4,08
370
,243
-
(8,5
21)
(779
,946
)(5
44,1
41)
6,07
4(5
38,0
67)
The
acco
mpa
nyin
gno
tes
form
an
inte
gral
par
toft
hefi
nanc
ials
tate
men
ts.
For the year ended 31 December 2006 (cont'd)
3� 35
3�3� 37
CompanyStatementofChangesinEquity
For the year ended 31 December 2006
Attributable to Equity Holders of the Company Non-distributable Share Share Accumulated Total
capital premium losses equity Note RM’000 RM’000 RM’000 RM'000
At 1 January 2005
Aspreviouslystated 174,083 70,243 (23,672) 220,654
Prioryearadjustments 47 - - 2,566 2,566
At 1 January 2005 (restated) 174,083 70,243 (21,106) 223,220
Lossfortheyear - - (432,700) (432,700)
At 31 December 2005 (restated) 174,083 70,243 (453,806) (209,480)
At 1 January 2006 (restated) 174,083 70,243 (453,806) (209,480)
Lossfortheyear - - (52,757) (52,757)
At 31 December 2006 174,083 70,243 (506,563) (262,237)
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
3�3� 37
CashFlowStatements
For the year ended 31 December 2006
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
Cash Flows from Operating Activities
Lossbeforetax (89,914) (619,464) (52,757) (440,756)
Adjustments for:- Amortisationofdeferredassets - 3,951 - - Baddebtswrittenoff 227 22,751 - - Cancellationofdividendby subsidiarycompanies - - 4,000 12,380 Deferredexpenditurewrittenoff - 143,486 - - Deferredassetswrittenoff - 63,217 - - Depositwrittenoff - 1,000 - - Depreciationofproperty,plant andequipment 4,098 18,637 132 73 Gainondisposalofa subsidiarycompany (13) (1,322,346) - - Gainondisposalof associatecompany - (1,061) - - Goodwillwrittenoff 15 203,496 - - Impairmentofotherinvestments 479 1,128 445 445 Impairmentofinvestmentsin subsidiarycompanies - - 30,456 262,726 Impairmentofproperty,plant andequipment 36,835 35,177 - - Interestexpense 40,104 101,026 13,760 21,197 Interestincome (2,139) (4,093) (334) (509) Interestwaivertosubsidiary companies - - - 19,020 Inventorieswrittendown 27 3,716 - - Net(gain)/lossondisposalof property,plantandequipment (113) 333 (39) -
Balancecarriedforward (10,394) (1,349,046) (4,337) (125,424)
CashFlowStatements
For the year ended 31 December 2006 (cont'd)
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
Cash Flows from Operating Activities
Balancebroughtforward (10,394) (1,349,046) (4,337) (125,424) OffshorePatrolVesselsexpenditure writtenoff - 455,341 - - Provisionfordoubtfuldebts 1,445 274,980 - 121,510 Provisionforforeseeablelossin relationtofreeholdlandofa subsidiarycompany 6,500 - - - Provisionforwarrantycosts 148 410 - - Provisionforrestructuringcosts 3,606 - 3,606 - Property,plantandequipment writtenoff 377 2,441 5 - Reversalofwrite-down ofinventories (16) (34) - - Shareoflossin associatecompanies 10 59 - - Netunrealisedloss/(gain) onforeignexchange 15 (15,788) - - Writebackofprovisionfor doubtfuldebts (675) (18,744) (468) - Fairvalueadjustmenton investmentproperty (534) - (534) - Debtwaiverbycreditors (9,140) - (64) -
Operating loss before changes in working capital (8,658) (650,381) (1,792) (3,914)
Changes in working capital Inventories 374 (3,942) - - Receivables (4,587) (63,462) 802 5,388 Payables 19,002 159,139 928 (1,297) Contructioncontracts (233) 531,070 - -
Cash generated from/(used in) operations 5,898 (27,576) (62) 177
3�
CashFlowStatements
For the year ended 31 December 2006 (cont'd)
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
Cash Flows from Operating Activities (Cont'd)
Cash generated from/(used in) operations 5,898 (27,576) (62) 177
Interestpaid (2,246) (16,688) (2) (54)Tax(paid)/refund (1,473) (765) 10 (50)Deferredexpenditurepaid - (382) - -
Net cash generated from (used in) operating activities 2,179 (45,411) (54) 73
Cash flows from investing activitiesInterestreceived 397 4,093 - 16Proceedsfromdisposalsofproperty,plantandequipment 616 2,232 149 -Proceedsfromdisposalofasubsidiarycompany (Note22(b)) - (2,782) - -Withdrawalfromfixeddepositpledged 1,268 37,084 - 135Placementoffixeddepositspledged (1,046) (3,599) - -Purchaseofproperty,plantandequipment (4,821) (15,203) - -
Net cash (used in)/generated from investing activities (3,586) 21,825 149 151
Cash flows from financing activitiesDividendspaidtominorityinterests (150) (128) - -Net(repayment)/drawdownofborrowings (697) (24,805) (109) (303)
Net cash (used in)/generated from financing activities (847) 24,677 (109) (303)
Net (decrease)/increase in cash and cash equivalents (2,254) 1,091 (14) (79)Effectofforeignexchangeratechanges (36) - - -Cashandcashequivalentsatbeginningofyear (19,875) (20,966) 40 119
Cash and cash equivalents at end of year (Note 28) (22,165) (19,875) 26 40
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
3� 39
NotestoTheFinancialStatements
1. CORPORATE INFORMATION
TheCompanyisapubliclimitedliabilitycompany, incorporatedanddomiciledinMalaysiaandislistedontheMainBoardofBursaMalaysiaSecuritiesBerhad.Theregisteredofficeis17thFloor,MenaraBoustead,69,JalanRajaChulan,50200KualaLumpur.
Theconsolidatedfinancialstatementsasatandfortheyearended31December2006comprisetheCompanyanditssubsidiarycompanies(togetherreferredtoastheGroup)andtheGroup’sinterestinassociatecompanies.ThefinancialstatementsoftheCompanyasatandfortheyearended31December2006donotincludeotherentities.
The principal activities of the Company are investment holding, property holding and development. The principalactivitiesofthesubsidiarycompaniesaremainlyheavyengineeringconstruction,shiprepair,shipbuildingcontractor,shipengineeringandfabrication,supplyanddesignofelectronicsandsystemtechnologyinrelationtotheshippingandmarineindustry,marketinganddistributingExocetWeaponSystem,providing,supplyingandservicingBOFORSweaponsystems,design,manufacture,supply,integratedserviceandmaintenancerepairandoverhaulofthecommunicationsystemsandequipment.
Therehavebeennosignificantchangesinthenatureoftheprincipalactivitiesduringthefinancialyear.
ThefinancialstatementsoftheGroupandtheCompanywereauthorisedforissuebytheBoardofdirectorsinaccordancewitharesolutionoftheDirectorson25April2007.
2. GOING CONCERN
Asat31December2006,theGroupandtheCompanyhaveincurredanetlossofRM93.2millionandRM52.7millionrespectivelyfortheyearended31December2006,and,asofthatdate,theGroup’sandCompany’scurrentliabilitiesexceededthecurrentassetsbyRM593.2millionandRM270.9millionrespectively.
TheGroupandtheCompanyhavedefaultedintheirrepaymentofloanandotherbankborrowingfacilitiesamountingtoRM588.5millionandRM254.7millionrespectivelyasat31December2006.ThelendershadissuedlettersofdemandforthefullrepaymentofoutstandingbalancesandhaveinitiatedlegalactionsagainsttheCompanyanditssubsidiarycompanies.
TheCompanyisnowclassifiedasanaffectedlistedissuerpursuanttoPracticeNote17oftheBursaMalaysiaSecuritiesBerhadListingRequirement.On30August2006,BursaMalaysiaSecuritiesBerhadhadapprovedanextensionuntil31December2006fortheCompanytosubmititsRegularisationPlan.
On 17 October 2006, the High Court of Malaya had granted to the Company and its subsidiary companies, PenangShipbuilding & Construction Sdn Bhd (“PSC”), an order pursuant to Sections 176(1) and 176(10) of the CompaniesAct,1965uponapplicationmadebytheCompanyandPSC,thedetailsofwhichareinNote45(b).Inthisrespect,theDirectorsoftheCompanyproposetoimplementtheProposedRestructuringSchemeassetoutinNote6herewith.
The Proposed Restructuring Scheme has been submitted to Securities Commission on 21 December 2006 and theproposalwasapprovedbyrelevantauthorities,shareholdersandschemecreditorsassetoutinNote46tothefinancialstatements.
Accordingly,theabilityoftheGroupandtheCompanytocontinueasagoingconcernisdependentonthesuccessoftheapprovalandimplementationoftheproposedrestructuringscheme,profitabilityandpositivecashflowsgeneratedfromfutureoperationsandfinancialsupportoftheshareholders.
ThefinancialstatementsoftheGroupandtheCompanyhavebeenpreparedontheassumptionthattheGroupandtheCompanyaregoingconcernanddonotincludeanyadjustmentsrelatingtotheamountsandclassificationofassetsandliabilitiesthatmightbenecessaryshouldtherelevantimplementationoftheproposedrestructuringschemebedelayedornotforthcoming.
�0
NotestoTheFinancialStatements
3. BASIS OF PREPARATION
(a) Statement of compliance
ThefinancialstatementscomplywiththeprovisionsoftheCompaniesAct,1965andapplicableMASBApprovedAccountingStandardsinMalaysiaforEntitiesOtherThanPrivateEntities.
TheMASBhadissuedanumberofnewandrevisedFinancialReportingStandards("FRSs")thatareeffectiveforaccountingperiodsbeginningonorafter1January2006oravailableforearlyadoption.Atthebeginningof thecurrentfinancial year, theGroupand theCompanyhadadopted thenewandrevisedFRSswhicharemandatory for thefinancialperiodsbeginningonorafter1January2006as fullydescribed inNote5 to thefinancialstatements.
Inaddition,theMASBhasissuedthefollowingFRSsandInterpretationsthatareeffectiveforannualperiodsbeginningafterJanuary2006,andthathavenotbeenappliedinpreparingthesefinancialstatements:
(i) FRS117-Leases (ii) FRS124-RelatedPartyTransactions(iii) FRS139-FinancialInstruments:RecognitionandMeasurement (iv) FRS6-ExplorationforandEvaluationofMineralResources(v) AmendmenttoFRS119:EmployeeBenefits-ActuarialGainsandLosses,GroupPlansandDisclosures(vi) AmendmenttoFRS121:TheEffectsofChangesinForeignExchangeRates-NetInvestmentinaForeign
Operation(vii) ICInterpretation1:ChangesinExistingDecommissioning,RestorationandSimilarLiabilities(viii)ICInterpretation2:Members’SharesinCo-operativeEntitiesandSimilarInstruments(ix) IC Interpretation 5: Rights to Interests arising from Decommissioning, Restoration and Environmental
RehabilitationFunds(x) ICInterpretation6:LiabilitiesarisingfromParticipatinginaSpecificMarket-WasteElectricalandElectronic
Equipment(xi) IC Interpretation 7: Applying the Restatement Approach under FRS 129 Financial Reporting in
HyperinflationaryEconomies(xii) ICInterpretation8:ScopeofFRS2
TheGroupplanstoapplyFRS117,FRS124,andtheAmendmenttoFRS1192004initiallyfortheannualperiodbeginning1January2007andtoapplytherestoftheabove-mentionedFRSs(exceptforFRSasexplainedbelowandFRS139whicheffectivedatehasyettobeannounced)andInterpretationsfortheannualperiodbeginning1January2008.
TheimpactofapplyingFRS117,FRS124andFRS139onthefinancialstatementsuponfirstadoptionofthesestandardsasrequiredbyparagraph30(b)ofFRS108,AccountingPolicies,ChangesinAccountingEstimatesandErrorsisnotdisclosedbyvirtueoftheexemptionsgivenintherespectivestandards.
FRS6isnotapplicabletotheCompany.Hencenofurtherdisclosureiswarranted.
TheinitialapplicationoftheotherstandardsandinterpretationsarenotexpectedtohaveanymaterialimpactinthefinancialstatementsoftheGroupandoftheCompany.
(b) Basis of measurement
ThefinancialstatementsoftheGroupandoftheCompanyarepreparedunderthehistoricalcostconvention,exceptforthefollowingassetsasexplainedintheirrespectiveaccountingpolicynotes:
•Property,plantandequipment
•Investmentproperties
(c) Functional and presentation currency
ThefinancialstatementsarepresentedinRinggitMalaysia(RM),whichistheCompany’sfunctionalcurrency.AllfinancialinformationpresentedareinRinggitMalaysia(RM)andareroundedtothenearestthousand(RM’000)exceptwhenotherwiseindicated.
�0 �1
3. BASIS OF PREPARATION (CONT'D)
(d) The use of estimates and judgements
Thepreparationoffinancialstatementsrequiresmanagementtomakejudgements,estimatesandassumptionsthataffecttheapplicationofaccountingpoliciesandthereportedamountsofassets,liabilities,incomeandexpenses.Actualresultsmaydifferfromtheseestimates.
Estimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisionstoaccountingestimatesarerecognisedintheperiodinwhichtheestimateisrevisedandinanyfutureperiodsaffected.
In particular, information about significant areas of estimation uncertainty and critical judgements in applyingaccountingpoliciesthathavethemostsignificanteffectontheamountrecognisedinthefinancialstatementsaredescribedinthefollowingnotes:-
(i) Impairment of property, plant and equipment
Duringthecurrentfinancialyear,theGrouphasrecognisedimpairmentlossesofinrespectofasubsidiary’sland,buildingsandyarddevelopmentincludedwithinproperty,plantandequipment.TheGroupcarriedoutanimpairmenttestbasedonthevaluationexerciseperformedbyregisteredindependentvaluers.Thecarryingamountofproperty,plantandequipmentof theGroupasat31December2006wasRM38.8million (2005:RM78.2million).FurtherdetailsoftheimpairmentlossesrecognisedaredisclosedinNotes11and17tothefinancialstatements.
(ii) Investment property
Fair value is arrived at by reference to market evidence of transaction prices for similar properties and isperformedbyregisteredindependentvaluershavinganappropriaterecognisedprofessionalqualificationandrecentexperienceinthelocationandcategoryofthepropertiesbeingvalued.
Intheabsenceofcurrentpricesinanactivemarket,thevaluationsarepreparedbyconsideringtheaggregateof theestimatedcashflowsexpected tobereceived fromrentingout theproperty.Ayield that reflects thespecificrisksinherentinthenetcashflowsthenisappliedtothenetannualcashflowstoarriveatthepropertyvaluation.FurtherdetailsofthecarryingamountaredisclosedinNote18tothefinancialstatements.
(iii) Useful lives of property, plant and equipment
TheGroupestimates theuseful livesofproperty,plantandequipmentbasedon theperiodoverwhich theassetsareexpectedtobeavailableforuse.Theestimatedusefullivesofproperty,plantandequipmentarereviewedonaperiodicallyandareupdatedifexpectationsdifferfrompreviousestimatesduetophysicalwearandtear,technicalorcommercialobsolescenceandlegalorotherlimitsontheuseoftherelevantassets.Inaddition,theestimationoftheusefullivesofproperty,plantandequipmentarebasedontheinternaltechnicalevaluationandexperiencewithsimilarassets.Itispossible,however,thatfutureresultsofoperationsoculdbemateriallyaffectedbychangesintheestimatesbroughtaboutbychangesinfactorsmentionedabove.Theamountsandtimingsofrecordedexpensesforanyperiodwouldbeaffectedbychangesinthesefactorsandcircumstances.Areductionintheestimatedusefullivesoftheproperty,plantandequipmentwouldincreasetherecordedexpensesanddecreasethenon-currentassets.
(iv) Income Taxes
Significantestimationisinvolvedindeterminingthegroup-wideprovisionforincometaxes.Therearecertaintransactionsandcomputationsforwhichtheultimatetaxdeterminationisuncertainduringtheordinarycourseofbusiness.TheGrouprecognisesliabilitiesforexpectedtaxissuesbasedonestimatesofwhetheradditionaltaxeswillbedue.Wherethefinaltaxoutcomeofthesemattersisdifferentfromtheamountsthatwereinitiallyrecognised,suchdifferenceswillimpacttheincometaxanddeferredtaxprovisionsintheperiodinwhichsuchdeterminationismade.
NotestoTheFinancialStatements
�2
NotestoTheFinancialStatements
3. BASIS OF PREPARATION (CONT'D)
(v) Classification between investment properties and property, plant and equipment
TheGrouphasdevelopedcertaincriteriabasedonFRS140inmakingjudgementwhetherapropertyqualifiesasaninvestmentproperty.Investmentpropertyisapropertyheldtoearnrentalsorforcapitalappreciationorboth.
Somepropertiescompriseaportion that isheld toearn rentalsor forcapitalappreciationandanotherportionthatisheldforadministrativepurposes.Iftheseportionscouldbesoldseparately(orleasedoutseparatelyunderafinancelease,theGroupwouldaccountfortheportionsseparately.Iftheportionscouldnotbesoldseparately, theproperty isan investmentpropertyonly ifan insignificantportion isheld foradministrativepurposes.Judgementismadeonanindividualpropertybasistodeterminewhetherancillaryservicesaresosignificantthatapropertydoesnotqualifyasinvestmentproperty.
(vi) Construction contracts
The Group recognises construction revenue and costs, including rendering of services, in the incomestatementbyusingthestageofcompletionmethod.Thestageofcompletionisdeterminedbytheproportionthatcontractcostsincurredforworkperformedtodatebeartotheestimatedtotalcontractcosts.
Significantjudgementisrequiredindeterminingthestageofcompletion,theextentofthecontractcostsincurred,theestimatedtotalcontractrevenueandcosts,aswellastherecoverabilityofthecontractprojects.Inmakingthejudgment,theGroupevaluatesbyrelyingonpastexperienceandtheworkofspecialists.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Theaccountingpoliciessetoutbelowhavebeenappliedconsistently toallperiodspresented in thesefinancialstatements,andhavebeenappliedconsistentlybytheGroupandtheCompany,unlessotherwisestated.
Certaincomparativeamountshavebeenreclassifiedtoconformtothecurrentyear’spresentation(seeNote47).Inaddition,thecomparativefinancialstatementshavebeenrestatedtotakeintoaccountthere-instatementofcertainassetsoftheGroupandtheCompany(seeNote47).
(a) Subsidiary companies
SubsidiarycompaniesarethosecompaniescontrolledbytheGroup,inwhichtheGrouphasthepowertogovernthefinancialandoperatingpoliciesofanentitysoastoobtainbenefitsfromitsactivities.Inassessingcontrol,potentialvotingrightsthatpresentlyareexercisablearetakenintoaccount.
InvestmentsinsubsidiarycompaniesarestatedintheCompany’sbalancesheetatcostlessimpairmentlosses.ThepolicyforrecognitionandmeasurementofimpairmentlossesisinaccordancewithNote4(o).
(b) Basis of consolidation
TheconsolidatedfinancialstatementscomprisethefinancialstatementsoftheCompanyanditssubsidiariesasatthebalancesheetdate.ThefinancialstatementsofthesubsidiariesarepreparedforthesamereportingdateastheCompany.
Subsidiariesareconsolidatedfromthedateofacquisition,beingthedateonwhichtheGroupobtainscontrol,andcontinuetobeconsolidateduntilthedatethatsuchcontrolceases.Inpreparingtheconsolidatedfinancialstatements, intragroupbalances, transactionsandunrealisedgainsor lossesareeliminated infull.Uniformaccounting policies are adopted in the consolidated financial statements for like transactions and events insimilarcircumstances.
Acquisitionsofsubsidiariesareaccountedforusingthepurchasemethod.Thepurchasemethodofaccountinginvolvesallocatingthecostoftheacquisitiontothefairvalueoftheassetsacquiredandliabilitiesandcontingentliabilitiesassumedatthedateofacquisition.Thecostofanacquisition ismeasuredastheaggregateofthefairvalues,atthedateofexchange,oftheassetsgiven,liabilitiesincurredorassumed,andequityinstrumentsissued,plusanycostsdirectlyattributabletotheacquisition.
AnyexcessofthecostoftheacquisitionovertheGroup’sinterestinthenetfairvalueoftheidentifiableassets,liabilitiesandcontingentliabilitiesrepresentsgoodwill.AnyexcessoftheGroup’sinterestinthenetfairvalueoftheidentifiableassets,liabilitiesandcontingentliabilitiesoverthecostofacquisitionisrecognisedimmediatelyintheincomestatement.
�2 �3
���� �5
NotestoTheFinancialStatements
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(c) Minority interests
Minorityinterestsatthebalancesheetdate,beingtheportionofthenetassetsofsubsidiariesattributabletoequity interests that are not owned by the Company, whether directly or indirectly through subsidiaries, arepresentedintheconsolidatedbalancesheetsandstatementsofchangesinequitywithinequity,separatelyfromequityattributabletotheequityshareholdersoftheCompany.MinorityinterestsintheresultsoftheGroupispresentedonthefaceoftheconsolidatedincomestatementsasanallocationofthetotalprofitorlossfortheperiodbetweenminorityinterestsandtheequityshareholdersoftheCompany.
Wherelossesapplicabletotheminorityexceedtheminority’sinterestintheequityofasubsidiary,theexcess,andanyfurtherlossesapplicabletotheminority,arechargedagainsttheGroup’sinterestexcepttotheextentthattheminorityhasabindingobligationto,andisableto,makeadditionalinvestmenttocoverthelosses.Ifthesubsidiarysubsequentlyreportsprofits,theGroup’sinterestisallocatedallsuchprofitsuntiltheminority’sshareoflossespreviouslyabsorbedbytheGrouphasbeenrecovered.
(d) Associate companies
Associatecompaniesareentities inwhichtheGroup is inapositiontoexercisesignificant influence,butnotcontrol,overthefinancialandoperatingpoliciesthroughmanagementparticipation.
Associatesareaccountedforintheconsolidatedfinancialstatementsusingtheequitymethod.TheconsolidatedfinancialstatementsincludetheGroup’sshareoftheincomeandexpensesoftheequityaccountedassociates,afteradjustmentstoaligntheaccountingpolicieswiththoseoftheGroup,fromthedatethatsignificantinfluencecommencesuntilthedatethatsignificantinfluenceceases.UnrealisedgainsontransactionsbetweentheGroupandtheassociateareeliminatedtotheextentoftheGroup’sinterestintheassociatecompanies.Unrealisedlossesareeliminatedinthesamewayasunrealisedgains,butonlytotheextendthatthereisnoevidenceofimpairment.
WhentheGroup’sshareof lossesexceeds its interest inanequityaccountedassociate, thecarryingamountof that interest (includingany long-term investments) is reduced toniland therecognitionof further lossesisdiscontinuedexcepttotheextentthattheGrouphasanobligationorhasmadepaymentsonbehalfoftheinvestee.
Themostrecentavailableauditedfinancialstatementsof theassociatecompaniesareusedby theGroup inapplyingtheequitymethod.WherethedatesoftheauditedfinancialstatementsusedarenotcoterminouswiththoseoftheGroup,theshareofresultsisarrivedatfromthelastauditedfinancialstatementsavailableandmanagementfinancialstatementstotheendoftheaccountingyear.
Investmentsinassociatecompaniesarestatedatcostlessimpairmentlosses.ThepolicyforrecognitionandmeasurementofimpairmentlossesisinaccordancewithNote4(o).
(e) Goodwill
Goodwill(negativegoodwill)arisesontheacquisitionofsubsidiaryandassociatecompanies.
Foracquisitionspriorto1January2006,goodwillrepresentstheexcessofthecostoftheacquisitionovertheGroup’sinterestinthefairvaluesofthenetidentifiableassetsandliabilities.
WiththeadoptionofFRS3beginning1January2006,goodwillrepresentstheexcessofthecostoftheacquisitionovertheGroup’sinterestinthenetfairvalueoftheidentifiableassets,liabilitiesandcontingentliabilitiesoftheacquiree.
���� �5
NotestoTheFinancialStatements
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(f) Property, plant and equipment and depreciation
(i) Recognition and measurement
Property,plantandequipmentarestatedatcostorvaluationlessaccumulateddepreciationandimpairmentlosses.
The Group has availed itself to the transitional provision when the MASB first adopted IAS 16, Property,PlantandEquipmentin1998.Certainlongtermleaseholdland,reclaimedlandandbuildingandshorttermleaseholdlandwererevaluedin1991and1997andnolatervaluationhasbeenrecordedfortheseproperty,plantandequipment(exceptinthecaseofimpairmentadjustmentsbasedonavaluation).
When significant parts of an item of property, plant and equipment have different useful lives, they areaccountedforasseparateitems(majorcomponents)ofproperty,plantandequipment.
(ii) Subsequent costs
Thecostofreplacingpartofanitemofproperty,plantandequipmentisrecognisedinthecarryingamountoftheitemifitisprobablethatthefutureeconomicbenefitsembodiedwithinthepartwillflowtotheGroupanditscostcanbemeasuredreliably.Thecarryingamountofthereplacedpartisde-recognised.Thecostsoftheday-to-dayservicingofproperty,plantandequipmentarerecognisedintheincomestatementasincurred.
(iii) Reclassification to investment property
Propertythatisbeingconstructedforfutureuseasinvestmentpropertyisaccountedforasproperty,plantandequipmentuntilconstructionordevelopmentiscomplete,atwhichtimeitisre-measuredtofairvalueandreclassifiedasinvestmentproperty.Anygainorlossarisingonre-measurementisrecognisedintheincomestatement.
Whentheuseofapropertychangesfromowned-occupiedtoinvestmentproperty,thepropertyisremeasuredto fair value and reclassified as investment property. Any gain arising on remeasurement is recogniseddirectlyinequity.Anylossisrecognisedimmediatelyintheincomestatement.
(iv) Depreciation
Freeholdlandisnotdepreciatedwhileleaseholdlandareamortisedovertheremainingperiodofthelease.
Depreciationofotherproperty,plantandequipmentiscalculatedonastraightlinebasistowriteofftheircostofeachassettoitsresidualvalueovertheestimatedusefullife,atthefollowingannualrates:
Leaseholdland Over29-99years Buildings,jetties,slipwaysandroads 3%-10% Leaseholdlandimprovements 1%-10% Plantandmachinery 5%-20% Equipment,furniture,fittings,toolsandrenovation 7%-50% Bargesandmotorvehicles 5%-25%
Thedepreciableamountisdeterminedafterdeductingtheresidualvalue.Theresidualvalue,depreciationmethodandusefullifearereviewedateachfinancialyear-endtoensurethattheamount,methodandperiodofdepreciationareconsistentwithpreviousestimatesandtheexpectedpatternofconsumptionofthefutureeconomicbenefitsembodiedintheitemsofproperty,plantandequipment.
Anitemofproperty,plantandequipmentisderecognisedupondisposalorwhennofutureeconomicbenefitsareexpectedfromitsuseordisposal.Thedifferencebetweenthenetdisposalproceeds,ifanyandthenetcarryingamountisrecognisedinprofitorlossandtheunutilisedportionoftherevaluationsurplusonthatitemistakendirectlytoretainedearnings.
NotestoTheFinancialStatements
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(f) Property, plant and equipment and depreciation (cont'd)
(v) Change in estimates
Duringthefinancialyear,thedepreciationrateformotorvehicleshadbeenrevisedfrom10%perannumto20%perannumfortheCompany.Therevisionswereaccountedforprospectivelyasachangeinaccountingestimatesandasaresult,thedepreciationchargeoftheGroupandoftheCompanyincreasedbyRM0.03millionforthecurrentfinancialyear.
(g) Capital work in progress
Capitalworkinprogressconsistsofbuilding,workshopandplatformunderconstruction/installationforintendeduseasproductionfacilities.Theamountisstatedatcostandnotdepreciateduntiltheassetsisfullycompletedandbroughtintouse.
(h) Investment properties
Investmentpropertiesarepropertieswhichareownedorheldunderaleaseholdinteresttoearnrentalincomeorforcapitalappreciationorforboth.Theseincludelandheldforacurrentlyundeterminedfutureuse.Investmentproperty was previously stated at revaluation with surplus recognised as revaluation reserve. Following theadoptionofFRS140,InvestmentProperties,allinvestmentpropertiesaremeasuredinitiallyandsubsequentlyatfairvaluewithanychangethereinrecognisedintheincomestatement.
ThischangeinaccountingpolicyhasbeenappliedinaccordancewiththetransitionalprovisionsinFRS140andtheeffectsofadoptingFRS140aresetoutinnote5(c).
Whenanitemofproperty,plantandequipmentistransferredtoinvestmentpropertyfollowingachangeinitsuse,anydifferencearisingatthedateoftransferbetweenthecarryingamountoftheitemimmediatelypriortotransferanditsfairvalueisrecogniseddirectlyinequityasarevaluationofproperty,plantandequipment.However,ifafairvaluegainreverseapreviousimpairmentloss,thegainisrecognisedintheincomestatements.Upondisposaloftheinvestmentproperty,anysurpluspreviouslyrecordedinequityistransferredtoretainedearnings;thetransferisnotmadethroughtheincomestatement.
Whentheuseofapropertychangessuchthatitisreclassifiedasproperty,plantandequipmentorinventories,itsfairvalueatthedateofreclassificationbecomesitscostforsubsequentaccounting.
Fair value is arrived at by reference to market evidence of transaction prices for similar properties and isperformedbyregisteredindependentvaluershavinganappropriaterecognisedprofessionalqualificationandrecentexperienceinthelocationandcategoryofthepropertiesbeingvalued.
Intheabsenceofcurrentpricesinanactivemarket,thevaluationsarepreparedbyconsideringtheaggregateof the estimated cash flows expected to be received from renting out the property. A yield that reflects thespecificrisksinherentinthenetcashflowsthenisappliedtothenetannualcashflowstoarriveatthepropertyvaluation.
Valuations reflect, where appropriate: the type of tenants actually in occupation or responsible for meetingleasecommitmentsorlikelytobeinoccupationafterlettingvacantaccommodation,andthemarket’sgeneralperceptionoftheircreditworthiness;theallocationofmaintenanceandinsuranceresponsibilitiesbetweentheGroupandthelessee;andtheremainingeconomiclifeoftheproperty.Whenrentreviewsorleaserenewalsarependingwithanticipatedreversionaryincreases,itisassumedthatallnoticesandwhereappropriatecounter-noticeshavebeenservedvalidlyandwithintheappropriatetime.
Aproperty interestunderanoperating lease isclassifiedandaccounted forasan investmentpropertyonaproperty-by-propertybasiswhentheGroupholdsittoearnrentalsorforcapitalappreciationorboth.Anysuchpropertyinterestunderanoperatingleaseclassifiedasaninvestmentpropertyiscarriedatfairvalue.
Investmentpropertiesarederecognisedwheneithertheyhavebeendisposedoforwhentheinvestmentpropertyispermanentlywithdrawnfromuseandnofutureeconomicbenefitisexpectedfromitsdisposal.Anygainsorlossesontheretirementordisposalofaninvestmentpropertyarerecognisedinprofitorlossintheyearinwhichtheyarise.
��
NotestoTheFinancialStatements
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(i) Other investments
Otherinvestmentswhichcomprisedebtandequitysecuritiesarerecognisedinitiallyatfairvalueplusattributabletransactioncosts.
Subsequenttoinitialrecognition:
(i) Investmentsinquotedsharesarestatedatthelowerofcostandmarketvalue.
(ii) Investment inunquotedsharesarestatedatcost less impairment losses.Thepolicy for recognitionandmeasurementofimpairmentlossesisinaccordancewithNote4(o).
(iii) Otherinvestmentswhichareheldonlongtermbasisarestatedatcostlessimpairmentlosses.ThepolicyforrecognitionandmeasurementofimpairmentlossesisinaccordancewithNote4(o).
Ondisposalofaninvestment,thedifferencebetweennetdisposalproceedsanditscarryingamountisrecognisedinprofitorlossintheyearwhichtheyarise.
(j) Construction contracts
Where the outcome of a construction contract involving the rendering of services can be reliably estimated,contractrevenueandcontractcostsarerecognisedasrevenueandexpensesrespectivelybyusingthestageofcompletionmethod.Thestageofcompletionismeasuredbyreferencetoproportionofcontractcostsincurredforworkperformedtodatetotheestimatedtotalcontractcosts.
Wheretheoutcomeofaconstructioncontractinvolvingtherenderingofservicescannotbereliablyestimated,contractrevenueisrecognisedtotheextentofcontractcosts incurredthat it isprobablewillberecoverable.Contractcostsarerecognisedasexpensesintheperiodinwhichtheyareincurred.
Whenitisprobablethattotalcontractcostswillexceedtotalcontractrevenue,theexpectedlossisrecognisedasanexpenseimmediately.
Whenthetotalofcostsincurredonconstructioncontractsinvolvingtherenderingofservices,plusrecognisedprofits(lessrecognisedlosses),exceedsprogressbillings,thebalanceisclassifiedasamountduefromcustomersoncontracts.Whenprogressbillingsexceedcostsincurredplus,recognisedprofits(lessrecognisedlosses),thebalanceisclassifiedasamountduetocustomersoncontracts.
(k) Inventories
Inventoriesarevaluedatthelowerofcostandnetrealisablevalue.
Cost isdeterminedprincipallyonafirst-in,first-outbasisandincludesexpenditure incurredinacquiringtheinventoriesandbringingthemtotheirexistinglocationandcondition.
Netrealisablevalueistheestimatedsellingpriceintheordinarycourseofbusiness,lesstheestimatedcostsofcompletionandtheestimatedcostsnecessarytomakethesale.
(l) Receivables
Receivablesareinitiallyrecognisedattheircostwhenthecontractualrighttoreceivecashoranotherfinancialassetfromanotherentityisestablished.
Subsequenttoinitialrecognition,receivablesarestatedatcostlessallowancefordoubtfuldebts.Baddebtsarewrittenoffwhenidentified.
Receivablesarenotheldforthepurposeoftrading.
�� �7
NotestoTheFinancialStatements
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(m) Cash and cash equivalents
Cashcomprisescashonhandanddemanddeposits.Cashequivalentsareshort-term,highlyliquidinvestmentsthatarereadilyconvertibletoknownamountsofcashandwhicharesubjecttoaninsignificantriskofchangesinvalue.Forthepurposeofcashflowstatement,cashandcashequivalentsarepresentednetofbankoverdraftandpledgeddeposits.
(n) Leases
(i) Classification
AleaseisrecognisedasafinanceleaseifittransferssubstantiallytotheGroupalltherisksandrewardsincidentaltoownership.Leasesoflandandbuildingsareclassifiedasoperatingorfinanceleasesinthesamewayasleasesofotherassetsandthelandandbuildingselementsofaleaseoflandandbuildingsareconsideredseparatelyforthepurposesofleaseclassification.
Allleasesthatdonottransfersubstantiallyalltheriskandrewardsareclassifiedasoperatingleases,withthefollowingexceptions:
• Propertyheldunderoperatingleasesthatwouldotherwisemeetthedefinitionofaninvestmentpropertyisclassifiedasaninvestmentpropertyonapropertybypropertybasisand,ifclassifiedasinvestmentproperty,isaccountedforasifheldunderfinanceleaseasdescribedinNote4(h);and
• Landheldforownuseunderanoperatinglease,thefairvalueofwhichcannotbemeasuredseparatelyfromthefairvalueofabuildingsituatedthereonattheinceptionofthelease,isaccountedforasbeingheldunderafinancelease,unlessthebuildingisalsoclearlyheldunderanoperatinglease.
(ii) Finance leases and hire purchase - the Group as lessee
Assetsacquiredbywayofhirepurchaseorfinanceleasesarestatedatanamountequaltotheloweroftheirfairvaluesandthepresentvalueoftheminimumleasepaymentsattheinceptionoftheleases,lessaccumulated depreciation and impairment losses. The corresponding liability is included in the balancesheetasborrowings.Incalculatingthepresentvalueoftheminimumleasepayments,thediscountfactorusedistheinterestrateimplicitinthelease,whenitispracticabletodetermine;otherwise,theCompany’sincrementalborrowingrateisused.Anyinitialdirectcostsarealsoaddedtothecarryingamountofsuchassets.
Leasepaymentsareapportionedbetweenthefinancecostsandthereductionoftheoutstandingliability.Financecosts,whichrepresentthedifferencebetweenthetotalleasingcommitmentsandthefairvalueoftheassetsacquired,arerecognisedintheprofitorlossoverthetermoftherelevantleasesoastoproduceaconstantperiodicrateofchargeontheremainingbalanceoftheobligationsforeachaccountingperiod.
The depreciation policy for leased assets is in accordance with that for depreciable property, plant andequipmentasdescribedinNote4(f)(iv).
(iii) Operating leases - the Group as lessee
Operating lease payments are recognised as an expense on a straight-line basis over the term of therelevantlease.Theaggregatebenefitof incentivesprovidedbythelessor isrecognisedasareductionofrentalexpensesovertheleasetermonastraight-linebasis.
(iv) Operating leases – the Group as lessor
Assetsleasedoutunderoperatingleasesarepresentedonthebalancesheetsaccordingtothenatureoftheassets.Rentalincomefromoperatingleasesisrecognisedonastraightlinebasisoverthetermoftherelevantlease(Note4(v)).Initialdirectcostsincurredinnegotiatingandarranginganoperatingleaseareaddedto thecarryingamountof the leasedassetandrecognisedonastraight-linebasisover the leaseterm.
��
NotestoTheFinancialStatements
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(o) Impairment of non-financial assets
Thecarryingamountsofassets,otherthaninvestmentproperty,constructioncontractassets,inventoriesandnon-currentassetsheldforsale,arereviewedateachbalancesheetdatetodeterminewhetherthere isanyindicationofimpairment.Ifanysuchindicationexiststhentheasset’srecoverableamountisestimated.
For goodwill and intangible assets that have indefinite useful life and intangible assets or that are not yetavailableforuse,therecoverableamountisestimatedateachbalancedateormorefrequentlywhenindicatorsofimpairmentareidentified.
Forthepurposeofimpairmenttestingoftheseassets,recoverableamountisdeterminedonanindividualassetbasisunlesstheassetdoesnotgeneratecashflowsthatarelargelyindependentofthosefromotherassets.Ifthisisthecase,recoverableamountisdeterminedforthecash-generatingunit(CGU)towhichtheassetbelongsto.Goodwillacquiredinabusinesscombinationis,fromtheacquisitiondate,allocatedtoeachoftheGroup’sCGUs,orgroupsofCGUs, thatareexpectedtobenefit fromthesynergiesof thecombination, irrespectiveofwhetherotherassetsorliabilitiesoftheGroupareassignedtothoseunitsorgroupsofunits.
Anasset’srecoverableamountisthehigherofanasset’sorCGU’sfairvaluelesscoststosellanditsvalueinuse.Inassessingvalueinuse,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheasset.Wherethecarryingamountofanassetexceedsitsrecoverableamount,theassetisconsideredimpairedandiswrittendowntoitsrecoverableamount.ImpairmentlossesrecognisedinrespectofaCGUorgroupsofCGUsareallocatedfirsttoreducethecarryingamountofanygoodwillallocatedtothoseunitsorgroupsofunitsandthen,toreducethecarryingamountoftheotherassetsintheunitorgroupsofunitsonapro-ratabasis.
Animpairmentlossisrecognisedinprofitorlossintheperiodinwhichitarises,unlesstheassetsarecarriedatarevaluedamount,inwhichcasetheimpairmentlossisaccountedforasarevaluationdecreasetotheextentthattheimpairmentlossdoesnotexceedtheamountheldintheassetrevaluationreserveforthesameasset.
Impairment loss on goodwill is not reversed in a subsequent period. An impairment loss for an asset otherthangoodwillisreversedif,andonlyif,therehasbeenachangeintheestimatesusedtodeterminetheasset’srecoverable amount since the last impairment loss was recognised. The carrying amount of an asset otherthangoodwill is increased to its revised recoverableamount,provided that thisamountdoesnotexceed thecarryingamountthatwouldhavebeendetermined(netofamortisationordepreciation)hadnoimpairmentlossbeenrecognisedfortheassetinprioryears.Areversalofimpairmentlossforanassetotherthangoodwillisrecognisedinprofitorloss,unlesstheassetiscarriedatrevaluedamount,inwhichcase,suchreversalistreatedasarevaluationincrease.
(p) Provisions
Aprovisionisrecognisedif,asaresultofapastevent,theGrouphasapresentlegalorconstructiveobligationthatcanbeestimatedreliably,anditisprobablethatanoutflowofeconomicbenefitswillberequiredtosettletheobligation.Provisionsaredeterminedbydiscountingtheexpectedfuturecashflowsatapre-taxratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheliability.
Contingentliabilities
Whereitisnotprobablethatanoutflowofeconomicbenefitswillberequired,ortheamountcannotbeestimatedreliably,theobligationisdisclosedasacontingentliability,unlesstheprobabilityofoutflowofeconomicbenefitsisremote.Possibleobligations,whoseexistencewillonlybeconfirmedbytheoccurrenceornon-occurrenceof one or more future events are also disclosed as contingent liabilities unless the probability of outflow ofeconomicbenefitsisremote.
WheretheCompanyentersintofinancialguaranteecontractstoguaranteetheindebtednessofothercompanieswithinitsgroup,theCompanyconsidersthesetobeinsurancearrangements,andaccountsforthemassuch.Inthisrespect,theCompanytreatstheguaranteecontractasacontingentliabilityuntilsuchtimeasitbecomesprobablethattheCompanywillberequiredtomakeapaymentundertheguarantee.
�� �9
NotestoTheFinancialStatements
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(q) Foreign currencies
(i) Functional and presentation currency
TheindividualfinancialstatementsofeachentityintheGrouparemeasuredusingthecurrencyoftheprimaryeconomicenvironmentinwhichtheentityoperates(“thefunctionalcurrency”).TheconsolidatedfinancialstatementsarepresentedinRinggitMalaysia(RM),whichisalsotheCompany’sfunctionalcurrency.
(ii) Foreign currency transactions
Inpreparingthefinancialstatementsof the individualentities, transactions incurrenciesotherthantheentity’sfunctionalcurrency(foreigncurrencies)arerecordedinthefunctionalcurrenciesusingtheexchangeratesprevailingatthedatesofthetransactions.Ateachbalancesheetdate,monetaryitemsdenominatedinforeigncurrenciesareretranslatedattheratesprevailingonthebalancesheetdate.Non-monetaryitemscarriedatfairvaluethataredenominatedinforeigncurrenciesareretranslatedattheratesprevailingonthedatewhenthefairvaluewasdetermined.Non-monetaryitemsthataremeasuredintermsofhistoricalcostinaforeigncurrencyarenotretranslated.
Exchangedifferencesarisingonthesettlementofmonetary items,andontheretranslationofmonetaryitems,areincludedinprofitorlossfortheperiod.
(iii) Group companies
Forthepurposeofconsolidation,financialstatementsoftheforeignsubsidiarycompaniesaretranslatedintoRMat rateofexchangerulingat thebalancesheetdatewhile incomestatementsare translatedataverageratesforthefinancialyear.Exchangedifferencesarisingfromthesetranslationsarereflectedintheexchangefluctuationreserveaccountwithinequity.
Goodwillandfairvalueadjustmentsarisingontheacquisitiononaforeignentityaretreatedasassetsandliabilitiesof the foreignentityonorafter1January2006andarerecorded in the functionalcurrencyoftheforeignoperationsandtranslatedattheclosingrateatthebalancesheetdate.Goodwillandfairvalueadjustmentswhicharoseontheacquisitionofforeignsubsidiariesbefore1January2006aredeemedtobeassetsandliabilitiesoftheparentcompanyandarerecordedinRMattheratesprevailingatthedateofacquisition.
Theprincipalexchangeratesusedforeveryunitofforeigncurrencyrulingatthebalancesheetdateusedareasfollows:
2006 2005 RM RM
1UnitedStatesDollar 3.53 3.781AustralianDollar - 2.771Euro 4.65 4.491SterlingPound - 6.521SwissFranc - 2.881000GhanaCedis 0.37 0.41
(r) Income tax
Incometaxontheprofitorlossfortheyearcomprisescurrentanddeferredtax.Currenttax istheexpectedamountofincometaxespayableinrespectofthetaxableprofitforthefinancialyearandismeasuredusingthetaxratesthathavebeenenactedatthebalancesheetdate.
Deferredtaxisprovidedfor,usingtheliabilitymethod.Inprinciple,deferredtaxliabilitiesarerecognisedforalltaxabletemporarydifferencesanddeferredtaxassetsarerecognisedforalldeductibletemporarydifferences,unusedtaxlossesandunusedtaxcreditstotheextentthat it isprobablethattaxableprofitwillbeavailableagainstwhichthedeductibletemporarydifferences,unusedtaxlossesandunusedtaxcreditscanbeutilised.Deferredtaxisnotrecognisedifthetemporarydifferencearisesfromgoodwillorfromtheinitialrecognitionofanassetorliabilityinatransactionwhichisnotabusinesscombinationandatthetimeofthetransactions,affectsneitheraccountingprofitsnortaxableprofit.
50
NotestoTheFinancialStatements
51
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(r) Income tax (cont'd)
Deferredtaxismeasuredatthetaxratesthatareexpectedtoapplyintheperiodwhentheassetisrealisedortheliabilityissettled,basedontaxratesthathavebeenenactedorsubstantivelyenactedatthebalancesheetdate.Deferredtaxisrecognisedasincomeoranexpenseandincludedintheprofitorlossfortheperiod,exceptwhenitarisesfromatransactionwhichisrecogniseddirectlyinequity,inwhichcasethedeferredtaxisalsorecogniseddirectlyinequity,orwhenitarisesfromabusinesscombinationthatisanacquisition,inwhichcasethedeferredtaxisincludedintheresultinggoodwillornegativegoodwill.
Additionaltaxesthatarisefromthedistributionofdividendsarerecognisedatthesametimeastheliabilitytopaytherelateddividendisrecognised.
(s) Financial instruments
FinancialinstrumentsarerecognisedinthebalancesheetswhentheGrouphasbecomeapartytothecontractualprovisionsoftheinstrument.
Financialinstrumentsareclassifiedasliabilitiesorequityinaccordancewiththesubstanceofthecontractualarrangement.Interest,dividends,gainsandlossesrelatingtoafinancialinstrumentclassifiedasaliability,arereportedasexpenseorincome.Distributionstoholdersoffinancialinstrumentsclassifiedasequityarechargeddirectlytoequity.FinancialinstrumentsareoffsetwhentheGrouphasalegallyenforceablerighttooffsetandintendstosettleeitheronanetbasisortorealisetheassetandsettletheliabilitysimultaneously.
(t) Payables
Tradeandotherpayablesarestatedatcostwhichisthefairvalueoftheconsiderationtobepaidinthefutureforgoodsandservicesreceived.Payablesarerecognisedwhenthereisacontractualobligationtodelivercashoranotherfinancialassettoanotherentity.
(u) Interest bearing borrowings
Interestbearingbankloansandoverdraftsarerecordedattheamountofproceedsreceived,netofrepayments.
(v) Revenue recognition
(i) Contract revenue and profit on long term construction contracts are accounted for on the percentageof completion method by reference to the percentage of actual construction work completed and costincurred.
Whentheoutcomeofaconstructioncontractcannotbeestimatedreliably:
1. Revenueisrecognisedonlytotheextentofacontractcostsincurredthatisprobablewillberecoverable;and
2. Contractcostswillberecognisedasanexpenseinthefinancialyearinwhichtheyareincurred.
Inallcases,fullprovisionsfortheselossesaremadeinthefinancialstatementswhereforeseeablelossesoncontractsareanticipated.
(ii) Revenuefromtradingactivitiesarerecognisedupondeliveryofproductandcustomeracceptance,ifany,orperformanceofservices,netofdiscountandsalesreturns.
(iii) Rentalincomefrominvestmentpropertyisrecognisedintheincomestatementonastraight-linebasisoverthetermofthelease.
(iv) Dividendincomeisrecognisedintheincomestatementasandwhendeclaredorrighttoreceivepaymentisestablished.
50 51
NotestoTheFinancialStatements
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(w) Employee benefits
(i) Short term benefits
Wages,salaries,bonusesandsocialsecuritycontributionsarerecognisedasanexpenseintheyearinwhichtheassociatedservicesarerenderedbyemployeesoftheCompany.Shorttermaccumulatingcompensatedabsencessuchaspaidannualleavearerecognisedwhenservicesarerenderedbyemployeesthatincreasetheirentitlementtofuturecompensatedabsences,andshorttermnon-accumulatingcompensatedabsencessuchassickleavearerecognisedwhentheabsencesoccur.
(ii) Defined contribution plans
Definedcontributionplansarepost-employmentbenefitplansunderwhichtheGrouppaysfixedcontributionsintoseparateentitiesorfundsandwillhavenolegalorconstructiveobligationtopayfurthercontributionsifanyofthefundsdonotholdsufficientassetstopayallemployeebenefitsrelatingtoemployeeservicesinthecurrentandprecedingfinancialyears.Suchcontributionsarerecognisedasanexpenseintheprofitorlossasincurred.Asrequiredbylaw,companiesinMalaysiamakesuchcontributionstotheEmployeesProvidentFund(“EPF”).
(iii) Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date orwheneveranemployeeacceptsvoluntaryredundancyinexchangeforthesebenefits.TheGrouprecognisesterminationbenefitasaliabilityandanexpensewhenitisdemonstrablycommittedtoeitherterminatetheemploymentofcurrentemployeesaccordingtoadetailedplanwithoutpossibilityofwithdrawalorprovidingterminationbenefitsasaresultofanofferaremadetoencouragevoluntaryredundancy. Inthecaseofanoffermadetoencouragevoluntaryredundancy, themeasurementof terminationbenefits isbasedonthenumberofemployeesexpectedtoaccepttheoffer.Benefitsfallingduemorethantwelvemonthsafterbalancesheetdatearediscountedtopresentvalue.
(x) Borrowing costs
Allborrowingcostsarerecognisedintheincomestatementusingtheeffectiveinterestmethod,intheperiodin which they are incurred except to the extent that they are capitalised as being directly attributable to theacquisition,constructionorproductionofanassetwhichnecessarilytakesasubstantialperiodoftimetobepreparedforitsintendeduse.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditurefortheassetisbeingincurred,borrowingcostsarebeingincurredandactivitiesthatarenecessarytopreparetheassetforitsintendeduseorsaleareinprogress.Capitalisationofborrowingcostsissuspendedorceaseswhensubstantiallyalltheactivitiesnecessarytopreparethequalifyingassetfor its intendeduseorsaleareinterruptedorcompleted.
(y) Derivative financial instruments
Derivativefinancialinstrumentsarenotrecognisedinthefinancialinstruments.
(z) Equity instruments
Ordinaryshares,areclassifiedasequity.Dividendsonordinarysharesarerecognisedinequityintheperiodinwhichtheyaredeclared.
Thetransactioncostsofanequitytransactionareaccountedforasadeductionfromequity,netoftax.Equitytransactioncostscompriseonlythoseincrementalexternalcostsdirectlyattributabletotheequitytransactionwhichwouldotherwisehavebeenavoided.
52
NotestoTheFinancialStatements
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(za) Non-current assets held for sale
Non-currentassetsareclassifiedasheldforsaleiftheircarryingamountwillberecoveredprincipallythroughasaletransactionratherthanthroughcontinuinguse.Thisconditionisregardedasmetonlywhenthesaleishighlyprobableandtheassetisavailableforimmediatesaleinitspresentconditionsubjectonlytermsthatareusualandcustomary.
Immediatelybeforeclassificationasheldforsale,themeasurementofthenon-currentassetsisbroughtup-to-dateinaccordancewithapplicableFRSs.Then,oninitialclassificationasheldforsale,non-currentassetsaremeasuredinaccordancewithFRS5thatisatthelowerofcarryingamountandfairvaluelesscoststosell.Anydifferencesareincludedinprofitorloss.
5. CHANGES IN ACCOUNTING POLICIES, EFFECTS AND CHANGES IN COMPARATIVES ARISING FROM THE ADOPTION OF NEW AND REVISED FRSs
On1January2006,theGroupandtheCompanyadoptedthefollowingFRSsmandatoryforfinancialperiodsbeginningonorafter1January2006:
FRS2 Share-basedPayment
FRS3 BusinessCombinations
FRS5 Non-currentAssetsHeldforSaleandDiscontinuedOperations
FRS101 PresentationofFinancialStatements
FRS102 Inventories
FRS108 AccountingPolicies,ChangesinEstimatesandErrors
FRS110 EventsaftertheBalanceSheetDate
FRS116 Property,PlantandEquipment
FRS121 TheEffectsofChangesinForeignExchangeRates
FRS127 ConsolidatedandSeparateFinancialStatements
FRS128 InvestmentinAssociates
FRS131 InterestsinJointVentures
FRS132 FinancialInstruments:DisclosureandPresentation
FRS133 EarningsPerShare
FRS136 ImpairmentofAssets
FRS138 IntangibleAssets
FRS140 InvestmentProperty
TheadoptionofaboveFRS,exceptforFRS2andFRS131whicharenotapplicabletotheGroup,doesnothaveanysignificantfinancialimpactontheGroupexceptforFRS101andFRS140.
Atthedateofauthorisationofthesefinancialstatements,thefollowingFRSs,amendmentstoFRSandInterpretationswerenotearlyadoptedbytheCompany.However,theywereinissuebutarenotyeteffective:
(i) FRS117-Leases(ii) FRS124-RelatedPartyTransactions(iii) FRS139-FinancialInstruments:RecognitionandMeasurement(iv) FRS6-ExplorationforandEvaluationofMineralResources(v) AmendmenttoFRS119:EmployeeBenefits-ActuarialGainsandLosses,GroupPlansandDisclosures(vi) AmendmenttoFRS121:TheEffectsofChanges inForeignExchangeRates-Net Investment inaForeign
Operation(vii) ICInterpretation1:ChangesinExistingDecommissioning,RestorationandSimilarLiabilities(viii) ICInterpretation2:Members’SharesinCo-operativeEntitiesandSimilarInstruments(ix) ICInterpretation5: Rights to Interests arising from Decommissioning, Restoration and Environmental
RehabilitationFunds
52 53
NotestoTheFinancialStatements
5. CHANGES IN ACCOUNTING POLICIES, EFFECTS AND CHANGES IN COMPARATIVES ARISING FROM THE ADOPTION OF NEW AND REVISED FRSs (CONT'D)
(x) ICInterpretation6:LiabilitiesarisingfromParticipatinginaSpecificMarket-WasteElectricalandElectronicEquipment
(xi) ICInterpretation7:ApplyingtheRestatementApproachunderFRS129FinancialReportinginHyperinflationaryEconomies
(xii) ICInterpretation8:ScopeofFRS2
TheprincipalchangesinaccountingpoliciesandtheireffectsresultingfromtheadoptionoftheothernewandrevisedFRSsarediscussedbelow:
(a) FRS 5 non-current assets held for sale and discontinued operations
Priorto1January2006,non-currentassetsheldforsalewereneitherclassifiednorpresentedascurrentassetsorliabilities.Therewerenodifferencesinthemeasurementofnon-currentassetsheldforsaleandthoseforcontinuinguse.UpontheadoptionofFRS5,non-currentassetsheldforsaleareclassifiedascurrentassetsandarestatedatlowerofcarryingamountandfairvaluelesscoststosell.
TheGrouphasappliedFRS5prospectivelyinaccordancewiththetransitionalprovisions.
(b) FRS 101 presentation of financial statements
Priorto1January2006,minorityinterestsatthebalancesheetdatewerepresentedintheconsolidatedbalancesheetseparately fromliabilitiesandequity.Upontheadoptionof therevisedFRS101,minority interestsarenowpresentedwithintotalequity. Intheconsolidated incomestatement,minority interestsarepresentedasanallocationofthetotalprofitorlossfortheyear.Asimilarrequirementisalsoapplicabletothestatementofchangesinequity.TherevisedFRS101alsorequiresdisclosure,onthefaceofthestatementofchangesinequity,totalrecognisedincomeandexpensesfortheyear,showingseparatelytheamountsattributabletoequityholdersoftheCompanyandtominorityinterests.
ThesechangesinpresentationhavebeenappliedretrospectivelyandhavenoimpactontheCompany’sfinancialstatements.
(c) FRS 140 investment properties
Investmentpropertywaspreviouslystatedatvaluationwithsurplusrecognisedasrevaluationreserve.UpontheadoptionofFRS140,investmentpropertiesarenowstatedatfairvalueandgainsandlossesarisingfromchangesinfairvaluesarerecognisedinprofitorlossintheyearinwhichtheyarise.
TheGrouphasappliedFRS140inaccordancewiththetransitionalprovisions.Thechangeinaccountingpolicyhashadnoimpactasamountsreportedin2005orprioryears.Instead,thechangeshavebeenaccountedforbyrestatingtheopeningbalancesasat1January2006.TheadoptionofFRS140hastheeffectofincreasingaccumulatedlossesat1January2006byRM15.8million.
6. PROPOSED RESTRUCTURING SCHEME
TheDirectorsoftheCompanyproposedtoimplementthefollowingProposedDisposalandProposedRestructuringScheme:
6.1 Proposed disposal of Menara PSCI (“Proposed Disposal”)
Proposeddisposalof three lotsof landheldunderGeranNo.27123LotNo.1199,GeranNo.27124LotNo.1197andGeranNo.27125LotNo.1198,Section13,all inTownofGeorgetown,NorthEastDistrict,StateofPulauPinangmeasuringapproximately71,817squarefeettogetherwithabuildingerectedthereon,knownas‘MenaraPSCI’,byPSCAssetHoldingsSdnBhd,awhollyownedsubsidiaryofPSCIndustriesBerhad(“PSCI”),toBousteadHoldingsBerhad(“Boustead”)foracashconsiderationofRM54million.
5�
NotestoTheFinancialStatements
6. PROPOSED RESTRUCTURING SCHEME (cont'd)
6.1 Proposed disposal of Menara PSCI (“Proposed Disposal”)(cont'd)
TheabovepropertyiscurrentlychargedtoOCBCBank(Malaysia)BerhadforcreditfacilitygrantedbyOCBCBank(Malaysia)BerhadtoPSCAssetHoldingsSdnBhdandPenangShipbuilding&ConstructionSdnBhd(“PSCSB”).
TheproceedsofRM54millionfromtheProposedDisposalwillbeutilisedinfulltopartiallyrepaytheoutstandingloantoOCBCBank(Malaysia)Berhadasat31August2006.
Asat31December2006,theaboveinvestmentpropertyhasbeenreclassifiedasnon-currentassetheldforsaleasdisclosedinNote18tothefinancialstatements.
6.2 Proposed capital reconstruction
6.2.1 ProposedShareCapitalReduction
TheProposedShareCapitalReductionpursuanttoSection64oftheCompaniesAct,1965(“theAct”),willinvolvethereductionoftheissuedandpaid-upsharecapitaloftheCompanyofRM174,083,348comprising174,083,348ordinarysharesofRM1.00eachinthefollowingmanner:-
i. 3ordinarysharesofRM1.00eachintheissuedandpaid-upcapitaloftheCompanywhichareheldbyBousteadHoldingsBerhadwillbecancelled;and
ii. theremaining174,038,345ordinarysharesofRM1.00eachintheissuedandpaid-upcapitalofPSCIwillbereducedbyRM0.80persharetobecome174,083,345ordinarysharesofRM0.20each.
6.2.2 ProposedShareCapitalConsolidation
Thereafter,theissuedandpaid-upsharecapitaloftheCompanyofRM34,816,669comprising174,083,345ordinarysharesofRM0.20eachwillbeconsolidatedsuchthateveryfive(5)ordinarysharesofRM0.20eachshallconstituteone(1)ordinaryshareofRM1.00eachcreditedasfullypaid-upandtheresultingissuedandpaid-upsharecapitaloftheCompanyofRM34,816,669willcomprise34,816,669ordinarysharesofRM1.00each.
6.2.3 ProposedSharePremiumAccountCancellation
Asat31August2006, thesharepremiumaccountof theCompanyamounted toRM70,243,000 (“SharePremiumAccount”).PursuanttoSection60(2)oftheAct,theprovisionsoftheActrelatingtothereductionofsharecapitalshallapplyasiftheSharePremiumAccountwerepaid-upsharecapitaloftheCompany.
Hence,theProposedShareCapitalReduction,ProposedShareCapitalConsolidationandProposedSharePremiumAccountCancellationwillgiverisetoanaggregatecreditofapproximatelyRM209.5millionwhichwillbeutilisedtoreducetheGroup’saccumulatedlosses.
5� 55
NotestoTheFinancialStatements
6. PROPOSED RESTRUCTURING SCHEME (cont'd)
6.3 Proposed debt settlement
The Proposed Debt Settlement involving the Company and PSCSB will be implemented by way of a schemeofarrangementunderSection176oftheAct inrespectoftheamountowing(“SchemeDebt”)totheSchemeCreditorsofboththeCompanyanditswhollyownedsubsidiary,PSCSB.
TheProposedDebtSettlementmaybesummarisedasfollows:
RM SchemeDebtasatCut-OffDate 539,926,530 Less: CollateralSet-off# * (3,100,000) TotalSchemeDebtwaived @ (392,818,923)
BalancefullysettledbyissuanceoftheSettlementShares^ 144,007,607
* Basedonthemarketvalueofthenon-operatingSchemeAssetsasappraisedbyCHWilliamsvidetheValuationReportdated15November2006.
@ Comprisingthefollowing:-
(i) waiverofalloutstandinginterestuptotheCut-OffDateamountingtoRM139,643,340;and
(ii) waiverof70%oftheprincipalamountasattheCut-OffDateamountingtoRM253,175,582
^ NewordinarysharesofRM1.00eachintheCompanytobeissuedasfullypaid-uptotherenouncesoftheSchemeCreditorspursuanttotheProposedDebtSettlement
# AsdefinedinSection6.3.1(iii)below
TheSettlementoftheSchemeDebtisestimatedtoresultinaninterestsavingsofRM51millionperannum.
6.3.1 Particulars
TheSchemeDebtowingtotheSecuredCreditorsoftheCompanyandPSCSBwillbesettledinthefollowingmanner:
(i) Waiver of any or all interests or (in the case of Scheme Debt based on Syariah principles) profit,compensationorequivalentaccruingontheoutstandingdebtaftertheCut-OffDateandanypenalties,charges,fees,costsandexpensesandindemnitypaymentobligationsor(inthecaseofSchemeDebtbasedonSyariahprinciples)othercompensation,penaltychargesorequivalent;
(ii) Fullsettlementofsecureddebtuptothecollateralvalueoftheoperatingassetsinthemannersetoutinsub-paragraphs(iii)and(iv)below,andtheportionoftheoutstandingdebtexceedingthecollateralvalueshallbereferredtoas“PartiallyUnsecuredDebt”;
(iii) Debtsecuredonnon-operatingassetsshallbesettledbywayofrequiringthecreditortoforeclose(otherwiseacquiring)thenon-operatingassetsorextinguishingallrightsoftheGroupinrelationtothesaidoperatingassetsassettlingthedebttotheextentofthecollateralvalue(“CollateralSet-Off”);
(iv) Debt secured on operating assets shall be settled by way of issuance of Settlement Shares forthe secured debt to the extent of the collateral value of the operating assets or outstanding debtwhicheverislower;whereupon,theSecuredCreditorsshalldischarge(orotherwiseextinguish)itssecurity interestoverthesaidoperatingassetsandtitleandpossessiontoallSchemeAssetsthatareunderhirepurchaseorareotherwiseownedbytheSecuredCreditorsshallbetransferredtotheCompanyorPSCSB,andall interestoftheSchemeCreditorsinthesaidoperatingassetsshallbeextinguished;
5�
NotestoTheFinancialStatements
6. PROPOSED RESTRUCTURING SCHEME (cont'd)
6.3 Proposed debt settlement (cont'd)
6.3.1 Particulars(cont'd)
v. TheSettlementSharestobeallottedtotheSecuredCreditorswillberenouncedentirelybytheSchemeCreditorsforacashconsiderationofRM1.00perSettlementShare(asdetailedinSection6.3.4below);and
vi. ThePartiallyUnsecuredDebtshallbetreatedasanunsecureddebtandshallbesettledinamannersimilartothatfortheUnsecuredCreditorsassetoutbelow.
ThesettlementfortheSecuredCreditorsoftheCompanyandPSCSBissummarisedbelow.
Secured Secured Creditors of Creditors of the Company PSCSB Total
RM RM RM SchemeDebtasatCut-OffDate 5,831,956 103,650,088 109,482,044Less:CollateralSet-Offforthenon-operating SchemeAssets* (3,100,000) - (3,100,000)Less: IssueofSettlementSharesforthe operatingSchemeAssets# - (35,503,786) (35,503,786)
BalanceasperPartiallyUnsecuredDebt 2,731,956 68,146,302 70,878,258
Notes:
* BasedonthemarketvalueasappraisedbyCHWilliamsvidevaluationreportdated15November2006
# Basedonthe lowerof theoutstandingdebtandthemarketvalueof theoperatingSchemeAssets,being the Pulau Jerejak Shipyard, plant and machinery which consist of 2 units of MHE-DemagoverheadcranesituatedatPulauJerejakShipyard,1unitofpassengerferrysituatedatPulauJerejakShipyardand1unitofsteelfloatingdocksituatedatPulauLangkawi,asappraisedbyCHWilliamsvidevaluationreportsdated17November2006and22November2006,respectively
5� 57
6. PROPOSED RESTRUCTURING SCHEME (cont'd)
6.3 Proposed debt settlement (cont'd)
6.3.1 Particulars(cont'd)
TheSchemeDebtowingtotheUnsecuredCreditorsoftheCompanyandPSCSBwillbesettledinthefollowingmanner:
(i) Waiverofanyandallinterestsor(inthecaseofSchemeDebtbasedonSyariahprinciples)profit,compensationorequivalentuptoandincludingtheCut-OffDateandanypenalties,charges,fees,costsandexpensesandindemnitypaymentobligationsor(inthecaseofSchemeDebtbasedonSyariahprinciples)othercompensation,penaltychargesorequivalentforsuchperiod,foralltheunsecureddebt;
(ii) Waiverofanyandallinterestsor(inthecaseofSchemeDebtbasedonSyariahprinciples)profit,compensationorequivalentaftertheCut-OffDateandanyandallpenalties,charges,fees,costsandexpensesandindemnitypaymentobligationsor(inthecaseofSchemeDebtbasedonSyariahprinciples)othercompensation,penaltychargesorequivalent,foralltheunsecureddebt;
(iii) Waiverof70%oftheprincipalamountofalltheunsecureddebtasattheCut-OffDateandsuchpost-waiver principal amount of the unsecured debt shall be referred to as the “RestructuredDebt”;
(iv) IssuanceoftheSettlementSharesasfullsettlementfortheRestructuredDebt;and
(v) TheSettlementSharestobeallottedtotheUnsecuredCreditorswillberenouncedentirelybytheUnsecuredCreditorsforacashconsiderationofRM1.00perSettlementShare.
EachoftheSecuredCreditorsandUnsecuredCreditorsofPSCSBwhichhavethebenefitofacorporateguarantee from PSCI shall fully discharge and release PSCI from all its obligations under the saidcorporateguaranteeandalloutstandingamountshallbeandwillbedeemedtobefullyandirrevocablysettled,satisfied,releasedanddischargedasbetweenPSCIandsuchSecuredCreditorsandUnsecuredCreditors.
The settlement for the Partially Unsecured Debt and the Unsecured Creditors of PSCI and PSCSB issummarisedbelow:
Partially Unsecured Unsecured Unsecured Creditors of Creditors of Debt the Company PSCSB Total
RM RM RM RM
SchemeDebtasatCut-OffDate 70,878,258 248,924,155 181,520,331 501,322,744
Less:Waiverofallinterestsand70%ofprincipalamountofSchemeDebt (49,972,462) (202,080,882) (140,765,579) (392,818,923)
BalanceofRestructuredDebt 20,905,796 46,843,273 40,754,752 108,503,821
TobesettledbytheissuanceofSettlementShares (20,905,796) (46,843,273) (40,754,752) (108,503,821)
- - - -
NotestoTheFinancialStatements
5� 59
NotestoTheFinancialStatements
6. PROPOSED RESTRUCTURING SCHEME (cont'd)
6.3 Proposed debt settlement (cont'd)
6.3.2 BindingEffectofProposedSchemeofArrangement
TheproposedschemeofarrangementtoeffecttheProposedDebtSettlementshall,ifsanctionedbyorderoftheCourtunderSection176(3)oftheAct,bebindingontheSchemeCreditorsandshalltakeeffectuponthelodgementofthesaidorderwiththeCompaniesCommissionofMalaysiawithinonemonththereoforsuchearlierdateastheCourtmaydeterminepursuanttoSection176(5)oftheAct.
6.3.3 RankingofSettlementShares
TheSettlementSharesshall,uponallotmentandissue,rankparipassuinallrespectswiththeordinarysharesoftheCompanyexistingatthetimeofsuchissue,exceptthattheSettlementSharesshallnotbeentitledtoparticipateinanyrights,allotment,dividendsand/oranyotherdistributions,theentitlementdateofwhichfallsonorpriortotheallotmentdateoftheSettlementShares.
6.3.4 ProposedRenunciation
AspartofthetermsoftheProposedDebtSettlement,theentire144,007,607SettlementShares(“RenouncedShares”)willberenouncedbytheSchemeCreditorsinfavourofBousteadHoldingsBerhad(“Boustead”)and/orsuchotherprospectiveinvestor(s)astheBoardmayidentifyandapprove(“Renouncees”)inthefollowingmanner:
No. of Settlement Shares Renounced in PSCSB favour of Entitlement Renounced in Renouncees
of Settlement favour of other than Scheme Creditors Shares Boustead Boustead
Securedcreditors 56,409,582 56,409,582 -Unsecuredcreditors 87,598,025 71,141,609 16,456,416
144,007,607 127,551,191 16,456,416
* Boustead,subjecttotheapprovalofitsshareholders,hason28February2007givenitswrittenundertakingtoacquireupto144,007,607RenouncedShares. In theevent that theRenounceesotherthanBousteaddoesnotacquireitsportionoftheRenouncedShares,BousteadwillacquiretheentireRenouncedSharesanditsresultantshareholdingintheCompanywillbe71.62%
TheconsiderationfortheProposedRenunciationshallbethecashsumofRM144,007,607orRM1.00persharebasedontheissuepriceofRM1.00eachpaidintoanaccountoperatedbyapartynominatedbytheCompany(“Stakeholder”)nolaterthanthree(3)marketdayspriortothelistingoftheRenouncedSharesandtheRightsShares.ThesaidStakeholdershallreleasethecashsumtotherenouncingSchemeCreditorswithinone(1)marketdayfromthelistingoftheRenouncedShares.
Inconsiderationoftheaforementionedcashpayment,theRenouncedShareswillbecrediteddirectlyintotherespectiveCentralDepositorySystemaccountsoftheRenounceespriortothelistingofandquotationfortheRenouncedSharesontheMainBoardofBursaSecurities.
5� 59
6. PROPOSED RESTRUCTURING SCHEME (cont'd)
6.3.5ProposedRightsIssue
TheCompanyproposestoundertakearenounceablerightsissueof69,633,338newordinarysharesofRM1.00eachatanindicativeissuepriceofRM1.00perRightsShareonthebasisoftwo(2)RightsSharesforeveryone (1)ordinaryshareofRM1.00eachheldafter theProposedCapitalReconstruction. Theissuepriceof theRightsShares ispayable infulluponacceptancebytheentitledshareholdersof theCompany.
TheRightsShareswillbeofferedtotheshareholdersoftheCompany(excepttheholdersoftheSettlementSharestobeissuedpursuanttotheProposedDebtSettlement)aspertheRecordofDepositorsontheentitlementdatetobeannouncedinduecourseafterobtainingtheapprovalsrequiredfromalltherelevantauthorities.
Partof theproceedsfromtheproposedrenounceablerights issueabovewillbeutilisedtopayoff theexpensesoftherestructuringexerciseamountingtoRM4.2million.
6.4 Proposed exemption
AspartofthetermsoftheProposedDebtSettlement,144,007,607SettlementSharesisproposedtobeissuedtotheSchemeCreditorsandwillberenouncedbytheSchemeCreditorsatacashconsiderationofRM1.00perSettlementShareinthefollowingmanner:
127,551,191 Settlement Shares will be renounced by the Scheme Creditors to Boustead; and 16,456,416Settlement Shares will be renounced to such other prospective investor(s) as the Board may identify andapprove.However,intheeventthatthereisnootherprospectiveinvestor(s)acquiringtheseSettlementShares,Bousteadhad,on28February2007,giventotheCompanytheirwrittenundertakingtoacquireuptotheentire144,007,607includingtheaforesaid16,456,416SettlementShares(“RemainingSettlementShares”).
OntheassumptionthatBousteaddoesnotacquiretheRemainingSettlementShares,Boustead’sshareholdingin the Company will increase from 32.5% equity interest to 65.0% equity interest, upon completion of theProposals.
IntheeventthatBousteadacquirestheRemainingSettlementShares,Boustead’sshareholdingintheCompanymaypotentiallyincreaseupto71.6%equityinterest,uponcompletionoftheProposals.
InviewoftheaboveandpursuanttoPartIIoftheMalaysianCodeonTakeOversandMergers,1998,asamendedfromtimetotimeandanyre-enactmentthereof,BousteadwouldbeobligedtomakeamandatorygeneralofferforalltheremainingCompanySharesnotheldbyBousteaduponcompletionoftheProposedRestructuringSchemeandproposedacquisitionofupto144,007,607SettlementSharespursuanttotheProposedRenunciation.
On22January2007,Affin InvestmentBankBerhad,onbehalfofBoustead,hadsubmittedanapplication tothe Securities Commission ("SC") in respect of the Proposed Exemption. The SC had, vide its letter dated13February2007,stated that theSCwillconsider theProposedExemptionsubject to,amongstothers, theprovisionofcompetentindependentadvice(“IA”)totheshareholdersoftheCompanywhereintheappointmentoftheIAandcontentsoftheIACircularmusthavebeenapprovedandconsentedbytheSC.
NotestoTheFinancialStatements
�0 �1
NotestoTheFinancialStatements
6. PROPOSED RESTRUCTURING SCHEME (cont'd)
6.5 Approvals required
6.5.1 TheProposedDisposalissubjecttoapprovalsfromthefollowing:- (i) TheSC;(ii) the SC (for and on behalf of Foreign Investment Committee (“FIC”)) under the FIC Guidelines
(Boustead,asthepurchaser);(iii) the shareholders of the Company at an Extraordinary General Meeting ("EGM") to be convened;
and(iv) otherrelevantparties/authorities,ifany.
TheProposedDisposalisnotconditionalupontheProposedCapitalReconstruction,ProposedDebtSettlement,ProposedRightsIssuecollectively(“ProposedRestructuringScheme”)andtheProposedExemption.
6.5.2 The Proposed Restructuring Scheme and the Proposed Exemption are subject to the followingapprovals: (i) theSCfortheProposedRestructuringSchemeandtheProposedExemption.(ii) theSC(forandonbehalfofFIC)undertheFICGuidelinesfortheProposedRestructuringScheme.(iii) theShareholdersoftheCompanyatanEGMtobeconvenedfortheProposedRestructuringScheme
andProposedExemption.(iv) theSchemeCreditorsattheCourt-ConvenedMeetingsfortheProposedDebtSettlement.(v) theconfirmationoftheHighCourtofMalayafortheProposedCapitalReductionandtheProposed
Share Premium Account Cancellation pursuant to Section 64 and 60 of the Act, as well as therequisitesanctionoftheHighCourtofMalayafortheProposedDebtSettlementpursuanttoSection176oftheAct;
(vi) theBursaSecuritiesforthelistingofandquotationfortheSettlementSharesandRightsSharestobeissuedpursuanttotheProposedRestructuringSchemeontheMainBoardofBursaSecurities;
(vii) theshareholdersofBousteadatanEGMtobeconvenedfortheproposedacquisitionofuptotheentire144,007,607RenouncedSharespursuanttotheProposedRenunciation;and
(viii) Otherrelevantparties/authorities,ifany
AsdisclosedinNote46,allapprovalshadbeenobtainedfromtheshareholders,lendersandrelevantauthoritiesexceptfor:
- theconfirmationoftheHighCourtofMalayafortheProposedCapitalReductionandtheProposedSharePremiumAccountCancellationpursuanttoSection64and60oftheAct,aswellastherequisitesanctionoftheHighCourtofMalayafortheproposalDebtSettlementpursuanttoSection176oftheAct;and
- BursaSecuritiesforthelistingofandquotationfortheSettlementSharesandRightsSharestobeissuedpursuanttotheProposedRestructuringSchemeontheMainBoardofBursaSecurities.
TheProposedRestructuringSchemeandtheProposedExemptionareinter-conditionalwitheachother.
�0 �1
NotestoTheFinancialStatements
�2 �3�2 �3
7. REVENUE
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
Saleofgoods 27,196 829 - -Shiprepairandmaintenancerelatedactivities 30,873 115,964 - -Constructionandshipbuilding 17,720 48,758 - -Rentalincomefrominvestmentproperty 4,687 5,412 - -Interestincome - - 334 493Managementfees - - - 500
80,476 170,963 334 993
8. COST OF SALES
Costofsalesrepresentscostofgoodssold,costrecognisedbyreferencetothestageofcompletionmethod,costofservicesrenderedinrelationtoshiprepairandshipbuildingaswellasdirectoperatingexpensesofinvestmentproperty.
9. OTHER INCOME
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
Includedinotherincomeare: Gainondisposalofasubsidiarycompany(Note22(b)) 13 1,322,346 - -Gainonforeignexchange:-realised 118 580 - --unrealised 77 15,882 - -Gainondiposalofproperty,plantandequipment 113 - 39 -Gainondisposalofassociatecompany - 1,061 - -Interestincome 2,139 4,093 - 16Rentalincome 2,327 1,406 - -Writebackofprovisionfordoubtfuldebts 675 18,744 468 -Reversalofwrite-downofinventories(Note25) 16 34 - -Reversalofprovisionforwarranties 1,344 - - -Fairvalueadjustmentofinvestmentproperty(Note18) 534 - 534 -Debtwaiverbycreditors 9,140 - 64 -
�2 �3
NotestoTheFinancialStatements
�2 �3
10. FINANCE COSTS
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
Interestexpenseon: Termloans 35,485 96,269 13,758 21,188Overdraft 2,124 2,746 - -Hirepurchaseandfinanceleaseliabilities 418 1,540 2 9Advancesfromassociatecompany 1,770 - - -Bankers’acceptance 307 439 - -Others - 32 - -
40,104 101,026 13,760 21,197
11. LOSS BEFORE TAX
Thefollowingamountshavebeenincludedinarrivingatlossbeforetax:
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
Staffcosts(Note12) 13,935 19,278 - 84Directors’remuneration:-ExecutiveDirectors(Note13) 18 1,675 18 347-Non-ExecutiveDirectors(Note13) 481 365 106 93Auditors’remuneration: -statutoryaudit 173 268 10 9-otherservices 290 40 250 21Amortisationofdeferredassets(Note20) - 3,951 - -Baddebtswrittenoff 227 22,751 - -Cancellationofdividendbysubsidiarycompanies - - 4,000 12,380Depreciationofproperty,plantandequipment(Note17) 4,098 18,637 132 73Depositwrittenoff - 1,000 - -Deferredassetswrittenoff(Note20) - 63,217 - -Deferredexpenditurewrittenoff(Note21) - 143,486 - -Goodwillwrittenoff(Note19) 15 203,496 - -Interestwaivertosubsidiarycompanies - - - 19,020Inventorieswrittendown 27 3,716 - -Impairmentofinvestmentsinsubsidiarycompanies(Note22) - - 30,456 262,726Impairmentofotherinvestments(Note24) 479 1,128 445 445Impairmentofproperty,plantandequipment(Note17) 36,835 35,177 - -Lossondiposalofproperty,plantandequipment - 333 - -Lossonforeignexchange: -realised 277 257 - --unrealised 92 94 - -OffshorePatrolVesselsexpenditurewrittenoff - 455,341 - -Operatingleases: -minimumleasepaymentsforlandandbuildings 638 1,357 - --minimumleasepaymentsforplantandequipment 587 3,454 - -Property,plantandequipmentwrittenoff 377 2,441 5 -
NotestoTheFinancialStatements
�� �5�� �5
11. LOSS BEFORE TAX (CONT'D)
Thefollowingamountshavebeenincludedinarrivingatlossbeforetax:
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
Provisionfordoubtfuldebts 1,445 274,980 - 121,510Provisionforforeseeablelossinrelationtofreeholdlandofasubsidiarycompany(Note37) 6,500 - - -Provisionforrestructuringcosts(Note37) 3,606 - 3,606 -Provisionforwarrantycosts(Note37) 148 410 - -ProvisionforOffshorePatrolVessel("OPV")costescalation - 606,899 - -
In prior year, a former subsidiary company wrote off the design and integrated logistics support system costsamountingtoRM455.3millionduetosignificantuncertaintyoveritsrealisationinthefutureandtherewouldbenoeconomicsbenefitstobeobtainedthereafter.Inaddition,aprovisionofRM606.9millionwasalsomadeinviewofthepossiblecostescalationinrelationtotheOPVproject.
OPVexpenditurecomprisedalldirectcostsandotherrelatedcostscommontotheconstructionofpatrolvessels,includinginterestsfromfinancing,depreciationandtechnicaladvisoryfeesinrelationtotheprivatisationagreementwiththeGovernmentofMalaysiafortheconstructionof27unitsofOPV,ofwhich6unitshadbeensecuredandremaining21unitswastobeawardedbytheGovernment.
12. STAFF COSTS (EXCLUDING DIRECTORS’ REMUNERATION)
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
Wagesandsalaries 9,808 13,536 - 67Socialsecuritycontribution 80 90 - 1Contributionstodefinedcontributionplan 1,089 1,424 - 8Terminationbenefits 202 350 - -Others 2,756 3,878 - 8
13,935 19,278 - 84
�� �5
NotestoTheFinancialStatements
�� �5
13. DIRECTORS’ REMUNERATION
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
ExecutiveDirectors’remuneration:Fees 12 49 12 43Otheremoluments 6 1,626 6 304
18 1,675 18 347
Non-ExecutiveDirectors’remuneration(Note11): Fees 65 39 58 39Otheremoluments 416 326 48 54
481 365 106 93TotalDirectors’remuneration: 499 2,040 124 440Estimatedmoneyvalueofbenefits-in-kind 23 128 - -
TotalDirectors’remunerationincludingbenefits-in-kind 522 2,168 124 440 Executive: Salariesandotheremoluments 6 1,529 6 304Fees 12 49 12 43Contributionstodefinedcontributionplan - 96 - -Estimatedmoneyvalueofbenefits-in-kind - 111 - -
18 1,785 18 347Non-Executive: Salariesandotheremoluments* 416 327 48 54Fees 65 39 58 39Estimatedmoneyvalueofbenefits-in-kind** 23 17 - -
522 2,168 124 440
* IncludedintheamountisRM371,895(2005:RMNil),beingsalary,EPFcontributionandallowancepaidtoaDirectorwhowasre-designatedfromanExecutiveDirectortoaNon-ExecutiveDirectorduringthefinancialyear.
** Included in the amount is RM23,467 (2005: RM Nil) in relation to a Director who was re-designated from anExecutiveDirectortoaNon-ExecutiveDirectorduringthefinancialyear.
ThenumberofDirectorsoftheCompanywhosetotalremunerationduringthefinancialyearfellwithinthefollowingbandsisanalysedbelow:
Number of directors
2006 2005 RM’000 RM’000
ExecutiveDirectors: RM0-RM50,000 1 1RM150,001-RM200,000 - 1RM450,001-RM500,000 - 2RM600,001-RM650,000 - 1
Non-Executive: RM0-RM50,000 3 2RM50,001-RM100,000 1 1RM250,001-RM300,000 - 1RM400,001-RM450,000 1 -
14. INCOME TAX EXPENSE
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
Current income tax: Malaysianincometax -currentyear 1,086 1,851 - --prioryear 1,692 (51) - (226)
2,778 1,800 - (226)
Non-Malaysianincometax -currentyear 212 92 - -
2,990 1,892 - (226)Deferred tax expense Originationandreversaloftemporarydifferences 353 (1,657) - (7,830)
3,343 235 - (8,056)
Domesticcurrentincometaxiscalculatedatthestatutorytaxrateof28%(2005:28%)oftheestimatedassessableprofit for the year. The domestic statutory tax rate will be reduced to 27% from the current year’s rate of 28%,effectiveyearofassessment2007andto26%effectiveyearofassessment2008.
CertainsubsidiariesoftheCompanyqualifyforthereducedstatutorytaxrateof20%onthefirstRM500,000(2005:RM500,000)ofestimatedassessableprofitduringthefinancialyear.
Areconciliationofincometaxexpense/(benefit)applicabletoprofitbeforetaxationatthestatutoryincometaxratetoincometaxexpense/(benefit)attheeffectiveincometaxrateoftheGroupandoftheCompanyisasfollows:
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
Lossbeforetaxation (89,914) (619,464) (52,757) (440,756) Incometaxatrateof28%(2005:28%) (25,176) (173,450) (14,772) (123,412)Differenttaxratesinothercountry (39) 64 - -Effectofreducedstatutoryrateon thefirstRM500,000assessableprofits (221) (172) - -Expensesnotdeductiblefortaxpurposes 13,649 208,241 14,897 115,823Incomenotsubjecttotax (2,468) (47,566) (282) (143)Utilisationofpreviouslyunrecognisedtaxlosses (316) - - -Deferredtaxassetsnotrecognisedinrespectofcurrentyear’staxlossesandunabsorbed capitalallowances 16,222 13,169 157 (98)Under/(over)provisionof taxexpenseinprioryears 1,692 (51) - (226)
Incometaxexpense 3,343 235 - (8,056) Taxsavingsduringthefinancialyeararisingfrom: Utilisationofpreviouslyunrecognisedtaxlosses (316) - - -
NotestoTheFinancialStatements
�� �7
NotestoTheFinancialStatements
15. LOSS PER SHARE
BasiclosspersharehasbeencalculatedbydividinglossfortheyearattributabletoordinaryequityholdersoftheCompanyofRM94.218million(2005:RM533.49million(restated))bytheweightedaveragenumberofsharesinissueduringthefinancialyearof174.083million(2005:174.083million).
Thecomparativesbasiclosspersharehasbeenrestatedtotakeintoaccounttheeffectofprioryearadjustments(Note47)onlossforthatyear.
16. DIVIDEND PER SHARE
Therewasnodividenddeclared,recommendedorpaidforthefinancialyearended31December2006(2005:Nil).
17. PROPERTY, PLANT AND EQUIPMENT
Equipment, fittings, renovation, Capital Land and Plant and vehicles and work in buildings machinery others progress TotalGroup RM’000 RM’000 RM’000 RM’000 RM’000
Cost or valuation At1January2005 Atcost 145,386 38,471 206,840 243,053 633,750Atvaluation:1991 13,096 - - - 13,096 :1997 200 - - - 200
158,682 38,471 206,840 243,053 647,046Additions 3 111 4,035 28,812 32,961Disposals - (73) (6,431) (1) (6,505)Writtenoff - (49) (2,391) (59) (2,499)Disposalofsubsidiarycompany (50,501) (31,746) (179,536) (270,643) (532,426)Exchangedifferences (24) (3) (7) (6) (40) At31December2005/1January2006 108,160 6,711 22,510 1,156 138,537Additions - 3,758 1,081 116 4,955Disposals (6) (92) (1,566) - (1,664)Writtenoff (365) (81) (373) (149) (968)Reclassification - 58 (58) - -
At31December2006 107,789 10,354 21,594 1,123 140,860 Representing: Atcost 94,693 10,354 21,594 1,123 127,764Atvaluation:1991 13,096 - - - 13,096 At31December2006 107,789 10,354 21,594 1,123 140,860
�� �7
17. PROPERTY, PLANT AND EQUIPMENT (CONT'D)
Equipment, fittings, renovation, Capital Land and Plant and vehicles and work in buildings machinery others progress TotalGroup (cont'd) RM’000 RM’000 RM’000 RM’000 RM’000
Accumulated depreciation and impairment At1January2005 29,490 22,236 101,043 - 152,769Depreciationchargefortheyear: 4,410 2,506 13,868 - 20,784
Recognisedinprofit orloss(Note11) 4,410 1,054 13,173 - 18,637Capitalisedinconstruction costs(Note27) - 1,442 - - 1,442CapitalisedinOffshorePatrol Vesselsexpenditure(Note27) - 10 695 - 705
Impairmentlossrecognised inprofitorloss(Note11) 12,800 1,050 21,327 - 35,177Disposals - (39) (3,486) - (3,525)Writtenoff - (35) (23) - (58)Reversalondisposalof subsidiarycompany -impairmentloss (12,800) (1,050) (21,327) - (35,177)-depreciation (3,921) (18,864) (95,087) - (117,872)Exchangedifferences (4) (2) (5) - (11)
At31December2005/ At1January2006 29,975 5,802 16,310 - 52,087Depreciationcharge fortheyear(Note11) 2,366 172 1,560 - 4,098Impairmentlossrecognised inprofitorloss(Note11) 36,835 - - - 36,835Disposals (2) (91) (1,068) - (1,161)Writtenoff (231) (78) (282) - (591)Reclassification - (46) 46 - -Exchangedifferences (3) (1) (5) - (9)
At31December2005 68,940 5,758 16,561 - 91,259 Representing:Accumulateddepreciation 32,105 5,758 16,561 - 54,424Impairmentloss 36,835 - - - 36,835
At31December2006 68,940 5,758 16,561 - 91,259 Net carrying amount At31December2006 38,849 4,596 5,033 1,123 49,601 At31December2005 78,185 909 6,200 1,156 86,450
NotestoTheFinancialStatements
�� �9
17. PROPERTY, PLANT AND EQUIPMENT (CONT'D)
Analysisoflandandbuildings:- Long term leasehold Buildings, land and Short term jetties, reclaimed leasehold Yard slipways land land development and roads TotalGroup (Cont'd) RM’000 RM’000 RM’000 RM’000 RM’000
Cost or valuationAt1January2005Atcost 2,853 - 101,193 41,340 145,386Atvaluation :1991 13,096 - - - 13,096 :1997 - 200 - - 200
15,949 200 101,193 41,340 158,682Additions - - 3 - 3Disposalofsubsidiarycompany - - (50,501) - (50,501)Exchangedifferences - - - (24) (24)
At31December2005/1January2006 15,949 200 50,695 41,316 108,160Disposals - - - (6) (6)Writtenoff - (200) - (165) (365)Reclassification - - 5,550 (5,550) -
At31December2006 15,949 - 56,245 35,595 107,789
Representing: Atcost 2,853 - 56,245 35,595 94,693Atvaluation:1991 13,096 - - - 13,096
At31December2006 15,949 - 56,245 35,595 107,789
Accumulated depreciation and impairmentAt1January2005 1,786 200 16,271 11,233 29,490Depreciationchargefortheyear 259 - 2,804 1,347 4,410Impairmentlossrecognised inprofitorloss - - 12,800 - 12,800Reversalondisposalofsubsidiarycompany-impairmentloss - - (12,800) - (12,800)-depreciation - - (3,921) - (3,921)Exchangedifferences - - - (4) (4)
At31December2005/At1January2006 2,045 200 15,154 12,576 29,975Depreciationchargefortheyear 192 - 1,168 1,006 2,366Impairmentlossrecognisedinprofitorloss 969 - 28,268 7,598 36,835Disposals - - - (2) (2)Writtenoff - (200) - (31) (231)Reclassification - - 1,943 (1,943) -Exchangedifferences - - - (3) (3)
At31December2005 3,206 - 46,533 19,201 68,940
Representing: Accumulateddepreciation 2,237 - 18,265 11,603 32,105Impairmentloss 969 - 28,268 7,598 36,835
At31December2006 3,206 - 46,533 19,201 68,940 Net carrying amount At31December2006 12,743 - 9,712 16,394 38,849
At31December2005 13,904 - 35,541 28,740 78,185
�� �9
NotestoTheFinancialStatements
NotestoTheFinancialStatements
70 7170 71
17. PROPERTY, PLANT AND EQUIPMENT (CONT'D)
Analysisofequipment,fittings,renovation,vehiclesandothersareasfollows: Office Equipment, fittings, renovation, Barges vehicles and motor Equipment and others vehicles TotalGroup (Cont'd) RM’000 RM’000 RM’000 RM’000
Cost At1January2005 33,712 57,639 115,489 206,840Additions 2,974 704 357 4,035Disposals (8) (43) (6,380) (6,431)Writtenoff - (2,391) - (2,391)Disposalofsubsidiarycompany (26,836) (47,749) (104,951) (179,536)Reclassification 65 (65) - -Exchangedifferences - (6) (1) (7)
At31December2005/1January2006 9,907 8,089 4,514 22,510Additions 4 415 662 1,081Disposals (47) (78) (1,441) (1,566)Writtenoff (109) (56) (208) (373)Reclassification - (58) - (58)
At31December2006 9,755 8,312 3,527 21,594
Accumulated depreciation and impairment At1January2005 25,196 27,454 48,393 101,043Depreciationchargefortheyear: 1,711 5,401 6,756 13,868
Recognisedinprofitorloss 1,711 4,706 6,756 13,173CapitalisedinOffshorePatrol Vesselsexpenditure - 695 - 695
Impairmentlossrecognisedinprofitorloss - - 21,327 21,327Disposals (5) (30) (3,451) (3,486)Writtenoff - (23) - (23)Reversalondisposalofsubsidiarycompany: -impairmentloss - - (21,327) (21,327)-depreciation (19,982) (26,625) (48,480) (95,087)Exchangedifferences - (4) (1) (5)
At31December2005/At1January2006 6,920 6,173 3,217 16,310Depreciationchargefortheyear 551 661 348 1,560Disposals (32) (57) (979) (1,068)Writtenoff (26) (48) (208) (282)Reclassification - (66) 112 46Exchangedifferences - (3) (2) (5)
At31December2005 7,413 6,660 2,488 16,561Net carrying amount At31December2006 2,342 1,652 1,039 5,033
At31December2005 2,987 1,916 1,297 6,200
70 71
NotestoTheFinancialStatements
70 71
17. PROPERTY, PLANT AND EQUIPMENT (CONT'D)
Furniture, fittings, tools, Short term equipment Barges leasehold and and motor land renovation vehicles TotalCompany RM’000 RM’000 RM’000 RM’000
CostAt1January2005Atcost - 26 706 732Atvaluation:1997 200 - - 200
At31December2005/1January2006 200 26 706 932Disposals - - (498) (498)Writtenoff (200) (26) - (226)
At31December2006 - - 208 208Accumulated depreciation and impairment At1January2005 200 18 394 612Depreciationchargefortheyear(Note11) - 3 70 73
At31December2005/1January2006 200 21 464 685Depreciationchargefortheyear(Note11) - - 132 132Disposals - - (388) (388)Writtenoff (200) (21) - (221)
At31December2006 - - 208 208
Net carrying amountAt31December2006 - - - -
At31December2005 - 5 242 247
(a) Longtermleaseholdland,reclaimedlandandbuildingandshorttermleaseholdlandoftheGroupwererevaluedbytheDirectorsin1991and1997respectivelybasedonvaluationcarriedoutbyindependentprofessionalvaluersbased on existing use basis and has not been revalued since. The Group does not adopt a policy of regularrevaluation as required by FRS116, Property, Plant and Equipment and has availed itself to the transitionalprovisionunderIAS16(Revised):Property,PlantandEquipment.
(b) A subsidiary of the Group, included within construction and shipbuilding segment, has engaged a firm ofprofessionalstocarryoutareviewoftherecoverableamountofitsproperty,plantandequipmentduringthefinancialyearinrelationtotheGroup’sproposedrestructuringscheme.
ThereviewledtoarecognitionofanimpairmentlossofRM36.8million(includedin“OtherExpenses”)asdisclosedinNote11.Therecoverableamountwasbasedoncomparisonmethod,wherebytherecenttransactionsandaskingpricesofsimilarpropertiesinthelocalityareanalysedforcomparisonpurposeswithadjustmentsmadefordifferencesinlocation,size,tenure,titlerestrictionsifanyandanyotherrelevantcharacteristicstoarriveatthemarketvalue,andthecostmethodofvaluationentailsseparatevaluationsofthelandandbuildingstoarriveatthemarketvalueofthesubjectproperty.
Thelandisvaluedbyreferencetotransactionsofsimilarlandsinthesurroundingwithadjustmentsmadefordifferencesinlocation,terrain,sizeandshapeoftheland,tenure,titlerestrictions, ifanyandotherrelevantcharacteristics. The buildings are valued by reference to their depreciated replacement costs, that is, thereplacementcostnewlessanappropriateadjustmentfordepreciationorobsolescencetoreflecttheexistingconditionofthebuildingsatthedateofvaluations.
NotestoTheFinancialStatements
72 7372 73
17. PROPERTY, PLANT AND EQUIPMENT (CONT'D)
Thelandandbuildingvaluesarethensummatedtoarriveatthemarketvalueofthesubject.
IntheopinionoftheDirectors,duetoabsenceofhistoricalrecords,unreasonableexpenseswouldbeincurredinobtainingtheoriginalcostsoftheassetsvalueinthatfinancialyear.Hence,theGroupisnotabletoprovidethecarryingamountsoftherevaluedlandandbuildinghadtheybeencarriedunderthecostmodel.
(c) Thelongtermleaseholdlandandthereclaimedlandhaveanunexpiredleaseperiodofmorethan50years.
(d) During the financial year, the Group acquired property, plant and equipment with an aggregate cost of RM4.95million (2005:RM32.96million)ofwhichRM0.13million (2005:RMNil)wasacquiredbymeansofhirepurchase.
(e) Netcarryingamountsofproperty,plantandequipmentheldunderhirepurchaseandfinanceleasearrangementsareasfollows:
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
Bargesandmotorvehicles 738 867 - 209
(f) Net carrying amounts of property, plant and equipment held pledged as securities for borrowings are asfollows:
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
Plantandmachinery 126 143 - -Leaseholdlandandbuildings 10,984 11,051 - -Yarddevelopment 9,714 35,541 - -Buildings,jetties,slipwaysandroads 13,269 25,409 - -
34,093 72,144 - -
DetailsofthetermsandconditionsofthehirepurchaseandfinanceleasearrangementsaredisclosedinNote35.
72 73
NotestoTheFinancialStatements
72 73
18. INVESTMENT PROPERTIES
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
At1January 89,686 70,000 2,566 -Prioryearadjustments(Note47) - 19,686 - 2,566
89,686 89,686 2,566 2,566EffectsofadoptingFRS140 (26,620) - - -Fairvalueadjustments(Note11) 534 - 534 -
63,600 89,686 3,100 2,566Reclassifiedasheldforsale (57,100) - (3,100) -
6,500 89,686 - 2,566 Comprise: Buildings - 52,800 - -Freeholdland 6,500 34,320 - -Leaseholdland - 2,566 - 2,566
6,500 89,686 - 2,566
ExceptforthefreeholdlandamountingtoRM6.5million(2005:RM17.1million),theaboveinvestmentpropertieshavebeenpledgedtolicensedbankstosecurethetermloans2,3,5andrevolvingcreditfacilityasdisclosedinNotes33and34tothefinancialstatements.
19. INTANGIBLE ASSETS
Negative Goodwill goodwill Total RM’000 RM’000 RM’000
Cost
At1January2005 206,393 (49,128) 157,265De-recognisedondisposalsubsidiarycompany (2,866) 49,112 46,246Writtenoff(Note11) (203,496) - (203,496)
At31December2005/At1January2006 31 (16) 15Writtenoff(Note11) (31) 16 (15)
At31December2006 - - -
TheDirectorshavecarriedoutareviewoftherecoverableamountoftheremaininggoodwillasat31December2006basedonitsvalueinuseanddeterminedthattherecoverableamountisRMNil,whichresultedintheamountofgoodwillbeingwrittenoff.
NotestoTheFinancialStatements
7� 757� 75
20. DEFERRED ASSETS
Group RM’000
Cost At1January2005 91,862Writtenoff(Note11) (91,862)
At31December2005 -
Accumulated amortisation At1January2005 24,694Chargefortheyear(Note11) 3,951Writtenoff(Note11) (28,645)
At31December2005 -
DeferredassetsrefertotheamountpaidfortheacquisitionoftheRightsundertheOffshorePatrolVesselContractsplusinterestexpensecapitaliseduntiltheOffshorePatrolVesselContractsstartedandisbeingamortisedequallyover231/4financialyearscommencingOctober1998.
Inprioryear,theamountwasfullywrittenoffastheDirectorswereoftheopinionthattheacquisitionoftheRightsnolongerexist,subsequenttothedisposalofasubsidiarycompany.
21. DEFERRED EXPENDITURE
Group RM’000
At1January2005 143,839Additions 382Reclassification (735)Writtenoff(Note11) (143,486)
At31December2005 -
Deferredexpenditurecompriseofexpenditureincurredforthepurposeofsecuringfutureprojects.Theexpenditurewouldbechargedtotheprojectaccountuponthesuccessfulprocurement oftheprojectconcerned.Shouldtheprojectbeaborted,therelatedexpenditurewillbechargedtotheincomestatementinthefinancialyearinwhichsuchdecisionismade.
Inprioryear,thecostswerewrittenoffduetosignificantuncertaintyoveritsrealisationinthefutureandtherewouldbenoeconomicsbenefitstobeobtainedthereafter.
7� 75
NotestoTheFinancialStatements
7� 75
22. INVESTMENTS IN SUBSIDIARY COMPANIES
Company
2006 2005 RM’000 RM’000
Unquotedshares,atcost 301,867 298,867Less:Accumulatedimpairmentlosses(Note11) (293,182) (262,726)
At31December2005 8,685 36,141
The cost of shares in a subsidiary company which are pledged to the financial institutions for banking facilitiesgrantedtotheCompanyandacorporateshareholderareRM102,087,798(2005:RM102,087,798)andRM6,380,487(2005:RM6,380,487)respectively.
Detailsofthesubsidiaries,allofwhichwereincorporatedinMalaysiaunlessotherwisestated,areasfollows:
Proportion of Ownership Interest Name of Subsidiaries 2006 2005 Principal Activities % %
PSCAssetHoldings 100 100 PropertyinvestmentandmanagementSdnBhd#
PenangShipbuilding 100 100 Heavy engineering construction, shiprepair andandConstruction shipbuilding,contractorandacommissionedagentSdnBhd#
SedapDevelopment 100 100 Propertydevelopment SdnBhd# SedapTrading 100 100 CeasedoperationsSdnBhd# EagacorpMarine 51 51 DormantSdnBhd# AsiaCoins - 100 DormantSdnBhd# PSCPetroleum 100 - DormantSdnBhd# Held by PSC Asset Holdings Sdn Bhd DesaPSC 100 100 ConstructionandbuildingcontractorSdnBhd#
NotestoTheFinancialStatements
7� 777� 77
22. INVESTMENTS IN SUBSIDIARY COMPANIES (CONT'D) Detailsofthesubsidiaries,allofwhichwereincorporatedinMalaysiaunlessotherwisestated,areasfollows:
Proportion of Ownership Interest Name of Subsidiaries 2006 2005 Principal Activities (cont'd) % %
Held by Penang Shipbuilding & Construction Sdn Bhd PSCTemaShipyard 60 60 Ship repairing, engineering and metalled activities,Limited# andfabricationandotheractivitiesinconnection(Incorporatedin therewithRepublicofGhana)
DominionDefence& 100 100 SupplyofequipmentandmachineryIndustriesSdnBhd# PerstimIndustries 99.87 99.87 InvestmentholdingSdnBhd#
PSCDefenceTechnologies 100 100 InvestmentholdingSdnBhd#
MalaysianHeavy 60 60 InvestmentholdingIndustrialGroupSdnBhd# PSCNavaltech 100 100 Designing, planning, specifications drawing forSdnBhd# constructionsandotherrelatedactivities UMCEngineering 51.3 51.3 CeasedoperationsSdnBhd# TenagaPSC 100 100 CeasedoperationsSdnBhd# PSCCrane-Systems 100 100 DormantSdnBhd# PSCWeldingServices 100 90 DormantSdnBhd# PSCMarine&Shipping 100 100 CeasedoperationsSdnBhd# PenangShipbuilding 100 100 Dormant&Construction(UK)Limited##(IncorporatedinUnitedKingdom)
PSCShipbuilding 100 100 Dormant&EngineeringSdnBhd# MarineTechnology 100 100 DormantIndustrialParkSdnBhd#
7� 77
NotestoTheFinancialStatements
7� 77
22. INVESTMENTS IN SUBSIDIARY COMPANIES (CONT'D) Detailsofthesubsidiaries,allofwhichwereincorporatedinMalaysiaunlessotherwisestated,areasfollows:
Proportion of Ownership Interest Name of Subsidiaries 2006 2005 Principal Activities (cont'd) % %
Held by Penang Shipbuilding & Construction Sdn Bhd (cont'd)
PSCMarineTechnology 100 100 DormantAcademySdnBhd#
PSCSrijeluda 100 100 DormantSdnBhd# MarineVenture 100 100 DormantCapitalSdnBhd#
PSCMiri 100 100 DormantSdnBhd# AlphaShanghai 100 100 Dormant(M)SdnBhd# Frigate-In-Support 100 100 DormantServicesSdnBhd# Held by Dominion Defence & Industries Sdn Bhd BurlingtonCapital 60 60 DormantSdnBhd# BurlingtonEngineering 60 60 Dormant&ConstructionSdnBhd# BurlingtonPromotions 100 100 Dormant&PublicationsSdnBhd# BurlingtonPlantations 100 100 DormantSdnBhd# Held by PSC Defence Technologies Sdn Bhd AeromarineMaintenance 70 70 Marketing and distributing Exocet Weapon SystemServicesSdnBhd#
AtlasDefence 70 70 Supply of electronics and system technology inTechnologySdnBhd# relationtotheshippingandmarineindustry PSCBoforsDefence 51 51 Providing,supplyingandservicingBOFORSweaponsSdnBhd# systems
NotestoTheFinancialStatements
7� 797� 79
22. INVESTMENTS IN SUBSIDIARY COMPANIES (CONT'D) Detailsofthesubsidiaries,allofwhichwereincorporatedinMalaysiaunlessotherwisestated,areasfollows:
Proportion of Ownership Interest Name of Subsidiaries 2006 2005 Principal Activities (cont'd) % %
Held by PSC Defence Technologies Sdn Bhd (cont'd)
NavalandDefence 100 100 Design, manufacture, supply, integrate serviceCommunication and maintenance repair and overhaul of theSystemSdnBhd# communicationsystemsandequipment
C3ISystems 100 100 CeasedoperationsSdnBhd# IntegratedNavigation 100 100 CeasedoperationsandDefenceSystemsSdnBhd#
Held by PSC Marine & Shipping Sdn Bhd
JohorRiauFerryServices 100 100 DormantSdnBhd## AuditedbyfirmsotherthanErnst&Young
## Companywhichisnotrequiredbylegislationtobeauditedinthecountryofincorporation.ManagementfinancialstatementshavebeenusedforconsolidationpurposesandtheDirectorsareoftheopinionthatitsresultsareimmaterialtotheGroup.
7� 79
NotestoTheFinancialStatements
7� 79
22. INVESTMENTS IN SUBSIDIARY COMPANIES (CONT'D)
(a) Acquisition of subsidiary companies
Inprioryear,theeffectofacquisitionofC3ISystemsSdnBhd("C3I"),IntegratedNavigationAndDefenceSystemsSdnBhd("INDS")andAsiaCoinsSdnBhd("AC")onthefinancialresultsoftheGroupwereasfollows:-
2005 RM’000
Revenue 1,307Costofsales (1,095)
Grossprofit 212Administrativeexpenses (15)Otherexpenses (1,433)
Lossbeforetax (1,236)IncreaseinGroup’snetlossfortheyear (1,236)
In prior year,the effect of acquisition of C3I, INDS and AC on the financial position of the Group were asfollows:-
Fair value recognised on acquisition
RM’000
Amountduefromrelatedcompany 30,053Cashandbankbalances 50
30,103
Borrowing (30,000)Tradepayables (459)Duetocustomersoncontract (23)Otherpayables (1,064)
(31,546)
Netliabilitiesasatfinancialyearend (1,443)
IncreaseinGroup’snetliabilities (1,443)
Therewerenoacquisitions in thefinancialyearended31December2006andsubsequent to31December2006.
NotestoTheFinancialStatements
�0 �1�0 �1
22. INVESTMENTS IN SUBSIDIARY COMPANIES (CONT'D)
(b) Disposals of subsidiary companies
On17April2006,ACceasedtobeawholly-ownedsubsidiaryoftheCompanysubsequenttothesubscriptionofthenewallotmentofsharesinACbyBousteadNavalShipyardSdnBhd("BNS")(formerlyknownasPSC-NavalDockyardSdnBhd),resultinginthedilutionoftheCompany’seffectiveinterestfrom100%to0.20%.Thesubsidiarywaspreviouslyreportedunderotheroperationssegment.
TheeffectofthedisposalofAConthefinancialresultsoftheGrouptothedateofdisposalwereasfollows(2005:disposalofBNS):-
2006 2005 RM’000 RM’000
Revenue - 85,604Costofsales - (101,157)
Grossprofit - (15,553)Otherincome - 20,389Administrativeexpenses - (939)Otherexpenses - (1,384,726)
Operatingloss - (1,380,829)Financecosts - (30,255)
Lossbeforetax - (1,411,084)Incometaxexpense - (147)
Lossfortheyear - (1,411,231)Minorityinterests - 87,095
- (1,324,136)
TheeffectofthedisposalofAConthefinancialpositionoftheGroupwereasfollows(2005:disposalofBNS):-
2006 2005 RM’000 RM’000
Property,plantandequipment - 379,377Inventories - 13,489Tradeandotherreceivables 30,000 167,781Taxrecoverable - 3,975Cashandbankbalances - 195,008
30,000 759,630
Tradeandotherpayables (13) (1,014,009)Netduetocustomersoncontract - (197,753)Borrowings (30,000) (547,229)Minorityinterests - (241)
(30,013) (1,759,232)
�0 �1
NotestoTheFinancialStatements
�0 �1
22. INVESTMENTS IN SUBSIDIARY COMPANIES (CONT'D)
(b) Disposals of subsidiary companies (Cont'd)
2006 2005 RM’000 RM’000
Shareofnetliabilities (13) (999,602)Goodwillonconsolidation - (46,246)Amountaccountedforasassociatecompany - 53,579Shareofpost-acquisitionlossofassociatecompany - (53,579)
(13) (1,045,848)Gainondisposalofsubsidiarycompany(Note9) 13 1,322,346
Proceedsfromdisposalofsubsidiarycompany - 276,498Less:Set-offagainsttermloan - (276,498)Less:Cashandcashequivalentsdisposed - (2,782)
Netcashoutflowsfromdisposalofsubsidiarycompany - (2,782)
Subsequenttoyearend,theGrouphasdisposeditsentireequityinterestinawholly-ownedsubsidiary,Frigate-In-SupportServicesSdnBhdforacashconsiderationofRM2.00.Thedisposalwouldnothaveanymaterialefectontheearnings,netassetsandsharecapitaloftheGroupandoftheCompanyforthefinancialyearended31December2006.
Forthefinancialyearended31December2006,thefinancialstatementsofthefollowingsubsidiarycompanieswerecommentedasfollows:
(i) PenangShipbuilding&ConstructionSdnBhd
Withoutqualifyingtheiropinion,theauditorsraisedconcernabouttheCompany’sabilitytocontinueasgoingconcerninviewoftherecurringlossesandnetcapitaldeficiencyasat31December2006.
The ability of the Company to continue as a going concern is dependent on the success of the approvaland implementation of the proposed restructuring scheme (as disclosed in Note 6 to the financialstatements),profitabilityandpositivecashflowgeneratedfromfutureoperationsandfinancialsupportoftheshareholders.
(ii) SedapDevelopmentSdnBhd
Withoutqualifyingtheiropinion,theauditorsraisedconcernabouttheCompany’sabilitytocontinueasgoingconcerninviewoftherecurringlossesandnetcapitaldeficiencyasat31December2006.TheCompanyhasagreednottodemandrepaymentoftheamount(equivalenttothenetcapitaldeficiency)duefromthesubsidiaryduringthenexttwelvemonthsfrom31December2006.
(ii) PSCTema&ShipyardLimited
Withoutqualifyingtheiropinion,theauditorsraisedconcernaboutthetitletocertainlandedpropertieswhichweretransferredtothecompanyunderasaleandpurchaseagreementwiththeDivestitureImplementationCommittee(“DIC”)thatremainstobeperfectedbythecompany,pendingthefinalpaymentofthepurchaseconsiderationtoDIC.
NotestoTheFinancialStatements
�2 �3�2 �3
23. INVESTMENTS IN ASSOCIATE COMPANIES (CONT'D)
Group Company
2006 2005 2006 2005 RM’000 RM’000 RM’000 RM’000
Unquotedshares,atcost 54,839 54,839 1,250 1,250 Shareofpostacquisitionreserves (54,839) (54,829) - -
At31December2005 - 10 1,250 1,250 Less:Accumulatedimpairmentloss - - (1,250) (1,250)
At31December2005 - 10 - -
Detailsoftheassociates,allofwhichwereincorporatedinMalaysiaunlessotherwisestated,areasfollows:
Proportion of Ownership Interest 2006 2005 Principal Activities Held by the Company: % %
Tohwa-SedapFood 50.00 50.00 UnderliquidationIndustrySdnBhd
Held through subsidiaries:
BousteadNavalShipyard 20.77 20.77 Repair and maintenance of naval and merchantSdnBhd(formerlyknown ships,equipmentandsystems, fabricationofsteelsasPSC-NavalDockyard structuresandshipbuildingSdnBhd) PenangShipbuildingand 48.80 48.80 InvestmentholdingConstructionHolding(Thailand)Limited(IncorporatedinThailand) ThefinancialstatementsoftheaboveassociatesarecoterminouswiththoseoftheGroup.
Thesummarisedfinancialinformationoftheassociatesareasfollows:
2006 2005 RM’000 RM’000
Assets and liabilities Currentassets 368,666 467,260 Non-currentassets 609,510 381,624
Totalassets 978,176 848,884
Currentliabilities 1,510,574 1,835,709 Non-currentliabilities 4,000 6,509
Totalliabilities 1,514,574 1,842,218 Results Revenue 117,875 85,731 Profit/(loss)fortheyear 456,936 (1,411,228)
�2 �3
NotestoTheFinancialStatements
�2 �3
23. INVESTMENTS IN ASSOCIATE COMPANIES (CONT'D)
TheGrouphasdiscontinuedtherecognitionofitsshareoflossesofBousteadNavalShipyardSdnBhd(formerlyknownasPSC-NavalDockyardSdnBhd)because itsshareof lossesof thisassociatehasexceededtheGroup’sinvestmentintheassociatecompany.TheGroup’sunrecognisedshareofresultsofthisassociatecompanyforthecurrentyearandcumulativelywerenetprofitofRM94.9million(2005:netlossofRM179.4million)andnetlossofRM84.5million(2005:netlossofRM179.4million)respectively.
Anyfutureshareofprofitsinassociatecompanieswouldbeutilisedforoffsetagainsttheunrecognisedcumulativeshareoflossesuntilthebalancehasbecomenil.Thereafter,theGroupwouldonlyrecognisetheshareofprofitsintheconsolidatedincomestatements.
24. OTHER INVESTMENTS
Group Company
2006 2005 2006 2005 RM’000 RM’000 RM’000 RM’000
Unquotedshares,atcost 683 683 - - QuotedsharesinMalaysia 26 26 - - Others 924 924 890 890
At31December2005 1,633 1,633 890 890 Less:Accumulatedimpairmentloss(Note11) (1,607) (1,128) (890) (445)
26 505 - 445
MarketvalueofquotedsharesinMalaysia 17 14 - -
25. INVENTORIES Group
2006 2005 RM’000 RM’000
Cost Rawmaterials - 27 Consumables 49 51 Projectinventories 22 -
71 78 Net realisable value Consumables 2,064 2,801
2,135 2,879
During the financial year, there was a reversal of a write-down of inventories of RM0.02 million (2005: RM0.03million).Thereversalarosefromanincreaseinnetrealisablevalueasaresultofutilisationofinventoriesforcertainprojects.
NotestoTheFinancialStatements
�� �5�� �5
26. TRADE AND OTHER RECEIVABLES
Group Company
2006 2005 2006 2005 RM’000 RM’000 RM’000 RM’000
Trade receivables
Thirdparties 118,411 134,018 - -Associatecompanies 23,432 34,840 - -Retentionsums(Note27) 3,899 5,298 - -
145,742 174,156 - - Less:Provisionfordoubtfuldebts -Thirdparties (111,773) (112,244) - - -Associatecompanies (1,624) (1,318) - -
(113,397) (113,562) - -
Tradereceivables,net 32,345 60,594 - -
Other receivables Amountduefromrelatedparties: Subsidiarycompanies - - 115,080 117,946Associatecompanies 31,249 27,137 - 621
31,249 27,137 115,080 118,567Deposits 1,684 1,718 - -Prepayments 282 451 - -Sundryreceivables 135,239 136,801 19,051 19,032
168,454 166,107 134,131 137,599
Less:Provisionfordoubtfuldebts -Subsidiarycompanies - - (112,010) (112,478) -Associatecompanies (29) - - - -Otherreceivables (135,773) (134,907) (19,032) (19,032)
(135,802) (134,907) (131,042) (131,510)
Otherreceivables,net 32,652 31,200 3,089 6,089
64,997 91,794 3,089 6,089
(a) Credit risk The Group’s primary exposure to credit risk arises through its trade receivables. The Group’s trading terms
with its customers are mainly on credit, except for, where payment in advance is normally required prior tocommencementofnewprojects.Thecreditperiodisgenerallyforaperiodofamonth,extendinguptothreemonthsformajorcustomers.TheGroupseekstomaintainstrictcontroloveritsoutstandingreceivablesandstrivestominimisecreditrisk.Overduebalancesarereviewedregularlybyseniormanagement.
Tradereceivablesarenon-interestbearingexceptforanamountofRM0.95million(2005:RM0.35million)duefromassociatecompanieswhichbearsinterestof8.40%(2005:8.40%)perannum.
�� �5
NotestoTheFinancialStatements
�� �5
26. TRADE AND OTHER RECEIVABLES (CONT'D)
(b) Amount due from related parties
IncludedinamountduefromsubsidiarycompaniesisRM3.1million(2005:RM5.4million)whichbearsinterestof8.00%(2005:8.00%)perannum.Theamountisunsecured,repayableondemandandistobesettledincash.
IncludedinamountduefromassociatecompaniesisRM31.2million(2005:RM30.3million)whichbearsinterestof5.90%(2005:5.90%)perannum.Theamountisunsecured,repayableondemandandistobesettledincash.Subsequenttothefinancialyearend,theentireamountwasfullysettled.
Theotheramountduefromrelatedpartiesarenon-interestbearingandarerepayableondemand.Allrelatedpartiesreceivableareunsecuredandaretobesettledincash.
FurtherdetailsonrelatedpartytransactionsaredisclosedinNote42.
OtherinformationonfinancialrisksofotherreceivablesaredisclosedinNote43.
27. DUE FROM/TO CUSTOMERS ON CONTRACTS
Group
2006 2005 RM’000 RM’000
Constructioncontractcostsincurredtodate 151,799 173,179 Attributableprofit 11,998 5,437
163,797 178,616 Less:Progressbillings (159,888) (174,940)
3,909 3,676
Retentionsumsoncontracts,included withintradereceivables(Note26) 3,899 5,298 Duefromcustomersoncontracts 4,283 3,887 Duetocustomersoncontracts (374) (211)
3,909 3,676
Thecostsincurredtodateonconstructioncontractsincludethefollowingchargesmadeduringthefinancialyear:
Group
2006 2005 RM’000 RM’000
Depreciationofproperty,plantandequipment(Note17) -construction,shipbuildingandshiprepair - 705
-OffshorePatrolVessels - 1,442 Operatinglease:
-minimumleasepaymentforplantandequipment 455 1,093 Staffcosts 633 4,867
Amountofcontractrevenueandcontractcosts recognisedinthefinancialyearareasfollows: Contractrevenue 48,593 164,722
Contractcosts(includedincostsofsales/directcosts) 41,995 178,577
NotestoTheFinancialStatements
�� �7�� �7
28. CASH AND BANK BALANCES Group Company
2006 2005 2006 2005 RM’000 RM’000 RM’000 RM’000
Depositswithlicensedbanks 8,608 4,916 - - Cashonhandandatbanks 9,062 12,634 26 40
17,670 17,550 26 40
DepositswithlicensedbanksamountingtoRM2.3million(2005:RM2.5million)arepledgedforassecuritiesforborrowings(Note33)andperformanceguaranteefacilitiesgrantedtotheGroup.
Forthepurposeofthecashflowstatements,cashandcashequivalentscomprisethefollowingasatthebalancesheetdate:
Group Company
2006 2005 2006 2005 RM’000 RM’000 RM’000 RM’000
Cashandbankbalances 17,670 17,550 26 40 Bankoverdrafts(Note33) (37,531) (34,900) - -
(19,861) (17,350) 26 40 Less:Depositspledged (2,304) (2,525) - -
(22,165) (19,875) 26 40
29. NON-CURRENT ASSETS HELD FOR SALE
Group Company
2006 2005 2006 2005 RM’000 RM’000 RM’000 RM’000
Investmentproperties 57,100 - 3,100 -
On6November2006,awholly-ownedsubsidiary,PSCAssetHoldingsSdnBhdhadenteredintoaSales&PurchaseagreementwithBousteadHoldingsBerhadtodisposethreepiecesoflandtogetherwithbuildingserectedthereon,knownasMenaraPSCIforacashconsiderationofRM54million.
ThesaleissubjecttoapprovalsfromrelevantauthoritiesandshareholdersasdisclosedinNote6tothefinancialstatements.TheapprovalsobtainedtodatearedisclosedinNote46tothefinancialstatements.
UndertheProposedDebtSettlement,theCompany'sleaseholdlandisclassifiedas“CollateralSet-OffforNon-operatingSchemeAssets”andwouldbeoffsetagainsttheSecuredCreditorsoftheCompany.
Thenon-currentassetsheldforsalehavebeenpledgedtolicensedbankstosecurethetermloans2,3and5and
revolvingcreditfacilitiesasdisclosedinNote33tothefinancialstatements.
�� �7
NotestoTheFinancialStatements
�� �7
30. SHARE CAPITAL
Number of shares of RM 1 each Group and Company
2006 2005 2006 2005 ’000 ’000 RM’000 RM’000
Issuedandfullypaid Ordinaryshares 174,083 174,083 174,083 174,083
Authorised Ordinaryshares 500,000 500,000 500,000 500,000
31. OTHER RESERVES
Foreign currency Share Revaluation translation Group premium reserve reserve Total RM’000 RM’000 RM’000 RM’000
At 1 January 2005 Aspreviouslystated 70,243 - (8,422) 61,821 Prioryearadjustments(Note47) - 10,841 - 10,841
At 1 January 2005 (restated) 70,243 10,841 (8,422) 72,662 Foreigncurrencytranslation-Group - - (20) (20)
At31December2005/At1January2006 70,243 10,841 (8,442) 72,642 EffectsofadoptingFRS140 - (10,841) (79) (10,920)
At 31 December 2006 70,243 - (8,521) 61,722
Share Company premium RM’000
At31December2005/At31December2006 70,243
(a) Revaluation reserve
The revaluation reserve relates to the revaluation of properties prior to its reclassification as investmentproperties.UpontheadoptionofFRS140,InvestmentPropertyasat1January2006,therevaluationreservebalancehasbeenreversed.
(b) Exchange fluctuation reserve
The exchange fluctuation reserve relates to exchange differences arising from translation of the financialstatementsofforeignoperationswhosefunctionalcurrenciesaredifferentfromthatoftheGroup’spresentationcurrency.It isalsousedtorecordtheexchangedifferencesarisingfrommonetarytermswhichformpartoftheGroup’snetinvestmentinforeignoperations,wherethemonetaryitemisdenominatedineitherfunctionalcurrencyofthereportingentityoftheforeignoperation.
NotestoTheFinancialStatements
�� �9�� �9
32. MINORITY INTERESTS Theminorityshareholders’shareoflossinthesubsidiarycompaniesarelimitedtotheirshareofthepaid-upcapital
ofthesubsidiarycompanies.ThebalanceofthelosseswillbebornebytheGroupuntilsuchtimethatthesubsidiarycompaniesareabletogenerateprofits.Theminorityinterests’shareoftheprofit/(loss)forthefinancialyearandcumulativelosseswhicharebornebytheGroupareRM0.2million(2005:RMNil)andRM0.1million(2005:RM0.3million)respectively.
33. BORROWINGS
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
Short term borrowings Secured: Termloans(Note34) 461,409 433,773 231,300 218,138Hirepurchaseandfinanceleaseliabilities(Note35) 8,885 8,293 - 41Bankoverdrafts 29,438 27,256 - -Revolvingcredits 11,258 10,887 - -
510,990 480,209 231,300 218,179
Unsecured: Termloans 62,591 90,608 23,456 22,860Bankoverdrafts 8,093 7,644 - -Bankers’acceptance 7,584 7,276 - -Tradefinancingfacilities 521 521 - -
78,789 106,049 23,456 22,860
589,779 586,258 254,756 241,039
Long term borrowings Secured: Hirepurchaseandfinance leaseliabilities(Note35) 169 427 - 68 Unsecured: Termloans(Note34) 32 180 - -
201 607 - 68
Total borrowings Termloans 524,032 524,561 254,756 240,998Hirepurchaseandfinanceleaseliabilities(Note35) 9,054 8,720 - 109Bankoverdrafts 37,531 34,900 - -Revolvingcredits 11,258 10,887 - -Bankers’acceptance 7,584 7,276 - -Tradefinancingfacilities 521 521 - -
589,980 586,865 254,756 241,107
�� �9
NotestoTheFinancialStatements
�� �9
33. BORROWINGS (CONT'D)
Thebankoverdrafts,revolvingcredits,bankers’acceptanceandtradefinancingfacilitiesoftheGrouparesecuredbythefollowing:
(a)Pledgeoverasubsidiarycompany’sdepositswithlicensedbanks;
(b)Legalchargeoverlandandbuilding;
(c)Fixedandfloatingchargeoverassets;
(d)Assignmentofcontractproceeds;
(e)Sinkingfund;
(f)CorporateguaranteebytheCompany.
Exceptforbankoverdraftfacilities,termloanandhirepurchase/financeleaseliabilitiesamountingtoRM1.05million(2005:RM0.43million),RM0.15million(RM30.30million),andRM0.26million(2005:RM0.69million)respectively,theGrouphasdefaultedinrepaymentforalltheabovementionedbankborrowingsandthelenders(alsotheSchemeCreditorsundertheProposedRestructuringSchemeasdisclosedinNote6tothefinancialstatements)havetakenlegalactionagainsttheGroup.
Financecostsfortheperiodfrom1September2006to31December2006fortheGroupandtheCompanyamountingtoRM17millionandRM7.7million,respectively,havenotbeenaccruedfortheyearended31December2006astheDirectorsareoftheopinionthatthesefinancecostswillbewaivedbythelenderbankspursuanttotheProposedRestructuringSchemeassetoutinNote6tothefinancialstatements.
OtherinformationonfinancialrisksofborrowingsaredisclosedinNote43.
34. TERM LOANS
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
Secured: Termloan1 176,391 166,265 176,391 166,265Termloan2 5,832 5,498 5,832 5,498Termloan3 39,303 42,726 - -Termloan4 76,742 72,766 - -Termloan5 22,513 21,890 - -Termloan6 24,972 15,114 - -Termloan7 66,467 63,013 - -Termloan8 49,077 46,375 49,077 46,375Termloan9 144 306 - -
461,441 433,953 231,300 218,138
Unsecured: Termloan10 14,889 14,889 14,889 14,889Termloan11 1,652 1,652 - -Termloan12 26,921 25,534 - -Termloan13 10,562 10,562 - -Termloan14 3,578 3,351 3,578 3,351Termloan15 4,989 4,620 4,989 4,620Termloan16 - 30,000 - -
62,591 90,608 23,456 22,860
Totaltermloans 524,032 524,561 254,756 240,998Less:Amountduewithin12months (524,000) (524,381) (254,756) (240,998)
Amountdueafter12months(Note33) 32 180 - -
NotestoTheFinancialStatements
90 9190 91
34. TERM LOANS (CONT'D)
(a) Thetermloansobtainedfromthefinancialinstitutionsaresecuredbythefollowing:
Termloan1 Aloanagreement,negativepledge,apledgebytheCompanyinrespectof13.2millionsharesinasubsidiarycompanyandpersonalguaranteebyaformerDirectoroftheCompany.
Termloan2 AfirstchargeovertheCompany’slandheldunderPajakanNegeri.
Termloan3 Afirstchargeoverasubsidiarycompany’sfreeholdlandandbuilding.
Termloan4 AnassignmentofsalesproceedsoftheconstructionofhousingprojectinAlbaniabyasubsidiarycompanyandaletterofguaranteefromtheCompany.
Termloan5 AsecondlegalthirdpartychargeforRM18million,rankingparipassuwiththefirstpartyfirst
fixedchargecreatedbyabankoverassetsoftheGroupandcorporateguaranteegivenbytheCompany.
Termloan6 Afirstchargeon2piecesoflandheldunderPajakanNegeri. Termloan7 Afirstchargeoverasubsidiarycompany’sconstructionprojectinChina.
Termloan8 Anegativepledgeinrespectof14millionsharesinasubsidiarycompany.
Termloan9 LienonfixeddepositforCedis1.0billion(equivalenttoRM420,000).
Termloan10 NegativepledgeinrespectofallthepresentandfutureassetsoftheCompany.
Termloan11 CorporateguaranteegivenbytheCompany.
Termloan12 CorporateguaranteegivenbytheCompany. Termloan13 CorporateguaranteegivenbytheCompany.
Termloan14 Cleanbasis. Termloan15 NegativepledgeontheassetsoftheCompany. Termloan16 Cleanbasis.
(b) Therepaymentscheduleofthetermloansare:
Termloan1 Restructuredtoberepaidover5yearscommencingApril2002.
Termloan2 Restructuredtoberepaidover5yearscommencingSeptember2002.
Termloan3 RestructuredtoberepaidbymonthlyinstalmentofRM250,000witheffectfromMay2003untiltheoutstandingbalancereducestoRM40millionandthereafterabulletrepaymentwillbemadetosettletheoutstandingloanby31December2004.
Termloan4 Repayableover7years,onatail-heavybasiswiththefirsttocommenceattheendof36months
fromthefirstdrawdowndatei.e.February1996. Termloan5 RestructuredtoberepaidbymonthlyinstalmentsofRM250,000witheffectfromMay2003until
theoutstandingbalancereducestoRM20millionandthereafterabulletrepaymentwillbemadetosettletheoutstandingloanby31December2004.
Termloan6 Restructuredtoberepaidover5yearscommencingApril2002.Attheendofthepreviousfinancialyear,RM150.9millionhasbeenoffsetagainstthetermloanbywayofforeclosureof36millionordinarysharesofBousteadNavalShipyardSdnBhd(formerlyknownasPSC-NavalDockyardSdnBhd)pledgedtothebank.
90 91
NotestoTheFinancialStatements
90 91
34. TERM LOANS (CONT'D)
(b) Therepaymentscheduleofthetermloansare:(cont'd)Termloan7 Restructuredtoberepaidover5yearscommencingApril2002. Termloan8 Restructuredtoberepaidover4yearscommencingMay2002. Termloan9 Repayableby36equalmonthlyinstalmentsfromthedateofdrawdown. Termloan10 Restructuredtoberepaidover4yearscommencingOctober2002. Termloan11 Restructuredtoberepaidover4yearscommencingOctober2002.
Termloan12 Restructuredtoberepaidover5yearscommencingApril2002.
Termloan13 Restructuredtoberepaidover4yearscommencingOctober2002.
Termloan14 Restructuredtoberepaidover19quarterlyprincipalrepaymentsofRM315,000perquarterandonefinalinstallmentofthebalancecommencingfromJuly2002.
Termloan15 Restructuredtoberepaidover12equalquarterlyinstalmentsofRM392,667each,commencingOctober2002.
Termloan16 Repayablebybulletrepaymentattheendof12monthsfromthedateofdrawdown.
TheGrouphasdefaultedinrepaymentofallthetermloansmentionedaboveexceptfortermloan9andthelenders(alsotheSchemeCreditorsundertheProposedRestructuringSchemeasdisclosedinNote6tothefinancialstatements)havetakenlegalactionagainsttheGroup.Assuch,allthesetermloansareclassifiedasshortterm.
OtherinformationonfinancialrisksofborrowingsaredisclosedinNote43.
35. HIRE PURCHASE AND FINANCE LEASE LIABILITIES
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
Future minimum lease payments: Notlaterthan1year 8,900 8,998 - 47Morethan1yearnotlaterthan2years 70 278 - 43Morethan2yearsnotlaterthan5years 110 178 - 28
9,080 9,454 - 118Less:Interestinsuspense (26) (734) - (9)
9,054 8,720 - 109
Analysis of present value of finance lease liabilities: Notlaterthan1year 8,885 8,293 - 41Morethan1yearnotlaterthan2years 62 261 - 40Morethan2yearsnotlaterthan5years 107 166 - 28
9,054 8,720 - 109
Amountduewithin12months(Note33) (8,885) (8,293) - (41)
Amountdueafter12months(Note33) 169 427 - 68
NotestoTheFinancialStatements
92 9392 93
35. HIRE PURCHASE AND FINANCE LEASE LIABILITIES (CONT'D)
The Group has defaulted in the repayment of RM8.8 million (2005: RM8.0 million) of the abovementioned hirepurchaseandfinanceleaseliabilitiesandthelenders(alsotheSchemeCreditorsundertheProposedRestructuringSchemeasdisclosedinNote6tothefinancialstatements)havetakenlegalactionagainsttheGroup.
TheGrouphasfinanceleasesandhirepurchasecontractsforvariousitemsofproperty,plantandequipment(seeNote17(e)).
OtherinformationonfinancialrisksofhirepurchaseandfinanceleaseliabilitiesaredisclosedinNote43.
36. TRADE AND OTHER PAYABLES
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
Trade payables:
Thirdparties 12,758 29,488 - -Associatecompanies 49,330 51,598 - -Affiliatedcompanies 4,261 9,015 8 -
66,349 90,101 8 -
Other payables:
Amountduetorelatedparties:Subsidiarycompanies - - 17,224 13,240Associatecompanies 37,203 3,572 - -
37,203 3,572 17,224 13,240Accruals 4,802 3,278 173 194Provisions(Note37) 10,254 1,345 3,606 -Sundrypayables 26,564 22,232 1,530 637
78,823 30,427 22,533 14,071
145,172 120,528 22,541 14,071
(a) Tradepayablesarenon-interestbearingandthenormaltradecredittermsgrantedtotheGrouprangefromone
monthtothreemonths.
(b) IncludedinsundrypayablesoftheGroupandoftheCompanyareRM0.1million(2005:RMNil)andRM0.1million(2005:RMNil)duetoafirmconnectedtoadirectoroftheCompany.
(c) Amountduetorelatedparties Included inamountdue toassociatecompanies isRM31.77million (2005:Nil)whichbears interestof5.90%
perannumandrepayableondemand.Theamountisunsecuredandistobesettledincash.Subsequenttothefinancialyearend,theamountwasfullysettled.
Amountduetootherrelatedpartiesarenon-interestbearingandarerepayableondemand.Allotherrelatedpartiesreceivableareunsecuredandaretobesettledincash.
FurtherdetailsonrelatedpartytransactionsaredisclosedinNote42.
OtherinformationonfinancialrisksoftradeandotherpayablesaredisclosedinNote43.
92 93
NotestoTheFinancialStatements
92 93
37. PROVISIONS
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
At1January 1,345 935 - -Currentyearprovision(Note11) 10,254 410 3,606 -Reversalofprovision (1,345) - - -
At31December 10,254 1,345 3,606 -
Included in theGroup isRM6.5million (2005:RMNil) inrelation to the foreseeable loss fora freehold landofasubsidiarycompany,whichhadbeenpledgedforbankingfacilitiesgrantedtoacorporateshareholder,wherebyanorderforsalehadbeenobtained.
IncludedintheGroupandtheCompanyisprovisionforrestructuringcostsamountingtoRM3.6million(2005:RMNil)andRM3.6million(2005:RMNil),respectively.
Theremainingbalanceisinrespectofprovisionforprojectwarrantywhichisbasedon10%ofvalueofworkorder,andisprovideduponacceptanceofcompletedworkbycustomers.Thewarrantyperiodrangesfrom6monthsto12months.
38. DEFERRED TAX
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
At1January 533 2,190 - 7,830Recognisedinincomestatement 290 (1,657) - (7,830)
At31December 823 533 - -
Thecomponentsandmovementsofdeferredtaxliabilitiesduringthefinancialyearareasfollows:
Property, plant and equipment Others Total
Group RM’000 RM’000 RM’000
At1January2005 266 1,924 2,190Recognisedinincomestatement 133 (1,790) (1,657)
At31December2005/At1January2006 399 134 533Recognisedinincomestatement 706 (353) 353Exchangedifferences (63) - (63)
At31December2006 1,042 (219) 823
Others Company RM’000
At1January2005 7,830Recognisedinincomestatement (7,830)
At31December2005 -
NotestoTheFinancialStatements
9� 959� 95
38. DEFERRED TAX (CONT'D)
Asat31December2006,theestimatedamountofdeferredtaxassetswhichhavenotbeenrecognisedintheGroup’sandCompany’sfinancialstatementsareasfollows:-
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
Property,plantandequipment (4,960) 29,357 - -Unutilisedtaxlosses (92,679) (70,796) (954) (394)Unabsorbedcapitalallowances (30,524) (29,916) (5,759) (5,759)
(128,163) (71,355) (6,713) (6,153)
Thedeductibletemporarydifferences,unutilisedtaxlossesandunabsorbedcapitalallowancesabovedonotexpireundercurrenttaxlegislation.
ThepotentialdeferredtaxassetsoftheGroupandoftheCompanyhavenotbeenrecognisedastheDirectorsdonotforeseethatitisprobablethattherewouldbetaxableprofitavailableagainstwhichthedeductibletemporarydifferencescouldbeutilised.
TheavailabilityoftheunutilisedtaxlossesandunabsorbedcapitalallowancesforoffsettingagainstfuturetaxableprofitsoftheCompanyissubjecttonosubstantialchangesintheshareholdingoftheCompanyunderSection44(5A)and(5B)ofIncomeTaxAct,1967.
39. OPERATING LEASE ARRANGEMENTS The Group as lessee
The Group has entered into non-cancellable operating lease agreements for the use of land and buildings andequipment.Theseleaseshaveanaveragelifebetween1to3yearswithrenewaloptionincludedinthecontracts.TherearenorestrictionsplacedupontheGroupbyenteringintothelease.
Thefutureaggregateminimumleasepaymentsundernon-cancellableoperatingleasescontractedforasatthebalancesheetdatebutnotrecognisedasliabilitiesareasfollows:
Group
2006 2005 RM'000 RM'000
Future minimum rentals payment: Notlaterthan1year 152 1,412Laterthan1yearandnotlaterthan5years 81 679
233 2,091
TheleasepaymentsrecognisedinprofitorlossduringthefinancialyearisdisclosedinNote11.
9� 95
NotestoTheFinancialStatements
9� 95
40. CAPITAL COMMITMENTS
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
Approvedandcontractedfor: -Balanceofunpaidsharecapital inaforeignsubsidiarycompany 4,131 4,446 - - -PurchaseofsharesinTenagaPSCSdnBhd 1,000 1,000 - - -Others 175 175
5,306 5,621 - -
41. CONTINGENT LIABILITIES
Group Company
2006 2005 2006 2005 RM'000 RM'000 RM'000 RM'000
Unsecured: Corporateguaranteeetofinancial institutionsonbehalfof: -subsidiarycompanies* - - 388,572 330,980-associatecompanies** 310,000 310,000 310,000 310,000-thirdparties - 2,000 - 2,000Corporateguaranteeetoothercorporationsonbehalfof subsidiarycompanies - - 366 1,466Amountunderlegalactionandindisputewithsuppliers 4,000 9,290 - -Amountindisputewith athirdparty - 1,980 - -Taxliabilityunderappealnotreflectedinthefinancialstatements - 1,430 - -Interestchargedonthebalanceof -unpaidcapitalofaforeignsubsidiary - - - -company 5,359 4,446 - -
319,359 329,146 698,938 644,446Secured: Sharesofsubsidiarycompany pledgedforthebankingfacilities ofacorporateshareholder 9,000 7,600 - -
328,359 336,746 698,938 644,446
* TheguaranteeshallbefullydischargeduponcompletionoftheproposedrestructuringschemeasdisclosedinNote6tothefinancialstatements.
** Subsequent to thefinancial yearend, the lendershaveagreed todischarge theentireamountsubject to thecompletionofadministrativematters.
NotestoTheFinancialStatements
9� 979� 97
42. RELATED PARTY DISCLOSURES
TheGroupandtheCompanyhadthefollowingtransactionswithaffiliatedcompaniesduringthefinancialyear:
Group Company
2006 2005 2006 2005Group RM'000 RM'000 RM'000 RM'000
(a) Sales of goods/Rendering of services
Associatecompanies (i) 36,474 - - - Subsidiarycompanies (ii) - - 334 493 Affiliatedcompanies* (i) 25 669 - -
(b) Purchases of goods/Rendering of services
Associatecompanies (iii) 1,051 - - - Affiliatedcompanies* (iii) 8,910 13,630 26 - Firmconnectedtoadirector oftheCompany (iv) 139 - 79 -
* AffiliatedcompaniesarecompanieswithinBousteadHoldingBerhadandminorityinterestsofcertainsubsidiarycompanies.
TheDirectorsareoftheopiniontheabovetransactionsareinthenormalcourseofbusinessandattermsmutuallyagreedbetweentheparties.
Informationregardingoutstandingbalancesarising fromrelatedparty transactionsasat31December2006aredisclosedinNotes26and36.
43. FINANCIAL INSTRUMENTS
(a) Financial Risk Management Objectives and Policies
TheGroup’sfinancialriskmanagementpolicyseekstoensurethatadequatefinancialresourcesareavailableforthedevelopmentoftheGroup’sbusinesseswhilstmanagingitsrisks.TheGroupoperateswithinguidelinesthatareapprovedbytheBoardandtheGroup’spolicyisnottoengageinspeculativetransactions.
(b) Foreign Exchange Risk
TheGroupisexposedtoforeigncurrencyriskasaresultofitsnormaloperatingactivities,bothexternalandintra-Groupwherethecurrencydenominationdiffersfromthelocalcurrency,RinggitMalaysia(RM).TheGroup’spolicyistominimisetheexposureofoverseasoperatingsubsidiarycompanies/activitiestotransactionriskbymatchinglocalcurrencyincomeagainstlocalcurrencycosts.ThecurrencygivingrisetothisriskisprimarilyEuroDollar(Euro)andGreatBritainPound(GBP).Foreignexchangeexposuresarekepttoanacceptablelevel.
9� 97
NotestoTheFinancialStatements
9� 97
43. FINANCIAL INSTRUMENTS (CONT'D)
(b) Foreign Exchange Risk (Cont'd)
ThenetunhedgedfinancialassetsandliabilitiesoftheGroupandoftheCompanythatarenotdenominatedintheirfunctionalcurrenciesareasfollows:
Euro Sterling dollar Pound Total
Group RM'000 RM'000 RM'000
At 31 December 2006 Tradepayables - 2,813 2,813 Duefromassociatecompany 260 - 260
260 2,813 3,073
At 31 December 2005 Tradepayables - 532 532 Duefromassociatecompany 1,091 - 1,091
1,091 532 1,623
(c) Liquidity and cash flow risks TheGrouphasacashflowdeficiencyandhaddefaultedintherepaymentofbankborrowingsamountingtoRM
588.5millionasat31December2006.TheGrouphasproposedtoimplementarestructuringschemeasstatedinNote6tothefinancialstatements.
(d) Interest Rate Risk
TheGroup’spolicyistoborrowprincipallyonthefloatingratebasisbuttoretainaproportionoffixedratedebt.Theobjectivesforthemixbetweenfixedandfloatingrateborrowingsaresettoreducetheimpactofanupwardchangeininterestrateswhileenablingbenefitstobeenjoyedifinterestratesfall.
Thefollowingtablessetoutthecarryingamounts,theweightedaverageeffectiveinterestrates(WAEIR)asatthebalancesheetdateandtheremainingmaturitiesoftheGroup’sandtheCompany’sfinancialinstrumentsthatareexposedtointerestraterisk:
WAEIR Within 1 1 - 2 2 - 5 Total % Year Years Years
At 31 December 2006 Note RM’000 RM’000 RM’000 RM’000
Group
Floating rate Hirepurchaseandfinanceleaseliabilities 35 2.8%-5.5% (8,885) (62) (107) (9,054)Revolvingcredits 33 7.05% (11,258) - - (11,258)Termloans 34 7.05%-8.0% (524,000) (32) - (524,032)Bankers’acceptance 33 6.5% (7,584) - - (7,584)Bankoverdrafts 33 8.0%-28.5% (37,531) - - (37,531)Tradefinancingfacilities 33 N/A (521) - - (521)Amountdueto associatecompany 36 5.9% (31,220) - - (31,220)Amountduefromassociatecompany 26 5.9% 31,770 - - 31,770Cashandbankbalances 28 2.5%to8.0% 8,608 - - 8,608
NotestoTheFinancialStatements
9� 999� 99
43. FINANCIAL INSTRUMENTS (CONT'D)
(d) Interest Rate Risk (Cont'd)
WAEIR Within 1 1 - 2 2 - 5 Total % Year Years Years
At 31 December 2006 Note RM’000 RM’000 RM’000 RM’000
Company
Floating rate Termloans 34 8.25%to9.0% (254,756) - - (254,756)
At 31 December 2005
Group
Floating rate Hirepurchaseand financeleaseliabilities 35 3.3%-5.5% (8,293) (261) (166) (8,720)Revolvingcredits 33 7.05% (10,887) - - (10,887)Termloans 34 7.05%-8.0% (524,561) - - (524,561)Bankers’acceptance 33 6.5% (7,276) - - (7,276)Bankoverdrafts 33 8.0%-22.5% (34,900) - - (34,900)Tradefinancingfacilities 33 N/A (521) - - (521)Cashandbankbalances 28 2.5%to12.5% 4,916 - - 4,916 Company
Floating rateTermloans 34 8.0%to9.0% (240,998) - - (240,998)Hirepurchaseandfinanceleaseliabilities 35 3.65% (41) (40) (28) (109)
(e) Credit risks
TheGrouphascreditpolicyforotherdebtorsandmonitortheexposuretocreditriskonanongoingbasis.Creditevaluationsareperformedontradecustomers.
Asat31December2006,themaximumexposuretocreditriskfortheGroupisthecarryingamountofeachfinancialasset.
(f) Fair Values
Thecarryingamountsofthefollowingfinancialassetsandliabilitiesapproximatetheirfairvaluesduetotherelativelyshorttermmaturityofthesefinancialinstruments:deposits,cashandbankbalances,receivablesandpayables(excludingnon-tradeamountsdueto/fromgroupcompanies)andshorttermborrowings.
ItisnotpracticaltoestimatethefairvaluesofthenoncurrentunquotedinvestmentsoftheCompanybecauseofthelackofquotedmarketpricesandtheinabilitytoestimatefairvalueswithoutincurringexcessivecosts.However,theCompanybelievesthatthecarryingamountsrepresentrecoverablevalues.
9� 99
NotestoTheFinancialStatements
9� 99
44. SEGMENT INFORMATION SegmentinformationispresentedinrespectoftheGroup’sbusinesssegments.ThebusinesssegmentisbasedontheGroup’smanagementandinternalreportingstructure.
Segmentresults,assetsandliabilitiesincludeitemsdirectlyattributabletoasegmentaswellasthosethatcanbeallocatedonareasonablebasis.Unallocateditemscomprisemainlyinvestments(otherthaninvestmentproperty)and related revenue, loans and borrowings and related expenses, corporate assets (primarily the Company’sheadquarters)andheadofficeexpenses,andtaxassetsandliabilities.
Transferpricesbetweenbusinesssegmentsareinthenormalcourseofbusinessandattermsmutuallyagreedbetweentheparties.Segmentrevenue,expensesandresultsincludetransfersbetweenbusinesssegments.Thesetransfersareeliminatedonconsolidation.
Business segments
TheGroupcomprisesthefollowingmainbusinesssegments:
BusinesssegmentShiprepairandmaintenancerelatedactivities
Constructionandshipbuildingrelatedactivities
InvestmentpropertyTrading
Otheroperations
Businessactivity
Supplying of electronics and system technology inrelationtotheshippingandmarineindustry,marketingand distributing Exocet Weapon System, providing,supplying and servicing BOFORS weapon systems,design, manufacture, supply, integrate service andmaintenancerepairandoverhaulofthecommunicationsystemsandequipment.
Heavy engineering construction, shiprepair andshipbuilding,contractorandacommissionagent.
Propertyholding.
Supplying of equipment and machinery in relation tonavalships.
Investmentholding.
TheGroup’sbusinessesaresubstantiallyoperatinginMalaysia.Hence,nodisclosureofgeographicalsegmentsarebeingpresented.
NotestoTheFinancialStatements
100 101100 101
44.
SEG
MEN
TAL
INFO
RM
ATIO
N (C
ON
T'D
)
Bus
ines
s Se
gmen
ts
The
follo
win
gta
ble
prov
ides
an
anal
ysis
oft
heG
roup
’sr
even
ue,r
esul
ts,a
sset
san
dlia
bilit
ies
and
othe
rin
form
atio
nby
bus
ines
sse
gmen
t:
Ship
repa
ir a
nd
m
aint
enan
ce
Cons
truc
tion
rela
ted
and
In
vest
men
t
Oth
er
ac
tivi
ties
s
hipb
uild
ing
pro
pert
y
Tra
ding
o
pera
tion
s El
imin
atio
ns
Con
solid
ated
20
06
RM
’000
R
M’0
00
RM
’000
R
M’0
00
RM
’000
R
M’0
00
RM
’000
R
even
ue
Exte
rnal
rev
enue
3
0,87
3
17,7
20
4,6
87
27,1
96
-
-
80,
476
Inte
r-se
gmen
tsal
es
-
-
-
-
334
(3
34)
-
30,8
73
17,7
20
4,68
727
,196
33
4
(334
)8
0,47
6
R
esul
tsSe
gmen
tres
ults
3
,872
(4
8,96
7)
2,89
7
1,57
8
(9,8
05)
(334
)(5
0,75
9)In
tere
stin
com
e2
44
1,76
4
31
83
15
-
2
,137
Una
lloca
ted
corp
orat
eex
pens
es
(1,1
88)
Ope
ratin
glo
ss
(49,
810)
Fina
nce
cost
s
(4
0,10
4)
Loss
bef
ore
tax
(89,
914)
Inco
me
tax
expe
nse
(3,3
43)
Loss
for
the
year
(9
3,25
7)
100 101
NotestoTheFinancialStatements
100 101
44.
SEG
MEN
TAL
INFO
RM
ATIO
N (C
ON
T'D
)
Ship
repa
ir a
nd
m
aint
enan
ce
Cons
truc
tion
rela
ted
and
Inve
stm
ent
O
ther
ac
tivi
ties
s
hipb
uild
ing
pro
pert
y
Tra
ding
o
pera
tion
s Co
nsol
idat
ed
2006
R
M’0
00
RM
’000
R
M’0
00
RM
’000
R
M’0
00
RM
’000
Ass
ets
Segm
enta
sset
s2
9,40
2
96,
059
55
,558
9
,674
8
,474
1
99,1
67U
nallo
cate
das
sets
3,14
5
Tota
lass
ets
20
2,31
2
Liab
iliti
es
Se
gmen
tlia
bilit
ies
14,9
75
105,
572
6,71
25
,327
7
,430
1
40,0
16U
nallo
cate
dlia
bilit
ies
60
0,36
3
Tota
llia
bilit
ies
7
40,3
79
Oth
er in
form
atio
nC
apita
lexp
endi
ture
4
,376
45
61
12
2
-
4,95
5D
epre
ciat
ion
and
amor
tisat
ion
723
3,15
53
447
13
94,
098
Impa
irm
entl
osse
sre
cogn
ised
inp
rofit
or
loss
-
36
,835
-
-
-
3
6,83
5
Oth
ers
igni
fican
tnon
-cas
hex
pens
es:
P
rovi
sion
for
doub
tful
deb
ts
306
1,
078
-
6
1-
1
,445
Bad
deb
tsw
ritt
eno
ff
202
-
6
19
-
2
27
D
ebtw
aive
r-
(5
,834
)-
-
(3
,306
)(9
,140
)
Impa
irm
ento
foth
erin
vest
men
ts
-
-
-
-
445
4
45
NotestoTheFinancialStatements
102 103102 103
44.
SEG
MEN
TAL
INFO
RM
ATIO
N (C
ON
T'D
)
Sh
ipre
pair
and
mai
nten
ance
Co
nstr
ucti
on
re
late
d a
nd
Inve
stm
ent
O
ther
acti
viti
es
shi
pbui
ldin
g p
rope
rty
T
radi
ng
ope
rati
ons
Elim
inat
ions
C
onso
lidat
ed
2005
R
M’0
00
RM
’000
R
M’0
00
RM
’000
R
M’0
00
RM
’000
R
M’0
00
Rev
enue
Exte
rnal
rev
enue
11
5,96
44
8,75
8
5,4
12
829
-
-
1
70,9
63
Inte
r-se
gmen
tsal
es
-
27,4
92
73
10,
100
99
4
(38,
659)
-
115,
964
76,2
50
5,4
85
10,
929
994
(3
8,65
9)
170
,963
Res
ults
Segm
entr
esul
ts
(204
,754
)(1
55,5
96)
1,21
6
359
(1
49,2
40)
(493
)(5
08,5
08)
Inte
rest
inco
me
3,9
82
61
15
19
1
6
-
4,0
93U
nallo
cate
dco
rpor
ate
expe
nses
(1
3,96
4)
Ope
ratin
glo
ss
(518
,379
)Fi
nanc
eco
sts
(101
,026
)Sh
are
oflo
ssin
ass
ocia
tec
ompa
nies
(5
9)
Loss
bef
ore
tax
(619
,464
)In
com
eta
xex
pens
e
(2
35)
Loss
for
the
year
(6
19,6
99)
102 103
NotestoTheFinancialStatements
102 103
44.
SEG
MEN
TAL
INFO
RM
ATIO
N (C
ON
T'D
)
Sh
ipre
pair
and
mai
nten
ance
Co
nstr
ucti
on
re
late
d an
d In
vest
men
t
Oth
er
acti
viti
es
shi
pbui
ldin
g p
rope
rty
T
radi
ng
ope
rati
ons
Cons
olid
ated
20
05
RM
’000
R
M’0
00
RM
’000
R
M’0
00
RM
’000
R
M’0
00
Ass
ets
Segm
enta
sset
s3
2,95
5
154,
834
71,
403
11
,346
18
,149
2
88,6
87
Una
lloca
ted
asse
ts
4,
089
29
2,77
6Li
abili
ties
Segm
entl
iabi
litie
s2
0,34
1
84,9
55
1,2
95
8,4
61
4,8
56
119
,908
Una
lloca
ted
liabi
litie
s
590,
776
Tota
llia
bilit
ies
7
10,6
84
Oth
er in
form
atio
nC
apita
lexp
endi
ture
32
,612
3
18
2
29
-
32,
961
Dep
reci
atio
nan
dam
ortis
atio
n15
,144
3
,333
3
8
37
85
18,
637
Impa
irm
entl
osse
sre
cogn
ised
inp
rofit
or
loss
3
5,17
7-
-
-
4
45
35,
622
Oth
ers
igni
fican
tnon
-cas
hex
pens
es:
D
efer
red
asse
tsw
ritt
eno
ff
-
3,95
1-
-
-
3
,951
Def
erre
dex
pend
iture
wri
tten
off
59
7,35
0
64,
694
-
-
-
6
62,0
44
P
rovi
sion
for
doub
tful
deb
ts
106,
624
157,
095
2,
101
-9
,160
2
74,9
80
B
add
ebts
wri
tten
off
-
4,
150
-
-
-
4,1
50
G
oodw
illw
ritt
eno
ff
-
16,1
53
-
-
187
,344
2
03,4
97
NotestoTheFinancialStatements
10� 10510� 105
45. SIGNIFICANT EVENTS
Duringthefinancialyear,thefollowingeventshaveoccurred:
(a) On30August2006,BursaMalaysiaSecuritiesBerhadhadapprovedanextensiontill31December2006fortheCompanytosubmititsRegularisationPlaninrelationtoitsPN17status,totheauthorities.
(b) On17October2006,theHighCourtofMalayagrantedanorderpursuanttoSections176(1)and176(10)oftheCompaniesAct,1965uponapplicationmadebytheCompanyanditssubsidiarycompany,PenangShipbuilding&ConstructionSdnBhd(“PSCSB”).PursuanttotheOrder:
(i) TheCompanymayproceedtoconvenevariousmeetingsofitsmembersandboththeCompanyandPSCSBmayproceedtoconvenemeetingsofcertaincreditorsofboththecompaniesforthepurposeofconsideringandifthoughtfit,approving(withorwithoutmodification)theproposedschemesofarrangementpursuanttosection176(1)oftheCompaniesAct,1965;and
(ii) Allfurtherproceedingsinanyaction,orproceedingsagainstthecompanyandPSCSBincludingbutnotlimitedtowindingup,executionandarbitrationproceedingsalreadycommencedagainstthem,arerestrainedandstayedforaperiodof9monthseffective17October2006upto16July2007.
(c) On6November2006,theCompanyannouncedthatitswhollyownedsubsidiary,PSCAssetHoldingsSdnBhdhadenteredintoaSales&PurchaseagreementwithBousteadHoldingsBerhadtodisposeofthreepiecesoflandtogetherwithbuildingserectedthereon,knownasMenaraPSCIforacashconsiderationofRM54million.Thesaleissubjecttoapprovalsfromrelevantauthoritiesandshareholders(“ProposedDisposal”).
(d) On 21 December 2006, the Company had submitted its Proposed Restructuring Scheme to the SecuritiesCommissionassetoutinNote6tothefinancialstatements.
46. SUBSEQUENT EVENTS
(a) Subsequenttothefinancialyearend,therelevantapprovalsfortheProposedRestructuringSchemehavebeenobtainedexceptfor:
- theconfirmationoftheHighCourtofMalayafortheProposedCapitalReductionandtheProposedSharePremiumAccountCancellationpursuanttoSection64and60oftheAct,aswellastherequisitesanctionoftheHighCourtofMalayafortheproposalDebtSettlementpursuanttoSection176oftheAct;and
- theBursaSecuritiesforthelistingofandquotationfortheSettlementSharesandRightsSharestobeissuedpursuanttotheProposedRestructuringSchemeontheMainBoardofBursaSecurities.
Thedetailsoftheapprovalsobtainedareasfollows:
On 19 March 2007, the Securities Commission (“SC”) had approved the Proposed Disposal and ProposedRestructuringSchemesubjecttothefollowingconditions:
(i) theCompanyshouldrectifyandobtainapprovalfortheunapprovedstructuretogetherwiththecertificateoffitnesswithin12months from thedateof theSC’sapproval for theProposedDisposalandProposedRestructuringScheme;
(ii) theCompanyshouldmakequarterlyannouncementtoBursaMalaysiaonthestatusofsuchrectificationorapplication;and
10� 105
NotestoTheFinancialStatements
10� 105
46. SUBSEQUENT EVENTS (CONT'D)
(iii) theCompanyandAffinInvestmentshouldupdatetheSConthestatusofsuchrectificationorapplicationwhenthequarterlyannouncementismade;
- AffinInvestmentandtheCompanyshouldinformtheSCuponcompletionoftheProposedDisposalandProposedRestructuringScheme;and
- AffinInvestmentandtheCompanyshouldfullycomplywiththerelevantrequirementsinthePoliciesandGuidelinesontheIssue/OfferofSecuritiespertainingtotheimplementationoftheProposals.
The SC, vide the same letter, approved the Proposed Restructuring Scheme under the Guidelines on theAcquisitionofInterests,mergersandtakeoverbyLocalandForeignInterests.
(b) On26March2007,theSchemeCreditorsoftheCompanyandPSCSBandshareholdersoftheCompanyhadapprovedalltheresolutionssetoutintheNoticesoftheCourt-ConvenedMeetingandExtraordinaryGeneralMeetingdated1March2007.
47. COMPARATIVES ThecomparativesfigureswereauditedbyanotherfirmofcharteredaccountantsotherthanErnst&Young.
(a) Prior year adjustments
Duringthefinancialyear,theGrouphasmadethefollowingprioryearadjustments:
(i) Inyearended31December1996,theCompanyhadenteredintoaSaleandPurchaseAgreementwithathirdpartyforthedisposalofapieceoflandheldbytheCompanyforatotalconsiderationofRM5.9million.Asatfinancialyearended31December2005,RM3.4millionhadbeenreceived.ProvisionfordoubtfuldebtsamountingtoRM2.5millionhasaccountedforasanadjustmentagainsttheopeningbalanceasat1January2005.
(ii) Inyearended31December1998,asubsidiarycompanyhadenteredintoaSaleandPurchaseAgreementwithathirdpartyforthedisposalofapieceoflandheldbythesubsidiarycompanyforatotalconsiderationofRM15.2million.Asatyearended31December2005,RM1.0millionhadbeenreceived.ThebalanceofamountoutstandingofRM14.2millionwasprovidedforasdoubtfuldebtinyearended31December2005.
As at 31 December 2006, the titles to both pieces of land above still remain with the Company and the
subsidiarycompanyrespectivelyasFICapprovalhasnotbeenobtained.Inthisrespect,theDirectorsoftheCompanyareoftheopinionthatthedisposalhavenotbeenlegallyeffectedandhavethereforere-instatedthelandasaprioryearadjustmenttotheinvestmentpropertyaccount.Similarly,therecognitionofgain/lossarisingfromthedisposalsin1996and1998respectivelywerereversedandtheaccumulatedlossesbalancerestated.
(b) Adoption of FRS 140 Investment Property
TheGroupnowmeasuresallinvestmentpropertyatfairvaluewithanychangethereinrecognisedintheincomestatement.ThechangeinaccountingpolicyhasbeenappliedinaccordancewiththetransitionalprovisionsofFRS140.Thischange inaccountingpolicyhasno impactontheamountsreported in2005orpriorperiods.Instead,thechangeshavebeenaccountedforbyrestatingtheopeningbalancesoftheGroupasat1January2006asfollows.
NotestoTheFinancialStatements
10� 10710� 107
47. COMPARATIVES (CONT'D) Asaresultoftheprioryearadjustments,thechangesinthecomparativesareasfollows:
Consolidated Statements of Changes in Equity Revaluation Accumulated
Reserve Losses Group RM’000 RM’000
At 1 January 2005 Aspreviouslystated - (131,600)
Prioryearadjustments 10,841 (4,859)
At 1 January 2005 (restated) 10,841 (136,459) At 1 January 2006
Aspreviouslystated - (680,290) Prioryearadjustments,asat1January2005 10,841 (4,859)
At 1 January 2006 (restated) 10,841 (685,149) Prioryearadjustment - 15,200
At 1 January 2006 (restated) 10,841 (669,949) EffectsofadoptionofFRS140 (10,841) (15,779)
At 1 January 2006 (restated) - (685,728)
Balance Sheets
Investment Other Tax
Properties Payables payable Group RM’000 RM’000 RM’000
At 1 January 2005 Aspreviouslystated 70,000 32,835 3,043
Prioryearadjustments 19,686 (1,000) (496) Re-instatementofbalances - (4,980) -
At 1 January 2005 (restated) 89,686 26,855 2,547
Group 2005 RM’000
Effects on loss for the year: Lossbeforeprioryearadjustments (548,690) Prioryearadjustment 15,200
Lossfortheyear (533,490)
10� 107
NotestoTheFinancialStatements
10� 107
47. COMPARATIVES (CONT'D)
Asaresultoftheprioryearadjustments,thechangesinthecomparativesareasfollows:
Investment Accumulated Properties Losses RM’000 Total Company RM’000
At 1 January 2005 Aspreviouslystated - (23,672)
Prioryearadjustments 2,566 2,566
At 1 January 2005 (restated) 2,566 (21,106)
FortheCompany,theprioryearadjustmentdoesnotaffecttheresultsforthefinancialyearended31December2005.
Thefollowingcomparativefigureshavebeenreclassifiedtoconformwithcurrentfinancialyear’spresentationtoreflectthenatureofthebalances/accounts:
As previously As stated Adjustments restated Group RM’000 RM’000 RM’000
Income Statement
Otherincome 46,787 1,322,346 1,369,133Administrativeexpenses (3,575) (97,628) (101,203)Otherexpenses (104,407) (1,686,503) (1,790,910)Exceptionalitems (476,985) 476,985 - Balance Sheets
AssetsInvestmentproperties 70,000 19,686 89,686Tradeandotherreceivables 56,038 35,756 91,794 Equity and liabilities Revaluationreserve - (10,841) (10,841)Accumulatedlosses (680,290) 10,341 (669,949)Tradeandotherpayables (90,753) (29,775) (120,528)Taxpayable (3,043) 496 (2,547)Borrowings (581,884) (4,981) (586,865)
47. COMPARATIVES (CONT'D)
As previously As Company stated Adjustments restated RM’000 RM’000 RM’000
Income Statement Administrativeexpenses (58) (1,394) (1,452)Otherexpenses (2,339) (416,777) (419,116)Exceptionalitems (418,171) 418,171 -
Balance Sheet
AssetsInvestmentproperties - 2,566 2,566
Equity and liabilities Accumulatedlosses (456,372) 2,566 (453,806)Tradeandotherpayables (14,112) 41 (14,071)Borrowings (241,066) (41) (241,107)
NotestoTheFinancialStatements
10� 109
As at 24 April 2007
AuthorisedShareCapital :RM500,000,000Paid-UpShareCapital :RM174,083,348ClassofShares :OrdinarysharesofRM1.00eachVotingrights :Onevoteperordinaryshare
ANALYSIS OF SHAREHOLDINGS BY RANGE GROUPS Size of Shareholdings Shareholdings Shareholdings No. of Shareholders Percentage Shareholders Percentage (%) (%)
Lessthan100shares 568 0.00 19 0.51 100-1,000shares 503,332 0.29 1,146 30.96 1,001-10,000shares 8,826,772 5.07 1,753 47.37 10,001to100,000shares 21,632,108 12.43 689 18.62 100,001tolessthan5%of 61,177,472 35.14 91 2.46 issuedshares 5%andaboveofissuedshares 81,943,096 47.07 3 0.08 TOTAL 174,083,348 100.00 3,701 100.00
LIST OF SUBSTANTIAL SHAREHOLDERS
No. of Shares No. of Shares Direct % Indirect %
BousteadHoldingsBerhad 56,577,100 32.5 - -
LembagaTabungAngkatanTentera - - 56,577,100^ 32.5
TanSriDato'AminShahBinHajiOmarShah 3,764,400 2.16 16,515,544* 9.49
BusinessFocusSdnBhd 15,505,544 8.91 - -
TelekomMalaysiaBerhad 13,887,396 7.98 - -
DIRECTORS' SHAREHOLDINGS
No. of Shares No. of Shares Direct % Indirect %
LaksamanaMadya(Rtd)Dato'SeriAhmadRamli 1,000 # - - BinHajiMohdNor
Tn.Hj.MohdNoordinBinAbdullah 100 # - -
Notes:
^ - DeemedinterestbyvirtueofitssubstantialshareholdinginBousteadHoldingsBerhad.
* - Deemed interestby virtueofhissubstantialshareholding inBusinessFocusSdnBhd,PilotLead InvestmentsLimitedandModalshah(M)SdnBhd.
# - Negligible.
10� 109
AnalysisofShareholdings
AnalysisofShareholdings
As at 24 April 2007
List Of Thirty Largest Shareholders
Holder Name No. of Shares %
1 BOUSTEAD HOLDINGS BERHAD 56,227,100 32.30 AccountNon-Trading
2 RHB NOMINEES (TEMPATAN) SDN BHD 13,887,396 7.98 TelekomMalaysiaBerhad
3 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 11,828,600 6.79 AllianceMerchantNominees(Tempatan)SdnBhd forBusinessFocusSdnBhd
4 ABDUL RADZIM BIN ABDUL RAHMAN 8,665,900 4.98
5 ZAKARIA BIN MERANUN 6,119,400 3.52
6 AIBB NOMINEES (TEMPATAN) SDN BHD 2,948,500 1.69 DanahartaManagersSdnBhd forElegantResidence(M)SdnBhd
7 KAMARUDIN BIN MERANUN 2,931,800 1.68
8 QUEK LENG CHAN 2,000,000 1.15
9 AIBB NOMINEES (TEMPATAN) SDN BHD 1,761,800 1.01 DanahartaManagersSdnBhd forAtlanticRange(M)SdnBhd
10 NOR ASHIKIN BINTI KHAMIS 1,749,700 1.01
11 TRACTORS MALAYSIA HOLDINGS BERHAD 1,718,000 0.99 12 CITIGROUP NOMINEES (ASING) SDN BHD 1,600,000 0.92 ExemptAnforMerrillLynch PierceFenner&SmithIncorporated(Foreign)
13 HLB NOMINEES (ASING) SDN BHD 1,580,000 0.91 PledgedSecuritiesAccount forHusseinAdamAliIbrahim (SIN606032)
14 CARTABAN NOMINEES (ASING) SDN BHD 1,540,000 0.88 CreditIndustrielETCommercial,Singapore forEngHuengFookHenry
15 CIMSEC NOMINEES (TEMPATAN) SDN BHD 1,535,940 0.88 DanahartaUrusSdnBhd forBusinessFocusSdnBhd(MisiAsiamS/B)
16 HLG NOMINEE (ASING) SDN BHD 1,504,000 0.86 Commerzbank(Sea)Ltd forRheinmetallDefenceElectronicsGMBH
110
AnalysisofShareholdings
As at 24 April 2007
List Of Thirty Largest Shareholders
Holder Name No. of Shares %
17 B & A FAMILY HOLDINGS SDN BHD 1,500,000 0.86
18 HLB NOMINEES (TEMPATAN) SDN BHD 1,480,000 0.85 PledgedSecuritiesAccount forDato’AminShahBinHajiOmarShah (PST4449-5)
19 JERNEH INSURANCE BHD 1,157,500 0.66 Shareholders’FundsAccount
20 HLB NOMINEES (TEMPATAN) SDN BHD 1,000,000 0.57 PledgedSecuritiesAccount forModalshah(M)SdnBhd (PST4449-5A)
21 AIBB NOMINEES (TEMPATAN) SDN BHD 968,300 0.56 DanahartaManagersSdnBhd forLeeChoongLim@LeeTinFook
22 HOR YIN KIN 873,700 0.50
23 TA NOMINEES (TEMPATAN) SDN BHD 765,200 0.44 PledgedSecuritiesAccount forOhKimSun
24 INTER-PACIFIC EQUITY NOMINEES (ASING) SDN BHD 744,000 0.43 KimEngSecuritiesPteLtd forSabcoInvestmentPteLtd
25 AIBB NOMINEES (TEMPATAN) SDN BHD 537,400 0.31 LowKhianSeng(D04)
26 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 530,000 0.30 PledgedSecuritiesAccount forAlbertNeoPoSoon(472160)
27 TA NOMINEES (TEMPATAN) SDN BHD 500,000 0.29 PledgedSecuritiesAccount forRiedzuanBinAbdullah
28 SMA GLOBAL PTY LTD 500,000 0.29
29 HDM NOMINEES (ASING) SDN BHD 500,000 0.29 UOBKayHianPteLtd forTanMongTong
30 ANWAR SYAHRIN BIN ABDUL AJIB 495,000 0.28
129,149,236 74.19
110 111
Location Description Area Tenure Age Net Book Value RM'000
PSC INDUSTRIES BERHADPM242,LotNo.5203 Vacantindustrial 2.737hectares Leasehold 12years 3,100MukimofBukitKatil land expiringonDistrictofMelakaTengah 24/05/2091Melaka
PSC ASSET HOLDINGS SDN BHDMenaraPSCI 21storeyoffice 6,672sq.m. Freehold 13years 54,00039JalanSultanAhmadShah buildingwith5PulauPinang storeyannexed carpark
PENANG SHIPBUILDING & CONSTRUCTION SDN BHD PajakanNegeriNo.649 Shipyard 20.21acres Leasehold 35years 32,210LotNo3222Mukim13 expiringonDaerahTimurLaut 24/01/2072PulauPinangHSD6981 Reclaimedlandfor 19.00acres Leasehold 35years 1,757Lot9777Mukim13 theextensionofthe expiringonDaerahTimurLaut areaoftheshipyard 24/01/2072PulauPinang HSD124733 MalaysiaArmy 135acres Leasehold 5years 1,760LotNoPT15804 Equipment& expiringonMukimTanjungTualang VehicleTestingSite 09/09/2102DaerahKintaPerak
HS(D)16204,PT8711 MarineIndustryLand 307,560sq.m. Leasehold 6years -MukimLumut expiringonDaerahManjungPerak 18/10/2099 SEDAP DEVELOPMENTSDN BHDGeran16228,16312to Vacantlandwith 11,018.03 Freehold 9years 6,50016326,16780 buildingsonsite sq.m.LotNos.142to146,148 whichareto151,182,183,186,187, constructedand327,328,334and427 occupiedbyTownAreaXIX(19), tenantsDistrictofMelakaTengahMelaka
ListofPropertiesHeldbyPSCIGroup
112
CompanyNo.11106-V Appendix1
The Companies Act, 1965
PUBLIC COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION OF PSC INDUSTRIES BERHAD
(CompanyNo.11106-V)
WORDS MEANINGS
Articles TheArticlesofAssociationasoriginally framedorasaltered fromtimeto timebyspecialresolution.
AuthorisedNominee ApersonwhoisauthorisedtoactasnomineeasspecifiedundertheRules.
BeneficialOwner In relation to Deposited Securities, the ultimate owner of the Deposited Securities who isthepersonwhoisentitledtoallrights,benefits,powersandprivilegesandissubjecttoallliabilities,dutiesandobligationsinrespectof,orarisingfrom,theDepositedSecuritiesanddoesnotincludeanomineeofanydescription.
Booksclosingdate ThespecifiedtimeanddatesetbytheCompanyforthepurposeofdeterminingentitlementstodividends,interest,newsecuritiesorotherdistributionsorrightsofholdersofitssecurities.
BursaSecurities BursaMalaysiaSecuritiesBerhad(CompanyNo.635998-W)
Depository BursaMalaysiaDepositorySdnBhd(CompanyNo.165570-W)
CentralDepositoriesAct The Securities Industry (Central Depositories) Act, 1991, or any statutory modification,amendmentorre-enactmentthereofforthetimebeinginforce.
Company PSCIndustriesBerhad(CompanyNo.11106-V).
Depositor AholderofaSecuritiesAccountashereinafterdefined.
DepositedSecurity AsecurityintheCompanystandingtothecreditofaSecuritiesAccountoftheDepositorandincludessecuritiesintheSecuritiesAccountthatisinsuspensesubjecttotheprovisionsoftheCentralDepositoriesActandtheRules.
Directors TheDirectorsforthetimebeingoftheCompany.
ListingRequirements BursaSecuritiesListingRequirementsincludinganyamendmenttotheListingRequirementsthatmaybemadefromtimetotime,includingPracticeNotesandotherrelevantrequirementsissuedbyBursaSecuritiesfromtimetotime.
MarketDays AnydayonwhichthestockmarketofBursaSecuritiesisopenfortradinginsecurities.
Member(s) Anyperson(s)forthetimebeingholdingsharesintheCompanyandwhosename(s)appearsintheRegisterofMembersandincludesaDepositorwhosename(s)appearsontheRecordofDepositorsandwhoshallbetreatedasifhewasaMemberpursuanttoSection35oftheCentralDepositoriesActbutexcludesDepositoryinitscapacityasabaretrustee.
Office TheRegisteredOfficeforthetimebeingoftheCompany.
TABLE A
1. TheregulationsinTableAintheFourthScheduletotheActshallnotapplytotheCompanyexceptsofarasthesamearerepeatedorcontainedintheseArticles.
INTERPRETATION
2. IntheseArticlesthewordsstandinginthefirstcolumnoftheTablenexthereinaftercontainedshallbearthemeaningssetoppositetothemrespectively inthesecondcolumnthereof, ifnotinconsistentwiththesubjectorcontext.
Table“A”excluded
Definition
112
CompanyNo.11106-V
RecordofDepositors ArecordprovidedbytheDepositorytotheCompanyunderChapter24.0oftheRules.
Registrar AnypersonsappointedtoperformthedutiesoftheRegistraroftheCompany.
Rules TheRulesofDepository.
Seal ThecommonsealoftheCompany.
Secretary Any person appointed to perform the duties of the Secretary of the Company including anassistantordeputysecretaryoranypersonappointedtemporarily.
Securities Referstodebentures,stocks,shares,bondsoftheCompanyandincludesanyrightoroptioninrespectthereofandanyinterestinunittrustschemes.
SecuritiesAccount An account established by the Depository for a Depositor for the recording of deposit ofsecurities and for dealing in such securities by the Depositor, as defined in the CentralDepositoriesActand/ortheRules.
TheAct TheCompaniesAct,1965andanystatutorymodification,amendmentorre-enactmentthereofforthetimebeinginforceconcerningcompaniesandaffectingtheCompany.
Expressions referring to writing shall, unless the contrary intention appears, be construed as including references toprinting,lithography,photography,andothermodesofrepresentingorreproducingwordsinavisibleform.
Wordsimportingthesingularnumberonlyshallincludethepluralnumberandviceversa.
Wordsimportingthemasculinegenderonlyshallincludethefemininegender.
Wordsimportingpersonsshallincludecorporationsandcompanies.
SubjectasaforesaidwordsorexpressionscontainedintheseArticlesshallbeinterpretedinaccordancewiththeprovisionsoftheInterpretationAct,1967andoftheActasinforceatthedateonwhichtheseArticlesbecomebindingontheCompany.
SHARES
3. Withoutprejudicetoanyspecialrightspreviouslyconferredontheholdersofanyexistingsharesorclassofshares,andsubjecttotheprovisionsoftheseArticlesandtheActandtotheprovisionsof any resolution of the Company, every issue of shares or options in the Company shall beapprovedbytheMembersingeneralmeetingandsuchsharesmaybeissuedbytheDirectors,whomayallot,orotherwisedisposeofsuchsharestosuchpersons,onsuchtermsandconditions,withsuchpreferred,deferredorotherspecialrights,andsubjecttosuchrestrictionsandatsuchtimes as the Directors may determine but the Directors in making any issue of shares shallcomplywiththefollowingconditions:-
(a) nosharesshallbeissuedatadiscountexceptincompliancewiththeprovisionsofsection59oftheAct;
(b) in thecaseofsharesofanyclass,other thanordinaryshares,nospecialrightsshallbeattacheduntilthesamehavebeenexpressedintheseArticles;
(c) no issueofsharesshallbemadewhichwillhave theeffectof transferringacontrollinginterestintheCompanytoanyperson,companyorsyndicatewithoutthepriorapprovaloftheMembersoftheCompanyingeneralmeeting;and
(d) noDirectorshallparticipateinashareschemeforemployeesunlesstheMembersingeneralmeetinghaveapprovedtheallotmenttobemadetosuchDirector.
4. TheCompanymustensurethatallnewissuesofsecuritiesforwhichlistingissoughtaremadebywayofcreditingtheSecuritiesAccountsoftheallotteeswithsuchsecuritiessaveandexceptwhereitisspecificallyexemptedfromcompliancewithsection38oftheCentralDepositoriesAct,inwhicheventitshallsosimilarlybeexemptedfromcompliancewiththeListingRequirements.Forthispurpose,theCompanymustnotifyDepositoryofthenamesoftheallotteesandallsuchparticularsrequiredbyDepository,toenableDepositorytomaketheappropriateentriesintheSecuritiesAccountsofsuchallottees.
Allotmentofshares
IssueofNewSecurities
CompanyNo.11106-V
5. TheCompanymustnotcauseorauthoriseitsregistrarstocausetheSecuritiesAccountsoftheallotteestobecreditedwiththeadditionalsecuritiesuntilaftertheCompanyhasfiledwithBursaSecuritiesanapplicationforlistingofsuchadditionalsecuritiesandhasbeennotifiedbyBursaSecuritiesthattheyhavebeenauthorisedforlisting.
6. SubjecttotheprovisionsoftheAct,theCentralDepositoriesAct,andtheRules,theCompanymustallotsecuritiesanddespatchnoticesofallotmenttoallotteesandapplicationforquotationofitssecuritieswithinsuchperiodasprescribedundertheListingRequirements.
7. Thecertificatesoftitletoshare,stock,debentures,debenturestock,notesandothersecuritiesshallbeissuedunderthesealoftheCompanywithsecurityfeaturesandofsuchsizeasprescribedbytheBursaSecuritiesandallsuchcertificatesshallbesignedbyatleastoneDirectorandtheSecretaryorinlieuoftheSecretarybysuchotherpersonastheDirectorsmayappointforthepurpose.ItshallbesufficientevidencethatthesealhasbeendulyaffixedtoanysuchcertificateandsignedasaforesaidifafacsimileofthesignatureofaDirectorandoftheSecretaryappearsthereon.
8. Subject to theAct,anypreferencesharesmaywith thesanctionofanordinaryresolution,beissuedonthetermsthattheyare,orattheoptionoftheCompanyareorwillbeliable,toberedeemedandtheCompanyshallnotissuepreferencesharesrankinginprioritytothepreferencesharesalreadyissued,butmayissuepreferencesharesrankingequallytherewith.Preferenceshareholdersshallhavethesamerightsasordinaryshareholdersasregardstoreceivingnotices,reportsandauditedaccounts,andattendinggeneralmeetingsoftheCompanyandshallalsohavetherighttovoteatanymeetingconvenedineachofthefollowingcircumstances:-
a) whenthedividendorpartofthedividendonthepreferencesharesisinarrearsformorethansix(6)months;
b) onaproposaltoreducetheCompany’ssharecapital;
c) on a proposal for the disposal of the whole of the Company’s property, business andundertaking;
d) onaproposalthataffectsrightsattachedtothepreferenceshares;
e) onaproposaltowinduptheCompany;and
f) duringthewindingupoftheCompany.
9. Notwithstanding Article 11 hereof, the repayment of preference share capital other thanredeemablepreferenceshares,oranyalterationofpreferenceshareholders’rightsshallonlybemadepursuanttoaspecialresolutionofthepreferenceshareholdersconcerned,providedalways thatwhere thenecessarymajority forsuchaspecial resolution isnotobtainedat themeeting,consentinwriting,ifobtainedfromtheholdersofthree-fourths(3/4)ofthepreferencecapital concerned within two (2) months of the meeting, shall be as valid and effectual as aspecialresolutioncarriedatthemeeting.
10. Subjecttotheprovisionsofsection65oftheAct,alloranyoftherights,privilegesorconditionsforthetimebeingattachedorbelongingtoanyclassofsharesforthetimebeingformingpartofthesharecapitaloftheCompanymayfromtimetotimebemodified,affected,varied,extendedorsurrenderedinanymannerwiththeconsentinwritingoftheholdersofnotlessthanthree-fourths(3/4)oftheissuedsharesofthatclassorwiththesanctionofaspecialresolutionpassedat a separate meeting of the Members of that class. To every such separate meeting all theprovisionsoftheseArticlesastogeneralmeetingsoftheCompanyshallmutatismutandisapply,butsothatthenecessaryquorumshallbetwo(2)Membersoftheclassholdingorrepresentingbyproxy,one-third(1/3)ofthesharecapitalpaidorcreditedaspaidontheissuedsharesoftheclass,andeveryholderofsharesoftheclassinquestionshallbeentitledonapolltoone(1)voteforeverysuchshareheldbyhim.Toeverysuchspecialresolutiontheprovisionsofsection152oftheActshallwithsuchadaptationasarenecessaryapply.
11. TheCompanymaypayacommissiontoanypersoninconsiderationofhissubscribingoragreeingtosubscribe,whetherabsolutelyorconditionally,foranysharesintheCompany,providedthatthe rate per cent or the amount of procuring or agreeing to procure subscriptions, whetherabsoluteorconditional,ofthecommissionpaidoragreedtobepaidshallbedisclosedinthemannerrequiredbytheAct,thatsuchcommissionshallnotexceedtenpercent(10%)ofthepriceatwhichsuchsharesareissued,oranamountequivalenttosuchpercentage,andthattherequirementsofsection58oftheActshallbeobserved.Subjecttotheprovisionsofsection54
CreditingofSecuritiesAccount
Allotmentanddispatchofnoticeforanissue
Certificates
Rightsofpreferenceshareholders
Repaymentofpreferencecapital
Modificationofclassrights
CommissionandBrokerage
CompanyNo.11106-V
oftheAct,suchcommissionmaybesatisfiedbythepaymentofcashortheallotmentoffullyorpartlypaidsharesorpartlyinonewayandpartlyintheother.TheCompanymayalsoonanyissueofsecuritiespaysuchbrokerageasmaybelawful.
12. NopersonshallberecognisedbytheCompanyasholdinganyshareuponanytrust,andtheCompanyshallnotbeboundbyorberequiredinanywaytorecognise(evenwhenhavingnoticethereof)anyequitable,contingent,futureorpartialinterestinanyshareoranyotherrightsinrespectofanyshareotherthananabsoluterighttotheentitythereofintheregisteredholderexceptonlyasbytheseArticlesotherwiseprovidedfororasbytheActortheRulesrequiredorpursuanttoanyorderoftheCourt.
13. The Company may by notice in writing, require any Member of the Company, within suchreasonabletimeasisspecifiedinthenotice:-
a) to informtheCompanywhetherheholdsanyvotingsharesintheCompanyasbeneficialowner,AuthorisedNomineeorastrustee;and
b) ifheholdsthemastrusteeorAuthorisedNominee,toindicatesofarashecan,thepersonsforwhomheholdsthembynameandbyotherparticularssufficienttoenablethosepersonstobeidentifiedandthenatureoftheirinterest
14. TheCompanyshallhavethepower,subjecttoandinaccordancewiththeprovisionsoftheActandanyrules,regulationsandguidelinesthereunderissuedbyBursaSecuritiesandanyotherrelevantauthoritiesinrespectthereofforthetimebeinginforce,topurchaseitsownsharesandthereaftertodealwiththesharespurchasedinaccordancewiththeprovisionsoftheActandanyrules,regulationsandguidelinesthereunderissuedbyBursaSecuritiesandanyotherrelevantauthoritiesinrespectthereof.
LIEN
15. TheCompanyshallhaveafirstandparamountlienuponallshares(notbeingafullypaid-upshare)registeredinthenameofanyMember,forhisdebts,liabilitiesandengagementswhethertheperiodforthepayment,fulfillmentordischargethereof,shallhaveactuallyarrivedornot,andsuchlienshallextendtoalldividendsfromtimetotimedeclaredinrespectofsuchshares,but theDirectorsmayatany timedeclareanyshare tobewhollyor inpartexempt fromtheprovisionofthisArticle.TheCompany’slien,ifany,onsharesanddividendsfromtimetotimedeclaredinrespectofsuchshares,shallberestrictedtounpaidcallsandinstalmentsuponthespecificsharesinrespectofwhichsuchmoneyaredueandunpaid,andtosuchamountsastheCompanymaybecalleduponbylawtopayandhaspaidinrespectofthesharesoftheMemberordeceasedMember.
16. TheDirectorsmaysellanysharessubjecttosuchlienatsuchtimeortimesandinsuchmannerastheythinkfit,butnosaleshallbemadeuntilsuchtimeasthemoneyinrespectofwhichsuchlienexistsorsomepartthereofareorispresentlypayableoraliabilityorengagementinrespectofwhichsuchlienexistsisliabletobepresentlyfulfilledordischarged,anduntilademandandnoticeinwritingstatingtheamountdueorspecifyingtheliabilityorengagementanddemandingpayment or fulfillment or discharge thereof, and giving notice of intention to sell in default,shallhavebeenservedonsuchMemberorthepersons(ifany)entitledbytransmissiontotheshares,anddefaultinpayment,fulfillmentordischargeshallhavebeenmadebyhimorthemforfourteen(14)daysaftersuchnotice.
17. TogiveeffecttoanysaletheDirectorsmayauthorisesomepersontotransferthesharessoldtothepurchaserandmayenterthepurchaser’snameintheregisterasholderoftheshares,andthepurchasershallnotbeboundtoseetotheapplicationofthepurchasemoney,norshallhistitletothesharesbeaffectedbyanyirregularityorinvalidityintheproceedingsinreferencetothesaleandtheremedyoftheholderofsuchsharesorofanypersonclaimingunderorthroughhiminrespectofanyallegedirregularityorinvalidity,shallbeagainsttheCompany.
18. ThenetproceedsofanysuchsaleshallbeappliedinortowardssatisfactionoftheamountduetotheCompany,oroftheliabilityorengagement,asthecasemaybe,andthebalance(ifany)shallbepaidtotheMemberortheperson(ifany)entitledbytransmissiontothesharessosold.
19. NoMembershallbeentitledtoreceiveanydividendortoexerciseanyprivilegesasaMemberuntilhehaspaidallcallsforthetimebeingdueandpayableoneveryshareheldbyhim,togetherwithinterestandexpenses(ifany).
Trustsnottoberecognised
InformationofShareholding
Sharesbuy-back
Companytohaveaparamountlien
Enforcinglienbysale
Evidence
Applicationofproceeds
Membernotentitledtodividendortovoteuntilcallspaid
CompanyNo.11106-V
CALLS ON SHARES
20. The Directors may, subject to the provisions of these Articles, from time to time make suchcallsupontheMembersinrespectofallmoneysunpaidontheirshares(whetheronaccountofnominalvalueofthesharesorbywayofpremium)astheythinkfit,providedthatfourteen(14)daysnoticeatleastisgivenofeachcallandeachMembershallbeliabletopaytheamountofeverycallsomadeuponhimtothepersonsbytheinstalments(ifany)andatthetimesandplaces appointed by the Directors. A call may be revoked or postponed as the Directors maydetermine.
21. A call shall be deemed to have been made at the time when the resolution of the Directorsauthorisingsuchcallwaspassed.
22. Ifbeforeoronthedayappointedforpaymentthereofacallorinstalmentpayableinrespectofashareisnotpaid,thepersonfromwhomthesameisdueshallpayinterestontheamountofthecallorinstalmentatsuchratenotexceedingtenpercent(10%)perannumastheDirectorsshallfixfromthedayappointedforpaymentthereoftothetimeofactualpayment,buttheDirectorsmaywaivepaymentofsuchinterestwhollyorinpart.
23. Anysumwhichbythetermsofallotmentofashareismadepayableuponallotmentoratanyfixeddate,whetheronaccountoftheamountoftheshareorbywayofpremium,shall,forallpurposeoftheseArticles,bedeemedtobeacalldulymadeandpayableonthedatefixedforpayment,andincaseofnon-paymenttheprovisionsoftheseArticlesastopaymentofinterestandexpenses,forfeitureandthelike,andalltherelevantprovisionsoftheseArticles,shallapplyasifsuchsumwereacalldulymadeandnotifiedasherebyprovided.
24. TheDirectorsmay,fromtimetotime,makearrangementsontheissueofsharesforadifferencebetweentheholdersofsuchsharesintheamountofcallstobepaidandinthetimeofpaymentofsuchcalls.
25. TheDirectorsmay,iftheythinkfit,receivefromanyMemberwillingtoadvancethesame,alloranypartofthemoneyuncalledandunpaiduponanysharesheldbyhim,anduponalloranypartofthemoneysoadvancedmay(untilthesamewould,butfortheadvance,becomepayable)payinterestatsuchrate(unlesstheCompanyingeneralmeetingshallotherwisedirect)asmaybeagreeduponbetweentheDirectorsandtheMemberpayingthesuminadvance,inadditiontothedividendpayableuponsuchpartoftheshareinrespectofwhichsuchadvancehasbeenmadeasisactuallycalledup.Suchcapitalpaidonsharesinadvanceofcallsshallnot,whilstcarryinginterest,conferarighttoparticipateinprofits.Exceptinliquidation,sumspaidinadvanceofcallsshallnot,untilthesamewouldbutforsuchadvancehavebecomepayable,betreatedaspaid-uponthesharesinrespectofwhichtheyhavebeenpaid.
TRANSFER OF SECURITIES
26. Theinstrumentoftransferofanysecuritiesshallbeexecutedbyoronbehalfofthetransferorandtransferee,andthetransferorshallbedeemedtoremaintheholderofthesecuritiesuntilthenameofthetransfereeisenteredintheRecordofDepositorsinrespectthereof.
27. Depository may refuse to register any transfer of Deposited Securities that does not complywith the Central Depositories Act and the Rules, no securities shall in any circumstances betransferredtoanyinfant,bankruptorpersonofunsoundmind.
28. TheregistrationoftransfersmaybeclosedatsuchtimesandforsuchperiodsastheDirectorsmayfromtimetotimedetermine,provideditshallnotbeclosedformorethanthirty(30)daysinanyyear.TheCompanyshallgiveBursaSecuritiespriorwrittennoticeof theperiodof theintendedsuspensionorclosureandthepurposesthereof,whichnoticeshallbeatleastten(10)marketdaysorsuchnumberofdaysasmaybeprescribedbyBursaSecurities.Inrelationtothesuspensionorclosure, theCompanyshallgivewrittennotice inaccordancewiththeRulestopreparetheappropriateRecordofDepositors.
29. ThetransferofanylistedsecuritiesorclassoflistedsecuritiesoftheCompanywhichhavebeendepositedwithDepository,shallbebywayofbookentrybyDepositoryinaccordancewiththeRulesand,notwithstandingsections103and104oftheAct,butsubjecttosubsection107C(2)oftheAct,andanyexemptionthatmaybemadefromcompliancewithsubsection107C(1)oftheAct,theCompanyshallbeprecludedfromregisteringandeffectinganytransferofsuchlistedsecurities.
Directorsmaymakecall
Call
Unpaidcall
Automaticcall
Paymentofcalls
Advanceoncall
Transferor’sRight
Refusaltoregistertransfers
Closingofregisters
Transferofsecurities
CompanyNo.11106-V
30. Subject to the provisions of the Central Depositories Act and the Rules, every instrument oftransfershallbeinwritingandintheformapprovedintheRulesandshallbepresentedtotheDepositorywithsuchevidence (ifany)as theDepositorymayrequire toprove the titleof theintendingtransferorandthattheintendedtransfereeisaqualifiedperson.
TRANSMISSION OF SECURITIES
31. In the case of the death of a Member, the legal personal representative or representatives,theexecutorsoradministratorsof thedeceased,shallbe theonlyperson recognisedby theCompany as having any title to his securities. Any person becoming entitled to securities inconsequence of the death or bankruptcy of a Member may, subject to the Rules and Article31hereof,transferthesecuritiestohimselfortosomeotherpersonnominatedbyhimasthetransfereebutnothinghereincontainedshallreleasetheestateofadeceasedfromanyliabilityinrespectofanyshareswhichhadbeenheldbyhim.
32. Any person becoming entitled to securities in consequence of the death or bankruptcy ofa Member, may, upon such evidence being produced as may from time to time properly berequiredbytheRulesandsubjectashereinafterprovided,electeithertoberegisteredhimselfasholderofthesecuritiesortohavesomeotherpersonnominatedbyhimregisteredasthetransferee thereof,but theDepositoryshall ineithercase,have thesameright todeclineorsuspendregistrationastheywouldhavehadinthecaseofatransferofthesecuritiesbythatMemberbeforehisdeathorbankruptcy.Providedalwaysthatwherethesecuritiesisadepositedsecurities,atransferofthesecuritiesmaybesubjecttotheRulescarriedoutbytheperson(s)becomingsoentitled.
33. A person entitled to securities by transmission shall be entitled to receive, and may give adischargefor,anydividendsorothermoneyspayableinrespectofthesecurities,butheshallnotbeentitledinrespectofittoreceivenoticeofortoattendorvoteatmeetingsoftheCompanyor,saveasaforesaid,toexerciseanyoftherightsor,privilegesasaMemberunlessanduntilheshallbecomeaMemberinrespectofthesecurities.Ifthepersonbecomingentitledelectstohavethesecuritiestransferredtohim,theaforesaidnoticeshallbegiventotheDepositoryandsubjecttotheRules,atransferofthesecuritiesmaybecarriedoutbythepersonbecomingsoentitled.
TRANSMISSION OF SECURITIES TO/FROM BRANCH REGISTER
34. Where:-
(a) thesecuritiesoftheCompanyarelistedonanotherstockexchange;and
(b) theCompanyisexemptedfromcompliancewithsection14oftheCentralDepositoriesActorsection29oftheSecuritiesIndustry(CentralDepositories)(Amendment)Act1998,asthecasemaybe,undertheRulesinrespectofsuchsecurities,
the Company shall, upon request of a securities holder, permit a transmission of securitiesheldbysuchsecuritiesholderfromtheregisterofholdersmaintainedbytheRegistraroftheCompanyinthejurisdictionoftheotherstockexchange,totheregisterofholdersmaintainedbytheRegistraroftheCompanyinMalaysiaandviceversaprovidedthatthereshallbenochangeintheownershipofsuchsecurities.
FORFEITURE OF SHARES
35. IfanyMemberfailstopaythewholeoranypartofanycallorinstalmentofacallonorbeforethedayappointedforthepaymentthereof,theDirectorsmayatanytimethereafter,duringsuchtimeasthecallorinstalmentoranypartthereofremainsunpaid,serveanoticeonhimoronthepersonentitledtothesharebytransmissionrequiringhimtopaysuchcallorinstalmentorsuchpartthereofasremainsunpaid,togetherwithinterestatsuchratenotexceedingtenpercent(10%)perannumoratsuchrateastheDirectorsshalldetermine,andanyexpensesthatmayhaveaccruedbyreasonofsuchnon-payment.
36. Thenoticeshallnameafurtherday(notearlierthantheexpirationoffourteen(14)daysfromthedateofthenotice)onorbeforewhichsuchcallorinstalment,orsuchpartasaforesaid,andallinterestandexpensesthathaveaccruedbyreasonofsuchnon-payment,aretobepaid.Itshallalsonametheplacewherepaymentistobemade,andshallstatethat,intheeventofnon-paymentatorbeforethetimeandattheplaceappointed,thesharesinrespectofwhichsuchcallwasmadewillbeliabletobeforfeited.
InstrumentofTransfer
Transmission
DeathorbankruptcyofaMember
Personentitledtoreceiveandgivedischargefordividends
TransmissionofsecuritiesfromForeignRegister
Noticetopaycalls
Formofnotice
CompanyNo.11106-V
37. Iftherequirementsofanysuchnoticeasaforesaidarenotcompliedwith,anyshareinrespectofwhichsuchnoticehasbeengivenmayatanytimethereafter,beforethepaymentrequiredbythenoticehasbeenmade,beforfeitedbyaresolutionoftheDirectorstothateffect.Aforfeitureofsharesshallincludealldividendsinrespectofthesharesnotactuallypaidbeforetheforfeiturenotwithstandingthattheyshallhavebeendeclared.
38. When any share has been forfeited in accordance with these Articles, notice of the forfeitureshall forthwith be given to the holder of the share or to the person entitled to the shares bytransmission,as thecasemaybe,andanentryof suchnoticehavingbeengiven,andof theforfeiturewiththedatethereof,shallforthwithbemadeintheRecordofDepositorsoppositetotheshare.
39. Notwithstanding any such forfeiture as aforesaid, the Directors may, at any time before theforfeitedsharehasbeenotherwisedisposedof,annultheforfeitureuponthetermsofpaymentofallcallsandinterestduethereonandallexpensesincurredinrespectoftheshareanduponsuchfurtherterms(ifany)astheyshallseefit.
40. Everysharewhichshallbe forfeitedmaybesold,re-allottedorotherwisedisposedof,eithertothepersonwhowasbeforeforfeituretheholderthereoforentitledthereto,ortoanyotherpersonuponsuchtermsandinsuchmannerastheDirectorsshallthinkfit,andtheDirectorsmay,ifnecessary,authorisesomepersontotransferthesametosuchotherpersonasaforesaid.Subjecttoanylienforsumsnotpresentlypayable,ifany,anyresidueoftheproceedsofsaleofshareswhichareforfeitedandsoldordisposedof,afterthesatisfactionoftheunpaidcallsandaccruedinterestandexpenses,shallbepaidtothepersonwhoseshareshavebeenforfeited,orhisexecutors,administrators,orassigneesorashedirects.
41. A shareholder whose shares have been forfeited shall cease to be a Member but shallnotwithstanding,be liable topay to theCompanyallcallsmadeandnotpaidonsuchsharesat the time of forfeiture, and interest thereon at such rate not exceeding ten per cent (10%)perannumtothedateofpayment,inthesamemannerinallrespectsasiftheshareshadnotbeenforfeited,andtosatisfyall(ifany)theclaimsanddemandswhichtheCompanymayhaveenforcedinrespectofthesharesatthetimeofforfeiture,withoutanydeductionorallowanceforthevalueofthesharesatthetimeofforfeiture.
42. Theforfeitureofashareshallinvolvetheextinction,atthetimeofforfeiture,ofallinterestinandallclaimsanddemandsagainsttheCompanyinrespectoftheshare,andallotherrightsandliabilitiesincidentaltotheshareasbetweentheshareholderwhoseshareisforfeitedandtheCompany,exceptonlysuchofthoserightsandliabilitiesasarebytheseArticlesexpresslysaved,orasarebytheAct,theCentralDepositoriesActandtheRules,givenorimposedinthecaseofpastMembers.
43. AstatutorydeclarationinwritingthatthedeclarantisaDirectororSecretaryoftheCompany,andthatasharehasbeendulyforfeitedinpursuanceoftheseArticles,andstatingthedateuponwhichitwasforfeited,shall,asagainstallpersonsclaimingtobeentitledtotheshareadverselytotheforfeiturethereof,beconclusiveevidenceofthefactsthereinstated,andsuchdeclaration,togetherwiththereceiptoftheCompanyfortheconsideration(ifany),givenfortheshareonthesaleordispositionthereof,shallconstituteagoodtitletotheshare,andsuchpersonshallberegisteredastheholderof theshareandshallbedischargedfromallcallsmadepriortosuchsaleordisposition,andshallnotbeboundtoseetheapplicationofthepurchasemoney(ifany),norshallhistitletothesharebeaffectedbyanyact,omissionorirregularityrelatingtoorconnectedwiththeproceedingsinreferencetotheforfeiture,sale,re-allotmentordisposaloftheshare.
CONVERSION OF SHARES INTO STOCK
44. (1) TheCompanymaybyordinaryresolutionpassedatageneralmeetingconvertanypaid-upsharesintostockandreconvertanystockintopaid-upsharesofanydenomination.
(2) Theholdersofstockmaytransferthesameoranypartthereof inthesamemannerandsubjecttothesameArticlesasandsubjecttowhichthesharesfromwhichthestockarosemightpreviouslytoconversionhavebeentransferredorasneartheretoascircumstancesadmit;buttheDirectorsmayfromtimetotimefixtheminimumamountofstocktransferableandrestrictorforbidthetransferoffractionsofthatminimum,buttheminimumshallnotexceedthenominalamountofthesharesfromwhichthestockarose.
Sharesforfeiture
Noticeofforfeiture
Directorsmayallowforfeitedsharetoberedeemed
Forfeitedsharesmaybesoldorreallotted
Arrearstobepaidnotwithstandingforfeiture
ForfeitureofsharesshallinvolveextinctionofinterestinandclaimsagainstCompany
Evidenceofforfeitureandvalidityofsale
Conversionofsharesintostockandreconversion
Shareholdersofstockmaytransfertheirinterests
CompanyNo.11106-V
(3) Theholdersofstockshallaccordingtotheamountofthestockheldbythemhavethesamerights,privilegesandadvantagesasregardsdividends,votingatmeetingsoftheCompanyandothermattersasiftheyheldthesharesfromwhichthestockarose,butnosuchprivilegeoradvantage(exceptparticipationinthedividendsandprofitsoftheCompanyandintheassetsonwindingup)shallbeconferredbyanysuchamountofthestockwhichwouldnotifexistinginshareshaveconferredthatprivilegeoradvantage.
(4) SuchoftheArticlesoftheCompanyasareapplicabletopaid-upsharesshallapplytostock,andthewords“shares”and“shareholders”thereininclude“stock”and“stockholder”.
ALTERATION OF CAPITAL
45. TheCompanymayfromtimetotimebyordinaryresolutionincreasethesharecapitalbysuchsum,tobedividedintosharesofsuchamount,astheresolutionshallprescribe.
46. SubjecttoanydirectiontothecontrarythatmaybegivenbytheCompanyingeneralmeeting,allnewsharesorotherconvertiblesecuritiesfromtimetotimetobecreatedshall,beforetheyareissuedbeofferedtosuchpersons,asatthedateoftheoffer,areentitledtoreceivenoticesfromtheCompanyofgeneralmeetingsinproportion,asnearlyasthecircumstancesadmit,totheamountoftheexistingsharesorsecuritiestowhichtheyareentitled.Theoffershallbemadebynoticespecifyingthenumberofsharesorsecuritiesoffered,andlimitingatimewithinwhichtheoffer,ifnotaccepted,shallbedeemedtobedeclined,and,aftertheexpirationofthattime,oronthereceiptofanintimationfromthepersontowhomtheofferismadethathedeclinestoacceptthesharesorsecuritiesoffered,theDirectorsmaydisposeofthosesharesorsecuritiesinsuchmannerastheythinkmostbeneficialtotheCompany.TheDirectorsmaylikewisealsodisposeofanynewsharesorsecuritieswhich(byreasonoftheratiowhichthenewsharesorsecuritiesbear tosharesorsecuritiesheldbypersonsentitled toanofferofnewsharesorsecurities)cannot,intheopinionoftheDirectors,beconvenientlyofferedunderthisArticle.
47. NotwithstandingtheforegoingandsubjecttotheActandtheListingRequirements,theCompanymustensurethatitshallnotissueanysharesorconvertiblesecuritiesifthenominalvalueofthethosesharesorconvertiblesecurities,whenaggregatedwiththenominalvalueofanysuchsharesorconvertiblesecuritiesissuedduringtheprecedingtwelve(12)months,exceedstenpercent(10%)ofthenominalvalueoftheissuedandpaid-upcapitaloftheCompany,exceptwherethesharesorconvertiblesecuritiesare issuedwith thepriorapprovalof theshareholders ingeneralmeetingoftheprecisetermsandconditionsoftheissue.
48. TheCompanymaybyordinaryresolution:-
(a) consolidateanddividealloranyofitssharecapitalintosharesoflargeramountthanitsexistingshares;or
(b) sub-divideitssharecapitaloranypartthereofintosharesofsmalleramountthanisfixedbytheMemorandumandArticlesofAssociationandtheAct;providedthatinthesub-divisiontheproportionbetweentheamountpaidandtheamount(ifany)unpaidoneachreducedshareshallbethesameasitwasinthecaseofthesharefromwhichthereducedshareisderivedandsothatasbetweentheresultingsharesoneormoreofsuchsharemay,bytheresolutionbywhichsuchsub-divisioniseffected,begivenanypreferenceoradvantageasregardsdividend,returnofcapital,votingorotherwiseovertheothersoranyotherofsuchshares,and
(c) cancelanysharesnottakenoragreedtobetakenbyanypersonanddiminishtheamountofitssharecapitalbytheamountofthesharessocancelled.
49. ExceptsofarasotherwiseprovidedbytheconditionsofissueorbytheseArticles,anycapitalraisedbythecreationofnewsharesshallbeconsideredaspartoftheoriginalcapital,andshallbesubjecttotheprovisionshereincontainedwithreferencetopaymentofcallsandinstalments,transferandtransmission,forfeiture,lien,surrenderandotherwise.UnlessotherwiseprovidedinaccordancewiththeseArticlesthenewsharesshallbeOrdinaryShares.
50. The Company may by special resolution reduce its share capital and any capital redemptionreserve fund or any share premium account in any manner authorised and subject to anyconditionsprescribedbytheAct.
Participationindividendsandprofits
Provisionapplicabletopaid-upsharesapplytostock
Powertoincreasecapital
Offerofunissuedshares
Issueofsecurities
Companymayalteritscapitalincertainways
Capitalraisedbythecreationofnewshares
Reductionofcapital
CompanyNo.11106-V
GENERAL MEETINGS
51. AnannualgeneralmeetingoftheCompanyshallbeheldinaccordancewiththeprovisionsoftheAct.Allgeneralmeetingsotherthantheannualgeneralmeetingsshallbecalledextraordinarygeneralmeetings.AllgeneralmeetingsshallbeheldatsuchtimeandplaceastheDirectorsshalldetermine.Everynoticeofanannualgeneralmeetingshallspecifythemeetingassuchandeverymeetingconvenedforpassingaspecialresolutionshallstatetheintentiontoproposesuchresolutionasaspecialresolution.
52. The Directors may whenever they so decide by resolution convene an extraordinary generalmeetingoftheCompany.Inaddition,anextraordinarygeneralmeetingshallbeconvenedonsuchrequisitionasreferredtoinsection144oftheAct,oriftheCompanymakesdefaultinconveningameetingincompliancewitharequisitionreceivedpursuanttosection144,ameetingmaybeconvenedbytherequisitioniststhemselvesinthemannerprovidedinsection144oftheAct.
53. Subject to the provision of the Act relating to special resolutions and special notice and theListing Requirements, the notices convening meetings shall specify the place, day and hourof the meeting, and shall be given to all shareholders at least fourteen (14) days before themeetingoratleasttwenty-one(21)daysbeforethemeetingwhereanyspecialresolutionistobeproposedorwhereitisanannualgeneralmeeting.Anynoticeofameetingcalledtoconsiderspecial business shall be accompanied by a statement regarding the effect of any proposedresolutioninrespectofsuchspecialbusiness.Atleastfourteen(14)days’noticeortwenty-one(21)days’noticeinthecasewhereanyspecialresolutionisproposedorwhereitistheannualgeneralmeeting,ofeverysuchmeetingshallbegivenbyadvertisementinatleastonenationallycirculatedBahasaMalaysiaorEnglishdailynewspaperandinwritingtoeachstockexchangeuponwhichthecompanyislistedinthedailypress.
54. (1) TheCompanyshallrequesttheDepositoryinaccordancewiththeRules,toissueaRecordofDepositorstowhomnoticesofgeneralmeetingsshallbegivenbytheCompany.
(2) TheCompanyshallalsorequesttheDepository inaccordancewiththeRules, toprepareaRecordofDepositorsasatthelatestdatewhichisreasonablypracticablewhichshallinanyeventbenotlessthanthree(3)marketdaysbeforethegeneralmeeting(hereinafterreferredtoas“theGeneralMeetingRecordofDepositors”).
(3) SubjecttotheSecuritiesIndustry(CentralDepositories)(ForeignOwnership)Regulations1996(whereapplicable)andnotwithstandinganyprovisionintheAct,aDepositorshallnotbe regardedasaMemberentitled toattendanygeneralmeetingand tospeakandvotethereatunlesshisnameappearsintheGeneralMeetingRecordofDepositors.
55. Allbusinessshallbespecialthatistransactedatanextraordinarygeneralmeeting,andalsoallthatistransactedatanannualgeneralmeeting,withtheexceptionofdeclaringadividend,the consideration of the financial statements, balance sheets, and reports of the Directorsand auditors, Directors’ fees, the election of Directors in the place of those retiring, and theappointmentandfixingoftheremunerationoftheauditors.
PROCEEDINGS AT GENERAL MEETING
56. NobusinessshallbetransactedatanygeneralmeetingunlessaquorumofMembersispresentat the time when the meeting proceeds to business. Save as herein otherwise provided, two(2)Memberspresentinpersonorbyproxy,orinthecaseofcorporationswhichareMembers,present by their representatives appointed pursuant to the provisions of these Articles andentitledtovoteshallbeaquorum.
57. Ifwithinhalf(1/2)anhourfromthetimeappointedforthemeetingaquorumisnotpresent,themeeting,ifconvenedupontherequisitionofMembers,shallbedissolved;inanyothercaseitshallstandadjournedtothesamedayinthenextweekatthesametimeandplace,ortosuchotherdayandatsuchothertimeandplaceastheDirectorsmaydeterminebutifaquorumisnotpresentwithinhalf(1/2)anhouratanyadjournedmeetingtheMemberorMemberspresentshallbeaquorum.
58. The Chairman (if any) of the Board of Directors shall preside as Chairman at every generalmeetingoftheCompany.IfthereisnosuchChairmanorDeputyChairman,orifatanymeetingneithertheChairmannortheDeputyChairmanispresentwithinfifteen(15)minutesafterthetimeappointedforholdingthemeeting,orifneitherofthemiswillingtoactaschairman,theDirectorspresentshallchooseone(1)oftheirnumbertoact,orifone(1)Directoronlyispresentheshallpresideaschairmanifwillingtoact.IfnoDirectorispresent,orifeachoftheDirectors
Generalmeeting
Extraordinarygeneralmeeting
Noticeofmeeting
RecordofDepositors
Specialbusiness
Quorum
Whenquorumnotpresent
Chairmanofgeneralmeeting
CompanyNo.11106-V
presentdeclinestotakethechair,thepersonspresentandentitledtovoteonapollshallelectone (1) of their number to be chairman. The election of the Chairman shall be by a show ofhands.
59. TheChairmanmay,withtheconsentofanymeetingatwhichaquorumispresent(andshallifsodirectedbythemeeting),adjournthemeetingfromtimetotimeandfromplacetoplace,butnobusinessshallbetransactedatanyadjournedmeetingotherthanthebusinessleftunfinishedatthemeetingfromwhichtheadjournmenttookplace.Whenameetingisadjournedforthirty(30)daysormore,noticeoftheadjournedmeetingshallbegivenasinthecaseofanoriginalmeeting.Saveasaforesaiditshallnotbenecessarytogiveanynoticeofanadjournmentorofthebusinesstobetransactedatanadjournedmeeting.
60. Atanygeneralmeetingaresolutionputtothevoteofthemeetingshallbedecidedonashowof hands unless a poll is (before or on the declaration of the result on the show of hands)demanded:-
(a) bytheChairman;
(b) byatleastthree(3)Memberspresentinpersonorbyproxyorbyattorneyorinthecaseofacorporationbyarepresentative;
(c) byaMemberorMemberspresentinpersonorbyproxyorbyattorneyorinthecaseofacorporationbyarepresentativeandrepresentingnotlessthanone-tenth(1/10)ofthetotalvotingrightsofalltheMembershavingtherighttovoteatthemeeting;or
(d) byaMemberorMemberspresentinpersonorbyproxyorbyattorneyorinthecaseofacorporationbyarepresentativeholdingsharesintheCompanyconferringarighttovoteatthemeetingbeingsharesonwhichanaggregatesumhasbeenpaid-upequaltonotlessthanone-tenth(1/10)ofthetotalsumpaid-uponallthesharesconferringthatright.
Unlessapollissodemanded,adeclarationbytheChairmanthataresolutionhasonashowofhandsbeencarriedorcarriedunanimously,orbyaparticularmajority,orlost,andanentryto thateffect in thebookcontainingtheminutesof theproceedingsof theCompanyshallbeconclusiveevidenceofthefactwithoutproofofthenumberorproportionofthevotesrecordedinfavouroforagainsttheresolution.Thedemandforapollmaybewithdrawn.
61. Ifapollisdulydemanded,itshallbetakeninsuchmannerandeitheratonceorafteranintervaloradjournmentorotherwiseas theChairmandirects,andtheresultof thepollshallbe theresolutionofthemeetingsatwhichthepollwasdemanded,butapolldemandedontheelectionofaChairmanoronaquestionofadjournmentshallbetakenforthwith.Thedemandforapollshall not prevent the continuance of a meeting for a transaction of any business other thanthe question on which the poll has been demanded. The Chairman of the meeting may (andifsodirectedby themeetingshall)appointscrutineersandmay inaddition to thepowersofadjourningmeetingscontainedinArticle60adjournthemeetingtosomeplaceandtimefixedforthepurposeofdeclaringtheresultofthepoll.
62. Inthecaseofanequalityofvotes,whetheronashowofhandsoronapoll,theChairmanofthemeetingatwhichtheshowofhandstakesplaceoratwhichthepollisdemandedshallbeentitledtoasecondorcastingvoteinadditiontoanyothervotehemayhave.
VOTES OF MEMBERS
63. Subjecttoanyrightsorrestrictionsforthetimebeingattachingtoanyclassorclassesofshares,atmeetingsofMembersorofclassesofMembers,eachMemberentitledtovotemayvoteinpersonorbyproxyorbyattorneyorbeingacorporationisrepresentedbyarepresentativeandon a show of hands. On resolution to be decided on a show of hands, every person presentwhoisaMember,whetheraholderofordinarysharesorpreferenceshares,whoispersonallypresentandentitledtovote,oraproxyoranattorneyorbeingacorporationisrepresentedbyanauthorisedrepresentativeofaMember,shallhaveone(1)vote.Onresolutiontobedecidedonapoll,everyMemberpresentinpersonorbyproxyorbyattorneyorotherdulyauthorisedrepresentativeforacorporationshallhaveone(1)voteforeverysuchshareheholds.
64. WherethecapitaloftheCompanyconsistsofsharesofdifferentmonetarydenominations,votingrightsshallbeprescribedinsuchamannerthataunitofcapitalineachclass,whenreducedtoacommondenominator,shallcarrythesamevotingpowerwhensuchrightisexercisable.
Powertoadjourngeneralmeeting
Votingonresolution
Polltobetaken
Chairmantohavecastingvotes
Righttovote
Sharesofdifferentmonetarydenominations
CompanyNo.11106-V
65. AMemberwhoisofunsoundmindorwhosepersonorestateisliabletobedealtwithinanywayunderthelawrelatingtomentaldisordermayvote,whetheronashowofhandsoronapoll,byhiscommitteeorbysuchotherpersonwhoproperlyhasthemanagementofhisestate,andanysuchcommitteeorotherpersonmayvotebyproxyorattorneyandanysuchcommitteeorotherpersonentitledunder thisArticlehereof to vote,mayvoteatanygeneralmeeting in respectthereofinthesamemannerasifhewastheregisteredholderofsuchsharesprovidedthatatleastforty-eight(48)hoursbeforethetimeofholdingthemeetingoradjournedmeeting,asthecasemaybeatwhichheproposestovote,heshallsatisfytheDirectorsofhisrighttovoteunlesstheDirectorsshallhavepreviouslyadmittedhisrighttovoteatsuchmeetinginrespectthereof.
66. SubjecttoArticle54,noMembershallbeentitledtobepresentandtovoteatanygeneralmeetingunlessallcallsorothersumspresentlypayablebyhiminrespectofsharesintheCompanyhavebeenpaid.
67. Noobjectionshallberaisedtothequalificationofanyvoterexceptatthemeetingoradjournedmeetingatwhichthevoteobjectedtoisgivenortendered,andeveryvotenotdisallowedatsuchmeetingshallbevalidforallpurposes.AnysuchobjectionmadeinduetimeshallbereferredtotheChairmanofthemeeting,whosedecisionshallbefinalandconclusive.
68. The instrument appointing a proxy shall be in writing (in the common or usual form) underthehandoftheappointororofhisattorneydulyauthorisedinwritingor, iftheappointorisacorporation,eitherundersealorunderthehandofanofficerorattorneydulyauthorised.TheDirectorsmaybutshallnotbeboundtorequireevidenceoftheauthorityofanysuchattorneyorofficer.AproxymaybutneednotbeaMemberoftheCompanyandtheprovisionsofsection149(1)(b)oftheActshallnotapplytotheCompany.Theinstrumentappointingaproxyshallbedeemedtoconferauthoritytodemandorjoinindemandingapoll.
69. A Member may appoint not more than two (2) proxies to attend the same meeting. Where aMember appoints two (2) proxies, he shall specify the proportion of his shareholdings to berepresentedbyeachproxy.WhereaMemberoftheCompanyisanauthorisednomineeasdefinedundertheCentralDepositoriesAct,itmayappointatleastone(1)proxybutnotmorethantwo(2)proxiesinrespectofeachSecuritiesAccountitholdswithordinarysharesoftheCompanystandingtothecreditofthesaidSecuritiesAccount.
70. The instrument appointing a proxy shall be in common or usual form as the Directors mayapprove. The proxy form must be in the manner which allows members of the Company toindicatehowhe/shewouldlikehis/herproxytovoteinrelationtoeachresolution.
71. The instrumentappointingaproxyandthepowerofattorneyorotherauthority, ifany,underwhichitissignedoranotariallycertifiedcopyofthatpowerorauthorityshallbedepositedbyhandatorbyfacsimiletransmissiontotheOfficeoftheCompany,oratsuchotherplacewithinMalaysiaasisspecifiedforthatpurposeinthenoticeconveningthemeeting,notlessthanforty-eight (48) hours before the time for holding the meeting or adjourned meeting at which thepersonnamedintheinstrumentproposedtovoteandindefaulttheinstrumentofproxyshallnotbetreatedasvalid.
72. Everypower,rightorprivilegehereingiveninthesepresentstoanyMemberoftheCompanytoconvene,attend,voteandinanywaytakepartinanymeetingoftheCompany,maybeexercisedin the event of such Member being out of Malaysia, by any attorney, whether a Member oftheCompanyornot,dulyappointedbysuchMemberfor thepurpose,byapowerofattorneyproducedattheOfficeoftheCompanyduringbusinesshoursnotlessthantwo(2)cleardaysbeforethesameisactedon.AndanyvotegivenorthingsdonebysuchattorneyshallbevalidnotwithstandingthepreviousdeathoftheMembergivingsuchpowerofattorneyorrevocationofsuchpowerofattorneybyothermeansprovidedno intimation inwritingofsuchdeathorrevocationsshallhavebeenreceivedattheOfficeoftheCompanybeforesuchvoteisgivenorthingdone.
73. A vote given in accordance with the terms of an instrument of proxy or attorney or authorityshallbevalid,notwithstandingthepreviousdeathorunsoundnessofmindoftheprincipalorrevocationof the instrumentofproxyorof theauthorityunderwhichthe instrumentofproxywasexecuted,orthetransferoftheshareinrespectofwhichtheinstrumentofproxyisgiven,ifnointimationinwritingofsuchdeath,unsoundnessofmind,revocationortransferasaforesaidhasbeenreceivedbytheCompanyattheOfficebeforethecommencementofthemeetingoradjournedmeetingorinthecaseofpollbeforethetimeappointedforthetakingofthepoll,atwhichtheinstrumentofproxyisused.
Membersofunsoundmind
NoMembertovotewhilstcallsunpaid
VotestobetakenasChairmanshalldirect
Proxytobeinwriting
Numberofproxy
Formofproxy
Instrumentappointingproxytobedeposited
PowerofAttorney
Validityofvotegivenunderproxy
CompanyNo.11106-V
74. AcorporationmaybyresolutionofitsDirectorsorothergoverningbody,ifitisaMemberoftheCompany,authorisesuchpersonasitthinksfittoactasitsrepresentativeeitherataparticulargeneralmeetingoratallgeneralmeetingsoftheCompanyorofanyclassofMembersandapersonsoauthorisedshallbeinaccordancewithhisauthorityanduntilhisauthorityisrevokedbythecorporation,beentitledtoexercisethesamepowersonbehalfofthecorporationasthecorporationcouldexerciseifitwereanindividualMemberoftheCompany.
DIRECTORS’ APPOINTMENT, ETC.
75. ThefirstDirectorsshallbeMrLowKiokBooandMrChanTawFah.
76. UntilotherwisedeterminedbygeneralmeetingthenumberofDirectorsshallnotbelessthantwo(2)normorethanfifteen(15)butintheeventofanycasualvacancyoccurringandreducingthenumberofDirectorsbelowtheaforesaidminimumthecontinuingDirectororDirectorsmay,exceptinanemergency,actonlyforthepurposeofincreasingthenumberofDirectorstosuchminimumnumberortosummonageneralmeetingoftheCompany.
77. AtthefirstannualgeneralmeetingoftheCompanyalltheDirectorsshallretirefromoffice,andattheannualgeneralmeetingineverysubsequentyearone-third(1/3)oftheDirectorsforthetimebeing,oriftheirnumberisnotthree(3)oramultipleofthree(3),thenthenumbernearestone-third(1/3)shallretirefromofficeprovidedalwaysthatallDirectorsshallretirefromofficeonceatleastineachthree(3)years,butshallbeeligibleforre-election.AnelectionofDirectorsshalltakeplaceeveryyear.
78. Aretiringdirectorshallbeeligibleforre-election.
79. TheDirectorstoretireineveryyearshallbethosewhohavebeenlongestinofficesincetheirlastelection,butasbetweenpersonwhobecomeDirectorsonthesamedaythosetoretireshall(unlesstheyotherwiseagreeamongthemselves)bedeterminedbylot.
80. NopersonnotbeingaretiringDirectorshallbeeligibleforelectiontotheofficeofDirectoratanygeneralmeetingunlessaMemberintendingtoproposehimforelectionhas,atleasteleven(11)cleardaysbeforethemeeting,leftattheOfficeoftheCompanyanoticeinwritingdulysignedbythenominee,givinghisconsenttothenominationandsignifyinghiscandidaturefortheoffice,ortheintentionofsuchMembertoproposehimforelection,providedthatinthecaseofapersonrecommendedbytheDirectorsforelection,nine(9)cleardays’noticeonlyshallbenecessary,andnoticeofeachandeverycandidatureforelectiontotheBoardofDirectorsshallbeservedontheregisteredholdersofsharesatleastseven(7)dayspriortothemeetingatwhichtheelectionistotakeplace.
81. Amotionfortheappointmentoftwo(2)ormorepersonsasDirectorsbyasingleresolutionshallnotbemadeatanygeneralmeetingunlessaresolutionthatitshallbesomadehasfirstbeenagreedtobythemeetingwithoutanyvotebeinggivenagainstit;andanyresolutionmovedincontraventionofthisprovisionshallbevoid.
82. TheCompanyatthemeetingatwhichaDirectorsoretiresmayfillthevacatedofficebyelectingapersonthereto,andindefaulttheretiringDirectorshallifofferinghimselfforre-electionandnotbeingdisqualifiedundertheActfromholdingofficeasaDirectorbedeemedtohavebeenre-elected,unlessatthatmeetingitisexpresslyresolvednottofillthevacatedoffice,orunlessaresolutionforthere-electionofthatDirectorisputtothemeetingandlost.
83. TheDirectorsshallhavepoweratanytime,andfromtimetotime,toappointanypersontobeaDirector,eithertofillacasualvacancyorasanadditiontotheexistingDirectors,butsothatthetotalnumberofDirectorsshallnotatanytimeexceedthenumberfixedinaccordancewiththeseArticles.AnyDirectorsoappointedshallholdofficeonlyuntilthenextfollowingannualgeneralmeetingandshallthenbeeligibleforre-electionbutshallnotbetakenintoaccountindeterminingtheDirectorswhoaretoretirebyrotationatthatmeeting.
84. TheCompanymaybyordinaryresolution,ofwhichspecialnoticeisgiven,removeanyDirectorbeforetheexpirationofhisperiodofoffice,andmaybyanordinaryresolutionappointanotherpersoninhisstead;thepersonsoappointedshallbesubjecttoretirementatthesametimeasifhehadbecomeaDirectoronthedayonwhichtheDirectorinwhoseplaceheisappointedwaslastelectedaDirector.
CorporateRepresentative
Directors
NumberofDirectors
RetirementofDirectors
DeterminationofDirectortoretire
NoticeofcandidateasaDirector
AppointmentofDirectorstobevotedonindividually
Fillingofvacancy
Casualvacancyoradditionalappointment
RemovalofDirectors
CompanyNo.11106-V
85. ThefeespayabletotheDirectorsshallfromtimetotimebedeterminedbytheCompanyingeneralmeeting,andsuchfeesshallbedividedamongtheDirectorsinsuchproportionsandmannerasthatDirectorsmaydetermineprovidedalwaysthat:-
(a) feespayabletoDirectorswhoholdnoexecutiveofficeintheCompanyshallbepaidbyafixedsumandnotbyacommissiononorpercentageofprofitsorturnover;
(b) fees payable to Directors shall not be increased except pursuant to a resolution passedatageneralmeeting,wherenoticeoftheproposedincreasehasbeengiveninthenoticeconveningthemeeting;
(c) any fee paid to an Alternate Director shall be such amount as shall be agreed betweenhimselfandtheDirectornominatinghimandshallbepaidoutoftheremunerationofthelatter.
86. TheDirectorsmayalsobepaidalltravelling,hotel,andotherexpensesproperlyincurredbytheminattendingandreturningfrommeetingoftheDirectorsoranycommitteeoftheDirectorsorgeneralmeetingsoftheCompanyorinconnectionwiththebusinessoftheCompany.AnyDirectororwhoservesonanycommitteeorwhootherwiseperformsserviceswhich in theopinionoftheDirectorsareoutsidethescopeoftheordinarydutiesofaDirector,maybepaidsuchextraremuneration.
87. Ifbyarrangementwith theDirectors,anyDirectorshallperformorrenderanyspecialdutiesoutsidehisordinarydutiesasaDirector inparticularwithout limiting to thegeneralityof theforegoingifanyDirectorbeingwillingshallbecalledupontoperformextraservicesortomakeanyspecialexertionsingoingorresidingawayfromhisusualplaceofbusinessorresidenceforanyofthepurposesoftheCompanyoringivingspecialattentiontothebusinessoftheCompanyasamemberofacommitteeofDirectors,theDirectorsmaypayhimspecialremuneration,inadditiontohisDirector’sfees,andsuchspecialremunerationmaybebywayofafixedsum,orotherwiseasmaybearrangedprovidedthatthespecialremunerationpayabletoNon-ExecutiveDirectorshallnotbywayofacommissiononorpercentageofprofitsorturnover.
88. A Director of the Company may be or become a Director or other officer of, or otherwiseinterestedin,anycompanypromotedbytheCompanyorinwhichtheCompanymaybeinterestedasshareholderorotherwise,andnosuchDirectorshallbeaccountabletotheCompanyforanyremunerationorotherbenefitsreceivedbyhimasaDirectororofficerof,orfromhisinterestin,suchothercompanyunlesstheCompanyotherwisedirects.
89. ADirectorshallnotberequiredtoholdanyqualificationshares.ADirectorwhoisnotamemberoftheCompanyshallneverthelessbeentitledtoattendandspeakatgeneralmeetingsormeetingsoftheholdersofanyclassofshares.
90. TheofficeofDirectorshallbecomevacantiftheDirectorduringhistermofoffice:-
(a) ceasestobeaDirectorbyvirtueoftheAct;
(b) becomesbankruptormakesanyarrangementorcompositionwithitscreditorsgenerally;
(c) becomesprohibitedfrombeingaDirectorbyreasonofanyordermadeundertheAct;
(d) becomesofunsoundmindorapersonwhosepersonorestateisliabletobedealtwithinanywayunderthelawrelatingtomentaldisorder;
(e) resignshisofficebynoticeinwritingtotheCompany;or
(f) isremovedbyaresolutionoftheCompanyingeneralmeetingandinthecaseofanalternateorsubstituteDirectorbyaresolutionoftheDirectors.
(g) Ifabsentfrommorethan50%ofthetotalBoardofDirectors’meetingsheldduringafinancialyearunlessanexemptionorwaiverisobtainedfromtheBursaSecurities.
POWERS AND DUTIES OF DIRECTORS
91. The business of the Company shall be managed by the Directors who may pay all expensesincurred inpromotingandregistering theCompany,andmayexerciseallsuchpowersof theCompanyasarenot,bytheActorbytheseArticles,requiredtobeexercisedbytheCompanyingeneralmeeting,subject,nevertheless,toanyoftheseArticles,totheprovisionsoftheAct,andtosuchregulations,beingnotinconsistentwiththeseArticlesorprovisionsoftheAct,asmay
Directors’fee
Reimbursement
Specialremuneration
Directormayholdotheroffice
QualificationofDirectors
OfficeofDirectorsvacatedincertaincases
GeneralpowersoftheCompanyvestedinDirectors
CompanyNo.11106-V
beprescribedbytheCompanyingeneralmeeting;butnoregulationmadebytheCompanyingeneralmeetingshallinvalidateanyprioractoftheDirectorswhichwouldhavebeenvalidifthatregulationhadnotbeenmade.
92. TheDirectorsshallnotwithoutthepriorapprovaloftheCompanyingeneralmeeting:
(a) carryintoeffectanyproposalorexecuteanytransactionfortheacquisitionofanundertakingorpropertyofasubstantialvalue,orthedisposalofasubstantialportionoforacontrollinginterestintheCompany’sundertakingorproperty;
(b) exerciseanypoweroftheCompanytoissuesharesunlessotherwisepermittedundertheAct;
(c) subjecttoSection132EoftheAct,enterintoanyarrangementortransactionwithaDirectoroftheCompanyor itsholdingCompanyorwithapersonconnectedwithsuchaDirectortoacquirefromordisposetosuchDirectororpersonanynon-cashassetsoftherequisitevalueasstatedintheAct;and
(d) issuewarrantsascalloptionsonsuchtermsandsubjecttosuchconditionswhichmayberecommendedby theDirectorswhichconfersa right tosubscribe fornewsharesof theCompany.
93. TheDirectorsmayexerciseall thepowersof theCompany toborrowor raisemoney for thepurposeoftheCompany’soranyofitsrelatedcorporations’businessesonsuchtermsastheythink fit and may secure the repayment of the same by mortgage or charge upon the wholeoranypartoftheCompany’sundertakingandproperty(bothpresentandfuture)includingitsuncalled or unissued capital and may issue bonds, debentures and other securities whetherchargeduponthewholeorpartof theassetsof theCompanyorotherwisebut theDirectorsshallnotborrowanymoneyormortgageorchargeanyoftheCompany’soranyofthesubsidiarycompanies’ undertaking, property or any uncalled capital or to issue debentures and othersecuritieswhetheroutrightorassecurityforanydebt,liabilityorobligationofanunrelatedthirdparty.
94. The Directors may establish or arrange any contributory or non-contributory pension orsuperannuation scheme for the benefit of, or pay a gratuity, pension or emolument to anypersonwhoisorhasbeenemployedbyorintheserviceoftheCompanyoranysubsidiaryoftheCompany,ortoanypersonwhoisorhasbeenaDirectororotherofficerofandholdsorhasheldsalariedemployment in theCompanyoranysuchsubsidiary,andthewidow, familyordependantsofanysuchperson.TheDirectorsmayalsosubscribetoanyassociationorfundwhichtheyconsider tobe for thebenefitof theCompanyoranysuchsubsidiaryoranysuchpersonsasaforesaidandmakepaymentsforortowardsanyhospitalorscholasticexpensesandanyDirectorholdingsuchsalariedemploymentshallbeentitledtoretainanybenefitreceivedbyhimhereundersubjectonly,wheretheActrequires,toproperdisclosuretotheMembersandtheapprovaloftheCompanyingeneralmeeting.
95. TheDirectorsmayexerciseallthepowersoftheCompanyinrelationtoanyofficialsealforuseoutsideMalaysiaandinrelationtobranchregister.
96. The Directors may from time to time by power of attorney appoint any corporation, firm orpersonorbodyofpersons,whethernominateddirectlyorindirectlybytheDirectors,tobetheattorneyorattorneysoftheCompanyforsuchpurposesandwithsuchpowers,authorities,anddiscretions(notexceedingthosevestedinorexercisablebytheDirectorsundertheseArticles)andforsuchperiodandsubjecttosuchconditionsastheymaythinkfit,andanysuchpowersofattorneymaycontainsuchprovisionsfortheprotectionandconvenienceofpersonsdealingwithanysuchattorneyastheDirectorsmaythinkfitandmayalsoauthoriseanysuchattorneytodelegatealloranyofthepowers,authorities,anddiscretionsvestedinhim.
97. AnyDirectorwiththeapprovalofthemajorityofDirectorsmayappointanyperson(whetheraMemberoftheCompanyornot)tobeanAlternateorSubstituteDirectorinhisplaceduringsuchperiodashethinksfit.AnypersonwhilehesoholdsofficeasanAlternateorSubstituteDirectorshallbeentitledtonoticeofmeetingsoftheDirectorsandtoattendandvotethereataccordingly,andtoexerciseallthepowersoftheappointerinhisplace.AnAlternateorSubstituteDirectorshallnotrequireanysharequalification,andshallipsofactovacateofficeiftheappointervacatesofficeasadirectororremovestheappointee fromoffice.Anyappointmentorremovalunderthisregulationshallbeeffectedbynoticeinwritingunderthehandofthedirectormakingthesame.
PowerofDirectors
Director'sborrowingpowers
Powertomaintainpensionfund
Branchregisters
Directorsmayappointattorneys
AppointmentofAlternateDirectors
CompanyNo.11106-V
98. All cheques, promissory notes, drafts, bills of exchange, and other negotiable instruments,andallreceiptsformoneypaidtotheCompany,shallbesigned,drawn,accepted,endorsed,orotherwiseexecuted,asthecasemaybe,insuchmannerastheDirectorsfromtimetotimebyresolutiondetermine.
99. ADirectorshallatalltimesacthonestlyandusereasonablediligenceinthedischargeofthedutiesofhisofficeandshallnotmakeuseofanyinformationacquiredbyvirtueofhispositiontogaindirectlyorindirectlyanimproperadvantageforhimselforforanyotherpersonortocausedetrimenttotheCompany.
100. EveryDirectorshallgivenoticetotheCompanyofsucheventsandmatterrelatingtohimselfasmaybenecessaryorexpedient toenable theCompanyand itsofficers tocomplywith therequirementsoftheAct.
101. SubjectalwaystotheprovisionsoftheAct,aDirectormayholdanyotherofficeorplaceofprofitundertheCompany(otherthantheofficeofAuditor)inconjunctionwithhisofficeofDirectorforsuchperiodandonsuchterms(astoremunerationandotherwise)astheDirectorsmaydetermineandnoDirectororintendingDirectorshallbedisqualified,byhisoffice,fromcontractingwiththeCompanyeitherwithregardtohistenureofanysuchotherofficeorplaceofprofitorasvendor,purchaserorotherwise,norshallanysuchcontract,oranycontractorarrangemententeredintobyoronbehalfoftheCompanywhichaDirectorisinanywayinterested,beliabletobeavoided,norshallanyDirectorsocontractingorbeingsointerestedbeliabletoaccounttotheCompanyforanyprofitrealisedbyanysuchcontractorarrangementbyreasonofsuchDirectorholdingthatofficeorofthefiduciaryrelationshiptherebyestablished.
102. AnyDirectormayactbyhimselforhisfirminaprofessionalcapacityfortheCompanyandheandhisfirmshallbeentitledtoremunerationforhisorhisfirm’sprofessionalservicesasifhewasnotaDirector,providedthatnothinghereincontainedshallauthoriseaDirectororhisfirmtoactasauditoroftheCompanyandprovidedfurtherthatsuchshallbeatnormalcommercialterms.
103. TheDirectorsshallcauseminutestobemadeforthepurpose:-
(a) ofallappointmentsofofficerstobeengagedinthemanagementoftheCompany’saffairs;
(b) ofnamesofDirectorspresentateachmeetingofDirectorsandofanycommitteeofDirectorsandoftheCompanyingeneralmeeting;and
(c) of all resolutions and proceedings at all meetings of the Company and of any class ofMembers,oftheDirectorsandofcommitteeofDirectors.
SuchminutesshallbesignedbytheChairmanofthemeetingatwhichtheproceedingswereheldorbytheChairmanofthenextsucceedingmeetingandifsosigned,shallbeconclusiveevidencewithoutanyfurtherproofofthefactsthereonstated.
104. TheDirectorsshalldulycomplywiththeprovisionsoftheActandinparticulartheprovisionsinregardtokeepingaRegisterofDirectorsandSecretaries,aRegisterofMembers,aRegisterofCharges,aRegisterofDirectors’Shareholdings,RegisterofDebentureHolders,RegisterofSubstantialShareholdersandRegisterofOptionHoldersand inregard to theproductionandfurnishingofcopiesofsuchRegisters.
PROCEEDINGS OF DIRECTORS
105. TheDirectorsmaymeettogetherforthedespatchofbusiness,adjournandotherwiseregulatetheirmeetingsastheythinkfit.AmeetingoftheDirectorsmaybeheldanywhereintheworld.AnyDirectormayatanytimeandtheSecretaryshallontherequisitionofanyoftheDirectors,summonameetingoftheDirectors.TheDirectorsmayholdameetingofDirectorsattwo(2)ormorevenueswithinoroutsideMalaysiausinganytechnologythatgivestheDirectorsasawholeareasonableopportunitytoparticipate.Aminuteoftheproceedingsofsuchmeetingissufficientevidenceoftheproceedingstowhichitrelates.
106. ThequorumnecessaryforthetransactionofthebusinessoftheDirectorsmaybefixedbytheDirectorsandunlesssofixedshallbetwo(2).
107. ItshallnotbenecessarytogiveanyDirectororAlternateDirectorwhohasnotgotanaddressinMalaysia,registeredwiththeCompany,noticeofameetingoftheDirectors.UnlessotherwisedeterminedbytheDirectorsfromtimetotime,noticeofallDirectors’meetingsshallbegivento
Executionofnegotiableinstrumentsandreceiptsformoneypaid
Dischargeofduties
Noticeofdisclosures
PowerofDirectorstoholdofficesofprofitandtocontractwithCompany
Directormayactinhisprofessionalcapacity
MinutestobemadeandwhensignedbyChairmantobeconclusiveevidence
KeepingofRegisters
Meetings
Quorum
NoticeofDirectors’Meeting
CompanyNo.11106-V
allDirectorsandtheiralternateswhohavearegisteredaddressinMalaysia.Exceptinthecaseofanemergency,reasonablenoticeofeveryDirectors’meetingshallbegiven inwriting.TheDirectormaywaivenoticeofanymeetingandanysuchwaivermayberetroactive.ThenoticeofeachDirectors’meetingshallbedeemedtobeservedifaproperlystampedlettercontainingthenoticeispostedorthenoticeissentbyhand,facsimiletransmission,electronicmailorotherelectroniccommunicationstotheDirectors.
108. SubjecttotheseArticles,anyquestionarisingatanymeetingofDirectorsshallbedecidedbyamajorityofvotesandadeterminationbyamajorityofDirectorsshallforallpurposesbedeemedadeterminationoftheDirectors.IncaseofanequalityofvotesandsubjecttoArticle106theChairmanofthemeetingshallhaveasecondorcastingvote.Wheretwo(2)Directorsformaquorum,theChairmanofthemeetingatwhichonlysuchaquorumispresent,oratwhichonlytwo (2) Directors are competent to vote on the question at issue, shall not have a second orcastingvote.
109. ADirectorshallnotvoteinrespectofanycontractorproposedcontractorarrangementinwhichhehas,directlyorindirectly,aninterestandifheshalldosohisvoteshallnotbecounted.
110. EveryDirectorshallcomplywiththeprovisionsofSections131and135oftheActinconnectionwith the disclosure of his shareholding and interest in the Company and his interest in anycontractorproposedcontractwiththeCompanyand inconnectionwiththedisclosure,everydirector shall state the fact and the nature, character and extent of any office or possessionofanypropertywherebywhetherdirectlyor indirectlydutiesor interestsmightbecreated inconflictwithhisdutyorinterestasaDirectoroftheCompany.
111. TheremainingDirectorsmaycontinuetoactnotwithstandinganyvacancyintheirbody,butifandso longas theirnumber is reducedbelow theminimumnumberfixedbyorpursuant totheArticlesoftheCompanyasthenecessaryquorumofDirectors,theremainingDirectorsorDirector may, except in an emergency, act only for the purpose of increasing the number ofDirectorstothatminimumnumber,ortosummonageneralmeetingoftheCompany,butfornootherpurpose.
112. TheDirectorsmayelectaChairmanoraDeputyChairmanoftheirmeetingsanddeterminetheperiodforwhichheistoholdoffice,butifnosuchChairmaniselected,orifatanymeetingtheChairmanorDeputyChairmanisnotpresentwithinfifteen(15)minutesafterthetimeappointedforholdingthemeeting,theDirectorspresentmaychooseone(1)oftheirMemberstobetheChairmanofthemeeting.
113. TheDirectorsmayestablishanycommittees, localboardsoragenciescomprisingone (1)ormorepersonsformanaginganyoftheaffairsoftheCompany,eitherinMalaysiaorelsewhere,andmaylaydown,varyorannulsuchrulesandregulationsastheymaythinkfitfortheconductofthebusinessthereof,andmayappointanypersonorpersonstobethememberormembersofanysuchcommitteeorlocalboardoragencyandmayfixtheirremunerationandmaydelegatetoanysuchcommitteeorlocalboardoragencyanyofthepowers,authoritiesanddiscretionsvestedintheDirectors,withpowertosub-delegate,andmayauthorisethememberofmembersofanysuchcommitteeorlocalboardoragencyoranyofthem,tofillanyvacanciestherein,andtoactnotwithstandingvacancies,andanysuchappointmentofdelegationmaybemadeuponsuchtermsandsubjecttosuchconditionsastheDirectorsmaythinkfit,andtheDirectorsmayremoveanypersonorpersonssoappointed,andmayannulorvaryanysuchdelegation,butnopersonorpersonsdealingingoodfaithandwithoutnoticeofanysuchannulmentorvariationshallbeaffectedthereby.Wheretwo(2)personsformaquorum,theChairmanofameetingofanysuchcommitteeoflocalboardoragencyatwhichonlysuchaquorumispresent,oratwhichonly two (2)personsarecompetent to vote in thequestionat issue,shallnothaveacastingvote.
114. AcommitteemayelectaChairmanofitsmeetings;ifnosuchChairmaniselected,orifatanymeeting theChairman isnotpresentwithinfifteen (15)minutesafter the timeappointed forholding themeeting,or isunwilling toact theMemberspresentmaychooseone (1)of theirMemberstobetheChairmanofthemeeting.
115. SubjecttoanyrulesandregulationsmadepursuanttoArticle113andtheListingRequirements,acommitteemaymeetandadjournasitthinksproper.QuestionsarisingatanymeetingshallbedeterminedbyamajorityofvotesoftheMemberspresent,andinthecaseofanequalityofvotestheChairmanshallhaveasecondorcastingvote.
Directors’powertovote
Restrictiononvoting
DisclosureofinterestbyDirectors
Numberreducedbelowquorum
Chairman
Committees
Chairmanofcommittee
Meetingsofcommittee
CompanyNo.11106-V
116. AllactsdonebyanymeetingoftheDirectorsorofacommitteeofDirectorsorbyanypersonactingasaDirectorshall,notwithstandingthatitisafterwardsdiscoveredthattherewassomedefectintheappointmentofanysuchDirectororpersonactingasaforesaid,orthattheyoranyofthemweredisqualified,beasvalidasifeverysuchpersonhadbeendulyappointedandwasqualifiedtobeaDirector.
117. A resolution inwritingsignedbyamajorityofallDirectorsshallbeasvalidandeffectualasif ithadbeenpassedatameetingof theDirectorsdulycalledandconstituted;provided thatwhereaDirectorhasanalternate,thensuchresolutionmayalsobesignedbysuchalternate.Allsuchresolutionsshallbedescribedas“Directors’CircularResolution”andshallbeforwardedor otherwise delivered to the Secretary without delay, and shall be recorded by him in theCompany’sMinutesBook.Anysuchresolutionmayconsistofseveraldocumentsinthelikeform,eachsignedbyoneormoreDirectors.AnysuchdocumentmaybeacceptedassufficientlysignedbyaDirectoriftransmittedtotheCompanybyanytechnologypurportingtoincludeasignatureand/orelectronicordigitalsignatureoftheDirector.
118. Notwithstanding any provisions to the contrary contained in these Articles but subject to thelaw,alloranyoftheDirectorsormembersofanycommitteeoftheDirectorsmayparticipateatameetingoftheDirectorsorthatcommitteebymeansoftelephoneorvideoconferencingorbymeansofothercommunicationequipmentwherebyallpersonsparticipatinginthemeetingareable toheareachotherandbeheard for theentiredurationof themeeting.Apersonsoparticipatingshallbedeemedtobepresentinpersonandshallbeentitledtovoteorbecountedinaquorumaccordingly.Anymeetingheldinsuchmannershallbedeemedtobeheldatsuchplaceasshallbeagreeduponbythepersonsattendingthemeetingorwherethelargestgroupofthoseparticipatingisassembledor,ifthereisnosuchgroup,wheretheChairmanofthemeetingthenis.
MANAGING DIRECTORS AND/OR EXECUTIVE DIRECTORS
119. TheDirectorsmayfromtimetotimeappointanyone(1)ormoreoftheirbodytobeManagingDirector or Deputy Managing Director and/or Executive Directors. If the appointment is for afixedterm,thattermshallnotexceedthree(3)years,anduponsuchconditionsastheDirectorsthinkfit,andmayvestinsuchManagingDirectororDeputyManagingDirectorand/orExecutiveDirectorsthepowerherebyvestedintheDirectorsgenerallyastheymaythinkfit,butprovidedalwaysthatsuchManagingDirector,DeputyManagingDirectorand/orExecutiveDirectorsshallbesubjecttothecontroloftheDirectors.
120. A Managing Director or Deputy Managing Director and/or Executive Directors shall, while hecontinuestoholdthatoffice,besubjecttoretirementbyrotation,andheshallbereckonedasaDirectorforthepurposeofdeterminingtherotationofretirementofDirectorsorinfixingthenumber of Directors to retire and subject to provisions of any contract between him and theCompanyshall,besubject to thesameprovisionsastoresignationandremovalastheotherDirectorsoftheCompanyandifheceasestoholdtheofficeofDirectorforanycauseshallipsofacto and immediately cease to be a Managing Director or Deputy Managing Director and/orExecutiveDirectors.
121. A Managing Director or Deputy Managing Director and/or Executive Directors shall, subjecttothetermsofanyagreemententeredintoinanyparticularcase,receivesuchremuneration(whetherbywayofsalary,commission,orparticipationinprofitsorpartlyinonewayandpartlyinanother)astheDirectorsmaydetermine.Suchremunerationmaynotincludeacommissiononorapercentageofturnover.
122. TheDirectorsmayentrusttoandconferuponaManagingDirectororDeputyManagingDirectorand/orExecutiveDirectorsanyofthepowersexercisablebythemuponsuchtermsandconditionsandwithsuchrestrictionsastheymaythinkfit,andeithercollaterallywithortotheexclusionoftheirownpowers,andmayfromtimetotimerevoke,withdraw,alter,orvaryalloranyofthosepowers.
ASSOCIATE DIRECTORS
123. TheDirectorsmayfromtimeto timeappointanypersontobeanassociatedirectorandmayfromtimetotimecancelanysuchappointment.TheDirectorsmayfix,determineandvarythepowers,dutiesandremunerationofanypersonsoappointed,butapersonsoappointedshallnotberequiredtoholdanysharestoqualifyhimforappointmentnorhaveanyrighttoattendorvoteatanymeetingofDirectorsexceptbytheinvitationandwiththeconsentoftheDirectors.
Validityofactswhereappointmentdefective
ResolutionsinwritingsignedbyDirectorseffective
Participationinmeetingsbywayoftelephoneandvideoconferencing
AppointmentofManagingDirectorand/orExecutiveDirectors
PositionofManagingDirectorand/orExecutiveDirectors
RemunerationofManagingDirectorand/orExecutiveDirector
Powers
Appointmentofassociatedirectors
CompanyNo.11106-V
AUTHENTICATION OF DOCUMENTS
124. AnyDirectoror theSecretaryoranypersonappointedby theDirectors for thepurposeshallhavepowertoauthenticateanydocumentseffectingtheconstitutionoftheCompanyandanyresolution passed by the Company or the Directors and any books, records, documents andaccountsrelatingtothebusinessoftheCompany,andtocertifycopiesthereoforextractstherefromastruecopiesorextracts;andwhereanybooks,records,documentsoraccountsarekeptelsewherethanintheOffice,thelocalmanagerorotherofficeroftheCompanyhavingcustodythereofshallbedeemedtobeapersonappointedbytheDirectorsasaforesaid.
125. A document purporting to be a copy of a resolution of the Directors or any extract from theminutesofameetingoftheDirectorswhichiscertifiedassuchinaccordancewiththeprovisionsofArticle124,shallbeconclusiveevidenceinfavourofallpersonsdealingwiththeCompanyuponthefaiththereofthatsuchresolutionhasbeendulypassedor,asthecasemaybe,thatsuchextractisatrueandaccuraterecordofadulyconstitutedmeetingoftheDirectors.
SECRETARY/JOINT SECRETARIES
126. TheSecretary/JointSecretariesshallinaccordancewiththeActbeappointedbytheDirectorsforsuchterm,atsuchremuneration,and,uponsuchconditionsastheymaythinkfit,andanySecretary/JointSecretariessoappointedmayberemovedbythem.
SEAL
127. TheDirectorsshallprovideforthesafecustodyoftheSeal,whichshallonlybeusedpursuanttotheauthorityoftheDirectorsorofacommitteeoftheDirectorsauthorisedbytheDirectorsin their behalf. The Directors may from time to time make such regulations as they think fitdeterminingthepersonsandthenumberofsuchpersonsinwhosepresencetheSealshallbeaffixedandunlessotherwisesodetermined,everyinstrumenttowhichtheSealisaffixedshallbesignedbyaDirectorandshallbecountersignedbytheSecretaryorbyasecondDirectororbysomeotherpersonappointedbytheDirectorsforthepurpose.
128. ForpurposeofsealingsharecertificatestobeissuedbytheCompany,theCompanyshallhaveaduplicatecommonsealwhichshallbeanexactreplicaofitscommonsealwiththeadditiononthefaceofitofthewords“ShareSeal”andacertificatesealedwithsuchduplicatesealbearingtheauthographicor facsimilesignatureofaDirector,countersignedby theSecretaryorbyasecondDirectororbysomeotherpersonappointedby theDirector for thepurpose,shallbedeemedtobesealedwiththeSeal.
129. TheCompanymayexercisethepowerconferredbytheActwithregardtohavinganofficialsealforuseabroadandsuchpowersshallbevestedintheDirectors.
ACCOUNTS
130. TheDirectorsshallcauseproperaccountingandotherrecordstobekeptandshalldistributecopiesofthebalancesheetsandotherdocumentsasrequiredbytheActandshallfromtimeto timedeterminewhetherandtowhatextentandatwhat timesandplacesandunderwhatconditions or regulations the accounting and other records of the Company or any of themshallbeopenedtotheinspectionofMembersnotbeingDirectorsandnoMember(notbeingaDirector)shallhaveanyrightofinspectinganyaccountorbookorpaperoftheCompanyexceptasconferredbystatuteorauthorisedbytheDirectorsorbytheCompanyingeneralmeeting.
131. TheDirectorsshallfromtimetotimeinaccordancewithsection169oftheActandtheListingRequirements,causetobepreparedandlaidbeforetheCompanyingeneralmeetingsuchprofitand lossaccounts,balancesheetsand reportsasare referred to in thesaidsectionand theListingRequirements.TheintervalbetweenthecloseofafinancialyearoftheCompanyandtheissueoftheannualauditedaccounts,theDirectors’andAuditors’reportsshallnotexceedfour(4)months.Acopyoftheannualreportincludingsuchdocumentshallnotlessthantwenty-one(21)daysbeforethedateofthemeeting,providedalwaysthatitshallnotexceedsix(6)monthsfromthecloseofafinancialyearoftheCompanybesenttoeveryMemberof,andtoeveryholderofdebenturesoftheCompanyundertheprovisionsoftheActoroftheseArticles.TherequisitenumberofcopiesofeachofsuchdocumentasmayberequiredbyBursaSecuritiesorsuchotherstockexchange, ifany,uponwhichtheCompany’ssecuritiesmaybelisted,shallatthesametimebelikewisesenttoBursaSecuritiesandsuchotherstockexchange,ifany,providedthattheseArticlesshallnotrequireacopyofthesedocumentstobesenttoanypersonofwhose
Authenticationofdocuments
Conclusiveevidenceofresolutionsandextractofminutesofmeetings
Secretary/JointSecretaries
MannerinwhichSealistobeaffixed
ShareSeal
PowertohaveSealforuseabroad
Accountstobekept
Towhomcopiesofprofitandlossaccountsmaybesent
CompanyNo.11106-V
addresstheCompanyisnotaware,butanyMembertowhomacopyofthesedocumentshasnotbeensentshallbeentitledtoreceiveacopy,freeofchargeonapplicationattheOffice.
DIVIDENDS AND RESERVES
132. TheCompanyingeneralmeetingmaydeclaredividends,butnodividendshallexceedtheamountrecommendedbytheDirectors.
133. TheDirectorsmayfromtimetotimepaytotheMemberssuchinterimdividendsasappeartotheDirectorstobejustifiedbytheprofitsoftheCompany.
134. NodividendshallbepaidotherwisethanoutofprofitsoftheCompanyexceptpursuanttosection60oftheActnorshallanydividendbearinterestagainsttheCompany.
135. TheDirectorsmay,beforerecommendinganydividends,setasideoutoftheprofitsoftheCompanysuchsumsastheythinkproperasreserveswhichshall,atthediscretionoftheDirectors,beapplicable foranypurposeatwhich theprofitsof theCompanymaybeproperlyapplied,andpendinganysuchapplicationmay,atthelikediscretion,eitherbeemployedinthebusinessoftheCompanyorbeinvestedinsuchinvestments(otherthansharesintheCompany)astheDirectorsmayfromtimetotimethinkfit.TheDirectorsmayalsowithoutplacingthesametoreservecarryforwardanyprofitswhichtheymaythinkprudentnottodivide.
136. Subjecttotherightsofpersons,ifany,entitledtoshareswithspecialrightsastodividend,alldividendsshallbedeclaredandpaidaccordingtotheamountspaidorcreditedaspaidonthesharesinrespectwhereofthedividendispaid,butnoamountpaidorcreditedaspaidonashareinadvanceofcallsshallbetreatedforthepurposesofthisregulationaspaidontheshares.Alldividendsshallbeapportionedandpaidproportionatelytotheamountspaidorcreditedaspaidonthesharesduringanyportionorportionsoftheperiodinrespectofwhichthedividendispaid;butifanyshareisissuedontermsprovidingthatitshallrankfordividendasfromaparticulardatethatshareshallrankfordividendaccordingly.
137. TheDirectorsmaydeductfromanydividendpayabletoanyMemberallsumsofmoney,ifany,presentlypayablebyhimtotheCompanyonaccountofcallsorotherwiseinrelationtothesharesoftheCompany.
138. Alldividendsunclaimedforone(1)yearafterhavingbeendeclaredshallbedealtwithbytheCompanyinaccordancewiththeprovisionsoftheUnclaimedMoneysAct,1965.
139. Any general meeting declaring a dividend or bonus may direct payment of such dividend orbonuswhollyorpartlybythedistributionofspecificassetsandinparticularofpaid-upshares,debenturesordebenturestocksofanyothercompanyor inanyone(1)ormoreofsuchwaysandtheDirectorsshallgiveeffecttosuchresolution,andwhereanydifficultyarisesinregardtosuchdistribution,theDirectorsmaysettlethesameastheythinkexpedient,andfixthevaluefordistributionofsuchspecificassetsoranypartthereofandmaydeterminethatcashpaymentsshallbemadetoanyMembersuponthefootingofthevaluesofixedinordertoadjusttherightsofallpartiesandmayvestanysuchspecificassetsintrusteesasmayseemexpedienttotheDirectors.
140. (a) Anydividend,interestorothermoneypayableincashinrespectofsharesmaybepaidbychequeorwarrantsentthroughthepostdirecttotheregisteredaddressoftheholder.Everysuch cheque or warrant shall be made payable to the order of the person to whom it issent.
(b) SubjecttotheprovisionsoftheAct,theCentralDepositoriesActandtheRules,theListingRequirements and/or regulatory authorities, payment of dividend may be made by directtransferorsuchothermodeofelectronicmeanstothebankaccountoftheholderwhosenameappearintheRecordofDepositorsor,ifapersonisentitledtheretoinconsequenceofthedeathorbankruptcyoftheholder,tosuchpersonortothebankaccountofsuchpersonbywritingdirect.Thepaymentofanydividendbysuchelectronicmeansshall constitutegooddischargetotheCompanyinrespectofthedividendrepresentedtherebyregardlessofanydiscrepancygivenbytheMemberinthedetailsofthebankaccount(s).
Declarationofdividend
Interimdividend
Nointerestonunpaiddividend
Paymentofdividends
Dividendpayequally
Debtsmaybededucted
UnclaimedDividends
Dividendinspecie
Paymentbypostanddischarge
Paymentbyelectronicmeansanddischarge
CompanyNo.11106-V
CAPITALISATION OF PROFITS
141. TheCompanyingeneralmeetingmayupontherecommendationoftheDirectorsresolvethatitisdesirabletocapitaliseanypartoftheamountforthetimebeingstandingtothecreditofanyoftheCompany’sreserveaccountsortothecreditoftheprofitandlossaccountorotherwiseavailable fordistribution,andaccordingly thatsuchsumbeset free fordistributionamongsttheMemberswhowouldhavebeenentitledtheretoifdistributedbywayofdividendandinthesameproportionsonconditionsthatthesamebenotpaid incashbutbeappliedeither inortowardspayingupanyamountsforthetimebeingunpaidonanysharesheldbysuchMembersrespectivelyorpayingupinfullunissuedsharesordebenturesoftheCompanytobeallottedanddistributed,creditedasfullypaiduptoandamongstsuchMembersintheproportionaforesaid,or partly in the one way and partly in the other, and the Directors shall give effect to suchresolution.Asharepremiumaccountandacapitalredemptionreservemay,forthepurposeofthisregulation,beappliedinaccordancewithsection60(3)oftheAct.
142. WheneversucharesolutionasaforesaidshallhavebeenpassedtheDirectorsshallmakeallappropriationsandapplicationsoftheundividedprofitsresolvedtobecapitalisedthereby,andallallotmentsandissuesoffullypaidsharesordebentures, ifany,andgenerallyshalldoallactsandthingsrequiredtogiveeffect thereto,with fullpowerto theDirectors tomakesuchprovisionbypaymentincashorotherwiseastheythinkfitforthecaseofsharesordebenturesbecomingdistributableinfractions,andalsotoauthoriseanypersontoenteronbehalfofalltheMembersentitledtheretointoanagreementwiththeCompanyprovidingfortheallotmenttothemrespectively,creditedasfullypaidup,ofanyfurthersharesordebenturestowhichtheymaybeentitleduponsuchcapitalisation,or(asthecasemayrequire)forthepaymentupbytheCompanyontheirbehalf,bytheapplicationtheretooftheirrespectiveproportionsoftheprofitsresolvedtobecapitalised,oftheamountsoranypartoftheamountsremainingunpaidontheirexistingshares,andanyagreementmadeunderauthorityshallbeeffectiveandbindingonallsuchMembers.
LANGUAGE
143. Whereanyaccounts,minutesbooksorotherrecordsrequiredtobekeptbytheActarenotkeptintheMalayorEnglishLanguage,theDirectorsshallcauseatruetranslationofsuchaccounts,minutesbooksandotherrecordstobemadefromtimetotimeat intervalsofnotmorethanseven(7)daysandshallcausesuchtranslationtobekeptwiththeoriginalaccounts,minutesbookandotherrecordsrequiredbytheActtobekept.
NOTICES
144. A notice may be given by the Company to any Member either personally or by sending it bypostorbycouriertohimathisregisteredaddressasappearing intheRecordofDepositors.Whereanoticeissentbypostorbycourier,serviceofthenoticeshallbedeemedtobeeffectedbyproperlyaddressing,preparingandpostingalettercontainingthenotice,andtohavebeeneffectedinthecaseofanoticeofameetingonthedayafterthedateofitsposting,andinanyothercaseatthetimeatwhichtheletterwouldbedeliveredintheordinarycourseofpost.Theaccidentalomissiontogiveanynoticeofanymeetingtoorthenon-receiptofanysuchnoticebyanyoftheMembersshallnotinvalidatetheproceedingsatanygeneralmeetingoranyresolutionpassedthereat.
145. AnoticemaybegivenbytheCompanytothepersonsentitledtoashareinconsequenceofthedeathorbankruptcyofaMemberbysendingitthroughthepostinaprepaidletteraddressedtothembyname,orbythetitleofrepresentativesofthedeceased,orassigneeofthebankrupt,orbyanylikedescription,attheaddress,ifanywithinMalaysiasuppliedforthepurposebythepersonsclaimingtobesoentitled,or(untilsuchanaddresshasbeensosupplied)bygivingthenoticeinanymannerinwhichthesamemighthavebeengivenifthedeathorbankruptcyhadnotoccurred.
146. (1) Noticeofeverygeneralmeetingshallbegiveninanymannerhereinbeforespecifiedto:-
(a) everyMemberwitharegisteredaddressinMalaysiaoranaddressforserviceofnoticeinMalaysia;
(b) every person entitled to a share in consequence of the death or bankruptcy of aMemberwho,butforhisdeathorbankruptcy,wouldbeentitledtoreceivenoticeofthemeeting;
(c) theAuditorforthetimebeingoftheCompany;and
Powertocapitalise
Effectofresolutiontocapitalise
Translation
HownoticestobeservedtoMembers
Noticetopersonsentitledbytransmission
Personsentitledtonotice
CompanyNo.11106-V
(d) Bursa Securities and the other stock exchange, if any, on which the shares of theCompanyarelisted.
(2) Except as aforesaid no other person shall be entitled to receive notices of generalmeetings.
147. Everypersonwhobyoperationoflaw,transfer,transmissionorothermeanswhatsoevershallbecomeentitledtoanyshare,shallbeboundbyeverynoticeissuedinrespectofsuchshare,including notices issued to such person or persons whose names were, prior to his name,enteredintheRecordofDepositorsastheregisteredholderofsuchshare.
WINDING UP
148. If the Company is wound up, the liquidator may, with the sanction of a special resolution oftheCompany,divideamongsttheMembersinkindthewholeoranypartoftheassetsoftheCompany(whethertheyconsistofpropertyofthesamekindornot)andmayforthatpurposesetsuchvalueashedeemsfairuponanypropertytobedividedasaforesaidandmaydeterminehowthedivisionshallbecarriedoutasbetweentheMembersordifferentclassesofMembers.Theliquidatormay,withthelikesanction,vestthewholeoranypartofanysuchassetsintrusteesupontrustsforthebenefitofthecontributoriesastheliquidator,withthelikesanction,thinksfit,butsothatnoMembershallbecompelledtoacceptanysharesorothersecuritieswhereonthereisanyliability.
149. IftheCompanyshallbewoundup,theMembersofeachclassofshareholdersshallbeentitledtoparticipateequallyindirectproportiontothenominalvalueoftheirshares,providedthatifthesharecapitaloftheCompanyisdividedintodifferentclassestherightsofeachclassinaliquidationshallbeinaccordancewiththetermsoftheissueofthesharesofthatclass.
150. OnthevoluntaryliquidationoftheCompany,nocommissionorfeeshallbepaidtotheliquidatorunlessitshallhavebeenapprovedbyMembers.TheamountofsuchpaymentshallbenotifiedtoallMembersatleastseven(7)dayspriortothemeetingatwhichthecommissionorfeeistobeconsidered.
INDEMNITY
151. Every Director, Managing Director, agent, auditor, secretary, and other officer for the timebeingoftheCompanyshallbeindemnifiedoutoftheassetsoftheCompanyagainstanyliabilityincurredbyhimindefendinganyproceedings,whethercivilorcriminal, inwhichjudgmentisgiveninhisfavourorinwhichheisacquittedorinconnectionwithanyapplicationundertheActinwhichreliefisgrantedtohimbytheCourtinrespectofanynegligence,defaultbreachofdutyorbreachoftrust.
SECRECY
152. NoMembershallbeentitledtorequirediscoveryofanyinformationrespectinganydetailoftheCompany’stradeoranymatterwhichmaybeinthenatureofatradesecret,mysteryoftradeorsecretprocesswhichmayrelatetotheconductofthebusinessoftheCompanyandwhichintheopinionoftheDirectorsitwillbeinexpedientintheinterestoftheCompanytocommunicatetothepublicsaveasmaybeauthorisedbylaw.
EFFECT OF THE LISTING REQUIREMENTS
153. (1) NotwithstandinganythingcontainedintheseArticles,iftheListingRequirementsprohibitanactbeingdone,theactshallnotbedone.
(2) NothingcontainedintheseArticlespreventsanactbeingdonethattheListingRequirementsrequiretobedone.
(3) IftheListingRequirementsrequireanacttobedoneornottobedone,authorityisgivenforthatacttobedoneornottobedone(asthecasemaybe).
(4) If the Listing Requirements require these Articles to contain a provision and they do notcontainsuchaprovision,theseArticlesaredeemedtocontainthatprovision.
(5) IftheListingRequirementsrequiretheseArticlesnottocontainaprovisionandtheycontainsuchaprovision,theseArticlesaredeemednottocontainthatprovision.
Personsboundbynotice
Distributionofassetsinspecie
Indemnify
Liquidator’sCommission
Indemnity
Secrecy
EffectoftheListingRequirementsofBursaSecurities
CompanyNo.11106-V
(6) IfanyprovisionoftheseArticlesisorbecomesinconsistentwiththeListingRequirements,theseArticlesaredeemednottocontainthatprovisiontotheextentoftheinconsistency.
(7) Notwithstanding anything contained in these Articles, nothing herein contained shallprevent theDirectors fromapplying toBursaSecurities forawaiver fromcomplianceorobservanceofanyoftheListingRequirements.IntheeventthecomplianceorobservanceofsuchListingRequirementsarewaivedbyBursaSecurities, theCompanyshallnotberequiredtocomplywithanyofthearticlesrelatingtothoseListingRequirementsinrespectofwhichcomplianceorobservancehasbeenwaivedbyBursaSecurities.
(8) Forthepurposeofthisarticle,unlessthecontextotherwiserequires,“ListingRequirements”includesanyamendmenttotheListingRequirementsthatmaybemadefromtimetotime.
154. TheCompanyshallcomplywiththeprovisionsoftherelevantgoverningstatutes,regulationsandrulesasmaybeamended,modifiedorvariedfromtimetotime,oranyotherdirectiveorrequirement imposed by Bursa Securities, Approved Market Place, the Depository and otherappropriateauthoritiestotheextentrequiredby law,notwithstandinganyprovisions intheseArticlestothecontrary.
CompliancewithStatutes,RegulationsandRules
CompanyNo.11106-V
I/We_______________________________________________________________________________________________(FULLNAMEINCAPITALLETTERS)
of_________________________________________________________________________________________________(FULLADDRESS)
beingamember/membersofPSC Industries Berhad,herebyappoint_________________________________________ (FULLNAMEINCAPITALLETTERS)
of_________________________________________________________________________________________________(FULLADDRESS)
orfailinghim/her____________________________________________________________________________________(FULLNAMEINCAPITALLETTERS)
of_________________________________________________________________________________________________(FULLADDRESS)
orfailinghim/her,theChairmanoftheMeetingasmy/ourproxytovoteformy/ourbehalfattheThirty-FifthAnnualGeneralMeetingoftheCompanytobeheldat4thFloor,MenaraBoustead,JalanRajaChulan,50200KualaLumpuronWednesday,27June2007at10.00a.m.andatanyadjournmentthereof.
FOR AGAINST
OrdinaryResolution1 ReceivetheAuditedFinancialStatementsfortheyearended 31December2006
OrdinaryResolution2 ApprovalofDirectors’Fees
OrdinaryResolution3 Re-electTuanHajiMohdNoordinBinAbdullah
OrdinaryResolution4 Re-electEncikIdrisBinZakaria
OrdinaryResolution5 AppointmentofMessrs.ErnstYoungasAuditors
OrdinaryResolution6 AuthoritytoIssueShares
OrdinaryResolution7 RenewalofShareholders’MandateandAdditional Shareholders’MandateforRecurrentRelatedPartyTransactions
SpecialResolution1 AmendmentstoArticlesofAssociationoftheCompany
SpecialResolution2 ChangeofCompany’sName
Pleaseindicatewitha“X”inthespaceaboveonhowyouwishtocastyourvote.Intheabsenceofspecificdirections,yourproxywillvoteorabstainashe/shethinksfit.
Signedthis_______________dayof__________________,2007.
____________________________________SignatureofshareholderorCommonSeal
Notes:1. AmemberoftheCompanyentitledtoattendandvoteatthemeetingisentitledtoappointaproxytoattendandvoteinhisstead.Aproxy
neednotbeamemberoftheCompany.
2. Theinstrumentappointingaproxyshallbeinwritingunderthehandoftheappointerorofhisattorneydulyauthorisedinwriting.IftheappointerisaCorporation,theFormofProxymustbeexecutedunderitsCommonSealorunderthehandofitsofficerorattorneydulyauthorised.
3. TheinstrumentappointingaproxymustbedepositedattheRegisteredOfficeoftheCompany,17thFloor,MenaraBoustead,69JalanRajaChulan,50200KualaLumpurnotlessthanforty-eighthoursbeforethetimeappointedforholdingthemeeting.
PROXY FORMNumber of shares held
PSC INDUSTRIES BERHAD(Incorporated in Malaysia)
(11106-V)
Number of shares held
TheCompanySecretaryPSC Industries Berhad
17thFloor,MenaraBoustead69,JalanRajaChulan50200KualaLumpur
STAMP
moving forwardfor a better and prosperous future