ANNUAL REPORT Creating excellence across the region SCOPE INDUSTRIES BERHAD ( D)

Transcription

1 ANNUAL REPORT 2004 Creating excellence across the region (Incorporated In Malaysia) SCOPE INDUSTRIES BERHAD (591376D) (Incorporated In Malaysia) Lot 6181, Jalan Perusahaan 2, Kawasan Perindustrian Parit Buntar, Parit Buntar, Perak, Malaysia Tel : Fax : Website :

2 Contents Corporate Information Corporate Structure Chairman s Statement Profile of Directors Corporate Governance Statement Statement on Internal Control Audit Committee Report Directors' Report Consolidated Balance Sheet Consolidated Income Statement Consolidated Statement of Changes in Equity Consolidated Cash Flow Statement Balance Sheet Income Statement Statement of Changes in Equity Cash Flow Statement Notes to the Financial Statements Directors Statement & Statutory Declaration Report of the Auditors Analysis of Shareholdings Notice Annual General Meeting Notice of Dividend Entitlement and Statement Accompanying Notice of the Second Annual General Meeting List of Properties Proxy Form

3 2 CORPORATE INFOATION DIRECTORS Lee Chin Hwa Lim Chiow Hoo Lee Min Huat Tan Eng Siang Too Ah Lake Lau Chin Wee NonExecutive Chairman Managing Director Executive Director Executive Director Independent NonExecutive Director Independent NonExecutive Director COMPANY SECRETARY Tan Choong Khiang (MAICSA ) AUDIT COMMITTEE Too Ah Lake Chairman Lau Chin Wee Members Lee Min Huat Members REGISTERED OFFICE 518B Menara BHL Bank Jalan Sultan Ahmad Shah Penang Tel : Fax : BUSINESS ADDRESS Lot 6181 Jalan Perusahaan 2 Kawasan Perindustrian Parit Buntar Parit Buntar Perak Tel : Fax : SHARE REGISTRAR Symphony Share Registrars Sdn Bhd Level 26 Menara Multipurpose Capital Square No.8 Jalan Munshi Abdullah Kuala Lumpur Tel : Fax : / AUDITORS JB Lau & Associates Chartered Accountants 518A, Menara BHL Bank Jalan Sultan Ahmad Shah Penang Tel : PRINCIPAL BANKERS RHB Bank Berhad Malaysian Industrial Development Finance Berhad Hong Leong Bank Berhad HSBC Bank Malaysia Berhad SPONSOR AmMerchant Bank Berhad 22nd Floor, Bangunan AmBank Group 55 Jalan Raja Chulan Kuala Lumpur Tel : Fax : SOLICITORS Wong Beh & Toh STOCK EXCHANGE LISTING MESDAQ Market of Bursa Malaysia Securities Berhad

4 CORPORATE STRUCTURE for the year ended 30 June History, Principal Activities and Group Structure Scope Industries Berhad ("Scope") was incorporated in Malaysia on 2 September 2002 under the Companies Act, 1965 as a public limited company under its present name. Scope is principally an investment holding company with two (2) whollyowned subsidiaries, namely Scope Manufacturers (M) Sdn Bhd ("SMSB") and Scope Sales & Services Sdn Bhd ("SSSB). The current group structure of the Group is as follows: Scope 100% 100% SMSB SSSB Subsidiary Company Date and Place of Incorporation Issued and Paidup Share Capital Principal activities Scope Manufacturers (M) Sdn Bhd 20 November 1991 Malaysia 3,220,00 Manufacturing and assembling of electronic components and products. Scope Sales & Services Sdn Bhd 18 December 2002 Malaysia 2 Marketing, sales and servicing of electrical and electronic products.

5 4 CHAIAN S STATEMENT for the year ended 30 June 2004 On behalf of the Board of Directors of Scope Industries Berhad, I am pleased to present the Annual Report of the Company for the financial year ended 30 June This is the first Annual Report after the listing of the Company on the MESDAQ Market of Bursa Malaysia Securities Berhad ("Bursa Securities") on 19 November OPERATIONS REVIEW For the financial year under review, the Scope Group achieved a turnover of million and recorded a profit after taxation of 5.15 million. DIVIDEND Despite difficult business and operating conditions, in recognition of shareholders' support for the Scope Group, the Directors are pleased to recommend a first and final tax exempt dividend of 5% in respect of financial year ended 30 June 2004 for the shareholders' approval at the forthcoming Second Annual General Meeting. CORPORATE DEVELOPMENT The year 2003 is a significant year in the history of the Company with the successful listing of its 250,000,000 new ordinary shares of 0.10 each at an issue price of 0.20 per ordinary share of 0.10 each on the MESDAQ Market of Bursa Securities. In 2004, the Company had on 15 April 2004 entered into a conditional share sale agreement to acquire the entire issued and paidup share capital of Trans Industry Sdn Bhd for a total consideration of 6,000,000 to be satisfied by the issuance of 18,181,818 new ordinary shares of 0.10 each at an issue price of 0.33 per share (the "Proposed Acquisition"). PROSPECTS The Scope Group aims to be one of the distinguished market players in PCBA industry in the Asean region. Management is optimistic of the Group s performance for the financial year ending 30 June Scope, which assemble PCBs used in audio, telecommunication, remote control of electronic hobby toys etc, expects higher sales in the next few years. As part of its plan to capture larger market share, the Group is presently constructing an additional factory adjacent to its present factory. The new factory is expected to be fully operational in early2005. With the new factory, Scope will be able to double its production capacity. APPRECIATION On behalf of the Board of Directors, I would like to take this opportunity to thanks to all our employees for their contribution, untiring commitment, dedication and loyalty. In addition, I would like to extend my gratitude and appreciation to our shareholders, customers, suppliers, business association, bankers and relevant government authorities for their cooperation and continued support. Last but not least, I would also like to extend my appreciation to my fellow Board members for their support, guidance and advice. LEE CHIN HWA Chairman

6 PROFILE OF DIRECTORS for the year ended 30 June Lee Chin Hwa, aged 71, was appointed as the NonExecutive Chairman of Scope on 9 September He is a businessman and presently holds directorships and substantial equity interests in several private limited and public companies involved in activities ranging from palm oil cultivation and processing, manufacturing of animal feed to investment holding. His business experience in the palm oil industry spans more than 25 years. He is presently a substantial shareholder of Pontian United Plantations Bhd ("PUPB"), a public company involved in palm oil cultivation and processing. He is responsible for the overall management of PUPB and has played an active role in the growth and expansion of PUPB, from its humble beginning of having a plantation holding of 2,000 to 38,000 acres currently. Mr Lee Chin Hwa is the Chairman of Nomination and Remuneration Committee of Scope. Lim Chiow Hoo, aged 41, was appointed as the Managing Director of Scope on 15 July He is a businessman by profession and is the founder of the Group. After completing his Higher School Certificate, he started his career as a Treasurer at Hup Hin Chan Rice Mill Sdn Bhd from 1984 to In 1990, he became a soleproprietor when he set up his business of assembling PCB for office equipments. In 1991, he founded SMSB and his business in the sole proprietorship was subsequently transferred to SMSB. SMSB's operations expanded to include the assembling of PCB for telecommunication products. Being the founder, he is directly involved in the growth and development of SMSB since its incorporation in Under his stewardship, SMSB's operations have since expanded to include the assembling of PCB for various electronic products with specialisation in audio and telecommunication equipments. Backed by more than 10 years of experience in the electronics industry, Mr Lim possesses indepth knowledge on the overall operations of SMSB. His functional roles in the Group include the overall management of sales and marketing, finances and operations of the Group. Lee Min Huat, aged 47, was appointed as the Executive Director of Scope on 15 July He graduated with a Diploma in Aircraft Maintenance Engineering from Confederation College, Canada in Upon graduation, he worked as a Manager at Kalayaan Sdn Bhd, a property developer, from 1980 to For the past 20 years, he has been involved in property development and commodity trading. In addition to his directorship in Scope, he currently holds directorships in other private limited companies. He is currently responsible for the formulation of corporate strategies and plans for the Group. Mr Lee Min Huat is also a member of Audit Committee of Scope. Tan Eng Siang, aged 44, was appointed as the Executive Director of Scope on 9 September After completing his secondary school education, he was involved in various businesses for more than 10 years before joining SMSB in He was one of the pioneers of the company and has vast handson experience in plant operation. He is also the driving force behind the implementation of strategic changes in the organisation to ensure the Group's continued competitiveness. Too Ah Lake, aged 49, was appointed as the Independent NonExecutive Director of Scope on 9 September He has been a Fellow of the Association of Chartered Certified Accountants (United Kingdom) since 1986 and a member of the Malaysian Institute of Accountants since From 1978 to 1982, he was attached to Messrs Goonting & Chew, an international accounting firm in Kuala Lumpur. He subsequently left the firm to join Messrs Francis Chia & Co, also an accounting practice, as its partner. He is presently the managing partner of the firm. He also sits on the board of several private limited companies. Mr Too Ah Lake is the Chairman of Audit Committee, Nomination Committee and Remuneration Committee of Scope. Lau Chin Wee, aged 47, was appointed as the Independent NonExecutive Director of Scope on 9 September He graduated from the University of Malaya with a Bachelor of Accounting (Hon.) degree in 1981 and from the National University of Singapore with a Bachelor of Laws (Hon.) degree in He also holds a Masters in Taxation Law, obtained from the University of Sydney in He has several years of practice in the accounting profession prior to joining the legal profession. He is a Chartered Accountant of Malaysia and a member of Malaysian Institute of Taxation. He has been serving the Malaysian Institute of Accountants' Company Law Practice Committee as well as Insolvency Practice Committee since He has been admitted to the Bar, both in Malaysia and Singapore, in 1989 and 1991 respectively and is currently the proprietor of the law of Messrs Lau Chin Wee & Partners. Mr Lau Chin Wee is also a member of Audit Committee Nomination Committee and Remuneration Committee of Scope. Save as disclosed herein, none of the Directors of the Company have any family relationship with any Director or major shareholders of the Company: a) Mr Lee Chin Hwa, the NonExecutive Chairman of Scope, is the father of Mr Lee Min Huat, who is an Executive Director and major shareholder of Scope; and b) Mr Lim Chiow Hoo, the Managing Director and major shareholder of Scope, is the brotherinlaw of Mr Tan Eng Siang, who is an Executive Director of Scope All the Directors do not have any conflict of interest with the Company and they also had not been convicted of any offence within the past ten (10) years.

7 6 CORPORATE GOVERNANCE STATEMENT for the year ended 30 June 2004 A. THE MALAYSIAN CODE ON CORPORATE GOVERNANCE (CODE) The Board of Directors fully supports the objectives of the Code and also acknowledges its role in ensuring that shareholders' interests are properly looked after. For this reason, the Board of Directors affirms its policy of adhering to the principles set out in Part 1 of the Code and the extent of the Group's compliance with the Best Practices in the Corporate Governance set out in Part 2 of the Code. B. BOARD OF DIRECTORS 1. Composition and Attendance The Board met 4 times for the financial year ended 30 June It meets within 2 months from the end of every quarter of the financial period, when the Group's financial results are deliberated and considered prior to releasing them to Bursa Malaysia Securities Berhad and the Securities Commission. The composition of the Board, and the individual Directors' attendance of meetings during the financial year ended 30 June 2004 were as follows: Attendance Mr Lee Chin Hwa (Appointed on ) Mr Lim Chiow Hoo Mr Lee Min Huat Mr Tan Eng Siang (Appointed on ) Mr Too Ah Lake (Appointed on ) Mr Lau Chin Wee (Appointed on ) NonExecutive Chairman Managing Director Executive Director Executive Director Independent NonExecutive Director Independent NonExecutive Director 3/3 4/4 4/4 3/3 3/3 3/3 Scope is led and managed by an experienced Board comprising members with a range of experience in relevant fields such as accounting, engineering and legal. Together, the Directors bring a broad range of skills, experience and knowledge to direct and supervise the Scope Group business activities. The profile of each Director is provided on page 5 of this Annual Report. The Board members have full and unrestricted access to information on the Group's business and affairs in discharging their duties. Prior to the meetings, they receive the agenda and a full set of Board papers. All Directors also have full access to the advice and service of the Company Secretary in furtherance of their duties. Where necessary, the Directors may obtain independent professional advice at the Company's expense on specific issues to enable the Board to discharge their duties on the matters being deliberated. The Board has 6 Directors comprising 3 Executive members and 3 NonExecutive members, 2 of whom are independent. The Chairman is a NonIndependent NonExecutive member of the Board. There is a clear division of responsibility between the Chairman and the Managing Director to ensure a balance of power and authority. The Board operates in an open environment in which opinions and information are freely exchanged and in these circumstances any concerns need not be focussed onto a single director as all members of the Board fulfil this role individually and collectively. The Board is alert to the possibility of potential conflicts of interest involving the Directors and the Company and affirms its commitment to ensuring that such situations of conflict are avoided.

8 CORPORATE GOVERNANCE STATEMENT (cont d) for the year ended 30 June Appointments and, Reelection of Directors The Directors in office for the time being (the number nearest to 1/3) shall retire from office at the forthcoming Annual General Meeting ("AGM") and shall be eligible for reelection. Director who is over 70 years of age is required to offer themselves for reappointment annually in accordance with Section 129 of the Companies Act, The details of the Directors seeking reelection and reappointment at the forthcoming Second AGM are disclosed in the Statement Accompanying the Notice of the AGM on page 53 in this Annual Report. 3. Board committees To assist the Board in the discharge of its duties effectively, the Board has delegated specific functions to certain Committees, namely Nomination Committee, Remuneration Committee and Audit Committee. Each committee will operate within its clearly defined terms of reference. The Chairman of the various committees will report to the Board on the outcome of the Committee meetings. The Nomination and Remuneration Committees were formed on 19 November The Nomination Committee is composed of the following members: Mr Lee Chin Hwa Mr Too Ah Lake Mr Lau Chin Wee Chairman Member Member The primary function of the Nomination Committee is to identify and recommend to the Board, technically competent persons of integrity and a strong sense of professionalism to be appointed to the Board. The Committee will assess the suitability of an individual to be appointed to the Board by taking into consideration of the individual's resources, other commitments and time available for input to the Board before recommendation is made for the Board's approval. The Committee will also review annually, if necessary, the required mix of skill and experience and other qualities and competencies of its Directors and shall review the composition, structure and size of the Board. The Remuneration Committee is composed of the following members: Mr Lee Chin Hwa Mr Too Ah Lake Mr Lau Chin Wee Chairman Member Member The Committee is responsible for recommending to the Board from time to time, the remuneration framework and package of the Executive Directors in all forms to commensurate with the respective contributions of the Executive Directors. The Executive Directors are to abstain from deliberations and voting on the decision in respect of their own remuneration packages. The Board as a whole decides on the remuneration of the NonExecutive Directors, including the NonExecutive Chairman. The individual concerned should abstain from deliberations of their own remuneration packages and the shareholders at the Annual General Meeting must approve the Directors' fees. 4. Remuneration The Directors are satisfied with the current levels of remuneration, which are in line with the responsibilities expected by the Company. The amounts of remuneration paid to Directors are disclosed in the Notes to the Audited Financial Statements.

9 8 CORPORATE GOVERNANCE STATEMENT (cont d) for the year ended 30 June Remuneration (cont d) Director Executive Director NonExecutive Director Fees 30,000 30,000 Salaries/Bonus/Allowance 463,673 5,250 Total 493,673 35,250 Remuneration Band Number of Directors Executive NonExecutive 50,000 and below 50, , , , , , , , Individual remuneration of each Director is not disclosed as the Directors are of the view that the disclosure by bands above provides sufficient information. 5. Training All the Directors of Scope have attended and successfully completed the Mandatory Accreditation Programme as required by the Bursa Securities. The Directors will continue to attend the Continuing Education Programme to ensure compliance with requirements of Bursa Securities. In addition, the Directors will be encouraged to attend other relevant training programmes, courses and seminars relevant in enhancing the Directors in discharging their duties. C. SHAREHOLDERS The Board recognises the value of good investor relation and the importance of disseminating information in a fair and equitable manner. The participation of shareholders and investors, both individual and institutional, at general meetings is encouraged whilst requests for briefings from the press and investment analysts are usually met as a matter of course. Notice of Annual General Meeting and the annual report are sent to shareholders at least 21 days before the date of the meeting. In addition, the shareholders and investors obtain the Company's latest announcements such as quarterly financial results and research report in the Bursa Malaysia website ( D. ACCOUNTABILITY AND AUDIT 1. The Audit Committee The Audit Committee was set up in The composition of the Committee, its terms of reference, attendance of meetings by individual members and a summary of its activities during the financial year ended 30 June 2004 are set out on pages 11 to12.

10 CORPORATE GOVERNANCE STATEMENT (cont d) for the year ended 30 June Responsibility For Annual Audited Financial Statements The Directors are responsible for the preparation of financial statements each financial year in accordance with the requirements of the Companies Act, 1965 and applicable approved accounting standards in Malaysia. Central to those requirements is the need to ensure that these accounts present a true and fair view of the state of affairs of the Group and the Company, the results, cash flows and statement of changes in equity. In the preparation of these financial statements for the year under review, appropriate accounting policies have been selected and they have been applied in a consistent manner. This statement is made in accordance with a resolution of the Board of Directors. 3. Internal control Information pertaining to the Company's internal control is presented in the Statement on Internal Control laid out on page 10 of this Annual Report. 4. Relationship with the Auditors E. OTHER INFOATION Material Contracts The Board always maintain a formal and transparent arrangement with its auditors in seeking professional advice and ensuring compliance with the accounting standards in Malaysia. There were no material contracts entered into by the Company and its subsidiaries involving Directors' and major shareholders' interests either still subsisting as at 30 June 2004 or entered into since the end of the previous financial year.

11 10 STATEMENT ON INTERNAL CONTROL for the year ended 30 June 2004 In the Scope Group, the Board of Directors has overall responsibility for internal control and reviewing its effectiveness. A set of policies and procedures is in place to ensure that assets are adequately protected against unauthorised use or disposal and that the interests of shareholders are safeguarded. The systems in place are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable but not absolute assurance against material misstatement or loss. The Board maintains an organisational structure with clearly defined levels of responsibility and authority and appropriate reporting procedures. The Board meets regularly and has a schedule of matters that are brought to it for decision in order that effective control over strategic, financial, operational and compliance issues can be maintained. The following outlines the main elements of the Group's internal control system: (i) (ii) (iii) Supplying comprehensive financial and management reports to the Audit Committee and the Board on a quarterly basis for review. Stringent recruitment policy is set to ensure only capable and competent staff are employed which in turn ensures that each operating unit is function effectively. The Group's performance is monitored through management and operational meeting attended by senior management. The Managing Director and Executive Directors are involved in the day to day operations of the Group. The Audit Committee, together with senior management, reviews the effectiveness of the internal financial and operating control environment of the Group. Currently, the Company does not have an internal audit department as the Board is of the view that the control mechanisms currently in place are sufficient for the size of the Group operation. The decision will be reviewed from time to time by the Audit Committee and the Board in the coming financial years. The senior management and Audit Committee work closely with the external auditors to review accounting and control issues to ensure significant issues are brought to the attention of the Board. The Board is of the view that the existing system of internal controls is sound and adequate for the current level of operations. There were no significant weaknesses or material problems in the internal control procedures that had arisen during the current financial year.

12 AUDIT COMMITTEE REPORT 11 MEMBERS Mr Too Ah Lake Chairman (Independent NonExecutive Director) Mr Lau Chin Wee (Independent NonExecutive Director) Mr Lee Min Huat (Executive Director) The Terms of Reference of the Committee are as follows: 1. MEMBERSHIP The Committee shall be appointed by the Board from amongst the Directors of the Company, a majority of whom must be independent. At least one member of the Committee: 2. ATTENDANCE AT MEETINGS The Head of Finance and Head of Internal Audit, if any will attend the meetings. At least once a year, the Committee shall meet with external auditors without the presence of the Executive Directors. The Company Secretary shall be the secretary of the Committee. 3. FREQUENCY AT MEETINGS Meetings will be held not less than four times a year. The external auditors may request a meeting if they consider that one is necessary. The quorum for any meeting shall be two members of the Committee. 4. AUTHORITY The committee is authorized by the Board to investigate any activity within its terms of reference. It is authorized to seek any information it requires from any employee and all employees are directed to cooperate with any request made by the Committee. 5. DUTIES must be member of the Malaysian Institute of Accountants; or if he is not a member of the Malaysian Institute of Accountants, he must have at least 3 years of working experience and he must have passed the examination specified in Part I of the 1st Schedule to the Accountants Act, 1967; or he must be a member of one of the associations of accountants specified in Part II of the 1st schedules to the Accountants Act, 1967 The members of the Committee shall elect the Chairman from among their number who shall be an Independent Director. The Chief Executive Officer shall not be a member of the Audit Committee. The duties of the Committee shall include: a) to recommend the appointment of the external auditors, their audit fee and any question of their resignation or dismissal to the Board. b) to discuss the nature and scope of the audit with the external auditors before the audit commences.

13 12 AUDIT COMMITTEE REPORT (cont d) 5. DUTIES (cont d) The duties of the Committee shall include: c) to review the financial statements of the Company and the Group before submission to the Board, focusing particularly on: public announcements of results and dividend payment; any changes in accounting policies and practices; major judgmental areas; significant adjustments resulting from the audit; the goingconcern assumption; compliance with accounting standards; and compliance with stock exchange and legal requirements. d) to discuss problems and reservations arising from the interim and final audits and any matters the auditors may wish to discuss (in the absence of management where necessary). e) to keep under review the effectiveness of internal control system and, in particular, review external auditors' management letter and management's response. f) to review any related party transactions that may arise within the Company or Group. g) to carry out such other functions and consider other topics, as may be agreed upon by the Board. 6. REPORTING PROCEDURES The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board. ATTENDANCE AT MEETINGS A total of three (3) Audit Committee meetings were held during the financial year ended 30 June The details of attendance of the Committee members were as follows: Name of Committee Member Mr Too Ah Lake Mr Lau Chin Wee Mr Lee Min Huat Attendance 3/3 3/3 3/3 ACTIVITIES OF THE COMMITTEE The summary of the activities of the Audit Committee in the discharge of its duties and responsibilities for the financial year ended 30 June 2004 included the following: (a) (b) (c) Reviewed with the external auditors their audit plans (inclusive of system evaluation, audit fees, issues raised and management response) prior to the commencement of the annual audit. Monitoring and coordinating reviews on the effectiveness of Group's system of internal controls through the Management. Reviewed the research report and unaudited quarterly financial results.

14 DIRECTORS REPORT for the year ended 30 June The directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the year ended 30 June PRINCIPAL ACTIVITIES The principal activity of the Company is that of an investment holding company. The principal activities of the subsidiary companies are the manufacturing, assembling, marketing, sales and servicing of electrical and electronic components and products. There have been no significant changes in the nature of these activities during the financial year. RESULTS Net profit after taxation for the year GROUP 5,151,688 COMPANY 1,932,273 DIVIDENDS No dividends have been declared or paid by the Company since the end of the previous financial period. The directors now recommend the payment of a first and final tax exempt dividend of 5% amounting to 1,250,000 for the financial year ended 30 June RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements. SHARE CAPITAL During the financial year, the Company increased its authorised share capital to 50,000,000 by the creation of 499,000,000 ordinary shares of 0.10 each, following the share split to convert the nominal value of the ordinary shares of the Company from 1.00 each to 0.10 each. The issued and paidup share capital was increased to 25,000,000 by the following issues : Terms of Issue Issued for the acquisition of the entire share capital of a subsidiary company, Scope Manufacturers (M) Sdn. Bhd. at an issue price of approximately per share of 1.00 each. Public issue of 64,200,000 new ordinary shares of 0.10 at an issue price of 0.20 per share. Number of ordinary shares of 1.00*/ 0.10 each * 18,579,998 64,200,000 Issued and paidup share capital 18,579,998 6,420,000 24,999,998

15 14 DIRECTORS REPORT (cont d) for the year ended 30 June 2004 SHARE CAPITAL (cont d) The proceeds from the public issue were used for the construction of factory building, repayment of bank borrowings, payment of listing expenses and for working capital purposes. The above new shares rank pari passu with the existing shares of the Company in all respects. Other than the foregoing, the Company did not grant any option to anyone to take up unissued shares of the Company. DIRECTORS The directors who served since the date of the last report are as follows : Lee Chin Hwa (appointed ) Lim Chiow Hoo Lee Min Huat Tan Eng Siang (appointed ) Too Ah Lake (appointed ) Lau Chin Wee (appointed ) In accordance with Article 132 of the Company's Articles of Association, Messrs Lee Chin Hwa, Tan Eng Siang, Too Ah Lake and Lau Chin Wee retire from the Board at the forthcoming Annual General Meeting and, being eligible, offer themselves for reelection. Mr Lee Chin Hwa, being over seventy years of age, retires in accordance with Section 129 of the Companies Act, 1965 and offers himself for reappointment in accordance with Section 129(6) of the Act to hold office until the conclusion of the next Annual General Meeting of the Company. DIRECTORS' INTERESTS IN SHARES According to the Register of Directors' Shareholdings, the interests of directors in office at the end of the financial year who held shares in the Company and its related corporations during the financial year are as follows : No. of ordinary shares of 0.10 each The Company Direct interest Balance at Allotment Sold Balance at Lee Chin Hwa Lim Chiow Hoo Lee Min Huat Tan Eng Siang Too Ah Lake Lau Chin Wee 500,000 71,165,830 62,701,860 1,923, ,000 50,000 (5,000,000) 500,000 71,165,830 57,701,860 1,923, ,000 50,000 By virtue of their shareholdings in the Company, Messrs Lim Chiow Hoo and Lee Min Huat are also deemed interested in the shares of all the subsidiary companies of the Company, to the extent that the Company has interests. There have been no changes in the directors' shareholdings within 21 days after the financial year ended 30 June 2004.

16 DIRECTORS REPORT (cont d) for the year ended 30 June DIRECTORS' BENEFITS Since the end of the previous financial period, no director of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directors as shown in the financial statements) by reason of a contract made by the Company or a related corporation with a director or with a firm of which the director is a member or with a company in which the director has a substantial financial interest. During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the objects of enabling directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. OTHER STATUTORY INFOATION Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that: i) all known bad debts have been written off and adequate provision made for doubtful debts, and ii) all current assets have been stated at the lower of cost and net realisable value. 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) iii) iv) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or that would render any amount stated in the financial statements of the Group and of the Company misleading, other than those already dealt with in this report and in the relevant financial statements, or which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. At the date of this report, there does not exist : i) any charge on the assets of the Group and of the Company that has arisen since the end of the financial year which secures the liabilities of any other person; or ii) any contingent liability in respect of the Group and of the Company that has arisen since the end of the financial year. No contingent liability or other liability of the Group and of the Company has become enforceable, or is likely to become enforceable, within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due. In the opinion of the directors, the results of the operations of the Group and of the Company for the financial year ended 30 June 2004 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 other than the acquisition of the entire share capital of Scope Manufacturers (M) Sdn. Bhd. on 3 July 2003 which contributed substantially to the Group results for the financial year.

17 16 DIRECTORS REPORT (cont d) for the year ended 30 June 2004 SIGNIFICANT EVENTS The significant events during the financial year were as follows : i) On 3 July 2003, the Company acquired the entire issued and paidup share capital of Scope Manufacturers (M) Sdn. Bhd. comprising 3,220,000 ordinary shares of 1.00 each for a total consideration of 18,587,882 satisfied by the issuance of 18,579,998 new ordinary shares of 1.00 each at an issue price of approximately per share. ii) iii) iv) After completion of the above acquisition, the Company undertook a share split whereby its existing ordinary shares of 1.00 each were split into ordinary shares of 0.10 each. Following the share split, the Company's issued and paidup share capital of 18,580,000 was converted from 18,580,000 ordinary shares of 1.00 each to 185,800,000 ordinary shares of 0.10 each. On 27 October 2003, the Company completed a public issue of 64,200,000 new ordinary shares of 0.10 each at an issue price of 0.20 per ordinary share of 0.10 each. On 19 November 2003, the Company's shares were officially listed and quoted on the MESDAQ Market of Bursa Malaysia Securities Berhad. v) On 15 April 2004, the Company had entered into a conditional share sale agreement to acquire the entire issued and paidup share capital of Trans Industry Sdn. Bhd. for a total consideration of 6,000,000 to be satisfied by the issuance of 18,181,818 new ordinary shares of 0.10 each at an issue price of 0.33 per share. The Company had submitted its application for the acquisition to the relevant authorities for their approvals. The Ministry of International Trade and Industry has given its approval on 21 July 2004 while the approvals from the other authorities are still pending. AUDITORS The auditors, JB LAU & ASSOCIATES, have expressed their willingness to continue in office. Signed in accordance with a resolution of the directors : Lim Chiow Hoo Managing Director Lee Min Huat Executive Director Penang, Date : 30 August 2004

18 CONSOLIDATED BALANCE SHEET at 30 June NOTE PROPERTY, PLANT AND EQUIPMENT 3 24,948,058 DEFERRED TAX ASSET 5 1,203 CURRENT ASSETS Inventories Trade receivables Other receivables, deposits and prepayments Tax recoverable Fixed deposits with licensed banks Cash and bank balances ,770,613 5,878, , ,185 6,029,009 2,751,543 18,164, , , ,502 CURRENT LIABILITIES Trade payables Other payables and accruals Amount due to directors Term loan Provision for taxation ,216 1,725,533 36, ,440 26,800 2,159, ,830 10, ,081 NET CURRENT ASSETS/(LIABILITIES) 16,004,536 (11,579) FINANCED BY : 40,952,594 (10,376) SHARE CAPITAL SHARE PREMIUM RESERVE ON CONSOLIDATION RETAINED PROFIT/(LOSS) SHAREHOLDERS' FUNDS DEFERRED TAXATION LONG TE LIABILITIES ,000,000 5,399,891 3,466,324 5,141,310 39,007,525 1,597, ,069 2 (10,378) (10,376) 40,952,594 (10,376) The notes set out on pages 26 to 46 form an integral part of these financial statements.

19 18 CONSOLIDATED INCOME STATEMENT for the year ended 30 June 2004 NOTE TO TO REVENUE 19 26,792, ,010 COST OF SALES (18,555,716) (471,186) GROSS PROFIT 8,236,431 14,824 OTHER OPERATING INCOME 198, ADMINISTRATIVE EXPENSES (3,028,122) (26,437) OPERATING PROFIT/(LOSS) 5,407,279 (11,581) FINANCE COSTS (146,315) PROFIT/(LOSS) BEFORE TAXATION 20 5,260,964 (11,581) TAXATION 21 (109,276) 1,203 NET PROFIT/(LOSS) FOR THE YEAR/PERIOD 5,151,688 (10,378) EARNINGS/(LOSS) PER SHARE (SEN) BASIC (51,890.00) DIVIDEND PER SHARE (SEN, NET) The notes set out on pages 26 to 46 form an integral part of these financial statements.

20 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 30 June NOTE SHARE CAPITAL SHARE PREMIUM Nondistributable RESERVE ON CONSOLIDATION Distributable RETAINED PROFIT/ (LOSS) TOTAL TO Balance at beginning 2 (10,378) (10,376) Issue of shares Acquisition of a subsidiary company Public issue 14 & & 15 18,579,998 6,420,000 7,884 6,420,000 3,466,324 22,054,206 12,840,000 Payment of listing expenses (1,027,993) (1,027,993) Net profit for the year 5,151,688 5,151,688 Balance at end 25,000,000 5,399,891 3,466,324 5,141,310 39,007, TO Balance at incorporation 2 2 Loss for the period (10,378) (10,378) Balance at end 2 (10,378) (10,376) The notes set out on pages 26 to 46 form an integral part of these financial statements.

21 20 CONSOLIDATED CASH FLOW STATEMENT for the year ended 30 June TO TO CASH FLOWS FROM OPERATING ACTIVITIES Profit/(Loss) before taxation Adjustments for : Allowance for doubtful debts Depreciation Interest expense Interest income Loss on disposal of property, plant and equipment Operating profit/(loss) before working capital changes Inventories Receivables Payables Cash generated from operations Income tax paid Interest paid Net cash from operating activities 5,260, ,975 2,712, ,315 (196,970) 221,223 8,345,886 (547,599) (972,604) (2,489,645) 4,336,038 (416,552) (146,315) 3,773,171 (11,581) (32) (11,613) (233,526) 261,081 15,942 15,942 CASH FLOWS FROM INVESTING ACTIVITIES Cash flow on acquisition of a subsidiary company (Note A) Interest income Proceeds from disposal of property, plant and equipment * Purchase of property, plant and equipment * Net cash (used in)/from investing activities 3,190, , ,800 (7,162,887) (3,573,949) Balance carried forward 199,222 15,974 The notes set out on pages 26 to 46 form an integral part of these financial statements.

22 CONSOLIDATED CASH FLOW STATEMENT (cont d) for the year ended 30 June TO TO Balance brought forward CASH FLOWS FROM FINANCING ACTIVITIES Bankers acceptance Director's account Payment of hire purchase loans Proceeds from term loans Repayment of term loans Proceeds from issuance of shares Payment of listing expenses Net cash from financing activities NET INCREASE IN CASH CASH AT BEGINNING CASH AT END Represented by : Fixed deposits with licensed banks Cash and bank balances * Purchase of property, plant and equipment Total acquisition cost Acquired under hire purchase loans Total cash acquisition Note A Cash flow on acquisition of a subsidiary company Property, plant and equipment Inventories Receivables Fixed deposits with licensed bank Cash and bank balances Payables Bank borrowings Provision for taxation Deferred taxation Long term liability Share of net assets acquired Add : Cash acquired Reserve on consolidation Less : Consideration satisfied by shares Cash flow on acquisition of subsidiary company 199,222 (730,000) (301,995) (803,247) 535,187 (1,946,598) 12,840,000 (1,027,993) 8,565,354 8,764,576 15,976 8,780,552 6,029,009 2,751,543 8,780,552 8,362,887 (1,200,000) 7,162,887 19,720,573 2,223,014 5,501, ,000 2,890,168 (4,043,328) (1,647,006) (272,094) (1,552,000) (1,066,146) 22,054,206 (3,190,168) (3,466,324) (18,587,882) (3,190,168) 15, ,976 15,976 15,976 15,976 The notes set out on pages 26 to 46 form an integral part of these financial statements.

23 22 BALANCE SHEET at 30 June 2004 NOTE INVESTMENT IN SUBSIDIARY COMPANIES 4 18,587,884 2 CURRENT ASSETS Amount due from a subsidiary company Fixed deposits with licensed banks Cash and bank balances CURRENT LIABILITIES Other payables and accruals Provision for taxation ,979,802 5,029, ,284 13,830,095 66,300 26,800 93,100 7,285 7,285 NET CURRENT ASSETS/(LIABILITIES) 13,736,995 (7,285) 32,324,879 (7,283) FINANCED BY : SHARE CAPITAL SHARE PREMIUM RETAINED PROFIT/(LOSS) ,000,000 5,399,891 1,924,988 2 (7,285) 32,324,879 (7,283) The notes set out on pages 26 to 46 form an integral part of these financial statements.

24 INCOME STATEMENT for the year ended 30 June TO TO NOTE REVENUE 19 1,932,000 OTHER OPERATING INCOME 162,806 ADMINISTRATIVE EXPENSES (119,233) (7,285) PROFIT/(LOSS) BEFORE TAXATION 20 1,975,573 (7,285) TAXATION 21 (43,300) NET PROFIT/(LOSS) FOR THE YEAR/PERIOD 1,932,273 (7,285) The notes set out on pages 26 to 46 form an integral part of these financial statements.

25 24 STATEMENT OF CHANGES IN EQUITY for the year ended 30 June 2004 NOTE SHARE CAPITAL Nondistributable SHARE PREMIUM Distributable RETAINED PROFIT/ (LOSS) TOTAL TO Balance at beginning 2 (7,285) (7,283) Issue of shares Acquisition of a subsidiary company Public issue 14 & & 15 18,579,998 6,420,000 7,884 6,420,000 18,587,882 12,840,000 Payment of listing expenses (1,027,993) (1,027,993) Net profit for the year 1,932,273 1,932,273 Balance at end 25,000,000 5,399,891 1,924,988 32,324, TO Balance at incorporation 2 2 Loss for the period (7,285) (7,285) Balance at end 2 (7,285) (7,283) The notes set out on pages 26 to 46 form an integral part of these financial statements.

26 CASH FLOW STATEMENT for the year ended 30 June TO TO CASH FLOWS FROM OPERATING ACTIVITIES Profit/(Loss) before taxation Adjustment for : Interest income Operating profit/(loss) before working capital changes Payables Cash generated from operations Income tax paid Net cash from operating activities 1,975,573 (162,806) 1,812,767 59,015 1,871,782 (16,500) 1,855,282 (7,285) (7,285) 7,285 CASH FLOWS FROM INVESTING ACTIVITIES Interest income Investment in a subsidiary company Net cash from/(used in) investing activities 162, ,806 (2) (2) CASH FLOWS FROM FINANCING ACTIVITIES Advance to a subsidiary company Payment of listing expenses Proceeds from issuance of shares Net cash from financing activities (7,979,802) (1,027,993) 12,840,000 3,832, NET INCREASE IN CASH 5,850,293 CASH AT BEGINNING CASH AT END 5,850,293 Represented by : Fixed deposits with licensed banks Cash and bank balances 5,029, ,284 5,850,293 The notes set out on pages 26 to 46 form an integral part of these financial statements.

27 26 NOTES TO THE FINANCIAL STATEMENTS 30 June GENERAL INFOATION The principal activity of the Company is that of an investment holding company. The principal activities of the subsidiary companies are the manufacturing, assembling, marketing, sales and servicing of electrical and electronic components and products. There have been no significant changes in the nature of these activities during the financial year. On 19 November 2003, the Company's shares were officially listed and quoted on the MESDAQ Market of Bursa Malaysia Securities Berhad. The number of employees of the Group at balance sheet date is 540 (2003 :). The Company has no employees at balance sheet date. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 30 August SIGNIFICANT ACCOUNTING POLICIES The following accounting policies adopted by the Group are consistent with those adopted in the previous financial years except for the adoption of the following accounting standards for the first time during the financial year : i. MASB 25 Income Taxes ii. MASB 27 Borrowing Costs iii. MASB 29 Employee Benefits The adoption of the above MASB Standards did not give rise to any adjustments to the opening balance of loss of the current year or to changes in the comparative figures. 2.1 Basis of Accounting The financial statements of the Group and of the Company are prepared under the historical cost convention unless otherwise indicated in the accounting policies below and comply with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia. 2.2 Basis of Consolidation The financial statements of the Group include the audited financial statements of the Company and all its subsidiary companies made up to the end of the financial year. Subsidiary companies are those companies in which the Group has a long term equity interest and where it has power to exercise control over the financial and operating activities so as to obtain benefits therefrom. Subsidiary companies are consolidated using the acquisition method of accounting. Under the acquisition method of accounting, the results of the subsidiary companies acquired or disposed of are included from the date of acquisition up to the date of disposal. At the date of acquisition, the fair values of the subsidiary companies' net assets are determined and these values are reflected in the consolidated financial statements. The difference of the cost of acquisition over the fair value of the Group's share of the subsidiary companies' identifiable net assets at the date of acquisition is reflected either as goodwill or reserve on consolidation, as appropriate. Goodwill on consolidation is reviewed at each balance sheet date and will be written down for impairment where it is considered necessary.

28 NOTES TO THE FINANCIAL STATEMENTS (cont d) 30 June Basis of Consolidation (cont d) Intercompany balances, transactions and resulting unrealised gains are eliminated on consolidation and the consolidated financial statements reflect external transactions only. Unrealised losses are eliminated on consolidation unless costs cannot be recovered. Where necessary, adjustments are made to the financial statements of the subsidiary companies to ensure consistency of accounting policies with those of the Group. Minority interest is measured at the minorities' share of the fair values of the identifiable assets and liabilities of the acquiree company. Separate disclosure is made of minority interest. 2.3 Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Capital workinprogress is not depreciated until the assets are ready for their intended use. All other property, plant and equipment are depreciated over their estimated useful lives on the straight line method at the following annual rates : Short leasehold land Amortised over the lease period of 48 years Factory building 2% Plant and machinery 10% Renovation and electrical installation 10% Airconditioners 10% Office equipment, furniture and fittings 10% Motor vehicles 10% Short leasehold land refers to land with unexpired lease period of less than 50 years determined as at balance sheet date. The policy for the recognition and measurement of impairment losses is in accordance with the accounting policy as set out in Note 2.9 below. Upon the disposal of an item of property, plant and equipment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the income statement. 2.4 Hire Purchase Property, plant and equipment financed under hire purchase are capitalised in the financial statements and are depreciated in accordance with the accounting policy as set out in Note 2.3 above. Outstanding obligations due under hire purchase after deducting finance costs are included as liabilities in the financial statements. The finance costs are charged to the income statement over the period of the respective agreements using the straight line method. 2.5 Investment in Subsidiary Companies Investment in subsidiary companies is stated at cost less accumulated impairment losses in the Company's financial statements. The policy for the recognition and measurement of impairment losses is in accordance with the accounting policy as set out in Note 2.9 below. On disposal of investment in subsidiary company, the difference between net disposal proceeds and its carrying amount is charged or credited to the income statement.

29 28 NOTES TO THE FINANCIAL STATEMENTS (cont d) 30 June Inventories Inventories are stated at the lower of cost and net realisable value. Cost of finished goods and workinprogress includes materials, direct labour and attributable production overheads. Cost of raw materials, trading goods and finished materials is determined on the firstin firstout basis. Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing, selling and distribution. 2.7 Receivables Receivables are stated at their anticipated realisable values. Known bad debts are written off and specific allowance is made for any debts considered to be doubtful of collection. 2.8 Payables Payables are stated at cost which is the fair value of the consideration to be paid in future for goods and services received. 2.9 Impairment of Assets At each balance sheet date, the Group reviews the carrying amounts of its assets to determine whether there is any indication of impairment. If any such indication exists, impairment is measured by comparing the carrying values of the assets with their recoverable amounts. Recoverable amount is the higher of net selling price and value in use, which is measured by reference to discounted future cash flows. An impairment loss is recognised as an expense in the income statement immediately, unless the asset is carried at a revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of any unutilised previously recognised revaluation surplus for the same asset. Reversal of impairment losses recognised in prior years is recorded when the impairment losses recognised for the asset no longer exist or have decreased Provisions for Liabilities Provisions for liabilities are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation Revenue Recognition Revenue from sale of goods is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. Revenue arising from provision of services is recognised on the dates the services are rendered. Dividend income is recognised in the income statement when the right to receive payment is established. Interest income is recognised on the accrual basis.

30 NOTES TO THE FINANCIAL STATEMENTS (cont d) 30 June Employee Benefits Short term benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term nonaccumulating compensated absences such as sick leave are recognised when the absences occur. Defined contribution plans As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees Provident Fund ("EPF"). Such contributions are recognised as an expense in the income statement as incurred Borrowing Costs Borrowing costs that are directly attributable to the acquisition, construction, production or preparation of assets until they are ready for their intended use or sale are capitalised as part of the cost of those assets. Other borrowing costs are recognised as expenses in the year in which they are incurred Income Taxes Current tax expense is determined according to the Malaysian tax laws and include all taxes based upon taxable profits. Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amounts attributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences or unused tax losses can be utilised. Deferred tax is recognised on temporary differences arising on investments in subsidiary companies except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Tax rates enacted or substantially enacted by the balance sheet date are used to determine deferred tax Foreign Currency Translation Assets and liabilities in foreign currencies at balance sheet date are translated into Ringgit Malaysia at the rates of exchange approximately ruling on that date. Transactions in foreign currencies during the year have been translated into Ringgit Malaysia at the rates of exchange approximately ruling on transaction dates. All exchange gains or losses are included in the income statement.

31 30 NOTES TO THE FINANCIAL STATEMENTS (cont d) 30 June Foreign Currency Translation (cont d) The principal closing rates of exchange of the foreign currencies used in the preparation of the financial statements are as follows : 1 Singapore Dollar 1 Japanese Yen 1 US Dollar Cash and Cash Equivalents Cash comprises cash in hand and demand deposits. Cash equivalents are short term and highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value, against which bank overdraft balances, if any, are deducted Financial Instruments Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instrument. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of the financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously. The particular recognition methods adopted are disclosed in the individual accounting policy associated with each item.

32 NOTES TO THE FINANCIAL STATEMENTS (cont d) 30 June PROPERTY, PLANT AND EQUIPMENT GROUP 2004 At cost Balance at Acquisition of a subsidiary company Additions Disposals Balance Short leasehold land Factory building Plant and machinery Renovation and eletrical installation Airconditioners Office equipment, furniture and fittings Motor vehicles Capital workinprogress 1,419,550 4,812,410 20,056, , , , , ,066 4,370,705 4,610 53, ,000 3,272,927 (789,470) 1,419,550 5,076,476 23,637, , , ,110 1,220,208 3,272,927 27,962,714 8,362,887 (789,470) 35,536,131 Accumulated depreciation Acquisition of Balance at a subsidiary company Current charge Disposals Balance Short leasehold land Factory building Plant and machinery Renovation and eletrical installation Airconditioners Office equipment, furniture and fittings Motor vehicles Capital workinprogress 46, ,340 7,391, ,582 65,988 93, ,991 34, ,529 2,363,730 31,636 20,620 38, ,021 (366,447) 80, ,869 9,388, ,218 86, , ,012 8,242,141 2,712,379 (366,447) 10,588,073 Net Book Value at Short leasehold land Factory building Plant and machinery Renovation and eletrical installation Airconditioners Office equipment, furniture and fittings Motor vehicles Capital workinprogress 1,339,034 4,625,607 14,248, , , , ,196 3,272,927 24,948, There were no acquisitions and disposals of property, plant and equipment during this financial period.

33 32 NOTES TO THE FINANCIAL STATEMENTS (cont d) 30 June PROPERTY, PLANT AND EQUIPMENT (cont d) GROUP The net book value of property, plant and equipment charged to a licensed bank as security for banking facilities granted to the Group are as follows : Short leasehold land Factory building Plant and machinery 551,306 4,580, ,440 5,822,673 The net book value of property, plant and equipment being acquired under hire purchase loans are as follows : Plant and machinery Motor vehicles 880, ,606 1,625, INVESTMENT IN SUBSIDIARY COMPANIES COMPANY Unquoted shares, at cost 18,587,884 2 Details of the subsidiary companies which are all incorporated in Malaysia are as follows : Name of Company Equity Interest Principal Activities Scope Manufacturers (M) Sdn. Bhd. 100% Manufacturing and assembling of electronic components and products. Scope Sales & Services Sdn. Bhd. 100% 100% Marketing, sales and servicing of electrical and electronic products.

34 NOTES TO THE FINANCIAL STATEMENTS (cont d) 30 June INVESTMENT IN SUBSIDIARY COMPANIES (cont d) On 3 July 2003, the Company acquired 100% equity interest of Scope Manufacturers (M) Sdn. Bhd. for a total consideration of 18,587,882. The acquisition was accounted for using the acquisition method of accounting. The effect of the acquisition of Scope Manufacturers (M) Sdn. Bhd. on the financial results of the Group for the financial year ended 30 June 2004 is as follows : Revenue Cost of sales 26,771,082 (18,539,610) Gross profit Other operating income Administrative expenses 8,231,472 35,816 (2,902,089) Operating profit Finance costs 5,365,199 (146,315) Profit before taxation Taxation 5,218,884 (64,773) Increase in Group's net profit 5,154,111 The effect of the acquisition of Scope Manufacturers (M) Sdn. Bhd. on the financial position of the Group as at 30 June 2004 is as follows : Property, plant and equipment Inventories Trade receivables Other receivables, deposits and prepayments Tax recoverable Fixed deposits with licensed banks Cash and bank balances Trade payables Other payables and accruals Bank borrowings Deferred taxation Long term liabilities 24,948,058 2,767,831 5,719, , ,185 1,000,000 1,849,386 (188,376) (1,691,738) (174,440) (1,597,000) (348,069) Increase in Group's net assets 33,020,099

35 34 NOTES TO THE FINANCIAL STATEMENTS (cont d) 30 June INVESTMENT IN SUBSIDIARY COMPANIES (cont d) On 23 December 2002, the Company acquired 100% equity interest in Scope Sales & Services Sdn. Bhd. for a cash consideration of 2. The acquisition was accounted for using the acquisition method of accounting. The effect of the acquisition of Scope Sales & Services Sdn. Bhd. on the financial results of the Group for the financial period ended 30 June 2003 is as follows : Revenue Cost of sales Gross profit Other operating income Administrative expenses Loss before taxation Taxation Increase in Group's net loss 486,010 (463,901) 22, (26,437) (4,296) 1,203 (3,093) The effect of the acquisition of Scope Sales & Services Sdn. Bhd. on the financial position of the Group as at 30 June 2003 is as follows : Deferred taxation asset Receivables Cash and bank balances Payables Increase in Group s net assets 1, ,526 15,976 (2,966) 247, DEFERRED TAX ASSET 2004 GROUP 2003 Balance at beginning Transfer (to)/from income statement Balance at end 1,203 (1,203) 1,203 1,203 Deferred tax asset represents unutilised tax loss of a subsidiary company at current tax rate.

36 NOTES TO THE FINANCIAL STATEMENTS (cont d) 30 June INVENTORIES 2004 GROUP 2003 At cost Raw materials Workinprogress Finished goods Trading goods 1,358,236 1,355,205 54,390 2,782 2,770, TRADE RECEIVABLES 2004 GROUP 2003 Total amount Less : Allowance for doubtful debts 6,080,019 (201,975) 233,126 5,878, ,126 Included herein is an amount of 120,598 (2003 : 215,511) that is denominated in US Dollar. The normal credit term for trade receivables is 30 to 90 days. Other credit terms are assessed and approved on a casebycase basis. 8. AMOUNT DUE FROM A SUBSIDIARY COMPANY COMPANY The amount due from a subsidiary company is unsecured, interest free and has no fixed terms of repayment. 9. FIXED DEPOSITS WITH LICENSED BANKS GROUP AND COMPANY The effective interest rates of fixed deposits with licensed banks at balance sheet date is 2.80% 3.00% (2003 : ) per annum.

37 36 NOTES TO THE FINANCIAL STATEMENTS (cont d) 30 June CASH AND BANK BALANCES 2004 GROUP COMPANY 2003 Cash and bank balances Short term investment with a licensed bank 2,251, ,000 15, , ,000 2,751,543 15, ,284 The effective interest rate of short term investment at balance sheet date is 2.40% (2003 : ) per annum. 11. OTHER PAYABLES AND ACCRUALS GROUP Included herein are the following amounts that are denominated in currencies other than : 2004 GROUP 2003 Singapore Dollar Japanese Yen US Dollar 2, ,121 29, , AMOUNT DUE TO DIRECTORS GROUP The amount due to directors is nontrade related, unsecured, interest free and has no fixed terms of repayment. 13. TE LOAN 2004 GROUP 2003 Repayable within twelve months (Note 18) 174,440 The term loan is secured by way of : (i) (ii) A first fixed charge on certain plant and machinery, and Joint and several guarantee of certain directors of the Company.

38 NOTES TO THE FINANCIAL STATEMENTS (cont d) 30 June SHARE CAPITAL Authorised : GROUP AND COMPANY Ordinary shares of 0.10 (2003 : 1.00) each : Balance at beginning Creation during the year Balance at end 100,000 49,900,000 50,000, , ,000 Issued and fully paid : GROUP AND COMPANY Ordinary shares of 0.10 (2003 : 1.00) each : Balance at beginning/incorporation Issued as consideration for the acquisition of Scope Manufacturers (M) Sdn. Bhd. Allotment pursuant to Public Issue Balance at end 2 18,579,998 6,420,000 25,000, SHARE PREMIUM GROUP AND COMPANY Share premium arising from : Acquisition of Scope Manufacturers (M) Sdn. Bhd. Public issue of 64,200,000 ordinary shares of 0.10 at a premium of 0.10 per share Less : Listing expenses 7,884 6,420,000 6,427,884 (1,027,993) 5,399,891 Included in listing expenses is an amount of 75,100 paid to the auditors for nonaudit services.

39 38 NOTES TO THE FINANCIAL STATEMENTS (cont d) 30 June RETAINED PROFIT COMPANY The Company has sufficient tax exempt account and Section 108 tax credit under the Income Tax Act, 1967 subject to the agreement of the Inland Revenue Board, to frank the payment of dividends out of its entire retained profit at balance sheet date. 17. DEFERRED TAXATION 2004 GROUP 2003 Balance at beginning Arising from the acquisition of Scope Manufacturers (M) Sdn. Bhd. 1,552,000 Transfer from income statement 372,000 1,924,000 Over provision in prior year (327,000) Balance at end 1,597,000 Deferred taxation is in respect of the following : Tax effect of timing differences on : 2004 GROUP 2003 Capital allowances in excess of depreciation on property, plant and equipment 1,653,553 Allowance for doubtful debts (56,553) 1,597,000

40 NOTES TO THE FINANCIAL STATEMENTS (cont d) 30 June LONG TE LIABILITIES 2004 GROUP 2003 Term loan Principal sum Less : Repayable within twelve months included under bank borrowings (Note 13) 440,842 (174,440) Repayable more than one year and less than five years 266,402 Hire purchase payables Total amount payable Less : Interest in suspense 802,331 (81,503) Less : Payable within twelve months included under other payables and accruals 720,828 (639,161) Payable more than one year and less than five years 81, ,069 The term loan is repayable over 35 equal monthly instalments and details of securities are disclosed in Note 13. The effective interest rates of bank borrowings per annum at balance sheet date are as follows: 2004 % GROUP 2003 % Term loan Hire purchase REVENUE Invoiced value of goods sold less returns and discounts Gross dividend income from a subsidiary company TO ,792,147 GROUP TO ,010 COMPANY TO ,932, TO ,792, ,010 1,932,000

41 40 NOTES TO THE FINANCIAL STATEMENTS (cont d) 30 June PROFIT/(LOSS) BEFORE TAXATION This is arrived at : After charging : TO GROUP TO TO COMPANY TO Allowance for doubtful debts Audit fee Depreciation Directors' remuneration fees emoluments* Interest expense Loss on disposal of property, plant and equipment Preliminary expenses 201,975 19,500 2,712,379 60, , , ,223 1,800 3,135 6,000 60,000 10, Realised loss on foreign exchange Rental of machinery Staff costs ** 6,520 18,000 5,938,006 And crediting : Gross dividend from a subsidiary company Interest income 196, ,932, ,806 *Directors' emoluments Salaries and allowances Bonus EPF SOCSO 401,806 30,500 36, , ,923 10,500 **Staff costs Salaries and wages Bonus EPF SOCSO 5,272, , ,775 84,620 5,938,006

42 NOTES TO THE FINANCIAL STATEMENTS (cont d) 30 June TAXATION Tax expense: TO GROUP TO TO COMPANY TO Current tax expense based on profit for the year Deferred tax expense/(income) relating to the origination and reversal of temporary differences 405, ,000 (1,203) 43, ,300 (1,203) 43,300 Over provision in prior year Current tax expense Deferred taxation (342,227) (325,797) 109,276 (1,203) 43,300 The reconciliation of the tax expense of the Group and Company is as follows : TO GROUP TO COMPANY TO TO Profit before taxation 5,260,964 (11,581) 1,975,573 (7,285) Taxation at Malaysian statutory tax rate of 28% Expenses not deductible for tax purposes Utilisation of current year's reinvestment allowance Income not subject to tax 1,473, ,734 (823,504) (3,242) 2, ,160 31,100 (540,960) (2,040) 2, ,300 (1,203) 43,300 Over provision in prior year Income taxation Deferred taxation (342,227) (325,797) 109,276 (1,203) 43,300

43 42 NOTES TO THE FINANCIAL STATEMENTS (cont d) 30 June EARNINGS PER SHARE GROUP Basic earnings per share of the Group is calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares in issue during the financial year calculated as follows : Net profit/(loss) for the year () Weighted average number of ordinary shares Basic earnings/(loss) per share (sen) TO ,151, ,717, TO (10,378) 20 (51,890.00) 23. DIVIDENDS At the forthcoming Annual General Meeting, a first and final tax exempt dividend of 5% amounting to 1,250,000 for the financial year ended 30 June 2004 will be proposed for shareholders' approval. Such dividend, if approved by the shareholders, will be accounted for in the shareholders' equity as an appropriation of retained profits in the next financial year ending 30 June CAPITAL COMMITMENT Contracted but not provided for GROUP AND COMPANY Factory building Acquisition of Trans Industry Sdn. Bhd. 1,727,793 6,000,000 7,727, CONTINGENT LIABILITIES (UNSECURED) Corporate guarantee extended to banks for credit facilities granted to a subsidiary company 2004 COMPANY 2003 Limit 4,115,000 Utilised as at balance sheet date 440,842

44 NOTES TO THE FINANCIAL STATEMENTS (cont d) 30 June SEGMENTAL INFOATION The Group is organised into three main business segments operating solely in Malaysia as follows : Manufacturing and assembling of electronic components and products. Trading of electrical and electronic products. Investment holding. By business segments 2004 Manufacturing Trading Investment holding Elimination Total Revenue from external customers Intersegment revenue Total revenue 26,704,662 66,420 26,771,082 87,485 87,485 1,932,000 1,932,000 (1,998,420) (1,998,420) 26,792,147 26,792,147 Segment results Interest expense Interest income Profit before taxation Taxation Net profit for the year 5,331,383 (1,841) 1,812,767 (1,932,000) 5,210,309 (146,315) 196,970 5,260,964 (109,276) 5,151,688 Assets Segment assets Tax recoverable Fixed deposits with licensed banks Cash and bank balances Total assets 34,298, ,700 26,245,686 (26,481,706) 34,223, ,185 6,029,009 2,751,543 43,112,588 Liabilities Segment liabilities Bank borrowings Provision for taxation Deferred taxation Total liabilities 9,941, ,360 66,300 (8,215,822) 2,040, ,842 26,800 1,597,000 4,105,063 Other information Capital expenditure Depreciation and amortisation 8,362,887 2,712,379 8,362,887 2,712,379

45 44 NOTES TO THE FINANCIAL STATEMENTS (cont d) 30 June SEGMENTAL INFOATION (cont d) 2003 Manufacturing Trading Investment holding Elimination Total Revenue from external customers Intersegment revenue Total revenue 486, , , ,010 Segment results Interest expense Interest income Profit before taxation Taxation Loss for the year (4,328) (7,285) (11,613) 32 (11,581) 1,203 (10,378) Assets Segment assets Tax recoverable Fixed deposits with licensed banks Cash and bank balances Total assets 234,729 2 (2) 234,729 15, ,705 Liabilities Segment liabilities Bank borrowings Provision for taxation Deferred taxation Total liabilities 253,796 7, , ,081 Other information Capital expenditure Depreciation and amortisation By geographical segments (cont d) 2004 Capital Revenue Total assets Expenditure Malaysia Other Asian countries 26,655, ,532 34,223,851 8,362,887 26,792,147 34,223,851 8,362,887 Unallocated assets 8,888,737 43,112,588

46 NOTES TO THE FINANCIAL STATEMENTS (cont d) 30 June SEGMENTAL INFOATION (cont d) By geographical segments (cont d) 2003 Capital Revenue Total assets expenditure Malaysia Other Asian countries 176, , , , ,729 Unallocated assets 15, , FINANCIAL INSTRUMENTS Financial risk management objectives and policies The Group's financial risk management policy seeks to ensure that adequate resources are available for the development of the Group's business whilst managing its credit, interest rate, foreign currency exposure and liquidity risks. The Group operates within clearly defined guidelines that are approved by the Board and the Group's policy is not to engage in speculative transactions. Credit Risk Credit risk, or the risk of counterparties defaulting, is controlled by the application of credit approvals, limits and monitoring procedures. Credit risks are minimised and monitored via strictly limiting the Group's associates to business partners with high creditworthiness. Trade receivables are monitored on an ongoing basis via the Group's management reporting procedures. The Group does not have any significant exposure to any individual customer or counterparty nor does it have any major concentration of credit risk related to any financial instrument. The Group's normal credit term for trade receivables and trade payables is 30 to 90 days. Other credit terms are assessed and approved on a casebycase basis. Interest Rate Risk The Group's primary interest rate risk relates to interestbearing debts borrowed at fixed rate. As at balance sheet date, the Group has total fixed rate borrowings of 1,161,670 and thus the exposure to interest rate risk is minimal. Foreign Currency Risk The objectives of the Group's foreign exchange policies are to allow the Group to manage exposures that arise from trading activities effectively within a framework of controls that does not expose the Group to unnecessary foreign exchange risks. Foreign currency denominated assets and liabilities together with expected cash flows from highly probable purchases and sales give rise to foreign exchange exposures, mainly Singapore Dollar, Japanese Yen and the US Dollar.

47 46 NOTES TO THE FINANCIAL STATEMENTS (cont d) 30 June FINANCIAL INSTRUMENTS (cont d) Foreign Currency Risk (cont d) However, the Group does not hedge its trade receivables and payables as the exchange rate for the US Dollar has been pegged to Ringgit Malaysia at Liquidity Risk The Group actively manages its debt maturity profile, operating cash flows and availability of funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash and cash equivalents to meet its working capital requirements. Fair Values The carrying amounts of the financial assets and financial liabilities of the Group and of the Company at balance sheet date approximate their fair values. The nominal/notional amount and net fair value of contingent liabilities (as disclosed in Note 25) are not recognised in the balance sheet as at 30 June 2004 as it is not practicable to make a reliable estimate due to the uncertainties of timing, costs and eventual outcome. 28. SIGNIFICANT EVENTS The significant events during the financial year were as follows : i) On 3 July 2003, the Company acquired the entire issued and paidup share capital of Scope Manufacturers (M) Sdn. Bhd. comprising 3,220,000 ordinary shares of 1.00 each for a total consideration of 18,587,882 satisfied by the issuance of 18,579,998 new ordinary shares of 1.00 each at an issue price of approximately per share. ii) iii) iv) After completion of the above acquisition, the Company undertook a share split whereby its existing ordinary shares of 1.00 each were split into ordinary shares of 0.10 each. Following the share split, the Company's issued and paidup share capital of 18,580,000 was converted from 18,580,000 ordinary shares of 1.00 each to 185,800,000 ordinary shares of 0.10 each. On 27 October 2003, the Company completed a public issue of 64,200,000 new ordinary shares of 0.10 each at an issue price of 0.20 per ordinary share of 0.10 each. On 19 November 2003, the Company's shares were officially listed and quoted on the MESDAQ Market of Bursa Malaysia Securities Berhad. v) On 15 April 2004, the Company had entered into a conditional share sale agreement to acquire the entire issued and paidup share capital of Trans Industry Sdn. Bhd. for a total consideration of 6,000,000 to be satisfied by the issuance of 18,181,818 new ordinary shares of 0.10 each at an issue price of 0.33 per share. The Company had submitted its application for the acquisition to the relevant authorities for their approvals. The Ministry of International Trade and Industry has given its approval on 21 July 2004 while the approvals from the other authorities are still pending. 29. EVENT AFTER THE BALANCE SHEET DATE Subsequent to the balance sheet date, the Company has issued a corporate guarantee of 5,697,000 to a licensed bank for banking facilities granted to a subsidiary company.

48 DIRECTORS STATEMENT 47 We, Lim Chiow Hoo and Lee Min Huat being two of the directors of Scope Industries Berhad state that in the opinion of the directors, the financial statements set out on pages 17 to 46 are properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs of the Group and of the Company at 30 June 2004 and of the results and cash flows of the Group and of the Company for the year ended on that date. Signed in accordance with a resolution of the directors: Lim Chiow Hoo Lee Min Huat Date : 30 August 2004 STATUTORY DECLARATION I, Lim Chiow Hoo, the director primarily responsible for the financial management of Scope Industries Berhad do solemnly and sincerely declare that the financial statements set out on pages 17 to 46 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, Subscribed and solemnly declared by ) the abovenamed at Penang, this 30th ) day of August ) ) Lim Chiow Hoo Before me, Govindasamy A/L G. Muttusamy, PJM Commissioner for Oaths

49 48 REPORT OF THE AUDITORS to the members of Scope Industries Berhad We have audited the financial statements set out on pages 17 to 46. The preparation of the financial statements is the responsibility of the Company's directors. Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with approved Standards on Auditing in Malaysia. Those standards require that we plan and perform the audit to obtain all the information and explanations which we consider necessary to provide us with evidence to give reasonable assurance that the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. An audit also includes an assessment of the accounting principles used and significant estimates made by directors as well as evaluating the overall adequacy of the presentation of information in the financial statements. We believe that our audit provides a reasonable basis for our opinion. In our opinion : (a) (i) (ii) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to give a true and fair view of : the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements; and the state of affairs of the Group and of the Company at 30 June 2004 and of the results and cash flows of the Group and of the Company for the year ended on that date; and (b) the accounting and other records and the registers required by the Act to be kept by the Company and by the subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. We are satisfied that the financial statements of the subsidiary companies 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 consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. The auditors' reports on the financial statements of the subsidiary companies were not subject to any qualification and did not include any adverse comment made under subsection (3) of Section 174 of the Act. JB LAU & ASSOCIATES NO. AF : 0042 CHARTERED ACCOUNTANTS JOHN LAU TIANG HUA NO. 1107/03/06 (J) DATE : 30 AUGUST 2004

50 ANALYSIS OF SHAREHOLDINGS as at 30 September A. Authorised Share Capital : 50,000,000 Issued and fully paidup Share Capital : 25,000,000 Class of Shares : Ordinary Shares of 0.10 each Voting Rights : One vote per share B. ANALYSIS BY SIZE OF SHAREHOLDINGS Size of shareholdings No. of shareholders % of total shareholders No. of shares % of total issued capital Less than 100 shares 100 to 999 shares 1,000 to 4,999 shares 5,000 to 10,000 shares 10,001 to 100,000 shares 100,001 to 1,000,000 shares Above 1,000,000 shares Total , ,200 1,433,300 5,255,700 19,122,600 27,943, ,236, ,000, C. SUBSTANTIAL SHAREHOLDERS Name <Number of Shares Held> Direct % Indirect % Lim Chiow Hoo Lee Min Huat Datin Zaiton Bt Abdullah Lembaga Tabung Angkatan Tentera 71,165,830 57,701,860 38,403,710 15,000, D. DIRECTORS' SHAREHOLDINGS Name <Number of Shares Held> Direct % Indirect % Lim Chiow Hoo Lee Min Huat Lee Chin Hwa Too Ah Lake Lau Chin Wee Tan Eng Siang 71,165,830 57,701, , ,000 50,000 1,923,

51 50 ANALYSIS OF SHAREHOLDINGS (cont d) as at 30 September 2004 E. TWENTY LARGEST SHAREHOLDERS Name of Shareholders No. of Shares % of total issued capital Lim Chiow Hoo Lee Min Huat OSK Nominees (Tempatan) Sdn. Berhad Lembaga Tabung Angkatan Tentera Yap Pei Pei Datin Zaiton Binti Abdullah Tan Eng Kim Lim Seng Chong Tan Eng Siang Ong Chee Keong Low Poh Lim Khor It Kwang Ang Eng Hoe HSBC Nominees (Tempatan) Sdn. Bhd. Lim Seng Hee Woo Yew Kheong Ngan Mee Ling CIMSEC Nominees (Tempatan) Sdn. Bhd. Zahrah Binti Seruji Low Mun Chong 71,165,830 57,701,860 35,413,710 15,000,000 4,236,900 3,000,000 2,180,000 2,076,200 1,923,380 1,736,500 1,475,000 1,240,000 1,090,000 1,014, , , , , , ,

52 NOTICE OF ANNUAL GENERAL MEETING 51 NOTICE IS HEREBY GIVEN THAT the Second Annual General Meeting of the Company will be held at Majestic Room, Bukit Jawi Golf Resort Berhad, 691 Main Road, Sungai Bakap, Seberang Perai Selatan, Pulau Pinang on Tuesday, 30 November 2004 at 2.00 p.m. for the following purposes: AGENDA 1. To receive and consider the Audited Financial Statements for the financial year ended 30 June 2004 together with the Reports of the Directors and Auditors thereon. 2. To approve the payment of a First and Final Tax Exempt Dividend of 5% for the financial year ended 30 June To approve the payment of Directors' fees of 60, for the financial year ended 30 June Resolution 1 Resolution 2 Resolution 3 4. To consider and if thought fit, pass the following resolution: "That pursuant to Section 129(6) of the Companies Act, 1965, Mr Lee Chin Hwa who has attained the age of 70 be reappointed as a Director of the Company to hold office as a Director until the conclusion of the next annual general meeting of the Company." Resolution 4 5. To reelect the following Directors retiring in accordance with Article 132 of the Company's Articles of Association: a) Mr Lau Chin Wee b) Mr Too Ah Lake c) Mr Tan Eng Siang 6. To reappoint Messrs. JB Lau & Associates as auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration. Resolution 5 Resolution 6 Resolution 7 Resolution 8 As special business : To consider and if thought fit, to pass with or without modifications the following ordinary resolution : 7. AUTHORITY TO ISSUE SHARES "That pursuant to Section 132D of the Companies Act, 1965, and subject to the approvals of the relevant Governmental and/or regulatory authorities, the Directors be hereby empowered to issue shares in the Company, at such time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution in any one financial year does not exceed 10% of the issued share capital of the Company for the time being and that the Directors be also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the listing of and quotation for the additional shares so issued and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company." Resolution 9 8. To transact any other business for which due notices shall have been given. By Order of the Board, TAN CHOONG KHIANG Company Secretary (MAICSA ) Penang Date : 8 November 2004

53 52 NOTICE OF ANNUAL GENERAL MEETING (cont d) Notes : 1. A proxy may but need not be a member of the Company and the proxy need not be an advocate or an approved company auditor or a person approved by the Companies Commission of Malaysia and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. 2. The proxy form must be duly completed and deposited at the Registered Office of the Company, 518B Menara BHL Bank, Jalan Sultan Ahmad Shah, Penang not less than fortyeight (48) hours before the time for holding the meeting. 3. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting. 4. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. 5. If the appointor is a corporation, this form must be executed under its Common Seal or under the hand of its attorney. Explanatory Note on item 7 of the Agenda The ordinary resolution proposed under item 7, if passed, will give the Directors of the Company authority to issue shares in the Company up to an amount not exceeding 10% of the total issued capital of the Company for the time being for such purposes as the Directors consider would be in the best interest of the Company. This would avoid any delay and costs in convening a general meeting to specifically approve such an issue of shares. This authority, unless revoked or varied by the shareholders of the Company in general meeting, will expire at the conclusion of the next Annual General Meeting.

54 NOTICE OF DIVIDEND ENTITLEMENT 53 NOTICE IS HEREBY GIVEN THAT a First and Final Tax Exempt Dividend of 5% in respect of the financial year ended 30 June 2004, if approved, will be paid on 10 January 2005 to depositors registered in the Record of Depositors at the close of business on 31 December A depositor shall qualify for entitlement to the Dividend only in respect of: a. shares transferred into the depositor's securities account before 4.00 p.m. on 31 December 2004 in respect of transfers. b. shares bought on the Exchange on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad. By Order of the Board, TAN CHOONG KHIANG Company Secretary (MAICSA ) Penang Date : 8 November 2004 STATEMENT ACCOMPANYING NOTICE OF THE SECOND ANNUAL GENERAL MEETING 1. The following Directors retiring by rotation pursuant to Article 132 of the Company's Articles of Association and seeking reelection are as follows: a) Mr Lau Chin Wee b) Mr Too Ah Lake c) Mr Tan Eng Siang 2. Mr Lee Chin Hwa, a Director who is over 70 years of age and is seeking reappointment pursuant to Section 129 of the Companies Act, The details of the four Directors seeking reelection or reappointment are set in their respective profiles which appear on page 5 of the Annual Report. 3. The details of attendance of Directors of the Company at Board meetings held during the financial year ended 30 June 2004 are disclosed in the Corporate Governance Report set out in page 6 of this Annual Report. 4. The details of the place, date and hour of the Second Annual General Meeting are as follows: Place : Majestic Room, Bukit Jawi Golf Resort Berhad, 691 Main Road, Sungai Bakap, Seberang Perai Selatan, Pulau Pinang Date : Tuesday, 30 November 2004 Time : 2.00 p.m.

55 54 LIST OF PROPERTIES Registered Owner / Location Description Tenure Age (Years) Land Area (Sq. ft.) Builtup Area (Sq. ft.) Existing Use Audited Net Book Value as at 30 June 2004 '000 Scope Manufacturers (M) Sdn Bhd / portion of PN 42984, Lot 6181, Mukim Parit Buntar, Kerian, Perak. Industrial Land Leasehold for 60 years (expiring on ) 6 65,340 58,040 Double storey office with annexed single storey factory building for use as head office and factory 5,173 HS(D) 2841, PT 1803, Mukim Parit Buntar, Kerian, Perak. Industrial Land Leasehold for 60 years (expiring on ) 87,120 presently under construction 792

56 PROXY FO 55 * I / We (Full Name in Block Letters) of (Address) being a * member / members of the abovenamed Company, hereby appoint (Full Name in Block Letters) of or failing him, of No. of Resolution (Address) (Full Name in Block Letters) (Address) as * my / our proxy to vote for * me / us on * my / our behalf at the Second Annual General Meeting of the Company to be held at Majestic Room, Bukit Jawi Golf Resort Berhad, 691 Main Road, Sungai Bakap, Seberang Perai Selatan, Pulau Pinang on Tuesday, 30 November 2004 at 2.00 p.m. and any adjournment thereof. Resolutions For Against To receive and consider the Reports and Financial Statements for financial year ended 30 June To approve a first and final tax exempt dividend of 5% for the financial ended 30 June To approve the payment of Directors' fees. To reappoint Mr Lee Chin Hwa as a Director in accordance with Section 129(6) of the Companies Act, To reelect the following Directors retiring in accordance with Article 132 of the Company's Articles of Association: a) Mr Lau Chin Wee b) Mr Too Ah Lake c) Mr Tan Eng Siang To reappoint Messrs JB Lau & Associates as Auditors To authorise Directors to issue shares pursuant to Section 132D of the Companies Act, 1965 Please indicate with an "x" in the appropriate spaces provided above on how you wish your vote to be cast. If no specific direction for voting is given, the proxy may vote as he thinks fit. No. of shares held Signed this.. day of, Signature of Member (s) Notes : 1. A proxy may but need not be a member of the Company and the proxy need not be an advocate or an approved company auditor or a person approved by the Companies Commission of Malaysia and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. 2. To be valid this form duly completed must be deposited at the registered office of the Company, 518B Menara BHL Bank, Jalan Sultan Ahmad Shah, Penang not less than fortyeight (48) hours before the time for holding the meeting. 3. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting. 4. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. 5. If the appointor is a corporation, this form must be executed under its Common Seal or under the hand of its attorney.

57 Please fold here Affix Stamp Company Secretary SCOPE INDUSTRIES BERHAD (591376D) 518B Menara BHL Bank Jalan Sultan Ahmad Shah Penang Please fold here