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Ann
ual R
epor
t 200
7
1
ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2007
Contents
Page
Vision & Mission 02
Chairman’s Statement 03
Our News 05
Corporate Information 06
Our Chairman and Managing Director 07
Profile of Directors 08
Statement of Corporate Governance 10
Additional Compliance Information 14
Audit Committee Report 17
Statement on Internal Control 19
Financial Statements 20
Analysis of Shareholdings 74
List of Properties 78
Notice of Annual General Meeting 79
Statement Accompanying Notice of AGM 82
Proxy Form 86
asiaEP Annual Report 2007 2
ASIAEP BHD (Company No. 253387-W)
Vision & Mission
Our Vision
To be a leading global specific community search engine and online serviceprovider in the world
Our Mission
To bridge the needs of the business community through Information &Communication Technology (ICT) by developing state of the art facilities fora thriving and profitable internet business to business (B2B) community thatis founded on a strong and trusted network of members
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ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2007
Chairman’s Statement
Tan Sri Dato’ (DR) Abdul Aziz Bin Abdul RahmanChairman
A NewExperience insearchingBusinessInformation
Tan Sri Dato’ (DR) Abdul Aziz Bin Abdul RahmanChairman
Dear Shareholders,On behalf of the Board ofDirectors, I have the pleasure ofpresenting the Annual Reportand Financial Statements ofasiaEP Berhad and its Group ofCompanies for the financialyear ended 28 February 2007.
asiaEP Annual Report 2007 4
ASIAEP BHD (Company No. 253387-W)
Chairman’s Statement (continued)
The past year has been a year of growth for us with continuous expansion of the group’s business. Forfinancial year ended 28 February 2007, the Group posted a net profit of RM5.099 million representingan increase of 67.0% from last financial year.
We have launched a new breakthrough product known as “B2B ITAH: Business Search Engine”which is a revolutionary specific community search engine with a simplified format on March 2007.B2B ITAH is set to totally change the way businesses enterprise and professionals obtain criticalinformation for the benefit of their customers and clients.
Research & Development
During the financial year ended 28 February 2007, the Group invested RM5.46 million in Research andDevelopment.
Going forward, the Group’s new on-line business models and B2B ITAH Business Search Engine are expectedto contribute positively to the performance and profitability of the asiaEP Group. With the success and positivecontribution of the Group’s online business models, the Group will continue its efforts in carrying out its keybusiness activities, namely, provision of ebusiness solutions and eMarketplace platform application for bothlocal and international enterprises and to further enhance the reach of the Group’s sales network.
Industry Outlook
Under the Ninth Malaysian Plan, the focus will be on the development of existing MSC cybercities as well as,where viable, newly identified MSC cybercities in Perak, Melaka, Johor and Sarawak. The proposed developmentis expected to bring 250 additional global multinational companies. The number of MSC-status companies isprojected to increase from 1,421 in 2005 to 4,000 by 2010, generating 100,000 jobs nationwide and 1,400intellectual properties (IPs).
The above industry outlook provides excellent opportunities for the Group to expand its business and enhancethe profitability.
Current Year Prospects
With all these positive developments, barring any unforeseen circumstances, the Board is confident that nextyear will be another successful year.
Tan Sri Dato’ (DR) Abdul Aziz Bin Abdul RahmanChairman
5
ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2007
asiaEP Annual Report 2007 6
ASIAEP BHD (Company No. 253387-W)
Registered OfficeNo. 18 & 20 Jalan TK 2/1CTaman Kinrara Seksyen 247100 Puchong SelangorMalaysiaTel : 603 - 8075 6213 (hunting line)Fax: 603 - 8070 5668
Company SecretariesMary Margret A/P V. Pelly (LS 04402)Ng Chong Teck (LS 0008866)
AuditorMonteiro & HengChartered Accountants22-1, Monteiro & Heng Chambers,Jalan Tun Sambanthan 3,50470 Kuala LumpurMalaysia
Share RegistrarSectrars Services Sdn Bhd28-1 Jalan Tun Sambathan 3Brickfields 50470 Kuala LumpurTel : 603 - 2274 6133Fax : 603 - 2274 1016
Principal BankersMalayan Banking BerhadHong Leong Bank BerhadCIMB Bank Berhad(formerly know as Bumiputra- Commerce Bank Berhad)
Affin Bank Berhad
AdviserKenanga Investment Bank Berhad(formerly know as K & N Kenanga Bhd)8th Floor, Kenanga InternationalJalan Sultan Ismail50250 Kuala LumpurMalaysiaTel : 603 - 2164 6689Fax : 603 - 2164 6690
Stock Exchange ListingMESDAQ MarketBursa Malaysia Securities Berhad
Websitewww.asiaEP.com
Corporate InformationCorporate Information
7
ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2007
Dr Tan Boon NuntManaging Director
Our Chairman and Managing Director
Tan Sri Dato’ (Dr) Abdul Aziz Bin Abdul RahmanChairman
asiaEP Annual Report 2007 8
ASIAEP BHD (Company No. 253387-W)
Tan Sri Dato’ (Dr) Abdul Aziz Bin Abdul RahmanChairman/ Independent Non-Executive DirectorMalaysian, Aged 74
Tan Sri Dato’ (Dr) Abdul Aziz Bin Abdul Rahman was appointed to the Board of the Company as the Non-ExecutiveChairman and an Independent Non-Executive Director on 8 July 2003.
A lawyer by profession with multiple doctorates obtained from University Utara Malaysia, Tan Sri who has more than 38years of experience in managing public and private corporations both locally and abroad is a well respected individualamong the business and profession fraternity. Some of the organisations which Tan Sri has been involved in previouslyinclude Malaysian Airlines System Berhad (Managing Director & CEO), Session Court (Magistrate & President), ABACUS(Chairman), International Council of the Chartered Institute of Transport (President). He also sits on the Board of UnitedChemical Industries Bhd & BTM Resources Bhd.
Tan Sri Dato’ (Dr) Abdul Aziz does not have any family relationship with any other Directors and / or substantialshareholders of the Company or any conflict of interest with the Company. He has not been convicted of any offencesin the last ten (10) years, other than traffic offences (if any).
Dr Tan Boon NuntManaging Director/ Chief Executive OfficerMalaysian, Aged 49
Dr Tan Boon Nunt was appointed to the Board of the Company in 1992. He was subsequently appointed as theManaging Director and Chief Executive Officer in 2002. He is the co-founder of the Company as well as TopclassAccess Sdn Bhd (TASB). Dr Tan achieved his doctorate in Management from Greenwich University of Australia in 2000.
He started his career as a media planner in the publication industry for more than eleven (11) years. Before foundingthe Company, he was the Managing Director of Better Living Sdn Bhd, a trading house, for five years prior to 1992. DrTan was awarded the 2002 Ernst & Young Entrepreneur of the Year Award for Information & Communication Technology.
Dr Tan does not have any family relationship with any Director and / or substantial shareholder of the Company or anyconflict of interest with the Company. He has not been convicted of any offences in the last ten (10) years, other thantraffic offences (if any).
Madam Lee Suet HongExecutive Director/ Chief Operating OfficerMalaysian, Aged 51
Madam Lee Suet Hong was appointed to the Board of the Company in 1992. She was subsequently appointed as theExecutive Director and Chief Operating Officer in 2002. She is also the co-founder of the Company as well as TASB.She graduated with a Diploma in Business Studies and Management from The London College of Business Studies in1979. She obtained her MBA, majoring in E-Marketing from the Greenwich University of Australia in 2002.
Madam Lee started her career as a Personal Assistant to the Managing Director of Atkinson Pte Ltd in London from1978 to 1979. She held senior management and administrative positions in several public listed companies beforejoining the company.
Madam Lee does not have any family relationship with any Director and / or substantial shareholders of the Companyor any conflict of interest with the Company. She has not been convicted of any offences in the last ten (10) years, otherthan trafic offences (if any).
Profile of Directors
9
ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2007
Mr. Low To FongIndependent Non-Executive DirectorMalaysian, Aged 51
Mr. Low To Fong was appointed to the Board of the Company as an Independent Non-Executive Director on 8 July2003. Mr Low is a Fellow member of the Association of Chartered Certified Accountants (ACCA), United Kingdom. Heis also a member of The Malaysian Institute of Accountants (MIA). Since graduating as an ACCA member, he hasacquired more than 12 years of post-qualifying experience in the fields of Accounting, Finance, Auditing and Banking.In the year of 1992, he resigned as the Audit Manager of a financial institution to venture into the stock broking businessand is presently attached with a local stock broking company as a licensed dealer’s representative.
Mr Low does not have any family relationship with any other Directors and / or substantial shareholders of the companyor any conflict of interest with the Company. He has not been convicted of any offences in the last ten (10) years, otherthan traffic offences (if any).
Profile Directors (continued)
asiaEP Annual Report 2007 10
ASIAEP BHD (Company No. 253387-W)
The Board of Directors acknowledges the importance of adopting high standards of corporate governance within theCompany. Good corporate governance is a fundamental part of the Company’s responsibility to protect, realize andenhance long-term shareholders’ value and the financial performance of the Company, whilst taking into account theinterests of other stakeholders.
The Statement below sets out how the Company has applied the Key Principles of the Malaysian Code on CorporateGovernance for the financial year ended 28 February 2007.
a) BOARD OF DIRECTORS
The Board of Directors consists of four (4) dedicated members, comprising of one Chairman / Independent Non-Executive Director, one CEO/Managing Director, one Executive Director, one Independent Non-Executive Director.The Company complied with the Listing Requirements of Bursa Malaysia Securities Bhd (Bursa Malaysia) for theMesdaq Market (Listing Requirements) which states that a listed company must have at least two Independentdirectors in the Board of Directors.
There is a clear division of responsibilities between the Chairman / Independent Non-Executive Directorand the Managing Director to ensure clear and definitive segregation of duties, balance of power and authority.
The Independent Non-Executive Directors are independent of management and free from any business orother relationship that could materially interfere with the exercise of their independent judgement.
i) Board Meetings
Since the Company’s previous financial year end, the Board has met six (6) times for the financial yearended 28 February 2007. The Board meetings have always gathered full attendance of its members.
The records of attendance of each Director at Board Meetings held during the financial year ended 28February 2007 are disclosed below:
Director (s) Number of Meeting(s) attended PercentageTan Sri Dato’(Dr) Abdul Aziz Bin Abdul Rahman 6 out of 6 100%Dr Tan Boon Nunt 6 out of 6 100%Madam Lee Suet Hong 6 out of 6 100%Mr. Low To Fong 6 out of 6 100%Mr. Koh Jee Kuan (resigned on 18/1/2007) 4 out of 4 100%
ii) Supply Of Information
The Directors have full and timely access to information concerning the Company. Agenda of meetingsand discussion papers are circulated prior to Board meetings to allow the Directors time to study andevaluate the matters to be discussed.
The Directors have unrestricted access to the advice and services of the Company Secretariesand senior management in the Company and may obtain independent professional advice at theCompany’s expense in order to discharge their duties effectively.
iii) The Board and Board Committees
To assist the Board in the discharge of its duties effectively, the Board has delegated specific functionsto certain Committees, namely the Nomination Committee, Remuneration Committee and AuditCommittee, each operating within its clearly defined terms of reference. The Chairman of the variousCommittees will report to the Board on the outcome of the Committee meetings.
Statement of Corporate Governance
11
ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2007
The primary function of the Nomination Committee is to identify and recommend to the Board,technically competent persons of integrity with a strong sense of professionalism to be appointed tothe Board.
The Nomination Committee will assess the suitability of an individual to be appointed to the Boardby taking into account the individual’s other commitments, resources and time available for input tothe Board before recommendation is made for the Board’s approval. The Committee shall reviewannually the required mix of skills and experience and other qualities and competencies of itsDirectors and shall review the composition, structure and size of the Board.
v) Remuneration Committee
The Remuneration Committee was established on 16 February, 2004 and its members are : Chairman: Tan Sri Dato’ (Dr) Abdul Aziz Bin Abdul Rahman (Independent Non-Executive Director) Members : MrLow To Fong (Independent Non-Executive Director) and Madam Lee Suet Hong (Executive Director)
The Committee is responsible for recommending to the Board from time to time, the remunerationframework and package of the Executive Directors of the Company in all forms to commensuratewith the respective contributions of the Executive Directors. Executive Directors are to abstain fromdeliberations and voting on the decision in respect of their own remuneration packages.
The Board as a whole decides on the remuneration of Non-Executive Directors, including the Non-Executive Chairman. The individuals concerned should abstain from discussion on their ownremuneration packages. The shareholders at the Annual General Meeting (AGM) approvethe Directors’ fees.
b) DIRECTORS’ REMUNERATION
The Directors are satisfied that the current levels of remuneration are in line with the responsibilitiesas undertaken by directors.
A summary of the remuneration of the Directors for the financial year under review, distinguishingbetween Executive and Non-Executive Directors in aggregate with categorization into appropriate
components is set out below:
Directors’ Fee Executive Non-executive Directors Total
Directors’ Fee (RM’000) - 42 42 Salaries and Other Emoluments (RM’000) 424 - 424
The number of Directors whose remuneration falls into the following brands are:-
Remuneration Range Executive Director Non Executive Director
Below RM50,000 1 2 Below RM50,0001-RM100,000 - - Below RM100,001-RM150,000 - - Below RM150,001-RM200,000 1 - Below RM200,001-RM250,000 1 -
The Board is of the view that the above disclosure, without divulging respective Directors’ individual remuneration, is sufficient.
iv) Nomination Committee
The Committee was formed on 16 February, 2004 with the following members: -Chairman: Tan Sri Dato’ (Dr) Abdul Aziz Bin Abdul Rahman (Chairman/IndependentNon-Executive Director) Members : Mr Low To Fong (Independent Non-Executive Director) and MadamLee Suet Hong (Executive Director)
asiaEP Annual Report 2007 12
ASIAEP BHD (Company No. 253387-W)
vi) Training for Directors
All the Directors have attended the Mandatory Accreditation Programme (MAP) conducted by theResearch Institute of Investment Analysts Malaysia, an affiliate of Bursa Malaysia.
The Board has assessed the training needs of the Directors and encourages the Directors to attend anyrelevant programme to further enhance their knowledge to enable them to discharge theirresponsibility more effectively.
vii) Appointment and Re-election
In accordance with the Company’s Articles of Association, all new Directors are subject to electionat the AGM following their first appointment.
In every year, one-third of the Directors or if their number is not three or a multiple of three, then thenumber nearest to one-third, shall retire by rotation from office and seek reelection at each AGM andthat each Director shall retire from office at least once in every three years and shall be eligible forreelection.
c) SHAREHOLDERS
i) Relations with Shareholders and Investors
The Company acknowledges the significance of being accountable to its shareholders and investors andas such, has maintained active communication and feedback policy from institutional investors, shareholdersand the public generally. All shareholders, including private investors, have an opportunity to participate indiscussion with the Board on matters relating to the Company’s operation and performance at the Company’sAGM. Alternatively, they may obtain the Company’s latest announcements such as quarterly financial resultsfrom the Bursa Malaysia’s website (www.bursamalaysia.com).
ii) Annual General Meeting (AGM)
The AGM is the principal forum for dialogue with public shareholders. The shareholders are encouraged toparticipate in the open question and answer sessions in the AGM in which they may raise questions on theresolutions being proposed at the meeting and the financial performance and business operation in general.
d) ACCOUNTABILITY AND AUDIT
i) Financial Reporting
The Directors have taken reasonable steps to provide a balanced and understandable assessment of theCompany’s financial performance and prospects. In this respect, the Audit Committee assists the Board withthe overseeing of the Company’s financial reporting process and the quality of the financial reporting.
ii) Statement of Directors’ in Relation to the Financial Statements
The Directors are responsible for the preparation of the Annual Audited Financial Statements which give atrue and fair view of the state of affairs of the Company and will ensure that they are presented in accordancewith the provisions of the Companies Act, 1965 and the applicable approved accounting standards inMalaysia.
In the preparation of the financial statements for the year ended 28 February 2007, the Directors are satisfiedthat the Company had used appropriate accounting policies that are consistently applied and supported byreasonable and prudent judgement and estimates.
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ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2007
iii) Internal Control
The Board recognizes the importance of internal control systems whereby shareholders’ investment and theCompany’s assets can be safeguarded. As at to date, the Board is comfortable with the current internalcontrols which are in place. The Board will improve the internal controls of the Company should the Boardbecome aware of any weaknesses.
iv) External Auditors
The Board has established a transparent relationship with the external auditors through the Audit Committee,which has been accorded with the power to communicate directly with the external auditors towards ensuringcompliance with the accounting standards and other related regulatory requirements.
v) Statement Of Compliance with the Best Practices of the Case
The Company is committed to achieve high standards of corporate governance throughout the Group and thehighest level of integrity and ethical standards in all of its business dealings.
The Board will continue to strive for full compliance with the Malaysian Code of Corporate Governance in thecoming financial year.
asiaEP Annual Report 2007 14
ASIAEP BHD (Company No. 253387-W)
1. CONFLICT OF INTEREST
None of the Directors have any family relationship with other Directors or major shareholders of the Company.
2. CONVICTIONS FOR OFFENCES
None of the Directors have been convicted for offences within the past ten (10) years other than traffic offences, ifany.
3. UTILISATION OF PROCEEDS
a. As at 28 Feb 2007, the Company has utilised approximately 91.1% of the proceeds raised from its Initial PublicOffering in January 2004.
Proposed Amt Actual Utilisation Unused Amt. RM RM % RM
Nature of expenses
Capital expenditure 4,200,000 4,200,000 100.0 0
Working Capital 5,200,000 5,200,000 100.0 0
Investment in foreign countries 5,000,000 3,400,019 68.0 1,599,981
R & D expenses 1,500,000 1,500,000 100.0 0
Listing expenses 1,300,000 1,300,000 100.0 0
Repayment of borrowings 800,000 800,000 100.0 0
18,000,000 16,400,019 91.1 1,599,981
b. Proceeds from the renounceable rights issue of 66,861,390 warrants at an issue price of RM0.01 per warrant(“Rights Issue”).
All the proceeds raised amounting to RM668,614 by the Company from the Rights Issue have been fully utilised asat the end of the 3rd quarter of the financial year ended 28 February 2007.
c. Proceeds from the private placement of first tranche 10,000,000 placement shares issued at RM0.21 per asiaEPShare allotted on 8 January 2007 have been fully utilised as at 4th quarter of the financial year ended 28 February2007.
4. SHARE BUY BACKS
During the financial year under review, the Company did not enter into any share buy-back transactions. ProposedShare Buy-Back of up to 10% ordinary share capital has been approved by the shareholders at the ExtraordinaryGeneral meeting held on 28th May 2007.
Additional Compliance Information
15
ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2007
5. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES
On 19th June 2006, the Company completed the listing of 66,681,390 Warrants issued pursuant to the Rights Issuewhich was implemented in accordance to the Deed Poll dated 3rd April 2006. Upon the expiry of the exercise period,any unexercised warrants will lapse and cease to be valid for any purpose. As at 28th Feabruary, 2007, there is a totalof 66,861,390 outstanding warrants.
During the financial year, the Company increased its ordinary shares from RM20,000,000/-to RM20,707,397/- by thecreation of 7,037,971 ordinary shares of RM0.10 each pursuant to the ESOS.
6. IMPOSITION OF SANCTIONS / PENALTIES
There were no sanctions and/or penalties imposed on the Company, directors or management by the relevantregulatory bodies during the financial year under review.
7. NON-AUDIT FEES
No non-audit fees were paid to the External Auditors, Messrs Monteiro & Heng.
8. PROFIT ESTIMATE, FORECAST OR PROJECTION
The Company did not make any release on the profit estimate, forecast or projection for the financial year.
9. PROFIT GUARANTEE
There were no material contracts entered into by the Company/or its subsidiaries involving Director’s or majorshareholders’ interest, during the financial year under review, except as disclosed in Note 36 to the FinancialStatements.
10. MATERIAL CONTRACTS
During the year, there was no profit guarantee given by the Company.
11. CONTRACTS RELATING TO LOAN
During the financial year under review, there were no contracts relating to loan by the Company involving Directorsand major shareholders.
12. REVALUATION OF LANDED PROPERTIES
The Company does not have a revaluation policy on landed properties.
13. CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES OR PRACTICES
The Group did not undertake any corporate social responsibilty activities or practices during the financial yearended 28 February 2007.
asiaEP Annual Report 2007 16
ASIAEP BHD (Company No. 253387-W)
14. AMERICAN DEPOSITORY RECEIPT (ADR) OR GLOBAL DOPOSITORY (GDR) PROGRAMME
During the financial year under review, the Company did not sponsor any ADR or GDR programmes.
15. RECURRENT RELATED PARTY TRANSACTIONS STATEMENT
During the financial year, the Company did not enter into any recurrent related party transactions of revenue or trading nature.
17
ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2007
Audit Committee ReportAudit Committee Report
COMPOSITION
Members of the Committee shall be determined by the Board of directors and shall be composed by no fewer than 3members with the majority of whom are independent directors. The Chairman of the Committee shall be an independentdirector.
The members of the Committee shall also possess the requisite qualification and experience that meet the prescribedlisting requirements of Bursa Malaysia for Mesdaq Market from time to time in force.
No Alternate Director or Chief Executive Officer shall be appointed as a member of the Audit Committee.
The audit cimmittee (“Committee”) comprises the following:
Chairman
Mr Low To Fong Independent and Non-Executive Director
Members
Tan Sri Dato (DR) Abdul Aziz Bin Abdul Rahman Independent Non-Executive dorector/chairmanMs Lee Suet Hong Executive Director
MEETINGS
The committee shall meet at least 4 times a year with 2 members in attendance to form a quorum.
AUTHORITY
The Committee is authorised by the Board to investigate any matter within its terms of reference.
The Committee shall have the resources and shall be allowed to obtain independent professional or other advice asnecessary to assist the Committee in fulfilling its responsibilities at the cost of the Company.
The Committee shall have full and unrestricted access to the Chief Executive Officer and any information pertaining tothe Company. The Committee shall also have direct communication channels with the external auditors and person(s)carrying out the internal audit function or activity. Whenever necessary, the Committee may also convene meetings withthe external auditors and to invite outsiders with relevant experience to attend its meetings, with or without the attendanceof the executive members of the Committee.
DUTIES
The duties of the Audit Committee are:-
• to report to the Board of Directors after review the following :-
(a) the effectiveness of the internal audit function (if any) ; internal control and managementinformation systems;
(b) the assistance given by the officers of the Company to the external auditor and theadequacy of the existing external audit arrangement, with particular emphasis on thescope and quality of the audit;
(c) the external auditors’ audit report and any management letter from the external auditorsto the Company and the management’s response to such letter; and
(d) the quarterly, half-yearly and year end consolidated financial statements of theCompany with both the external auditors and management; and
asiaEP Annual Report 2007 18
ASIAEP BHD (Company No. 253387-W)
(e) all area of significant financial risk and the arrangements in place to contain thoserisks to acceptable levels; and
(f) all related party transaction and potential conflict of interest situation.
• to recommend to the board the nomination, appointment or reappointment of the external auditors and any question of their resignation and termination; and
• to perform any other duties as may be agreed by the Committee and the Board of Directors.
MATERIAL CONTRACTS INVOLVING DIRECTORS AND SUBSTANTIAL SHAREHOLDERS
There were no material contracts entered into by the Company or its subsidiaries, which involved the interests of theDirectors and substantial shareholders during the financial year.
VARIATION IN RESULTS
There were no significant variations between the audited results for the financial year and the unaudited resultspreviously announced.
RECURRENT RELATED PARTY TRANSACTION
Details of Recurrent Related Party Transactions of revenue or trading nature are disclosed in the Notes to the FinancialStatements.
SUMMARY OF ACTIVITIES OF THE COMMITTEE DURING THE FINANCIAL YEAR ENDED 28 FEBRUARY 2007
During the financial year under review, the Committee convended five (5) meetings. Details of attentande are asfollows:-
Committee Members No. of meetings attended
Mr. Low To Fong 5/5Tan Sri Dato (DR) Abdul Aziz B. Abdul Rahman 5/5Ms. Lee Suet Hong 5/5
STATEMENT VERIFYING ALLOCATION OF OPTIONS
The Committee has reviewed and verified that the allocation of share options pursuant to the Employees Share OptionScheme (ESOS) for the financial year ended 28 February 2007 was made in accordance with the criteria as set out inthe By-Laws of the Company’s ESOS.
There were no options granted to any of the non-executive directors of the company.
Audit Committee Report (continued)
19
ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2007
The Board of Directors is pleased to present the Statement on Internal Control of the Group which outlines the keyelements of internal control for the year ended 28 February 2007.
RESPONSIBILITY OF THE BOARD
The Board is ultimately responsible for the Group’s system of internal control which includes financial, compliance andoperational controls of the Group. The Board also recognizes its responsibility for reviewing the adequacy and integrityof the system of internal control to safeguard shareholders’ investments and the Group’s assets.
RISK MANAGEMENT FRAMEWORK
The Executive Directors with assistance of the management are continuously identifying, evaluating and managingsignificant business risks that affecting the day-to-day operations of the Group.
The Audit Committee, on behalf of the Board, considers the effectiveness of the operation of the internal controlprocedures in the Group during the financial year. The Audit Committee reviews internal control issues identified by theexternal auditors and management and evaluates the adequacy and effectiveness of the Group’s risk managementand internal control system.
KEY ELEMENTS
The key elements of the Group’s internal control system include the following:
- There is a clearly defined delegation of responsibility to the Management and operating units to ensure properidentification of accountabilities and segregation of duties.
- Policy guidelines, procedures and authority limits are established for Executive Director and management withinthe Group in respect of day-to-day operations, acquisitions and disposal of assets.
- There are standard operating policies and procedures which are set out and communicated to all levels of theorganization.
- Regular Board and Management Meetings are held where information is provided to the Board and Managementcovering financial performance and operation.
CONCLUSION
The Board is of the opinion that based on the current level of activities, the Group’s system of internal control isadequate, and the Management will continue to take measures to strengthen the control environment.
Statement on Internal Control
asiaEP Annual Report 2007 20
ASIAEP BHD (Company No. 253387-W)
Contents Page
Directors’ Report 1 - 6
Financial statements
Balance Sheet 7
Income Statement 8
Statement of Changes in Equity 9 - 10
Cash Flow Statement 11 - 13
Notes to the Financial Statements 14 - 49
Statement by Directors 50
Statutory Declaration 51
Report of the Auditors 52 - 53
Financial Statements
REPORTS AND FINANCIAL STATEMENTSFOR THE YEAR ENDED 28TH FEBRUARY 2007
ASIAEP BHD.(Incorporated in Malaysia)
1Company No. 253387 - W
ASIAEP BHD.(Incorporated in Malaysia)
DIRECTORS' REPORT
The directors hereby submit their report together with the audited financial statements of theGroup and of the Company for the financial year ended 28th February 2007.
PRINCIPAL ACTIVITIES
The Company is principally engaged in providing e-commerce solutions and developing an e-market place for both local and international enterprises. The principal activities of itssubsidiaries are disclosed in Note 4 to the financial statements. There have been no significantchanges to the nature of these principal activities during the financial year.
RESULTS
DIVIDEND
No dividend was paid or declared by the Company since the end of the previous financial year.
The directors do not recommend the payment of any dividend in respect of the financial yearended 28th February 2007.
RESERVES AND PROVISIONS
All material transfers to and from reserves and provisions during the financial year have beendisclosed in the financial statements.
BAD AND DOUBTFUL DEBTS
Before the income statements and balance sheets of the Group and of the Company were madeout, the directors took reasonable steps to ascertain that action had been taken in relation to thewriting off of bad debts and the making of allowance for doubtful debts, and satisfied themselvesthat all known bad debts had been written off and that adequate allowance had been made fordoubtful debts.
Group CompanyRM'000 RM'000
Net profit for the year 5,099 5,261
2Company No. 253387 - W
At the date of this report, the directors are not aware of any circumstances that would render theamount written off for bad debts, or the amount of the allowance for doubtful debts, in thefinancial statements of the Group and of the Company inadequate to any substantial extent.
CURRENT ASSETS
Before the income statements and balance sheets of the Group and of the Company were madeout, the directors took reasonable steps to ensure that any current assets, other than debts, whichwere unlikely to realise in the ordinary course of business, their values as shown in theaccounting records of the Group and of the Company have been written down to an amount thatthey might be expected to realise.
At the date of this report, the directors are not aware of any circumstances that would render thevalues attributed to the current assets in the financial statements of the Group and of theCompany misleading.
VALUATION METHODS
At the date of this report, the directors are not aware of any circumstances which have arisenwhich render adherence to the existing methods of valuation of assets or liabilities of the Groupand of the Company misleading or inappropriate.
CONTINGENT AND OTHER LIABILITIES
At the date of this report, there does not exist:-
(i) any charge on the assets of the Group and of the Company that has arisen since the end ofthe financial year which secures the liabilities of any other person, or
(ii) any contingent liability in respect of the Group and of the Company that has arisen sincethe end of the financial year.
No contingent liability or other liability of the Group and of the Company has becomeenforceable, or is likely to become enforceable within the period of twelve months after the endof the financial year which, in the opinion of the directors, will or may substantially affect theability of the Group and of the Company to meet their obligations as and when they fall due.
CHANGE OF CIRCUMSTANCES
At the date of this report, the directors are not aware of any circumstances, not otherwise dealtwith in this report or the financial statements of the Group and of the Company that would renderany amount stated in the financial statements misleading.
ITEMS OF AN UNUSUAL NATURE
The results of the operations of the Group and of the Company for the financial year were not, inthe opinion of the directors, substantially affected by any item, transaction or event of a materialand unusual nature.
3Company No. 253387 - W
There has not arisen in the interval between the end of the financial year and the date of thisreport any item, transaction or event of a material and unusual nature likely, in the opinion of thedirectors, to affect substantially the results of the operations of the Group and of the Companyfor the financial year in which this report is made.
ISSUE OF SHARES, DEBENTURES AND WARRANTS
During the financial year, the issued and paid-up share capital of the Company was increasedfrom 200,000,000 ordinary shares of RM0.10 each to 217,073,971 ordinary shares of RM0.10each by :-
(a) the issue of 7,073,971 new ordinary shares of RM0.10 each at RM0.135 per share for cashby virtue of the exercise of options pursuant to the Company’s Employees’ Share OptionScheme.
(b) way of private placement of 10,000,000 new ordinary shares of RM0.10 for cash each at anissue price of RM0.21 per share.
The new ordinary shares issued during the financial year ranked pari passu in all respects withthe existing ordinary shares of the Company.
There was no change in the authorised share capital of the Company during the financial year.
The Company has not issued any debentures during the financial year.
ISSUE OF WARRANTS
During the financial year, the Company issued 66,861,390 new warrants, for cash, at an issueprice of RM0.01 per warrant. Details of the warrant are set out in Note 15 to the financialstatements.
EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”)
No options were granted to any person to take up unissued shares or debentures of the Companyduring the year apart from the issue of options pursuant to the ESOS.
At an extraordinary general meeting held on 23rd August 2004, the Company’s shareholdersapproved the establishment of an ESOS of up to 15% of the issued share capital of the Company,to eligible Executives Directors and employees of the Group.
The options offered to take up unissued ordinary shares of RM0.10 each and the option prices areas follows:-
Exericse Balance at Balance atGrant Expiry price 1.3.2006 Granted Lapsed Exercised 28.2.2007Date Date RM/Share
4.02.2005 3.05.2006 0.220 2,589,500 - (2,589,500) - - 22.12.2005 21.02.2007 0.135 12,124,306 - (5,050,335) (7,073,971) - 22.12.2005 26.08.2007 0.135 10,352,812 - (358,062) - 9,994,750
25,066,618 - (7,997,897) (7,073,971) 9,994,750
Number of offer over ordinary shares of RM0.10 each
4Company No. 253387 - W
In respect of the offer of the Company’s ESOS, the Company has been granted an exemption bythe Companies Commission of Malaysia from having to disclose the names of options holderswho have been granted options in aggregate under 1,500,000 ordinary shares. The names of theoption holders and the number of options granted which are in aggregate over 1,500,000 ordinaryshares are set out below:-
Number of share options over ordinary shares ofRM0.10 each
Name ofOption Holder
ExercisePrice/ShareRM
ExpiryDate
At1.3.2006 Exercised Lapsed
At28.2.2007
Dr. Tan Boon Nunt 0.220 17.5.2006 2,000,000 1,000,000 1,000,000 -0.135 26.8.2007 575,000 - - 575,000
Lee Suet Hong 0.220 17.5.2006 2,000,00 1,000,000 1,000,000 -0.135 26.8.2007 575,000 - - 575,000
Details of the ESOS are set out in Note 13 to the financial statements.
The persons to whom the options have been granted have no right to participate by virtue of theoptions in any share issue of any other companies.
DIRECTORS
The directors in office since the date of the last report are:-
YB Tan Sri Dato’ (DR) Abdul Aziz Bin Abdul RahmanDr. Tan Boon NuntLee Suet HongLow To FongKoh Jee Kuan - resigned on 18.1.2007
DIRECTORS’ INTERESTS
According to the Register of Directors’ Shareholdings, the interests of those directors who heldoffice at the end of the financial year in shares, options over ordinary shares and warrants in theCompany during the financial year are as follows:-
Number of ordinary shares of RM0.10 each
At At1.3.2006 Bought Sold 28.2.2007
Shareholdings in which directors have interests in the CompanyYB Tan Sri Dato’(Dr) Abdul Aziz Bin Abdul Rahman 100,000 - - 100,000Dr. Tan Boon Nunt 18,787,260 - 4,050,000 14,737,260Lee Suet Hong 16,898,760 - 1,500,000 15,398,760
5Company No. 253387 - W
Number of ordinary shares of RM0.10 each
At At1.3.2006 Bought Sold 28.2.2007
Shareholdings in which directors have deemed interests through Topclass Access Sdn. Bhd.Dr. Tan Boon Nunt 23,152,509 - 4,590,000 18,562,509Lee Suet Hong 23,152,509 - 4,590,000 18,562,509
Options over ordinary shares of RM1/- eachAt
1.3.2006 Granted Exercised LapsedAt
28.2.2007
Dr. Tan Boon Nunt 2,575,000 - 1,000,000 1,000,000 575,000Lee Suet Hong 2,575,000 - 1,000,000 1,000,000 575,000
Warrants 2006/2011At
1.3.2006 Bought SoldAt
28.2.2007
Dr. Tan Boon Nunt - 3,640,116 - 3,640,116Lee Suet Hong - 2,944,983 - 2,944,983
Other than as disclosed above, according to the Register of Directors’ Shareholdings, thedirectors in the office at the end of the financial year did not hold any interest in shares, optionsover ordinary shares and warrants of the Company or shares of its related corporations during thefinancial year.
DIRECTORS' BENEFITS
Since the end of the previous financial year, no director of the Company has received or becomeentitled to receive a benefit (other than as disclosed in the financial statements) by reason of acontract made by the Company or a related corporation with the director or with a firm of whichthe director is a member, or with a company in which the director has a substantial financialinterest.
Neither during nor at the end of the financial year was the Company or any of its relatedcorporations a party to any arrangement, whose object was to enable the directors to acquirebenefits by means of the acquisition of shares in, or debentures of, the Company or any otherbody corporate apart from the director’s entitlements to subscribe for new ordinary shares in theCompany under the ESOS of the Company.
SIGNIFICANT EVENTS DURING AND AFTER THE FINANCIAL YEAR
Significant events during and after the financial year are disclosed in Note 23 to the financialstatements.
6Company No. 253387 - W
AUDITORS
The auditors, Messrs Monteiro & Heng, have expressed their willingness to continue in office.
On behalf of the Board,
……………………………..DR. TAN BOON NUNTDirector
……………………………..LEE SUET HONGDirector
Kuala Lumpur
Date : 25th June 2007
7Company No. 253387 - W
ASIAEP BHD.(Incorporated in Malaysia)
The accompanying notes form an integral part of these financial statements.
BALANCE SHEETS AS AT 28TH FEBRUARY 2007
2007 2006 2007 2006Note RM'000 RM'000 RM'000 RM'000
Non-current assetsProperty, plant and equipment 3 20,177 11,284 3,257 11,165 Investment in subsidiaries 4 - - 1,999 1,999 Intangible assets 5 26,094 21,760 14,895 20,950
46,271 33,044 20,151 34,114
Current assetsTrade receivables 6 4,973 8,601 4,973 8,601 Other receivables, deposits and prepayments 7 147 339 62 317 Amounts owing by subsidiaries 8 - - 27,270 915 Short term investments 9 - 1,646 - 1,646 Cash and bank balances 5,318 4,639 4,798 2,973
10,438 15,225 37,103 14,452
Less:Current liabilitiesTrade payables 10 24 24 24 24 Other payables and accruals 11 247 551 237 547 Hire purchase liabilities 12 39 37 39 37 Tax payable 2 51 2 51
312 663 302 659 Net current assets 10,126 14,562 36,801 13,793
Less: Non-current liabilitiesHire purchase liabilities 12 67 109 67 109 Net assets 56,330 47,497 56,885 47,798
Capital and reserves attributable to equity holders of the CompanyShare capital 13 21,707 20,000 21,707 20,000 Reserves 14 34,623 27,497 35,178 27,798
56,330 47,497 56,885 47,798 Minority interest - - - - Total equity 56,330 47,497 56,885 47,798
Group Company
8Company No. 253387 - W
ASIAEP BHD.(Incorporated in Malaysia)
The accompanying notes form an integral part of these financial statements.
INCOME STATEMENTSFOR THE YEAR ENDED 28TH FEBRUARY 2007
2007 2006 2007 2006Note RM'000 RM'000 RM'000 RM'000
REVENUE 16 11,069 10,748 11,069 10,748
Cost of services (1,196) (1,818) (1,196) (1,818) GROSS PROFIT 9,873 8,930 9,873 8,930
Other operating income 36 133 29 130 Other operating expenses (130) - (130) - Administrative expenses (4,686) (6,029) (4,517) (5,875) Finance cost- hire purchase interest (8) (14) (8) (14) PROFIT BEFORE TAXATION 17 5,085 3,020 5,247 3,171
Taxation 18 14 (71) 14 (71) NET PROFIT FOR THE YEAR 5,099 2,949 5,261 3,100
Attributable to:Equity holders of the Company 5,099 2,949 5,261 3,100 Minority interest - - - -
Net profit for the year 5,099 2,949 5,261 3,100
Earnings per share attributable to ordinary equity holders of the Company: 19 Basic (sen) 2.53 1.47
Diluted (sen) 2.31 1.47
Group Company
Company No. 253387 - W
ASIAEP BHD.(Incorporated in Malaysia)
STATEMENTS OF CHANGES IN EQUITYFOR THE YEAR ENDED 28TH FEBRUARY 2007
ShareShare ESOS Translation Warrant Premium Minority Total
Note Capital Reserve Reserve Reserve Reserve Total Interest EquityGroup RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
At 1st March 2005 20,000 - - - 14,462 10,001 44,463 - 44,463 Exchange differences - - (20) - - - (20) - (20) Net profit for the year - - - - - 3,054 3,054 - 3,054 Effects of adopting FRS 2 25 - 105 - - - (105) - - -
- 105 - - - 2,949 3,054 - 3,054
At 28th February 2006 (as restated) 20,000 105 (20) - 14,462 12,950 47,497 - 47,497 Issue of shares- private placements 1,000 - - - 1,100 - 2,100 - 2,100 - exercised of options 707 218 - - 430 - 1,355 - 1,355 - options lapsed - (113) - - - 113 - - - - share issue expense - - - - (75) - (75) - (75) Issue of warrants- renounceable rights issue - - - 668 - - 668 - 668 - warrants issue costs - - - (222) - - (222) - (222) Exchange differences - - (92) - - - (92) - (92) Net profit for the year - - - - - 5,099 5,099 - 5,099
At 28th February 2007 21,707 210 (112) 446 15,917 18,162 56,330 - 56,330
RM'000Profits
Attributable to equity holders of the Company
Accumulated
Non-distributable Distributable
9
Company No. 253387 - W
STATEMENTS OF CHANGES IN EQUITYFOR THE YEAR ENDED 28TH FEBRUARY 2007 (Continued)
ShareShare ESOS Translation Warrant Premium
Capital Reserve Reserve Reserve Reserve TotalCompany Note RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
At 1st March 2005 20,000 - - - 14,462 10,131 44,593
Net profit for the year - - - - - 3,205 3,205 Effects of adopting FRS 2 25 - 105 - - - (105) -
- 105 - - - 3,100 3,205
At 28th February 2006 (as restated) 20,000 105 - - 14,462 13,231 47,798 Issue of shares- private placements 1,000 - - - 1,100 - 2,100 - exrcised of options 707 218 - - 430 - 1,355 - options lapsed - (113) - - - 113 - - share issue expense - - - - (75) - (75) Issue of warrants- renounceable right issue - - - 668 - - 668 - warrants issue costs - - - (222) - - (222) Net profit for the year - - - - - 5,261 5,261
At 28th February 2007 21,707 210 - 446 15,917 18,605 56,885
RM'000Profits
Non-distributable Distributable
Accumulated
10
11Company No. 253387 - W
ASIAEP BHD.(Incorporated in Malaysia)
CASH FLOW STATEMENTSFOR THE YEAR ENDED 28TH FEBRUARY 2007
2007 2006 2007 2006RM'000 RM'000 RM'000 RM'000
CASH FLOWS FROM OPERATING ACTIVITIES: Net profit for the year 5,099 2,949 5,261 3,100
Adjustments for: Amortisation - intellectual property 771 698 771 698 - development costs 350 350 350 350 ESOS expenses 399 105 399 105 Currency realignment 52 (20) - - Goodwill written-off - 5 - - Interest expense 8 14 8 14 Unrealised loss on foreign exchange - - - 47 Interest income (35) (129) (28) (126) Depreciation 188 1,053 163 1,049 Loss/(gain) on disposal property, plant and equipment 3 (4) 3 (4) Taxation (14) 71 (14) 71
6,821 5,092 6,913 5,304 Changes In Working Capital:
Receivables 3,820 (3,148) 3,883 (3,126) Payables (304) 499 (310) 495 Development costs paid (1,896) (2,493) (1,016) (1,683) Tax paid (34) (20) (35) (20)
Net Operating Cash Flow 8,407 (70) 9,435 970
CASH FLOWS FROM INVESTING ACTIVITIES:
+ Additional investment in subsidaries - - - (1,480) Acquisition of subsidiaries - - - (5) Purchase of property, plant and equipment (12,700) (4,553) (8,766) (4,430) Net cash outflow on acquisition of a subsidiary** - (5) - - Withdrawal of short term funds - 7,698 - 7,698 Interest received 35 129 28 126 Proceeds from disposal of property, plant and equipment - 4 - 4 Net Investing Cash Flow (12,665) 3,273 (8,738) 1,913
Group Company
12Company No. 253387 - W
**ANALYSIS OF ACQUISITION OF A SUBSIDIARY
2007
There was no acquisition during the financial year.
2006
On 17th November 2005, the company acquired 100% equity interest in asiaEP Hong Kong Ltd.for a consideration of RM5,343/-. The fair value of the assets acquired and the liabilities assumedare as follows:-
+ RM6/-
RM'000AssetCash in hand - #Net asset acquired -
Goodwill on consolidation 5
Purchase consideration satisfied in cash (5) Net cash from subsidiary acquired - Net cash outflow from acquisition of a subsidiary (5)
# RM1/-
CASH FLOW STATEMENTSFOR THE YEAR ENDED 28TH FEBRUARY 2007 (Continued)
2007 2006 2007 2006RM'000 RM'000 RM'000 RM'000
CASH FLOWS FROM FINANCING ACTIVITIES: Interest paid (8) (14) (8) (14) Payment of hire purchase liabilities (40) (32) (40) (32) Advances to subsidiaries - - (3,896) (832) Proceeds from issuance of shares 2,980 - 2,980 - Proceeds from issuance of warrants 446 - 446 -
Net Financing Cash Flow 3,378 (46) (518) (878)
NET CHANGE IN CASH AND CASH EQUIVALENTS (880) 3,157 179 2,005 EFFECT ON EXCHANGE RATE CHANGES ON OPENING CASH (87) - - - CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 6,285 3,128 4,619 2,614
CASH AND CASH EQUIVALENTS AT END OF THE YEAR 5,318 6,285 4,798 4,619
ANALYSIS OF CASH AND CASH EQUIVALENTS: Short term investments - 1,646 - 1,646 Cash and bank balances 5,318 4,639 4,798 2,973
5,318 6,285 4,798 4,619
Group Company
13Company No. 253387 - W
CASH FLOW STATEMENTSFOR THE YEAR ENDED 31ST DECEMBER 2006 (Continued)
**ANALYSIS OF ACQUISITION OF A SUBSIDIARY (Continued)
2006
The effective date of acquisition was 17th November 2005. The effect of this acquisition on thefinancial results of the Group during the year was as follows:-
The effect of this acquisition on the financial position on 28th February 2006 was as follows:-
The accompanying notes form an integral part of these financial statements.
RM'000
Revenue - Administrative expenses (92) Decrease in group profit (92)
RM'000Non-current assetsProperty, plant and equipment 118 Development costs 810
Current assetsOther receivables 22 Cash and bank balances 1,154
1,176 Current LiabilitiesOther payables 4 Amount owing to holding company 753
757 Net Current Assets 419 Increase in Group assets 1,347
14Company No. 253387 - W
ASIAEP BHD.(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
The Company is principally engaged in providing e-commerce solutions and developing ane-market place for both local and international enterprises. The principal activities of itssubsidiaries are disclosed in Note 4 to the financial statements. There have been nosignificant changes to the nature of these principal activities during the financial year.
The Company is a public limited liability company, incorporated and domiciled in Malaysia,and listed on the MESDAQ Market of Bursa Malaysia Securities Berhad.
The registered office and the principal place of business of the Company are located at No.18 & 20, Jalan TK 2/1C, Taman Kinrara Seksyen 2, 47100 Puchong, Selangor Darul Ehsan.
The financial statements are expressed in Ringgit Malaysia and all values are rounded to thenearest thousand (RM’000) except when otherwise indicated.
The financial statements were authorised for issue by the Board of Directors in accordancewith a resolution of the directors on 25th June 2007.
2. SUMMARY OF ACCOUNTING POLICIES
2.1 Basis of Preparation
The financial statements of the Group and of the Company have been prepared under thehistorical cost convention, unless otherwise stated in the individual policy statements setout below, and comply with the provisions of the Companies Act, 1965 and the MalaysianAccounting Standards Board (“MASB”) Approved Accounting Standards for EntitiesOther Than Private Entities.
At the beginning of the current financial year, the Group and the Company had adoptednew and revised Financial Reporting Standards (“FRSs”) issued by the MASB which aremandatory for financial periods beginning on or after 1st January 2006 as described fullyin Note 2.2 to the financial statements.
The preparation of financial statements in conformity with the MASB ApprovedAccounting Standards in Malaysia for Entities Other Than Private Entities requires the useof certain accounting estimates and assumptions that affect the reported amounts of assetsand liabilities and disclosure of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenue and expenses during the reported financialyear. It also requires directors to exercise their judgments in the process of applying theGroup’s and the Company’s accounting policies. Although these estimates and judgmentsare based on the directors’ best knowledge of current events and actions, actual results maydiffer.
15Company No. 253387 - W
2. SUMMARY ACCOUNTING POLICIES (Continued)
2.1 Basis of Preparation (Continued)
The areas involving a higher degree of judgement or complexity, or areas whereassumptions and estimates are significant to the financial statements, are disclosed in Note2.4 to the financial statements.
2.2 Changes in Accounting Policies and Effects Arising From Adoption of New andRevised FRSs
On 1st January 2006, the Group and the Company adopted the following new and revisedFRSs mandatory for financial periods beginning on or after 1st January 2006:-
FRS 2 Share-based PaymentFRS 3 Business CombinationsFRS 5 Non-current Assets Held for Sale and Discontinued OperationsFRS 101 Presentation of Financial StatementsFRS 102 InventoriesFRS 108 Accounting Policies, Changes in Estimates and ErrorsFRS 110 Events after the Balance Sheet DateFRS 116 Property, Plant and EquipmentFRS 121 The Effects of Changes in Foreign Exchange RatesFRS 127 Consolidated and Separate Financial StatementsFRS 128 Investment in AssociatesFRS 131 Interests in Joint VenturesFRS 132 Financial Instruments : Disclosure and PresentationFRS 133 Earnings Per ShareFRS 136 Impairment of AssetsFRS 138 Intangible AssetsFRS 140 Investment Property
The Group applied the above FRSs retrospectively or prospectively as allowed by therespective FRSs. Certain comparative figures have been restated or reclassified to reflectthe relevant adjustments under retrospective application and are disclosed in Note 25 to thefinancial statements.
The Group and the Company have not early adopted the following new and revised FRSseffective for financial periods beginning on or after 1st October 2006:-
• FRS 117 Leases• FRS 124 Related Party Disclosures
The Group and the Company have also not early adopted the deferred FRS 139 : FinancialInstruments : Recognition and Measurement and; the following new FRS and amendmentthat are mandatory for financial periods beginning on or after 1st January 2007 which notrelevant for the Group’s operations:-
• FRS 6 : Exploration for and Evaluation of Mineral Resources• Amendment of FRS 1192004 : Employee Benefits – Actuarial Gains and Losses,
Group Plans and Disclosures
16Company No. 253387 - W
2. SUMMARY ACCOUNTING POLICIES (Continued)
2.2 Changes in Accounting Policies and Effects Arising From Adoption of New andRevised FRSs (Continued)
The principal effects for the adoption of the new and revised FRSs are as follows:-
(a) FRS 2 : Share-Based Payment
The adoption of FRS 2 has resulted in a change in accounting policy of share optionsgranted by the Company to employees of the Company and of its subsidiaries. FRS2 requires an entity to recognise share-based payment transactions in its financialstatements, including transactions with employees or other parties to be settled incash, other assets, or equity instruments of the entity.
Prior to 1st January 2006, no compensation expense was recognised in the incomestatement for share options granted. With the adoption of FRS 2, the compensationexpense relating to share options is recognised in the income statement over thevesting periods of the grants with a corresponding increase in equity. The totalamount to be recognised as compensation expense is determined by reference to thefair value of the share options at the date of the grant and the number of shareoptions to be vested by vesting date.
The Group has applied FRS 2 in accordance with its transitional provisions whichallow this change in accounting policy to be applied to share options that weregranted after 31st December 2004 but had not yet vested on 1st January 2006. Theapplication of the new accounting policy has been applied retrospectively. Theeffect on the Group and the Company’s financial statements for the current and prioryears are set out in Note 25 to the financial statements.
(b) FRS 3 : Business Combination
Cost of investment
Previously, where shares were issued as cost of a business combination, themeasurement of the shares issued were that valued by independent advisers andagreed upon by the parties to the acquisition. Under FRS 3, fair value of the sharesat the date of exchange were used instead.
The Group has, as provided by FRS 3, applied this FRS prospectively. Accordingly,business combinations entered into prior to the effective date have not been restatedto comply with this FRS. There is no new business combination for which theagreement date is on or after 1st January 2006.
Goodwill
The adoption of FRS 3 resulted in a change in the accounting policy for goodwillprospectively from 1st March 2006. Until 28th February 2006, goodwill was writtenoff to the income statement in the year of business combination. In accordance withthe provisions of FRS 3, the Group ceased to write off the goodwill on consolidationin the year of acquisition. As more fully described in Note 2.3(c)(i) to the financialstatements, goodwill is carried at cost less accumulated impairment losses and istested for impairment annually or more frequently if events or changes incircumstances indicate it might be impaired.
17Company No. 253387 - W
2. SUMMARY ACCOUNTING POLICIES (Continued)
2.2 Changes in Accounting Policies and Effects Arising From Adoption of New andRevised FRSs (Continued)
(b) FRS 3 : Business Combination (Continued)
Goodwill (Continued)
Under the FRS 3, any excess of the Group’s interest in the net fair value ofacquirees’ identifiable assets, liabilities and contingent liabilities over cost ofacquisitions (previously referred to as “negative goodwill” or “reserve onconsolidation”), after reassessment, is now recognised immediately in incomestatement.
(c) FRS 101 : Presentation of Financial Statements
The adoption of the revised FRS 101 has affected the presentation of minorityinterest and other disclosures. In the consolidated balance sheet, minority interestsare now presented within total equity. In the consolidated income statement,minority interests are presented as an allocation of the total profit or loss of theperiod. A similar requirement is also applicable to the statement of changes inequity.
FRS 101 also requires disclosure, on the face of the statement of changes in equity,total recognised income and expense for the period, showing separately the amountsattributable to equity holders of the parent and to minority interest. The current yearpresentation of the Group’s financial statements is based on the revised requirementsFRS 101.
2.3 Significant Accounting Policies
(a) Subsidiaries and Basis of Consolidation
The consolidated financial statements include the financial statements of theCompany and its subsidiaries made up to the end of the financial year. The financialstatements of the parent and its subsidiaries are all drawn up to the same reportingdate, except as indicated in Note 4 to the financial statements.
Subsidiaries are entities in which the Group has the power to exercise control overthe financial and operating policies so as to obtain benefits from their activities,generally accompanying a shareholding of more than one half of the voting rights.The existence and effect of potential voting rights that are currently exercisable orconvertible are considered when assessing whether the Group has such power overanother entity.
Subsidiaries are consolidated using the purchase method of accounting. Under thepurchase method of accounting, subsidiaries are fully consolidated from the datecontrol is transferred to the Group and are de-consolidated from the date that controlceases. The cost of an acquisition is measured as the fair value of the assets given,equity instruments issued and liabilities incurred or assumed at the date of exchange,plus costs directly attributable to the acquisition.
18Company No. 253387 - W
2. SUMMARY ACCOUNTING POLICIES (Continued)
2.3 Significant Accounting Policies (Continued)
(a) Subsidiaries and Basis of Consolidation (Continued)
Identifiable assets acquired and liabilities and contingent liabilities assumed in abusiness combination are measured initially at their fair values at the date ofacquisition, irrespective of the extent of any minority interest. The excess of the costof the acquisition over the net fair value of the Group’s identifiable assets acquired atthe date of acquisition is reflected as goodwill. See the accounting policies Note2.3(c)(i) on goodwill. If the cost of acquisition is less than the fair value of the netassets of the subsidiary acquired, the difference is recognised directly in the incomestatement.
Intra-group transactions, balances and resulting unrealised gains on transactionswithin the Group are eliminated in full on consolidation and the consolidatedfinancial statements reflect external transactions only. Unrealised losses resultingfrom intra-group transactions are also eliminated on consolidation unless costscannot be recovered. When necessary, adjustments are made to the financialstatements of the subsidiaries to ensure consistency of accounting policies with thoseadopted by the Group.
The gain or loss on disposal of a subsidiary is the difference between net disposalproceeds and the Group’s share of its net assets as of the date of disposal includingthe cumulative amount of any exchange differences that relate to the subsidiary isrecognised in the consolidated income statements.
(b) Property, Plant and Equipment and Depreciation
Property, plant and equipment are stated at cost less accumulated depreciation andimpairment losses, if any. Cost includes expenditure that is directly attributable tothe acquisition of the asset. When significant parts of an item of property, plant andequipment have different useful lives, they are accounted for as separate items ofproperty, plant and equipment.
The cost of replacing part of an item of property, plant and equipment is recognisedin the carrying amount of the item if it is probable that the future economic benefitsembodied within the part will flow to the Group and its cost can be measuredreliably. The costs of the day-to-day servicing of property, plant and equipment arerecognised in the financial statements as incurred.
Depreciation is calculated to write off the cost on the straight line basis over theexpected useful lives of the assets concerned. The principal annual rates used forthis purpose are as follows:-
Leasehold buildings 2%Office equipment 10%Motor vehicles 20%Computer equipment 10%Renovation 20%Furniture and fittings 10%
Leasehold land is amortised over the lease term of 99 years.
19Company No. 253387 - W
2. SUMMARY ACCOUNTING POLICIES (Continued)
2.3 Significant Accounting Policies (Continued)
(b) Property, Plant and Equipment and Depreciation (Continued)
The residual values, useful lives and depreciation method of assets are reviewed, andadjusted if appropriate at each balance sheet date to ensure that the amount, methodand period of depreciation are consistent with previous estimates and the expectedpattern of consumption of the future economic benefits embodied in these items ofproperty, plant and equipment.
Fully depreciated assets are retained in the accounts until the assets are no longer inuse.
At each balance sheet date, the Group assesses whether there is any indication ofimpairment. If such indications exist, an analysis is performed to assess whether thecarrying amount of the asset is fully recoverable. A write down is made if thecarrying amount exceeds the recoverable amount. See accounting policy Note 2.3(k)on impairment of assets.
An item of property, plant and equipment is recognised upon disposal or when nofuture economic benefits are expected from its use or disposal. Any gain or lossarising on derecognition of the asset is included in the income statement in the yearthe asset is derecognised.
(c) Intangible Assets
(i) Goodwill on consolidation
Goodwill represents the excess of the cost of business combination over thefair value of the Group’s share of the identifiable net assets at the date ofacquisition.
Prior to 1st March 2006, goodwill arising on consolidation is fully written offagainst profit before taxation in the year of acquisition.
During the financial year, following the adoption of FRS 3, the Group ceasedto write off the goodwill on consolidation in the year of acquisition. Goodwillis tested annually for impairment and carried at cost less accumulatedimpairment losses. Impairment losses on goodwill are not reversed. Gainsand losses on the disposal of an entity include the carrying amount of goodwillrelating to the entity sold.
Goodwill is allocated to cash-generating units for purpose of impairmenttesting. The allocation is made to those cash-generating units or groups ofcash-generating units that are expected to benefit from the synergies of thebusiness combination in which the goodwill arose. See accounting policyNote 2.3(k) on impairment of assets.
20Company No. 253387 - W
2. SUMMARY ACCOUNTING POLICIES (Continued)
2.3 Significant Accounting Policies (Continued)
(c) Intangible Assets (Continued)
(ii) Research and development costs
All research costs undertaken with the prospect of gaining new scientific ortechnical knowledge and understanding are recognised in the income statementas incurred.
Expenditure on development activities, whereby research findings are appliedto a plan or design for the production of new or substantively improvedproducts and processes, is capitalised and deferred only when the Group candemonstrate the technical feasibility of completing the intangible asset so thatit will be available for use or sale, its intention to complete and its ability touse or sell the asset, how the asset will generate future economic benefits, theavailability of resources to complete the project and the ability to measurereliably the expenditure during the development. Product developmentexpenditure which does not meet these criteria is expensed when incurred.The expenditure capitalised includes cost of materials, direct labour and anappropriate proportion of overheads. Other development expenditure isrecognised in the income statement as an expense as incurred.
Capitalised development costs, considered to have finite useful lives, are statedat cost less any impairment losses and are amortised using the straight linebasis over the commercial lives of the underlying products, not exceeding aperiod of 5 years.
Impairment is assessed whenever there is an indication of impairment and theamortisation period and method are also reviewed at least at each balance sheetdate.
(iii) Intellectual property
Intellectual property consists of the exclusive rights of an online platformsystem, including the intellectual property trademarks, copyright, sourceprogrammes and associated documentation. This expenditure is capitalised asit is able to generate future economic benefits to the Group.
The intellectual property is amortised and recognised as an expense based onthe forecasted income stream so as to reflect the pattern in which the asset’seconomics benefits are consumed by the Group over fifteen years.
(d) Investments
Investments in subsidiaries are stated at cost less impairment losses, if any. Wherethere is an indication of impairment exists, the carrying amount of the investment isreviewed, and if found to be in excess of recoverable amount, is written downimmediately to its recoverable amount. The policy of the recognition andmeasurement of impairment losses is in accordance with Note 2.3(k) to the financialstatements.
21Company No. 253387 - W
2. SUMMARY ACCOUNTING POLICIES (Continued)
2.3 Significant Accounting Policies (Continued)
(d) Investments (Continued)
On disposal of an investment, the difference between net disposal proceeds and itscarrying amount is charged or credited to the income statement.
(e) Receivables
Receivables are carried at anticipated realisable values. Bad debts are written offwhen identified. An estimate is made for doubtful debts based on a review of alloutstanding amounts as at the balance sheet date.
(f) Payables
Payables are stated at cost which is the fair value of the consideration to be paid in thefuture, whether or not billed to the Group.
(g) Taxation
The tax expense in the income statement represents the aggregate amount of currenttax and deferred tax. Current tax is the expected amount of income taxes payable inrespect of the taxable profit for the year and is measured using the tax rates that havebeen enacted at the balance sheet date.
Deferred tax is recognised, using the liability method, on temporary differences at thebalance sheet date between the tax bases of assets and liabilities and their carryingamounts in the financial statements. In principle, deferred tax liabilities are recognisedfor all taxable temporary differences and deferred tax assets are recognised for alldeductible temporary differences, unused tax losses and unused tax credits to theextent that it is probable that taxable profit will be available against which thedeductible temporary differences, unused tax losses and unused tax credit can beutilised. Deferred tax is not recognised if the temporary difference arises formgoodwill or negative goodwill or from the initial recognition of an asset or liability ina transaction which is not a business combination and at time of the transaction,affects neither accounting profit nor taxable profit.
Deferred tax is measured at the tax rates that are expected to apply in the period whenthe asset is realised or the liability is settled, based on tax rates that have been enactedor substantively enacted at the balance sheet date. Deferred tax is recognised in theincome statement, except when it arises from a transaction which is recogniseddirectly in equity, in which case the deferred tax is also charged or credited directly inequity or when it arises from a business combination that is an acquisition, in whichcase the deferred tax is included in the resulting goodwill or negative goodwill.
22Company No. 253387 - W
2. SUMMARY ACCOUNTING POLICIES (Continued)
2.3 Significant Accounting Policies (Continued)
(h) Foreign Currencies
The individual financial statements of each entity in the Group are measured using thecurrency of the primary economic environment in which the entity operates (“thefunctional currency”). The financial statements are presented in Ringgit Malaysia,which is the Group’s functional currency and presentation currency.
(i) Foreign currency translation
Transactions in foreign currencies are translated into Ringgit Malaysia at ratesof exchange ruling at transaction dates. Monetary assets and liabilitiesdenominated in foreign currencies at the balance sheet date are translated intoRinggit Malaysia at the foreign exchange rates ruling at that date. Exchangedifferences arising from the settlement of foreign currency transactions andfrom the translation of foreign currency monetary assets and liabilities areincluded in the income statement.
Non-monetary items are measured in term of historical cost in a foreigncurrency or translated using the exchange rates as at the date of the initialtransaction. Non-monetary items measured as fair value in foreign currencyare translated using the exchange rates at the date when the fair value wasdetermined.
(ii) Financial statement of foreign operation
The Group’s foreign entities are those operations that are not an integral partof the operations of the Group. Income statements of foreign entities aretranslated into Ringgit Malaysia at average exchange rates for the financialyear and the balance sheets are translated at exchange rates ruling at thebalance sheet date. Exchange differences arising from the retranslation of thenet investment in foreign entities are taken up in Exchange TranslationReserve in shareholders’ equity. On disposal of the foreign entity, suchtranslation differences are recognised in the income statement as part of thegain or loss on disposal.
(i) Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits willflow to the Group and the revenue can be reliably measured. The following specificrecognition criteria must also be met before revenue is recognised.
Sales of Goods and Services Rendered
Revenue is measured at the fair value of the consideration received or receivable forthe sale of goods and services in the ordinary course of the Group’s activities and isrecognised in the income statement when the significant risks and rewards ofownership of the goods have been transferred to the buyer and when the services arerendered.
23Company No. 253387 - W
2. SUMMARY ACCOUNTING POLICIES (Continued)
2.3 Significant Accounting Policies (Continued)
(i) Revenue Recognition (Continued)
Interest income
Interest income is recognised on the accrual basis.
(j) Financial Instruments
Financial instruments are recognised in the balance sheet when the Group has becomea party to the contractual provisions of the instruments. The particular recognitionmethods adopted are disclosed in the individual accounting policy statementsassociated with each item.
Financial instruments are classified as liabilities or equity in accordance with thesubstance of the contractual arrangement. Interest, dividends, gains and lossesrelating to a financial instrument classified as liability are reported as expense orincome. Distributions to holders of financial instruments classified as equity arecharged directly to equity. Financial instruments are offset when the Company has alegally enforceable right to set off the recognised amounts and intends either to settleon a net basis, or to realise the asset and settle the liability simultaneously.
(k) Impairment of Assets
The carrying amounts of assets other than inventories, deferred tax assets and non-current assets held for sale and financial assets (except for investment in subsidiaries)are reviewed for impairment when there is an indication that the assets might beimpaired.
If any such indication exists, the asset’s recoverable amount is estimated to determinethe amount of impairment loss. For goodwill and intangible assets that haveindefinite useful lives or that are not yet available for use, the recoverable amount isestimated at each reporting date.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallestidentifiable asset group that generates cash flows that largely are independent fromother assets and groups. Impairment losses are recognised in the income statement.Impairment losses recognised in respect of cash-generating units are allocated first toreduce the carrying amount of any goodwill allocated to the units and then to reducethe carrying amount of the other assets in the unit on a pro-rata basis.
The recoverable amount of an asset or cash-generating unit is the greater of its valuein use and its fair value less costs to sell. In assessing value in use, the estimatedfuture cash flows are discounted to their present value using a pre-tax discount ratethat reflects current market assessments of the time value of money and the risksspecific to the asset.
24Company No. 253387 - W
2. SUMMARY ACCOUNTING POLICIES (Continued)
2.3 Significant Accounting Policies (Continued)
(k) Impairment of Assets (Continued)
An impairment loss in respect of goodwill is not reversed. In respect of other assets,impairment losses recognised in prior periods are assessed at each reporting date forany indications that the loss has decreased or no longer exists. An impairment loss isreversed if there has been a change in the estimates used to determine the recoverableamount. An impairment loss is reversed only to the extent that the asset’s carryingamount does not exceed the carrying amount that would have been determined, net ofdepreciation or amortisation, if no impairment loss had been recognised. Reversals ofimpairment losses are credited to the income statement in the year in which thereversals are recognised.
(l) Borrowing Costs
Borrowing costs are charged to the income statement as an expense in the period inwhich they are incurred.
(m) Employee Benefits
(i) Short term employee benefits
Wages, salaries, social security contribution, bonuses and non-monetary benefitsare accrued in the period in which the associated services are rendered by theemployees.
(ii) Post-employment benefits
The Group contributes to the Employees’ Provident Fund, the national definedcontribution plan. The contributions are charged to the income statement in theperiod to which they are related. Once the contributions have been paid, theGroup has no further payment obligations.
(iii) Share-based compensation
The Group operates an equity-settled, share-based compensation plan for theemployees of the Group to acquire shares of the Company. The fair value of theemployee services received in exchange for the grant of the share options isrecognised as an expense in the income statement over the vesting periods of thegrant with a corresponding increase in equity.
The total amount to be expensed over the vesting period is determined byreference to the fair value of the share options granted, excluding the impact ofany non-market vesting conditions. Non-market vesting conditions are includedin assumptions about the number of options that are expected to vest. At eachbalance sheet date, the Group revises its estimates of the number of share optionsthat are expected to vest. It recognises the impact of the revision of originalestimates, if any, in the income statement, with a corresponding adjustment toequity.
25Company No. 253387 - W
2. SUMMARY ACCOUNTING POLICIES (Continued)
2.3 Significant Accounting Policies (Continued)
(m) Employee Benefits (Continued)
(iii) Share-based compensation (Continued)
The proceeds received net of any directly attributable transaction costs arecredited to share capital (nominal value) and share premium when the optionsare exercised.
(n) Hire Purchase
Property, plant and equipment acquired under hire purchase arrangements whichtransfer substantially all the risks and rewards of ownership to the Group arecapitalised. The corresponding obligations net of future finance charges, are includedin liabilities. The property, plant and equipment capitalised are depreciated inaccordance with the accounting policy on property, plant and equipment. Financecharges are charged to the income statement over the periods to give a constantperiodic rate of interest on the remaining hire purchase liabilities.
(o) Segmental Information
Segment reporting is presented for enhanced assessment of the Group’s risks andreturns. A business segment is a group of assets and operations engaged in providingproducts or services that are subject to risks and returns that are different from thoseof other business segments. A geographical segment is engaged in providingproducts or services within a particular economic environment that are subject to risksand returns that are different from those components.
The primary reporting segment information is in respect of geographical segment. Nobusiness segment is prepared as the Group’s activities are predominantly in oneindustry.
Segment revenue, expense, assets and liabilities are those amounts resulting from theoperating activities of a segment that are directly attributable to the segment and therelevant portion that can be allocated on a reasonable basis to the segment. Segmentrevenue, expense, assets and segment liabilities are determined before intra-grouptransactions are eliminated as part of the consolidation process, except to the extentthat such intra-group balances and transactions are between group enterprises within asingle segment. Inter-segment pricing is based on similar terms as those available toother external parties.
Segment assets and liabilities do not include income taxes and liabilities respectively.
Segment capital expenditure is the total cost incurred during the period to acquiresegment assets that are expected to be used for more than one period.
26Company No. 253387 - W
2. SUMMARY ACCOUNTING POLICIES (Continued)
2.3 Significant Accounting Policies (Continued)
(p) Cash and Cash Equivalents
Cash and cash equivalents for the purpose of cash flow statement comprise cash inhand, bank balances, demand deposits and other short-term, highly liquidinvestments that are readily convertible to known amounts of cash and which aresubject to an insignificant risk of changes in value.
2.4 Critical Accounting Estimates and Judgements
The Group makes estimates and assumptions concerning the future. The resultingaccounting estimates will, by definition, rarely equal the related actual results. To enhancethe information content of the estimates, certain key variables that are anticipated to havematerial impact to the Group’s results and financial position are tested for sensitivity tochanges in the underlying parameters. The estimates and assumptions that have asignificant risk of causing a material adjustment to the carrying amounts of assets andliabilities within the next financial year are as below:-
(a) Depreciation of Property, Plant and Equipment
Property, plant and equipment are depreciated on the straight line basis over theirestimated useful lives. Management estimates the useful lives of the property, plantand equipment to be 5 to 99 years. The carrying amounts of the Group and theCompany’s property, plant and equipment as at 28th February 2007 wasRM20,177,000/- (2006 : RM11,284,000/-) and RM3,257,000/- (2006 :RM11,165,000/-) respectively. Changes in expected level of usage andtechnological developments could impact the economic useful lives and residualvalues of the property, plant and equipment, therefore the future depreciation chargescould be revised.
(b) Recoverable receivables
The Group makes allowances for doubtful debts based on an assessment of therecoverability of receivables. Allowances are applied to receivables where events orchanges in circumstances indicate that the carrying amounts may not be recoverable.Management specifically analysed historical bad debts, customer concentrations,customer creditworthiness, current economic trends and changes in customerpayment terms when making a judgement to evaluate the adequacy of the allowancefor doubtful debts of receivables. Where the expectation is different from theoriginal estimate, such difference will impact the carrying value of receivables.
(c) Impairment of investments in subsidiaries and intangible assets
The Group carried out the impairment test based on a variety of estimation includingthe value-in-use of the cash generating unit. Estimating the value-in-use requires theGroup to make an estimate of the expected future cash flows from the cashgenerating unit and also to choose a suitable discount rate in order to calculate thepresent value of those cash flows.
27Company No. 253387 - W
3. PROPERTY, PLANT AND EQUIPMENT
Group
Leasehold FurnitureLand and Motor Computer Office and Buildings Vehicles Equipment Equipment Fittings Renovation Total
28th February 2007 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
CostAt 1st March 2006 1,107 765 14,719 989 797 1,090 19,467 Additions - - 12,611 58 - 31 12,700 Disposals - - - - (10) - (10) Currency alignment - - (1) - (2) (5) (8) At 28th February 2007 1,107 765 27,329 1,047 785 1,116 32,149
Accumulated DepreciationAt 1st March 2006 59 472 6,537 206 236 673 8,183 Charge for the year 17 97 3,446 87 67 86 3,800 Disposals - - - - (7) - (7) Currency alignment - - (3) - - (1) (4) At 28th February 2007 76 569 9,980 293 296 758 11,972
Net Book Value at 28th February 2007 1,031 196 17,349 754 489 358 20,177
28th February 2006
At 1st March 2005 1,107 683 10,956 579 645 996 14,966 Additions - 134 3,763 410 152 94 4,553 Disposals - (52) - - - - (52) At 28th February 2006 1,107 765 14,719 989 797 1,090 19,467
Accumulated DepreciationAt 1st March 2005 35 400 3,898 122 168 486 5,109 Charge for the year 24 124 2,639 84 68 187 3,126 Disposals - (52) - - - - (52) At 28th February 2006 59 472 6,537 206 236 673 8,183
Net Book Value at 28th February 2006 1,048 293 8,182 783 561 417 11,284
28Company No. 253387 - W
3. PROPERTY, PLANT AND EQUIPMENT (Continued)
Company
* Transfers relate to asset transferred at net book value to a newly incorporated subsidiary,Defined Search Sdn. Bhd., during the year pursuant to the Novation and TransferAgreement dated 28th February 2007.
Leasehold FurnitureLand and Motor Computer Office and Buildings Vehicles Equipment Equipment Fittings Renovation Total
28th February 2007 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
CostAt 1st March 2006 1,107 765 14,709 985 763 1,015 19,344 Additions - - 8,706 57 - 3 8,766 Disposals - - - - (10) - (10) Transfers * - - (19,542) - - - (19,542) At 28th February 2007 1,107 765 3,873 1,042 753 1,018 8,558
Accumulated DepreciationAt 1st March 2006 59 472 6,537 205 235 671 8,179 Charge for the year 17 97 3,335 86 61 67 3,663 Disposals - - - - (7) - (7) Transfers * - - (6,534) - - - (6,534) At 28th February 2007 76 569 3,338 291 289 738 5,301
Net Book Value at 28th February 2007 1,031 196 535 751 464 280 3,257
28th February 2006
CostAt 1st March 2005 1,107 683 10,956 579 645 996 14,966 Additions - 134 3,753 406 118 19 4,430 Disposals - (52) - - - - (52) At 28th February 2006 1,107 765 14,709 985 763 1,015 19,344
Accumulated DepreciationAt 1st March 2005 35 400 3,898 122 168 486 5,109 Charge for the year 24 124 2,639 83 67 185 3,122 Disposals - (52) - - - - (52) At 28th February 2006 59 472 6,537 205 235 671 8,179
Net Book Value at 28th February 2006 1,048 293 8,172 780 528 344 11,165
29Company No. 253387 - W
3. PROPERTY, PLANT AND EQUIPMENT (Continued)
Group and Company
Included in property, plant and equipment of the Group and of the Company are motorvehicles acquired under hire purchase installment plan with a net book value of RM104,745/-(2006 : RM149,636/-).
Depreciation charge during the year for certain computer equipment of the Group and of theCompany amounting to RM3,612,000/- (2006 : RM2,073,000/-) and RM3,500,00/- (2006 :RM2,073,00/-) respectively has been capitalised as development costs.
4. INVESTMENTS IN SUBSIDIARIES
Details of the subsidiaries are as follows:-
Name of CompanyCountry of
Incorporation
EffectiveEquityInterest Principal Activities
2007 2006% %
asiaEP China * China 100 100 Dormant – Intended principalactivity is to provide e-commerce solutions anddevelop an e-market place.
asiaEP Hong Kong Ltd. *
Hong Kong 100 100 Dormant – Intended principalactivity is to provide e-commerce solutions anddevelop an e-market place.
asiaEP eMarketplace Sdn. Bhd. #
Malaysia 100 - Dormant – Incorporated on30th November 2006 andintended activity is to providee-commerce solutions and e-market platform.
Defined Search Sdn. Bhd. #
Malaysia 100 - Dormant – Incorporated on 4thDecember 2006 and intendedactivity is to provide internetsearch engine services.
Exportmate Sdn. Bhd. # Malaysia 100 - Dormant – Incorporated on 8thDecember 2006 and intendedactivity is to provide onlinemarketing solutions.
2007 2006RM'000 RM'000
Unquoted investments 1,999 1,999
Company
30Company No. 253387 - W
4. INVESTMENTS IN SUBSIDIARIES (Continued)
* these subsidiaries are not audited by Monteiro & Heng.
# The Company paid RM6/- in cash to subscribe for 100% equity interest in these newlyincorporated companies during the financial year.
The audited financial statements of asiaEP China as at 31st December 2006 have beenincluded in the consolidated financial statements, after taking into consideration significanttransactions if any, which occurred between 31st December 2006 and 28th February 2007,the reporting date of its holding company.
5. INTANGIBLE ASSETS
Development IntellectualCosts Property Total
RM'000 RM'000 RM'000Group28th February 2007
CostAt 1st March 2006 7,975 16,500 24,475 Additions 5,508 - 5,508 Disposals - - - Exchange differences (53) - (53)
At 28th February 2007 13,430 16,500 29,930
AmortisationAt 1st March 2006 501 2,214 2,715 Charge for the year 350 771 1,121
At 28th February 2007 851 2,985 3,836
Net Book Value at 28th February 2007 12,579 13,515 26,094
31Company No. 253387 - W
5. INTANGIBLE ASSETS (Continued)
* Transfers relate to assets transferred at net book value to a newly incorporated subsidiary,Defined Search Sdn. Bhd., pursuant to the Novation and Transfer Agreement dated 28thFebruary 2007.
Development IntellectualCosts Property Total
RM'000 RM'000 RM'000Company28th February 2007
CostAt 1st March 2006 7,165 16,500 23,665 Additions 4,516 - 4,516 Transfers * (9,450) - (9,450)
At 28th February 2007 2,231 16,500 18,731
AmortisationAt 1st March 2006 501 2,214 2,715 Charge for the year 350 771 1,121
At 28th February 2007 851 2,985 3,836
Net Book Value at 28th February 2007 1,380 13,515 14,895
Development IntellectualGroup Costs Property Total
RM'000 RM'000 RM'00028th February 2006
CostAt 1st March 2005 3,409 16,500 19,909 Additions 4,566 - 4,566 At 28th February 2006 7,975 16,500 24,475
AmortisationAt 1st March 2005 151 1,516 1,667 Charge for the year 350 698 1,048 At 28th February 2006 501 2,214 2,715
Net Book Value at 28th February 2006 7,474 14,286 21,760
32Company No. 253387 - W
5. INTANGIBLE ASSETS (Continued)
Intellectual Property (“IP”) of the Group costing RM16.5 million represents the exclusiverights to an online platform system, acquired from one of the Directors on 16 August 2002.The IP constitutes a trademark, copyrights, source programmes and associateddocumentation.
The IP has an estimated economic life of fifteen years and will be amortised andrecognised as an expense based on the forecasted revenue stream so as to reflect the patternin which the asset’s economic benefits are consumed by the company.
Included in the additions of the development costs of the Group and of the Company aredepreciation charge of RM3,612,00/- (2006 : RM2,073,000/-) and RM3,500,000/- (2006 :RM2,073,00/-) respectively.
6. TRADE RECEIVABLES
The Group’s normal trade credit terms range from 30 to 90 days. Other credit terms areassessed and approved on a case by case basis.
2007 2006RM'000 RM'000
Trade receivables 5,574 9,732 Less: Allowance for doubtful debts net of bad debts written off of RM529,350/- (2006 : Nil) (601) (1,131)
4,973 8,601
Group and Company
Development IntellectualCosts Property Total
RM'000 RM'000 RM'000Company
28th February 2006
CostAt 1st March 2005 3,409 16,500 19,909 Additions 3,756 - 3,756 At 28th February 2006 7,165 16,500 23,665
AmortisationAt 1st March 2005 151 1,516 1,667 Charge for the year 350 698 1,048 At 28th February 2006 501 2,214 2,715
Net Book Value at 28th February 2006 6,664 14,286 20,950
33Company No. 253387 - W
7. OTHER RECEVABLES, DEPOSITS AND PREPAYMENTS
* These expenses were set off against the proceeds from the issuance of warrants on19th June 2006.
** These expenses were charged to income statement during the financial year upon thetermination of the Sales of Shares Agreement as disclosed in Note 23(iii) to thefinancial statements.
8. AMOUNTS OWING BY SUBSIDIARIES
The amounts owing by subsidiaries are advances and payments made on behalf, which areunsecured, interest free and have no fixed terms of repayment.
9. SHORT TERM INVESTMENTS
10. TRADE PAYABLES
The normal credit term granted to the Group is 30 days.
2007 2006 2007 2006RM'000 RM'000 RM'000 RM'000
Expenses on warrant exercise* - 113 - 113 Expenses incurred on the proposed acquisition of a Singapore subsidiary ** - 101 - 101 Other receivables 109 23 29 23 Deposits 38 102 33 80
147 339 62 317
Group Company
2007 2006RM'000 RM'000
Placement in repo - 1,646
Group and Company
34Company No. 253387 - W
11. OTHER PAYABLES AND ACCRUALS
12. HIRE PURCHASE LIABILITIES
The hire purchase liabilities are effectively secured on the rights of the assets under hirepurchase.
2007 2006 2007 2006RM'000 RM'000 RM'000 RM'000
Expenses on warrant exercise - 64 - 64 Expenses incurred on the proposed acquisition of a Singapore subsidiary - 87 - 87 Leaseline payable - 48 - 48 Accrual for directors' remuneration and staff related expenses 124 218 113 218 Other payables 123 134 124 130
247 551 237 547
Group Company
2007 2006RM'000 RM'000
Minimum hire purchase payment- not later than one year 47 47 - later than one year and not later than five years 67 115
114 162 Less: Future interest charges (8) (16) Present value of hire purchase liabilities 106 146
Current 39 37 Non-current 67 109
106 146
Group and Company
35Company No. 253387 - W
13. SHARE CAPITAL
During the financial year, the issued and paid-up share capital of the Company wasincreased from 200,000,000 ordinary shares of RM0.10 each to 217,073,971 ordinaryshares of RM0.10 each by:-
(a) the issue of 7,073,971 new ordinary shares of RM0.10 each at RM0.135 per sharefor cash by virtue of the exercise of options pursuant to the Company’s ESOS.
(b) way of private placement of 10,000,000 new ordinary shares of RM0.10 each forcash at an issue price of RM0.21 per share.
Employees’ Share Option Scheme (“ESOS”)
The salient features of the scheme are as follows:-
(a) Eligible employees and Executive Directors must be at least eighteen (18) years ofage and must have been confirmed on the date of offer.
(b) The option is personal to the grantee whilst he is in the employment of any companyin the Group and is non-assignable.
(c) The exercise price shall be discounted not more than 10% from the weighted averageof the market price of the Shares as shown in the daily official list issued by theBursa Malaysia Securities Bhd. for the five (5) trading days immediately precedingthe respective dates of the offer in writing to the grantee or at the par value of theordinary shares of the Company, whichever is higher.
(d) The option granted may be exercised at any time within a period of three (3) yearsfrom the date of offer of the option or such shorter period as may be specificallystated in the offer upon giving notice in writing. In the event that duration of theoption shall be renewed, the date of expiry of the option shall be that date of expiryso as extended or renewed.
(e) The options granted may be exercised in full or in lesser number of ordinary sharesprovided that the number shall be in multiples of 100 shares.
Other provisions are stipulated in the Company’s By-Law of ESOS Scheme.
2007 2006 2007 2006Number of
sharesNumber of
shares RM RMOrdinary shares of RM0.10 each '000 '000 '000 '000 Authorised: At beginning of the year 500,000 250,000 50,000 25,000 Created during the year - 250,000 - 25,000 At end of the year 500,000 500,000 50,000 50,000
Issued and fully paid: At beginning the year 200,000 200,000 20,000 20,000 Issued during the year 17,074 - 1,707 -
At end of the year 217,074 200,000 21,707 20,000
Group and CompanyGroup and Company
36Company No. 253387 - W
13. SHARE CAPITAL (Continued)
Employees’ Share Option Scheme (“ESOS”) (Continued)
Movements in the number of share options outstanding and their related exercise price areas follows:-
The outstanding options of 9,994,750 units (2005 : 22,477,118 units) were not exercisableas at balance sheet date.
Options exercised during the year resulted in 7,073,971 units of new ordinary shares beingissued at RM0.135. The related weighted average share price at the time of exercise wasRM0.477 per share.
The options outstanding at the end of the year will expire on 27th August 2007 as theScheme is subject to By-laws which are in force for a duration of 3 years from the effectivedate for the implementation and launching of the scheme. Notwithstanding anything to thecontrary, all unexercised options shall lapse on the date of expiry. The scheme may be-extended for further periods of up to 3 years, at the discretion of the Board upon therecommendation of the Option Committee.
The weighted average fair value of options determined using the Trinomial valuationmodel was RM0.048 (2006 : RM0.048) per option. The significant inputs into the modelwere as follows:-
The volatility measured at the standard deviation of continuously compounded sharereturns is based on statistical analysis of daily share prices over the last 100 days.
The expected life of the options is based on historical data and is not necessarily indicativeof exercise patterns that may occur. The expected volatility reflects the assumption that thehistorical volatility is indicative of future trends, which may also not necessarily be theactual outcome. No other features of the option grant were incorporated into themeasurement of fair value.
Exericse Balance at Balance atGrant Expiry price 1.3.2006 Granted Lapsed Exercised 28.2.2007Date Date RM/Share
4.2.2005 3.5.2006 0.220 2,589,500 - (2,589,500) - - 22.12.2005 21.02.2007 0.135 12,124,306 - (5,050,335) (7,073,971) - 22.12.2005 26.8.2007 0.135 10,352,812 - (358,062) - 9,994,750
25,066,618 - (7,997,897) (7,073,971) 9,994,750
Number of offer over ordinary shares of RM0.10 each
2007 2006Valuation assumptions
Expected volatility 51.11% 51.11%Expected dividend yield 0% 0%Expected option life 426-612 days 426-612 daysWeighted average share price at date of grant 0.155 0.155Risk-free interest rate (per annum) 3.25% 3.25%
Group
37Company No. 253387 - W
14. RESERVES
Subject to the agreement with the Inland Revenue Board, the Company has sufficient taxexempt profit to distribute tax exempt dividends of approximately RM15,953,000/- (2006 :RM10,900,000/-) out of its accumulated profits as at 28th February 2007. Accumulatedprofits not covered by tax credit amounted to RM2,652,000/- (2006 : RM2,331,000/-).
15. WARRANT RESERVE
During the financial year, the Company issued 66,861,390 new warrants, for cash at anissue price of RM0.01 per warrant arising from the renounceable rights issue which wereconstituted by a Deed Poll dated 3rd April 2006.
Number of warrants 2006/2011
IssueDate
ExpiryDate
ExercisePriceRM/Warrant
AtStart ofFinancialYear Issued Exercised
At end ofFinancialYear
19.6.2006 18.6.2011 0.30 - 66,861,390 - 66,861,390
The new warrants are listed on Bursa Securities. Each new warrant entitles its registeredholder, at any time from the date of its issue up to and including 18th June 2011, tosubscribe for one new ordinary shares of RM1/- each in the Company at an exercise priceof RM0.30 per share which is subject to adjustments under the terms set out in the DeedPoll.
2007 2006RM'000 RM'000
Warrants issued during the financial year:-Renounceable rights issue 668 - Less: Warrants issue cost (222) -
446 -
2007 2006 2007 2006RM'000 RM'000 RM'000 RM'000
Non-distributableShare premium reserve 15,917 14,462 15,917 14,462 ESOS reserve 210 105 210 105 Translation reserve (112) (20) - - Warrant reserve (Note 15) 446 - 446 - DistributableAccumulated profits 18,162 12,950 18,605 13,231
34,623 27,497 35,178 27,798
Group Company
38Company No. 253387 - W
16. REVENUE
Revenue represents the invoiced value of products and services rendered, net of discounts.
17. PROFIT BEFORE TAXATION
Profit before taxation has been arrived at:-
The estimated monetary value of non-cash benefits provided to directors during the yearamounted to RM11,900/- (2006 : RM23,900/-).
Staff costs amounting to RM881,282/- (2006 : RM1,062,620/-) have been capitalised asdevelopment costs.
2007 2006 2007 2006RM'000 RM'000 RM'000 RM'000
After charging:-Amortisation- intellectual property 771 698 771 698 - development costs 350 350 350 350 Audit fee- current year 34 27 22 23 - prior year 22 11 22 11 - others - 18 - 18 Depreciation 188 1,053 163 1,049 Directors' remuneration- fees 42 42 42 42 - salaries and allowances 424 450 424 450 - Employees' Provident Fund 37 23 37 23 - other - - - 12 ESOS expenses 399 105 399 105 Goodwill written off - 5 - - Loss on disposal of property, plant and equipment 3 - 3 - Pre-operating expenses - 70 - - Rental of buildings 53 46 30 46 Staff costs- Employees' Provident Fund 174 225 174 225 - salaries, wages and bonus 563 707 563 707 - other staff related costs 183 195 183 221 Unrealised loss on foreign exchange - - - 47
And crediting:-
Interest income 35 129 28 126 Gain on disposal of property, plant and equipment - 4 - 4
Group Company
39Company No. 253387 - W
18. TAXATION
The Company was awarded Multimedia Super Corridor (MSC) Status on 4th March 1998,thereby making the Company eligible for Pioneer Status for 100% tax exemption for aperiod of five years. The Company was granted an extension for its MSC Status byMultimedia Development Centre (MDC), which entitles the Company to have another fiveyears tax exemption status with effect from 1st March 2003.
A subsidiary, Defined Search Sdn. Bhd., was awarded MSC Status on 18th January 2007,thereby making the subsidiary eligible for Pioneer Status for 100% tax exemption for aperiod of five years.
A reconciliation of income tax expense applicable to profit before taxation at the statutoryincome tax rate to income tax expense at the effective income tax rate of the Group and theCompany are as follows:-
19. EARNINGS PER SHARE
(a) Basic Earnings Per Share
Basic earnings per share of the Group is calculated by dividing the net profit for theyear of RM5.099 million (2006 : RM2.949 million) by the weighted average numberof 201,679,042 (2006: 200,000,000) ordinary shares in issue during the year.
2007 2006 2007 2006RM'000 RM'000 RM'000 RM'000
Profit before taxation 5,085 3,020 5,247 3,171
Taxation at applicable tax rate of 28% (1,424) (846) (1,469) (888) Tax effects arising from- non taxable income 1,417 813 1,462 855 - prior years 21 (38) 21 (38)
Tax credit/(expense) for the year 14 (71) 14 (71)
Group Company
2007 2006RM'000 RM'000
Taxation- current year (7) (33) - prior years 21 (38)
14 (71)
Group and Company
40Company No. 253387 - W
19. EARNINGS PER SHARE (Continued)
(b) Diluted Earnings Per Share
For diluted earnings per share calculation, the weighted average number of ordinaryshares in issue is adjusted to assume conversion of all dilutive potential ordinaryshares. The Company has ESOS and warrants that can potentially be converted intoordinary shares.
20. CONTINGENT LIABILITIES
The Group is contingently liable to the following:-
(a) The Company has commenced legal actions against an IT company and anindividual for infringement of copyright and passing off in relation to the Company’sbusiness. An interim injunction has been obtained by the Company restraining thedefendants from further infringement. The defendants have filed their defense andcounter claimed. Both the Company and the defendants have sought unliquidateddamages in their respective claims.
The solicitors representing the Company are of the view that the Defendants do nothave a valid counter-claim against the Company. Further, the defendants have notpursued the counter-claim since the grant of the injunction in 2000. The solicitorshad vided a letter dated 16th May 2005 confirmed that the suit is still pending andmay take 2 to 5 years to reach trial stage. To date, the solicitors have not receivedany instruction from the Company to file a Notice for Case Management to move thecase towards trial.
(b) A claim was made against the Company for alleged breach of undertaking to issueshares of the Company to the Plaintiff, amounting to 15% of its entire paid up capitalas at January 1999 based on the par value of RM1.00 per ordinary share.
2007 2006
Net profit for the year (RM'000) 5,099 2,949
Weighted average number of ordinary shares in issue ('000) 201,679 200,000 Adjustment for share options ('000) 12,834 450 Adjustment for warrants ('000) 5,755 - Adjusted weighted average number of ordinary shares in issue ('000) 220,268 200,450
Diluted earnings per share (sen) 2.31 1.47
Group
41Company No. 253387 - W
20. CONTINGENT LIABILITIES (Continued)
The application to strike out the claim has been dismissed by the Senior AssistantRegistrar on 15th March 2005. The Company does not intend to file any appealagainst the decision. The matter is now fixed for the Pre Trial Case Management.Whilst it cannot be said with certainty that the Plaintiff’s claim will fail, the solicitorrepresenting the Company are of the view that the Company has a reasonably strongchance of dismissing the Plaintiff’s claim subject always to the availability andcredibility of the witnesses during the trial.
The solicitors are of the opinion that there will be no adverse effect on the financialposition of the Company. In any event, if the Plaintiff succeeds in his claim and theCourt allows the following prayers:-
(i) that the Company do pay the plaintiff damages to be assessed;
(ii) that the Company do refrain from soliciting or procuring any business in thestate of Johor;
(iii) costs; and
(iv) such other relief deem fit and just by the Court.
then, subject to any warranty and/or undertaking which may be provided by the 2ndand 3rd defendants who are also the directors of the Company to pay such losses,damages and/or costs to be awarded and provided that such warranty andundertakings are fulfilled, the solicitors are of the view that the financial impact onthe Company will be negligible.
To mitigate any effect of the suit, the above-mentioned directors of the Company,Dr. Tan Boon Nunt and Lee Suet Hong have provided a letter of indemnity to theCompany to indemnify the Company against all claims, losses, damages, costs, feesand expenses arising in the event the Petitioner is successful against the Company.The Court has directed both parties to file and serve a list of witnesses forpreparation of trial before next mention date on 8th April 2008.
(c) A claim was made against the Directors of the Company for alleged breach of dutiesas directors and oppressive and/or prejudical conduct. The Court had allowed thePetitioner’s application to amend the Originating Petition to include the Company asthe 6th respondent. The Company has filed a notice of appeal to the Court and theproceedings are pending in Court.
The solicitors are of the view that there is a strong likelihood that the Court may bepersuaded to dismiss on the Originating Petition subject always to the availabilityand credibility of the witnesses during the trial. In any event, if the Petitionersucceeds in his claim and the Court allows the following prayers, the Company is:-
(i) compelled to hand over all the accounting documents, records and customers’sign up forms belonging to Asia Electronics Publication (Johor) Sdn. Bhd.(hereafter referred to as “AEP(J)”);
(ii) compelled to permit an approved company auditor appointed by the Petitionerto inspect and take copies of all accounting records of AEP(J) and theCompany; and
42Company No. 253387 - W
20. CONTINGENT LIABILITIES (Continued)
(iii) restrained from acting any way interfering with the business of AEP(J).
The solicitors are of the view that the appointment of the approved company auditorby the Petitioner per se will not have adverse financial effect on the Company.
However if the Court allows the following prayers:-
(i) that 2nd, 3rd, 4th, 5th respondents and the Company pay the Petitioner and/orAEP(J) all losses and damages arising from their breaches of duties asdirectors of AEP(J); and
(ii) the cost of the petition be taxed and paid by the 2nd, 3rd, 4th, 5th respondentsand the Company,
there may be some financial effect on the Company should the Petitioner besuccessful in its claim against the Company. The solicitors are of the opinion thatthe Petitioner will have an uphill task in persuading the Court to grant the aboveorders.
To mitigate any effect of the suit on the Company, two of the directors of theCompany, Dr. Tan Boon Nunt and Lee Suet Hong have provided a letter ofindemnity to the Company to indemnify the Company against all claims, losses,damages, costs, fees and expenses arising in the event the Petitioner is successfulagainst the Company.
21. SEGMENTAL ANALYSIS
Business Segments
No business segmental reporting is prepared as the Group’s activities are predominantly inone industry.
Geographical Segments
People'sRepublic Hong
Malaysia of China Kong Total2007 RM'000 RM'000 RM'000 RM'000
Revenue 11,069 - - 11,069 Total assets 50,525 432 5,752 56,709 Total liabilities 367 - 10 377 Capital expenditure 8,766 - 3,934 12,700 Depreciation 3,663 1 136 3,800
43Company No. 253387 - W
21. SEGMENTAL ANALYSIS (Continued)
22. FINANCIAL INSTRUMENTS
(a) Financial Risk Management and Objectives
The Group seeks to manage effectively the various risks namely credit, liquidity,foreign currency and interest rate risks to which the group is exposed to in its dailyoperations.
(i) Credit risk
The management has a credit procedure in place to monitor and minimise theexposure of default. Trade receivables are monitored on an ongoing basis.
As at balance sheet date, there were no significant concentrations of credit riskin the Group except for amounts owing by subsidiaries as disclosed in Note 8to the financial statements. The maximum exposure to credit risk for theGroup is represented by the carrying amount of each financial instrument.
(ii) Liquidity risk
The Group actively manages its debt maturity profile, operating cash flowsand the availability of funding so as to ensure that all financing, repayment andfunding needs are met. As part of its overall prudent liquidity management,the Group maintains sufficient level of cash and cash equivalents to meet itsworking capital requirement.
(iii) Foreign currency risk
The Group operates apart from Malaysia, in China and Hong Kong and isexposed to Chinese Yuan and Hong Kong Dollar. Foreign currencydenominated assets and liabilities give rise to foreign exchange exposure. TheGroup’s policy is to manage all its foreign financial assets and liabilities usingthe best available foreign currency exchange rates where applicable.
People'sRepublic Hong
Malaysia of China Kong Total2006 RM'000 RM'000 RM'000 RM'000
Revenue 10,748 - - 10,748 Total assets 45,652 513 2,104 48,269 Total liabilities 717 - 4 721 Capital expenditure 4,430 2 121 4,553 Depreciation 3,122 4 - 3,126
44Company No. 253387 - W
22. FINANCIAL INSTRUMENTS (Continued)
(a) Financial Risk Management (Continued)
(iv) Interest rate risk
The Group’s primary interest rate risk relates to interest-bearing debt as at 28thFebruary 2007. The investments in financial assets are mainly short term innature and they are not held for speculative purposes.
Effective interest rates
Group and Company
(b) Fair Values
(i) Recognised financial instruments
The fair values of the financial assets and liabilities approximate theirrespective carrying values on the balance sheet of the Company except foramounts owing by subsidiaries.
It is not practicable to estimate the fair values of the amounts owing bysubsidiaries due principally to the inability to estimate the settlement datewithout incurring excessive costs as these amounts lack a fixed repaymentterm. However, the Company does not anticipate the carrying amountsrecorded at the balance sheet date to be significantly different from the valuesthat would be eventually received or settled.
Effective Between MoreInterest Within 1 and 5 Than 5
Rate 1 Year Years Years Total28th February 2007 % RM'000 RM'000 RM'000 RM'000
Financial AssetPlacement in Repo - - - - -
Financial LiabilityHire purchase liabilities 5.84 - 7.21 39 67 - 106
28th February 2006
Financial AssetPlacement in Repo 1.75 - 2.72 1,646 - - 1,646
Financial LiabilityHire purchase liabilities 5.84 - 7.21 37 109 - 146
45Company No. 253387 - W
22. FINANCIAL INSTRUMENTS (Continued)
(b) Fair Values (Continued)
(ii) Unrecognised financial instruments
There were no financial instruments not recognised in the balance sheet as at28th February 2007 that are required to be disclosed.
The nominal/notional amount and net fair value of contingent liabilities are notrecognised in the balance sheet as at 28th February 2007 as it is not practicableto make a reliable estimate due to the uncertainties of timing, costs andeventual outcome.
23. SIGNIFICANT EVENTS DURING AND AFTER THE FINANCIAL YEAR
(i) Rights Issue of Warrants
On 16th February 2007, the members at the Extraordinary General Meetingapproved the proposed renounceable Rights Issue of 82,777,778 new warrants on thebasis of one new Warrant for every three existing ordinary shares of RM0.10 eachheld in the Company at an issue price of RM0.01 per Warrant.
On 19th June 2006, the Company completed the listing of 66,681,390 Warrantsissued pursuant to the Rights Issue which was implemented in accordance with theDeed Poll dated 3rd April 2006. Upon the expiry of the exercise period, anyunexercised warrants will lapse and cease to be valid for any purpose. As at 28thFebruary 2007, there are a total of 66,861,390 outstanding warrants.
(ii) ESOS Exercised
During the financial year, the Company increased its ordinary shares fromRM20,000,000/- to RM20,707,397/- by the creation of 7,073,971 ordinary shares ofRM0.10 each pursuant to the ESOS.
(iii) Acquisition of Conversant Solutions Pte. Ltd.
On 23rd May 2006, the members at the Extraordinary General Meeting approved theproposed acquisition of Conversant Solutions Pte. Ltd. for a purchase considerationof up to RM9,900,000/-. The purchase consideration is to be satisfied in thefollowing manner:-
(a) Up to RM4,950,000/- in the form of up to 18,333,334 new asiaEP ordinaryshares at par value of RM0.10 each at an issue price of RM0.27 each to beallotted and issued to the existing shareholder of Conversant Solutions Pte.Ltd.; and
(b) Up to RM4,950,000/- in cash payable to the vendor.
On 23rd February 2007, the Company and the vendor had mutually terminatedthe Sale of Shares Agreement (“SSA”) dated 7th May 2005 in relation to theproposed acquisition.
46Company No. 253387 - W
23. SIGNIFICANT EVENTS DURING AND AFTER THE FINANCIAL YEAR(Continued)
(iii) Acquisition of Conversant Solutions Pte. Ltd. (Continued)
On 11th January 2007, the Company had issued a letter to the vendor detailingcertain breaches committed by him pursuant to the SSA and demanded that they beremedied within fourteen (14) days from the date of receipt of the letter (“Letter l”),the expiry of which fell on 25th January 2007.
In a separate letter following Letter l, also dated 11th January 2007, the Vendor hadbeen advised that the Company is amenable, on a without prejudice basis, to anamicable solution to the abovementioned matter subject to the Vendor agreeing tocertain terms of settlement set out therein (“Letter 2”). Similarly with Letter 1, theVendor had been provided with fourteen (14) days from the date of receipt of Letter2 to revert on his decision to accept such terms of settlement, the expiry of whichalso fell on 25th January 2007.
The Vendor had vided its letters dated 19th January 2007 replied to Letter 1 andLetter 2 and had rejected the matters set out therein. Counter terms for settlementwere also offered, on a without prejudice basis, to the Company with a deadlinefalling on 2nd February 2007 given for the Company to revert with their reply to thesame.
On 26th January 2007, the board of directors of the Company, had resolved to seekan amicable settlement with the Vendor by 30th January 2006, failing which, theBoard has agreed to terminate the SAA by way of notice and to institute legalproceedings against the Vendor.
Due to the Vendor’s failure to respond to the Company for an amicable settlement,the Company had on 30th January 2007 issued a notice of termination of the SSAand shall institute legal proceedings against the Vendor for breach of contract.
Following from the notice of termination of the SSA, the Vendor had on 31stJanuary 2007 rejecting the termination and was also agreeable to a mutualtermination of the SSA subject to certain terms of settlement.
Subsequent to the above and after a series of exchange of letters, on 23rd February2007, the Company and the Vendor had reached an amicable resolution to thetermination of the SSA. The Company and the Vendor shall relinquish all claimswhatsoever against each other under the SSA and the position of both the Companyand the Vendor shall be restored to their original position prior to the date of theSSA’s execution.
47Company No. 253387 - W
23. SIGNIFICANT EVENTS DURING AND AFTER THE FINANCIAL YEAR(Continued)
(iv) Proposed Private Placement
On 6th October 2006, the Company announced that it proposes to undertake aprivate placement exercise of up to 20,000,000 new ordinary shares of RM0.10 each,representing up to approximately 10% of the issued and paid-up share capital of theCompany (“Proposed Private Placement”).
On 1st November 2006 and 2nd November 2006, the Company announced that theProposed Private Placement has been approved by Securities Commission (“SC”)and Foreign Investment Committee on 31st October 2006.
On 10th November 2006, the Company announced that Bursa Malaysia had, videdits letter dated 8th November 2006, given its approval-in-principle for the listing andquotation.
On 28th December 2006, the Company announced that the issue price for the firsttrance placement of 10,000,000 new ordinary shares of RM0.10 each (“PlacementShares”) at RM0.21 per placement share.
As at the date of this report, the Company had placed out 10,000,000 placementshares out of 20,000,000 asiaEP Shares. The 10,000,000 placement shares wereallotted on 8th January 2007 and granted listing and quotation on 19th January 2007.
The SC had on 25th April 2007 approved the Company’s application for anextension of time up to 31st October 2007 to place out the remaining 10,000,000asiaEP Shares.
(v) Proposed Share Buy-Back of up to 10% asiaEP’s Ordinary Share Capital
On 24th January 2007, the Company announced that the Company proposes to seekshareholders’ approval at an Extraordinary General Meeting to be convened for theProposed Share Buy-Back from the open market of up to 10% of the Company’sissued and paid-up ordinary share capital at any point of time through BursaMalaysia.
After the approval has been obtained from the relevant authorities, the ProposedShare Buy-Back has been approved by the shareholders at the Extraordinary GeneralMeeting held on 28th May 2007.
(vi) On 26th March 2007, the Company had launched a Business to Business (“B2B”)“simplified format” search engine called B2B ITAH Business Search Engine thatcaters specifically to the B2B industry. The B2B ITAH Business Search Enginedeveloped by the Company offers a simpler, deeper and more relevant search forglobal B2B users, and is expected to benefit both business surfer as well asadvertisers.
48Company No. 253387 - W
24. CAPITAL COMMITMENT
25. PRIOR YEAR ADJUSTMENT
The Group has applied FRS 2, Share-Based Payment in the current financial year for shareoptions granted. The total fair value of share options granted to employees is recognised asan employee cost with a corresponding increase in the share option reserve within equityover vesting period. The application is retrospective and accordingly, certain comparativeshave been restated as a result of adopting this new FRS.
(i) Restatement of Comparatives
2007 2006 2006 2006RM'000 RM'000 RM'000 RM'000
Contractual commitment for the proposed acquisition of Conversant Solutions Pte. Ltd. - 9,900 - 9,900
Group Company
AsPreviously AsReported Restated
Balance Sheets RM'000 RM'000GroupAccumulated profits 13,055 (105) 12,950 ESOS reserve - 105 105
CompanyAccumulated profits 13,336 (105) 13,231 ESOS reserve - 105 105
Income StatementsGroupAdministrative expenses (5,924) (105) (6,029) Profit before taxation 3,125 (105) 3,020 Net profit for the year 3,054 (105) 2,949
Earnings per share (sen)- Basic 1.53 1.47- Diluted 1.52 1.47
AdjustmentsRM'000
49Company No. 253387 - W
25. PRIOR YEAR ADJUSTMENT (Continued)
(i) Restatement of Comparatives (Continued)
(ii) Effects on balance sheets as at 28th February 2007
(iii) Effects on income statements for the year ended 28th February 2007
RM'000
Administrative expenses 399 Profit before taxation (399) Net profit for the year (399)
Earnings per share (sen)Basis (0.20) Diluted (0.18)
RM'000Group/CompanyRetained profits (210) ESOS reserve 210
AsPreviously AsReported RestatedRM'000 RM'000
CompanyAdministrative expenses (5,770) (105) (5,875) Profit before taxation 3,276 (105) 3,171 Net profit for the year 3,205 (105) 3,100
Cash Flow StatementsGroupNet profit for the year 3,054 (105) 2,949 ESOS expenses - 105 105
CompanyNet profit for the year 3,205 (105) 3,100 ESOS expenses - 105 105
AdjustmentsRM'000
50Company No. 253387 - W
ASIAEP BHD.(Incorporated in Malaysia)
STATEMENT BY DIRECTORS
We, DR. TAN BOON NUNT and LEE SUET HONG, being two of the directors of theCompany, do hereby state that in the opinion of the directors, the accompanying financialstatements are drawn up so as to give a true and fair view of the state of affairs of the Group andof the Company as at 28th February 2007 and of the results and cash flows of the Group and ofthe Company for the year ended on that date in accordance with the provisions of the CompaniesAct, 1965 and the MASB Approved Accounting Standards for Entities Other Than PrivateEntities.
On behalf of the Board,
...............................................DR. TAN BOON NUNTDirector
..............................................LEE SUET HONGDirector
Kuala Lumpur
Date : 25th June 2007
51Company No. 253387 - W
ASIAEP BHD.(Incorporated in Malaysia)
STATUTORY DECLARATION
I, YEONG WENG SEONG, being the officer primarily responsible for the financialmanagement of the Company, do solemnly and sincerely declare that to the best of myknowledge and belief, the accompanying financial statements are correct, and I make this solemndeclaration conscientiously believing the same to be true, and by virtue of the provisions of theStatutory Declarations Act, 1960.
...............................................YEONG WENG SEONG
Subscribed and solemnly declared by the abovenamed at Kuala Lumpur in the Federal Territoryon 25th June 2007.
Before me,
Mohd Radzi Bin YasinCommissioner for OathsNo. W327
52
Company No. 253387 - W
REPORT OF THE AUDITORS TO THE MEMBERS OFASIAEP BHD.(Incorporated in Malaysia)
We have audited the financial statements set out on pages 7 to 49.
These financial statements are the responsibility of the Company’s directors.
It is our responsibility to form an independent opinion, based on our audit, on these financialstatements and to report our opinion to you as a body, in accordance with section 174 of theCompanies Act, 1965 and for no other purpose. We do not assume responsibility towards anyother person for the content of this report.
We conducted our audit in accordance with approved standards on auditing in Malaysia. Thosestandards require that we plan and perform the audit to obtain reasonable assurance whether thefinancial statements are free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made by directors, aswell as evaluating the overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.
In our opinion:-
(a) the financial statements are properly drawn up in accordance with the provisions of theCompanies Act, 1965 and the MASB Approved Accounting Standards for Entities OtherThan Private Entities so as to give a true and fair view of:-
(i) the state of affairs of the Group and of the Company as at 28th February 2007 and ofthe results and cash flows of the Group and of the Company for the year ended on thatdate; and
(ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in thefinancial statements of the Group and of the Company;
and
(b) the accounting and other records and the registers required by the Companies Act, 1965 tobe kept by the Company and its subsidiaries of which we have acted as auditors have beenproperly kept in accordance with the provisions of the said Act.
53
Company No. 253387 - W
We have considered the audited financial statements of the subsidiaries of which we have notacted as auditors, as indicated in Note 4 to the financial statements, being financial statementsthat have been included in the consolidated financial statements. We are satisfied that the financial statements of the subsidiaries that have been consolidated withthe Company’s financial statements are in form and content appropriate and proper for thepurposes of the preparation of the consolidated financial statements and we have receivedsatisfactory information and explanations required by us for those purposes.
The auditors’ reports on the financial statements of the subsidiaries were not subject to anyqualification and did not include any comment made under subsection (3) of Section 174 of theAct.
Monteiro & HengNo. AF 0117Chartered Accountants
Heng Ji KengNo. 578/05/08 (J/PH)Partner
Kuala Lumpur
Date : 25th June 2007
asiaEP Annual Report 2007 74
ASIAEP BHD (Company No. 253387-W)
Type of shares : Ordinary shares of RM 0.10 each
Voting rights : One vote per shareholder on a show of handsOne vote per ordinary share on a poll
Number of shareholders : 2,272
Analysis of Shareholdings
Size of Holdings No of Holders No of Shares %
Less than 100100 - 9991, 000 - 4, 9995, 000 - 10,00010,001 - 100,000100,001 - 1, 000, 000Above 1, 000, 000
Total
1,05114, 907
1, 802, 0975, 264, 304
16, 262, 37327, 185, 220
175, 718, 620
226, 248, 571
0.000.000.802.337.19
12.0277.66
100.00
Analysis of Shareholdings as at 27 June 2007
1948
891717
466 9140
2, 272
List of Substantial Shareholders as Per Register of Substantial Shareholders
Name Direct % Indirect %
Topclass Access Sdn. Bhd (TASB)
Dr. Tan Boon Nunt
Lee Suet Hong
41, 250, 020
15, 737, 260
16, 398, 760
-
18.23
18.23
18.23
6.96
7.25
-
41, 250, 020 *
41, 250, 020 *
Direct & deemed interest of Director
Name Direct % Indirect % Esos % Warrant %
* Deemed interested by virtue of their shareholding in TASB pursuant to Section 6A of the Companies Act, 1965.
Dr. Tan Boon Nunt
Lee Suet Hong
Tan Sri Dato’ (DR) Abdul Aziz Bin AbdulRahman
Low To Fong
6.96
7.25
0.04
0
41, 250, 020 *
41, 250, 020 *
-
0
18.23
18.23
-
0
575,000
575,000
-
0
5.75
5.75
-
0
3,640,116
2,944,983
-
0
5.44
4.40
-
0
15, 737, 260
16, 398, 760
100,000
0
75
ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2007
List of Top 30 shareholders
Name No. of Shares Held %
CIMB Group Nominees (Tempatan) Sdn. Bhd. for Topclass Access Sdn. Bhd.
Topclass Access Sdn. Bhd.
Kenanga Nominees (Tempatan) Sdn. Bhd.for Tan Boon Nunt
Teoh Chuan Guan
Dr Tan Boon Nunt
M&A Nominee (Tempatan) Sdn. Bhd.)for Lee Suet Hong
Lee Suat Yean
Wong Mun Hoo
Tan Lye Ban
Kenanga Nominees (Tempatan) Sdn. Bhd.for Lee Suet Hong
M&A Nominee (Tempatan) Sdn. Bhd.for Lim Chean Keong
Wong Tuck Kuen
Lim Chean Keong
M&A Nominee (Tempatan) Sdn. Bhd.for Liew Nyek Mee
Wong Thay Wee
M&A Nominee (Tempatan) Sdn. Bhd.for Tan Lye Ban
Cimsec Nominees (Tempatan) Sdn. Bhd.for Lee Suet Hong
Ng Kong Boon
Liew Nyek Mee
Malacca Equity Nominees (Tempatan) Sdn. Bhd.for Wong Thay Wee
Choong Wai Han
Chan Choon Chye
M&A Nominee (Tempatan) Sdn. Bhd.for Ng Chee Kwong
Ng Chee Kwong
M&A Nominee (Tempatan) Sdn. Bhd.for Teoh Chuan Guan
Saw Soon Chong @ Saw Choo Hong
Lee Suet Hong
Ng Lay Cheng
Tan Soong Ling
M & A Nominee (Tempatan) Sdn. Bhd.for Saw Soon Chong @ Saw Choo Hong
Total
26,000, 000
15,000, 000
10, 000, 000
7,573, 800
5, 737,260
5, 000, 000
4, 980, 000
4, 948, 600
4, 933, 800
4, 567, 500
4, 539, 200
4, 509, 000
4, 416, 800
4, 281, 900
4, 198, 000
4, 003, 600
4, 000, 000
3,880,100
3,755, 000
3,715, 600
3,524,000
3,410,800
3,253,800
3,209,800
3,080,000
2,955,000
2,831,260
2,630,000
2,545,900
2,533,500
160,013,650
11.49
6.62
4.41
3.34
2.53
2.20
2.20
2.18
2.18
2.01
2.00
1.99
1.95
1.89
1.85
1.76
1.76
1.71
1.65
1.64
1.55
1.50
1.43
1.41
1.36
1.30
1.25
1.16
1.12
1.11
70.55
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Analysis of Shareholdings as at 27 June 2007
asiaEP Annual Report 2007 76
ASIAEP BHD (Company No. 253387-W)
Analysis of warrant holdings
Size of holdings No of Holders % No of warrants %
Less than 10001000 - 10,00010, 001 - 100, 000100, 001 - Less than 5% ofissued shares.5% and above ofissued shares
Total
14,2243,794, 627
12, 957, 61336, 258, 951
3, 642, 975
56, 668, 390
0.036.70
22.8763.98
6.42
100.00
Analysis of warrant holdings as at 27 June 2007
144699
36583
1
1, 292
11.1554.1028.25
6.42
0.08
100.00
77
ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2007
List of Top 30 warrant holders
Name No. of warrant held %
Topclass Access Sdn. Bhd.
HLG Nominees (Tempatan) Sdn. Bhd.for Chung Chiong Bing
Khoo Keat
Cimsec Nominees (Tempatan) Sdn. Bhd.for Tan Boon Nunt
Topclass Access Sdn. Bhd.
Onn Teik Hock
Kenanga Nominees (Tempatan) Sdn. Bhd.for Lee Suet Hong
Tan Boon Nunt
Goh Chye Hong
Cimsec Nominees (Tempatan) Sdn. Bhd.for Lee Suet Hong
Public Nominees (Tempatan) Sdn. Bhd.for Ramanathan A/L Kulanthaivelan
Toh Bee Hiang
TA Nominees (Tempatan) Sdn. Bhd.for Tan Siew Tin
Mayban Nominee (Tempatan) Sdn. Bhd.for Eng Beng Lan
Wong Ah Yong
RHB Nominees (Tempatan) Sdn. Bhd.for Wong Chan Thong
Siew Weng Lee
Yau Pik Cheng
Ambank Bhd.for Wong Ah Yong
Cimsec Nominees (Tempatan) Sdn. Bhd.For Yap Yit Chang
TA Nominee (Tempatan) Sdn. Bhd.for Yee Boon Chee
Low Chon
Chan Eng Nai
Abang Karim Bun Abang Fata
Chew Chong Kee
SJ Nominee (Tempatan) Sdn. Bhd.for Ang Siew Im
Harijinder Singh A/L Kuldip Singh
Mayban Nominees (Tempatan) Sdn. Bhd.for Liang Chee Hoo
Matheswaran Rajagopal
Public Nominees (Tempatan) Sdn. Bhd.for Lian Man Hoong
Total
3,642, 975
2,769, 000
2,702, 000
2,166, 666
1, 688, 636
1, 650, 000
1, 522, 500
1, 473, 450
1, 340, 000
1, 333, 133
1, 000, 000
890, 000
674, 000
672, 000
610, 000
603, 000
600, 000
588,500
500, 000
500, 000
478,800
410,000
400,000
380,000
362,100
343,000
335,000
325,900
300,000
300,000
30,561,360
6.42
4.88
4.76
3.82
2.97
2.91
2.68
2.60
2.36
2.35
1.76
1.57
1.18
1.18
1.07
1.06
1.05
1.03
0.88
0.88
0.84
0.72
0.70
0.67
0.63
0.60
0.59
0.57
0.52
0.52
53.77
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Analysis of warrant holdings as at 27 June 2007
asiaEP Annual Report 2007 78
ASIAEP BHD (Company No. 253387-W)
Description/existing use
3rd Floor,Corner-Shop lot/Commercial
Single-storeysemi-detached
house/residential
Double-storeyshop-office
Double-storeyshop-office
Date ofAcquisition/Price
24 Nov 2001RM 67, 400
12 April 2002RM 180, 000
6 July 2004RM 430, 000
6 July 2004RM 430, 000
Age ofBuildings/Land Area
4 year/ 784 sq ft
47 years/2942 sq ft
11 years/1540 sq ft
11 years/1540 sq ft
Tenure
Leaseholdfor99 years,expiringon14 June2092
Leaseholdfor99 years,expiringon12 July2056
Leaseholdfor99 years,expiringon18 July2095
Leaseholdfor99 years,expiringon18 July2095
List of Properties
Auditednet bookvalueas at28 February2007 (RM’000)
61
162
407
407
Landed property
Registered owner/title/ Address
Unit 553-3A,3rd FloorMetro Ipoh Baru,Perak(Master Title Nos:HS(D)KA 27098,27099, 27100,27101, 27105 andPT No. 123928 inthe Mukin of HuluKinta, District ofKinta, State ofPerak)
35, Jalan 8/18,Petaling Jaya46050 Selangor(H.S. (D) 124476,Lot No. PT 35,Road 8/18, BandarPetaling Jaya,District of PetalingJaya)
18, Jalan TK2/1C, TamanKinrara Seksyen 2,47100 Puchong, SelangorDarul Ehsan, Malaysia
20, Jalan TK2/1C, TamanKinrara Seksyen 2,47100 Puchong, SelangorDarul Ehsan, Malaysia
79
ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2007
NOTICE IS HEREBY GIVEN THAT the Fourteenth Annual General Meeting of the Company will be held atLevel 3, Cempaka Room, HOTEL EQUATORIAL BANGI-PUTRAJAYA, Off Persiaran Bandar, 43650 Bandar BaruBangi, Selangor on Friday, 27 July 2007, at 10.00 a.m. to transact the following businesses:-
Resolution 1
Resolution 2
Resolution 3
Resolution 4
Resolution 5
Resolution 6
Resolution 7
Notice of Annual General Meeting
AGENDA
ORDINARY BUSINESS
1. To receive the Audited Financial Statements of the Company for the financial year ended 28February 2007 together with the Reports of the Directors and Auditors thereon.
2. To approve the payment of Directors’ Fees for the financial year ended 28 February 2007.
3. To consider and if thought fit, to pass the following resolutions:-
3.1. “That Tan Sri Dato (Dr) Abdul Aziz Bin Abdul Rahman who retires pursuant to Section129 of the Companies Act, 1965, be and is hereby re-appointed a Director of theCompany.”
3.2. “That Low To Fong who retires pursuant to Article 90 of the Company’s Articles ofAssociation, be and is hereby re-elected a Director of the Company.”
4. To re-appoint Messrs Monteiro & Heng as Auditors of the Company and to authorise theDirectors to fix their remuneration.
SPECIAL BUSINESS
To consider and if thought fit, to pass the following ordinary resolution.
5. Authority to issue shares
“THAT, subject always to the Companies Act, 1965, the Articles of Association of the Companyand approvals of the relevant governmental and/or regulatory authorities, approval be and ishereby given for the Directors to exercise, pursuant to Section 132D of the Companies Act,1965, the power to issue shares in the Company from time to time and upon such terms andconditions and for such purposes as the Directors may deem fit provided that the aggregatenumber of shares issued pursuant to this resolution does not exceed ten per centum (10%) ofthe total issued share capital of the Company and that such approval shall continue in forceuntil the conclusion of the next Annual General Meeting of the Company.”
6. To consider and, if thought fit, to pass the following Ordinary Resolution:-
“That, subject always to the Companies Act, 1965, the Articles of Association of the Companyand the approvals of the relevant government and/or regulatory authorities, the Company beand is hereby authorized to purchase such amount of ordinary shares of RM0.10 each in the
asiaEP Annual Report 2007 80
ASIAEP BHD (Company No. 253387-W)
Resolution 8
Company (“Proposed Share Buy- Back”) as may be determined by the Directors of the Companyfrom time to time through Bursa Malaysia Securities Berhad (“Bursa Securities”) upon suchterms and conditions as the Directors may deem fit in the interest of the Company providedthat the aggregate number of shares purchased pursuant to this resolution does not exceed10% of its issued and paid-up share capital and the 10% shall always take into account anyof the Proposed Share Buy-Back backed by an equivalent amount of audited retainedprofits and / or share premium of the Company. Upon purchase by the Company of its ownshares, the purchased shares will be cancelled or retained as treasury shares or both and/ordealt with in accordance with the relevant prevailing statutory provisions and guidelines. That,the Directors be and are hereby empowered to do all acts and things to give effect to theProposed Share Buy-Back and to be dealt with in accordance with Listing Requirements ofBursa Malaysia Securities Berhad for MESDAQ Market and Companies Act, 1965. That, suchauthority shall commence immediately upon passing of this resolution until the conclusion ofthe next Annual General Meeting of the Company or the expiry of the period within which thenext Annual General Meeting is required by law to be held or revoked or varied by ordinaryresolution passed by shareholders in general meeting, whichever occurs first, but so as not toprejudice the completion of a purchase made before such expiry date.”
7. To consider and, if thought fit, to pass the following Special Resolution:-
Proposed Amendments to Articles of Association
“THAT the alteration, modifications and/or additions to the Articles of Association of theCompany as set out in Appendix I of the 2007 Annual Report be and are hereby approved.”
8. To transact any other business for which due notice shall have been given.
81
ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2007
Notice of Annual General Meeting (continued)
BY ORDER OF THE BOARDMary Margret A/P V. Pelly (LS 04402)Ng Chong Teck (LS 0008866)SecretariesKuala LumpurDated : 5 July 2007
NOTES:-
A member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy to attend and voteinstead of the member. A proxy may but need not be a member of the Company. The instrument appointing a proxy shallbe in writing under the hand of the appointor or his attorney duly authorised in writing, or if the appointor is a corporation,either under its common seal or under the hand of an officer or attorney duly authorised.
Where a member appoints more than one (1) proxy, the member shall specify the proportion of the members’ shareholdingto be represented by each proxy.
The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or anotarially certified copy of that power or authority shall be deposited with the Company’s registered office at 18 & 20Jalan TK2/1C, Taman Kinrara Seksyen 2, 47100 Puchong, Selangor Darul Ehsan not less than 48 hours before the timefor holding the meeting or adjourned meeting.
Explanatory notes on special business
1. Authority to issue shares
The proposed Ordinary Resolution, under item (5) if passed, will empower the Directors to issue shares in the Companyup to an amount not exceeding 10% of the total issued share capital of the Company for such purposes as the Directorsconsider would be in the interest of the Company. In order to avoid any delay and costs involved in convening a generalmeeting, it is thus appropriate to seek members’ approval.
2. Proposed Renewal of Share Buy-Back
The proposed Special Resolution, under item (6) if passed, will give the Directors of the Company authority to purchaseits own shares up to 10% of the issued and paid-up share capital of the Company. This authority, unless revoked orvaried by the shareholders of the Company in general meeting, will expire at the conclusion of the next Annual GeneralMeeting.
3. Resolution to amend Articles of Association
The proposed Special Resolution, under item (7) if passed, is to amend the Articles of Association of the Company in linewith the revamped Listing Requirements of Bursa Malaysia Securities Berhad for the MESDAQ Market. The details of theProposed Amendments to the Articles of Association are set out in Appendix I of the 2007 Annual Report.
asiaEP Annual Report 2007 82
ASIAEP BHD (Company No. 253387-W)
Pursuant to Rule 8.36(2) of the Listing Requirements of Bursa Malaysia Securities Berhad for the MESDAQ Market
Further to the details of the individuals who are standing for re-election as Directors
The Directors retiring are
1. Tan Sri Dato’ (Dr) Abdul Aziz Bin Abdul Rahman who retires pursuant to Section 129 of the Companies Act,1965.
2. Low To Fong who retires pursuant to Article 90 of the Company’s Articles of Association.
Their details are set out in the Directors’ Profile which appear on pages 8 and 9 of this Annual Report, while theirsecurities holdings in the Company and its subsidiaries (if any) are disclosed on page 4 of Audited Financial Statements.
Statement Accompanying Notice of Annual General Meeting
83
ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2007
Details to the Proposed Amendments to the Articles of Association of the Company(Insertions are highlighted in italics and deletions are highlighted by underline)
Article No. Existing Article Proposed Article
2
2
2
21
Central Depository –Malaysian Central Depository Sdn Bhd
the Listing Requirements –The Listing Requirements of Kuala LumpurStock Exchange for the MESDAQ Market.
the Stock Exchange –Kuala Lumpur Stock Exchange and/or otherstock exchange or in which the shares andother securities of the Company are quoted.
The Company shall have a first andparamount lien of every share (not being fullya paid share) and dividends for all money(whether presently payable or not) called orpayable as declared from time to time inrespect of that share, provided that the saidlien shall be restricted to the following:-
(i) all unpaid instalment andinterest thereon and to suchamounts as the Company maybe called upon by law to payand has paid in respect of theshares of the Member(s) ordeceased Member(s);
(ii) on all shares (other than fullypaid shares) registered in thename of a Member for allmoneys (whether presentlypayable or not) payable by himor his estate, to the Companybut the Directors may at anytime declare any share to bewholly or in part exempt for theprovisions of this Article;
(iii) on shares acquired under anemployee share optionscheme, amounts which areowed to the Company foracquiring them.
The Company’s lien, if any, on a share shallextend to all dividends payable thereon, andin each case, the lien extends to reasonableinterest and expenses incurred because theamount is not paid.
Central Depository –Bursa Malaysia Depository Sdn Bhd
the Listing Requirements –The Listing Requirements of Bursa MalaysiaSecurities Berhad for the MESDAQ Market.
the Stock Exchange –Bursa Malaysia Securities Berhad and/or otherstock exchange or in which the shares and othersecurities of the Company are quoted.
The Company shall have a first and paramountlien of every share (not being fully a paid share)and dividends for all money (whether presentlypayable or not) called or payable as declaredfrom time to time in respect of that share,provided that the said lien shall be restricted tothe following:-
(i) all unpaid instalment and interestthereon and to such amounts asthe Company may be called uponby law to pay and has paid inrespect of the shares of theMember(s) or deceasedMember(s);
(ii) on all shares (other than fully paidshares) registered in the name ofa Member for all moneys (whetherpresently payable or not) payableby him or his estate, to theCompany;
(iii) on shares acquired under anemployee share option scheme,amounts which are owed to theCompany for acquiring them.
In each case, the lien extends to reasonableinterest and expenses incurred because theamount is not paid.
Appendix l
asiaEP Annual Report 2007 84
ASIAEP BHD (Company No. 253387-W)
Article No. Existing Article Proposed Article
65
67
Subject to the provisions of the Act andagreements for shorter notice, at leastfourteen (14) days’ notice or at least twenty-one (21) days’ where any special resolutionis proposed or where it is an annual generalmeeting, specifying the place, the day andthe hour of meeting, and in the case specialbusiness the general nature of suchbusiness, shall be given in the mannerhereinafter mentioned to such persons asare under the provisions of these Articlesentitled to receive notices of generalmeetings from the Company, but with theconsent of all persons for the time beingentitled as aforesaid, a meeting may beconvened upon a shorter notice, and in suchmanner as such persons may approve.Notice of any meeting convened shall begiven by way of advertisement in one (1)daily newspaper published in Malaysia atleast fourteen (14) days before the date forwhich the meeting is to take place or at leasttwenty-one (21) days before the date forwhich the meeting is to take place in the casewhere any special resolution is proposed orwhere it is the annual general meeting, andsuch notice shall similarly be served on everystock exchange upon which the shares ofthe Company are for the time being listed.Any such notice in relation to any specialbusiness, shall be accompanied by astatement explaining the effects if suchresolution in respect of such business isadopted and implemented.
The Company shall inform the CentralDepository of the dates of general meetingsan shall in written request made in duplicatein the prescribed form and in accordancewith the Rules, request the CentralDepository in accordance with the Rules, toissue the Record of Depositors, as at the dateat least (3) market days prior to and notincluding the date of the general meeting(hereinafter referred to as “the GeneralMeeting Record of Depositors”). The GeneralMeeting Record of Depositors shall be thefinal record of all Depositors who shall bedeemed to be the registered holders ofordinary shares of the Company eligible tobe present and vote at such meeting.
Subject to the provisions of the Act andagreements for shorter notice, at least fourteen(14) days’ notice or at least twenty-one (21) days’where any special resolution is proposed orwhere it is an annual general meeting,specifying the place, the day and the hour ofmeeting, and in the case special business thegeneral nature of such business, shall be givenin the manner hereinafter mentioned to suchpersons as are under the provisions of theseArticles entitled to receive notices of generalmeetings from the Company, but with theconsent of all persons for the time being entitledas aforesaid, a meeting may be convened upona shorter notice, and in such manner as suchpersons may approve. Notice of any meetingconvened shall be given by way ofadvertisement in one (1) nationally circulatedBahasa Malaysia or English published inMalaysia at least fourteen (14) days before thedate for which the meeting is to take place or atleast twenty-one (21) days before the date forwhich the meeting is to take place in the casewhere any special resolution is proposed orwhere it is the annual general meeting, and suchnotice shall similarly be served on every stockexchange upon which the shares of theCompany are for the time being listed. Any suchnotice in relation to any special business, shallbe accompanied by a statement explaining theeffects if such resolution in respect of suchbusiness is adopted and implemented.
The Company shall request the CentralDepository in accordance with the Rules, toissue the Record of Depositors, as at the dateat least (3) market days prior to the generalmeeting (hereinafter referred to as “the GeneralMeeting Record of Depositors”). The GeneralMeeting Record of Depositors shall be the finalrecord of all Depositors who shall be deemedto be the registered holders of ordinary sharesof the Company eligible to be present and voteat such meeting.
85
ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2007
Article No. Existing Article Proposed Article
67A
90
127
97A
165
166
[New Article]
At the annual general meeting in every yearone third of the Directors for the time beingor, if their number is not a multiple of threethen the number nearest but not exceedingone third shall retire from office and beeligible for re-election PROVIDED ALWAYSthat all Directors except a Managing Directorshall retire from office once at least three (3)years but shall be eligible for re-election. Aretiring Director shall retain office until theclose of the meeting at which he retires.
A Managing Director shall not, while hecontinues to hold that office, be subject toretirement by rotation, and he shall not bereckoned as a Director for the purpose ofdetermining the rotating or retirement ofDirectors or in fixing the number of Directorsto retire, but he shall subject to provisions ofany contract between him and the Company,be subject to the same provisions as toresignation and removal as the otherDirectors of the Company and if he ceasesto hold the office of Director from any causeshall ipso facto and immediately cease to bea Managing Director.
[New]
The Company shall not delete, amend or addto any of its existing articles which havepreviously been approved by the StockExchange, unless prior written approval hasbeen sought and obtained from the StockExchange for such deletion, amendment oraddition.
For the purpose of this Article, unless thecontext otherwise requires, “ListingRequirements” means the ListingRequirements of the Kuala Lumpur StockExchange for the Mesdaq Market includingany amendment to the Listing Requirementsthat may be made from time to time.
Subject to the Securities Industry (CentralDepositories) (Foreign Ownership) Regulation1996 (where applicable), a depositor shall notbe regarded as a member entitled to attend anygeneral meeting and to speak and vote thereatunless his name appears in the GeneralMeeting Record of Depositors.
At the annual general meeting in every yearone third of the Directors for the time being or, iftheir number is not a multiple of three then thenumber nearest but not exceeding one thirdshall retire from office and be eligible for re-election PROVIDED ALWAYS that all Directorsshall retire from office once at least three (3)years but shall be eligible for re-election. Aretiring Director shall retain office until the closeof the meeting at which he retires.
A Managing Director shall subject to provisionsof any contract between him and the Company,be subject to the same provisions as toresignation and removal as the other Directorsof the Company and if he ceases to hold theoffice of Director from any cause shall ipso factoand immediately cease to be a ManagingDirector.
A Director may appoint a person approved by amajority of his co-directors to act as his alternate,provided that any fee paid by the Company tothe alternate shall be deducted from thatDirector’s remuneration.
[Deleted]
For the purpose of this Article, unless the contextotherwise requires, “Listing Requirements”means the Listing Requirements of the BursaMalaysia Securities Berhad for the MESDAQMarket including any amendment to the ListingRequirements that may be made from time totime.
asiaEP Annual Report 2007 86
ASIAEP BHD (Company No. 253387-W)
ASIAEP BERHAD(Company No. : 253387-W)(Incorporated In Malaysia)
I/We, ………… ….……..………………………………NRIC No. :…………………………...............................….
of……………………….………………………………………………………………………..............................…..
……………………..…………………………………………………………………………...........................………
being a member/members of the abovenamed Company, hereby appoint……………………................………………………………………..……of………………………………………………..………….…or failinghim, the Chairman of the Meeting as my/our proxy to attend and vote for me/us on my/our behalf at theAnnual General Meeting of the Company to be held at Level 3, Cempaka Room, Hotel Equatorial,Bangi-Putrajaya, off Persiaran Bandar, 43650 Bandar Baru Bangi, Selangor on Friday, 27 July 2007,at 10.00 a.m. and at any adjournment thereof in the manner indicated below:-
Resolutions Number For Against
Adoption of Financial Statements and Reports 1
Directors’ fees 2
Re-election of Director:
-Tan Sri Dato (Dr) Abdul Aziz Bin Abdul Rahman 3
- Low To Fong 4
Re-appointment of Auditors 5
Authority to issue shares pursuant to Section 132D 6
Proposed Renewal of Share Buy-Back Authority 7
Amendments to Articles of Association 8
Please indicate with an “X” in the appropriate box against the resolution how you wish your proxy to vote. Ifno instruction is given, this form will be taken to authorise the proxy to vote at his/her discretion.
Number of Shares ………………………
CDS No. ……………............................…
……………………….……..….……..…........ …………………………..……..….……..….Date : Signature
Notes:-A member entitled to attend and vote at the General Meeting is entitled to appoint a proxy to attend and vote instead of the member. Aproxy may but need not be a member of the Company. The instrument appointing a proxy shall be in writing under the hand of theappointor or his attorney duly authorised in writing, or if the appointor is a corporation, either under its common seal or under the handof an officer or attorney duly authorised.
Where a member appoints more than one (1) proxy, the member shall specify the proportion of the members’ shareholding to berepresented by each proxy.
The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certifiedcopy of that power or authority shall be deposited with the Company’s registered office at 18 & 20 Jalan TK2/1C, Taman KinraraSeksyen 2, 47100 Puchong, Selangor Darul Ehsan not less than 48 hours before the time for holding the meeting or adjourned meeting.
Proxy Form
87
ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2007
fold this line for sending
Second fold here
Third fold here
asiaEP BERHAD (Co No: 253387-W)
18 & 20, Jalan TK2/ 1C, Taman Kinrara
Seksyen 2, 47100 Puchong
Selangor Darul Ehsan, Malaysia
Af f i x
Stamp