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TIME ENGINEERING BERHAD (10039 - P)

www.timeengineering.com.my

Tower 3, Avenue 5, The Horizon, Bangsar South, No.8 Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia. Tel : + 6 03 - 2730 0300 Fax : + 6 03 - 2713 3131 Email: info@timegroup.com.my

ANNUAL REPORT 2009

TIME Engineering Berhad (10039 - P)

A N N U A L RE P O RT 2009


New Corporate Office

2

Corporate Profile

3

5 Year Financial Highlights

4

PrOdUCTIVITY OF rESOUrCES Chairman’s Statement

6

EXPanSIOn and grOWTh OF ThE BUSInESS CEO’s Review of Operations Awards and Recognition

9 13

PEOPLE and OrganISaTIOnaL dEVELOPMEnT Human Capital Development

14

SYSTEMS and PrOCESSES IMPrOVEMEnT Statement on Corporate Governance

15

Audit Committee Report

19

Statement on Internal Control

23

IMagE and PErCEPTIOn IMPrOVEMEnT

Financial Diary / Corporate Announcements 2009

30

Corporate Structure

37

Corporate Information

38

Profile of Board of Directors

39

Share Performance Chart

42

Financial Statements

43

Changes to Share Capital Structure Arising From The Completion of the Capital Restructuring

94

Analysis of Shareholdings

96

List of Properties

99

Notice of Fortieth Annual General Meeting

100

Statement Accompanying Notice of Fortieth Annual General Meeting

102

Appendix 1

103

Appendix 2

104

Corporate Social Responsibility

25

Administrative Details

105

Group Calendar of Events 2009

27

Form of Proxy

•••


A new place to call our second home - The TIME Group of Companies has relocated its operations to a new office in Bangsar South since August 2009. An 11-storey boutique office which houses TIME and its subsidiaries, Dagang Net Technologies Sdn Bhd (Dagang Net), TIME Systems Integrators Sdn Bhd (TSI), TIME Quantum Technology Sdn Bhd (TQT) and Toplink Advisory and Management Services Sdn Bhd (TOPLINK). The move to the new corporate office from three separate locations previously will enhance communications and interactions among staff apart from improving operational efficiency and cost savings. The new office will meet the Group’s future growth plans and this is also coincide with TIME’s 40th anniversary in 2010. For added convenience of our valued business partners and customers, TIME Group’s new corporate office is strategically located in the sprawling and newly developed Bangsar South which is easily accessible via Federal Highway and New Pantai Expressway.

We are here.

LoCation MaP

ouR aDDRess anD ContaCt DetaiLs

2

tiMe, tsi, tqt and toPLinK

Dagang net

Tower 3, Avenue 5, The Horizon, Bangsar South N0. 8, Jalan Kerinchi, 59200 Kuala Lumpur

Tower 3, Avenue 5, The Horizon, Bangsar South N0. 8, Jalan Kerinchi, 59200 Kuala Lumpur

General Line : 603-2730 0300

General Line : 603-2730 0200

Fax

: 603-2713 3131

Fax

: 603-2713 2121

Email

: info@timegroup.com.my

Careline

: 1-300-133-133

Website

: www.timeengineering.com.my

Email

: careline@dagangnet.com info@dagangnet.com

Website

: www.dagangnet.com

TIME EngInEErIng BErhad

Annual Report 2009


TIME Engineering Berhad (TIME) is a leading information technology (IT) infrastructure service provider that offers services and solutions catering to both domestic and international markets, ranging from E-Commerce, Managed Services, Project Fulfillment, Asset Maintenance and Contact Centre. TIME Group of Companies include Dagang Net Technologies Sdn Bhd (Dagang Net), TIME Systems Integrators Sdn Bhd (TSI), TIME Quantum Technology Sdn Bhd (TQT) and Toplink Advisory and Management Services Sdn Bhd (TOPLINK). At TIME, we are determined to be the partner of choice for customers. We embrace the convergence of various evolving technologies whilst playing our role as a partner in nation building. Guided by the mandate to help build the nation, we aim to innovate, create and share IT-driven knowledge and tools as the driving force for Malaysia’s growth and competitiveness. We are committed to continuously develop and diffuse information and communication technologies for infrastructure, content and applications. We enable tomorrow’s solutions today. A Government-Linked Company, TIME is also part of the UEM Group of Companies.

VISION To be a world class IT infrastructure service provider

MISSION •

To be a trusted and loyal business partner

To enable our customers to operate with maximum efficiency and reliability

Annual Report 2009

TIME EngInEErIng BErhad

3


Profit / (Loss) Before Taxation RM’000

Revenue RM’000

48,227

30,155

547,864 (29,372)

(15,328)

422,125

(254,390) 151,040

173,933 2005

2006

2007

2008

124,109 2009

Net Earning / (Loss) Per Share Sen

4.75

-4.50

4

2006

2007

2009

Net Assets per share RM

-4.82

0.20

0.20 0.15

2006

2008

3.05

-34.50

2005

2005

2007

TIME Engineering Berhad

2008

Annual Report 2009

2009

2005

2006

0.18 0.15

2007

2008

2009


5-Year Financial Highlights (cont’d) CONSOLIDATED BALANCE SHEETS (RM’000) 2005

As at 31 December 2006 2007

2008

2009

Investments Other Assets

813,942 186,608

631,200 299,419

429,430 327,013

348,599 207,706

348,599 148,292

Total Assets

1,000,550

930,619

756,443

556,305

496,891

Share Capital Reserves

775,245 (621,424)

775,245 (656,100)

775,245 (619,302)

775,245 (656,683)

155,049 (12,862)

153,821 12,405 776,383 57,941

119,145 11,980 647,855 151,639

155,943 15,913 397,458 187,129

118,562 19,008 335,474 83,261

142,187 21,457 303,561 29,686

1,000,550

930,619

756,443

556,305

496,891

2008

2009

Equity attributable to equity holders of the company Minority Interest Borrowings Other Liabilities Total Equity and Liabilities

CONSOLIDATED INCOME STATEMENTS (RM’000) 2005 Revenue

As at 31 December 2006 2007

173,933

422,125

547,864

151,040

124,109

Results from operating activities Finance costs Gain/(loss) on disposal of investments Impairment loss in investments Interest income Share of Results of Associates

23,980 (63,515) (770) (123,429) 602 (91,258)

40,314 (59,900) 65,217 1,758 (76,761)

57,547 (47,978) 94,982 3,440 (59,764)

51,611 (29,454) 9,382 (50,561) 3,694 -

33,728 (5,499) 1,926 -

Profit/(Loss) Before Taxation Taxation

(254,390) (7,177)

(29,372) 388

48,227 (5,941)

(15,328) (15,168)

30,155 147

Profit/(Loss) For the Year

(261,567)

(28,984)

42,286

(30,496)

30,302

Attributable to: Equity Holders of the Company Minority Interest

(266,040) 4,473

(34,676) 5,692

36,798 5,488

(37,381) 6,885

23,625 6,677

Profit/(Loss) For the Year

(261,567)

(28,984)

42,286

(30,496)

30,302

FINANCIAL HIGHLIGHTS (RM’000) 2005

2006

2007

2008

2009

173,933 (254,390) (261,567) (266,040)

422,125 (29,372) (28,984) (34,676)

547,864 48,227 42,286 36,798

151,040 (15,328) (30,496) (37,381)

124,109 30,155 30,302 23,625

% times

(60.8) 5.0

142.7 5.4

29.8 2.5

(72.4) 2.8

(17.8) 2.1

sen sen RM

(34.50) 0.20

(4.50) 0.15

4.75 0.20

(4.82) 0.15

3.05 1.33 0.18

sen times

27.5 N/A

63.5 N/A

57.0 12.0

9.5 N/A

43.0 14.1

Revenue Profit/(Loss) Before Taxation Profit/(Loss) For The Year After Taxation Profit/(Loss) Attributable to Equity Holders of the Company Financial Ratios Revenue Growth Debt/Equity ratio Net Earnings/(Loss) per Share Gross dividend per Share Net Assets per Share Closing Price Price Earnings Ratio

Annual Report 2009

TIME Engineering Berhad

5


DATUK HAJI MOHD KHALIL DATO’ HAJI MOHD NOOR Chairman/Independent Non-Executive Director

6

TIME Engineering Berhad

Annual Report 2009


Chairman’s Statement

DEAR VALUED SHAREHOLDERS On behalf of the Board of Directors of TIME Engineering Berhad, it is my pleasure to present the Annual Report for the year ended 31 December 2009. Despite the challenging business landscape, 2009 has been a year of reckoning for the TIME Group as it successfully completed its restructuring exercise, involving a capital reduction and debt restructuring in October 2009. You would be pleased to note that Bursa Malaysia Securities Berhad has lifted the PN17 status on TIME last November enabling the Company to move forward after having addressed our financial and operational viability. Beside our business partners and customers, the investment community has responded enthusiastically to the lifting of the PN17 status. Our share price responded positively following this development and the TIME Group’s success in securing several projects in late 2009.

Year 2009 in review For the financial year ended 31 December 2009, the Group recorded a decline in revenue to RM124.0 million from RM151.0 million in 2008 mainly due to the completion of the Teaching and Learning of Science and Mathematics in English Programme (“PPSMI”) project Phase V in the first quarter of 2009. The TIME Group’s operation remained profitable with an impressive operating profit margin of 24% despite the global economic downturn, lower Government budget and cutbacks in private sector spending. During the year under review, our subsidiary, Dagang Net Technologies Sdn Bhd was awarded a 5-year contract for the implementation of Malaysia’s National Single Window effective from 25 September 2009. The contract was an extension of the current trade facilitation services for the Royal Malaysian Customs. Naturally, it was a key milestone for the TIME Group’s continued growth in the trade sector. Further, I am happy to note that the Cyber Security Services operated by our subsidiary, TIME Quantum Technology Sdn Bhd continued to make inroads in the financial sector securing several new clients. Internationally, the TIME Group continued to grow its presence via strategic projects in Vietnam and Myanmar. The TIME Group has expanded from offering hardware development to providing, among others, security solutions and web portal developments. At the same time, business relationship has been established with a company in Senegal to develop a trade facilitation network project linking Africa with Asia and Europe through the electronic exchange of cross-border trade data. As part of the cost cutting measures, the TIME Group’s operations have been grouped at one location at the new corporate office in Bangsar South. The relocation has led to the reduction of overall operating expenditure and increased efficiency as a result of multi-tasking and optimization of resources.

Dividend For the financial year ended 31 December 2009, the Board of Directors is pleased to recommend a final gross dividend of 1.333 sen, less 25% tax (net 1 sen per share) on ordinary shares in issue of 775,244,683 for shareholders’ approval at the forthcoming Annual General Meeting. The dividend payment is made possible following the improvement in the Group’s results and cash flow position, due to lower interest payment arising from the restructuring of the term loan. The dividend is also to reward valued shareholders for their long patience and continued support to the Company.

Annual Report 2009

TIME Engineering Berhad

7


Chairman’s Statement (cont’d)

Prospects for 2010 With the completion of the Company’s debt restructuring and the award of the National Single Window contract by the Government, the TIME Group is poised to pursue growth opportunities in its business areas of e-commerce and ICT services. The TIME Group is confident that it will be able to sustain the operational results achieved to date and with new opportunities will show further improvement for the financial year.

Appreciation I would like to thank members of our Board for their valuable support, insights and contribution throughout the year. On behalf of the TIME Group, I would also like to record our gratitude and appreciation to Raja Azmi Raja Nazuddin who resigned on 5 June 2009 for his invaluable contributions. A warm welcome is extended to Dato’ Mohd Izzaddin Idris who was appointed to the Board on 4 August 2009. My sincere appreciation also goes to our clients, business partners, financiers, the Government and regulatory authorities, particularly the Ministry of Finance, Ministry of Education, Ministry of International Trade & Industry and the Royal Malaysian Customs for their support. And I must also thank the management and employees of the TIME Group for their unwavering support, understanding and dedicated service during the year and look forward to their continuing good work as we embark upon new chapters to realize our vision and aspirations. Thank you.

DATUK HAJI MOHD KHALIL DATO’ HAJI MOHD NOOR Chairman

30 April 2010

8

TIME Engineering Berhad

Annual Report 2009


Mr Steven Lim Kee Seng, aged 45, a Malaysian, was appointed as Chief Executive Officer of TIME Engineering Berhad (TIME) on 18 May 2009. He holds a Master of Business Administration, E-Commerce from Edith Cowan University, Australia and Diploma in Electronics Engineering from Ngee Ann Polytechnic, Singapore. He has vast experience in technical, marketing, and sales of more than 20 years, locally and internationally in various positions ranging from technical support, country manager and director, business development and played an active advisory role to a number of companies on network design including Maersk Line, Nedloyd Shipping Company, RaboBank, SLW Corporation and Raja Garuda Mas. He had served TIME from November 2005 to April 2008 as its General Manager, Corporate Development Division and prior to that he was the Head of Strategy at Multimedia Development Corporation (MDec) a Government agency responsible for the development of the Multimedia Super Corridor. He has no family relationship with any Directors and/or major shareholders of the Company, no conflict of interest with the Company, never been charged for any offence in the past 10 years and does not hold any shares in the Company and its subsidiaries.

I am pleased to report the successful implementation of several forward-moving initiatives, driven with the desire to place TIME on a firmer footing. Without a doubt, 2009 was a year of changes and challenges for the Group. Besides the challenging economy at home and abroad, the Group was further challenged with the mounting corporate debt which subsequently led to our PN17 classification. You would be pleased to note the past issues were satisfactorily addressed following the successful implementation of the Group’s corporate restructuring exercise. Our term loan, due on 30 June 2009, was restructured into 7 years redeemable secured loan stocks and interest expenses reduced from 8.5% to 2-3% per annum. And this was followed by the lifting of the PN17 status on 5 November 2009. Going forward, the Group is well placed to emerge stronger as one of Malaysia’s leading information technology infrastructure service providers after the corporate restructuring exercise. On the back of the positive outlook of Malaysia’s economy and our growing regional expansion, TIME is targeting to achieve an annual revenue growth of 15% in 2010 and the years to come. During the year under review, there were several changes to the Group’s management, including my appointment as the new Chief Executive Officer in May. Besides the corporate restructuring exercise, my priorities were primarily to drive the Group’s turnaround activities, focusing on our staff, partnership and business re-modeling. A lot of emphasis was also placed to improve resource optimization and efficiency, and costcutting measures to improve returns to shareholders.

Mr Steven Lim Kee Seng

People Staff skill sets and competencies were one of our top priorities during the year. As highlighted in the Human Capital Development section of this Annual Report, a lot of emphasis and investments were made in 2009 to enhance the technical and sales staff capabilities.

Partnership Beside from the organic enhancement of capabilities, the Group also embarked aggressively to securing strategic partners as a source of competencies and business networks. Collectively, the Group formalized a total of 9 strategic local and foreign partners in various IT network and services areas. Our choices of foreign partners are aligned to our targeted regional markets and they gave us significant jump start in pursuing our regional expansion plans.

Business Re-Modeling At the beginning of 2009, the Group undertook a review of its resources and business mix . As a result, resources were reorganized and aligned with business focus into 3 key business areas - E-Commerce, Integrated Intelligent Infrastructure and Cyber Security Services housed under specific operating subsidiaries. Supporting these business lines, sales activities were centralized at the Group level to improve account management and resource utilization whilst support functions operated under a cross-matrix model.

Annual Report 2009

TIME Engineering Berhad

9


CEO’s Review of Operations (cont’d)

E-COMMERCE

3. Electronic Permit System (ePermit)

The Group’s e-commerce businesses are anchored by its subsidiary, Dagang Net Technologies Sdn Bhd (Dagang Net). Dagang Net is Malaysia’s first and leading e-commerce service provider that provides electronic trade facilitation service to importers, exporters, forwarding agents, shipping agents as well as the Government. Its product Sistem Matlumat KastamDagang*Net (SMK-DNT) enables the electronic exchange of data, submission of documents and transmission of messages for cargo clearance. Dagang Net serves over 5,000 customers and in 2009, the SMK-DNT availability increased from 449 to 454 Customs stations nationwide.

4. Electronic Manifest System (eManifest)

eManifest is a Shipping Community System that allows the port users such as shipping agents and freight forwarders to prepare and submit Customs Conveyance Reports and Customs Cargo Reports to the respective Authorities using the Internet as the primary data carrier source. The eManifest is also designed to cater for needs of different users groups such as Shipping Agents, Port Authorities, Ship Call Number Issuing Authorities, Port Operators, Pilotage Providers and Customs.

eManifest has been fully implemented in Port Klang and Kuantan Port and was extended to Penang Port on 1 April 2010.

National Single Window On 18 September 2009, the Malaysia Government awarded Dagang Net a 5-year contract for the implementation of the National Single Window (NSW) for trade facilitation commencing from 25th September 2009. The online trade facilitation service will further streamline the paperless crossborder trade facilitation services to link trading communities to the government trade-related agencies via a single window. Together with the Government, Dagang Net implemented NSW which is known as ‘myTradeLink’ in September 2009, allowing submission of data and information securely and efficiently via a Single Window. This expedites customs clearances and reduces time and costs thus enhancing Malaysia’s trade efficiency and competitiveness. Beside the single sign on feature, myTradeLink allows data reusability, interoperability and standardisation of data by all trading communities that use this web based service for electronic exchange of trade documents.

5. Electronic Preferential Certificate of Origin (ePCO)

The ePCO is a web-based Certificate of Origin application and approval system. It is an online document that certifies the country of origin of a particular product and is intended solely to prove the origin of goods in order to satisfy customs or trade requirements. It can be used also as supporting documents for the issuance of corresponding Certificate of Origin by another authorised party.

The schemes available under ePCO are:-

The five core products and services available on myTradeLink are: 1.

Customs Declaration (eDeclare) eDeclare is a web based service that facilitates the importers, exporters and forwarding agents to prepare and submit electronic declaration to Customs. In 2009, 454 Customs stations (an increase of 5 stations from 2008) nationwide used the eDeclare application to submit their customs declarations for SMK processing.

2.

Customs Duty Payment (ePayment) ePayment is an electronic service that facilitates Customs duty payment instructions by importers, exporters or forwarding agents to banks during and after office hours using electronic fund transfers (EFT), Duty Net and Financial System Payment Gateway (FSPG). EFT is currently supported by eight (8) banks while the FSPG is supported by three (3) banks. It has been implemented in Selangor, Kuala Lumpur International Airport (KLIA) and the Johor Ports of Tanjung Pelepas and Pasir Gudang. Duty Net payments are made via CIMB Biz-Channel and it has gone live at Customs Stations in Northport, Westport, Padang Besar, Pasir Gudang, KLIA and Negeri Sembilan.

10

TIME Engineering Berhad

Annual Report 2009

ePermit is a web based service that enables importers, exporters and forwarding agents to apply for import or export permits from the relevant permit issuing authorities for processing and approval. The ePermit system was successfully implemented in 19 Other Government Agencies out of 22 in 2009. The remaining agencies are mainly in Sabah and Sarawak which are in the process of conducting their requirement studies.

ASEAN Industrial Cooperation (AICO)

Common Effective Preferential Tariff (CEPT)

Generalized System of Preferences (GSP)

Textile

Free Trade Agreement: ASEAN-China

Free Trade Agreement: Malaysia-Japan

Free Trade Agreement: Malaysia-Pakistan

Free Trade Agreement: Malaysia- Korea

OTHER E-COMMERCE INITIATIVES Beside the products and developments under the NSW initiative, Dagang Net has made inroads in development and service enhancement which stands outside of the NSW focus.


CEO’s Review of Operations (cont’d)

Financial Services Payment Gateway (FSPG)

Awards & Recognition

FSPG is a payment gateway developed by Dagang Net to facilitate secured online payment as a value-added service to customers. The FSPG currently offers our customers the services for submission of Customs duty payment to Customs. In future, FSPG will facilitate submission of other trade payment transactions as well as non-trade payment transactions such as other government agencies’ permit payment and marine insurance payment. FSPG enhances efficiency and convenience of transactions.

In 2009, Dagang Net’s Electronic Preferential Certificate of Origin (ePCO) was awarded the eAsia Award Winner 2009 (Category Trade Facilitation) and the MSC APICTA Award for Best of e-Government & Services 2009.

For duty payment, the FSPG is to multiple bank internet banking services for various electronic payment transactions which currently have the participation of three (3) major banks, namely Maybank, CIMB Bank and Public Bank. There are further plans to increase its payment channels to include mobile payment and prepaid cards. Presently, already four (4) NSW users based in Port Klang have migrated from the EFT platform to FSPG.

ASW Connectivity Dagang Net plays an important role in the ASEAN Single Window (ASW) initiative where it has been appointed as advisor to the Malaysia Government in the technical and legal working groups for the ASW matters. Further Dagang Net is also a permanent member of Pan-Asian e-Commerce Alliance and has been appointed as the technical work group leader in facilitating cross-border exchange. Dagang Net has in July 2009 implemented the Preferential Certificate of Origin exchange with Indonesia and Philippines. In 2009, Dagang Net was also awarded Phase 2 of the ASEAN Data Harmonisation Project worth USD250k by USAID (The United State Agency for International Development). It was successfully delivered in the same year.

United Nations Initiative Dagang Net is working closely with Asia Europe Alliance for Paperless Trade (ASEAL) to promote paperless trade between Asia and Europe. Dagang Net hosted the ASEAL Summit Meeting on 18 January 2010. The meeting brings together leaders and experts in international paperless trade and customs to discuss on new and emerging issues confronting the global paperless trade. Dagang Net is a member of the United Nation Economic Commission for European (UNECE). It has been appointed as the liaison for the Service Provide stakeholder group by UNECE to provide collective views and opinion on Single Window implementation as well as the Trade Facilitation Implementation Guide. Further Dagang Net is also members of United Nations Network of Expert for Paperless Trade in Asia Pacific, Center for Trade Facilitation Electronic Business and Asia Pacific Council for Trade Facilitation and Electronic Business.

INTEGRATED INTELLIGENT INFRASTRUCTURE Integrated Intelligent Infrastructure (I3 ) is part of the ‘Business Re-Modeling’ offered by subsidiary companies, TIME Quantum Technology Sdn Bhd (TQT) and TIME Systems Integrators Sdn Bhd (TSI) to provide niche value services to the customers. They include: •

Design of IT infrastructure and consultancy services for IT service implementation and enhancements by TQT; and

Implementation, operation, maintenance and support of IT equipment and systems by TSI.

These services are mainly targeted at the Government and Corporate sectors both locally and within the Indo-China region. In 2009, the Group’s notable on-going and completed projects are:

PPSMI TSI was awarded 4 phases of the project to supply multimedia teaching equipment under the Teaching and Learning of Mathematics and Science in the English Programme (PPSMI) since 2004. Support and maintenance for the final phase concluded end of March 2010.

MAMPU PCN Overhaul Project In late 2008, TSI was appointed as a sub-contractor for the Malaysian Modernisation and Management Planning Unit (MAMPU) to conduct a technology overhaul project, involving a replacement of the Asynchronous Transfer Mode Technology to Gigabit Ethernet with Multiple Protocol Label Switching at the Putrajaya Campus Network (PCN). The project was satisfactorily completed ahead of schedule in 2009. With the niche value services under I3 , TSI was awarded postimplementation support and maintenance works for a further 2 years.

Nusajaya Intelligent City Management Platform TQT was awarded a contract to design an IT blueprint for the Nusajaya Intelligent City Management Platform (NICMP) in Johor in 2008. NICMP is a city management platform that integrates all city components such as urban security and safety, transportation and utilities management, city asset management, public information, city call centre, public and private City services, environment monitoring, event and incident management. The awarded project was completed in 2009. In addition, the Group increased its sales order in 2009 and managed to expand its presence internationally. The following are 2 notable international projects secured which expanded the Group’s international footprint and credentials in this sector. Annual Report 2009

TIME Engineering Berhad

11


CEO’s Review of Operations (cont’d)

GAINDE2000: Inter-Region Linkage

Wind-Up/Sale of Dormant Companies

The Group secured its first African project with GAINDE2000 of Senegal to develop an inter-region network link between the continents of Africa, Asia and Europe. The project is to build a network across the African continent to the ASEAN and European continents to simplify the electronic exchange of cross border trade data, to help share experiences and to promote paperless trade. The Group is working in partnership with a British trading company to develop the European gateway. The project is expected to be completed by end of December 2012.

The Group also undertook to reduce its administrative costs by dispersing of its dormant companies. For the year under review, a 51% subsidiary company, Smartcard Systems (M) Sdn Bhd had been disposed off whilst seven dormant subsidiaries including Cyberplus Sdn Bhd had been placed under Members’ Voluntary Liquidation. The disposal and liquidation exercises were completed on 11 September 2009 and 30 November 2009 respectively.

Myanmar Motion Picture Enterprise Project (MMPE) The Group secured a project to supply equipment to the Myanmar Motion Picture Enterprise (MMPE) in Yangon, Myanmar. The project was undertaken in partnership with Addaudio Post Sdn Bhd, a company experienced in providing digital audit professionals with the expertise and facilities relating to audio post production, music post production and sound design. The award marks a 1st phase of total project and the Group is working towards securing a subsequent phase of more significant value.

CYBER SECURITY SERVICES The Group through subsidiary TQT continued and further expanded its sales reach for its Cyber Security Services under the brand-name FORTRESS. FORTRESS offers 24 hours, 7 days a week managed data security services for customers who require operational efficiency, risk mitigation and a cost efficient secured IT environment. Information being the vital asset for businesses, FORTRESS emphasizes on confidentiality, integrity and availability of information by managing and securing the customer’s IT systems. This allows customers to focus on building their business. Having doubled in revenue in the past year, FORTRESS has also expanded its clientele in the financial services sector with its notable clients being Mitsui Sumitomo Insurance Group, ING, RHB Bank, EON Bank and Affin Bank. In addition to the above 3 areas of strategic focus being People, Partnerships and Business Realignment, the Group also undertook various cost cutting and optimization measures.

New Corporate Headquarters The Group consolidated its 3 separated management office locations into 1 building and started operating from its new headquarter in Bangsar South in August 2009. The relocation resulted in significant improvements in operating efficiencies and cost reduction.

Shut down of a Non-Core Business Unit Further to our business re-modeling exercise and review which resulted in the Group refocusing its business mix, the Group wound up its non-core digital advertising outfit, Cyberplus Sdn Bhd, which was not profitable. TIME Engineering Berhad

Effective Tax Planning Beside the business operations, an effective tax planning also plays a significant role in the Group’s integrated financial management system. These include our continued efforts to maximize the available tax benefits for the improvement of the Group’s bottom-line. I am glad to report the results are very encouraging. The Group had on 30 March 2010 received RM19.4 million, representing the tax recoverable from Inland Revenue Board.

Variation in Results The Company had announced that the Group’s audited results for the financial year ended 31 December 2009 recorded a net profit of RM30.302 million as compared to the Group’s unaudited results of a net profit of RM21.532 million as announced on 23 February 2010. The variance between the audited results and the unaudited results previously announced, represents a variance exceeding 10%, was mainly due to the tax adjustment of RM8.936 million. Subsequent to the announcement of the unaudited results, the Company had received the confirmation from the Inland Revenue Board (“IRB”) on 12 March 2010 allowing the unabsorbed losses to be utilized. As this is an adjusting post balance sheet event as defined in Financial Reporting Standard 110 Events After the Balance Sheet Date which required an adjustment be made to the Audited Financial Statements of the Group and of the Company for the year ended 31 December 2009 to reverse the tax expense. This is also disclosed in Note 26 of the financial statements set out on page 81 of this Annual Report.

Outlook

OTHER INITIATIVES

12

Both the disposal and liquidation exercises did not have any material impacts to the Group.

Annual Report 2009

Premised on the promising footprints we have made in 2009 via business refocusing and cost reduction exercise, the Group strives forward for higher achievements and confident to give better returns to shareholders in 2010 and years to come. With this, I wish to express my gratitude to the Board of Directors, shareholders, business partners, customers and employees of TIME for their commitment and support.


Dagang Net Technologies Sdn Bhd (Dagang Net) has done the TIME Group proud again as Malaysia’s leading e-commerce service provider. Product innovation and capabilities have reinforced Dagang Net’s market leadership position in 2009, winning two prestigious awards at the E-Asia Awards and Malaysia MSC APICTA 2009 Awards. Dagang Net has won numerous local and international awards, including the prized MSC-Asia Pacific ICT (MSC-APICTA) Awards 2005 for Best of “e-Government and Services” category since 1994. TIME Quantum Technology Sdn Bhd’s (TQT) ISO/IEC 27001:2005 certification was approved and renewed by TUV Asia Pacific Ltd, an international ISO certification body, reaffirming TQT/FORTRESS’ capabilities and commitment to delivering world-class information security management system that meets clients’ expectations.

2009 E-Asia Awards for Trade Facilitation Dagang Net’s Electronic Preferential Certificate of Origin (ePCO) The E-Asia Awards, administered by Asia Pacific Council for Trade Facilitation and Electronic Business, recognizes the significance and great effort made by Dagang Net to enhance the international trade and business. Dagang Net won the prestigious “2009 E-Asia Award” under Trade Facilitation category.

Malaysia MSC APICTA 2009 Awards “Best eGovernment and Services” category Dagang Net won the Merit Award for its Electronic Preferential Certificate of Origin or ePCO application in the “Best eGovernment and Services” category. ePCO is a web-based Certificate of Origin application and approval system. It is an online document that certifies the country of origin of a particular product, and intended solely to prove the origin of goods in order to satisfy customs or trade requirements.

FORTRESS ISO/IEC 27001:2005 Certification Attaining the prestigious ISO/IEC 27001:2005 certification effectively validates TQT/ FORTRESS’s commitment to delivering a comprehensive and quality suite of Information Security Management System (ISMS) that meet clients’ expectations. The ISO/IEC 27001:2005 certification, reaffirmed by TUV Asia Pacific Ltd, also demonstrates TQT/FORTRESS’s dedication to protecting its clients’ information assets apart from addressing security concerns by defining and maintaining the strictest security policies 24 hours a day, seven days a week against information threats such as identity theft, security breaches, malware, viruses, national disasters and hackers. The certification is an internationally recognised standard that ensures adequate security controls are set within the organization to protect information and intellectual property assets.

Annual Report 2009

TIME Engineering Berhad

13


People have always been the guiding force behind the Group’s success. It is only with our employees’ support, dedication and commitment that the Group could move forward apart from meeting challenges and gaining market acceptance. During the year under review, employees’ engagement and motivation was given one of the top priorities after TIME was placed under PN17. Thereafter, the Group placed more emphasis in nurturing the employees to strive for higher performance and productivity vis-à-vis resource optimization and building greater competencies through strategic development programmes and strategic partnerships.

Employee’s Engagement & Motivation Paramount to the Group’s continued growth amidst the PN17 challenges (subsequently lifted in November 2009) is the employees’ continued commitment and motivation. The Group started the year 2009 with a series of in-house motivation activities, involving employees from all levels. The Group also held a teambuilding event specifically for the sales force to foster closer ties, cooperation and strategic thinking whilst organizational health and sports programs were also continued to enhance participation and staff morale.

Resource Optimization Our newly appointed Chief Executive Officer Steven Lim Kee Seng has put in a lot of efforts and greater emphasis on the Sales Force, introducing new incentives and building greater competitiveness. The Sales Teams in the Group were reorganised from segment-based units to sector-focused with concentration on Integrated Intelligent Infrastructure and Cyber Security Services. This is intended to improve the sales drive and implementation.

Building Competencies Upgrading of skills and competencies towards improved performance is critical to the Group’s growth and competitiveness. The Group embarked on several strategically identified courses with long term development plans starting in the areas of business intelligence, strategic communications and enhancement of decision-making in 2009 and continuing into 2010. These programs were in line with the Group’s objectives to better equip employees with capabilities to develop the strategies and execute them. The technical teams were also given priority to enhance their technical know-how and marketability via product training and accreditations. Carrying on from our ISO27001:2005 attainments, selected employees were enrolled into Lead Auditor Certifications for ISO27001:2005 as well as the Certified Information Systems Security Professional (CISSP), both of which are widely recognised market accreditations. By end 2009, the Group has also increased its certified employees from 10 to 20. Aside from the sales and technical focus, the Group also placed emphasis on leadership development via the ESQ Leadership Program which is a blend of modern management, spirituality and science to promote growth and continued motivation among the Group managers. At the support functions, the Group continued its commitment to enhance staff capabilities via various trainings and accreditations such as Human Resource and Investor Relations certifications.

Attracting & Retaining Talents Apart from recruiting and building up talents among the Group’s valued work force, talent retention and an attractive career development is also key towards realizing the Group’s goals. Among the initiatives carried out were ongoing programs to strengthen and align compensation structures to the market to attract and retain talents, and succession planning. These have resulted clearly defined development plans and career paths to mould candidates towards becoming the next generation of leaders.

14

TIME Engineering Berhad

Annual Report 2009


The Board of Directors of the Company (the Board) is pleased to report on the manner the Group has applied the principles and the extent of compliance with the best practices of corporate governance as prescribed in the Revised 2007 Malaysian Code on Corporate Governance (Revised 2007 Code) and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (Bursa Securities) during the financial year ended 31 December 2009 and up to the date of this Statement as follows:-

1. CHANGES IN BOARD COMPOSITION AND TOP MANAGEMENT

Raja Azmi Raja Nazuddin, the nominee of UEM Group Berhad, was appointed as Executive Director of the Company on 1 January 2009 and subsequently left the UEM Group and resigned from his position on 5 June 2009.

Taking into consideration the need to maintain continuity at the top management level to oversee the day-to-day operations of the TIME Group, Mr Steven Lim Kee Seng was appointed as Chief Executive Officer (CEO) of the Company on 18 May 2009. Mr Steven Lim had previously served the Company as the General Manager, Corporate Development Division from November 2005 to April 2008.

To maintain its current representation, UEM Group Berhad (UEMG) nominated Dato’ Mohd Izzaddin Idris as its second nominee for appointment to the Board of TIME. Dato’ Mohd Izzaddin, the Managing Director/CEO of UEMG was appointed as a Non-Independent Non-Executive Director on 4 August 2009.

Dato’ Mohd Izzaddin had brought with him a right mix of skills and experience to the Company.

2. CHANGES IN COMPOSITION OF BOARD COMMITTEES

Changes were made in the composition of the Board Committees to comply with the Main Market Listing Requirements and the Terms of Reference of the Nomination Committee of the Company as follows:-

(i) Audit Committee

Puan Elakumari Kantilal, a Non-Independent Non-Executive Director, was appointed as a Member of the Audit Committee effective from 17 June 2009 to fill the vacant position in the Audit Committee and to comply with paragraph 15.09(1)(c) of the Main Market Listing Requirements of Bursa Securities.

(ii) Nomination Committee

Dato’ Mohd Izzaddin Idris, a Non-Independent Non-Executive Director, was appointed as a Member of the Nomination Committee effective from 10 September 2009 to comply with the minimum number of three (3) members as set out under the Terms of Reference of the Nomination Committee.

3. RE-APPOINTMENT AND RE-ELECTION OF DIRECTORS

Tuan Haji Abdullah Yusof who is over the age of 70 years had been re-appointed as a Director of the Company pursuant to Section 129(6) of the Companies Act 1965 at the last Annual General Meeting (AGM). At the forthcoming AGM and in every subsequent year, the Company will seek the approval of its shareholders on the re-appointment of Tuan Haji Abdullah Yusof as a Director of the Company.

Pursuant to the relevant Articles of Association of the Company, the following Directors have offered themselves for reelection at the forthcoming AGM:(i)

Datuk Haji Mohd Khalil Dato’ Haji Mohd Noor; and

(ii)

Dato’ Mohd Izzaddin Idris

4. REMUNERATION SCHEME FOR NON-EXECUTIVE DIRECTORS

The Non-Executive Directors (NEDs) are paid annual fee in consideration of their service as members of the Board and the Audit Committee. In addition, the NEDs are paid attendance allowance for each Board meeting and Board Committee meeting. The NEDs including the Non-Executive Chairman are also entitled to medical and hospitalization coverage.

Annual Report 2009

TIME Engineering Berhad

15


Statement on Corporate Governance (cont’d)

The annual fees for the NEDs for the financial year 2009 would be paid at the revised rates which was agreed to by the shareholders during the 38th AGM held on 18 June 2008 but the implementation of which was defered due to the then Company’s position as an Affected PN17 Listed Issuer.

Details of the remuneration paid or payable to all NEDs of the Company who have served during the financial year ended 31 December 2009 based on the revised annual fees are shown in the table below. Directors’ Other Fees Emoluments (RM) (RM) Non-Executive Directors

294,300

Benefits in Total kind Remuneration (RM) (RM)

178,250

-

472,550

The number of NEDs of the Company who served during the financial year ended 31 December 2009 and whose remuneration fall under each successive band of RM50,000 are as follows:-

No of Directors

RM10,000 to RM50,000

RM50,001 to RM100,000

RM100,001 and above

1

4

-

Non-Executive Directors

5. MEETINGS OF BOARD AND BOARD COMMITTEES

The Company’s position as an Affected PN17 Listed Issuer since 30 April 2008 necessitated that more Board meetings were held during the financial year 2009 to resolve the matter. The PN17 classification was lifted on 5 November 2009. In addition the Board Committees also held their respective meetings in accordance with their terms of reference.

The number of meetings convened during the year and attendance of the Directors and the Chief Executive Officer (CEO) were as follows:Board Meeting

Meeting of Audit Committee

Meeting of Nomination Committee

16/17

6/7

2/2

6/6

3/3

2/2

Haji Abdullah Yusof

17/17

7/7

N/A

Dato’ Dr Gan Khuan Poh

16/17

7/7

2/2

6/6

N/A

-

17/17

4/4

N/A

9/9

4/4

N/A

Datuk Haji Mohd Khalil Dato’ Haji Mohd Noor Raja Azmi Raja Nazuddin * Resigned on 5 June 2009

Dato’ Mohd Izzaddin Idris *Appointed on 4 August 2009 Elakumari Kantilal *Appointed as Audit Committee member on 17 June 2009 Steven Lim Kee Seng * Appointed as CEO on 18 May 2010

6. TRAINING AND DEVELOPMENT OF DIRECTORS

16

In accordance with the training framework established for them, the Directors have participated in conferences, seminar and training programmes to keep abreast with the latest development on business segments and other relevant related matters which were organized by the Company, UEM Group Berhad and other organizations. The training programmes attended by the Directors include the following:-

TIME Engineering Berhad

Annual Report 2009


Statement on Corporate Governance (cont’d)

Corporate Governance and Board Effectiveness

• Essential Updates for Directors • Forbes Global CEO Conference

Audit Committee Function

• Board Audit Committee Forum • Is It Worth The Risk? Ensuring Compliance and Protecting Asset Value • Risk Management Review Session

Strategic Planning and Communication

• Crisis Communication Briefing Session • Board Strategy Forum Planning 2010-2014

Economy and Investment

• • • •

Financial Turbulence Forum Business Forum The Challenges of Implementing FRS 139 Forum Financial Industry Conference

7. COMMUNICATION WITH SHAREHOLDERS AND EXTERNAL PARTIES

The Company had adopted a Policy on Investor Relations and Communication with Shareholders. In accordance with this Policy, the Company publishes all material information as required by the regulators via the Bursa Malaysia link as well as other publications such as the annual report, quarterly financial reports and press announcements.

During the financial year, periodic announcements were made on the progress of the regularisation plan in accordance with the PN17 Listing Requirements of Bursa Securities.

There were two (2) general meetings convened during the year, that is, the 39th AGM on 22 June 2009 and the EGM on 21 August 2009. The EGM was convened for the purpose of passing the special resolution on the Proposed Capital Restructuring pursuant to the Regularisation Plan to address the Company’s PN17 status; and the ordinary resolution on the Proposed Shareholders’ Mandate for the disposal of up to 726,181,720 ordinary shares of RM1.00 each in TIME dotCom Berhad (TdC) representing up to 28.69% of TdC’s issued and paid-up share capital.

8. ACCOUNTABILITY AND AUDIT 8.1 Financial Reporting

The Board ensures that shareholders are provided with a balanced and meaningful evaluation of the Company’s financial performance, its position and its future prospects, through the issuance of Annual Audited Financial Statements and quarterly financial reports and corporate announcements on significant developments affecting the Company in accordance with the Listing Requirements of Bursa Securities.

The Board is committed to continuously provide and present a clear, balanced and comprehensive assessment of the Group’s financial performance and prospects. In order to fulfill the commitments to stakeholders, the Company ensures that the recording and reporting of financial and business information is as fair and accurate as determinable.

8.2 Statement of Directors’ Responsibility in respect of the preparation of the Audited Financial Statements

The Directors are responsible in ensuring that the Company and its subsidiaries maintain and properly keep their accounting records, the register books and other statutory documents to enable the preparation of the Audited Financial Statements with reasonable accuracy in compliance with the provisions of the Companies Act, 1965 (CA).

In preparing the financial statements, the Directors have selected and applied consistently appropriate accounting policies and made reasonable and prudent judgments and estimates. The Directors also have a general responsibility for taking such steps to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

The Statement of Directors pursuant to Section 169 of the CA is set out on page xxxx of this Annual Report.

8.3 Statement on Internal Control

The Board acknowledges its responsibility to establish a sound system of internal control that is maintained and reviewed for its adequacy and integrity.

The Statement on Internal Control furnished on pages 23 and 24 of this Annual Report provides an overview on the state of internal controls within the Group. Annual Report 2009

TIME Engineering Berhad

17


Statement on Corporate Governance (cont’d)

8.4 Relationship With Auditors

The Board has established formal and professional arrangements for maintaining an appropriate relationship with the Company’s Auditors, both external and internal. The external auditors, Messrs KPMG, provide an independent opinion, based on audit performed on the financial statements of the Group and report the same to the shareholders of the Company in accordance with Section 174 of the CA.

From time to time, the auditors highlight matters that require attention of the Audit Committee and the Board of Directors.

9. OTHER Matters 9.1 Related Party Transactions

An internal policy and procedure exists to ensure that the Company meets its obligations in connection with related party transactions. The Board, through the Audit Committee, reviews all related party transactions on a quarterly basis. A Director who has an interest in a transaction must abstain from deliberation and voting on the relevant resolution in respect of such transaction at the Board meeting.

During the financial year under review, the Group had not entered into any recurrent related party transaction which is of a revenue or trading nature other than those disclosed in the Audited Financial Statements for the year ended 31 December 2009.

9.2 Material Contracts Awarded To Directors And Substantial Shareholders

During the financial year under review, save as disclosed in the Audited Financial Statements for the year ended 31 December 2009, none of the Directors and major shareholders has any material contract with the Company and/or its subsidiaries.

9.3 Sanctions And/Or Penalties Imposed

During the financial year under review, the Group, Directors or Management have not been imposed with any sanctions and/or penalties by any regulatory authorities.

9.4 Dealing in Securities

The Company has in place the Guidelines for Dealings in Securities for Directors and Principal Officers which sets out the internal process for compliance by Directors and Principal Officers when dealing in securities during and outside the closed periods, in accordance with the relevant provisions of the Listing Requirements of Bursa Securities.

COMPLIANCE STATEMENT The Board is committed to achieving a high standard of Corporate Governance throughout the organization. The Board is satisfied that in 2009 the Company has complied with the Best Practices as set out in the Revised 2007 Malaysian Code on Corporate Governance. This Statement is issued in accordance with the Board Resolutions passed on 18 March 2010 and 13 April 2010.

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TIME Engineering Berhad

Annual Report 2009


The Audit Committee has pleasure in submitting its report for the financial year ended 31 December 2009.

1. COMPOSITION OF THE AUDIT COMMITTEE The members of the Audit Committee for the financial year are:-

Haji Abdullah Yusof

Chairman

Independent Non-Executive Director

Members

Independent Non-Executive Director

Independent Non-Executive Director

Non-Independent Non-Executive Director (member of the Malaysian Institute of Accountants)

Datuk Haji Mohd Khalil Dato’ Haji Mohd Noor Dato’ Dr. Gan Khuan Poh Elakumari Kantilal

Puan Elakumari Kantilal was appointed as a member of the Audit Committee on 17 June 2009 in compliance with paragraph 15.10(1)(c) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (Bursa Securities).

2. MEETINGS The Audit Committee held a total of seven (7) meetings during the year ended 31 December 2009. The details of attendance of each member at the Audit Committee meetings held during 2009 are as follows:-

Attendance

Haji Abdullah Yusof, Chairman

7/7

Datuk Hj Mohd Khalil Dato’ Haji Mohd Noor

6/7

Dato’ Dr. Gan Khuan Poh

7/7

Elakumari Kantilal*

4/4

*Attended all of the meetings from the date of her appointment

3. SUMMARY OF ACTIVITIES The following activities were carried out by the Audit Committee during the financial year ended 31 December 2009.

(i) Financial Reporting • •

Reviewed the Group’s quarterly unaudited financial results prior to submission to the Board of Directors for approval. Reviewed the annual audited financial statements of the Group and of the Company prior to submission to the Board of Directors for approval. The review was to ensure that the financial reporting and disclosures are in compliance with the Listing Requirements of Bursa Malaysia Securities Berhad, provisions of the Companies Act 1965, applicable approved accounting standards issued by the Malaysian Accounting Standards Board and any other relevant legal and regulatory requirements.

In the review of the annual audited financial statements, the Audit Committee discussed with Management and External Auditors the accounting principles and standards that were applied and the impact of the items to the financial statements. Annual Report 2009

TIME Engineering Berhad

19


Audit Committee Report (cont’d)

(ii) Internal Audit

Reviewed the following Internal Audit Reports:•

Audit of Information Technology and Revenue Assurance of Dagang Net Technologies Sdn Bhd dated 17 February 2009;

Audit of Business Development and Strategy Review of TIME dated 8 May 2009;

Audit on Operations and Financial Management of Dagang Net Technologies Sdn Bhd dated 16 September 2009; and

Audit on Operations of TIME Quantum Technology Sdn Bhd dated 2 October 2009.

The review was carried out to provide reasonable assurance that the internal controls relating to operational, financial and management information systems are functioning effectively in the TIME Group. •

Reviewed the Internal Auditors’ Work Progress to ensure that the internal audit services were implemented in accordance with the 2009 Internal Audit Plan.

Reviewed the implementation of the recommendations through follow-up audit reports to ensure all key risks and control issues were addressed.

Reviewed the Internal Audit Plan for the financial year 2010 to ensure that it was drawn up in accordance with the strategic objectives of the TIME Group.

(iii) External Audit •

Reviewed the External Auditors’ audit plan, audit strategy and scope of audit for the financial year 2009; and Management Letter arising from the audit of the financial statements for year 2008 together with Management’s response to the audit findings.

Received briefings from the External Auditors on the implementation of FRS 139 (Financial Instruments: Recognition and Measurement) beginning 1 January 2010.

Held meeting with the External Auditors without the presence of management.

(iv) Other Activities

20

Reviewed the Risk Register of the TIME Group on periodic basis and related party transactions on a quarterly basis.

Reviewed the status of dormant subsidiary companies in the Group; and the proposal to wind-up identified dormant subsidiary companies by way of Members’ Voluntary Liquidation prior to submission to the Board of Directors for approval. Subsequently, on 30 November 2009 seven (7) subsidiary companies which were dormant and inactive entered into a Members’ Voluntary Liquidation pursuant to Section 254(1) of the Companies Act 1965.

Reviewed the Audit Committee Report, the Statement on Internal Control and the Statement on Corporate Governance to be included in the Company’s Annual Report for 2008.

Received briefings from the Company Secretary on proposed merging of the Main Board and the Second Board to be known as the Main Market with effect from 3 August 2009; and on changes to the Listing Requirements in relation to Transactions, Related Party Transactions and Recurrent Related Party Transactions pursuant to the Main Market Listing Requirement of Bursa Securities.

TIME Engineering Berhad

Annual Report 2009


Audit Committee Report (cont’d)

4. INTERNAL AUDIT FUNCTION The internal audit function was outsourced to the Internal Audit Division of UEM Group Management Sdn Bhd (UEM Group Internal Audit) since 1 October 2008. By virtue that UEM Group Berhad is a major shareholder of the Company, the UEM Group Internal Audit is a party related to the Company. UEM Group Internal Audit reports directly to the Audit Committee and assists the Audit Committee in discharging its duties and responsibilities. The UEM Group Internal Audit undertakes the internal audit activities in conformance with the International Standards for the Professional Practice of Internal Auditing issued by the Institute of Internal Auditors. Based on the 2009 Internal Audit Plan, there were twelve (12) planned audit assignments and three (3) ad-hoc audit assignments out of which two (2) internal audit reports were issued subsequent to the year end. During the financial year 2009, there were four (4) Internal Audit Reports tabled to the Audit Committee and three (3) Audit Review Reports were tabled to the Board of Dagang Net Technologies Sdn Bhd. As set out in Section 3 above, the Audit Committee deliberated on the internal audit reports and ensured that all recommendations were duly acted upon by Management. As at 31 December 2009, the total cost incurred for the internal audit function was RM225,106 which relates to personnel cost on audit assignments (excluding out of pocket expenses).

5. TERMS OF REFERENCE OF THE AUDIT COMMITTEE The terms of reference of the Audit Committee are set out in the table below.

Membership (i)

The Audit Committee shall have a minimum of three members, of which a majority must be independent directors.

(ii)

All members of the Audit Committee shall be non-executive directors.

(iii)

At least one member of the Audit Committee must be a member of the Malaysian Institute of Accountants (MIA) or have any other equivalent qualifications recognised by the MIA.

(iv)

The Chairman of the Audit Committee must be an independent director.

(v)

All members of the Audit Committee shall hold office only so long as they serve as directors of the Company.

(vi)

Alternate directors are not eligible to become members of the Audit Committee.

Authority Of The Audit Committee (i)

To investigate any matter within its Terms of Reference.

(ii)

To have the resources to perform its duties.

(iii)

To have rights to full, free and unrestricted access to information, records, personnel and properties of the Company and other companies in the Group.

(iv)

To communicate directly with the external auditors and Head of Internal Audit.

(v)

To obtain external professional advice and secure the attendance of outside parties with relevant experience and expertise if deemed necessary.

(vi)

To hold meetings with the external auditors, without the presence of Management, if deemed necessary.

Annual Report 2009

TIME Engineering Berhad

21


Audit Committee Report (cont’d)

Functions Of The Audit Committee (i)

To review the quarterly, half yearly and year-end financial statements of the Company and its subsidiaries (the Group) for recommendation to the Board for approval, focusing on compliance with accounting standards and legal requirements, changes in accounting policies and practices and major potential risk issues.

(ii)

To assist the Board of Directors in ensuring that there is adequate and effective systems of governance, control and risk management.

(iii)

To consider the appointment of the external auditors, the audit fee and any questions of their resignation or dismissal.

(iv)

To review the external auditors’ nature and scope of the audit before commencement of the audit, review the external auditors’ audit report, management letter and responses thereto.

(v)

To review with the external auditors their evaluation of the systems and control and any comments they may have with respect to improving the system for internal control.

(vi)

To review the adequacy of the scope, functions and resources of the internal audit department, and ascertain that it has the necessary authority to carry out its work.

(vii) To review the internal audit plan and results of the internal audit process and ensure that appropriate action is taken on the recommendations of the internal audit department. (viii) To consider any related party transactions that may arise within the Group. (ix)

To consider the major findings of internal investigations and Management’s responses, and direct Management to take appropriate actions.

Frequency & Attendance At Audit Committee Meetings

22

(i)

The Audit Committee should meet regularly, at least once in every quarter, with a quorum consisting of a majority of independent directors. The Chairman of the Committee should report on each meeting to the Board. The Head of Finance, Internal Audit and a representative of the external auditors shall be entitled to attend meetings and make known their views on matters under consideration by the Committee.

(ii)

The Company Secretary acts as the secretary of the Audit Committee.

(iii)

The internal auditors of the Company, Heads of subsidiary companies and their Management teams, and when required, representatives from the external auditors, have attended Audit Committee meetings.

TIME Engineering Berhad

Annual Report 2009


INTRODUCTION Pursuant to Paragraph 15.27 (b) of the Listing Requirements of Bursa Malaysia Securities Berhad, the Board is pleased to provide the following statement which outlines the nature and scope of internal of the Group for the financial year ended 31 December 2009.

BOARD RESPONSIBILITY The Board acknowledges its responsibility for the preparation and fair presentation of 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 appreciate accounting policies; and making accounting estimates that are reasonable in the circumstances. However, given the inherent limitations in any system of internal control, such a system is designed to manage rather than eliminate the risks of failure to achieve business objectives. Consequently, it can only provide reasonable but not absolute assurance against material misstatement or loss to the Group.

RISK MANAGEMENT The Group’s risk management activities are governed by an approved risk management framework, risk management review sessions are continued and will be continued to be held, and the following key risk was given due attention to for the year under review: 1. Financial and funding risk relating to the debt obligations of the parent company; 2. Performance risk of the Group’s key investments ; and 3. Business risk on local and overseas projects. Action plans to mitigate the above identified key risk were presented. Various measures were then initiated and undertaken by the Group. During the financial year, the Group had implemented the debt restructuring by converting the outstanding term loan to a seven (7) years redeemable secured loan stock (RSLS) to mature on 31 December 2015; and with the award of new National Single Window for five (5) years concession ending 2014, the Group is now poised to pursue growth opportunities in its business areas of e-Commerce and ICT services. Business continuity planning initiatives which commenced the previous year were continued in the current year. Among others, risk assessment, business impact analysis and formulation of recovery strategies were carried out. At a major operating subsidiary, a business continuity plan has been drawn up for implementation.

Annual Report 2009

TIME Engineering Berhad

23


Statement on Internal Control (cont’d)

MONITORING AND CONTROL STRUCTURES AND PROCESSES During the year, the key structures and processes are:•

An organization structure with clear lines of reporting, delineation of responsibilities and delegation of authority which provides an auditable trail of accountability

Clearly defined authority limits for the approval of various transactions which are set out in a schedule known as the Discretionary Authority Limits

Periodic Board meetings with due notices given; agendas clearly set out; and detailed minutes maintained, are held, where significant matters are tabled to, deliberated by and decided upon by the Board, this availing the Board oversight over key issues

Board Committees with their own terms of reference, were in place to assist the Board in discharging its duties, namely:•

Audit Committee

Nomination Committee

Remuneration Committee

Documented policies and procedures are in place to promote and facilitate compliance and consistent practices in the daily operations and business activities

An independent internal audit function which performs reviews on the systems on internal controls of the Group and provides objective assessments to the Audit Committee

A process requiring departments or business units to draw up annual budgets and prepare business plans for the approval by the Board and to monitor the variance reporting on quarterly basis.

During the year, internal audit reviews were performed on various operational areas including area of information technology. Improvement opportunities were identified from the reviews and appropriate measures which were agreed by Management, were then recommended and implemented to improve the controls in the relevant areas. For 2009, there were no material losses found which would require disclosure in the Annual Report.

REVIEW BY EXTERNAL AUDITORS The external auditors have reviewed this Statement on Internal Control for the inclusion in the annual report of the Company for the year ended 31 December 2009 and reported to the Board that nothing has come to their attention that causes them to believe that the statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the system of internal controls. This statement has been approved by the Board of Directors at its meeting on 30 March 2010.

24

TIME Engineering Berhad

Annual Report 2009


Beyond the bottom-line, welfare and development of our valued employees, TIME is also committed to be a responsible corporate citizen. We also strive to meet the needs of the stakeholders, by undertaking various corporate social responsibility initiatives involving education, environment and the community. Essentially TIME’s CSR activities in 2009 were in education, environment and human capital development. We supported education and were involved in several key projects, helping the community to gain and enhance their IT knowledge and capabilities through the use of technology. The CSR initiatives in 2009 included:

Flood Relief In January 2009, the states of Kelantan, Terengganu and Pahang were hit by the year-end flood crisis affecting many schoolgoing children. The TIME Group, through TIME Systems Integrators Sdn Bhd (TSI), undertook the relief efforts for the third year running by donating over RM10,000 worth of school uniforms, books and stationeries to the affected students in these three states.

International Islamic University Malaysia (Iium) 8th Inter-School Debating Championship 2009 TIME Group contributed RM20,000 to the International Islamic University Malaysia (IIUM) Inter-School Debating Championship. TIME has supported the Inter-School Debating Championship since 2006.

TIME Group ‘Go Green Effort’ The ‘Go Green’ Programme is one of the flagship activities undertaken by TIME Group which is also in line with its CSR core theme in Environmental Protection. In support of the environment, the TIME Group undertook the following : 1. TIME For Earth EARTH HOUR is a global event to create a platform of support on climate change and instill awareness to save our planet. Malaysia participated in this global event, organised by the World Wildlife Fund, for the first time in 2009. TIME Group participated in EARTH HOUR as part of our green efforts to help protect the environment. The goal of this event was simply to turn off all lights for one hour on Saturday 28 March 2009 (8:30pm to 9.30pm) and reach the target of 1 billion participants globally.

Annual Report 2009

TIME Engineering Berhad

25


Corporate Social Responsibility (cont’d)

2. New Office Recycle Program

The Group also initiated in-house recycling programmes, educating all employees about the compelling need to go green apart from reducing wastage. Our internal green efforts included: •

Reduced stationery consumption and wastage,

Reduced utility bills – electricity and water

Reduced operational costs by undertaking “e” approach such as e-card, e-newsletter, etc,

CSR Fund includes sales of old newspapers and magazines,

Employees are encouraged to use recycled bags and bins.

TIME Support “Passionately You” Campaign TIME Group contributed to the improvement of the women’s welfare by donating RM10,000 to the “Passionately You” Campaign organized by Assunta Hospital. The contribution was linked to the Assunta Foundation for breast and cervical cancer treatments. The Assunta Foundation thanked TIME Group for its support in embarking this important cause to generate greater awareness on the need for early detection of the two most common cancer ailments affecting women.

26

TIME Engineering Berhad

Annual Report 2009


PRIMARY LITERATURE PROGRAMME CLOSING CEREMONY (PLC) – 5 May TIME continued to support the TIME Primary Literacy Programme which has to date benefited over 1,400 teachers. Introduced in 2004 as part of the Company’s Corporate Social Responsibility initiative, the programme, supported by the Education Ministry’s Curriculum Development Centre and the British Education Council Malaysia, was aimed at enhancing teaching methods among English teachers in primary schools and to make the learning process more fun for the students. The programme included workshops on innovative and effective methods in delivering lessons in the classroom apart from creative teaching materials based on the Primary Literature syllabus of the Ministry of Education.

39th ANNUAL GENERAL MEETING (AGM) – 22 June TIME held its 39th Annual General Meeting at Sunway Resort Hotel. About 600 shareholders and proxies attended the meeting.

EXTRAORDINARY GENERAL MEETING (EGM) – 21 August TIME held its EGM at Nikko Hotel Kuala Lumpur to obtain shareholders’ approval on: 1. Special Resolution 1 pertaining to the Proposed Capital Restructuring pursuant to the Regularisation Plan to address its PN17 status. 2. Ordinary Resolution 1 pertaining to the Proposed Shareholders’ Mandate for the disposal by the Company of up to 726,181,720 ordinary shares of RM1.00 each in TIME dotCom Berhad (TdC) representing up to 28.69% of TdC’s issued and paid-up share capital from the date of obtaining the shareholders’ approval up to 31 December 2015 at prices which shall not be less than RM0.48 each.

Annual Report 2009

TIME Engineering Berhad

27


Group Calendar of Events (cont’d)

FSPG AWARENESS CAMPAIGN – Sept/October Two awareness campaigns were conducted to introduce Dagang Net’s Financial Services Payment Gateway (FSPG) to the Selangor Freight Forwarders and Logistics Associations (SFFLA) members in Port Klang. The FSPG facilitates online payment for products and services, including customs duty, marine cargo insurance and payments to other government agencies.

MAJLIS HARI RAYA BERSAMA WARGA BANGSAR SOUTH – 14 October TIME Group participated in this joint open house gathering at its new corporate office building to promote the spirit of neighbourliness amongst the Bangsar South corporate community in conjunction with the Hari Raya celebrations. Invited guests included the Social Welfare Department as well as the Bukit Kerinchi community.

‘PROGRAM KHIDMAT BANTU SEKOLAH’ – 19 to 22 October TIME Group was appointed the ICT partner for ‘Program Khidmat Bantu Sekolah’ by Jabatan Pelajaran Negeri Johor (JPNJ) in collaboration with Pejabat Pelajaran Daerah dan Pusat Kegiatan Guru Kota Tinggi. The four-day programme at Kompleks Sekolah Teluk Sengat Kota Tinggi, Johor, was aimed at enhancing creativity and innovation among students and teachers using ICT. TIME’s support for this programme is an extension of its ongoing CSR’s commitment for the development of education in Malaysia through ICT.

28

TIME Engineering Berhad

Annual Report 2009


Group Calendar of Events (cont’d)

TIME AT LaoICT EXPO – 14 to 17 January 2010 TIME Group participated in the LaoICT Expo, Vientiane, Laos in January 2010 as one of the platinum partners. The highlight of the participation in Laos’ biggest ICT exhibition was the signing of a strategic partnership agreement with Datacom Co Ltd, a local ICT company, to provide cyber security services to the Central Bank of Laos. At the four-day LaoICT Expo, TIME impressed the visitors with its wide range of ICT products and services, including e-commerce, information security systems, asset management systems and digital media contents, among others.

5th ASIA EUROPE ALLIANCE SUMMIT MEETING (ASEAL) – 18 & 19 January 2010 Dagang Net hosted the 5th Asia Europe Alliance Summit Meeting which was held at Cititel MidValley. The ASEAL Paperless Trade Summit Meeting emphasizes the importance of paperless trade in the global economy by delivering a more secure and efficient international supply chain with speedier, more predictable and cost effective cross border trade. The event was officiated by YB Dato’ Mukhriz Tun Mahathir, Deputy Minister, Ministry of International Trade and Industry.

Annual Report 2009

TIME Engineering Berhad

29


during the Financial Year 2009

finanCiaL ResuLts 18 feBRuaRY 1.

Announcement of TIME Group’s Unaudited Financial Results for the fourth quarter and year ended 31 December 2008.

2.

Announcement of the Company’s Economic Profit Statement for the fourth quarter ended 31 December 2008 and Headline Key Performance Indicator (KPI) targets for financial years 2009 to 2011 which is prescribed under the GLC Transformation Program and was disclosed on a voluntary basis.

28 aPRiL Submission of the Annual Audited Accounts of the Company and its subsidiaries for the financial year ended 31 December 2008 to Bursa Malaysia Securities Berhad.

15 MaY Announcement of TIME Group’s Unaudited Financial Results and Economic Profit Statement for the first quarter ended 31 March 2009.

13 august Announcement of TIME Group’s Unaudited Financial Results and Economic Profit Statement and Half Year Review on Headline Key Performance Indicators (KPI) for the second quarter ended 30 June 2009.

12 noveMBeR Announcement of TIME Group’s Unaudited Financial Results and Economic Profit Statement for the third quarter ended 30 September 2009.

30

TIME EngInEErIng BErhad

Annual Report 2009


Financial Diary/Corporate Announcement during the Financial Year 2009 (cont’d)

ANNOUNCEMENT PURSUANT to the amended Practice Note No. 17/2005 (PN17) of the listing requirements of Bursa Malaysia Securities Berhad (Bursa Securities) and Practice Note 17 of the main market listing requirements of Bursa Securities 3 February Monthly Announcement stating that the Company was in the midst of finalising a Regularisation Plan to regularise its financial condition and will submit the Regularisation Plan to the Securities Commission and other relevant authorities for approval before the end of March 2009.

18 February A Requisite Announcement of the Company’s Regularisation Plan which comprises the following proposals:1.

Proposed Capital Reduction wherein the issued and paid-up share capital of the Company of RM775,244,683 comprising 775,244,683 ordinary shares of RM1.00 each shall be reduced to RM155,048,937 comprising 775,244,683 ordinary shares of RM0.20 each (Proposed Par Value Reduction);

2.

Proposed set-off of the Company’s share premium account standing at RM1,717,012,458 as at 31 December 2008 against the accumulated losses of the Company (Proposed Share Premium Reduction);

3.

Proposed cancellation of reserves which involves the utilisation of the capital reserve of RM18,419,328 as at 31 December 2008 to set-off against the accumulated losses of the Company (Proposed Capital Reserve Reduction);

4.

Proposed amendment to the Memorandum and Articles of Association of the Company to facilitate the change in par value of the Company’s ordinary shares from RM1.00 to RM0.20 each (Proposed M&A Amendment).

(The Proposed Par Value Reduction, Proposed Share Premium Reduction, Proposed Capital Reserve Reduction and Proposed M&A Amendment are collectively referred to as the “Proposed Capital Restructuring”). 5.

Proposed Debt Restructuring which entails the proposed issuance of 712,500,000 nominal value redeemable secured loan stocks at RM0.48 each totaling RM342,000,000 as settlement of the outstanding term loan facilities owing to Bank Pembangunan Malaysia Berhad (Proposed Debt Restructuring); and

6.

Proposed Private Placement of up to ten percent (10%) of the revised issued and paid-up share capital of the Company (Proposed Private Placement).

(The Proposed Capital Restructuring, Proposed Debt Restructuring and Proposed Private Placement are collectively referred to as the “Proposed Restructuring Exercise”).

2 March Monthly Announcement stating the update on the Regularisation Plan to be undertaken by the Company to alleviate itself from the PN17 position as follows:1.

The Proposed Regularisation Plan consisting of the Proposed Capital Restructuring, the Proposed Debt Restructuring and the Proposed Private Placement was submitted to the Securities Commission on 20 February 2009 prior to the deadline of 30 March 2009; and

2.

The Company and Bank Pembangunan Malaysia Berhad (BPMB) had on 27 February 2009 entered into a Debt Restructuring Agreement for the restructuring of the total debt owing by the Company to BPMB amounting to RM347,355,096 via the issuance of 712,500,000 nominal value redeemable secured loan stocks at RM0.48 each totaling RM342,000,000.

Annual Report 2009

TIME Engineering Berhad

31


Financial Diary/Corporate Announcement during the Financial Year 2009 (cont’d)

1 April Monthly Announcement stating that the Company’s Proposed Debt Restructuring was expected to be completed by the end of June 2009 pursuant to the approval received from the Securities Commission (Private Debt Securities Division) on 18 March 2009.

4 May Monthly Announcement stating that the Company had secured the key milestones for the implementation of the Proposed Debt Restructuring and based on the conditions which had been fulfilled the Company’s Proposed Debt Restructuring was expected to be completed by the end of June 2009.

1 June Monthly Announcement stating the updated status of the Regularisation Plan as follows:1.

The Company will be issuing 712,500,000 nominal value redeemable secured loan stocks at RM0.48 each totaling RM342,000,000 (TIME RSLS) to Bank Pembangunan Malaysia Berhad in satisfaction of the total debt owing by TIME to BPMB.

2.

The Company’s application for the Proposed Restructuring Exercise which was made on 20 February 2009 was still pending the decision from the Securities Commission.

11 June Announcement of the issuance of 712,500,000 nominal value redeemable secured loan stocks at RM0.48 each totaling RM342,000,000 (TIME RSLS) pursuant to the Debt Restructuring in accordance with the principal terms and conditions which were approved by the Securities Commission (Private Debt Securities) on 16 March 2009. The TIME RSLS was issued as settlement for the Company’s outstanding term loan facilities owing to Bank Pembangunan Malaysia Berhad (BPMB) as prescribed by the Debt Restructuring Agreement and the RSLS Subscription Agreement entered into between the Company and BPMB on 27 February 2009.

30 June Announcement of the approval obtained from the Securities Commission in its letter dated 29 June 2009 which was received by the Company on 30 June 2009 approving the Company’s Proposed Restructuring Exercise based on the following terms:1.

Proposed Capital Reduction wherein the issued and paid-up share capital of the Company of RM775,244,683 comprising 775,244,683 ordinary shares of RM1.00 each shall be reduced to RM155,048,937 comprising 775,244,683 ordinary shares of RM0.20 each (Proposed Par Value Reduction);

2.

Proposed set-off of the Company’s share premium account standing at RM1,717,012,458 as at 31 December 2008 against the accumulated losses of the Company (Proposed Share Premium Reduction);

3.

Proposed cancellation of reserves which involves the utilisation of the capital reserve of RM18,419,328 as at 31 December 2008 to set-off against the accumulated losses of the Company (Proposed Capital Reserve Reduction);

4.

Proposed Private Placement of up to 77,524,468 new TIME ordinary shares of RM0.20 each (Placement Shares) to identified investors (Proposed Private Placement); and

5.

Listing of and quotation for the Placement Shares on the Main Board of Bursa Malaysia Securities Berhad.

1 July Monthly Announcement stating that the Company will take the necessary steps to implement the Proposed Restructuring Exercise furtherance to the issuance of the TIME RSLS on 11 June 2009 and the approval received from the Securities Commission (Securities Issues Division) under Section 212(5) of the Capital Markets and Services Act, 2007 vide its letter dated 29 June 2009.

32

TIME Engineering Berhad

Annual Report 2009


Financial Diary/Corporate Announcement during the Financial Year 2009 (cont’d)

17 July Announcement of the proposal by the Company to seek its shareholders’ approval for the disposal of up to 726,181,720 ordinary shares of RM1.00 each in TIME dotCom Berhad (TdC) representing up to 28.69% of TdC’s issued and paid-up share capital, subject to the consent of Bank Pembangunan Malaysia Berhad (BPMB), to whom the TdC shares were charged pursuant to the terms and conditions of the 712,500,000 nominal value redeemable secured loan stocks of RM0.48 each totaling RM342,000,000 (TIME RSLS). The purpose of obtaining the Proposed Shareholders’ Mandate was to provide the Company with flexibility to effect the Proposed Disposal of Subject Shares at the opportune time, whereby the proceeds will be used to redeem the TIME RSLS first, as settlement of the outstanding term loan facilities owing to BPMB without the need to convene separate general meetings to seek shareholders’ approval.

3 August Monthly Announcement stating that the Company •

had on 30 July 2009 despatched a circular to its shareholders in relation to the Proposed Capital Restructuring which forms an integral part of the Proposing Restructuring Exercise; and

will be holding an EGM on Friday, 21 August 2009 for the purpose of passing a Special Resolution on the Proposed Capital Restructuring.

24 August Announcement of the application made by the Company to the High Court of Malaya on 24 August 2009 relating to the Proposed Capital Restructuring (except for the Proposed Memorandum and Articles of Association Amendment) pursuant to Section 64 of the Companies Act,1965.

1 September Monthly Announcement stating that the Company had obtained the approval from the shareholders on the Proposed Capital Restructuring at the EGM held on 21 August 2009 and made the application to the High Court of Malaya on 24 August 2009 to sanction the Proposed Capital Restructuring (except for the Proposed Memorandum and Articles of Association Amendment) pursuant to Section 64 of the Companies Act 1965.

9 September Announcement of the Company’s petition filed to the High Court of Malaya on 24 August 2009 for the Proposed Par Value Reduction, Proposed Share Premium Reduction and Proposed Capital Reserve Reduction had been fixed for hearing on 17 September 2009.

17 September Announcement of the Company’s petition for an Order for reduction of the Company’s share capital pursuant to Section 64 of the Companies Act 1965 in respect of the Proposed Par Value Reduction to reduce the Company’s issued and paid-up share capital by RM620,195,746 from RM775,244,683 to RM155,048,937 had been confirmed and sanctioned by the High Court of Malaya on 17 September 2009.

1 October Monthly Announcement stating that the High Court of Malaya had on 17 September 2009 confirmed and sanctioned the Company’s petition for an Order for the reduction of the Company’s share capital pursuant to Section 64 of the Companies Act 1965 in respect of the Proposed Par Value Reduction to reduce the Company’s issued and paid-up share capital from RM775,244,683 to RM155,048,937 (resulting in the reduction of the par value of TIME shares from RM1.00 to RM0.20); a reduction of the Company’s share premium reserve from RM1,717,012,458 to NIL and the utilisation of the Company’s capital reserve of RM18,419,328 to partially set off the accumulated losses of the Company pursuant to Sections 60 and 64 of the Companies Act, 1965.

Annual Report 2009

TIME Engineering Berhad

33


Financial Diary/Corporate Announcement during the Financial Year 2009 (cont’d)

7 October Announcement of the application made by the Company to the Securities Commission (SC) on 7 October 2009 seeking the approval from the SC to discontinue the implementation of the Proposed Private Placement being the last proposal of the Proposed Restructuring Exercise.

8 October Announcement of the lodgment of the office copy of the Order granted by the High Court of Malaya dated 17 September 2009 confirming the Company’s Proposed Par Value Reduction, Proposed Share Premium Reduction and Proposed Capital Reserve Reduction with the Companies Commission of Malaysia on 8 October 2009 pursuant to Section 64(6) of the Companies Act, 1965. Pursuant thereto, the reduction of the par value of the TIME Shares from RM1.00 to RM0.20 and the reduction of the share premium reserve and capital reserve of TIME had taken effect on 8 October 2009. In addition, the Proposed Amendment to Clause 5 of the Company’s Memorandum of Association was completed on 8 October 2009. Accordingly, the Proposed Capital Restructuring was completed on 8 October 2009.

12 October Announcement of Waiver of Bumiputera Equity Condition in relation to the Company’s Proposed Restructuring Exercise as stipulated in the Securities Commission’s approval letter dated 29 June 2009 in line with the liberalization of the bumiputera equity condition on public listed companies which was announced by the Prime Minister on 30 June 2009.

2 November Monthly Announcement stating that the Company was in the final stages of completing its implementation of the Proposed Restructuring Exercise and will seek the upliftment of the PN17 status from Bursa Securities.

3 November Announcement in relation to the Proposed Restructuring Exercise as follows:1.

The Company had on 3 November 2009 submitted a letter to the Securities Commission for the withdrawal of the application for the Proposed Variation and informing the SC that the Company does not intend to implement the Proposed Private Placement . With the notification to the SC on the discontinuance of the Proposed Private Placement, TIME had completed all proposals for its Proposed Restructuring Exercise.

2.

The Company had on 3 November 2009 written to Bursa Malaysia Securities Berhad for the upliftment of Practice Note 17 status.

4 November Announcement of the approval received from Bursa Malaysia Securities Berhad (Bursa Securities) on the upliftment of the Company from its PN17 status effective from 5 November 2009. Consequent thereto, Bursa Securities announced that the Company had regularized its financial condition and no longer triggers any of the criteria under Paragraph 2.1 of the Practice Note 17 of the Main Market Listing Requirements. The Company will be uplifted from being classified as a PN17 company effective from 5 November 2009.

34

TIME Engineering Berhad

Annual Report 2009


Financial Diary/Corporate Announcement during the Financial Year 2009 (cont’d)

GENERAL ANNOUNCEMENT 31 March

Announcement of the approval received by the Company from Bursa Malaysia Securities Berhad vide its letter dated 27 March 2009 in respect of the Company’s application dated 19 March 2009. Bursa Securities granted an extension of time of three (3) months until 30 June 2009 (Extended Timeframe) for the Company to fill a vacant position in the Audit Committee to comply with paragraph 15.10 (c) of the Listing Requirements of Bursa Securities.

28 May Issuance of Notice of Thirty Ninth Annual General Meeting (39th AGM) of the Company.

22 June Announcement of the resolutions passed at the 39th AGM of the Company held on 22 June 2009.

29 July Announcement of Extraordinary General Meeting (EGM) of the Company to be held at Junior Ballroom, Level 2 Hotel Nikko Kuala Lumpur, 165 Jalan Ampang, Kuala Lumpur on Friday, 21 August 2009 at 10.00 am for the purpose of passing the following resolutions:•

Special Resolution 1 in relation to the Proposed Capital Restructuring; and

Ordinary Resolution 1 in relation to the Proposed Shareholders’ Mandate

21 August Announcement of the following resolutions passed at the EGM of the Company held at Hotel Nikko Kuala Lumpur on 21 August 2009:•

Special Resolution 1 pertaining to the Proposed Capital Restructuring.

Ordinary Resolution 1 pertaining to the Proposed Shareholders’ Mandate for the disposal by the Company of up to 726,181,720 ordinary shares of RM1.00 each in TIME dotCom Berhad (TdC) representing up to 28.69% of TdC’s issued and paid-up share capital from the date of obtaining the shareholders’ approval up to 31 December 2015 at prices which shall not be less than RM0.48 each.

11 September Announcement of the completion of disposal of Smartcard Systems (M) Sdn Bhd, a 51% dormant subsidiary of TIME. The disposal was in line with the TIME Group’s strategy to focus on core business activities in the Information, Communication and Technology industry.

24 September Announcement of Dagang Net Technologies Sdn Bhd, a 71.25% subsidiary of TIME, had been appointed by the Government of Malaysia as the service provider responsible for developing, managing and operating the National Single Window for Trade Facilitation System for a period of five (5) years with effect from 25 September 2009.

19 November Announcement of Dagang Net Technologies Sdn Bhd, a 71.25% subsidiary of TIME, had on 19 November 2009 entered into an Agreement with the Government of Malaysia for the design, development, operation and maintenance of the National Single Window (NSW) System for the purposes of providing the NSW Services with effect from 25 September 2009.

Annual Report 2009

TIME Engineering Berhad

35


Financial Diary/Corporate Announcement during the Financial Year 2009 (cont’d)

30 November Announcement of TIME Dormant Subsidiary Companies listed below had on 30 November 2009 been placed under Members’ Voluntary Winding Up pursuant to Section 254(1) of the Companies Act 1965:1.

Cyberplus Sdn Bhd

2.

Eternaland Sdn Bhd

3.

Krisbiz Sdn Bhd

4.

X-Calibre Online Sdn Bhd

5.

Dagang Net Commerce Sdn Bhd

6.

Dagang Net Solutions Sdn Bhd

7.

Opbase Trading Sdn Bhd

CHANGES IN CORPORATE INFORMATION 30 January Announcement on the relocation of Head Office and Registered Office of the Company effective 1 February 2009 to the following address:Level 10-1, Mercu UEM Jalan Stesen Sentral 5 Kuala Lumpur Sentral 50470 Kuala Lumpur

18 May Announcement of the appointment of Mr Steven Lim Kee Seng as Chief Executive Officer of the Company with effect from 18 May 2009.

4 June Announcement of the resignation of Raja Azmi Raja Nazuddin as Executive Director of the Company with effect from 5 June 2009.

17 June Announcement of the appointment of Puan Elakumari Kantilal, a Non-Independent Non-Executive Director, as a Member of the Audit Committee effective from 17 June 2009 to comply with paragraph 15.10 (c) of the Listing Requirements of Bursa Malaysia Securities Berhad.

5 August Announcement of the appointment of Dato’ Mohd Izzaddin Idris, the Managing Director/Chief Executive Officer of UEM Group Berhad, to the Board of Directors of TIME as a Non-Independent Non-Executive Director on 4 August 2009.

12 August Announcement of change of the Company’s Registered Office and Head Office to the following address effective 17 August 2009:Tower 3, Avenue 5 The Horizon, Bangsar South No.8 Jalan Kerinchi 59200 Kuala Lumpur General Line : 03-27300300 Fax : 03-27133131

36

TIME Engineering Berhad

Annual Report 2009


as at 30 April 2010

KHAZANAH NASIONAL BERHAD 100%

UEM GROUP BERHAD 45.03%

Dagang Net Technologies Sdn Bhd (71.25%) Principal Activity Development, management and provision of B2B e-commerce and computerised transaction facilitation services.

TIME ENGINEERING BERHAD

TIME Quantum Technology Sdn Bhd (100%) Principal Activity Supply of business continuity facility services and provision of services such as consultancy for ICT projects, hardware and softwares maintenance, outsourcing of information technology requirements, information technology project management, system integration for information technology systems and turnkey project implementor.

TIME Systems Integrators Sdn Bhd (100%) Principal Activity Provides expertise in IT project management and consultancy, supply of (ICT) hardware equipment, maintenance and asset management.

Toplink Advisory and Management Services Sdn Bhd (100%) Principal Activity Provides business support services in areas of Contact Centre, Business Process Outsourcing and Consultancy.

Annual Report 2009

TIME Engineering Berhad

37


as at 30 April 2010 Board of Directors

Board Committees

DATUK HAJI MOHD KHALIL DATO’ HAJI MOHD NOOR

Audit Committee

Independent Non-Executive Director

Haji Abdullah Yusof, Chairman Datuk Haji Mohd Khalil Dato’ Haji Mohd Noor Dato’ Dr Gan Khuan Poh Elakumari Kantilal (Appointed on 17 June 2009)

DATO’ DR GAN KHUAN POH

Nomination Committee

DATO’ MOHD IZZADDIN IDRIS*

Datuk Haji Mohd Khalil Dato’ Haji Mohd Noor, Chairman Dato’ Dr Gan Khuan Poh Dato’ Mohd Izzaddin Idris (Appointed on 10 September 2009)

Chairman/Independent Non-Executive Director

HAJI ABDULLAH YUSOF

Independent Non-Executive Director

Non-Independent Non-Executive Director (Appointed on 4 August 2009)

ELAKUMARI KANTILAL*

Non-Independent Non-Executive Director *Nominees of UEM Group Berhad

Remuneration Committee Elakumari Kantilal, Chairperson Datuk Haji Mohd Khalil Dato’ Haji Mohd Noor Haji Abdullah Yusof Dato’ Dr Gan Khuan Poh

Company Secretary

Registered Office

Sapiah Jamaludin

Tower 3, Avenue 5 The Horizon, Bangsar South No. 8 Jalan Kerinchi 59200 Kuala Lumpur Tel : (03) 2730 0300 Fax : (03) 2713 3131/2730 0457 Website: www.timeengineering.com.my

MAICSA 0807355

Share Registrar Mega Corporate Services Sdn Bhd Level 15-2, Faber Imperial Court Jalan Sultan Ismail, 50250 Kuala Lumpur Tel : (03) 2692 4271 Fax : (03) 2732 5399 / (03) 2732 5388

Auditors

Main Market of Bursa Malaysia Securities Berhad

Messrs KPMG (AF0758) (Chartered Accountants) Level 10, KPMG Tower, 8 First Avenue, Bandar Utama 47800 Petaling Jaya, Selangor Tel : (03) 7721 3388 Fax : (03) 7721 3399

Principal bankers

Principal Solicitors

AmIslamic Bank Berhad Bank Muamalat Malaysia Berhad Bank Kerjasama Rakyat Malaysia Berhad CIMB Bank Berhad Public Bank Berhad

Messrs Abu Talib Shahrom Messrs Deol & Gill Messrs Zul Rafique & Partners

Stock Exchange Listing

(Listed since 12 September 1983)

38

TIME Engineering Berhad

Annual Report 2009


Datuk Haji Mohd Khalil Dato’ Haji Mohd Noor

Datuk Haji Mohd Khalil Dato’ Haji Mohd Noor, aged 69, a Malaysian, was appointed as the Chairman of the Company on 31 October 2001 following his appointment as an Independent Non-Executive Director on 22 October 2001. He is also the member of the Audit and Remuneration Committees and Chairman of the Nomination Committee of the Company. He holds a B.A. (Honours) Degree in Economics and Islamic Studies from University of Malaya and Diploma in Commercial Policy from Geneva. He is a former public servant and his last position in the public service was Auditor General of Malaysia from 1994 to 2000. Some of the other positions he held during his 36 years of distinguished service in the public sector were Secretary Foreign Investment

Haji Abdullah Yusof

Haji Abdullah Yusof, aged 74, a Malaysian, was appointed as an Independent Non-Executive Director on 22 October 2001. He is also the Chairman of the Audit Committee and member of the Remuneration Committee of the Company. He is a mining engineer who graduated from the Camborne School of Metalliferous Mining, United Kingdom in 1961. He has over 35 years experience in the mining tin industry and related activities, having held various positions in the Osborne & Chappel Group of Companies, which were involved in mine management and consultancy both locally and at international level. He is a Fellow of the Institute of Materials, Minerals and Mining, United Kingdom and Fellow of the Institution of Mineral Engineers Malaysia. He is also a

Committee in the Prime Minister’s Department, Secretary Finance Division in the Ministry of Finance, Deputy Secretary General in the Ministry of Trade and Industry and Secretary General at the Ministry of Works. He also sits on the Board of IOI Corporation Berhad, MNRB Holdings Berhad, Malaysian Reinsurance Berhad, MNRB Retakaful Berhad and is a Trustee of Yayasan Tan Sri Dato’ Lee Shin Cheng. He has no family relationship with any Director and/or major shareholder of the Company, no conflict of interest with the Company, never been charged for any offence in the past 10 years. He attended 16 out of 17 Board Meetings which were held in the financial year ended 31 December 2009.

registered Professional Engineer (Mining) with the Board of Engineers Malaysia, a council member of the Malaysian Chamber of Mines and the Tin Industry (Research and Development) Board. He is currently the Executive Chairman of Osborne & Chappel International Sdn Bhd and a Non-Executive Chairman of Ireka Corporation Berhad. He also sits on the Board of Gopeng Berhad and several other private limited companies. He has no family relationship with any Director and/or major shareholder of the Company, no conflict of interest with the Company, never been charged for any offence in the past 10 years and does not hold any shares in the Company and its subsidiaries. He attended all of the 17 Board Meetings which were held in the financial year ended 31 December 2009.

Annual Report 2009

TIME Engineering Berhad

39


Profile of Board of Directors (cont’d)

DATO’ DR GAN KHUAN POH

Dato’ Dr Gan Khuan Poh, aged 65, a Malaysian was appointed as an Independent Non-Executive Director of the Company on 12 November 2001. He is also the member of the Audit, Remuneration and Nomination Committees of the Company. He holds a Ph.D (Economics) and M.A. (Economics) from Duke University, NC, USA, M.B.A. (Finance) from Cornell University, New York, USA and B.A. (Hons.) (Business Economics) from University of Malaya. He started as a Government Service Officer in 1967 and served for 31 years at various positions ranging from the District level, the National Institute of Public Administration (INTAN) to the Prime Minister’s Department as Senior Director responsible for Macroeconomics in the Economic Planning Unit. He later joined the Pilecon Group of Companies in 1997

ELAKUMARI KANTILAL

Elakumari Kantilal, aged 53, a Malaysian, was appointed as a NonIndependent Non-Executive Director of the Company on 22 October 2001. She is also the Chairperson of the Remuneration Committee and a member of the Audit Committee of the Company. She holds a Master of Science in Finance & Accounting from the University of East Anglia, United Kingdom and a Bachelor of Accounting from the Universiti Kebangsaan Malaysia. She is a member of the Malaysian Institute of Accountants. She started her career with the Accountant General’s office in 1981 and later served the Division on Monitoring of Government Owned Enterprises in the Ministry of Finance from 1986 to

40

TIME Engineering Berhad

Annual Report 2009

as Executive Director responsible for Group Finance and Corporate Planning and later as its Managing Director until the end of year 2000. He is currently the President of the Malaysian Economic Association (MEA) and sits on the Board of Silver Bird Group Berhad, Permodalan Bank Simpanan Nasional Berhad, Prudential Assurance Malaysia Berhad and several other companies. He has no family relationship with any Director and/or major shareholder of the Company, no conflict of interest with the Company, never been charged for any offence in the past 10 years and does not hold any shares in the Company and its subsidiaries. He attended 16 out of the 17 Board Meetings which were held in the financial year ended 31 December 2009.

1994. In September 1994, she joined Khazanah Nasional Berhad as the Senior Manager and in November 2004, she was appointed as the Director of Investment. She also sits on the Board of TIME dotCom Berhad and Faber Group Berhad and several other private limited companies. She has no family relationship with any Director and/or major shareholder of the Company, no conflict of interest with the Company, never been charged for any offence in the past 10 years and does not hold any shares in the Company and its subsidiaries. She attended all of the 17 Board Meetings which were held in the financial year ended 31 December 2009.


Profile of Board of Directors (cont’d)

Dato’ Mohd Izzaddin Idris

Dato’ Mohd Izzaddin Idris, aged 48, a Malaysian, was appointed as a NonIndependent Non-Executive Director of the Company on 4 August 2009. He is also the member of the Nomination Committee of the Company. He holds a Bachelor of Commerce from the University of New South Wales, Australia. He is a member of the CPA Australia and also a member of the Malaysian Institute of Accountants. Dato’ Mohd Izzaddin has over 20 years’ experience in investment banking, financial and general management and was previously the Chief Financial Officer/Senior Vice President (Group Finance) of Tenaga Nasional Berhad, a position he held from September 2008 to June 2009. He was formerly a Senior Vice President (Corporate Finance) of Southern Bank Berhad and the Chief Financial Officer of Ranhill Berhad. He also held the position of Chief Operating Officer of Malaysian Resources Corporation Berhad in the late 1990s. In addition, he had served with Malaysian International Merchant Bankers Berhad

for almost 11 years which included a 3-year secondment in the late 1980s to Barclays de Zoete Wedd Limited, a London-based investment bank and a subsidiary of Barclays Bank PLC then. He was voted as 2nd best CFO in Malaysia by Finance Asia in 2007. He is currently the Managing Director/ Chief Executive Officer of UEM Group Berhad and also a Non-Executive Deputy Chairman of PLUS Expressways Berhad. He holds directorships in Cement Industries of Malaysia Berhad, Opus Group Berhad, UEM Builders Berhad and UEM Land Holdings Berhad. He has no family relationship with any Director and/or major shareholder of the Company, no conflict of interest with the Company, never been charged for any offence in the past 10 years and does not hold any shares in the Company and its subsidiaries. He attended 6 of the Board Meetings held in the financial year ended 31 December 2009 from the date of his appointment.

Annual Report 2009

TIME Engineering Berhad

41


Price 1.20

1.00

0.80

0.60

0.441 0.40 0.320

0.238 0.20

0.00

Volume 400m

200m

1.297m

2005

42

TIME Engineering Berhad

2006

Annual Report 2009

2007

2008

2009

2010


Directors’ Report

44

Balance Sheets

49

Income Statements

50

Statement of Changes in Equity

51

Cash Flow Statements

52

Notes to the Financial Statements

54

Statement by Directors

91

Statutory Declaration

91

Independent Auditors’ Report

92


The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the year ended 31 December 2009.

Principal activities The principal activity of the Company is that of investment holding whilst the principal activities of the subsidiaries are as stated in Note 6 to the financial statements. There has been no significant change in the nature of these activities during the financial year.

Results Group RM’000

Company RM’000

Profit attributable to: Shareholders of the Company Minority interests

23,625 6,677

12,928 -

Net profit for the year

30,302

12,928

Reserves and provisions There were no material transfers to or from reserves and provisions during the financial year except as disclosed in the financial statements.

Dividends For the current financial year ended 31 December 2009, the Board of Directors recommend a final gross dividend of 1.333 sen, less tax of 25% (2008: Nil) on ordinary shares in issue of 775,244,683 (2008: 775,244,683) for shareholders’ approval at the forthcoming Annual General Meeting. The date of the Annual General Meeting and the book closure for the final dividend payment will be announced in due course.

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

44

Datuk Hj Mohd Khalil Dato’ Hj Mohd Noor (Chairman) Dato’ Dr Gan Khuan Poh Hj Abdullah Yusof Elakumari Kantilal Dato’ Mohd Izzaddin Idris (Appointed on 4 August 2009) Raja Azmi bin Raja Nazuddin (Resigned on 5 June 2009)

TIME Engineering Berhad

Annual Report 2009


Directors’ Report (cont’d) for the year ended 31 December 2009

Directors’ interests The interests and deemed interests in the ordinary shares and options over shares of the Company and of its related corporations (other than wholly-owned subsidiaries) of those who were Directors at year end (including the interests of the spouses or children of the Directors who themselves are not Directors of the Company) as recorded in the Register of Directors’ Shareholdings are as follows: Number of ordinary shares of RM1.00 each At At 1.1.2009 Bought Sold 31.12.2009 Interests in the holding company: Datuk Hj Mohd Khalil Dato’ Hj Mohd Noor Interest in the Company: - own

5,000

-

-

5,000

None of the other Directors holding office at 31 December 2009 had any interest in the ordinary shares and options over shares of the Company and of its related corporations during the financial year.

Directors’ benefits Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements or the fixed salary of a full time employee of the Company or of related corporations) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest. There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Issue of shares and capital reduction During the financial year, the Company has reduced its issued and paid-up share capital, pursuant to the Proposed Par Value Reduction. The issued and paid-up share capital of the Company of RM775,244,683 comprising 775,244,683 ordinary shares of RM1.00 each were reduced to RM155,048,937 comprising 775,244,683 ordinary shares of RM0.20 each. The Proposed Par Value Reduction was fully implemented during the financial year after obtaining the necessary approvals from the relevant authorities. There were no other changes in the authorised, issued and paid-up capital of the Company during the financial year.

Options granted over unissued shares No options were granted to any person to take up unissued shares of the Company during the financial year.

Other statutory information Before the balance sheets and income statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that: i) ii)

all known bad debts have been written off and adequate provision made for doubtful debts, and any current assets have been stated at the lower of cost and net realisable value.

Annual Report 2009

TIME Engineering Berhad

45


Directors’ Report (cont’d) for the year ended 31 December 2009

Other statutory information (cont’d) At the date of this report, the Directors are not aware of any circumstances: i)

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

ii)

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

iii)

which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate, or

iv)

not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of the Group and of the Company misleading.

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

any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which secures the liabilities of any other person, or

ii)

any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.

No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due. In the opinion of the Directors, except for the significant events disclosed below and the following: i)

impairment loss of a subsidiary of RM15,000,000 due to the reduction in transaction rates following the award of new five years concession for the Group’s e-Commerce business ending 2014 (Note 6 of the financial statements), and

ii)

reversal of the over provision of taxation in the prior year of RM8,836,559 (Note 26 of the financial statements)

the results of the operations of the Group and of the Company for the financial year ended 31 December 2009 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.

Significant events Affected Listed Issuer under the Amended Practice Note No.17/2005 (“Amended PN 17”) Pursuant to Paragraph 8.14C of the Listing Requirement and Amended PN 17, the Company had on 30 April 2008 announced that the Company had triggered one of the prescribed criteria of Amended PN 17 and was therefore an Affected Listed Issuer. The Company had on 18 February 2009 made the requisite announcement; and subsequently submitted to the Securities Commission (“SC”) a regularisation plan on 20 February 2009 detailing the following proposals to be undertaken by the Company: (i)

Proposed Capital Restructuring;

(ii)

Proposed Debt Restructuring; and

(iii)

Proposed Private Placement.

46

TIME Engineering Berhad

Annual Report 2009


Directors’ Report (cont’d) for the year ended 31 December 2009

Significant events (cont’d) Details of the Proposed Restructuring Exercise are set out in the ensuing paragraphs. (i)

Proposed capital reduction wherein the issued and paid-up share capital of the Company of RM775,244,683 comprising 775,244,683 ordinary shares of RM1.00 each shall be reduced to RM155,048,937 comprising 775,244,683 ordinary shares of RM0.20 each (“Proposed Par Value Reduction”);

(ii)

Proposed set-off of the Company’s share premium account standing at RM1,717,012,458 against the accumulated losses of the Company (“Proposed Share Premium Reduction”);

(iii)

Proposed cancellation of reserves which involves the utilisation of the capital reserve of RM18,419,328 to set-off against the accumulated losses of the Company (“Proposed Capital Reserve Reduction”);

(iv)

Proposed amendment to the Memorandum and Articles of Association (“M&A”) of the Company to facilitate the change in par value of the Company’s ordinary shares from RM1.00 to RM0.20 (“Proposed M&A Amendment”);

(The Proposed Par Value Reduction, Proposed Share Premium Reduction, Proposed Capital Reserve Reduction and Proposed M&A Amendment are collectively referred to as the “Proposed Capital Restructuring”).

(v)

Proposed debt restructuring which entails the proposed issuance of 712,500,000 redeemable secured loan stocks at RM0.48 each (“RSLS”) totaling RM342,000,000, as settlement of the outstanding term loan facilities owing to the development bank (“Proposed Debt Restructuring”).

(vi)

Proposed private placement of up to ten percent (10%) of the revised issued and paid-up share capital of the Company (“Proposed Private Placement”).

The Proposed Capital Restructuring, the Proposed Debt Restructuring and the Proposed Private Placement were collectively referred to as the “Proposed Restructuring Exercise”. The Proposed Restructuring Exercise was approved by the SC on 29 June 2009, fully implemented after obtaining the approvals from shareholders on 21 August 2009, and from the High Court of Malaya on 17 September 2009. TIME had on 3 November 2009, submitted a letter to the SC informing the SC that the Company did not intend to implement the Proposed Private Placement, as such, with the notification to the SC on the discontinuance of the Proposed Private Placement, TIME had completed all proposals for its Proposed Restructuring Exercise. Bursa Malaysia Securities Berhad had on 4 November 2009, approved the upliftment of the Company from its PN 17 status effective on 5 November 2009.

Term Loan Facility The Company had on 27 February 2009 entered into a Debt Restructuring Agreement (“DRA”) with a development bank for the restructuring of the term loan facility. Pursuant to the DRA, the outstanding indebtedness under the term loan facility of RM347,355,096, which comprised of a principal portion of RM335,473,735 and interest accrued of RM11,881,361, would be satisfied in the following manner:i.

Upon execution of the DRA, RM25,000,000 would be paid in cash by the Company to the development bank (“Part Settlement 1”);

ii.

Upon the approval of the proposed issuance of the Company’s Redeemable Secured Loan Stocks (“TIME RSLS”) by the Securities Commission, RM22,355,096 would be paid in cash by the Company to the development bank (“Part Settlement 2”); and

iii.

RM300,000,000 of the term loan facility and RM42,000,000 of the capitalised interest would be converted to TIME RSLS.

Cash repayment amounting to RM47,355,096, being the sum of Part Settlement 1 and Part Settlement 2, were made by the Company via internally generated funds. The TIME RSLS was issued to the development bank on 11 June 2009. It bears interest of 2% per annum from the date of issuance until 31 December 2011 and 3% per annum from 1 January 2012 up to 31 December 2015. Annual Report 2009

TIME Engineering Berhad

47


Directors’ Report (cont’d) for the year ended 31 December 2009

Subsequent events Significant events subsequent to balance sheet date are disclosed in Note 35 to the financial statements.

Auditors The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

Datuk Hj Mohd Khalil Dato’ Hj Mohd Noor

Haji Abdullah Yusof

Kuala Lumpur,

Date: 27 April 2010

48

TIME Engineering Berhad

Annual Report 2009


Group

Company

Note

2009 RM’000

2008 RM’000

2009 RM’000

2008 RM’000

3 4 5 6 7 9

11,275 3,943 303 348,599 -

7,730 6,610 303 348,599 17,078

109 1 94,283 348,567 -

221 23 110,786 348,567 -

364,120

380,320

442,960

459,597

26,113 63 23,969 82,626

49,103 317 14,472 112,093

923 28,146 22,752 7,982

4,413 11,990 13,527 31,972

Total current assets

132,771

175,985

59,803

61,902

Total assets

496,891

556,305

502,763

521,499

155,049 (12,862)

775,245 (656,683)

155,049 (6,887)

775,245 (640,011)

142,187 21,457

118,562 19,008

148,162 -

135,234 -

163,644

137,570

148,162

135,234

138 303,561

138 -

303,561

-

303,699

138

303,561

-

26,737 2,811 -

45,857 335,474 2,343 34,923

2,365 48,675 -

16,146 34,645 335,474 -

29,548

418,597

51,040

386,265

Total liabilities

333,247

418,735

354,601

386,265

Total equity and liabilities

496,891

556,305

502,763

521,499

Assets Plant and equipment Intangible assets Investment property Investments in subsidiaries Other investments Non-current receivables Total non-current assets Receivables, deposits and prepayments Amount due from subsidiaries Inventories Tax recoverable Cash and cash equivalents

Equity Share capital Reserves Total equity attributable to shareholders of the Company Minority interest

10 11 12 13

14

17

Total equity Liabilities Deferred tax liabilities Redeemable Secured Loan Stocks (“RSLS”)

8 21

Total non-current liabilities Payables and accruals Amount due to subsidiaries Bank borrowings Tax payable Deferred income Total current liabilities

18 11 20 19

The notes on pages 54 to 90 are an integral part of these financial statements. Annual Report 2009

TIME Engineering Berhad

49


Group

Company

Note

2009 RM’000

2008 RM’000 Restated

2009 RM’000

2008 RM’000 Restated

22

124,109 (28,547)

151,040 (39,542)

32,424 (452)

45,932 (5,167)

95,562 (12,358) (11,002) (37,579) 1,682

111,498 (20,671) (8,003) (37,936) 6,923

31,972 (2,882) (14,403) 10,957

40,765 (2,201) (8,831) 3,854

7 6

(2,242)

(50,561) -

(15,000) (1,503) -

(50,561) (23,000) -

11

-

-

-

18,910

-

9,382

-

9,382

34,063 (5,499) 1,926

10,632 (29,454) 3,694

9,141 (5,389) 340

(11,682) (28,834) 1,431

30,490 (335) 147

(15,128) (200) (15,168)

4,092 8,836

(39,085) (8,190)

Net profit/(loss) after tax

30,302

(30,496)

12,928

(47,275)

Attributable to: Shareholders of the Company Minority interests

23,625 6,677

(37,381) 6,885

12,928 -

(47,275) -

Net profit/(loss) for the year

30,302

(30,496)

12,928

(47,275)

3.05

(4.82)

1.67

(6.10)

Continuing operations Revenue Cost of goods sold Gross profit Sales and marketing expenses Administrative expenses Other operating expenses Other operating income Impairment loss - investment in: - other investment - a subsidiary Investment in subsidiary written off Goodwill written off Reversal of allowance for doubtful debts - amount due from a subsidiary Gain on disposal of: - a portion assets classified as held for sale Results from operating activities Finance costs Interest income Profit/(Loss) before tax Zakat Tax credit/(expense)

23

25 24

26

Basic profit/(loss) per ordinary share (sen)

27

The notes on pages 54 to 90 are an integral part of these financial statements.

50

TIME Engineering Berhad

Annual Report 2009


Group

Attributable to the shareholders of the Company <------------------------- Non-distributable ----------------------> Share Capital Share Accumulated capital reserve premium losses Total RM’000 RM’000 RM’000 RM’000 RM’000

Minority interest RM’000

Total equity RM’000

At 1 January 2008

775,245

18,419

1,717,012

(2,354,733)

155,943

15,913

171,856

Net loss for the year

-

-

-

(37,381)

(37,381)

6,885

(30,496)

-

-

-

(37,381)

(37,381)

6,885

(30,496)

-

-

-

-

-

(3,790)

(3,790)

At 31 December 2008/ 1 January 2009

775,245

18,419

1,717,012

(2,392,114)

118,562

19,008

137,570

Capital restructuring

(620,196)

(18,419) (1,717,012)

2,355,627

-

-

-

Total recognised expense for the year Dividend paid by subsidiary to minority interest

Net profit for the year

-

-

-

23,625

23,625

6,677

30,302

-

-

-

23,625

23,625

6,677

30,302

-

-

-

-

-

(4,228)

(4,228)

155,049

-

-

(12,862)

142,187

21,457

163,644

Note 14

Note 15

Note 16

Total recognised income and expense for the year Dividend paid by subsidiary to minority interest At 31 December 2009

Company

Note 17

Attributable to the shareholders of the Company <--------------------- Non-distributable ------------------> Share Capital Share Accumulated capital reserve premium losses RM’000 RM’000 RM’000 RM’000

Total equity RM’000

At 1 January 2008

775,245

18,419

1,717,012

(2,328,167)

182,509

Net loss for the year

-

-

-

(47,275)

(47,275)

Total recognised income and expense for the year

-

-

-

(47,275)

(47,275)

At 31 December 2008/ 1 January 2009

775,245

18,419

1,717,012

(2,375,442)

135,234

Capital restructuring

(620,196)

(18,419)

(1,717,012)

2,355,627

-

Net loss for the year

-

-

-

12,928

12,928

Total recognised income and expense for the year

-

-

-

12,928

12,928

155,049

-

-

(6,887)

148,162

Note 14

Note 15

Note 16

At 31 December 2009

The notes on pages 54 to 90 are an integral part of these financial statements. Annual Report 2009

TIME Engineering Berhad

51


2009 RM’000

Group 2008 RM’000

2009 RM’000

Company 2008 RM’000

129,255 (43,883) (38,663)

232,852 (41,296) (47,900)

28,615 359 (1,965) (11,298)

55,264 4,213 (8,772) (11,116)

Cash flows generated from operating activities Taxation (paid)/refunded Interest and other income received Zakat paid

46,709 (8,988) (335)

143,656 (16,330) (200)

15,711 2,946 380 -

39,589 2,909 109 -

Net cash generated from operating activities

37,386

127,126

19,037

42,607

1,926

3,586

-

(8,073) 1,211

7

39,684 9

5

39,684 -

(12,843)

(8,365)

(92)

(61)

Net cash (used in)/generated from investing activities

(10,910)

34,914

(87)

32,761

Cash flows from financing activities Dividend paid by subsidiary to minority shareholders Drawdown of bank borrowings Interest paid Decrease/(Increase) in deposits pledged Payment from subsidiary companies Repayment of revolving credit Repayment of borrowings

(4,228) (16,241) 3,304 (35,474)

(3,790) 2,780 (74,043) 2,250 (36,986) (27,778)

(16,011) (174) 8,545 (35,474)

(73,422) (148) 31,838 (27,778)

Net cash used in financing activities

(52,639)

(137,567)

(43,114)

(69,510)

Net change in cash and cash equivalents Cash and cash equivalents at 1 January

(26,163) 94,479

24,473 70,006

(24,164) 25,808

5,858 19,950

68,316

94,479

1,644

25,808

Cash flows from operating activities Dividend received from investees Cash receipts from customers Cash payments to suppliers Cash payments to employees and for expenses

Cash flows from investing activities Advances to subsidiaries Interest received Proceeds from disposal of a portion of other investments Proceeds from disposal of plant and equipment Purchase of plant and equipment, and intangible assets

Cash and cash equivalents at 31 December

52

TIME Engineering Berhad

Annual Report 2009

(ii)

(i)


Cash Flow Statements (cont’d) for the year ended 31 December 2009

Notes to the cash flow statements i)

Cash and cash equivalents

Cash and cash equivalents included in the cash flow statements comprise the following balance sheet amounts: Group

Current Deposits with licensed banks and cash and bank balances - Unrestricted - Restricted

Less: Fixed deposit pledged as security

2009 RM’000

2008 RM’000

2009 RM’000

Company 2008 RM’000

68,316 14,310

94,479 17,614

1,644 6,338

25,808 6,164

82,626

112,093

7,982

31,972

82,626 (14,310)

112,093 (17,614)

7,982 (6,338)

31,972 (6,164)

68,316

94,479

1,644

25,808

ii)

Purchase of plant and equipment, and intangible assets

Included in the Group purchase of plant and equipment and intangible assets in the current year which were unpaid as of the end of the financial year. Group

Plant and equipment Intangible assets

2009 RM’000

2008 RM’000

-

266 1,152

The notes on pages 54 to 90 are an integral part of these financial statements. Annual Report 2009

TIME Engineering Berhad

53


Time Engineering Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Bursa Malaysia Securities Berhad. The address of its registered office and principal place of business is as follows: Registered office and principal place of business Tower 3, Avenue 5 The Horizon, Bangsar South No. 8, Jalan Kerinchi 59200 Kuala Lumpur The consolidated financial statements as at 31 December 2009 comprise the Company and its subsidiaries (together referred to as the Group). The Company is principally engaged in investment holding whilst the principal activities of the subsidiaries are as stated in Note 6 to the financial statements. The financial statements were approved by the Board of Directors on 27 April 2010.

1. Basis of preparation (a) Statement of compliance

These financial statements have been prepared in accordance with Financial Reporting Standards (FRS), accounting principles generally accepted and the Companies Act, 1965 in Malaysia.

The Group and the Company has not applied the following accounting standards, amendments and interpretations that have been issued by the Malaysian Accounting Standards Board (MASB) but are not yet effective for the Group and the Company:

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2009 • FRS 8, Operating Segments FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2010 • FRS 4, Insurance Contracts • FRS 7, Financial Instruments: Disclosures • FRS 101, Presentation of Financial Statements (revised) • FRS 123, Borrowing Costs (revised) • FRS 139, Financial Instruments: Recognition and Measurement • Amendments to FRS 1, First-time Adoption of Financial Reporting Standards • Amendments to FRS 2, Share-based Payment: Vesting Conditions and Cancellations • Amendments to FRS 7, Financial Instruments: Disclosures • Amendments to FRS 101, Presentation of Financial Statements – Puttable Financial Instruments and Obligations Arising on Liquidation • Amendments to FRS 127, Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate • Amendments to FRS 132, Financial Instruments: Presentation – Puttable Financial Instruments and Obligations Arising on Liquidation – Separation of Compound Instruments • Amendments to FRS 139, Financial Instruments: Recognition and Measurement – Reclassification of Financial Assets – Collective Assessment of Impairment for Banking Institutions • Improvements to FRSs (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, FRS 119 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and Their Interaction

54

TIME Engineering Berhad

Annual Report 2009


Notes to the Financial Statements (cont’d)

1. Basis of preparation (cont’d) (a) Statement of compliance (cont’d) FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 March 2010 • Amendments to FRS 132, Financial Instruments: Presentation – Classification of Rights Issues FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2010 • FRS 1, First-time Adoption of Financial Reporting Standards (revised) • FRS 3, Business Combinations (revised) • FRS 127, Consolidated and Separate Financial Statements (revised) • Amendments to FRS 2, Share-based Payment • Amendments to FRS 5, Non-current Assets Held for Sale and Discontinued Operations • Amendments to FRS 138, Intangible Assets • IC Interpretation 12, Service Concession Agreements • IC Interpretation 15, Agreements for the Construction of Real Estate • IC Interpretation 16, Hedges of a Net Investment in a Foreign Operation • IC Interpretation 17, Distribution of Non-cash Assets to Owners FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2011 Amendments to FRS 1, First-time Adoption of Financial Reporting Standards – Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters

Amendments to FRS 7, Financial Instruments: Disclosures – Improving Disclosures about Financial Instruments

The Company plans to adopt the following applicable FRSs/Amendments/ Interpretations from the annual period beginning 1 January 2010 and 1 January 2011:

From 1 January 2010 • FRS 7 • FRS 101 • FRS 139 • Amendments to FRS 1 • Amendments to FRS 127 • Amendments to FRS 132 • Amendments to FRS 101 • Amendments to FRS 139 • Amendments to FRS 7 • Improvements to FRSs (2009) • IC Interpretation 9 • IC Interpretation 10 From 1 January 2011 • FRS 1 • FRS 3 • FRS 127 • Amendments to FRS 138 • Amendments to IC Interpretation 9

The impacts and disclosures as required by FRS 108.30(b), Accounting Policies, Changes in Accounting Estimates and Errors, in respect of applying FRS 7 and FRS 139 are not disclosed by virtue of the exemptions given in these respective FRSs.

The initial application of the other abovementioned standards, amendments or interpretations which will be applied retrospectively or prospectively, is not expected to have any significant financial impacts to the current and prior periods financial statements upon their first adoption.

Annual Report 2009

TIME Engineering Berhad

55


Notes to the Financial Statements (cont’d)

1. Basis of preparation (cont’d) (a) Statement of compliance (cont’d)

Material impacts of initial application of a standard, an amendment or an interpretation, which will be applied retrospectively, are disclosed below: (i) FRS 8, Operating Segments

FRS 8 replaces FRS 1142004, Segment Reporting and requires the identification and reporting of operating segments based on internal reports that are regularly reviewed by the chief operating decision maker of the Group in order to allocate resources to the segment and to assess its performance. Currently, the Group presents segment information in respect of its business and geographical segments (see Note 28). Under FRS 8, the Group will present segment information in respect of its operating segments as follows: information communication technology, corporate and others.

(ii) FRS 123, Borrowing Costs (revised)

The revised FRS 123 removes the option to expense borrowing costs and requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The adoption of this standard will result in a change in accounting policy. In accordance with the transitional provisions, the Group will apply the revised FRS 123 to borrowing costs related to qualifying assets for which the commencement date of capitalisation is on or after 1 January 2010.

(iii) IC Interpretation 10, Interim Financial Reporting and Impairment

IC Interpretation 10 prohibits the reversal of an impairment loss that has been recognised in an interim period during a financial year in respect of the following: (a) (b) (c)

goodwill; an investment in an equity instrument; or a financial asset carried at cost.

In accordance with the transitional provisions, the Group will apply IC Interpretation 10 to goodwill, investments in equity instruments, and financial assets carried at cost prospectively from the date the Group first applied the measurement criteria of FRS 136, Impairment of Assets and FRS 139, Financial Instruments: Recognition and Measurement respectively.

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis other than as disclosed in the notes to the financial statements.

(c) Functional and presentation currency

These financial statements are presented in Ringgit Malaysia (RM), which is the Company’s functional currency. All financial information presented in RM and has been rounded to the nearest thousand, unless otherwise stated.

(d) Use of estimates and judgements

56

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

TIME Engineering Berhad

Annual Report 2009


Notes to the Financial Statements (cont’d)

1. Basis of preparation (cont’d) (d) Use of estimates and judgements (cont’d)

In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following note: (a) (b)

Note 6 – valuation of investments in subsidiaries Note 7 – valuation of other investments

2. Significant accounting policies

The accounting policies set out below have been applied consistently to the periods presented in these financial statements, and have been applied consistently by Group entities, unless otherwise stated.

(a) Basis of consolidation (i) Subsidiaries

Subsidiaries are entities, including unincorporated entities, controlled by the Group. Control exists when the Group has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. Subsidiaries are consolidated using the purchase method of accounting except for business combinations involving entities or businesses under common control which are accounted for using the pooling-of-interests method of accounting.

Under the purchase method of accounting, the financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Investments in subsidiaries are stated in the Company’s balance sheet at cost less any impairment losses, unless the investment is held for sale (or included in a disposal group that is classified as held for sale).

(ii) Changes in Group composition

Where a subsidiary issues new equity shares to minority interests for cash consideration and the issue price has been established at fair value, the reduction in the Group’s interests in the subsidiary is accounted for as a disposal of equity interest with the corresponding gain or loss recognised in the income statement.

When the group purchases a subsidiary’s equity shares from minority interests for cash consideration and the purchase price has been established at fair value, the accretion of the Group’s interests in the subsidiary is accounted for as a purchase of equity interest for which the acquisition accounting method of accounting is applied.

The Group treats all other changes in group composition as equity transactions between the Group and its minority interest holders. Any difference between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves.

(iii) Minority interest

Minority interests at the end of the reporting period, being the portion of the net identifiable assets of subsidiaries attributable to equity interests that are not owned by the Company, whether directly or indirectly through subsidiaries, are presented in the consolidated income statement and statement of changes in equity within equity, separately from equity attributable to the owner of the Company. Minority interests in the results of the Group are presented on the face of the consolidated income statement allocation of total profit or loss for the year between minority interests and the equity shareholders of the Company.

Annual Report 2009

TIME Engineering Berhad

57


Notes to the Financial Statements (cont’d)

2. Significant accounting policies (cont’d) (a) Basis of consolidation (cont’d) (iii) Minority interest (cont’d)

Where losses applicable to the minority exceed the minority’s interest in the equity of a subsidiary, the excess, and any further losses applicable to the minority, are charged against the Group’s interest except to the extent that the minority has a binding obligation to, and is able to, make additional investment to cover the losses. If the subsidiary subsequently reports profits, the Group’s interest is allocated with all such profits until the minority’s share of losses previously absorbed by the Group has been recovered.

(iv) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investees. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(b) Foreign currency

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transaction.

Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies are translated at exchange rates at the dates of the transactions except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in the income statement.

(c) Plant and equipment (i) Recognition and measurement

Plant and equipment are stated at cost less accumulated depreciation and any impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour and, for qualifying assets, borrowing costs are capitalised in accordance with the Group’s accounting policy. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When significant parts of an item of plant and equipment have different useful lives, they are accounted for as separate items (major components) of plant and equipment.

Gains and losses on disposal of an item of plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of plant and equipment and are recognised net within “other income” or “other operating expenses” respectively in the income statements.

(ii) Subsequent costs

58

The cost of replacing part of an item of plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised to profit or loss. The costs of the day-to-day servicing of plant and equipment are recognised in profit or loss as incurred.

TIME Engineering Berhad

Annual Report 2009


Notes to the Financial Statements (cont’d)

2. Significant accounting policies (cont’d) (c) Plant and equipment (cont’d) (iii) Depreciation

Depreciation is recognised in income statement on a straight-line basis over the estimated useful lives of each part of an item of plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Plant and equipment under construction are not depreciated until the assets are ready for their intended use.

The estimated useful lives for the current and comparative periods are as follows: • • • • •

Office Renovations Plant and Machinery Motor Vehicles Office equipment, furniture & fittings Computer equipment & software

20% 20% 20% 10% - 20% 33 1/3%

Depreciation methods, useful lives and residual values are reassessed at the balance sheet date.

(d) Leased assets (i) Finance lease Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. On initial recognition of the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

(ii) Operating lease Leases, where the Group does not assume substantially all the risks and rewards of the ownership are classified as operating leases and, except for property interest held under operating lease, the leased assets are not recognised on the Group’s balance sheet. Property interest held under an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as investment property.

Payments made under operating leases are recognised in the income statements on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

(e) Intangible assets (i)

Goodwill

Goodwill arises on business combinations and is measured at cost less any accumulated impairment losses.

For acquisitions prior to 1 January 2006, goodwill represents the excess of the cost of the acquisition over the Group’s interest in the fair values of the net identifiable assets and liabilities.

For business acquisitions beginning from 1 January 2006, goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree. Annual Report 2009

TIME Engineering Berhad

59


Notes to the Financial Statements (cont’d)

2. Significant accounting policies (cont’d) (e) Intangible assets (cont’d) (i)

Goodwill (continued)

Any excess of the Group’s interest in the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in the income statement.

(ii) Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the profit or loss when incurred.

Expenditure on development activities, whereby the application of research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to and has sufficient resources to complete development.

The expenditure capitalised includes the cost of materials, direct labour and overheads costs that are directly attributable to preparing the asset for its intended use. Other development expenditure is recognised in income statement as incurred. Capitalised development expenditure is measured at cost less any accumulated amortisation and any accumulated impairment losses.

(iii) Other intangible assets

Intangible assets, other than goodwill, that are acquired by the Group, which have finite useful lives, are stated at cost less any accumulated amortisation and any accumulated impairment losses.

(iv) Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

(v) Amortisation

Goodwill and intangible assets with indefinite useful lives are tested for impairment annually and whenever there is an indication that they may be impaired.

Other intangible assets are amortised from the date that they are available for use. Amortisation of intangible assets is charged to the income statements on a straight-line basis over the estimated useful lives of intangible assets.

The estimated useful live of capitalised development costs is 3 years.

(f) Investments in debt and equity securities

60

Investments in debt and equity securities are recognised initially at fair value plus attributable transaction costs.

Subsequent to initial recognition: •

Investments in non-current equity securities other than investments in subsidiaries and associates are stated at cost less allowance for diminution in value,

All current investments are carried at the lower of cost and market value, determined on an aggregate portfolio basis by category of investments.

TIME Engineering Berhad

Annual Report 2009


Notes to the Financial Statements (cont’d)

2. Significant accounting policies (cont’d) (f) Investments in debt and equity securities (cont’d)

Where in the opinion of the Directors, there is a decline other than temporary in the value of non-current equity securities other than investment in subsidiaries, the allowance for diminution in value is recognised as an expense in the financial year in which the decline is identified.

On disposal of an investment, the difference between net disposal proceeds and its carrying amount is recognised in the income statement.

All investments in debt and equity securities are accounted for using settlement date accounting. Settlement date accounting refers to: (a)

the recognition of an asset on the day it is received by the entity, and

(b)

the derecognition on an asset and recognition of any gain or loss on disposal on the date it is delivered.

(g) Investment property

Investment property carried at cost

Investment properties are properties which are owned to earn rental income or for capital appreciation or for both. These include land held for a currently undetermined future use. Properties that are occupied by the companies in the Group are accounted for as owner-occupied rather than as investment properties. Investment properties are stated at cost less accumulated depreciation and impairment losses, consistent with the accounting policy for plant and equipment as stated in accounting policy note 2 (c).

Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of 25 to 50 years for buildings. Freehold land is not depreciated.

(h) Inventories

Inventories are measured at the lower of cost and net realisable value with weighted average cost being the main basis for cost. Cost consists of purchase costs. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

(i) Receivables

Receivables are initially recognised at their cost when the contractual right to receive cash or another financial asset from another entity is established. Subsequent to initial recognition, receivables are stated at cost less allowance for doubtful debts. Receivables are not held for trading purposes.

(j) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in value. For the purpose of the cash flow statement, cash and cash equivalents are presented net of pledged deposits and restricted cash.

(k) Impairment of assets

The carrying amounts of assets, other than inventories and financial assets (other than investments in subsidiaries), are reviewed at each reporting date to determine whether there is any indication of impairment.

If any such indication exists, then the asset’s recoverable amount is estimated. For intangible assets that have indefinite useful lives or that are not yet available for use, recoverable amount is estimated at each reporting date.

Annual Report 2009

TIME Engineering Berhad

61


Notes to the Financial Statements (cont’d)

2. Significant accounting policies (cont’d) (k) Impairment of assets (cont’d)

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows 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. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”).

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (groups of units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to the income statement in the year in which the reversals are recognised.

(l) Amount due from/(to) contract customers

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

(m) Loans, borrowings and RSLS

Loans, borrowings and RSLS are stated at amortised cost with any difference between cost and redemption value being recognized in the income statement over the period of the loans and borrowings using the effective interest method.

(n) Employee benefits Short term employee benefits

Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided.

A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

The Group’s contributions to the statutory pension funds are charged to the income statements in the year to which they relate. Once the contributions have been paid, the Group has no further payment obligations.

(o) Provisions

62

A provision is recognised if, as a result of a past event, the Group and Company have a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

TIME Engineering Berhad

Annual Report 2009


Notes to the Financial Statements (cont’d)

2. Significant accounting policies (cont’d) (p) Payables

Payables are measured initially and subsequently at cost. Payables are recognised when there is a contractual obligation to deliver cash or another financial asset to another entity.

(q) Deferred income

Revenue from the fixed price contract includes the revenue for the maintenance warranty period of three years from the date of commissioning. A certain value of the contract value received, is recognised as deferred income and is being amortised over the period of maintenance of the equipment.

(r) Revenue recognition (i)

Goods sold

Revenue from the sale of goods is measured at fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods.

(ii) Services

Revenue from services rendered is recognised in the income statements in proportion to the stage of completion of the transaction at the balance sheet date. The stage of completion is assessed by reference to surveys of work performed.

(iii) Contracts

Revenue from fixed price contracts is recognised on the percentage of completion method, measured by reference to surveys of work performed. When the outcome of a contract cannot be estimated reliably, revenue is recognised only to the extent of contract costs that are probable to be recoverable. An expected loss on a contract is recognised immediately in the income statement.

(iv) Dividend income

Dividend income is recognised in income statements on the date that the Group’s or the Company’s right to receive payment is established.

(v) Rental income

Rental income from investment property is recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.

(s) Interest income and borrowing costs

Interest income is recognised as it accrues, using the effective interest method.

All borrowing costs are recognised in the income statements using the effective interest method, in the period in which they are incurred except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to be prepared for its intended use.

Annual Report 2009

TIME Engineering Berhad

63


Notes to the Financial Statements (contâ&#x20AC;&#x2122;d)

2. Significant accounting policies (contâ&#x20AC;&#x2122;d) (t) Income tax

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statements except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit (tax loss). Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax liability is recognised for all taxable temporary differences.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(u) Earnings per share

The Group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.

(v) Segment reporting

64

A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.

TIME Engineering Berhad

Annual Report 2009


Notes to the Financial Statements (cont’d)

3. Plant and equipment

Group Cost/Valuation At 1 January 2008 Additions Disposals Written off Reclassifications At 31 December 2008/ At 1 January 2009 Additions Disposals Written off Reclassifications from intangible assets Adjustment * At 31 December 2009

Office Plant and renovations machinery RM’000 RM’000

Office equipment, Motor furniture Computer vehicles and fittings equipment RM’000 RM’000 RM’000

Capitalwork-inprogress RM’000

Total RM’000

2,424 186 (18) -

4,197 96 20

365 -

2,024 149 (10) -

24,024 4,491 (6) (397) -

290 2,731 (5) (20)

33,324 7,653 (39) (397) -

2,592 3,172 (28) (1,830)

4,313 40 (106)

365 -

2,163 884 (9) (55)

28,112 4,312 (36) (4,357)

2,996 670 (67)

40,541 9,078 (73) (6,415)

-

-

-

-

1,017 54

(2,685)

1,017 (2,631)

3,906

4,247

365

2,983

29,102

914

41,517

* Included in this balance relates to deposit previously paid for the purchase of a building which was subsequently reclassified to other deposits amounting to RM2,655,998.

Annual Report 2009

TIME Engineering Berhad

65


Notes to the Financial Statements (cont’d)

3. Plant and equipment (cont’d)

Group Accumulated depreciation and impairment loss At 1 January 2008 Accumulated depreciation Accumulated impairment loss

Capitalwork-inprogress RM’000

Total RM’000

1,613

2,467

283

1,346

23,421

-

29,130

-

1,702

-

-

-

-

1,702

412 (14) -

42 -

52 -

164 (3) -

1,729 (6) (397)

-

2,399 (23) (397)

At 31 December 2008/ At 1 January 2009 Accumulated depreciation Accumulated impairment loss

2,011

2,509

335

1,507

24,747

-

31,109

-

1,702

-

-

-

-

1,702

Depreciation charge Disposals Written off

500 (28) (1,700)

100 (106)

30 -

198 (9) (44)

2,870 (36) (4,344)

-

3,698 (73) (6,194)

783

2,503

365

1,652

23,237

-

28,540

-

1,702

-

-

-

-

1,702

Depreciation charge Disposals Written off

At 31 December 2009 Accumulated depreciation Accumulated impairment loss

66

Office Plant and renovations machinery RM’000 RM’000

Office equipment, Motor furniture Computer vehicles and fittings equipment RM’000 RM’000 RM’000

TIME Engineering Berhad

Annual Report 2009


Notes to the Financial Statements (cont’d)

3. Plant and equipment (cont’d)

Group (cont’d)

Office Plant and renovations machinery RM’000 RM’000

Office equipment, Motor furniture Computer vehicles and fittings equipment RM’000 RM’000 RM’000

Capitalwork-in progress RM’000

Total RM’000

Carrying amounts At 1 January 2008

811

28

82

678

603

290

2,492

At 31 December 2008/ At 1 January 2009

581

102

30

656

3,365

2,996

7,730

3,123

42

-

1,331

5,865

914

11,275

Office equipment, Motor furniture Computer vehicles and fittings equipment RM’000 RM’000 RM’000

Capital work-inprogress RM’000

Total RM’000

At 31 December 2009

Company Cost/Valuation

Office renovations RM’000

At 1 January 2008 Additions Written off

277 -

361 -

57 5 -

558 56 (397)

23 -

1,276 61 (397)

At 31 December 2008/ At 1 January 2009 Additions Adjustment Disposal Written off

277

361

62

217

23

940

(28) (249)

-

44 (9) -

47 23 -

(23) -

91 (37) (249)

-

361

97

287

-

745

125 52 -

280 50 -

36 10 -

490 73 (397)

-

931 185 (397)

177

330

46

166

-

719

47 (28) (196)

30 -

17 (9) -

56 -

-

150 (37) (196)

-

360

54

222

-

636

At 31 December 2009 Accumulated depreciation At 1 January 2008 Depreciation charge Written off At 31 December 2008/ At 1 January 2009 Depreciation charge Disposal Written off At 31 December 2009

Annual Report 2009

TIME Engineering Berhad

67


Notes to the Financial Statements (cont’d)

3. Plant and equipment (cont’d)

Office renovations RM’000

Company (cont’d)

Office equipment, Motor furniture Computer vehicles and fittings equipment RM’000 RM’000 RM’000

Capital work-inprogress RM’000

Total RM’000

Carrying amounts At 1 January 2008

152

81

21

68

23

345

At 1 January 2009

100

31

16

51

23

221

-

1

43

65

-

109

At 31 December 2009

4. Intangible assets Group Cost At 1 January 2008 Additions Written off Reclassifications At 31 December 2008/ At 1 January 2009 Additions Written off Reclassifications to plant and equipment

Software in progress RM’000

Software RM’000

1,911 1,920 (720) (1,509)

12,927 210 1,509

3,321 -

315 -

18,474 2,130 (720) -

1,602 613 -

14,646 1,734 (10)

3,321 (3,321)

315 -

19,884 2,347 (3,331)

(1,153)

136

-

-

(1,017)

1,062

16,506

-

315

17,883

At 31 December 2009

68

TIME Engineering Berhad

Annual Report 2009

Development Goodwill expenditure RM’000 RM’000

Total RM’000


Notes to the Financial Statements (cont’d)

4. Intangible assets (cont’d) Software in progress RM’000

Software RM’000

Goodwill RM’000

Development expenditure RM’000

Total RM’000

Accumulated amortisation and impairment loss At 1 January 2008 Accumulated amortisation Accumulated impairment loss

-

8,661 192

108 971

315 -

9,084 1,163

Amortisation for the year

-

3,027

-

-

3,027

At 31 December 2008/ 1 January 2009 Accumulated amortisation Accumulated impairment loss

-

11,688 192

108 971

315 -

12,111 1,163

Amortisation for the year Written Off

-

1,755 (10)

(1,079)

-

1,755 (1,089)

At 31 December 2009 Accumulated amortisation Accumulated impairment loss

-

13,433 192

-

315 -

13,748 192

Carrying amount At 1 January 2008

1,911

4,074

2,242

-

8,227

At 31 December 2008/ 1 January 2009

1,602

2,766

2,242

-

6,610

At 31 December 2009

1,062

2,881

-

-

3,943

Group (cont’d)

Annual Report 2009

TIME Engineering Berhad

69


Notes to the Financial Statements (cont’d)

4. Intangible assets (cont’d) Company Cost

Software RM’000

At 1 January 2008 Acquisitions

436 1

At 31 December 2008/1 January 2009 Acquisitions

437 1

At 31 December 2009

438

Accumulated amortisation At 1 January 2008 Amortisation for the year

385 29

At 31 December 2008/1 January 2009 Amortisation for the year

414 23

At 31 December 2009

437

Carrying amount At 1 January 2008

51

At 31 December 2008/1 January 2009

23

31 December 2009

1

5. Investment property Group

Freehold Land RM’000 Restated

Building RM’000 Restated

Total RM’000

Cost 1 January 2008/31 December 2008/ 1 January 2009 (previously stated) Reclassified

347 50

267 (50)

614 -

1 January 2009/31 December 2009 (restated)

397

217

614

94

37 180

37 274

94

217

311

303

-

303

Accumulated amortisation and impairment loss At 1 January 2008/31 December 2008/ 1 January 2009/31 December 2009 Accumulated depreciation Accumulated impairment

Carrying amount At 1 January 2008/31 December 2008/ 1 January 2009/31 December 2009 (restated)

70

TIME Engineering Berhad

Annual Report 2009


Notes to the Financial Statements (cont’d)

6. Investments in subsidiaries

Unquoted shares At cost Less: Impairment loss

2009 RM’000

Company 2008 RM’000

134,383 (40,100)

136,510 (25,724)

94,283

110,786

During the financial year, the investments in subsidiary with a carrying amount of RM1,503,046 (net of impairment loss provided in the previous year of RM624,045) has been written off to Income Statement.

The principal activities of the companies in the Group, all incorporated in Malaysia and the interests of TIME Engineering Berhad are shown below:

Name of company

Effective ownership interests 2009 2008

Principal Activities

Information Communication Technology Dagang Net Technologies Sdn. Bhd. (“DNT”)

Development, management and provision of business to business (B2B) e-commerce and computerised transaction facilitation services.

71.25%

71.25%

- Dagang Net Commerce Sdn. Bhd. **

Development, management and provision of business to business (B2B) e-commerce and computerised transaction facilitation services.

-

71.25%

- Dagang Net Solutions Sdn. Bhd. **Dormant.

-

71.25%

- Opbase Trading Sdn. Bhd. **

Dormant.

-

36.34%

TIME Systems Integrators Sdn. Bhd.

Supply, delivery, installation, testing, commissioning, and maintenance of teaching aids equipment.

100%

100%

TIME Quantum Technology Sdn. Bhd. and its subsidiaries

Providing managed and internetrelated services and supply of computer hardware, software and peripherals.

100%

100%

- X-Calibre Online Sdn. Bhd. **

Dormant.

-

100%

- Krisbiz Sdn. Bhd. **

Dormant.

-

100%

- Cyberplus Sdn. Bhd. **

Dormant.

-

100%

TIME Automation & Management Services Sdn. Bhd. and its subsidiaries

Dormant.

100%

100%

Annual Report 2009

TIME Engineering Berhad

71


Notes to the Financial Statements (cont’d)

6. Investments in subsidiaries (cont’d)

Name of company

Principal Activities

Effective ownership interests 2009 2008

- TIME Spectrum Communication Sdn. Bhd. (Indirect subsidiary company)

Dormant.

100%

100%

Toplink Advisory and Management Services Sdn. Bhd.

Call Centre.

100%

100%

Smartcard Systems (M) Sdn. Bhd. ***

Dormant.

-

51%

Eternaland Sdn. Bhd. **

Dormant.

-

100%

**

These companies have been placed under members’ voluntary liquidation during the year and no audit reports were issued for these companies for the financial year ended 31 December 2009. The results of these companies (prior to liquidation) are consolidated using management accounts. The liquidation of these companies was completed on 30 November 2009.

***

This subsidiary was disposed during the financial year 2009.

For the purpose of annual impairment testing of investment in subsidiaries, the Company has assessed the recoverable amount of the subsidiaries based on its value in use. Value in use was determined by discounting the future cash flows generated from the continuing use of the subsidiaries. The projected cash flows were based on estimated operating results for 10 years based on certain key assumptions and the subsidiaries budget for financial year 2010 to 2019.

The key assumptions used in the value in use calculations are as follows: • • • •

72

Revenue growth rate ranging from -14% to 4% from year 2010 through 2014 Subsequent revenue growth rate of 3% from year 2015 through 2019 Discount rate of 15% Renewal of projects granted to the subsidiary after the expiration of 5 years

The growth rate, discount rate and the renewal of projects subsequent to expiration upon 5 years are the key assumptions affecting the projected cash flows. The values assigned to the key assumptions represent management’s assessment of future trends of the subsidiaries.

TIME Engineering Berhad

Annual Report 2009


Notes to the Financial Statements (cont’d)

7. Other investments 2009 RM’000

Group 2008 RM’000

2009 RM’000

Company 2008 RM’000

1,520,084 (660,771)

1,520,084 (660,771)

1,520,066 (1,171,499)

1,520,066 (1,171,499)

859,313 (510,728)

859,313 (510,728)

348,567 -

348,567 -

348,585

348,585

348,567

348,567

14

14

-

-

Total investments

348,599

348,599

348,567

348,567

Market value Quoted shares Quoted unit trusts

275,949 14

181,563 14

275,949 -

181,545 -

Quoted shares At cost Less: Impairment loss Share of post-acquisition reserves

Quoted unit trusts (at cost)

Other investments comprise mainly investment in TIME dotCom Bhd which is incorporated in Malaysia is as follows:

Effective ownership interests 2009 2008

Name of company

Principal Activities

TIME dotCom Berhad (“TdC”)

Investment holding in telecommunication companies providing communication and internet services (including wireless transmission) through its established domestic and international network.

28.69%

28.69%

The Company’s quoted shares are pledged with the development bank (Note 20 and 21) as security for credit facilities granted to the Company. The carrying values of the pledged quoted shares are as follows: Group and Company 2009 2008 RM’000 RM’000 Pledged with development bank

348,567

348,567

The Directors have relied on a valuation analysis report prepared by an independent accounting firm to form the basis for the fair value of its investment in TdC.The indicative fair value of RM0.48/share has been agreed with the development bank to be the nominal value of the proposed issuance of RSLS pursuant to the Debt Restructuring Agreement.

Annual Report 2009

TIME Engineering Berhad

73


Notes to the Financial Statements (cont’d)

8. Deferred tax liabilities Recognised deferred tax assets/(liabilities)

Deferred tax assets/(liabilities) are attributable to the following:

2009 RM’000

Assets 2008 RM’000

2009 RM’000

Liabilities 2008 RM’000

2009 RM’000

2008 RM’000

Plant and equipment - capital allowances Provisions

220

220

(358) -

(358) -

(358) 220

(358) 220

Net deferred tax asset/ (liabilities)

220

220

(358)

(358)

(138)

(138)

Group

Net

Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the following items: Group

Plant and equipment - capital allowances Provisions Unabsorbed capital allowances Unutilised tax losses

Unrecognised deferred tax assets

2009 RM’000

2008 RM’000

2009 RM’000

Company 2008 RM’000

(891) 3,283 7,541 66,774

(757) 4,219 8,882 134,544

9 240 2,120 43,485

10 240 2,040 103,657

76,707

146,888

45,854

105,947

19,177

36,722

11,464

26,487

The unabsorbed capital allowances and unutilised tax losses do not expire under current tax legislation.Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profits will be available against which the Group and Company can utilise the benefits. The unabsorbed capital allowances and unutilised tax losses are subject to the agreement of the tax authorities.

Movement in temporary differences during the year

Group

At 1.1.2008 RM’000

Recognised in income statement (Note 26) RM’000

At 31.12.2008/ 1.1.2009 RM’000

Recognised in income statement (Note 26) RM’000

At 31.12.2009 RM’000

(123) 1,639

(235) (1,419)

(358) 220

-

(358) 220

1,516

(1,654)

(138)

-

(138)

Plant and equipment - capital allowances Provisions

74

TIME Engineering Berhad

Annual Report 2009


Notes to the Financial Statements (cont’d)

9. Non-current receivables Group and Company 2009 2008 RM’000 RM’000 Non-current trade receivables Amount due from related company

-

17,078

The amount owing from a related company was settled during the year via proceeds from the development or disposal of a piece of landed property located in the state of Johor in accordance with the terms stated in the Settlement Agreement dated 31 May 2000 (“the Settlement Amount”).

10. Receivables, deposits and prepayments Group

Trade Trade receivables Less: Allowance for doubtful debts

Non-trade Other receivables and prepaid expenses Less: Allowance for doubtful debts

Company

2009 RM’000

2008 RM’000

2009 RM’000

2008 RM’000

20,412 (2,839)

45,849 (4,771)

-

-

17,573

41,078

-

-

13,074 (4,534)

8,310 (285)

4,813 (3,890)

4,698 (285)

8,540

8,025

923

4,413

26,113

49,103

923

4,413

During the year, the Group had written off trade receivables of RM2,587,203 (2008 - RM202,703) against allowance for doubtful debts.

11. Amount due from/(to) subsidiaries

The amount due from/(to) subsidiaries consist of the following: Company

Amount due from subsidiaries Less: Allowance for doubtful debts

Amount due to subsidiaries

2009 RM’000

2008 RM’000

28,146 -

16,023 (4,033)

28,146

11,990

(48,675)

(34,645)

During the year, RM4,032,827 of amount due from subsidiaries was written off against allowance for doubtful debts.

Certain inter-company advances bear interest at 4% (2008 - 4%) per annum with no fixed repayment terms and repayable on demand. Annual Report 2009

TIME Engineering Berhad

75


Notes to the Financial Statements (cont’d)

12. Inventories Group

At cost: Finished goods Smart cards and smartcard readers

2009 RM’000

2008 RM’000

51 12

301 16

63

317

13. Cash and cash equivalents Group

Current Deposits with licensed banks Cash and bank balances

Company

2009 RM’000

2008 RM’000

2009 RM’000

2008 RM’000

76,095 6,531

79,176 32,917

6,338 1,644

6,164 25,808

82,626

112,093

7,982

31,972

Included in cash and bank balances and deposits with licensed banks of the Group and Company amount of RM14,310,000 (2008 - RM17,614,000) and RM6,338,000 (2008 - RM6,164,000) respectively which were pledged to banks for credit facilities granted to subsidiaries.

14. Share capital Group and Company Number of shares Amount 2009 2008 ’000 RM’000

Number of shares 2008 ’000

2,000,000

2,000,000

2,000,000

2,000,000

775,245 (620,196)

775,245 -

775,245 -

775,245 -

155,049

775,245

775,245

775,245

Amount 2009 RM’000 Authorised: Ordinary shares of RM1 each Issued and fully paid: Ordinary shares Reduction in par value

76

Ordinary shares

The reduction of the par value of the ordinary shares from RM1.00 to RM0.20 was approved on 17 September 2009 by the High Court of Malaya. The Order confirming the Company’s Proposed Par Value Reduction had been lodged with the Companies Commission of Malaysia on 8 October 2009.

TIME Engineering Berhad

Annual Report 2009


Notes to the Financial Statements (cont’d)

15. Capital reserve Group and Company 2009 2008 RM’000 RM’000 At 31 December

-

18,419

On 17 September 2009, the High Court of Malaya has approved the Company’s Proposed Capital Reserve Reduction. The Order confirming the reduction had been lodged with the Companies Commission of Malaysia on 8 October 2009.

16. Share premium Group and Company 2009 2008 RM’000 RM’000 At 31 December

-

1,717,012

On 17 September 2009, the High Court of Malaya has approved the Company’s Proposed Share Premium Reduction. The Order confirming the reduction had been lodged with the Companies Commission of Malaysia on 8 October 2009.

17. Minority shareholders’ interests

This consists of the minority shareholders’ proportion of share capital and reserves of subsidiaries.

18. Payables and accruals Group

Trade Trade payables Non-trade Other payables and accrued expenses Interest payable – term loan

Company

2009 RM’000

2008 RM’000

2009 RM’000

2008 RM’000

2,686

8,375

-

-

24,051 -

23,179 14,303

2,365 -

1,843 14,303

24,051

37,482

2,365

16,146

26,737

45,857

2,365

16,146

Annual Report 2009

TIME Engineering Berhad

77


Notes to the Financial Statements (cont’d)

19. Deferred income Group

Current At 31 December

2009 RM’000

2008 RM’000

-

34,923

The contract pursuant to the Ministry of Education’s teaching and learning of Science and Mathematics in English Program undertaken by the Group includes the maintenance of equipment for a period of three years from the date of commissioning. A certain value of the contract value received relating to the call centre and the maintenance project was recognised as deferred income and amortised over the contractual period of 36 months and ended at the end of 2009.

20. Bank borrowings Group and Company 2009 2008 RM’000 RM’000 Term loan (secured)

-

335,474

Term loan facility

The term loan in the prior year was obtained from the development bank, bears interest at 8.5% due for repayment as of 30 June 2009 and was secured against the Company’s investments in quoted shares as mentioned in Note 7.

The Company had on 27 February 2009 entered into a Debt Restructuring Agreement (“DRA”) with a development bank for the restructuring of the term loan facility. Pursuant to the DRA, the outstanding indebtedness under the term loan facility of RM347,355,096, comprises of a principal portion of RM335,473,735 and interest accrued of RM11,881,361, were satisfied in the following manner:i. ii. iii.

Upon execution of the DRA, RM25,000,000 would be paid in cash by the Company to the development bank (“Part Settlement 1”); Upon the approval of the proposed issuance of the Company’s Redeemable Secured Loan Stocks (“TIME RSLS”) by the Securities Commission, RM22,355,096 would be paid in cash by the Company to the development bank (“Part Settlement 2”); and RM300,000,000 of the term loan facility and RM42,000,000 of the capitalised interest of two percent (2%) for seven years, would be converted to TIME RSLS (Note 21).

21. Redeemable Secured Loan Stocks (“RSLS”) Group and Company 2009 2008 RM’000 RM’000 RSLS – Nominal Value Less: Discount

78

342,000 (38,439)

-

303,561

-

RM342 million of the RSLS (712,500,000 number of RSLS at RM0.48 each) was issued on 11 June 2009 and matures on 31 December 2015. It bears interest at 2 % per annum from the date of issuance until 31 December 2011 and 3% per annum from 1 January 2012 until maturity. The RSLS is secured against 726,181,720 TIME dotcom shares (Note 7). TIME Engineering Berhad

Annual Report 2009


Notes to the Financial Statements (cont’d)

22. Revenue Group

Continuing operations Sale of goods Rendering of services Gross dividend income from: - Subsidiary company

Company

2009 RM’000

2008 RM’000

2009 RM’000

2008 RM’000

53,578 70,531

84,703 66,337

390 84

5,235 -

-

-

31,950

40,697

124,109

151,040

32,424

45,932

23. Other operating income

Included in other operating income are the following: Group

Gain on disposal of plant and equipment Realised gain on foreign exchange Rental income Management fee Write back of allowance for doubtful debts: Trade receivables Recovery of previously impaired long term receivables

Company

2009 RM’000

2008 RM’000

2009 RM’000

2008 RM’000

7 -

-

5 42 9,123

42 3,140

71

6,661

-

-

552

-

-

-

2009 RM’000

2008 RM’000

2009 RM’000

2008 RM’000

(2,422) 7,690 231

28,834 571 49

(2,422) 7,690 121

28,834 -

5,499

29,454

5,389

28,834

24. Finance costs Group

Company

Finance charges/interest expense on: Term loan - Interest expense - Prior year’s interest waived RSLS Revolving credit Others

Annual Report 2009

TIME Engineering Berhad

79


Notes to the Financial Statements (cont’d)

25. Result from operating activities Group

Result from operating activities is arrived at after charging:Allowance for doubtful debts - Trade receivables - Amount due from subsidiaries - Other receivables Amortisation of: - Software Auditors’ remuneration - statutory audit - other services Depreciation - Plant and equipment Bad debts written off Directors’ remuneration Intangible assets written off Loss on disposal of plant and equipment Personnel expenses - Contributions to Employees Provident Fund - Wages, salaries and others Plant and equipment written off Rental of premises payable to: Related party Others Rental of site and equipment

80

TIME Engineering Berhad

Annual Report 2009

Company

2009 RM’000

2008 RM’000

2009 RM’000

2008 RM’000

726 4,249

39 -

3,605

1,022 -

1,755

3,027

23

29

140 210

125 17

53 210

48 15

3,698 1,390 808 2,242

2,399 986 720

150 472 -

185 855 -

-

7

-

-

2,306 18,496 221

2,905 23,210 -

663 5,748 53

582 4,953 -

850 1,806 1,116

827 1,327 2,227

788 42 117

412 160


Notes to the Financial Statements (cont’d)

26. Tax expense Group

Company

2009 RM’000

2008 RM’000

2009 RM’000

2008 RM’000

9,595 (9,742)

16,877 (3,363)

(8,836)

9,302 (1,112)

(147)

13,514

(8,836)

8,190

Deferred tax expense - Current year Over provision of prior year deferred tax assets

-

15 1,639

-

-

Total deferred tax expense

-

1,654

-

-

(147)

15,168

(8,836)

8,190

2009 RM’000

2008 RM’000

2009 RM’000

2008 RM’000

Net profit/(loss) after tax Total tax (credit)/expense Zakat payment

30,302 (147) 335

(30,496) 15,168 200

12,928 (8,836) -

(47,275) 8,190 -

Net profit/(loss) excluding tax and zakat

30,490

(15,128)

4,092

(39,085)

7,623 2,641

(3,933) 512 (2,855) 12,881

1,023 (3,850) 5,717

(10,162) (7,505) 18,789

(174)

1,040

(2,571)

(280)

(495)

8,613 327 307

(319)

8,613 333 (486)

9,595 (9,742) -

16,892 (3,363) 1,639

(8,836) -

9,302 (1,112) -

(147)

15,168

(8,836)

8,190

Major components of tax expense include: Current tax expense - Current year - Over provision in prior years Total current tax (credit)/expense

Total tax (credit)/expense

Reconciliation of effective tax expense Group

Income tax using Malaysian tax rate of 25% Difference due to different tax rate Income not subject to tax Expenses not deductible for tax purposes Effect of unrecognised deferred tax Reversal of deferred tax on unutilised tax losses recognised in previous year Effect of changes in tax rates* Other items Over provision in prior years Over provision in prior year deferred tax assets Total tax (credit)/expense *

Company

The corporate tax rates are 25% for year of assessment 2009. Consequently deferred tax assets and liabilities are measured using this tax rate.

Annual Report 2009

TIME Engineering Berhad

81


Notes to the Financial Statements (cont’d)

27. Profit/(Loss) per share a) Basic profit/(loss) per ordinary share

The calculation of basic earnings per share at 31 December 2009 was based on the profit attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding calculated as follows: Continuing operations Company 2008 2009 2008 RM’000 RM’000 RM’000

Group 2009 RM’000 Profit/(loss) for the year attributable to shareholders

23,625

(37,381)

12,928

Group

Weighted average number of ordinary shares at 31 December

(47,275)

Company

2009 RM’000

2008 RM’000

2009 RM’000

2008 RM’000

775,245

775,245

775,245

775,245

Basic profit/(loss) per share Group

From continuing operations

Company

2009 Sen

2008 Sen

2009 Sen

2008 Sen

3.05

(4.82)

1.67

(6.10)

Sen per share (net of tax)

Total amount RM’000

1.0

7,751

28. Dividends

2009 Final 2009 ordinary

The above dividends are subject to approval at the forthcoming Annual General Meeting.

29. Segmental information

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

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly investments (other than investment property) and related revenue, loans and borrowings and related expenses, corporate assets (primarily the Company’s headquarters) and head office expenses, and tax assets and liabilities.

Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, and intangible assets other than goodwill.

82

TIME Engineering Berhad

Annual Report 2009


Notes to the Financial Statements (cont’d)

29. Segmental information (cont’d)

Inter-segment pricing is determined on a negotiated basis.

Business segments

Corporate

The Company is an investment holding company. During the year, the Group’s operating businesses are classified into two major segments as follows:

Information communication technology

Supply, delivery, installation, testing, commissioning and maintenance of teaching aids equipment, development, management and provision of business to business (B2B) e-commerce and computerised transaction facilitation services, provision of media and electronic communications services, provisioning of managed and internet-related services and total systems integrators and information technology consultancy.

Others

Supply, installation and maintenance of engineering and other equipment for expressways, telecommunications network and other general engineering works.

31 December 2009 Business segments

Information communication technology Corporate RM’000 RM’000

Others RM’000

Eliminations Consolidated RM’000 RM’000

Revenue from external customers Inter-segment revenue

123,623 8,197

474 29,450

12 -

(37,647)

124,109 -

Total revenue

131,820

29,924

12

(37,647)

124,109

46,164

6,641

2,974

(21,716)

34,063

(110) 1,586

(5,389) 340

-

-

(5,499) 1,926

(335) (11,904)

8,836

(147)

3,362

30,490 (335) 147

Segment result Profit from operations Finance costs Interest income Profit before tax Zakat Tax (expense)/credit Net profit after tax

30,302

Attributable to: Shareholders of the Company Minority interest

23,625 6,677

Net profit for the year

30,302

Annual Report 2009

TIME Engineering Berhad

83


Notes to the Financial Statements (cont’d)

29. Segmental information (cont’d) Information communication technology Corporate RM’000 RM’000

31 December 2009 Segment assets

Eliminations Consolidated RM’000 RM’000

146,709

502,763

15,735

(168,316)

496,891

Segment liabilities

33,282

354,601

3,044

(57,680)

333,247

Capital expenditure Depreciation and amortisation

11,333 5,280

92 173

-

-

11,425 5,453

Information communication technology Corporate RM’000 RM’000

Others RM’000

31 December 2008

Eliminations Consolidated RM’000 RM’000

Business segments Revenue from external customers Inter-segment revenue

144,268 3,865

5,235 42,497

1,537 81

(46,443)

151,040 -

Total revenue

148,133

47,732

1,618

(46,443)

151,040

56,841

(10,787)

(1,947)

(33,475)

10,632

(729) 2,372

(28,834) 1,431

-

109 (109)

(29,454) 3,694

Segment result Profit/(loss) from operations Finance costs Interest income

84

Others RM’000

Loss before tax Zakat Tax expense

(15,128) (200) (15,168)

Net loss after tax

(30,496)

Attributable to: Shareholders of the Company Minority interest

(37,381) 6,885

Net loss for the year

(30,496)

TIME Engineering Berhad

Annual Report 2009


Notes to the Financial Statements (cont’d)

29. Segmental information (cont’d)

31 December 2008

Information communication technology RM’000

Corporate RM’000

168,865

523,736

21,921

(158,217)

556,305

77,040

386,743

11,704

(56,752)

418,735

9,373 5,149

62 212

348 65

-

9,783 5,426

Segment assets Segment liabilities Capital expenditure Depreciation and amortisation

Others Eliminations Consolidated RM’000 RM’000 RM’000

30. Financial instruments Financial risk management objectives and policies

The operations of the Group are subject to a variety of financial risks, including foreign currency risk, interest rate risk, credit risk, and liquidity risk. The Group has formulated a financial risk management framework whose principal objective is to minimise the group’s exposure to risks and or costs associated with the financing, investing and operating activities of the Group. Various risk management assessments are continuously carried out by the Board of Directors for the controlling and management of the risks associated with financial instruments.

Foreign currency risk

The Group and the Company have exposure to foreign currency risk as a result of transactions denominated in foreign currency arising from its normal business activities. The exposure to foreign exchange is monitored on an ongoing basis to maintain acceptable level of risk and exposure.

Interest rate risk

The deposit placements as of balance sheet date are short term and therefore exposure to the effects of future changes in prevailing level of interest rates is limited.

The Group and the Company’s significant interest-bearing financial assets and financial liabilities are mainly its deposit placements.

Credit risk Management has a standard operating procedure on credit management and the exposure to credit risk is monitored on an ongoing basis. The Group and the Company does not require collateral in respect of financial assets. Liquidity risk

The Group and the Company’s exposure to liquidity risk stems from its short term debt obligations. The Group and the Company actively manages its operating cash flow and availability of funding so as to ensure all refinancing, repayment and funding needs are met.

The Group and the Company practice prudent liquidity risk management to minimise the mismatch of financial assets and liabilities to meet its debt obligations as and when they fall due.The Group and the Company also maintain sufficient levels of cash or cash convertible investments and credit facilities for contingent funding requirement of working capital.

Annual Report 2009

TIME Engineering Berhad

85


Notes to the Financial Statements (cont’d)

30. Financial instruments (cont’d) Fair values Recognised financial instruments The fair values of quoted securities are their quoted market prices at the balance sheet date. The fair values of quoted securities are disclosed in Note 7.

The carrying amounts of trade and other receivables, cash and cash equivalents, trade and other payables approximate fair values due to the relatively short term nature of these financial instruments.

It was not practicable to estimate the fair value of the Group and the Company’s RSLS due to the lack of comparable quoted market prices and the inability to estimate fair value without incurring excessive costs. The directors estimate the market interest rate for a comparable instrument to be approximately 4% to 8%.

Effective interest rates and repricing analysis

In respect of interest-earning financial assets and interest-bearing financial liabilities, the following table indicates their effective interest rates at the balance sheet date and the periods in which they reprice or mature, whichever is earlier. Group 2009 Fixed rate instruments RSLS Floating rate instruments Deposits placed with licensed banks

Effective interest rate p.a. %

Total RM’000

Within 1 year RM’000

1-5 years RM’000

4.8

(303,561)

-

(303,561)

2.0 - 3.6

76,095

76,095

-

8.5

(335,474)

(335,474)

-

2.8 - 3.7

79,176

79,176

-

4.8

(303,561)

-

(303,561)

2.0 – 3.6

6,338

6,338

-

8.5

(335,474)

(335,474)

-

2.8 - 3.7

6,164

6,164

-

Group 2008 Fixed rate instruments Term loan Floating rate instruments Deposits placed with licensed banks Company 2009 Fixed rate instruments RSLS Floating rate instruments Deposits placed with licensed banks 2008 Fixed rate instruments Term loan Floating rate instruments Deposits placed with licensed banks

86

TIME Engineering Berhad

Annual Report 2009


Notes to the Financial Statements (cont’d)

31. Operating leases Group

Non cancellable commitments for rental of office premises, data transmission expenses, lease of computer equipment and computer network setting up: Payable within 1 year Payable between 1 to 5 years

2009 RM’000

2008 RM’000

1,733 2,453

1,324 1,158

4,186

2,482

32. Commitments Group

Capital commitments: Plant and equipment Authorised and contracted for within one year

Company

2009 RM’000

2008 RM’000

2009 RM’000

2008 RM’000

1,744

996

-

-

33. Related parties

Identity of related parties

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

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

Annual Report 2009

TIME Engineering Berhad

87


Notes to the Financial Statements (cont’d)

33. Related parties (cont’d)

Identity of related parties

The significant related party transactions of the Group and the Company are as follows: Group

Company

2009 RM’000

2008 RM’000

2009 RM’000

2008 RM’000

-

-

9,123 31,950

3,140 109 40,697

Related companies Rental expenses Payment for multimedia and ISDN Sale of IT products & services Management fee

850 633 687 249

827 779 1,645 249

788 -

412 -

Other related party* Sale of IT products and services Lease line and phone charges Building maintenance

888 117

513 1,262 334

(88)

(164)

Subsidiary companies Management fee income Interest income Dividend income

*

The related party and the Group are subject to common significant influence.

The terms and conditions for the above transactions are based on normal trade terms. Significant related party balances of the Group and the Company are disclosed in Notes 11 and 12.

There are no significant related party transactions of the Group and the Company and its key management personnel of the Group and holding company, other than key management personnel compensation as disclosed below. Group

Company

2009 RM’000

2008 RM’000

2009 RM’000

2008 RM’000

416 392

335 126

294 178

228 102

-

432 93

-

432 93

808

986

472

855

Key management personnel compensation Non-executive Directors - Fees - Remuneration Executive Directors - Remuneration Other short-term employee benefits Total short-term employee benefits

88

TIME Engineering Berhad

Annual Report 2009


Notes to the Financial Statements (cont’d)

33. Related parties (cont’d) Group

Other key management personnel: - Remuneration - Short-term employee benefits - EPF - Others Total short-term employee benefits

Company

2009 RM’000

2008 RM’000

2009 RM’000

2008 RM’000

2,375

2,566

1,186

1,118

366 521

388 452

175 241

175 218

3,262

3,406

1,602

1,511

4,070

4,392

2,074

2,366

Other key management personnel comprise persons other than the Directors of Group entities, having authority and responsibility for planning, directing and controlling the activities of the entity either directly or indirectly.

In addition to their salaries, the Group also voluntarily provided additional Employees Provident Fund (EPF) contributions over the statutory requirement for a significant number of employees.

34. Comparative figures

The following comparative figures have been reclassified to conform with current year’s presentation: 2008 As previously As restated stated RM’000 RM’000 Group Income statement Cost of sales Sales and marketing expenses Administrative expenses Other operating expenses Company Income statement Other operating expenses Allowance for doubtful debts - subsidiaries

Annual Report 2009

39,542 20,671 8,003 37,936

35,745 20,423 11,800 38,184

8,831 -

7,809 1,022

TIME Engineering Berhad

89


Notes to the Financial Statements (cont’d)

34. Comparative figures (cont’d) 2008 Group As previously As restated stated RM’000 RM’000 Notes to financial statements Investment Property Cost Investment property at 31 December Freehold land Building

397 217

347 267

Carrying Amount Investment property at 31 December Freehold land Building

303 -

253 50

35. Significant subsequent events

Significant events subsequent to the balance sheet date to the date of this report are disclosed as follows:

A subsidiary company conducted a capital repayment exercise to the shareholders by reducing the issued and paid up share capital of RM54,000,054 comprising 54,000,054 ordinary shares of RM1.00 each to RM27,000,027 comprising 54,000,054 ordinary shares of RM0.50 each via cash distribution of RM27,000,027 on the basis of RM0.50 each for every one (1) existing ordinary share which were approved by the shareholders at the Extraordinary General Meeting held on 8 December 2009. The payment was made on 5 March 2010 after obtaining confirmation from High Court of Malaya on the 8 February 2010.

The Company had on 30 March 2010 received an amount of RM19,417,117, representing the tax recoverable from Inland Revenue Board.

90

TIME Engineering Berhad

Annual Report 2009


In the opinion of the Directors, the financial statements set out on pages 49 to 90 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 of 31 December 2009 and of their financial performance and cash flows for the year then ended. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

Datuk Hj Mohd Khalil Datoâ&#x20AC;&#x2122; Hj Mohd Noor

Haji Abdullah Yusof Kuala Lumpur, Date: 27 April 2010

I, Lim Kek Siang, the officer primarily responsible for the financial management of TIME Engineering Berhad, do solemnly and sincerely declare that the financial statements set out on pages 49 to 90 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed in Kuala Lumpur on 27 April 2010.

Lim Kek Siang

Before me:

Annual Report 2009

TIME Engineering Berhad

91


Report on the Financial Statements We have audited the financial statements of TIME Engineering Berhad, which comprise the balance sheets as at 31 December 2009 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements 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 49 to 90. 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 Company’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 Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2009 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 Companies Act, 1965 in Malaysia, we also report the following: a)

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

b)

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

c)

Our audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

92

TIME Engineering Berhad

Annual Report 2009


Independent Auditorsâ&#x20AC;&#x2122; Report (contâ&#x20AC;&#x2122;d)

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

KPMG Firm Number:AF 0758 Chartered Accountants

Mok Wan Kong Approval Number:2877/12/10(J) Chartered Accountant

Petaling Jaya, Selangor Date: 27 April 2010

Annual Report 2009

TIME Engineering Berhad

93


1.

Introduction On 30 April 2008 TIME announced that it had triggered one of the prescribed criteria of the Amended PN17 Listing Requirements and had been classified as an Affected PN 17 Listed Issuer.

2.

Requisite Announcement and Submission to the Securities Commission On 18 February 2009, TIME made the requisite announcement detailing its plan to undertake the following proposals to address its Amended PN17 status:(i)

Proposed Capital Restructuring

(ii)

Proposed Debt Restructuring; and

(iii)

Proposed Private Placement

(Collectively referred to as the “Proposed Restructuring Exercise”) A submission detailing the Proposed Restructuring Exercise was made to the Securities Commission (SC) on 20 February 2009 and received the approval of the SC (Securities Issues Department) for the Proposed Restructuring Exercise pursuant to Section 212(5) of the Capital Markets and Services Act, 2007 and the FIC Guidelines vide its letter dated 29 June 2009. 3.

Details of the Proposed Capital Restructuring The Capital Restructuring proposed to be undertaken by the Company involves the following proposals and received the approval from the shareholders at the Extraordinary General Meeting held on 21 August 2009:(i)

Proposed Par Value Reduction

The existing issued and paid-up share capital of the Company be reduced, pursuant to Section 64(1) of the Companies Act 1965, from RM775,244,683 comprising 775,244,683 ordinary shares of RM1.00 each to RM155,048,937 comprising 775,244,683 ordinary shares of RM0.20 each by the cancellation of RM0.80 from the par value of each existing ordinary share with the credit arising from such reduction and cancellation of RM620,195,746 from the accumulated losses of the Company as at 31 December 2008;

(ii)

Proposed Share Premium Reduction

The credit up to RM1,717,012,458 from the audited share premium account of the Company as at 31 December 2008 of RM1,717,012,458 be applied pursuant to Section 60(2) and 64(1) of the Companies Act, 1965 towards setting–off and reducing an amount of RM1,717,012,458 from the accumulated losses of the Company as at 31 December 2008;

(iii) Proposed Capital Reserve Reduction

The entire amount standing to the credit of the capital reserve of the Company amounting to RM18,419,328 be cancelled and that the credit of up to RM18,419,328 arising from the cancellation be set-off against the accumulated losses of the Company as at 31 December 2008; and

(iv) Proposed Amendment to Clause 5 of the Memorandum of Association

94

The proposed amendments to Clause 5 of the Memorandum of Association which was intended to facilitate the change in the par value of TIME’s ordinary shares from RM1.00 to RM0.20 resulting from the Proposed Par Value Reduction.

TIME Engineering Berhad

Annual Report 2009


Changes to the Share Capital Structure Arising From the Completion of the Capital Restructuring (cont’d)

Confirmation of Order from the High Court The reduction of the par value of the ordinary shares from RM1.00 to RM0.20 was approved by the High Court of Malaya on 17 September 2009. The Order confirming the Company’s Proposed Par Value Reduction was lodged with the Companies Commission of Malaysia on 8 October 2009 pursuant to Section 64(6) of the Companies Act 1965. The resultant effects to the share capital structure of the Company are as follows:Share Capital Authorized

RM2,000,000,000 comprising of 10,000,000,000 ordinary shares of RM0.20 each.

Issued and Fully Paid

RM155,048,937 comprising 775,244,683 ordinary shares of RM0.20 each.

Completion of the Proposed Capital Restructuring The effects from the implementation of the capital restructuring exercise pursuant to the PN17’s regularization plan to the share capital of the Company and its capital reserve and share premium are illustrated in the Statement of Changes in Equity for the year ended 31 December 2009 in the Financial Statements section of this Annual Report.

Annual Report 2009

TIME Engineering Berhad

95


Authorised Share Capital Issued and Fully Paid Class of Shares No. of Shareholders Voting Right

: : : : :

RM2,000,000,000.00 RM155,048,937 Ordinary Shares of RM0.20 each 26,500 1 vote per Ordinary Share

ANALYSIS BY SIZES Category

No. of Shareholders Malaysian Foreign

Less than 100 shares 100 to 1,000 shares 1,001 to 10,000 shares 10,001 to 100,000 shares 100,001 to less than 5% of issued shares 5% and above of issued shares

357 5,659 14,315 5,098

1 74 290 162

504 1

TOTAL

25,934

No. of Shares Malaysian Foreign 5,887 5,469,981 69,242,614 161,538,442

Percentage (%) Malaysian Foreign

1 71,866 1,591,533 5,987,870

0.00 0.71 8.93 20.84

0.00 0.01 0.20 0.77

39 -

162,083,251 20,140,507 349,112,731 -

20.91 45.03

2.60 0.00

566

747,452,906 27,791,777

96.42

3.58

CLASSIFICATION OF SHAREHOLDERS Category

No. of Shares

Percentage No. of (%) Shareholders

Percentage (%)

Individuals Nominee Companies Industrial & Commercial Companies Government Agencies Banks/ Finance Companies Foundation/ Investment Trusts/ Charities

320,442,613 94,668,245 357,043,825 118,000 2,013,000 959,000

41.33 12.21 46.06 0.02 0.26 0.12

22,865 3,414 175 4 31 11

86.28 12.88 0.66 0.02 0.12 0.04

TOTAL

775,244,683

100.00

26,500

100.00

DIRECTORS’ INTERESTS IN SHARES IN THE COMPANY Name of Director Datuk Haji Mohd Khalil bin Dato’ Haji Mohd Noor

96

TIME Engineering Berhad

Annual Report 2009

No. of Shares Held Direct

Percentage (%)

5,000

Negligible


Analysis of Shareholdings (cont’d) as at 30 April 2010

30 LARGEST OF SHAREHOLDERS AS AT 30 April 2010 No. of Shares

Percentage (%)

349,112,731

45.03

12,688,000

1.64

Lim Kim Pue

7,761,000

1.00

4.

HSBC Nominees (Asing) Sdn Bhd - Exempt Authorised Nominee for The Bank of New York Mellon

7,093,100

0.91

5.

Choong Yean Yaw

2,294,100

0.30

6.

Wong Ah Chai

2,150,000

0.28

7.

Low Yew Hock

2,000,000

0.26

8.

Ng Meng Kee

1,750,000

0.23

9.

Tan Tiam Yee

1,680,000

0.22

10.

Ting Ata @ Ting Teong Cheow

1,600,000

0.21

11.

Tan Chee Sing

1,550,000

0.20

12.

Lau Ngit Fah

1,527,000

0.20

13.

Tan Ah Chong

1,500,000

0.19

14.

Mercsec Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Chong Han Wah

1,477,100

0.19

15.

HDM Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Tiang Chiin Yew

1,400,000

0.18

16.

Cartaban Nominees (Tempatan) Sdn Bhd - DBS Vickers (Hong Kong) Limited for Teh Hong Eng

1,300,000

0.17

17.

Ngeng Eng Cheng

1,200,000

0.15

18.

Kho Sow Gan

1,159,800

0.15

19.

Citigroup Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Tiang Ming Sing

1,100,000

0.14

20.

SAP Malaysia Sdn Bhd

1,021,331

0.13

21.

Ding Yee (Chen Yi)

1,015,000

0.13

22.

Rescom International Limited

1,000,000

0.13

23.

Yap Chin Leong

1,000,000

0.13

24.

Tan Lai Kim

1,000,000

0.13

25.

Nurul Jasminah Jaya Binti Abdullah

960,000

0.12

26.

Citigroup Nominees (Asing) Sdn Bhd - Exempt Authorised Nominee for OCBC Securities Private Limited

897,332

0.12

27.

Yayasan Kelantan Darulnaim

870,000

0.11

28.

Lim Say Chong

850,000

0.11

29.

Cimsec Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Chen Siong Ping

850,000

0.11

30.

Teo Kin Swee

828,700

0.11

 

TOTAL

410,635,194

52.97

No

Name of Shareholders

1.

UEM Group Berhad

2.

Yap Sook Chin

3.

Annual Report 2009

TIME Engineering Berhad

97


Analysis of Shareholdings (contâ&#x20AC;&#x2122;d) as at 30 April 2010

SUBSTANTIAL SHAREHOLDERS AS PER THE REGISTER OF SUBSTANTIAL SHAREHOLDERS, EXCLUDING BARE TRUSTEES AS AT 30 April 2010 No

Name

1. 2.

UEM Group Berhad Khazanah Nasional Berhad (a)

(a)

98

Deemed interest through UEM Group Berhad.

TIME Engineering Berhad

Annual Report 2009

No. of Shares Held Direct

Percentage (%)

Deemed Interest

Percentage (%)

349,112,731 -

45.03 -

349,112,731

45.03


Location

Description

Tenure

Area

Existing Use

Approximate Age of Building

Audited Date of Last Net Book Revaluation Value (“R”) / Date as at of Acquisition 31.12.2009 (“A”)

TIME Automation and Management Services Sdn Bhd Lot 60005 GF–Ground Floor G9 Jalan Trompet, Seksyen BB7 Bandar Bukit Beruntung 48300 Rawang Selangor Darul Ehsan

Unit No.1-131 Bandar Bukit Mahkota Bangi, Selangor Darul Ehsan

Land and a 4 storey Shop Office

Freehold

108 sq metres

Vacant

9 years

50,000

18.11.1998 (A)

Bungalow Lot

Freehold

1,234 sq metres

Vacant

-

252,586

1.3.2002 (A)

Annual Report 2009

TIME Engineering Berhad

99


NOTICE IS HEREBY GIVEN that the Fortieth Annual General Meeting (“40th AGM”) of Members of TIME Engineering Berhad will be held at Taming Sari 1 Ballroom, Ground Floor, The Royale Chulan Kuala Lumpur, 6 Jalan Conlay, 50450 Kuala Lumpur on Tuesday, 22 June 2010 at 3.30 p.m. for the purpose of transacting the following businesses:AGENDA 1.

To receive the Audited Financial Statements for the year ended 31 December 2009 together with the reports of the Directors and Auditors thereon.

Please refer to Note A

AS ORDINARY BUSINESS 2.

To declare a final gross dividend of 1.333 sen, less tax of 25% (net dividend of 1 sen) per ordinary share for the financial year ended 31 December 2009.

Resolution 1

3.

To re-elect Datuk Haji Mohd Khalil Dato’ Haji Mohd Noor who retires by rotation in accordance with Article 94 of the Company’s Articles of Association and who being eligible offer himself for re-election.

Resolution 2

4.

To re-elect Dato’ Mohd Izzaddin Idris, the Director who retires in accordance with Article 99 of the Company’s Articles of Association and who being eligible offer himself for re-election.

Resolution 3

5.

To consider, and if thought fit, to pass the following Special Resolution in accordance with Section 129(6) of the Companies Act, 1965:-

Special Resolution

“That Tuan Haji Abdullah Yusof, who is over the age of 70 years be and is hereby re-appointed as Director of the Company to hold office until the conclusion of the next Annual General Meeting of the Company.” 6.

To approve the payment of Directors’ Fees amounting to RM294,300 for the financial year ended 31 December 2009.

Resolution 4

7.

To re-appoint Messrs KPMG as Auditors of the Company to hold office until the conclusion of the next Annual General Meeting of the Company and to authorize the Directors to fix the Auditors’ remuneration.

Resolution 5

AS SPECIAL BUSINESS 8.

Proposed Amendment to the Articles of Association of the Company

Special Resolution

“That the proposed amendment to the Articles of Association of the Company by including a new Article 116A as set out in the Appendix 1 attached to the Company’s Annual Report 2009 be and is hereby approved and adopted”. 9.

To transact any other business of which due notice shall have been given in accordance with the Companies Act 1965 and the Company’s Articles of Association.

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT NOTICE IS HEREBY GIVEN that subject to the approval of the shareholders at the Fortieth Annual General Meeting to be held on Tuesday, 22 June 2010, a final gross dividend of 1.333 sen, less tax of 25% (net dividend of 1 sen) per ordinary share for the financial year ended 31 December 2009 will be paid on 30 June 2010 to Depositors registered in the Record of Depositors at the close of business on 22 June 2010. A Depositor shall qualify for entitlement to the dividend only in respect of:-

100

(a)

securities transferred to the Depositor’s securities account before 4.00 p.m. on 22 June 2010 in respect of ordinary transfers; and

(b)

securities bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad.

TIME Engineering Berhad

Annual Report 2009


Notice of Fortieth Annual General Meeting (cont’d)

By Order of the Board

SAPIAH JAMALUDIN MAICSA 0807355 Secretary Kuala Lumpur 26 May 2010 NOTE A This agenda item is meant for discussion only as the provisions of Section 169(1) of the Companies Act 1965 do not require a formal approval of the shareholders and hence is not put forward for voting.

EXPLANATORY NOTE ON SPECIAL RESOLUTION The re-appointment of Tuan Haji Abdullah Yusof, a person over the age of 70 years as Director of the Company to hold office until the conclusion of the next AGM of the Company shall take effect if the proposed Special Resolution has been passed by a majority of not less than three-fourth (3/4) of such members as being entitled to vote in person or by proxy.

EXPLANATORY NOTE ON SPECIAL BUSINESS Special Resolution, if passed, will bring the Articles of Association of the Company in line with the current development pursuant to the Directive dated 19 February 2010 (Ref. No.:SR/TAC/ro/LD07/10) from Bursa Malaysia Securities Berhad (“Bursa Securities”) in relation to the implementation of electronic dividend payment (“eDividend”) and the new Paragraph 8.26A of the Main Market Listing Requirements of Bursa Securities relating to eDividend which will take effect from 1 September 2010. The Proposed Amendment also would ensure that the Company’s Articles of Association are updated and comprehensive. Information on implementation of eDividend are set out in the Appendix 2 attached to the Company’s Annual Report 2009.

PROXY 1.

Further notice is hereby given that for the purpose of determining a member who shall be entitled to attend and vote at the 40th AGM, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd in accordance with Article 55(b) of the Company’s Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act 1991 to issue a General Meeting Record of Depositories as at 16 June 2010. Only a depositor whose name appears on the Record of Depositories as at 16 June 2010 shall be entitled to attend the said meeting or appoint proxies to attend and/vote on his/her behalf.

2.

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

3.

This instrument appointing a proxy shall be in writing, in case of an individual shall be signed by the appointer or by his attorney; and in the case of a corporation shall be either under its common seal or signed by its attorney or by an officer on behalf of the corporation.

4.

A member of the Company holding 1,000 shares or less in the Company shall be entitled to appoint one (1) proxy to attend and vote at the same meeting. A member holding more than 1,000 shares in the Company shall be entitled to appoint a maximum of two (2) proxies to attend and vote at the same meeting and such appointment shall be invalid unless the member specifies the proportion of his/her shareholding to be represented by each proxy.

5.

Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds which is credited with ordinary shares of the Company.

6. This instrument appointing a proxy must be deposited at the Company’s Registered Office at Tower 3, Avenue 5, The Horizon, Bangsar South, No. 8 Jalan Kerinchi, 59200 Kuala Lumpur not less than twenty four (24) hours before the time fixed for holding the Meeting or any adjournment thereof in the following manner:• •

By hand and post; and By facsimile at 03-27300457 and to follow-up with the original form of proxy, which the original form must also be deposited at the said Company’s Registered Office not less than the said 24 hours

Annual Report 2009

TIME Engineering Berhad

101


Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad

DIRECTORS WHO ARE STANDING FOR RE-ELECTION OR RE-APPOINTMENT AT THE 40TH AGM OF THE COMPANY Director retiring pursuant to Article 94 of the Company’s Articles of Association and seeking re-election is Datuk Haji Mohd Khalil Dato’ Haji Mohd Noor. Director retiring in accordance with Article 99 of the Company’s Articles of Association and seeking re-election is Dato’ Mohd Izzaddin Idris. Director who is over the age of 70 years and seeking re-appointment pursuant to Section 129 of the Companies Act 1965 is Tuan Haji Abdullah Yusof. The details of the three (3) Directors seeking re-election or re-appointment are set out in their respective profiles which appear in the Corporate Information section of this Annual Report. The details of the interest of Datuk Haji Mohd Khalil Dato’ Haji Mohd Noor in the securities of the Company are set out in the Analysis of Shareholdings section of this Annual Report.

102

TIME Engineering Berhad

Annual Report 2009


New Article 116A - Mode of Payment Any dividend, interest or other money payable in cash in respect of shares may be paid by way of direct transfer by means of the electronic payment systems upon terms and subject to the provisions of the Act, the Rules, the Listing Requirements and/ or other regulatory authorities or by cheque or warrant sent through the post directed to the registered address of the Holder as shown in the Register of Members or the Record of Depositors (as the case may be) or to such person and to such address as the Holder may in writing direct. Every such cheque, warrant or payment by direct transfer shall be made payable to the order of the person to whom it is sent, or to such person as the holder or person or persons entitled to the share in consequence to the death or bankruptcy of the holder may direct and the payment of any such cheque, warrant or by such electronic means shall operate as a good discharge to the Company in respect of the dividend represented thereby, notwithstanding that it may subsequently appear that the same has been stolen or that the endorsement thereon or the instruction for the electronic transfer of remittance has been forged. Every such cheque or warrant or electronic transfer of remittance shall be sent at the risk of the person entitled to the money thereby represented. Definitions The following definitions shall apply to the new Article 116A and the existing Articles of Association of the Company:The Act

The Companies Act, 1965 or any statutory modification amendments or revision thereof for the time being in force.

Rules

The Rules of the Central Depositories and any appendices thereto.

Listing Requirements

The Listing Requirements of the Stock Exchange including any amendments to the Listing Requirements that may be made from time to time.

Annual Report 2009

TIME Engineering Berhad

103


IMPLEMENTATION OF ELECTRONIC DIVIDEND PAYMENT (“eDIVIDEND”) Directive dated 19 February 2010 on the implementation of eDividend and Amendments to Bursa Malaysia Securities Berhad Main Market Listing Requirements relating to eDividend Bursa Malaysia Securities Berhad (“Bursa Securities”) issued a Directive dated 19 February 2010 under Ref. No.:SR/TAC/ ro/LD07/10 on implementation of Electronic Dividend Payment or eDividend and subsequently on 15 April 2010 announced the amendments to the Main Market Listing Requirements relating to eDividend (collectively referred to as “eDividend Amendments”). The eDividend Amendments will take effect from 1 September 2010. What is eDividend? Electronic Dividend Payment or eDividend refers to the payment of cash dividends by a listed issuer to its shareholders by directly crediting the shareholders’ cash dividend entitlements into their respective bank accounts. All listed companies to pay via eDividend for all dividends declared from 1 September 2010 onwards. The eDividend framework will be implemented in two (2) phases as follows:First Phase

The first phase involves the collation of bank account information from shareholders where shareholders will be able to start providing their bank account information to Bursa Malaysia Depository Sdn Bhd (“Bursa Depository”) through their authorised depository agents/brokers from 19 April 2010.

Second Phase

In the second phase, Bursa Depository will be able to provide bank account information together with the Record of Depositors to those listed issuers who need the bank account information for eDividend. As such, by 1 September 2010, listed issuers may request for the bank account information together with the Record of Depositors from Bursa Depository.

Registration of eDividend Shareholders are given a one-year grace period from 19 April 2010 until 18 April 2011 to provide their bank account information to Bursa Depository at no cost. An administrative charge will be imposed for registrations after the 1 year period. To register for eDividend, shareholders are required to complete the relevant prescribed form and submit it together with the required supporting documents to Bursa Depository through their stock broker’s office (where the CDS account is maintained). What supporting documents are required? Individual CDS Depositor

• NRIC or Passport or Authority Card or other acceptable identification documents. • Bank Statement or Bank Saving Book or details of your bank account obtained from your bank’s website that has been certified by your bank or copy of the letter from your bank confirming your bank account details. Note: Original documents must be produced for stock broker’s verification.

Corporate CDS Depositor

• Certified true copy of Certificate of Incorporation/Certificate of Registration. • Certified true copy of Bank Statement or Bank Saving Book or details of your bank account obtained from your bank’s website that has been certified by your bank or copy of the letter from your bank confirming your bank account details.

If the CDS account is held in the name of a nominee, the nominee will register for the eDividend. If a shareholder is not able to be present at his/her stock broker’s office for the registration, please ensure that the signing of the prescribed form and the supporting documents have been witnessed by an acceptable witness specified by Bursa Depository (i.e. an Authorised Officer of the stock broker, a Dealer’s Representative, a notary public or an Authorised Officer of the Malaysian Embassy/High Commission). Once shareholders have registered for eDividend, any cash dividend entitlement with a books closure date on or after 1 September 2010 shall be paid to them via eDividend. Notification of eDividend Payment after registration Shareholders are encouraged to provide in the prescribed form to Bursa Depository both their email address and/or mobile phone number, if any. This is to enable listed issuers to issue an electronic notification of dividend payment to shareholders via email. Short Message Service (“SMS”) notification is made available if such service is provided by the listed issuers. Shareholders will continue to receive their tax vouchers as long as the law requires it. Additional Information For more information, kindly refer to the eDividend page at www.bursamalaysia.com. For queries, please contact Bursa Malaysia Customer Care Centre at (603) 27320067 or email at edividend@bursamalaysia.com

104

TIME Engineering Berhad

Annual Report 2009


Date Time Venue

Tuesday, 22 June 2010 3.30 p.m. Taming Sari 1 Ballroom, Ground Floor, The Royale Chulan Kuala Lumpur 6 Jalan Conlay, 50450 Kuala Lumpur

Registration 1. Registration will start at 2.00 p.m. and will end at 4.00 p.m. or such other time as directed by the Chairman of the meeting. 2. Please read the signage to ascertain where you should register yourself for the meeting and join the queue accordingly. 3. Please produce your original Identity Card (IC) to the registration staff for verification. 4. After the verification, you are required to write your name and sign on the Attendance List placed on the Registration table. 5. You will also be given an identification tag. No person will be allowed to enter the meeting room without the identification tag. There will be no replacement in the event that you lose or misplace the identification tag. 6. No person will be allowed to register on behalf of another person even with the original IC of that other person. 7. The registration counter will handle only verification of identity and registration. If you have any clarification or enquiry, please proceed to the Help Desk.

Proxy 1. A member entitled to attend and vote is entitled to appoint proxy/proxies, to attend and vote instead of him. If you are unable to attend the meeting and wish to appoint a proxy to vote on your behalf, please submit your Form of Proxy in accordance with the notes and instructions printed therein. 2. If you have submitted your Form of Proxy prior to the meeting and subsequently decided to attend the meeting yourself, please proceed to the Help Desk to revoke the appointment of your proxy. 3. If you wish to submit your Form of Proxy by fax, please fax to the office of TIME Engineering Berhad at Fax No. 03-27300457. Please also ensure that the original Form of Proxy is deposited at the office of TIME Engineering Berhad not less than 24 hours before the time appointed for holding the meeting. Annual Report 2009 1. The Annual Report 2009 is available on Bursa Malaysia’s website at www.bursamalaysia.com under Company Announcements. If you wish to request for printed copy of the Annual Report 2009, please forward your request by completing the Request Form provided by us. We will send to you by ordinary post within four market days from the date of receipt of written request. Enquiry If you have any enquiry prior to the meeting, please contact the following persons during office hours or e-mail us at secretarial@timegroup.com.my :

Help Desk 1. Please proceed to Help Desk for any clarification or enquiry. 2. The Help Desk will also handle revocation of proxy’s appointment. General Meeting Record of Depositors 1. For the purpose of determining a member who shall be entitled to attend the 40th AGM, the Company shall be requesting Bursa Malaysia Depository Sdn. Bhd. in accordance with Article 55(b) of the Company’s Article of Association and Section 34(1) of the Securities Industry (Central Depositories) Act, 191 to issue a General Meeting Record of Depositors as at 16 June 2010. Only the depositor whose name appears in the Record of Depositors as at 16 June 2010 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his/her behalf.

1.

TIME Engineering Berhad Tower 3, Avenue 5 The Horizon, Bangsar South No. 8 Jalan Kerinchi 59200 Kuala Lumpur

Telephone Number Fax Number (i) Noryusnaidah Yusof (ii) Sopiah Mat Husin

2.

Mega Corporate Services Sdn Bhd Level 15-2, Faber Imperial Court Jalan Sultan Ismail 50250 Kuala Lumpur

Telephone Number Fax Number (i) Zakaria Ali (ii) Alfred John

Annual Report 2009

03-2730 0300 03-2713 3131/03-2730 0457 03-2730 0432 03-2730 0434

03-2692 4271 03-2732 5399/03-2732 5388 03-2692 4271 03-2692 4271

TIME Engineering Berhad

105


This page is intentionally left blank


No. of shares held CDS Account No. Telephone No.

(Before completing this form please refer to the notes below) I / We (FULL NAME IN BLOCK LETTERS)

of (FULL ADDRESS IN BLOCK LETTERS)

being a member of TIME Engineering Berhad hereby appoint

(FULL NAME IN BLOCK LETTERS)

of (FULL ADDRESS IN BLOCK LETTERS)

or failing him/her,

of (FULL NAME IN BLOCK LETTERS)

(FULL ADDRESS IN BLOCK LETTERS)

or failing him/her, The Chairman of the Meeting as my/our proxy, to vote for me/us on my/our behalf at the Fortieth Annual General Meeting of the Company to be held at Taming Sari 1 Ballroom, Ground Floor, The Royale Chulan Kuala Lumpur, 6 Jalan Conlay, 50450 Kuala Lumpur on Tuesday, 22 June 2010 at 3.30 p.m. and at any adjournment thereof, in the manner indicated below:(Please indicate with a “x” or “√“ in the boxes provided belowhow you wish your vote to be cast. If you do not do so, the proxy shall vote as he thinks fit, or at his discretion, abstain from voting.) AS ORDINARY BUSINESS Resolution 1 To declare a final gross dividend of 1.333 sen, less tax of 25% (net dividend of 1 sen) per ordinary share for the financial year ended 31 December 2009. Resolution 2 To re-elect Datuk Haji Mohd Khalil Dato’ Haji Mohd Noor who retires by rotation in accordance with Article 94 of the Company’s Articles of Association and who being eligible offer himself for re-election. Resolution 3 To re-elect Dato’ Mohd Izzaddin Idris, the Director who retires in accordance with Article 99 of the Company’s Articles of Association and who being eligible offer himself for reelection. Special To re-appoint Haji Abdullah Yusof as Director of the Company pursuant to Section 129(6) Resolution of the Companies Act, 1965. Resolution 4 To approve the payment of Directors’ Fees amounting to RM294,300 for the financial year ended 31 December 2009. Resolution 5 To re-appoint Messrs. KPMG as Auditors of the Company to hold office until the conclusion of the next Annual General Meeting and to authorize the Directors to fix the Auditors’ remuneration. AS SPECIAL BUSINESS Proposed Amendment to the Articles of Association of the Company by including a new Special Article 116A as set out in the Appendix 1 attached to the Company’s Annual Report 2009. Resolution

FOR

AGAINST

Dated this ……….. day of …………………….. 2010

For appointment of two proxies, percentage of shareholdings to be represented by the proxies:

………………………………………………………… Signature(s) of Shareholder(s) / Seal

No. of shares Proxy 1 Proxy 2 Total

Percentage 100%

NOTES :1. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act 1965 shall not apply to the Company. 2. The instrument appointing a proxy shall be in writing, in case of an individual shall be signed by the appointer or by his attorney; and in the case of a corporation shall be either under its common seal or signed by its attorney or by an officer on behalf of the corporation. 3. A member of the Company holding 1,000 shares or less in the Company shall be entitled to appoint one (1) proxy to attend and vote at the same meeting. A member holding more than 1,000 shares in the Company shall be entitled to appoint a maximum of two (2) proxies to attend and vote at the same meeting and such appointment shall be invalid unless the member specifies the proportion of his/her shareholding to be represented by each proxy. 4. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds which is credited with ordinary shares of the Company. 5. The instrument appointing a proxy must be deposited at the Company’s Registered Office at Tower 3, Avenue 5, The Horizon, Bangsar South, No. 8 Jalan Kerinchi, 59200 Kuala Lumpur not less than twenty four (24) hours before the time fixed for holding the Meeting or any adjournment thereof in the following manner:• By hand and post; and • By facsimile at 03-2730 0457 and to follow-up with the original form, which the original form must also be deposited at the said Company’s Registered Office not less than the said twenty four (24) hours.


Fold this flap for sealing

Then fold here

STAMP

The Company Secretary TIME ENGINEERING BERHAD (10039-P) Tower 3, Avenue 5 The Horizon, Bangsar South No. 8, Jalan Kerinchi 59200 Kuala Lumpur Malaysia

1st fold here


TIME ENGINEERING BERHAD (10039 - P)

www.timeengineering.com.my

Tower 3, Avenue 5, The Horizon, Bangsar South, No.8 Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia. Tel : + 6 03 - 2730 0300 Fax : + 6 03 - 2713 3131 Email: info@timegroup.com.my

ANNUAL REPORT 2009

TIME Engineering Berhad (10039 - P)

A N N U A L RE P O RT 2009


Time Engineering 2009 AR