seremban engineering berhad charting … corporate structure corporate information chairman’s...

CHARTINGOUR FUTUREA N N U A L R E P O R T 2 0 1 0

(45332-X)

(45332-X)

Lot 1A-1C, Lorong Bunga Tanjung 1/3, Senawang Industrial Park, 70400 Seremban, N. Sembilan, Malaysia.

Tel: +606-677 5898 Fax: +606-677 5162

SEREMBA

N EN

GIN

EERING

BERHA

D (45332-X

)A

NN

UA

L REPORT 2010

CH

ARTIN

G O

UR FU

TURE

Group’s 5 Year Financial Highlights

2010 2009 2008 2007 2006

Revenue (RM’ 000) 50,722 69,036 62,127 55,208 54,333 Shareholders’ Equity (RM’ 000) 56,173 43,167 30,468 22,759 14,847

PBT (RM’ 000) 3,921 12,164 9,948 9,902 7,444

PAT after MI (RM’ 000) 2,958 9,252 7,818 7,912 5,287

2010 2009 2008 2007 2006 2010 2009 2008 2007 2006

2010 2009 2008 2007 2006 2010 2009 2008 2007 2006

Contents

Corporate Structure

Corporate Information

Chairman’s Statement

Corporate Social Responsibility Statement

Directors’ Profiles

Corporate Governance Statement

Audit Committee Report

Statement on Internal Control

Other Compliance Information

Financial Statements

List of Properties

Analysis of Shareholdings

Notice of Annual General Meeting

Statement Accompanying Notice of Annual General Meeting

Appendix 1

Proxy Form

02

03

04

06

07

13

18

23

25

27

95

97

100

105

106

seremban enGineerinG berHad (45332-X)�

Corporate struCture

seb resourcessdn. bhd

100%

sepen engineeringsdn. bhd

60%

50%(JV)

Groupage seb sdn. bhd.

aCe standard international Limited

50%(JV)

� annuaL report 2010

Corporate inFormation

direCtors

tan sri ahmad Fuzi bin abdul razakIndependent Non-Executive Director cum Chairman

Wong Choon Cheon Non-Independent Non-Executive Director cum Vice Chairman

Wong Chee KianManaging Director

Wong poh CheeExecutive Director

tan tian sengExecutive Director

ir. mohamad noh bin serulExecutive Director

Chiam tau meng Independent Non-Executive Director

dato’ dr. ir. andy seo Kian HawIndependent Non-Executive Director

tan ah bah @ tan ah ping Non-Independent Non-Executive Director

Wong Wai HungNon-Independent Non-Executive Director

tan ah moyAlternate Director to Tan Tian Seng

CompanY seCretarY

Pang Kah Man (MIA 18831)

reGistered oFFiCe

3-2, 3rd Mile SquareNo. 151, Jalan Kelang LamaBatu 3 1/2, 58100 Kuala Lumpur Tel: (603) 7987 5300Fax: (603) 7987 5200

Corporate oFFiCe

Lot 1A - 1C, Lorong Bunga Tanjung 1/3Senawang Industrial Park70400 Seremban, N. Sembilan, MalaysiaTel: (606) 677 5898Fax: (606) 677 5162

auditors

SC Lim, Ng & Co. (AF 0681)

sHare reGistrars

Symphony Share Registrars Sdn Bhd

stoCK eXCHanGe ListinG

Main Market of Bursa Malaysia Securities Berhad


On behalf of the Board of Directors of Seremban Engineering Berhad (“SEB”), I hereby present the Annual Report and the Audited Financial Statements of the Group and the Company for the financial year ended 31 December 2010.

perFormanCe revieW

The business environment for the 2010 financial year was very challenging. While the global financial crisis had subsided and economic activities are gradually stabilizing, the process equipment industry as a whole remained mired in a weak demand and over-capacity situation. As a result, the SEB Group’s revenue registered a decline of 26.7% to RM50.6 million from RM69.0 million in 2009. The Group achieved a profit after tax and minority interest (“PATMI”) of RM2.9 million in 2010 as compared to RM9.0 million in 2009. The decline in PATMI was mainly due to lower revenue and margin.

Despite the challenging operating environment, the SEB Group remained profitable and achieved a PATMI of RM2.9 million in 2010. Moreover, the Group’s financial position remains healthy with a cash position of RM16.9 million or cash per share of 21.1 sen as at 31 December 2010.

prospeCts

Malaysia’s economy outperformed expectations to chalk up a commendable growth of 7.2 per cent in 2010 as compared to a contraction of 1.7 per cent in 2009, bolstered by a rebound in manufacturing and services as well as brisk exports and imports. The continued inflow of foreign direct investments, a healthy reserves position maintained by the central bank, a record performing ringgit, as well as high commodity prices boosted growth and aided the rebound in 2010.

However, the global economy remains largely uncertain amidst the recent natural disaster in Japan and the uprising in the Middle East. Nevertheless, economists appeared confident that Japan being the world’s third largest economy will bounce back and that damage to the global economy will be limited. Meanwhile, the turmoil in the Middle East continues to exert pressure on oil prices as well as other commodities.

Despite the above, the Group believes that economic prospects in Malaysia remain positive as domestic demand spurred by the government’s stimulus initiatives would improve macroeconomic fundamentals and attract capital inflows into the country.

In addition, the SEB Group will continue to focus on its core business and intensify its effort in building up its business in oil & gas and waste management industry. The Board of Directors believes that capital spending in the oil and gas sector is expected to remain relatively strong due to the focus given by the Malaysian Government to improve Malaysia’s oil and gas production as set out in the Economic Transformation Programme.

With the listing of SEB Group on the Main Market of Bursa Malaysia on 10 May 2010, SEB Group will be able to gain financial autonomy by having direct access to capital market that will expedite the execution of its expansion plans at a faster pace as well as enhance its corporate reputation which will be beneficial in attracting more clientele.

CHairman’s


As ever, the Group continues to be mindful of the prevailing uncertainties and difficulties in the operating environment and will continue to be vigilant and will take all the necessary measures to stay competitive. In addition, the strong cash position will enable the Group to seize any potential opportunities as and when they arise.

dividend

The Board of Directors does not recommend any payment of dividend for the financial year ended 31 December 2010.

auditors

In line with the requirements of Bursa Malaysia Securities Berhad, SEB has received a Notice of Nomination to engage Messrs. Crowe Horwath which is registered with the Audit Oversight Board under Section 310 of the Securities Commission Act, 1993 to act as the auditors for SEB group of companies. Meanwhile, the Board of Directors wishes to express its appreciation to Messrs. SC Lim, Ng & Co for their years of service.

aCKnoWLedGement

On behalf of the Board, I would like to thank our valued customers, suppliers, bankers, regulatory authorities, business partners and shareholders for their unwavering support and confidence in the Group.

I would also like to extend my sincere appreciation to my fellow directors, the management and staff of the Group at all levels for their conscientious contribution, untiring commitment and dedication, which have been extremely supportive throughout this challenging year.

tan sri ahmad Fuzi bin abdul razakChairman

statement


Corporate soCiaL responsibiLitY statement

At SEB there is a long standing commitment to social responsibility based upon the belief that business can be both profitable and responsible. We have always believed that the continuous effort to improve the workplace, marketplace, the community and environment is good business practice for us and is what our customers expect of us.

For a better workplace, we stress on safety training and provide no hazardous working environment. It is our goal to maintain a safe and healthy working condition for all our employees. Furthermore, trainings and annual dinner are provided as a platform to foster interaction which constitutes part of our staff welfare and development program. The Company also organizes sports events such as badminton and bowling competitions with the aim to motivate and build up teamwork amongst the employee. Loyalty and dedication were appreciated and recognized with our Long Services Awards, awarded annually to staffs who have achieved service milestones at five-year intervals.

For a better marketplace, we are committed to engage and respond to our shareholders, analysts, bankers, customers and suppliers with a view to better relations and understanding. High ethical standards in the areas of marketing, advertising and procurement are consistently applied. We also seek to protect our customers’ rights through responsive customer complaints as well as handle our business dealings with the strictest confidence and integrity. The same applies to our business relationship with suppliers.

For a better community, we as a responsible corporate citizen supports and gets involved in community and society activities to assist the needy and less fortunate group through cash and in-kind contributions to charitable organizations and welfare institutions. We recognize that a solid community and society is a significant factor to support the company’s business.

For a better environment, the Group recognizes the importance of environmental conservation. We are committed to actively reducing our environmental impact through conservation. The Group has adopted eco-friendly practices in its day-to-day work in order to minimize the impact on the environment such as adopting paperless environment by using email for communications and recycling of papers by using both sides of the papers for printing to minimize paper usage.

Looking forward, we will review this document annually in order to evaluate, update and improve our policies on an ongoing basis in order to incorporate our corporate social responsibility practices to strive for good business results while also improving the society and environment.

Corporate soCiaL responsibiLitY


direCtors’ proFiLes

tan sri aHmad FuZi bin abduL raZaKIndependent Non-Executive Director cum Chairman

Tan Sri Ahmad Fuzi Bin Abdul Razak, aged 62, a Malaysian, is the Independent Non-Executive Director cum Chairman of our Company. He is a member of the Audit Committee and the Chairman of the Nomination Committee.

He obtained his Bachelor of Arts Degree (Hons) from the University of Malaya in 1972. He subsequently attended a Foreign Service Course with a Certificate in Diplomacy from the University of Oxford in 1974.

He joined the Malaysian Diplomatic and Administrative Service in 1972, and served in various capacities at the Ministry of Foreign Affairs, mainly in the Political Division and at the Malaysian Missions abroad in Moscow, the Hague, Canberra, Washington and Dhaka before assuming the post of Director General of the Institute of Diplomacy and foreign Relations, Deputy Secretary Genral I (Political) and Secretary General of the Ministry of Foreign Affairs. As Secretary General, he played a prominent role in organising the Non Aligned Movement Summit (2003), the Organisation of the Islamic Conference Summit (2003) and the Association of Southern Asian Nations (“ASEAN”) Summit and Related Summits including the East Asia Summit in Kuala Lumpur (2005).

He has previously served as Ambassador at-large; Malaysia’s Representative to the ASEAN High Level Task Force on the Drafting of the ASEAN Charter; Malaysia’s Representative to the High Level Panel on the Drafting of the Terms of Reference of the ASEAN Human Rights Body; Member, the Board of Berita Nasional Malaysia; Proton Holdings Berhad; the Malaysian-Thailand Joint Authority; the Maritime Institute of Malaysia; the Board of Advisors, Institute of Diplomacy and Foreign Relations; the Board of Trustee, World Islamic Economic Forum (“WIEF”); International Advisory Panel of the WIEF; Chairman, AmanahRaya Capital Group Sdn. Bhd; Chairman; Al-Nibras Limited and Independent Non-Executive Director, LCL Corporation Berhad.

He is currently the Secretary General of the WIEF Foundation; Chairman, Amanahraya-Reit; Executive Chairman, AsiaEP Bhd; Chairman, PKT Logistics (M) Sdn Bhd; Non-Executive Chairman, Sofgen Sdn Bhd; Chairman, Leisure Guide Publishing Sdn Bhd; Independent Non-Executive Director, Puncak Niaga Holdings Berhad; Non-Executive Director, Management Development Institude of Singapore; Member, Board of Trustees, F3 Strategies Berhad; and Member, Advisory Board, Asia Pacific Entrepreneurship Award (APEA).

Tan Sri Ahmad Fuzi is also a Distinguised Fellow, Institute of Strategic and International Studies (ISIS); Distinguished Fellow, Institute of Diplomacy and Foreign Relations; Deputy Chairman, Malaysian Member Committee of the Council for Security Cooperation in the Asia Pacific (CSCAP Malaysia); Member, Board of Trustees, MERCY, Malaysia; President, Association of Former Malaysian Ambassadors (AFMA) and Advisor, High School Bukit Mertajam Alumni Malaysia.

In recognition of his service to the nation, he was awarded the AMN (1979), the JSM (1999), the DSPN (1999), the DMPN (2002) and the PSM (2003).

WonG CHoon CHeon Non-Independent Non-Executive Director cum Vice Chairman

Mr. Wong Choon Cheon, aged 66, a Malaysian, is the Non-Independent Executive Director of our Company. He brings with him extensive experience having accumulated approximately 49 years of working experience in the metal fabrication industry including fabrication of process equipment and metal structure including plant erection, assembly, installation and commissioning. He has contributed significantly to the growth and development of our Group and has successfully led our Group to become an established and reputable player in the metal fabrication industry in Malaysia. He is mainly responsible for our Group’s overall strategy and development of the overall vision of our Group. He began his career with Wong Heng Engineering Sdn Bhd in 1962, and was later appointed as an Executive Director.

While he was with Wong Heng Engineering Sdn Bhd, he was actively involved in the fabrication of various types of continuous manufacturing lines, process equipment, metal structure and plant fabrication and installation. He and Dato’ Wong Choon Tat incorporated our Company in 1979.

In 1991, he took control of SEB Company, and was appointed as Managing Director. He played an instrumental role in shifting of Company’s business focus from providing automotive maintenance services to provision of services such as plant shutdown, general maintenance, plant modification and repair services to manufacturing and processing plants, and subsequently to Group’s current focus as a fabricator of process equipment and metal structure. He was appointed as SEB Company’s Vice Chairman in 2009.

Madam Tan Ah Moy is the spouse, Ms. Wong Poh Chee is the daughter and Mr. Wong Chee Kian is the son of Mr. Wong Choon Cheon.


direCtors’ proFiLes (Cont’d)

WonG CHee KianManaging Director

Mr. Wong Chee Kian, aged 40, a Malaysian, is the Managing Director of our Company. He obtained his Bachelor of Science majoring in Business Administration from California State University, Fresno USA in 1993. He has accumulated approximately 16 years of experience in the metal fabrication industry. He has contributed significantly to the growth and development of our Group. Under his overall management, our Group has diversified into various user industries such as palm oil, oil and gas and food processing, and has expanded to reach into the export markets. He began his career as a Marketing Manager with Hydraufit Sdn Bhd in 1994, where he was responsible for selling and marketing the company’s hydraulic hoses and couplings. Subsequently, he joined our Company as a Marketing Executive in 1994, and he was promoted to the position of Marketing Manager later in the same year. In 1995, he was promoted to the position of Project Manager, where he was responsible for managing a number of our Group’s plant fabrication and installation projects. He was subsequently promoted to planning and increasing our Group’s market penetration locally and overseas. He was responsible for our Group’s day-to-day operations including strategic planning, business development, marketing and promotional activities.

Mr. Wong Choon Cheon is the father and Madam Tan Ah Moy is the mother of Mr. Wong Chee Kian.

WonG poH CHeeExecutive Director

Ms. Wong Poh Chee, aged 43, a Malaysian, is the Executive Director and a member of the Remuneration Committee. She obtained her Bachelor of Science majoring in Marketing from California State University, Fresno, USA in 1990. She began her career in 1990 as an Administrative Supervisor with the Investor’s Business Daily in Los Angeles, USA where she was responsible for managing and supervising the entire Telemarketing/ Marketing Department for the financial newspaper company. In 1991, she returned to Malaysia and joined our Company as an Administrative Assistant.

She was appointed as a Director of our Company and promoted to the position of Operations and Administrative Manager in 1998. She is responsible for overseeing the entire IT, overall operations, administrative, human resources, finance and marketing functions of our Group.

She also holds various positions within FMM including Seremban Regional Chairman of FMM from 2001 to 2004, Small and Medium Industries Committee Chairman of FMM from 2001 to 2005. She was the Chairman and Council Member of FMM from November 2006 until October 2010. She is the committee member of the FFM Strategic Policies Committee and Finance Committee and the Chairman of the Women in Business Committee of FMM since April 2009. She is also the Vice Chairman of the Negeri Sembilan Branch of the Federation of Malaysian Manufacturers (“FMM”) since October 2010.

She was also a member of the Steering Committee of the World Congress Chambers, which was held from 3 to 5 June 2009. She was awarded the DNS (Darjah Setia) by the Negeri Sembilan Yang Dipertuan Besar in 2010.

Mr. Wong Choon Cheon is the father and Madam Tan Ah Moy is the mother of Ms. Wong Poh Chee.


direCtors’ proFiLe (Cont’d)

tan tian senGExecutive Director

Mr. Tan Tian Seng, aged 58, a Malaysian, is the Executive Director and the Production Director of our Company. He brings with him 27 years of experience in the fabrication process equipment and metal structure. He began his career in 1973 with Wong Heng Engineering Sdn Bhd, where he was first engaged as boilermaker and qualified welder. In 1981, he was promoted to the position of Chief Foreman in 1986. He was actively engaged in fabrication various types of continuous manufacturing lines, process equipment and metal structure while he was with Wong Heng Engineering Sdn Bhd. He joined our Company in 1991 as the Workshop Superintendent, where he oversaw workshop operations. He was then promoted to Factory Manager and appointed as a Production Director of our Company in 1992. He is currently responsible for overseeing the day-to-day operations of our Group’s fabrication yard, as well as carrying out marketing activities for our Group’s maintenance, repair and shutdown services.

Madam Tan Ah Moy is the sister of Mr. Tan Tian Seng.

ir. moHamad noH bin seruLExecutive Director

Mr. Ir. Mohamad Noh Bin Serul, aged 43, a Malaysian is the Executive Director and the Technical Director of our Company. He obtained his Bachelor degree in Mechanical Engineering from Universiti Teknologi Malaysia in 1991. He subsequently obtained his Advanced Diploma in Business and Management from the Swansea Institute in 1998. He began his career with DOSH, where he was responsible for monitoring and inspecting various types of industrial machinery and equipment, and he is familiar with the various Malaysian and internationally recognised process equipment design codes. He held the position of Assistant Director when he left DOSH in 2003. In 2004, he joined Shell Refining Co. (FOM) Berhad as the Chief Inspector for Plant Integrity Inspection (Static Equipment and Piping), where he was responsible for managing plant integrity, planning and implementing the plant inspection schedule. In 2005, he joined RNZ Integrated Sdn Bhd as a Senior Mechanical Engineer, where he was seconded to PETRONAS Carigali Sdn Bhd for Sumandak offshore project. He was responsible for reviewing technical drawings for process equipment and metal structure based on PETRONAS and internationally recognised specification, and reviewing safety and health requirements for compliance with DOSH requirements.

In 2005, he was appointed as Managing Director of Ideal Plant Technology Sdn Bhd and RBPV Fabricator and Engineering Sdn Bhd, where he was responsible for providing engineering consultation services for clients, reviewing and managing technical matters related to work activities such as code practices and legislation for petroleum piping installation, pressure vessel and steam boiler fabrication and repair, and managing the day-to-day operation of the companies. He joined our Company in 2009 in his current capacity as Technical Director. He is currently responsible for reviewing and managing technical matters related to our Group’s process equipment and metal structure fabrication businesses. He is also responsible for verifying and endorsing engineering drawings for metal structure, and training workers in matters related to engineering, technical matters and workplace health and safety.

seremban enGineerinG berHad (45332-X)10


CHiam tau menG Independent Non-Executive Director

Mr. Chiam Tau Meng, aged 58, a Malaysian, is an Independent Non-Executive Director of SEB. He was appointed to the Board of the Company on 03 September 2009. Currently, he is also the Chairman of the Audit Committee and a member of the Nomination Committee and Remuneration Committee.

Mr Chiam Tau Meng graduated with a Bachelor of Commerce Degree majoring in Accountancy from University of Otago, Dunedin, New Zealand in 1976. He is an Associate Chartered Accountant of the Institute of Chartered Accountants of New Zealand and Malaysian Institute of Accountant. He started his career in 1976 as Finance Manager of Tolley Industries Ltd (New Zealand) and in 1979, he joined Malaysian Containers (1974) Berhad as Finance Manager cum Company Secretary. In 1984, he joined Menang Corporation (M) Berhad as General Manager of Corporate Services and in 1989 he joined Bee Hin Holdings Sdn. Bhd. as General Manager of Corporate Finance in charge of the reconstruction scheme under Section 176 of the Companies Act 1965 on Kuala Lumpur Industries Berhad. In 1992, he was in the management consultancy practice of an international accounting organisation and in 1994, he set up his own consulting practice namely CTM Consulting.

Presently, he is also an Independent Non-Executive Director of Menang Corporation (M) Berhad, KYM Holdings Berhad, Syarikat Kayu Wangi Berhad and Success Transformer Corporation Berhad.

tan aH baH @ tan aH pinG Non-Independent Non-Executive Director

Mr. Tan Ah Bah @ Tan Ah Ping, aged 60, is the Non-Independent Non-Executive Director of SEB who was appointed to the Board on 1 March 2007. He is a representative of Success Transformer Corporation Berhad (“STC”), the holding company of SEB and is currently the Managing Director of STC. Mr Tan Ah Bah @ Tan Ah Ping, the founder of Success Transformer Manufacturer Sdn Bhd, has more than 32 years of working experience in the electrical industrial equipment industry. He assumes the role of Managing Director in all the subsidiaries of STC, save for SEB Group and Ningbo Success Zhenye Luminaire Limited Liabilities Company and its subsidiary, Ningbo Success Zhenye Casting Limited Liabilities Company. Currently, he is responsible for the overall management, strategic business planning and development, decision making and technical advisory of the STC Group.

11 annuaL report 2010

direCtors’ proFiLe (Cont’d)

dato’ dr. ir. andY seo Kian HaWIndependent Non-Executive Director

Dato’ Dr. Ir. Andy Seo Kian Haw, aged 54, is an Independent Non-Executive Director of our Company. He is also the Chairman of the Remuneration Committee and a member of the Audit Committee and Nomination Committee.

He graduated in Production Engineering from the University of Hertfordshire, UK. He subsequently obtained a Master in Business Administration majoring in General Management from the University of Hull, UK. He has attended the KONE Executive Edge Strategic Management course conducted by the London Business School, UK and the KONE Strategic Management Programme conducted at IMD, Switzerland. He has also received a Honorary Doctor of Science degree from the University of Hertfordshire, UK, and he is a Honorary Fellow of the Asscociation of ASEAN Fellow Engineers Organisation. He is a Registered Professional Engineer in Mechanical Engineering and an ASEAN Chartered Professional Engineer. He is a Fellow of the Institute of Engineers Malaysia, a Fellow of the Institution of Engineering and Technology, UK and a member of the Malaysian Institute of Management.

He began his career as a Production Engineer with Focus Para Wood Sdn Bhd in 1981. In 1982, he joined Contraves Advance Devices (M) Sdn Bhd as Production Planning Engineer. He then joined LVD (M) Sdn Bhd in 1983 as a sales executive and was promoted to Technical & Service Manager. In 1989, he joined The General Electric Company of Malaysia Sdn Bhd as the General Manager of the Manufacturing Division. In 1998, he was appointed the Managing Director of KONE Malaysia; later on as the President Director of PT. KONE Indo Elevator, Indonesia and Business Development Director of KONE Asia South. He was also the Senior Advisor to KONE Malaysia.

He is currently a partner of Andy Seo & Associates, a management engineering consultancy practice. He is also currently the Executive Chairman, Senior Advisor and Directors of various organisations. He currently serves as a Vice President of the FMM, an Exco Member of the National Chamber of Commerce and Industry of Malaysia (NCCIM) and an Appointed Council Member of the Kuala Lumpur and Selangor Chinese Chamber of Commerce and Industry (KLSCCCI). He is a Member of the 23-person Special Task Force to Improve the Government Delivery System (PEMUDAH) appointed by the Prime Minister of Malaysia. He is a Council Member of the Institution of Engineers Malaysia. He also serves as a Member of the Selangor Business Council; Council Member of Standard and Accreditation Malaysia; Member of the Malaysian Design Council; Chairman of the Consultation Panel for Manufacturing Sector, Malaysia Productivity Corporation; Board of Directors of the German Malaysian Institute; Committee Member of the Malaysian Finnish Business Council; Director of the EU-Malaysia Chamber of Commerce and Industry; President of the University of Hertfordshire Alumni Association in Malaysia (from 1991 to 2002); Member of the University Court at the University of Hertfordshire, UK and an Advisor to the Faculty of Engineering, University Putra Malaysia and University Malaysia Pahang.

He was awarded the S.M.S by the Sultan of Selangor in 2004, and was awarded the DIMP by the Sultan of Pahang in 2008.

WonG Wai HunGNon-Independent Non-Executive Director

Mr. Wong Wai Hung, aged 44, is the Non-Independent Non-Executive Director of our Company, and is a representative of STC. He obtained his Diploma in Commerce majoring in Management Accounting from Tunku Abdul Rahman College in 1991. In 2004, he obtained his Master of Business Administration in Electronic Commerce from Charles Stuart University, Australia. He has been an Associate Member and Chartered Management Accountants in 1997. He was also admitted as an Associate Member of the Malaysian Institute of Accountants in 2001. He started his career as an Audit Trainee with Ong & Wong. In 1991, he joined Chong Kee Ling & Son as an Accounts Assistant. He joined EAC Rubber Industries (M) Sdn Bhd later that same year as an Accounts Supervisor. He subsequently joined NKK International (M) Sdn Bhd as an Assistant Accountant in 1993. He then joined Cahaya Kelang Construction Sdn Bhd as an Accountant in 1995. He joined SETM in 1998 as the Finance Manager, and has been promoted to his current position as the Group Finance Manager of STC.

seremban enGineerinG berHad (45332-X)1�


tan aH moYAlternate Director to Tan Tian Seng

Madam Tan Ah Moy, aged 63, is the Alternate Director to Tan Tian Seng and the Purchasing Director of our Company. She has 28 years of hands-on management experience. She began her career in 1982 as the Workshop Manager of our Company, during which time our Company was engaged in providing automotive maintenance services. She was responsible for the day-to-day running and management of our Company. Following our Company’s change in business focus, she was appointed as our Purchasing Manager in 1991. She was appointed to her current position as Purchasing Director in 2008. She is currently in charge of our Group’s purchasing function, with responsibility for purchasing all raw materials, machinery and equipment, and tools. Mr. Wong Choon Cheon is the spouse, Ms. Wong Poh Chee is the daughter and Mr. Wong Chee Kian is the son of Madam Tan Ah Moy.

otHer inFormation

Family relationship

Save as disclosed above, none of the Directors has any family relationship with the other directors and/or major shareholders of the Company.

Conflict of Interest

Save as disclosed in the Circular to shareholders dated 20 May 2011, none of the Directors has any conflict of interest with the business of the company.

Directorship of Public Companies

None of the Directors has any directorships in any other public companies, save as disclosed above.

Convictions

None of the Directors has convicted of any offences within the past 10 years, other than traffic offences.

Attendance of Directors at Board Meetings

The details of attendance of the Directors at the Board Meetings are set out on page 13 of this Annual Report.

shareholdings

The details of Directors’ Interest in the securities of the Company are set out in the Analysis of Shareholdings on page 98 of this Annual Report.

13 AnnuAl RepoRt 2010

coRpoRAte goveRnAnce stAtement

The Board of Directors (“the Board”) recognises the importance of good corporate governance in ensuring that the interest of the Company, shareholders and other stakeholders are protected. The Board is committed to the maintenance of high standards of corporate governance by supporting and implementing the prescriptions of the principles and best practices set out in Parts 1 and 2 respectively of the Malaysian Code on Corporate Governance (“the Code”)

The Board is pleased to provide the following statement, which outlines the main corporate governance practices that were in place throughout the financial year unless otherwise stated.

tHe BoARD oF DIRectoRs

The Board currently has ten (10) members comprising one (1) Independent Non-Executive Director cum Chairman, four (4) Executive Directors, three (3) Non-Independent Non-Executive Directors, two (2) Independent Non-Executive Directors and one (1) Alternate Director. This composition complies with Paragraph 15.02 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) whereby the Company must have at least two (2) directors or one-third (1/3) of the Board, whichever is higher who are independent directors. The roles and responsibilities of the Chairman and Managing Director are separated and assumed by different individuals to ensure a balance of power and authority.

The presence of the three (3) Independent Non-Executive Directors is essential in providing guidance, unbiased, fully balanced and independent views, advice and judgement to many aspects of the Group’s strategy so as to safeguard the interests of minority shareholders and to ensure that high standards of conduct and integrity are maintained by the Group.

The Board has not nominated a Senior Independent Non-Executive Director to whom concerns may be conveyed as the Board is of the opinion that given the strong independent element on the Board, any concern regarding the Group may be conveyed by shareholders or investors to any of the Independent Directors and such concerns will be reviewed and addressed by the Board accordingly.

The Profile of each director is presented on pages 7 to 12.

supplY oF InFoRmAtIon, meetIngs & BoARD commIttees

The Board is provided with appropriate and timely information in furtherance of its duties. The Management and Auditors are invited to be present at the Board and Audit Committee meetings to provide further explanations and reports to the Board as and when necessary. Board meetings are scheduled quarterly and additional meetings are convened as and when necessary.

During the financial year ended 31 December 2010, a total of four (4) Board meetings were held. Details of attendance of the Directors at Board Meetings held during the financial year are as follows:

name of Directors no.of meetings Attended

Tan Sri Ahmad Fuzi Bin Abdul Razak 4/4 Wong Choon Cheon 4/4Wong Chee Kian 4/4 Wong Poh Chee 4/4 Ir. Mohamad Noh Bin Serul 4/4 Tan Tian Seng 4/4 Chiam Tau Meng 4/4 Dato’ Dr. Ir Andy Seo Kian Haw 4/4 Tan Ah Bah @ Tan Ah Ping 4/4Wong Wai Hung 4/4Tan Ah Moy (Alternate Director to Tan Tian Seng) -

seRemBAn engIneeRIng BeRHAD (45332-X)14

coRpoRAte goveRnAnce stAtement (cont’D)

supplY oF InFoRmAtIon, meetIngs & BoARD commIttees (cont’d)

The Board also maintains specific Board committees namely Audit Committee, Nomination Committee and Remuneration Committee to address specific Board agenda. However, in order to ensure the direction and control of the Group is firmly within the Board, the Board has defined the terms of reference for each Committee. The ultimate decisions on all matters deliberated in these Committees are required to be reported to the Board.

AppoIntments to tHe BoARD

The objective of the Nomination Committee is to ensure that there is a formal and transparent procedure for appointment of new directors and appraisal of directors for recommendation to the Board. However, the Board has the final decision on appointments after considering the recommendations of the Committee. This Committee comprises exclusively of Independent Non-Executive Directors. The members are as follows:

ChairmanTan Sri Ahmad Fuzi Bin Abdul Razak Independent Non-Executive Director

MembersDato’ Dr. Ir Andy Seo Kian Haw Independent Non-Executive DirectorChiam Tau Meng Independent Non-Executive Director

The Nomination Committee operates under its terms of reference and had one (1) meeting during the financial year ended 31 December 2010.

DIRectoRs’ tRAInIng

All the Directors have attended and completed the Mandatory Accreditation Programme (“MAP”) as prescribed by Bursa Securities. The Directors are encouraged to attend other relevant trainings to further enhance their skills and knowledge, as well as to keep abreast with the challenging regulatory and corporate governance developments.

During the financial year ended 31 December 2010, the training programme attended by the following Director was as follows:

Save for Mr. Chiam Tau Meng, the remaining Directors did not attend any training during the financial year due to their hectic schedule throughout the year. However, the Directors are aware of their responsibility to enhance their business acumen and knowledge in discharging their duties as Directors and have constantly updated themselves with the relevant knowledge via industrial statistics, forum and business discussions.

The Directors will continue to attend other relevant training programmes as appropriate, to further enhance their skills and knowledge and fully equip themselves to effectively discharge their duties.

The Company Secretary and external auditors have also regularly updated the Directors on the latest relevant regulatory requirements and accounting standards to enable them to keep abreast with such developments and amendments.

Re-electIon oF DIRectoRs

In accordance with the Articles of Association of the Company, all directors shall retire from office once in every three (3) years but shall be eligible for re-election and one-third (1/3) of the directors shall retire from office and be eligible for re-election at each Annual General Meeting (“AGM”).

Newly appointed directors during the financial year shall hold office until the next following AGM and shall then be eligible for re-election. This requirement has been adhered to by the Board members in every AGM.

name of Director training programmeChiam Tau Meng What every Director should know about fraud: A new Approach towards the Prevention and Detection of Fraud



DIRectoRs’ RemuneRAtIon

The objective of the Remuneration Committee is to recommend the remuneration framework of executive directors to the Board. The remunerations and entitlements of the non-executive directors including the Non-Executive Chairman shall be a matter to be decided by the Board as a whole with the director concerned abstaining from deliberation and voting on his individual remuneration.

The Remuneration Committee had one (1) meeting during the financial year ended 31 December 2010. This meeting was attended by all members.

The members of the Remuneration Committee are:

ChairmanDato’ Dr. Ir Andy Seo Kian Haw Independent Non-Executive Director

MembersWong Poh Chee Executive DirectorChiam Tau Meng Independent Non-Executive Director

The Remuneration Committee adopts the principles recommended by the Code in determining the directors’ remuneration, whereby, the executive remuneration is designed to link rewards to the Group’s performance whilst the remuneration of the Non-Executive directors is determined in accordance with their experience and the level of responsibilities assumed. The directors’ fees are subject to the approval of the shareholders of the Company at AGMs.

The number of Directors of the Company whose income falls within the following bands are set out as follows:

executive non-executive

RM 50,000 and below - 5RM 50,001 to RM 100,000 - -RM 100,001 to RM 150,000 1 -RM 150,001 to RM 250,000 2 -RM 250,001 to RM 350,000 3 -RM 350,001 to RM 400,000 - -

number of Directors

The aggregate remuneration paid or payable to all Directors are further categorised into the following components:

Fees Salaries&otheremoluments Benefitsinkind Total Rm’000 Rm’000 Rm’000 Rm’000 Executive 180 823 93 1,096 Non-Executive 150 - 16 166

* Subject to the approval of shareholders

The above disclosure includes the remuneration paid to Alternate Director who had received their remuneration from their capacity as Executive Director and manager of the subsidiary companies of SEB.

In respect of the non-disclosure of detailed remuneration of each director, the Board views that the transparency in respect of the Directors’ remuneration has been appropriately dealt with by the ‘band disclosure’ presented in this statement.

*



sHAReHolDeRs

The Board values dialogue with investors as a means of effective communication that enables the Board and management to convey information about the SEB Group’s performance, corporate directions and other matters affecting shareholders’ interests. Such information is disseminated through various disclosures and announcements made to the Bursa Securities covering quarterly financial results, audited financial statements and annual reports. This information is also accessible by the public through the Bursa Securities’ website at http://www.bursamalaysia.com.

The Company’s AGM continues to be used as a principal forum for dialogue and interaction with shareholders. Shareholders are encouraged to participate in discussions and to give their views to the Board. Extraordinary General Meetings are held as and when required. At the General Meetings, the directors will respond to the shareholders’ queries. Proposed resolutions for special business included in the notice of meeting will be accompanied by an explanatory statement to facilitate shareholders’ understanding and evaluation of issues involved.

AccountABIlItY AnD AuDIt

The Board is committed to present a balanced and understandable assessment of the Group’s financial position and prospects to the public. These results are contained in the quarterly financial results, audited financial statements and annual reports.

The Board also affirms its responsibility for maintaining a sound system of internal control for the Group. The effectiveness of the systems of internal control, which is in place, is reviewed by internal auditors, who operated independently from the activities of the Company. The internal audit function is currently outsourced to an external consulting company. Further explanation on the Group’s state of internal control is reported in the Statement on Internal Control set on pages 23 to 24.

RelAtIonsHIp WItH AuDItoRs

The Board, via the Audit Committee, maintains a formal and transparent relationship with the Group’s external auditors in seeking valuable professional advice and in ensuring compliance with Financial Reporting Standards issued by the Malaysian Accounting Standards Board in Malaysia. The Audit Committee meets up with the external auditors at least twice a year to review audit plans and exchange views on issues requiring attention.

The roles of the Audit Committee in relation to the external auditors are described in the Audit Committee Report set out on pages 18 to 22.

InteRnAl contRol

The Board acknowledges its responsibilities for the Group’s systems of internal control covering not only financial controls but also operational and compliance controls. The Board has overall responsibility in maintaining a sound system of internal control to safeguard shareholders’ investment and the Group’s assets.

With the assistance of the internal audit function, the Audit Committee and the Board review the effectiveness of key internal controls on an ongoing basis, provides its perspective on management control and ensures that the necessary corrective actions are taken on a timely basis.

The Statement on Internal Control set out on pages 23 to 24 provides an overview of the state of internal controls within the Group.



stAtement oF DIRectoRs’ ResponsIBIlItY FoR pRepARIng tHe FInAncIAl stAtements

The Board is responsible for ensuring that the financial statements are properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as give a true and fair view of the state of affairs of the SEB Group as at 31 December 2010 and of the results and the cash flow of the SEB Group for the financial year ended on that date.

In preparing the financial statements, the Directors have adopted suitable accounting policies and applied them consistently, and made estimates and judgements which are reasonable and prudent. The financial statements have been prepared on a going-concern basis.

The statement by directors pursuant to Section 169 of the Companies Act, 1965 is set out on page 33 of this Annual Report.


AuDIt commIttee RepoRt

1. composItIon oF AuDIt commIttee

2. teRms oF ReFeRence

objectives

The primary objective of the Audit Committee is to assist the Board in fulfilling their responsibilities relating to accounting and reporting practices of the holding company and each of its subsidiaries (collectively referred to as “the Group”). In addition, the Committee will:

• oversee and appraise the quality of the audit conducted by the Company’s external auditors and where applicable, the internal auditors in order to strengthen the confidence of the public in the Group’s reported results;

• maintain, by scheduling regular meetings, open lines of communication amongst the Board, the external auditors and where applicable the internal auditors, to exchange view and information as well as to confirm their respective authority and responsibilities;

• provide emphasis on the internal audit function by increasing the objectivity and independence of the internal audit personnel and provide a forum for direct communication to the Audit Committee that is independent of management.

• review related party transactions entered into by the Company and the Group to ensure that such transactions are undertaken on the Group’s normal commercial terms and that the internal control procedures with regards to such transactions are sufficient;

• provide assistance to the Board in fulfilling its fiduciary responsibilities relating to the Company’s administrative, operating and accounting controls; and

• act upon the Board’s request to investigate and report on any issues or concerns on the management of the Group.

• enhance the disclosure in Annual Report to include information pertaining to the Internal Audit Function.

composition

The Audit Committee shall be appointed by the Board from among their Members and composed no fewer than 3 Members where a majority shall be independent Directors. All members of the Audit Committee must be non-executive Directors with a majority of them being independent Directors.

ChairmanChiam Tau Meng Independent Non-Executive Director

MembersTan Sri Ahmad Fuzi Bin Abdul Razak Independent Non-Executive DirectorDato’ Dr. Ir Andy Seo Kian Haw Independent Non-Executive Director


AuDIt commIttee RepoRt (cont’D)

2. teRms oF ReFeRence (cont’d)

composition (cont’d)

All members of the Audit Committee should be financially literate and at least one (1) Member of the Audit Committee:

• must be a Member of the Malaysian Institute of Accountants (MIA); or

• if he is not a Member of MIA, he must have at least three (3) years’ working experience 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 Schedule of the Accountants Act 1967; or – he must have a degree/masters/doctorate in accounting or finance and at least 3 years’ post qualification experience in accounting or finance; or – he must have at least 7 years’ experience being a chief financial officer of a corporation or having the function primarily responsible for the management of the financial affairs of a corporation.

The Members of the Audit Committee shall elect a Chairman from among their number who shall be an independent Director.

In the event that if a Member of the Audit Committee vacates office resulting in the total number reduced to below three (3), the Board shall, within three (3) months of that event, appoint a new Member to make up the minimum number of three (3).

meetings

The Audit Committee will meet at least once a quarter and such additional meetings as the Chairman shall decide in order to fulfil its duties. In addition, the Chairman may call a meeting if a request is made by any Committee Member, the Company’s Managing Director, the external auditors or the internal auditors where applicable.

The finance director, the head of internal audit and a representative of the external auditors should normally attend Audit Committee meetings. Other board members may attend meeting upon the invitation of the Audit Committee. However, the Audit Committee should meet with the external auditors without executive Board members present at least twice a year.

The Chairman may appoint a Secretary responsible for keeping the minutes of meetings of the Committee, and circulating them to Committee Members and to other Members of the Board. A quorum for a meeting shall be two (2) Members, with the majority of the Members present shall be independent Directors. The Board must prepare an Audit Committee Report at the end of the financial year in the Annual Report of the Company which summarises the Audit Committee’s activities during the year and the related significant findings.

Authority

The Audit Committee is authorised to investigate any activity of the Company within its Terms and Reference and all employees shall be directed to co-operate with any request made by the Audit Committee. The Audit Committee shall have unrestricted access to any information pertaining to the Company and have direct communication channels with the external and internal auditors, when applicable and to the senior management of the Group. The Audit Committee shall be empowered to retain persons or experts having special competence as necessary to assist the Audit Committee in fulfilling its responsibilities. The Audit Committee also has the rights to convene meetings with external auditors, internal auditors or both, without the attendance of Board Members and employees at least twice a year.




Duties and Responsibilities

The duties and responsibilities of the Audit Committee shall be as follows:

• to consider and recommend the appointment of the external auditors, the audit fees and any other related matters;

• to oversee all matters pertaining to audit including the review of the audit plan and audit report with the external auditors;

• to review any letters of resignation from the external auditors or suggestions for their dismissal;

• To convene meetings with the external auditors, the internal auditors or both excluding the attendance of other directors and employees of the Group, whenever deemed necessary;

• To review the quarterly and annual financial statements of the Company and the Group prior to the approval by the Board of Directors, focusing particularly on:

– Any changes in or implementation of major accounting policy changes. – Significant and unusual events. – Significant adjustments arising from the audit. – The going concern assumption. – Compliance with Financial Reporting Standards issued by the Malaysian Accounting Standards Board and other legal requirements. – The accuracy and adequacy of the disclosure of information essential to a fair and full presentation of the financial affairs of the Group.

• 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 external auditors as well as internal auditors in order to kept informed of matters affecting the Company.

• in relation to the internal audit function :

– review the annual Internal Control Statement to be published in the Annual Report of the Company;

– review the adequacy of the scope, function and resources of the internal audit function, and that it has the necessary authority to carry out its works;

– review the internal audit programme and results of the internal audit process and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function;

– review any appraisal or assessment of the performance of members of the internal audit function;

– approve any appointment or termination of senior staff members of the internal audit function; and

– review the appointment or re-appointment of the internal auditors, the audit fee and questions of resignation or dismissal.

• to review any related parties transactions and conflict of interest situations that may arise within the Company or the Group including transaction, procedure or course of conduct that raises a question of management integrity;



Duties and Responsibilities

• to review the application of corporate governance principles and the extent of the Group’s compliance with the best practices set out under the Malaysian Code on Corporate Governance directions and guidelines established by the relevant regulatory bodies;

• to consider all areas of significant financial risk and arrangements in place to contain those risks to acceptable levels;

• to ensure that the Group is in compliance with the regulations of Companies Act 1965, Main Market Listing Requirements of the Bursa Malaysia Securities Berhad and other legislative and reporting requirements;

• to identify and direct any special project or investigate and to report on any issues or concerns in regards to the management of the Group; and

• such other functions as may be mutually agreed upon by the Audit Committee and the Board.

3. AuDIt commIttee meetIng AttenDAnce

The Audit Committee was formed by the Board on 3 September 2009. During the financial year, a total of three (3) meetings were held since its official listing on the Main Market of Bursa Malaysia Securities Berhad on 10 May 2010.

Details of attendance of the Directors at Audit Committee Meetings held during the financial year are as follows:


name of Directors no.of meetings Attended

Chiam Tau Meng 3/3 Tan Sri Ahmad Fuzi Bin Abdul Razak 3/3 Dato’ Dr. Ir Andy Seo Kian Haw 3/3

4. summARY oF ActIvItIes

During the financial year, the Audit Committee had carried out the following activities:

(a) Reviewed the quarterly financial results and announcements prior to submission to the Board of Directors for consideration and approval;

(b) Reviewed the audit plan of the external auditors in terms of their scope of audit prior to the commencement of annual audit;

(c) Reviewed the audit reports in relation to audit and accounting issues arising from the audit, matters arising from the audit of the Group in meetings with the external auditors without the presence of the executive Board members and management;

(d) Considered the nomination of external auditors for recommendation to the Board re-appointment;

(e) Reviewed the internal audit plan, findings and reports;

(f) Reviewed the recurrent related party transactions and control procedures to ensure that these transactions are fair and reasonable to and not to the detriment of minorty shareholders.


5. InteRnAl AuDIt FunctIon

The internal audit function is essential to assist the Board in obtaining the assurance of the system of internal control maintained by the management.

To achieve this objective, the Company outsourced its internal audit function to an external consulting company, NGL Consulting Sdn Bhd. The audit team members are independent of the activities audited by them. The internal auditors review and assess the Group’s system of internal control and report to the Audit Committee.

The Audit Committee approves the annual internal audit plan before the commencement of the internal audit reviews for each financial year. During the financial year, the internal auditors conducted reviews on the operations in the subsidiary companies of the Group and presented their reports to the Audit Committee. Areas for improvements identified were communicated to the management for further action.



stAtement on InteRnAl contRol

IntRoDuctIon

The Board is committed to maintain a sound system of internal control. In addition, the Board is also responsible for the Group’s risk management and to review the adequacy and integrity of these systems to safeguard shareholders’ investment and Group’s assets.

In pursuant to Paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Securities, the Board is pleased to provide the following Statement on Internal Control which illustrates the nature and scope of internal control of the Group during the financial year. However, it shall be noted that these systems are designed to manage, rather than eliminate risk of failure in achieving the Group’s business objectives and to provide reasonable, but not absolute, assurance against material misstatement or loss.

tHe sYstem oF InteRnAl contRol

The principal elements of the Group’s system of internal controls are summarised as follows:

1. A documented hierarchical organization structure defining the line of management responsibility, authority and appropriate reporting structure;

2. Internal policies, procedures and manuals of the Group are updated from time to time. These policies, procedures and manual are further strengthened with the implementation of ISO9001:2008 Quality Management System;

3. Financial statements and management information are provided to the Audit Committee and the Board on a quarterly basis for review. These reviews help the Audit Committee and the Board members to complement its understanding of the risk management in the Group;

4. An annual budgeting process where key performance indicators for each business units are set, and reviewed by the Board and Audit Committee. Performance is monitored regularly and a reporting system highlights significant variances against budgets for investigation and follow-up by management of respective business units;

5. Management and operational meetings are held to monitor and review the operational performance and changes in the business environments. These meetings are led by executive directors and attended by the senior management;

6. Significant corporate matters and its status discussed at the management meetings are brought to the Board meetings for further deliberation and review by the Board members; and

7. Appointment of staff is based on the required level of qualification, experience and competency to fulfill their responsibilities. Trainings and development programs are provided as part of the management succession plan for selected staff to further enhance their skill and capability

monItoRIng AnD RevIeW oF tHe sYstem oF InteRnAl contRol The present system of internal control have been operating effectively in the financial year under review up to the date of issuance of the financial statements, and there were no reported material losses caused by weaknesses in the Group’s system of internal control. The Board is committed to maintain a sound system of internal control and will strive for continuous improvement where necessary, to further enhance the Group’s system of internal control. The system of internal control is reviewed by the Board in accordance with the guideline for directors on internal control, the Statement on Internal Control: Guidance for Directors of Public Listed Companies.


stAtement on InteRnAl contRol (cont’D)

RIsK mAnAgement FRAmeWoRK

The Board regards risk management as an integral part of the business operations. The executive directors and the senior management have put in place an ongoing process for identifying, evaluating and managing the significant risks faced by the Group throughout the financial year under review.

The management’s risk management initiative includes delegating the responsibilities of identifying and managing risk to the respective Head of each business units. Significant risk identified and the corresponding internal controls implemented are discussed during periodic management meetings. In addition, significant risks identified are also brought to the attention of the Audit Committee at their scheduled meetings. This is to ascertain risk is properly monitored, managed, and mitigated to an acceptable level.

InteRnAl AuDIt FunctIon

The Group has outsourced its internal audit function to an independent internal audit service provider to review the adequacy and integrity of the internal control systems of the business units.

The internal audit adopts a risk-based approach and prepares its audit strategy and plan based on the risk profiles of the business units of the Group. Audits are carried out according to the audit plan approved by the Audit Committee. The resulting reports from the annual audits undertaken are presented to the Audit Committee at its regular meetings for review, discussion, and direct actions on matters pertaining to reports, which among other matter, include findings relating to the adequacy and integrity of the internal control system of the Group. After the Audit Committee had deliberated on the reports, these are then forwarded to the operational management for attention and necessary actions. The operational management is responsible for ensuring recommended corrective actions on reported weaknesses were taken within the required time frame. The cost of internal audit function for the financial year ended 31 December 2010 was about RM20,000.

conclusIon

In consideration of the Internal Auditors’ report and management representations, the Board is pleased that internal control deficiencies or weaknesses highlighted are dealt with appropriately.

RevIeW oF stAtement BY eXteRnAl AuDItoR

In accordance with the Paragraph 15.23 of the Main Market Listing Requirements of Bursa Securities, the external auditors have reviewed this Statement on Internal Control and reported that nothing has come to their attention that causes them to believe that the contents of this Statement is inconsistent with their understanding of the actual processes carried out in the Group.


otheR compliAnce infoRmAtion

1. ShARe BuY-BAcKS

TheCompanydidnothaveaschemetobuy-backitsownshares.

2. optionS, WARRAntS oR conVeRtiBle SecuRitieS

TheCompanyhasnotgrantedanyoptionstoanypartiestotakeupunissuedshares intheCompany.The Companyhasnot issuedanywarrantsorconvertiblesecurities.Assuchthere isnoexerciseofanyoptions, warrantsorconvertiblesecuritiesduringthefinancialyear.

3. AmeRicAn DepoSitoRY Receipt (“ADR”) oR GloBAl DepoSitoRY Receipt (“GDR”)

TheCompanyhasnotsponsoredanyADRorGDRprogrammeduringthefinancialyear.

4. impoSition of SAnctionS AnD/oR penAltieS

Nosanctionsand/orpenaltieshavebeenimposedbyanyregulatorybodiesontheCompanyoritssubsidiaries, orontheDirectorsormanagementoftheCompanyoritssubsidiariesduringthefinancialyear.

5. non-AuDit feeS

AnamountofRM20,000waspaidtotheexternalauditorbytheGroupfornon-auditservicesprovidedforthe financialyearended31December2010.

6. mAteRiAl contRActS

OtherthantherelatedpartytransactionsasdisclosedinNote31tothefinancialstatements,therewereno material contracts entered into by the Company and its subsidiaries involving the Directors’ and major shareholders’interests,eitherstillsubsistingattheendofthefinancialyearended31December2010orentered intosincetheendofthepreviousfinancialyear.

7. utiliSAtion of pRoceeDS

Asatthedateofthisreport,thegrossproceedsofRM16,939,000.00arisingfromthePublicIssuehavebeen utilisedinthefollowingmanner:

Description proposed Amount Deviation Balance utilisation utilised unutilised Rm’000 Rm’000 Rm’000 Rm’000

Purchaseofplantandmachineryand 9,000 2,346 - 6,654 extension/upgradingofproperties

Repaymentofborrowings 3,000 1,171 - 1,829

Workingcapital 2,939 3,141 -

Defrayestimatedlistingexpenses 2,000 1,798 202 -

Totalgrossproceeds 16,939 8,456 - 8,483

(202)


otHeR complIAnce InFoRmAtIon (cont’D)

8. pRoFIt FoRecAst AnD pRoFIt guARAntee

During the financial year, there were no profit guarantees given by the Company.

9. RevAluAtIon polIcY

There was no statement regarding the revaluation policy on landed properties given by the Company.

10. RecuRRent RelAteD pARtY tRAnsActIons oF Revenue nAtuRe

Bursa Securities had, on 26 April 2010, granted the Group an extension of time from having to procure the shareholders’ mandate on the recurrent related party transactions of a revenue or trading in nature entered into or to be entered into by the Group from 10 May 2010, being the date of official listing of the Company on Bursa Securities to the date of the forthcoming Annual General Meeting and to ratify such related party transactions of a revenue and trading in nature at the forthcoming AGM. This is to enable the Company to reduce substantial administrative time, inconvenience and expenses in convening such general meeting on ad-hoc basis.

Further details of the shareholders’ ratification and mandate to be sought are furnished in the Circular to Shareholders dated 20 May 2011, which is despatched together with the 2010 Annual Report.

11. vARIAtIon In Results FoR tHe FInAncIAl YeAR

There were no material variance between the audited results for the financial year ended 31 December 2010 and the unaudited results previously announced.

complIAnce stAtement

The Company has complied with the best practices as set out in the Code save for the appointment of a Senior Independent Non-Executive Director and the disclosure on the details of the remuneration of each Director as stated above.


FinAnciAlstAtements

DIRECTORS’ REPORT

STATEMENT BY DIRECTORS

STATUTORY DECLARATION

INDEPENDENT AUDITORS’ REPORT

STATEMENTS OF FINANCIAL POSITION

STATEMENTS OF COMPREHENSIVE INCOME

STATEMENTS OF CHANGES IN EQUITY

STATEMENTS OF CASH FLOWS

NOTES TO THE FINANCIAL STATEMENTS

28

33

33

34

36

37

38

39

41

seRembAn engineeRing beRhAd (45332-X)28

diRectoRs’ RepoRt

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 31 December 2010.

pRincipAl ActiVities

The Company is principally engaged in the fabrication of process equipment and metal structures and the provision of maintenance, repair and shutdown works. The principal activities of its subsidiaries are described in Note 9 to the financial statements. There have been no significant changes in the nature of these principal activities during the financial year.

Results

group company Rm Rm

Profit after taxation for the financial year 3,017,301 2,876,167

Attributable to : Owners of the Company 2,958,011 2,876,167 Minority interests 59,290 -

3,017,301 2,876,167

diVidend

Since the end of previous financial year, the following dividends were declared:

(a) In respect of the financial year ended 31 December 2009: A final tax exempt dividend of 550% on 2,000,000 ordinary shares of RM0.50 each amounting to RM5,500,000, paid on 26 March 2010.

(b) In respect of the financial year ending 31 December 2011:

An interim tax exempt dividend of 2% on 80,000,000 ordinary shares of RM0.50 each amounting to RM800,000. The payment shall be made to the shareholders whose names appear in the Company’s Record of Depositors at the close of business on 11 May 2011.

The Directors do not recommend any final dividend in respect of the financial year ended 31 December 2010.

ReseRVes And pRoVisions

There was no material transfer to or from reserves and provisions during the financial year saved as disclosed in the notes to the financial statements.

holding compAnies

The Company is a subsidiary company of Success Transformer Corporation Berhad, a company listed on the Main Market of Bursa Malaysia Securities Berhad. The Directors regard Omega Attraction Sdn. Bhd. as its ultimate holding company. All the above companies are incorporated in Malaysia.


diRectoRs’ RepoRt (cont’d)

issue oF shARes And debentuRes

During the financial year, the issued and paid-up capital of the Company was increased from RM1,000,000 to RM40,000,000 through the following transactions:

(i) bonus issue of 58,072,000 new ordinary shares of RM0.50 each in the Company (“Bonus Issue”) on the basis of approximately 2,904 bonus shares for every existing 100 shares held, by way of capitalisation of an aggregate RM28,009,000 out of the retained earnings and RM1,027,000 out of the revaluation surplus of the Company, and

(ii) public issue of 19,928,000 new ordinary shares of RM0.50 each at RM0.85 for cash (“Public Issue”). There were no issue of debentures by the Company during the financial year.

options gRAnted oVeR unissued shARes

No options have been granted to any person to take up unissued shares of the Company during the financial year.

bAd And doubtFul debts

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that the action had been taken in relation to the writing off of bad debts and the making of allowance for impairment losses on receivables, and satisfied themselves that all know bad debts had been written off and that adequate allowance had been made for impairment losses on receivables.

At the date of this report, the Directors are not aware of any circumstances that would require the further writing off of bad debts, or the additional allowances for impairment losses on receivables in the financial statements of the Group and of the Company.

cuRRent Assets

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

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

VAluAtion methods

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

chAnge oF ciRcumstAnces

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



contingent And otheR liAbilities

The contingent liabilities are disclosed in Note 33 to the financial statements. At the date of this report, their 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 of the Group and of the Company which has arisen since the end of the financial year.

No contingent 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 when they fall due.

item oF An unusuAl nAtuRe

The results of the operations of the Group and of the Company during the financial year were not, in the opinion of the Directors, substantially affected by any item, transaction or event of a material and unusual nature save as disclosed in the notes to the financial statements.

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

diRectoRs oF the compAnY

The Directors who served since the date of last report are:

(a) Tan Ah Bah @ Tan Ah Ping

(b) Tan Ah Moy (f) (Alternate Director to Tan Tian Seng)

(c) Tan Tian Seng

(d) Wong Chee Kian

(e) Wong Choon Cheon

(f) Wong Poh Chee (f)

(g) Wong Wai Hung

(h) Mohamad Noh Bin Serul

(i) Chiam Tau Meng

(j) Dato’ Dr. Ir. Andy Seo Kian Haw

(k) Tan Sri Ahmad Fuzi Bin Abdul Razak



diRectoRs’ inteRest in shARes

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

balance balance as at at at 01.01.10 bought sold 31.12.2010

Tan Ah Bah @ Tan Ah Ping – Direct - 56,533 - 56,533– Indirect 2,000,000 54,116,052 - 56,116,052Tan Ah Moy (f) (Alternate Director to Tan Tian Seng) – Direct - 54,100 - 54,100– Indirect - 1,017,213 - 1,017,213Tan Tian Seng – Direct - 50,000 - 50,000Wong Chee Kian – Direct - 50,000 - 50,000– Indirect - 1,021,213 - 1,021,213Wong Choon Cheon – Direct - 50,000 - 50,000– Indirect - 1,021,213 - 1,021,213Wong Poh Chee (f) – Direct - 50,000 - 50,000– Indirect - 1,021,213 - 1,021,213Wong Wai Hung – Direct - 52,000 - 52,000Mohamad Noh Bin Serul – Direct - 50,000 - 50,000Dato’ Dr. Ir. Andy Seo Kian Haw – Direct - 50,000 - 50,000Tan Sri Ahmad Fuzi Bin Abdul Razak – Direct - 50,000 - 50,000

ultimate holding company – omega Attractionsdn. bhd. (“oAsb”)

Tan Ah Bah @ Tan Ah Ping – Direct 49,466 - - 49,466– Indirect 9,590 - - 9,590

ordinary shares of Rm0.50 eachthe company

Notes:

(1) Deemed interest by virtue of his direct interest in the Company and his substantial interests in OASB and Success Transformer Corporation

Berhad.

(2) Deemed interest by virtue of her spouse’s and children’s direct interests in the Company and their substantial interests in Wtech Holdings Sdn.

Bhd.

(3) Deemed interest by virtue of his parents’ and sister’s direct interests in the Company and his substantial interest in Wtech Holdings Sdn. Bhd.

(4) Deemed interest by virtue of his spouse’s and children’s direct interests in the Company and his substantial interest in Wtech Holdings Sdn. Bhd.

(5) Deemed interest by virtue of her parents’ and brother’s direct interests in the Company and her substantial interest in Wtech Holdings Sdn.

Bhd.

(6) Deemed interest by virtue of his spouse’s direct interest in OASB.

(1)

(2)

(3)

(4)

(5)

(6)

By virtue of his interests in the shares of OASB, Mr Tan Ah Bah @ Tan Ah Ping is deemed to have an interest in the shares of the Company and its related corporations to the extent that OASB has an interest.

ordinary shares of Rm1.00 each



diRectoRs’ beneFits

Since the end of the previous financial year, none of the Directors 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 directors shown as disclosed in Note 25 the financial statements, or the fixed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest except for any benefits which may be deemed to arise from transactions entered into in the ordinary course of business with companies in which certain Directors have substantial financial interests as disclosed in Note 31(b) to the financial statements.

Neither during nor at the end of the financial year was the Group or the Company a party to any arrangements whose object is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the company or any other body incorporate.

signiFicAnt eVents duRing the FinAnciAl YeAR

Significant events during the financial year are disclosed in Note 36 to the financial statements.

signiFicAnt eVents subseQuent to the bAlAnce sheet dAte

Significant events subsequent to the balance sheet date are disclosed in Note 37 to the financial statements.

AuditoRs

The auditors, Messrs. SC Lim, Ng & Co., retire at the forthcoming annual meeting and do not wish to seek re-appointment.

Signed on behalf of the Board in accordance with a resolution of the Directors:

WONG CHEE KIANDIRECTOR

WONG POH CHEE (f)DIRECTOR

SerembanDate: 14 April 2011


stAtement bY diRectoRs

We, Wong Chee Kian and Wong Poh Chee (f), being two of the Directors of Seremban Engineering Berhad, state that, in the opinion of the Directors, the financial statements set out on pages 36 to 94 are drawn up in accordance with the provisions of the Companies Act, 1965 and the applicable Financial Reporting Standards in Malaysia so as to exhibit a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2010 and of their results and cash flows for the financial year ended on that date.

The supplementary information set out in Note 39, which is not part of the financial statements, is prepared in all material respects, 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 and the directive of Bursa Malaysia Securities Berhad.

Signed on behalf of the Board in accordance with a resolution of the Directors:

WONG CHEE KIANDIRECTOR

WONG POH CHEE (f)DIRECTOR

SerembanDate: 14 April 2011

stAtutoRY declARAtion

I, CHONG LEONG YEW , being the Officer primarily responsible for the financial management of Seremban Engineering Berhad ,do solemnly and sincerely declare that the financial statements set out on pages 36 to 94 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 Chong Leong Yew }at Seremban }in the state of Negeri Sembilan Darul Khusus }on the 14 April 2011 } CHONG LEONG YEW MIA 11900 Chartered AccountantBefore me:ZABIL HARUNNo. N071 Commissioner for Oaths


independent AuditoRs’ RepoRt

RepoRt on the FinAnciAl stAtements

We have audited the financial statements of Seremban Engineering Berhad, which comprise the statements of financial position of the Group and of the Company as at 31 December 2010, 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 year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 36 to 93.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia, and for such internal 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 about 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 Company’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’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 of 31 December 2010 and of their financial performance and cash flows for the year then ended.

to the membeRs oF seRembAn engineeRing beRhAd


independent AuditoRs’ RepoRt (cont’d)

RepoRt on otheR legAl And RegulAtoRY ReQuiRements

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

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

(ii) We have considered the financial statements and the auditors’ report of the subsidiary of which we have not acted as auditors, which are indicated in Note 9 to the financial statements.

(iii) We are satisfied that the financial statements 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.

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

The supplementary information set out in Note 39 on page 94 is disclosed to meet the requirement of Bursa Malaysia 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 and 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.

SC LIM, NG & CO.No. AF 0681Chartered Accountants

NG KIM KIATNo. 2074/10/12 (J)Chartered Accountant Date: 14 April 2011Kuala Lumpur

to the membeRs oF seRembAn engineeRing beRhAd


stAtements oF FinAnciAl position

group company Restated Restated note 2010 2009 2010 2009 Rm Rm Rm Rm

AssetsNON-CURRENT ASSETS Property, plant and equipment 6 29,352,047 26,221,076 24,821,184 23,733,826 Prepaid lease payments 7 - - - - Investment properties 8 97,000 97,000 97,000 97,000 Investment in subsidiary companies 9 - - 526,099 476,101 Investment in jointly controlled entities 10 1,445 14,028 17,901 17,900 29,450,492 26,332,104 25,462,184 24,324,827 CURRENT ASSETS Inventories 11 14,661,667 5,325,130 14,592,251 5,231,508 Amount due from contract customers 12 2,664,077 3,170,319 2,560,597 3,159,117 Trade and other receivables 13 29,169,717 23,084,693 28,109,533 22,442,655 Deposits, cash and bank balances 14 16,929,382 11,663,047 16,355,631 11,281,610

63,424,843 43,243,189 61,618,012 42,114,890

TOTAL ASSETS 92,875,335 69,575,293 87,080,196 66,439,717 eQuitY And liAbilities EQUTITY Share capital 15 40,000,000 1,000,000 40,000,000 1,000,000 Reserves 16 16,173,471 42,167,529 15,535,960 41,611,862 TOTAL EQUITY ATTRIBUTABLE TOOWNERS OF THE COMPANY 56,173,471 43,167,529 55,535,960 42,611,862 Minority interests 575,725 516,435 - - TOTAL EQUITY 56,749,196 43,683,964 55,535,960 42,611,862 NON-CURRENT LIBILITIES Bank borrowings 17 4,022,712 3,032,870 1,477,395 2,019,564 Hire purchases and lease payables 18 227,289 108,238 227,289 108,238 Deferred tax liabilities 19 2,476,407 2,249,511 2,379,547 2,207,524 6,726,408 5,390,619 4,084,231 4,335,326 CURRENT LIABILITIES Trade and other payables 20 16,698,909 12,200,612 15,705,190 11,852,533 Bank borrowings 17 12,592,392 7,365,979 11,646,385 6,907,656 Hire purchases and lease payables 18 108,430 84,431 108,430 84,431 Tax liability - 849,688 - 647,909 29,399,731 20,500,710 27,460,005 19,492,529

TOTAL LIABILITIES 36,126,139 25,891,329 31,544,236 23,827,855

TOTAL EQUITY AND LIABILITIES 92,875,335 69,575,293 87,080,196 66,439,717

The accompanying notes form an integral part of the financial statements

As At 31 decembeR 2010


stAtements oF compRehensiVe incomeFoR the FinAnciAl YeAR ended 31 decembeR 2010

group company note 2010 2009 2010 2009 Rm Rm Rm Rm

REVENUE 21 50,722,351 69,036,100 46,913,700 67,757,193

COST OF SALES 22

GROSS PROFIT 8,921,729 17,337,148 8,266,619 15,900,854

OTHER INCOME 528,973 314,033 520,843 413,130

ADMINISTRATIVE EXPENSES

OTHER OPERATING EXPENSES

FINANCE COSTS 23

SHARE OF (LOSS) OF JOINTLY CONTROLLED ENTITIES - -

PROFIT BEFORE TAXATION 24 3,920,943 12,163,695 3,724,196 11,321,061

TAX EXPENSE 27 PROFIT AFTER TAXATION FOR THE FINANCIAL YEAR 3,017,301 9,252,250 2,876,167 8,631,901 OTHER COMPREHENSIVE INCOME Revaluation of property, plant and equipment - 3,693,973 - -

TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR 3,017,301 12,946,223 2,876,167 8,631,901

PROFIT ATTRIBUTABLE TO: Owners of the Company 2,958,011 9,004,952 - - Minority interests 59,290 247,298 - - PROFIT FOR THE YEAR 3,017,301 9,252,250 - -

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Company 2,958,011 12,698,925 2,876,167 8,631,901 Minority interests 59,290 247,298 - -

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 3,017,301 12,946,223 2,876,167 8,631,901

EARNINGS PER ORDINARY SHARE (SEN) 28 4 15


(41,800,622) (51,698,952) (38,647,081) (51,856,339)

(4,737,502) (4,544,499) (4,326,987) (4,063,186)

(291,626) (316,773) (290,308) (316,773)

(488,047) (622,342) (445,971) (612,964)

(12,584) (3,872)

(903,642) (2,911,445) (848,029) (2,689,160)


stAtements oF chAnges in eQuitYFoR the FinAnciAl YeAR ended 31 decembeR 2010

Attributable to equity holders of the parent non-distributable distributable group share share Revaluation Retained minority total Note capital premium reserve profits Total interests equity Rm Rm Rm Rm Rm Rm Rm

As at 1 January 2009 1,000,000 - 1,126,511 28,342,093 30,468,604 269,137 30,737,741 Total comprehensive income for the financial year - - 3,693,973 9,004,952 12,698,925 247,298 12,946,223 As at 31 December 2009 1,000,000 - 4,820,484 37,347,045 43,167,529 516,435 43,683,964 Issue of shares pursuant to: – bonus issue 15 29,036,000 - - - - – public issue 15 9,964,000 6,974,800 - - 16,938,800 - 16,938,800 Listing expenses offset against share premium - - - -Dividend 29 - - - -Total comprehensive income for the financial year - - - 2,958,011 2,958,011 59,290 3,017,301 As at 31 December 2010 40,000,000 5,583,931 3,793,484 6,796,056 56,173,471 575,725 56,749,196

Attributable to equity holders of the parent non-distributable distributable company share share Revaluation Retained Note capital premium reserve profits Total Rm Rm Rm Rm Rm

As at 1 January 2009 1,000,000 - 1,126,511 28,159,477 30,285,988

Arising from revaluation of landed properties - - 3,693,973 - 3,693,973 Total comprehensive income for the financial year - - - 8,631,901 8,631,901 As at 31 December 2009 1,000,000 - 4,820,484 36,791,378 42,611,862 Issue of shares pursuant to: – public issue 15 9,964,000 6,974,800 - - 16,938,800 – bonus issue 15 29,036,000 - - Listing expenses offset against share premium - - -Dividend 29 - - -Total comprehensive income for the financial year - - - 2,876,167 2,876,167 As at 31 December 2010 40,000,000 5,583,931 3,793,484 6,158,545 55,535,960


(1,027,000) (28,009,000)

(1,390,869) (1,390,869) (1,390,869) (5,500,000) (5,500,000) (5,500,000)

(1,027,000) (28,009,000) (1,390,869) (1,390,869) (5,500,000) (5,500,000)


stAtements oF cAsh FlowsFoR the FinAnciAl YeAR ended 31 decembeR 2010


(82,176) (82,176)

(273,216) (69,442) (273,216) (69,442)

(4,000) (4,000) (6,000) (6,000)

(9,336,537) (9,360,743) (1,174,958) (1,163,756) (5,610,133) (5,442,209) (5,288,013) (5,291,587) (3,329,856) (2,920,925)

(4,602,371) (5,182,876) (432,070) (570,801) (395,361) (563,349)

(2,186,053) (2,196,611) (1,887,506) (2,151,553)

(6,947,278) (7,192,527)

(49,998) (1) (17,900) (1) (17,900)

(4,219,020) (4,177,016) (2,096,392) (2,073,985)

(4,052,129) (4,194,916) (1,979,499) (2,091,885)

(10,999,407) (9,172,026)

cAsh Flows FRom opeRAting ActiVities Profit before tax 3,920,943 12,163,695 3,724,196 11,321,061 Adjustments for: Allowance for impairment losses of trade receivables – effect of adopting FRS 139 70,222 - 70,222 - – collective impairment - 2,000 - 2,000 – individual impairment - 214,560 - 214,560 Amortisation of prepaid lease payments 7 - - - - Bad debts written off - 167 - 167 Depreciation of property, plant and equipment 1,266,616 1,182,554 1,187,599 1,115,322 (Gain) on disposal of property, plant and equipment - - Interest expenses 432,070 570,801 395,361 563,349 Interest incomeProperty, plant and equipment written off 2,717 3,148 2,717 3,148 Share of loss of jointly controlled entities 12,584 3,872 - - Write-back of allowance for impairment losses of trade receivables – collective impairment - - Doubtful debts recovered - individual - -

opeRAting pRoFit beFoRe woRKing cApitAl chAnges 5,339,760 14,071,355 5,014,703 13,150,165 changes in working capital Inventories 9,344,712 9,429,084 Amount due from contract customers 506,242 598,520Trade and other receivablesTrade and other payables 4,498,297 3,852,657

cAsh (AbsoRbed into) / geneRAted FRom opeRAting ActiVities 13,469,044 13,202,981 Interest paidInterest received 273,216 69,442 273,216 69,442 Tax paid

net cAsh (used in) / FRom opeRAting ActiVities 10,771,074 10,557,521 cAsh Flows FRom inVesting ActiVities Investment in subsidiary company - - - Investment in jointly controlled entitiesProceeds from disposal of property, plant and equipment 166,892 - 166,892 - Purchase of property, plant and equipment 30(b)

net cAsh (used in) inVesting ActiVities

FoRwARd 6,576,158 8,465,636



stAtements oF cAsh Flows (cont’d)FoR the FinAnciAl YeAR ended 31 decembeR 2010


FoRwARd 6,576,158 8,465,636

cAsh Flows FRom FinAncing ActiVities Drawdown from term loan 2,359,800 2,874,864 697,000 1,800,000 Dividend paid - - Listing expenses paidProceeds from issuance of shares to minority shareholders 16,938,800 - 16,938,800 - Net (increase) in fixed deposits pledgedNet movement in trade bills 5,908,000 5,439,000Repayment of hire purchases and lease payablesRepayment of term loans

net cAsh FRom/(used in) FinAncing ActiVities 16,322,124 14,222,107 net incReAse in cAsh And cAsh eQuiVAlents 5,322,717 635,854 5,050,081 1,322,672 cAsh And cAsh eQuiVAlents At beginning oF FinAnciAl YeAR 10,265,037 9,629,183 10,152,569 8,829,897 cAsh And cAsh eQuiVAlents At end oF FinAnciAl YeAR 30(a) 15,587,754 10,265,037 15,202,650 10,152,569

(10,999,407) (9,172,026)

(5,500,000) (5,500,000) (1,266,363) (531,162) (1,266,363) (531,162)

(23,940) (19,490) (23,940) (19,490) (6,958,000) (7,111,000) (122,950) (260,088) (122,950) (260,088) (1,971,223) (1,046,428) (1,939,440) (1,021,224)

(5,940,304) (7,142,964)


notes to the FinAnciAl stAtementsFinAnciAl YeAR ended 31 decembeR 2010

1. coRpoRAte inFoRmAtion

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office and principal place of business are as follows:

(a) Registered office: 3-2, 3rd Mile Square, No. 151, Jalan Kelang Lama, Batu 3 ½, 58100 Kuala Lumpur.

(b) Principal place of business: Lot 1A – 1C, Lorong Bunga Tanjung 1/3, Senawang Industrial Park, 70400 Seremban, Negeri Sembilan.

These financial statements were authorised for issue by the Board of Directors on 14 April 2011.

2. pRincipAl ActiVities

The Company is principally engaged in the fabrication of process equipment and metal structures and the provision of maintenance, repair and shutdown works. The principal activities of its subsidiary companies are described in Note 9 to the financial statements. There have been no significant changes in the nature of these principal activities during the financial year.

3. bAsis oF pRepARAtion oF FinAnciAl stAtements

The financial statements of the Group and of the Company have been prepared in accordance with the Financial Reporting Standards issued by the Malaysian Accounting Standards Board (“MASB”) for entities other than private entities, accounting principles generally accepted in Malaysia and the provisions of the Companies Act, 1965.

The financial statements of the Group and of the Company have been prepared under the historical cost convention, unless otherwise disclosed in significant accounting policies.

(a) During the financial year, the Group has adopted the following new accounting standards and interpretations (including the consequential amendments):

FRs s and ic interpretations (including the consequential Amendments) FRS 7 Financial Instruments: Disclosures FRS 8 Operating Segments FRS 101 (Revised) Presentation of Financial Statements FRS 123 (Revised) Borrowing Costs FRS 139 Financial Instruments: Recognition and Measurements Amendments to FRS 1 and FRS 127 Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate Amendments to FRS 2 Vesting Conditions and Cancellations Amendments to FRS 7, Financial Instruments: Recognition and Measurement, Disclosure FRS 139 and IC and Reassessment of Embedded Derivatives Interpretation 9 Amendments to FRS 132 Classification of Rights Issues and the Transitional Provision in Relation to Compound Instruments IC Interpretation FRS 139 Financial Instruments: Recognition and Measurement IC Interpretation 9 Reassessment of Embedded Derivatives IC Interpretation 10 Interim Financial Reporting and Impairment Improvement to FRSs (2009) Amendment to FRS 5, FRS 8, FRS 107, FRS 108, FRS 110, FRS 116, FRS 117, FRS 118. FRS 119, FRS 120, FRS 123, FRS 127, FRS 128, FRS 129, FRS 131, FRS 134, FRS 136, FRS 138, FRS 140


notes to FinAnciAl stAtements (cont’d)FinAnciAl YeAR ended 31 decembeR 2010

3. bAsis oF pRepARAtion oF FinAnciAl stAtements (cont’d)

(a) (cont’d)

The adoption of the above accounting standards and interpretation (including the consequential amendments) did not have any material impact on the Group’s and the Company’s financial statements, other than as follows:

i) FRS 7 required additional disclosures about the financial instruments of the Group. Prior to 1 January 2010, information about financial instruments was disclosed in accordance with the requirements of FRS 132 – Financial Instruments: Disclosures and Presentation. FRS 7 requires the disclosure of qualitative and quantitative information about the exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk.

The Group has applied FRS 7 prospectively in accordance with the transitional provisions. Accordingly, the new disclosures have not been applied to the comparatives and are included throughout the financial statements for the current financial year.

ii) FRS 8 requires a “management approach”, under which segment information is presented on the same basis as that used for internal reporting purposes. The adoption of this standard only impacts the form and content of disclosures presented in the financial statements of the Group.

iii) FRS 101 (Revised) 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 has elected to present this statement as one single statement.

The revised standard also 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 in the statement of comprehensive income as other comprehensive income. 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 statement.

FRS 101 (Revised) also requires the Group to make new disclosures to enable users of the financial statements to evaluate the Group’s objectives, policies and processes for managing capital. This new disclosure is made in Note 35(b) to the financial statements.

Comparative information has been re-presented so that it is in conformity with the requirements of this revised standard.

iv) The adoption of FRS 139 (including the consequential amendments) has resulted in several changes to accounting policies relating to recognition and measurements of financial instruments.

Prior to 1 January 2010, advances to other receivables were recorded at cost. With the adoption of FRS 139, these advances are now recognised initially at their fair values, which are estimated by discounting the expected cash flows using the current market interest rate of a loan with similar risk and tenure. Interest income is recognised in profit or loss using the effective interest method.




(a) (cont’d)

iv) Prior to the adoption of FRS 139, all derivative financial instruments were recognised in the financial statements only upon settlement. These instruments do not qualify for hedge accounting and hence, upon adoption of this standard, all derivatives held by the Group as at 1 January 2010 are recognised at their fair values and are classified as financial assets at fair value through profit or loss.

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

Prior to 1 January 2010, inter-company loans or advances were recorded at cost. With the adoption of FRS 139, inter-company loans and advances are now recognised initially at their fair values, which are estimated by discounting the expected cash flows using the current market interest rate of a loan with similar risk and tenure. The difference between the fair value and cost of the loan or advance is recognised as an additional investment in the subsidiary in the Company’s financial statements. Subsequent to initial recognition, the loans and advances are measured at amortised cost.

Besides, certain loans or advances of which the settlement is neither planned nor likely to occur in the foreseeable future are, in substance, a part of the Company’ net investment in the subsidiaries. These loans and advances are stated at cost less accumulated impairment losses, if any, in the financial statements of the Company.

All these financial statements impacts are recognised as an adjustment to the opening balance of retained profits or another appropriate reserve upon the adoption of FRS 139. Comparatives are not adjusted by virtue of the exemption given in this standard.

v) The Group has adopted the amendments made to FRS 117 – Leases pursuant to the Annual Improvements to FRSs (2009). The Group has reassessed and determined that the leasehold land of the Group is in substance a finance lease and has been reclassified as property and equipment. This change in accounting policy has been made retrospectively in accordance with the transitional provisions of the amendments.

(b) The Group has not applied in advance the following accounting standards and interpretations (including the consequential amendments) that have been issued by the Malaysia Accounting Standards Boards (“MASB”) but not yet effective for the current financial year:

FRss and ic interpretations (including the consequential Amendments) effective date FRS 1 (Revised) First-time Adoption of Financial Reporting Standards 1 July 2010 FRS 3 (Revised) Business Combinations 1 July 2010 FRS 124 (Revised) Related Party Disclosures 1 January 2012 FRS 127 (Revised) Consolidated and Separate Financial Statements 1 July 2010 Amendments to FRS 1 Limited Exemption from Comparative FRS 7 1 January 2011 (Revised) Disclosures for First-time Adopters Amendments to FRS 1 Additional Exemptions for First-time Adopters 1 January 2011 Amendments to FRS 2 Share-based Payments 1 July 2010 Amendments to FRS 2 Scope of FRS 2 and Revised FRS 3 (2010) 1 July 2010 Amendments to FRS 2 Group Cash-settled Share-based Payment Transactions 1 January 2011 Amendments to FRS 5 Non-current Assets Held for Sale and Discontinued Operations 1 July 2010



(b) (cont’d)

FRss and ic interpretations (including the consequential Amendments) effective date Amendments to FRS 5 Plan to Sell the Controlling Interest in a Subsidiary 1 July 2010 Amendments to FRS 7 Improving Disclosures about Financial Instruments 1 January 2011 Amendments to FRS 132 Financial Instruments: Presentation 1 March 2010 – Amendments in paragraphs 11, 16 and 97E of the standard, relating to Classification of Rights Issues Amendments to FRS 138 Intangible Assets 1 July 2010 Amendments to FRS 138 Consequential Amendments Arising from Revised 1 July 2010 FRS 3 (2010) Amendments to IC Reassessment of Embedded Derivatives 1 July 2010 Interpretation 9 Amendments to IC Scope of IC Interpretation 9 and FRS 3 (Revised) 1 July 2010 Interpretation 9 Amendments to IC Prepayment of a Minimum Funding Requirement 1 July 2011 Interpretation 14 IC Interpretation 4 Determining Whether An Arrangement Contains a Lease 1 January 2011 IC Interpretation 12 Service Concession Arrangements 1 July 2010 IC Interpretation 15 Agreements for the Construction of Real Estate 1 January 2012 IC Interpretation 16 Hedges of a Net Investment in a Foreign Operation 1 July 2010 IC Interpretation 17 Distributions of Non-cash Assets to Owners 1 July 2010 IC Interpretation 18 Transfers of Assets from Customers 1 January 2011 IC Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments 1 July 2011 Improvements to Amendments to FRS 1, FRS 3, FRS 7, FRS 101, 1 January 2011 FRSs (2010) FRS 121, FRS 128, FRS 131, FRS 132, FRS 134 and FRS 139

The above accounting standards and interpretations (including the consequential amendments) are not relevant to the Group’s operations except as follows:

i) FRS 3 (Revised) introduces significant changes to the accounting for business combinations, both at the acquisition date and post acquisition, and requires greater use of fair values. In addition, all transaction costs, other than share and debt issue costs, will be expensed as incurred. This revised standard will be applied prospectively and therefore there will not have any financial impact on the financial statements of the Group for the current financial year but may impact the accounting for future transactions or arrangements.

ii) FRS 127 (Revised) requires accounting for changes in ownership interests by the group in a subsidiary, while maintaining control, to be recognised as an equity transaction. When the group loses control of a subsidiary, any interest retained in the former subsidiary will be measured at fair value with the gain or loss recognised in profit or loss. The revised standard also requires all losses attributable to the minority interest to be absorbed by the minority interest instead of by the parent. The Group will apply the major changes of FRS 127 (Revised) prospectively and therefore there will not have any financial impact on the financial statements of the Group for the current financial year but may impact the accounting its future transactions or arrangements.



4. signiFicAnt Accounting policies

(a) critical Accounting estimates and Judgements

Estimates and judgements are continually evaluate by the directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that affect the application of the Group’s accounting policies and disclosures, and have a significant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses are discussed below:-

i) DepreciationofProperty,PlantandEquipment

The estimates for the residual values, useful lives and related depreciation charges for the property, plant and equipment are based on commercial factors which could change significantly as a result of technical innovations and competitors’ actions in response to the market conditions.

The Group anticipates that the residual values of its property, plant and equipment will be insignificant. As a result, residual values are not being taken into consideration for the computation of the depreciation amount.

Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

ii) IncomeTaxes

There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Group recognised tax liabilities based on its understanding of the prevailing tax laws and estimated of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the year in which such determination is made.

iii) ImpairmentofNon-financialAssets

When the recoverable amount of an asset is determined based on the estimate of the value-in-use of the cash-generating unit to which the asset is allocated, the management is required to make an estimate of the expected future cash flows from the cash-generating unit and also to apply a suitable discount rate in order to determine the present value of those cash flows.

iv) AllowanceforInventories

Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories.

v) ClassificationbetweenInvestmentPropertiesandOwner-occupiedProperties

The Group determined whether a property qualifies as an investment property, and has developed a criteria in making that judgement. Investment property is a property held to earn rentals or for capital appreciation or both. Therefore, the Group considers whether a property generates cash flows largely independent of the other assets held by the Group.



4. signiFicAnt Accounting policies (cont’d)

(a) critical Accounting estimates and Judgements (cont’d)

v) ClassificationbetweenInvestmentPropertiesandOwner-occupiedProperties(cont’d)

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. If these portions could be sold separately (or leased out separately under a finance lease), the Group accounts for the portions separately. If the portions could not be sold separately, the property is an investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes.

Judgement is made on an individual property basis to determine whether ancillary services are so significant that a property does not qualify as investment property.

vi) ImpairmentofTradeandOtherReceivables

An impairment loss is recognised when there is objective evidence that a financial asset is impaired. Management specifically reviews its loan and receivables financial assets and analyses historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in the customer payment terms when making a judgement to evaluate evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. If the expectation is different from the estimation, such difference will impact the carrying value of receivables.

vii) FairValueEstimatesforCertainFinancialAssetsandLiabilities

The Group carries certain financial assets and liabilities at fair value, which requires extensive use of accounting estimates and judgement. While significant components of fair value measurement were determined using verifiable objective evidence, the amount of changes in fair value would differ if the Group uses different valuation methodologies. Any changes in fair value of these assets and liabilities would affect profit and/or equity.

viii) AmountDuefromContractCustomers

Revenue and expenses that satisfy the characteristic of construction contracts are recognised in the income statement by using the stage of completion method. The stage of completion is determined by the proportion that contract costs incurred for work performed to date compared to the estimated total contract costs.

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

Where the total actual revenue and cost incurred are different from the total estimated revenue and cost incurred, such differences will impact the contract profit or losses recognised.




(b) basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to 31 December 2010.

A subsidiary is defined as a company in which the parent company has the power, directly or indirectly, to exercise control over its financial and operating policies so as to obtain benefits from its activities.

All subsidiaries are consolidated using the purchase method. Under the purchase method, the results of the subsidiaries acquired or disposed of are included from the date of acquisition or 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. The cost if acquisition is measured at the aggregate of the fair values, at the date if exchange of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination.

Intragroup transactions, balances and unrealized gains and transactions are eliminated; unrealized losses are also elimated unless cost cannot be recovered. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.

Minority interest in the consolidated statement of financial position consist of the minorities’ share of fair values of the identifiable assets and liabilities of the acquiree as at the date of acquisition and the minorities’ share of movements in the acquiree’s equity.

Minority interests are presented within equity in the consolidated statement of financial position, separately from the Company’s shareholders’ equity, and are separately disclosed in the consolidated statement of comprehensive income. Transactions with minority interests are accounted for as transactions with owners. Gain or loss on disposal to minority interests is recognised directly in equity.

(c) Functional and Foreign currencies

i) FunctionalandPresentationCurrency

The individual financial statements if each entity in the Group are presented in the currency of the primary economic environment in which the entity operates, which is the functional currency. The consolidated financial statements are presented in Ringgit Malaysia, which is the Company’s functional and presentation currency.

ii) TransactionandBalances

Transactions in foreign currencies are converted into the respective functional currencies on initial recognition, using the exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities at the end of the reporting period are translated at the rates ruling as of that date. Non-monetary assets and liabilities are translated using exchange differences are recognised in profit or loss.




(d) Financial instruments

Financial instruments are recognised in the statements of financial position when the Group has become a party to the contractual provisions of the instruments.

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity.

Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument.

Financial instruments recognised in the statements of financial position are disclosed in the individual policy statement associated with each item.

i) FinancialAssets

On initial recognition, financial assets are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets, as appropriate.

• Financial Assets as Fair Value Through Profit or Loss

Financial assets are classified as financial assets at fair value through profit or loss when the financial asset is either held for trading or is designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. Derivatives are also classified as held for trading unless they are designated as hedges.

Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. Dividend income from this category of financial assets is recognised in profit or loss when the Company’s right to receive payment is established. • Held-to-maturity Investments

As at the end of the reporting period, there were no financial assets classified under this category.

• Loans and Receivables Financial Assets

Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables financial assets. Loans and receivables financial assets are measured at amortised cost using the effective interest method, less any impairment loss. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

• Available-for-sale Financial Assets

As at the end of the reporting period, there were no financial assets classified under this category.




(d) Financial instruments (cont’d)

ii) FinancialLiabilities

All financial liabilities are initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method other than those categorized as fair value through profit or loss.

Fair value through profit or loss category comprises financial liabilities that are either held for trading or are designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. Derivatives are also classified as held for trading unless they are designated as hedges.

iii) EquityInstruments

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from proceeds. Dividends on ordinary shares are recognised as liabilities when approved for appropriation.

(e) investment in subsidiaries

Investments in subsidiaries are stated at cost in the statement of financial position of the Company, and are reviewed for impairment at the end of the reporting period if events or changes in circumstances indicate that the carrying values may not be recoverable.

On the disposal of the investments in subsidiaries, the difference between the net disposal proceeds and the carrying amount of the investments is recognised in profit or loss.

(f) Jointly controlled entity (“JV”)

A JV is a contractual agreement whereby two parties undertake an economic activity that is subject to joint control, and the JV is a joint venture that involves the establishment of a separate entity in which each venturer has financial interest.

Investment in JV is accounted for in the consolidated financial statements using the equity method of accounting. The investment is carried in the consolidated balance sheet at cost adjusted for post acquisition changes in the Group’s share of net assets of the JV. The Group’s share of the net profit or loss is recognised in the consolidated profit or loss. Where there has been a change recognised directly in the equity of the JV, the Group recognises its share of such changes. In applying the equity method, unrealised gains and losses on transactions between the Group and the JV are eliminated to the extent of the Group’s interest in the JV. 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 JV. The JV is equity accounted for from the date the Group obtains jointly control right until the date the Group ceases to have the jointly control right over the JV.

In the Company’s separate financial statements, investment in JV is stated at cost less impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 4(i). On disposal of such investment, the difference between net disposal proceeds and their carrying value is recognised in the income statement.




(g) property, plant and equipment and depreciation

Property, plant and equipment, other than freehold land and buildings, are stated at cost less accumulated depreciation and impairment losses, if any.

Freehold land is stated at valuation less impairment losses recognised after date of revaluation. Freehold land is not depreciated. Freehold buildings are stated at revalued amount less accumulated depreciation and impairment losses recognised after the date of the revaluation.

Freehold land and buildings are revalued periodically, at least once in every 5 years. Surpluses arising from the revaluation are recognised in other comprehensive income and accumulated in equity under the revaluation reserve. Deficits arising from the revaluation, to the extent that they are not supported by any previous revaluation surpluses, are recognised in profit or loss.

Depreciation is calculated under the straight-line method to write off the depreciation amount of the assets over their estimated useful lives. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated.

The principal annual rates used for this purpose are:

Factory buildings 50-66 years Leasehold land Over the lease period of 66 years Furniture, fittings and office equipment 5-10 years Motor vehicles 5-10 years Plant and machinery 10 years

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

Subsequent costs are included in the assets’ carrying amount or recognised as a separate asset, as appropriate, only when the cost is incurred and it is probable that the future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. The carrying amount of parts that are replaced is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. Cost also comprises the initial estimate of dismantling and removing the asset and restoring the site on which it is located for which the Group is obligated to incur when the asset is acquired, if applicable.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from derecognition of the asset is recognised in profit or loss.

In the previous financial year, a leasehold land that normally had an indefinite economic life and title was not expected to pass to the lessee by the end of the lease term was treated as an operating lease. The payment made on entering into or acquiring a leasehold land that was accounted for as an operating lease represents prepaid lease payments.

During the financial year, the Group adopted the amendments made to FRS 117 – Leases in relation to the classification of lease of land. The Group’s leasehold land which in substance is a finance lease has been reclassified as property, plant and equipment and measured as such retrospectively.




(h) investment properties

Investment properties are properties held either to earn rental income or for capital appreciation or for both. Initially investment properties are measured at cost including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value. Gains or losses arising from changes in the fair values of investment properties are recognised in profit or loss in the year in which they arise.

Investment properties are derecognised when they have either been disposed of or when the investment property is permanently withdrawn from use and no future benefit is expected from its disposal.

On the derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount is recognised in profit or loss.

(i) impairment

i) ImpairmentofFinancialAssets

All financial assets (other than those categorised at fair value through profit or loss), are assessed at the end of each reporting period whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. For an equity instrument, a significant or prolonged decline in the fair value below its cost is considered to be objective evidence of impairment.

An impairment loss in respect of held-to-maturity investments and loans and receivables financial assets is recognised in profit or loss and 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.

An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in the fair value reserve. In addition, the cumulative loss recognised in other comprehensive income and accumulated in equity under fair value reserve, is reclassified from equity to profit or loss.

With the exception of available-for-sale equity instruments, 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 through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In respect of available-for-sale equity instruments, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss made is recognised in other comprehensive income.

ii) ImpairmentofNon-financialAssets

The carrying values of assets, other than those to which FRS 136 – Impairment of Assets does not apply, are reviewed at the end of each reporting period for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount of the assets is the higher of the assets’ net selling price and their value-in-use, which is measured by reference to discounted future cash flow.




(i) impairment (cont’d)

ii) ImpairmentofNon-financialAssets(cont’d)

An impairment loss is recognised in profit or loss immediately unless the asset is carried at its revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of a previously recognised revaluation surplus for the same asset.

In respect of assets other than goodwill, and when there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in profit or loss immediately, unless the asset is carried at its revalued amount. A reversal of an impairment loss on a revalued asset is credited to other comprehensive income. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense in the statements of comprehensive income, a reversal of that impairment loss is recognised as income in the statements of comprehensive income.

(j) leases

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incident to ownership. All other leases are classified as operating leases.

i) FinanceLeases Property, plant and equipment acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses.

Hire purchase or lease payments are apportioned between finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised as an expense in the income statement over the term of the relevant lease so as to produce a constant periodic rate of change on the remaining balance of the obligations for each accounting period.

The property, plant and equipment so capitalised are depreciated in accordance with the accounting policy on property, plant and equipment and depreciation as described in Note 4(g).

ii) OperatingLeases

Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the term of the relevant lease.

(k) derivatives

Derivative financial instruments are used by the Group to manage its exposure to foreign currency risk arising from operating, investing and financing activities. The Group does not use derivative financial instruments for speculative and trading purposes.

Derivative financial instruments are initially recognised at cost, and are subsequently re-measured at fair value. Changes in the fair value that do not qualify for hedge accounting are recognised in the profit or loss. The fair value of forward exchange contracts is determined based on the quoted market rate at the balance sheet date.




(l) inventories

Inventories comprising raw materials, consumable stores and work-in-progress (“WIP”) are stated at the lower of cost and net realisable value. Cost is determined on the weighted average basis. Cost of WIP includes direct materials, direct labour, other direct costs and appropriate production overheads. In arriving at net realisable value, due allowance is made for all obsolete and slow moving items. Net realisable value is the estimate of the selling price in the ordinary course of business, less the costs of completion and selling expenses.

(m) income taxes

Income tax 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 or substantively enacted at the end of the reporting period.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination costs or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

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 future taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The carrying amounts of deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax assets to be utilised.

Deferred tax assets and liabilities are 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 the tax rates that have been enacted or substantively enacted at the end of the reporting period.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same taxation authority.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transactions either in other comprehensive income or directly in equity and deferred tax arising from a business combination is included in the resulting goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination costs.

(n) cash and cash equivalents

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, deposits pledged with financial institutions, bank overdrafts and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.




(o) provisions

Provisions are recognised when the Group has a present obligation as a result of past events, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when 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 provision is the present value of the estimated expenditure required to settle the obligation.

(p) EmployeeBenefits

i) ShortTermEmployeeBenefits Wages, salaries, social security contributions and bonuses 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. Short term non- accumulating compensated absences such as sick leave are recognised when the absences occur.

ii) DefinedContributionPlan

As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees Provident Fund Board (“EPF”). Such contributions are recognised as an expense in the income statement as incurred.

(q) Related parties

A party is related to an entity if:

i) Directly, or indirectly through one or more intermediaries, the party:-

• controls, is controlled by, or is under common control with, the entity (this includes parents, subsidiaries and fellow subsidiaries);

• has an interest in the entity that gives it significant influence over the entity; or

• has joint control the entity;

ii) The party is an associate of the entity;

iii) The party is a joint venture in which the entity is a venturer;

iv) The party is a member of the key management personnel of the entity or its parent;

v) The party is a close member of the family of any individual referred to in (i) or (iv);

vi) The party is an entity that is controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (iv) or (v); or




(q) Related parties (cont’d)

vii) The party is a post-employment benefit plan for the benefit of employees of the entity, or of any entity that is a related party of the entity.

Close members of the family of an individual are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the entity.

(r) contingent liabilities and Assets

Contingent liabilities are disclosed in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare circumstances where there is a liability that cannot be recognised because it cannot be measured reliably.

A contingent asset is a possible asset that arises from past events whose existence will be confirmed by uncertain future events beyond the control of the Group. The Group discloses the existence of contingent assets where inflows of economic benefits are probable, but not virtually certain.

(s) Revenue Recognition

Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the Group and the amount of the revenue can be measured reliably.

i) ConstructionContracts

Revenue from construction contracts is recognised on the percentage of completion method for projects supported by contracts, and/or where specific progress claims can be clearly identified against the stage of completion of contracts or when there is continuous transfer of control and risks and rewards of ownership. When these characteristics cannot be identified, the delivery and acceptance basis shall be adopted.

The stage of completion is measured by reference to the proportion that contract costs incurred for contract work performed to date that reflect work performed bear to the total estimated contract costs.

When the outcome of a contract cannot be estimated reliably, revenue is recognised only to the extent of contract costs incurred that is probable to be recoverable and the contract costs are recognised as an expense in the period in which they are incurred.

An expected loss on a contract is recognised immediately in the income statement.

ii) SalesofGoods Revenue from sales of goods is recognised upon transfer of significant risk and rewards of ownership of the goods to the customer, which generally coincides with delivery and acceptances of goods sold.




(s) Revenue Recognition (cont’d)

iii) InterestIncome

Interest income is recognised on a time proportion basis that reflects the effective yield on the asset.

iv) RentalIncome

Rental income from properties is recognised on an accrual basis unless collectability is in doubt, in which case it is recognised on cash receipt basis.

(t) operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues 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 to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

(u) Amount due from/to contract customers

Amount due from contract customers on fixed price contracts is stated at cost plus attributable profits less progress billings and anticipated losses, if any. Cost includes all direct costs and other related costs. Where progress billings exceed the aggregate amount due from contract customers plus attributable profits less foreseeable losses, the net credit balance on all such contracts is shown in trade payables as amount due to contract customers.

(v) borrowing costs

Borrowing costs, directly attributable to the acquisition and construction of property, plant and equipment are capitalised as part of the cost of those assets, until such time as the assets are ready for their intended use or sale. Capitalisation of borrowing costs is suspended during extended periods in which active development is interrupted.

All other borrowing costs are recognised in profit or loss as expenses in the period in which they incurred.

5. holding compAnies

The Company is a subsidiary company of Success Transformer Corporation Berhad, a company listed on the Main Market of Bursa Malaysia Securities Berhad. The Directors regard Omega Attraction Sdn. Bhd. as its ultimate holding company. All the above companies are incorporated in Malaysia.



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6. pRopeRtY, plAnt And eQuipment (cont’d)

(a) The following property, plant and equipment are charged against bank borrowings (Note 17):

group company 2010 2009 2010 2009 Rm Rm Rm Rm

At carrying amount Freehold land 7,034,367 6,989,400 5,360,000 5,360,000 Leasehold land 192,231 195,261 192,231 195,261 Factory buildings 15,134,837 13,397,417 13,127,217 13,397,417 Plant and machinery 1,148,942 1,301,142 1,148,942 1,301,142 Capital work-in-progress 679,981 404,400 679,981 - 24,190,358 22,287,620 20,508,371 20,253,820

(b) The following property, plant and equipment of the Group and of the Company have been previously revalued by a registered valuer with an independent firm of professional valuers.

description date of valuation Valuation method Valuer Freehold land June 2006 Cost comparative method Mr. Jacob H.T. Lim of Raine & Horne International Zaki + Partners Sdn. Bhd.

Freehold and leasehold July 2009 Cost comparative method Mr. Siew Weng Hong land and factory of Henry Butcher buildings Malaysia (NS) Sdn. Bhd. Freehold land December 2009 Cost comparative method Mr. Hee Chee Meng of Rahim & Co (Sel) Sdn. Bhd.

(c) All subsequent addition to property, plant and equipment are stated at cost and deletions at cost or valuation, where applicable. Had the leasehold land, freehold land and factory buildings of the Group and of the Company been carried at historical cost less accumulated depreciation and impairment loss, if any, the carrying amount of the revalued assets that would have been included in the financial statements at the end of the financial year would be as follows:


At carrying amount Leasehold land 120,548 - 120,548 - Freehold land 6,496,584 6,451,616 4,822,216 4,822,216 Factory buildings 9,605,545 7,900,012 7,679,984 7,900,012 16,222,677 14,351,628 12,622,748 12,722,228



6. pRopeRtY, plAnt And eQuipment (cont’d)

(d) The motor vehicles of the Group and of the Company with net book value of RM438,927 (2009: RM267,801) are subject to hire purchase agreement (Note 18).

7. pRepAid leAse pAYments

group and company 2010 2009 Rm Rm

At carrying amount Leasehold land, at cost – as previously reported - 200,000 – Effects of FRS 117 -

– as restated - -

Accumulated amortisation – as previously reported - 4,739 – Effects of FRS 117 -

As at 31 December - -

The Group has adopted the amendments made to FRS 117 – Lease during the financial year. The Group has reassessed and determined that the leasehold land of the Group is in substance a finance lease and has been reclassified as property, plant and equipment. This change in accounting policy has been made retrospetively in accordance with the transitional provisions of the amendments.

8. inVestment pRopeRties

The investment properties held by the Group and the Company as at end of the financial year are as follows:


At carrying amount At Fair value As at 1 January 97,000 383,729 Less: Reclassified to prepaid lease payments (Note 7) - Reclassified to property, plant and equipment (Note 6) -

97,000 99,660 Less: Valuation deficit -

As at 31 December 97,000 97,000

(a) The investment properties were last revalued by a registered valuer with an independent firm of professional valuers in July 2009 as disclosed in Note 6(b).

(200,000)

(4,739)

(198,291) (85,778)

(2,660)



8. inVestment pRopeRties (cont’d)

(b) As at end of the financial year, the Directors are of the opinion that the fair value of the investment property does not differ materially from its carrying amount. The details of the investment property held by the Group and the Company as at end of 31 December 2010 are as follows:

Name of properties : Senawang Light Industry Estate, Negeri Sembilan Description : 1 unit of single storey terrace factory Tenure of land : 90 years lease from 1 June 1985

(c) The property rental income earned by the Group and the Company from its investment property, all of which are leased out under operating lease amounted to RM6,000 (2009: RM6,000). Direct operating expenses arising from the rental-earning investment property amount to RM404 (2009: RM404).

(d) The investment property with fair value of RM97,000 (2009: RM97,000) is charged against bank borrowings (Note 17 ).

9. inVestment in subsidiARY compAnies

company 2010 2009 Rm Rm

At carrying amount Unquoted shares – at cost As at 1 January 476,101 476,101 Add: Addition 49,998 -

As at 31 December 526,099 476,101

(a) The subsidiary companies, all of which are incorporated in Malaysia, are as follows:

name of subsidiaries principal activities effective interest in equity 2010 2009 % %

SEB Resources Sdn. Bhd. Supply of labour for the Group’s fabrication 100 100 (“SRSB”) # operations (formerly known as Seremban Engineering Industries Sdn. Bhd.) Sepen Engineering Sdn. Bhd. Fabrication of process equipment and 60 60 (“SEPEN”) metal structure

# Audited by firm other than SC Lim, Ng & Co.

(b) During the current financial year, the Directors reviewed the Company’s investment in subsidiary companies for indication of impairment and concluded that the recoverable amounts of the investment in subsidiary companies are in excess of their carrying values.

(c) On 20 January 2010, the Company subscribed to 49,998 new ordinary shares of RM1 each in SRSB for a total cash consideration of RM49,998.



10. inVestment in JointlY contRolled entities


At carrying amount Represented by: Unquoted shares 14,028 17,900 17,900 17,900 Add: Addition 1 - 1 - Share of post-acquisition (loss) - -

1,445 14,028 17,901 17,900

(a) The details of the jointly controlled entities are as follows:

name of jointly controlled entities principal activities effective interest in equity 2010 2009 % %

ACE Standard International Limited Dormant 50 50 (“ACE”) # (Incorporated in British Virgin Island) Groupage SEB Sdn. Bhd. Dormant 50 - (“GROUPAGE”) (Incorporated in Malaysia)

# Not a legal requirement to be audited and therefore consolidated based on unaudited management account.

(b) The Group’s aggregate share of the assets and liabilities of the jointly controlled entities are as follows:

2010 2009 Rm Rm

Current assets 26,815 14,568 Current liabilitie

Net assets 1,445 14,028

(c) The Group’s aggregate share of the revenue and expenses of the jointly controlled entities are as follows:

2010 2009 Rm Rm

Revenue - - Administrative expenses (Loss) before tax Tax expense - -

Net (loss) for the financial year

(12,584) (3,872)

(25,370) (540)

(12,584) (3,872) (12,584) (3,872)

(12,584) (3,872)



11. inVentoRies


At cost Raw materials 5,832,962 4,213,970 5,763,546 4,120,348 Consumable stores 205,093 258,518 205,093 258,518 Work-in-progress 8,623,612 852,642 8,623,612 852,642 14,661,667 5,325,130 14,592,251 5,231,508

12. Amount due FRom contRAct customeRs


Aggregate costs incurred to date 4,307,048 7,022,345 4,175,347 6,758,783 Add: Attributable profits 1,087,436 651,037 1,048,953 548,667 5,394,484 7,673,382 5,224,300 7,307,450 Less: Progress billings 2,664,077 3,170,319 2,560,597 3,159,117

13. tRAde And otheR ReceiVAbles


trade receivables Amount due from a related company 150,700 - 150,700 - Amount due from a related party 2,860,000 - 2,860,000 - Other trade receivables 23,860,012 22,474,082 22,881,816 21,778,004 Less: Allowance for impairment losses – Effect of adopting FRS 139 - - – Collective impairment - - – Individual impairment 26,591,930 22,255,522 25,613,734 21,559,444

other receivables Amount due from holding company 284,659 - 284,659 - Amount due from a subsidiary company - - 61,646 83,765 Deposits 1,416,254 80,315 1,384,354 63,915 Prepayments 774,139 98,995 678,130 98,995 Sundry receivables 102,735 649,861 87,010 636,536

2,577,787 829,171 2,495,799 883,211 29,169,717 23,084,693 28,109,533 22,442,655

(2,730,407) (4,503,063) (2,663,703) (4,148,333)

(70,222) (70,222) (4,000) (4,000) (208,560) (214,560) (208,560) (214,560)



13. tRAde And otheR ReceiVAbles (cont’d)

(a) The Group’s trade receivables are non-interest bearing and are generally on credit terms ranging from 7 to 60 days (2009: 7 to 60 days) whilst credit terms for retention sums are generally up to 180 days. Other credit terms are assessed and approved on a case-by-case basis.

(b) The amount due from holding company and a subsidiary company is unsecured, interest free and repayable on demand.

14. deposits, cAsh And bAnK bAlAnces


Cash and bank balances 3,143,676 10,534,006 2,569,925 10,152,569 Short term deposit placed with licensed banks 12,632,725 - 12,632,725 - Fixed deposits placed with licensed banks 1,152,981 1,129,041 1,152,981 1,129,041 16,929,382 11,663,047 16,355,631 11,281,610

(a) The effective interest rates of fixed and short term deposits placed with licensed banks of the Group and of the Company as at the end of financial year are ranging from 1.5% – 2.2% and 1.9% – 2.5% (2009: 1.5% – 2.2%) per annum respectively.

(b) The maturity period for fixed and short term deposits placed with licensed banks of the Group and of the Company as at the end of financial year is 30 days and 1 – 14 days respectively (2009: 30 days).

(c) Fixed deposits placed with licensed banks of the Group and of the Company amounting to RM1,152,981 (2009: RM1,129,041) are pledged against bank borrowings (Note 17).

15. shARe cApitAl

group and company group and company 2010 2009 no. of shares Rm no. of shares Rm

ordinary shares of Rm1.00/Rm0.50 each Authorised: As beginning of year 100,000,000 50,000,000 3,000,000 3,000,000 Arising from share split * - - 3,000,000 - Created during the year - - 94,000,000 47,000,000

As at end of year 100,000,000 50,000,000 100,000,000 50,000,000

Issued and fully paid: As at beginning of year 2,000,000 1,000,000 1,000,000 1,000,000 Arising from share split * - - 1,000,000 - Issue of new shares – Bonus issue 58,072,000 29,036,000 - - – Public issue 19,928,000 9,964,000 - -

As at end of year 80,000,000 40,000,000 2,000,000 1,000,000

* On 30 July 2009, every one existing ordinary shares of RM1.00 each in the Company was subdivided into two ordinary shares of RM0.50 each in the Company.



16. ReseRVes


non-distributable Share Premium 5,583,931 - 5,583,931 - Revaluation reserve 3,793,484 4,820,484 3,793,484 4,820,484

distributable Retained profits 6,796,056 37,347,045 6,158,545 36,791,378

16,173,471 42,167,529 15,535,960 41,611,862

(a) share premium

Share premium arises from the issuance of new ordinary shares above its par value. A portion of the listing expenses amounting to RM1,390,869 have been offset against the share premium account. The share premium is not distributable by way of cash dividends and may be utilised in the manner set out in Section 60(3) of the Companies Act, 1965.

(b) Revaluation Reserve

Revaluation reserve represents non-distributable surplus arising from the revaluation of freehold land, factory buildings and investment properties. (Note 6(b))

(c) RetainedProfits

Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with the Finance Act, 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders (“single tier system”). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard the balance under Section 108 of the Income Tax Act, 1967 (“108 balance”) and opt to pay dividends under the single tier system. The change in the tax legislation also provides for the 108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act, 2007.

The Company did not elect for the irrevocable option to disregard the 108 balance. Accordingly, during the transitional period, the Company may utilise the credit in the 108 balance brought forward from 31 December 2007 to distribute cash dividend payments to ordinary shareholdings as defined under the Finance Act, 2007. As at 31 December 2010, the Company has sufficient tax credit to distribute the retained earnings up to approximately RM32.0 million as dividends. As at 31 December 2010, the Company has balance in the tax-exempt accounts available to be utilised for the distribution of reserves as tax-exempt dividend amounting to approximately RM3.0 million, subject to the agreement of the Inland Revenue Board.



17. bAnK boRRowings


current Secured – Bank overdraft 188,647 268,969 - - – Term loans 658,745 1,260,010 523,385 1,223,656 – Trade bills 11,745,000 5,837,000 11,123,000 5,684,000

12,592,392 7,365,979 11,646,385 6,907,656 non-current Secured - Term loans 4,022,712 3,032,870 1,477,395 2,019,564

16,615,104 10,398,849 13,123,780 8,927,220

(a) The bank borrowings are secured against:

i) Charge over the Group and Company’s freehold land, certain factory buildings, certain plant and machinery and capital work-in-progress (Note 6 );

ii) Charge over the Company’s investment properties (Note 8 );

iii) Corporate guarantee provided by immediate holding company; and

iv) Fixed deposits of the Group and of the Company with licensed banks (Note 14).

(b) The effective interest rates (per annum) for bank borrowings during the financial year are as follow:

group and company 2010 2009 % %

Bank overdraft 7.1 – 8.1 6.1 – 7.3 Revolving credit 4.8 4.8 Term loans 3.8 – 6.7 3.8 – 6.1 Trade bills 3.1 – 4.2 3.1 – 4.5



17. bAnK boRRowings (cont’d)

(c) The term loans are repayable by 36 to 240 (2009: 36 to 60) equal monthly instalments. As at the end of financial year, they are repayable as follows:


current Not later than one year 658,745 1,260,010 523,385 1,223,656

non-current Later than one year and not later than two years 693,683 927,680 551,259 889,920 Later than two years and not later than five years 1,403,089 1,251,911 926,136 1,129,644 Later than five years 1,925,940 853,279 - -

4,022,712 3,032,870 1,477,395 2,019,564

4,681,457 4,292,880 2,000,780 3,243,220

18. hiRe puRchAses And leAse pAYAbles

As at the end of the financial year, the outstanding hire purchase and lease obligations are repayable as follows:


minimum hire purchase payments: Not later than one year 123,187 92,117 Later than one year and not later than two years 94,692 63,584 Later than two years and not later than five years 153,292 50,919

371,171 206,620 Less: Unexpired term charges

335,719 192,669

principal amounts outstanding: Current portion 108,430 84,431 Non-current portion 227,289 108,238

335,719 192,669

The effective interest rates of the hire purchase obligations are ranging from 4.3% – 8.0% (2009: 4.3% – 8.0%) per annum.

(35,452) (13,951)



19. deFeRRed tAX Assets/(liAbilities)

Deferred tax assets and liabilities are offset where there is a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred taxes relate to the same tax authority. The following amounts, determined after appropriate offsetting, are shown in the balance sheet:


As at 1 January Recognised in income statement – Accelerated capital allowances

Recognised in equity – Arising from revaluation surplus on: – property, plant and equipment - -

As at 31 December

Presented after appropriate offsetting as follow: Deferred tax assets - 500 - 500 Deferred tax liabilities

Deferred tax asset (before offsetting) Allowance for doubtful debts 500 520 500 520 Offsetting

Deferred tax asset (after offsetting) - 500 - 500

Deferred tax liabilities (before offsetting) Revaluation surplus arising from: – property, plant and equipment 2,249,511 1,415,269 2,207,524 1,415,269 Accelerated capital allowances 227,396 834,762 172,523 792,775

2,476,907 2,250,031 2,380,047 2,208,044 Offsetting

Deferred tax liabilites (after offsetting) 2,476,407 2,250,011 2,379,547 2,208,024

(2,249,511) (707,950) (2,207,524) (678,825) (226,896) (126,292) (172,023) (113,430)

(1,415,269) (1,415,269)

(2,476,407) (2,249,511) (2,379,547) (2,207,524)

(2,476,407) (2,250,011) (2,379,547) (2,208,024)

(2,476,407) (2,249,511) (2,379,547) (2,207,524)

(500) (20) (500) (20)

(500) (20) (500) (20)



20. tRAde And otheR pAYAbles


trade payables Amount due to a subsidiary company - - 417,967 150,891 Other trade payables 7,467,117 7,703,321 6,318,810 7,444,080

7,467,117 7,703,321 6,736,777 7,594,971

other payables Amount due to a related party 85,771 - - - Accruals 3,564,509 1,727,448 3,396,899 1,566,213 Derivatives 32 - 32 - Sundry payables 5,581,480 2,769,843 5,571,482 2,691,349

9,231,792 4,497,291 8,968,413 4,257,562

16,698,909 12,200,612 15,705,190 11,852,533

(a) The normal credit terms granted to the Group and the Company are ranging from 30 to 90 days (2009: 30 to 90 days).

(b) Included in the Group and the Company’s sundry payables is an amount of RM3,698,648 (2009: RM982,154) being advance payment from customers.

(c) The amount due to a related party is a company in which directors of a subsidiary company have substantial financial interest. The amount due to a related party is unsecured, interest free and repayable on demand.

(d) During the financial year, the Group and the Company recognised a loss of RM32 (2009: Nil) arising from fair value changes of derivative liabilities. The fair value changes are attributable to changes in foreign exchange spot and forward rate are as follow:

group and company 2010 Rm Rm contract/ notional amount liability

non-hedging derivatives: current Forward currency contracts 152,960 (32)

Total held for trading financial (liability) 152,960 (32)

The Group and the Company use forward currency contracts to manage some of the transaction exposure. These contracts are not designed as cash flow or fair value hedges and are entered into for periods consistent with currency transaction exposure and fair value changes exposure. Such derivatives do not qualify for hedge accounting.

Forward currency contracts are used to hedge the Group’s and the Company purchases denominated in SGD for which firm commitments existed at the reporting date, extending to April 2011 (2009: Nil).



21. ReVenue


Invoiced value of process equipment sold 42,636,879 55,432,956 38,828,228 55,432,956 Invoiced value of maintenance and shutdown services 2,861,172 5,396,801 2,861,172 5,016,787 Contract revenue 5,224,300 8,206,343 5,224,300 7,307,450

50,722,351 69,036,100 46,913,700 67,757,193

22. cost oF sAles

The cost of sales in relation to the Group’s and the Company’s revenue consist of cost of contract, cost of rendering services, manufacturing and other incidental expenses incurred in bringing the inventories to their present locations and conditions.

23. FinAnce costs


Interest on: – Bank overdraft 19,954 7,714 - 262 – Revolving credit - 6,119 - 6,119 – Hire purchase and leasing 18,838 11,261 18,838 11,261 – Term loans 141,738 163,815 141,738 163,815 – Trade bills 251,540 378,645 234,785 378,645 – Others - 3,247 - 3,247

432,070 570,801 395,361 563,349 Bank charges 55,977 51,541 50,610 49,615

488,047 622,342 445,971 612,964



24. pRoFit beFoRe tAXAtion

Profit before taxation is arrived at:


After charging: Allowance for impairment losses of trade receivables: – effect of adopting FRS 139 70,222 - 70,222 - – collective impairment - 2,000 - 2,000 – individual impairment - 214,560 - 214,560 Audit fee 31,100 29,270 23,100 22,850 Bad debts written off - 167 - 167 Depreciation of property, plant and equipment 1,266,616 1,182,554 1,187,599 1,115,322 Listing expenses 121,997 - 121,997 - Loss on foreign exchange, realised 48,089 46,509 48,089 46,509 Property, plant and equipment written off 2,717 3,148 2,717 3,148 Rental expenses: – Crane 257,191 330,274 257,191 174,145 – Gas cylinder 4,927 71,793 4,927 15,303 – Forklift – current year 6,500 100 - 100 – (over) provision in prior year - - – Hostel 11,100 16,500 11,100 16,500 – Machine 35,516 21,700 6,516 300 – Motor vehicle 4,980 - 4,980 - – Workshop 7,000 - 7,000 - – Equipment 8,904 - 8,904 -

And crediting: Interest income Gain on disposal of property, plant and equipment - - Insurance compensation - - Realised gain on foreign exchange - - - Rental income Sundry income Write-back of allowance for impairment losses of trade receivables – collective impairment - - Doubtful debts recovered - individual - -

(2,000) (2,000)

(273,216) (69,442) (273,216) (69,442)

(82,176) (82,176) (3,619) (3,619) (953) (6,000) (6,000) (96,000) (126,000) (153,009) (238,592) (55,832) (217,688)

(4,000) (4,000) (6,000) (6,000)



25. diRectoRs’ RemuneRAtion


(a) directors of the company executive directors: – Fees 180,000 105,000 180,000 105,000 – under provision in prior year 85,000 - 85,000 - – Salaries and other emoluments 822,862 685,962 822,862 685,962 – Defined contribution plan (EPF) 112,512 120,594 112,512 120,594 – Bonus and incentive 218,000 428,000 218,000 428,000 – (over) provision in prior year - - – Benefit-in-kind - cash 2,902 3,002 2,902 3,002

1,336,276 1,342,558 1,336,276 1,342,558 – Benefit-in-kind - non-cash 92,696 45,811 92,696 45,811

1,428,972 1,388,369 1,428,972 1,388,369

non-executive directors: – Fees 150,000 20,000 150,000 20,000 – Benefit-in-kind - non-cash 16,000 - 16,000 -

166,000 20,000 166,000 20,000

1,594,972 1,408,369 1,594,972 1,408,369

(b) directors of subsidiary companies: – Fees - - - - – Salaries and other emoluments 151,240 133,240 - - – Defined contribution plan (EPF) 18,000 18,000 - - – Bonus and incentive - 18,000 - -

169,240 169,240 - -

1,764,212 1,577,609 1,594,972 1,408,369

(85,000) (85,000)



26. emploYees’ beneFits


(a) directors’ remunerations (Note 25) 1,764,212 1,577,609 1,594,972 1,408,369

(b) other staff costs: – Wages, salaries and bonuses 6,224,592 5,376,954 5,052,046 4,317,275 – Defined contribution plan (EPF) 506,757 438,117 433,186 368,106 – Other benefits 324,924 274,919 271,924 220,218

7,056,273 6,089,990 5,757,156 4,905,599

8,820,485 7,667,599 7,352,128 6,313,968

27. tAX eXpense


(a) component of the tax expense: Current tax expense 678,859 2,782,946 676,006 2,575,730 Deferred tax relating to origination of temporary differences 223,569 120,720 172,023 113,430 Effect of changes on opening deferred tax expense resulting from increase in tax rate - 5,572 - - (Over) / Under provision of current tax in prior year 2,207 - - Under provision of deferred tax in prior year 3,327 - - -

Tax expense for the financial year 903,642 2,911,445 848,029 2,689,160

(b) Reconciliations of tax expense with statutory income tax rates: Profit before tax 3,920,943 12,163,695 3,724,196 11,321,061 Tax at statutory income tax rates at 25% 980,236 3,040,924 931,050 2,830,265 Tax effects of expenses not deductible for tax purposes 25,526 58,061 20,313 54,214 Utilisation of reinvestment allowance Effect of changes on opening deferred tax resulting from increase in tax rate - 5,572 - - (Over) / Under provision of current tax in prior year 2,207 - - Under provision of deferred tax in prior year 3,327 - - - Tax expense for the financial year 903,642 2,911,445 848,029 2,689,160

(2,113)

(103,334) (195,319) (103,334) (195,319)

(2,113)



28. eARnings peR oRdinARY shARe (sen)

(a) The basic earnings per share is calculated by dividing the total comprehensive income for the financial year attributable to owners of the parent by the weighted average number of ordinary shares in issue during the financial year:

group 2010 2009 Rm Rm

Total comprehensive income attributable to owners of the parent 2,958,011 9,004,952 Weighted average number of ordinary shares in issue 72,956,953 60,072,000

Earnings per share (sen) 4 15

(b) The previous year’s basic earnings per share has been restated based on the weighted average number of shares of 60,072,000 ordinary shares in issue during the year after taking into consideration of the bonus issue of 58,072,000 new ordinary shares of RM0.50 each.

(c) The diluted earnings per share of the Group were not presented as there were no dilutive potential ordinary shares during the financial year.

29. diVidend


Inrespectoffinancialyearended31December2009 A final dividend of 550% tax exempt on 2,000,000 ordinary shares of RM0.50 each, paid on 26 March 2010 5,500,000 -

30. cAsh And cAsh eQuiVAlents

(a) Cash and cash equivalents included in the statements of cash flows comprise the following amounts:


Deposits, cash and bank balances (Note 14) 16,929,382 11,663,047 16,355,631 11,281,610 Bank overdraft (Note 17) - -

16,740,735 11,394,078 16,355,631 11,281,610 Less: Non-cash and cash equivalents Fixed deposits pledged to licensed banks 15,587,754 10,265,037 15,202,650 10,152,569

(188,647) (268,969)

(1,152,981) (1,129,041) (1,152,981) (1,129,041)



30. cAsh And cAsh eQuiVAlents (cont’d)

(b) Cash payments on acquisition of property, plant and equipment are as follows:


Purchase of property, plant and equipment 4,485,020 4,222,016 2,362,392 2,118,985 Financed by hire purchase agreement

4,219,020 4,177,016 2,096,392 2,073,985

31. RelAted pARtY disclosuRes

For the purposes of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel include all the Directors of the Group.

(a) Related party Relationship

Other than as disclosed elsewhere in the financial statements, the related parties and their relationship with the Group and its related parties are as follows:

names of related parties Relationships

Success Transformer Corporation Berhad Immediate Holding Company Success Transformer Marketing Sdn. Bhd. Related Company * Success Electronic & Transformer Related Company * Manufacturer Sdn. Bhd. SEB Resources Sdn. Bhd. Subsidiary Company (formerly known as Seremban Engineering Indutries Sdn. Bhd.) Sepen Engineering Sdn. Bhd. Subsidiary Company Pen Steel Engineering Works Sdn. Bhd. A company in which directors of a subsidiary company, Messrs. Wong Kee Pen and Wong Kah Poh have substantial financial interest. Ideal Plant Technology Sdn. Bhd. A company in which a director of the Company, En. Mohamad Noh Bin Serul has substantial financial interest.

* Related company are companies within the Success Transformer Corporation Berhad group of companies.

(266,000) (45,000) (266,000) (45,000)



31. RelAted pARtY disclosuRes (cont’d)

(b) Related party transactions

In addition to the transactions detail elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year:


(i) immediate holding company – Sundry loan from - 1,000,000 - 1,000,000 – Sundry interest from - 3,247 - 3,247 – Share of listing expenses 284,659 - 284,659 -

(ii) subsidiary companies – Supply of labour services - - 2,860,644 4,326,687 – Factory rental to - - 90,000 120,000

(iii) Related companies – Purchase of property, plant and equipment - 15,015 - 10,615 – Purchase of goods 7,321 5,400 7,321 5,400 – Sales of goods 152,260 - 152,260 - – Sundry loan to - 1,195,000 - 1,195,000 – Sundry interest to - 32,932 - 32,932

(iv) other Related parties – Maintenance and shutdown services received - 3,670 - 3,670 – Sub contractor fees 116,500 2,200 116,500 2,200 – Supply of labour and materials 2,860,000 - 2,860,000 - – Supply of labour and tools - 186,746 - - – Rental of hostel 6,000 6,000 6,000 6,000

The outstanding balances as at financial year end, arising from sale/purchase of goods and services, are disclosed in Note 13 and 20 respectively.



31. RelAted pARtY disclosuRes (cont’d)

(c) compensation of Key management personnel


Fees 330,000 125,000 330,000 125,000 Salary and wages 1,723,157 1,620,124 1,571,917 1,468,884 Defined contribution plans (EPF) 174,480 159,042 156,480 141,042

2,227,637 1,904,166 2,058,397 1,734,926

Comprise amounts paid to: – Directors of the Company 1,764,212 1,577,609 1,594,972 1,408,369 – Other key management personnel 463,425 326,557 463,425 326,557

2,227,637 1,904,166 2,058,397 1,734,926

The remuneration of key management personnel are determined by the Board of Directors having regard to the performance of individuals and market trends.

32. cApitAl commitment

As at financial year end, the capital expenditure contracted for but not provided for in the financial statements are as follows:


Approved and contracted for: Purchase of property, plant and equipment 3,485,337 1,647,900

33. contingent liAbilities


secured Bank guarantees issued to third parties 1,526,215 512,464 1,526,215 512,464 Warranty for products to a customer - 42,540 - 42,540

1,526,215 555,004 1,526,215 555,004

unsecured Corporate guarantee to financial institution for banking facilities granted to a subsidiary company - - 4,043,000 3,773,000

The Company provides guarantees to a licensed bank amounting to RM4,043,000 (2009: 3,773,000) for bank overdraft and banking facilities extended to a subsidiary of which RM3,491,324 (2009: 1,471,629) has been drawndown as at 31 December 2010.



34. segmentAl inFoRmAtion

Segment information is presented in respect of the Group’s business and geographical segments.

The primary format, business segment, is based on the nature of business activities and the secondary format, geographical segment, is based on the geographical location of its customers.

The Group is principally engaged in the fabrication of process equipment and metal structures and the provision of maintenance, repair and shutdown works. Therefore, business segmental information has not been prepared as the Group’s revenue, operating profit, assets employed, liabilities, capital expenditure, depreciation and non-cash expenses are confined to one business segment and located in Malaysia.

(a) geographical information

Revenue analysed by geographical location of customers are as follows:


Revenue – Domestic 30,931,385 29,579,340 – Overseas 19,790,966 39,456,760

50,722,351 69,036,100

No segmental analysis on the results by geographical location is prepared because it is not practicable to allocate operating expenses as any basis of making such allocations is arbitrary.

(b) major customers

Revenue from 1 (2009: 2) major customer with revenue equal to or more than 10% of the Group’s revenue, amounts to RM16,973,846 (2009: RM35,478,079).

35. FinAnciAl instRuments

(a) Financial Risk management

The Group’s and the Company’s activities are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include foreign currency risk, interest rate risk, credit risk and liquidity risk. The Group’s and the Company’s overall financial risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s and the Company’s financial performance.

The following sections provide details on the Group’s and the Company’s exposure to the abovementioned financial risks and the objectives, policies and processes for the management of these risks.

(i) ForeignCurrencyRisk

Foreign currency risk is the risk that the fair value of future cash flow of a financial instrument will fluctuate because of changes in foreign currency exchange rates. The Group is exposed to foreign currency risk on transactions arising from sales or purchases and balances that are denominated in currencies other than Ringgit Malaysia. The currencies giving rise to this risk are primarily United States Dollar (“USD”), Singapore Dollar (“SGD”) and Euro Currency (“EUR”).



35. FinAnciAl instRuments (cont’d)

(a) Financial Risk management (cont’d)

(i) ForeignCurrencyRisk(cont’d)

The Group enters into forward foreign currency contracts to reduce the risk of exposure to fluctuations on foreign currency. These forward foreign currency contracts are recognised in the financial statements as financial derivatives. The Group has no outstanding forward foreign currency contracts as at 31 December 2010.

Exposure to Foreign Currency Risk

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

usd sgd euR Rm total Rm Rm Rm Rm Rm

As at 31 december 2010

Financial Assets Trade and other receivables 953,944 396,480 111,221 27,708,072 29,169,717 Bank and cash balances 108,971 178,340 31,904 16,610,167 16,929,382

1,062,915 574,820 143,125 44,318,239 46,099,099 Financial liabilities Trade and other payables - - Bank borrowings - - - Hire purchases and lease payables - - -

- -

Net financial assets / (liabilities) 1,059,702 574,820 143,125 10,671,720 12,449,367 Less: Net financial assets denominated in the Company’s functional currency - - - currency exposure 1,059,702 574,820 143,125 - 1,777,647

(3,213) (16,695,696) (16,698,909) (16,615,104) (16,615,104) (335,719) (335,719)

(3,213) (33,646,519) (33,649,732)

(10,671,720) (10,671,720)






usd sgd euR Rm total Rm Rm Rm Rm Rm

As at 31 december 2009

Financial Assets Trade and other receivables 15,713 - - 23,068,980 23,084,693 Bank and cash balances 4,900 122,778 645 11,534,724 11,663,047

20,613 122,778 645 34,603,704 34,747,740

Financial liabilities Trade and other payables - - - Bank borrowings - - - Hire purchases and lease payables - - -

- - -

Net financial assets / (liabilities) 20,613 122,778 645 11,811,574 11,955,610 Less: Net financial assets denominated in the Company’s functional currency - - -

currency exposure 20,613 122,778 645 - 144,036

Foreign Currency Risk Sensitivity Analysis

The following table details the sensitivity analysis to a reasonably possible change in the foreign currencies as at the end of the reporting period, with all other variables held constant:

increase/ (decrease) Rm

31 december 2010 1% strengthened of RM against SGD (5,748) 1% strengthened of RM against USD (10,597) 1% strengthened of RM against EUR (1,431)

(17,776)

(12,200,612) (12,200,612) (10,398,849) (10,398,849) (192,669) (192,669)

(22,792,130) (22,792,130)

(11,811,574) (11,811,574)






Foreign Currency Risk Sensitivity Analysis

increase/ (decrease) Rm

31 december 2009 1% strengthened of RM against SGD (1,228) 1% strengthened of RM against USD (206) 1% strengthened of RM against EUR (6)

(1,440)

Conversely, a weakening of the Ringgit Malaysia, against the above currencies at 31 December would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

(ii) InterestRateRisk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to interest rate risk arises mainly from interest-bearing financial assets and liabilities. The Group’s policy is to obtain the most favourable interest rates available. Any surplus funds of the Group will be placed with licensed financial institutions to generate interest income.

Information relating to the Group’s exposure to the interest rate risk of the financial liabilities is disclosed in Note 17 to the financial statements.

Interest Rate Risk Sensitivity Analysis

The following table details the sensitivity analysis to a reasonably possible change in the interest rates as at the end of the reporting period, with all other variables held constant:

2010 2009 increase/ increase / (decrease) (decrease) Rm Rm

Effectsonprofitaftertaxation/equity Increase of 25 basis point (bp) (6,861) (4,372)





(iii) CreditRisk

The credit risk with respect to trade and other receivables are managed through the application of credit approvals, credit limits and monitoring procedures. Credit is extended to the customers based upon careful evaluation of the customer’s financial condition and credit history.

The Group’s normal credit term ranges from 7 to 60 days except for related companies, which are not subject to credit terms, whilst credit terms for retention sums are generally up to 180 days. Any other credit terms are assessed and approved on a case-by-case basis depending on the length of trading relationship, the volume of trade and other management considerations. Notwithstanding the credit terms granted to customers, it is the industry norm to begin counting the credit period from the first day of the immediate following month after sales transactions occurred, i.e. invoicing date.

At statements of financial position date, the two (2) largest customers account for 54% (2009: three (3) largest customers account for 71%) of total trade receivables of the Group. Except for the above, there were no significant concentrations of credit risk. The maximum exposure to credit risk for the Group is represented by the carrying amount of the receivables presented in the statements of financial position.

Ageing Analysis

The ageing analysis of the Group’s trade receivables are as follows:

group effects of gross adopting individual collective carrying amount FRs 139 impairment impairment value Rm Rm Rm Rm Rm

31 december 2010 Not past due 19,624,673 - - - 19,624,673

Past due: – 0 to 30 days 2,071,981 - - - 2,071,981 – 31 to 60 days 3,754,701 - - - 3,754,701 – 61 to 90 days 350,991 - - - 350,991 – over 91 days 1,068,366 - 789,584

26,870,712 - 26,591,930

31 december 2009 Not past due 13,362,745 - - - 13,362,745

Past due: – 0 to 30 days 983,812 - - - 983,812 – 31 to 60 days 5,638,955 - - - 5,638,955 – 61 to 90 days 314,165 - - - 314,165 – over 91 days 2,174,405 - 1,955,845

22,474,082 - 22,255,522

(70,222) (208,560)

(70,222) (208,560)

(214,560) (4,000)

(214,560) (4,000)





(iii) CreditRisk(cont’d)

Ageing Analysis (cont’d)

At the end of the reporting period, trade receivables that are individually impaired were those in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancement.

The collective impairment allowance is determined based on estimated irrecoverable amounts from the sale of goods, determined by reference to past default experience. Trade Receivables that are Neither Past Due Nor Impaired

The receivables that are neither past due not impaired are creditworthy customers with good payment records with the Group and the Company.

None of the Group and the Company trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

Trade Receivables that are Past Due but Not Impaired

The Group believes that no impairment allowance is necessary in respect of these trade receivables. They are substantially companies with good collection track record and no recent history of default.

Trade Receivables that are Past Due and Impaired

The receivables of the Group and the Company that are past due and impaired at the end of the reporting period had been individually impaired.

(iv) LiquidityandCashFlowRisk

Liquidity risk is the risk that the Group or the Company will encounter difficult in meeting financial obligations due to shortage of funds. The Group and the Company maintain a level of cash and cash equivalents and banking facilities deemed adequate by the management to ensure that they will have sufficient liquidity to meet their liabilities when they fall due.



effective rate within 1 year 1-5 years total % Rm Rm Rm

group

As at 31 december 2010 Trade and other payables - 16,698,909 - 16,698,909 Hire purchases payable 4.3 - 8.0 108,430 227,289 335,719 Bank borrowings 3.1 - 8.1 12,592,392 4,022,712 16,615,104

29,399,731 4,250,001 33,649,732 As at 31 december 2009 Trade and other payables - 12,200,612 - 12,200,612 Hire purchases payable 4.3 - 8.0 84,431 108,238 192,669 Bank borrowings 3.1 - 7.3 7,365,979 3,032,870 10,398,849

19,651,022 3,141,108 22,792,130

company


27,460,005 1,704,684 29,164,689


18,844,620 2,127,802 20,972,422



(iv) LiquidityandCashFlowRisk(cont’d)

The following table sets out the maturity profile of the financial liabilities as at the end of the reporting period based on contractual undiscounted cash flows:

(b) capital Risk management

The Group manages its capital by maintaining an optimal capital structure so as to support businesses and maximize shareholders value. To achieve its objective, the Group may make adjustments to the capital structure in view of changes in economic conditions, such as adjusting the amount of dividend payment, returning of capital to shareholders or issuing new shares.

The Group manages its capital based on debt-equity ratio. The Group seeks to maintain a balance between the higher returns that might be possible with higher level of borrowings and the advantages and security afforded by a sound capital position.




(b) capital Risk management (cont’d)

The Group’s policy is to keep gearing within manageable levels. The debt-to-equity ratio of the Group as at the end of the reporting year was as follows:


Hire purchase and lease payables 335,719 192,669 Bank borrowings 16,615,104 10,398,849

16,950,823 10,591,518 Less: Deposits, cash and bank balances

Net debt / (Cash) 21,441

Total equity 56,749,196 43,683,964

Debt-to-equity ratio 0% -2%

There were no changes in the Group’s approach to capital management during the year.

Under the requirement of Bursa Malaysia Practice Note No. 17/2005, the Company is required to maintain a consolidated shareholders’ equity equal to or not less than 25% of the issued and paid-up capital (excluding treasury shares) and such shareholders’ equity is not less RM40 million. The Company has complied with this requirement.

(c) ClassificationofFinancialInstruments

group company 2010 2010 Rm Rm

Financial assets loans and receivables Amount due from contract customers 2,664,077 2,560,597 Trade and other receivables 29,169,717 28,109,533 Deposit, cash and bank balances 16,929,382 16,355,631 48,763,176 47,025,761 Financial liabilities Otherfinancialliabilities Trade and other payables 16,698,909 15,705,190 Bank borrowings 16,615,104 13,123,780 Hire purchases and lease payables 335,719 335,719

33,649,732 29,164,689

(16,929,382) (11,663,047)

(1,071,529)




(d) Fair Values

The carrying amounts of financial assets and financial liabilities of the Group and of the Company as at the end of the reporting period approximate their fair values due to the relatively short term maturity of these financial instruments except for the following:

carrying Fair amount value note Rm Rm

31 december 2010

Financial liability Hire purchases and lease payables (non-current) 18 227,289 169,785

31 december 2009

Financial liability Hire purchases and lease payables (non-current) 18 108,238 80,854

The methodologies used in arriving at the fair values of the principal financial assets and financial liabilities of the Group are as follows:

(i) The carrying amounts of cash and cash equivalents, receivables, payables and trade bills are considered to approximate their carrying amounts as they are either payable on demand or within the normal credit term or they have short maturity.

(ii) The fair value of term loans approximates its carrying amount as the interest rate is on floating rate basis.

(iii) The fair value of hire purchases and lease payables has been determined using discounted cash flow technique. The discount rates used are based on the current finance lease interest rate with similar nature of borrowing of the group.

derivatives

Forward currency contracts are valued using a valuation technique with market observable inputs. The fair value of the forward foreign currency contracts is the amount that would be payable or receivable on completion/termination of the outstanding position, and is determined by reference to the difference between the contracted rate and the market rate as the reporting date.

36. signiFicAnt eVents duRing the FinAnciAl YeAR

There were no significant events of the Group and of the Company during the financial year that will affect materially the contents of this report other than as follows:

a) On 21 January 2010, a wholly-owned subsidiary of the Company, Seremban Engineering Industries Sdn. Bhd., increased its issued and paid-up share capital from RM200,002 to RM250,000 through the allotment of 49,998 new ordinary shares of RM1.00 each at par for cash. The proceeds were used as working capital.



36. signiFicAnt eVents duRing the FinAnciAl YeAR (cont’d)

b) On 29 January 2010, the Securities Commission (“SC”) granted condition approval for the Proposed Flotation Exercise except for the declaration of dividend.

c) On 25 February 2010, Bursa Securities had approved the admission of the Company to the Official List of Bursa Securities and the listing of and quotation for its entire enlarged issued and paid-up share capital of up to RM40,000,000 comprising 80,000,000 shares on the Main Market if Bursa Securities upon completion of the Proposed Public Issue and Proposed Offer for sale.

d) On 4 March 2010, the Company made an appeal to the SC for the waiver of the condition in which the Company shall not declare any dividends prior to its listing on the Main Market of Bursa Malaysia Securities Berhad.

Upon obtained the approval from SC on 24 March 2010, the Directors of the Company proposed a final tax-exempt dividend of RM2.75 per ordinary share amounting to RM5,500,000 in respect of the financial year ended 31 December 2009. The dividend was approved by the shareholders of the Company at the Annual General Meeting held on 26 March 2010 and paid on the same day.

e) On 31 March 2010, the issued and fully paid-up share capital of the Company was increased from RM1,000,000 to RM30,036,000 through the Bonus Issue of 58,072,000 new ordinary shares of RM0.50 each on the basis of approximately 2,904 new ordinary shares of RM0.50 each for every existing 100 ordinary shares of RM0.50 each in the Company, by way of capitalisation of an aggregate RM28,009,000 and RM1,027,000 out of retained earnings and revaluation surplus of the Company respectively. The Bonus Issue had no effect on financial position and results of the Group.

f) On 31 March 2010, the Company entered into an underwriting agreement with RHB Investment Bank Berhad (“RHBIB”) and the Offeror, namely Success Transformer Corporation Berhad, for the underwriting of an aggregate of 16,737,768 ordinary shares of RM0.50 each of the Company, representing 20,92% of the total enlarged issued and paid-up share capital of the Company upon completion of the Proposed Floating Exercise.

g) On 14 April 2010, the Company has, through its adviser RHBIB issued a Prospectus for the public issue and offer for sale a total of 28,000,000 ordinary shares of RM0.50 each at an offer price of RM0.85 per share.

h) On 10 May 2010, the Company completed the listing of and quotation for its entire enlarged issued and paid-up share capital of RM40,000,000 comprising of 80,000,000 ordinary shares of RM0.50 each on the Main Market of Bursa Securities.

i) On 27 May 2010, the Company entered into Joint Venture Agreement with Groupage Energy Sdn. Bhd. (“GESB”) with the objective to incorporate a joint venture company (“JV Co.”), in Malaysia to undertake the projects set out in relation to contracts for services (“Projects”), with oil and gas and petrochemical companies and/or other companies that may require the services and assistance as set out in the JV Agreement wherein the Company shall hold 50% and GESB shall hold the remaining 50% in the participating interest of the JV Co.

Pursuant to this agreement, the Company announced that the establishment of the JV Company, namely Twin Values Sdn. Bhd. (“TVSB”) had been completed on 7 July 2010. The initial investment of RM2.00 comprising 2 ordinary shares of RM1.00 each, were held by the Company and GESB in equal proportion. On 9 July 2010, TVSB had changed its name to Groupage SEB Sdn. Bhd (“GROUPAGE”).

j) On 11 November 2010, the Company entered into a sale and purchase agreement with Mr. Low Seng Kern to acquire a piece of freehold industrial land held under GRN 114865, Lot 32554, Pekan Senawang, Negeri Sembilan, for a total cash consideration of RM 3,497,708. The acquisition was completed in February 2011.



37. signiFicAnt eVents subseQuent to the bAlAnce sheet dAte

On 14 April 2011, the Directors declared an interim tax exempt dividend of 2% per ordinary share of RM0.50 each in respect of financial year ending 31 December 2011. The payment shall be made to the shareholders whose names appear in the Company’s Record of Depositors on 11 May 2011.

38. compARAtiVe FiguRes

The following comparative figures on the face of statement of financial position of the Group and of the Company have been reclassified to conform with current year is presentation:

group As As previously restated reported Rm Rm

stAtement oF FinAnciAl position

Property, plant and equipment 26,221,076 26,025,815

Prepaid land lease payment - 195,261

company As As previously restated reported Rm Rm

stAtement oF FinAnciAl position

Property, plant and equipment 23,733,826 23,538,565

Prepaid land lease payment - 195,261



FinAnciAl YeAR ended 31 decembeR 2010

notes to FinAnciAl stAtements (cont’d)

group company 2010 2010 Rm Rm

Total retained profits / (losses) – Realised 9,753,359 8,538,124 – Unrealised

7,276,920 6,158,545

Total share of accumulated losses from the jointly controlled entities: – Realised - – Unrealised - -

7,264,336 6,158,545 Less: Consolidation adjustments -

Total retained profits as per statement of financial position 6,796,056 6,158,545

The determination of realised and unrealised profits is compiled based on Guidance of Special Matter No. 1 “Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements”, issued by the Malaysian Institute of Accountants on 20 December 2010.

The disclosure of realised and unrealised profits above is solely for complying with the disclosure requirements stipulated in the directive of Bursa Securities and should not be applied for any other purposes.

(2,476,439) (2,379,579)

(12,584)

(468,280)

39. supplementARY inFoRmAtion – disclosuRe oF ReAlised And unReAlised pRoFit / losses

On 25 March 2010, Bursa Malaysia Securities Berhad (“Bursa Securities”) had issued directives to all listed issuers to disclose a breakdown of the unappropriated profits or accumulated losses into unrealised profits or losses.

On 20 December 2010, Bursa Securities further issued guidance on the disclosure and the format required.

Pursuant to the directive, the breakdown of the retained profits of the Group as at 31 December 2010, into realised and unrealised profits is as follows:


list oF pRopeRties

location/postalAddress

description/existing use

date ofRevaluation/

AcquisitionAge of

building

landArea/

built upArea

tenure(years)

net bookValues as at31/12/2010

Rm

Title No. H.S.(M) 417, P.T. 227 (Lot No. 10308), Pekan Sungai Gadut, District of Seremban, State of Negeri Sembilan.

Address

No. 95, Senawang Light Industrial Area, 70450 Seremban, Negeri Sembilan.

Industrial premises comprising a single storey terrace factory

22 July 200918164 square metres/

102.19 square metres

Leasehold interest for

90 years expiring on

1 June 2075, leaving an unexpired

term of about 66

years

61,970(Land)

35,030(Building)

The summary of the information on the landed properties of the SEB Group is as follows:

Title No. H.S.(M) 492, P.T. 305 (Lot No. 10383), Pekan Sungai Gadut, District of Seremban, State of Negeri Sembilan

Address

No. 170, Senawang Light Industrial Area, 70450 Seremban, Negeri Sembilan.

Industrial premises comprising a single storey corner terrace factory

22 July 200923901 square metres/

434.3square metres

Leasehold interest for

90 years expiring on

1 June 2075, leaving

an unex-pired term

of about 66years

192,230 (Land)

82,058(Building)

Title No. H.S.(D) 75500 & 122098, P.T. 14711 & 1286 (Lot No. 32563), Pekan Senawang District of Seremban, State of Negeri Sembilan

Address

Lot 1A & 1B, Lorong Bunga Tanjung 1/3, Senawang Industrial Park, 70400 Seremban, Negeri Sembilan

Industrial premises comprising a 3-storey office with an attached single storey open-sided factory annexed together with a guardhouse

22 July 20091514,144 square

metres/ 7,272.82

square metres

Freehold 2,260,000(Land)

5,596,800(Building)


list oF pRopeRties (cont’d)

location/postalAddress

description/existing use

date ofRevaluation/

AcquisitionAge of

building

landArea/

built upArea

tenure(years)

net bookValues as at31/12/2010

Rm

Title No. H.S.(D) 122097, P.T. 1285 (Lot No. 32564), Pekan Senawang District of Seremban, State of Negeri Sembilan

Address

Lot 1C, Lorong Bunga Tanjung 1/3, Senawang Industrial Park, 70400 Seremban, Negeri Sembilan

Industrial premises comprising a 2single storeystore and office with an attached single storey open-sided factory

22 July 200948,786 square metres/5,030.71

square metres


4,644,566(Building)

Title No. H.S.(D) 64702, (Lot No. 1666, GRN 162852), Pekan Senawang District of Seremban, State of Negeri Sembilan

Address

Lot 6A, Lorong Bunga Tanjung 1/2, Senawang Industrial Park, 70400 Seremban, Negeri Sembilan

Industrial premises with an attached single storey open-sided factory annexed together with a guardhouse

22 July 2009310,565 square

metres/ 2,445.63

square metres


2,885,850(Building)

Geran 85454, Lot 19731, Mukim Bandar Kundang, Daerah Gombak

Address

Lot 243, Jalan KPK, Kawasan Perindustrian Kundang, Kundang Jaya, 48020 Rawang

A single-storey detached factory together with a canteen/surau/toilet block, a guard house and a refuse chamber

28 October 2010

16,801square metres

2,972.90square metres

Freehold 1,674,367 (Land)

1,940,260(Building)

The statement regarding the revaluation policy on landed properties is disclosed at Notes 4(g) of the Notes to the Financial Statements.


AnAlYsis oF shAReholdingsAs At 21 ApRil 2011

distRibution oF shAReholdings

size of shareholdings no. of no. of shareholders % shares %

Less than 100 11 0.51 645 0.00100 to 1,000 852 39.65 558,414 0.691,001 – 10,000 992 46.16 4,372,240 5.4710,001 – 100,000 260 12.10 8,312,136 10.39100,001 – less than 5% of issued shares 32 1.49 10,702,046 13.385% and above of issued shares 2 0.09 56,054,519 70.07

total 2,149 100.00 80,000,000 100.00

Authorised Share Capital : RM50,000,000.00Issued and Fully Paid-Up Capital : RM40,000,000.00Class of Shares : Ordinary Shares of RM0.50 eachVoting Right : Every member of the Company, present in person or by proxy, shall have on a show of hands, one (1) vote or on a poll, one (1) vote for each share he holds.Number of Shareholders : 2,149

substAntiAl shAReholdeRs’ shAReholdings

no. of no. of name shares % shares %

1. Success Transformer Corporation Berhad (“STC”) 52,000,000 65.00 - -2. Omega Attraction Sdn Bhd (“OASB”) 4,054,519 5.07 - -3. Tan Ah Bah @ Tan Ah Ping 56,533 0.07 56,116,052 70.154. Pan Kim Foon 11,533 0.01 56,161,052 70.205. Tan Chung Ling 50,000 0.06 56,122,585 70.15

direct interest indirect interest

Notes:(1) Deemed interested by virtue of his substantial interest in OASB and STC, his spouse, Pan Kim Foon’s and daughter, Tan Chung Ling’s direct interests in the Company.

(2) Deemed interested by virtue of her substantial interest in OASB and STC her spouse, Tan Ah Bah @ Tan Ah Ping’s and daughter, Tan Chung Ling’s direct interests in the Company.

(3) Deemed interested by virtue of her parents, Tan Ah Bah @ Tan Ah Ping’s and Pan Kim Foon’s substantial interests in OASB and STC and their direct interests in the Company.

(1)

(2)

(3)


AnAlYsis oF shAReholdings (cont’d)As At 21 ApRil 2011

diRectoRs’ shAReholdings

no. of no. of name shares % shares %

1. Tan Sri Ahmad Fuzi Bin Abdul Razak 50,000 0.06 - -2. Wong Choon Cheon 50,000 0.06 931,813 1.163. Wong Chee Kian 50,000 0.06 881,813 1.104. Wong Poh Chee 50,000 0.06 881,813 1.105. Tan Tian Seng 50,000 0.06 - -6. Dato’ Dr. Ir. Andy Seo Kian Haw 50,000 0.06 - -7. Ir. Mohamad Noh Bin Serul 50,000 0.06 - -8. Tan Ah Bah @ Tan Ah Ping 56,533 0.07 56,116,052 70.159. Wong Wai Hung 52,000 0.07 - -10. Chiam Tau Meng - - - -11. Tan Ah Moy (Alternate Director to Tan Tian Seng) 54,100 0.07 927,713 1.16

direct interest indirect interest

Notes:

(1) Deemed interested by virtue of his substantial interest in Wtech Holdings Sdn Bhd (“Wtech”), his spouse, Tan Ah Moy’s, daughter, Wong Poh Chee’s and son, Wong Chee Kian’s direct interests in the Company.

(2) Deemed interested by virtue of his substantial interest in Wtech, his father, Wong Choon Cheon’s and mother, Tan Ah Moy’s direct interests in the Company.

(3) Deemed interested by virtue of her substantial interest in Wtech, her father, Wong Choon Cheon’s and mother, Tan Ah Moy’s direct interests in the Company.

(4) Deemed interested by virtue of his substantial interest in OASB and STC and his spouse’s and daughter’s direct interests in the Company.

(5) Deemed interested by virtue of her substantial interest in Wtech,; her spouse, Wong Choon Cheon’s and children, Wong Chee Kian’s and Wong Poh Chee’s direct interests in the Company.

(1)

(2)

(3)

(4)

(5)


AnAlYsis oF shAReholdings (cont’d)As At 21 ApRil 2011

top thiRtY (30) shAReholdeRs

no. names no. of ordinary %

1. Success Transformer Corporation Berhad 52,000,000 65.002. Omega Attraction Sdn Bhd 4,054,519 5.073. Lipico Bioenergy Pte Ltd 1,200,000 1.504. Public Invest Nominees (Tempatan) Sdn Bhd 1,001,333 1.25 Pledged Securities Account for Yoong Fui Kien (C)5. Wtech Holdings Sdn Bhd 777,713 0.976. Fong Ting Wong 767,000 0.967. Koh Kin Lip 756,000 0.958. Lim Lock Yoong 592,514 0.749. Yoo Kee Mo 549,800 0.6910. Yow Yee Mooi 486,600 0.6111 Yew Kwee Mong 399,000 0.5012. Tan Siew Seng 363,000 0.4513. Lee Yik Foong 331,000 0.4114. Mayban Nominees (Tempatan) Sdn Bhd 282,600 0.35 Ho Fook Seng @ Ho Pock Seng15. Mohamed Faroz Bin Mohamed Jakel 252,000 0.3216. Tan Kong Chian 251,653 0.3117. Chan Mee Lian 222,000 0.2818. Wong Keen Weng 200,000 0.2519. Mayban Nominees (Tempatan) Sdn Bhd 196,000 0.25 Pledged Securities Account for Ho Fook Seng @ Ho Pock Seng20. Tengku AB Malek Bin Tengku Mohamed 189,400 0.2421. Lim Hui Huat @ Lim Hooi Chang 175,000 0.2222. Tan Tian Moo @ Tan Tian Mong 168,000 0.2123. HLG Nominee (Tempatan) Sdn Bhd 147,200 0.18 Pledged Securities Account for Yeoh Ah Chai (CCTS)24. Kua Hock Lai 144,900 0.1825. CIMSEC Nominees (Tempatan) Sdn Bhd 141,733 0.18 CIMB Bank for Rickoh Corporation Sdn Bhd (MY0507)26. RHB Nominees (Tempatan) Sdn Bhd 140,000 0.18 RHB Investment Management Sdn Bhd for Yoong Kah Yin (EPF)27. Laily Binti Paim 131,000 0.1628. CIMSEC Nominees (Tempatan) Sdn Bhd 126,000 0.16 CIMB Bank for Mohd Ariffin Bin Mohd Yusuf (MM1336)29. Kenanga Nominees (Tempatan) Sdn Bhd 126,000 0.16 Kenanga Capital Sdn Bhd for Abdul Rahman Bin Haji Siraj30. Khair Azmi Bin Husin 126,000 0.16


notice oF AnnuAl geneRAl meeting

notice is heRebY giVen that the Thirty-Second Annual General Meeting of the Company will be held at Langkawi Room, Bukit Jalil Golf and Country Resort, Jalan 3/155B, Bukit Jalil, 57000 Kuala Lumpur on Wednesday, 15 June 2011 at 10.30 a.m. for the following purposes:

As oRdinARY business

1. To receive the Audited Financial Statements for the financial year ended 31 December 2010 together with the Reports of Directors and Auditors thereon (Please refer to Note A).

2. To approve the payment of Directors’ fees for the financial year ended 31 December 2010. 3. To re-elect the following Directors retiring in accordance with the Article 95 of the Company’s Articles of Association:

(1) Mr. Wong Choon Cheon (2) Ms. Wong Poh Chee (3) Mr. Wong Wai Hung 4. To appoint Messrs Crowe Horwath as Auditors of the Company and to authorise the Directors to determine their remuneration.

Notice of Nomination pursuant to Section 172(11) of the Companies Act, 1965 (a copy of which is annexed and marked “Appendix I” in the 2010 Annual Report) has been received by the Company for the appointment of Messrs Crowe Horwath, who have given their consent to act, as Auditors of the Company in place of the current Auditors, Messrs SC Lim, Ng & Co. whom had indicated their intention not to seek for re-appointment. As speciAl business

To consider and if thought fit, to pass the following resolutions with or without any modifications as resolutions: 5. ordinary Resolution Authority to directors to allot and issue shares pursuant to section 132d of the companies Act, 1965 “THAT subject always to the Companies Act, 1965 (“the Act”), the Articles of Association of the Company and the approvals of Bursa Malaysia Securities Berhad and other relevant governmental or regulatory bodies, where such approvals are necessary, the Directors be and are hereby empowered, pursuant to Section 132D of the Act, to issue shares in the Company from time to time and upon such terms and conditions and for such purposes as the Directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten percent (10%) of the issued share capital of the Company for the time being and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”

Resolution 1

Resolution 2Resolution 3Resolution 4

Resolution 5

Resolution 6


6. ordinary Resolution ProposedShareholders’RatificationforpastRecurrentRelatedPartyTransactionsofaRevenue or trading nature and proposed shareholders’ mandate for Recurrent Related party transactions of a Revenue or trading nature “THAT pursuant to paragraph 10.09 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Main Market LR”), approval be and is hereby given for the ratification of the specified Recurrent Related Party Transactions of a revenue or trading nature with the Related Parties as stated in Section 2.3 of the Circular to Shareholders dated 20 May 2011, which were necessary for its day-to-day operations, entered into or to be entered into by the Company and its subsidiaries (“SEB Group”) on the basis that these transactions were entered into on terms which were not more favorable to the Related Parties involved than generally available to the public and were not detrimental to the minority shareholders of the Company (hereinafter referred to as the “Proposed Shareholders’ Ratification”);

“THAT pursuant to paragraph 10.09 of the Main Market LR, approval be and is hereby given to the SEB Group to enter into and to give effect to specified Recurrent Related Party Transactions of a revenue or trading nature and with the Related Parties as stated in Section 2.3 of the Circular to Shareholders dated 20 May 2011, which are necessary for its day-to-day operations, to be entered into by the SEB Group on the basis that these transactions are entered into on terms which are not more favorable to the Related Parties involved than generally available to the public and are not detrimental to the minority shareholders of the Company (hereinafter referred to as the “Proposed Shareholders’ Mandate”);

THAT the Proposed Shareholders’ Mandate is subject to annual renewal. In this respect, any authority conferred by the Proposed Shareholders’ Mandate shall only continue to be in force until:

(a) the conclusion of the annual general meeting of the Company following the general meeting at which the Proposed Shareholders’ Mandate was passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed; or

(b) the expiration of the period within which the annual general meeting after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (“the Act”) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

(c) revoked or varied by resolution passed by the shareholders in a general meeting,

whichever is the earlier;

AND THAT the Directors of the Company and/or any of them be and are hereby authorized to complete and do all such acts and things (including executing such documents as may be required) to give effect to the Proposed Shareholders’ Ratification and the Proposed Shareholders’ Mandate.” Resolution 7

notice oF AnnuAl geneRAl meeting (cont’d)



7. ordinary Resolution proposed Authority for the purchase by the company of its own shares “THAT subject to the Companies Act, 1965 (“the Act”), rules, regulations and orders made pursuant to the Act, provisions of the Company’s Articles of Association, the requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and any other relevant authority, the Directors of the Company be and are hereby authorised to make purchases of ordinary shares of RM0.50 each comprised in the Company’s issued and paid-up ordinary share capital, such purchases to be made through the Bursa Securities subject further to the following:

(i) the aggregate number of shares of RM0.50 each in the Company which may be purchased and/or held by the Company shall not exceed ten percent (10%) of the issued and paid-up share capital of the Company (“Shares”) subject to it maintaining a shareholding spread that is in compliance with the requirement of the Main Market Listing Requirements for the Bursa Securities after the purchase(s) of the Shares.

(ii) the maximum funds to be allocated by the Company for the purpose of purchasing the Shares shall not exceed the total retained profits or share premium reserve of the Company at the time of the purchase.

As at 31 December 2010, the retained profits and share premium reserve of the Company were approximately RM6.8 million and RM5.6 million respectively.

(iii) the authority conferred by this resolution will commence immediately upon passing of this ordinary resolution and will continue to be in force until:

(a) the conclusion of the next annual general meeting of the Company following the general meeting at which this resolution was passed at which time it shall lapse unless by ordinary resolution passed at the meeting, the authority is renewed, either unconditionally or subject to conditions;

(b) the expiration of the period within which the next annual general meeting after that date is required by law to be held; or

(c) revoked or varied by ordinary resolution passed by the shareholders in general meeting, whichever occurs first, but not so as to prejudice the completion of purchase(s) by the Company before the aforesaid expiry date and, made in any event, in accordance with the provisions of the guidelines issued by the Bursa Securities and any prevailing laws, rules, regulations, orders, guidelines and requirements issued by any relevant authority; and

(iv) upon completion of the purchase(s) of the Shares by the Company, the Directors of the Company be and are hereby authorised to deal with the Shares in the following manner:

(a) cancel the Shares so purchased; or (b) retain the Shares so purchased as treasury shares; or (c) retain part of the Shares so purchased as treasury shares and cancel the remainder; or (d) distribute the treasury shares as dividends to shareholders and/or resell on the Bursa Securities and/or cancel all or part of them; or

in any other manner as prescribed by the Act, rules, regulations and orders made pursuant to the Act and the requirements of the Bursa Securities and any other relevant authorities for the time being in force;


AND THAT the Directors of the Company be and are hereby authorized to take all such steps as are necessary or expedient to implement, finalise, complete or to effect the purchase(s) of the Shares with full power to assent to any conditions, modifications, variations, resolutions and/or amendments as may be imposed by the relevant authorities and to do all such acts and things as they may deem necessary and/or expedient in the best interest of the Company to implement, finalise and give full effect in relation thereto.”

8. special Resolution proposed Amendments to the Articles of Association of the company “THAT the proposed amendments to the existing Article 166 of the Articles of Association of the Company as set out in Appendix II attached in the Circular to Shareholders dated 20 May 2011 be and is hereby approved and adopted.”

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

by order of the board

pAng KAh mAn (MIA 18831)Company Secretary

Kuala Lumpur20 May 2011

Resolution 8

Resolution 9


Notes:

(A) This Agenda item is meant for discussion only as the provision of Section 169(1) of the Companies Act, 1965 does not require a formal approval of the shareholders and hence, is not put forward for voting.

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

2. To be valid, the proxy form duly completed must be deposited at the Registered Office of the Company at 3-2, 3rd Mile Square, No. 151 Jalan Kelang Lama, Batu 3½, 58100 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting provided that in the event the member(s) duly executes the proxy form but does not name any proxy, such member(s) shall be deemed to have appointed the Chairman of the meeting as his/their proxy, provided always that the rest of the proxy, other than the particulars of the proxy have been duly completed by the member(s).

3. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting provided that the provisions of Section 149(1)(c) of the Companies Act, 1965 are not complied with.

4. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportion of his holdings to be represented by each proxy.

5. If the appointor is a corporation, the proxy form must be executed under its common seal or under the hand of an officer or attorney duly authorised.



ExplanatoryNotesonSpecialBusiness: 6. OrdinaryResolutionno.6 AuthoritytoAllotandIssueSharespursuanttoSection132DoftheCompaniesAct,1965

(a) The proposed Ordinary Resolution no. 6, if passed, will empower the Directors of the Company, from the date of the forthcoming Annual General Meeting to allot and issue shares in the Company up to an amount not exceeding ten percent (10%) of the issued capital of the Company for the time being for such purposes as they may deem fit and in the interest of the Company. This authority, unless revoked or varied at a general meeting will expire at the conclusion of the next Annual General Meeting of the Company. (b) The mandate now sought is a renewal from the previous mandate obtained at the last Annual General Meeting held on 26 March 2010 which will expire at the conclusion of the forthcoming Annual General Meeting.

(c) The authority 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 and/or acquisitions.

7. OrdinaryResolutionno.7 Proposed Shareholders’ Ratification and Proposed Shareholders’Mandate for Recurrent Related Party Transactions of a RevenueorTradingNature

The proposed Ordinary Resolution no. 7, if passed, will enable the Company and its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature from 10 May 2010, being the listing date until the date of the forthcoming Annual General Meeting and which are necessary for its day-to-day operations and with those related parties as set out in Section 2.3 of the Circular to Shareholders of the Company dated 20 May 2011 provided that such transactions are entered into on terms which are not more favourable to the related parties involved than generally available to the public and are not detrimental to the minority shareholders of the Company.

Further details of the proposed shareholders’ ratification and proposed shareholders’ mandate for the recurrent related party transactions of a revenue or trading nature are set out in the Circular to Shareholders dated 20 May 2011.

8. OrdinaryResolution8 ProposedAuthorityforthePurchasebytheCompanyofitsOwnShares

The proposed Ordinary Resolution no. 8 if passed, will empower the Company to purchase and/or hold up to ten percent (10%) of the issued and paid-up share of the Company (“Proposed Share Buy-Back Authority”). This authority unless revoked or varied by the Company at a General Meeting will expire at the next Annual General Meeting.

Further details of the Proposed Share Buy-Back Authority are set out in the Circular to Shareholders dated 20 May 2011.

9. SpecialResolution ProposedAmendmentstotheArticlesofAssociationoftheCompany

The proposed Special Resolution is to amend the existing Article 166 of the Articles of Association of the Company in relation to the implementation of the electronic dividend payment (“eDividend”) (“Proposed Amendments”).

The main objective of implementing the eDividend are, amongst others, to promote greater efficiency of the dividend payment system to reflect the new initiatives with regard to the capital market, specifically to provide shareholders with an eDividend payment system which is an alternative method of receiving cash dividends that is convenient to the shareholders. The eDividend will allow the Company to credit dividend entitlements in respect of the shares of the Company directly into the shareholders’ bank accounts and improve the efficiency of the Company.

Further details of the Proposed Amendments are set out in the Circular to Shareholders dated 20 May 2011.


stAtement AccompAnYing notice oF AnnuAl geneRAl meeting(puRsuAnt to pARAgRAph 8.27(2) oF the mAin mARKet

listing ReQuiRements oF buRsA mAlAYsiA secuRities beRhAd)

detAils oF indiViduAl who is stAnding FoR election As diRectoR

No individual is seeking election as a Director at the Thirty-Second Annual General Meeting of the Company.


notice oF nominAtion puRsuAnt to section 172(11) oF the compAnies Act, 1965

success tRAnsFoRmeR coRpoRAtion beRhAd (636939-W)No. 3, 5 & 7, Jalan TSB 8, Taman Industri Sungai Buloh47000 Sungai Buloh, SelangorTel : 03-6157 2788 Fax : 03-6157 6355

Date: 18 April 2011

The Board of DirectorsseRembAn engineeRing beRhAdLot 1A – 1C, Lorong Bunga Tanjung 1/3Senawang Industrial Park70400 SerembanNegeri Sembilan Darul Khusus

Dear Sirs,

Re: notice oF nominAtion oF messRs cRowe hoRwAth

We, Success Transformer Corporation Berhad (636939-W), being the holding company of the Company, hereby give notice pursuant to Section 172(11) of the Companies Act, 1965 of our nomination of Messrs Crowe Horwath as Auditors of the Company in place of the retiring Auditors, Messrs SC Lim, Ng & Co.

Yours faithfullyFor and on behalf of SUCCESS TRANSFORMER CORPORATION BERHAD

TAN AH BAH @ TAN AH PINGDirector

This is the Appendix I referred to in Resolution 5 of the Notice of Annual General Meeting of Seremban Engineering Berhad.

AppendiX 1


pRoXY FoRm

Please indicate with an “X” in the appropriate box against each Resolution how you wish your proxy to vote if no instruction is given, this form will be taken to authorise the proxy to vote at his/ her discretion.

For appointment of two proxies, percentage of shareholdings to be represented by the proxies:

I/Weof being a member(s) of seremban engineering berhad, hereby appoint(s)

of or failing him/herofas my / our proxy to vote for me / us and on my / our behalf at the Thirty-Second Annual General Meeting of the Company to be held at Langkawi Room, Bukit Jalil Golf and Country Resort, Jalan 3/155B, Bukit Jalil, 57000 Kuala Lumpur, on Wednesday, 15 June 2011 at 10.30 a.m. and at any adjournment thereof.

1 Approval of Directors’ Fees for the financial year ended 31 December 2010 2 Re-election of Mr. Wong Choon Cheon as Director 3 Re-election of Ms. Wong Poh Chee as Director 4 Re-election of Mr. Wong Wai Hung as Director 5 Appointment of Messrs Crowe Horwath as Auditors and to authorise the Directors to fix their remuneration 6 Renewal of authority for Directors to allot and issue shares pursuant to Section 132D of the Companies Act, 1965 7 Proposed Shareholders’ Ratification for past Recurrent Related Party Transactions of a Revenue or Trading Nature (“RRPT”) and Proposed Shareholders’ Mandate for RRPT. 8 Proposed Authority for the Company to purchase its own shares 9 Proposed Amendments to the Articles of Association of the Company

no. Resolution FoR AgAinst

(FULL ADDRESS)

no. of shares percentageProxy 1

Proxy 2

Total 100%

Number of Shares Held

Signature of Shareholder(s) or Common Seal Signed this day of 2011

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. To be valid, the proxy form duly completed must be deposited at the registered office of the Company situated at 3-2, 3rd Mile Square, No. 151 Jalan Kelang Lama, Batu 3½, 58100 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting provided that in the event the member(s) duly executes the proxy form but does not name any proxy, such member(s) shall be deemed to have appointed the Chairman of the meeting as his/their proxy, provided always that the rest of the proxy form, other than the particulars of the proxy have been duly completed by the member(s). 3. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting provided that the provisions of Section 149(1)(c) of the Companies Act, 1965 are complied with. 4. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. 5. If the appointor is a corporation, the proxy form must be executed under its common seal or under the hand of an officer or attorney duly authorised.


The Company Secretary

seRembAn engineeRing beRhAd (45332-X)

3-2, 3rd Mile SquareNo. 151, Jalan Kelang LamaBatu 3 1/2, 58100 Kuala Lumpur

Fold Here

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CHARTINGOUR FUTUREA N N U A L R E P O R T 2 0 1 0

(45332-X)

(45332-X)

Lot 1A-1C, Lorong Bunga Tanjung 1/3, Senawang Industrial Park, 70400 Seremban, N. Sembilan, Malaysia.

Tel: +606-677 5898 Fax: +606-677 5162

SEREMBA

N EN

GIN

EERING

BERHA

D (45332-X

)A

NN

UA

L REPORT 2010

CH

ARTIN

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