COMINTEL CORPORATION BHDcomcorp.com.my/~comcorpc/comcorp/images/Annual_Reports/...Ballroom A,...

COMINTEL CORPORATION BHD (630068-T)No. 37, Jalan Pelukis U1/46, Section U1, Temasya Industrial Park

40150 Shah Alam, Selangor Darul Ehsan

Tel : 603 5039 9898

Fax : 603 5039 9833

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Annual R

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COMINTEL CORPORATION BHD (630068-T)

2006

Harnessing Technology for a

better Tomorrow

Annual Report

Annual Report 2006

Corporate Information 02

Corporate Structure 03

Notice of Annual General Meeting 04

Statement Accompanying Notice of Annual General Meeting 07

Board of Directors 09

Profile of Directors 10

Chairman’s Statement 15

Statement of Corporate Governance 17

Additional Compliance information 22

Statement of Internal Control 23

Audit Committee Report 24

Financial Statements 29

Analysis of Shareholdings 67

List of Properties 70

Proxy Form

01

contents

Harnessing TecHnology for a BeTTer Tomorrow

Well positioned to harness the dynamic opportunities in the

region technology industry, Comintel Corporation Bhd is

identifying changes, and taking action in the investment of

knowledge and people, utilizing technology, and expanding

our services regionally and globally. Emerging with renewed

strength and vigour to be the best, this commitment is a

very real part of each day for our people, an unwavering

commitment and goals the Group continually pursue, in the

harnessing technology for a better tomorrow.

InformationCorporateBoard of direcTors

Tan sri dato’ samshuri bin arshadChairman (Non-Executive)

dato’ seri ahmad ramli bin Haji mohd norDeputy Chairman (Non-Executive)

leng Keng Hok @ lim Keng HockManaging Director

lee choon BinExecutive Director

abdul majid bin omarExecutive Director

loh Hock chiangExecutive Director

dato’ dr. loga Bala mohan a/l JaganathanExecutive Director

mohamadon bin abdullahDirector (Non-Executive)

Tengku makram bin Tengku ariffIndependent Director

Koh Kek HoeIndependent Director

yeo ean @ yeo e anIndependent Director

lee chai BeeIndependent Director

nominaTion commiTTee

Tan sri dato’ samshuri bin arshadNon-Executive Director (Chairman)



remUneraTion commiTTee

dato’ seri ahmad ramli bin Haji mohd norNon-Executive Director (Chairman)

mohamadon bin abdullahNon-Executive Director


aUdiT commiTTee

yeo ean @ yeo e anIndependent Director (Chairman)



company secreTaries

loh Hock chiang (MIA 11139)

chong fui nyee (MAICSA 0861032)

regisTed office/Head office

No. 37, Jalan Pelukis U1/46Section U1, Temasya Industrial Park40150 Shah AlamSelangor Darul EhsanTel : 603 5039 9898Fax : 603 5039 9833

sHare regisTrar

PFA Registration Services Sdn BhdLevel 13, Uptown 1No. 1, Jalan SS21/58, Damansara Uptown47400 Petaling JayaSelangor Darul EhsanTel : 603 7725 4888

aUdiTors

Russ Ooi & AssociatesChartered AccountantsSuite E-08-07, Block E, Plaza Mont’ KiaraNo. 2 Jalan Kiara, Mont’ Kiara50480 Kuala LumpurTel : 603 6201 3113

sTocK excHange lisTing

Bursa Malaysia Securities BerhadSecond BoardSector : Technology

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Annual Report 2006

Comintel CoRpoRAtion bhd (630068-t)02

02 03

Annual Report 2006

Comintel CoRpoRAtion bhd (630068-t)

Annual General MeetingNotice of

noTice is HereBy g i V e n T H a T the Third Annual General Meeting of the Company will be held at Glenmarie Ballroom A, Holiday Inn Glenmarie Kuala Lumpur, No. 1 Jalan Usahawan U1/8 , Seksyen U1, 40250 Shah Alam, Selangor on Monday, 17 July 2006 at 10.00 a.m. for the fol lowing purposes:-

agenda

1. To receive the Audited Financial Statements of the Company for the year ended 31 January 2006 together with the Reports of the Directors and Auditors thereon. (Resolution 1)

2. To approve the payment of Directors’ fees of RM339,900.00 in respect of the year ended 31 January 2006. (Resolution 2)

3. To re-elect the following Directors retiring in accordance with Article 93 of the Company’s Articles of Association:-

(i) Dato’ Seri Ahmad Ramli bin Haji Mohd Nor (Resolution 3)

(ii) Leng Keng Hok @ Lim Keng Hock (Resolution 4)

(iii) Lee Choon Bin (F) (Resolution 5)

4. To re-elect the following Directors retiring in accordance with Article 100 of the Company’s Articles of Association:-

(i) Tengku Makram bin Tengku Ariff (Resolution 6)

(ii) Dato’ Dr. Loga Bala Mohan a/l Jaganathan (Resolution 7)

5. To re-appoint Messrs Russ Ooi & Associates as Auditors of the Company and to authorise the Directors to fix their remuneration. (Resolution 8)

special Business:-

6. To consider and, if thought fit, to pass the following Ordinary Resolutions with or without modifications:-

authority To allot and issue shares pursuant To section 132d of The companies act, 1965

“THaT subject always to the Companies Act, 1965 and the relevant governmental and/or regulatory authorities, where such approvals shall be necessary, full authority be and is hereby given to the Directors pursuant to Section 132D of the Companies Act, 1965 to issue ordinary shares from the unissued share capital of the Company at any time until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes as the Board of Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued does not exceed 10% of the issued share capital of the Company for the time being and THaT the Board of Directors be and are also empowered to obtain approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad.” (Resolution 9)

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Annual Report 2006

proposed shareholders’ mandate for recurrent related party Transactions of a revenue or Trading nature (“proposed shareholders’ mandate”)

“THaT approval be and is hereby given to the Company and its subsidiaries to enter into and give effect to the recurrent related party transactions of a revenue or trading nature and with the related parties as stated in Sections 2.3 and 2.4 of the Circular to Shareholders dated 21 June 2006, being necessary for the day-to-day operations of the Group, subject to the following:-

(i) the transactions are in the ordinary course of business and are on terms not more favourable to the related parties than those generally available to the public and is not to the detriment of the minority shareholders and that such transactions are made on an arm’s length basis and on normal commercial terms; and

(ii) disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to this shareholders’ mandate during the financial year; and

(iii) the authority hereby given shall continue in force until:-

a) the conclusion of the next Annual General Meeting (“AGM”) of the Company, at which time it will lapse, unless, by a resolution passed at the meeting, the authority is renewed; or

b) the expiration of the period within which the next AGM of the Company is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Companies Act, 1965); or

c) it is revoked or varied by resolution passed by the shareholders in general meeting,

whichever is the earliest; and

(iv) the Board by any one or more of the directors be and are hereby authorised to complete and do all such acts, deeds and things necessary to give effect to the transactions contemplated or authorised by this resolution.” (Resolution 10)

7. To transact any other ordinary business of which due notice shall have been given.

By Order of the Board

loH HocK cHiang (MIA 11139)cHong fUi nyee (MAICSA 0861032)Company Secretaries

Shah Alam21 June 2006


notes:-

1. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

2. A member shall not be entitled to appoint more than two (2) proxies to attend and vote at this meeting.

3. Where a member appoints two (2) proxies, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

4. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

5. To be valid, the proxy form must be duly completed and deposited at the registered office of the Company situated at No. 37, Jalan Pelukis U1/46, Section U1, Temasya Industrial Park, 40150 Shah Alam, Selangor Darul Ehsan not less than forty-eight (48) hours before the time for holding the meeting.

6. If the appointer is a corporation, the proxy form must be executed under its Seal or under the hand of its attorney.

explanaTory noTes on special BUsiness

1. resolution pursuant to section 132d of the companies act, 1965

The Ordinary resolution No. 9, if passed, will give powers to the Directors of the Company to issue ordinary shares in the Company up to an aggregate amount not exceeding 10% of the issued share capital of the Company for the time being and for such purposes as the Directors consider would be in the interest of the Company. This would avoid any delay and cost involved in convening a General Meeting to specifically approve such an issue of shares. This authority, unless revoked or varied at a General Meeting will expire at the next Annual General Meeting of the Company.

2. proposed shareholders’ mandate for recurrent related party Transactions of a revenue or Trading nature (“proposed shareholders’ mandate”)

The Ordinary resolution No. 10, if passed, will allow the Company and its subsidiaries to enter into recurrent related party transactions provided that such transactions are in the ordinary course of business and undertaken at arms’ length, on normal commercial terms of the Company and its subsidiaries which are not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders (“Proposed Shareholders’ Mandate”).

The Proposed Shareholders’ Mandate would eliminate the need to convene separate general meetings from time to time to seek shareholders’ approval as and when potential recurrent related party transactions arise, thereby reducing substantially administrative time and expenses in convening such meetings, without compromising the corporate objectives and adversely affecting the business opportunities available to the Company and its subsidiaries.

Further information on the Proposed Shareholders’ Mandate is set out in the Circular to shareholders of the Company which is despatched together with the Annual Report of the Company for the financial year ended 31 January 2006.

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Annual Report 2006

Statement AccompanyingNotice of Annual General Meetingpursuant to Paragraph 8.28(2) of the Listing Requirements of Bursa Malaysia Securities Berhad

1. Third Annual General Meeting of the Company will be held at

Venue : Glenmarie Ballroom A, Holiday Inn Glenmarie Kuala Lumpur, No. 1 Jalan Usahawan U1/8, Seksyen U1, 40250 Shah Alam, Selangor.

Date : Monday, 17 July 2006

Time : 10.00 a.m.

2. The Directors who are standing for re-election pursuant to Articles 93 of the Company’s Articles of Association are as follows:-

(i) Dato’ Seri Ahmad Ramli bin Haji Mohd Nor

(ii) Leng Keng Hok @ Lim Keng Hock

(iii) Lee Choon Bin (F)

3. The Directors who are standing for re-election pursuant to Article 100 of the Company’s Articles of Association are as follows:-

(i) Tengku Makram bin Tengku Ariff

(ii) Dato’ Dr. Loga Bala Mohan a/l Jaganathan

4. During the financial year ended 31 January 2006, 4 Board Meetings were held. The details of attendance of Directors at Board Meetings were as follows:-

directors no. of meetings attended %

Tan Sri Dato’ Samshuri bin Arshad 4/4 100

Dato’ Seri Ahmad Ramli bin Mohd Nor 4/4 100

Leng Keng Hok @ Lim Keng Hock 4/4 100

Lee Choon Bin 4/4 100

Abdul Majid bin Omar 4/4 100

Loh Hock Chiang 4/4 100

Dato’ Dr. Loga Bala Mohan a/l Jaganathan (appointed on 19 September 2005) 2/2 100

Mohamadon bin Abdullah 4/4 100

Tengku Makram bin Tengku Ariff (appointed on 19 September 2005) 2/2 100

Koh Kek Hoe 4/4 100

Yeo Ean @ Yeo E An 4/4 100

Lee Chai Bee 3/4 75

5. Further details on the Directors who are standing for re-election under Article 93 and Article 100 are disclosed under the Profile of the Directors on page 10 and 13 of the Annual Report 2006. The shareholdings of these Directors in the Company and its subsidiaries are disclosed under the Analysis of Shareholdings from pages 67 to 69.

Technical excellencedrives our business

Deeply seated client domain knowledge and technical expertise underpin the value we deliver to our clients. Investing in these assets ensures we evolve to meet future needs and keeps us ahead of the competition.

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Annual Report 2006

DirectorsBoard of

Tan sri dato’ samshuri bin arshadChairman (Non-Executive)

dato’ seri ahmad ramli bin Haji mohd norDeputy Chairman (Non-Executive)


mohamadon bin abdullahDirector (Non-Executive)


abdul majid bin omarExecutive Director

Tengku makram bin Tengku ariffIndependent Director


loh Hock chiangExecutive Director


dato’ dr. loga Bala mohan a/l JaganathanExecutive Director

lee chai BeeIndependent Director

standing from left to right sitting from left to right


profileofdirectors

Aged 64, a Malaysian, was appointed the Chairman of the Company on 28 June 2004. He was a police officer with the Royal Malaysian Police force, which he served for 34 years. He retired from the police force upon reaching the compulsory retirement age of 55 years on 5 May 1997. His last appointment was as Deputy Inspector General of Police, a post he held for 3 1/2 years. He has considerable experience in police operations, management, command and control, criminal investigations and also served as the Chief Police Officer in Selangor, Sabah and Perak.

He has benefited from wide regional and international exposures and networking when he served as the head of missions for Interpol, the Association of Asean Police Forces and the Uni ted Nat ions Cr ime Prevention Commission (Vienna). He had undergone international police training in Japan, Australia and the UK. He also attended leadership and management programmes conducted by Harvard Business School in the USA, National Training Institute in South Korea and the Imperial Defence College in the UK.

He has attended all the four Board meetings held for the financial year and serves as the Chairman of the Nomination Committee. He is also a Director of Unisem (M) Berhad, Avenue Assets Bhd, Aokam Perdana Bhd and several private limited companies. He has no conflict of interest with the Company other than as disclosed in the notes to the financial statements and had no conviction for offences within the past ten years.

Tan sri daTo’ samsHUri Bin arsHadChairman (Non-executive)

Aged 62, a Malaysian, was appointed to the Board on 28 June 2004. He had his early education at the Andersen School, Ipoh, Perak. He joined the Armed Forces in 1964 as a Cadet Officer, and was trained at the Britannia Royal Naval College, Dartmouth, UK. Since then, he rose through the ranks from acting Sub-lieutenant to Vice Admiral and Chief of the Royal Malaysian Navy in October 1995. Whilst in service, he attended var ious academic and t ra in ing programmes and went on to acquire a Masters in Public Administration from Harvard University. He also holds a Masters in Defence Management from the Naval War College, USA. His qualifications and experience in the navy, coupled with his familiarity with the requirements of the navy’s defence and communication systems, is an essential resource to the business of the Comcorp Group.

For his services to the country, he has received various awards and decorations, the highest of which is the Panglima Gagah Angkatan Tentera. He is the Chairman of Comlenia Sendirian Berhad and a Director of Muhibbah Engineering (M) Bhd, Affin Bank Berhad, PSC Industries Berhad and several private limited companies.

He has attended all the four Board meetings held for the financial year and serves as the Chairman of the Remuneration Committee. He is also a major shareholder of the Company. He has no conflict of interest with the Company other than as disclosed in the notes to the financial statements and had no conviction for offences within the past ten years.

Aged 60, a Malaysian, is one of the founders of the Comcorp Group and was appointed the Managing Director of the Company on 28 June 2004. A graduate of the Royal Melbourne Institute of Technology, Australia, he holds an Associate Diploma in Electrical Engineering. From 1968 to 1969, he was involved in design work at PMG Research Laboratory in Melbourne. He then worked in Singapore as a Calibration Manger. He joined Melen Engineering Sdn Bhd (formerly known as Mars Electronic Sdn Bhd) in 1973 as the Technical Manager before being promoted to the position of General Manager in 1976. Subsequently, in 1984, he founded Comintel Sdn Bhd, holding the positions of both Executive Director and General Manager.

H e h a s v a s t e x p e r i e n c e i n t e l e c o m m u n i c a t i o n s s y s t e m engineering and has been involved in various activities which include test ing and designing of cable pair identification test sets using pseudorandom noise generators, designing the go-no-go high voltage impulse test set for insulation testing and designing communication systems for various government and private offshore and onshore projects.

He has attended all the four Board meetings held for the financial year and serves as the member of the Audit Committee. He is also a major shareholder of the Company and a Director of several private limited companies. He has no conflict of interest with the Company other than as disclosed in the notes to the financial statements and does not hold any other directorship in public companies. He had no conviction for offences within the past ten years.

daTo’ seri aHmad ramli Bin HaJi moHd nor

Deputy Chairman (Non-executive)

leng Keng HoK @ lim Keng HocK

Managing Director

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Annual Report 2006

Aged 57 , a Ma lays ian , was appointed to the Board on 28 June 2004. He brings with him 32 years of varied experience with in-depth emphasis in banking and finance. He grounded his corporate experience with extensive business as well as operational responsibilities at various levels and positions in banking, money brokering and construction. His banking experience covers central, merchant and retail banking. He has also attended various banking courses and holds a Diploma in Advance Banking from the Asian Institute of Management. He has served in various operational and advisory positions to Chairman of boards, board members and chief executive officer. He is also the Chief Operating Officer of Comintel Sdn Bhd and a Director of several private limited companies.

He has attended all the four Board meetings held for the financial year. He has no conflict of interest with the Company other than as disclosed in the notes to the financial statements and does not hold any other directorship in public companies. He had no conviction for offences within the past ten years.

aBdUl maJid Bin omarExecutive Director

Aged 54, a Malaysian, is one of the founders of the Comcorp Group and was appointed to the Board on 28 June 2004. She graduated from the Singapore Polytechnic with a Diploma in Electronic & Communication Engineering in 1972. With her relevant technical background, she has played a formative role since the inception of Comintel Sdn Bhd to its current status, in addition to being an important driving force of the said company in its early years. She is responsible for the Group’s overall personnel and administrative functions including procurement, logistics, shipping of raw materials and products and warehousing. She also assists in the implementation of business strategies and supports the marketing activities of the Group.

She has attended all the four Board meetings held for the financial year and serves as the member of the Remuneration Committee. She is also a major shareholder of the Company and a Director of several private limited companies. She has no conflict of interest with the Company other than as disclosed in the notes to the financial statements and does not hold any other directorship in public companies. She had no conviction for offences within the past ten years.

Aged 40, a Malaysian, was appointed to the Board on 19 September 2005. He obtained a Bachelor of Law (LLB) Honours from King’s College, University of London, UK in 1987 and was admitted to the Honourable Society of the Middle Temple, London, UK. He was conferred a Doctorate in Philosophy from the Pacific Western University, USA in 1997. He started his career as Managing Director with Sanatan Holdings Sdn Bhd in 1993 and was later appointed as Executive Director of Tenco Berhad in 1996. In 1999, he was appointed Executive Director of Westmont Lands Sdn Bhd and a Director of Wing Tiek Holdings Berhad. He was also appointed as Independent Non-Executive Director of Associated Kaolin Industries Berhad in year 2000. Presently, he sits on the board of Kumpulan Emas Berhad and several private limited companies in Malaysia.

He has attended two out of the four Board meetings held for the financial year which were held subsequent to his appointment to the Board. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company. He had no conviction for offences within the past ten years.

lee cHoon Bin

Executive Director

daTo’ dr. loga Bala moHan a/l JaganaTHan

Executive Director


Aged 41 , a Ma lays ian , was appointed to the Board on 28 June 2004. He holds an Honours Degree in Management Studies and is a Chartered Accountant of the New Zealand Institute of Chartered Accountants and the Malaysian Institute of Accountants. He joined Comintel Sdn Bhd in 1994 and has held various positions in the Group, where he was subsequently promoted to the position of Chief Financial Officer of the Group. He is also a Director of several private limited companies.

He has attended all the four Board meetings held for the financial year. He has no conflict of interest with the Company other than as disclosed in the notes to the financial statements and does not hold any other directorship in public companies. He had no conviction for offences within the past ten years.

loH HocK cHiang

Executive Director

Aged 56 , a Ma lays ian , was appointed as the independent Non-executive Director on 19 September 2005. Tengku Makram completed his middle certificate of education (MCE) and served in the Royal Malaysian Armed Forces before venturing into business. He was involved in property development and construction and operates a motorcar distribution dealership.

He has attended two out of the four Board meetings held for the financial year which were held subsequent to his appointment to the Board. He is also a Director of Kemayan Corporation Bhd, Thong Guan Industries Bhd and Tien Wah Press Holdings Berhad. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and had no conviction for offences within the past ten years.

Aged 59 , a Ma lays ian , was appointed to the Board on 28 June 2004. He graduated from the University of Malaya in 1972 with a Bachelor of Arts (Honours). He joined Malaysian Airline System Berhad (“MAS”) in June 1972 as a management trainee. During his career in MAS, he attended various training programmes and gained wide experience in human resource management, sales and marketing (passenger and cargo sector), air l ines catering, management development, centralised purchasing & procurement, in-flight services and flight operations. He has held the position of Senior General Manager of Corporate Services in MAS and is responsible for MAS’s legal affairs, insurance, management development, government relations and corporate communications, aviation safety and security, and medical services. He has since retired from MAS. With his wide experience in management, his forte lies in the management of the overall operation of the Comcorp Group.

He has attended all the four Board meetings held for the financial year and serves as the member of the Remuneration Committee. He is also a major shareholder of the Company and a Director of several private limited companies. He has no conflict of interest with the Company other than as disclosed in the notes to the financial statements and does not hold any other directorship in public companies. He had no conviction for offences within the past ten years.

TengKU maKramBin TengKU ariff

Independent Director

moHamadon Bin aBdUllaH

Director (Non-Executive)

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Annual Report 2006

Aged 50, a Malaysian, was appointed to the Board on 28 June 2004. He obtained his professional accounting qualification upon completing the final part of the professional examinations conducted by the Malaysian Institute of Ceritifed Public Accountants (“MICPA”) in June 1981 and was subsequently admitted as a member in November 1981. He is a lso a Chartered Accountant of the Malaysian Institute of Accountants and has had more than 27 years of working experience in the financial services industry.

He began his career in KPMG as an audit assistant under articleship with MICPA in 1977. In 1982, he left KPMG to join Highlands & Lowlands Berhad as its internal auditor. Subsequently, he joined Promet Berhad as an accountant from 1984 to 1992. From 1992 to 2002, he was with Pica (M) Corporation Berhad (“PICA”), a company specializing in direct equity and equity-related investments, where his main functions include evaluating investment opportunities in private equities and handling its treasury matters. He joined PICA as Manager, Investment/Treasury and his last position was Senior Vice President – Investments. He is currently attached to Public Mutual Berhad, a large unit trust management company as a Unit Trust sales consultant.

He has attended all the four Board meetings held for the financial year and serves as the Chairman of the Audit Committee and as a member of the Nomination Committee. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and does not hold any other directorship in public companies. He had no conviction for offences within the past ten years.

yeo ean @ yeo e an


Aged 50, a Malaysian, was appointed to the Board on 28 June 2004. He graduated with LL.B. from the University of London King’s College in 1978 and subsequently obtained his LL.M. from the same university in 1979. After a period of pupilage in London and in Kuala Lumpur, he served as a legal assistant in Messrs. Allen & Gledhill for about a year. He then went into partnerships under several firms before becoming a partner in Messrs. KH Koh Azhar & Koh in 1992, the firm in which he has since served as Senior Partner until 31 March 2006. In his 26 years of practice, he has accumulated considerable experience in legal work pertaining to both the commercial and financial sectors. On 1 April 2006, he was admitted as a partner of Messrs. Lee Hishammuddin Allen & Gledhill.

He has attended all the four Board meetings held for the financial year and serves as a member of the Audit Committee and Nomination Committee. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and does not hold any other directorship in public companies. He had no conviction for offences within the past ten years.

Aged 56, a Malaysian, was appointed to the Board on 28 June 2004. She was admitted as a member of the Institute of Chartered Secretaries and Administrators in 1972 upon completing the p ro fess iona l examina t ions conducted by the said institute. She subsequently started her career in the same year as an accounts assistant with Kidson Chartered Accountants in Birmingham, UK. In 1978, she joined Tan Chong Motor Holdings Bhd as their internal auditor. In 1985, she joined Auto Parts Manufacturers Bhd as Manager. In 1989, she was Senior Manager of Operations for Kilang Alat-Ganti Letrik Kereta Sdn Bhd.

In 1993, she joined Seldredge Industries Sdn Bhd as General Manager - Projects and was overseeing Oriental Metal Industries Sdn Bhd. In addition, she was also a Director of a subsidiary of Sledredge Industries Sdn Bhd, namely Parajaya Sdn Bhd where she served for 7 years. She is currently a Director of Eco Resources Bhd, a position she has held since 1994.

She has attended three out of four Board meetings held for the financial year. She has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and does not hold any other directorship in public companies. She had no conviction for offences within the past ten years.

KoH KeK Hoe


lee cHai Bee



Building an extensiveinternational network

Over the years we have worked with many organisations facing advanced technological and personnel challenges. We can now leverage this experience across all our markets and geographies.

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Annual Report 2006

Chairman’s statement

DearShareholders,On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Financial Statements of the Comintel Corporation Bhd Group for the financial year ended 31 January 2006.

oVerView

The financial year under review has been a challenging year due to uncertainties in the global and regional economic environment, impending inflationary pressures and surging crude oil prices. The Malaysian economy recorded a moderate Gross Domestic Product (GDP) growth of 5.3% in 2005, a decline from 7.1% in the previous year.

Notwithstanding such adversity in a competitive market and weak business environment, the Group had remained focused and resilient.

reView of financial performance and operaTions

The Group has performed satisfactory despite unfavourable regional trade factors and a difficult business environment. For the financial year ended 31 January 2006, the Group registered a Turnover of RM297,887,008.00, and a Group’s profit before tax of RM2,063,381.00. The gearing level of the Group remains stable at 12.8% times for the current financial year with an EPS of 0.6 sen.


The Group, with its focused strategy, stable financial position and commitment to deliver the “one source solution” services in telecommunications, ranging from R&D, manufacturing, system design and integration to after sales integrated logistics support, will stand to benefit from the present move in market trend toward electrical and electronic products.

Having regards to encouraging market indicators and the aggressive approach adopted by the Group, the prospects for the Group is geared toward harvesting good returns in 2006.

acKnowledgemenTs

We warmly welcome to our Board, Tengku Makram bin Tengku Ariff and Dato’ Dr. Loga Bala Mohan a/l Jaganathan who, with their wealth of experience, will greatly enhance the scope of our Board representation.

On behalf of the Board, I would like to take this opportunity to express our sincere appreciation and thanks to the management team and all staff for their continuous effort, dedication and valuable contribution to the Group. Our sincere thanks also to all our business associates, partners and customers for their invaluable support and to our shareholders for their confidence in the Group.

Last but not least, we would like to record our sincere gratitude to the Malaysian government and its various agencies for all their assistance and encouragement in facilitating our endeavours.

Tan sri daTo’ samsHUri Bin arsHadChairman

One of our more recent successes, that of Comintel Sdn Bhd, is the completion and hand-over on 25 April 2006 of the C4i System Project of the Polis Diraja Malaysia. This sophisticated system encompasses an integrated IT and communication system on command and control by linking all operation bases at a touch of a key which enables the Police to respond immediately to any distress call.

Another innovative product of Comintel is the Tracer AVLS, an automatic vehicle location system for use in compact housing environments. The Tracer is a device connected to a mobile radio which provides data communication between the vehicles and the host computer that monitors the vehicle’s position and the status of the sensors installed in the vehicle. It is well suited for fleet management, protection services, automation, traffic management and intelligent transportation.

The Group’s move to venture into new and innovative products and technology with an emphasis on R&D has contributed significantly to the Group’s performance.

oUTlooK for 2006

The Malaysian government has projected that all sectors will record positive growth in 2006, with the manufacturing and services sectors growing at 4.9% and 6.1% respectively. Bank Negara remains optimistic of a 6% GDP growth rate for 2006 supported by the upturn in the global electronics industry cycle, which will benefit Malaysia. The upswing in worldwide demand for electrical and electronic products such as semiconductor devices, radios and televisions sets, will have a positive impact on both exports and private consumption.

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Annual Report 2006

The Board of Directors of Comintel Corporation Bhd considers that it has maintain a high standard of corporate governance in directing and managing the business and affairs of the Company and the Group to ensure that effective self regulatory controls are in place for continued growth and enhancement of its shareholders’ value.

This statement sets out the application by the Group of the principles and the extent of compliance with the Best Practices of the Malaysian Code on Corporate Governance throughout the year under review.

BOARD OF DIRECTORS

Principal Responsibilities

The Board has the overall responsibilities of providing strategic direction in steering the Group towards achieving its business objectives, including overseeing the management and conduct of business operations, identifying and managing critical business risks, and ensuring the Group’s systems of internal controls and reporting are adequately established.

The Board has delegated specific responsibilities to 3 committees, namely, the Audit, the Remuneration and the Nomination Committees, which operate within their respective approved terms of reference. These Committees have the authority to examine particular issues and report to the Board with their recommendations. The entire Board is ultimately responsible in making the final decision on all matters after careful consideration of such recommendations of these Committees.

Board Balance

The Board consists of 5 executive directors and 7 non-executive directors, of whom 4 are independent. The current Board composition complies with the Listing Requirements of the Bursa Malaysia Securities Berhad that requires a minimum of 2 directors or 1/3 of the Board to be independent members. The Board is represented by members who are professionals in their own fields contributing a diverse mix of skills and experience in business, corporate, finance, information technology, technical know-how and law, all of which are essential for sound business decisions and for effective management.

The Chairman is responsible for representing the Board to shareholders and stakeholders, ensuring integrity and effectiveness of the governance process of the Board. The Managing Director is responsible for the day to day management of the Group’s operations and effective implementation of policies and decisions approved by the Board. The presence of the independent directors is particularly important in corporate accountability as they provide an element of objectivity, independent judgement and check and balance on the Board.

The profile of each director is set out in pages 10 to 13 of this Annual Report.

Board Meetings

The Board has 4 scheduled meetings annually to review the performance of the Group and discuss business strategy. Additional meetings are convened when decisions on urgent issues are required between scheduled meetings.

The Directors are provided with an agenda and a set of board papers prior to each Board meeting to be convened. The Chairman of the Audit Committee reports on matters deliberated by the Audit Committee and highlights any business and financial risks. Management staff may be invited to attend Board meetings when necessary to provide the Board with further explanation and clarification on matters being tabled. Where necessary, external auditors and other professional were invited to attend the Board meetings or Committee meetings for similar reasons.

Corporate GovernanceStatement of

16


During the financial year ended 31 January 2006, the Board met 4 times and the record of attendance of each director is as follows:-

Name of Director Attendance at Board Meetings

Tan Sri Dato’ Samshuri bin Arshad 4/4

Dato’ Seri Ahmad Ramli bin Mohd Nor 4/4

Leng Keng Hok @ Lim Keng Hock 4/4

Lee Choon Bin 4/4

Abdul Majid bin Omar 4/4

Loh Hock Chiang 4/4

Dato’ Dr. Loga Bala Mohan a/l Jaganathan (appointed on 19 September 2005) 2/4

Mohamadon bin Abdullah 4/4

Tengku Makram bin Tengku Ariff (appointed on 19 September 2005) 2/4

Koh Kek Hoe 4/4

Yeo Ean @ Yeo E An 4/4

Lee Chai Bee 3/4

Supply of Information

The directors have full and timely access to information on the Company and the Group. Documents pertaining to matters for discussion are circulated in sufficient time before meetings to all directors for their review. The Board papers generally include reports on the Group’s financial performance, business operations and corporate developments.

All directors have access to the assistance and services of the company secretaries and to independent professional advice when needed.

Board Committees

The following committees have been established to assist the Board in the discharge of its duties:-

(a) Audit Committee

The details of the Audit Committee including its terms of reference, its composition and other information are set out in the Audit Committee Report on pages 24 to 27 of this Annual Report.

(b) Nomination Committee

The Nomination Committee met twice during the financial year. The Committee is responsible for identifying and nominating new directors and assessing existing directors on an on-going basis.

The members of the Nomination Committee comprises:- Chairman : Tan Sri Dato’ Samshuri bin Arshad Non-Executive Director

Members : Yeo Ean @ Yeo E An Independent Director

Koh Kek Hoe Independent Director

18 19

Annual Report 2006

(c) Remuneration Committee

The Remuneration Committee met once during the financial year. The Committee is responsible for making recommendations to the Board on the remuneration of executive directors.

The members of the Remuneration Committee comprises:-

Chairman : Dato’ Seri Ahmad Ramli bin Haji Mohd Nor Non-Executive Director

Members : Mohamadon bin Abdullah Non-Executive Director

Lee Choon Bin Executive Director

Directors’ Training

All the current directors have attended the Mandatory Accreditation Programme organised by Bursatra (formerly known as Bursa Malaysia Training Sdn Bhd).

The directors shall continue to undergo other relevant training programmes to keep abreast with new regulatory development and requirements in compliance with Bursa Malaysia Listing Requirements on Continuing Education. Throughout the year, directors also received updates and briefings, particularly on regulatory, industry and legal developments, including information on significant changes in business risks and procedures instituted to mitigate such risks.

Re-election

In accordance with the Company’s Articles of Association, any director appointed during the year shall hold office only until the next following Annual General Meeting and shall then be eligible for re-election. The Articles also provide that one third of the directors or the number nearest one third shall retire from office at every Annual General Meeting so that each director shall retire from office at least once in every 3 years and be eligible for re-election.

Directors’ Remuneration

Details of the directors’ remuneration for the year ended 31 January 2006 are as follows:-

Executive Directors Non-Executive Directors (RM) (RM)

Salaries 1,166,164 -

Fees 135,600 204,300

Bonus 47,204 8,450

Total 1,348,788 212,750


The directors’ remuneration for the financial year ended 31 January 2006 fall within the following bands:-

Executive Directors Non-Executive Directors

Above RM500,000 1 -

RM200,000 - RM300,000 1 -

RM100,000 - RM200,000 2 -

Less than RM100,000 1 7

Individual remuneration of each director is not disclosed as the directors are of the view that the disclosure by bands above provides sufficient information.

SHAREHOLDERS

The Board recognises the importance of transparency and accountability to its shareholders. Announcements made to inform shareholders of the developments and events within the Group includes financial results on a quarterly basis, press releases, annual reports and circulars to shareholders.

The Annual General Meeting is the principal forum for dialogue and interaction between the Board and its shareholders. Shareholders are invited to participate in the proceedings at the AGM and have the opportunity to raise issue or seek clarification on the business and performance of the Company and the Group.

Shareholders and members of the public can also obtain information on the annual and quarterly reports announced by the Company by accessing Bursa Securities Malaysia Berhad’s website.

ACCOUNTABILITY AND AUDIT

Statement of Directors’ Responsibility for Preparing the Financial Statements

The directors are required by the Companies Act, 1965 (“the Act”) to table at its Annual General Meeting, financial statements (which include the consolidated balance sheet and the consolidated income statement of the Group) for each financial year, prepared in accordance with the applicable approved accounting standards in Malaysia, the provisions of the Act and the Listing Requirements of the Bursa Malaysia Securities Berhad.

The directors are responsible for ensuring that the financial statements give a true and fair view of the state of affairs of the Group and of the Company at the end of the financial year and of their results and cash flows for the financial year then ended.

In preparing the financial statements, the directors have taken steps to ensure that:-

• suitable accounting policies are adopted and applied consistently.

• judgements and estimates made are prudent and reasonable.

• all applicable accounting standards have been adhered to.

20 21

Annual Report 2006

The directors are responsible for ensuring that the Company maintains proper accounting records which disclose with reasonable accuracy the financial position of the Group and the Company and which will enable them to ensure that the financial statements comply with the Act.

The directors are also responsible for taking reasonable steps to safeguard the assets of the Group and the Company and to prevent and detect fraud and other irregularities.

Financial Reporting

The Board aims to present a balanced, fair and comprehensive assessment of the business position and prospects of the Group in the quarterly and annual financial statements.

The Group’s quarterly and annual financial statements are reviewed by the Audit Committee and approved by the Board prior to release to Bursa Malaysia Securities Berhad within the stipulated time frame.

Internal Control

The Board acknowledges its responsibility for maintaining a sound system of internal control and the need for constant review of the adequacy and integrity of such system. The internal control system is intended to address areas of risk in the financial procedures, business operations and legal compliance to safeguard shareholders’ investments and the Company’s assets. The Board considers that such a system, manage rather than to eliminate all risks, can provide a reasonable although not an absolute assurance against material risks and loss.

The Board, recognising that the internal audit function is an integral part of an effective internal control system and on the recommendation of the Audit Committee, decided to outsource the internal audit function to a professional firm. During the financial year under review, the Group had appointed Deloitte Risk Enterprise Services Sdn Bhd to undertake the internal audit function.

The Statement on Internal Control is presented on page 23 of this Annual Report.

External Auditors

The Company has established a professional and transparent relationship with the external auditors through its Audit Committee in seeking professional advice and ensuring compliance with the appropriate accounting standards. Whenever necessary, the external auditors have been invited to attend Board meetings and Audit Committee meetings.


In compliance with The Bursa Malaysia Securities Berhad Listing Requirements, the following additional information is provided:-

1. Variation in Results

There is no significance variance in the Group’s audited financial results for the financial year ended 31 January 2006 from the unaudited results as previously announced.

2. Material Contracts

There were no material contracts entered into by the Company or any of its subsidiaries involving any director or major shareholder during the financial year ended 31 January 2006.

3. Share Buyback

There were no share buyback during the financial year ended 31 January 2006.

4. Options, Warrants or Convertible Securities

The Company did not issue any options, warrants or convertible securities during the financial year ended 31 January 2006.

5. Non-audit Fees

The Group’s non-audit fees paid to the external auditors amounted to RM23,226.00 during the financial year ended 31 January 2006.

6. Imposition of sanctions and penalties

There were no sanctions or penalties imposed on the Group, the directors or the management by any relevant regulatory body during the financial year ended 31 January 2006.

7. Profit Guarantee

The Company did not issue any profit guarantee for the financial year ended 31 January 2006.

8. Revaluation of Landed Properties

The Group’s revaluation policy is disclosed in Note 4 to the Financial Statements for the financial year ended 31 January 2006.

9. Recurrent Related Party Transactions of a Revenue or Trading Nature (“RRPT”)

All RRPT entered into by the Group during the financial year ended 31 January 2006 are reported in note 23 to the financial statements.

Additional ComplianceInformation

22 23

Annual Report 2006

In compliance with paragraph 15.27(b) of the Bursa Malaysia Securities Berhad’s Listing Requirements, the Board provide herewith a statement on the state of internal controls of the Group, guided by Bursa Malaysia Securities Berhad’s Statement on Internal Control: Guide for Directors of Public Listed Companies.

RESPONSIBILITIES

The Board of Directors is responsible for establishing and maintaining an effective system of internal control to safeguard shareholders’ investment and the Group’s assets, which covers controls relating to financial procedures, business operations and legal compliance. The Board considers that such a system, manage rather than to eliminate all risks, can provide a reasonable although not an absolute assurance against material risks or loss.

The Group has outsourced its internal audit function to a professional firm for the financial year ended 31 January 2006. They report directly to the Audit Committee.

RISk MANAGEMENT FRAMEWORk

The Board recognises the importance of identifying and implementing proper risk management controls for the Group. Accordingly, as part of an overall risk management programme, the Board envisages that a professional firm will be appointed to implement a strategic enterprise-wide risk management framework.

CONTROL STRUCTURE AND ENVIRONMENT

The Group has structured its organisation with distinct lines of responsibilities, delegated authority, proper segregation of duties and established authority limits for major capital expenditure, contract awards and other significant transactions.

The Board reviews the financial results, business operations and marketing activities on a quarterly basis. The Executive Directors review the management reports on a continuing basis.

There are no significant failures or weaknesses in the system of internal control of the Group that resulted in material losses or contingencies during the financial year under review.

HUMAN RESOURCES

Annual review of employees’ performance is conducted to ensure that the quality and competency of its employees are not compromised and when required, training programs are developed to improve knowledge, skills and abilities of employees.

INTERNAL CONTROL MANAGEMENT

Although, the Board considers that the existing system of internal control is adequate and the Board is not aware of any significant weakness or deficiency for the financial year under review, the Board (through the Audit Committee) and management will continue to take appropriate measures to improve and strengthen the control environment.

Internal ControlStatement of


The Audit Committee was established on 6 July 2004 in compliance with Paragraph 15.10 of the Bursa Malaysia Securities Berhad’s Listing Requirements. The Audit Committee comprises the following members:-

Chairman : Yeo Ean @ Yeo E An Non Executive Independent Director

Members : Koh Kek Hoe Non Executive Independent Director

Leng Keng Hok @ Lim Keng Hock Managing Director

MEETINGS AND ATTENDANCE

The Audit Committee has held 5 meetings during the financial year ended 31 January 2006, and the details of the attendance are as follows:-

Committee Members No. of Meetings Attended %

Yeo Ean @ Yeo E An 5/5 100

Koh Keh Hoe 5/5 100

Leng Keng Hock @ Lim Keng Hock 4/5 75

The external auditors attended 4 of these meetings.

TERMS OF REFERENCE

The Audit Committee shall be governed by the following terms of reference.

Objectives

The objective of the Audit Committee is to assist the Board in fulfilling its responsibilities for the accounting and internal control systems, the financial reporting procedures, the audit process, and compliance with the listing requirements.

Composition

The Board from among its members shall appoint the Audit Committee that fulfils the following requirements:-

(a) the audit committee must be composed of no fewer than 3 members.

(b) a majority of the Audit Committee members must be independent directors; and

Audit Committee Report

24 25

Annual Report 2006

(c) at least one member of the audit committee:-

(i) must be a member of the Malaysian Institute of Accountants; or

(ii) if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years’ working experience and

• he must have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act 1967; or

• he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967; or

(iii) fulfils such other requirements as prescribed by Bursa Malaysia Securities Berhad.

In the event of any vacancy in the Audit Committee resulting in the non-compliance of the abovementioned composition, the Board of Directors shall fill the vacancy within 3 months of that event.

The members of the Audit Committee shall elect a chairperson from among their numbers who shall be an independent director.

The Board of Directors must review the term of office and performance of the Audit Committee and each of its members at least once every 3 years to determine whether the Audit Committee and its members have carried out their duties in accordance with their terms of reference.

Meetings and Attendance

The Committee shall meet at least 4 times a year. At least once a year the Audit Committee shall meet with the external auditors without executive Board members present.

In addition, the chairperson may call a meeting of the committee if requested to do so by any committee member, internal auditors or external auditors.

The quorum for a meeting of the Audit Committee shall be 2 and the majority of members present must be independent directors.

The chief financial officer, the head of internal audit shall normally attend meetings. The presence of external auditor or his representative may be requested, if required. Other board members and employers may attend meetings upon the invitation of the Audit Committee.

The Company Secretary shall act as secretary of the Audit Committee and shall be responsible for drawing up the agenda with the concurrence of the chairperson and circulating it, supported by relevant documentation to committee members prior to each meeting.

The secretary shall also be responsible for keeping the minutes of meetings of the Audit Committee, and circulating them to the Audit Committee members and other Board members.


Reporting Procedures

The Audit Committee shall prepare reports, at least once a year, to the Board summarising the Audit Committee’s activities during the year in discharge of its primary responsibilities.

Where the Audit Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Bursa Malaysia Securities Berhad’s Listing Requirements, the Audit Committee shall promptly report such matter to Bursa Malaysia Securities Berhad.

Authority

The Audit Committee shall, wherever necessary and reasonable for the performance of its duties, have the following authority as empowered by the Board:-

(a) have authority to investigate any matter within its terms of reference;

(b) have the resources which are required to performed its duties;

(c) have full and unrestricted access to any information pertaining to the Company or the Group;

(d) have direct communication channels with the external auditors and persons carrying out the internal audit function or activity (if any);

(e) be able to obtain, at the expense of the Company, independent professional or other advice; and

(f) be able to convene meetings with the external auditors, excluding the attendance of the executive members of the committee, whenever deemed necessary.

Duties and Responsibilities

The duties and responsibilities of the committee shall be:-

• Review and discuss with the external auditor

(a) the audit scope of work and plan, before the audit commences;

(b) their evaluation of the system of internal controls;

(c) their audit report;

(d) problems and reservations arising from the interim and final audits, and any matter the auditor may wish to discuss (in the absence of management if necessary);

(e) the external auditor’s management letter and management’s response;

(f) the assistance given by the employees to the external auditor.

26 27

Annual Report 2006

• Review the quarterly results and year-end financial statements, prior to submission to the Board for approval, focusing particularly on:-

(a) change in or implementation of major accounting policy changes;

(b) significant and unusual events;

(c) the going concern assumption;

(d) compliance with accounting standards and other legal requirements.

• Review and monitor any related party transactions and conflict of interest situation that may arise within the Company or the Group.

• Consider and recommend the appointment of external auditor, the audit fee and any questions of resignation or dismissal.

• Review and consider the following where an internal audit function exists:-

(a) the adequacy of the scope, functions and resources of the internal audit function, and that it has the necessary authority to carry out its work;

(b) the internal audit programme and results of the internal audit process and where necessary ensure that appropriate action is taken on the recommendations of the internal audit function;

(c) any appraisal or assessment of the performance of members of the internal audit function;

(d) any appointment or termination of senior staff members of the internal audit function;

(e) note any resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning;

(f) major findings of internal audit investigations and management’s response.

• Act on any activities as may be directed by the Board.

SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE

Amongst the main activities conducted by the Audit Committee during the financial year ended 31 January 2006 were as follows:-

(a) reviewed the unaudited quarterly financial results and annual financial statements of the Company and the Group prior to submission to the Board for approval and subsequent release to Bursa Malaysia Securities Berhad.

(b) reviewed the recurrent related party transactions of a revenue or trading nature of the Group for the financial year ended 31 January 2006.

(c) reviewed the internal audit programmes and the reports prepared by the Internal auditors on their audit findings.

(d) met with the External auditors and reviewed their evaluation of the system of internal control of the Group, problems and reservations encountered during their audit, the cooperation from Management.

INTERNAL AUDIT FUNCTION

Following the recommendations by the Audit Committee and approval by the Board, the Company appointed a professional firm to carry out the internal audit function of the Group for the financial year ended 31 January 2006.

The Internal auditors prepared reports on the extent of compliance with the Company’s policies and operational procedures after each scheduled audit during the year under review. It has also provided recommendations to improve existing systems of internal controls, which have been communicated to both operation management and the Audit Committee.


Report of the Directors 30

Consolidated Balance Sheet 34

Consolidated Income Statement 35

Consolidated Statement of Changes in Equity 36

Consolidated Cash Flow Statement 37

Balance Sheet 40

Income Statement 41

Statement of Changes in Equity 42

Cash Flow Statement 43

Notes to the Financial Statements 44

Statement by Directors 65

Statutory Declaration 65

Report of the Auditors to the Members 66

StatementsFinancial

28 29

Annual Report 2006


The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 January 2006.

PRINCIPAL ACTIVITIES

The Company is principally engaged in investment holding. The principal activities of the subsidiary companies are described in Note 5 to the financial statements.

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

FINANCIAL RESULTS

Group Company RM RM

Profit attributable to shareholders 778,833 2,663,475Retained profits brought forward 12,415,036 129,829Dividend (2,520,000) (2,520,000)

Retained profits carried forward 10,673,869 273,304

DIVIDENDS

During the financial year, a first and final gross dividend of 2.5 sen per share, less taxation of 28%, amounting to RM2,520,000 in respect of the previous financial year was paid by the Company.

There were no dividends declared or proposed by the Company in respect of current financial year.

RESERVES AND PROVISIONS

All material transfers to or from reserves or provisions during the financial year have been disclosed in the financial statements.

BAD AND DOUBTFUL DEBTS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of provisions for doubtful debts, and all known bad debts had been written off and adequate provision had been made for doubtful debts.

At the date of this report, the directors are not aware of any circumstances that would render the amount written off for bad debts, or the amount of the provision for doubtful debts, in the Group and in the Company, inadequate to any substantial extent.

VALUATION METHODS

At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets or liabilities in the financial statements of the Group and of the Company misleading or inappropriate.

report of the directors

30 31

Annual Report 2006

CURRENT ASSETS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain whether any current assets, other than debts, were unlikely to realise in the ordinary course of business their value as shown in the accounting records of the Group and of the Company and to the extent so ascertained were written down to an amount that they might be expected to realise.

At the date of this report, the directors are not aware of any circumstances that would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

CONTINGENT AND OTHER LIABILITIES

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

(a) any charge on the assets of the Group and of the Company that has arisen since the end of the financial year which secures the liabilities of any other person; or

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

No contingent liability or other liability of the Group and of the Company has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.

ITEMS OF AN UNUSUAL NATURE

The results of the operations of the Group and of the Company for the financial year were not, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature.

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations of the Group and of the Company for the current financial year.

CHANGE OF CIRCUMSTANCES

At the date of this report, the directors are not aware of any circumstances, not otherwise dealt with in this report or the financial statements of the Group and of the Company, that would render any amount stated in the respective financial statements misleading.

SHARE CAPITAL

During the financial year, no issue of shares was made by the Company.

OPTIONS

No option has been granted to any person to take up unissued shares of the Company and no shares have been issued by virtue of any option.

report of the directors (cont’d)


DIRECTORS OF THE COMPANY

The directors who served since the date of the last report are:-

Tan Sri Dato’ Samshuri bin ArshadDato’ Seri Ahmad Ramli bin Haji Mohd NorLeng Keng Hok @ Lim Keng HockLee Choon BinAbdul Majid bin OmarLoh Hock ChiangMohamadon bin AbdullahKoh Kek HoeYeo Ean @ Yeo E AnLee Chai BeeTengku Makram bin Tengku Ariff (Appointed on 19.09.05)Dato’ Dr. Loga Bala Mohan a/l Jaganathan (Appointed on 19.09.05)

In accordance with the Articles of Association, DATO’ SERI AHMAD RAMLI BIN HJ MOHD NOR, MR. LENG KENG HOK @ LIM KENG HOCK and MDM LEE CHOON BIN retire by rotation from the Board of Directors at the forthcoming Annual General Meeting, and being eligible, offer themselves for re-election.

In accordance with the Articles of Association, TENGKU MAKRAM BIN TENGKU ARIFF and DATO’ DR. LOGA BALA MOHAN A/L JAGANATHAN, who were appointed since the date of the last report retire from the Board of Directors at the forthcoming Annual General Meeting, and being eligible, offer themselves for re-election.

DIRECTORS’ INTEREST

According to the register of directors’ shareholdings maintained by the Company in accordance with Section 134 of the Companies Act, 1965, the following directors who held office at the end of the financial year, had interests in the shares of the Company and its related corporations as stated below:-

Balance @ Bought, Balance @Ordinary shares of RM0.50 each 01.02.05 Rights Sold 31.01.06

Direct interestTan Sri Dato’ Samshuri bin Arshad 5,147,328 - - 5,147,328Dato’ Seri Ahmad Ramli bin Haji Mohd Nor 50,000 - - 50,000Leng Keng Hok @ Lim Keng Hock - 500,000 - 500,000Lee Choon Bin 100,000 - - 100,000Abdul Majid bin Omar 1,500,000 60,000 1,500,000 60,000Loh Hock Chiang 100,000 - - 100,000Mohamadon bin Abdullah 4,114,885 - - 4,114,885Koh Kek Hoe 30,000 - - 30,000Yeo Ean @ Yeo E An 30,000 - - 30,000Lee Chai Bee 30,000 - - 30,000

Indirect interestDato’ Seri Ahmad Ramli bin Haji Mohd Nor 28,856,680 - - 28,856,680Leng Keng Hok @ Lim Keng Hock 49,999,762 - - 49,999,762Lee Choon Bin 60,324,190 - - 60,324,190Loh Hock Chiang 2,064,885 - 1,000,000 1,064,885Mohamadon bin Abdullah 28,856,680 - - 28,856,680


32 33

Annual Report 2006

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director of the Company has received or become entitled to receive any benefit (other than those disclosed in the financial statements) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a Company in which the director has a substantial financial interest.

Neither during nor at the end of the financial year, was the Company or any of its related corporations a party to any arrangement whose object is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

AUDITORS

The retiring auditors, Messrs. RUSS OOI & ASSOCIATES, Chartered Accountants, have indicated their willingness to continue in office.

On behalf of the Board,

TAN SRI DATO’ SAMSHURI BIN ARSHAD

LENG kENG HOk @ LIM kENG HOCk

Shah Alam,

Dated: 26 May 2006



Note 2006 2005 RM RM

Property, Plant and Equipment 4 90,805,006 98,235,404Investment in Associated Company 6 4,510,262 -Intangible Assets - 287,699Deferred Tax Assets 17 - 80,880Current Assets Inventories 7 54,758,709 56,815,029 Trade receivables 8 40,840,533 56,125,844 Other receivables, deposits and prepayments 9 21,888,427 12,055,272 Fixed deposits with financial institutions 10 12,455,119 12,169,972 Cash and bank balances 9,988,033 7,661,347

139,930,821 144,827,464

Current Liabilities Trade payables 11 35,896,183 26,105,270 Other payables and accruals 12 22,479,889 26,564,168 Bank borrowings 13 50,140,855 62,670,958 Hire purchase payables 14 145,800 769,086 Provision for taxation 709,248 583,000

109,371,975 116,692,482

Net Current Assets 30,558,846 28,134,982

125,874,114 126,738,965

Financed by:- Share capital 15 70,000,000 70,000,000 Share premium 25,744,796 25,744,796 Other reserves 16 193,846 (164,907) Retained profits carried forward 10,673,869 12,415,036 Shareholders’ equity 106,612,511 107,994,925

Bank borrowings 13 13,650,561 15,050,247 Hire purchase payables 14 486,078 79,333 Deferred tax liabilities 17 3,179,000 3,870,400 Minority interests 1,945,964 (255,940)

125,874,114 126,738,965

The notes set out on pages 44 to 64 form an integral part of, and should be read in conjunction with, these financial statements.

consolidated balance sheet as at 31 january 2006

34 35

Annual Report 2006


Revenue 18 297,887,008 361,465,336Less: Cost of sales (276,906,209) (326,598,272)

Gross profit 20,980,799 34,867,064 Administrative expenses (907,136) (652,032) Other operating expenses (20,848,374) (19,241,747) Selling and distribution expenses (767,277) (985,677) Other operating income 8,183,149 9,288,078

Profit from operations 6,641,161 23,275,686 Finance cost (4,577,780) (4,308,225)

Profit before taxation 19 2,063,381 18,967,461Less: Taxation 20 (633,038) (4,993,520)

Profit after taxation 1,430,343 13,973,941Minority interests (651,510) 968,927

Profit after taxation and minority interests 778,833 14,942,868Pre-acquisition results - (2,522,597)

Profit attributable to shareholder 778,833 12,420,271

Basic earnings per ordinary share (sen) 21 0.6 14.4

Dividend per ordinary share (sen) 22 - 1.8


consolidated income statementfor the year ended 31 january 2006


Non-distributable Distributable

Share Share Other Retained capital premium reserves profits Total RM RM RM RM RM

At 11 June 2004 2 - - (5,235) (5,233)Shares issued during the period 69,999,998 27,582,469 - - 97,582,467Listing expenses - (1,837,673) - - (1,837,673)Translation reserve - - (164,907) - (164,907)Net profit for the period - - - 12,420,271 12,420,271

Balance at 31 January 2005 70,000,000 25,744,796 (164,907) 12,415,036 107,994,925

Transferred from deferred tax - - 294,000 - 294,000Translation reserve - - (138,003) - (138,003)Disposal of investment - - 202,756 - 202,756Net profit for the year - - - 778,833 778,833Dividend paid (Note 22) - - - (2,520,000) (2,520,000)

Balance at 31 January 2006 70,000,000 25,744,796 193,846 10,673,869 106,612,511


consolidated statement of changes in equityfor the year ended 31 january 2006

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Annual Report 2006


Cash flows from operating activities Profit before taxation 2,063,381 18,967,461 Less: Pre-acquisition profits - (2,522,597)

2,063,381 16,444,864 Adjustments for:- Amortisation of development cost 9,119 55,248 Depreciation of property, plant and equipment 4 9,506,559 6,501,212 Impairment losses on investment 978,299 - Interest expense 3,387,029 4,233,363 Property, plant and equipment written off 426,041 - Gain on deemed disposal of investment in subsidiary company (5,168,008) - Gain on disposal of property, plant and equipment (5,173) (59,075) Interest income (203,502) (380,074) Listing expenses - (1,837,673) Negative goodwill written off - (4,734,331)

Operating cash flow before working capital changes 10,993,745 20,223,534 Inventories 1,299,188 1,484,065 Trade receivables 14,408,000 (5,225,115) Other receivables, deposits and prepayments 1,342,316 11,159,049 Trade payables 10,396,150 (7,647,605) Other payables and accruals (2,421,025) (8,018,107) Reserves - (164,907) Minority interests - 712,987

Net cash flow from operations 36,018,374 12,523,901 Bank interest and charges paid (3,375,709) (515,466) Income tax paid (2,523,072) (2,720,554)

Net operating cash flow 30,119,593 9,287,881

Balance carried forward 30,119,593 9,287,881


consolidated cash flow statementfor the year ended 31 january 2006



Balance brought forward 30,119,593 9,287,881

Cash flows from investing activities Purchase of property, plant and equipment 4 (4,203,677) (20,091,407) Proceeds from disposal of property, plant and equipment 7,447 - Acquisition of subsidiaries - 18,754,555 Investment in associated company (5,260,261) - Patent expenditure incurred (3,043) - Deemed disposal of investment in subsidiary (Note a) (1,007,116) - Interest income received 203,502 380,074

Net investing cash flow (10,263,148) (956,778)

Cash flow from financing activities Net proceeds from issuance of shares - 16,507,000 Net repayment of bank borrowings (10,039,076) (2,500,909) Net repayment of term loans (3,386,624) (388,561) Repayment of hire purchase liabilities (820,861) (850,380) Dividend paid (2,520,000) - Interest paid - (3,611,024)

Net financing cash flow (16,766,561) 9,156,126

Net changes in cash and cash equivalents 3,089,884 17,487,229Cash and cash equivalents at the beginning of the year 17,487,231 2

Cash and cash equivalents at the end of the year 20,577,115 17,487,231

Analysed into:- Fixed deposits with financial institutions 12,455,119 12,169,972 Cash and bank balances 9,988,033 7,661,347 Bank overdrafts 13 (1,866,037) (2,344,088)

20,577,115 17,487,231


consolidated cash flow statementfor the year ended 31 january 2006 (cont’d)

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Annual Report 2006

2006 RM

(a) Analysis of deemed disposal of investment in subsidiary, LNC Tech Co., Ltd

Property, plant & equipment 2,266,163 Patent 14,500 Development cost 267,123 Inventories 757,132 Trade receivables 877,311 Other receivables and deposits 659,807 Cash and bank balances 1,007,116 Trade payables (605,237) Other payables and accruals (12,207,204) Foreign exchange reserve 202,756

Net liabilities disposed off (6,760,533) Minority interest 1,592,525 Gain on disposal of subsidiary company 5,168,008

Net value of disposal - Less: Cash and bank balances disposed (1,007,116)

Cash flow on disposal, net of cash disposed (1,007,116)


consolidated cash flow statementfor the year ended 31 january 2006 (cont’d)



Investment in Subsidiaries 5 81,075,467 81,075,467Current Assets Other receivables 9 15,084,801 14,422,679 Fixed deposits with financial institutions 10 - 422,000 Bank balances 18,081 48,073

15,102,882 14,892,752

Current Liabilities Other payables and accruals 12 53,677 40,594 Provision for taxation 106,572 53,000

160,249 93,594

Net Current Assets 14,942,633 14,799,158

96,018,100 95,874,625

Financed by:- Share capital 15 70,000,000 70,000,000 Share premium 25,744,796 25,744,796 Retained profits carried forward 273,304 129,829

96,018,100 95,874,625


balance sheetas at 31 january 2006

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Annual Report 2006


Revenue 18 3,500,000 -Less: Cost of sales - -

Gross profit 3,500,000 - Administrative expenses (62,071) (29,859) Other operating expenses (367,070) (56,191) Other operating income 752,537 274,231

Profit from operations 3,823,396 188,181 Finance cost (349) (117)

Profit before taxation 19 3,823,047 188,064Less: Taxation 20 (1,159,572) (53,000)

Profit after taxation 2,663,475 135,064

Dividend per ordinary share (sen) 22 - 1.8


income statementfor the year ended 31 january 2006


Non- distributable Distributable

Share Share Retained Note capital premium profits Total RM RM RM RM

Balance at 31 January 2004 2 - (5,235) (5,233)Shares issued during the year 69,999,998 27,582,469 - 97,582,467Listing expenses - (1,837,673) - (1,837,673)Net profit for the year - - 135,064 135,064

Balance at 31 January 2005 70,000,000 25,744,796 129,829 95,874,625Net profit for the year - - 2,663,475 2,663,475Dividend paid 22 - - (2,520,000) (2,520,000)

Balance at 31 January 2006 70,000,000 25,744,796 273,304 96,018,100


statement of changes in equityfor the year ended 31 january 2006

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Annual Report 2006

2006 2005 RM RM

Cash flows from operating activities Profit before taxation 3,823,047 188,064 Adjustments for:- Interest expense 349 117 Interest income (1,457) (68,944) Interest on advances (747,245) (205,287) Listing expenses - (1,837,673)

Operating cash flow before working capital changes 3,074,694 (1,923,723) Other receivables (662,122) (14,422,679) Other payables and accruals 13,083 35,359

Net cash flow from operations 2,425,655 (16,311,043) Bank interest and charges paid (349) (117) Income tax paid (1,106,000) -

Net operating cash flow 1,319,306 (16,311,160)

Cash flows from investing activities Interest income received 1,457 68,944 Interest on advances 747,245 205,287

Net investing cash flow 748,702 274,231

Cash flow from financing activities Net proceeds from issuance of shares - 16,507,000 Dividend paid (2,520,000) -

Net financing cash flow (2,520,000) 16,507,000

Net changes in cash and cash equivalents (451,992) 470,071Cash and cash equivalents at the beginning of the year 470,073 2

Cash and cash equivalents at the end of the year 18,081 470,073

Analysed into:- Fixed deposits with financial institutions - 422,000 Bank balances 18,081 48,073

18,081 470,073


cash flow statementfor the year ended 31 january 2006


1. PRINCIPAL ACTIVITIES

The Company is principally engaged in investment holding. The principal activities of the subsidiary companies are described in Note 5 to the financial statements.

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

2. FINANCIAL RISk MANAGEMENT POLICIES

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the developmentof the Group’s business whilst managing its currency, interest rate, credit, liquidity and cash flow risks. The Group operates within defined guidelines that are approved by the Board and the policies in respect of the major areas of treasury activity are as follows:-

Currency risk

The Group is exposed to foreign exchange risk on sales, purchases and transactions that are mainly denominated in US Dollars and Euro.

Interest rate risk

The Group’s exposure to interest rate risk arises from the Group’s borrowings and deposits.

The Group’s bank borrowings are subject to the prime lending rate of the banks while hire purchase and lease financing are based on fixed rates. Investments in financial assets are short term in nature and are placed as short term deposits with licensed financial institutions.

Market interest rates movements are monitored with a view to ensure that the most competitive rates are secured and where appropriate borrowing arrangements and interest bearing instruments are restructured or reduced.

Credit risk

The Group’s exposure to credit risks, or the risk of counterparties defaulting, arises mainly from trade receivables. The Group manages its exposure to credit risk by the application of monitoring procedures on an ongoing basis.

The Group does not have any major concentration of credit risk related to any individual customer or counterparty as at balance sheet date.

Liquidity and cash flow risks

The Group’s exposure to liquidity and cash flow risks arises mainly from general funding and business activities.

Liquidity and cash flow risks are addressed by annual and continuous review and forward planning of cash flow in relation to business plans to ensure a balanced and prudent portfolio of cash and other liquid assets and credit facilities are maintained. Borrowings are arranged so as not to go beyond the Group’s ability to repay or refinance.

3. SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

The financial statements have been prepared under the historical cost convention, modified by the revaluation of the leasehold land and buildings, and comply with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia.

notes to the financial statements

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Annual Report 2006

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiary companies made up to the end of the financial year using the acquisition method of accounting. The results of the subsidiary companies acquired or disposed during the financial year are included in the group financial statements from the effective date of acquisition or to the effective date disposal.

Inter-company transactions and balances are eliminated on consolidation.

At the date of acquisition, the fair values of the subsidiaries’ net assets are determined and these values are reflected in the Group financial statements.

Goodwill arising on consolidation, if any, represents the excess of the purchase price over the Company’s share of the value of net assets of the subsidiary company at the date of acquisition. Goodwill arising on consolidation is netted off against the reserve on consolidation, if any, and the resultant balance is amortised over 5 years on a straight line basis.

Negative goodwill represents the excess of the fair values of the net identifiable assets over the cost of acquisition. Negative goodwill, not exceeding the fair values of the non-monetary assets is recognised in the income statement over the weighted average useful life of those assets that are depreciable or amortisable. Negative goodwill in excess of the fair values of the non-monetary assets acquired is recognised immediately in the income statement.

For foreign subsidiary companies which are consolidated, all monetary items are translated into Ringgit Malaysia at the closing rate; non-monetary items that are recorded in terms of past events are translated at the exchange rates that existed when the relevant transactions occurred and income statement items are translated at average exchange rates that existed during the financial year. The net translation difference for the financial year is taken to reserves.

Investment in subsidiaries / associated compan

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