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George Kent (M

alaysia) Berhad (1945-X)A

nnual Report for the financial year ended 31 January 2012

George Kent (Malaysia) Berhad (1945-X)

Lot 1115, Batu 15, Jalan Dengkil, 47100 Puchong, Selangor Darul Ehsan.Tel : 603-8064 8000 Fax : 603-8061 9954, 8061 3295 Email : [email protected]

www.georgekent.net

George Kent (M

alaysia) Berhad (1945-X)

Annual Report for the fin

George Kent (Malaysia) Berhad(1945-X)

YOUR TRUSTED ENGINEERING PARTNER

“Together we can make the world a litt le greener.. .”

a n n u a l r e p o r tfor the financial year ended 31 January 2012

CONTENTS12368

121618192528303233

117120121122125

126127

Vision Statement Corporate Information Five-Year Group Financial Highlights Chairman’s Statement Management Analysis & ReviewEvent Highlights Profile of Directors Senior Management Statement on Corporate Governance Audit Committee ReportStatement on Corporate Social Responsibility Statement on Internal Control Additional Information Financial Statements Shareholders’ Information Statement on Directors’ Interests List of Properties Held Notice of Annual General MeetingStatement Accompanying the Notice of Annual General MeetingAppendix IAppendix IIForm of Proxy

CORPORATE PROFILE

George Kent (Malaysia) was established in Penang in 1936 as a service branch of the then parent Company, George Kent Limited, United Kingdom. The Company was incorporated in 1951 as George Kent (Malaya) Ltd and on 11 July 1969, it was converted to a public company under the name of George Kent (Malaysia) Berhad. In 1974 the Company listed its shares through an offer for sale of 20% equity by George Kent Limited and new issue of 20% shares to Malaysians.

George Kent is an engineering company involved in manufacturing, trading and investment and development of water infrastructure projects. Its core business is in the water industry. It has contributed to the nation’s manufacturing growth by building up over the years to become the leader in the region in brass products manufacturing. George Kent is the market leader in the supply of industrial and domestic water meters, valves and fitting, boilers, control instrumentation, telemetry and building automation systems.

George Kent is also involved in the extrusion of brass rods. George Kent products manufactured by the Manufacturing Division are up to the standard of MS ISO 9001:2000 Quality Management Systems and ISO 14001:2004 Environmental management System.

George Kent is a Company with regional activities in the ASEAN countries, China and Papua New Guinea. It exports its manufactured products to Singapore, Thailand, Vietnam, Myanmar, Cambodia, Indonesia, Philippines, Papua New Guinea, Australia, Hong Kong, Sri Lanka, Kenya, South Africa, South America and the United Kingdom.

Infrastructure Investments;Manufacturing & sales of water/water related products including OEM;M&E and process engineering design and build capability andmajor civil engineeringconstruction.

To become an admired Malaysianbased Engineering Company withRegional and InternationalOperations in:

Annual Report 20122

CorporateInformation

Board of Directors

Tan Sri Dato’ Tan Kay Hock Chairman/Non-Independent Non-Executive Director

Puan Sri Datin Tan Swee Bee Non-Independent Non-Executive Director

Ong Seng Pheow Independent Non-Executive Director

Ir. Dr. Cheong Thiam Fook Non-Independent Executive Director

Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul bin Abdullah Independent Non-Executive Director

Audit Committee

Ong Seng Pheow (Chairman)Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul bin AbdullahTan Sri Dato’ Tan Kay Hock

Risk Management Committee

Ong Seng Pheow (Chairman)Tan Sri Dato’ Tan Kay HockIr. Dr. Cheong Thiam Fook

Remuneration Committee

Tan Sri Dato’ Tan Kay Hock (Chairman)Puan Sri Datin Tan Swee BeeDato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul bin Abdullah

Company Secretary

Teh Yong Fah (MACS00400)

Registered Office

George Kent Technology CentreLot 1115, Batu 15, Jalan Dengkil47100 Puchong, Selangor Darul EhsanTel : 603-8064 8000Fax : 603-8061 3295, 603-8061 9954E-mail : [email protected] : www.georgekent.net

Share Registrar

Johan Management Services Sdn. Bhd.11th Floor, Wisma E&CNo. 2 Lorong Dungun Kiri, Damansara Heights50490 Kuala LumpurTel : 603-2092 1858Fax : 603-2092 2812E-mail : [email protected]

Auditors

Ernst & YoungChartered Accountants

Group Principal Bankers(In alphabetical order)

Kuwait Finance House (Malaysia) BerhadMalayan Banking BerhadThe Royal Bank of Scotland Group

Stock Exchange Listing

Main Market, Bursa Malaysia Securities BerhadStock Name : GKENTStock Code : 3204Sector : Trading

George Kent (Malaysia) Berhad (1945-X) 3

Five-Year Group Financial Highlights

Year Ended 31 January

2012 2011 2010 2009 2008

RM’000 RM’000 RM’000 RM’000 RM’000

Restated Restated

INCOME STATEMENT

Revenue 152,249 165,037 124,813 106,933 89,832

Profit Before Tax 26,192 32,434 26,095 14,618 13,051

Income Tax 6,858 7,659 6,229 3,410 4,079

Profit for the year 19,334 24,775 19,866 11,193 8,882

STATEMENT OF FINANCIAL POSITION

Total non-current assets 96,800 83,506 80,257 78,709 74,154

Total current assets 153,142 147,679 126,901 95,348 81,995

Shareholders’ fund 183,323 164,261 148,660 135,585 122,579

Shareholders’ Equity 183,323 164,261 148,660 135,585 123,492

Total non-current liabilities 21,564 13,415 15,253 16,888 12,551

Total current liabilities 45,055 53,509 43,245 21,584 20,106

SHARE INFORMATION

Per Ordinary Share

Earnings, basic (sen) 8.60 11.00 8.80 5.00 3.90

Dividend – gross (sen) 5.00 5.00 4.00 3.50 -

Net assets (sen) 81.37 72.93 66.01 70.42 77.36

Share price as at 31 January (RM) 0.95 1.20 0.88 0.50 0.52

FINANCIAL RATIOS

Return on equity (%) 10.55 15.08 13.36 8.26 7.19

Gross Dividend Yield (%) 5.26 4.17 4.55 7.00 -

Annual Report 20124

Five-Year Group Financial Highlightscont’d

2008 2009 2010 2011 2012

REV

ENU

E (R

M’0

00)

PBT

/PAT

(RM

’000

)

0

50

100

150

200

5

10

15

20

25

30

35

89,832

106,933

124,813

165,037

152,249

8,882

11,193

19,866

24,775

19,334

13,051

14,618

26,095

32,434

26,192

Revenue Profit Before Tax (PBT) Profit After Tax (PAT)

REVENUE/PBT/PAT

2008 2009 2010 2011 2012

TO

TAL

ASS

ET (R

M’0

00)

SH

ARE

HO

LDER

S’ E

QU

ITY

(RM

’000

)

0

50

100

150

200

250

100

125

150

175

200

156,149

174,057

207,158

231,185

249,942

123,492

135,585

148,660

164,261

183,323

Total Asset Shareholders’ Equity

TOTAL ASSET/SHAREHOLDERS’ EQUITY

2008 2009 2010 2011 2012

EA

RNIN

GS

PER

SH

ARE

(SEN

)

NET

ASS

ETS

PER

SHA

RE (S

EN)

0

2

4

6

10

8

12

60

70

80

90

77.36

70.42

66.01

72.93

81.37

3.90

5.00

8.80

11.00

8.6

Earnings per share Net Assets per share

EARNINGS PER SHARE/NET ASSETS PER SHARE


Five-Year Group Financial Highlights

cont’d

Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb Mac Apr May

High (RM) 1.23 1.19 1.20 1.19 1.18 1.22 1.18 1.12 1.05 1.00 1.00 1.00 1.00 0.98 1.01

Low (RM) 1.08 1.06 1.10 1.04 1.07 1.08 0.94 1.00 0.92 0.90 0.91 0.90 0.92 0.81 0.87

Total Volume (million) 5 5 11 8 5 19 5 5 6 4 4 6 7 11 21

1.14

0.95

10

0

5

10

15

20

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

Volume Price

Share Performance in 2011/2012

High (RM) Low (RM) Total Volume (million)

Annual Report 20126

Chairman’s Statement

Dear Shareholders,

On behalf of your Board of Directors, I am pleased to present the Annual Report of George Kent (Malaysia) Berhad for the financial year ended 31 January 2012.

ECONOMIC AND BUSINESS ENVIRONMENT REVIEW

Over the past one year, we witnessed the persistent uncertainty in the global economy caused by the sovereign debt crisis in Europe which affected many economies including those we operate in. While the larger economies in the region such as Indonesia and China have shown resilience, the European debt crisis continues to cast a shadow over the current year.

Against this backdrop of a global economic outlook plagued by uncertainties, the Malaysian economy remained resilient to grow at a steady but moderate rate of 5.1% for the whole of 2011. The economy had responded positively to the Government’s initiative programmes being implemented under the Economic Transformation Programme and the New Economic Model of the 10th Malaysia Plan and supported by expenditures of both private and public sector.

FINANCIAL REVIEW

For financial year ended 31 January 2012 (FY2012), your Group achieved revenue of RM152.249 million, down by 7.7% as compared to RM165.037 million in financial year ended 31 January 2011 (FY2011). The lower revenue was due to lower demand for our products and services for exports as a result of the global economic slowdown and lower revenue from projects. Group profit before tax was RM26.192 million, down 19.2% from RM32.434 million in FY2011 due to lower gross profit margin for manufactured products. Group profit after tax was RM19.334 million, down by 22.0% when compared to RM24.775 million in FY2011.

Accordingly, Earnings per share was 8.6 sen compared to 11.0 sen for FY2011.

As at end of FY2012, our Group balance sheet recorded an increase of 11.6% in shareholders’ fund to RM183.323 million (FY2011: RM164.261 million). Cash and cash equivalents stood at RM54.896 million (FY2011: RM59.345 million). Net assets per share of 81.37 sen was up 11.6% (FY2011: 72.91 sen).


Chairman’s Statement

cont’d

DIVIDENDS

For the financial year ended 31 January 2012, your Company paid an interim dividend of 2.0 sen per share less 25% tax on 31 October 2011.

As announced on 28 March 2012, your Board has recommended, subject to shareholders’ approval at the forthcoming Annual General Meeting, a final dividend of 3.0 sen per share less 25% tax. This will bring the total gross dividend to 5.0 sen per share declared for the financial year ended 31 January 2012. In monetary term, the total net dividend payout in respect of the financial year under review will be RM8.45 million (FY2011: RM8.45 million).

BUSINESS OUTLOOK AND PROSPECTS

Global economic prospect in 2012 is expected to be more challenging due to the economic slowdown in the United States, Europe and Japan, inflationary pressures due to rising commodity prices, the Eurozone debt crisis and slowdown in world trade.

Premised on these developments, the Malaysian Government had put in place measures to stimulate domestic economic activities, in particular public and private investments and private consumption with the RM232.8 billion budget for 2012. The Government is targeting a GDP growth of between 4%-5% in 2012. The construction sector is expected to grow by 7% in 2012 with special stimulus package through the private financing initiative worth RM6 billion provided by the Government. In addition, the Malaysian Second Rolling Plan (“RP2”) will focus on high-impact development projects with allocation under the Tenth Malaysia Plan (“10MP”) worth RM98.4 billion to be spent equally in 2012 and 2013.

Europe’s sovereign debt crisis has led to a global economic slowdown resulting in lower demand for our products and services. Your Group will take all necessary steps to minimise the adverse impact on your Group’s performance due to the economic slowdown. Your Group will continue to strengthen its manufacturing capabilities to put ourselves in a position to capitalise on new markets and new products. Further with the necessary M&E engineering capabilities and track record your Group is in a good position to participate in high value infrastructure projects at home and abroad. Your Board is optimistic of your Group’s prospects for the financial year ending 31 January 2013.

ACKNOWLEDGEMENT

On behalf of your Board of Directors, I wish to thank the management and staff at all levels for their commitment, dedication and collective contribution to the Group’s performance. I also wish to thank our valued customers, suppliers, business partners and shareholders for their continued support.

TAN SRI DATO’ TAN KAY HOCKChairman18 May 2012

Annual Report 20128

Towards achieving a new milestone of 2,000,000 units of Water Meter and Water Meter Housings

Part of the new production facilities installed under Phase 1 of GKM’s RM50 million upgrading and modernisation programme

Management Analysis & Review

The George Kent Group has two Business Divisions namely, “Manufacturing, Meters & Industrial Products (MMI)” and “Infrastructure Investments, Water & Construction (IWC)”. It is a strategic alignment where the respective Sub-Business Departments (SBDs) within each Business Division will focus on its main business areas as well as building on the strengths and synergies of the other SBDs within the Division in driving the Group’s businesses towards achieving its business objectives in accordance with its Annual Budget and 5-year Strategy Plan.

Whilst George Kent Group has traditionally been a major player in the Water Industry, it has now broadened its engineering construction business scope to four key areas i.e. Water, Healthcare, Transportation and Green Tech to further strengthen its market position towards achieving its long-term strategic goals.

MANUFACTURING, METERS & INDUSTRIAL PRODUCTS (MMI)

Manufacturing The George Kent Technology Centre in Puchong is the base of George Kent’s manufacturing unit and houses the largest hot brass forging facility in the region. Its manufacturing activities are centred on production of water meters, valves and fittings and brass parts and components for other industries. Water meters produced by George Kent are certified to international standards and distributed extensively throughout the world. The George Kent brand is synonymous with quality and that is further attested with its ISO9001-2008 and ISO14001-2004 certifications.


New machine for machining of OEM parts New T-probe machine for machining PSM water meters

Flow rate testing of water meters


cont’d

Its PSM water meters is the world’s biggest selling Class “C” water meter and are exported to more than 20 countries worldwide and the numbers keep increasing by the years. George Kent water meter manufacturing facilities are currently undergoing a RM50 million upgrading and modernisation program. The Phase 1 of the program was completed with RM20 mil of new production facilities installed and commissioned. These new facilities will boost the water meter production capacity to 2.4 million units annually which is in line with its business growth plan. Besides continuing to hold on to its market leadership in Malaysia, it has successfully grown its markets in the Indo

Going forward, George Kent will continue to build on its strong engineering capabilities and expertise in brass-forging and with the continuing modernization and acquisitions of modern equipment and state-of-the-art machineries. George Kent is poised to continue to excel in its manufacturing business as well as becoming a world-class Original Equipment Manufacturer (OEM) for brass parts and components such as LPG gas valves, control valves, heating and cooling equipments for other Water and Non-Water related industries.

George Kent is close to achieving its next milestone of producing 2 million units of water meter and water meter housings in a year as progress made on business development activities in the targeted new markets has been very encouraging with fruition in sight.

Meters George Kent is a leading supplier and distributor of water meters and metering solutions in the region. It has a complete range of water meters which include the domestic PSM meters and Industrial/Commercial Bulk meters that are designed to serve the needs and wants of the cross segments of the market in the residential, industrial and commercial sectors. George Kent water meters are distributed throughout the country either directly to the respective State water authorities or through its dealership network for the private sector. It also serves the ASEAN regional markets through its network of distributors in the respective countries who actively promote George Kent water meters and other related products to provide a complete solution in consumption measurement and management, network monitoring and distribution management.

China markets especially in Vietnam where sales figures keep breaching new heights. Products manufactured by George Kent are acclaimed for its quality and performance and often regarded as the preferred brand for products in the water industry worldwide.

Annual Report 201210

Operating the new Multi-spindle machines

The Port Moresby Water Treatment Plant in Papua New Guinea

Management Analysis & Review cont’d

George Kent exports its water meters to more than 20 countries worldwide and is continuing to penetrate new markets every year. Automatic Water Reading (AMR) will be a new business area that George Kent will be focusing to boost revenue substantially. The rapid growth of AMR in the developed nations is expected to gain further momentum which will create the spill-over effects to the fast developing economies in regions like ASEAN. George Kent has planned ahead to seize such opportunities.

Nevertheless, George Kent will be taking a cautious stance in view of the many uncertainties enveloping the global economies by focusing on its core areas of strengths. It will strategically align itself towards achieving the set goals that have been designed to strengthen its technological advancement and cost leadership to strengthen its competitive position in both the domestic and export markets.

Industrial Products

George Kent’s Industrial Products business unit is focused in the marketing and distribution of non-ferrous and related products to complement its water meter business towards offering total water distribution and metering solution. This business unit is strategically aligned with Meters as there are many shared common markets served by both these units.

The George Kent brand is synonymous with quality and it is the market pioneer of a range of valves and fittings that are regarded as the choice-products in the premium market over the years. George Kent will continue to build on its strengths to strengthen its market position as well as building market niches through innovation and providing value-added solutions to stay in the forefront of the ever changing market environment. George Kent will expand its products offerings to serve more market segments to extend its market reach where its range of valves, fittings and other appropriate products will provide complete solutions to the plumbing and sanitary markets.

Infrastructure Investment

George Kent Group actively invests in infrastructure projects both locally and overseas. Besides focusing in the core area of water infrastructure projects, it will extend its involvements to other infrastructures projects under the Government PPP and PFI initiatives. George Kent Group’s current major involvement in infrastructure investment is in Papua New Guinea where it is a shareholder and operator of the Port Moresby water treatment plant in Papua New Guinea. Its investment in PNG Water Ltd in Papua New Guinea under a 22 year concession to supply processed water to the capital city of Port Moresby has been very successful and has been contributing significant returns to the Group.


Construction work in progress in Panching

The completed Kuala Lipis Hospital extension project in Pahang


cont’d

George Kent will build on its success in the PNG project and its experience in effective management and operation of such facilities will be an edge for its involvement in other similar projects in the future. George Kent will continually and actively seek new long-term investments in infrastructure assets both locally and overseas.

Water & Wastewater George Kent Group is a specialist contractor in water infrastructure projects with high mechanical and engineering contents. It has successfully completed more than 26 major water-supply and non-water related projects over the past 20 years. The completed projects are of diverse types and of varying nature, ranging from construction, rehabilitation, operation to maintenance of treatment plants and laying of pipelines. George Kent is currently undertaking two major projects namely the Semantan Intake Package 3A of

the Pahang Selangor Raw Water Transfer Project and the Panching Water Treatment in Pahang with a total order book of more than RM250 million. Besides its specialized engineering expertise in the water industry George Kent also provides total solutions to water efficiency management. Over the years George Kent Group has reaped many successes as a specialist in turnkey construction of major water infrastructure projects locally and abroad particularly for the Greater KL Wastewater Treatment Projects.

Construction George Kent Group is a specialist in construction for design and building of hospitals and medical facilities. George Kent has successfully completed the 106-bed Kuala Lipis Hospital extension project in Pahang within the contract period and contract price. It is the first non-water related construction project undertaken by the George Kent Group. It is by far the only project undertaken by the Ministry of Health that was delivered on schedule and within budget. George Kent Group will build on the success of this project and is poised to make further forays into the construction industry and secure other healthcare related projects. George Kent Group is also expanding on its resources and building its capabilities to expand its construction activities into the transportation/rail and green tech sectors that are now the most vibrant sectors in line with the Economic Transformation Programs of the Malaysian Government. George Kent Group is desirous to propel its construction business to become a core business area in the next few years where it will harness on its strengths in its engineering capabilities as well as building effective partnerships with appropriate business partners to provide total building solutions to span across the targeted sectors that has been identified in its long-term strategic business plan.


14 March 2011GKM’s 75th Anniversary Celebrations at Inter-Continental Hotel, KL,graced by Y.A.B. Tan Sri Muhyiddin Yassin, theDeputy Prime Minister and Minister of Education

21 May 20111st GKM Management Seminar

3 June 201110th Management Conference

23 Apr 20119th Management Conference with YB Dato’ Seri Idris Jala giving talk on the Malaysian Government’s Economic Transformation Program

graced by Y.A.B. Tan Sri Muhyiddin Yassin, theDeputy Prime Minister and Minister of Education

the Malaysian Government’s Economic Transformation Program n

r

Donation of RM500,000 to the MCA 1MalaysiaMedical Foundation in conjunction withGKM’s 75th Anniversary Celebrations

Celebrating GKM’s achievement of the 1st 1,000,000Water Meters within FY2011

Event Highlights

CORPORATE & BUSINESS ACTIVITIES


3 July 2011 Change Agent/Budget & Business Plan Workshop in Kuala Lipis

7 July 2011Annual General Meeting

29 Oct 201111th Management Conference

18 Oct 2011Dealers Seminar

21-24 Nov 2011 Participation in 2nd IWA Exhibition at KL Convention Centre

21-24 Nov 20

28 Aug 2011Kuala Lipis Hospital – Handover Ceremony

9 Dec 2011Green Technology Talk

EventHighlights

cont’d

CORPORATE & BUSINESS ACTIVITIES cont’d


7 Oct 2011INTI International University Graduation 2011

11 Nov 2011Healthcare and Blood Donation Campaign

17 Nov 2011INTI International College Penang/University of Bradford School ofEngineering, Design and TechnologyGraduation Ceremony

INTI InteUniversit

ring, Design and Technologytion Ceremony

EngineerGraduati

George Kent sponsored the Best Project Awardfor Engineering, Design & Technology Student

George Kent sponsored the Best Mechanical EngineeringStudent Award

EventHighlightscont’d

CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES


14 May 2011Inter-Dept Futsal Competition at Sports Planet Puchong

19 Feb 2011In-house Bowling Competition at Ampang Superbowl, IOI Mall, Puchong

23 Mar 2011Friendly Badminton match with LOH & LOH Construction at Kepong Sports Centre

7 May 2011Family Day in Desa Waterpark Kuala Lumpur

25 May 2011Tan Sri Dato’ Tan Kay Hock Badminton Challenge Trophy

13 Sept 2011Hari Raya Puasa Staff Luncheon

12 Dec 2011Sports Club Annual Dinner in Klang Executive Club

31 Dec 2011Annual Badminton Tournament between office & factory employees

EventHighlights

cont’d

EMPLOYEES’ SPORTS & RECREATIONAL ACTIVITIES


Profileof Directors

Name TAN SRI DATO’ TAN KAY HOCK PUAN SRI DATIN TAN SWEE BEE

Age 64 65

Nationality Malaysian British Citizen

Qualification Barrister-at-Law Barrister-at-Law

Position on Board Chairman (Non-Independent Non-Executive Director)

Director (Non-Independent Non-Executive Director)

Date of Appointment 14 January 1982 11 October 1989

Working Experience A lawyer by training having been called to the Bar by Lincoln’s Inn, UK in 1971. In 1972, he was admitted as an advocate and solicitor to the Supreme Court of Malaysia. He is a non-practising lawyer. Since August 1981, he is the Chairman and Chief Executive of Johan Holdings Berhad which is listed on the Main Market of Bursa Malaysia Securities Berhad. The Johan Group principal activities are franchise operator for Diners Club charge & credit cards, travel & tours, manufacturing of ceramics tiles, distribution and retailing of health food & supplements, property development, resorts and hotels. He is a Member of the Iskandar Regional Development Authority (IRDA), a Committee Member of the Malaysian Philippines Business Council and a Trustee of Malaysian Humanitarian Foundation.

She is a UK trained Barrister-at-Law from Lincoln’s Inn, UK in 1971. In 1972, she was admitted as an advocate and solicitor to the Supreme Court of Malaysia. She is a non-practising lawyer. Since December 1984, she is the Group Managing Director of Johan Holdings Berhad, listed on the Main Market of Bursa Malaysia Securities Berhad. The Johan Group principal activities are franchise operator for Diners Club charge & credit cards, travel & tours, manufacturing of ceramics tiles, distribution and retailing of health food & supplements, property development, resorts and hotels.

Other Directorships of public companies

• Johan Holdings Berhad• Jacks International Limited

• Johan Holdings Berhad• Jacks International Limited

Family relationship with any Director and/or major shareholders of the Company

Spouse of Puan Sri Datin Tan Swee Bee, a Non-Executive Director of the Company

Spouse of Tan Sri Dato’ Tan Kay Hock, the Chairman of the Company.

Conflict of interest with the Company

NIL NIL

List of convictions for offences within the past ten (10) years

NIL NIL

Committee Member of the Audit Committee, Risk Management Committee, ESOS Committee and Chairman of the Remuneration Committee.

Member of the Remuneration Committee and ESOS Committee.


Profileof Directors

cont’d

ONG SENG PHEOW DATO' PADUKA PROF. (DR.) IR. HJ. KEIZRUL BIN ABDULLAH

IR. DR. CHEONG THIAM FOOK

63 60 57

Malaysian Malaysian Malaysian

Certified Public Accountant (Malaysia)• Member of the Malaysian

Institute of Certified Public Accountants

• Member of the Malaysian Institute of Accountants

• Fellow (F1691), Institution of Engineers, Malaysia (IEM)

• Registered Professional Engineer (4133 Civil), Malaysia

• Founding Fellow (0078), ASEAN Academy of Engineering and Technology

• Founding Member, Malaysian Hydrology Society (MHS)

• Member, International Association of Hydrological Sciences (IAHS)

• BSc in Mechanical Engineering• Master in Energy Technology• PhD in Manufacturing Management• Fellow (F6100) Institution of Engineers,

Malaysia (IEM)• Registered Professional Engineer (6333

Mech), Malaysia

Director (Independent Non-Executive Director)

Director (Independent Non-Executive Director)

Director (Non-Independent Executive Director)

13 September 2004 8 December 2009 10 December 2008

Over 30 years of experience as Public Accountant with international firm of accountants, and was a partner of Messrs Ernst & Young from 1984 to 2003.

Dato’ Paduka Prof. (Ir. Dr.) Ir. Hj. Keizrul has been involved in the field of water and water resources engineering for the past 34 years. Upon graduation in 1975, he joined the Department of Irrigation and Drainage Malaysia and over an illustrious career, rose to become the Director General in November 1997 until his retirement from public service in December 2007

He is the Executive Director responsible for the entire operations of the Group. He is Fellow member of the Institute of Engineers, Malaysia and a registered Professional Engineer with the Board of Engineers, Malaysia. He has over 30 years of experience in the engineering construction and manufacturing industries. His capacity as Project Manager and Company Director, has successful completed many projects including high-rise buildings, industrial plant and public infrastructure projects such as The Star LRT System I Phase 1 & 2.

• Daiman Development Bhd.• LCTH Corporation Bhd.• RHB Bank Berhad• HELP International

Corporation Berhad• RHB Insurance Berhad

• Wetlands International• Kimlun Corporation Berhad• Malaysian Green Technology

Corporation

NIL

NIL NIL NIL

NIL NIL NIL

NIL NIL NIL

Chairman of the Audit Committee and Risk Management Committee.

Member of the Audit Committee and Remuneration Committee

Member of the Risk Management Committee


SeniorManagement

EXECUTIVE DIRECTOR

IR. DR. CHEONG THIAM FOOK, aged 57, is the Executive Director responsible for the entire operations of the Group. He holds a BSc in Mechanical Engineering, a Master in Energy Technology and a PhD in Manufacturing Management. He is a Fellow member of the Institute of Engineers, Malaysia and a registered Professional Engineer with the Board of Engineers, Malaysia. Ir. Dr. Cheong has over 30 years of experience in the engineering construction and manufacturing industries. His capacity as Project Manager and Company Director, has successful completed many projects including high-rise buildings, industrial plant and public infrastructure projects such as The Star LRT System I Phase 1 & 2.

SENIOR MANAGERS

OOI CHIN KHOON, aged 51, is the Senior General Manager – Finance & Control appointed with effect from 12 September 2011. He is responsible for the financial and strategic management of the Group. He is a member of the Malaysian Institute of Accountants. He has more than 25 years of experience and knowledge in financial, strategic and operations management covering various industries.

CHAN KIM CHUAN, aged 62, is the General Manager of the Meters, Manufacturing and Industrial Division. He has served the Company for over 38 years and has experience in factory, engineering and manufacturing management. He is responsible for the development, manufacturing and marketing of meters and industrial products and OEM-manufacturing services and products.

IR THONG KOON CHOON, aged 57, a registered Professional Engineer is the General Manager of the Contract Division. He holds a BSc in Civil Engineering from University of Portsmouth, a MBA from University of Strathclyde and a CDipAF from ACCA, UK. He has more than 30 years of working experience in the Water and Wastewater sectors covering Consultancy, Turnkey Contracting, Contracts Management and Sub-Contracting. Key areas of expertise and knowledge covers design, project management, contract administration, site supervision, marketing and business development of the Water and Wastewater business.

HAN YEW KWONG, aged 54, is the General Manager – Commercial & Building of the Company. He holds a Diploma in Technology (Building) from Tunku Abdul Rahman College in 1984, obtained his professional degree in 1986 and became a member of The Chartered Institute of Buildings, UK in 1991. Mr. Han has over 28 years experience in in the areas of property development, project management and construction cost management. Among the projects he was involved in include The Weld Redevelopment in Jalan Raja Chulan, Country Heights in Kajang, The British High Commission in Jalan Ampang, Labuan Financial Parks in Labuan, Demark House in Jalan Ampang and Wisma Cycle and Carriage in Jalan Raja Laut.


Statement on Corporate Governance

The Board is committed to ensuring high standards of corporate governance throughout the Group and endeavours to ensure consistency of policies and procedures of the Group of companies in different geographical regions. This statement illustrates the extent of which the Board has embodied the spirit and principles of the Malaysian Code on Corporate Governance (“The Code”). The Code formalises management practices that have generally been adopted by the Board for some time now. Unless otherwise stated below, the Company is in compliance with the requirements of the Code.

A. BOARD OF DIRECTORS

(i) Board Composition

The Board currently has five (5) members, comprised of one (1) Executive Director and four (4) Non-Executive Directors, two (2) of whom are Independent Directors. Together, the Directors have a diverse wealth of experience as well as skills and knowledge in law, engineering, accounting and general management. The profile of each Director on the current Board is included in Pages 16 and 17 of this Annual Report.

There is clear segregation of responsibilities between the Chairman and Executive Directors to ensure a balance of power and authority. The role of the non-executive Directors is particularly important as they provide unbiased and independent view, advice and judgement to fulfil a pivotal role in corporate accountability.

(ii) Duties and Responsibilities

The Board recognises its duties and responsibilities to shareholders of the Company which principally include the following:

• Reviewing and adopting a strategic plan for the Company and the Group;• Overseeing the overall conduct of the Company’s business and that of the Group;• Identifying principal risks and ensuring that an appropriate system of internal control exists to manage

these risks;• Reviewing the adequacy and integrity of internal controls systems and management information systems

in the Company and within the Group;• Developing and implementing a sound communication policy for investor relations;• Succession planning, including appointing and determining compensation of senior management; and• Assessing the effectiveness of the Board, Board Committees and individual Directors.

(iii) Supply of Information

All Directors are provided with an agenda and a set of Board papers prior to each Board Meeting to be convened. Board papers are circulated in sufficient time to enable Directors to obtain further explanation, if necessary, in order to be properly briefed before each meeting. Board members are supplied with full and timely information necessary to enable them to discharge their responsibilities. Senior management staffs are also invited to attend Board Meetings when necessary to provide the Board with further explanation and clarification on matters being tabled for consideration by the Board.

The Board meets quarterly, scheduled to hold within two months of each quarter, to consider the quarterly financial results and review operational performance. Additional meetings are convened as and when necessary.

All Directors have access to the advice and services of the Company Secretary and are updated on new statutory or regulations requirements concerning their duties and responsibilities.

Newly appointed Directors are briefed by the Board, the Company Secretary and the members of the management on the nature of business and current issues within the Company and the Group.


Statement on Corporate Governancecont’d

A. BOARD OF DIRECTORS cont’d

(iv) Board of Directors’ Meetings cont’d

During the financial year ended 31 January 2012, the number of Board of Directors’ Meetings held and the attendance of each Director were as follows:-

No. of Board Meetings

Directors Held Attended

Tan Sri Dato’ Tan Kay Hock 6 6

Puan Sri Datin Tan Swee Bee 6 6

Dato’ Ir. Haji Zaidan Bin Haji Othman (Retired on 7 July 2012) 4 3

Ong Seng Pheow 6 6

Ir. Dr. Cheong Thiam Fook 6 6

Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul Bin Abdullah 6 5

(v) Re-election of Directors

In accordance with the Articles of Association of the Company at least one-third of the Directors including the Managing Director are required to retire by rotation at each Annual General Meeting but shall be eligible for re-election.

Details of Directors seeking re-election as required under Paragraph 8.27(2) of the Main Market Listing Requirements are disclosed in the Statement Accompanying Notice of Annual General Meeting.

(vi) Directors’ Training

The Board encourages its Directors to attend talks, seminars, workshops and in-house conferences to update and enhance their skills and knowledge and to keep abreast with developments in regulatory and corporate governance issues. During the year the Directors in their individual capacity and as Director of other public listed companies in Malaysia, had attended many courses, briefings and seminars, relating to risk management, corporate governance, investors relations and financial statements reporting under IFRS. The latest seminar attended by the Directors was the seminar entitled “Corporate Disclosure Guide 2011” conducted by Bursatra Sdn. Bhd.

(vii) Board Committees

The Board had delegated certain responsibilities and duties to the following Board Committees which operate within clearly defined terms of reference. Except for the Remuneration Committee, the other Committees as listed below do not have executive powers but report to the Board on all matters considered and their recommendations thereon.

(a) Audit Committee

The Audit Committee currently is comprised of three (3) Non-Executive Directors as follows:-

1. Ong Seng Pheow (Independent Non-Executive Director) – Chairman2. Tan Sri Dato’ Tan Kay Hock (Non-Independent non-Executive Director)3. Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul Bin Abdullah (Independent Non-Executive Director)



cont’d


(vii) Board Committees cont’d

(a) Audit Committee cont’d

The Audit Committee’s terms of reference include the review of the Group’s quarterly and year end financial results, review of any major audit findings raised by external auditors and internal auditors and management’s response thereon. The Executive Directors, Head of Finance & Control and Internal Audit Manager attend the Audit Committee Meetings at the invitation of the Audit Committee. The Audit Committee meet with the external auditors at least once a year without any executive Directors being present.

Agenda of Audit Committee Meetings also include internal audit findings of operating units of the Group and investigations carried out by internal audit department.

The Audit Committee Report for the financial year pursuant to Paragraph 15.15 of the Main Market Listing Requirements is contained in Pages 25 to 27 of this Annual Report.

(b) Risk Management Committee

The Risk Management Committee comprises the following as members:-

1. Ong Seng Pheow (Independent Non-Executive Director) – Chairman2. Tan Sri Dato’ Tan Kay Hock (Non-Independent Non-Executive Director)3. Ir. Dr. Cheong Thiam Fook (Non-Independent Executive Director)

The Risk Management Committees’ primary responsibility is to oversee the overall risk management of the Group, particularly on the strategic areas of the business. The Risk Management Committee, supported by the Risk Management Working Group, which comprises of the Senior Managers, is responsible for identifying, managing and mitigating risks through a systematic risk evaluation/profiling exercise. The Risk Profile is reviewed and revised on a quarterly basis and submitted to the Risk Management Committee for review.

(c) Remuneration Committee

During the financial year ended 31 January 2012, the Remuneration Committee comprised of an Independent Non-Executive Directors and two (2) Non-Independent Non-Executive Director as follows:-

1. Tan Sri Dato’ Tan Kay Hock (Non-Independent Non-Executive Director) – Chairman2. Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul Bin Abdullah (Independent Non-Executive Director) 3. Puan Sri Datin Tan Swee Bee (Non-Independent Non-Executive Director)

The Remuneration Committees’ primary responsibilities are to recommend to the Board the remuneration package and the terms of employment on each executive Director. The determination of fees payable to non-executive Director will be a matter for the Board as a whole, and a Director shall not participate in the decision on their own remuneration packages.

The Remuneration Committee is also responsible for developing the Group’s remuneration policy and determining the remuneration packages of senior executive employees of the Group.



(vii) Board Committees cont’d

(d) Nomination Committee

Given the limited size of the Board, the Directors consider it inappropriate for the time being, to formally establish a Nomination Committee as all new nominations of Directors received are assessed and approved by the entire Board. The process of assessing Directors’ performance is also an ongoing responsibility of the entire Board.

(e) Employee Share Option Scheme (“ESOS”) Committee

The ESOS Committee was established on 8 October 2003 to administer the ESOS of the Group implemented to be in force for a period of five (5) years commencing from 8 October 2003 to 7 October 2008. The shareholders had approved the extension of the duration of the ESOS for another five (5) years expiring 7 October 2013. The ESOS Committee comprised of the following members:-

1. Tan Sri Dato’ Tan Kay Hock (Non-Independent Non-Executive Director) - Chairman2. Puan Sri Datin Tan Swee Bee (Non-Independent Non-Executive Director)3. Teh Yong Fah (Company Secretary)

Up to 31 January 2012, a total of 446,000 option shares under the 1st tranche were exercised with 273,000 option shares remaining unexercised.

B. DIRECTORS’ REMUNERATION

The remuneration of Directors is determined at levels which enable the Company to attract and retain Directors with the relevant experience and expertise to manage the Groups effectively.

The fees payable to the non-executive Directors, any increase of which are subject to approval by shareholders at annual general meeting. The Chairman of each Board Committee is paid an allowance of RM1,500/- per meeting and each Non-Executive Committee member is paid RM1,000/- per meeting.

The aggregate remuneration of the Directors for the financial year ended 31 January 2012 is as follows:-

Fees

Salaries and Other

EmolumentsBenefits-In-

Kind Total

(RM’000) (RM’000) (RM’000) (RM’000)

Executive DirectorsIr. Dr. Cheong Thiam Fook - 458 25 483

Non-Executive DirectorsTan Sri Dato’ Tan Kay Hock 144 4 28 176Puan Sri Datin Tan Swee Bee 72 1 - 73Ong Seng Pheow 50 6 - 56Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul Bin Abdullah 45 3 - 48Dato’ Ir Hj Zaidan bin Hj Othman (Retired on 7 July 2012) 20 2 - 22

331 474 53 858



B. DIRECTORS’ REMUNERATION cont’d

The number of Directors whose remuneration falls into bands of RM50,000 is as follows:-

Number of Directors

Range of Remuneration Executive Non-executive Total

Below RM50,000 - 2 2

RM50,001 to RM100,000 - 2 2

RM100,001 to RM200,000 - 1 1

RM400,001 to RM500,001 1 - 1

1 5 6

C. SHAREHOLDERS COMMUNICATION AND INVESTORS RELATIONSHIP POLICY

The Board acknowledges the need for shareholders to be informed of all material business and developments concerning the Group. In addition to various announcements made during the year, the Board had ensured timely release of financial results on a quarterly basis to provide shareholders with an overview of the Group’s performance and operations. Copies of the full announcement are supplied to shareholders and members of the public upon request.

The Annual General Meeting is the principal forum for communicating with shareholders. Shareholders who are unable to attend are allowed to appoint not more than two (2) proxies, who need not be the shareholders, to attend and vote on their behalf. Board members as well as the Head of Finance & Control and the external Auditors of the Company are present to answer questions raised by shareholders. Shareholders are given the opportunity to ask questions during the questions and answers session prior to each resolution being proposed for consideration by shareholders.

Briefings to fund managers and analysts are held throughout the year. Corporate information of the Group is also available via the Company’s website, www.georgekent.net.

D. ACCOUNTABILITY AND AUDIT

(i) Financial Reporting

The Board acknowledge their responsibility to ensure that the financial statements of the Company and the Group are prepared in accordance with the provisions of the Companies Act, 1965 and approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs and the result of the Company and of the Group.

In preparing these financial statements, the Directors have:-

- adopted suitable accounting policies and applying them consistently;- made judgement and estimates that are prudent and reasonable;- ensured applicable accounting standards have been followed, subject to any material departures disclosed

and explained in the financial statements; and- prepared the financial statements on a going concern basis.


cont’d


D. ACCOUNTABILITY AND AUDIT cont’d

(i) Financial Reporting cont’d

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements as prepared comply with the Companies Act, 1965. The Directors are also responsible for safeguarding the assets of the Company and the Group and to take reasonable steps for the prevention and detection of fraud and other irregularities.

(ii) Internal Control

The Board acknowledges its overall responsibility for ensuring that a sound system of internal control is maintained throughout the Group and the need to review its effectiveness regularly. The Board recognises that risks cannot be totally eliminated and the system of internal controls instituted can only help minimise and manage risks and provide some assurance that the assets of the Company and of the Group are safeguarded against material loss and unauthorised use and that financial statements are not materially misstated.

The information on the Group’s internal control is presented in the Statement on Internal Control of this Annual Report.

(iii) Relationship with External Auditors

A transparent and professional relationship with the external auditors to enable them to independently report to shareholders in accordance with statutory and professional requirement is established through the Audit Committee. The role of the Audit Committee members in relation to the external auditors is set out in the Audit Committee Report of this Annual Report.

This Statement is made in accordance with the resolution of the Board of Directors dated 18 May 2012.



AuditCommittee Report

MEMBERS

Ong Seng Pheow Chairman (Independent Non-Executive Director)

Tan Sri Dato’ Tan Kay Hock(Non-Independent Non-Executive Director)

Dato’ Paduka Prof. (Ir. Dr.) Ir. Hj. Keizrul Bin Abdullah (Independent Non-Executive Director)

A. TERMS OF REFERENCE

1. Constitution

i) The Audit Committee (“the Committee”) was established by the Board of Directors (“the Board”) of the Company at its meeting held on 3 March 1994; and

ii) The Board shall ensure that the composition and functions of the Committee comply as far as possible with the Bursa Securities Listing Requirements as well as other regulatory requirements.

2. Objectives

i) To assist the Board in fulfilling its fiduciary responsibilities relating to corporate accounting and reporting practices of the Company and the Group;

ii) To maintain, through regularly scheduled meetings, a direct line of communication between the Board and the external auditors as well as the internal auditors;

iii) To act upon the Board of Directors’ request to investigate and report on any issue or concern with regard to the management of the Group.

3. Duties and Responsibilities

(i) To review with the external auditors the audit plan and their evaluation of the system of internal controls;

(ii) To consider and recommend for approval of the Board the appointment or re-appointment of the external auditors, the audit fees and any questions of their resignation or dismissal;

(iii) To review the adequacy of the internal audit plans, scope of examination of the internal auditors and ensure that appropriate action is taken by Management in respect of the audit observations and the Committee’s recommendations;

(iv) To review the quarterly, half-yearly and annual financial statements before submission to the Board. The review should focus primarily on compliance with accounting standards as well as other regulatory requirements and the adequacy of information disclosure for a fair and full presentation of the financial affairs of the Company and the Group;


AuditCommittee Reportcont’d

A. TERMS OF REFERENCE cont’d

3. Duties and Responsibilities cont’d

(v) To review any related party transaction and conflict of interest situation that may arise within the Company and the Group including any transaction, procedure or conduct that raises questions of management integrity;

(vi) To direct any special investigations on the Group’s operations to be carried out by the internal audit department or any other appropriate agencies;

(vii) To discuss problems and reservations arising out of external or internal audits and any matters which the auditors wish to bring up in the absence of Management or the Executive Directors of the Group where necessary; and

(viii) To perform other related duties as may be agreed by the Committee and the Board.

B. MEETINGS

During the year ended 31 January 2012, the number of Audit Committee Meetings held and the attendance of each Director were as follows:-

No. of Audit Committee Meetings

Held Attended

Ong Seng Pheow (Chairman) 4 4

Dato’ Ir. Haji Zaidan Bin Haji Othman 2 2

Tan Sri Dato’ Tan Kay Hock 4 4

Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul Bin Abdullah 4 3

At these Committee Meetings, the Executive Directors, Head of Finance & Control Department together with the Internal Audit Manager and representatives of the external auditors were as appropriate, in attendance to review with the Committee Members the quarterly reports as the case may be focusing on going concern assumption compliance with accounting standards, significant audit issues and internal controls.

After each Committee Meeting, the Chairman of the Committee reports to the Board on the proceedings conducted thereat and to convey the recommendation of the Committee to the Board for its consideration.

The Audit Committee had also met with the External Auditors separately on an occasion without the presence of Executive Directors and Senior Management.


AuditCommittee Report

cont’d

C. ACTIVITIES

In line with the terms of reference of the Committee, the following activities were carried out by the Committee during the financial year ended 31 January 2012 in the discharge of its functions and duties:-

i) Review of the audit plans and scope for the year for the Group prepared by Internal Audit Department and the external auditors;

ii) Review of the internal audit reports of companies within the Group prepared by the Internal Audit Department and Auditors’ Reports by the external auditors and consideration of the major findings by the auditors and management’s responses thereto. Monitored the corrective actions on the outstanding audit issues to ensure that all the key risks and control lapses have been addressed;

iii) Review of the quarterly and annual financial statements of the Group prior to submission to the Board for consideration and approval;

iv) Review of the related party transactions entered into by the Group;

v) Review of the fees of the external auditors; and

vi) Meeting with the external auditors without the presence of the management.

D. INTERNAL AUDIT FUNCTION

The Internal Audit Department was established in year 2006 to carry out internal audit function of the Group’s key operations in Malaysia and overseas. The internal audit team assists the Audit Committee in providing assurance that a sound system of internal controls exists by reviewing such controls and procedures of the Company and its subsidiaries. At the beginning of each year, the audit programme would have to be approved by the Audit Committee and findings would be presented to the Committee in a timely manner for their consideration. The internal audit team is independent and has no involvement in the operations of Group companies.

The total cost incurred for the internal audit function for the year ended 31 January 2012 was RM133,000 (2011:RM115,000).

This Audit Committee Report has been reviewed and approved by the Board of Directors for inclusion in this Annual Report on 18 May 2012.


Statementon Corporate Social Responsibility

The George Kent Group, as a responsible corporate citizen, is committed to the sound principals of Corporate Social Responsibility (“CSR”) which is integral to the way we conduct and manage our businesses, creating value to our shareholders and enhancing the long term sustainability of our Group. The development and implementation of the Group’s CSR policies and practices are directed to key areas of environmental management, employment, health and safety, community support and supply chain management.

THE ENVIRONMENT

The Group practice environmental preservation and maintain high standards of occupational and health management practices as part of our commitment to our employees and society as a whole. George Kent had embarked on “resources conservation” since we started our transformation initiatives back in 2007. The Energy Efficiency Management Team aims to achieve savings in electricity bills and other energy cost of at least 15%. Other eco-friendly steps taken include recycling, air pollution controls and waste management. The Group also ensures that wastes from its manufacturing activities are properly treated to ensure safe disposal to minimise any negative impact to the environment. The Group also undertook several initiatives in preserving the environment including upgrading its IT infrastructure to move to a paperless environment, reducing the usage of papers via electronic communication.

George Kent’s manufacturing plant in Puchong is fully ISO 14001 compliant. The plant also harvest rainwater for use in its test-bench operations as well as utility washing and cleaning in general.

THE COMMUNITY

We believe in adding value to the communities in which we operate through providing support in diverse areas of social welfare. We also encourage our employees to also participate in community projects and undertake voluntary works for fund-raising and social welfare.

We continue to provide sponsorship and training to students of certain colleges that offer industry-related courses. George Kent is an industry partner with the INTI Education Group in its long-term CSR programme. George Kent works with some of its students in projects that would expose them to the real-life working environment and at the same time tap on their creativity and knowledge to provide ideas that may be useful to its operations. In conjunction with the Graduation Ceremony on 17 November 2011 at INTI International University, Putra Nilai for INTI International College Penang/University of Bradford School of Engineering, Design & Technology, George Kent sponsored the Best Project Award for Engineering, Design and Technology Student. George Kent also sponsored the Best Mechanical Engineering Student Award during INTI’s Graduation Ceremony held at Grand Dorsett Subang Jaya on 7 October 2011.

THE WORKPLACE

The Company is unwavering in its drive to make George Kent Technology Centre a learning organisation where staff training and development are given continuous focus and emphasis. Our employees are central to our continued success of our businesses and our reputation for service excellence.

Existing and new staff are given in-house training programmes such as leadership and team development programmes, management trainee programmes and internships etc. to upgrade their work skills and capabilities towards higher responsibilities and career growth. Some of the staff welfare benefits include staff canteen subsidy, sponsorship of Family Day, local study trips, financial support of staff sports and recreational amenities, festival celebrations and staff loan assistance. Senior management personnel are given exposure to study trips overseas and senior management learning programmes are conducted by renowned institutions to widen their horizon and talents.


Statementon Corporate Social Responsibility

cont’d

THE WORKPLACE cont’d

On 7 May 2011, in conjunction with George Kent’s 75th Anniversary Celebrations, a Family Day with the theme “Uniting Our Families” was held in Desa Waterpark. 7 May 2011 was also Mother’s Day and aptness of the theme “Uniting Our Families” strengthened the importance of the family institution and getting together as one big George Kent family.

Since November 2008, a quarterly GKM Newsletter was published in-house to provide an additional channel of communication to keep our staff informed of the Group’s developments.

THE MARKETPLACE

We are committed to actively engage and respond to our shareholders, analyst, fund managers, customers, suppliers and government and non-government bodies with a view to better relations and understanding.

We are committed to high ethical standards in the areas of marketing, advertising and procurement. We seek to protect our customers’ rights through responsive customer complaint and meeting with the strictest data protection requirements. We continue to monitor all levels of our operations for efficiency to ensure that these are aligned with our corporate governance statements.

We maintain timely and open communications with our shareholders, analyst and fund managers so as to have a clear understanding of the Group’s strategy, performance and growth direction. Details of the Company’s “Shareholders Communication and Investors Relationship Policy” are found on the Statement On Corporate Governance on Page 23 of the Annual Report.


Statement on Internal Control

The Malaysian Code on Corporate Governance requires listed companies to maintain a sound system of internal control to safeguard shareholders’ investments and the Company’s assets. This Statement is prepared in accordance with Paragraph 15.26 (b) of the Main Market Listing Requirements (“LR”) of Bursa Malaysia Securities Berhad.

BOARD RESPONSIBILITY

The Board recognizes its responsibilities for and the importance of sound internal control and risk management practices and for reviewing the adequacy and integrity of those systems. However it should be noted that such systems are designed to manage rather than eliminate risk. Also any system can only provide reasonable and not absolute assurance against material loss or misstatement.

INTERNAL CONTROL

Internal audit plays a critical role in the objective assessment of the Group’s business processes by providing the Audit Committee with reasonable independent assurance on the effectiveness and integrity of the Group’s system of internal control. Further, there are organizational structures in place for each operating unit with clearly defined levels of authority. Operational management has clear responsibility for identifying risks affecting their business and for instituting adequate procedures and internal controls to mitigate and monitor such risks in an ongoing basis. Issues are brought to the Board’s attention regularly during Board’s attention regularly during Board meetings. Standard operating policies and procedures that document how transactions are captured and where internal controls are applied exist for all Group operating companies. As part of the performance monitoring process, management information in the form of annual budgets, revised forecasts and quarterly management accounts and reports are provided to the Board for approval and review respectively.

The other key elements of the Group’s internal control system are described below:-

• Organisation Structure The Group has in placed an organisation structure with key responsibilities clearly defined for the Board, Committees

of the Board and executive management of the Group’s operating units.

• Independence of Audit Committee The Audit Committee currently comprises two (2) Independent Non-Executive Directors and one (1) Non-Independent

Non-Executive Director, who have full access to both internal and external auditors

• Documented Internal Policies and Procedures Key policies and control procedures regulating financial and operating activities are clearly documented in manuals

for the Group’s operations. Compliance with the controls set out in the manuals monitored by regular internal audit reviews. These manuals are also subject to regular reviews and updates to take into consideration the changing business risks and to resolve any operational deficiencies.

• Detailed Budgeting Process Detailed annual budgets are prepared by individual operating units containing business strategies, financial and

operating targets, performance indicators and capital expenditure proposals, which are reviewed by the Board. The Board approves the consolidated Group budget with objectives for each operating unit.

• Financial Reporting System Detained management accounts are prepared by each operating unit based on annual budget with monthly

reports compared against budget, analysis of significant variances and key performance indicators and quarterly re-forecasting.


Statementon Internal Control

cont’d

INTERNAL CONTROL cont’d

• Capital Expenditure Approval Process The Group has formal procedures for the appraisal of major capital expenditure, which must be approved by the Board

and detailed procedures and authority levels relating to all other capital expenditure. There are also clear procedures for obtaining Board approval for assets disposal and major business transactions.

RISK MANAGEMENT

The Risk Management Committee, set up by the Board in September 2002, comprised of executive board members and senior management to better identify and to review the risk profile of companies within the Group.

There is an ongoing process for identifying, evaluating and managing significant risks faced by the Group in the context of its business objectives. Each major operating unit of the Group has produced a Risk Register which identifies the key risks, their potential impact and likelihood of occurrence as well as control strategies material risks are identified, analysed, treated, monitored and reported to the Risk Management Committee and Audit Committee by various business units through the submission of Risk Profile that is reviewed on a half-yearly basis.

INTERNAL AUDIT

The internal audit team assists the Audit Committee in providing assurance that a sound system of internal controls exists by reviewing such controls and procedures of the Company and its subsidiaries. The internal audit team reports to the Audit Committee regarding the effectiveness of the risk and control management and also recommends improvements in controls. The internal audit team is independent and has no involvement in the operation of Group companies. At the beginning of each year, the audit programme agreed with the Audit Committee and findings would be presented to the Committee in a timely manner for their consideration.

REVIEW OF EFFECTIVENESS

The Board is satisfied with the procedures outlined above and believes that the system of internal controls had continued to operate effectively in the financial year under review.

As required by paragraph 15.23 of the Main Market Listing Requirements of Bursa Securities, the external auditors have reviewed this Statement on Internal Control. Based on their review, they have reported to the Board that nothing has comes to their attention that cause them to believe that this Statement of Internal Control is inconsistent with their understanding with the procedures adopted by the Board in the review of the effectiveness of the internal controls.

This Statement is made in accordance with the resolution of the Board of Directors dated 18 May 2012.


Additional Information

MATERIAL CONTRACTS

There are no material contracts entered into by the Company and its subsidiaries involving Directors’ and major shareholders’ interests.

SANCTIONS AND/OR PENALTIES IMPOSED

No sanctions and/or penalties were imposed on the Company and its subsidiaries, Directors or management by the relevant regulatory bodies during the financial year ended 31 January 2012.

NON AUDIT FEES

Non-audit fees incurred by the Group and the Company to the external auditors and firm affiliated to the external auditors of the Company during the financial year ended 31 January 2012 amounted to RM36,000 (2011 : RM33,000).

SHARE BUYBACKS

The Company does not have a scheme to buy back its own shares.

OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES EXERCISED

There were no exercise of options during the financial year ended 31 January 2012.

The Company did not issue any warrants or convertibles securities during the financial year ended 31 January 2012.

VARIATION IN RESULTS FOR THE FINANCIAL YEAR

There was no deviation of 10% or more between the profit after tax and minority interest stated in the announced unaudited results and the audited accounts of the Company and the Group for the financial year ended 31 January 2012.

AMERICAN DEPOSITORY RECEIPT “ADR” OR GLOBAL DEPOSITORY RECEIPT “GDR”

The Company did not sponsor any ADR or GDR programme during the financial year ended 31 January 2012.

REVALUATION POLICY ON LANDED PROPERTIES

The Group does not have a policy on regular revaluation of its landed properties.

PROFIT GUARANTEE

The Company has not given any profit guarantee during the financial year ended 31 January 2012.

UTILISATION OF PROCEEDS RAISED FROM ANY CORPORATE PROPOSAL

No proceeds were raised by the Company from any corporate exercise implemented during the financial year ended 31 January 2012.

Directors’ Report 34Statement by Directors 39 Statutory Declaration 39 Independent Auditors’ Report 40Statements of Comprehensive Income 42 Statements of Financial Position 44 Statements of Changes in Equity 46 Statements of Cash Flows 49Notes to the Financial Statements 51Supplementary Information on the Disclosure 116 of Realised and Unrealised Profit and Loss

FINANCIALSTATEMENTS


Directors’ Report

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 2012.

PRINCIPAL ACTIVITIES

The principal activities of the Company consist of:

(a) manufacturing and marketing of water meters, waterworks fittings, fibreglass reinforced polyester panel tanks and a variety of hot-stamped brass products and components;

(b) operation of water infrastructure;

(c) marketing of industrial measurement and automatic control products, compressed air pumping and heating equipment, valves and pipes and pipeline fittings;

(d) design, supply, installation, commissioning and maintenance of instrumentation, process control systems and Scada systems for industry as well as building automation and building security systems;

(e) mechanical and electrical turnkey water infrastructure project management; and

(f) investment holding and management company.

The principal activities of its subsidiaries and associates are described in Note 37 to the financial statements.

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

RESULTS

Group Company

RM’000 RM’000

Profit, net of tax and attributable to the owners of the parent 19,334 15,005

There were no material transfers to or from reserves or provisions during the financial year other than the effects arising from the changes in accounting policies due to the adoption of IC Intepretation 12: Service Concession Arrangement as disclosed in Note 2.2 to the financial statements.

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


Directors’ Report

cont’d

DIVIDENDS The amount of dividends paid by the Company since 31 January 2011 were as follows:

RM’000

Final dividend in respect of the financial year ended 31 January 2011, of 3.0 sen less 25% tax, approved on 7 July 2011 and paid on 11 August 2011 5,069

Interim dividend in respect of the financial year ended 31 January 2012, of 2.0 sen less 25% tax, declared on 27 September 2011 and paid on 31 October 2011 3,379

8,448

At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 31 January 2012, of 3.0 sen less 25% tax per ordinary share of 50 sen amounting to RM5,069,000 will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 January 2013.

DIRECTORS The names of the directors of the Company in office since the date of the last report and at the date of this report are:

Tan Sri Dato’ Tan Kay HockPuan Sri Datin Tan Swee BeeOng Seng PheowIr. Dr. Cheong Thiam FookDato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul bin AbdullahDato’ Ir. Haji Zaidan bin Haji Othman (retired on 7 July 2011)

Neither at the end of the financial year, nor at any time during the year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate, other than those arising from the share options granted under the Employee Share Option Scheme.

Since the end of previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors as shown in Note 10 to the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest, other than as disclosed in Note 32 to the financial statements.


Directors’ Reportcont’d

DIRECTORS’ INTERESTS

According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares and debentures of the Company and its related corporations during the financial year were as follows:

Number of ordinary shares of RM0.50 each

As at As at

1.2.2011 Acquired Sold 31.1.2012

The Company

Direct interest

Tan Sri Dato’ Tan Kay Hock 10,753,000 - - 10,753,000

Puan Sri Datin Tan Swee Bee 17,444,100 - - 17,444,100

Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul bin Abdullah 5,000 - - 5,000

Ong Seng Pheow 30,000 - - 30,000

Indirect interest

Tan Sri Dato’ Tan Kay Hock 84,344,743 * - - 84,344,743 *

Puan Sri Datin Tan Swee Bee 77,653,643 * - - 77,653,643 *

* Include Call Option of 31,600,000 ordinary shares of George Kent (Malaysia) Berhad granted by Star Wealth Investment Ltd which will expire on 6 October 2012.

By virtue of Tan Sri Dato’ Tan Kay Hock’s and Puan Sri Datin Tan Swee Bee’s interests in the shareholdings of George Kent (Malaysia) Berhad, they are deemed interested in the shares in all the Company’s subsidiaries to the extent that the Company has an interest.

None of the other directors in office at the end of the financial year had any interest in shares in the Company or its related corporations during the financial year.

ISSUE OF SHARES

During the financial year, 3,000 new ordinary shares of RM0.50 each were issued upon the exercise of share options granted pursuant to the Employee Share Options Scheme. Accordingly, the Company’s issued and paid up ordinary share capital increased by RM1,500 to RM112,651,313 comprising 225,302,626 ordinary share of RM0.50 each.

The new ordinary shares issued during the year ranked parri passu in all respects with the existing ordinary shares of the Company.

EMPLOYEE SHARE OPTIONS SCHEME

The Company implemented an Employee Share Options Scheme (“ESOS”) which is governed by the Bye-Laws approved by the shareholders at an Extraordinary General Meeting held on 19 June 2003. The ESOS was implemented on 27 October 2003 and was to be in force for a period of 5 years up to 26 October 2008.


EMPLOYEE SHARE OPTIONS SCHEME cont’d

Subsequently at the Annual General Meeting of the Company held on 22 July 2008, shareholders’ approval was obtained for the extension of the term of the ESOS for a further 5 years commencing from 27 October 2008 until 26 October 2013.

The salient features and other terms of the ESOS are disclosed in Note 25 to the financial statements.

The Company has been granted exemption by the Companies Commission of Malaysia vide their letter dated 13 March 2012 from having to disclose the list of option holders and their holdings pursuant to Section 169(11) of the Companies Act, 1965 except for information of employees who were granted 3,000 options and above which are disclosed below:

Number of options over ordinary shares of RM0.50 each

As at As at

1.2.2011 Granted Exercised 31.1.2012

Tan Hoo Chow 11,000 - - 11,000

Mohd Kumar bin Abdullah 5,000 - - 5,000

Voong Choon Yee 5,000 - - 5,000

Errwin Rommel Al Krishnan 5,000 - - 5,000

A Kumereshwaran a/l R Anandasekaran 3,000 - - 3,000

Nor Hisham B Shamsudin 3,000 - - 3,000

Wong Hun Peng 3,000 - - 3,000

Zamri bin Jamil 3,000 - - 3,000

OTHER STATUTORY INFORMATION

(a) Before the statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the directors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that there were no known bad debts and adequate allowance had been made for doubtful debts; and

(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

(b) At the date of this report, the directors are not aware of any circumstances which would render:

(i) it necessary to write off any bad debts or the amount of the allowance for doubtful debts inadequate to any substantial extent; and

(ii) the values attributed to current assets in the financial statements of the Group and of the Company misleading.

(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

Directors’ Report

cont’d


OTHER STATUTORY INFORMATION cont’d

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

(e) At the date of this report, there does not exist:

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

(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year.

(f) In the opinion of the directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.

AUDITORS The auditors, Ernst & Young, do not wish to seek reappointment at the forthcoming Annual General Meeting.

Signed on behalf of the Board in accordance with a resolution of the directors dated 18 May 2012.

TAN SRI DATO’ TAN KAY HOCK IR. DR. CHEONG THIAM FOOK

Directors’ Reportcont’d


Statementby Directors

Pursuant to Section 169(15) of the Companies Act, 1965

Statutory Declaration

Pursuant to Section 169(16) of the Companies Act, 1965

We, Tan Sri Dato’ Tan Kay Hock and Ir. Dr. Cheong Thiam Fook, being two of the directors of George Kent (Malaysia) Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 42 to 115 are drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 January 2012 and of their financial performance and the cash flows for the year then ended.

The information set out in Note 40 on page 116 to the financial statements have been prepared in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Signed on behalf of the Board in accordance with a resolution of the directors dated 18 May 2012.

TAN SRI DATO’ TAN KAY HOCK IR. DR. CHEONG THIAM FOOK

I, Ooi Chin Khoon, being the officer primarily responsible for the financial management of George Kent (Malaysia) Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 42 to 116 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared bythe abovenamed Ooi Chin Khoonat Kuala Lumpur in the FederalTerritory on 18 May 2012. OOI CHIN KHOON

Before me,

MOHAN A. S. MANIAMNo. W521Pesuruhjaya Sumpah(Commissioner for Oaths)Kuala Lumpur


Independent Auditors’ Report to the Members of George Kent (Malaysia) Berhad(Incorporated in Malaysia)

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of George Kent (Malaysia) Berhad, which comprise the statements of financial position as at 31 January 2012 of the Group and of the Company, and statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 42 to 115.

Directors’ responsibility for the financial statements

The directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia, and for such internal controls as the directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 (“Act”) in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 January 2012 and of their financial performance and cash flows for the year then ended.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Act in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ reports of the subsidiaries of which we have not acted as auditors, which are indicated in Note 37 to the financial statements, being financial statements that have been included in the consolidated financial statements.


REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS cont’d

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.

(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act.

OTHER REPORTING RESPONSIBILITIES

The supplementary information set out in Note 40 on page 116 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

OTHER MATTERS

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

ERNST & YOUNG LOW KHUNG LEONGAF: 0039 No. 2697/01/13 (J) Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia18 May 2012

IndependentAuditors’ Report

to the Members of George Kent (Malaysia) Berhad(Incorporated in Malaysia)

cont’d


Statements ofComprehensive IncomeFor the year ended 31 January 2012

Group Company

2012 2011 2012 2011

Note RM’000 RM’000 RM’000 RM’000

Restated

Revenue 4 152,249 165,037 146,895 161,755

Cost of sales 5 (104,816) (110,121) (105,527) (114,269)

Gross profit 47,433 54,916 41,368 47,486

Other items of income

Interest income 6(a) 1,839 2,647 149 185

Dividend income from investment activities 125 130 - -

Other income 6(b) 1,357 631 1,737 186

Other items of expense

Administrative expenses (2,989) (7,894) (2,376) (3,327)

Distribution costs (1,747) (884) (1,747) (883)

Other operating expenses (20,063) (17,421) (18,082) (15,468)

Finance costs 7 (1,869) (1,386) (1,795) (1,299)

Operating profit 24,086 30,739 19,254 26,880

Share of results of associates 2,106 1,695 - -

Profit before tax 8 26,192 32,434 19,254 26,880

Income tax expense 11 (6,858) (7,659) (4,249) (5,588)

Profit net of tax 19,334 24,775 15,005 21,292

Other comprehensive income:

Foreign exchange translation 8,174 (2,483) - -

Other comprehensive income for the year, net of tax 8,174 (2,483) - -

Total comprehensive income for the year 27,508 22,292 15,005 21,292


Statements ofComprehensive Income

For the year ended 31 January 2012cont’d

Group Company

2012 2011 2012 2011

Note RM’000 RM’000 RM’000 RM’000

Restated

Profit attributable to:

Owners of the parent 19,334 24,775 15,005 21,292

Total comprehensive income attributable to:

Owners of the parent 27,508 22,292 15,005 21,292

Earnings per share attributable to owners of the parent (sen per share)

- Basic/diluted 12 8.6 11.0

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.


Statements ofFinancial PositionAs at 31 January 2012

Group Company

Note 2012 2011 As at

1.2.2010 2012 2011

RM’000 RM’000 RM’000 RM’000 RM’000

Restated Restated

Assets

Non-current assets

Property, plant and equipment 14 62,401 56,064 49,758 61,126 54,869

Intangible assets 15 454 496 461 454 496

Investment in subsidiaries 16 - - - 2,005 2,005

Associates 17 32,110 25,224 28,172 24 174

Deferred tax assets 30 1,835 1,722 1,866 - -

96,800 83,506 80,257 63,609 57,544

Current assets

Inventories 18 38,615 39,814 28,537 36,162 37,673

Trade and other receivables 19 50,155 38,428 30,059 54,866 61,722

Other current assets 20 106 3,226 1,782 106 3,226

Investment securities 22 4,692 4,497 3,182 - -

Cash and bank balances 23 59,574 61,714 63,341 20,577 27,833

153,142 147,679 126,901 111,711 130,454

Total assets 249,942 231,185 207,158 175,320 187,998


Statements ofFinancial Position

As at 31 January 2012cont’d

Group Company

Note 2012 2011 As at

1.2.2010 2012 2011

RM’000 RM’000 RM’000 RM’000 RM’000

Restated Restated

Equity attributable to owners of the parent

Share capital 24 112,651 112,650 112,610 112,651 112,650

Share premium 2,092 2,091 2,065 2,092 2,091

Retained earnings/(accumulated losses) 60,683 49,797 31,779 (16,865) (23,422)

Other reserves 26 7,897 (277) 2,206 11,422 11,422

Total equity 183,323 164,261 148,660 109,300 102,741

Non-current liabilities

Loans and borrowings 27 19,237 11,570 14,196 19,237 11,570

Deferred tax liabilities 30 2,327 1,845 1,057 2,177 1,815

21,564 13,415 15,253 21,414 13,385

Current liabilities

Loans and borrowings 27 15,219 16,674 15,142 15,219 16,674

Trade and other payables 28 21,164 32,183 25,253 20,716 50,444

Other current liabilities 29 8,415 3,826 1,035 8,415 3,826

Income tax payables 257 826 1,815 256 928

45,055 53,509 43,245 44,606 71,872

Total liabilities 66,619 66,924 58,498 66,020 85,257

Total equity and liabilities 249,942 231,185 207,158 175,320 187,998



Statements ofChanges in EquityFor the year ended 31 January 2012

Attributable to owners of the parent

Non-distributable Distributable Non-distributable

Equity, total

Equity attributable

to owners of the parent,

total Share capital

Share premium

Retained earnings

Other reserves,

total

Asset revaluation

reserve

Foreign currency

translation reserve

Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 February 2011 163,510 163,510 112,650 2,091 40,046 8,723 11,508 (2,785)

Effect of adoptiong IC 12 751 751 - - 9,751 (9,000) - (9,000)

At 1 February 2011, restated 164,261 164,261 112,650 2,091 49,797 (277) 11,508 (11,785)

Total comprehensive income 27,508 27,508 - - 19,334 8,174 - 8,174

Transactions with owners

Dividends on ordinary shares (8,448) (8,448) - - (8,448) - - -

Issue of ordinary shares pursuant to ESOS 2 2 1 1 - - - -

Total transactions with owners (8,446) (8,446) 1 1 (8,448) - - -

At 31 January 2012 183,323 183,323 112,651 2,092 60,683 7,897 11,508 (3,611)


Attributable to owners of the parent


Equity, total

Equity attributable

to owners of the parent,

total Share capital

Share premium

Retained earnings

Other reserves,

total

Asset revaluation

reserve

Foreign currency

translation reserve

Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 February 2010

As previously stated 148,116 148,116 112,610 2,065 22,004 11,437 11,508 (71)

Effect of adopting IC 12 544 544 - - 9,775 (9,231) - (9,231)

At 1 February 2010, restated 148,660 148,660 112,610 2,065 31,779 2,206 11,508 (9,302)

Total comprehensive income 22,292 22,292 - - 24,775 (2,483) - (2,483)


Dividends on ordinary shares (6,757) (6,757) - - (6,757) - - -

Issue of ordinary shares pursuant to ESOS 66 66 40 26 - - - -

Total transactions with owners (6,691) (6,691) 40 26 (6,757) - - -

At 31 January 2011 164,261 164,261 112,650 2,091 49,797 (277) 11,508 (11,785)

Statements ofChanges in Equity

For the year ended 31 January 2012cont’d


Statements ofChanges in EquityFor the year ended 31 January 2012cont’d


Equity, total

Share capital

Share premium

Accumulated

losses

Other reserves,

total

Revaluation reserve - freehold

land

Company RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 February 2011 102,741 112,650 2,091 (23,422) 11,422 11,422

Total comprehensive income 15,005 - - 15,005 - -


Dividends on ordinary shares (8,448) - - (8,448) - -

Issue of ordinary shares pursuant to ESOS 2 1 1 - - -

Total transactions with owners (8,446) 1 1 (8,448) - -

At 31 January 2012 109,300 112,651 2,092 (16,865) 11,422 11,422

At 1 February 2010 88,140 112,610 2,065 (37,957) 11,422 11,422

Total comprehensive income 21,292 - - 21,292 - -


Dividends on ordinary shares (6,757) - - (6,757) - -

Issue of ordinary shares pursuant to ESOS 66 40 26 - - -

Total transactions with owners (6,691) 40 26 (6,757) - -

At 31 January 2011 102,741 112,650 2,091 (23,422) 11,422 11,422



Statements ofCash Flows

For the year ended 31 January 2012

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Restated

Cash flows from operating activities

Profit before tax 26,192 32,434 19,254 26,880

Adjustments for:

Depreciation of property, plant and equipment 2,610 1,559 2,378 1,338

(Gain)/loss on disposal of property, plant and equipment (30) - 13 -

Gain on disposal of an associate (33) - (350) -

Amortisation of intangible assets 88 63 88 63

Reversal of impairment loss on financial assets

- Trade receivables - (218) - (218)

Net fair value loss/(gain) on held for trading investment securities 474 (308) - -

Share of results of associates (2,106) (1,695) - -

Loss/(gain) on disposal of investment securities 31 (106) - -

Dividend income (125) (130) (2,382) (1,500)

Unrealised foreign exchange losses/(gain) 1,126 (2,467) (159) (347)

Interest expense 1,869 1,386 1,795 1,299

Interest income (1,839) (2,647) (149) (185)

Operating profit before working capital changes 28,257 27,871 20,488 27,330

Decrease/(increase) in inventories 1,199 (11,192) 1,511 (11,617)

(Increase)/decrease in receivables (7,081) (8,584) 10,195 1,949

(Decrease)/increase in payables (8,688) 11,118 (24,805) 21,255

Cash generated from operations 13,687 19,213 7,389 38,917

Interest paid (2,303) (1,471) (2,663) (1,384)

Income tax paid (7,058) (7,716) (4,559) (5,617)

Net cash generated from operating activities 4,326 10,026 167 31,916


Statements ofCash FlowsFor the year ended 31 January 2012cont’d

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Restated

Cash flows from investing activities

Proceeds from disposal of property, plant and equipment 140 - 68 -

Proceeds from disposal of an associate 500 - 500 -

Proceeds from disposal of investment securities 1,865 2,191 - -

Purchase of investment securities (2,565) (3,142) - -

Purchase of intangible assets (46) (98) (46) (98)

Purchase of property, plant and equipment (6,886) (7,173) (6,711) (7,014)

Interest received 1,839 2,647 149 185

Redemption of debenture by associate - 2,470 - -

Dividend income received 125 130 310 1,500

Net cash used in investing activities (5,028) (2,975) (5,730) (5,427)

Cash flows from financing activities

Repayment of term loans (2,399) (2,400) (2,399) (2,400)

Drawdown of term loans 8,900 - 8,900 -

Repayment of other bank borrowings (4,038) 343 (4,038) 343

Payment of finance lease (605) (1,087) (605) (1,087)

Proceeds from exercise of ESOS 2 66 2 66

Dividend paid (8,448) (6,757) (8,448) (6,757)

Net cash used in financing activities (6,588) (9,835) (6,588) (9,835)

Net change in cash and cash equivalents (7,290) (2,784) (12,151) 16,654

Effects of exchange rate changes 2,841 (77) 2,586 369

Cash and cash equivalents at beginning of year 59,345 62,206 25,464 8,441

Cash and cash equivalents at end of year (Note 23) 54,896 59,345 15,899 25,464



Notes to theFinancial Statements

31 January 2012

1. CORPORATE INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office and principal place of business of the Company is located at George Kent Technology Centre, Lot 1115, Batu 15, Jalan Dengkil, 47100 Puchong, Selangor Darul Ehsan.

The principal activities of the Company consist of:

(a) manufacturing and marketing of water meters, waterworks fittings, fibreglass reinforced polyester panel tanks and a variety of hot-stamped brass products and components;

(b) operation of water infrastructure;

(c) marketing of industrial measurement and automatic control products, compressed air pumping and heating equipment, valves and pipes and pipeline fittings;

(d) design, supply, installation, commissioning and maintenance of instrumentation, process control systems and Scada systems for industry as well as building automation and building security systems;

(e) mechanical and electrical turnkey water infrastructure project management; and

(f) investment holding and management company.

The principal activities of its subsidiaries and associates are described in Note 37. There have been no significant changes in the nature of the principal activities during the financial year.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

The financial statements of the Group and of the Company have been prepared in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia. At the beginning of the current financial year, the Group and the Company adopted new and revised FRS which are mandatory for financial periods beginning on or after 1 February 2011 as described fully in Note 2.2. The financial statements have been prepared on the respective measurement basis as stated in the significant accounting policies below.

The financial statements are presented in Ringgit Malaysia (RM).


Notes to theFinancial Statements31 January 2012cont’d

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except as follows:

On 1 February 2011, the Group and the Company adopted the following new and amended FRS and IC Interpretations mandatory for annual financial periods beginning on or after 1 February 2011.

FRS 1 First-time Adoption of Financial Reporting StandardsFRS 3 Business Combinations (revised)Amendments to FRS 1 Limited Exemption from Comparative FRS 7 Disclosures for First-time AdoptersAmendments to FRS 1 Additional Exemptions for First-time AdoptersAmendments to FRS 2 Share-based PaymentAmendments to FRS 2 Group Cash-settled Share-based Payment Transactions Amendments to FRS 5 Non-current Assets Held for Sale and Discontinued OperationsAmendments to FRS 7 Improving Disclosures about Financial InstrumentsAmendments to FRS 127 Consolidated and Separate Financial StatementsAmendments to FRS 132 Classification of Rights IssuesAmendments to FRS 138 Intangible Assets Improvements to FRSs (2010)IC Interpretation 4 Determining Whether an Arrangement contains a LeaseIC Interpretation 12 Service Concession Arrangements IC Interpretation 16 Hedges of a Net Investment in a Foreign OperationIC Interpretation 17 Distributions of Non-cash Assets to OwnersIC Interpretation 18 Transfers of Assets from CustomersAmendments to IC Interpretation 9 Reassessment of Embedded Derivatives

The new and revised FRSs, Amendments to FRS and IC Interpretations which are mandatory for companies with financial periods beginning on or after 1 February 2011 do not give rise to any significant effects on the financial statements of the Group and of the Company except for those disclosed below:

Revised FRS 3 Business Combinations and Amendments to FRS 127 Consolidated and Separate Financial Statements

The revised standards are effective for annual periods beginning on or after 1 July 2010. The revised FRS 3 introduces a number of changes in accounting for business combinations occurring after 1 July 2010. These changes impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future reported results. The revised FRS 3 continues to apply the acquisition method to business combinations but with some significant changes. All payments to purchase a business are recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently remeasured through the statement of comprehensive income. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related costs are expensed. The amendments to FRS 127 require that a change in the ownership interest of a subsidiary (without loss of control) be accounted for as an equity transaction. Therefore, such transactions will no longer give rise to goodwill, nor will they give rise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary.



2.2 Changes in accounting policies cont’d

IC Interpretation 12: Service Concession Arrangements

This IC Interpretation 12 applies to operators for public-to-private service concession arrangements and explains the treatment for recognising and measuring the obligations and related rights received in service concession arrangements. Consideration given by the grantor to the operator may be rights to a financial asset or an intangible asset.

The operator shall recognise a financial asset model to the extent that it has an unconditional right to receive cash or another financial asset from or at the direction of the grantor for the construction services. The operator shall recognise an intangible asset to the extent that it receives a right (a licence) to charge users of the public service. For financial asset model, the amount due from grantor is accounted as loan or receivable under FRS 139, and requires interest calculated using the effective interest method to be recognised in profit or loss. Intangible asset with a finite useful life shall be amortised on a systematic basis over its useful life. Where the operator has contractual obligations to maintain and restore infrastructure that it must fulfil as a condition of its licence, these obligations are recognised and measured at the best estimate of the expenditure that would be required to settle the present obligation at the end of the reporting period.

Pursuant to IC Interpretation 12, the Group has applied the Interpretation retrospectively and the following are the effects arising from the changes in the accounting policy:

31 January 2012Increase/

(decrease)

RM

Consolidated statement of financial position

Associates 2,106

Retained earnings 10,104

Foreign currency translation reserve (7,998)

Consolidated statement of comprehensive income

Share of results of associates 353

Foreign exchange translation 1,003


31 January 2012cont’d



2.2 Changes in accounting policies cont’d

IC Interpretation 12: Service Concession Arrangements cont’d

The following comparatives have been restated as well:

31 January 2011

As previously

stated Adjustments As restated

RM’000 RM’000 RM’000

Consolidated statement of comprehensive income

Share of results of associates 1,719 (24) 1,695

Foreign exchange translation (2,714) 231 (2,483)


Associates (Note 17) 18,069 751 18,820

Retained earnings 40,046 9,751 49,797

Foreign currency translation reserve (2,785) (9,000) (11,785)

1 February 2010


Associates (Note 17) 17,734 544 18,278

Retained earnings 22,004 9,775 31,779

Foreign currency translation reserve (71) (9,231) (9,302)

Amendments to FRS 7: Improving Disclosures about Financial Instruments The amended standard requires enhanced disclosure about fair value measurement and liquidity risk. Fair value measurements related to items recorded at fair value are to be disclosed by source of inputs using a three level fair value hierarchy (Level 1, Level 2 and Level 3), by class, for all financial instruments recognised at fair value. A reconciliation between the beginning and ending balance for Level 3 fair value measurements is required.

Any significant transfers between levels of the fair value hierarchy and the reasons for those transfers need to be disclosed. The amendments also clarify the requirements for liquidity risk disclosures with respect to derivative transactions and assets used for liquidity management. The fair value measurement disclosures are presented in Note 33. The liquidity risk disclosures are not significantly impacted by the amendments and are presented in Note 34(b).




2.3 Malaysian Financial Reporting Standards

On 19 November 2011, the Malaysian Accounting Standards Board (MASB) issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (MFRS Framework).

The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture (MFRS 141) and IC Interpretation 15 Agreements for Construction of Real Estate (IC 15), including its parent, significant investor and venturer.

The Group will be required to prepare financial statements using the MFRS Framework in its first MFRS financial statements for the year ending 31 January 2013. In presenting its first MFRS financial statements, the Group will be required to restate the comparative financial statements to amounts reflecting the application of MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits.

The Group has established a project team to plan and manage the adoption of the MFRS Framework.

The Group has not completed its assessment of the financial effects of the differences between Financial Reporting Standards and accounting standards under the MFRS Framework. Accordingly, the consolidated financial performance and financial position as disclosed in these financial statements for the year ended 31 January 2012 could be different if prepared under the MFRS Framework.

The Group expects to be in a position to fully comply with the requirements of the MFRS Framework for the financial year ending 31 January 2013.

2.4 Basis of consolidation

Business combination before 1 February 2011

Business combinations are accounted for by applying the purchase method. Transaction costs directly attributable to the acquisition formed part of the acquisition costs.

Business combinations achieved in stages were accounted for as separate steps. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in equity.

Business combination from 1 February 2011

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full except for unrealised losses which are not eliminated when indications of impairment exists.





2.4 Basis of consolidation cont’d

Business combination from 1 February 2011 cont’d

Acquisitions of subsidiaries are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received.

In business combinations achieved in stages, previously held equity interests in the acquiree are re-measured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.

The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognised on the acquisition date at fair value, or at the non-controlling interest’s proportionate share of the acquiree net identifiable assets. Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group’s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree’s identifiable assets and liabilities is recorded as goodwill in the statement of financial position. In instances where the latter amount exceeds the former, the excess is recognised as a gain on bargain purchase in profit or loss on the acquisition date.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

2.5 Transactions with non-controlling interests

Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and is presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately from equity attributable to owners of the Company.

Changes in the Company owners’ ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the parent.

2.6 Subsidiaries

A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less any accumulated impairment losses.

2.7 Associates

An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. An associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate.




2.7 Associates cont’d

The Group’s investments in associates are accounted for using the equity method. Under the equity method, investment in associates are measured in the statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the associates. Goodwill relating to associates is included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s profit or loss for the period in which the investment is acquired.

When the Group’s share of losses in associates equals or exceeds its interest in the associates, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associates.

After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investment in its associates. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in profit or loss.

The financial statements of the associates are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

In the Company’s separate financial statements, investments in associates are stated at cost less any accumulated impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

2.8 Intangible assets

Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial acquisition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefitsembodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in profit or loss. Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually, or more frequently if the events and circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. Such intangible assets are not amortised. The useful life of an intangible asset with an indefinite useful life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.





2.8 Intangible assets cont’d

(i) Development costs

Development costs, considered to have finite useful lives, are stated at cost less any accumulated impairment losses and are amortised using the straight-line basis from the commencement of the contract to which they relate over the period of their expected benefit not exceeding 20 years.

(ii) Computer software

Computer software are stated at cost less any accumulated impairment losses and are amortised on a straight-line basis over the estimated economic useful lives at the annual rate of 20%. Impairment is assessed whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at the end of reporting date.

2.9 Property, plant and equipment and depreciation

All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Subsequent to recognition, property, plant and equipment except for certain freehold land and buildings are stated at cost less accumulated depreciation and any accumulated impairment losses. Certain freehold land and buildings of the Group and of the Company were revalued in 1996 based on independent professional valuations using open market values on an existing use basis.

Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates:

Building on freehold land 2%

Long term leasehold building 2%

Plant and machinery, furniture, equipment and vehicles 10% - 25%

Assets under construction included in plant and equipment are not depreciated as these assets are not yet available for use.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is derecognised.




2.10 Construction contracts

Where the outcome of a construction contract can be reliably estimated, contract revenue and contract costs are recognised as revenue and expenses respectively by using the stage of completion method. The stage of completion is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs.

Where the outcome of a construction contract cannot be reliably estimated, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Contract revenue comprises the initial amount of revenue agreed in the contract and variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and they are capable of being reliably measured.

When the total of costs incurred on construction contracts plus, recognised profits (less recognised losses), exceeds progress billings, the balance is classified as amount due from customers on contracts. When progress billings exceed costs incurred plus, recognised profits (less recognised losses), the balance is classified as amount due to customers on contracts.

2.11 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (“CGU”)).

In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis. Impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.





2.11 Impairment of non-financial assets cont’d

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at the revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.

2.12 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, and short-term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. These also include bank overdrafts that form an integral part of the Company’s cash management.

2.13 Inventories

Inventories are stated at lower of cost and net realisable value.

Cost is determined using the first in, first out method. The cost of raw materials comprises costs of purchase. The costs of finished goods and work-in-progress comprise costs of raw materials, direct labour, other direct costs and appropriate proportions of manufacturing overheads based on normal operating capacity.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

2.14 Financial assets

Financial assets are recognised in the statements of financial position when, and only when, the Group and of the Company become a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets.

(a) Financial assets at fair value through profit or loss

Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.




2.14 Financial assets cont’d

(a) Financial assets at fair value through profit or loss cont’d

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income.

Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that are held primarily for trading purposes are presented as current whereas financial assets that are not held primarily for trading purposes are presented as current or non-current based on the settlement date.

(b) Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

Loans and receivables are classified as current, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.

(c) Held-to-maturity investments

Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity.

Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process.

Held-to-maturity investments are classified as non-current, except for those having maturity within 12 months after the reporting date which are classified as current.

(d) Available-for-sale financial assets

Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories.





2.14 Financial assets cont’d

(d) Available-for-sale financial assets cont’d

After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Company’s right to receive payment is established.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.

Available-for-sale financial assets are classified as non-current unless they are expected to be realised within 12 months after the reporting date.

A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Company commits to purchase or sell the asset.

2.15 Impairment of financial assets

The Company assesses at each reporting date whether there is any objective evidence that a financial asset is impaired.

(a) Trade and other receivables and other financial assets carried at amortised costs

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.




2.15 Impairment of financial assets cont’d

(a) Trade and other receivables and other financial assets carried at amortised costs cont’d

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

(b) Available-for-sale financial assets

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disapperance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss.

Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase in the fair value of the investment can be objectively related to an event occuring after the recognition of the impairment loss in profit or loss.

The Group and Company has not designated any financial assets as available for sale.

2.16 Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.





2.17 Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities, within the scope of FRS 139, are recognised in the statement of financial position when, and only when, the Group and of the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

(a) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities held for trading include derivatives entered into by the Group and of the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences.

The Company has not designated any financial liabilities as at fair value through profit or loss.

(b) Other financial liabilities

The Group’s and the Company’s other financial liabilities include trade payables, other payables and loans and borrowings.

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.




2.18 Leases

As lessee

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life and the lease term.

Total operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

2.19 Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that the Group and of the Company incurred in connection with the borrowing of funds.

2.20 Income taxes

(a) Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

(b) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.





2.20 Income taxes cont’d

(b) Deferred tax cont’d

Deferred tax liabilities are recognised for all temporary differences, except:

- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

- where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.




2.21 Employee benefits

(a) Defined contribution plans

The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. The companies in the Group make contributions to the Employees Provident Fund in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.

(b) Short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

(c) Employee share option plans

Employees of the Group receive remuneration in the form of share options as consideration for services rendered. The cost of these equity-settled transactions with employees is measured by reference to the fair value of the options at the date on which the options are granted. This cost is recognised in profit or loss, with a corresponding increase in the employee share option reserve over the vesting period. The cumulative expense recognised at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of options that will ultimately vest. The charge or credit to profit or loss for a period represents the movement in cumulative expense recognised at the beginning and end of that period.

No expense is recognised for options that do not ultimately vest, except for options where vesting is conditional upon a market or non-vesting condition, which are treated as vested irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied. The employee share option reserve is transferred to retained earnings upon expiry of the share options. When the options are exercised, the employee share option reserve is transferred to share capital if new shares are issued, or to treasury shares if the options are satisfied by the reissuance of treasury shares.

2.22 Foreign currency

(a) Functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is also the Company’s functional currency.





2.22 Foreign currency cont’d

(b) Foreign currency transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign curriencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.

(c) Foreign operations

The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the reporting date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other other comprehensive income and accumulated in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in the profit or loss. Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date.

2.23 Service concession arrangements

IC Interpretation 12 Service Concession Arrangements is applicable for annual periods beginning on or after 1 July 2010.

An associates of the Group has entered into a service concession arrangement with the Papua New Guinea (“PNG”) government for the construction, operation and maintainance of a water treatment plant for twenty years.

Notes to theFinancial Statement31 January 2012cont’d




2.23 Service concession arrangements cont’d

The Group recognises revenue from the construction and upgrading of the infrastructure in accordance with its accounting policy for construction contracts set out in Note 2.10. Where the Group performs more than one service under the arrangement, consideration received or receivable is allocated to the components by reference to the relative fair values of the services delivered, when the amounts are separately identifiable.

The Group recognises the consideration received or receivable as a financial asset to the extent that it has an unconditional right to receive cash or another financial asset for the construction services. Financial assets are accounted for in accordance with the accounting policy set out in Note 2.14.

Capital expenditures necessary to support the Group’s operation as a whole are recognized as property and equipment, and accounted for in accordance with the policy stated under property and equipment in Note 2.9. When the Group has contractual obligations that it must fulfill as a condition of its agreement to: a) maintain the infrastructure to a specified standard or, b) to restore the infrastructure when the infrastructure has deteriorated below a specified condition, it recognises and measures these contractual obligations in accordance with the accounting policy for provisions. Repairs and maintenance and other expenses that are routine in nature are expensed and recognised in the profit or loss as incurred.

2.24 Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.

(i) Sale of goods

Revenue from sale of goods is recognised upon the transfer of significant risk and rewards of ownership of the goods to the customer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

(ii) Interest income

Interest income is recognised using the effective interest method.

(iii) Dividend income

Dividend income is recognised when the Group’s right to receive payment is established.

(iv) Construction Contracts

Revenue from construction contracts is accounted for by the stage of completion method.

(v) Management fees

Management fees are recognised when services are rendered.





2.25 Segment reporting For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 36, including the factors used to identify the reportable segments and the measurement basis of segment information.

2.26 Share capital and share issuance expenses An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments.

Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. However, there are no significant judgements involved in the preparation of these financial statements.

3.1 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(i) Useful lives of property, plant and equipment

The cost of property, plant and equipment for the Group is depreciated on a straight-line basis over the assets’ estimated economic useful lives. Management estimates the useful lives of these property, plant and equipment to be within 4 to 60 years. These are common life expectancies applied in the industries in which the Group operate. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. However, management believes that no reasonable probable change in the above key assumptions would cause a material impact to the future depreciation charges. The carrying amount of the Group’s property, plant and equipment at the reporting date is disclosed in Note 14. A 10% difference in the expected useful lives of these assets from management’s estimates would result in approximately 1% (2011: 1%) variance in the Group’s profit for the year.



3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES cont’d

3.1 Key sources of estimation uncertainty cont’d

(ii) Deferred tax assets

Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent that it is probable that taxable profit will be available against which the losses and capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

Assumptions about generation of future taxable profits depend on management’s estimates of future cash flows. These depend on estimates of future production and sales volume, operating costs, capital expenditure, dividends and other capital management transactions. Judgement is also required about application of income tax legislation. These judgements and assumptions are subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised in the statements of financial position and the amount of unrecognised tax losses and unrecognised temporary differences.

The total carrying value of deferred tax assets of the Group at reporting date and the unrecognised tax losses and capital allowances of the Group are disclosed in Note 30. These deferred tax assets and unrecognised tax losses and capital allowances relate to subsidiaries of the Company. If the taxable profits of the said subsidiaries differ by 10% due to the change in estimates of the Group’s future results from operating activites, the Group’s deferred tax assets and unabsorbed capital allowances will vary by RM2,000 and RM8,000.

(iii) Income taxes

Judgement is involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. As at 31 January 2012, the Group has income tax payable and deferred tax liabilities of approximately RM257,000 (2011: RM826,000), and RM2,327,000 (2011: RM1,845,000), respectively.

A 10% difference in taxable profits would result in approximately 5% (2011: 5%) variance in the Group’s profit for the year.

(iv) Construction contracts The Company recognises contract revenue and expenses in the statement of comprehensive income by using the stage of completion method. The stage of completion is determined by using the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs.

Significant judgement is required in determining the stage of completion, the extent of the contract costs incurred, the estimated total contract revenue and costs, as well as the recoverability of the contracts. In making the judgement, the Company evaluates by relying on the work of specialists.




3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES cont’d

3.1 Key sources of estimation uncertainty cont’d

(iv) Construction contracts cont’d

The Group has recognised contract revenue of RM46,786,000 (2011: RM49,556,000) and contract costs of RM29,319,000 (2011: RM34,624,000) during the financial year. If contract revenue and contract cost vary by 10% from management’s estimates, the Group’s revenue and cost of sales will vary by 3% (2011: 3%) and 3% (2011: 3%) respectively.

(v) Impairment of loans and receivables

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivable at the reporting date is disclosed in Note 19. If the present value of estimated future cash flows varies by 10% from management’s estimates, the Group’s allowance for impairment will increase by RM9,500 (2011: increase by RM7,300).

4. REVENUE

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Sale of goods and services 105,463 115,481 97,727 110,699

Infrastructure contracts 46,786 49,556 46,786 49,556

Dividend income - - 2,382 1,500

152,249 165,037 146,895 161,755

5. COST OF SALES

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Cost of inventories sold and services rendered 75,497 75,497 76,208 79,645

Contract costs 29,319 34,624 29,319 34,624

104,816 110,121 105,527 114,269



6. INTEREST AND OTHER INCOME

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

(a) Interest income

Interest income from

- deposits with licensed banks 907 1,560 149 185

Debenture interest income 932 1,087 - -

1,839 2,647 149 185

(b) Other income

Gain on disposal of investment securities - 106 - -

Gain on disposal of an associate 33 - 350 -

Net gain on foreign exchange 533 - 596 -

Net fair value gains on held for trading investment securities - 308 - -

Project management fees 424 - 424 -

Miscellaneous 367 217 367 186

1,357 631 1,737 186

7. FINANCE COSTS

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Interest expense on:

- Bank borrowings 1,528 1,296 1,454 1,209

- Hire purchase and finance lease liabilities 775 175 775 175

2,303 1,471 2,229 1,384

Less: capitalised in construction contract costs (Note 21) (434) (85) (434) (85)

1,869 1,386 1,795 1,299




8. PROFIT BEFORE TAX

The following amounts have been included in arriving at profit before tax:

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Employee benefits expense (Note 9) 14,076 11,437 12,247 10,054

Non-executive directors’ remuneration (Note 10) 375 1,011 375 411

Auditors’ remuneration

- current year 188 113 129 53

- under provision in prior years 1 - - -

Research costs 338 376 338 376

Amortisation of intangible assets (Note 15) 88 63 88 63

Depreciation of property, plant and equipment (Note 14) 2,610 1,559 2,378 1,338

Reversal of impairment loss on financial assets:

- Trade receivables (Note 19) - (218) - (218)

Impairment loss on financial assets:

- Bad debt written off - 7 - 126

Net fair value loss on held for trading investment securities 474 - - -

Dividend income from:

- investment securities held for trading (125) (130) - -

- subsidiaries - - (2,103) (1,500)

- associates - - (279) -

Rental expenses 39 37 39 35

Loss on disposal of investment securities 31 - - -

Utility charges 3,926 3,635 877 662

Gain on disposal of an associate (33) - (350) -

Distribution charges 1,747 884 1,747 883

Legal and other professional fees 276 751 244 636

(Gain)/loss on disposal of property, plant and equipment (30) - 81 -



9. EMPLOYEE BENEFITS EXPENSE

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Wages and salaries 11,217 10,040 9,549 8,770

Social security contributions 96 88 88 85

Defined contributions plan 1,369 1,108 1,290 1,081

Other benefits 1,394 201 1,320 118

Total 14,076 11,437 12,247 10,054

Included in employee benefits expense of the Group and the Company are executive directors’ remuneration amounting

to RM458,000 (2011: RM483,000) and RM458,000 (2011: RM483,000) respectively.

10. DIRECTORS’ REMUNERATION

The details of remuneration receivable by directors of the Company during the year are as follows:

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Directors of the Company

Executive directors

Salaries and other emoluments 458 483 458 483

Estimated monetary value of benefits-in-kind 25 25 25 25

483 508 483 508

Non-executive directors

Fees 331 356 331 356

Other emoluments 16 627 16 27

Estimated monetary value of benefits-in-kind 28 28 28 28

375 1,011 375 411

Total 858 1,519 858 919

Total directors remuneration excluding benefits-in-kind 805 1,466 805 866




10. DIRECTORS’ REMUNERATION cont’d The number of directors of the Company whose total remuneration during the year fell within the following bands is

analysed below:

Number of directors

2012 2011

Executive directors:

RM400,001 - RM500,001 1 1

Non-executive directors:

Below RM50,000 2 1

RM 50,001 - RM100,000 2 2

RM 100,001 - RM200,001 1 -

RM300,001 - RM400,000 - 1

RM400,001 - RM500,000 - 1

11. INCOME TAX EXPENSE

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Statement of comprehensive income:

Current income tax

-Malaysian income tax 3,861 4,892 3,861 4,822

-Foreign tax 2,602 1,827 - -

-Under provision in respect of prior years 26 8 26 8

6,489 6,727 3,887 4,830

Deferred income tax - continuing operations (Note 30):

-Origination and reversal of temporary differences 622 932 614 758

-Over provision in respect of prior years (253) - (252) -

369 932 362 758

Income tax expense recognised in profit or loss 6,858 7,659 4,249 5,588

Domestic income tax is calculated at the Malaysian statutory rate of 25% (2011: 25%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.



11. INCOME TAX EXPENSE cont’d

A reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate tax rate are as follows:

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Restated

Profit before tax 26,192 32,434 19,254 26,880

Taxation at Malaysian statutory tax rate of 25% (2011: 25%) 6,548 8,109 4,814 6,720

Different tax rates in other countries 42 408 - - Income not subject to tax (424) (358) (460) (327)Benefits from utilisation of reinvestment allowance - (815) - (815)Expenses not deductible for tax purposes 1,395 728 121 2 Deferred tax not recognised on tax losses 51 3 - - Under/(over) provision in prior years

- current taxation 26 8 26 8 - deferred taxation (253) - (252) -

Share of results of associates (527) (424) - -

Tax expense for the year 6,858 7,659 4,249 5,588

12. EARNINGS PER SHARE Basic earnings per share amounts are calculated by dividing the profit for the year, net of tax, attributable to owners

of the parent by the weighted average number of ordinary share outstanding during the financial year.

Diluted earnings per share amounts are calculated by dividing profit for the year from continuing operations, net of tax, attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

(a) Basic

The following tables reflect the profit and share data used in the computation of basic earnings per share for the years ended 31 January:

2012 2011

RM’000 RM’000

Restated

Profit net of tax attributable to owners of the parent 19,334 24,775




12. EARNINGS PER SHARE cont’d (a) Basic cont’d

No. of shares

No. of shares

‘000 ‘000

Weighted average number of ordinary shares for basic earnings per share computation* 225,302 225,264

Basic earnings per share (sen) 8.6 11.0

* The weighted number of ordinary shares takes into account the weighted average effect of the exercise of share options

during the year.

(b) Diluted

The following tables reflect the profit and share data used in the computation of diluted earnings per share for the years ended 31 January:

2012 2011

RM’000 RM’000

Restated

Profit net of tax attributable to owners of the parent 19,334 24,775

No. of shares

No. of shares

‘000 ‘000

Weighted average number of ordinary shares for basic earnings per share computation 225,302 225,264

Effects of dilution

-share options 37 90

Weighted average number of ordinary shares for diluted earnings per share computation 225,339 225,354

Diluted earnings per share (sen) 8.6 11.0

Since the end of the financial year, employees have exercised the options to acquire nil (2011: 3,000) ordinary

shares. There have been no other transactions involving ordinary shares or potential ordinary shares since the reporting date and before the completion of these financial statements.



13. DIVIDENDS

Dividends in respect of year

Dividends recognised in year

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Recognised during the year:

Final dividend for 2011: 3.0 sen less 25% taxation, on 225,302,626 ordinary shares (2.25 sen per ordinary share) - - 5,069 -

Final dividend for 2010: 2.0 sen less 25% taxation, on 225,269,626 ordinary shares (1.5 sen per ordinary share) - - - 3,378

Interim dividend for 2012: 2 sen less 25% taxation, on 225,302,626 ordinary shares (2.25 sen per ordinary share) 3,379 - 3,379 -

Interim dividend for 2011: 2 sen less 25% taxation, on 225,274,626 ordinary shares (1.5 sen per ordinary share) - 3,379 - 3,379

3,379 3,379 8,448 6,757

Proposed for approval at AGM (not recognised as at 31 January):

Final dividend for 2012: 3.0 sen less 25% taxation, on 225,302,626 ordinary shares (2.25 sen per ordinary share) 5,069 - - -

Final dividend for 2011: 3.0 sen less 25% taxation, on 225,302,626 ordinary shares (2.25 sen per ordinary share) - 5,069 - -

5,069 5,069 - -

8,448 8,448 8,448 6,757

At the forthcoming Annual General Meeting (“AGM”), a final dividend in respect of the financial year ended 31 January

2012, of 3.0 sen less 25% tax per ordinary share of 50 sen amounting to RM5,069,000 will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 January 2013.




14. PROPERTY, PLANT AND EQUIPMENT

Group Freehold

land

Building on

freehold land

Long term

leasehold building

Long term

leasehold land

Plant and machinery,

furniture, equipment

and vehicles

Capital work in

progress Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 31 January 2012

Cost or valuation

At 1 February 2011 21,012 31,091 116 113 59,616 734 112,682

Additions - 38 - - 8,748 145 8,931

Disposal - - - - (317) - (317)

Exchange differences - - 29 28 296 - 353

At 31 January 2012 21,012 31,129 145 141 68,343 879 121,649

Accumulated depreciation

At 1 February 2011 - 8,207 59 - 48,352 - 56,618

Depreciation charge - 750 6 - 1,894 - 2,650

Disposal - - - - (207) - (207)

Exchange differences - 8 14 - 165 - 187

At 31 January 2012 - 8,965 79 - 50,204 - 59,248

Net carrying amount 21,012 22,164 66 141 18,139 879 62,401

At 31 January 2011

Cost or valuation

At 1 February 2010 21,012 31,078 123 123 52,515 - 104,851

Additions - 13 3 - 7,239 734 7,989

Adjustment - - - - (38) - (38)

Exchange differences - - (10) (10) (100) - (120)

At 31 January 2011 21,012 31,091 116 113 59,616 734 112,682



14. PROPERTY, PLANT AND EQUIPMENT cont’d

Group Freehold

land

Building on

freehold land

Long term

leasehold building

Long term

leasehold land



and vehicles

Capital work in

progress Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 31 January 2011 cont’d


At 1 February 2010 - 7,586 30 30 47,447 - 55,093

Depreciation charge - 621 2 - 978 - 1,601

Exchange differences - - 27 (30) (73) - (76)

At 31 January 2011 - 8,207 59 - 48,352 - 56,618

Net carrying amount 21,012 22,884 57 113 11,264 734 56,064

Company

At 31 January 2012

Cost or valuation

At 1 February 2011 21,012 31,091 - - 50,651 734 103,488

Additions - 37 - - 8,573 146 8,756

Disposal - - - - (184) - (184)

At 31 January 2012 21,012 31,128 - - 59,040 880 112,060


At 1 February 2011 - 8,215 - - 40,404 - 48,619

Depreciation charge - 750 - - 1,668 - 2,418

Disposal - - - - (103) - (103)

At 31 January 2012 - 8,965 - - 41,969 - 50,934

Net carrying amount 21,012 22,163 - - 17,071 880 61,126




14. PROPERTY, PLANT AND EQUIPMENT cont’d

Company Freehold

land

Building on

freehold land

Long term

leasehold building

Long term

leasehold land



and vehicles

Capital work in

progress Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 31 January 2011

Cost or valuation

At 1 February 2010 21,012 31,078 - - 43,603 - 95,693

Additions - 13 - - 7,083 734 7,830

Adjustment - - - - (35) - (35)

At 31 January 2011 21,012 31,091 - - 50,651 734 103,488


At 1 February 2010 - 7,586 - - 39,653 - 47,239

Depreciation charge - 629 - - 751 - 1,380

At 31 January 2011 - 8,215 - - 40,404 - 48,619

Net carrying amount 21,012 22,876 - - 10,247 734 54,869

Revaluation of freehold land Except for certain of the freehold land of the Company and of the Group, which are carried at valuation, all other

property, plant and equipment are carried at cost less accumulated depreciation.

Certain freehold land of the Group and the Company have not been revalued since they were first revalued in 1996. The directors have not adopted a policy of regular revaluations of such assets and no later valuation has been recorded. As permitted under the transitional provisions of IAS 16 (Revised): Property, Plant and Equipment, these assets continue to be stated at their 1996 valuation less accumulated depreciation.

The freehold land of the Group and of the Company were revalued by the directors based on valuation carried out in 1996 by Edmund H C Ng, a partner at KGV Lambert Smith Hampton and also a member of the Institution of Surveyors, Malaysia. Valuations were made on the basis of open market values on existing use bases.

If the freehold land was measured using the cost model, the carrying amounts would be as follows:

Group/Company

2012 2011

RM’000 RM’000

Freehold land at 31 January

- Cost and net carrying amount 9,312 9,398



14. PROPERTY, PLANT AND EQUIPMENT cont’d Assets held under finance leases During the financial year, the Group and the Company acquired property, plant and equipment at aggregate costs of

RM8,931,000 (2011: RM7,989,000) and RM8,756,000 (2011: RM7,830,000) respectively of which motor vehicles of RM2,045,000 (2011: RM816,000) were acquired by means of finance lease for the Group and the Company.

Net carrying amount of motor vehicles of the Group and of the Company held under finance lease arrangements is RM1,145,464 (2011: RM1,298,000). Leased assets are pledged as security for the related finance lease liabilities (Note 27).

Depreciation charge is recognised in the financial statements as follows:

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

- income statement (Note 8) 2,610 1,559 2,378 1,338

- construction cost (Note 21) 40 42 40 42

Asset pledged as security The Group’s landed properties with a net carrying amount of RM43,176,000 (2011: RM43,896,000) are mortgaged to

secure the Group’s and of the Company’s bank loans (Note 27).




15. INTANGIBLE ASSETS

Computer software

Development costs Total

RM’000 RM’000 RM’000

Group/Company

Cost

At 1 February 2010 145 980 1,125

Addition 98 - 98

At 31 January 2011 243 980 1,223

Addition 46 - 46

At 31 January 2012 289 980 1,269

Accumulated amortisation

At 1 February 2010 125 539 664

Amortisation 14 49 63

At 31 January 2011 139 588 727

Amortisation 39 49 88

At 31 January 2012 178 637 815

Net carrying amount

At 31 January 2012 111 343 454

At 31 January 2011 104 392 496 Computer software and development costs Computer software are stated at cost less any accumulated impairment losses and are amortised on a straight-line

basis over the estimated economic useful lives at the annual rate of 20%. Impairment is assessed whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at each reporting date.

Development costs, considered to have finite useful lives, are stated at cost less any accumulated impairment losses and are amortised using the straight-line basis from the commencement of the contract to which they relate over the period of their expected benefit not exceeding 20 years.

Amortisation expense The amortisation of computer software and development costs are included in the “Administrative expenses” line

item in the statements of comprehensive income.



16. INVESTMENT IN SUBSIDIARIES

Company

2012 2011

RM’000 RM’000

Shares, at cost

In Malaysia 20,009 20,009

Less: Accumulated impairment losses (18,004) (18,004)

2,005 2,005

The Group’s equity interest in the subsidiaries, their respective principal activities and countries of incorporation are

set out in Note 37. 17. ASSOCIATES

Group Company

2012 2011 2010 2012 2011

RM’000 RM’000 RM’000 RM’000 RM’000

Restated Restated

Unquoted shares at cost:

- in Malaysia 24 174 174 24 174

- outside Malaysia 2,396 2,396 2,396 - -

Share of post-acquisition reserves 29,704 28,035 16,904 - -

Exchange differences (7,998) (11,785) (1,196) - -

24,126 18,820 18,278 24 174

Unquoted debentures, outside Malaysia 5,400 5,400 7,870 - -

Exchange differences 2,584 1,004 2,024 - -

7,984 6,404 9,894 - -

32,110 25,224 28,172 24 174

In accordance with an agreement signed by a subsidiary (Asialink Pacific Limited) and the other shareholders of PNG Water Limited dated 14 June 1999, that subsidiary had subscribed for K7,670,000 (equivalent to RM9,012,000) Class ‘B’ debentures in PNG Water Limited.

The above debentures are unsecured and bear interest at 13% per annum. PNG Water Limited may repay to the

holders of the Class ‘B’ debentures in proportion to the debentures held by them no earlier than ten years from the last date on which any Class ‘B’ debentures were issued. However, repayment to Class ‘B’ debenture holders is subordinated in favour of Class ‘A’ debenture holders and other creditors (including contingent obligations) of PNG Water Limited.




17. ASSOCIATES cont’d

On 30 December 2011, the Company completed the disposal of its entire investment in Meteraya Sdn Bhd, an associate of the Company for a total consideration of RM500,000.

The Group’s equity interest in the associates, their respective principal activities and countries of incorporation are set out in Note 37.

Unquoted debentures, outside Malaysia

Group

2012 2011 2010

RM’000 RM’000 RM’000

Restated Restated

As at 1 February 6,404 9,894 9,251

Redemption during the year * - (2,470) -

Recognised in profit and loss

-Realised exchange loss due to redemption - (322) -

-Revaluation exchange gain/(loss) 1,580 (698) 643

As at 31 January 7,984 6,404 9,894

* PNG Water Limited had redeemed Class B Debentures issued for K1,320,000 and K950,000 on 16 October 2010 and 24

October 2010 respectively. The summarised financial information of the associates, not adjusted for the proportion of ownership interest held by

the Group, is as follows:

Group

2012 2011 2010

RM’000 RM’000 RM’000

Restated Restated

Assets and liabilities:

Total assets 155,920 154,711 173,680

Total liabilities 49,264 56,252 84,371

Results:

Revenue 50,687 68,458 63,791

Profit for the year 8,197 9,150 6,705



18. INVENTORIES

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Cost

Raw materials and components 21,670 19,282 20,082 17,912

Work-in-progress 7,671 11,329 7,460 11,316

Manufactured goods 6,940 6,123 6,940 6,123

Finished goods for resale 2,299 3,080 1,645 2,322

38,580 39,814 36,127 37,673

Net realisable value

Finished goods for resale 35 - 35 -

38,615 39,814 36,162 37,673

During the year, the amount of inventories recognised as an expense in cost of sales of the Group and the Company

was RM75,497,000 (2011: RM75,497,000) and RM76,208,000 (2011: RM79,645,000) respectively.

19. TRADE AND OTHER RECEIVABLES

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Current

Trade receivables

Third parties 41,487 28,698 40,207 27,495

Subsidiaries - - 2,159 2,073

Associates 6,038 7,820 6,038 7,820

47,525 36,518 48,404 37,388

Less: Allowance for impairment (1,126) (1,126) (1,104) (1,104)

Trade receivables, net 46,399 35,392 47,300 36,284




19. TRADE AND OTHER RECEIVABLES cont’d

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Other receivables

Amounts due from:


Related parties 87 40 87 49

Associates 4 4 4 4

91 44 7,339 24,664

Refundable deposits 160 659 149 648

Other receivables 3,505 2,333 78 126

3,756 3,036 7,566 25,438

Total trade and other receivables (current) 50,155 38,428 54,866 61,722

Add: Cash and bank balances (Note 23) 59,574 61,714 20,577 27,833

Unquoted debentures of associate (Note 17) 7,984 6,404 - -

Total loans and receivables 117,713 106,546 75,443 89,555

(a) Trade receivables

Trade receivables are non-interest bearing and are generally on 30 to 90 days (2011: 30 to 90 days) terms. They

are recognised at their original invoice amounts which represent their fair values on intial recognition.

(b) Amounts due from related parties

Amounts due from related parties are from subsidiaries of a company in which the directors, Tan Sri Dato’ Tan Kay Hock and Puan Sri Datin Tan Swee Bee have interest in.

The amounts due from related parties are unsecured, interest-free and repayable on demand.

(c) Amounts due from subsidiaries and associates

The amounts due from subsidiaries and associates are unsecured, interest-free and repayable on demand.

(d) Other receivables

Other receivables are unsecured, non-interest bearing and are generally on 30 to 90 days (2011: 30 to 90 days) terms.



19. TRADE AND OTHER RECEIVABLES cont’d

Ageing analysis of trade receivables The ageing analysis of the trade receivables is as follows:

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Neither past due nor impaired 30,844 28,649 29,564 28,771

1 to 30 days past due not impaired 4,274 2,775 6,433 2,786

31 to 60 days past due not impaired 4,503 2,304 4,503 2,289

60 to 90 days past due not impaired 2,641 602 2,641 498

More than 91 days past due not impaired 4,137 1,062 4,159 1,940

15,555 6,743 17,736 7,513

Impaired 1,126 1,126 1,104 1,104

47,525 36,518 48,404 37,388

Receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records. None

of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

Receivables that are past due but not impaired The Group has trade receivables amounting to RM15,555,000 (2011: RM6,743,000) that are past due at the reporting

date but not impaired. Trade receivables that are past due but not impaired are unsecured in nature.

Receivables that are impaired The trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to

record the impairment are as follows: Trade receivables that are individually impaired:

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Trade receivables - nominal amounts 1,126 1,126 1,104 1,104

Less: Allowance for impairment (1,126) (1,126) (1,104) (1,104)

- - - -




19. TRADE AND OTHER RECEIVABLES cont’d Receivables that are impaired cont’d

Movement in allowance accounts:

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

At 1 February 1,126 1,344 1,104 1,322

Reversal of impairment losses - (218) - (218)

At 31 January 1,126 1,126 1,104 1,104

20. OTHER CURRENT ASSETS

Group/Company

2012 2011

RM’000 RM’000

Prepaid operating expenses 106 655

Amounts due from customers for contract (Note 21) - 2,571

106 3,226

21. DUE TO /FROM CUSTOMERS ON CONTRACTS

Group/Company

2012 2011

RM’000 RM’000

Construction costs incurred to date 78,733 56,023

Attributable profits 39,846 23,013

118,579 79,036

Less: Progress billings (126,994) (80,291)

(8,415) (1,255)

Presented as:

Gross amounts due from customers for contract work (Note 20) - 2,571

Gross amounts due to customers for contract work (Note 29) (8,415) (3,826)

(8,415) (1,255)



21. DUE TO /FROM CUSTOMERS ON CONTRACTS cont’d The costs incurred to date on construction contracts include the following charges incurred during the financial year:

Group/Company

2012 2011

RM’000 RM’000

Hire of plant and machinery 49 323

Depreciation of property, plant and equipment (Note 14) 40 42

Interest expense (Note 7) 434 85

Rental expense for building - 12

22. INVESTMENT SECURITIES

Group

2012 2011

RM’000 RM’000

Carrying Market Carrying Market

amount value amount value

Current

Held for trading investments

- Equity instruments (quoted in Malaysia) 2,000 2,000 2,000 2,000

- Equity instruments (quoted outside Malaysia) 2,692 2,692 2,497 2,497

Total current investment securities 4,692 4,692 4,497 4,497

23. CASH AND BANK BALANCES

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Cash on hand and at banks 30,070 26,041 6,627 738

Short term deposits with licensed banks 29,504 35,673 13,950 27,095

Cash and bank balances 59,574 61,714 20,577 27,833

Cash at banks earn interests at floating rates based on daily bank deposit rates. Short term deposits are made for

varying periods of between 1 to 365 days (2011: between 1 to 365 days) and earn interests at the respective short term deposits rates. The weighted average effective interest as at 31 January 2012 for the Group were between 0.1% and 16.13% (2011: 0.1% and 16.13%) per annum.




23. CASH AND BANK BALANCES cont’d For the purpose of the statements of cash flows, cash and cash equivalents comprise the following at the reporting

date:

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Cash and short term deposits 59,574 61,714 20,577 27,833

Bank overdrafts (Note 27) (4,678) (2,369) (4,678) (2,369)

Cash and cash equivalents 54,896 59,345 15,899 25,464

24. SHARE CAPITAL

Number of ordinary shares of

50 sen each Amount

2012 2011 2012 2011

‘000 ‘000 RM’000 RM’000

Authorised:

At 1 February/31 January 400,000 400,000 200,000 200,000

Issued and fully paid:

At 1 February 225,300 225,219 112,650 112,610

Issue of ordinary shares pursuant to conversion/exercise of

- ESOS 3 81 1 40

At 31 January 225,303 225,300 112,651 112,650

(a) The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All

ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company’s residual assets.

(b) During the financial year, 3,000 new ordinary shares of RM0.50 each were issued upon the exercise of share options granted pursuant to the Employee Share Options Scheme. Accordingly, the Company’s issued and paid up ordinary share capital increased by RM1,500 to RM112,651,313.

(c) The new ordinary shares issued during the year ranked parri passu in all respects, with the existing ordinary shares of the Company.



25. EMPLOYEE BENEFITS

Employee Share Options Scheme (“ESOS”)

The George Kent (Malaysia) Berhad Employee Share Options Scheme (“ESOS”) is governed by the Bye-Laws approved by the shareholders at an Extraordinary General Meeting held on 19 June 2003. The ESOS was implemented on 27 October 2003 and was to be in force for a period of 5 years up to 26 October 2008. Subsequently at the Annual General Meeting of the Company held on 22 July 2008, shareholders’ approval was obtained for the extension of the term of the ESOS for a further 5 years commencing from 27 October 2008 until 26 October 2013.

The other salient features of the ESOS are as follows:

(i) Eligible persons are employees of the Group (including executive directors) who have been confirmed in the employment of the Group and have served at least two years in the Company or its Malaysian subsidiaries, or five years in its overseas subsidiaries before the date of the offer.

(ii) The total number of shares to be issued under the ESOS shall not exceed in aggregate 10% of the issued share capital of the Company at any point of time during the tenure of the ESOS.

(iii) The option price for each share shall be set at the 5-day weighted average market price of the shares or at a discount of not more than 10% from the 5-day weighted average market price of the shares at the date the option is granted. Notwithstanding this, the option price per share shall in no event be less than its par value.

(iv) No option shall be granted for less than 1,000 shares nor more than 400,000 shares to any eligible employee.

(v) An option granted under the ESOS shall be capable of being exercised by the grantee by notice in writing to the Company commencing from the date of the offer but before the expiry of five years from the date of the offer.

(vi) All new ordinary shares issued upon exercise of the options granted under the ESOS shall rank pari passu in all respects with the existing ordinary shares of the Company other than as may be specified in a resolution approving the distribution of dividends prior to their exercise dates.

(vii) The persons to whom the options have been granted have no right to participate by virtue of the options in any share issue of any other company.

Movement of share options during the financial year

The following table illustrates the number (“No.”) and weighted average exercise prices (“WAEP”) of, and movements in, share options during the financial year:

Group

2012 2011

No. WAEP (RM) No. WAEP (RM)

Outstanding at 1 February 283,000 0.82 373,000 0.82

-Forfeited (7,000) 0.82 (9,000) 0.82

-Exercised (3,000) 0.82 (81,000) 0.82

Outstanding at 31 January 273,000 283,000

Exercisable at 31 January 273,000 283,000




25. EMPLOYEE BENEFITS cont’d

Movement of share options during the financial year cont’d - The weighted average share price at the date of exercise of the options exercised during the financial year was

RM1.18 (2011: RM1.32).

- The exercise price for options outstanding at the end of the year was RM0.82 (2011: RM0.82). The weighted average remaining contractual life for these options is 1.5 years (2011: 2.5 years).

26. OTHER RESERVES

Asset revaluation

reserve - freehold

land

Foreign currency

translation reserve Total

RM’000 RM’000 RM’000

Restated

Group

At 1 February 2009 11,508 1,478 12,986

Effect of adopting IC 12 - (9,231) (9,231)

At 1 February 2009, as restated 11,508 (7,753) 3,755

Foreign currency translation - (1,549) (1,549)

At 31 January 2010 11,508 (9,302) 2,206

At 1 February 2010 11,508 (71) 11,437

Effect of adopting IC 12 - (9,000) (9,000)

At 1 February 2010, as restated 11,508 (9,071) 2,437

Foreign currency translation - (2,714) (2,714)

At 31 January 2011 11,508 (11,785) (277)

At 1 February 2011 11,508 (11,785) (277)

Foreign currency translation - 8,174 8,174

At 31 January 2012 11,508 (3,611) 7,897



26. OTHER RESERVES cont’d

Revaluation reserve - freehold

land

RM’000

Company

At 1 February 2010/31 January 2011 11,422

At 1 February 2011/31 January 2012 11,422

The nature and purpose of each category of reserve are as follows:

(a) Asset revaluation reserve - freehold land

The asset revaluation reserve represents increases in the fair value of freehold land, and decreases to the extent

that such decreases relate to an increase on the same asset previously recognised in other comprehensive income.

(b) Foreign currency translation reserve

The foreign currency translation reserve represents exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.

27. LOANS AND BORROWINGS

Group Company

2012 2011 2012 2011

Maturity RM’000 RM’000 RM’000 RM’000

Current

Secured:

Bank overdrafts (Note 23) On demand 4,678 2,369 4,678 2,369

Revolving credits 2012 4,000 3,000 4,000 3,000

Bankers’ acceptances 2012 3,641 8,679 3,641 8,679

Term loans 2012 2,400 2,400 2,400 2,400

Finance lease liabilities 2012 500 226 500 226

15,219 16,674 15,219 16,674




27. LOANS AND BORROWINGS cont’d

Group Company

2012 2011 2012 2011

Maturity RM’000 RM’000 RM’000 RM’000

Non-current

Secured:

Term loans 2014 17,557 11,056 17,557 11,056

Finance lease liabilities 2013-2016 1,680 514 1,680 514

19,237 11,570 19,237 11,570

Total loans and borrowings 34,456 28,244 34,456 28,244

The remaining maturities of the borrowings as at 31 January 2012 are as follows:

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

On demand or within one year 15,219 16,674 15,219 16,674

More than 1 year and less than 2 years 3,556 11,218 3,556 11,218

More than 2 year and less than 5 years 15,681 352 15,681 352

34,456 28,244 34,456 28,244

Bank overdrafts Bank overdrafts are denominated in RM, bear interest at rates ranging from 7.3% to 7.6% per annum and are secured

by a first, second, third and fourth charge over a landed property of the Company.

Finance lease liabilities

These liabilities are secured over the leased assets (Note 14). The average discount rate implicit in the lease is 4.28% (2011: 3.25%) per annum.

RM1.0 million Revolving Credit

This Revolving Credit is secured by a legal charge over a landed property of the Company (Note 14) and is repayable on 12 March 2012. It bears an average interest rate of 4.23% (2011: 3.65%) per annum.

RM3.0 million Revolving Credit

This Revolving Credit is secured by a legal charge over a landed property of the Company (Note 14) and is repayable on 12 March 2012. It bears an average interest rate of 4.23% (2011: 3.65%) per annum.



27. LOANS AND BORROWINGS cont’d

Bankers’ Acceptances

These borrowings are utilised by the Company to finance sales and purchases and are repayable in year 2012. These borrowings are secured by a legal charge over a landed property of the Company (Note 14) and bear an average interest rate of 4.2% (2011: 3.97%) per annum.

RM5.0 million term loan

This loan is secured by a legal charge over a landed property of the Company (Note 14) and is repayable quarterly over a period of 4 years ending in September 2013. This loan bears an average interest rate of 4.6% (2011: 3.97%) per annum.


This loan is secured by a legal charge over a landed property of the Company (Note 14) and is repayable quarterly

over a period of 4 years ending in February 2013. This loan bears an average interest rate of 4.51% (2011: 3.97%) per annum.


This loan is secured by a specific debenture over the machineries/equipment financed (Note 14) and is repayable

monthly over a period of 3 and half years ending in October 2016. This loan bears an average interest rate of 4.8% (2011: 3.65%) per annum.

28. TRADE AND OTHER PAYABLES

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Current

Trade payables

Third parties 13,605 16,102 9,339 15,935

Other payables

Related parties 33 48 33 48


Associate - 1,264 - 1,264

Accruals 803 4,613 555 3,744

Other payables 6,723 10,156 5,234 10,059

7,559 16,081 11,377 34,509




28. TRADE AND OTHER PAYABLES cont’d

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Total trade and other payables (current) 21,164 32,183 20,716 50,444

Add: Loans and borrowings (Note 27) 34,456 28,244 34,456 28,244

Total financial liabilities at amortised cost 55,620 60,427 55,172 78,688

(a) Trade payables Trade payables are non-interest bearing and the normal trade credit terms granted to the Group range from 30

to 90 days. (b) Other payables Other payables are non-interest bearing. These amounts are normally settled on 30 to 90 day terms.

(c) Related parties Related parties refer to subsidiaries of a company in which the directors, Tan Sri Dato’ Tan Kay Hock and Puan Sri

Datin Tan Swee Bee have interest in. The amounts due to related parties are unsecured, non interest bearing and repayable on demand.

(d) Amounts due to subsidiaries and associate The amounts due to subsidiaries and associate are unsecured, interest-free and repayable on demand.

29. OTHER CURRENT LIABILITIES

Group and Company

2012 2011

RM’000 RM’000

Gross amounts due to customers from contract work (Note 21) 8,415 3,826



30. DEFERRED TAX Deferred income tax as at 31 January relates to the following:

As at 1 February

2010

Recognised in profit or

loss

As at 31 January

2011

Recognised in profit or

loss

As at 31 January

2012

RM’000 RM’000 RM’000 RM’000 RM’000

Group

Deferred tax liabilities:

Property, plant and equipment (1,057) (788) (1,845) (482) (2,327)

Deferred tax assets:

Unutilised tax losses and unabsorbed allowances 1,523 (243) 1,280 263 1,543

Others 343 99 442 (150) 292

1,866 (144) 1,722 113 1,835

809 (932) (123) (369) (492)

Company

Deferred tax liabilities:

Property, plant and equipment (1,057) (758) (1,815) (362) (2,177)

Presented after appropriate offsetting as follows:

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Deferred tax assets 1,835 1,722 - -

Deferred tax liabilities (2,327) (1,845) (2,177) (1,815)

(492) (123) (2,177) (1,815)




30. DEFERRED TAX cont’d

Deferred tax assets not recognised are in respect of the following items:

Group

2012 2011

RM’000 RM’000

Unused tax losses 44,504 44,302

Unabsorbed capital allowances 4,571 4,571

The unused tax losses and unabsorbed capital allowances of the Group are available indefinitely for offsetting against

future taxable profits of the respective entities within the Group, except for dormant subsidiaries which are subject to no substantial change in shareholdings of those entities under the Income Tax Act, 1967 and guidelines issued by the tax authority.

Deferred tax assets have not been recognised in respect of unused tax losses and unabsorbed capital allowances as it

is not probable that future taxable profit will be available against which they can be utilised based on the current plan of the respective companies.

31. COMMITMENTS

(a) Capital commitments

Capital expenditure as at the reporting date is as follows:

Group/Company

2012 2011

RM’000 RM’000

Approved but not contracted for :

Property, plant and equipment 3,880 12,479

(b) Finance lease commitments

The Group has finance leases for certain motor vehicles. These leases do not have terms of renewal, but have purchase options at nominal values at the end of the lease terms.



31. COMMITMENTS cont’d

(b) Finance lease commitments cont’d

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:

Group/Company

2012 2011

RM’000 RM’000

Minimum lease payments:

Not later than 1 year 572 265

Later than 1 year but not later than 2 years 586 189

Later than 2 years but not later than 5 years 1,327 418

Total minimum future lease payments 2,485 872

Less: Future finance charges (305) (132)

Present value of finance lease liabilities 2,180 740

Present value payments:

Not later than 1 year 500 226

Later than 1 year but not later than 2 years 515 162

Later than 2 years but not later than 5 years 1,165 352

2,180 740

Less: Amount due within 12 months (Note 27) (500) (226)

Amount due after 12 months (Note 27) 1,680 514




32. SIGNIFICANT RELATED PARTY TRANSACTIONS

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Transactions with subsidiaries:

- Purchases - - 6,678 10,886

- Sales - - 6,309 8,161

- Management fee income - - 506 418

- Dividend income - - 2,103 1,500

Transactions with associates:

- Dividend income - - 279 -

- Sales 19,389 21,493 19,389 21,493

- Debenture interest income 932 1,087 - -

- Rental income for motor vehicle 11 - 11 -

Transactions with corporations in which the directors have interest in:

- Purchase of air tickets 125 321 125 321

- Purchase of tiles 110 414 - -

- Share registration charges and secretarial fees 94 75 58 47

Information regarding outstanding balances arising from related party transactions as at reporting date is disclosed in

Note 19 and 28. Compensation of key management personnel

Key management personnel includes directors of the Group and of the Company and their remuneration during the

year is disclosed in Note 10. The remunerations of other members of key management personnel (excluding directors) during the year are as follows:

Group and Company

2012 2011

RM’000 RM’000

Salaries and other related costs 689 842

Benefits-in-kind 12 15

701 857



33. FAIR VALUE OF FINANCIAL INSTRUMENTS A. Fair value of financial instruments by classes that are carried at fair value.

Note

Group Carrying amount Fair value

RM’000 RM’000

Financial assets

At 31 January 2012

Investment securities 22 4,692 4,692

At 31 January 2011

Investment securities 22 4,497 4,497

As stipulated in Amendments to FRS 7: Improving Disclosure about Financial Instruments, the Group and the

Company are required to classify fair value measurement using a fair value hierarchy. The fair value hierarchy would have the following levels:

Level 1 - the fair value is measured using quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - the fair value is measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - the fair value is measured using inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The following table presents the Group’s other financial assets and financial liabilities that are measured at fair

value as at 31 January 2012:

Level 1 Total

RM’000 RM’000

Assets

Financial asset held for trading:

- Quoted shares 4,692 4,692




33. FAIR VALUE OF FINANCIAL INSTRUMENTS cont’d B. Determination of fair value

Financial instruments that are carried at fair value

Investment securities - Held for trading investment : Fair Value is determined directly by reference to their published quoted prices in active market at reporting date.

Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value

The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value:

Note

Trade and other receivables (current) 19

Trade and other payables (current) 28

Loans and borrowings (current) 27

Loans and borrowings (non-current) 27

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date.

The carrying amounts of the loans and borrowings are reasonable approximations of fair values due to the insignificant impact of discounting.

34. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk, foreign currency risk and market price risk.

The Board of Directors reviews and agrees policies and procedures for the management of these risks. The Audit Committee provides independent oversight to the effectiveness of the risk management process.

It is, and has been throughout the current and previous financial year, the Group’s policy that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient. The Group and the Company do not apply hedge accounting.

The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.



34. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont’d

(a) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including cash and bank balances), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

The Group’s objectives are to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

Exposure to credit risk At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by the

carrying amount of each class of financial assets recognised in the statements of financial position.

Information regarding credit enhancements for trade and other receivables is disclosed in Note 19.

Credit risk concentration profile The Group determines concentrations of credit risk by monitoring the geographical segment of its trade

receivables on an ongoing basis. The credit risk concentration profile of the Group’s and the Company’s trade receivables at the reporting date are as follows:

Group

2012 2011

RM’000 % of total RM’000 % of total

By country:

Malaysia 32,941 71% 24,037 68%

United Kingdom 2,446 5% 3,184 9%

Hong Kong 69 1% 2,531 7%

Vietnam 3,841 8% 2,147 6%

Others 7,102 15% 3,493 10%

46,399 100% 35,392 100%

At the reporting date, approximately:

- 36% (2011:38%) of the Group’s trade receivables were due from 10 major customers who are multi industry

conglomerates located in Malaysia.





(a) Credit risk cont’d

Financial assets that are neither past due nor impaired

Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note 19. Deposits with banks and other financial institutions and investment securities that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is diclosed in Note 19.

(b) Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.

The Group’s and the Company’s liquidity risk management policy is to maintain sufficient liquid financial assets and stand-by credit facilities with different banks. At the reporting date, approximately 44% (2011:59%) of the Group’s and of the Company’s loans and borrowings (Note 27) will mature in less than one year based on the carrying amount reflected in the financial statements.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations.

2012

On demand or within one year

One to five years

Over five years Total

RM’000 RM’000 RM’000 RM’000

Group

Financial liabilities:

Trade and other payables 21,164 - - 21,164

Loans and borrowings 15,219 19,542 - 34,761

Total undiscounted financial liabilities 36,383 19,542 - 55,925




(b) Liquidity risk cont’d

2012

On demand or within one year

One to five years

Over five years Total

RM’000 RM’000 RM’000 RM’000

Company

Financial liabilities:

Trade and other payables 20,716 - - 20,716

Loans and borrowings financial liabilities 15,219 19,542 - 34,761

Total undiscounted financial liabilities 35,935 19,542 - 55,477

(c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial

instruments will fluctuate because of changes in market interest rates.

The Group’s and the Company’s exposure to interest rate risk arise primarily from their loans and borrowings bearing interest at floating rates and investment in fixed rate unquoted debenture in an associate.

The interest rate risk arising from floating rate loans and borrowing are mitigated by the Group’s and the Company’s cash deposits, which are generating interest income at floating rate. The Group does not hedge its investment in fixed rate unquoted debenture in an associate as this investment is to be held to maturity. All of the Group’s and the Company’s financial assets and liabilities at floating rates are contractually re-priced quarterly or at maturity date (2011: quarterly or at maturity date) whichever applicable.

The Group’s policy is to manage interest cost using a mix of fixed and floating rate debts. At the reporting date, approximately 6.3% (2011: 2.6%) of the Group’s borrowings are at fixed rates of interest.

Sensitivity analysis for interest rate risk

At the reporting date, if interest rates had been 10 basis points lower/higher, with all other variables held constant, the Group’s profit net of tax would have been RM18,000 higher/lower, arising mainly as a result of lower/higher interest expense on floating rate loans and borrowings.

(d) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.





(d) Foreign currency risk cont’d

The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of Group entities, primarily RM. The foreign currencies in which these transactions are denominated are mainly United States Dollar, Euro Dollar, Sterling Pound, Australian Dollar, Singapore Dollar, Japanese Yen and Papua New Guinea Kina.

Approximately 37% (2011: 37%) of the Group’s sales are denominated in foreign currencies whilst almost 54% (2011: 56%) of costs are denominated in the foreign currencies. The Group’s trade receivable and trade payable balances at the reporting date have similar exposures.

The Group and Company also hold cash and cash equivalents denominated in foreign currencies for working capital purposes. At the reporting date, such foreign currency balances (mainly in SGD) amount to RM43.4 million (2011: RM41.8 million) and RM4.2 million (2011: RM8.3 million) for the Group and the Company respectively.

The Group is also exposed to currency translation risk arising from its net investments in foreign operations which is in Papua New Guinea. The Group’s investment in its Papua New Guinea subsidiary is not hedged as currency position in Kina is considered to be long-term in nature.

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group’s profit net of tax to a reasonably possible change in the United States Dollar, Euro Dollar, Sterling Pound, Australian Dollar, Singapore Dollar, Japanese Yen and Papua New Guinea Kina against the respective functional currencies of the Group entities, with all other variables held constant.

Group Company

2012 2012

RM’000 RM’000

Profit net Profit net

of tax of tax

USD/RM -strengthened 3% (2011: 3%) 410 246

-weakened 3% (2011: 3%) (410) (246)

EUR/RM -strengthened 3% (2011: 3%) (192) (205)

-weakened 3% (2011: 3%) 192 205

GBP/RM -strengthened 3% (2011: 3%) (128) (135)

-weakened 3% (2011: 3%) 128 135

AUD/RM -strengthened 3% (2011: 3%) 224 85

-weakened 3% (2011: 3%) (224) (85)

SGD/RM -strengthened 3% (2011: 3%) 333 -

-weakened 3% (2011: 3%) (333) -

JPY/RM -strengthened 3% (2011: 3%) 39 25

-weakened 3% (2011: 3%) (39) (25)

KINA/RM -strengthened 3% (2011: 3%) 395 -

-weakened 3% (2011: 3%) (395) -



34. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont’d (e) Market price risk

Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will

fluctuate because of changes in market price (other than interest or exchange rates).

The Group is exposed to equity price risk arising from its investment in quoted equity instruments. The quoted equity instruments in Malaysia are listed on the Bursa Malaysia, whereas the quoted equity instruments outside Malaysia are substantially listed in Hong Kong and Singapore Stock Exchanges. These instruments are classified as held for trading or available-for-sale financial assets. The Group does not have exposure to commodity price risk.

The Group’s objective is to manage investment returns and equity price risk using a mix of investment grade share with steady dividend yield and non-investment grade shares with higher volatility. Any deviation from this policy is required to be approved by the Board of Directors.

Sensitivity analysis for equity price risk

At the reporting date, if the market price of the equity investment had been 5% higher/lower, with all other variables held constant, the Group’s profit net of tax would have been RM235,000 higher/lower, arising as a result of higher/lower fair value gains on held for trading investments in equity instruments.

35. CAPITAL MANAGEMENT

The primary objective of the Group’s capital management is to ensure healthy capital ratios in order to support its

business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 January 2012 and 31 January 2011.

The Group’s policy is to maintain a sustainable gearing ratio to meet its existing requirements taking into consideration

the facilities agreements entered into by the Group. The Group includes within the net debt, loans and borrowings, hire purchase liabilities, trade and other payables, less cash and bank balances. Capital refers to equity attributable to owners.




35. CAPITAL MANAGEMENT cont’d

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Restated

Loans and borrowings 34,456 28,244 34,456 28,244

Trade and other payables 21,164 32,183 20,716 50,444

Less: - Cash and bank balances (59,574) (61,714) (20,577) (27,833)

Sub-total (3,954) (1,287) 34,595 50,855

Net debt - - 34,595 50,855

Equity attributable to the owners of the parent, representing total capital 183,323 164,261 109,300 102,741

Capital and net debt 183,323 164,261 143,895 153,596

Gearing ratio - - 24% 33%

36. SEGMENT INFORMATION

Investment

Water infrastructure/

engineering

Adjustments and

elimination Notes

Per consolidated

financial statements

RM’000 RM’000 RM’000 RM’000

2012

Revenue:

External customers - 152,249 - 152,249



36. SEGMENT INFORMATION cont’d

Investment

Water infrastructure/

engineering

Adjustments and

elimination Notes

Per consolidated

financial statements

RM’000 RM’000 RM’000 RM’000

2012

Results:

Interest income 1,589 250 - 1,839 Depreciation and amortisation - (2,698) - (2,698)Share of results of associates - 2,106 - 2,106 Other non-cash loss (524) - - A (524)Segment profit 5,448 20,507 237 B 26,192

Assets:

Associates - 32,110 - 32,110 Additions to non-current assets - 8,977 - C 8,977 Segment assets 20,217 192,252 37,473 D 249,942

Segment liabilities 14 18,270 48,335 E 66,619

2011Restated

Revenue:

External customers 1,500 163,537 - 165,037

Results:

Interest income 2,434 213 - 2,647 Depreciation and amortisation - (1,622) - (1,622)Share of results of associates - 1,695 - 1,695 Other non-cash income 308 218 - A 526 Segment (loss)/profit (1,243) 33,368 309 B 32,434

Assets:

Associates - 25,224 - 25,224 Additions to non-current assets - 8,087 - C 8,087 Segment assets 15,410 188,829 26,946 D 231,185

Segment liabilities 655 35,354 30,915 E 66,924





Notes Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements

A Other material non-cash expenses/(income) consist of the following items as presented in the respective notes to the financial statements:

2012 2011

RM’000 RM’000

Net fair value (loss)/gain on held for trading investment securities (524) 308

Reversal of impairment loss on financial assets - 218

(524) 526

B The following items are added to/(deducted from) segment profit to arrive at “Profit before tax from operations” presented in the consolidated statement of comprehensive income:

2012 2011

RM’000 RM’000

Restated

Share of results of associates 2,106 1,695

Finance costs (1,869) (1,386)

237 309

C Additions to non-current assets consist of:

2012 2011

RM’000 RM’000


Intangible assets 46 98

8,977 8,087

D The following items are added to segment assets to arrive at total assets reported in the consolidated statement of financial position:

2012 2011

RM’000 RM’000

Restated

Investment in associates 24,126 18,820

Investment in unquoted debentures of associate 7,984 6,404

Deferred tax assets 1,835 1,722

Inter segment transfer 3,528 -

37,473 26,946




Notes Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements cont’d

E The following items are added to segment liabilities to arrive at total liabilities reported in the consolidated statement of financial position:

2012 2011

RM’000 RM’000

Deferred tax liabilities 2,327 1,845

Income tax payable 257 826

Loans and borrowings 34,456 28,244

Inter segment transfer 11,295 -

48,335 30,915

Geographical segments

Revenue and non-current assets information based on the geographical location of customers and assets respectively are as follows:

Revenue Non-current assets

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Malaysia 139,040 152,147 62,029 55,885

Overseas 13,209 12,890 826 675

152,249 165,037 62,855 56,560

Non-current assets information presented above consist of the following items as presented in the consolidated statement of financial position.

2012 2011

RM’000 RM’000


Intangible assets 454 496

62,855 56,560 Information about major customers

Revenue from ten major customers amount to RM84,129,000 (2011: RM119,779,000) arising from water infrastructure/

engineering segment.




37. SUBSIDIARIES AND ASSOCIATES

Details of the subsidiaries are as follows:

Name of subsidiariesCountry of

incorporation Principal activitiesProportion of

ownership interest

2012 2011

% %

Brass Alloys Sdn. Bhd. Malaysia Manufacturing of brass rods 100 100

George Kent (Sabah) Sdn. Bhd. Malaysia Inactive** 70 70

George Kent (PNG) Ltd. * Papua New Guinea

Operation and maintenance of water treatment plant

100 100

GK Equities Sdn. Bhd. Malaysia Investment holding and trading 100 100

Alfa Management Ltd. * Hong Kong Investment holding and trading 100 100

Asialink Pacific Ltd. * British Virgin Islands

Investment holding and trading 100 100

George Kent (China) Company Limited *

Hong Kong Investment holding 100 100

GK-Hardie Sdn. Bhd. Malaysia Inactive 100 100

Teknologi Air Patcandy Sdn. Bhd. Malaysia Inactive 100 100

Details of the associates are as follows:

Name of associatesCountry of

incorporation Principal activitiesProportion of

ownership interest

2012 2011

% %

PNG Water Limited * Papua New Guinea

Water concession 19 19

Meteraya Sdn. Bhd. Malaysia Marketing of water meters and brass products

- 48

Pakar Sains Sdn. Bhd. Malaysia Inactive ** 26 26 * subsidiaries and associate audited by firms of auditors other than Ernst & Young. ** voluntary liquidation currently in progress.



37. SUBSIDIARIES AND ASSOCIATES cont’d

The investment in PNG Water Limited is classified as an associate notwithstanding its 19% shareholding since a director of the Company has been appointed to the Board of PNG Water Limited. A subsidiary of the Company is providing operation and maintenance services to the associate and also the Group participates in the policy-making decisions and provides technical assistance to PNG Water Limited.

38. COMPARATIVES The presentation and classification of items in the current financial statements have been consistent with previous

financial year except that certain comparative amounts have been adjusted as a result of changes in policies as disclosed in Note 2.2.

39. AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUE

The financial statements for the year ended 31 January 2012 were authorised for issue in accordance with a resolution

of the directors on 18 May 2012.




40. SUPPLEMENTARY INFORMATION ON THE DISCLOSURE OF REALISED AND UNREALISED PROFIT AND LOSS

On 25 March 2010, Bursa Malaysia Securities Berhad (“Bursa Malaysia”) issued a directive to all listed issuers pursuant to Paragraph 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements. The directive requires all listed issuers to disclose the breakdown of the unappropriated profits or accumulated losses as at the end of the reporting period, into realised and unrealised profits or losses.

On 20 December 2010, Bursa Malaysia further issued another directive on the disclosure and prescribed format of presentation.

Pursuant to the directive, the amounts of realised and unrealised profits or losses included in the retained profits/(accumulated losses) of the Group and the Company as at 31 January 2012 are as follows:

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Restated

Total retained profits/(accumulated losses) of the Company and its subsidiaries

- realised (75,064) (94,115) (14,848) (21,924)

- unrealised (2,027) 2,545 (2,017) (1,498)

(77,091) (91,570) (16,865) (23,422)

Total share of profits from associates

- realised 21,772 25,513 - -

- unrealised (369) (263) - -

(55,688) (66,320) (16,865) (23,422)

Less: Consolidation adjustments 116,371 116,117 - -

Retained profits/(accumulated losses) as per financial statements 60,683 49,797 (16,865) (23,422)

The determination of realised and unrealised profits is based on the Guidance of Special Matter No.1, Determination

of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirement, issued by Malaysian Institute of Accountants on 20 December 2010.

The disclosure of realised and unrealised profit above is solely for complying with the disclosure requirements stipulated in the directive of Bursa Malaysia and should not be applied for any other purpose.



Shareholders’ Information

as at 1 June 2012

SHARE CAPITAL INFORMATION Authorised Share Capital : RM200,000,000.00 Issued and Fully Paid-up Capital : RM112,651,313.00 Total Number of Shares Issued : 225,302,626 Class of Securities : Ordinary Shares of 50 sen each Voting Rights : One (1) vote per Ordinary Share

DISTRIBUTION OF SHAREHOLDINGS

No. of Holders % Size of Holdings Total Holdings %

210 5.57 Less than 100 shares 7,203 0.00

1,042 27.62 100 to 1,000 shares 886,252 0.39

1,930 51.17 1,001 to 10,000 shares 8,254,649 3.66

517 13.71 10,001 to 100,000 shares 15,156,811 6.73

69 1.83 100,001 to less than 5% of issued shares 123,849,680 54.97

4 0.11 5% and above of issued shares 77,148,031 34.24

3,772 100.00 Total 225,302,626 100.00

LIST OF THIRTY LARGEST REGISTERED SHAREHOLDERS (as shown in the Record of Depositors)

No. Name of Shareholders No. of Shares Held %

1 STAR WEALTH INVESTMENT LIMITED 31,600,000 14.03

2 HSBC NOMINEES (ASING) SDN BHDEXEMPT AN FOR COUTTS & CO LTD (HK BRANCH)

16,225,931 7.20

3 CESUCO TRADING LIMITED 16,000,000 7.10

4 HSBC NOMINEES (ASING) SDN BHDFOR TAN SWEE BEE

13,322,100 5.91

5 HECTOMIC LIMITED 11,248,200 4.99

6 KIN FAI INTERNATIONAL LIMITED 10,675,000 4.74

7 NORRIS PIE LIMITED 9,623,257 4.27

8 OSK NOMINEES (TEMPATAN) SDN BERHADPLEDGED SECURITIES ACCOUNT FOR JOHAN EQUITIES SDN BHD

9,435,600 4.19

9 HSBC NOMINEES (ASING) SDN BHDEXEMPT AN FOR CREDIT SUISSE (SG BR-TST-ASING)

7,967,200 3.54

10 KWOK HENG HOLDINGS LIMITED 7,881,043 3.50

11 ASIAN RIM LIMITED 7,476,448 3.32


Shareholders’ Informationas at 1 June 2012cont’d

LIST OF THIRTY LARGEST REGISTERED SHAREHOLDERS cont’d (as shown in the Record of Depositors)

No. Name of Shareholders No. of Shares Held %

12 HSBC NOMINEES (ASING) SDN BHDFOR SUNCROWN HOLDINGS LIMITED

7,309,000 3.24

13 HDM NOMINEES (ASING) SDN BHDPLEDGED SECURITIES ACCOUNT FOR PROMOTO COMPANY LIMITED

6,831,500 3.03

14 DEUTSCHE BANK (MALAYSIA) BERHAD 5,530,417 2.45

15 CHERUBIM INVESTMENT (HK) LIMITED 5,000,000 2.22

16 EB NOMINEES (TEMPATAN) SENDIRIAN BERHADPLEDGED SECURITIES ACCOUNT FOR TAN KAY HOCK

4,898,000 2.17

17 HDM NOMINEES (ASING) SDN BHDPLEDGED SECURITIES ACCOUNT FOR AIMUP CONSULTANTS LIMITED

3,337,551 1.48

18 HLG NOMINEE (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR TAN KAY HOCK

3,180,000 1.41

19 HLG NOMINEE (ASING) SDN BHDPLEDGED SECURITIES ACCOUNT FOR TAN SWEE BEE

3,167,000 1.41

20 PM NOMINEES (TEMPATAN) SDN BHDPCB ASSET MANAGEMENT SDN BHD FOR MUI CONTINENTAL INSURANCE BERHAD

3,000,000 1.33

21 EB NOMINEES (TEMPATAN) SENDIRIAN BERHADPLEDGED SECURITIES ACCOUNT FOR TAN KAY HOCK

1,675,000 0.74

22 MAYBANK SECURITIES NOMINEES (ASING) SDN BHDPLEDGED SECURITIES ACCOUNT FOR JAGINDER SINGH PASRICHA

1,400,000 0.62

23 LEONG TOK WAN @ LIM CHO WAN 1,386,000 0.62

24 KENANGA NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR TIONG YOUNG KONG

857,000 0.38

25 EB NOMINEES (TEMPATAN) SENDIRIAN BERHADPLEDGED SECURITIES ACCOUNT FOR YAP FOOK LOI

847,000 0.38

26 CITIGROUP NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR TAN SWEE BEE (472824)

655,000 0.29

27 TAN KAY HOCK 630,000 0.28

28 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR LIM CHEE SEONG

410,000 0.18

29 JF APEX NOMINEES (ASING) SDN BHDPLEDGED SECURITIES ACCOUNT FOR YEO KOK LEONG

394,450 0.18

30 CHONG YING CHOY 370,000 0.16

192,341,197 85.37


Shareholders’ Informationas at 1 June 2012

cont’d

SUBSTANTIAL SHAREHOLDERS (EXCLUDING BARE TRUSTEES) (as per Register of Substantial Shareholders)

No. Of Shares Ordinary Shares of RM0.50 each

Name of Substantial ShareholderDirect

Interest %Deemed Interest %

Star Wealth Investment Limited 31,600,000 14.03 - -

Cesuco Trading Limited 16,000,000 7.1 - -

Puan Sri Datin Tan Swee Bee 17,444,100 7.74 77,653,643 (1) 34.47

Tan Sri Dato’ Tan Kay Hock 10,753,000 4.77 84,344,743 (1) 37.44

Tan Sri Dato’ Khoo Kay Peng - - 24,058,400 (2) 10.68

Malayan United Industries Berhad - - 19,058,400 (3) 8.46

MUI Properties Berhad - - 16,058,400 (4) 7.13 Notes:- (1) Deemed interested by virtue of their equity interest in Kwok Heng Holdings Ltd, Kin Fai International Limited and various companies,

and call options granted over all existing GKENT shares held by Star Wealth Investment Limited as well as deemed interest in shares held in each other’s name.

(2) Deemed interested through Cherubim Investment (HK) Ltd and Malayan United Industries Berhad by virtue of Section 6A(4) of the Companies Act, 1965.

(3) Deemed interested by virtue of Section 6A(4)(c) of the Companies Act, 1965 which its shareholding exceeding 15% of the issued and paid-up capital in MUI Properties Berhad and MUI Continental Insurance Berhad.

(4) Deemed interested through Bahtera Muhibbah Sdn Bhd and Cesuco trading Limited being its wholly-owned subsidiaries which hold 58,400 and 16,000,000 shares respectively.


Statement on Directors’ Interestsin the Company and Related Corporationas at 1 June 2012

DIRECTORS’ INTEREST IN SHARES(as shown in the Register of Directors’ Holdings)

In George Kent (Malaysia) Berhad No. of Ordinary Shares of RM0.50 each

Name of DirectorDirect

Interest %Deemed Interest %

Tan Sri Dato’ Tan Kay Hock 10,753,000 4.77 84,344,743* 37.44

Puan Sri Datin Tan Swee Bee 17,444,100 7.74 77,653,643* 34.47

Ir. Dr. Cheong Thiam Fook - - - -

Dato’ Ir Haji Zaidan bin Haji Othman - - - -

Ong Seng Pheow 30,000 0.01 - -

Dato’ Paduka Dr Ir Hj Keizrul bin Abdullah 5,000 0.00 - -

* Deemed interested by virtue of their 100% equity interest in Kwok Heng Holdings Limited, Kin Fai International Limited, various companies, and by virtue of Section 6A(4) of the Companies Act 1965 in Johan Equities Sdn Bhd, and also shares held in each other’s name including call option granted over all existing GKENT shares held by Star Wealth Investment Limited.


List of Properties Held

as at 31 January 2012

Location DescriptionArea

(Sq. metre) Tenure

Net Book Value

RM’000

Age of Building (Years)

Year of Revaluation

Year of Acquisition

Lot 1115, 15th Mile Jalan Dengkil 47100 Puchong Selangor Darul Ehsan

Factory, stores and

offices

67,870 Freehold 43,176 15 20/12/1996 1996

Section 515, Lot 6 Waigani Drive Hohola NCD, Papua New Guinea

Double-storey

residential unit

230 Leasehold 99 year

Expiring on 28.05.2095

207 14 - 1997


Noticeof Annual General Meeting

NOTICE IS HEREBY GIVEN that the Sixty-First Annual General Meeting of the Company will be held at the Registered Office of the Company, George Kent Technology Centre, Lot 1115, Batu 15, Jalan Dengkil 47100 Puchong, Selangor Darul Ehsan on Wednesday, 18 July 2012 at 11:00 a.m. for the following purposes:-

ORDINARY BUSINESS 1. To receive the Audited Financial Statements for the year ended 31 January 2012 and the Directors’

and Auditors’ Reports thereon.

2. To approve the payment of a final dividend of RM0.03 per 50 sen ordinary share less tax at 25% for the financial year ended 31 January 2012.

3. To re-elect Mr Ong Seng Pheow who retires by rotation in accordance with Article 83 of the Articles of Association and being eligible, has offered himself for re-election.

4. To re-elect Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul Bin Abdullah who retires by rotation in accordance with Article 83 of the Articles of Association and being eligible, has offered himself for re-election.

5. To approve the payment of Directors’ fees of RM331,000.00 in respect of the year ended 31 January 2012 (2011:RM356,000).

6. To appoint Messrs Deloitte & Touche as Auditors of the Company in place of the retiring Auditors, Messrs Ernst & Young and to authorise the Directors to fix their remuneration.

Notice of Nomination from a shareholder pursuant to Section 172(11) of the Companies Act, 1965, has been received by the Company for the nomination of Messrs Deloitte & Touche, who have given their consent to act, for appointment as Auditors in place of the retiring Auditors, Messrs Ernst & Young (a copy of which is annexed hereto and marked as “Appendix I” on Page 126 of the Annual Report 2012) and of the intention to propose the following Ordinary Resolution:-

Appointment of Auditors “THAT Messrs Deloitte & Touche be and are hereby appointed as Auditors of the Company for the

financial year ended 31 January 2013 in place of the retiring Auditors, Messrs Ernst & Young and to hold office until the conclusion of the next Annual General Meeting at a remuneration to be determined by the Directors.”

(Please refer to Note A)

(Resolution 1)

(Resolution 2)

(Resolution 3)

(Resolution 4)

(Resolution 5)


SPECIAL BUSINESS 7. To consider and if thought fit, pass with or without modifications the following as Ordinary

Resolution:-

Authority To Allot And Issue Shares In General Pursuant To Section 132D Of The Companies Act, 1965

“THAT pursuant to Section 132D of the Companies Act, 1965 and subject to the approvals of the relevant governmental/regulatory authorities, the Directors be and are hereby empowered to issue shares in the capital of the Company from time to time and upon the terms and conditions and for such purposes as the Directors, may in their absolute discretion deem fit including provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being AND THAT the Directors be and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the listing and quotation for the additional shares so issued AND THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.”

8. To consider and if thought fit, pass with or without modifications the following as Special

Resolution:-

Proposed amendments to the Company’s Articles of Association

“THAT the alterations, modification, additions and/or deletions to the Articles of Association of the Company as set out in Appendix II on Page 127 of the Annual Report 2012 be and are hereby approved.”

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

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT

NOTICE IS HEREBY GIVEN THAT subject to the approval by the shareholders at the Sixty-First Annual General Meeting, the final dividend of RM0.03 per 50 sen ordinary share less tax at 25% for year ended 31 January 2012, will be payable on 16 August 2012 to shareholders whose names appear in the Register of Members and Record of Depositors on 2 August 2012.

A Depositor shall qualify for entitlement to the dividend only in respect of:-

(a) Shares transferred into the Depositor’s securities account before 4:00 p.m. on 2 August 2012 in respect of ordinary transfers; and

(b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad.

By order of the Board,

TEH YONG FAHCompany Secretary (MACS00400)Kuala LumpurDated: 26 June 2012

Noticeof Annual General Meeting

cont’d

(Resolution 6)

(Resolution 7)


Notes:-

A. This Agenda item is meant for discussion only. The provisions of Section 169 of the Companies Act, 1965 and the Articles of Association of the Company require that the audited financial statements and the Reports of the Directors and Auditors thereon be laid before the Company at its Annual General Meeting. As such this Agenda item is not a business which requires a resolution to be put to the vote by shareholders.

1. A member of the Company entitled to attend and vote is entitled to appoint not more than two proxies to attend and vote instead of him. A proxy need not be a member of the Company. Where a member appoints two proxies, he shall specify the proportion of his shareholdings to be represented by each proxy.

2. Where a holder of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

3. To be valid, the proxy form shall be deposited at the Registered Office of the Company, George Kent Technology Centre, Lot 1115, Batu 15 Jalan Dengkil 47100 Puchong, Selangor Darul Ehsan not less than forty-eight (48) hours before the time appointed for holding the meeting.

Explanatory Notes on Special Business

1. Authority To Allot And Issue Shares In General Pursuant To Section 132D Of The Companies Act, 1965

The proposed Ordinary Resolution if passed will empower the Directors to issue shares of the Company up to 10% of the issued capital of the Company for the time being for such purposes as the Directors consider would be in the interest of the Company. This would avoid any delays and costs in convening a general meeting to specifically approve such an issue of shares. This authority unless revoked or varied by the Company in general meeting will expire at the next Annual General Meeting (AGM) of the Company.

The Company has not issued any new shares under this general authority which was approved at the last AGM held on 7 July 2011 and which will lapse at the conclusion of this AGM. A renewal of this general authority is being sought at this AGM under the proposed Resolution 6. The renewed mandate is to provide flexibility to the Company for any possible future fund raising activities including but not limited to placement of shares for purposes of funding future investments, working capital and/or acquisition.

2. Proposed amendments to the Company’s Articles of Association

The proposed amendments is to be in consistent with the amendment to the provisions under Chapter 7 of the Listing Requirements.

Noticeof Annual General Meeting cont’d


DIRECTORS STANDING FOR RE ELECTION/RE APPOINTMENT AS THE CASE MAY BE

Pursuant to Paragraph 8.27(2) of the Bursa Malaysia Securities Berhad Listing Requirements, Directors who are standing for re-election at the Sixty-First Annual General Meeting of the Company are as follows:-

Mr Ong Seng Pheow - Article 83 of the Articles of AssociationDato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul Bin Abdullah - Article 83 of the Articles of Association

The profile and further details of the above Directors are set out on page 17 in the Annual report. Details of any interest in securities of the Company and their attendance of Board Meetings held during the financial year ended 31 January 2012 can be found on page 120 and 20 respectively.

FOR SHAREHOLDERS’ INFORMATION

The Sixty-First Annual General Meeting of the Company will be held at the Registered Office of the Company, George Kent Technology Centre, Lot 1115, Batu 15 Jalan Dengkil 47100 Puchong, Selangor Darul Ehsan on Wednesday, 18 July 2012, at 11:00 a.m.

Details of the Sixty-First Annual General Meeting are set out in the Notice of Annual General Meeting which accompanies the Annual Report 2012 together with a Form of Proxy. They are also available on Bursa Malaysia’s website, www.bursamalaysia.com

The Company has requested Bursa Malaysia Depository in accordance with Article 57(1) of the Company’s Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act 1991 to issue a Record of Depository (ROD) as at 21 June 2012 for the purpose of determining the members to whom the Notice of Sixty-First Annual General Meeting shall be given by the Company. Only a depositor whose name appears on the ROD as at 21 June 2012 shall be given the notice of the said meeting.

The General Meeting ROD as at 13 July 2012 will determine a member who shall be entitled to attend the Sixty-First Annual General Meeting or to appoint proxy(s) to attend and/or vote on his/her behalf.

Final dividend of RM0.03 per 50 ordinary share less tax of 25% in respect of financial year ended 31 January 2012 if approved by the shareholders under Resolution 1 at the Sixty-First Annual General Meeting of the Company will be paid on 16 August 2012 to shareholders as per ROD on 2 August 2012.

StatementAccompanying the Notice of Annual General Meeting

Annual Report 2012126 Annual Report 2012126

Appendix I Referred to in the Notice of AGM

Johan Equities Sdn. Bhd.(Company No. 120585-D)

Date: 5 June 2012

The Board of DirectorsGeorge Kent (Malaysia) Berhad Lot 1115, Batu 15, Jalan Dengkil47100 PuchongSelangor Darul Ehsan

Dear Sirs,

NOTICE OF NOMINATION OF MESSRS DELOITTE & TOUCHE

Pursuant to Section 172(11) of the Companies Act, 1965, we being a shareholder of George Kent (Malaysia) Berhad, hereby give notice of our nomination of Messrs Deloitte & Touche for appointment as Auditors of the Company in place of the retiring Auditors, Messrs Ernst & Young and of our intention to propose the following resolution as an Ordinary Resolution at the forthcoming Sixty-First Annual General Meeting of the Company:-

“THAT Messrs Deloitte & Touche be and are hereby appointed as Auditors of the Company in place of the retiring Auditors, Messrs Ernst & Young and to hold office until the conclusion of the next Annual General Meeting at a remuneration to be determined by the Directors.”

Yours faithfully,JOHAN EQUITIES SDN BHD

Director

11th Floor, Wisma E&C, No. 2 Lorong Dungun Kiri, Damansara Heights 50490 Kuala Lumpur.Postal Address: P.O. Box 10436, 50714 Kuala Lumpur. Tel: 03-2521858 Fax: 03-2522812

ector


Appendix II Referred to in the Notice of AGM

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY

The amendment which are proposed to be made to the Articles of Association (“Articles”) are set out below:-

Existing Articles Proposed Amendment to the Articles Rationale

Article 2 – Interpretation

WordsNo provision

MeaningsNo provision

Article 2 – Interpretation

Words

Exempt authorised nominee

MeaningsAn exempt authorised nominee refers to an authorised nominee defined under the Central Depository Act which is exempted from compliance with the provisions of subsection 25A(1) of the Central Depositories Act.

Pursuant to Paragraph 7.21(2) of the LR

Article 72 – Proxies

A holder may appoint not more than two proxies to attend at the same meeting. Where a holder appoints two proxies, he shall specify the proportion of his shareholdings to be represented by each proxy. Where a holder of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

Article 72 – Proxies

A holder may appoint not more than two proxies to attend at the same meeting. Where a holder appoints two proxies, he shall specify the proportion of his shareholdings to be represented by each proxy. Where a holder of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

Pursuant to Paragraph 7.21(1) of the LR

Article 76 – Instrument appointing proxy to be in writing

The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or if the appointor is a corporation, either under seal or under the hand of an officer or attorney duly authorised. The Directors may, but shall not be bound to require evidence of the authority of any such attorney or officer. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(b) of the Act shall not apply to the Company. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll.

Article 76 – Instrument appointing proxy to be in writing

The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or if the appointor is a corporation, either under seal or under the hand of an officer or attorney duly authorised. The Directors may, but shall not be bound to require evidence of the authority of any such attorney or officer. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(b) of the Act shall not apply to the Company. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll. There shall be no restriction as to the qualification of the proxy. The proxy appointed to attend and vote at a meeting of the Company shall have the same right as the member to speak at the meeting.

Pursuant to Paragraph 7.21A of the LR


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I/We (Company/Passport/NRIC No. )

of

being a member/members of GEORGE KENT (MALAYSIA) BERHAD hereby appoint:-

Name Address NRIC/Passport No.Proportion of

Shareholding (%)

and/or (delete as appropriate)

Name Address NRIC/Passport No.Proportion of

Shareholding (%)

as my/our proxy/proxies to vote for me/us on my/our behalf at the Sixty-First Annual General Meeting of the Company, to be held at the Registered Office of the Company, George Kent Technology Centre, Lot 1115, Batu 15, Jalan Dengkil 47100 Puchong, Selangor Darul Ehsan on Wednesday, 18 July 2012 at 11:00 a.m. and at any adjournment thereof.

I/We direct my/our proxy/proxies to vote for or against the Resolutions to be proposed at the meeting as hereunder indicated.

RESOLUTIONS For Against

1. To approve the payment a of a final dividend

2. Re-election of Mr Ong Seng Pheow as a Director

3. Re-election of Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul Bin Abdullah as a Director

4. To approve payment of Directors’ fees

5. To appoint the Auditors and to authorise the Directors to fix their remuneration

6. Authority to Directors to allot shares

7. Proposed amendment to Articles of Associations of the Company

(Please indicate with a cross (“X”) in the appropriate box against each Resolution how you wish your proxy/proxies to vote. If this proxy form is returned without any indication as to how the proxy/proxies shall vote, the proxy/proxies will vote or abstain as he/their think fit.)

Dated this day of , 2012.

Signature/Common Seal*Strike out whichever is not desired.

Form of Proxy (Before completing the form, please refer to notes on the next page)

No. of Shares Held

CDS Account No.

AFFIXPOSTAGE

STAMP

1st Fold Here

Then Fold Here

The Company Secretary

GEORGE KENT (MALAYSIA) BERHADGeorge Kent Technology CentreLot 1115, Batu 15, Jalan Dengkil47100 PuchongSelangor Darul EhsanMALAYSIA

Notes:-

1. Vote may be given personally or by proxy/proxies (not more than two proxies) or in the case of a corporation by a representative duly authorised. Where a member appoints two proxies, he shall specify the proportion of his shareholdings to be represented by each proxy. The instrument appointing proxy/proxies shall be in writing under the hand of the appointor or his attorney or if such an appointor is a corporation under its Common Seal or the hands of its attorney. Proxy/proxies need not be a member of the Company.

2. Where a holder of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

3. The instrument appointing proxy/proxies and the power of attorney (if any) under which it is signed or an office copy or notarially certified copy thereof shall be deposited at the registered office not less than forty-eight (48) hours before the time for holding the meeting or adjourned meeting (as the case may be) at which the person named in such instrument propose to vote but no instrument (other than power of attorney under seal) appointing proxy/proxies shall be valid after the expiration of twelve months from the date of its execution

gk cover - george kent · 2018-07-14 · e-mail : [email protected] auditors ernst & young...

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