George Kent (Malaysia) Berhad · George Kent (Malaysia) Berhad (1945-X) George Kent (Malaysia) Berhad (1945-X) Annual Report for the year ended 31 January 2011 George Kent (Malaysia)

75 Years of Excellence

Embrace the Futureto

1936 ~ 2011

George Kent (Malaysia) Berhad(1945-X)

George K

ent (Malaysia) Berhad (1945-X

)A

nnual Report for the year ended 31 January 2011

George Kent (Malaysia) Berhad (1945-X)

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

www.georgekent.net

75 Years of Excellence to Embrace the FutureANNUAL REPORT

for the year ended 31 January 2011

Core Values/Chairman’s Message 1

Corporate Profile 2

Corporate Information 3

History of George Kent (Malaysia) Berhad 4

Five-year Group Financial Highlights 10

Transformation Journey and The Way Forward 9

Chairman’s Statement 12

Management Analysis & Review 14

Event Highlights 18

Profile of Directors 20

Senior Management 23

Statement on Corporate Governance 24

Financial Statements 39

Statement on Corporate Social Responsibility 33

Audit Committee Report 30

Statement on Internal Control 35

Additional Information 37

Shareholders’ Information 116

Statement on Directors’ Interests 119

Notice of Annual General Meeting 121

List of Properties Held 120

Statement Accompanying the Notice of Annual General Meeting 123

Form of Proxy

CONTENTS

Infrastructure Investments,

Major Civil Engineering Construction,

M&E and Process Engineering Design and Build Capability, and

Manufacturing & Sales of Water/Water Related Products including OEM.

VISION STATEMENTTo become an admired Malaysian-based Engineering Company with

Regional and International Operations in:

HISTORY OF

GEORGE KENT (MALAYSIA) BERHADcont’d

CORPORATE PERSONAL

OUR CORE VALUES

75 Years of Excellenceto

Embrace the Future

1936 ~ 2011

CHAIRMAN’S MESSAGE

“This Year 2011 marks the 75th Anniversary of George Kent (Malaysia) Berhad from its humble beginnings in 1936 as just a service branch office in Penang, of the then parent company, George Kent Limited in the United Kingdom.

Today, George Kent is recognised as the leading engineering group in Malaysia specialising in the manufacture of water meters, water works components and brass products; investments in water related infrastructure assets; engineering and turnkey construction of hospitals.

We export our own George Kent products to more than 20 countries worldwide, earning much needed foreign exchange. We also successfully compete in the international arena for the manufacture of OEM products bound for the United Kingdom and Japan markets. The “George Kent” brand is synonymous with quality and is a household name across the world, particularly in the Commonwealth nations.”

(“Excerpt from the Chairman’s speech at the launch of George Kent (Malaysia) Berhad’s 75th Anniversary at the function held on Monday, 14 March 2011,

graced by Y.A.B. Tan Sri Dato’ Hj Muhyiddin Hj Mohd Yassin, Deputy Prime Minister of Malaysia.”)

Over these 75 years, George Kent (Malaysia) Berhad has reached many significant milestones and will have many more important

milestones to reach in the future. We recollect the notable achievements for the past 75 years as set out on pages 4 to 7.

Passionate

Ethical

Responsible

Friendly

Efficient

Committed

Teamwork

Professional

Equitable

Result-driven

Focused

Environment conscious

Caring

Trustworthy

75TH ANNIVERSARY (1936 TO 2011) OF GEORGE KENT (MALAYSIA) BERHAD


Embrace the Future

1936 ~ 2011

2 Annual Report 2011

CORPORATE PROFILE

George Kent (Malaysia) was established in Penang in 1936 as

a service branch of the then parent Company, George Kent

Limited, United Kingdom. The Company was incorporated

in 1951 as George Kent (Malaya) Ltd and on 11 July 1969, it

was converted to a public company under the name of George

Kent (Malaysia) Berhad (“GKM”). In 1974 the Company listed its

shares through an offer for sale of 20% equity by George Kent

Limited and new issue of 20% shares to Malaysians.

George Kent is an engineering company involved in

manufacturing, trading and investment and development of

water infrastructure projects. The core business is in the water

industry. It has contributed to the nation’s manufacturing growth

by building up over the years to become the leader in the region

in brass products manufacturing. George Kent is the market

leader in the supply of control instrumentation, telemetry, pipes,

valves and fittings, industrial and domestic water meters, boilers,

incinerators and building automation systems.

George Kent is also involved in the manufacture of fibre glass

reinforced polyester (FRP) panel tanks for bulk water storage, and

the extrusion of brass rods. George Kent products manufactured

by the Manufacturing Division are up to the standard of MS ISO

9001:2000 Quality Management Systems and ISO 14001: 2004

Environmental Management System.

George Kent is a Company with regional activities in the

ASEAN countries, China and Papua New Guinea. It exports

its manufactured products to Singapore, Thailand, Vietnam,

Myanmar, Cambodia, Indonesia, Philippines, Papua New

Guinea, Australia, Hong Kong, Sri Lanka, Kenya, South Africa,

South America and the United Kingdom.

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

CORPORATE INFORMATION

Registered Office

George Kent Technology Centre

Lot 1115, Batu 15, Jalan Dengkil

47100 Puchong, Selangor Darul Ehsan

Tel : 603-8064 8000

Fax : 603-8061 3295, 603-8061 9954

E-mail : [email protected]

Website : www.georgekent.net

Share Registrar

Johan Management Services Sdn. Bhd.

11th Floor, Wisma E&C

No. 2 Lorong Dungun Kiri, Damansara Heights

50490 Kuala Lumpur

Tel : 603-2092 1858

Fax : 603-2092 2812

E-mail : [email protected]

Auditors

Ernst & Young

(Chartered Accountants)

Group Principal Bankers(in alphabetical order)

Kuwait Finance House (Malaysia) Berhad

Malayan Banking Berhad

The Royal Bank of Scotland Group

Stock Exchange Listing

Main Market, Bursa Malaysia Securities Berhad

Stock Name : GKENT

Stock Code : 3204

Sector : Trading

Audit Committee

Ong Seng Pheow (Chairman)

Dato’ Ir. Haji Zaidan Bin Haji Othman

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

Tan Sri Dato’ Tan Kay Hock

Risk Management Committee

Ong Seng Pheow (Chairman)


Ir. Dr. Cheong Thiam Fook

Remuneration Committee

Tan Sri Dato’ Tan Kay Hock (Chairman)


Puan Sri Datin Tan Swee Bee

Company Secretary

Teh Yong Fah (MACS 00400)

Board of Directors


(Chairman/Non-Independent Non-Executive Director)


(Independent Non-Executive Director)


(Non-Independent Non-Executive Director)

Ong Seng Pheow


Ir. Dr. Cheong Thiam Fook

(Non-Independent Executive Director)




Embrace the Future

1936 ~ 2011


HISTORY OF

GEORGE KENT (MALAYSIA) BERHAD

1936

The Company commenced operations at

No. 8, Ayer Rajah Road, Penang as a

service branch of George Kent Limited,

Luton, United Kingdom. Work involved

repairs and maintenance of water meters,

venture recorders, steam flow indicators

and waste-not taps for public stand pipes.

T

1968

An Industrial Equipment Division was

established by the Company.

1981

On 11 June 1981, Johan Holdings Berhad

acquired from Brown-Boveri Kent Ltd, its

controlling 51% equity interest in GKM,

bringing it under Malaysian control.

1983

An Automation Systems Division was

established in August 1983 to be involved

in the building automation and building

security business.

1985

In February 1985, GKM acquired a

42.85% interest in a local company

specialising in sales of equipment for the

upstream oil and gas industry.

1986

In September 1986, GKM commenced the

manufacture of Fibreglass Reinforced

Polyester (FRP) sectional water tanks

under licence from Sekisui Koji Co. Ltd of

Japan.

1988

During the year, GKM acquired a 51%

interest in Teknologi Air Patcandy Sdn

Bhd, a joint venture company with Portals

Water Treatment Overseas Ltd of United

Kingdom, specializing in water treatment

business.

1990

GKM secured several supply contracts

exceeding RM200 million, the largest of

which was the RM102.7 million contract to

supply pumping equipment, instrumentation

and valves for the Sungai Selangor Water

Project.

1969

In March 1969, the Company’s manufac-

turing plant started operations at a 4-acre

site located on Lot 4 & 6, Jalan Pahat

16/8A, Shah Alam Industrial Estate, Shah

Alam, Selangor.

On 11 July 1969, the Company was

converted to a public company under the

present name of George Kent (Malaysia)

Berhad (“GKM”).

1972

A Medical and Scientific Division for sales

of high quality surgical instruments, sterile

disposables, medical instruments and

monitoring equipment for cardiology was

set up.

1974 On 2 March 1974, GKM made a public

issue of 1,500,000 new shares and offer

for sale of 900,000 shares by George Kent

Ltd, England, with 1,150,000 shares

reserved for Bumiputras in connection with

its application to seek listing on the Kuala

Lumpur Stock Exchange (KLSE) and the

Stock Exchange of Singapore Limited

(SES). GKM’s entire issued and paid up

share capital of $6,000,000 comprising

6,000,000 ordinary shares of $1.00 each

was granted official quotation on the

KLSE and the SES on 15 April 1974.

1951

On 2nd January, 1951, George Kent

(Malaya) Ltd was incorporated in the

Federation of Malaya as a wholly-owned

subsidiary of George Kent Limited.

1956

A workshop was opened in Singapore,

mainly to repair Kent water meters,

maintain and upkeep Kent flow, level and

pressure recorders bought by the

Singapore Municipality.

1962

A branch office was set up at Jalan Ipoh in

Kuala Lumpur to sell Kent instruments in

the Klang Valley.

1963

An Industrial Fittings Division and a

Petroleum Marketing Equipment Division

were established by the Company.

1964 The name of George Kent (Malaya) Ltd

was changed to George Kent (Malaysia)

Limited in July 1964.

1965

A wholly owned subsidiary, George Kent

(Singapore) Pte Ltd, was incorporated on

8 September 1965.

The Company moved from Penang to its

premises at No. 2, Lorong 19/1A, Petaling

Jaya, Selangor in November 1965.

Assembly of water meters had

commenced by then.


1991

GKM established an Export Division to

market its expertise and products to the

Asean countries.

GKM established a branch office in Johor

Bahru and a representative office in Kota

Kinabalu, Sabah.

1995

GK-Hardie Sdn Bhd, a 55% subsidiary in

joint venture with James Hardie Plumbing

& Pipelines Pty Ltd of Australia,

commenced commercial production of

high quality plastic pipes for the water

related industry. The RM20 million plant

was located on a 14,951 sq. m site on Lot

20, Rawang Integrated Industrial Park,

Rawang, Selangor.

The Infrastructure Division successfully

completed the contract for design and

build 50 MLD New Gemas Water Supply

Turnkey Project.

1997

In May 1997, Brass Alloys Sdn Bhd’s

brass rods extrusion plant was awarded

full ISO 9002 quality accreditation.

During the year, the Water Infrastructure

Division secured the concession for the

operation and management of the Mt.

Eriama Water Treatment Plant in Port

Moresby, Papua New Guinea. The Group

invested in a 19% equity interest in PNG

(Water) Ltd. which holds the US$120

million concession for this water treatment

plant. A wholly-owned subsidiary, George

Kent (PNG) Pty. Ltd. was incorporated as

sole operator and maintenance contractor

for this project.

In December 1997, GK-Hardie Sdn Bhd

became the first manufacturer in Malaysia

to receive the ISO 9002 quality certification

for its UPVC and polybutylene pipes

manufacturing process. With this

certification, all manufacturing companies

in the GKM Group have attained ISO 9002

quality accreditation for their manufacturing

processes.

1998 Infrastructure Division completed the

160 MLD Lat Krabang distribution

pumping station turnkey contract for the

Metropolitan Waterworks Authority,

Bangkok, Thailand. Also completed a

contract for upgrading and rehabilitation

of Sungai Batu and Sungai Rangkap

water treatment plants in Selangor.

1996

GKM secured a contract from KLCC

Berhad for the security and card access

control system for Petronas Twin Towers.

GKM also secured contracts to supply the

FRP-panel water tanks and valves for the

Twin Towers.

GKM received the “Best Class A

Contractor” award from Jabatan Bekalan

Air Negeri Sembilan for the exemplary

overall performance in the New Gemas

Water Supply Turnkey Project .

In the 4th quarter of 1996, the Group’s

head office and manufacturing plants were

relocated to a newly built RM42 million

integrated faci l i ty, George Kent

Technology Centre, on a 17 acres site in

Jalan Dengkil, Puchong, Selangor.

In October 1996, GKM was awarded full

compliance of ISO 9001:2000 certification

standards for the production of water

meters, brass fittings and FRP panels for

water tanks using the MMD manufacturing

process.

1993

Brass Alloys Sdn Bhd, a wholly owned

subsidiary, successfully commissioned its

RM20 million integrated brass extrusion

plant on a 1.2 hectare site at Lot 6491, 6th

Mile, Mukim of Kapar, Klang, Selangor.

Commercial production of brass rods

commenced in February 1993.

1994

A new Regional Business Development

Division was established to market GKM’s

expertise and products in the Asia Pacific

region. This Division was successful in

securing orders for its products from

Thailand, Vietnam, Indonesia and

Philippines.

HISTORY OF



of Su g

water treatment plants in S


Embrace the Future

1936 ~ 2011


HISTORY OF


1999 The completion of two large projects by

the Infrastructure Division _ the Sungai

Kelinchi and the Sungai Linggi projects in

Negeri Sembilan.

GKM in joint venture with a local

construction company was awarded the

RM366 million contract for the Rasa Water

Treatment works for the Sungai Selangor

Water Supply Scheme _ Phase 3 in

Selangor.

2004 Manufacturing Division which operates the

largest hot brass-stamping and water

meter manufacturing plant in South _ East

Asia is accredited with ISO 9001:2000.

The Infrastructure Division also secured

several water projects including the 100

MLD raw water booster pump station at

Mt. Eriama, Port Moresby, the 100 MLD

water transfer from Muar river to Talang

dam in Kuala Pilah, Negeri Sembilan and

the National sewerage treatment plant

project _ Package A.

2009

On 16 February 2009, George Kent

secured the RM 97.75 million contract

from the Ministry of Health, Malaysia to

design, build, complete, and commission

& maintain upgrading works for the Kuala

Lipis Hospital, Pahang. The project is

scheduled to be completed by 25 August

2011.

2010

In June 2010, George Kent in joint venture

with two parties secured the Package 3A

of the inter-state raw water transfer

project, Semantan Intake And Pumping

Station Works, valued at RM317.6 million.

The project is scheduled to be completed

in May 2014.

In July 2010, George Kent secured the

RM129.8 million project to construct and

complete a 160 MLD Water Treatment

Plant in Pancing, Kuantan, Pahang in joint

venture with Leika Sdn Bhd. The project is

scheduled to be completed in August

2013.

History was created in George Kent in

December 2010 when the Manufacturing

Division achieved the 1st ONE MILLION

Water Meters within one financial year.

2005

Industrial Equipment Dept FRP business

unit secured a contract from Sekisui Aqua

Systems Co. Limited of Japan to supply

the water tanks and accessories for the

global markets for 3 years.

2006 Manufacturing Division works towards

achieving the ISO 14001:2004

Environmental Management System

certification.

The Export Division started propecting for

business in the South Asian and African

countries.

2007 The Infrastructure Division works towards

achieving the ISO 9001:2000 certification

for its engineering operations.

In April 2007, George Kent embarked on

initiatives to re-engineer, transform and

streamlined its businesses into four core

divisions, namely, Meters, Manufacturing,

Contracts and Industrial/Systems Divisions.

This is in line with the objective of having

better focus and emphasis in growing the

businesses significantly in meeting the

strategic five years plan.2000 The Manufacturing Division launched a

new series of industrial Multijet water meter

for the export market.

Infrastructure Division successfully

completed the contract for rehabilitation

and upgrading of the Sungai Linggi Water

Treatment Plant (from 70 MLD to 130

MLD) in Negeri Sembilan.

2001

Infrastructure Division successfully

completed Stage 1 works for the Sungai

Selangor Water Supply Phase 3 Project.

2002 GKM won the “Builders Award _

Mechanical & Electrical Works Category

Mechanical Project” by Construction

Industry Development Board (CIDB) for its

outstanding performance in the

implementation of the 250 MLD Rasa

Headworks and Bulk Transfer Works

(Stage 1) _ Sungai Selangor Water Supply

Scheme Phase 3 Project.

2003 GKM secured several landmark projects:

The Central Kedah water supply project in

Gurun, Kedah, and the upgrading works

for a new 50 MLD filtration plant in Mount

Eriama, Port Moresby, PNG.


HISTORY OF


The Company commenced operations in Penang

as a service branch office of George Kent Ltd,

United Kingdom

1936

Branch office in Perak Lane, Penang

1950’s

United Kingdom

The Head Office was relocated from Penang to No. 2, Lorong 19/1A, Petaling Jaya in November 1965

1996

The Manufacturing plant started operations at Lot 4&6,

Jalan Pahat 16/8A, Shah Alam, Selangor Darul Ehsan

55

196919991965

GKM’s Head Office in Petaling Jaya and Manufacturing plant in Shah Alam were relocated in December 1996 to the RM42 million integrated facility, George Kent Technology Centre on a 17 acres site in Jalan Dengkil, Puchong.


Embrace the Future

1936 ~ 2011


Great changes may not happen right away,

but with whole-hearted efforts

even the most difficult one

can be accomplished


The Company started business way back in 1936 as just a branch office in Penang, established by George Kent, Luton, United Kingdom. Work performed during this early period were repairs and maintenance of water meters, venture recorders, steam flow indicators and waste-not taps for public stand pipes.

Today, George Kent is recognised as the leading engineering group specialising in water works construction; the largest manufacturer of water meters, water works components and brass products. Our Plant on a 17 acres site in Puchong, Selangor Darul Ehsan, is the largest brass stamping plant in South East Asia; and possibly the largest water facility in a single location in the world outside the United States and China. The “George Kent” brand is a household name across the world. In 2010, we achieved a record output of 2,000,000 completed household water meters and housings, not including other components.

Over the years, many things have changed. Towards the tail end of the last century, the world has changed even faster. Globalization and the introduction of technology especially, the internet, has completely changed the shape of business. It is now becoming more competitive and companies have to move at an even faster pace to keep up with the ever increasing changes in the business environment. The influences shaping business and competition in this technology fuelled environment is a call for action to companies which want to stay ahead of these trends in order to remain competitive. The world is moving faster than we can keep up. Companies must learn to learn, teaching itself to stay curious and innovative, if it is to excel in the global economy. To survive and stay ahead of competitors, companies must adapt to new realities quickly, whether these be unexpected technologies, emerging markets or rule-changing innovations.

George Kent’s Transformation journey began on 12 May 2007, when the Chairman launched the 1st GKM Management Conference to share his vision of a new George Kent to make the Group more competitive and innovative for a fundamental shift in the Group’s performance. The Transformation initiatives implemented to re-engineer and change the way George Kent conducts its businesses were as follows:

(i) Streamlining its businesses under four (4) core divisions, namely (1) Meters, (2) Manufacturing, (3) Contracts and (4) Industrial/Systems Divisions.

(ii) Re-examining its talent resources, succession planning readiness, performance management systems, reward and compensation systems to bring about the needed organisational changes crucial to its long term corporate success and competiveness.

(iii) Re-defining the Group’s strategic thrust and forward planning to capitalise on new business opportunities and growth avenues hitherto untapped and uncontested.

The success of the Transformation initiatives were reflected in the following FYE results of GKM Group:

31 Jan.‘08 31 Jan.‘09 31 Jan.‘10 31 Jan.‘11

(RM’000) (RM’000) (RM’000) (RM’000)

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

Profit before tax 13,051 14,618 26,095 32,458

Profit attributable to shareholders 8,882 11,193 19,866 24,799

Shareholders’ Fund 122,579 135,585 148,116 163,510

Dividend per share - 3.5 sen 4.0 sen 5.0 sen

The strategic plan under the Transformation initiatives is:

1) To build George Kent into a company with substantial investments in water infrastructure with specialised engineering capabilities in the region.

2) To develop George Kent into a leading water meter supplier in the region.3) To develop George Kent into a major international supplier of waterworks products by capitalising on the “George Kent” brand

name.

To this end, the Transformation Journey that we started in May 2007 continues.

TRANSFORMATION JOURNEY

AND THE WAY FORWARD


Embrace the Future

1936 ~ 2011


Revenue(RMmillion)

Profit before tax(RMmillion)

Total assets(RMmillion)

1110090807 1110090807 1110090807

165

125

107

9094

32

26

1513

11

230

207

174156

166

Shareholders’ funds(RMmillion)

Earnings per share(sen)

Net assets per share(sen)

1110090807 1110090807 1110090807

164148

136123

113

11.0

8.8

5.03.93.6

72.665.8

70.477.9

71.7

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

High (RM) 0.94 1.20 1.55 1.57 1.45 1.45 1.41 1.33 1.31 1.25 1.25 1.25 1.23 1.19 1.20 1.19

Low (RM) 0.86 0.92 1.13 1.17 1.23 1.28 1.21 1.15 1.17 1.16 1.15 1.09 1.08 1.06 1.10 1.04

Total Volume (million) 19 132 217 79 38 17 9 11 14 13 9 22 5 5 11 8

-10

40

90

140

190

240

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

Volume Price Share Performance in 2010/2011

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

FIVE-YEAR GROUP FINANCIAL HIGHLIGHTS


FIVE-YEAR GROUP FINANCIAL HIGHLIGHTScont’d

Year Ended 31 January

2011 2010 2009 2008 2007

RM’000 RM’000 RM’000 RM’000 RM’000

Restated

INCOME STATEMENT

Revenue 165,037 124,813 106,933 89,832 93,777

Profit Before Tax 32,458 26,095 14,618 13,051 10,836

Income Tax 7,659 6,229 3,410 4,079 2,609

Profit for the year 24,799 19,866 11,193 8,882 8,081

BALANCE SHEET

Total non-current assets 82,755 79,713 78,709 74,154 78,701

Total current assets 147,679 126,901 95,348 81,995 87,748

Shareholders’ fund 163,510 148,116 135,585 122,579 112,756

Minority Interest 0 0 0 913 823

Shareholders’ Equity 163,510 148,116 135,585 123,492 113,579

Total non-current liabilities 13,415 15,253 16,888 12,551 21,507

Total current liabilities 53,509 43,245 21,584 20,106 31,363

SHARE INFORMATION

Per Ordinary Share

Earnings, fully diluted basis (sen) 11.00 8.80 5.00 3.90 3.60

Dividend – gross (sen) 5.00 4.00 3.50 - -

Net assets (sen) 72.60 65.80 70.40 77.90 71.70

Share price as at 31 January (RM) 1.20 0.880 0.500 0.520 0.565

FINANCIAL RATIOS

Return on equity (%) 15.17 13.40 8.30 7.20 7.20

Net Debt – equity ratio (Note 1) Nil Nil Nil Nil 0.1 : 15.8

Note 1: Net Debt comprise current and non-current bank borrowings, hire purchase and finance lease liabilities less cash and bank balances.


Embrace the Future

1936 ~ 2011


Dear Shareholders,

On behalf of your Board of Directors, I am pleased to present the Annual

Report of George Kent (Malaysia) Berhad for the financial year ended

31 January 2011.

ECONOMIC AND BUSINESS ENVIRONMENT REVIEW

Whilst the economy in the United States and parts of Europe remained in the doldrums during 2010, recovery in Asia, under its own steam, continues to surge ahead due to better growth prospects driven by strengthening domestic demand and a more robust financial sector. However structural issues such as high unemployment, a fragile financial sector and weak fiscal policies facing advanced economies posed downside risks to this growth outlook, given Asia’s dependence on export demand.

The Malaysian economy registered commendable growth rate of 7.2% in 2010, underpinned by strong domestic demand and recovery in exports, supported by the Government’s proactive stimulus packages and accommodative monetary policies. 2010 also saw the Government setting in place the necessary measures to start the National Transformation Programme to support sustainable growth and to achieve its objectives of Malaysia becoming a developed and high income nation in 2020.

In tandem with growth of economies in the Asian countries, Singapore, Indonesia and Hong Kong registered growth rates of 14.5%, 6.1% and 6.8% respectively in 2010, all higher than the respective countries’ initial forecasts at the beginning of the year.

FINANCIAL REVIEW

I am delighted to report that for the financial year under review, your Group achieved commendable performance, achieving an all time record profit before tax of RM32.458 million. Highlights of financial results are as follows:

million)

Your Group’s excellent performance was attributed to the higher sales of meters, OEM products and project related jobs.

DIVIDENDS

For the financial year ended 31 January 2011, your Company paid an interim dividend of 2.0 sen per share less 25% tax on 11 November 2010.

CHAIRMAN’S STATEMENT


As announced on 11 March 2011, your Board has recommended, subject to shareholder’s approval at the forthcoming Annual General Meeting, a final dividend of 3.0 sen per share less 25% tax. This will bring the total gross dividend to 5.0 sen per share declared for the financial year ended 31 January 2011. In monetary term, the total net dividend payout in respect of the financial year under review will be RM8.448 million (2010: RM6.684 million).

BUSINESS OUTLOOK AND PROSPECTS

The Asian economies, including Malaysia’s, are on track to achieve more sustainable growth rates. Proactive fiscal stimulus measures, strong domestic demand, robust regional demand for Asia’s exports and accommodative monetary policies will remain the key drivers of Asia’s resilience compared to the advanced economies. We expect 2011 to be a better year, however the sovereign debt issue in Europe and rising inflationary pressures are expected to spill over to 2011. The recent upheaval in the Middle East may also negatively affect the global economy and cause oil prices to escalate, further aggravating inflationary pressure. In view of these challenges, your Group will continue to strive for sustainable growth and to enhance our competiveness going forward.

Your Group’s main focus moving forward, is to continue with the upgrading of production capabilites in our manufacturing plant in Puchong over the next 3 years to increase water meters production and for the manufacture of high quality OEM products. We will seek new regional markets and strategic affiliations with major regional players. Your Group has been marketing water meters to Vietnam for many years and it is our plan to further penetrate this and other Asian markets. We continue to pursue major works in infrastructure projects in water, waste water and in the healthcare industry.

Your Group will capitalise on the opportunities arising from the bold initiatives implemented by the Malaysian Government to stimulate the economy which will benefit the private sector. With the improving economic environment, your Group is optimistic of its prospects for the current year.

ACKNOWLEDGEMENT

Pursuant to Section 129 of the Companies Act, 1965, Dato’ Ir. Haji Zaidan bin Haji Othman, age 78, vacates his office as Director at the forthcoming Annual General Meeting of your Company to be held on 7 July 2011. He has intimated that he does not wish to offer himself for re-appointment.

On behalf of your Board of Directors, I would like to thank him for his valuable contribution and wise counsel to the Group during his 23 year tenure of office. We wish to convey our best wishes to him and to wish him well.

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

TAN SRI DATO’ TAN KAY HOCKChairman27 May 2011

CHAIRMAN’S STATEMENTcont’d


Embrace the Future

1936 ~ 2011


MANAGEMENT ANALYSIS & REVIEW

Manufacturing

The Manufacturing Division operates the largest hot brass forging

plant in South East Asia for the production of internationally

certified water meters for standard household applications and

specialised industrial usage. Its integrated plant on a 17 acres

site in Puchong, Selangor Darul Ehsan, Malaysia is accredited

with full compliance of ISO 9001:2000 certification standards

for the production of water meters, brass fittings and Fibreglass

Reinforced Polyester (FRP) panels for water tanks as well as

ISO14001:2004 Environmental Management System. This plant

is one of the largest single location water meter manufacturing

facilities in the world. The water meters produced by George

Kent are ISO Class ‘C’ rated water meters, the preferred

standard in Malaysia and many other countries worldwide. The

water meters manufactured by the Group are exported to more

than 20 countries worldwide and continuing to make inroads

into new export markets. In addition to meters, the plant also

manufactures a multitude of brass products and components

ranging from waterwork fittings, stopcocks, ferrules, housings,

brass parts, ball float control valves and high quality FRP water

tanks. The plant serves as the in-house manufacturer for the

Meters and Industrial Products Divisions as well as contract

manufacturer of OEM parts and products of the Group’s local

and overseas customers.

The Manufacturing Division achieved production of 2 million

units of water meters and water meter housing during the

financial year under review. Revenue from its OEM contract

manufacturing business for the year under review was 66.3%

higher when compared to the previous year due to sales to new

OEM markets and recovery in the global economy since the

beginning of the financial year under review.

Going forward, the Manufacturing Division’s strategic thrust is to

continue intensifying its efforts to secure more orders for OEM

contract manufacturing, an important revenue stream for the

Group. The Group will capitalise on its long term experience in

working with business partners worldwide to generate a win-

win situation. In this respect, the Company had since the 4th

quarter of 2009 embarked on its 5-year facilities upgrade plan to

increase the production capacity of both meter and non-meter

products. The first phase of the expansion plan was completed

in January 2011 with the purchase of machineries and

equipments which enabled water meters production capacity to

be increased by 30%. The second phase, involving purchase of

additional machineries has commenced and upon completion

will double its water meter production capacity.

George Kent Group has two (2) core business units namely, Manufacturing,

Meters & Industrial Products (MMI) and Infrastructure Investment, Water &

Construction (IWC). Its core businesses are centred in the Water Industry.

MANUFACTURING, METERS & INDUSTRIAL PRODUCTS


MANAGEMENT ANALYSIS & REVIEWcont’d

Meters

The Group is a major supplier and distributor of water metering

products to a large number of water authorities in the various

states of Malaysia and also exports significant quantities to

several ASEAN countries. Its diverse product range includes

meters used for residential, industrial and commercial sectors

and offers a complete solution in consumption measurement,

network monitoring and distribution application.

The Meters Division’s revenue for the financial year under review

was higher by 12.3% compared to the previous financial year.

The increased demand for the Group’s water metering products

was due to its success in recapturing some of the water meters

contracts lost previously.

With the shifting of the centre of the global economic growth to

the East Asia region, the demand for basic infrastructure and

related supporting products is set to increase. In this respect,

the Group is well position to benefit from this growth in potential

businesses. Meanwhile, the Group will continue to improve its

efficiencies and product quality so to maintain its leadership

position in the local market and remain competitive in both the

local and export markets.

Industrial Products

The Industrial Products Division comprises non-meters supplies,

trading and industrial equipment supply and installation

businesses which include: brass components, fittings and

parts for waterworks used specifically by the plumbing industry

and distributed through a network of hardware dealers and

agents under the brand name of “George Kent”; FRP water

tanks manufactured under licence from Sekisui Aqua Systems

of Japan; industrial boilers under the Garioni, Fulton and

Wanson brands and other oil heating products under agency

distribution from other established international manufacturers;

and instrumentations that include leak detection equipments,

analytical instruments, recorders & controllers, pressure and

level measurement equipments, gauges and dead weight tester

& calibrators.

The current range of products under the Industrial Products

Division also include stopcocks, bibtaps, ferrules, ball float

valves, brass ball valves, lockable valves, angle valves, brass

gate valves, ductile iron resilient seat sluice valves, ductile

iron gate valves, and cast/ductile iron saddles and fittings and

others.

The Group has sought to deepen and extend its industrial

products distribution channels locally and overseas through

establishing a network of agents and distributors involved in the

hardware trade or building materials supply chain to provide a

consistent level of stocks and customer service. Exports remain

a key driver for the FRP water tanks manufactured locally due to

their high material grade and quality of finishing.


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Infrastructure Investment

The Group invests in long term infrastructure assets as well as

managing the operation and maintenance for such assets.

The Group’s infrastructure investment in PNG Water Ltd (PWL)

in Papua New Guinea under a 22-year concession to supply

processed water to the capital city of Port Moresby, continues

to contribute significant returns on investment. The Group’s

wholly owned subsidiary, George Kent (PNG) Limited (“GKPNG”)

is the operation and maintenance contractor for PWL’s water

treatment plant. Both PWL and GKPNG are expected to provide

recurring income contribution to the Group’s Contracts Division

over the remaining concession period.

The Group is consistently exploring opportunities to increase

its recurring income base by extending its investment in

infrastructure assets as well as the operation and maintenance

operator for the invested assets.

Water and Construction

The Water and Construction Division bids for mechanical and

engineering contracts for water infrastructure related projects

and non-water related projects with high mechanical and

engineering contents. The Group has successfully completed

over 26 major water-supply contracts in the past 20 years. The

projects are of a varied nature, ranging from construction and

rehabilitation, operation and maintenance of treatment plants;

laying of pipelines and etc. The Company is also a specialist in

turnkey construction of major water supply projects.

As at 31 January 2011, the RM97.75 million contract to

construct and upgrade a new 106-bed hospital at Hospital Kuala

Lipis in Pahang for the Ministry of Health was 78% completed.

The works include the design and building of medical facilities

for a 6-storey medical ward, operating theatres, car park,

building amenities and services for the said new hospital wing.

The contract is expected to be completed during the current

financial year.

During the financial year under review, the Company, together

with its joint venture partners was successful in securing the

following contracts:


INFRASTRUCTURE INVESTMENT, WATER AND CONSTRUCTION DIVISION


i. Pahang-Selangor raw water transfer project, lot 1-3A

Semantan intake pumping station and related works with

contract value at RM317.6 million; and

ii. Construction and completion of Panching water treatment

works in Kuantan, Pahang, for the East Coast Economic

Region Development (Package 1) with contract value at

RM129.8 million.

The Company’s portion of the works for the above contracts

constitutes approximately 50% of the contract value.

The Group continues to explore business opportunities

to participate in large-scale civil engineering and building

construction works under the 10th Malaysia Plan plus other

water-related infrastructural or mechanical & engineering works.

In this respect, the Group is currently tendering/bidding for

infrastructure projects with value exceeding RM1 billion.

With the plan of providing a total solution in the provision of

mechanical and engineering services, the Group has developed

a strong capability in installation, implementation and the

maintenance of industrial/automation system applications

of commercial buildings and key industrial installations such

as water treatment plants, petrochemical complexes, ports,

telecommunications hubs, or transportation terminus where

security and flow management of day-to-day operations/

transactions/processes are critical and/or prone to security

risks and disruption. These products/systems include building

surveillance systems, building automation/access cards,

SCADA and telemetry systems and flow control processes.

Beside complementing the Group in securing construction

projects, this business unit is also serving non-project related

customers. Leveraging on the Group’s expertise and extensive

experience in this area, the Group is also seeking opportunity to

extend the business reach of this segment.



Embrace the Future

1936 ~ 2011


EVENT HIGHLIGHTS

3 February 2010

Analysts’ Briefing cum Factory Visit to GKM

8 February 2010

Staff Appreciation Dinner in Quality Hotel Kuala Lumpur

22 February 2010

Lion Dance & Chinese New Year Staff Luncheon in GKM

10 April 2010

Kelab Sukan George Kent Annual Dinner in Klang Executive

Club

23-24 April 2010

Sales Management Seminar – “The Art of Innovative Selling”

8 May 2010

George Kent Family Day & Tree Planting

22 May 2010

7th Management Conference

1 June 2010

Kuala Lipis Hospital Project Topping – Up Ceremony

18 June 2010

Commencement of ERP Foundation Training for all staff

22 June 2010

Career Fair in INTI University College in Nilai

24-25 June 2010

Microsoft Project Application Training

26 June 2010

Tan Sri Dato’ Tan Kay Hock Badminton Challenge Trophy


EVENT HIGHLIGHTScont’d

9-10 January 2011

Change Agents’ Teambuilding in Malacca

12 January 2011

George Kent’s 1st One Million Water Meter Celebration at

George Kent Technology Centre, Puchong.

4-5 July 2010

Budget Review Brainstorming in Lumut for all Change Agents

31 July 2010

CPR Safety Training Course

4 October 2010

Hari Raya Puasa Staff Luncheon

23 October 2010

8th Management Conference

30 October 2010

Kejohanan Ping Pong Kelab Sukan George Kent

13 November 2010

Sales Management Seminar “Next Step to Breakthrough

Sales”

23 December 2010

Professional Career in Engineering Talk by IEM

31 December 2010

Annual GKM Badminton Tournament between Office & Factory

Employees


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1936 ~ 2011


PROFILE OF DIRECTORS

Name TAN SRI DATO’ TAN KAY HOCK DATO’ IR. HAJI ZAIDAN BIN HAJI OTHMAN

Age 63 78

Nationality Malaysian Malaysian

Qualification Barrister-at-Law Master of Science in Engineering from Northwestern University, USA, Postgraduate Diploma in Highway & Traffic Engineering from Kings College, Durham University, England and Diploma in Civil & Structural Engineering from Brighton Technical College, England.

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

Director(Independent Non-Executive Director)

Date of Appointment 14 January 1982 27 June 1988

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

More than 40 years of experience in the engineering industry, and had held the positions of Director of Highway Planning Unit (1972 _ 1980), Director General in Lembaga Lebuhraya Malaysia (1980 _ 1984) and Deputy Director General of Jabatan Kerja Raya Malaysia (1984 _ 1988)

Other directorships of public companies

Johan Holdings BerhadJacks International Limited

NIL

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

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

NIL

Conflict of interest with the Company NIL NIL

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

NIL NIL

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

Member of the Audit Committee and Remuneration Committee.


PROFILE OF DIRECTORScont’d

PUAN SRI DATIN TAN SWEE BEE ONG SENG PHEOW

64 62

British Citizen Malaysian

Barrister-at-Law Certified Public Accountant (Malaysia)Member of the Malaysian Institute of Certified Public AccountantsMember of the Malaysian Institute of Accountants

Director (Non-Independent Non-Executive Director)

Director(Independent Non-Executive Director)

11 October 1989 13 September 2004

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

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

Johan Holdings Berhad Jacks International Limited

Daiman Development BerhadLCTH Corporation BerhadRHB Bank Berhad HELP International Corporation BerhadRHB Insurance Berhad

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

NIL

NIL NIL

NIL NIL

Member of the Remuneration Committee and ESOS Committee.

Chairman of the Audit Committee and Risk Management Committee.


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1936 ~ 2011


PROFILE OF DIRECTORScont’d

Name DATO’ PADUKA PROF. (DR.) IR. HJ. KEIZRUL BIN ABDULLAH

IR. DR. CHEONG THIAM FOOK

Age 59 56

Nationality Malaysian Malaysian

Qualification Fellow (F1691), Institute of Engineers, Malaysia (IEM)Registered Professional Engineer (4133 Civil), MalaysiaFounding Fellow (0078), ASEAN Academy of Engineering and TechnologyFounding Member, Malaysian Hydrology Society (MHS)Member, International Association of Hydrological Sciences (IAHS)

BSc in Mechanical EngineeringMaster in Energy Technology PhD in Manufacturing Management

Position on Board Director(Independent Non-Executive Director)

Director(Non-Independent Executive Director)

Date of Appointment 8 December 2009 10 December 2008

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

He is responsible for all business units in the Group. He has over 25 years of experience in the building and construction services industry and as Project Manager in the successful completion of many projects including high-rise buildings, industrial plant and public infrastructure projects such as Star LRT System Phase 1 & 2.

Other directorships of public companies

Wetlands InternationalKimlun Corporation BerhadMalaysian Green Technology Corporation

NIL

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

NIL NIL

Conflict of interest with the Company NIL NIL

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

NIL NIL

Committee Member of the Audit Committee Member of the Risk Management Committee.


EXECUTIVE DIRECTOR

Ir. Dr. Cheong Thiam Fook, aged 56, is the Executive Director responsible for the entire operations of the Group. He holds a BSc

in Mechanical Engineering, a Master in Energy Technology and a PhD in Manufacturing Management. He is Fellow member of the

Institute of Engineers, Malaysia and a registered Professional Engineer with the Board of Engineers, Malaysia. He has over 25 years of

experience in the building and construction services industry and as Project Manager in the successful completion of many projects

including high-rise buildings, industrial plant and public infrastructure projects such as Star LRT System Phase 1 & 2.

SENIOR MANAGERS

(in alphabetical order)

Chan Kim Chuan, aged 61, is the General Manager of the Meters, Manufacturing and Industrial Division. He has served the Company

for over 38 years and has experience in factory, engineering and manufacturing management. He is responsible for the development,

manufacturing and marketing of meters and industrial products and OEM-manufacturing services and products.

Kong Chee Khoon, aged 47, is the General Manager Corporate Affairs of the Company. He is a fellow member of the Association of

Chartered Certified Accountants and a member of the Malaysian Institute of Accountants. He has more than 15 years of corporate

finance related experience in his prior engagement with a local conglomerate. Mr Kong is primary responsible in the corporate finance

activities of the Group.

Ir. Thong Koon Choon, aged 56, a registered professional engineer is the General Manager of the Contract Division. He holds a

BSc in Civil Engineering from University of Portsmouth, a MBA from University of Strathclyde and a CDipAF from ACCA, UK. He is a

member of MIEM, MICE, MCIWEM, MMWA, C Eng (UK), P Eng (Malaysia). He has more than 30 years of working experience in the

Water and Wastewater sectors covering Consultancy, Turnkey Contracting, Contracts Management and Sub-Contracting. Key areas

of expertise and knowledge covers design, project management, contract administration, site supervision, marketing and business

development of the Water and Wastewater business.

SENIOR MANAGEMENT


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STATEMENT ON CORPORATE GOVERNANCE

The Board is committed to ensuring high standards of corporate governance throughout the Group and endeavours to ensure

consistency of policies and procedures of the Group of companies in different geographical regions. This statement illustrates the

extent of which the Board has embodied the spirit and principles of the Malaysian Code on Corporate Governance (“The Code”). The

Code formalises management practices that have generally been adopted by the Board for some time now. Unless otherwise stated

below, the Company is in compliance with the requirements of the Code.

A. BOARD OF DIRECTORS

(i) Board Composition

The Board currently has six (6) members, comprised of one (1) Executive Director and five (5) Non-Executive Directors,

three (3) of whom are Independent Directors. Together, the Directors have a diverse wealth of experience as well as skills

and knowledge in law, engineering, accounting and general management. The profile of each Director on the current

Board is included in Pages 20 to 22 of this Annual Report.

There is clear segregation of responsibilities between the Chairman and Executive Directors to ensure a balance of power

and authority. The role of the non-executive Directors is particularly important as they provide unbiased and independent

view, advice and judgement to fulfil a pivotal role in corporate accountability.

(ii) Duties and Responsibilities

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

following:

Company and within the Group;

(iii) Supply of Information

All Directors are provided with an agenda and a set of Board papers prior to each Board Meeting to be convened. Board

papers are circulated in sufficient time to enable Directors to obtain further explanation, if necessary, in order to be properly

briefed before each meeting. Board members are supplied with full and timely information necessary to enable them to

discharge their responsibilities. Senior management staffs are also invited to attend Board Meetings when necessary to

provide the Board with further explanation and clarification on matters being tabled for consideration by the Board.

The Board meets quarterly, scheduled to hold within two months of each quarter, to consider the quarterly financial results

and review operational performance. Additional meetings are convened as and when necessary.

All Directors have access to the advice and services of the Company Secretary and are updated on new statutory or

regulations requirements concerning their duties and responsibilities.

Newly appointed Directors are briefed by the Board, the Company Secretary and the members of the management on the

nature of business and current issues within the Company and the Group.


A. BOARD OF DIRECTORS cont’d

(iv) Board of Directors’ Meetings

During the financial year ended 31 January 2011, the number of Board of Directors’ Meetings held and the attendance of

each Director were as follows:-

No. of Board Meetings

Directors Held Attended

Tan Sri Dato’ Tan Kay Hock 4 4

Puan Sri Datin Tan Swee Bee 4 4

Dato’ Ir. Haji Zaidan Bin Haji Othman 4 3

Ong Seng Pheow 4 4

Ir. Dr. Cheong Thiam Fook 4 4

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

(v) Re-election of Directors

In accordance with the Articles of Association of the Company at least one-third of the Directors including the Managing

Director are required to retire by rotation at each Annual General Meeting but shall be eligible for re-election

The Articles of Association of the Company also provided that the newly appointed Director shall hold office until the

forthcoming Annual General Meeting and shall then be eligible for re-election.

Directors over seventy years (70) of age are required to submit themselves for re-appointment annually in accordance with

Section 129(6) of the Companies Act, 1965.

Details of Directors seeking re-election or re-appointment (as the case may be) as required under Paragraph 8.27(2) of the

Bursa Securities Listing Requirements are disclosed in the Statement Accompanying Notice of Annual General Meeting.

(vi) Directors’ Training

The Board encourages its Directors to attend talks, seminars, workshops and in-house conferences to update and

enhance their skills and knowledge and to keep abreast with developments in regulatory and corporate governance

issues. During the year the Directors in their individual capacity and as Director of other public listed companies in

Malaysia, had attended many courses, briefings and seminars, relating to risk management, corporate governance,

investors relations and financial statements reporting under IFRS. The latest seminar organised for Directors was entitled

“Compliance of the Listing Requirements – Expectations on Directors of Listed Companies” conducted by Bursatra Sdn

Bhd.

(vii) Board Committees

The Board had delegated certain responsibilities and duties to the following Board Committees which operate within

clearly defined terms of reference. These Committees as listed below do not have executive powers but report to the

Board on all matters considered and their recommendations thereon.

STATEMENT ON CORPORATE GOVERNANCEcont’d


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(vii) Board Committees cont’d

(a) Audit Committee

The Audit Committee currently is comprised of four (4) Non-Executive Directors as follows:-

1. Ong Seng Pheow (Independent Non-Executive Director) – Chairman2. Dato’ Ir. Haji Zaidan Bin Haji Othman (Independent Non-Executive Director)3. Tan Sri Dato’ Tan Kay Hock (Non-Independent Non-Executive Director)4. Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul Bin Abdullah (Independent Non-Executive Director) (appointed w.e.f. 31 March 2010)

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

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

The Audit Committee Report for the financial year pursuant to Paragraph 15.15 of the Bursa Securities Listing Requirements is contained in Pages 30 to 32 of this Annual Report.

(b) Risk Management Committee

The Risk Management Committee comprised of the following as members:-

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

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

(c) Remuneration Committee

During the financial year ended 31 January 2011, the Remuneration Committee comprised of two (2) Non-Independent Non-Executive Directors and one (1) Independent Non-Executive Director as follows:-

1. Tan Sri Dato’ Tan Kay Hock (Non-Independent Non-Executive Director) – Chairman2. Dato’ Ir. Haji Zaidan Bin Haji Othman (Independent Non-Executive Director)3. Puan Sri Datin Tan Swee Bee (Non-Independent Non-Executive Director)

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

The Remuneration Committee is also responsible for developing the Group’s remuneration policy and determining

the remuneration packages of senior executive employees of the Group.



(vii) Board Committees cont’d

(d) Nomination Committee

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

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

The ESOS Committee was established on 8 October 2003 to administer the ESOS of the Group implemented to be in force for a period of five (5) years commencing from 8 October 2003 to 7 October 2008. At the Annual General Meeting of the Company held on 28 July 2008, shareholders had approved the extension of the duration of the ESOS for another five (5) years expiring 7 October 2013. The ESOS Committee comprised of the following members:-

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

Up to 31 January 2011, a total of 443,000 option shares under the 1st tranche were exercised with 283,000 option shares remaining unexercised.

B. DIRECTORS’ REMUNERATION

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

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

The aggregate remuneration of the Directors for the financial year ended 31 January 2011 is as follows:-

Fees

Salaries

and Other

Emoluments

Benefits-

In-Kind Total

(RM’000) (RM’000) (RM’000) (RM’000)

Executive Directors

Ir. Dr. Cheong Thiam Fook - 483 25 508

Non-Executive Directors

Tan Sri Dato’ Tan Kay Hock 144 4 28 176

Puan Sri Datin Tan Swee Bee 72 - - 72

Dato’ Ir. Hj. Zaidan Bin Hj. Othman 45 10 - 55

Ong Seng Pheow 50 10 - 60

Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul Bin Abdullah 45 3 - 48

Total 356 510 53 919



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B. DIRECTORS’ REMUNERATION cont’d

The number of Directors whose remuneration falls within the following bands is as follows:-

Number of Directors

Range of Remuneration Executive Non-Executive Total

Below RM50,000 - 1 1

RM50,001 to RM100,000 - 2 2

RM300,001 to RM400,000 - 1 1

RM400,001 to RM500,000 - 1 1

RM500,001 to RM600,000 1 - 1

C. SHAREHOLDERS COMMUNICATION AND INVESTORS RELATIONSHIP POLICY

The Board acknowledges the need for shareholders to be informed of all material business and developments concerning the

Group. In addition to various announcements made during the year, the Board had ensured timely release of financial results

on a quarterly basis to provide shareholders with an overview of the Group’s performance and operations. Copies of the full

announcement are supplied to shareholders and members of the public upon request.

The Annual General Meeting is the principal forum for communicating with shareholders. Shareholders who are unable to attend

are allowed to appoint not more than two (2) proxies, who need not be the shareholders, to attend and vote on their behalf.

Board members as well as the Head of Finance & Control and the external Auditors of the Company are present to answer

questions raised by shareholders. Shareholders are given the opportunity to ask questions during the questions and answers

session prior to each resolution being proposed for consideration by shareholders.

Briefings to fund managers and analysts are held throughout the year. Corporate information of the Group is also available via

the Company’s website, www.georgekent.net.

D. ACCOUNTABILITY AND AUDIT

(i) Financial Reporting

The Board acknowledge their responsibility to ensure that the financial statements of the Company and the Group are

prepared in accordance with the provisions of the Companies Act, 1965 and approved accounting standards in Malaysia

so as to give a true and fair view of the state of affairs and the result of the Company and of the Group.

In preparing these financial statements, the Directors have:-

- adopted suitable accounting policies and applying them consistently;

- made judgement and estimates that are prudent and reasonable;

- ensured applicable accounting standards have been followed, subject to any material departures disclosed and

explained in the financial statements; and

- prepared the financial statements on a going concern basis.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any

time the financial position of the Company and the Group and to enable them to ensure that the financial statements as

prepared comply with the Companies Act, 1965. The Directors are also responsible for safeguarding the assets of the

Company and the Group and to take reasonable steps for the prevention and detection of fraud and other irregularities.


D. ACCOUNTABILITY AND AUDIT cont’d

(ii) Internal Control

The Board acknowledges its overall responsibility for ensuring that a sound system of internal control is maintained

throughout the Group and the need to review its effectiveness regularly. The Board recognises that risks cannot be totally

eliminated and the system of internal controls instituted can only help minimise and manage risks and provide some

assurance that the assets of the Company and of the Group are safeguarded against material loss and unauthorised use

and that financial statements are not materially misstated.

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

(iii) Relationship with External Auditors

A transparent and professional relationship with the external auditors to enable them to independently report to shareholders

in accordance with statutory and professional requirement is established through the Audit Committee. The role of the

Audit Committee members in relation to the external auditors is set out in the Audit Committee Report of this Annual

Report.

This Statement is made in accordance with the resolution of the Board of Directors dated 27 May 2011.



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AUDIT COMMITTEE REPORT

MEMBERS

Ong Seng Pheow Chairman (Independent Non-Executive Director)Dato’ Ir. Haji Zaidan Bin Haji Othman (Independent Non-Executive Director)Tan Sri Dato’ Tan Kay Hock (Non-Independent Non-Executive Director)Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul Bin Abdullah (Independent Non-Executive Director) (appointed on 31 March 2010)

A. TERMS OF REFERENCE

1. Constitution

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

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

2. Objectives

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

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

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

3. Duties and Responsibilities

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

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

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

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

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

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

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

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


B. MEETINGS

During the year ended 31 January 2011, the number of Audit Committee Meetings held and the attendance of each Director

were as follows:-

No. of Audit

Committee Meetings

Held Attended

Ong Seng Pheow (Chairman) 4 4

Dato’ Ir. Haji Zaidan Bin Haji Othman 4 3

Tan Sri Dato’ Tan Kay Hock 4 4

Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul Bin Abdullah (appointed w.e.f. 31 March 2010) 3 3

At these Committee Meetings, the Executive Directors, Head of Finance & Control Department together with the Internal Audit

Manager and representatives of the external auditors were as appropriate, in attendance to review with the Committee Members

the quarterly reports as the case may be focusing on going concern assumption compliance with accounting standards,

significant audit issues and internal controls.

After each Committee Meeting, the Chairman of the Committee reports to the Board on the proceedings conducted thereat and

to convey the recommendation of the Committee to the Board for its consideration.

The Audit Committee had also met with the External Auditors separately on an occasion without the presence of Executive

Directors and Senior Management.

C. ACTIVITIES

In line with the terms of reference of the Committee, the following activities were carried out by the Committee during the

financial year ended 31 January 2011 in the discharge of its functions and duties:-

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

auditors;

(ii) Review of the internal audit reports of companies within the Group prepared by the Internal Audit Department and Auditors’

Reports by the external auditors and consideration of the major findings by the auditors and management’s responses

thereto. Monitored the corrective actions on the outstanding audit issues to ensure that all the key risks and control lapses

have been addressed;

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

and approval;

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

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

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

AUDIT COMMITTEE REPORTcont’d


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1936 ~ 2011


AUDIT COMMITTEE REPORTcont’d

D. INTERNAL AUDIT FUNCTION

The Internal Audit Department was established in year 2006 to carry out internal audit function of the Group’s key operations

in Malaysia and overseas. The internal audit team assists the Audit Committee in providing assurance that a sound system of

internal controls exists by reviewing such controls and procedures of the Company and its subsidiaries. At the beginning of

each year, the audit programme would have to be approved by the Audit Committee and findings would be presented to the

Committee in a timely manner for their consideration. The internal audit team is independent and has no involvement in the

operations of Group companies.

The total cost incurred for the internal audit function for the year ended 31 January 2011 was RM115,000 (2010: RM67,000).

This Audit Committee Report has been reviewed and approved by the Board of Directors for inclusion in this Annual Report on 27

May 2011.


STATEMENT ON CORPORATE SOCIAL RESPONSIBILITY

The George Kent Group recognise Corporate Social Responsibility (“CSR”) as an integral part to our approach in managing our

businesses, creating value to our shareholders and enhancing the long term sustainability of our Group. Our Group believe in the concept

of CSR in going beyond business to fulfil our responsibilities towards the Environment, Community, Workplace and Marketplace.

THE ENVIRONMENT

The Group practice environmental preservation and maintain high standards of occupational and health management practices as

part of our commitment to our employees and society as a whole. George Kent had embarked on “resources conservation” since

we started our transformation initiatives back in 2007. The Energy Efficiency Management Team set up aims to achieve savings in

electricity bills and other energy cost of at least 15%. Other eco-friendly steps taken include recycling, air pollution controls, and waste

management. In conjunction with the Company’s Family Day held on 8 May 2010, we also had a Green Day which saw more than 100

trees being planted by the management in the perimeter of GKM’s factory site as a greening of the environment event.

George Kent’s manufacturing plant is fully ISO 14001 compliant. The plant also harvest rainwater for use in its test-bench operations

as well as utility washing and cleaning in general.

THE COMMUNITY

We believe in adding value to the communities in which we operate through providing support in diverse areas of social welfare.

We also encourage our employees to also participate in community projects and undertake voluntary works for fund-raising and

social welfare. The Group support and will continue to contribute to charity organisations which are directed in aiding the needy. In

conjunction with the launch of George Kent’s 75th Anniversary Celebration on 14 March 2011, the Company made a tax exempt

donation of RM500,000 to the MCA 1Malaysia Medical Foundation. This Foundation is to assist Malaysian citizens of all races with

limited financial capacity or medical insurance to pay medical expenses.

THE WORKPLACE

The Company is unwavering in its drive to make George Kent Technology Centre a learning organisation where staff training and

development are given continuous focus and emphasis. Our employees are central to our continued success of our businesses and

our reputation for service excellence.

Existing and new staff are given in-house training programmes such as leadership and team development programmes, management

trainee programmes and, internships etc. To upgrade their work skills and capabilities towards higher responsibilities and career

growth. Some of the staff welfare benefits include staff canteen subsidy, sponsorship of Family Day, local study trips, financial support

of staff sports and recreational amenities, festival celebrations and staff loan assistance. Senior management personnel are given

exposure to study trips overseas and senior management learning programmes are conducted by renowned institutions to widen

their horizon and talents.

On 8th May 2010, a Family Day with the theme “One Team One Spirit” was held in George Kent Technology Centre in Puchong,

attended by more than 800 employees and their family members. Besides a wide array of food and refreshments being provided, other

events include telematches, karaoke & colouring contests and entertainment of children by 2 clowns.

Since November 2008, a quarterly GKM Newsletter was published in-house to provide an additional channel of communication to

keep our staff informed of the Group’s developments.

In conjunction with its 75th Anniversary Celebration, the Company also launched the George Kent Education Fund as its long term

human capital development plan to provide University scholarships to eligible staff family members, Vocational College assistance to

qualified staff members and Management Trainee Programme to develop talents of staff in Engineering, Finance, Business and Law.


Embrace the Future

1936 ~ 2011


THE MARKETPLACE

We are committed to actively engage and respond to our shareholders, analyst, fund managers, customers, suppliers and government

and non-government bodies with a view to better relations and understanding.

We are committed to high ethical standards in the areas of marketing, advertising and procurement. We seek to protect our customers’

rights through responsive customer complaint and meeting with the strictest data protection requirements. We continue to monitor all

levels of our operations for efficiency to ensure that these are aligned with our corporate governance statements.

We maintain timely and open communications with our shareholders, analyst and fund managers so as to have a clear understanding

of the Group’s strategy, performance and growth direction. Details of the Company’s “Shareholders Communication and Investors

Relationship Policy” are found on the Statement on Corporate Governance on Page 28 of the Annual Report.

STATEMENT ON CORPORATE SOCIAL RESPONSIBILITYcont’d


STATEMENT ON INTERNAL CONTROL

The Malaysian Code on Corporate Governance requires listed companies to maintain a sound system of internal control to safeguard

shareholders’ investments and the Company’s assets. This Statement is prepared in accordance with Paragraph 15.26 (b) of the Main

Market Listing Requirements (“LR”) of Bursa Malaysia Securities Berhad.

BOARD RESPONSIBILITY

The Board recognizes its responsibilities for and the importance of sound internal controls and risk management practices and for

reviewing the adequacy and integrity of those systems. However it should be noted that such systems are designed to manage rather

than eliminate risk. Also any system can only provide reasonable and not absolute assurance against material loss or misstatement.

INTERNAL CONTROL

Internal audit plays a critical role in the objective assessment of the Group’s business processes by providing the Audit Committee

with reasonable independent assurance on the effectiveness and integrity of the Group’s system of internal control. Further, there are

organizational structures in place for each operating unit with clearly defined levels of authority. Operational management has clear

responsibility for identifying risks affecting their business and for instituting adequate procedures and internal controls to mitigate

and monitor such risks in an ongoing basis. Issues are brought to the Board’s attention regularly during Board meetings. Standard

operating policies and procedures that document how transactions are captured and where internal controls are applied exist for all

Group operating companies. As part of the performance monitoring process, management information in the form of annual budgets,

revised forecasts and quarterly management accounts and reports are provided to the Board for approval and review respectively.

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

Organisation Structure

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

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

Independence of Audit Committee

The Audit Committee currently comprises three (3) Independent Non-Executive Directors and one (1) Non-Independent Non-

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

Documented Internal Policies and Procedures

Key policies and control procedures regulating financial and operating activities are clearly documented in manuals for the

Group’s operations. Compliance with the controls set out in the manuals monitored by regular internal audit reviews. These

manuals are also subject to regular reviews and updates to take into consideration the changing business risks and to resolve

any operational deficiencies.

Detailed Budgeting Process

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

targets, performance indicators and capital expenditure proposals, which are reviewed by the Board. The Board approves the

consolidated Group budget with objectives for each operating unit.

Financial Reporting System

Detailed management accounts are prepared by each operating unit based on annual budget with monthly reports compared

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

Capital Expenditure Approval Process

The Group has formal procedures for the appraisal of major capital expenditure, which must be approved by the Board and

detailed procedures and authority levels relating to all other capital expenditure. There are also clear procedures for obtaining

Board approval for assets disposal and major business transactions.


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1936 ~ 2011


STATEMENT ON INTERNAL CONTROLcont’d

RISK MANAGEMENT

The Risk Management Committee, set up by the Board in September 2002, comprised of executive board members and senior

management to better identify and to review the risk profile of companies within the Group.

There is an ongoing process for identifying, evaluating and managing significant risks faced by the Group in the context of its business

objectives. Each major operating unit of the Group has produced a Risk Register which indentifies the key risks, their potential impact

and likelihood of occurrence as well as control strategies material risks are identified, analysed, treated, monitored and reported to the

Risk Management Committee and Audit Committee by various business units through the submission of Risk Profile that is reviewed

on a half-yearly basis.

INTERNAL AUDIT

The internal audit team assists the Audit Committee in providing assurance that a sound system of internal controls exists by reviewing

such controls and procedures of the Company and its subsidiaries. The internal audit team reports to the Audit Committee regarding

the effectiveness of the risk and control management and also recommends improvements in controls. The internal audit team is

independent and has no involvement in the operations of Group companies. At the beginning of each year, the audit programme is

agreed with the Audit Committee and findings are presented to the Committee on a timely manner for their consideration.

REVIEW OF EFFECTIVENESS

The Board is satisfied with the procedures outlined above and believes that the system of internal controls had continued to operate

effectively in the financial year under review.

As required by Paragraph 15.23 of the Listing Requirements of Bursa Malaysia Securities Berhad, the external auditors have reviewed

this Statement on Internal Control. Based on their review, they have reported to the Board that nothing has come to their attention that

caused them to believe that this Statement of Internal Control is inconsistent with their understanding with the procedures adopted by

the Board in the review of the effectiveness of the internal controls.

This Statement is made in accordance with the resolution of the Board of Directors on 27 May 2011.


MATERIAL CONTRACTS

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

SANCTIONS AND/OR PENALTIES IMPOSED

No sanctions and/or penalties were imposed on the Company and its subsidiaries, Directors or management by the relevant regulatory bodies during the financial year ended 31 January 2011.

NON-AUDIT FEES

Non-audit fees paid/payable by the Group and the Company to the external auditors and firm affiliated to the external auditors of the Company during the financial year ended 31 January 2011 amounted to RM26,000 (2010 : RM26,000).

SHARE BUYBACKS

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

OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES EXERCISED

81,000 share options under the Company’s Employees Shares Option Scheme were exercised during the financial year ended 31 January 2011.

The Company did not issue any warrants or convertibles securities during the financial year ended 31 January 2011.

VARIATION IN RESULTS FOR THE FINANCIAL YEAR

There was no deviation of 10% or more between the profit after tax and minority interest stated in the announced unaudited results and the audited accounts of the Company and the Group for the financial year ended 31 January 2011.

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

The Company did not sponsor any ADR or GDR programme during the financial year ended 31 January 2011.

REVALUATION POLICY ON LANDED PROPERTIES

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

PROFIT GUARANTEE

The Company has not given any profit guarantee during the financial year ended 31 January 2011.

UTILISATION OF PROCEEDS RAISED FROM ANY CORPORATE PROPOSAL

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

2011.

ADDITIONAL INFORMATION

DIRECTORS’ REPORT 40

STATEMENT BY DIRECTORS 45

STATUTORY DECLARATION 45

INDEPENDENT AUDITORS’ REPORT 46

STATEMENTS OF COMPREHENSIVE INCOME 48

STATEMENTS OF FINANCIAL POSITION 49

STATEMENTS OF CHANGES IN EQUITY 51

STATEMENTS OF CASH FLOWS 54

NOTES TO THE FINANCIAL STATEMENTS 56

SUPPLEMENTARY INFORMATION ON THE DISCLOSURE 115

OF REALISED AND UNREALISED PROFIT AND LOSS

FINANCIAL STATEMENTS


Embrace the Future

1936 ~ 2011


The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company

for the financial year ended 31 January 2011.

PRINCIPAL ACTIVITIES

The principal activities of the Company consist of:

(a) manufacturing and marketing of water meters, waterworks fittings, fibreglass reinforced polyester panel tanks and a variety of

hot-stamped brass products and components;

(b) operation of water infrastructure;

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

and pipes and pipeline fittings;

(d) design, supply, installation, commissioning and maintenance of instrumentation, process control systems and Scada systems

for industry as well as building automation and building security systems;

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

(f) investment holding and management company.

The principal activities of its subsidiaries and associates are described in Note 39 to the financial statements.

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

RESULTS

Group Company

RM’000 RM’000

Profit, net of tax and attributable to the owner of the Company 24,799 21,293

There were no material transfers to or from reserves or provisions during the financial year.

In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not

substantially affected by any item, transaction or event of a material and unusual nature.

DIRECTORS’ REPORT


DIVIDENDS

The amount of dividends paid by the Company since 31 January 2010 were as follows:

RM’000

Final dividend in respect of the financial year ended 31 January 2010, of 2.0 sen less 25% tax, approved on

29 June 2010 and paid on 2 August 2010 3,378

Interim dividend in respect of the financial year ended 31 January 2011, of 2.0 sen less 25% tax, declared on

27 September 2010 and paid on 11 November 2010 3,379

6,757

At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 31 January 2011, of 3.0 sen less

25% tax per ordinary share of 50 sen amounting to RM5,069,000 will be proposed for shareholders’ approval. The financial statements

for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted

for in equity as an appropriation of retained earnings in the financial year ending 31 January 2012.

DIRECTORS

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




Ong Seng Pheow

Dr. Cheong Thiam Fook


Neither at the end of the financial year, nor at any time during the year, did there subsist any arrangement to which the Company was

a party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures of the Company or any other

body corporate, other than those arising from the share options granted under the Employee Share Option Scheme.

Since the end of previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in

the aggregate amount of emoluments received or due and receivable by the directors as shown in Note 10 to the financial statements)

by reason of a contract made by the Company or a related corporation with any director or with a firm of which the director is a

member, or with a company in which the director has a substantial financial interest, other than as disclosed in Note 33 to the financial

statements.

DIRECTORS’ REPORT cont’d


Embrace the Future

1936 ~ 2011


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

Number of ordinary shares of 50 sen each

As at As at

1.2.2010 Acquired Sold 31.1.2011

The Company

Direct interest

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

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

Ong Seng Pheow 30,000 - - 30,000

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

Indirect interest

Tan Sri Dato’ Tan Kay Hock 85,125,743 * 619,000 1,400,000 84,344,743*

Puan Sri Datin Tan Swee Bee 78,434,643* 619,000 1,400,000 77,653,643*

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

6 October 2012.

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

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

ISSUE OF SHARES During the financial year, 81,000 new ordinary shares of RM0.50 each were issued upon the exercise of share options granted pursuant to the Employee Share Options Scheme. Accordingly, the Company’s issued and paid up ordinary share capital increased by RM40,500 to RM112,649,813.

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

EMPLOYEE SHARE OPTIONS SCHEME The Company implemented an Employee Share Options Scheme (“ESOS”) which is governed by the Bye-Laws approved by the shareholders at an Extraordinary General Meeting held on 19 June 2003. The ESOS was implemented on 27 October 2003 and is to be in force for a period of 5 years expiring on 26 October 2008. Subsequently at the Annual General Meeting of the Company held on 22 July 2008, shareholders’ approval was obtained for the extension of the term of the ESOS for a further 5 years commencing from 27 October 2008 until 26 October 2013.

The salient features and other terms of the ESOS are disclosed in Note 26 to the financial statements.



EMPLOYEE SHARE OPTIONS SCHEME cont’d

The Company has been granted exemption by the Companies Commission of Malaysia vide their letter dated 21 March 2011 from

having to disclose the list of option holders and their holdings pursuant to Section 169(11) of the Companies Act, 1965 except for

information of employees who were granted 20,000 options and above.

There was no employee granted 20,000 options and above.

OTHER STATUTORY INFORMATION

(a) Before the statements of comprehensive income and statements of financial position of the Group and of the Company were

made out, the directors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for

doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had

been made for doubtful debts; and

(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the

ordinary course of business had been written down to an amount which they might be expected so to realise.

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

(i) the amount written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the

Group and of the Company inadequate to any substantial extent; and

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

(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to

the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial

statements of the Group and of the Company which would render any amount stated in the financial statements misleading.

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

(i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which

secures the liabilities of any other person; or

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

(f) In the opinion of the directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve

months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their

obligations when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial

year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the

Company for the financial year in which this report is made.



Embrace the Future

1936 ~ 2011


AUDITORS

The auditors, Ernst & Young, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the directors dated 27 May 2011.

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

Kuala Lumpur, Malaysia



STATEMENT BY DIRECTORS

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

We, Tan Sri Dato’ Tan Kay Hock and Dr Cheong Thiam Fook, being two of the directors of George Kent (Malaysia) Berhad, do

hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 48 to 114 are drawn up

in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the

financial position of the Group and of the Company as at 31 January 2011 and of their financial performance and the cash flows for

the year then ended.

The information set out in Note 41 on page 115 to the financial statements have been prepared in accordance with the Guidance

on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa

Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Signed on behalf of the Board in accordance with a resolution of the directors dated 27 May 2011.

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

Kuala Lumpur

Malaysia

STATUTORY DECLARATION

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

I, Kong Chee Khoon, being the officer primarily responsible for the financial management of George Kent (Malaysia) Berhad, do

solemnly and sincerely declare that the accompanying financial statements set out on pages 48 to 114 are in my opinion correct, and I

make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations

Act, 1960.

Subscribed and solemnly declared by

the abovenamed Kong Chee Khoon

at Kuala Lumpur in the Federal

Territory on 27 May 2011 KONG CHEE KHOON

Before me,

Mohan A.S. Maniam

No. W521

Pesuruhjaya Sumpah

(Commissioner for Oaths)

Malaysia


Embrace the Future

1936 ~ 2011


INDEPENDENT AUDITORS’ REPORTto the Members of George Kent (Malaysia) Berhad(Incorporated in Malaysia)

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of George Kent (Malaysia) Berhad, which comprise the statements of financial position as at

31 January 2011 of the Group and of the Company, and statements of comprehensive income, statements of changes in equity and

statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies

and other explanatory notes, as set out on pages 48 to 114.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance

with Financial Reporting Standards and the Companies Act, 1965 in Malaysia. This responsibility includes: designing, implementing

and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material

misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates

that are reasonable in the circumstances.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance

with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and

perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The

procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements,

whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and

fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not

for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the

appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the directors, as well as

evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the

Companies Act, 1965 (“Act”) in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company

as at 31 January 2011 and of their financial performance and cash flows for the year then ended.

Report on Other Legal and Regulatory Requirements

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

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Entity and its subsidiaries

of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ reports of the subsidiaries of which we have not acted as

auditors, which are indicated in Note 39 to the financial statements.

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements

of the Entity are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial

statements and we have received satisfactory information and explanations required by us for those purposes.

(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any

comment required to be made under Section 174(3) of the Act.


INDEPENDENT AUDITORS’ REPORTto the Members of George Kent (Malaysia) Berhad(Incorporated in Malaysia)

cont’d

OTHER MATTERS

The supplementary information set out in Note 41 on page 115 is disclosed to meet the requirement of Bursa Malaysia Securities

Berhad. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special

Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia

Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of

Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance

with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965

in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

ERNST & YOUNG KUA CHOO KAI

AF: 0039 No. 2030/03/12(J)

Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia

27 May 2011


Embrace the Future

1936 ~ 2011


STATEMENTS OF COMPREHENSIVE INCOMEfor the Year Ended 31 January 2011

Group Company

2011 2010 2011 2010

Note RM’000 RM’000 RM’000 RM’000

Restated

Revenue 4 165,037 124,813 161,755 121,676

Cost of sales 5 (110,121) (81,955) (114,269) (84,332)

Gross profit 54,916 42,858 47,486 37,344

Other items of income

Interest income 6 (a) 2,647 4,008 185 1,011

Dividend income from investment activities 130 3 - -

Other income 6 (b) 631 413 186 89

Other items of expense

Administrative expenses (7,894) (5,607) (3,327) (2,932)

Distribution cost (884) (688) (883) (680)

Other operating expenses (17,421) (14,850) (15,467) (12,001)

Operating profit 32,125 26,137 28,180 22,831

Finance costs 7 (1,386) (1,256) (1,299) (1,230)

Share of results of associates 1,719 1,214 - -

Profit before tax 8 32,458 26,095 26,881 21,601

Income tax expense 11 (7,659) (6,229) (5,588) (4,437)

Profit, net of tax 24,799 19,866 21,293 17,164

Other comprehensive income:

Foreign exchange translation (2,714) (1,549) - -

Other comprehensive income for the year,

net of tax (2,714) (1,549) - -

Total comprehensive income for the year 22,085 18,317 21,293 17,164

Profit attributable to:

Owners of the parent 24,799 19,866 21,293 17,164

Total comprehensive income attributable to:

Owners of the parent 22,085 18,317 21,293 17,164

Earnings per share from attributable to owners of

the parent (sen per share)

Basic/diluted 12 11.0 8.8

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


STATEMENTS OF FINANCIAL POSITIONas at 31 January 2011

Group Company

As at

Note 2011 2010 1.2.2009 2011 2010

RM’000 RM’000 RM’000 RM’000 RM’000

Restated Restated

Assets

Non-current assets

Property, plant and equipment 14 56,064 49,758 49,603 54,869 48,454

Land use rights 15 - - - - -

Intangible assets 16 496 461 519 496 461

Investment in subsidiaries 17 - - - 2,005 2,005

Investment in associates 18 18,069 17,734 16,943 174 174

Investment in unquoted debentures of

associate 18 6,404 9,894 10,443 - -

Deferred tax assets 31 1,722 1,866 1,201 - -

82,755 79,713 78,709 57,544 51,094

Current assets

Inventories 19 39,814 28,537 29,643 37,673 25,971

Trade and other receivables 20 38,428 30,059 31,789 61,722 64,927

Other current assets 21 3,176 1,782 6,012 3,226 1,736

Investment securities 23 4,547 3,182 232 - -

Tax recoverable - - 179 - -

Cash and bank balances 24 61,714 63,341 27,493 27,833 9,576

147,679 126,901 95,348 130,454 102,210

Total assets 230,434 206,614 174,057 187,998 153,304

Equity and liabilities attributable to

owners of the parent

Share capital 25 112,650 112,610 96,263 112,650 112,610

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

Other reserves 27 8,723 11,437 12,986 11,422 11,422

ICULS* - - 16,347 - -

Retained earnings/(accumulated

losses) 40,046 22,004 7,924 (23,422) (37,957)

Total equity 163,510 148,116 135,585 102,741 88,140


Embrace the Future

1936 ~ 2011


STATEMENTS OF FINANCIAL POSITIONas at 31 January 2011cont’d

Group Company

As at

Note 2011 2010 1.2.2009 2011 2010

RM’000 RM’000 RM’000 RM’000 RM’000

Restated Restated

Non-current liabilities

Loans and borrowings 28 11,570 14,196 16,083 11,570 14,196

Deferred tax liabilities 31 1,845 1,057 805 1,815 1,057

13,415 15,253 16,888 13,385 15,253

Current liabilities

Loans and borrowings 28 16,674 15,142 5,849 16,674 15,142

Trade and other payables 29 32,183 25,253 15,372 50,444 32,019

Other current liabilities 30 3,826 1,035 - 3,826 1,035

Tax payables 826 1,815 363 928 1,715

53,509 43,245 21,584 71,872 49,911

Total liabilities 66,924 58,498 38,472 85,257 65,164

Total equity and liabilities 230,434 206,614 174,057 187,998 153,304

* Irredeemable Convertible Unsecured Loan Stocks



STATEMENTS OF CHANGES IN EQUITY

for the Year Ended 31 January 2011

Attributable to owners of the parent

Non-distributable Distributable Non-distributable

Equity,

total

Equity

attributable

to owners

of the

parent,

total

Share

capital

Share

premium

Retained

earnings

Other

reserves,

total

Asset

revaluation

reserve

Foreign

currency

translation

reserve

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

At 1 February 2010 148,116 148,116 112,610 2,065 22,004 11,437 11,508 (71)

Total comprehensive

income 22,085 22,085 - - 24,799 (2,714) - (2,714)

Transactions with

owners

Dividends on ordinary

shares (6,757) (6,757) - - (6,757) - - -

Issue of ordinary shares

pursuant to ESOS 66 66 40 26 - - - -

Total transactions

withowners (6,691) (6,691) 40 26 (6,757) - - -

At 31 January 2011 163,510 163,510 112,650 2,091 40,046 8,723 11,508 (2,785)


Embrace the Future

1936 ~ 2011



for the Year Ended 31 January 2011cont’d

Attributable to owners of the parent

Non-distributable Distributable Non-distributable

Equity,

total

Equity

attributable

to owners

of the

parent,

total

Share

capital

Share

premium ICULS

Retained

earnings

Other

reserves,

total

Asset

revaluation

reserve

Foreign

currency

translation

reserve

Group cont’d RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 February 2009 135,585 135,585 96,263 2,065 16,347 7,924 12,986 11,508 1,478

Total comprehensive

income 18,317 18,317 - - - 19,866 (1,549) - (1,549)

Transactions with

owners

Dividends on

ordinary shares (5,786) (5,786) - - - (5,786) - - -

Issue of ordinary

shares pursuant to

ICULS - - 16,347 - (16,347) - - - -

Total transactions

with owners (5,786) (5,786) 16,347 - (16,347) (5,786) - - -

At 31 January 2010 148,116 148,116 112,610 2,065 - 22,004 11,437 11,508 (71)



for the Year Ended 31 January 2011cont’d

Non-distributable

Equity,

total

Share

capital

Share

premium ICULS

Accumulated

losses

Other

reserves,

total

Revaluation

reserve –

freehold land

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

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

Total comprehensive income 21,293 - - - 21,293 - -

Transactions with owners

Dividends on ordinary shares (6,758) - - - (6,758) - -

Issue of ordinary shares pursuant to

ESOS 66 40 26 - - - -

Total transactions with owners (6,692) 40 26 - (6,758) - -

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

At 1 February 2009 76,762 96,263 2,065 16,347 (49,335) 11,422 11,422

Total comprehensive income 17,164 - - - 17,164 - -

Transactions with owners

Dividends on ordinary shares (5,786) - - - (5,786) - -

Issue of ordinary shares pursuant to

ICULS - 16,347 - (16,347) - - -

Total transactions with owners (5,786) 16,347 - (16,347) (5,786) - -

At 31 January 2010 88,140 112,610 2,065 - (37,957) 11,422 11,422



Embrace the Future

1936 ~ 2011


STATEMENTS OF CASH FLOWSfor the Year Ended 31 January 2011

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Cash flows from operating activities


Adjustments for:

Depreciation of property, plant and equipment 1,559 1,201 1,335 972

Gain on disposal of property, plant and equipment - (69) - (69)

Amortisation of intangible assets 63 58 63 58

Plant and equipment written off - 7 - -

Write-down of inventories - 108 - 108

Inventories written off - 82 - 82

Reversal of impairment loss on on financial assets

- Trade receivables (218) (209) (218) (209)

- Investment securities held for trading - (98) - -

Impairment loss on financial assets

- Trade receivables - 76 - 76

- Bad debt written off - 7 - 126

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

Share of profit of associates (1,719) (1,214) - -

Gain on disposal of investment securities (106) (253) - -

Dividend income (130) (3) (1,500) (3,108)

Unrealised foreign exchange losses/(gain) (2,467) 199 (347) (304)

Interest expense 1,386 1,256 1,299 1,230

Interest income (2,647) (4,008) (185) (1,011)

Operating profit before working capital changes 27,871 23,235 27,328 19,552

(Increase)/decrease in inventories (11,277) 916 (11,702) 1,415

Decrease/(increase) in receivables (8,584) 8,142 1,949 (26,691)

Increase in payables 11,118 10,201 21,254 10,172

Cash generated from operations 19,128 42,494 38,829 4,448

Interest paid (1,386) (1,256) (1,299) (1,230)

Income tax paid (7,716) (5,011) (5,617) (2,291)

Net cash generated from operating activities 10,026 36,227 31,913 927


STATEMENTS OF CASH FLOWSfor the Year Ended 31 January 2011cont’d

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Cash flows from operating activities

Proceeds from disposal of property, plant and equipment - 458 - 458

Proceeds from disposal of investment securities 2,191 1,195 - -

Purchase of investment securities (3,142) (3,794) - -

Purchase of intangible assets (98) - (98) -

Purchase of property, plant and equipment (7,989) (1,003) (7,830) (796)

Interest received 2,647 4,008 185 1,011

Redemption of debenture by associate 2,470 - - -

Dividend income received 130 3 1,500 3,108

Net (used in)/cash generated from investing activities (3,791) 867 (6,243) 3,781

Cash flows from financing activities

Repayment of term loans (2,400) (1,600) (2,400) (1,600)

Drawdown of other short term bank borrowings 343 8,136 343 8,136

Repayment of finance lease (271) (276) (271) (276)

Proceeds from exercise of ESOS 66 - 66 -

Dividend paid (6,757) (5,786) (6,757) (5,786)

Net cash (used in)/generated from financing activities (9,019) 474 (9,019) 474

Net change in cash and cash equivalents (2,784) 37,568 16,651 5,182

Effects of exchange rate changes (77) (2,050) 372 25

Cash and cash equivalents at beginning of year 62,206 26,688 8,441 3,234

Cash and cash equivalents at end of year (Note 24) 59,345 62,206 25,464 8,441



Embrace the Future

1936 ~ 2011


NOTES TO THE FINANCIAL STATEMENTS31 January 2011

1. CORPORATE INFORMATION The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of

Bursa Malaysia Securities Berhad. The registered office and principal place of business of the Company is located at George Kent Technology Centre, Lot 1115, Batu 15, Jalan Dengkil, 47100 Puchong, Selangor Darul Ehsan.

The principal activities of the Company consist of:

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

(b) operation of water infrastructure;

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

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

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

(f) investment holding and management company.

The principal activities of its subsidiaries and associates are described in Note 39. There have been no significant changes in the nature of the principal activities during the financial year.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

The financial statements of the Group and the Company have been prepared in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia. At the beginning of the current financial year, the Group and the Company adopted new and revised FRS which are mandatory for financial periods beginning on or after 1 February 2010 as described fully in Note 2.2.

The financial statements have been prepared on the respective measurement basis as stated in the significant accounting

policies below.

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

2.2 Changes in accounting policies

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

On 1 February 2010, the Group and the Company adopted the following applicable new and amended FRS and IC Interpretations mandatory for annual financial periods beginning on or after 1 February 2010.

FRS 7 Financial Instruments: Disclosures FRS 8 Operating Segments FRS 101 Presentation of Financial Statements (Revised)

FRS 123 Borrowing Costs FRS 139 Financial Instruments: Recognition and Measurement

Amendments to FRS 1 First-time Adoption of Financial Reporting Standards and FRS 127 Consolidated and Separate

Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate


NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d

2.2 Changes in accounting policies cont’d

Amendments to FRS 2 Share-based Payment – Vesting Conditions and Cancellations

Amendments to FRS 132 Financial Instruments: Presentation

Amendments to FRS 139 Financial Instruments: Recognition and Measurement, FRS 7 Financial Instruments:

Disclosures and IC Interpretation 9 Reassessment of Embedded Derivatives

Improvements to FRS issued in 2009

IC Interpretation 9 Reassessment of Embedded Derivatives

IC Interpretation 10 Interim Financial Reporting and Impairment

IC Interpretation 11 FRS 2 Group and Treasury Share Transactions

IC Interpretation 13 Customer Loyalty Programmes

IC Interpretation 14 FRS119 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

Adoption of the above standards and interpretations did not have any effect on the financial performance or position of the

Group and of the Company except for those discussed below:

FRS 7 Financial Instruments: Disclosures

Prior to 1 February 2010, information about financial instruments was disclosed in accordance with the requirements of

FRS 132 Financial Instruments: Disclosure and Presentation. FRS 7 introduces new disclosures to improve the information

about financial instruments. It requires the disclosure of qualitative and quantitative information about 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 and the Company have applied FRS 7 prospectively in accordance with the transitional provisions. Hence, the

new disclosures have not been applied to the comparatives. The new disclosures are included throughout the Group’s and

the Company’s financial statements for the year ended 31 January 2011.

FRS 8 Operating Segments

FRS 8, which replaces FRS 114 Segment Reporting, specifies how an entity should report information about its operating

segments, based on information about the components of the entity that is available to the chief operating decision maker

for the purpose of allocating resources to the segments and assessing their performance. The Standard also requires the

disclosure of information about the products and services provided by the segments, the geographical areas in which

the Group operates, and revenue from the Group’s major customers. The Group concluded that the reportable operating

segments determined in accordance with FRS 8 are the same as the business segments previously identified under FRS

114. The Group has adopted FRS 8 retrospectively. These revised disclosures, including the related revised comparative

information, are shown in Note 37.

FRS 101 Presentation of Financial Statements (Revised)

The revised FRS 101 introduces changes in the presentation and disclosures of financial statements. The revised Standard

separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions

with owners, with all non-owner changes in equity presented as a single line. The Standard also introduces the statement

of comprehensive income, with all items of income and expense recognised in profit or loss, together with all other items of

recognised income and expense recognised directly in equity, either in one single statement, or in two linked statements.

The Group and the Company have elected to present this statement as one single statement.

In addition, a statement of financial position is required at the beginning of the earliest comparative period following a

change in accounting policy, the correction of an error or the classification of items in the financial statements.


Embrace the Future

1936 ~ 2011




FRS 101 Presentation of Financial Statements (Revised) cont’d

The revised FRS 101 also requires the Group and the Company to make new disclosures to enable users of the financial

statements to evaluate the Company’s objectives, policies and processes for managing capital (Note 36).

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

FRS 139 Financial Instruments: Recognition and Measurement

FRS 139 establishes principles for recognising and measuring financial assets, financial liabilities and some contracts

to buy and sell non-financial items. The Group and the Company have adopted FRS 139 prospectively on 1 February

2010 in accordance with the transitional provisions. The adoption of this standard has no material impact on the financial

statements as at 1 February 2010. Comparatives are not restated. The details of the changes in accounting policies and

the effects arising from the adoption of FRS 139 are discussed below:

- Equity instruments

Prior to 1 February 2010, the Group classified its investments in equity instruments which were held for trading

purposes as marketable securities. Such investments were carried at the lower of cost and market value, determined

on an aggregate basis. Upon the adoption of FRS 139, these investments are designated at 1 February 2010

as financial assets at fair value through profit or loss and accordingly are stated at their fair values as at that

date amounting to RM3.2 million. As at 1 February 2010, the Group has remeasured these investments and the

differences arising are immaterial.

- Impairment of trade receivables and other receivables

Prior to 1 February 2010, provision for doubtful debts was recognised when it was considered uncollectible. Upon

the adoption of FRS 139, an impairment loss is recognised when there is objective evidence that an impairment loss

has been incurred. The amount of the loss is measured as the difference between the receivable’s carrying amount

and the present value of the estimated future cash flows discounted at the receivable’s original effective interest rate.

As at 1 February 2010, the Group has remeasured the allowance for impairment losses in accordance with FRS 139

and the differences arising are immaterial.

Amendments to FRS 117 Leases

Prior to 1 February 2010, for all leases of land and buildings, if title is not expected to pass to the lessee by the end of the

lease term, the lessee normally does not receive substantially all of the risks and rewards incidental to ownership. Hence,

all leasehold land held for own use was classified by the Group as operating lease and where necessary, the minimum

lease payments or the up-front payments made were allocated between the land and the buildings elements in proportion

to the relative fair values for leasehold interests in the land element and building element of the lease at the inception of

the lease. The up-front payment represented prepaid lease payments and were amortised on a straight-line basis over the

lease term.

The amendments to FRS 117 Leases clarify that leases of land and buildings are classified as operating or finance lease

in the same way as leases of other assets. They also clarify that the present value of the residual value of the property in a

lease with a term of several decades would be negligible and accounting for the land element as a finance lease in such

circumstances would be consistent with the economic position of the lessee. Hence, the adoption of the amendments

to FRS 117 has resulted in certain unexpired land leases to be reclassified as finance leases. The Group has applied this

change in accounting policy retrospectively and certain comparatives have been restated. The following are effects to the

consolidated statement of financial positions at 31 January 2011 arising from the above change in accounting policy.





Amendments to FRS 117 Leases cont’d

Group

2011

RM’000

Increase/(decrease) in:

Property, plant and equipment 93

Land use rights (93)

The following comparatives have been restated:

As

previously

stated Adjustments As restated

RM’000 RM’000 RM’000

Consolidated statement of financial position

31 January 2010

Property, plant and equipment 49,665 93 49,758

Land use rights 93 (93) -

1 February 2009

Property, plant and equipment 49,503 100 49,603

Land use rights 100 (100) -

2.3 Standards and interpretations issued but not yet effective

The Group has not adopted the following standards and interpretations that have been issued but not yet effective:

Description

Effective

for financial

periods

beginning

on or after

FRS 1 First-time Adoption of Financial Reporting Standards 1 July 2010

FRS 3 Business Combinations (revised) 1 July 2010

Amendments to FRS 2 Share-based Payment 1 July 2010

Amendments to FRS 5 Non-current Assets Held for Sale and Discontinued Operations 1 July 2010

Amendments to FRS 127 Consolidated and Separate Financial Statements 1 July 2010

Amendments to FRS 138 Intangible Assets 1 July 2010



Embrace the Future

1936 ~ 2011



2.3 Standards and interpretations issued but not yet effective cont’d

Description

Effective

for financial

periods

beginning on

or after

Amendments to IC Interpretation 9 Reassessment of Embedded Derivatives 1 July 2010

IC Interpretation 12 Service Concession Arrangements 1 July 2010

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

Amendments to FRS 132 Classification of Rights Issues 1 March 2010

Amendments to FRS 1 Limited Exemption from Comparative FRS 7 Disclosures for First-time

Adopters

1 Jan 2011

Amendments to FRS 7 Improving Disclosures about Financial Instruments 1 Jan 2011

Amendments to FRS 2 Share based Payment – Group Cash settled Share based Payment

Transactions

1 Jan 2011

IC Interpretation 4 Determining Whether An Arrangement contains a Lease 1 Jan 2011

IC Interpretation 18 Transfers of Assets from Customers 1 Jan 2011

FRS 124: Related Party Transactions (Revised) 1 Jan 2012

IC Interpretation 15 Agreements for the Construction of Real Estate 1 Jan 2012

Except for the changes in accounting policies arising from the adoption of the revised FRS 3 and the amendments to FRS

127 as well as the new disclosures required under the Amendments to FRS 7, the directors expect that the adoption of

the other standards and interpretations above will have no material impact on the financial statements in the period of

initial application. The nature of the impending changes in accounting policy on adoption of the revised FRS 3 and the

amendments to FRS 127 are described below.

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

The revised standards are effective for annual periods beginning on or after 1 July 2010. The revised FRS 3 introduces a

number of changes in the accounting for business combinations occurring after 1 July 2010. These changes will impact

the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future reported

results. The Amendments to FRS 127 require that a change in the ownership interest of a subsidiary (without loss of

control) is accounted for as an equity transaction. Therefore, such transactions will no longer give rise to goodwill, nor will

they give rise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the

subsidiary as well as the loss of control of a subsidiary.

Other consequential amendments have been made to FRS 107 Statement of Cash Flows, FRS 112 Income Taxes, FRS

121 The Effects of Changes in Foreign Exchange Rates, FRS 128 Investments in Associates and FRS 131 Interests in Joint

Ventures. The changes from revised FRS 3 and Amendments to FRS 127 will affect future acquisitions or loss of control

and transactions with non-controlling interests. The standards may be early adopted. However, the Group does not intend

to early adopt.




2.4 Basis of consolidation

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

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

Acquisitions of subsidiaries are accounted for using the purchase method. The purchase method of accounting involves allocating the cost of the acquisition to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the acquisition.

Any excess of the Group’s share in the net fair value of the acquired subsidiary’s identifiable assets, liabilities and contingent liabilities over the cost of business combination is recognised as income in profit or loss on the date of acquisition. When the Group acquires a business, embedded derivatives separated from the host contract by the acquiree are reassessed on acquisition unless the business combination results in a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required under the contract.

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

2.5 Transactions with non-controlling interests

Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group and are presented separately in profit or loss of the Group and within equity in the consolidated statements of financial position, separately from parent shareholders’ equity. Transactions with non-controlling interests are accounted for using the entity concept method, whereby, transactions with non-controlling interests are accounted for as transactions with owners. On acquisition of non-controlling interests, the difference between the consideration and book value of the share of the net assets acquired is recognised directly in equity. Gain or loss on disposal to non-controlling interests is recognised directly in equity.

2.6 Subsidiaries

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

benefits from its activities. In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment

losses.

2.7 Associates

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

The Group’s investments in associates are accounted for using the equity method. Under the equity method, investment in

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



Embrace the Future

1936 ~ 2011



2.7 Associates cont’d

When the Group’s share of losses in associates equals or exceeds its interest in the associates, the Group does not

recognise further losses, unless it has incurred obligations or made payments on behalf of the associates.

After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment

loss on the Group’s investment in its associates. The Group determines at each reporting date whether there is any

objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of

impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the

amount in profit or loss.

The financial statements of the associates are prepared as of the same reporting date as the Company. Where necessary,

adjustments are made to bring the accounting policies in line with those of the Group.

In the Company’s separate financial statements, investments in associates are stated at cost less impairment losses. On

disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in

profit or loss.

2.8 Intangible assets

Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired in a business

combination is their fair value as at the date of acquisition. Following initial acquisition, intangible assets are measured at

cost less any accumulated amortisation and accumulated impairment losses.

Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever

there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are

reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption

of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as

appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite

lives is recognised in profit or loss.

Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually, or more

frequently if the events and circumstances indicate that the carrying value may be impaired either individually or at the

cash-generating unit level. Such intangible assets are not amortised. The useful life of an intangible asset with an indefinite

useful life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the

change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecignition of an intangible asset are measured as the difference between the net disposal

proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.

(i) Development costs

Development costs, considered to have finite useful lives, are stated at cost less any impairment losses and are

amortised using the straight-line basis from the commencement of the contract to which they relate over the period

of their expected benefit not exceeding 20 years.

(ii) Computer software

Computer software are stated at cost less any impairment losses and are amortised on a straight-line basis over the

estimated economic useful lives at the annual rate of 20%. Impairment is assessed whenever there is an indication

that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at

least at the end of reporting date.




2.9 Property, plant and equipment and depreciation

All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment

is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the

Group and the cost of the item can be measured reliably.

Subsequent to recognition, property, plant and equipment except for certain freehold land and buildings are stated at cost

less accumulated depreciation and any accumulated impairment losses. Certain freehold land and buildings of the Group

and of the Company were revalued in 1996 based on independent professional valuations using open market values on

an existing use basis.

Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation of other property, plant and

equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated

useful life, at the following annual rates:

Building on freehold land 2%

Long term leasehold building 2%

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

The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount,

method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the

future economic benefits embodied in the items of property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected

from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset

is derecognised.

2.10 Construction contracts

Where the outcome of a construction contract can be reliably estimated, contract revenue and contract costs are

recognised as revenue and expenses respectively by using the stage of completion method. The stage of completion

is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total

contract costs.

Where the outcome of a construction contract cannot be reliably estimated, contract revenue is recognised to the extent

of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period

in which they are incurred.

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

expense immediately.

When the total of costs incurred on construction contracts plus, recognised profits (less recognised losses), exceeds

progress billings, the balance is classified as amount due from customers on contracts. When progress billings exceed

costs incurred plus, recognised profits (less recognised losses), the balance is classified as amount due to customers on

contracts.

2.11 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such

indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the

asset’s recoverable amount.



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2.11 Impairment of non-financial assets cont’d

An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose

of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows

(cash-generating units (“CGU”)).

In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their

present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the

risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written

down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first

to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying

amount of the other assets in the unit or groups of units on a pro-rata basis.

Impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation was

taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up

to the amount of any previous revaluation.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment

losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has

been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was

recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase

cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been

recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at the revalued amount, in

which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent

period.

2.12 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, and short-term, highly liquid investments that are readily

convertible to known amount of cash and which are subject to an insignificant risk of changes in value. These also include

bank overdrafts that form an integral part of the Company’s cash management.

2.13 Inventories

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

Cost is determined using the first in, first out method. The cost of raw materials comprises costs of purchase. The costs

of finished goods and work-in-progress comprise costs of raw materials, direct labour, other direct costs and appropriate

proportions of manufacturing overheads based on normal operating capacity.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion

and the estimated costs necessary to make the sale.

2.14 Financial assets

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

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

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair

value through profit or loss, directly attributable transaction costs.




2.14 Financial assets cont’d

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

Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are

designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated

embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value.

Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses

on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend

income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss

are recognised separately in profit or loss as part of other losses or other income.

Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that

is held primarily for trading purposes are presented as current whereas financial assets that is not held primarily for

trading purposes are presented as current or non-current based on the settlement date.

(b) Loans and receivables

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

and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest

method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or

impaired, and through the amortisation process.

Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months

after the reporting date which are classified as non-current.

(c) Held-to-maturity investments

Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the

Group has the positive intention and ability to hold the investment to maturity.

Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective

interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are

derecognised or impaired, and through the amortisation process.

Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months

after the reporting date which are classified as current.

The Company has not designated any financial assets as held-to-maturity.

(d) Available-for-sale financial assets

Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in

any of the three preceding categories.



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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d 2.14 Financial assets cont’d

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

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

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

Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within

12 months after the reporting date.

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

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

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

2.15 Impairment of financial assets

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

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

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

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

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account.

When a trade receivable becomes uncollectible, it is written off against the allowance account.




2.15 Impairment of financial assets cont’d

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

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively

to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to

the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount

of reversal is recognised in profit or loss.

(b) Available-for-sale financial assets

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and

the disapperance of an active trading market are considerations to determine whether there is objective evidence

that investment securities classified as available-for-sale financial assets are impaired.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any

principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit

or loss, is transferred from equity to profit or loss.

Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent

periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income.

For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase in

the fair value of the investment can be objectively related to an event occuring after the recognition of the impairment

loss in profit or loss.

2.16 Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it

is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation

can be estimated reliably.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable

that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the

time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate,

the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is

recognised as a finance cost.

2.17 Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions

of a financial liability.

Financial liabilities, within the scope of FRS 139, are recognised in the statement of financial position when, and only when,

the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities

are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

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

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities

designated upon initial recognition as at fair value through profit or loss.



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2.17 Financial liabilities cont’d

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

Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet

the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at

fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include

exchange differences.

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

(b) Other financial liabilities

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

borrowings.

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and

subsequently measured at amortised cost using the effective interest method.

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

and through the amortisation process.

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently

measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless

the group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting

date.

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability

is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are

substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the

recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

2.18 Leases

(a) As lessee

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the

leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the

present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised.

Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve

a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss.

Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty

that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the

estimated useful life and the lease term.

Total operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease

term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over

the lease term on a straight-line basis.




2.19 Borrowing costs

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

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

2.20 Income taxes

(a) Current tax

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

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

(b) Deferred tax

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

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

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

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

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

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

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

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

become probable that future taxable profit will allow the deferred tax assets to be utilised.



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2.20 Income taxes cont’d

(b) Deferred tax cont’d

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset

is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted

at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items

are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity

and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax

assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation

authority.

2.21 Employee benefits

(a) Defined contribution plans

The Group participates in the national pension schemes as defined by the laws of the countries in which it has

operations. The companies in the Group make contributions to the Employee Provident Fund in Malaysia, a defined

contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense

in the period in which the related service is performed.

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

associated services are rendered by employees of the Group. Short term accumulating compensated absences

such as paid annual leave are recognised when services are rendered by employees that increase their entitlement

to future compensated absences, and short term non-accumulating compensated absences such as sick leave are

recognised when the absences occur.

(b) Equity compensation benefits

The Employee Share Options Scheme (“ESOS”), an equity-settled, share-based compensation plan, allows the

Group’s employees to acquire ordinary shares of the Company.

The total fair value of share options granted to employees is recognised as an employee cost with a corresponding

increase in the share option reserve within equity over the vesting period and taking into account the probability

that the options will vest. The fair value of share options is measured at grant date, taking into account, if any,

the market vesting conditions upon which the options were granted but excluding the impact of any non-market

vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are

expected to become exercisable on vesting date.

At each balance sheet date, the Group revises its estimates of the number of options that are expected to become

exercisable on vesting date. It recognises the impact of the revision of original estimates, if any, in the profit or loss,

and a corresponding adjustment to equity over the remaining vesting period. The equity amount is recognised in

the share option reserve until the option is exercised, upon which it will be transferred to share premium, or until the

option expires, upon which it will be transferred directly to retained earnings.

The proceeds received net of any directly attributable transaction costs are credited to equity when the options are

exercised.




2.22 Foreign currency

(a) Functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency of the primary

economic environment in which the entity operates (“the functional currency”). The consolidated financial statements

are presented in Ringgit Malaysia (“RM”), which is also the Company’s functional currency.

(b) Foreign currency transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its

subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating

those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign curriencies are translated

at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are

measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-

monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at

the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting

date are recognised in profit or loss except for exchange differences arising on monetary items that form part of

the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income

and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is

reclassified from equity to profit or loss of the Group on disposal of the foreign operation.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or

loss for the period except for the differences arising on the translation of non-monetary items in respect of which

gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are

also recognised directly in equity.

The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the reporting

date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange

differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign

operation, the cumulative amount recognised in other other comprehensive income and accumulated in equity

under foreign currency translation reserve relating to that particular foreign operation is recognised in the profit or

loss.

(c) Foreign operations

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities

of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the

closing rate at the reporting date.

2.23 Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue

can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.

(i) Sale of goods

Revenue from sale of goods is recognised upon the transfer of significant risk and rewards of ownership of the

goods to the customer. Revenue is not recognised to the extent where there are significant uncertainties regarding

recovery of the consideration due, associated costs or the possible return of goods.



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2.23 Revenue cont’d

(ii) Interest income

Interest income is recognised using the effective interest method.

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

(iv) Construction Contracts

Revenue from construction contracts is accounted for by the stage of completion method as described in Note 2.10.

(v) Management fees

Management fees are recognised when services are rendered.

2.24 Segment reporting

For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 37, including the factors used to identify the reportable segments and the measurement basis of segment information.

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

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

3.1 Key sources of estimation uncertainty

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

(i) Useful lives of plant and equipment

The cost of property, plant and equipment for the Group is depreciated on a straight-line basis over the assets’

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

would result in approximately 1% (2010: 1%) variance in the Group’s profit for the year.



3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES cont’d

3.1 Key sources of estimation uncertainty cont’d

(ii) Deferred tax assets

Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent that

it is probable that taxable profit will be available against which the losses and capital allowances can be utilised.

Significant management judgement is required to determine the amount of deferred tax assets that can be recognised,

based upon the likely timing and level of future taxable profits together with future tax planning strategies.

Assumptions about generation of future taxable profits depend on management’s estimates of future cash

flows. These depends on estimates of future production and sales volume, operating costs, capital expenditure,

dividends and other capital management transactions. Judgement is also required about application of income tax

legislation. These judgements and assumptions are subject to risks and uncertainty, hence there is a possibility that

changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised

in the statements of financial position and the amount of unrecognised tax losses and unrecognised temporary

differences.

The total carrying value of deferred tax assets of the Group at reporting date and the unrecognised tax losses and

capital allowances of the Group are disclosed in Note 31. These deferred tax assets and unrecognised tax losses

and capital allowances relate to subsidiaries of the Company. If the taxable profits of the said subsidiaries differ by

10% due to the change in estimates of the Group’s future results from operating activites, the Group’s deferred tax

assets and unabsorbed capital allowances will vary by RM20,000 and RM80,000.

(iii) Income taxes

Judgement is involved in determining the provision for income taxes. There are certain transactions and computations

for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises

liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax

outcome of these matters is different from the amounts that were initially recognised, such differences will impact the

income tax and deferred tax provisions in the period in which such determination is made. As at 31 January 2011,

the Group have tax payables and deferred tax liabilities of approximately RM826,000 (2010: RM1,815,000), and

RM1,845,000 (2010: RM1,057,000), respectively.

A 10% difference in taxable profits would result in approximately 5% (2010: 3%) variance in Group’s profit for the

year.

(iv) Construction contracts

The Company recognises contract revenue and expenses in the income statement by using the stage of completion

method. The stage of completion is determined by using the proportion that contract costs incurred for work

performed to date bear to the estimated total contract costs.

Significant judgement is required in determining the stage of completion, the extent of the contract costs incurred, the

estimated total contract revenue and costs, as well as the recoverability of the contracts. In making the judgement,

the Company evaluates by relying on the work of specialists.

The Group has recognised contract revenue of RM49,556,000 (2010: RM27,161,000) and contract costs of

RM34,624,000 (2010: RM20,743,000) during the financial year. If contract revenue and contract cost vary by 10%

from management’s estimates, the Group’s revenue and cost of sales will vary by 3% (2010: 2%) and 3% (2010: 3%)

respectively.



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4. REVENUE

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Sale of goods and services 115,481 96,652 110,699 90,407

Infrastructure contracts 49,556 28,161 49,556 28,161

Dividend income from subsidiaries and associates - - 1,500 3,108

165,037 124,813 161,755 121,676

5. COST OF SALES

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Cost of inventories sold and services rendered 75,497 61,212 79,645 63,589

Contract costs 34,624 20,743 34,624 20,743

110,121 81,955 114,269 84,332

6. INTEREST INCOME AND OTHER INCOME

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

(a) Interest income

Interest income from

- deposits with licensed banks 1,560 2,725 185 1,011

Debenture interest income 1,087 1,283 - -

2,647 4,008 185 1,011

(b) Other income

Net gain on disposal of of property, plant and

equipment - 69 - 69

Gain on disposal of investment securities 106 253 - -

Net fair value gains on held for trading investment

securities 308 - - -

Miscellaneous 217 91 186 20

631 413 186 89



7. FINANCE COSTS

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Interest expense on:

- Bank borrowings 1,296 1,182 1,209 1,156

- Hire purchase and finance lease liabilities 90 74 90 74

1,386 1,256 1,299 1,230

8. PROFIT BEFORE TAX

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

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Employee benefits expense (Note 9) 11,437 9,756 10,054 8,500

Non-executive directors’ remuneration (Note 10) 1,011 868 411 335

Auditors’ remuneration

- current year 113 113 53 53

- over provision in prior years - (4) - -

Research and development costs 376 279 376 279

Amortisation of intangible assets (Note 16) 63 58 63 58

Plant and equipment written off - 7 - -

Depreciation of property, plant and equipment (Note 14) 1,559 1,201 1,335 972

Write-down of inventories - 108 - 108

Inventories written off - 82 - 82

Reversal of impairment loss on financial assets:

- Trade receivables (Note 20) (218) (209) (218) (209)

- Investment securities held for trading - (98) - -

Impairment loss on financial assets:

- Trade receivables (Note 20) - 76 - -

- Bad debt written off - 7 - 126

Dividend income from:

- investment securities held for trading (130) (3) - -

- subsidiaries - - (1,500) (3,004)

- associate - - - (104)



Embrace the Future

1936 ~ 2011


8. PROFIT BEFORE TAX cont’d

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Rental expenses 37 32 35 30

Utility charges 3,635 3,642 662 608

Transportation charges 883 680 883 680

Legal and other professional fees 751 297 636 175

Loss/(gain) on foreign exchange:

- realised 5,959 421 1,587 345

- unrealised (2,467) 199 (347) (304)

9. EMPLOYEE BENEFITS EXPENSE

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Wages and salaries 10,040 8,611 8,770 7,446

Social security contributions 88 81 85 78

EPF contributions 1,108 979 1,081 946

Other benefits 201 85 118 30

Total 11,437 9,756 10,054 8,500

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

RM508,000 (2010: RM784,000) and RM508,000 (2010: RM784,000) respectively.



10. DIRECTORS’ REMUNERATION

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

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Directors of the Company

Executive directors

Salaries and other emoluments 483 750 483 750

Estimated money value of benefits-in-kind 25 34 25 34

508 784 508 784

Non-Executive directors

Fees 356 293 356 293

Other emoluments 627 547 27 14

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

1,011 868 411 335

1,519 1,652 919 1,119

The number of directors of the Company whose total remuneration during the year fell within the following bands is analysed

below:

Number of directors

2011 2010

Executive directors:

RM300,001 – RM400,000 - 1

RM400,001 – RM500,000 - 1

RM500,001 – RM600,001 1 -

Non-Executive directors:

Below RM50,000 1 3

RM 50,001 – RM100,000 2 -

RM300,001 – RM400,000 1 1

RM400,001 – RM500,000 1 1



Embrace the Future

1936 ~ 2011


11. INCOME TAX EXPENSE

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Statement of comprehensive income:

Current income tax

- Malaysian income tax 4,892 4,365 4,822 4,391

- Foreign tax 1,827 2,481 - -

- Under/(over) provision in respect of prior years 8 (204) 8 (206)

6,727 6,642 4,830 4,185

Deferred income tax – continuing operations (Note 31):

- Origination and reversal of temporary differences 932 (90) 758 252

- Over provision in respect of prior years - (323) - -

932 (413) 758 252

Income tax expense recognised in profit or loss 7,659 6,229 5,588 4,437

Domestic income tax is calculated at the Malaysian statutory rate of 25% (2009: 25%) of the estimated assessable profit for the

year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

A reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for the

years ended 31 January 2011 and 2010 are as follows:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000


Taxation at Malaysian statutory tax rate of 25%

(2009: 25%) 8,115 6,523 6,720 5,400

Different tax rates in other countries 408 289 - -

Income not subject to tax (358) (238) (327) (789)

Benefits from utilisation of reinvestment allowance (815) - (815) -

Expenses not deductible for tax purposes 301 182 2 32

(Over)/underprovision in prior years

- current taxation 8 (204) 8 (206)

- deferred taxation - (323) - -

Tax expense for the year 7,659 6,229 5,588 4,437



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

by the number of ordinary outstanding during the financial year.

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

(a) Basic

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

ended 31 January:

2011 2010

RM’000 RM’000

Profit net of tax attributable to owners of the parent 24,799 19,866

No. of

shares

No. of

shares

‘000 ‘000

Weighted average number of ordinary shares for basic earnings per share

computation* 225,264 225,219

Basic earnings per share (sen) 11.0 8.8

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

during the year.

(b) Diluted

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

2011 2010

RM’000 RM’000

Profit net of tax attributable to owners of the parent 24,799 19,866

No. of

shares

No. of

shares

‘000 ‘000

Weighted average number of ordinary shares for basic earnings per share

computation 225,264 225,219

Effects of dilution

- share options 95 -*

Weighted average number of ordinary shares for diluted earnings per share

computation 225,359 225,219



Embrace the Future

1936 ~ 2011


12. EARNINGS PER SHARE cont’d

2011 2010

Diluted earnings per share (sen) 11.0 8.8

* The outstanding share options have not been included in the computation because they are anti-dilutive.

Since the end of the financial year, employees have exercised the options to acquire 3,000 (2010: 46,500) ordinary shares. There

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

13. DIVIDENDS

Dividends

in respect of year

Dividends

recognised in year

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Recognised during the year:

Final dividend for 2010: 2.0 sen less 25% taxation, on

225,218,626 ordinary shares (1.5 sen per ordinary

share) - - 3,378 -



share) - - - 2,480

Interim dividend for 2011: 2 sen less 25% taxation, on


share) 3,379 - 3,379 -

Interim dividend for 2010: 2 sen less 25% taxation, on


share) - 3,306 - 3,306

3,379 3,306 6,757 5,786

Proposed for approval at AGM (not recognised as at

31 January):



share) 5,069 - - -



share) - 3,378 - -

5,069 3,378 - -

8,448 6,684 6,757 5,786



13. DIVIDENDS cont’d

At the forthcoming Annual General Meeting (“AGM”), a final dividend in respect of the financial year ended 31 January 2011,

of 3.0 sen less 25% tax per ordinary share of 50 sen amounting to RM5,069,000 will be proposed for shareholders’ approval.

The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the

shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 January

2012.

14. PROPERTY, PLANT AND EQUIPMENT

Group

Freehold

land

Building

on

freehold

land

Long

term

leasehold

building

Long

term

leasehold

land

Plant and

machinery,

furniture,

equipment

and

vehicles

Capital

work in

progress Total

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

31 January 2011

At 1 February 2010

- As previously stated 21,012 31,078 123 - 52,515 - 104,728

- Effects of adopting

amendments to FRS 117 - - - 123 - - 123

- As restated 21,012 31,078 123 123 52,515 - 104,851

Cost or valuation

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

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

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

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

Representing

At cost 192 31,091 116 113 59,616 734 91,862

At valuation – 1996 20,820 - - - - - 20,820

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

Accumulated depreciation

At 1 February 2010

- As previously stated - 7,586 30 - 47,447 - 55,063



- As restated - 7,586 30 30 47,447 - 55,093

Depreciation charge - 621 2 - 978 - 1,601

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

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



Embrace the Future

1936 ~ 2011


14. PROPERTY, PLANT AND EQUIPMENT cont’d

Group cont’d

Freehold

land

Building

on

freehold

land

Long

term

leasehold

building

Long

term

leasehold

land

Plant and

machinery,

furniture,

equipment

and

vehicles

Capital

work in

progress Total

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

31 January 2010

At 1 February 2009

- As previously stated 21,012 31,116 129 - 51,810 139 104,206



- As restated 21,012 31,116 129 135 51,810 139 104,341

Cost or valuation

Additons - 9 1 1 1,808 - 1,819

Reclassification - - - - 139 (139) -

Disposals - (47) - - (1,160) - (1,207)

Exchange differences - (7) (13) (61) - (81)

Write off - - - - (21) - (21)

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

Representing

At cost 192 31,078 123 123 52,515 - 84,031

At valuation – 1996 20,820 - - - - - 20,820

21,012 31,078 123 123 52,515 - 104,851


and impairment loss

At 1 February 2009

- As previously stated - 6,973 29 - 47,701 - 54,703



- As restated - 6,973 29 35 47,701 - 54,738

Depreciation charge - 613 2 2 609 - 1,226

Disposals - - - - (818) - (818)

Write off - - - - (14) - (14)

Exchange differences - - (1) (7) (31) - (39)

At 31 January 2010 - 7,586 30 30 47,447 - 55,093





Group cont’d

Freehold

land

Building

on

freehold

land

Long

term

leasehold

building

Long

term

leasehold

land

Plant and

machinery,

furniture,

equipment

and

vehicles

Capital

work in

progress Total

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

Net carrying amount

At 31 January 2011 192 22,884 57 113 11,264 734 35,244

At cost 20,820 - - - - - 20,820

At valuation 21,012 22,884 57 113 11,264 734 56,064

At 31 January 2010

At cost 192 23,492 93 93 5,068 - 28,938

At valuation 20,820 - - - - - 20,820

21,012 23,492 93 93 5,068 - 49,758

At 31 January 2009

At cost 192 24,143 100 100 4,109 139 28,783

At valuation 20,820 - - - - - 20,820

21,012 24,143 100 100 4,109 139 49,603

Company

31 January 2011

Cost or valuation

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

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

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

At 31 January 2011 21,012 31,091 - - 50,648 734 103,485

Representing:

At cost 192 31,091 - - 50,648 734 82,665

At valuation – 1996 20,820 - - - - - 20,820

21,012 31,091 - - 50,648 734 103,485


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

Depreciation charge - 621 - - 756 - 1,377

At 31 January 2011 - 8,207 - - 40,409 - 48,616


Embrace the Future

1936 ~ 2011



Company cont’d Freehold

land Building on

freehold land

Plant and machinery,

furniture, equipment

and vehicles

Capital work in

progress Total

RM’000 RM’000 RM’000 RM’000 RM’000

31 January 2011

Net carrying amount

At 31 January 2011

At cost 192 22,884 10,239 734 34,049

At valuation – 1996 20,820 - - - 20,820

21,012 22,884 10,239 734 54,869

At 31 January 2010

Cost or valuation

At 1 February 2009 21,012 31,116 43,021 139 95,288

Additions - 9 1,603 - 1,612

Reclassifications - - 139 (139) -

Disposals - (47) (1,160) - (1,207)

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

Representing:

At cost 192 31,078 43,603 - 74,873

At valuation – 1996 20,820 - - - 20,820

21,012 31,078 43,603 - 95,693


At 1 February 2009 - 6,973 40,087 - 47,060

Depreciation charge - 613 384 - 997

Disposals - - (818) - (818)

At 31 January 2010 - 7,586 39,653 - 47,239

Net carrying amount

At 31 January 2010

At cost 192 23,492 3,950 - 27,634

At valuation – 1996 20,820 - - - 20,820

21,012 23,492 3,950 - 48,454

Revaluation of freehold land and buildings

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

The freehold land and buildings of the Group and of the Company were revalued by the directors based on valuation carried out in 1996 by Edmund H C Ng, a partner at KGV Lambert Smith Hampton and also a member of the Institution of Surveyors, Malaysia.

Valuations were made on the basis of open market values on existing use bases.




Revaluation of freehold land and buildings cont’d

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

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Freehold land at 31 January

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

Assets held under finance leases

During the financial year, the Group and the Company acquired a property, plant and equipment at aggregate costs of

RM7,989,000 (2010: RM1,819,000) and RM7,830,000 (2010: RM1,612,000) respectively of which motor vehicles of RM816,000

was acquired by means of finance lease for the Group and the Company in previous year.

Net carrying amount of motor vehicles of the Group and of the Company held under finance lease arrangements is RM1,298,000

(2010: RM1,503,000). Leased assets are pledged as security for the related finance lease liabilities (Note 28).

Depreciation charge is recognised in the financial statements as follows:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

- income statement (Note 8) 1,559 1,201 1,335 972

- construction cost (Note 22) 42 25 42 25

Asset pledged as security

The Group’s landed properties with a carrying amount of RM43,896,000 (2010: RM44,504,000) are mortgaged to secure the

Group and the Company’s bank loans (Note 28).

15. LAND USE RIGHTS

Group

2011 2010

RM’000 RM’000

Cost

At 1 February

As previously stated 123 135

Effects of adopting the amendments to FRS 117 (123) (135)

At 31 January (restated) - -



Embrace the Future

1936 ~ 2011


15. LAND USE RIGHTS cont’d

Group

2011 2010

RM’000 RM’000

Accumulated amortisation

At 1 February

As previously stated 30 35

Effects of adopting the amendments to FRS 117 (30) (35)

At 31 January (restated) - -

Net carrying amount - -

Amount to be amortised (restated) - -

16. INTANGIBLE ASSETS

Computer

software

Development

costs Total

RM’000 RM’000 RM’000

Group/Company

Cost

At 1 February 2009 145 980 1,125

Addition - - -

At 31 January 2010 145 980 1,125

Addition 98 - 98

At 31 January 2011 243 980 1,223

Accumulated amortisation

At 1 February 2009 116 490 606

Amortisation 9 49 58

At 31 January 2010 125 539 664

Amortisation 14 49 63

At 31 January 2011 139 588 727

Net carrying amount

At 31 January 2010 20 441 461

At 31 January 2011 104 392 496



16. INTANGIBLE ASSETS cont’d

Computer software and development costs

Computer software are stated at cost less any impairment losses and are amortised on a straight-line basis over the estimated

economic useful lives at the annual rate of 20%. Impairment is assessed whenever there is an indication that the intangible asset

may be impaired. The amortisation period and the amortisation method are reviewed at least at each reporting date.

Development costs, considered to have finite useful lives, are stated at cost less any impairment losses and are amortised using

the straight-line basis from the commencement of the contract to which they relate over the period of their expected benefit not

exceeding 20 years.

Amortisation expense

The amortisation of computer software and development costs are included in the “Other operating expenses” line item in the

statement of comprehensive income.

17. INVESTMENT IN SUBSIDIARIES

Company

2011 2010

RM’000 RM’000

Shares, at cost

In Malaysia 20,009 20,009

Impairment losses (18,004) (18,004)

2,005 2,005

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

Note 39.

18. INVESTMENT IN ASSOCIATES AND INVESTMENT IN UNQUOTED DEBENTURES OF ASSOCIATE

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Unquoted shares at cost:

- in Malaysia 174 174 174 174

- outside Malaysia 2,396 2,396 - -

Share of post-acquisition reserves 15,499 15,164 - -

18,069 17,734 174 174

Unquoted debentures, outside Malaysia 6,404 9,894 - -

24,473 27,628 174 174



Embrace the Future

1936 ~ 2011


18. INVESTMENT IN ASSOCIATES AND INVESTMENT IN UNQUOTED DEBENTURES OF ASSOCIATE cont’d

In accordance with an agreement signed by a subsidiary (Asialink Pacific Limited) and the other shareholders of PNG Water

Limited dated 14 June 1999, that subsidiary had subscribed for K7,670,000 (Papua New Guinea Kina equivalent to RM9,012,000)

Class ‘B’ debentures in PNG Water Limited.

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

Class ‘B’ debentures in proportion to the debentures held by them no earlier than ten years from the last date on which any

Class ‘B’ debentures were issued. However, repayment to Class ‘B’ debenture holders is subordinated in favour of Class ‘A’

debenture holders and other creditors (including contingent obligations) of PNG Water Limited.

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

Note 39.

Unquoted debentures, outside Malaysia

Group

2011 2010

RM’000 RM’000

As at 1 February 9,894 9,251

Redemption during the year* (2,470) -

Recognised in profit and loss

- Realised exchange loss due to redemption (322) -

- Revaluation exchange (loss)/gain (698) 643

As at 31 January 6,404 9,894

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

2010 respectively during the year.

The summarised financial information of the associates, not adjusted for the proportion of ownership interest held by the Group,

is as follows:

Group

2011 2010

RM’000 RM’000

Assets and liabilities:

Total assets 146,488 173,680

Total liabilities 56,252 84,371

Results

Revenue 68,458 63,791

Profit for the year 9,150 6,705



19. INVENTORIES

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Cost

Raw materials and components 19,282 14,334 17,912 11,938

Work-in-progress 11,329 7,510 11,316 7,504

Manufactured goods 6,123 4,407 6,123 4,407

Finished goods for resale 3,080 21 2,322 -

39,814 26,272 37,673 23,849

Net realisable value

Finished goods for resale - 2,265 - 2,122

39,814 28,537 37,673 25,971

During the year, the amounts of inventories recognised as an expense in cost of sales of the Group and of the Company were RM75,497,000 (2010: RM 61,212,000) and RM79,645,000 (2010: RM63,598,000) respectively.

20. TRADE AND OTHER RECEIVABLES

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Current

Trade receivables

Third parties 28,698 25,665 27,495 24,912

Subsidiaries - - 2,073 6,784

Related parties - 10 - 10

Associates 7,820 3,778 7,820 3,778

36,518 29,453 37,388 35,484

Less: Allowance for impairment (1,126) (1,344) (1,104) (1,322)

Trade receivables, net 35,392 28,109 36,284 34,162

Other receivables

Amounts due from:


Related parties 40 40 49 40

Associates 4 135 4 28

44 175 24,664 30,418

Refundable deposits 659 223 648 209

Other receivables 2,333 1,552 126 138

3,036 1,950 25,438 30,765

Total trade and other receivables (current) 38,428 30,059 61,722 64,927



Embrace the Future

1936 ~ 2011


20. TRADE AND OTHER RECEIVABLES cont’d

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Trade and other receivables (current and non-current) 38,428 30,059 61,722 64,927

Add: Cash and bank balances (Note 24) 61,714 63,341 27,833 9,576

Unquoted debentures of associate (Note 18) 6,404 9,894 - -

Total loan and receivables 106,546 103,294 89,555 74,503

(a) Trade receivables

Trade receivables are non-interest bearing and are generally on 30 to 90 days (2010: 30 to 90 days) terms. They are

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

(b) Amounts due from related parties

Amounts due from related parties are from subsidiaries of a company in which the directors, Tan Sri Dato’ Tan Kay Hock

and Puan Sri Datin Tan Swee Bee have interest in.

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

(c) Amounts due from subsidiaries and associates

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

(d) Other receivables

Other receivables are unsecured, non-interest bearing and are generally on 30 to 90 days (2010: 30 to 90 days) terms.

Ageing analysis of trade receivables

The ageing analysis of the trade receivables is as follows:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Neither past due nor impaired 28,649 20,469 28,771 22,232

1 to 30 days past due not impaired 2,775 3,061 2,786 4,377

31 to 60 days past due not impaired 2,304 2,162 2,289 3,105

60 to 90 days past due not impaired 602 1,388 498 1,566

More than 91 days past due not impaired 1,062 1,029 1,940 2,882

6,743 7,640 7,513 11,930

Impaired 1,126 1,344 1,104 1,322

36,518 29,453 37,388 35,484



20. TRADE AND OTHER RECEIVABLES cont’d

Receivables that are neither past due nor impaired

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

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

Receivables that are past due but not impaired

Trade receivables that are past due but not impaired are unsecured.

Included in trade receivables of the Group are long outstanding balances totalling RM7,891,000 (2010: RM8,984,000) due from

90 entities (2010: 108). In determining the extent of allowance for doubtful debts, the directors have given due consideration

to the current economic conditions and other information available to assess the likelihood of impairment. Although uncertainty

generally exists with regard to the recovery of debts under the current economic conditions, the directors are of the opinion that

the allowance made for doubtful debts is adequate. It is not possible, however, to anticipate any possible future deterioration in

credit condition of these debtors.

Receivables that are impaired

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

impairment are as follows:

Trade receivables that are individually impaired:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Trade receivables – nominal amounts 36,518 29,453 37,388 35,484

Less: Allowance for impairment (1,126) (1,344) (1,104) (1,322)

35,392 28,109 36,284 34,162

Movement in allowance accounts:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

At 1 February 1,344 1,477 1,322 1,455

Charge for the year (Note 8) - 76 - 76

Reversal of impairment losses (218) (209) (218) (209)

At 31 January 1,126 1,344 1,104 1,322



Embrace the Future

1936 ~ 2011


21. OTHER CURRENT ASSETS

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Prepaid operating expenses 605 253 655 207

Amounts due from customers for contract (Note 22) 2,571 1,529 2,571 1,529

3,176 1,782 3,226 1,736

22. DUE (TO)/FROM CUSTOMERS ON CONTRACTS

Group and Company

2011 2010

RM’000 RM’000

Construction costs incurred to date 56,023 22,825

Attributable profits 23,013 7,821

79,036 30,646

Less: Progress billings (80,291) (30,152)

(1,255) 494

Presented as:

Gross amounts due from customers for contract work (Note 21) 2,571 1,529

Gross amounts due to customers for contract work (Note 30) (3,826) (1,035)

(1,255) 494

The costs incurred to date on construction contracts include the following charges made during the financial year:

Group and Company

2011 2010

RM’000 RM’000

Hire of plant and machinery 323 86

Depreciation of property, plant and equipment 42 25

Interest expense 85 671

Rental expense for building 12 2



23. INVESTMENT SECURITIES

Group

2011 2010

RM’000 RM’000

Carrying

amount

Market

value

Carrying

amount

Market

value

Current

Held for trading investments

- Equity instruments (quoted in Malaysia) 2,000 2,000 1,876 1,876

- Equity instruments (quoted outside Malaysia) 2,547 2,547 1,306 1,306

Total current investment securities 4,547 3,182

24. CASH AND CASH EQUIVALENTS

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Cash on hand and at banks 26,041 41,660 738 4,743

Short term deposits with licensed banks 35,673 21,681 27,095 4,833

Cash and bank balances 61,714 63,341 27,833 9,576

Cash at banks earns interest at floating rates based on daily bank deposit rates. Short term deposits are made for varying

periods of between 1 to 365 days (2010: between 1 to 365 days) and earn interests at the respective short term deposits rates.

The weighted average effective interest as at 31 January 2011 for the Group were between 0.1% to 16.13% (2010: 0.03% to

5.3%).

For the purpose of the statements of cash flows, cash and cash equivalents comprise the following at the reporting date:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Cash and short term deposits 61,714 63,341 27,833 9,576

Bank overdrafts (Note 28) (2,369) (1,135) (2,369) (1,135)

Cash and cash equivalents 59,345 62,206 25,464 8,441



Embrace the Future

1936 ~ 2011


25. SHARE CAPITAL

Number of ordinary

shares of 50 sen each Amount

2011 2010 2011 2010

‘000 ‘000 RM’000 RM’000

Authorised:

At 1 February/31 January 400,000 400,000 200,000 200,000

Issued and fully paid:

At 1 February 225,219 192,525 112,610 96,263

Issue of ordinary shares pursuant to conversion/

exercise of

- ICULS - 32,694 - 16,347

- ESOS 81 - 40 -

At 31 January 225,300 225,219 112,650 112,610

(a) The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares

carry one vote per share without restrictions and rank equally with regard to the Company residual assets.

(b) During the financial year, 81,000 new ordinary shares of RM0.50 each were issued upon the exercise of share options

granted pursuant to the Employee Share Options Scheme. Accordingly, the Company’s issued and paid up ordinary share

capital increased by RM40,500 to RM112,649,813.

26. EMPLOYEE BENEFITS

Employee Share Option Scheme (“ESOS”)

The George Kent (Malaysia) Berhad Employee Share Options Scheme (“ESOS”) is governed by the Bye-Laws approved by the

shareholders at an Extraordinary General Meeting held on 19 June 2003. The ESOS was implemented on 27 October 2003

and is to be in force for a period of 5 years from the date of implementation. Subsequently at the Annual General Meeting of the

company held on 22 July 2008, shareholders’ approval was obtained for the extension of the term of the ESOS for a further 5

years commencing from 27 October 2008 until 26 October 2013.

The other salient features of the ESOS are as follows:

(i) Eligible persons are employees of the Group (including executive director) who have been confirmed in the employment

of the Group and have served at least two years in the Company or its Malaysian subsidiaries, or five years in its overseas

subsidiaries before the date of the offer.

(ii) The total number of shares to be issued under the ESOS shall not exceed in aggregate 10% of the issued share capital of

the Company at any point of time during the tenure of the ESOS.

(iii) The option price for each share shall be set at the 5-days weighted average market price of the shares or at a discount

of not more than 10% from the 5-days weighted average market price of the shares at the date the option is granted.

Notwithstanding this, the option price per share shall in no event be less than its par value.

(iv) No option shall be granted for less than 1,000 shares nor more than 400,000 shares to any eligible employee.



26. EMPLOYEE BENEFITS cont’d

Employee Share Option Scheme (“ESOS”) cont’d

(v) An option granted under the ESOS shall be capable of being exercised by the grantee by notice in writing to the Company

commencing from the date of the offer but before the expiry of five years from the date of the offer.

(vi) All new ordinary shares issued upon exercise of the options granted under the ESOS shall rank pari passu in all respects

with the existing ordinary shares of the Company other than as may be specified in a resolution approving the distribution

of dividends prior to their exercise dates.

(vii) The persons to whom the options have been granted have no right to participate by virtue of the options in any share issue

of any other company.

Movement of share options during the financial year

The following table illustrates the number (“No.”) and weighted average exercise prices (“WAEP”) of, and movements in, share

options during the financial year:

Group

2011 2010

No. WAEP (RM) No. WAEP (RM)

Outstanding at 1 February 373,000 0.82 460,000 0.82

- Forfeited 9,000 0.82 87,000 0.82

- Exercised 81,000 0.82 - 0.82

Outstanding at 31 January 283,000 373,000

Exercisable at 31 January 283,000 373,000

- The weighted average share price at the date of exercise of the options exercised during the financial year was RM1.32

(2010: nil).

- The exercise price for options outstanding at the end of the year was RM0.82 (2010: RM0.82). The weighted average

remaining contractual life for these options is 2.5 years (2010: 3.5 years).



Embrace the Future

1936 ~ 2011


27. OTHER RESERVES

Asset

revaluation

reserve –

freehold

land

Foreign

currency

translation

reserve

Fair value

adjustment

reserve Total

RM’000 RM’000 RM’000 RM’000

Group

At 1 February 2009 11,508 1,478 - 12,986

Foreign currency translation - (1,549) - (1,549)

At 31 January 2010 11,508 (71) - 11,437

Asset

revaluation

reserve –

freehold

land

Foreign

currency

translation

reserve

Total

RM’000 RM’000 RM’000

At 1 February 2010 11,508 (71) 11,437

Foreign currency translation - (2,714) (2,714)

At 31 January 2011 11,508 (2,785) 8,723

Revaluation

reserve –

freehold

land

RM’000

Company

At 1 February 2009/31 January 2010 11,422

At 1 February 2010/31 January 2011 11,422

The nature and purpose of each category of reserve are as follows:

(a) Asset revaluation reserve – freehold land

The asset revaluation reserve represents increases in the fair value of freehold land and decreases to the extent that such

decreases relate to an increase on the same asset previously recognised in other comprehensive income.

(b) Foreign currency translation reserve

The foreign currency translation reserve represents exchange differences arising from the translation of the financial

statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.



28. LOANS AND BORROWINGS

Group Company

2011 2010 2011 2010

Maturity RM’000 RM’000 RM’000 RM’000

Current

Secured:

Bank overdrafts (Note 24) On demand 2,369 1,135 2,369 1,135

Revolving credits 2011 3,000 4,500 3,000 4,500

Bankers’ acceptances 2011 8,679 6,836 8,679 6,836

Term loans 2011 2,400 2,400 2,400 2,400

Finance lease liabilities 2011 226 271 226 271

16,674 15,142 16,674 15,142

Non-current

Secured:

Term loans 2014 11,056 13,456 11,056 13,456

Finance lease liabilities 2012-2016 514 740 514 740

11,570 14,196 11,570 14,196

Total loans and borrowings (Note 29) 28,244 29,338 28,244 29,338

The remaining maturities of the borrowings as at 31 January 2011 are as follows:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

On demand or within one year 16,674 15,142 16,674 15,142

More than 1 year and less than 2 years 11,218 13,684 11,218 13,684

More than 2 year and less than 5 years 352 412 352 412

More than 5 years - 100 - 100

28,244 29,338 28,244 29,338

Bank overdraft

Bank overdraft is denominated in RM, bears interest at BLR + 1% p.a. and is secured by a first, second, third and fourth charge

over a landed property of the Company.

Finance lease liabilities

These liabilities are secured over the leased assets (Note 14). The average discount rate implicit in the lease is 3.25% (2010:

3.15%) per annum.



Embrace the Future

1936 ~ 2011


28. LOANS AND BORROWINGS cont’d

RM5.0 million bank loan

This loan is secured by a legal charge over a landed property of the Company (Note 14) and is repayable quarterly in 5 years due

on 30 April 2014. This loan bears an average interest of 3.97% (2010: 3.22%) per annum.

RM12.5 million bank loan

This loan is secured by a legal charge over a landed property of the Company (Note 14) and is repayable quarterly in 5 years due

on 28 February 2014. This loan bears an average interest of 3.97% (2010: 3.22%) per annum.

RM1.0 million Revolving Credits

This short term loan is secured by a legal charge over a landed property of the Company (Note 14) and is due on 9 February

2011. This loan bears an average interest of 3.65% (2010: 3.59%) per annum.

RM2.0 million Revolving Credits

This short term loan is secured by a legal charge over a landed property of the Company (Note 14) and is due on 9 February

2011. This loan bears an average interest of 3.65% (2010: 3.59%) per annum.

RM8.7 million Bankers’ Acceptance

These borrowings are utilised by the Company to finance sales and purchases and due in year 2011. The borrowings are

secured by a legal charge over a landed property of the Company (Note 14) and bear an average interest of 3.97% (2010:

3.22%) per annum.



29. TRADE AND OTHER PAYABLES

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Current

Trade payables

Third parties 16,102 16,058 15,935 15,878

Other payables

Related parties 48 93 48 93


Associate 1,264 1,415 1,264 1,415

Accruals 4,613 4,561 3,744 3,807

Other payables 10,156 3,126 10,059 1,363

16,081 9,195 34,509 16,141

Total trade and other payables

(current and non current) 32,183 25,253 50,444 32,019

Add: loans and borrowings (Note 28) 28,244 29,338 28,244 29,338

Total financial liabilities at amortised cost 60,427 54,591 78,688 61,357

(a) Trade payables

Trade payables are non-interest bearing and the normal trade credit terms granted to the Group range from 30 to 90

days.

(b) Other payables

Other payables are non-interest bearing. These amounts are normally settled on 30 to 90-day terms.

(c) Related parties

Related parties refer to subsidiaries of a company in which the directors, Tan Sri Dato’ Tan Kay Hock and Puan Sri Datin

Tan Swee Bee have interest in. The amounts due to related parties are unsecured, non interest bearing and repayable on

demand.

(d) Amounts due to subsidiaries and associates

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



Embrace the Future

1936 ~ 2011


30. OTHER CURRENT LIABILITIES

Group and Company

2011 2010

RM’000 RM’000

Gross amounts due to customers from contract work (Note 22) 3,826 1,035

31. DEFERRED TAX

Deferred income tax as at 31 January relates to the following:

As at 1

February

2009

Recognised

in profit

or loss

As at 31

January

2010

Recognised

in profit

or loss

As at 31

January

2011

RM’000 RM’000 RM’000 RM’000 RM’000

Group

Deferred tax liabilities:

Property, plant and equipment (797) (260) (1,057) (788) (1,845)

Deferred tax assets:

Provisions - 343 343 99 442

Unutilised tax losses and unabsorbed

allowances 1,193 330 1,523 (243) 1,280

1,193 673 1,866 (144) 1,722

396 413 809 (932) (123)

Company

Deferred tax liabilities:

Property, plant and equipment (805) (252) (1,057) (758) (1,815)

Presented after appropriate offsetting as follows:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Deferred tax assets 1,722 1,866 - -

Deferred tax liabilities (1,845) (1,057) (1,815) (1,057)

(123) 809 (1,815) (1,057)



31. DEFERRED TAX cont’d

Deferred tax assets not recognised are in respect of the following items:

Group

2011 2010

RM’000 RM’000

Unused tax losses 44,302 44,292

Unabsorbed capital allowances 4,571 4,571

The unused tax losses and unabsorbed capital allowances of the Group are available indefinitely for offsetting against future

taxable profits of the respective entities within the Group, except for dormant subsidiaries which are subject to no substantial

change in shareholdings of those entities under the Income Tax Act, 1967 and guidelines issued by the tax authority.

Deferred tax assets have not been recognised in respect of unused tax losses and unabsorbed capital allowances as it is not

probable that future taxable profit will be available against which they can be utilised based on the current plan of the respective

companies.

32. COMMITMENTS

(a) Capital commitments

Capital expenditure as at the reporting date is as follows:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Approved but not contracted for property, plant

and equipment 12,479 6,693 12,479 6,693

(b) Finance lease commitments

The Group has finance leases for certain motor vehicles. These lease do not have terms of renewal, but have purchase

options at nominal values at the end of the lease term.



Embrace the Future

1936 ~ 2011


32. COMMITMENTS cont’d

(b) Finance lease commitments cont’d

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments

are as follows:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Minimum lease payments:

Not later than 1 year 265 317 265 317

Later than 1 year and not later than 2 years 189 265 189 265


Later than 5 years - 115 - 115

Total minimum future lease payments 872 1,189 872 1,189

Less: Future finance charges (132) (178) (132) (178)

Present value of finance lease liabilities (Note 28) 740 1,011 740 1,011

Present value payments:

Not later than 1 year 226 271 226 271



Later than 5 years - 100 - 100

740 1,011 740 1,011

Less: Amount due within (226) (271) (226) (271)

Amount due after 12 months 514 740 514 740



33. SIGNIFICANT RELATED PARTY TRANSACTIONS

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Transactions with subsidiaries:

- Purchases - - 10,886 9,070

- Sales - - 8,161 7,286

- Management fee income - - 418 478

- Dividend income - - 1,500 3,004

Transactions with associates:

- Sales 21,493 18,928 21,493 18,928

- Debenture interest income 1,087 1,283 - -

- Dividend income - - - 104

Transactions with corporations in which the directors

have interest in:

- Purchase of air tickets 321 292 321 292

- Purchase of tiles 414 1 - -

- Share registration charges and secretarial fees 75 81 47 54

Information regarding outstanding balances arising from related party transactions as at reporting date is disclosed in Note 20

and 29.

Compensation of key management personnel

Key management personnel includes directors of the Group and of the Company and their remuneration during the year is

disclosed in Note 10. The remunerations of other members of key management personnel (excluding directors) during the year

are as follows:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Salaries and other related costs 842 897 842 897

Benefits-in-kind 15 28 15 28

857 925 857 925



Embrace the Future

1936 ~ 2011


34. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of all financial assets and liabilities are a reasonable approximation of their fair values, except for the

following:

Financial instruments whose carrying amounts approximate fair value

Management has determined that the carrying amounts of cash and short-term deposits, receivables and payables, based on

their notional amounts, reasonably approximate their fair values because these are mostly short-term in nature or that they are

floating rate instruments that are re-priced to market interest rates on or near the reporting date.

35. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments.

The key financial risks include credit risk, liquidity risk, interest rate risk and market price risk.

The Board of Directors reviews and agrees policies and procedures for the management of these risks. The audit committee

provides independent oversight to the effectiveness of the risk management process.

It is, and has been throughout the current and previous financial year, and the Group’s policy that no derivatives shall be

undertaken except for the use as hedging instruments where appropriate and cost-efficient. The Group and the Company do

not apply hedge accounting.

The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks

and the objectives, policies and processes for the management of these risks.

(a) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its

obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For

other financial assets (including cash and bank balances), the Group and the Company minimise credit risk by dealing

exclusively with high credit rating counterparties.

The Group’s objectives are to seek continual revenue growth while minimising losses incurred due to increased credit risk

exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers

who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are

monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

Exposure to credit risk

At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by the carrying

amount of each class of financial assets recognised in the statements of financial position.

Information regarding credit enhancements for trade and other receivables is disclosed in Note 20.



35. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont’d

(a) Credit risk cont’d

Credit risk concentration profile

The Group determines concentrations of credit risk by monitoring the geographical segment of its trade receivables on an

ongoing basis. The credit risk concentration profile of the Group’s and the Company’s trade receivables at the reporting

date are as follows:

Group

2011 2010

RM’000 % of total RM’000 % of total

By country:

Malaysia 24,037 68% 25,878 92%

United Kingdom 3,184 9% 208 1%

Hong Kong 2,531 7% 851 3%

Vietnam 2,147 6% 151 1%

Others 3,493 10% 1,021 4%

35,392 100% 28,109 100%

At the reporting date, approximately:

- 38% (2010: 33%) of the Group’s trade receivables were due from 10 major customers who are multi industry

conglomerates located in Malaysia.

Financial assets that are neither past due nor impaired

Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note 20. Deposits

with banks and other financial institutions, investment securities and derivatives that are neither past due nor impaired

are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of

default.

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is diclosed in Note 20.

(b) Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to

shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the

maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between

continuity of funding and flexibility through the use of stand-by credit facilities.

The Group’s and the Company’s liquidity risk management policy is to maintain sufficient liquid financial assets and

stand-by credit facilities with different banks. At reporting date, approximately 59% (2010: 52%) of the Group and of the

Company’s loans and borrowings (Note 28) will mature in less than one year based on the carrying amount reflected in the

financial statements.



Embrace the Future

1936 ~ 2011



(b) Liquidity risk cont’d

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based

on contractual undiscounted repayment obligations.

2011

On demand

or within

one year

One to

five years

Over five

years Total

RM’000 RM’000 RM’000 RM’000

Group

Financial liabilities:

Trade and other payables 32,183 - - 32,183

Loans and borrowings 16,674 11,702 - 28,376

Total undiscounted financial liabilities 48,857 11,702 - 60,559

Company

Financial liabilities:

Trade and other payables, 50,444 - - 50,444

Loans and borrowings financial liabilities 16,674 11,702 - 28,376

Total undiscounted financial liabilities 67,118 11,702 - 78,820

(c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments

will fluctuate because of changes in market interest rates.

The Group and the Company exposure to interest rate risk arise primarily from their loans and borrowings bearing interest

at floating rates and investment in fixed rate unquoted debenture in an associate.

The interest rate risk arising from floating rate loans and borrowing are mitigated by the Group and the Company’s cash

deposits, which are generating interest income at floating rate. The Group does not hedge its investment in fixed rate

unquoted debenture in an associate as these investments are to be held to maturity. All of the Group’s and the Company’s

financial assets and liabilities at floating rates are contractually re-priced quarterly or at maturity date (2010: quarterly or at

maturity date) whichever applicable.

The Group’s policy is to manage interest cost using a mix of fixed and floating rate debts. At the reporting date,

approximately 2.6% (2010: 3.4%) of the Group’s borrowings are at fixed rates of interest.




(c) Interest rate risk cont’d

Sensitivity analysis for interest rate risk

At the reporting date, if interest rates had been 10 basis points lower/higher, with all other variables held constant, the

group’s profit net of tax would have been RM13,000 higher/lower, arising mainly as a result of lower/higher interest

expense on floating rate loans and borrowings.

(d) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of

changes in foreign exchange rates.

The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency

other than the respective functional currencies of Group entities, primarily RM. The foreign currencies in which these

transactions are denominated are mainly United States Dollar, Sterling Pound, Australian Dollar, Japanese Yen, Papua

New Guinea Kina, Singapore Dollar, Euro Dollar and Swiss Franc.

Approximately 37% (2010: 37%) of the Group’s sales are denominated in foreign currencies whilst almost 56% (2010:

45%) of costs are denominated in the foreign currencies. The Group’s trade receivable and trade payable balances at the

reporting date have similar exposures.

The Group and Company also hold cash and cash equivalents denominated in foreign currencies for working capital

purposes. At the reporting date, such foreign currency balances (mainly in SGD) amount to RM41.8 million (2010: RM41.8

million) and RM8.3 million (2010: RM4.1 million) for the Group and the Company respectively.

The Group is also exposed to currency translation risk arising from its net investments in foreign operations, including

United Kingdom, Singapore and Papua New Guinea. The Group’s investment in its Papua New Guinea subsidiary is not

hedged as currency position in Kina is considered to be long-term in nature.

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group’s profit net of tax to a reasonably possible change in the

USD, EURO, Sterling Pound, Kina, Yen, Australian and Singapore Dollar against the respective functional currencies of the

Group entities, with all other variables held constant.

Group

2011

Company

2011

RM’000 RM’000

Profit net

of tax

Profit net

of tax

USD/RM - strengthened 3% (2010: 3%) (87) (87)

- weakened 3% (2010: 3%) 87 87

EUR/RM - strengthened 3% (2010: 3%) (327) (327)

- weakened 3% (2010: 3%) 327 327

GBP/RM - strengthened 3% (2010: 3%) (15) (15)

- weakened 3% (2010: 3%) 15 15



Embrace the Future

1936 ~ 2011



(d) Foreign currency risk cont’d

Sensitivity analysis for foreign currency risk cont’d

Group

2011

Company

2011

RM’000 RM’000

Profit net

of tax

Profit net

of tax

AUD/RM - strengthened 3% (2010: 3%) 45 45

- weakened 3% (2010: 3%) (45) (45)

SGD/RM - strengthened 3% (2010: 3%) 3 3

- weakened 3% (2010: 3%) (3) (3)

JPY/RM - strengthened 3% (2010: 3%) 92 92

- weakened 3% (2010: 3%) (92) (92)

KINA/RM - strengthened 3% (2010: 3%) 176 176

- weakened 3% (2010: 3%) (176) (176)

(e) Market price risk

Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because

of changes in market price (other than interest or exchange rates).

The Group is exposed to equity price risk arising from its investment in quoted equity instruments. The quoted equity

instruments in Malaysia are listed on the Bursa Malaysia, whereas the quoted equity instruments outside Malaysia are

substantially listed in Hong Kong and Singapore Stock Exchange. These instruments are classified as held for trading or

available-for-sale financial assets. The Group does not have exposure to commodity price risk.

The Group’s objective is to manage investment returns and equity price risk using a mix of investment grade share with

steady dividend yield and non-investment grade shares with higher volatility. Any deviation from this policy is required to

be approved by the board of directors.

Sensitivity analysis for equity price risk

At the reporting date, if the market price of the equity investment had been 5% higher/lower, with all other variables held

constant, the Group’s profit net of tax would have been RM 227,000 higher/lower, arising as a result of higher/lower fair

value gains on held for trading investments in equity instruments, and the Group’s other reserve in equity would have been

no higher/lower, arising as a result of an increase/decrease in the fair value of equity instruments classified as held for

trading.



36. CAPITAL MANAGEMENT

The primary objective of the Group’s capital management is to ensure healthy capital ratios in order to support its business and

maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or

adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue

new shares. No changes were made in the objectives, policies or processes during the years ended 31 January 2011 and 31

January 2010.

The Group’s policy is to maintain a sustainable gearing ratio to meet its existing requirements taking into consideration the

facilities agreements entered into by the Group. The Group includes within the net debt, loans and borrowings, hire purchase

liabilities, trade and other payables, less cash and bank balances. Capital refers to equity attributable to owners.

Group Company

Note 2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Loans and borrowings 28,244 29,338 28,244 29,338

Trade and other payables 32,183 25,253 50,444 32,019

Less: – Cash and bank balances (61,714) (63,341) (27,833) (9,576)

Sub-total (1,287) (8,750) 50,855 51,781

Net debt - - 50,855 51,781

Equity attributable to the owners of the parent,

representing total capital 163,510 148,116 102,741 88,140

Capital and net debt 163,510 148,116 153,596 139,921

Gearing ratio - - 33% 37%



Embrace the Future

1936 ~ 2011


37. SEGMENT INFORMATION

Investment

Water

infrastructure/

engineering

Adjustments

and

elimination Notes

Per

consolidated

financial

statements

RM’000 RM’000 RM’000 RM’000

2011

Revenue:

External customers 1,500 163,537 - 165,037

Results:

Interest income 2,434 213 - 2,647

Depreciation and amortisation - 1,664 - 1,664

Share of results of associates - 1,719 - 1,719

Other non-cash expenses/(income) (308) (218) - A (526)

Segment profit (1,243) 33,368 333 B 32,458

Assets:

Investment in associates - 18,069 - 18,069

Additions to non-current assets - 8,087 - C 8,087

Segment assets 15,410 188,829 26,195 D 230,434

Segment liabilities 655 35,354 30,915 E 66,924

Investment

Water

infrastructure/

engineering

Adjustments

and

elimination Notes

Per

consolidated

financial

statements

RM’000 RM’000 RM’000 RM’000

2010

Revenue:

External customers - 124,813 - 124,813

Results:

Interest income 2,992 1,016 - 4,008

Depreciation and amortisation - 1,284 - 1,284

Share of results of associates - 1,214 - 1,214

Other non-cash expenses - 57 - A 57

Segment profit 597 25,540 (42) B 26,095



37. SEGMENT INFORMATION cont’d

Investment

Water

infrastructure/

engineering

Adjustments

and

elimination Notes

Per

consolidated

financial

statements

RM’000 RM’000 RM’000 RM’000

Assets:

Investment in associates - 17,734 - 17,734

Additions to non-current assets - 1,843 - C 1,843

Segment assets 27,694 149,426 29,494 D 206,614

Segment liabilities 555 25,733 32,210 E 58,498

Notes Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements

A Other material non-cash expenses/(income) consist of the following items as presented in the respective notes to the

financial statements:

2011 2010

RM’000 RM’000

Net fair value gain on held for trading investment activities (308) -

Inventories written down - 190

Impairment of financial assets (218) (133)

(526) 57

B The following items are added to/(deducted from) segment profit to arrive at “Profit before tax from operations”

presented in the consolidated statement of comprehensive income:

2011 2010

RM’000 RM’000

Share of results of associates 1,719 1,214

Finance costs (1,386) (1,256)

333 (42)

C Additions to non-current assets consist of:

2011 2010

RM’000 RM’000

Property, plant and equipment 7,989 1,819

Intangible assets 98 24

8,087 1,843



Embrace the Future

1936 ~ 2011



Notes Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements cont’d

D The following items are added to segment assets to arrive at total assets reported in the consolidated statement of

financial position:

2011 2010

RM’000 RM’000

Investment in associates 18,069 17,734

Investment in unquoted debentures of associate 6,404 9,894

Deferred tax assets 1,722 1,866

26,195 29,494

E The following items are added to segment liabilities to arrive at total liabilities reported in the consolidated statement

of financial position:

2011 2010

RM’000 RM’000

Deferred tax liabilities 1,845 1,057

Income tax payable 826 1,815

Loan and borrowings 28,244 29,338

30,915 32,210

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

follows:

Revenue Non-current assets

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Malaysia 152,147 111,279 55,885 49,508

Overseas 12,890 13,534 675 711

165,037 124,813 56,560 50,219

Non-current assets information presented above consist of the following items as presented in the consolidated statement of

financial position.

2011 2010

RM’000 RM’000

Property, plant and equipment 56,064 49,758

Intangible assets 496 461

56,560 50,219




Information about major customers

Revenue from ten major customers amount to RM119,779,000 (2010: RM84,262,000) arising from water infrastructure/

engineering segment.

38. AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUE

The financial statements for the year ended 31 January 2011 were authorised for issue in accordance with a resolution of the

directors on 27 May 2011.

39. SUBSIDIARIES AND ASSOCIATES

Details of the subsidiaries are as follows:

Name of subsidiaries

Country of

incorporation

Principal

activities

Proportion of

ownership interest

2011 2010

% %

Brass Alloys Sdn. Bhd. Malaysia Manufacturing

of brass rods

100 100

George Kent (Sabah) Sdn. Bhd. Malaysia Inactive 70 70

George Kent (PNG) Ltd. * Papua New

Guinea

Operation and

maintenance of

water treatment

plant

100 100

GK Equities Sdn. Bhd. Malaysia Investment

holding and

trading

100 100

Alfa Management Ltd.* Hong Kong Investment

holding and

trading

100 100

Asialink Pacific Ltd.* British Virgin

Islands

Investment

holding and

marketing

100 100

George Kent (China) Company Limited* Hong Kong Investment

holding

100 100

GK-Hardie Sdn. Bhd. Malaysia Inactive 100 100

Teknologi Air Patcandy Sdn. Bhd. Malaysia Inactive 100 100



Embrace the Future

1936 ~ 2011


39. SUBSIDIARIES AND ASSOCIATES cont’d

Name of associates

Country of

incorporation

Principal

activities

Proportion of

ownership interest

2011 2010

% %

PNG Water Limited* Papua New

Guinea

Water

concession

19 19

Meteraya Sdn. Bhd. Malaysia Marketing of

water meters

and brass

products

48 48

Pakar Sains Sdn. Bhd. Malaysia Inactive** 26 26

* subsidiaries and associate audited by firms of auditors other than Ernst & Young.

** voluntarily liquidation currently in progress.

The investment in PNG Water Limited is classified as an associate notwithstanding its 19% shareholding since a director of the

Company has been appointed to the Board of PNG Water Limited. A subsidiary of the Company is providing operation and

maintenance services to the associate and also the Group participates in the policy-making decisions and provides technical

assistance to PNG Water Limited.

The financial statements of the above associates are coterminous with those of the Group, except for PNG Water Limited which

has a financial year end of 31 March to conform with its holding company’s financial year end. For the purpose of applying the

equity method of accounting, the unaudited financial statements of PNG Water Limited for the period ended 31 December 2010

have been used and appropriate adjustments have been made for the effects of significant transactions between that date and

31 January 2011.

40. COMPARATIVES

The presentation and classification of items in the current financial statements have been consistent with previous financial

year except that certain comparative amounts have been adjusted as a result of changes in policies as disclosed in Note 2.2.

In addition, the following comparative amounts as at 31 January 2010 have been reclassified to conform with current year’s

presentation:

As previously

stated Adjustments As restated

RM’000 RM’000 RM’000

Consolidated statement of comprehensive income

Interest income 2,725 1,283 4,008

Administrative and other expenses (19,174) 19,174 -

Other operating expenses - (14,850) (14,850)

Administrative expenses - (5,607) (5,607)



41. SUPPLEMENTARY INFORMATION ON THE DISCLOSURE OF REALISED AND UNREALISED PROFIT AND LOSS

On 25 March 2010, Bursa Malaysia Securities Berhad (“Bursa Malaysia”) issued a directive to all listed issuers pursuant to

Paragraph 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements. The directive requires all listed issuers to

disclose the breakdown of the unappropriated profits or accumulated losses as at the end of the reporting period, into realised

and unrealised profits or losses.

On 20 December 2010, Bursa Malaysia further issued another directive on the disclosure and prescribed format of

presentation.

Pursuant to the directive, the amounts of realised and unrealised profits or losses included in the retained profits/(accumulated

losses) of the Group and the Company as at 31 January 2011 are as follows:

Group Company

RM’000 RM’000

Total retained profits/(accumulated losses) of the Company and its subsidiaries

- realised (94,115) (21,924)

- unrealised 2,545 (1,498)

(91,570) (23,422)

Total share of profits from associate

- realised 15,762 -

- unrealised (263) -

(76,071) (23,422)

Less: Consolidation adjustments 116,117 -

Retained profits/(accumulated losses) as per financial statements 40,046 (23,422)

The determination of realised and unrealised profits is based on the Guidance of Special Matter No.1, Determination of Realised

and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirement,

issued by Malaysian Institute of Accountants on 20 December 2010.

The disclosure of realised and unrealised profit above is solely for complying with the disclosure requirements stipulated in the

directive of Bursa Malaysia and should not be applied for any other purpose.



Embrace the Future

1936 ~ 2011


SHARE CAPITAL AS AT 18 MAY 2011

Authorised Share Capital : RM200,000,000.00

Issued and Fully Paid up Capital : RM112,651,313.00

Total No. of Shares Issued : 225,302,626

Class of Securities : Ordinary Shares of 50 sen each

Voting Rights : One (1) vote per Ordinary Share

DISTRIBUTION OF SHAREHOLDINGS AS AT 18 MAY 2011

No. of Holders % Size of Holdings No. of Shares %

211 5.34% Less than 100 shares 7,430 0.00%

1,102 27.88% 100 to 1,000 shares 940,482 0.42%

2,049 51.83% 1,001 to 10,000 shares 8,722,487 3.87%

516 13.05% 10,001 to 100,000 shares 15,452,404 6.86%

71 1.80% 100,001 to less than 5% of issued shares 123,051,892 54.62%

4 0.10% 5% and above of issued shares 77,127,931 34.23%

3,953 100.00% Total 225,302,626 100.00%

LIST OF THIRTY LARGEST REGISTERED SHAREHOLDERS AS AT 18 MAY 2011

(as shown in the Record of Depositors)

No. Name of Shareholders No. of Shares Held %

1 Star Wealth Investment Limited 31,600,000 14.03

2 HSBC Nominees (Asing) Sdn Bhd

- Exempt AN for RBS Coutts Bank Ltd (HK Branch)

16,205,831 7.19

3 Cesuco Trading Limited 16,000,000 7.10


- For Tan Swee Bee

13,322,100 5.91

5 Hectomic Limited 11,200,000 4.97

6 Kin Fai International Limited 10,675,000 4.74

7 Norris Pie Limited 9,623,257 4.27

8 OSK Nominees (Tempatan) Sdn Bhd

- Pledged securities account for Johan Equities Sdn Bhd

8,061,400 3.58

9 HSBC Nominess (Asing) Sdn Bhd

- Exempt AN for Credit Suisse (SG BR-TST-Asing)

7,707,200 3.42


- For Suncrown Holdings Limited

7,309,000 3.24

11 Asian Rim Limited 7,057,148 3.13

12 Kwok Heng Holdings Limited 7,000,000 3.11

13 HDM Nominees (Asing) Sdn Bhd

- Pledged securities account for Promoto Company Limited

6,269,000 2.78

SHAREHOLDERS’ INFORMATION


No. Name of Shareholders No. of Shares Held %

14 EB Nominees (Tempatan) Sdn Bhd

- Pledged securities account for Tan Kay Hock

5,898,000 2.62

15 Deutsche Bank (Malaysia) Berhad 5,554,817 2.47

16 Cherubim Investment (HK) Limited 5,000,000 2.22

17 HLG Nominee (Tempatan) Sdn Bhd


3,180,000 1.41

18 HLG Nominee (Asing) Sdn Bhd

- Pledged securities account for Tan Swee Bee

3,167,000 1.41

19 PM Nominees (Tempatan) Sdn Bhd

- PCB Asset Management Sdn Bhd for MUI Continental Insurance Berhad

3,000,000 1.33

20 HDM Nominees (Asing) Sdn Bhd

- Pledged securities account for Aimup Consultants Ltd

2,578,051 1.14

21 EB Nominees (Tempatan) Sdn Bhd


1,675,000 0.74

22 Mayban Securities Nominees (Asing) Sdn Bhd

- Pledged securities account for Jaginder Singh Pasricha

1,400,000 0.62

23 Leong Tok Wan @ Lim Cho Wan 1,386,000 0.62

24 Johan Equities Sdn Bhd 1,374,200 0.61

25 Kenanga Nominees (Tempatan) Sdn Bhd

- Pledged securities account for Tiong Young Kong

857,000 0.38

26 Mayban Nominees (Tempatan) Sdn Bhd

- Libra Invest Berhad for Kumpulan Wang Persaraan (Diperbadankan)

763,900 0.34

27 Citigroup Nominees (Tempatan) Sdn Bhd

- Pledged securities account for Tan Swee Bee

655,000 0.29

28 Ling Hee Leong 541,600 0.24

29 RHB Capital Nominees (Tempatan) Sdn Bhd

- Pledged securities account for Lim Chee Seong

400,000 0.18

30 Malaysian Assurance Alliance Berhad

- As Beneficial Owner (Dana Mas Maju)

367,800 0.16

189,828,304 84.25

SHAREHOLDERS’ INFORMATIONcont’d


Embrace the Future

1936 ~ 2011


SUBSTANTIAL SHAREHOLDERS (EXCLUDING BARE TRUSTEES) AS AT 18 MAY 2011

(as per Register of Substantial Shareholders)

No. of Shares Ordinary Shares of RM0.50 each

Name of Substantial Shareholder

Direct

Interest %

Deemed

Interest %

Star Wealth Investment Limited 31,600,000 14.03 - -

Cesuco Trading Limited 16,000,000 7.10 - -

Puan Sri Datin Tan Swee Bee 17,444,100 7.74 77,653,643(1) 34.47

Tan Sri Dato’ Tan Kay Hock 10,753,000 4.77 84,344,743(1) 37.44

Tan Sri Dato’ Khoo Kay Peng - - 24,058,400(2) 10.68

Malayan United Industries Berhad - - 19,058,400(3) 8.46

MUI Properties Berhad - - 16,058,400(4) 7.13

Notes:-(1) Deemed interested by virtue of their equity interest in Kwok Heng Holdings Ltd, Kin Fai International Limited and various companies, and call

options granted over all existing GKENT shares held by Star Wealth Investment Limited as well as deemed interest in shares held in each other’s

name.(2) Deemed interested through Cherubim Investment (HK) Ltd and Malayan United Industries Berhad by virtue of Section 6A(4) of the Companies

Act, 1965.(3) Deemed interested by virtue of Section 6A(4)(c) of the Companies Act, 1965 which its shareholding exceeding 15% of the issued and paid-up

capital in MUI Properties Berhad and MUI Continental Insurance Berhad.(4) Deemed interested through Bahtera Muhibbah Sdn Bhd and Cesuco Trading Limited being its wholly-owned subsidiaries which hold 58,400

and 16,000,000 shares respectively.

SHAREHOLDERS’ INFORMATIONcont’d


DIRECTORS’ INTEREST IN SHARES AS AT 18 MAY 2011

(as shown in the Register of Directors’ Holdings)

In George Kent (Malaysia) Berhad No. of Ordinary Shares of RM0.50 each

Name of Director

Direct

Interest %

Deemed

Interest %

Tan Sri Dato’ Tan Kay Hock 10,753,000 4.77 84,344,743 * 37.44

Puan Sri Datin Tan Swee Bee 17,444,100 7.74 77,653,643* 34.47

Ir. Dr. Cheong Thiam Fook - - - -

Dato’ Ir. Haji Zaidan Bin Haji Othman - - - -

Ong Seng Pheow 30,000 0.01 - -

Dato’ Paduka Dr. Ir. Hj. Keizrul Bin Abdullah 5,000 0.00 - -

* Deemed interested by virtue of their 100% equity interest in Kwok Heng Holdings Limited, Kin Fai International Limited, various companies, and

by virtue of Section 6A(4) of the Companies Act 1965 in Johan Equities Sdn Bhd, and also shares held in each other’s name including call option

granted over all existing GKENT shares held by Star Wealth Investment Limited.

STATEMENT ON DIRECTORS’ INTERESTS

In The Company And Related Corporation As At 18 May 2011


Embrace the Future

1936 ~ 2011


Location Description

Area

(Sq. metre) Tenure

Net

Book Value

RM’000

Age of

Building

(Years)

Year of

Revaluation

Year of

Acquisition

Lot 1115, 15th Mile

Jalan Dengkil

47100 Puchong

Selangor Darul Ehsan

Factory,

stores and

offices

67,870 Freehold 43,896 14 20/12/1996 1996

Section 515, Lot 6

Waigani Drive Hohola NCD,

Papua New Guinea

Double-

storey

residential

unit

230 Leasehold

99 year

Expiring on

28.05.2095

170 13 - 1997

LIST OF PROPERTIES HELDas at 31 January 2011


NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Sixtieth Annual General Meeting of the Company will be held at the Registered Office of the Company, George Kent Technology Centre, Lot 1115, Batu 15, Jalan Dengkil, 47100 Puchong, Selangor Darul Ehsan on Thursday, 7th July 2011 at 11:00 a.m. for the following purposes:-

ORDINARY BUSINESS 1. To receive the Audited Financial Statements for the year ended 31 January 2011 and the Directors’ and

Auditors’ Reports thereon.

2. To approve the payment of a final dividend of RM0.03 per 50 sen ordinary share less tax at 25% for the financial year ended 31 January 2011.

3. To re-elect Tan Sri Dato’ Tan Kay Hock who retires by rotation in accordance with Article 83 of the Articles of Association and being eligible, has offered himself for re-election.

4. To re-elect Ir. Dr. Cheong Thiam Fook who retires by rotation in accordance with Article 83 of the Articles of Association and being eligible, has offered himself for re-election.

5 To approve the payment of Directors’ fees of RM356,000 in respect of the year ended 31 January 2011

(2010 : RM293,000).

6. To re-appoint Auditors and to authorise the Directors to fix their remuneration.

SPECIAL BUSINESS 7. To consider and if thought fit, pass with or without modifications the following as Ordinary Resolution:-

Authority To Allot And Issue Shares In General Pursuant To Section 132D Of The Companies Act, 1965

“THAT pursuant to Section 132D of the Companies Act, 1965 and subject to the approvals of the relevant governmental/regulatory authorities, the Directors be and are hereby empowered to issue shares in the capital of the Company from time to time and upon the terms and conditions and for such purposes as the Directors, may in their absolute discretion deem fit including provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being AND THAT the Directors be and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the listing and quotation for the additional shares so issued AND THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.”

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

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT

NOTICE IS HEREBY GIVEN THAT subject to the approval by the shareholders at the Sixtieth Annual General Meeting, the final dividend of RM0.03 per 50 sen ordinary share less tax at 25% for year ended 31 January 2011, will be payable on 11 August 2011 to shareholders whose names appear in the Register of Members and Record of Depositors on 22 July 2011.

A Depositor shall qualify for entitlement to the dividend only in respect of:-

(a) Shares transferred into the Depositor’s securities account before 4:00 p.m. on 22 July 2011 in respect of ordinary transfers; and

(b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia

Securities Berhad.

(Please refer to Note A)

(Resolution 1)

(Resolution 2)

(Resolution 3)

(Resolution 4)

(Resolution 5)

(Resolution 6)


Embrace the Future

1936 ~ 2011


By order of the Board,

Teh Yong Fah

Company Secretary (MACS00400)

KUALA LUMPUR

Dated: 15 June 2011

Notes:-

A. This Agenda item is meant for discussion only. The provisions of Section 169 of the Companies Act, 1965 and the Articles of Association of the

Company require that the Audited Financial Statements and the Reports of the Directors and Auditors thereon be laid before the Company at

its Annual General Meeting. As such this Agenda item is not a business which requires a resolution to be put to the vote by shareholders.

1. A member of the Company entitled to attend and vote is entitled to appoint not more than two proxies to attend and vote instead of him. A

proxy need not be a member of the Company. Where a member appoints two proxies, he shall specify the proportion of his shareholdings to

be represented by each proxy.

2. To be valid, the proxy form shall be deposited at the Registered Office of the Company, George Kent Technology Centre, Lot 1115, Batu 15,

Jalan Dengkil, 47100 Puchong, Selangor Darul Ehsan not less than forty-eight (48) hours before the time appointed for holding the meeting.

Explanatory Notes on Special Business

1. Authority To Allot And Issue Shares In General Pursuant to Section 132 of the Companies Act, 1965

The proposed Ordinary Resolution if passed will empower the Directors to issue shares of the Company up to 10% of the issued capital of the

Company for the time being for such purposes as the Directors consider would be in the interest of the Company. This is also to avoid any

delays and costs in convening a general meeting to specifically approve such an issue of shares. This authority unless revoked or varied by the

Company in general meeting will expire at the next Annual General Meeting (AGM) of the Company.

The Company has not issued any new shares under this general authority which was approved at the last AGM held on 29 June 2010 and which

will lapse at the conclusion of this AGM. A renewal of this general authority is being sought at this AGM under the proposed Resolution 6. The

renewed mandate is to provide flexibility to the Company for any possible future fund raising activities including but not limited to placement of

shares for purposes of funding future investments, working capital and/or acquisitions.

NOTICE OF ANNUAL GENERAL MEETINGcont’d


DIRECTORS STANDING FOR RE-ELECTION

Pursuant to Paragraph 8.27(2) of the Bursa Malaysia Securities Berhad Listing Requirements, Directors who are standing for re-

election at the Sixtieth Annual General Meeting of the Company are as follows:-

Tan Sri Dato’ Tan Kay Hock - Article 83 of the Articles of Association

Ir. Dr. Cheong Thiam Fook - Article 83 of the Articles of Association

Dato’ Ir. Haji Zaidan bin Haji Othman, age 78, pursuant to Section 129 of the Companies Act, 1965, is required to vacate his position

as Director at the Annual General Meeting (AGM) of the Company to be held on 7 July 2011. He has intimated that he does not wish

to seek re-appointment as Director. He will therefore retire from office as Director with effect from the conclusion of this AGM.

The profile and further details of Tan Sri Dato’ Tan Kay Hock and Ir. Dr. Cheong Thiam Fook, the two Directors retiring by rotation

above, are set out on pages 20 and 22 in the Annual Report respectively. Details of any interest in securities of the Company and

their attendance of Board Meetings held during the financial year ended 31 January 2011 can be found on pages 119 and 25 in the

Annual Report respectively.

FOR SHAREHOLDERS’ INFORMATION

The Sixtieth Annual General Meeting of the Company will be held at the Registered Office of the Company, George Kent Technology

Centre, Lot 1115, Batu 15, Jalan Dengkil, 47100 Puchong, Selangor Darul Ehsan on Thursday, 7 July 2011 at 11:00 a.m.

Details of the Sixtieth Annual General Meeting are set out in the Notice of Annual General Meeting which accompanies the Annual

Report 2011 together with a Form of Proxy. They are also available on Bursa Malaysia’s website, www.bursamalaysia.com

The Company has requested Bursa Malaysia Depository in accordance with Article 57(1) of the Company’s Articles of Association and

Section 34(1) of the Securities Industry (Central Depositories) Act 1991 to issue a Record of Depository (ROD) as at 10 June 2011 for

the purpose of determining the members to whom the Notice of Sixtieth Annual General Meeting shall be given by the Company. Only

a depositor whose name appears on the ROD as at 10 June 2011 shall be given the notice of the said meeting.

The General Meeting ROD as at 4 July 2011 will determine a member who shall be entitled to attend the Sixtieth Annual General

Meeting or to appoint proxy(s) to attend and/or vote on his/her behalf.

Final dividend of RM0.03 per 50 ordinary share less tax of 25% in respect of financial year ended 31 January 2011 if approved by

the shareholders under Resolution 1 at the Sixtieth Annual General Meeting of the Company will be paid on 11 August 2011 to

shareholders as per ROD on 22 July 2011.

STATEMENT ACCOMPANYING

THE NOTICE OF ANNUAL GENERAL MEETING



Embrace the Future

1936 ~ 2011

This page has been intentionally left blank.

I/We (Company/Passport/NRIC No. )

of

being a member/members of GEORGE KENT (MALAYSIA) BERHAD hereby appoint:-

Name Address NRIC/Passport No.

Proportion of

Shareholding (%)

and/or (delete as appropriate)

Name Address NRIC/Passport No.

Proportion of

Shareholding (%)

as my/our proxy/proxies to vote for me/us on my/our behalf at the Sixtieth Annual General Meeting of the Company, to be held at the

Registered Office of the Company, George Kent Technology Centre, Lot 1115, Batu 15, Jalan Dengkil, 47100 Puchong, Selangor

Darul Ehsan on Thursday, 7th July 2011 at 11:00 a.m. and at any adjournment thereof.

I/We direct my/our proxy/proxies to vote for or against the Resolutions to be proposed at the meeting as hereunder indicated.

RESOLUTIONS For Against

1. To approve the payment of a final dividend

2. Re-election of Tan Sri Dato’ Tan Kay Hock as a Director

3. Re-election of Ir. Dr. Cheong Thiam Fook as a Director

4. To approve payment of Directors’ fees

5. Re-appointment of Auditors and to authorise the Directors to fix their remuneration

6. Authority to Directors to allot shares

(Please indicate with a cross (“X”) in the appropriate box against each Resolution how you wish your proxy/proxies to vote. If this proxy form is returned

without any indication as to how the proxy/proxies shall vote, the proxy/proxies will vote or abstain as he/their think fit.)

Dated this day of , 2011.

Signature/Common Seal*Strike out whichever is not desired.

FORM OF PROXY (Before completing the form, please refer to notes on the next page)

No. of Shares Held

CDS Account No.

Notes:-

1. Vote may be given personally or by proxy/proxies (not more than two proxies) or in the case of a corporation by a representative duly authorised.

Where a member appoints two proxies, he shall specify the proportion of his shareholdings to be represented by each proxy. The instrument

appointing proxy/proxies shall be in writing under the hand of the appointor or his attorney or if such an appointor is a corporation under its Common

Seal or the hands of its attorney. Proxy/proxies need not be a member of the Company.

2. The instrument appointing proxy/proxies and the power of attorney (if any) under which it is signed or an office copy or notarially certified copy

thereof shall be deposited at the registered office not less than forty-eight (48) hours before the time for holding the meeting or adjourned meeting

(as the case may be) at which the person named in such instrument propose to vote but no instrument (other than power of attorney under seal)

appointing proxy/proxies shall be valid after the expiration of twelve months from the date of its execution

AFFIX

POSTAGE

STAMP

1st Fold Here

Then Fold Here

The Company Secretary

GEORGE KENT (MALAYSIA) BERHAD

George Kent Technology Centre

Lot 1115, Batu 15, Jalan Dengkil

47100 Puchong

Selangor Darul Ehsan

MALAYSIA

Documents

George Kent (Malaysia) Berhad · George Kent (Malaysia) Berhad (1945-X) George Kent (Malaysia) Berhad (1945-X) Annual Report for the year ended 31 January 2011 George Kent (Malaysia)