Annual Report - SCOPE · 2011-11-03 · the firm until 2000. He then joined Messrs Skrine as a partner in the Corporate Division in January 2001. Currently, he is the co-head of the

We Care, We Share

2 01 1

A n n u a l R e p o r t

CONTENTS

02 Corporate Information

03 History, Principal Activities and Group Structure

04 Chairman's Statement

05 Statement on Corporate Social Responsibility

06 - 07 Directors' Profiles

08 - 13 Corporate Governance Statement

14 Statement on Internal Control

15 - 17 Audit Committee's Report

18 - 20 Directors' Report

21 Directors' Statement and Statutory Declaration

22 - 23 Independent Auditors' Report to the Members of Scope Industries Berhad

24 Consolidated Statement of Financial Position

25 Consolidated Statement of Comprehensive Income

26 Consolidated Statement of Changes in Equity

27 - 28 Consolidated Statement of Cash Flows

29 Statement of Financial Position

30 Statement of Comprehensive Income

31 Statement of Changes in Equity

32 Statement of Cash Flows

33 - 67 Notes to the Financial Statements

68 - 69 Notice of Annual General Meeting

70 Statement Accompanying Notice of Annual General Meeting

71 - 72 Appendix 1

73 Notice Of Dividend Entitlement

74 List of Properties

75 - 76 Analysis of Shareholdings

77 Proxy Form

79 - 80 Notification on eDividend

SCOPE INDUSTRIES BERHAD (591376-D) ANNUAL REPORT 201102

CORPORATE INFORMATION

COMPANY SECRETARIES Chee Wai Hong (MIA 17181)Foo Li Ling (MAICSA 7019557)

AUDIT COMMITTEE

Tan Poh Heng (Chairman)Dato’ Philip Chan Hon Keong Yong Loong Chen

REGISTERED OFFICE 51-13-A Menara BHL BankJalan Sultan Ahmad Shah10050 Penang Tel: 04-228 9700Fax: 04-227 9800

BUSINESS ADDRESS Lot 6181 Jalan Perusahaan 2Kawasan Perindustrian Parit Buntar34200 Parit BuntarPerakTel: 05-716 9605Fax: 05-716 6606

SHARE REGISTRAR Symphony Share Registrars Sdn. Bhd.Level 6, Symphony HouseBlock D13, Pusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling JayaSelangorTel: 03-7841 8000Fax: 03-7841 8008

AUDITORS Grant ThorntonChartered Accountants51-8-A Menara BHL BankJalan Sultan Ahmad Shah10050 Penang Tel: 04-228 7828Fax: 04-227 9828

PRINCIPAL BANKERS Hong Leong Bank BerhadHSBC Bank Malaysia Berhad

SOLICITORS

Wong Beh & Toh

STOCK EXCHANGE LISTING

ACE Market of Bursa Malaysia Securities BerhadStock Name : SCOPEStock Code : 0028Website : http://www.scope.com.my

DIRECTORS

Dato’ Philip Chan Hon Keong (Chairman/Independent Non-Executive Director)Lim Chiow Hoo (Managing Director)Lee Min Huat (Executive Director)Tan Poh Heng (Independent Non-Executive Director)Yong Loong Chen (Independent Non-Executive Director)


HISTORY, PRINCIPAL ACTIVITIES AND GROUP STRUCTURE

Scope Industries Berhad (“Scope”) was incorporated in Malaysia on 2 September 2002 under the Companies Act, 1965 as a public limited company under its present name. Scope is principally an investment holding company with three (3) wholly-owned subsidiaries, namely Scope Manufacturers (M) Sdn. Bhd. (“SMSB”), Trans Industry Sdn. Bhd. (“TISB”) and Scope Sales & Services Sdn. Bhd. (“SSSB”). Besides that, Scope via SSSB has a 33% and 46.795% interest in associate companies namely Paramit Scope Sdn. Bhd. (“PSSB”) and Dien Quang-Scope Joint Stock Company (“DQS”) respectively.

The current group structure is as follows:-

The principal activities of its subsidiaries and associate are as follow:-

CompaniesDate and Place of

IncorporationIssued and Paid-up

Share Capital Principal activities

RM

Subsidiaries

Scope Manufacturers (M) Sdn. Bhd.

20 November 1991Malaysia

3,220,000 Manufacturing and assembling of electronic components and products.

Scope Sales & Services Sdn. Bhd.

18 December 2002 Malaysia

2 Investment holding and trading of electrical products.

Trans Industry Sdn. Bhd. 18 February 2000Malaysia

500,000 Ceased operation during the financial year.

Associates of Scope Sales & Services Sdn. Bhd.

Paramit Scope Sdn. Bhd. 12 August 2005 Malaysia

500,000 International procurement centre.

Dien Quang-Scope Joint Stock Company

23 May 2008(Vietnam)

VDN25,272,000,000 Manufacturing and assembling of electronics components and products.


CHAIRMAN'S STATEMENT

On behalf of the Board of Directors, I am pleased to present to you the Annual Report and Audited Financial Statements of the Group and the Company for the financial year ended 30 June 2011.

INDUSTRY TRENDS AND DEVELOPMENT

Consumer confidence in America and Europe has plunged as a result of high unemployment and a persistent sovereign debt

crisis that has yet to be satisfactorily resolved. Since the United States of America and Europe are the largest electrical

and electronics products consuming countries, the lower confidence level may slow down the demand for the electrical and

electronics product. With the current economic uncertainty and competitive market environment, we expect the next financial

year to be challenging.

OPERATION REVIEW

Revenue for the financial year ended 30 June 2011 was approximately RM21.48 million, which represents growth of 17.56%

over the preceding year. The Group posted a net profit of RM5.21 million for the financial year ended 30 June 2011 as

compared to a net loss of RM4.16 million in the financial year ended 30 June 2010, which amounts to an improvement of

225.34%. The increased profitability is attributable to a costs saving exercise and economies of scale arising from better

utilization of fixed factory overheads following the increase in revenue.

PROSPECT

We will continue to implement cost cutting measures and monitor developments in market demands and industry trends in

order to remain operationally flexible and competitive to meet changing market conditions. We will also continue to seek new

business opportunities in order to strengthen the Group’s financial performance.

DIVIDEND

During the financial year, the Company paid a single tier interim dividend of 5% or 0.5 sen per ordinary share on 15 December

2010, totaling RM1,340,909.00 in respect of the financial year ended 30 June 2011.

The Directors recommended a final single tier dividend of 5% or 0.5 sen per ordinary share in respect of the financial year

ended 30 June 2011, subject to the shareholders’ approval at the forthcoming Annual General Meeting.

APPRECIATION

On behalf of the Boards of Directors, I wish to convey my gratitude to our shareholders, affiliates, partners and esteemed

customers for their support and confidence in our Group. I would like to extend my heartfelt gratitude to all of our employees

for your patience, dedication, hard work and the spirit of excellence that you have all exhibited. These attributes will definitely

help the Group to ride through the future challenges amidst the expected difficult business environment in the year ahead.

Last but not least, my sincere thanks to my Board Members for your expert guidance and insight. I look forward to your

support and commitment to secure the future growth of the Group.

Dato’ Philip Chan Hon KeongChairman


STATEMENT ON CORPORATE SOCIAL RESPONSIBILITY (CSR)

Scope Group’s Corporate Social Responsibility (CSR) principle emphasises on achieving commercial success in a balanced and responsible manner by addressing the interests of all stakeholders. The Group not only increases the stakeholder value through its core business but also bearing in mind of its responsibilities for the betterment of the community and the environment.

This simple guiding principle ensures that CSR, as we see it, is part and parcel of how we do business. The key initiatives currently undertaken by the Group are:-

ü Stakeholder Relations

• We are committed to timely and meaningful dialogues with all stakeholders, including shareholders, customers, employees, regulators, etc.

ü Employees

• The Group recognises that its employees are important assets. It takes good care of the welfare of its employees and employs them under fair and equitable terms besides offering equal opportunity for career advancement based on performance and academic qualification.

• Training on industrial safety is frequently conducted to ensure high level of awareness on safety requirement at all levels.

ü Community

• Strengthening our contribution to the community in our township and helping to foster better community care and goodwill with a target in place to employ 50% of local workforce.

• We have been conducting industrial training programmes for a period of 3 months providing training and work experience to students in the community.

ü Environment

• Improving on environmental care in our business operations with scheduled waste disposal. • Employees are encouraged to reduce the use of paper, recycle any recyclable items and reduce wastages. Efforts

have also been made to conserve energy by ensuring that all lights and air-conditioning are operating only when there is a need.

üSave A Life Campaign

In line with the theme of “Save a Life Campaign”, the Company had organised a Blood Donation Campaign for the blood bank of Parit Buntar General Hospital. We received a very good voluntarily response of donors from our employees.


DIRECTORS’ PROFILES

Dato’ Philip Chan Hon Keong, a Malaysian, aged 46, was appointed as a Chairman/Independent Non-Executive Director of

Scope on 17 April 2006. He graduated with a Bachelor of Economics and a Bachelor of Laws from The University of Sydney in

1989. Upon admission to the Malaysian Bar in June 1990, he practiced in Messrs Azalina, Chan & Chia and was a partner of

the firm until 2000. He then joined Messrs Skrine as a partner in the Corporate Division in January 2001. Currently, he is the

co-head of the Banking and Property Unit in Messrs Skrine. In addition to his directorship in Scope, he currently sits on the

board of several private limited companies and two public companies, JF Technology Berhad and Eksons Corporation Berhad.

Dato’ Philip Chan Hon Keong is the Chairman of the Nomination Committee and a member of the Audit Committee and

Remuneration Committee.

Lim Chiow Hoo, a Malaysian, aged 48 was appointed as the Managing Director of Scope on 15 July 2003. He is a

businessman by profession and is the founder of the Group. After completing his Higher School Certificate, he started his

career as a Treasurer at Hup Hin Chan Rice Mill Sdn. Bhd. from 1984 to 1990. In 1990, he became a sole-proprietor when

he set up his business of assembling PCB for office equipments. In 1991, he founded SMSB and his business in the sole

proprietorship was subsequently transferred to SMSB. SMSB’s operations expanded to include the assembly of PCB for

telecommunication products. Being the founder, he is directly involved in the growth and development of SMSB since its

inception in 1991. Under his stewardship, SMSB’s operations have since expanded to include the assembly of PCB for

various electronic products with specialisation in audio and telecommunication equipments.

Backed by more than 10 years of experience in the electronics industry, Mr. Lim Chiow Hoo possesses in-depth knowledge

on the overall operations of SMSB. His functional roles in the Group include the overall management of sales and marketing,

finance and operations of the Group.

Lee Min Huat, a Malaysian, aged 54, was appointed as the Executive Director of Scope on 15 July 2003. He graduated with

a Diploma in Aircraft Maintenance Engineering from Confederation College, Canada in 1979. Upon graduation, he worked as

a Manager at Kalayaan Sdn. Bhd., a property developer, from 1980 to 1984. For the past 20 years, he has been involved

in property development and commodity trading. In addition to his directorship in Scope, he currently holds directorships

in other private limited companies. He is currently responsible for the formulation of corporate strategies and plans for the

Group.

Mr. Lee Min Huat is a member of the Remuneration Committee.


DIRECTORS’ PROFILES (CONT'D)

Tan Poh Heng, a Malaysian, aged 54 was appointed as the Independent Non-Executive Director of Scope on 13 May 2008.

After completing his High School Certificate in 1977, he joined Messrs Price Waterhouse & Co. as an Audit Assistant in May

1978 until March 1983 when he completed his professional examination and qualified as an accountant. In the same year

he was admitted as a member of the Malaysian Institute of Certified Public Accountants and later a member of the Malaysian

Institute of Accountants in year 1987. On April 1983, Mr. Tan Poh Heng joined Messrs Peat, Marwick, Mitchell & Co. as a

Qualified Assistant and was subsequently promoted as an Audit Supervisor in January 1985. He left Messrs Peat, Marwick,

Mitchell & Co. in August 1985 to join South Island Garment Sdn. Bhd. as a Chief Accountant. Mr. Tan left South Island

Garment Sdn. Bhd. in March 2002 when he held the position of Senior General Manager and was subsequently employed by

Messrs JB Lau & Associates (now known as Grant Thornton) in June 2002 as the Senior Audit Manager, a position he held

until September 2003. He re-joined the workforce in December 2004 as the Chief Financial Officer of GPS Tech Solutions

Sdn. Bhd., an associated company of a public listed entity, Magni-Tech Industries Berhad, a position he holds to date.

Mr. Tan Poh Heng is also the Chairman of the Audit Committee and Remuneration Committee and a member of the Nomination

Committee.

Yong Loong Chen, a Malaysian, aged 45, was appointed as the Independent Non-Executive Director of Scope on 1 December

2008. He is a Chartered Accountant by profession as well as a member of the Malaysian Institute of Certified Public

Accountants and also member of the Malaysian Institute of Accountants. He joined Messrs KMPG Peat Marwick as audit

senior in year 1990 until 1994. Subsequently, he was attached with Paul Chuah & Co as Audit Manager from year 1994

to 1995. From year 1995 to 2010, he was a dealer representative with Affin Investment Bank Berhad. Currently he is the

Chairman and Executive Director of Fountain View Development Berhad.

Mr. Yong Loong Chen is a member of the Audit Committee and a member of the Nomination Committee.

Notes:

None of the Directors of the Company have any family relationship with any Director or major shareholders of the Company.

All the Directors do not have any conflict of interest with the Company and they also had not been convicted of any offence

within the past ten (10) years, other than traffic offences, if any.

The Directors’ shareholdings are as disclosed in page 75 of this Annual Report.


CORPORATE GOVERNANCE STATEMENT

A. THE MALAYSIAN CODE ON CORPORATE GOVERNANCE (“CODE”)

The Board fully supports the objectives of the Code and also acknowledges its role in ensuring that shareholders’ interests are properly looked after. For this reason, the Board affirms its policy of adhering to the principles set out in Part 1 of the Code and the extent of the Group’s compliance with the Best Practices in the Corporate Governance set out in Part 2 of the Code. This statement is made in accordance with a resolution of the Board of Directors dated 6 October 2011.

B. BOARD OF DIRECTORS

1. Composition and Attendance

The Board met four (4) times for the financial year ended 30 June 2011. It met within two (2) months from the end of every quarter of the financial period when the Group’s financial results were deliberated and considered prior to releasing them to Bursa Malaysia Securities Berhad (“Bursa Securities”) and the Securities Commission. The composition of the Board and the individual Directors’ attendance of meetings during the financial year ended 30 June 2011 were as follows:-

Attendance

Dato’ Philip Chan Hon Keong Chairman/Independent Non-Executive Director 4/4

Mr. Lim Chiow Hoo Managing Director 4/4

Mr. Lee Min Huat Executive Director 4/4

Mr. Tan Poh Heng Independent Non-Executive Director 4/4

Mr. Yong Loong Chen Independent Non-Executive Director 4/4 Scope is led and managed by an experienced Board comprising members with a range of experience in related

fields such as accounting, engineering and law. Together, the Directors bring a broad range of skills, experience and knowledge to direct and supervise the Scope Group business activities. The profile of each Director is pro- The profile of each Director is pro-vided on pages 6 to 7 of this Annual Report.

The Company Secretary ensures there is a quorum for all meetings and that such meetings are convened in accordance with the relevant Terms of Reference. The minutes prepared by the Company Secretary memorialise the proceedings of all meetings including pertinent issues, the substance of inquiries and responses, members’ suggestions and the decisions made. This reflects the fulfilment of the Board’s fiduciary duties and the significant oversight role performed by the respective Board Committees.

2. Supply and Access to Information

The Board members have full and unrestricted access to information on the Group’s business and affairs in discharging their duties. Prior to the meetings, all directors are provided with sufficient and timely reports and supporting documents which are circulated in advance of each meeting to ensure sufficient time is given to understand the key issues and contents.

All Directors also have full access to the advice and service of the Company Secretaries in furtherance of their duties. Where necessary, the Directors may obtain independent professional advice at the Company’s expense on specific issues to enable the Board to discharge their duties on the matters being deliberated.

3. Board Balance

The Board has five (5) Directors comprising two (2) Executive members and three (3) Independent Non-Executive members. The Chairman is an Independent Non-Executive member of the Board. The number of independent directors is in compliance with the Listing Requirements of Bursa Securities for the ACE Market which requires the Board to have at least two (2) independent directors or 1/3 of the Board to be independent. The Board operates in an open environment in which opinions and information are freely exchanged and in these circumstances any concerns need not be focussed onto a single director as all members of the Board fulfil this role individually and collectively.

The Board is alert to the possibility of potential conflicts of interest involving the Directors and the Company and affirms its commitment to ensure that such situations of conflict are avoided.


CORPORATE GOVERNANCE STATEMENT (CONT'D)

B. BOARD OF DIRECTORS

4. Appointments of Directors

The Nomination Committee which was formed on 19 November 2003 comprises of the following members and the individual Directors’ attendance of meetings during the financial year ended 30 June 2011 were as follows:-

Attendance

Dato’ Philip Chan Hon Keong (Chairman) Chairman/Independent Non-Executive Director 1/1

Mr. Tan Poh Heng Independent Non-Executive Director 1/1

Mr. Yong Loong Chen Independent Non-Executive Director 1/1

The Nomination Committee is empowered by its terms of reference and its primary function is to identify and recommend to the Board, technically competent persons of integrity and a strong sense professionalism to be appointed to the Board. The Committee will assess the suitability of an individual to be appointed to the Board by taking into consideration of the individual’s resources, other commitments and time available for input to the Board before recommendation is made for the Board’s approval. The Committee will also review annually, if necessary, the required mix of skill and experience and other qualities and competencies of its Directors and shall review the composition, structure and size of the Board.

The Chairman will report to the Board on the outcome of the Committee meetings.

5. Re-election of Directors

Any Director appointed during the year is required under the Company’s Articles of Association, to retire and is eligible to seek re-election by shareholders at the forthcoming Annual General Meeting (“AGM”). The Articles of Association of the Company also requires that Directors shall retire from office at least once every three years at the forthcoming AGM and shall be eligible for re-election.

The Director who is seeking for re-election at the forthcoming Ninth AGM is set out in the Notice of the AGM on page 68 in this Annual Report.

6. Directors’ Training

All the Directors of Scope have attended and successfully completed the Mandatory Accreditation Programme as required by the Bursa Securities. In addition, the Directors are encouraged to attend other relevant training programmes, courses and seminars relevant in enhancing the Directors in discharging their duties.

During the financial year, the Directors have also attended and participated at other seminars and conferences for the continuing enhancement of their knowledge and to keep abreast of developments in the market place. Among the training programmes attended by the Directors are as listed :

No. Name of Director Seminar/Training Course Attended Hours

1. Dato’ Philip Chan Hon Keong • Australasian Finance & Banking Conference (AFBC). (15, 16 & 17 December 2010)

36

2. Mr. Lim Chiow Hoo • Budget 2011 Highlights. (29 October 2010)

• Are Corporate Leader Safe from Litigation. (2 March 2011)

3

4



B. BOARD OF DIRECTORS (cont'd)

6. Directors’ Training (cont'd)

No. Name of Director Seminar/Training Course Attended Hours

3. Mr. Lee Min Huat • Sustainability Programme for Corporate Malaysia. (9 February 2011, 23 March 2011 & 13 April 2011)

• The Board’s Responsibility for Corporate Culture – Selected Governance Concerns and Tools for Addressing Corporate Culture and Board Performance. (5 May 2011)

12

3

4. Mr. Tan Poh Heng • Budget 2011 Highlights. (29 October 2010) • Sustainability Programme for Corporate Malaysia.

(23 March 2011 & 13 April 2011)


3

8

3

5. Mr. Yong Loong Chen • Towards Corporate Governance Excellence For Sustainable Success. (1 September 2010)

• Sustainability Programme for Corporate Malaysia. (9 February 2011, 9 March 2011, 23 March 2011 & 13 April 2011)


8

16

3

C. DIRECTORS’ REMUNERATION

1. Remuneration Committee

The Remuneration Committee which was formed on 19 November 2003 comprises of the following members and the individual Directors’ attendance of meetings during the financial year ended 30 June 2011 were as follows:-

Attendance

Mr. Tan Poh Heng (Chairman) Independent Non-Executive Director 1/1

Dato’ Philip Chan Hon Keong Chairman/Independent Non-Executive Director 1/1

Mr. Lee Min Huat Executive Director 1/1

The Remuneration Committee is empowered by its terms of reference and its primary function is to be responsible for recommending to the Board from time to time, the remuneration framework and package of the Executive Directors in all forms to commensurate with the respective contributions of the Executive Directors. The Executive Directors are to abstain from deliberations and voting on the decision in respect of their own remuneration packages. The Board as a whole decides on the remuneration of the Non-Executive Directors, including the Non-Executive Chairman. The individual concerned should abstain from deliberations of their own remuneration packages.

The Chairman will report to the Board on the outcome of the Committee meetings.



C. DIRECTORS’ REMUNERATION (cont'd)

2. Remuneration

The Directors are satisfied with the current levels of remuneration, which are in line with the responsibilities expected by the Company.

The details of the nature and amount of remuneration paid or payable to the Directors of the Company for the financial year ended 30 June 2011 are as follows :

Executive Non-Executive Total

RM

Salaries and bonuses 838,000 - 838,000

Fees 40,000 60,000 100,000

Benefits-in-kind 29,208 - 29,208

EPF 24,720 - 24,720

Allowance 4,000 6,000 10,000

935,928 66,000 1,001,928

The number of Directors whose remuneration falls into the following bands for the financial year ended 30 June 2011 are as follows :

Number of Directors

Range of Remuneration Executive Non-Executive

Below RM50,000 - 3

RM150,000 to RM200,000 1 -

RM750,000 to RM800,000 1 -

D. SHAREHOLDERS

The Board recognises the value of investor relations and the importance of disseminating information in a fair and equitable manner. The participation of shareholders and investors, both individual and institutional, at general meetings is encouraged whilst requests for briefings from the press and investment analysts are usually met as a matter of course.

Notice of Annual General Meeting and the annual report are sent to shareholders at least 21 days before the date of the meeting.

In addition, the shareholders and investors may visit Bursa Securities website (http://www.bursamalaysia.com) or Scope’s website (http://www.scope.com.my) to access the Company’s latest announcements such as quarterly financial results.

E. ACCOUNTABILITY AND AUDIT

1. Financial Reporting

The Board has a responsibility to present a true and fair assessment of the Group’s position and prospects primarily through the quarterly reports to the Bursa Securities and the Annual Report to shareholders. The Audit Committee assists the Board in scrutinising information for disclosure to ensure accuracy and adequacy.



E. ACCOUNTABILITY AND AUDIT (cont'd)

2. Statement of Directors’ Responsibility for Annual Audited Financial Statements

The Directors are responsible for the preparation of financial statements each financial year in accordance with the requirements of the Companies Act, 1965 and Financial Reporting Standards in Malaysia. Central to those requirements is the need to ensure that these financial statements present a true and fair view of the state of affairs of the Group and of the Company, the results, cash flows and statement of changes in equity. In the preparation of these financial statements for the financial year under review, appropriate accounting policies have been selected and they have been applied in a consistent manner.

The Directors have the general responsibility of taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

3. Internal Control

The Statement on Internal Control is laid out on page 14 of this Annual Report.

4. Relationship with the Auditors

The role of the Audit Committee in relation to the External Auditors may be found in the Report of the Audit Committee set out in pages 15 to 17. The Group has always maintained a close and transparent relationship with its auditors in seeking professional advice and ensuring compliance with the appropriate accounting standards.

5. Statement on the Compliance with the best practices of the Code The Board is committed to achieve high standards of corporate governance throughout the Group and high

level of integrity and ethics in its business dealings. The Board has taken steps to ensure that the Group has implemented as far as possible the best practices as set out in the Code. The Board considers that all other best practices have been implemented in accordance with the Code.

F. OTHER INFORMATION

1. Share Buybacks

During the financial year, the Company did not enter into any share buyback transactions.

2. Options or Convertible Securities

No options or convertible securities were granted to any person to take up unissued shares or debentures of the Company during the financial year.

3. Depository Receipt (DR)

During the financial year, the Company did not sponsor any DR programme.

4. Imposition of Sanctions and/or Penalties

There was no public imposition of sanctions and/or penalties imposed on the Company and its subsidiaries, directors or management by the regulatory bodies during the financial year.

5. Profit Guarantee

The Company did not receive any profit guarantee from any parties during the financial year.

6. Material Contracts

There were no material contracts entered into by the Company and its subsidiaries involving Directors’ and major shareholders’ interests either still subsisting as at 30 June 2011 or entered into since the end of the previous financial year.



F. OTHER INFORMATION (cont'd)

7. Revaluation Policy on Landed Properties

The Company does not adopt a policy of regular revaluation of its landed properties.

8. Recurrent Related Party Transactions of a Revenue or Trading Nature

There was no recurrent related party transaction of a revenue or trading nature during the financial year ended 30 June 2011.

9. Variation in Results

There were no material variations between the audited results for the financial year ended 30 June 2011 and the unaudited results released for the financial quarter ended 30 June 2011.

10. Utilisation of Proceeds

There was no corporate proposal implemented during the financial year ended 30 June 2011.

11. Non-Audit Fees

During the financial year, there was no non-audit fees paid to the external auditors of the Group or a company affiliated to the auditors' firm.


STATEMENT ON INTERNAL CONTROL

The Board is committed to maintain a sound system of internal control in the Group and is pleased to provide the following statement, which outlines the nature and scope of internal control of the Group during the financial year 2011.

Board Responsibility

In Scope, the Board has overall responsibility for internal control and risk management, and for reviewing the adequacy and integrity of those systems. The Board fully understands its responsibility to maintain a sound system of internal control to safeguard the interest of shareholders. The systems in place are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable but not absolute assurance against material misstatement or loss.

Risk Management

The Board recognises the importance of establishing a structured risk management framework to sustain and enhance good corporate governance practices. The Board has a structured Risk Management framework that undertakes the Group’s desires to identify evaluate and manage significant business risks. The framework includes examining of business risks, assessing impact and likelihood of risks and taking management action plans to mitigate and minimise risks exposure.

Key Internal Control Processes

The Board maintains an organisational structure with clearly defined levels of responsibility and authority and appropriate reporting procedures. The following outlines the main elements of the Group’s internal control system:-

(a) Supplying comprehensive financial and management reports to the Audit Committee and the Board on a quarterly basis for review.

(b) Stringent recruitment policy is set to ensure only capable and competent staff are employed which in turn ensure each operating unit is functioning effectively.

(c) The Group’s performance is monitored through management and operational meeting attended by senior management. The Managing Director and Executive Directors are involved in the day to day operations of the Group.

During the financial year, the Group has appointed an independent internal audit service provider to carry out internal audit reviews on assessing the adequacy and integrity of the internal control systems of the business units within the Group. The internal audit team highlights to the executive and operational management on areas for improvement and subsequently reviews the extent to which its recommendations have been implemented. The reports are submitted to the Audit Committee, who reviews the findings with management at its quarterly meetings. In addition, the management’s response to the control recommendations on deficiencies found during the internal audits in order to provide an added assurances that control procedures are in place, and being followed.

The cost incurred for the internal audit function in respect of the financial year ended 30 June 2011 was RM5,000.


AUDIT COMMITTEE’S REPORT

MEMBERS POSITION

Mr. Tan Poh Heng Chairman (Independent Non-Executive Director)

Dato’ Philip Chan Hon Keong Member (Chairman/Independent Non-Executive Director)

Mr. Yong Loong Chen Member (Independent Non-Executive Director)

The Terms of Reference of the Committee are as follows: -

1. MEMBERSHIP The Board should establish an audit committee of at least three directors, a majority of whom must be Independent

Non-Executive Directors with written terms of reference which deal clearly with its authority and duties. All members of the Committee should be Non-Executive Directors of the Company and all members of the Committee should be financially literate. At least one member of the Committee:-

• mustbememberoftheMalaysianInstituteofAccountants;or

• ifheisnotamemberoftheMalaysianInstituteofAccountants,hemusthaveatleast3yearsofworkingexperience and- he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act,

1967;or- he must be a member of one of the associations of accountants specified in Part II of the 1st Schedules

oftheAccountantsAct,1967;or- fulfills such other requirements as prescribed or approved by the Exchange.

The members of the Committee shall elect the Chairman from among their number who shall be an Independent Non-Executive Director. An alternate director shall not be a member of the Audit Committee.

If a Member of the Committee for any reason ceases to be a Member of the Committee with the result that the number of Member is reduced below (3), the Board shall within three (3) months of that event, appoint such number of new Member as may be required to make up the minimum number of three (3) Members.

2. ATTENDANCE AT MEETINGS The finance director, representatives of the internal auditor and a representative of the external auditors will be invited

to some of the Audit Committee Meetings. Other board members and employees may attend any particular Audit Committee meeting only at the Audit committee’s invitation, specific to the relevant meeting. At least twice a year, the Committee shall meet with external auditors without the presence of the Executive Directors. The Company Secretary shall be the secretary of the Committee.

3. FREQUENCY AT MEETINGS Meetings will be held not less than four times a year. Additional meetings may be held at the discretion of the

Committee or at the request of external auditors. The external auditors may request a meeting if they consider that one is necessary. The quorum for any meeting shall be two and the majority members of the Committee present must be Independent Non-Executive Directors.

The Chairman of the Audit Committee should engage on a continuous basis with senior management, such as the Chairman, the chief executive officer, the finance director, the head of the internal audit and the external auditors in order to be kept informed of matters affecting the Company.

4. RETIREMENT AND RESIGNATION In the event of any vacancy in an audit committee resulting in the non-compliance of sub-Rule 15.09(1) of the ACE

Market Listing Requirements of Bursa Malaysia Securities Berhad, a listed company must fill the vacancy within 3 months.


AUDIT COMMITTEE’S REPORT (CONT'D)

5. AUTHORITY The Committee is authorised by the Board to investigate any activity within its terms of reference, the resources

it needs to do so and full access to information pertaining to the Company. The Committee should have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity and be able to obtain external professional advice and to invite outsiders with relevant experience to attend, if necessary. The Committee should be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the listed company, whenever deemed necessary. It is authorised to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Committee.

6. DUTIES The duties of the Committee shall include:-

a) to consider the appointment/nomination/suitability of the external auditors, their audit fees and any question of their resignation or dismissal and to recommend to the Board.

b) to discuss with the external auditors before the audit commences, the nature and scope of their audit, their evaluation of the system of internal accounting controls and to ensure co-ordination where more than one audit firm is involved.

c) to discuss problems and reservations arising from the interim and final audits, and any matters the external auditors may wish to discuss (in the absence of management where necessary).

d) to keep under review the effectiveness of internal control system and, in particular, review external auditors’ management letter and management’s response.

e) to do the following, in relation to the internal audit function

• reviewtheadequacyofthescope,functions,competencyandresourcesoftheinternalauditfunctions,andtoensurethatithasthenecessaryauthoritytocarryoutitswork;

• reviewtheinternalauditprogramme,processes,theresultsoftheinternalauditprogramme,processesor investigation undertaken and, where necessary, ensure that appropriate actions are taken on the recommendationsoftheinternalauditfunction;

• reviewanyappraisalorassessmentoftheperformanceofmembersoftheinternalauditfunction;• approveanyappointmentorterminationofseniormembersoftheinternalauditfunction;and• takecognizanceofresignationsofinternalauditstaffmembersandprovidetheresigningstaffmemberan

opportunity to submit his reasons for resigning.

f) to review the quarterly results and year-end financial statements of the Company and of the Group, prior to the approval by the Board, whilst ensuring that they are prepared in a timely and accurate manner, focusing particularly on:-

• publicannouncementsofresultsanddividendpayment;• anychangesinorimplementationofmajoraccountingpoliciesandpractices;• majorjudgmentalareas;• significantadjustmentsresultingfromtheaudit;• thegoing-concernassumption;• compliancewithaccountingstandards;• compliancewithBursaSecuritiesandlegalrequirements;and• significantandunusualevents.

g) to consider/review any related party transactions and conflict of interest situation that may arise within the Company or the Group, including any transaction, procedure or course of conduct that raises questions of management integrity.

h) to consider the major findings of internal investigations and management’s response and ensure co-ordination between the internal and external auditors.

i) to review and verify the allocation of share options granted to employees pursuant to the Employees share option scheme, transactions, procedure or course of conduct that raises questions of management integrity.

j) to review with the external auditor, his audit report.

k) to review with the external auditor, the assistance given by the employees of the Company.


AUDIT COMMITTEE’S REPORT (CONT'D)

6. DUTIES (cont’d)

l) to review with the Board of Directors of the Company whether there is reason (supported by grounds) to believe that the Company’s external auditors is not suitable for re-appointment.

m) to consider/carry out such other functions and consider other topics, as may be agreed upon by the Board.

7. REPORTING PROCEDURES The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board.

ATTENDANCE AT MEETINGS

A total of four (4) Audit Committee meetings were held during the financial year ended 30 June 2011. The details of attendance of the Committee members are as follows:

Name of Committee Member Attendance

Mr. Tan Poh Heng 4/4Dato’ Philip Chan Hon Keong 4/4Mr. Yong Loong Chen 4/4

ACTIVITIES OF THE COMMITTEE

The summary of the activities of the Audit Committee during the financial year ended 30 June 2011 is as follows:

1. Reviewing and recommending for the Board’s approval on the quarterly financial results and audited financial statements.

2. Reviewing with the external auditors’ their audit planning memorandum.

3. Reviewed and approved the Internal Audit Report.

4. Reviewed the re-appointment of external auditors for the ensuring year.

INTERNAL AUDIT FUNCTION

The Group has outsourced the internal audit function to a firm of professional internal auditors. The main role of the internal audit is to review the effectiveness of the Group’s system of internal controls and this is performed with impartiality, proficiency and due professional care. The internal auditors report directly to the Audit Committee and assist the Board in monitoring and reviewing the effectiveness of the risk management, internal control and governance process within the Group.

The Audit Committee approved the internal audit plan presented by the internal auditors. The internal audit plan is derived based on the risk-based assessment of all units and operations of the Group. The internal audit reports highlight any deficiencies or findings which were discussed with the management and relevant action plans agreed to be implemented. Significant findings are presented in Audit Committee Meetings for consideration and reported to the Board and audit review is also conducted to determine whether the recommendations made by internal auditor are implemented.

Further details on the internal audit function and its activities are set out in the Statement on Internal Control on page 14 of this Annual Report.

The Board is of the view that there is no significant breakdown or weakness in the systems of internal controls of the Group that may result in material losses incurred by the Group for the financial year ended 30 June 2011.


DIRECTORS' REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011

The directors have pleasure in submitting their report together with the audited financial statements of the Group and of the Company for the financial year ended 30 June 2011.

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are disclosed in Note 4 to the financial statements.

There have been no significant changes in the nature of these activities during the reporting period.

RESULTS

GROUP COMPANY

RM RM

Profit after taxation for the year 5,212,723 2,847,916

In the opinion of the directors, the results of the operations of the Group and of the Company for the financial year ended 30 June 2011 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report except for the impairment loss on investment in associates amounting to RM355,044 recognised by the Group.

DIVIDENDS

Since the end of the previous financial year, the Company has paid an interim single tier dividend of 0.5 sen per share amounting to RM1,340,909 for the financial year ended 30 June 2011.

At the forthcoming Annual General Meeting, a final single tier dividend of 0.5 sen per share amounting to RM1,340,909 in respect of the financial year ended 30 June 2011 will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders will be accounted for in equity as an appropriation of retained profits in the financial year ending 30 June 2012.

RESERVES AND PROVISIONS

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

SHARE CAPITAL AND DEBENTURE

During the financial year, the Company did not issue any share or debenture and did not grant any option to anyone to take up unissued shares of the Company.

DIRECTORS

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

Dato’ Philip Chan Hon Keong Lim Chiow Hoo Lee Min Huat Tan Poh Heng Yong Loong Chen


DIRECTORS' REPORT (CONT'D)FOR THE FINANCIAL YEAR ENDED 30 JUNE 2011

DIRECTORS’ INTERESTS IN SHARES

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

-- Number of ordinary shares of RM0.10 each --Balance Balance

at at1.7.10 Bought Sold 30.6.11

The CompanyDirect Interest :Dato’ Philip Chan Hon Keong 250,000 125,000 - 375,000Lim Chiow Hoo 83,249,330 - - 83,249,330Lee Min Huat 57,701,860 - - 57,701,860Yong Loong Chen 520,000 311,000 - 831,000

By virtue of their shareholdings in the Company, Messrs Lim Chiow Hoo and Lee Min Huat are also deemed interested in the shares of all the subsidiaries of the Company, to the extent that the Company has interests.

DIRECTORS’ BENEFITS

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

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the objects of enabling directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

OTHER STATUTORY INFORMATION

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps :

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts, and

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

At the date of this report, the directors are not aware of any circumstances :

(i) that would render the amount written off for bad debts or the amount of the allowance for doubtful debts in the Group and in the Company inadequate to any substantial extent, or

(ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or

(iii) that would render any amount stated in the financial statements of the Group and of the Company misleading, or

(iv) which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.


DIRECTORS' REPORT (CONT'D)FOR THE FINANCIAL YEAR ENDED 30 JUNE 2011

OTHER STATUTORY INFORMATION (cont’d)

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 of the 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 since the end of the financial year.

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

AUDITORS

The auditors, Grant Thornton, have expressed their willingness to continue in office.

Signed in accordance with a resolution of the directors :

..............................................……....…. …....................……..................….......Lim Chiow Hoo Lee Min HuatManaging Director Executive Director

Penang,

Date : 6 October 2011


DIRECTORS’ STATEMENT

We, Lim Chiow Hoo and Lee Min Huat, being two of the directors of Scope Industries Berhad state that in the opinion of the directors, the financial statements set out on pages 24 to 66 are properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 30 June 2011 and of their financial performance and cash flows for the financial year then ended.

Signed in accordance with a resolution of the directors :

.....................................………..................... .............….............................................. Lim Chiow Hoo Lee Min Huat


STATUTORY DECLARATION

I, Lim Chiow Hoo, the director primarily responsible for the financial management of Scope Industries Berhad do solemnly and sincerely declare that the financial statements set out on pages 24 to 66 are to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by )the abovenamed at Penang, this 6th )day of October 2011 ) ) ………..……………………………... Lim Chiow HooBefore me,

....................................................................Goh Suan BeeNo.: P125Commissioner for Oaths


Report on the Financial Statements

We have audited the financial statements of Scope Industries Berhad, which comprise the statements of financial position as at 30 June 2011 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 24 to 66.

Directors’ Responsibility for the Financial Statements

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

Auditors’ Responsibility

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

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

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 30 June 2011 and of their financial performance and cash flows for the financial year then ended.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following :

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

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

(c) The auditors’ reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF SCOPE INDUSTRIES BERHAD


INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF SCOPE INDUSTRIES BERHAD (CONT'D)

Other Reporting Responsibilities

The supplementary information set out in Note 30 on page 67 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other Matters

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

Grant Thornton Hooi Kok MunNo. AF : 0042 No. 2207/01/12 (J)Chartered Accountants Chartered Accountant Penang



CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2011

(Restated) (Restated)

30.6.2011 30.6.2010 1.7.2009

NOTE RM RM RM

ASSETS

Non-current assets

Property, plant and equipment 3 25,805,352 28,520,124 35,370,419

Investment in associates 5 1,916,149 2,301,416 2,156,303

Other investments 6 1,295,200 - -

29,016,701 30,821,540 37,526,722

Current assets

Inventories 7 1,473,888 1,374,469 3,621,482

Trade receivables 8 2,466,399 2,934,629 1,352,918

Other receivables, deposits and prepayments 9 309,387 330,840 754,938

Tax recoverable 326,053 16,635 215,284

Cash and cash equivalents 11 3,884,683 1,224,455 1,520,517

8,460,410 5,881,028 7,465,139

TOTAL ASSETS 37,477,111 36,702,568 44,991,861

EQUITY AND LIABILITIES

Share capital 12 26,818,182 26,818,182 26,818,182

Share premium 9,363,934 9,363,934 9,363,934

Exchange translation reserve - - 20,081

Fair value reserve 13 (105,770) - -

Accumulated losses (2,185,462) (6,057,276) (1,898,458)

Total equity 33,890,884 30,124,840 34,303,739

Non-current liabilities

Borrowings 14 392,380 945,520 1,757,504

Deferred tax liabilities 15 - 2,799,000 2,600,000

392,380 3,744,520 4,357,504

Current liabilities

Trade payables 16 356,741 1,206,579 674,141

Other payables and accruals 17 1,506,190 827,959 2,555,177

Amount due to directors - - 870,000

Borrowings 14 1,330,916 798,149 2,231,300

Provision for taxation - 521 -

3,193,847 2,833,208 6,330,618

Total liabilities 3,586,227 6,577,728 10,688,122

TOTAL EQUITY AND LIABILITIES 37,477,111 36,702,568 44,991,861

The notes set out on pages 33 to 66 form an integral part of these financial statements.


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30 JUNE 2011

NOTE 2011 2010

RM RM

Revenue 18 21,474,633 18,268,183

Cost of sales (16,725,874) (17,489,848)

Gross profit 4,748,759 778,335

Other income 79,305 94,788

Administrative expenses (2,584,556) (4,715,063)

Operating profit/(loss) 2,243,508 (3,841,940)

Finance costs (87,501) (146,188)

Share of results of associates (30,223) 31,537

Profit/(Loss) before taxation 19 2,125,784 (3,956,591)

Taxation 20 3,086,939 (202,227)

Profit/(Loss) for the year 5,212,723 (4,158,818)

Other comprehensive loss, net of tax :

Fair value adjustment on available-for-sale financial assets (105,770) -

Total comprehensive income/(loss) for the year 5,106,953 (4,158,818)

Basic earnings/(loss) per share (sen) 21 1.94 (1.55)



|----------------------- Non-distributable -----------------------|

NOTE

ShareCapital

RM

SharePremium

RM

ExchangeTranslation

ReserveRM

Fair ValueReserve

RM

AccumulatedLosses

RM

TotalEquity

RM

2011

Balance at beginning 26,818,182 9,363,934 - - (6,057,276) 30,124,840

Total comprehensive (loss)/

income for the year - - - (105,770) 5,212,723 5,106,953

Dividend 22 - - - - (1,340,909) (1,340,909)

Balance at end 26,818,182 9,363,934 - (105,770) (2,185,462) 33,890,884

2010

Balance at beginning 26,818,182 9,363,934 20,081 - (1,898,458) 34,303,739

Foreign currency translation - - (70,961) - - (70,961)

Total comprehensive loss

for the year - - - - (4,158,818) (4,158,818)

26,818,182 9,363,934 (50,880) - (6,057,276) 30,073,960

Deconsolidation of investment

in subsidiaries - - 50,880 - - 50,880

Balance at end 26,818,182 9,363,934 - - (6,057,276) 30,124,840

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011



CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011

2011 2010

RM RM

CASH FLOWS FROM OPERATING ACTIVITIES

Profit/(Loss) before taxation 2,125,784 (3,956,591)

Adjustments for :

Allowance for slow moving inventories 45,386 30,041

Bad debts - 405,469

Depreciation 4,216,168 4,744,483

Dividend income (8,400) -

Gain on disposal of other investments (118,491) -

Impairment loss on investment in associates 355,044 -

Impairment loss on receivables - 60,408

Interest expense 87,501 146,188

Interest income (79,031) (15,099)

Loss on deconsolidation of investment in subsidiaries - 994,030

Loss on disposal of property, plant and equipment 1,820 237,130

Property, plant and equipment written off 147,508 455,310

Share of results of associates 30,223 (31,537)

Unrealised gain on foreign exchange (1,044) (14,960)

Operating profit before working capital changes 6,802,468 3,054,872

(Increase)/Decrease in inventories (144,805) 939,596

Decease/(Increase) in receivables 489,683 (1,632,938)

(Decrease)/Increase in payables (155,767) 216,664

Cash generated from operations 6,991,579 2,578,194

Dividend received 8,400 -

Income tax paid (22,000) (2,479)

Income tax refund - 199,372

Interest paid (87,501) (146,188)

Net cash from operating activities 6,890,478 2,628,899

CASH FLOWS FROM INVESTING ACTIVITIES

* Cash flows from deconsolidation of investment in subsidiaries - 397,718

Interest received 79,031 15,099

Investment in an associate - (114,526)

Proceeds from disposal of other investments 1,161,877 -

Proceeds from disposal of property, plant and equipment 131,125 59,302

Purchase of other investments (2,444,356) -

Purchase of property, plant and equipment (1,781,849) (233,259)

Net cash (used in)/from investing activities (2,854,172) 124,334

Balance carried forward 4,036,306 2,753,233



2011 2010

RM RM

Balance brought forward 4,036,306 2,753,233

CASH FLOWS FROM FINANCING ACTIVITIES

Dividend paid (1,340,909) -

Drawdown of term loan 1,000,000 -

Payment of finance lease (638,696) (1,191,572)

Repayment of term loans (381,677) (1,053,563)

Repayment to directors' account - (870,000)

Net cash used in financing activities (1,361,282) (3,115,135)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 2,675,024 (361,902)

Effects of changes in exchange rates (14,796) 65,840

CASH AND CASH EQUIVALENTS AT BEGINNING 1,224,455 1,520,517

CASH AND CASH EQUIVALENTS AT END 3,884,683 1,224,455

Represented by :

Fixed deposits with licensed banks 3,730,000 501,094

Short term deposit with a licensed bank - 200,000

Cash and bank balances 154,683 523,361

3,884,683 1,224,455

* Cash flows from deconsolidation of investment in subsidiaries

Property, plant and equipment - 1,587,329

Inventories - 1,277,376

Receivables - 9,448

Cash and bank balances - 2,282

Payables - (1,411,444)

Exchange translation reserve - (70,961)

Share of net assets disposed - 1,394,030

Loss on deconsolidation of investment in subsidiaries - (994,030)

Total disposal consideration - 400,000

Less : Cash and bank balances - (2,282)

Cash flows from deconsolidation of investment in subsidiaries - 397,718

CONSOLIDATED STATEMENT OF CASH FLOWS (CONT'D)FOR THE FINANCIAL YEAR ENDED 30 JUNE 2011



2011 2010

NOTE RM RM

ASSETS

Non-current assets

Investment in subsidiaries 4 18,882,884 18,607,884

Other investments 6 1,295,200 -

20,178,084 18,607,884

Current assets

Amount due from subsidiaries 10 7,606,645 10,969,895

Tax recoverable 19,599 14,349

Cash and cash equivalents 11 3,730,899 501,229

11,357,143 11,485,473

TOTAL ASSETS 31,535,227 30,093,357

EQUITY AND LIABILITIES

Share capital 12 26,818,182 26,818,182

Share premium 9,363,934 9,363,934

Fair value reserve 13 (105,770) -

Accumulated losses (4,654,723) (6,161,730)

Total equity 31,421,623 30,020,386

Current liabilities

Other payables and accruals 17 113,604 72,971

TOTAL EQUITY AND LIABILITIES 31,535,227 30,093,357

STATEMENT OF FINANCIAL POSITIONAS AT 30 JUNE 2011



2011 2010

NOTE RM RM

Revenue 18 3,584,161 1,762

Administrative expenses 103,755 (2,894,805)

Profit/(Loss) before taxation 19 3,687,916 (2,893,043)

Taxation 20 (840,000) 599

Profit/(Loss) for the year 2,847,916 (2,892,444)

Other comprehensive loss, net of tax :

Fair value adjustment on available-for-sale financial assets (105,770) -

Total comprehensive income/(loss) for the year 2,742,146 (2,892,444)

STATEMENT OF COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011



STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011


|---------- Non-distributable ----------|

Share Share Fair Value Accumulated Total

Capital Premium Reserve Losses Equity

NOTE RM RM RM RM RM

2011

Balance at beginning 26,818,182 9,363,934 - (6,161,730) 30,020,386

Total comprehensive (loss)/

income for the year - - (105,770) 2,847,916 2,742,146

Dividend 22 - - - (1,340,909) (1,340,909)

Balance at end 26,818,182 9,363,934 (105,770) (4,654,723) 31,421,623

2010

Balance at beginning 26,818,182 9,363,934 - (3,269,286) 32,912,830

Total comprehensive loss

for the year - - - (2,892,444) (2,892,444)

Balance at end 26,818,182 9,363,934 - (6,161,730) 30,020,386


2011 2010

RM RM

CASH FLOWS FROM OPERATING ACTIVITIES

Profit/(Loss) before taxation 3,687,916 (2,893,043)

Adjustments for :

Bad debts - 77,536

Dividend income (3,389,400) -


(Reversal)/Addition of impairment loss on investment in a subsidiary (275,000) 580,000

Interest income (75,899) (1,762)

Loss on disposal of investment in subsidiaries - 2,100,000

Operating loss before working capital changes (170,874) (137,269)

Increase in payables 40,633 3,746

Cash used in operations (130,241) (133,523)

Dividend received 2,544,150 -

Income tax refund - 40,000

Interest received 75,899 1,762

Net cash from/(used in) operating activities 2,489,808 (91,761)

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from disposal of investment in subsidiaries - 400,000

Proceeds from disposal of other investments 1,161,877 -

Purchase of other investments (2,444,356) -

Net cash (used in)/from investing activities (1,282,479) 400,000

CASH FLOWS FROM FINANCING ACTIVITIES

Dividend paid (1,340,909) -

Repayment from subsidiaries 3,363,250 191,103

Net cash from financing activities 2,022,341 191,103

NET INCREASE IN CASH AND CASH EQUIVALENTS 3,229,670 499,342

CASH AND CASH EQUIVALENTS AT BEGINNING 501,229 1,887

CASH AND CASH EQUIVALENTS AT END 3,730,899 501,229

Represented by :

Fixed deposits with licensed banks 3,730,000 501,094

Cash and bank balances 899 135

3,730,899 501,229

STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2011



NOTES TO THE FINANCIAL STATEMENTS30 JUNE 2011

1. CORPORATE INFORMATION General

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the ACE Market of Bursa Malaysia Securities Berhad.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 6 October 2011.

Principal Activities

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are disclosed in Note 4 to the financial statements.

There have been no significant changes in the nature of these activities during the reporting period.

2. SIGNIFICANT ACCOUNTING POLICIES

The following accounting policies adopted by the Group and by the Company are consistent with those adopted in the previous financial years unless otherwise indicated below.

2.1 Basis of Preparation

The financial statements of the Group and of the Company are prepared under the historical cost convention unless otherwise indicated in the accounting policies below and in accordance with applicable Financial Reporting Standards (“FRSs”) and the Companies Act, 1965 in Malaysia.

At the beginning of the current financial year, the Group and the Company have adopted new and revised FRSs which are mandatory for the reporting period as described fully in Note 2.3.

The financial statements are presented in Ringgit Malaysia (“RM”) which is also the Group’s and the Company’s functional currency.

2.2 Significant Accounting Estimates and Judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

2.2.1 Judgements made in applying accounting policies

There are no significant areas of critical judgement in applying accounting policies that have a significant effect on the amount recognised in the financial statements.

2.2.2 Key sources of estimation uncertainty

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

(i) Useful lives of depreciable assets

The depreciable costs of plant and equipment are allocated on a straight line basis over their estimated useful lives. Management estimates the useful lives of these assets to be 10 years. Changes in the expected level of usage and technological developments could impact the economic useful lives and residual values of these assets affecting future depreciation charges.


NOTES TO THE FINANCIAL STATEMENTS (CONT'D)30 JUNE 2011

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.2.2 Key sources of estimation uncertainty (cont’d)

(ii) Inventories

The management reviews for damage, slow-moving and obsolete inventories. This review requires judgement and estimates. Possible changes in these estimates could result in revision to the valuation of inventories.

(iii) Impairment of loans and receivables

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

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience of assets with similar credit risk characteristics.

2.3 Adoption of New and Revised FRSs

The accounting policies adopted by the Group and by the Company are consistent with those of the previous financial year except for the adoption of the following new and revised FRSs and IC Interpretations mandatory for the reporting period :

(a) Mandatory for financial periods beginning on or after 1 January 2010

FRS 7 Financial Instruments : Disclosures

FRS 101 Presentation of Financial Statements (Revised)

FRS 123 Borrowing Costs (Revised)

FRS 139 Financial Instruments : Recognition and Measurement

Amendments to FRS 1 and FRS 127

First-time Adoption of Financial Reporting Standards and Consolidated and Separate Financial Statements. Amendments relating to cost of an investment in a subsidiary, jointly controlled entity or associate

Amendments to FRS 2 Share Based Payment. Amendments relating to vesting conditions and cancellations

Amendments to FRS 132

Financial Instruments : Presentation. Amendments relating to puttable financial instruments and effective date and transition of the classification of compound instruments

Amendments to FRS 139, FRS 132 and IC Interpretation 9

Financial Instruments : Recognition and Measurement, Financial Instruments : Disclosure and Reassessment of Embedded Derivatives. Amendments relating to eligible hedged items, reclassification of financial assets and embedded derivatives

Improvements to FRSs issued in 2009 and mandatory for annual financial periods beginning on or after 1 January 2010.

IC Interpretation 9 Reassessment of Embedded Derivatives

IC Interpretation 10 Interim Financial Reporting and Impairment

IC Interpretation 11 FRS 2 - Group and Treasury Share Transactions

IC Interpretation 13 Customer Loyalty Programmes

IC Interpretation 14 FRS 119 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their interaction




2.3 Adoption of New and Revised FRSs (cont’d)

(b) Mandatory for financial periods beginning on or after 1 March 2010

Amendment to FRS 132

Financial Instruments : Presentation. Amendments relating to classification of rights issues

The Group and the Company have adopted FRS 4 Insurance Contract and TR i-3 Presentation of Financial Statements of Islamic Financial Institutions on 1 July 2010. These FRSs are, however, not relevant to the operations of the Group and of the Company.

Initial application of the above FRSs, Amendments to FRSs and IC Interpretations did not have any effect on the financial statements of the Group and of the Company except for the following :

FRS 7 Financial Instruments : Disclosures

Prior to 1 July 2010, information about financial instruments was disclosed in accordance with the requirements of FRS 132 Financial Instruments : Disclosure and Presentation. FRS 7 and the consequential amendment to FRS 101 Presentation of Financial Statements require disclosure of qualitative and quantitative information about the significance of financial instruments for the Group’s and for the Company’s financial position and performance, the nature and extent of risks arising from financial instruments and the objectives, policies and processes for managing capital.

The Group and the Company have applied FRS 7 prospectively in accordance with the transitional provisions. Hence, the new disclosures have not been applied to the comparatives. The new disclosures are included in the Group’s and the Company’s financial statements for the financial year ended 30 June 2011.

FRS 101 Presentation of Financial Statements (Revised)

The revised FRS 101 introduces changes in the presentation and disclosures of financial statements. The revised standard separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions with owners, with all non-owner changes in equity presented as a single line. The standard also introduces the statement of comprehensive income, with all items of income and expense recognised in profit or loss, together with all other items of recognised income and expense recognised directly in equity, either in one single statement, or in two linked statements. The Group and the Company have elected to present this statement as one single statement.

In addition, a statement of financial position is required at the beginning of the earliest comparative period following a change in accounting policy, the correction of an error or the classification of items in the financial statements.

The revised FRS 101 also requires the Group and the Company to make new disclosures to enable users of the financial statements to evaluate the Group’s and the Company’s objectives, policies and processes for managing capital.

The revised FRS 101 was adopted retrospectively by the Group and by the Company.

FRS 123 Borrowing Costs (Revised)

FRS 123 (Revised) eliminates the option available under the previous version of FRS 123 to recognise all borrowing costs immediately as an expense. The Group and the Company shall capitalise borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The Group and the Company have adopted this as a prospective change in accounting policy.




2.3 Adoption of New and Revised FRSs (cont’d)

FRS 139 Financial Instruments : Recognition and Measurement

FRS 139 establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to buy and sell non-financial items. The Group and the Company have adopted FRS 139 prospectively on 1 July 2010 in accordance with the transitional provisions. The details of the changes in accounting policies arising from the adoption of FRS 139 are discussed below :

• Equity instruments :

Prior to 1 July 2010, the Group classified its investments in equity instruments which were held for non-trading purposes as non-current investments. Such investments were carried at cost less impairment losses. Upon the adoption of FRS 139, these investments, except for those whose fair value cannot be reliably measured, are designated at 1 July 2010 as available-for-sale financial assets. Investment in equity instruments whose fair value cannot be reliably measured continued to be carried at cost less impairment losses.

• Impairment of receivables :

Prior to 1 July 2010, allowance for doubtful debts was recognised when it was considered uncollectible. Upon the adoption of FRS 139, an impairment loss is recognised when there is objective evidence that impairment has been incurred. The amount of the loss is measured as the difference between the receivable’s carrying amount and the present value of the estimated future cash flows discounted at the receivable’s original effective interest rate.

• Financial guarantee contracts :

During the current period and prior years, the Company provided financial guarantees to banks in connection with bank borrowings granted to one of its subsidiaries. Prior to 1 July 2010, the Company did not provide for such guarantees unless it was more likely than not that the guarantees would be called upon. The guarantees were disclosed as contingent liabilities. Upon the adoption of FRS 139, all unexpired financial guarantees issued by the Company are recognised as financial liabilities and are measured at their initial fair value less accumulated amortisation as at 1 July 2010.

Improvement of FRSs 2009

The adoption of Improvement to FRSs issued in 2009 and mandatory for annual financial periods beginning on or after 1 July 2010 will have the following impacts on the financial statements :

• Amendment to FRS 117 Leases :

The amendment clarifies the classification of lease of land and requires entities with existing leases of land and buildings to reassess the classification of land as finance or operating lease. Leasehold land which in substance is a finance lease will be reclassified to property, plant and equipment. The adoption of these amendments will result in a change in accounting policy which will be applied retrospectively in accordance with the transitional provisions.

The effects of adoption on the financial statements are shown in Note 29 to the financial statements.




(c) Effective for financial periods beginning on or after 1 July 2010

FRS 1 First-time Adoption of Financial Reporting Standards (Revised)

FRS 3 Business Combinations (Revised)

FRS 127 Consolidated and Separate Financial Statements (Revised)

IC Interpretation 12 Service Concession Arrangements

IC Interpretation 17 Distributions of Non-cash Assets to Owners

Improvements to FRSs issued in 2010 and mandatory for annual financial periods beginning on or after 1 July 2010.

2.4 Standards Issued But Not Yet Effective

The following are Standards and IC Interpretations which are not yet effective and have not been early adopted by the Group and by the Company :

(a) Effective for financial periods beginning on or after 1 January 2011

Amendment to FRS 1 Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters. Amendment relating to transition provisions for first-time adopters

Amendments to FRS 1 Additional Exemptions for First-time Adopters. Amendment relating to transition provision for first-time adopters in the industry of oil and gas

Amendments to FRS 2 Group Cash-settled Share-based Payment Transactions. Amendments relating to the scope and accounting for group cash-settled share-based payments transactions

Amendments to FRS 7 Improving Disclosures about Financial Instruments. Amendments relating to the fair value measurement using fair value hierarchy and disclosure of liquidity risk

IC Interpretation 4 Determining whether an Arrangement contains a Lease

IC Interpretation 18 Transfers of Assets from Customers *

Improvements to FRSs issued in 2010 and mandatory for annual financial periods beginning on or after 1 January 2011.

* During the reporting period, MASB approved and issued IC Interpretation 18 - Transfers of Assets from Customers and requires the interpretation to be applied prospectively to all transfers of assets from customers received on or after 1 January 2011.

(b) Effective for financial periods beginning on or after 1 July 2011

IC Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments

Amendments to IC Interpretation 14

FRS 119 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. Amendment relating to the treatment of prepayments of future contributions when there is a minimum funding requirement

(c) Effective for financial periods beginning on or after 1 January 2012

IC Interpretation 15 Agreements for the Construction of Real Estate

FRS 124 Related Party Disclosures (Revised)




2.4 Standards Issued But Not Yet Effective (cont’d)

The existing FRS 1, FRS 3, FRS 127 and FRS 124 will be withdrawn upon the adoption of the new requirements. IC Interpretation 15 will replace FRS 2012004. IC Interpretation 8 and IC Interpretation 11 will be withdrawn upon the application of Amendments to FRS 2 - Group Cash-settled Share-based Payment Transactions. IC Interpretation 12 is not expected to be relevant to the operations of the Group and of the Company.

The directors anticipate that the adoption of these new/revised FRSs, amendments to FRSs and IC Interpretations will have no material impact on the financial statements of the Group and of the Company in the period for initial application except for the following :

FRS 3 Business Combination (Revised)

The revised standard continues to apply the acquisition method to business combinations, with some significant changes. All payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through profit or loss. There is a choice to measure the non-controlling interest in the acquiree at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related costs should be expensed.

FRS 124 Related Party Disclosures (Revised)

The revised standard modifies the definition of a related party and simplifies disclosures for government-related entities. The disclosure exemptions introduced in the standard do not affect the Group because the Group is not a government-related entity. However, disclosures regarding related party transactions and balances in these consolidated financial statements may be affected when the revised standard is applied in future accounting periods because some counterparties that did not previously meet the definition of a related party may come within the scope of the standard.

FRS 127 Consolidated and Separate Financial Statements (Revised)

The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is remeasured to fair value, and a gain or loss is recognised in profit or loss. The revised standard requires losses to be allocated to non-controlling interests, even if it results in the non-controlling interest to be in a deficit position.

2.5 Subsidiaries and Basis of Consolidation

Subsidiaries

Subsidiaries are those companies in which the Group has a long term equity interest and where it has power to exercise control over the financial and operating policies so as to obtain benefits therefrom.

Investment in subsidiaries which is eliminated on consolidation is stated at cost less accumulated impairment losses in the Company’s separate financial statements.

Upon the disposal of investment in subsidiaries, the difference between the net disposal proceeds and their carrying amount is included in profit or loss.

Basis of Consolidation

The financial statements of the Group include the audited financial statements of the Company and all its subsidiaries made up to the end of the reporting period.

Under the acquisition method of accounting, the results of the subsidiaries acquired or disposed of are included from the date of acquisition and up to the date of disposal. At the date of acquisition, the fair values of the subsidiaries’ net assets are determined and these values are reflected in the consolidated financial statements.

Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the acquirees’ identifiable assets, liabilities and contingent liabilities represents goodwill and is retained in the statement of financial position.




Basis of Consolidation (cont’d)

Any excess of the Group’s interest in the net fair value of the acquirees’ identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in profit or loss.

Inter-company balances, transactions and resulting unrealised gains are eliminated on consolidation and the consolidated financial statements reflect external transactions only. Unrealised losses are eliminated on consolidation unless costs cannot be recovered. Where necessary, adjustments are made to the financial statements of the subsidiaries to ensure consistency of accounting policies with those of the Group.

Minority interest is measured at the minorities’ share of the acquisition fair values of the identifiable assets and liabilities of the acquiree company. Separate disclosure is made of minority interest.

2.6 Property, Plant and Equipment

Property, plant and equipment are initially stated at cost less accumulated depreciation and accumulated impairment losses.

Property, plant and equipment are depreciated on the straight line method to write off the cost of each asset to

its residual value over its estimated useful life at the following annual rates :

Short leasehold land Amortised over lease period of 30 to 40 years Factory buildings 2% Plant and machinery 10% Renovation and electrical installation 10% Air conditioners 10% Office equipment, furniture and fittings 10% Motor vehicles 10%

The residual value, useful life and depreciation method are reviewed at the end of each reporting period to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.

Upon the disposal of an item of property, plant and equipment, the difference between the net disposal proceeds and its carrying amount is included in profit or loss.

2.7 Investment in Associates

An associate is defined as one in which the Company has significant influence, but not control, over the financial and operating policies.

Investment in associates is accounted for in the consolidated financial statements by the equity method of accounting based on audited or management financial statements of the associates. Under the equity method of accounting, the Group’s share of profits/losses of the associates during the financial year is included in the consolidated statement of comprehensive income. The Group’s interest in associates is carried in the consolidated statement of financial position at cost plus the Group’s share of post-acquisition retained profits or accumulated losses and other reserves as well as goodwill on acquisition less dividends received. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in the associates.

Unrealised profits arising on transactions between the Group and its associates which are included in the carrying amount of the related assets and liabilities are eliminated to the extent of the Group’s interests in the associates. Unrealised losses on such transactions are also eliminated unless cost cannot be recovered.

The equity method of accounting is discontinued when the Group’s share of losses of the associates exceeds the carrying amount of investment, unless the Group has incurred obligations or guaranteed obligations in respect of the associates.




2.7 Investment in Associates (cont’d)

In the Company’s separate financial statements, investment in associates is stated at cost less accumulated impairment losses.

Upon the disposal of investment in an associate, the difference between the net disposal proceeds and its carrying amount is included in profit or loss.

2.8 Leases

A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time.

Finance lease

A finance lease which includes hire purchase arrangement, is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset to the lessee. Title may or may not eventually be transferred.

Plant and equipment acquired by way of finance leases are stated at amount equal to the lower of their fair values and the present value of minimum lease payments at the inception of the leases, less accumulated depreciation and any impairment losses.

In calculating the present value of the minimum lease payments, the discount rate is the interest rate implicit in

thelease,ifthisisdeterminable;ifnot,theGroup’sincrementalborrowingrateisused. Operating Leases An operating lease is a lease other than finance lease.

Operating lease income or operating lease rental are recognised in profit or loss on a straight line basis over the period of the lease.

2.9 Impairment of Non-Financial Assets

The Group and the Company assess at the end of each reporting period whether there is an indication that an asset may be impaired.

For the purpose of impairment testing, recoverable amount (i.e. the higher of the fair value less cost to sell and value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the cash-generating units (“CGU”) to which the asset belongs.

If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.

The difference between the carrying amount and recoverable amount is recognised as an impairment loss in the profit or loss except for assets that were previously revalued where the revaluation surplus was taken to other comprehensive income. In this case the impairment loss is also recognised in other comprehensive income up to the amount of any previous revaluation surplus.

An impairment loss for an asset is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of this asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.




2.10 Financial Assets Financial assets are recognised in the statements of financial position when, and only when, the Group and the

Company become a party to the contractual provisions of the financial instrument.

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

The Group and the Company determine the classification of their financial assets at initial recognition, and categorise their financial assets as loans and receivables and available-for-sale financial assets.

A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired or when the financial assets and all substantial risks and rewards are transferred.

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

(a) Loans and receivables

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

Subsequent to initial recognition, loans and receivables are measured at amortised cost using effective interest method, except for short-term receivables when the recognition of interest would be immaterial. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. The Group’s and Company’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.

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

(b) Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets. The Group’s available-for-sale financial assets include listed securities, debentures and equity instruments.

Available-for-sale financial assets are measured at fair value subsequent to the initial recognition. Gains and losses are recognised in other comprehensive income and reported within the available-for-sale reserve within equity, except for impairment losses and foreign exchange differences on monetary assets, which are recognised in profit and loss. When the assets are disposed of or are determined to be impaired the cumulative gain or loss recognised in other comprehensive income is reclassified from the equity reserve to profit or loss and presented as a reclassification adjustment within other comprehensive income.

Interest calculated using the effective interest method and dividends are recognised in profit or loss. Dividends on an available-for-sale equity are recognised in profit or loss when the Group’s right to receive payment is established.

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

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




2.11 Impairment of Financial Assets

The Group and the Company assess at the end of each reporting period whether there is any objective evidence that a financial asset is impaired.

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

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

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

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

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

(b) Available-for-sale financial assets

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

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

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

2.12 Inventories

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

Cost is determined on the first-in, first-out basis.

Cost of finished goods and work-in-progress includes materials, direct labour and attributable production overheads.

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

2.13 Cash and Cash Equivalents

Cash comprises cash in hand, cash at bank and demand deposits. Cash equivalents are short term and highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value, against which bank overdraft balances, if any, are deducted.




2.14 Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

2.15 Financial Liabilities

Financial liabilities, within the scope of FRS 139, are recognised in the statement of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

The Group and the Company classified its financial liabilities as other financial liabilities.

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

Other financial liabilities

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

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method, unless the effect of discounting would be immaterial, in which case they are stated at cost.

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

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

2.16 Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction, production or preparation of assets until they are ready for their intended use or sale are capitalised as part of the cost of those assets. Other borrowing costs are recognised as expenses in the period in which they are incurred.

2.17 Income Recognition

Revenue from sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer.

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

Interest income is recognised on an accrual basis.

2.18 Employee Benefits

Short term benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which

the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.




2.18 Employee Benefits (cont’d)

Defined contribution plans As required by law, companies in Malaysia make contributions to the national pension scheme, the Employees

Provident Fund (“EPF”). Such contributions are recognised as an expense in the profit or loss as incurred.

2.19 Income Tax

Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted by the end of the reporting period.

Deferred tax is provided for, using the liability method, on temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax is recognised in the profit or loss, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also recognised directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or the amount of any excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the cost of the combination.

2.20 Foreign Currency Translations

Assets and liabilities in foreign currencies at the end of reporting period are translated into Ringgit Malaysia at the rates of exchange ruling on that date. Transactions in foreign currencies during the financial year have been translated into Ringgit Malaysia at the rates of exchange ruling on transaction dates. Gains and losses on foreign exchange are included in profit or loss.

2.21 Share Capital and Share Issuance Expenses

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

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

2.22 Segment Reporting

Following the adoption of FRS 8, Operating Segments, an operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed regularly by the chief operating decision maker, which in this case is the Board of Directors of the Company, to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

2.23 Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future events not wholly within the control of the Group and of the Company.

Contingent liabilities and assets are not recognised in the statements of financial position of the Group and of the Company.



3. PROPERTY, PLANT AND EQUIPMENT

GROUP

Shortleasehold

landRM

Factorybuildings

RM

Plant andmachinery

RM

Renovation and

electricalinstallation

RM

Airconditioners

RM

Office equipment,

furniture and

fittingsRM

Motorvehicles

RMTotal

RM

At cost

At 1 July 2009 - 11,637,803 50,189,274 1,960,573 1,478,589 1,114,873 982,450 67,363,562

Effect of adopting the

amendment to FRS 117 1,419,550 - - - - - - 1,419,550

At 1 July 2009, restated 1,419,550 11,637,803 50,189,274 1,960,573 1,478,589 1,114,873 982,450 68,783,112

Additions - 17,979 208,611 - - 6,669 - 233,259

Disposals - - (3,626,900) - - (680) - (3,627,580)

Written off - - (5,116,186) - - (100,013) (9,300) (5,225,499)

Disposal of subsidiaries - - (1,761,379) (9,239) - - - (1,770,618)

Foreign currency translation - - (168,728) (786) - - - (169,514)

At 30 June 2010, restated/

At 1 July 2010 1,419,550 11,655,782 39,724,692 1,950,548 1,478,589 1,020,849 973,150 58,223,160

Additions - - 1,760,652 7,000 7,300 6,897 - 1,781,849

Disposals - - (133,280) - - - (605,000) (738,280)

Written off - - (749,106) - - (56,481) - (805,587)

At 30 June 2011 1,419,550 11,655,782 40,602,958 1,957,548 1,485,889 971,265 368,150 58,461,142

Accumulated depreciation

At 1 July 2009 - 1,512,923 28,198,362 845,799 726,727 599,997 577,709 32,461,517

Effect of adopting the

amendment to FRS 117 251,176 - - - - - - 251,176

At 1 July 2009, restated 251,176 1,512,923 28,198,362 845,799 726,727 599,997 577,709 32,712,693

Current charge 34,132 233,115 3,955,697 183,607 146,925 93,693 97,314 4,744,483

Disposals - - (2,630,878) - - (270) - (2,631,148)

Written off - - (4,731,029) - - (29,861) (9,299) (4,770,189)

Disposal of subsidiaries - - (326,033) (3,071) - - - (329,104)

Foreign currency translation - - (23,436) (263) - - - (23,699)

At 30 June 2010, restated/

At 1 July 2010 285,308 1,746,038 24,442,683 1,026,072 873,652 663,559 665,724 29,703,036

Current charge 34,132 233,116 3,477,386 182,543 128,430 86,120 74,441 4,216,168

Disposals - - (99,960) - - - (505,375) (605,335)

Written off - - (614,343) - - (43,736) - (658,079)

At 30 June 2011 319,440 1,979,154 27,205,766 1,208,615 1,002,082 705,943 234,790 32,655,790

Impairment loss

At 1 July 2009 - - 700,000 - - - - 700,000

Disposals - - (700,000) - - - - (700,000)

At 30 June 2010 - - - - - - - -

Carrying amount

At 30 June 2010 1,134,242 9,909,744 15,282,009 924,476 604,937 357,290 307,426 28,520,124

At 30 June 2011 1,100,110 9,676,628 13,397,192 748,933 483,807 265,322 133,360 25,805,352



3. PROPERTY, PLANT AND EQUIPMENT (cont'd)

GROUP

(i) The carrying amount of plant and machinery charged to a licensed bank as security for banking facilities granted to the Group is RM1,044,000 (2010 : RM2,488,290).

(ii) The carrying amount of plant and machinery acquired under finance lease is RM1,848,457 (2010 : RM2,215,657).

The leased assets are pledged as security for the related finance lease liability (Note 14).

4. INVESTMENT IN SUBSIDIARIES

COMPANY

2011 2010

RM RM

Unquoted shares, at cost 24,587,884 24,587,884

Less : Impairment loss

Balance at beginning 5,980,000 5,400,000

Additional impairment - 580,000

Reversal of impairment (275,000) -

Balance at end (5,705,000) (5,980,000)

18,882,884 18,607,884

Details of the subsidiaries which are all incorporated in Malaysia are as follows :

Name of CompanyEffective

Equity Interest Principal Activities

2011 2010

Direct

Scope Manufacturers (M) Sdn. Bhd.

100% 100% Manufacturing and assembling of electronic components and products.

Scope Sales & Services Sdn. Bhd.

100% 100% Investment holding and trading of electrical products.

Trans Industry Sdn. Bhd. 100% 100% Ceased operation during the financial year.

5. INVESTMENT IN ASSOCIATES

GROUP

2011 2010

RM RM

Unquoted shares, at cost 2,494,149 2,494,149

Share of post-acquisition reserves (222,956) (192,733)

2,271,193 2,301,416

Less : Impairment loss (355,044) -

1,916,149 2,301,416



5. INVESTMENT IN ASSOCIATES (cont’d) Details of the associates are as follows :

Name of CompanyPlace of

IncorporationEffective

Equity Interest Principal Activity

2011 2010

Paramit Scope Sdn. Bhd. Malaysia 33.00% 33.00% International procurement centre.

Dien Quang- Scope Joint Stock Company

Vietnam 46.80% 46.80% Manufacturing and assembling of electronic components and products.

2010

On 16 September 2009, the Company announced that due to the global financial turmoil and uncertain economic outlook, the intended Charter Capital (Issued and Paid-up Share Capital) for Dien Quang-Scope Joint Stock Company (“DQS”) has been reduced from USD3.0 million to USD1.5 million and that Scope Sales & Services Sdn. Bhd. (“SSS”) has made a final payment of USD135,000, which was fully remitted in the previous financial year, to make up for the total subscription of USD675,000 or 45% of the entire issued and paid-up share capital of DQS.

On 17 December 2009, SSS has subscribed for an additional 45,363 ordinary shares of VND10,000 each, representing 1.795% of the enlarged issued and paid-up share capital in DQS for a total consideration of USD26,925.

The summarised financial information of the associates is as follow :

GROUP

2011 2010

RM RM

Assets and Liabilities

Current assets 1,491,896 1,082,720

Current liabilities 577,771 306,576

Results

Revenue 1,033,391 653,346

(Loss)/Profit for the year (69,679) 143,834

The above summarised financial information is based on the unaudited financial statements of the associates for the financial period ended 30 June 2011. The financial year end of Paramit Scope Sdn. Bhd. and Dien Quang-Scope Joint Stock Company is 30 September and 31 December respectively to conform with their holding company’s financial year end.



6. OTHER INVESTMENTS

Quoted in Fair value Carrying

Malaysia adjustment amount

RM RM RM

GROUP AND COMPANY

2011

Available-for-sale financial assets : Shares 1,400,970 (105,770) 1,295,200

Market value :

Shares 1,295,200

7. INVENTORIES

GROUP

2011 2010

RM RM

At cost :

Raw materials 1,237,740 993,223

Less : Allowance for slow moving inventories

Balance at beginning (30,041) -

Current year (249) (30,041)

Balance at end (30,290) (30,041)

1,207,450 963,182

Work-in-progress 42,922 14,379

Finished goods 268,653 396,908

Less : Allowance for slow moving inventories

Current year/Balance at end (45,137) -

223,516 396,908

1,473,888 1,374,469



8. TRADE RECEIVABLES

GROUP

2011 2010

RM RM

Trade receivables 2,466,399 2,995,037

Less : Allowance for impairment

Balance at beginning 60,408 -

Current charge - 60,408

Impairment loss recovered (17,048) -

Impairment loss written off (43,360) -

Balance at end - (60,408)

2,466,399 2,934,629

The trade receivables are non-interest bearing and are generally on 30 to 60 days (2010 : 15 to 60 days) credit terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.

9. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

GROUP

2011 2010

RM RM

* Other receivables 83,728 103,551

Deposits 153,300 153,680

Prepayments 72,359 73,609

309,387 330,840

Analysis by currencies :

Ringgit Malaysia 305,942 328,321

US Dollar 3,445 2,519

309,387 330,840

10. AMOUNT DUE FROM SUBSIDIARIES

COMPANY

The amount due from subsidiaries is non-trade related, unsecured, non-interest bearing and is repayable on demand.



11. CASH AND CASH EQUIVALENTS

GROUP COMPANY

2011 2010 2011 2010

RM RM RM RM

Short term deposits with licensed banks 3,730,000 701,094 3,730,000 501,094

Cash and bank balances 154,683 523,361 899 135

3,884,683 1,224,455 3,730,899 501,229


Ringgit Malaysia 3,822,874 1,048,609 3,730,899 501,229

US Dollar 61,809 175,846 - -

3,884,683 1,224,455 3,730,899 501,229 The effective interest rates per annum and maturities of short term deposits as at the end of the reporting period are

as follows :

GROUP COMPANY

2011 2010 2011 2010

Short term deposits with licensed banks

- % per annum 3.05 to 3.20 1.20 to 2.50 3.05 to 3.20 2.40 to 2.50

- Days 30 to 90 13 to 90 30 to 90 30 to 90

12. SHARE CAPITAL

Number of ordinaryshares of RM0.10 each Amount

2011 2010 2011 2010

RM RM

Authorised 500,000,000 500,000,000 50,000,000 50,000,000

Issued and fully paid 268,181,818 268,181,818 26,818,182 26,818,182

13. FAIR VALUE ADJUSTMENT RESERVE

Fair value adjustment reserve represents the cumulative fair value changes, net of tax, of available-for-sale financial assets until they are disposed or impaired.



14. BORROWINGS

GROUP

2011 2010

RM RM

Non-current liabilities

Finance lease liability 281,276 945,520

Term loan 111,104 -

392,380 945,520

Current liabilities

Finance lease liability 664,244 638,696

Term loan 666,672 159,453

1,330,916 798,149

The borrowings (except for finance lease liability) are secured by way of :

(i) Fixedchargeoncertainplantandmachineryofasubsidiary;and(ii) Corporate guarantee of the Company.

A summary of the effective interest rates and the maturities of the borrowings are as follows :

Averageeffective

interest rateper annum

(%)Total

RM

Withinone year

RM

More than one year

and less thantwo years

RM

GROUP

2011

Finance lease liability 4.00 945,520 664,244 281,276

Term loan II 6.80 777,776 666,672 111,104

2010

Finance lease liability 4.00 1,584,216 638,696 945,520

Term loan I 6.55 159,453 159,453 - Term loan I of USD886,812 is repayable over 36 equal monthly instalments of USD24,634 each commencing in

September 2007. It is denominated in US Dollar. This loan was fully settled during the financial year ended 30 June 2011.

Term loan II of RM1,000,000 is repayable over 18 equal monthly instalments of RM55,556 each commencing in March 2011.



15. DEFERRED TAX LIABILITIES

GROUP

2011 2010

RM RM

Balance at beginning 2,799,000 2,600,000

Transfer from profit or loss - 24,000

2,799,000 2,624,000

(Over)/Under provision in prior years (2,799,000) 175,000

Balance at end - 2,799,000 The temporary differences on which deferred tax liabilities was provided for were in respect of the excess of capital

allowances over depreciation on property, plant and equipment.

16. TRADE PAYABLES

GROUP

2011 2010

RM RM


Ringgit Malaysia 252,151 1,067,976

US Dollar 37,510 106,351

Singapore Dollar 67,080 32,252

356,741 1,206,579

The trade payables are non-interest bearing and are normally settled on 30 to 60 days (2010 : 30 to 60 days) credit terms.

17. OTHER PAYABLES AND ACCRUALS

GROUP COMPANY

2011 2010 2011 2010

RM RM RM RM

* Other payables 195,467 209,989 1,004 -

Accruals 1,310,723 617,970 112,600 72,971

1,506,190 827,959 113,604 72,971

GROUP

* Included herein is an amount of RM99,660 (2010 : RM115,500) due to an associate of a subsidiary.



18. REVENUE

GROUP COMPANY2011 2010 2011 2010

RM RM RM RM

Interest income 75,899 1,762 75,899 1,762Invoiced value of goods sold less returns and

discounts 21,271,472 18,266,421 - -Gain on disposal of other investments 118,491 - 118,491 -Gross dividend income from a subsidiary - - 3,381,000 -Gross dividend income from investments

quoted in Malaysia 8,400 - 8,400 -Other 371 - 371 -

21,474,633 18,268,183 3,584,161 1,762

19. PROFIT/(LOSS) BEFORE TAXATION

This is arrived at : GROUP COMPANY

2011 2010 2011 2010RM RM RM RM

Allowance for slow moving inventories 45,386 30,041 - -Audit fee- statutory audit

- current year 29,000 27,000 11,000 10,000- over provision in prior year (1,000) (1,100) (1,000) -

- other services- current year - 1,000 - 1,000- over provision in prior year - (1,000) - (1,000)

Bad debts - 405,469 - 77,536Depreciation 4,216,168 4,744,483 - -

* Directors’ remuneration for non-executive directors 66,000 42,000 66,000 42,000

Impairment loss on investment in associates 355,044 - - -

Impairment loss on receivables - 60,408 - -Interest expense 87,501 146,188 - -Inventories written off 1,238 253,230 - -Loss on deconsolidation of investment in

subsidiaries - 994,030 - -Loss on disposal of investment in

subsidiaries - - - 2,100,000Loss on disposal of property, plant and

equipment 1,820 237,130 - -Property, plant and equipment written off 147,508 455,310 - -Realised loss on foreign exchange - 223 - 223Rental of machinery 30,438 19,890 - -Rental of premises 40,240 43,320 - -(Reversal)/Addition of impairment loss on

investment in a subsidiary - - (275,000) 580,000**Staff costs 6,641,357 5,427,817 44,000 28,000

And crediting :

Gain on disposal of other investments 118,491 - 118,491 -Gain on disposal of property, plant and

equipment - 26,091 - -Gross dividend income from a subsidiary - - 3,381,000 -Gross dividend income from investments

quoted in Malaysia 8,400 - 8,400 -



19. PROFIT/(LOSS) BEFORE TAXATION (cont’d)

GROUP COMPANY

2011 2010 2011 2010

RM RM RM RM

Impairment loss on receivables recovered 17,048 - - -

Interest income 79,031 15,099 75,899 1,762

Realised gain on foreign exchange 11,822 40,023 - -

Unrealised gain on foreign exchange 1,044 14,960 - -

* Directors’ remuneration for non-executive directors of the Company

Directors’ emoluments 6,000 6,000 6,000 6,000

Directors’ fee 60,000 36,000 60,000 36,000

66,000 42,000 66,000 42,000

**Staff costs

- Salaries, allowance, bonus and wages 6,292,190 5,071,536 44,000 28,000

- EPF 299,493 305,051 - -

- SOCSO 49,674 51,230 - -

6,641,357 5,427,817 44,000 28,000

Directors’ remuneration

Included in the staff costs of the Group and of the Company is directors’ emoluments as shown below :

GROUP COMPANY

2011 2010 2011 2010

RM RM RM RM

Executive directors of the Company :

- Salary and allowance 842,000 224,800 4,000 4,000

- EPF 24,720 23,040 - -

866,720 247,840 4,000 4,000

Directors’ fee 40,000 24,000 40,000 24,000

906,720 271,840 44,000 28,000

Benefits-in-kind 29,208 35,050 - -

935,928 306,890 44,000 28,000

Executive director of a subsidiary :

- Salary and allowance 56,000 54,000 - -

- EPF 5,760 5,760 - -

61,760 59,760 - -

Total executive directors’ remuneration 997,688 366,650 44,000 28,000



20. TAXATION

GROUP COMPANY

2011 2010 2011 2010

RM RM RM RM

Malaysian income tax :

Based on results for the year

- Current tax 4,250 (3,000) (840,000) -

- Deferred tax relating to the origination and reversal of temporary differences - (24,000) - -

4,250 (27,000) (840,000) -

Over/(Under) provision in prior years

- Current tax 283,689 (227) - 599

- Deferred tax 2,799,000 (175,000) - -

3,082,689 (175,227) - 599

3,086,939 (202,227) (840,000) 599

The reconciliation of tax expense of the Group and of the Company is as follows :

GROUP COMPANY

2011 2010 2011 2010

RM RM RM RM

Profit/(Loss) before taxation 2,125,784 (3,956,591) 3,687,916 (2,893,043)

Less : Share of results of associates 30,223 (31,537) - -

2,156,007 (3,988,128) 3,687,916 (2,893,043)

Income tax at Malaysian statutory tax rate of 25% (539,002) 997,032 (921,979) 723,261

Income not subject to tax 35,776 464 31,816 440

Expenses not deductible for tax purposes (190,066) (437,994) 50,163 (723,701)

Deferred tax assets not recognised (652,191) (586,502) - -

Utilisation of unabsorbed tax losses and capital allowances 986,898 - - -

Current year unabsorbed reinvestment allowance 362,835 - - -

4,250 (27,000) (840,000) -

Over/(Under) provision in prior years 3,082,689 (175,227) - 599

3,086,939 (202,227) (840,000) 599



20. TAXATION (cont’d) GROUP

The amount and future availability of unabsorbed tax losses, capital allowances and reinvestment allowance for which the related tax effects have not been accounted for at the end of the reporting period are as follows :

2011 2010

RM RM

Unabsorbed tax losses 1,188,000 1,189,000

Unabsorbed capital allowances 749,000 4,320,000

Unabsorbed reinvestment allowance 20,035,000 18,584,000 The net deferred tax (assets)/liabilities which have not been recognised are represented by temporary differences

arising from :

2011 2010

RM RM

Property, plant and equipment 2,473,055 2,668,726

Unabsorbed tax losses (296,975) (297,369)

Unabsorbed capital allowances (187,265) (1,080,083)

Unabsorbed reinvestment allowance (5,008,970) (4,646,136)

(3,020,155) (3,354,862) The potential deferred tax assets are not recognised in the financial statements as it is anticipated that the tax effects

of such deferral will not reverse in the foreseeable future.

21. EARNINGS/(LOSS) PER SHARE

GROUP

The basic earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year as follows :

2011 2010

Profit/(Loss) attributable to owners of the parent (RM) 5,212,723 (4,158,818)

Weighted average number of ordinary shares of RM0.10 each in issue 268,181,818 268,181,818

Basic earnings/(loss) per shares for the year (sen) 1.94 (1.55)

There is no dilutive earnings/loss per share as the Company does not have any convertible financial instruments as at the end of the reporting period.



22. DIVIDEND

2011 2010

RM RM

In respect of the financial year ended 30 June 2011

- An interim single tier dividend of 0.5 sen per share 1,340,909 -

At the forthcoming Annual General Meeting, a final single tier dividend of 0.5 sen per share amounting to RM1,340,909 in respect of the financial year ended 30 June 2011 will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders will be accounted for in equity as an appropriation of retained profits in the financial year ending 30 June 2012.

23. CONTINGENT LIABILITIES (UNSECURED)

COMPANY

2011 2010

RM RM

Corporate guarantee extended by the Company to financial institutions for credit facilities granted to a subsidiary as at the end of the reporting period are as follows :

- Limit 19,550,000 26,630,000

- Utilised 777,776 159,453

The corporate guarantee does not have a determinable effect on the terms of the credit facilities due to the financial institutions requiring parent guarantee as a pre-condition for approving the credit facilities granted to a subsidiary. The actual terms of the credit facilities are likely to be the best indicator of “at market” terms and hence the fair value of the credit facilities are equal to the credit facilities amount received by the subsidiary. As such, there is no value on the corporate guarantee to be recognised in the financial statements.

24. SEGMENTAL INFORMATION

Segmental information is presented in respect of the Group’s business segments. The primary format, business segment, is based on the Group’s management and internal reporting structure.

Business Segment

For management purposes, the Group is organised into trading and manufacturing divisions. Inter-segment pricing is determined based on negotiated terms.



24. SEGMENTAL INFORMATION (cont’d)

By business segments

Investment

2011 Manufacturing Trading holding Elimination Total

RM RM RM RM Note RM

Revenue from external customers 21,250,055 21,417 203,161 - 21,474,633

Inter-segment revenue - 1,657 3,381,000 (3,382,657) A -

Total revenue 21,250,055 23,074 3,584,161 (3,382,657) 21,474,633

Segment results 2,542,628 (557,124) 3,612,017 (3,433,044) 2,164,477

Interest expense (87,501) - - - (87,501)

Interest income 3,132 - 75,899 - 79,031

Share of results of associates - - (30,223) - (30,223)

Profit/(Loss) before taxation 2,458,259 (557,124) 3,657,693 (3,433,044) 2,125,784

Taxation 3,077,543 4,146 (840,000) 845,250 3,086,939

Profit/(Loss) for the year 5,535,802 (552,978) 2,817,693 (2,587,794) 5,212,723

Assets

Segment assets 29,833,892 2,140,348 25,868,580 (26,492,594) 31,350,226

Investment in associates - - 1,916,149 - 1,916,149

Tax recoverable 315,022 5,182 19,599 (13,750) 326,053

Cash and cash equivalents 148,567 5,217 3,730,899 - 3,884,683

Total assets 30,297,481 2,150,747 31,535,227 (26,506,344) 37,477,111

Liabilities

Segment liabilities 6,881,725 2,477,312 113,604 (7,609,710) 1,862,931

Borrowings 1,723,296 - - - 1,723,296

Total liabilities 8,605,021 2,477,312 113,604 (7,609,710) 3,586,227

Other information

Capital expenditure 1,781,849 - - - B 1,781,849

Depreciation 4,216,168 - - - 4,216,168

Non-cash expenses/(income)

other than depreciation 209,510 562,160 (88,268) (222,956) C 460,446




Investment

2010 Manufacturing Trading holding Elimination Total

RM RM RM RM Note RM

Revenue from external customers 18,132,151 134,270 1,762 - 18,268,183

Inter-segment revenue - 5,142 - (5,142) A -

Total revenue 18,132,151 139,412 1,762 (5,142) 18,268,183

Segment results (2,639,026) (23,822) (4,720,060) 3,525,869 (3,857,039)

Interest expense (146,188) - - - (146,188)

Interest income 13,337 - 1,762 - 15,099

Share of results of associates - - 31,537 - 31,537

Loss before taxation (2,771,877) (23,822) (4,686,761) 3,525,869 (3,956,591)

Taxation (202,912) 86 599 - (202,227)

Loss for the year (2,974,789) (23,736) (4,686,162) 3,525,869 (4,158,818)

Assets

Segment assets 30,452,333 2,719,729 29,577,779 (29,589,779) 33,160,062

Investment in associates - - 2,301,416 - 2,301,416

Tax recoverable 1,036 15,000 599 - 16,635

Cash and cash equivalents 721,803 1,423 501,229 - 1,224,455

Total assets 31,175,172 2,736,152 32,381,023 (29,589,779) 36,702,568

Liabilities

Segment liabilities 10,433,723 2,509,739 72,971 (10,981,895) 2,034,538

Borrowings 1,743,669 - - - 1,743,669

Deferred tax liabilities 2,799,000 - - - 2,799,000

Provision for taxation 521 - - - 521

Total liabilities 14,976,913 2,509,739 72,971 (10,981,895) 6,577,728

Other information

Capital expenditure 233,259 - - - B 233,259

Depreciation 4,744,483 - - - 4,744,483

Non-cash expenses other

than depreciation 1,095,862 - 1,040,029 - C 2,135,891




Notes to segment information :

A Inter-segment revenue are eliminated on consolidation.

B Additions to non-current assets consist of :

2011 2010

RM RM

Property, plant and equipment 1,781,849 233,259 C Other material non-cash expenses/(income) consist of the following items as presented in Note 19 to the

financial statements :

2011 2010

RM RM

Allowance for slow moving inventories 45,386 30,041

Bad debts - 405,469


Impairment loss on investment in associates 355,044 -

Impairment loss on receivables - 60,408

Loss on deconsolidation of investment in subsidiaries - 994,030

Loss on disposal of property, plant and equipment 1,820 237,130

Property, plant and equipment written off 147,508 455,310

Share of results of associates 30,223 (31,537)

Unrealised gain on foreign exchange (1,044) (14,960)

460,446 2,135,891

Geographical segments

Revenue and non-current assets information based on the geographical location of customers and assets respectively are as follows :

Revenue Non-current assets

2011 2010 2011 2010

RM RM RM RM

Malaysia 20,535,621 16,349,074 25,805,352 28,520,124

United States 5,914 759,439 - -

Singapore 933,098 1,159,670 - -

21,474,633 18,268,183 25,805,352 28,520,124

Non-current assets information presented above consist of the following items :

2011 2010

RM RM

Property, plant and equipment 25,805,352 28,520,124 Information about major customer

Revenue from a major customer amounted to RM16,021,632 (2010 : RM9,013,943), arising from sales by the manufacturing segment.



25. RELATED PARTY DISCLOSURES

(i) Related party transactions

GROUP COMPANY

2011 2010 2011 2010

RM RM RM RM

Gross dividend income from a subsidiary - - 3,381,000 -

Sales of property, plant and equipment to certain directors of the Company 99,625 - - -

(ii) Compensation of key management personnel

The Group and the Company have no other members of key management personnel apart from the Board of Directors which compensation has been shown in Note 19.

Key management personnel are those persons including directors having authority and responsibility for planning, directing and controlling the activities of the Group and of the Company, directly or indirectly.

26. CATEGORIES OF FINANCIAL INSTRUMENTS

The table below provides an analysis of financial instruments categorised as loans and receivables (“L&R”), available-for-sale financial assets (“AFS”) and other liabilities measured at amortised cost (“AC”).

Carryingamount L&R AFS AC

RM RM RM RM

2011

GROUP

Financial assets

Other investments (Note 6) 1,295,200 - 1,295,200 -

Trade receivables (Note 8) 2,466,399 2,466,399 - -

Other receivables and refundable deposits (Note 9) 237,028 237,028 - -

Cash and cash equivalents (Note 11) 3,884,683 3,884,683 - -

7,883,310 6,588,110 1,295,200 -

Financial liabilities

Borrowings (Note 14) 1,723,296 - - 1,723,296

Trade payables (Note 16) 356,741 - - 356,741

Other payables and accruals (Note 17) 1,506,190 - - 1,506,190

3,586,227 - - 3,586,227


26. CATEGORIES OF FINANCIAL INSTRUMENTS (cont’d)

Carryingamount L&R AFS AC

RM RM RM RM

2011

COMPANY

Financial assets

Other investments (Note 6) 1,295,200 - 1,295,200 -

Amount due from subsidiaries (Note 10) 7,606,645 7,606,645 - -

Cash and cash equivalents (Note 11) 3,730,899 3,730,899 - -

12,632,744 11,337,544 1,295,200 -

Financial liabilities

Other payables and accruals (Note 17) 113,604 - - 113,604

Comparative figures have not been presented for 30 June 2010 by virtue of the exemption given in paragraph 44AA of FRS 7.

27. FINANCIAL RISK MANAGEMENT

The Group and the Company are exposed to a variety of financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk and foreign currency exchange risk. The Group operates within clearly defined guidelines that are approved by the Board and the Group’s policy is not to engage in speculative activities.

27.1 Credit risk

Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Group and to the Company. The Group’s exposure to credit risk arises principally from its trade receivables. The Company’s exposure to credit risk arises principally from advances to subsidiaries and financial guarantees provided to financial institutions in respect of credit facilities granted to the subsidiaries.

27.1.1 Trade receivables

The Group typically gives its existing customers credit terms that range between 30 to 60 days. In deciding whether credit terms shall be extended, the Group will take into consideration factors such as the relationship with the customer, its payment history and credit worthiness. The Group subjects new customers to credit verification procedures. In addition, debt monitoring procedures are performed on an on-going basis with the result that the Group’s exposure to bad debts is not significant.

The maximum exposure to credit risk arising from trade receivables is represented by their carrying amount in the statement of financial position.




27. FINANCIAL RISK MANAGEMENT (cont’d)

27.1.1 Trade receivables (cont’d)

The ageing of trade receivables and allowance for impairment of the Group is as follows :

Carrying

amount

RM

Not past due 2,459,737

1 to 30 days past due 1,258

31 to 60 days past due -

61 to 90 days past due -

Past due more than 91 days 5,404

6,662

2,466,399 Trade receivables that are neither past due nor impaired are creditworthy customers with good payment

record with the Group. None of the Group’s trade receivables that are neither pass due nor impaired have been renegotiated during the financial year.

The Group has trade receivables amounting to RM6,662 that are past due as at the end of the reporting

period but not impaired as the management is of the view that these past due amounts will be collected in due course.

The Group has concentration of credit risk on 1 customer which represents 86% of total trade receivables.

27.1.2 Intercompany balances

The Company provides advances to its subsidiaries and the Company monitors the performance of the subsidiaries regularly.

The maximum exposure to credit risk is represented by their carrying amount in the statement of financial position.

As at the end of the reporting period, there was no indication that the advances to its subsidiaries are not recoverable. The Company does not specifically monitor the ageing of the advances to its subsidiaries.

27.1.3 Financial guarantees

The Company provides unsecured corporate guarantee to financial institutions in respect of credit facilities granted to a subsidiary.

The maximum exposure to credit risk is disclosed in Note 23, representing the outstanding credit facilities of the said subsidiary as at the end of the reporting period. The Company monitors on an ongoing basis the results of the subsidiary and repayments made by the subsidiary.

The financial guarantees have not been recognised since the fair value on initial recognition was not material.




27.2 Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they fall due. The Group actively manages its debt maturity profile, operating cash flows and availability of funding so as to ensure that all repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash and cash equivalents to meet its working capital requirements.

The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at the end of the reporting period based on the undiscounted contractual payments :

Carryingamount

RM

Contractualcash flows

RM

Withinone year

RM

More thanone yearand less

thantwo years

RM

2011

GROUP

Interest bearing borrowings 1,723,296 1,772,368 1,368,737 403,631

Trade payables 356,741 356,741 356,741 -

Other payables and accruals 1,506,190 1,506,190 1,506,190 -

3,586,227 3,635,299 3,231,668 403,631

COMPANY

Other payables and accruals 113,604 113,604 113,604 -

27.3 Interest rate risk

The Group’s and the Company’s fixed rate deposits and borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s and the Company’s floating rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates.

The interest rate profile of the Group’s and the Company’s interest-bearing financial instruments based on the carrying amount as at the end of the reporting period are as follows :

GROUP COMPANY

RM RM

Fixed rate instruments

Financial assets 3,730,000 3,730,000

Financial liabilities 945,520 -

Floating rate instruments

Financial liabilities 777,776 -




27.3 Interest rate risk (cont’d) Fair value sensitivity analysis for fixed rate instruments

The Group and the Company do not account for any fixed rate financial assets and financial liabilities at fair value through profit or loss, and the Group and the Company do not designate derivatives as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss.

Cash flow sensitivity analysis for variable rate instruments

An increase of 25 basis point at the end of the reporting period would have decreased profit before taxation by the amount shown below and a corresponding decrease would have an equal but opposite effect. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.

GROUP COMPANY

RM RM

Decrease in profit before taxation 842 -

27.4 Foreign currency risk

The Group is exposed to foreign currency risk on sales and purchases that are denominated in currencies other than the functional currency of the Group. The Group also holds cash and bank balances denominated in foreign currency for working capital purposes. The currencies giving rise to this risk is US Dollar (“USD”) and Singapore Dollar (“SGD”).

The Group’s exposure to foreign currency risk, based on carrying amounts as at the end of the reporting period is as follows :

USD SGD

RM RM

GROUP

Other receivables 3,445 -

Cash and bank balances 61,809 -

Trade payables (37,510) (67,080)

Net exposure 27,744 (67,080)

Sensitivity analysis for foreign currency risk

Below demonstrates the sensitivity to a reasonably possible change in the foreign currencies exchange rates (against Ringgit Malaysia), with all other variables held constant, of the Group’s profit before taxation. A 10% strengthening of the RM against the following currencies at the end of the reporting period would have increased profit before taxation by the amount shown below and a corresponding decrease would have an equal but opposite effect.

GROUP

RM

USD (2,774)

SGD 6,708

Increase in profit before taxation 3,934




27.5 Capital Management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to support the Group’s stability and growth so as to maximise shareholders’ returns and stakeholders’ benefits.

To achieve its objectives, the Group ensures an optimal capital structure is maintained. The Group actively and regularly reviews its capital structure by taking into consideration the future capital requirements of the Group, capital efficiency, prevailing and projected profitability, projected operating cash flows, projected expenditures and projected strategic investment opportunities. As part of managing the capital structure, the Group may adjust the amount of dividend payment.

28. FAIR VALUE OF FINANCIAL INSTRUMENTS

GROUP AND COMPANY

The carrying amounts of financial assets (other than investments in quoted equity instruments) and financial liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the end of the reporting period.

The fair value of investments in quoted equity instruments is its quoted market price at 30 June 2011. The fair value of the investments is disclosed in Note 6.

29. EFFECTS OF ADOPTING NEW OR REVISED FRSs

Amendment to FRS 117 Leases

The amendment requires the Group to reassess the classification of leasehold land as finance lease or operating lease based on the extent of risks and rewards associated with the land. The Group has reassessed the risks and rewards of the leasehold land and concluded that they are finance leases. Consequently, leasehold land has been reclassified from prepaid lease payments to property, plant and equipment.

The reclassification has been made retrospectively and the comparatives figures have been restated as below :

As previously

reported Reclassification Restated

RM RM RM

Consolidated Statement of Financial Position

30 June 2010

Property, plant and equipment 27,385,882 1,134,242 28,520,124

Prepaid land lease payments 1,134,242 (1,134,242) -

1 July 2009

Property, plant and equipment 34,202,045 1,168,374 35,370,419

Prepaid land lease payments 1,168,374 (1,168,374) -



30. SUPPLEMENTARY INFORMATION DISCLOSED PURSUANT TO BURSA MALAYSIA SECURITIES BERHAD LISTING REQUIREMENTS

With the purpose of improving transparency, Bursa Malaysia Securities Berhad has on 25 March 2010, and subsequently on 20 December 2010, issued directives which require all listed corporations to disclose the breakdown of unappropriated profits or accumulated losses into realised and unrealised on group and company basis in the annual audited financial statements.

The breakdown of accumulated losses as at the end of the reporting period has been prepared by the Directors in accordance with the directives from Bursa Malaysia Securities Berhad stated above and the Guidance on Special Matter No. 1 - Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants are as follows :

GROUP COMPANY

RM RM

2011

Total retained profits/(accumulated losses) of the Company and its subsidiaries :

- Realised 11,133,726 (4,654,723)

- Unrealised 1,044 -

11,134,770 (4,654,723)

Less : Consolidation adjustments (12,742,232) -

(1,607,462) (4,654,723)

Total share of results of associates

- Realised (578,000) -

Total accumulated losses as per statements of financial position (2,185,462) (4,654,723)


NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the Ninth Annual General Meeting of the Company will be held at Bamboo Room, Scope Manufacturers (M) Sdn. Bhd., Lot 6181 Jalan Perusahaan 2, Kawasan Perindustrian Parit Buntar, 34200 Parit Buntar, Perak on Thursday, 17 November 2011 at 2:30 pm for the following purposes:-

AGENDA

AS ORDINARY BUSINESS :

1. To receive the Audited Financial Statements of the Company for the financial year ended 30 June 2011 together with the Reports of the Directors and Auditors thereon.

2. To approve the payment of single tier final dividend of 0.5 sen per share for the financial year ended 30 June 2011. Resolution 1

3. To approve the payment of Directors’ fee of RM100,000-00 for the financial year ended 30 June 2011. Resolution 2

4. To re-elect Mr Lee Min Huat as a Director who retires in accordance with Article 127 of the Company’s Articles of Association. Resolution 3

5. To re-appoint Messrs Grant Thornton as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration. Resolution 4

AS SPECIAL BUSINESS :

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

(i) ORDINARY RESOLUTION

AUTHORITY TO ISSUE SHARES

“That pursuant to Section 132D of the Companies Act, 1965, and subject to the approvals of the relevant Governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue shares in the Company, at such time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution in any one financial year does not exceed 10% of the issued share capital of the Company for the time being and that the Directors be and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the listing of and quotation for the additional shares so issued and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.” Resolution 5

(ii) SPECIAL RESOLUTION PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY

“That the amendments to the Articles of Association of the Company contained in Appendix I be and are hereby approved.” Resolution 6

7. To transact any other business of which due notices shall have been given in accordance with the Companies Act, 1965.

By Order of the Board,

CHEE WAI HONG (MIA 17181)FOO LI LING (MAICSA 7019557)Company Secretaries

Penang



NOTICE OF ANNUAL GENERAL MEETING (CONT'D)

Notes :

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

2. The proxy form must be duly completed and deposited at the Registered Office of the Company, 51-13-A Menara BHL Bank, Jalan Sultan Ahmad Shah, 10050 Penang not less than forty-eight (48) hours before the time for holding the meeting.

3. A member shall be entitled to appoint more than two (2) proxies to attend and vote at the same meeting.

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

5. If the appointor is a corporation, this form must be executed under its Common Seal or under the hand of its attorney.

Explanatory Notes on Special Business

Resolution 5 – Authority to issue sharesThe Ordinary Resolution proposed under item 6(i) above, if passed, primarily to renew the mandate to give authority to the Board of Directors of the Company to issue and allot shares in the Company up to an amount not exceeding 10% of the total issued capital of the Company for the time being for such purposes as the Directors consider would be in the best interest of the Company without convening a general meeting. This would avoid any delay and costs in convening a general meeting to specifically approve such an issue of shares. This authority, unless revoked or varied by the shareholders of the Company in general meeting, will expire at the conclusion of the next Annual General Meeting.

As at the date of this Notice, the Company has not issued any new shares pursuant to Section 132D of the Companies Act, 1965 under the general authority which was approved at the Eighth Annual General Meeting held on 16 November 2010 and which will lapse at the conclusion of the Ninth Annual General Meeting to be held on 17 November 2011. A renewal of this authority is being sought at the Ninth Annual General Meeting under proposed Resolution 5.

This authority if granted will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares, for purpose of funding future investment project(s), working capital, acquisition(s) and/or settlement of banking facility(ies).

Resolution 6 – Proposed Amendments to the Articles of Association The Special Resolution proposed under item 6(ii) above, if passed, will give authority for the Company to amend its Articles of Association in order to align with the amendments of the Listing Requirements pursuant to the directive from Bursa Malaysia Securities Berhad on the implementation of payment of electronic cash dividend, for clarification and enhancements and, where relevant, to render consistency throughout the Articles.


STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING(Pursuant to Rule 8.29(2) of the Listing Requirements of Bursa Malaysia Securities Berhad)

As at date of this notice, there are no individuals who are standing for election as Directors (excluding the Director who is standing for re-election) at this forthcoming Annual General Meeting.


“Appendix I”

Special Resolution Proposed Amendments to the Articles of Association of the Company

“That the following existing Article 166 of the Articles of Association of the Company be hereby deleted in its entirety:-

166. (1) Any dividend, interest or other moneys payable in cash in respect of a share may be paid by direct debit, bank transfer, cheque or dividend warrant and (in the case of a cheque or dividend warrant for such payment) sent:

(a) by post, by courier or by hand to the registered address of the person entitled as appearing in the Record ofDepositors;or

(b) by post, by courier or by hand to the registered address of the person becoming entitled to the share by reason of the death, bankruptcy or mental disorder of he holder or by operation of law or if such address has not been supplied, to such address to which such cheque or warrant might have been posted if the death,bankruptcy,mentaldisorderoroperationoflawhadnotoccurred;or

(c) by post, by courier or by hand to such address as the person entitled may direct in writing but the Company shall be entitled to send such cheque or dividend warrant to such other address or by such other means stated in Articles 166 (1) (a) to 166 (1) (c) notwithstanding such direction.

(2) Every cheque or warrant may be made payable:

(a) totheorderofthepersonentitled;or

(b) to the order of the person entitled by reason of the death, bankruptcy or mental disorder of the holder or byoperationoflaw;or

(c) to the order of such other person as the person entitled may in writing direct or direct to be sent to,

but nothing in Article 166(2) shall prevent such cheque or warrant from being made payable in such other manner as the Company would be entitled to in respect of such cheque or warrant including (without limitation), in the case of the death of the holder of the share in respect of which the dividend or other moneys to be paid by the cheque or warrant are payable making such cheque or warrant payable to the estate of such holder if the Company thinks appropriate. Such cheque or warrant shall be a good discharge to the Company. The Company shall not be responsible for any loss of any such cheque or warrant (whether in the post, while being delivered by courier or by hand, after delivery to the relevant address or person or otherwise).

and be replaced with a new Article 166 which reads as follows:-

166 (1) Any dividend, interest or other moneys payable in cash in respect of a share may be paid by way of telegraphic transfer or electronic transfer or remittance to such account as designated by such holder or the person entitled to such payment (“eDividend”), direct debit, bank transfer, cheque or dividend warrant or via any other mode or manner as may be prescribed by the Act, Listing Requirements of Bursa Securities and any other relevant authority for the time being in force.


(2) In the event that a member has not provided his bank account details to the Depository, any dividend, interest or other moneys payable in cash in respect of a share may be paid by cheque, bank draft, dividend warrant or postal order (in the case of a cheque, bank draft, dividend warrant or postal order for such payment) sent:

(a) by post, by courier or by hand to the registered address of the person entitled as appearing in the Record ofDepositors;or

(b) by post, by courier or by hand to the registered address of the person becoming entitled to the share by reason of the death, bankruptcy or mental disorder of the holder or by operation of law or if such address has not been supplied, to such address to which such cheque or warrant might have been posted if the death,bankruptcy,mentaldisorderoroperationoflawhadnotoccurred;or

(c) by post, by courier or by hand to such address as the person entitled may direct in writing but the Company shall be entitled to send such cheque or dividend warrant to such other address or by such other means stated in Articles 166(2)(a) to 166(2)(c) notwithstanding such direction.

(3) Every cheque or warrant or telegraphic transfer or electronics transfer or remittance may be made payable:

(a) totheorderofthepersonentitled;or

(b) to the order of the person entitled by reason of the death, bankruptcy or mental disorder of the holder or byoperationoflaw;or

(c) to the order of such other person as the person entitled may in writing direct or direct to be sent to,

but nothing in Article 166(3) shall prevent such cheque or warrant or telegraphic transfer or electronics transfer or remittance from being made payable in such other manner as the Company would be entitled to in respect of such cheque or warrant or telegraphic transfer or electronics transfer or remittance including (without limitation), in the case of the death of the holder of the share in respect of which the dividend or other moneys to be paid by the cheque or warrant or telegraphic transfer or electronics transfer or remittance are payable making such cheque or warrant or telegraphic transfer or electronics transfer or remittance payable to the estate of such holder if the Company thinks appropriate. Such cheque or warrant or telegraphic transfer or electronics transfer or remittance shall be a good discharge to the Company. The Company shall not be responsible for any loss of any such cheque or warrant or telegraphic transfer or electronics transfer or remittance (whether in the post, while being delivered by courier or by hand, after delivery to the relevant address or person or otherwise). The Company shall not be responsible for any inaccurate details supplied by the members or any errors, delay or power or electronic failure encountered during or in the course of transmission of data or payment or for any loss of any such eDividend, cheque, bank draft, dividend warrant or postal order (whether in the bank account transfer, post, while being delivered by courier or by hand, after bank account transferring and/or delivering to the relevant address or person or otherwise).”

“Appendix I” (CONT'D)


NOTICE IS HEREBY GIVEN that a Single Tier Final Dividend of 0.5 sen per share in respect of the financial year ended 30 June 2011, if approved, will be paid on 15 December 2011 to depositors registered in the Record of Depositors at the close of business on 30 November 2011.

A depositor shall qualify for entitlement to the Dividend only in respect of:

a. Shares transferred into the depositor’s securities account before 4.00 p.m. on 30 November 2011.

b. Shares bought on the Bursa Malaysia Securities Berhad (“Bursa Securities”) on a cum entitlement basis according to the Rules of the Bursa Securities.

By Order of the Board,

CHEE WAI HONG (MIA 17181)FOO LI LING (MAICSA 7019557)Company Secretaries

Penang

Date: 25 October 2011

NOTICE OF DIVIDEND ENTITLEMENT


LIST OF PROPERTIES

RegisteredOwner / Location

Date ofAcquisition Description Tenure

Age of building(Years)

LandArea

(Sq. ft.)

Built upArea

(Sq. ft.)

ExistingUse

Audited Carrying Amount

as at 30 June 2011

RM '000

Scope Manufacturers 27.02.1998 Industrial Land Leasehold 12 65,340 58,040 Double storey 4,360

(M) Sdn Bhd & Building for 60 years office with

HS(D) 8228 (expiring on annexed single

PT 4149, Lot 6181 16.02.2049) storey factory

Jalan Perusahaan 2 building for

Kawasan Perindustrian use as office

Parit Buntar and factory

34200 Parit Buntar

Perak, Malaysia

HS(D) 2841, 14.11.2002 Industrial Land Leasehold 6 87,120 66,000 Double storey 6,417

PT 1803, Lot 6181 & Building for 60 years office with

Jalan Perusahaan 2 (expiring on annexed single

Kawasan Perindustrian 13.03.2039) storey factory

Parit Buntar building for

34200 Parit Buntar use as head

Perak, Malaysia office and factory


ANALYSIS OF SHAREHOLDINGSAS AT 5 OCTOBER 2011

A. Authorised Share Capital : RM50,000,000.00

Issued and fully paid-up Share Capital : RM26,818,182.00

Class of Shares : Ordinary Shares of RM0.10 each

Voting Rights : On show of hands – One vote for one person

On a poll – One vote for one ordinary share

B. ANALYSIS BY SIZE OF SHAREHOLDINGS

Size of holdings No. of holders % No. of shares %

1 – 99 8 0.50 260 0.00

100 – 1,000 283 17.86 260,700 0.10

1,001 – 10,000 707 44.61 4,172,840 1.55

10,001 – 100,000 456 28.77 17,078,600 6.37

100,001 – 13,409,089 (*) 127 8.01 105,718,228 39.42

13,409,090 and above (**) 4 0.25 140,951,190 52.56

Total 1,585 100.00 268,181,818 100.00

Remark : * - Less than 5% of Issued Holdings ** - 5% and above of Issued Holdings

C. SUBSTANTIAL SHAREHOLDERS

Name <-------------------------------------------- Number of Shares Held -------------------------------------------->

Direct % Indirect %

Lim Chiow Hoo 83,249,330 31.04 - -

Lee Min Huat 57,701,860 21.52 - -

D. DIRECTORS’ SHAREHOLDINGS

Name <-------------------------------------------- Number of Shares Held -------------------------------------------->

Direct % Indirect %

Lim Chiow Hoo 83,249,330 31.04 - -

Lee Min Huat 57,701,860 21.52 - -

Dato’ Philip Chan Hon Keong 375,000 0.14 - -

Tan Poh Heng - - - -

Yong Loong Chen 831,000 0.31 - -


ANALYSIS OF SHAREHOLDINGS (CONT'D)AS AT 5 OCTOBER 2011

E. THIRTY LARGEST SHAREHOLDERS

Name of Shareholders No. of Shares % of total issued

capital

1. Lim Chiow Hoo 50,000,000 18.64

2. Lee Min Huat 42,701,860 15.92

3. Lim Chiow Hoo 33,249,330 12.40

4. AIBB Nominees (Tempatan) Sdn BhdPledged Securities Account For Lee Min Huat 15,000,000 5.59

5. Ngan Mee Ling 12,998,165 4.85

6. Siew Lee Ying @ Siew Lee Yong 12,873,310 4.80

7. Khor It Kwang 10,000,000 3.73

8. Lim Seng Chong 8,925,000 3.33

9. Cimsec Nominees (Tempatan) Sdn BhdPledged Securities Account For Lee Chin Hwa (Seremban-CL) 5,516,000 2.06

10. Yap Pei Pei 4,860,900 1.81

11. Tan Siew Booy 3,648,000 1.36

12. Mohammed Ab Halim Bin Ab Rahman 3,000,000 1.12

13. Tan Eng Kim 2,242,500 0.84

14. Public Nominees (Tempatan) Sdn BhdPledged Securities Account For Chin Leong Thye Sdn Bhd (E-SRB) 2,055,700 0.77

15. Tan Eng Siang 1,923,380 0.72

16. Lee Am Plek @ Lee Ah Lek 1,480,000 0.55

17. Low Poh Lim 1,475,000 0.55

18. Ong Chee Keong 1,401,500 0.52

19. RHB Capital Nominees (Tempatan) Sdn BhdWong Ming Nee (LPN) 1,128,600 0.42

20. Tan Kow How 1,023,000 0.38

21. Ong Lai Choon 1,009,000 0.38

22. Lee Chin Hwa 995,700 0.37

23. Lee Ming Keong 926,500 0.35

24. Ng Cheng Lin 900,000 0.34

25. Kalaivani A/P P Kandasamy 740,000 0.28

26. Lim Seng Hee 704,500 0.26

27. Low Mun Chong 660,000 0.25

28. United Formula Sdn Bhd 600,000 0.22

29. Ang Eng Hoe 549,200 0.20

30. Ang Eng Hoe 536,200 0.20


PROXY FORM

No. of ordinary shares held

*I / We………………………………………..……………...............................……. of …………............……………….………… (Full Name in Block Letters)

………………………………………………………………….................................……. being a *Member/Members of Scope (Full Address)

Industries Berhad hereby appoint * the Chairman of the meeting or ………................................……………………………… (Full Name in Block Letters)

of …………………………………………………………………………….....................................……………………………..…(Full Address)

or failing him/her, …………………………………………………………...........… of ………..........................………………… (Full Name in Block Letters)

…………………………………………………………….....................................……….……..… as *my/our proxy/proxies to (Full Address)attend and vote for *me/us and on *my/our behalf at the Ninth Annual General Meeting of the Company to be held at Bamboo Room, Scope Manufacturers (M) Sdn. Bhd., Lot 6181 Jalan Perusahaan 2, Kawasan Perindustrian Parit Buntar, 34200 Parit Buntar, Perak on Thursday, 17 November 2011 at 2:30 pm, and at any adjournment thereof to vote as indicated below:

No. of Resolution Resolutions For Against

1 Approval on payment of a single tier final dividend of 0.5 sen per share for the financial year ended 30 June 2011.

2 Approval of payment of Directors’ fees for the financial year ended 30 June 2011.

3 Re-election of Mr. Lee Min Huat as Director.

4 Re-appointment of Messrs Grant Thornton as Auditors and to authorise the Directors to fix Auditor’s remuneration.

5 Authority under Section 132D of the Companies Act, 1965 for the Directors to issue shares.

6 Proposed Amendments to the Articles of Association of the Company.

(Please indicate with an “X” in the spaces provided above to how you wish your vote to be cast. If you do not do so, the proxy will vote or abstain from voting at his/her discretion)

The proportion of my holdings to be represented by my *proxy/proxies are as follows:-

First named Proxy %

Second named Proxy %

100%

In case of a vote taken by a show of hands, the First Proxy shall vote on *my/ our behalf.

As witness my hand this ….......….. day of ………….........……… 2011. ……..…………………............…………………… Signature of Member(s)/Common Seal* Strike out whichever is not desired

Notes :

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

2. The proxy form must be duly completed and deposited at the Registered Office of the Company, 51-13-A Menara BHL Bank, Jalan Sultan Ahmad Shah, 10050 Penang not less than forty-eight (48) hours before the time for holding the meeting.

3. A member shall be entitled to appoint more than two (2) proxies to attend and vote at the same meeting.

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

5. If the appointor is a corporation, this form must be executed under its Common Seal or under the hand of its attorney.

Please fold across the line and close

Please fold across the line and close

The Company SecretariesSCOPE INDUSTRIES BERHAD (591376-D)

51-13-A Menara BHL BankJalan Sultan Ahmad Shah

10050 Penang

Affix Stamp


NOTIFICATION ON EDIVIDEND

25 October 2011

To All Shareholders of Scope Industries Berhad

Electronic Dividend Payment (eDividend)

The eDividend refers to the payment of cash dividends by a listed issuer directly crediting the shareholders’ cash dividend into their respective bank accounts.

We wish to inform that all listed issuers who announce a books closing date for cash dividend entitlements on or after September 1, 2010 are directed to pay the cash dividends via eDividend to shareholders who have provided their bank account information to Bursa Malaysia Depository Sdn Bhd (“BMD”). One of the main objectives of implementing eDividend is to promote greater efficiency of the payment system which is aligned to the national agenda of migrating to electronic payment.

1. Benefits of eDividend

1.1 The eDividend extends to all listed issuers and provides, amongst others, faster access to your cash dividends, eliminates the inconvenience of depositing the dividend cheques and problems such as misplaced, lost or expired cheques and unauthorised deposit of dividend cheques.

1.2 When you register for eDividend you will enjoy the following additional benefits:(a) Theconvenienceofaone-offregistrationforentitlementtoeDividendfromalllistedissuers;and

(b) The option to consolidate the dividends from all your Central Depository System (“CDS”) accounts into one bank account for better account management.

2. Registration for eDividend

2.1 Registration for eDividend has commenced on April 19, 2010 for a period of 2 years until April 18, 2012, at no cost to the shareholders. An administrative charge will be imposed for registrations after the 2 years period.

To register for eDividend, you are required to provide to BMD through your stock broker, your bank account number and other information by completing the prescribed form. The prescribed form can be obtained from your stock broker’s office where your CDS account is maintained, or downloaded from Bursa Malaysia Berhad (“BURSA”)’s website at http://www.bursamalaysia.com/website/bm/trading/edividend.html. You may find an eDividend information kit from BURSA’s website to facilitate your better understanding with regards to eDividend.

2.2 You need to submit to your stock broker’s office where your CDS account is maintained, the duly completed prescribed form and the following for registration:

(a) Individual depositor: Copy of identification documents i.e. NRIC, Passport, Authority Card or other acceptable identification documents. Original documents must be produced for your stock broker’s verification.

Corporatedepositor:CertifiedtruecopyoftheCertificateofIncorporation/CertificateofRegistration;and

(b) Copy of your bank statement/bank savings book/details of your bank account obtained from your bank’s website that has been certified by your bank/copy of letter from your bank confirming your bank account particulars. For individuals, original documents must be produced for your stock broker’s verification. For corporate entities, a certified true copy is to be submitted.

If the CDS account is held in the name of a nominee, the nominee will register for the eDividend.

2.3 If you are not able to be present at your stock broker’s office to submit the prescribed form and supporting documents, please ensure that the signing of the prescribed form and the supporting documents has been witnessed by an acceptable witness specified by BMD. In this regard, an acceptable witness includes an Authorised Officer of your stock broker, a Dealer’s Representative, a notary public and an Authorised Officer of the Malaysian Embassy/High Commission.


3. Notification of eDividend payments after registration

You are encouraged to provide in the prescribed form to BMD both your mobile phone number and e-mail address, if any. This is to enable the Company to issue electronic notification to you either via e-mail or sms, at the discretion of the Company, once the Company has paid the cash dividend out of its account. Please note that if you provide only your mobile phone number, you may only be notified of the cash dividend payment when you receive your dividend warrant or tax certificate.

4. Additional information for shareholders

4.1 Your savings or current account must be an active bank account maintained with a local bank under your name or, in the case of a joint account, has your name as one of the account holders. It must also be a bank account with a financial institution that is a member of the Malaysian Electronic Payment System Inter-Bank GIRO (IBG) set out below, which can be found on this website: http://www.meps.com.my/faq/interbank_giro.asp?id=2#answer

•AffinBankBerhad •EONBankBerhad

•HongLeongBankBerhad •HSBCBankMalaysiaBerhad

•AllianceBankMalaysiaBerhad •BankMuamalatMalaysiaBerhad

•AmBank(M)Berhad •OCBCBank(Malaysia)Berhad

•BankIslamMalaysiaBerhad •BankofAmerica

•MalayanBankingBerhad •RHBBankBerhad

•BankKerjasamaRakyatMalaysiaBerhad •StandardCharteredBankMalaysiaBerhad

•PublicBankBerhad •CitibankBerhad

•BankSimpananNasional •UnitedOverseasBank(Malaysia)Bhd

•CIMBBankBerhad •BankPertanianMalaysiaBerhad(Agrobank)

•TheRoyalBankofScotlandBerhad •J.P.MorganChaseBankBerhad

•DeutscheBankBerhad •KuwaitFinanceHouse(Malaysia)Berhad

4.2 Your bank account particulars and other related information is protected under the Securities Industry (Central Depositories) Act 1991 which strictly prohibits the disclosure of such information to any person unless you expressly authorise the disclosure in writing. For eDividend purposes, you will be authorising disclosure of your bank account particulars and other related information to persons necessary to facilitate the eDividend such as the Company, the share registrar and the appointed paying banks.

4.3 Once you have registered for eDividend, any cash dividend entitlement of which the books closure date is announced by the Company on or after September 1, 2010, shall be paid to you via eDividend.

You may find more information pertaining to e-Dividend on the Bursa Malaysia website at http://www.bursamalaysia.com/website/bm/trading/edividend_info_kit.html

We look forward to a successful implementation of eDividend through your active participation, and to serving you better as our valued shareholders. If you have any enquiry relating to eDividend service, please do not hesitate to contact our Share Registrars, Symphony Share Registrars Sdn Bhd at 603-7841 8000.

Thank you.

Yours faithfully

DATO’ PHILIP CHAN HON KEONGChairman

NOTIFICATION ON EDIVIDEND (CONT'D)

SCOPE INDUSTRIES BERHAD (591376-D)

(Incorporated In Malaysia)

Lot 6181, Jalan Perusahaan 2,Kawasan Perindustrian Parit Buntar,34200 Parit Buntar,Perak, Malaysia.

Tel : (60)5 7169605Fax : (60)5 7166606Email : [email protected] [email protected] : http://www.scope.com.my

Documents

Annual Report - SCOPE · 2011-11-03 · the firm until 2000. He then joined Messrs Skrine as a partner in the Corporate Division in January 2001. Currently, he is the co-head of the