Contents. Page. Chairman s Statement 02. Corporate Information 04. Our Executive Chairman and Managing Director 05. Profile of Directors 06

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2 ASIAEP BHD (Company No W) Contents Page Chairman s Statement 02 Corporate Information 04 Our Executive Chairman and Managing Director 05 Profile of Directors 06 Statement of Corporate Governance 09 Additional Compliance Information 13 Audit Committee Report 16 Statement on Internal Control 18 Financial Statements 19 Analysis of Shareholdings 91 List of Properties 97 Notice of Annual General Meeting 98 Statement Accompanying Notice of AGM 101 Proxy Form 102 asiaep Annual Report

3 ASIAEP BHD (Company No W) Chairman s Statement Dear Shareholders, On behalf of the Board of Directors of asiaep Berhad, I have the pleasure of presenting to you the Annual Report and Financial Statements of asiaep Berhad and its Group of Companies for the financial year ended 28 February As shown in our previous quarterly reports, due to the spillover effect into the local economy from the current volatility of the global economies and the cautious worldwide market sentiments, the financial year ended 28 February 2011 has been a challenging year for the Group. At the same time, we are looking positively on the Economic Transformation Program initiated by the Government to assist in promoting the overall growth of the local economy. Tan Sri Dato Ahmad Fuzi bin Haji Abdul Razak Executive Chairman Financial Highlight In view of the market uncertainties, the Board of Directors, reflecting its prudent stance, took a major decision during the financial year ended 28 February 2011, by making a huge impairment on to the intangible asset. In this respect, upon the additional impairment amount of RM28.3 million being taken in, the Group registered a total loss of RM33.1 million. The decline in the Group turnover from RM9.86 million as for the financial year ended 28 February 2010 to RM8.27 million, as registered during the financial year ended 28 February 2011 and the necessity of maintaining a high level of administration expenses for ensuring smooth operations of the Group, also contributed towards the Group loss of RM4.8 million before taking into account the above-mentioned impairment. asiaep Annual Report

4 ASIAEP BHD (Company No W) Chairman s Statement (continued) Industry Outlook and the Group s Future Strategies Besides maintaining our on-line business, the Board of Directors is in consensus that there is an urgent need to diversify the business risks of the Group with the purpose of enhancing future shareholders values. In pursuit of such objective, the Group is currently looking for other avenues of growth such as investing in sectors with potential for generating profits. At this juncture, the Group has identified one potentially lucrative venture in the sector of iron ore-mining. Our first announcement about the subject was made on 1st April 2011 which indicated our proposal to take over 41% of shareholding in Global Mineral Technologies Sdn Bhd. However, this proposed acquisition is subject to the satisfaction of all conditions precedent mentioned therein. Current Year Prospects The Board anticipates that the growth prospect of the Group continues to be challenging for the financial year ending 28 February 2012, subject also to the timing for the realisation of the prospective new ventures. Tan Sri Dato Ahmad Fuzi bin Haji Abdul Razak Executive Chairman asiaep Annual Report

5 ASIAEP BHD (Company No W) Corporate Information Corporate Information Registered Office No. 18 & 20 Jalan TK 2/1C Taman Kinrara Seksyen Puchong, Selangor Malaysia Tel : (hunting line) Fax: Company Secretaries Wong Youn Kim Sin May Peng Share Registrar Sectrars Services Sdn Bhd 28-1 Jalan Tun Sambathan 3 Brickfields Kuala Lumpur Tel : Fax : Auditors Baker Tilly Monteiro Heng Chartered Accountants 22-1, Monteiro & Heng Chambers, Jalan Tun Sambanthan 3, Kuala Lumpur Malaysia Principal Bankers Malayan Banking Berhad Hong Leong Bank Berhad CIMB Bank Berhad (formerly know as Bumiputra - Commerce Bank Berhad) Affin Bank Berhad Solicitors Kadir, Andri & Partners Advocates & Solicitors 8th Floor, Menara Safuan 80 Jalan Ampang Kuala Lumpur Malaysia Stock Exchange Listing ACE Market Bursa Malaysia Securities Berhad Website asiaep Annual Report

6 ASIAEP BHD (Company No W) Our Executive Chairman and Managing Director Tan Sri Dato Ahmad Fuzi bin Haji Abdul Razak Executive Chairman Dr Tan Boon Nunt Managing Director asiaep Annual Report

7 ASIAEP BHD (Company No W) Profile of Directors Tan Sri Dato Ahmad Fuzi bin Haji Abdul Razak Executive Chairman Malaysian, Aged 62 Tan Sri Dato Ahmad Fuzi bin Haji Abdul Razak was previously the Secretary General of the Ministry of Foreign Affairs Malaysia. He joined the Ministry of Foreign Affairs, mainly in the Political Division, and at the Malaysian Missions abroad in Moscow, the Hague, Canberra, Washington and Dhaka. Tan Sri Ahmad Fuzi has previously also served as Director General, Institute of Diplomacy and Foreign Relations Malayisa; Ambassador-at-Large; Malaysia s Representative to the ASEAN High Level Task Force (HLTF) on the Drafting of the ASEAN Charter and Malaysia s Representative to the High Level Panel (HLP) on the Drafting of the Terms of Reference of the ASEAN Human Rights Body. He was formerly Member, the Board of BERNAMA; PROTON; the Malaysian-Thailand Joint Authority (MTJA); the Maritime Institute of Malaysia (MIMA); the Board of Advisors, Institute of Diplomacy and Foreign Relations (IDFR); the Board of Trustee, World Islamic Economic Forum (WIEF); International Advisory Panel (IAP) of the WIEF; Chairman, AmanahRaya Capital Group Sdn Bhd; Chairman, Al-Nibras Limited and Independent Non-Executive Director, LCL Corporation Berhad. Tan Sri Ahmad Fuzi is currently the Secretary General of the World Islamic Economic Forum Foundation (WIEF); Chairman, Amanahraya-Reit; Chairman, Seremban Engineering Berhand; Executive Chairman, AsiaEP Bhd; Chairman, PKT Logistics (M) Sdn Bhd; Non-Executive Chairman, Sofgen Sdn Bhd; Chairman, Leisure Guide Publishing Sdn Bhd; Independent Non-Executive Director, Puncak Niaga Holdings Berhad; Non-Executive Director, Management Development Institute of Singapore; Member, Board of Trustees, F3 Strategies Berhad; and Member, Advisory Board, Asia Pacific Entrepreneurship Award (APEA). Tan Sri Ahmad Fuzi is also a Distinguished Fellow, Institute of Strategic and International Studies (ISIS); Distinguished Fellow, Institute of Diplomacy and Foreign Relations; Deputy Chairman, Malaysian Member Committee of the Council for Security Cooperation in the Asia Pacific (CSCAP Malaysia); Member, Board of Trustees MERCY, Malaysia; President, Association of Former Malaysian Ambassadors (AFMA) and Advisor High School Bukit Mertajam Alumni Malaysia. He holds a Bachelor of Arts Degree (Honours) from the University of Malaya (1972) and a Certificate in Diplomacy (Foreign Service Course) from the University of Oxford (1974). In recognition of his service to the nation, he was awarded the AMN (1979), the JSM (1999), the DSPN (1999), the DMPN (2002) and the PSM (2003). Born on 8 January 1949, Tan Sri Ahmad Fuzi is married to Puan Sri Khadijah bt. Mohd. Nor and has two children. Tan Sri Ahmad Fuzi does not have any family relationship with any Director and / or substantial shareholder of the Company or any conflict of interest with the Company. He has not been convicted of any offences in the last ten (10) years, other than traffic offences (if any). asiaep Annual Report

8 ASIAEP BHD (Company No W) Profile Directors (continued) Dr Tan Boon Nunt Managing Director/ Chief Executive Officer Malaysian, Aged 53 Dr Tan Boon Nunt was appointed to the Board of the Company in He was subsequently appointed as the Managing Director and Chief Executive Officer in He is the co-founder of the Company as well as Topclass Access Sdn Bhd (TASB). Dr Tan achieved his doctorate in Management from Greenwich University of Australia in He started his career as a media planner in the publication industry for more than eleven (11) years. Before founding the Company, he was the Managing Director of Better Living Sdn Bhd, a trading house, for five years prior to Dr Tan was awarded the 2002 Ernst & Young Entrepreneur of the Year Award for Information & Communication Technology. Dr Tan does not have any family relationship with any Director and / or substantial shareholder of the Company or any conflict of interest with the Company. He has not been convicted of any offences in the last ten (10) years, other than traffic offences (if any). Madam Lee Suet Hong Executive Director/ Chief Operating Officer Malaysian, Aged 55 Madam Lee Suet Hong was appointed to the Board of the Company in She was subsequently appointed as the Executive Director and Chief Operating Officer in She is also the co-founder of the Company as well as TASB. She graduated with a Diploma in Business Studies and Management from The London College of Business Studies in She obtained her MBA, majoring in E-Marketing from the Greenwich University of Australia in Madam Lee started her career as a Personal Assistant to the Managing Director of Atkinson Pte Ltd in London from 1978 to She held senior management and administrative positions in several public listed companies before joining the company. Madam Lee does not have any family relationship with any Director and / or substantial shareholders of the Company or any conflict of interest with the Company. She has not been convicted of any offences in the last ten (10) years, other than traffic offences (if any). Mr. Khor Chai Tian Independent Non-Executive Director Malaysian, Aged 49 Mr. Khor Chai Tian was appointed to the Board of the Company as an Independent Non-Executive Director on 13 December He obtained a Bachelor of Economics Degree(Honours) from University of Malaya and M.B.A from Asia International Open University, Macau. He was Executive Director of Master-Pack Group Bhd from 1995 to Currently, he is an Executive Director of Master Advisory Services Sdn Bhd and Oceanpac Sdn Bhd. Mr. Khor does not have any family relationship with any Director and / or substantial shareholders of the Company or any conflict of interest with the Company. He has not been convicted of any offences in the last ten (10) years, other than traffic offences (if any). asiaep Annual Report

9 ASIAEP BHD (Company No W) Mr. Lim Ghim Chai Independent Non-Executive Director Malaysian, Aged 36 Mr. Lim Ghim Chai was appointed to the Board of the Company as an Independent Non-Executive Director on 11 April He graduated with a Bachelor of Commerce (Accounting) Degree from La Trobe University at Melbourne, Australia and is a member of Malaysian Institute of Accountants and Malaysian Insurance Institute. He obtained membership of Certified Practising Accountant of CPA Australia in year Mr. Lim worked as a Financial Accountant in Acer Technologies (M) Sdn. Bhd. from year 2000 to 2001 and was a Financial Analyst in Agilent Technologies (M) Sdn Bhd in year Thereafter, he worked as an Accountant in Lorry Commercial Logistic Sdn Bhd in year He was a Partner and also a Director in a professional firm providing services of taxation, business planning consultancy, company accounting and company secretarial from years 2003 until Currently, Mr. Lim is a Partner, Managing Director and Executive Director and also Shareholder of a few companies in the business of Interior Design, Property Development and Recycling. Mr. Lim does not have any family relationship with any Director and / or substantial shareholders of the Company or any conflict of interest with the Company. He has not been convicted of any offences in the last ten (10) years, other than traffic offences (if any). Mr Chu Kheh Wee Independent Non-Executive Director Malaysian, Aged 41 Mr. Chu Kheh Wee was appointed to the Board of the Company as an Independent Non-Executive Director on 22 July He is a Associate member of the Chartered Institute of Management Accountants (CIMA) and the Chartered Accountant of Malaysian Institute of Accountants (MIA). Mr Chu has vast experience working with industries of property development/construction, hotel development and management and oil/gas throughout his career. He worked as the Senior Finance Manager of Worthy Builders since October 2000.Subsequently he joined Oilcorp Berhad Group in May 2002 as Senior Manager - Corporate Finance and he was designated as Chief Financial Officer of D Tiara Corp Limited in Year 2007 before he left the group in end of year At present, he is director of Tracklink Resources Sdn Bhd, a trading cum business consultant service provider. He is also appointed as the Independent Director of Sumatec Resources Bhd. Mr. Chu does not have any family relationship with any Director and / or substantial shareholders of the Company or any conflict of interest with the Company. He has not been convicted of any offences in the last ten (10) years, other than traffic offences (if any). asiaep Annual Report

10 ASIAEP BHD (Company No W) Statement of Corporate Governance The Board of Directors acknowledges the importance of adopting high standards of corporate governance within the Company. Good corporate governance is a fundamental part of the Company s responsibility to protect, realise and enhance long-term shareholders value and the financial performance of the Company. The Statement below sets out how the Company has applied the Key Principles of the Malaysian Code on Corporate Governance ( the Code ) and how the Board has complied with the Best Practices set in the Code for the financial year ended 28 February a) BOARD OF DIRECTORS The Board of Directors consists of six (6) dedicated members, comprising of Executive Chairman, CEO/Managing Director, Executive Director and three Independent Non-Executive Directors. The Company complied with the Listing Requirements of Bursa Malaysia Securities Bhd (Bursa Malaysia) for the ACE Market (Listing Requirements) which states that a listed company must have at least two directors or one third of the Board of Directors, whichever is the higher, whom are independent. The role and responsibilities of the Executive Chairman is assumed by Tan Sri Dato Ahmad Fuzi bin Haji Abdul Razak whilst as for the Managing Director is by Dr. Tan Boon Nunt. The Independent Non-Executive Directors are independent of management and free from any business or other relationship that could materially interfere with the exercise of their independent judgement. i) Board Meetings Since the Company s previous financial year end, the Board has met six (6) times for the financial year ended 28 February The records of attendance of each Director at Board Meetings held during the financial year ended 28 February 2011 are disclosed below: Director (s) Number of Meeting(s) attended Percentage Tan Sri Dato Ahmad Fuzi bin Haji Abdul Razak 6 out of 6 100% Dr Tan Boon Nunt 6 out of 6 100% Madam Lee Suet Hong 6 out of 6 100% Mr. Khor Chai Tian 6 out of 6 100% Mr. Lim Ghim Chai 5 out of 6 83% Mr. Chu Kheh Wee 6 out of 6 100% ii) Supply of Information The Directors have full and timely access to information concerning the Company. Agenda of meetings and discussion papers are circulated prior to Board meetings to provide adequate time for the Directors to study and evaluate the matters to be discussed. The Directors have unrestricted access to the advice and services of the Company Secretaries and senior management in the Company and may obtain independent professional advice at the Company s expense in order to discharge their duties effectively. iii) Identification of the Senior Independent Non-Executive Director In order to provide an avenue to the shareholders to convey their concerns, the Board has identified Mr Khor Chai Tian who is currently the Chairman of the Audit Committee, to act as the Senior Independent Non- Executive Director, serving as an alternative for shareholders to convey their concerns and seek clarifications from the Board. asiaep Annual Report

11 ASIAEP BHD (Company No W) iv) The Board and Board Committees In order to assist the Board in the discharge of its duties effectively, the Board has formal and delegated specific functions to the Board Committees, namely the Nomination Committee, Remuneration Committee and Audit Committee. Each committee operates within its clearly defined terms of reference conferred by the Board. The Chairman of the various Committees reports to the Board on the outcome of the Committee meetings. v) Nomination Committee The Nomination Committee was formed on 16 February The members are Mr Khor Chai Tian (Independent Non-Executive Director) and Mr Lim Ghim Chai (Independent Non-Executive Director). The Nomination Committee shall be appointed by the Board from amongst the Directors of the Company and shall consists exclusively of a minimum of two (2) non-executive directors, majority of whom are independent. The members of the Nomination Committee shall elect the Chairman from among their number who shall be an independent director. The majority of members present in the Commitee must be independent directors in order to form a quorum. The functions of the Nomination Committee is to recommend the suitability of an individual to be appointed to the Board and to assess not only the performance of each Director on an on-going basis but the effectiveness of the whole Board and other Board Committees as a whole. The Board of Directors have full responsibility in considering the approval on each nomination taking into account the individual s skills, knowledge, expertise, experience, professionalism, integrity and suitability in filling the particular position. The Nomination Committee conducted a meeting on 30 April 2010 during the financial year. vi) Remuneration Committee The Remuneration Committee was established on 16 February, The members are Mr Khor Chai Tian (Independent Non-Executive Director), Mr Lim Ghim Chai (Independent Non- Executive) and Madam Lee Suet Hong (Executive Director / Chief Operating Officer). The Committee is responsible for recommending to the Board from time to time, the remuneration framework and package of the Executive Directors of the Company in all forms to commensurate with the respective contributions of the Executive Directors. 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 Non-Executive Directors, including the Executive Chairman. The individuals concerned should abstain from discussion on their own remuneration packages. The shareholders at the Annual General Meeting (AGM) approve the Directors fees. The Remuneration Committee conducted a meeting on 30 April 2010 during the financial year. vii) Training for Directors All the Directors have attended the Mandatory Accreditation Programme (MAP) as prescribed under the Listing Requirements of the Bursa Malaysia Securities Berhad. The Board has assessed the training needs of the Directors and encourages the Directors to attend any relevant programme to further enhance their knowledge to enable them to discharge their responsibility more effectively. During the financial year under review the directors were updated on new regulatory and statutory requirements. On 28th October 2010, all board members attended a workshop called Business Protocol : Weathering the Ever Challenging Corporate Environment at the Malaysian Petroleum Club in Kuala Lumpur. asiaep Annual Report

12 ASIAEP BHD (Company No W) viii) Appointment and Re-election In accordance with the Company s Articles of Association, all new Directors are subject to election at the AGM following their first appointment. In every year, one-third of the Directors or if their number is not three or a multiple of three, then the number nearest to one-third, shall retire by rotation from office and seek re-election at each AGM and that each Director shall retire from office at least once in every three years and shall be eligible for re-election. b) DIRECTORS REMUNERATION The Directors are satisfied that the current levels of remuneration are in line with the responsibilities undertaken by directors. A summary of the remuneration of the Directors for the financial year under review, distinguishing between Executive and Non-Executive Directors in aggregate with categorization into appropriate components is set out below: Directors Remuneration Executive Director Non-Executive Director Total Directors Fee (RM 000) Salaries and Other Emoluments (RM 000) The number of Directors whose remuneration falls into the following bands are:- Remuneration Range Executive Director Non-Executive Director Below RM50,000-3 RM50,001-RM100, RM350,001-RM400, RM400,001-RM450, The Board is of the view that the above disclosure, without divulging the respective Directors individual remuneration, is sufficient. c) SHAREHOLDERS i) Relations with Shareholders and Investors The Company acknowledges the significance of being accountable to its shareholders and investors and as such, has maintained active communication and feedback policy from institutional investors, shareholders and the public generally. All shareholders, including private investors, have an opportunity to participate in discussion with the Board on matters relating to the Company s operation and performance at the Company s AGM. Alternatively, they may obtain the Company s latest announcements such as quarterly financial results from the Bursa Malaysia s website ( as well as our website at aboutus/investor.php. ii) Annual General Meeting (AGM) The AGM is the principal forum of dialogue with public shareholders. The shareholders are encouraged to participate in the open question and answer sessions in the AGM in which they may raise questions on the resolutions being proposed at the meeting and the financial performance and business operations in general. d) ACCOUNTABILITY AND AUDIT i) Financial Reporting The Directors have taken reasonable steps to provide a balanced and understandable assessment of the Company s financial performance and prospects. In this respect, the Audit Committee assists the Board to oversee the Company s financial reporting process and the quality of financial reporting. asiaep Annual Report

13 ASIAEP BHD (Company No W) ii) Statement of Directors Responsibility in the Financial Statements The Directors are responsible for the preparation of the Annual Audited Financial Statements which give a true and fair view of the state of affairs of the Company and will ensure that they are presented in accordance with the provisions of the Companies Act, 1965 and the applicable approved accounting standards in Malaysia. In the preparation of the financial statements for the year ended 28 February 2011, the Directors are satisfied that the Company had used appropriate accounting policies that are consistently applied and supported by reasonable and prudent judgement and estimates. iii) Internal Control The Board recognises the importance of internal control systems to safeguard the shareholders investment and the Company s assets. As at to date, the Board is comfortable with the current systems of internal control in the Group. Nonetheless, The Board will improve the internal controls of the Group continuously. iv) External Auditors The Board has established a transparent relationship with the external auditors through the Audit Committee. The Audit Committee has the right to communicate directly with the external auditors for ensuring compliance with the accounting standards and other related regulatory requirements are addressed objectively. v) Statement of Compliance with the Best Practices of the Code Except for the non-disclosure of individual director s remunerations which the explanation thereto has been provided in the foregoing, the Board believes that all material aspects of the best practices set out in Part 2 of the Revised Code have been complied with during the financial year. asiaep Annual Report

14 ASIAEP BHD (Company No W) Additional Compliance Information Additional Compliance Information 1. CONFLICT OF INTEREST None of the Directors have any family relationship with other Directors or major shareholders of the Company. 2. CONVICTIONS FOR OFFENCES None of the Directors have been convicted for offences within the past ten (10) years other than traffic offences, if any. 3. SHARE BUY BACKS The Company purchased 3,423,300 of its ordinary shares from the open market at an average RM0.194 per share. The total consideration paid for the repurchase including transaction costs was RM669, and this was financed by internally generated funds. The shares repurchased are being held as treasury shares in accordance with Section 67A of the Companies Act, OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES The were no options, warrants or convertible securities issued by the Company during the financial year. 5. AMERICAN DEPOSITORY RECEIPT (ADR) OR GLOBAL DEPOSITORY (GDR) PROGRAMME During the financial year under review, the Company did not sponsor any ADR or GDR programmes. 6. IMPOSITION of SANCTIONS / PENALTIES There were no sanctions and/or penalties imposed on the Company, directors or management by the relevant regulatory bodies during the financial year under review. 7. NON-AUDIT FEES There was no non-audit fees paid to the External Auditors, Messrs Baker Tilly Monteiro Heng during the financial year ended 28 February PROFIT ESTIMATE, FORECAST OR PROJECTION There is no material variance between the results for the financial year and the unaudited results previously announced by the Company. The Company did not issue any profit estimate, forecast or projections for the financial year. 9. MATERIAL CONTRACTS There were no material contracts entered into by the Company/or its subsidiaries involving Director s or major shareholders interest, during the financial year under review. asiaep Annual Report

15 ASIAEP BHD (Company No W) 10. PROFIT GUARANTEE During the year, there was no profit guarantee given by the Company. 11. CONTRACTS RELATING TO LOAN During the financial year under review, there were no contracts relating to loan by the Company involving Directors and major shareholders. 12. REVALUATION OF LANDED PROPERTIES The Company does not have a revaluation policy on landed properties. 13. CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES OR PRACTICES The Group was actively involved in corporate social responsibilty activities or practices during the financial year ended 28 February During the financial year, the management encouraged the staff to recycle paper and reduce the storage of paper and documents. The Group interacts responsibly with our shareholders, suppliers, customers, government departments, regulators and industry associations in a number of ways, such as supporting the market with good products, engaging in ethical procurement practices, maintaining quality of its service and business offerings and compliance with the relevant regulations and obligations. We are also committed to career development of our management and support staff, by sponsoring key personnel for training and seminars. 14. RECURRENT RELATED PARTY TRANSACTIONS STATEMENT During the financial year, the Company did not enter into any recurrent related party transactions of revenue or trading nature. 15. MATERIAL CONTRACTS INVOLVING DIRECTORS AND SUBSTANTIAL SHAREHOLDERS There were no material contracts entered into by the Company or its subsidiaries, which involved the interests of the Directors and substantial shareholders during the financial year. asiaep Annual Report

16 ASIAEP BHD (Company No W) 16. UTILISATION OF PRIVATE PLACEMENT PROCEEDS On 27 January 2011, the Company annouced that it proposed to undertake a private placement exercise of up to 72,568,496 ordinary shares at par value RM0.10 each in asiaep ( asiaep Shares ) representing up to 10% of the issued and paid-up share capital (excluding treasury shares) of asiaep. On 10 February 2011, the Company announced that Bursa Malaysia had, vide its letter dated 9 February 2011, given its approval-in-principle for the listing and quotation. On 10 February 2011, the Company announced that the issue price for the first tranche placement of 5,000,000 new ordinary shares of RM0.10 each ( Placement Shares ) at RM0.10 per Placement Share. on 3 March 2011, the Company announced that the issue price for the second tranche placement of 3,000,000 new ordinary shares of RM0.10 each ( Placement Shares ) at RM0.10 per Placement Share. on 22 April 2011, the Company announced that the issue price for the third tranche placement of 3,000,000 new ordinary shares of RM0.10 each ( Placement Shares ) at RM0.10 per Placement Share. As at the date of this report, the Company had placed out 11,000,000 placement shares out of 72,568,496 proposed number as mentioned above. The following are the allotment details of the shares concerned : Allotment Date Quotation Date 1st tranche - 5,000,000 shares 11/02/ /02/2011 2nd tranche - 3,000,000 shares 04/03/ /03/2011 3rd tranche - 3,000,000 shares 25/ /04/2011 As at date of Notice of Meeting the Company has utilised approximately 87.2% of the proceeds from the private placement. Amount Allocated Amount Utilised Balance Purpose RM 000 RM 000 RM 000 i. Working Capital 1, ii. Defray Private Placement Expenses , asiaep Annual Report

17 ASIAEP BHD (Company No W) Audit Audit Committee Committee Report Report The Audit Committee comprises the following:- Members Mr Khor Chai Tian Mr Lim Ghim Chai Mr Chu Kheh Wee (Chairman) (Independent Non-Executive Director) (Independent Non-Executive Director) (Independent Non-Executive Director) AUDIT COMMITTEE TERMS OF REFERENCE COMPOSITION Members of the Committee shall be determined by the Board of Directors and shall be composed of no fewer than 3 members and all the members must be non-executive directors, with a majority of them being independent directors. The Chairman of the Audit Committee shall be an independent director & non-executive director. The members of the Committee shall also possess the requisite qualification and experience that meet the prescribed requirements of Bursa Malaysia Securities Berhad for the ACE Market from time to time in force. No Alternate Director or Chief Executive Officer shall be appointed as a member of the Audit Committee. CHAIRMAN The Chairman of the Committee must be an Independent Director. In the absence of the Chairman, the members shall elect an Independent Director present at the meeting to be Chairman of the meeting. MEETINGS The Committee shall meet at least 4 times a year. The Executive Directors, Accountant, Representative of the internal auditors may be present in any meeting upon the invitation of the Committee. SECRETARY The Company Secretary shall be the Secretary of the Committee. QUORUM In order to form a quorum in respect of a meeting of an audit committee, the majority of members present must be independent directors. AUTHORITY The Committee is authorised by the Board to investigate any matter within its terms of reference. The Committee shall have the resources and shall be allowed to obtain independent professional or other advice as deemed necessary to assist the Committee in fulfilling its responsibilities at the cost of the Company. The Committee shall also have full and unrestricted access to the Chief Executive Officer and any information pertaining to the Company. The Committee shall also have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity. Whenever necessary, the Committee may also convene meetings with the external auditors, the internal auditors or both, without the attendance of the other directors and employees of the Company. DUTIES The duties of the Audit Committee are :- 1) Report to the Board of Directors after review the following :- the audit plan with the external auditors; the evaluation of the internal control system with the external auditors; the External Auditors audit report and any management letter from the external auditors to the Company and the management s response to such letter; asiaep Annual Report

18 ASIAEP BHD (Company No W) the assistance given by the employees of the Company to the external auditor; the adequacy of the scope, functions, competency and resources of the internal audit function and that it has the necessary authority to carry out its work; the internal audit programme, processes, the results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function, the quarterly results and year end consolidated financial statements, prior to the approval by the board of directors, focusing particularly on:- (i) changes in or implementation of major accounting policy changes; (ii) significant and unusual events; and (iii) compliance with accounting standards and other legal requirements; any related party transaction and potential conflict of interest situation that may arise within the listed company or group including any transaction, procedure or course of conduct that raises questions of management integrity; 2) Recommend to the Board the nomination, appointment or reappointment of the External Auditors and any question of their resignation and termination; and 3) Perform any other duties as may be agreed by the Committee and the Board of Directors REVIEW OF THE AUDIT COMMITTEE The term of office and performance and each of its members of the Audit Committee shall be reviewed by the Board at least once in every 3 years to determine whether the Committee and members have carried out their duties in accordance with their terms of reference. VARIATION IN RESULTS There were no significant variations between the audited results for the financial year and the unaudited results previously announced. RECURRENT RELATED PARTY TRANSACTION Details of Recurrent Related Party Transactions of revenue or trading nature are disclosed in the Notes to the Financial Statements. SUMMARY OF ACTIVITIES OF THE COMMITTEE DURING THE FINANCIAL YEAR ENDED 28 FEBRUARY 2011 During the financial year under review, the Committee convened six (6) meetings. Details of attendance are as follows:- Committee Members No. of meetings attended Mr. Khor Chai Tian 6/6 Mr. Lim Ghim Chai 5/6 Mr. Chu Kheh Wee 6/6 STATEMENT VERIFYING ALLOCATION OF OPTIONS The Committee has reviewed and verified that the allocation of share options pursuant to the Employees Share Option Scheme (ESOS) for the financial year ended 28 February 2011 was made in accordance with the criteria as set out in the By-Laws of the Company s ESOS. There were no options granted to any of the non-executive directors of the company. Internal Audit Function The Group has outsourced its internal audit function to a professional consulting firm. The internal audit function is therefore independent of the activities of the Group and performs its duties with impartiality, objectivity and due professional care. During the financial year, the report on 28 February 2011 was presented to the Audit Committee. asiaep Annual Report

19 ASIAEP BHD (Company No W) Statement on Internal Control INTRODUCTION The Malaysian Code on Corporate Governance requires listed companies to maintain a sound system of internal controls to safeguard shareholders investments and the Group s assets. The Bursa Malaysia Securities Berhad s Listing Requirements require directors of public listed companies to include a statement in their annual reports on the state of their internal controls. The Bursa Securities Statement on Internal Control: Guidance for Directors of Public Listed Companies ( Guidance ) provides guidance for compliance with these requirements. The Board of Directors is pleased to present the Statement on Internal Control of the Group which outlines the key elements of internal control for the year ended 28 February This statement has been prepared in accordance with the Guidance and the Listing Requirements of Bursa Securities. RESPONSIBILITY OF THE BOARD The Board is ultimately responsible for the Group s system of internal control which includes financial, compliance and operational controls of the Group. The Board also recognises its responsibility for reviewing the adequacy and integrity of the system of internal control to safeguard shareholders investments and the Group s assets. RISK MANAGEMENT FRAMEWORK The Executive Directors with assistance of the management are continuously identifying, evaluating and managing significant business risks that affect the day-to-day operations of the Group. The Audit Committee, on behalf of the Board, considers the effectiveness of the operation of the internal control procedures in the Group during the financial year. The Audit Committee reviews internal control issues identified by management and evaluates the adequacy and effectiveness of the Group s risk management and internal control system. INTERNAL AUDIT FUNCTION The Group has appointed HMC Governance Sdn Bhd, an external professional firm as internal auditor. The Internal Audit function reports directly to the Audit Committee, carries out regular review of business process to assess the effectiveness of internal controls and highlights any significant risk that may adversely affect the Group. Whenever necessary, the Audit Committee reviews and discusses with key management on the issues brought up by the Internal Audit function. For the financial year ended 28 February 2011, the amount of fees incurred in respect of the internal control review performed by the professional firm was RM18,000. KEY ELEMENTS The key elements of the Group s internal control system include the following: - There is a clearly defined delegation of responsibility to the Management and operating units to ensure proper identification of accountability and segregation of duties. - Policy guidelines, procedures and authority limits are established for Executive Directors and management within the Group in respect of the day-to-day operations, acquisitions and disposal of assets. - There are standard operating policies and procedures which are set out and communicated to all levels of the organisation. - Regular Board and Management Meetings are held where information is provided to the Board and Management covering financial performance and operation. CONCLUSION The Board is of the opinion that based on the current level of activities, the Group s system of internal control is adequate, and the Management will continue to take measures to strengthen the control environment. This statement was made in accordance with a resolution of the Board of Directors. asiaep Annual Report

20 ASIAEP BHD (Company No W) Financial Statements ASIAEP BHD. (Incorporated in Malaysia) REPORTS AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 28TH FEBRUARY 2011 Contents Page Directors Report 1-7 Financial Statements Statements of Financial Position 8 Statements of Comprehensive Income 9-10 Statements of Changes in Equity Statements of Cash Flow Notes to the Financial Statements Supplementary Information on the Disclosure of Realised and Unrealised Profits or Losses 67 Statement by Directors 68 Statutory Declaration 69 Independent Auditor s Report asiaep Annual Report

21 asiaep BERHAD (Incorporated in Malaysia) DIRECTORS' REPORT The directors hereby submit their report together with the audited financial statements of the Group and of the Company for the financial year ended 28th February PRINCIPAL ACTIVITIES The Company is principally engaged in providing e-commerce solutions and developing an e- market place for both local and international enterprises. The principal activities of its subsidiaries are disclosed in Note 6 to the financial statements. There have been no significant changes in the nature of these principal activities during the financial year. RESULTS Group RM'000 Company RM'000 Net loss for the financial year (33,078) (56,690) Other comprehensive income (21) - Total comprehensive loss (33,099) (56,690) Attributable to: Owners of the parent (33,099) (56,690) Minority interests - - (33,099) (56,690) DIVIDEND No dividend was paid or declared by the Company since the end of the previous financial year. The directors do not recommend the payment of any dividends in respect of the financial year ended 28th February RESERVES AND PROVISIONS All material transfers to and from reserves and provisions during the financial year have been disclosed in the financial statements. 1

22 BAD AND DOUBTFUL DEBTS Before the statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts, and had satisfied themselves that all known bad debts had been written off and adequate allowance had been made for doubtful debts. At the date of this report, the directors are not aware of any circumstances that would render the amount written off for bad debts, or the amount of the allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent. CURRENT ASSETS Before statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the directors took reasonable steps to ensure that any current assets, other than debts, which were unlikely to be realised in the ordinary course of business, their values as shown in the accounting records of the Group and of the Company had been written down to an amount that they might be expected to be realised. At the date of this report, the directors are not aware of any circumstances that would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading. VALUATION METHODS At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. CONTINGENT AND OTHER LIABILITIES At the date of this report, there does not exist:- (i) (ii) 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 any contingent liabilities in respect of the Group and of the Company that has arisen since the end of the financial year. No contingent liabilities or other liabilities 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. 2

23 CHANGE OF CIRCUMSTANCES At the date of this report, the directors are not aware of any circumstances, not otherwise dealt with in this report or the financial statements of the Group and of the Company that would render any amount stated in the financial statements misleading. ITEMS OF AN UNUSUAL NATURE In the opinion of the directors, other than impairment loss on investment in subsidiary companies amounting to RM204,000/- and impairment loss on amount owing by subsidiary companies amounting to RM52,253,000/- charged to the profit or loss, the results of the operations of the Company for the financial year were not substantially affected by any item, transaction or event of a material and unusual nature. In the opinion of the directors, other than the impairment loss on intangible assets amounting to RM28,265,000/- charged to the profit or loss, the results of the operations of the Group for the financial year were not substantially affected by any item, transaction or event of a material and unusual nature. No item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made. ISSUE OF SHARES AND DEBENTURES During the financial year, the issued and paid-up ordinary share capital of the Company was increased from RM72,911,000/- to RM73,411,000/- by way of the issuance of 5,000,000 ordinary shares of RM0.10 each additional working capital purposes. The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the Company. The Company has not issued any debentures during the financial year. WARRANTS The Company has not issued any warrant during the financial year. Details of the warrants are disclosed in Note 11 to the financial statements. TREASURY SHARES The Company has not repurchased any issued share capital during the financial year. 3

24 EMPLOYEES SHARE OPTION SCHEME ( ESOS ) At an Extraordinary General Meeting held on 23rd August 2004, the Company s shareholders approved the establishment of an ESOS of up to 15% of the issued share capital of the Company, to eligible Executive Directors and employees of the Group ( the Scheme ). The Scheme was set to expire on 27th August 2007 ( Date of Expiry ). Prior to the Date of Expiry, on 20th August 2007, the Company approved the proposal to extend the existing scheme for a further period of up to 3 years from the date of expiry ( Extended Scheme ). The Extended Scheme shall be implemented in accordance with the terms of the Company s By-Laws of the ESOS Scheme. Prior to the expiration of the Extended Scheme, on 26th August 2010, the Company proposed to extend the Extended Scheme for a further period of up to 4 years from the date of expiry ( Extension ). The Extension shall be implemented in accordance with the terms of the Company s By-Laws of the ESOS Scheme. The salient terms of the scheme are as follows:- (a) (b) (c) (d) (e) Eligible employees and Executive Directors must be at least eighteen (18) years of age and must have been confirmed on the date of offer. The option is personal to the grantee whilst he is in employment of any company in the Group and is non-assignable. The exercise price shall be discounted by not more than 10% from the weighted average of the market price of the Shares as shown in the daily official list issued by the Bursa Malaysia Securities Berhad for the five (5) trading days immediately preceding the respective dates of the offer in writing to the grantee or at the par value of the ordinary shares of the Company, whichever is higher. The option granted may be exercised at any time within a period of three (3) years from the date of offer of the option or such shorter period as may be specifically stated in the offer upon giving notice in writing. In the event that the duration of the option shall be renewed, the Date of Expiry of the option shall be that Date of Expiry as so extended or renewed. The options granted may be exercised in full or in lesser number of ordinary shares provided that the number shall be in multiples of 100 shares. Other provisions are stipulated in the Company s By-Laws of ESOS Scheme. The persons to whom the options have been granted have no right to participate by virtue of the options in any share issue of any other companies. No options were granted to any person to take up unissued shares or debentures of the Company during the financial year. 4

25 DIRECTORS The names of the directors of the Company in office since the date of the last report and at the date of this report are:- YB Tan Sri Dato Ahmad Fuzi Bin Haji Abdul Razak Dr. Tan Boon Nunt Lee Suet Hong Khor Chai Tian Lim Ghim Chai Chu Kheh Wee DIRECTORS INTERESTS According to the register of directors shareholdings kept by the Company under Section 134 of the Companies Act, 1965, the interests of those directors who held office at the end of the financial year in shares and warrants in the Company during the financial year ended 28th February 2011 are as follows:- Number of ordinary shares of RM0.10 each Shareholdings in the Company At At Bought Sold Dr. Tan Boon Nunt 14,624,074 - (12,699,900) 1,924,174 Lee Suet Hong 13,802,074 - (13,802,000) 74 Shareholdings in which directors have deemed interests through Topclass Access Sdn. Bhd. Dr. Tan Boon Nunt 45,787,527 5,087,508 (5,100,000) 45,775,030 Lee Suet Hong 45,787,527 5,087,508 (5,100,000) 45,775,030 Number of warrants 2006/2011 At Bought Sold At Dr. Tan Boon Nunt 4,295,471-4,295,471 - Lee Suet Hong 2,643,405-2,643,405-5

26 DIRECTORS INTERESTS (Continued) Number of warrants 2009/2014 At Bought Sold At Dr. Tan Boon Nunt 4,874, ,874,907 Lee Suet Hong 4,600, ,600,907 Warrant holdings in which directors have deemed interests through Topclass Access Sdn. Bhd. Dr. Tan Boon Nunt 2,812, ,501 (2,500,000) 625,010 Lee Suet Hong 2,812, ,501 (2,500,000) 625,010 By virtue of their interests in the shares of the Company, Dr. Tan Boon Nunt and Lee Suet Hong are also deemed interested in the shares of all the subsidiaries to the extent the Company has an interest. Other than as stated above, none of the directors in office at the end of the financial year had any interest in shares and warrants in the Company and its related corporations during the financial year. DIRECTORS' BENEFITS Since the end of the previous financial year, no director of the Company has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors shown in the financial statements) 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. Neither during nor at the end of the financial year was the Company or any of its related corporations a party to any arrangement, whose object was to enable the directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. REMUNERATION COMMITTEE The Remuneration Committee reviews and recommends to the Board of Directors, the Company s remuneration policy for Executive Directors to ensure that they are appropriately rewarded for their contribution to the Group. The members of the Remuneration Committee during the financial year ended 28th February 2011 are as follows:- Lee Suet Hong Khor Chai Tian Lim Ghim Chai Executive Director/Chief Operating Officer Independent Non-Executive Director Independent Non-Executive Director 6

27 SUBSEQUENT EVENTS Details of subsequent events are disclosed in Note 25 to the financial statements. AUDITORS The auditors, Messrs Baker Tilly Monteiro Heng, have expressed their willingness to continue in office. On behalf of the Board,.. DR. TAN BOON NUNT Director.. LEE SUET HONG Director Kuala Lumpur Date: 10th May

28 asiaep BERHAD (Incorporated in Malaysia) STATEMENT OF FINANCIAL POSITION AS AT 28TH FEBRUARY 2011 Group Company Note RM'000 RM'000 RM'000 RM'000 ASSETS Non-Current Assets Property, plant and equipment 4 28,432 32,397 3,532 2,226 Prepaid land lease payments Investment in subsidiaries Intangible assets 7 10,468 34,977 7,359 11,017 Total Non-Current Assets 39,388 67,844 12,204 14,642 Current Assets Trade and other receivables ,234 61,495 Tax recoverable Deposit placed with a licensed bank - 3,696-3,696 Cash and bank balances Total Current Assets 1,030 5,000 11,772 65,384 TOTAL ASSETS 40,418 72,844 23,976 80,026 EQUITY AND LIABILITIES Equity attributable to Owners of the Parent Share capital 9 73,411 72,911 73,411 72,911 Reserves 10 (33,483) (384) (49,873) 6,817 Total Equity 39,928 72,527 23,538 79,728 Current Liability Trade and other payables Total Liability TOTAL EQUITY AND LIABILITIES 40,418 72,844 23,976 80,026 The accompanying notes form an integral part of these financial statements. 8

29 asiaep BERHAD (Incorporated in Malaysia) STATEMENTS OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 28TH FEBRUARY 2011 Group Company Note RM'000 RM'000 RM'000 RM'000 Revenue 15 8,274 9,860 2,642 3,663 Cost of sales (4,311) (4,661) (1,103) (1,529) Gross Profit 3,963 5,199 1,539 2,134 Other operating income Administrative expenses (8,870) (8,532) (5,236) (5,142) Other operating expenses (28,265) - (53,087) (537) Operating Loss 16 (33,078) (3,044) (56,690) (3,256) Finance costs - hire purchase interest - (26) - (26) - overdraft interest - (57) - (57) Loss Before Taxation (33,078) (3,127) (56,690) (3,339) Taxation Loss for the Financial Year (33,078) (2,890) (56,690) (3,102) Other Comprehensive Income, Net of Tax: Foreign currency translation reserve (21) (13) - - Total Comprehensive Loss for the Financial Year (33,099) (2,903) (56,690) (3,102) 9

30 asiaep BERHAD (Incorporated in Malaysia) STATEMENTS OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 28TH FEBRUARY 2011 (Continued) Loss attributable to: Group Company Note RM'000 RM'000 RM'000 RM'000 Owners of the parent (33,078) (2,890) (56,690) (3,102) Minority interest (33,078) (2,890) (56,690) (3,102) Total Comprehensive Loss attributable to: Owners of the parent (33,099) (2,903) (56,690) (3,102) Minority interest (33,099) (2,903) (56,690) (3,102) Loss per share attributable to owners of the parent 18 Basic (sen) (4.56) (0.61) Diluted (sen) (4.56) (0.61) The accompanying notes form an integral part of these financial statements. 10

31 asiaep BERHAD (Incorporated in Malaysia) STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 28TH FEBRUARY 2011 Attributable to Owners of the Parent Retained Profits/ Share Translation Warrant Share Treasury (Accumulated Total Capital Reserve Reserve Premium Shares Losses) Equity Group Note RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Balance at 1st March ,532 (704) ,661 (669) 17,537 61,676 Total Comprehensive Loss for the Financial Year - (13) - - (2,890) (2,903) Transaction with Owners: Issuance of ordinary shares 9, 11 48,379-13,275 (20,661) - (27,239) 13,754 Total Transaction with Owners 48,379-13,275 (20,661) - (27,239) 13,754 Balance at 28th February ,911 (717) 13,594 - (669) (12,592) 72,527 Total Comprehensive Loss for the Financial Year - (21) (33,078) (33,099) Transaction with Owners: Issuance of ordinary shares Total Transaction with Owners Balance at 28th February ,411 (738) 13,594 - (669) (45,670) 39,928 11

32 asiaep BERHAD (Incorporated in Malaysia) STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 28TH FEBRUARY 2011 (Continued) Retained Profits/ Share Warrant Share Treasury (Accumulated Capital Reserve Premium Shares Losses)/ Total Company Note RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 At 1st March , ,661 (669) 24,233 69,076 Total Comprehensive Loss for the Financial Year (3,102) (3,102) Transaction with Owners: Issuance of ordinary shares 9 48,379 13,275 (20,661) - (27,239) 13,754 Total Transaction with Owners 48,379 13,275 (20,661) - (27,239) 13,754 Balance at 28th February ,911 13,594 - (669) (6,108) 79,728 Total Comprehensive Loss for the Financial Year (56,690) (56,690) Transaction with Owners: Issuance of ordinary shares Total Transaction with Owners Balance at 28th February ,411 13,594 - (669) (62,798) 23,538 The accompanying notes form an integral part of these financial statements. 12

33 asiaep BERHAD (Incorporated in Malaysia) STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 28TH FEBRUARY 2011 CASH FLOWS FROM OPERATING ACTIVITIES: Group Company RM'000 RM'000 RM'000 RM'000 Loss before taxation (33,078) (3,127) (56,690) (3,339) Adjustments for: Amortisation - development costs 2,943 2, intellectual property 1,806 1,399 1,806 1,399 - prepaid land lease payments Currency realignment - (5) - - Depreciation 3,858 3, Gain on disposal of property, plant and equipment - (27) - (27) Impairment loss - intangible assets 28, investment in subsidiaries loan to subsidiaries ,253 - Interest expense Interest income (18) (46) (18) (46) Reversal of amortisation of prepaid land land lease payment overcharged in prior year (23) - (23) - Reversal of impairment loss on trade receivables (76) (214) (76) (214) Changes In Working Capital: 3,682 4,647 (1,632) (1,102) Receivables 356 1, ,114 Payables 173 (380) 140 (357) Development costs paid (663) (640) (399) (74) 3,548 4,854 (1,669) (419) Interest paid - (83) - (83) Tax paid (4) (6) (4) (6) Net Operating Cash Flows 3,544 4,765 (1,673) (508) 13

34 asiaep BERHAD (Incorporated in Malaysia) STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 28TH FEBRUARY 2011 (Continued) CASH FLOWS FROM INVESTING ACTIVITIES: Group Company RM'000 RM'000 RM'000 RM'000 Acquisition of shares in subsidiary - - (100) - Purchase of property, plant and equipment (7,740) (13,021) (1,884) (4,895) Interest received Proceeds from disposal of property, plant and equipment Net Investing Cash Flows (7,722) (12,945) (1,966) (4,819) CASH FLOWS FROM FINANCING ACTIVITIES: Net changes on amount owing by subsidiaries - - (216) (3,173) Proceeds from issuance of shares Proceeds from Rights Issue - 14,514-14,514 (Repayment)/drawdown of short term borrowing - (1,504) - (1,504) Repayment of hire purchase liabilities - (355) - (355) Rights Issue expenses - (760) - (760) Net Financing Cash Flows , ,722 NET CHANGE IN CASH AND CASH EQUIVALENTS (3,678) 3,715 (3,355) 3,395 EFFECTS OF FOREIGN EXCHANGE TRANSLATION (16) (3) - - CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR 4, , CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 549 4, ,880 14

35 asiaep BERHAD (Incorporated in Malaysia) STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 28TH FEBRUARY 2011 (Continued) ANALYSIS OF CASH AND CASH EQUIVALENTS: Group Company RM'000 RM'000 RM'000 RM'000 Deposit placed with a licensed bank - 3,696-3,696 Cash and bank balances , ,880 The accompanying notes form an integral part of these financial statements. 15

36 asiaep BERHAD (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS 1. GENERAL INFORMATION The Company is principally engaged in providing e-commerce solutions and developing an e-market place for both local and international enterprises. The principal activities of its subsidiaries are disclosed in Note 6 to the financial statements. There have been no significant changes in the nature of these principal activities during the financial year. The Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on the ACE Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at No. 28-1, Jalan Tun Sambanthan 3, Kuala Lumpur. The principal place of business of the Company is located at No. 18 & 20, Jalan TK 2/1C, Taman Kinrara Seksyen 2, Puchong, Selangor Darul Ehsan. The financial statements are expressed in Ringgit Malaysia and all values are rounded to the nearest thousand (RM 000) except when otherwise indicated. The financial statements were authorised for issue by the board of directors in accordance with a resolution of the directors on 10th May SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 Basis of Preparation The financial statements of the Group and of the Company have been prepared in accordance with the Financial Reporting Standards ( FRSs ) and the provisions of the Companies Act, 1965 in Malaysia. The financial statements of the Group and of the Company have been prepared under the historical cost basis, except as disclosed in the significant accounting policies in Note 2.3 to the financial statements. The preparation of financial statements in conformity with FRSs requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of the revenue and expenses during the reported financial period. It also requires directors best knowledge of current events and actions, and therefore actual results may differ. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3 to the financial statements. 16

37 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.2 New and Revised FRSs, Amendments/Improvements to FRSs, IC Interpretations ( IC Int ) and Amendments to IC Int (a) Adoption of New and Revised FRSs, Amendments/Improvements to FRSs, IC Int and Amendments to IC Int The Group and the Company had adopted the following new and revised FRSs, amendments/improvements to FRSs, IC Int and amendments to IC Int that are relevant to their operations and are mandatory effective for the financial periods beginning on or after 1st January 2010:- New FRSs FRS 4 FRS 7 FRS 8 FRS 101 FRS 123 FRS 139 Revised FRSs FRS 1 FRS 3 Insurance Contracts Financial Instruments : Disclosures Operating Segments Presentation of Financial Statements Borrowing Costs Financial Instruments : Recognition and Measurement First-time Adoption of Financial Reporting Standards Business Combinations Amendments/Improvements to FRSs FRS 5 Non-current Assets Held for Sale and Discontinued Operations FRS 7 Financial Instruments : Disclosures FRS 8 Operating Segments FRS 107 Statement of Cash Flows FRS 108 Accounting Policies, Changes in Accounting Estimates and Errors FRS 110 Events After the Reporting Period FRS 116 Property, Plant and Equipment FRS 117 Leases FRS 118 Revenue FRS 119 Employee Benefits FRS 120 Accounting for Government Grants and Disclosure of Government Assistance FRS 123 Borrowing Costs FRS 127 Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate FRS 128 Investments in Associates FRS 129 Financial Reporting in Hyperinflationary Economies FRS 131 Interests in Joint Ventures FRS 132 Financial Instruments : Presentation FRS 134 Interim Financial Reporting FRS 138 Intangible Assets FRS 140 Investment Property 17

38 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.2 New and Revised FRSs, Amendments/Improvements to FRSs, IC Interpretations ( IC Int ) and Amendments to IC Int (a) Adoption of New and Revised FRSs, Amendments/Improvements to FRSs, IC Int and Amendments to IC Int (Continued) IC Int IC Int 9 IC Int 10 IC Int 11 IC Int 13 Reassessment of Embedded Derivatives Interim Financial Reporting and Impairment FRS 2 Group and Treasury Share Transactions Customer Loyalty Programmes Amendments to IC Int IC Int 9 Reassessment of Embedded Derivatives IC Int 14 FRS 119 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction Adoption of the above standards and interpretations did not have any effect on the financial performance or position of the Group and the Company except for those as discussed below:- FRS 7 Financial Instruments: Disclosures Prior to 1st January 2010, information about financial instruments was disclosed in accordance with the requirements of FRS 132 Financial Instruments: Disclosure and Presentation. FRS 7 introduces new disclosure to improve the information about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market price risk. As the change in accounting policy only results in additional disclosures, there is no impact on earnings per share. The Group and the Company have applied FRS 7 prospectively in accordance with the transitional provisions. Hence, the new disclosures have not been applied to the comparatives. The new disclosures are included throughout the Group s and the Company s financial statements for the financial year ended 28th February FRS 8 Operating Segments As of 1st January 2010, the Group determines and presents operating segments based on the information that is internally provided to the Chief Executive Officer, who is the Group s chief operation decision maker and concluded that the reportable operating segments determined in accordance with FRS 8 are the same as the business segments previously identified under FRS 114. The Group has adopted FRS 8 retrospectively and comparative segment information has been re-presented. Since the change in accounting policy only impact presentation and disclosure aspects, there is no impact on earnings per share. These revised disclosures, including the related revised comparative information, are shown in Note 23 to the financial statements. 18

39 Company No W 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.2 New and Revised FRSs, Amendments/Improvements to FRSs, IC Interpretations ( IC Int ) and Amendments to IC Int (a) Adoption of New and Revised FRSs, Amendments/Improvements to FRSs, IC Int and Amendments to IC Int (Continued) FRS 101 Presentation of Financial Statements (revised) The revised FRS 101 introduces changes in the presentation and disclosures of financial statements. The revised Standard separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions with owners, with all non-owner changes in equity presented as a single line. The Standard also introduces the statement of comprehensive income, with all items of income and expenses recognised in profit and loss, together with all other items of recognised income and expense recognised directly in equity, either in one single statement, or in two linked statements. The Group and the Company have elected to present this statement as one single statement. In addition, a statement of financial position is required at the beginning of the earliest comparative period following a change in accounting policy, the correction of an error or the classification of items in the financial statements. The revised FRS 101 also requires the Group to make new disclosures to enable users of the financial statements to evaluate the Group s objectives, policies and processes for managing capital. The revised FRS 101 was adopted retrospectively by the Group and the Company. Since the change only affects presentation aspects, there is no impact on earnings per share. Amendments to FRS 117 Leases Prior to 1st January 2010, for all leases of land and buildings, if title is not expected to pass to the lessee by the end of the lease term, the lessee normally does not receive substantially all of the risks and rewards incidental to ownership. Hence, all leasehold land held for own use was classified by the Group as operating lease and where necessary, the minimum lease payments or the up-front payments made were allocated between the land and the building elements in proportion to the relative fair values for leasehold interests in the land element and building element of the lease at the inception of the lease. The up-front payment represented prepaid lease payments and were amortised on a straight-line basis over the lease term. The amendments to FRS 117 Leases require assessment of classification based on the risks and rewards of the lease assets. 19

40 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.2 New and Revised FRSs, Amendments/Improvements to FRSs, IC Interpretations ( IC Int ) and Amendments to IC Int (Continued) (a) Adoption of New and Revised FRSs, Amendments/Improvements to FRSs, IC Int and Amendments to IC Int (Continued) FRS 139 Financial Instruments: Recognition and Measurement FRS 139 establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to buy and sell non-financial items. The Group and the Company have adopted FRS 139 prospectively on 1st January 2010 in accordance with the transitional provisions. The adoptions of this Standard do not have a significant effect on the financial statements of the Group and the Company. (b) New and Revised FRSs, Amendments/Improvements to FRSs, IC Int and Amendments to IC Int that are issued, but not yet effective and have not been adopted early The Group and the Company has not adopted the following new and revised FRSs, amendments/improvements to FRSs and IC Int that have been issued as at the date of authorisation of these financial statements but are not yet effective for the Group and the Company:- Effective for financial periods beginning on or after Revised FRSs FRS 1 First-time Adoption of Financial Reporting 1 July 2010 Standards FRS 3 Business Combinations 1 July 2010 FRS 124 Related Party Disclosures 1 January 2012 FRS 127 Consolidated and Separate Financial Statements 1 July 2010 Amendments/Improvements to FRSs FRS 1 First-time Adoption of Financial Reporting 1 January 2011 Standards FRS 2 Share-based Payment 1 July 2010 and 1 January 2011 FRS 3 Business Combinations 1 January 2011 FRS 5 Non-current Assets Held for Sale and 1 July 2010 Discontinued Operations FRS 7 Financial Instruments: Disclosure 1 January 2011 FRS 101 Presentation of Financial Statements 1 January 2011 FRS 121 The Effects of Changes in Foreign Exchange Rates 1 January

41 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.2 New and Revised FRSs, Amendments/Improvements to FRSs, IC Interpretations ( IC Int ) and Amendments to IC Int (Continued) (b) New and Revised FRSs, Amendments/Improvements to FRSs, IC Int and Amendments to IC Int that are issued, but not yet effective and have not been adopted early (Continued) Effective for financial periods beginning on or after Amendments/Improvements to FRSs (Continued) FRS 128 Related Party Disclosures 1 January 2011 FRS 131 Interests in Joint Ventures 1 January 2011 FRS 132 Financial Instruments: Presentation 1 March 2010 and 1January 2011 FRS 134 Interim Financial Reporting 1 January 2011 FRS 138 Intangible Assets 1 July 2010 FRS 139 Financial Instruments: Recognition and 1 January 2011 Measurement IC Int IC Int 4 Determining Whether an Arrangement contains a 1 January 2011 Lease IC Int 12 Service Concession Arrangements 1 July 2010 IC Int 15 Agreements for the Construction of Real Estate 1 January 2012 IC Int 16 Hedges of a Net Investment in a Foreign 1 July 2010 Operation IC Int 17 Distributions of Non-cash Assets to Owners 1 July 2010 IC Int 18 Transfers of Assets from Customers 1 January 2011 IC Int 19 Extinguishing Financial Liabilities with Equity 1 July 2011 Instruments FRS 134 Interim Financial Reporting 1 January 2011 FRS 138 Intangible Assets 1 July 2010 FRS 139 Financial Instruments: Recognition and 1 January 2011 Measurement IC Int IC Int 4 Determining Whether an Arrangement contains a 1 January 2011 Lease IC Int 12 Service Concession Arrangements 1 July 2010 IC Int 15 Agreements for the Construction of Real Estate 1 January 2012 IC Int 16 Hedges of a Net Investment in a Foreign 1 July 2010 Operation IC Int 17 Distributions of Non-cash Assets to Owners 1 July 2010 IC Int 18 Transfers of Assets from Customers 1 Jan 2011 IC Int 19 Extinguishing Financial Liabilities with Equity Instruments 1 July

42 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.2 New and Revised FRSs, Amendments/Improvements to FRSs, IC Interpretations ( IC Int ) and Amendments to IC Int (Continued) (b) New and Revised FRSs, Amendments/Improvements to FRSs, IC Int and Amendments to IC Int that are issued, but not yet effective and have not been adopted early (Continued) Effective for financial periods beginning on or after Amendments to IC Int IC Int 9 Reassessment of Embedded Derivatives 1 July 2010 IC Int 13 Customer Royalty Programmes 1 January 2011 IC Int 14 FRS 119 The Limit on a Defined Benefit Asset, 1 July 2011 Minimum Funding Requirements and their Interaction IC Int 15 Agreements for the Construction of Real Estate 30 August 2010 The Directors do not anticipate that the application of the above new and revised FRS, amendments/improvements to FRS, IC Int and amendments to IC Int, when they are effective, will have a material impact on the results and the financial position of the Group and of the Company, except for those discussed below:- FRS 3 Business Combinations (revised) and Amendments to FRS 127 Consolidated and Separate Financial Statements (revised) The revised standards are effective for annual periods beginning on or after 1st July The revised FRS 3 introduces a number of changes which will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future reported results. The Amendments to FRS 127 require that a change in the ownership interest of a subsidiary (without loss of control) is accounted for as an equity transaction. Therefore, such transactions will no longer give rise to goodwill, nor will they give rise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. These changes will affect future acquisitions or loss of control and transactions with minority interests. The Group does not intend to early adopt. 22

43 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.3 Significant Accounting Policies (a) Basis of Consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to the end of the financial year. The financial statements of the parent and its subsidiaries are all drawn up to the same financial year end. Subsidiaries are consolidated using the purchase method of accounting. Under the purchase method of accounting, subsidiaries are fully consolidated from the date on which control is transferred to the Group and are de-consolidated from the date that control ceases. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the date of acquisition, irrespective of the extent of any minority interest. The excess of the cost of the acquisition over the net fair value of the Group s share of the identifiable net assets, liabilities and contingent liabilities represents goodwill. Any excess of the net fair value of the Group s share of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in the profit or loss. Intra-group transactions and balances, and resulting unrealised gains are eliminated on consolidation. Unrealised losses resulting from intra-group transactions are also eliminated on consolidation to the extent of the cost of the asset that can be recovered. The extent of the costs that cannot be recovered is treated as write downs or impairment losses as appropriate. Where necessary, adjustments are made to the financial statements of the subsidiaries to ensure consistency with the accounting policies adopted by the Group. (b) Subsidiaries Subsidiaries are those corporations in which the Group has the power to exercise control over the financial and operating policies so as to obtain benefits from their activities, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity. In the Company s separate financial statements, investments in subsidiaries are stated at costs less impairment losses, if any. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.3(f). On disposal of such investments, the difference between the net disposal proceeds and their carrying amount is included in the profit or loss. 23

44 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.3 Significant Accounting Policies (Continued) (b) Subsidiaries (Continued) In the Group s consolidated financial statements, the difference between the net disposal proceeds and the Group s share of the subsidiary s net assets together with any unamortised goodwill is reflected as a gain or loss on disposal in the consolidated profit or loss. (c) Property, Plant and Equipment and Depreciation All property, plant and equipment were initially stated at cost. Land and buildings were subsequently shown at market value, based on valuations of external independent valuers, less subsequent accumulated depreciation and impairment losses, if any. All other property, plant and equipment are stated at historical cost less accumulated depreciation and impairment loss, if any. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.3(f). Cost includes expenditure that is directly attributable to the acquisition of the asset. When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. The cost of replacing part of an item of property, plant and equipment is included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the profit or loss as incurred. Freehold lands are not depreciated as it has an infinite life. All other property, plant and equipment are depreciated on a straight line basis to write off the cost of each asset to its residual value over the estimated useful lives of the assets concerned. The annual rates used for this purpose are as follows:- Leasehold lands 99 years Buildings 2% Motor Vehicles 20% Computer equipment 20% Office equipment 10% Furniture and fittings 10% Renovation 20% The residual values and useful lives of property, plant and equipment are reviewed, and adjusted if appropriate, at each reporting date. The effects of any revisions of the residual values and useful lives are included in the profit or loss for the financial year in which the changes arise. Fully depreciated assets are retained in the accounts until the assets are no longer in use. 24

45 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.3 Significant Accounting Policies (Continued) (c) Property, Plant and Equipment and Depreciation (Continued) An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the profit or loss in the financial year the asset is derecognised. (d) Intangible Assets (i) Research and development costs All research costs undertaken with the prospect of gaining new scientific or technical knowledge and understanding are recognised in the profit or loss as incurred. Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantively improved products and processes, is capitalised and deferred only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development. Product development expenditure which do not meet these criteria are expensed when incurred. The expenditure capitalised includes cost of materials, direct labour and an appropriate proportion of overheads. Other development expenditure is recognised in the profit or loss as an expense as incurred. Capitalised development costs, considered to have finite useful lives, are stated at cost less any impairment losses and are amortised using the straight line basis over the commercial lives of the underlying products, not exceeding a period of 5 years. Impairment is assessed whenever there is an indication of impairment and the amortisation period and method are also reviewed at least at each reporting date. The recoverable amount of development costs not yet available for use are measured annually, irrespective of whether there is any indication that it may be impaired. See accounting policy Note 2.3(f) on impairment of assets. 25

46 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.3 Significant Accounting Policies (Continued) (d) Intangible Assets (Continued) (ii) Intellectual property Intellectual property consists of the exclusive rights of an online platform system, including the intellectual property trademarks, copyright, source programmes and associated documentation. This expenditure is capitalised as it is able to generate future economic benefits to the Group. The intellectual property is amortised and recognised as an expense based on the forecasted income stream so as to reflect the pattern in which the asset s economics benefits are consumed by the Group over fifteen years. (e) Financial Instruments Financial instruments are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contract provisions of the financial instrument. A financial instrument is recognised initially, at its fair value, plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument. An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised at fair value through profit or loss. The host contract, the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract. The Group and the Company categorise the financial instruments as follows:- (i) Financial Assets Financial assets at fair value through profit or loss Financial assets are classified as fair value through profit or loss if they are held for trading, including derivatives, or are designated as such upon initial recognition. Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value with the gain or loss recognised in profit or loss. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised as other gains or losses in the profit or loss. 26

47 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.3 Significant Accounting Policies (Continued) (e) Financial Instruments (Continued) The Group and the Company categorise the financial instruments as follows:- (i) Financial Assets (Continued) Loans and receivables Financial assets with fixed or determinable payments that are not quoted in an active market, trade and other receivables and cash and cash equivalents are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. Held-to-maturity investments Financial assets with fixed or determinable payments and fixed maturity that are quoted in an active market and the Group have the positive intention and ability to hold the investment to maturity is classified as held-to-maturity. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process. Available-for-sale financial assets Available-for-sale financial are financial assets that are designated as available for sale or are not classified in any of the three preceding categories. After initial recognition, available-for-sale financial assets are measured at fair value with the gain or loss recognised in other comprehensive income, except for impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss. 27

48 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.3 Significant Accounting Policies (Continued) (e) Financial Instruments (Continued) (ii) Financial Liabilities All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profit or loss. Fair value through profit or loss comprises financial liabilities that are held for trading, derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial liabilities that are specifically designated as fair value through profit or loss upon initial recognition. Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost. Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss. (iii) Financial Guarantee Contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. Financial guarantee contracts are classified as deferred income and are amortised to profit or loss over the contractual period or, upon discharge of the guarantee. When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is made. If the carrying value of the financial guarantee contract is lower than the obligation, the carrying value is adjusted to the obligation amount and accounted for as a provision. (iv) Regular Way Purchase or Sale of Financial Assets A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention the marketplace concerned. A regular way purchase or sale of financial asset is recognised and derecognised, as applicable, using trade date accounting. Trade date accounting refers to: the recognition of an asset to be received and the liability to pay for it on the trade date, and derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a receivable from the buyer for payment on the trade date. 28

49 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.3 Significant Accounting Policies (Continued) (e) Financial Instruments (Continued) (v) Derecognition A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired or is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss. A financial liability is derecognised when the obligation specified in the contract is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount and the consideration paid is recognised in profit or loss. (f) Impairment The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired. (i) Impairment of Financial Assets Trade and other receivables To determine whether there is objective evidence that an impairment loss on financial assets has been occurred, the Group and the Company consider factors such as the probability of insolvency or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group s and the Company s past experience of collecting payments, an increased in the number of delayed payments in the portfolio past the average credit period and the observable changes in national or local economic conditions that correlate with default on receivables. If any such evidence exists, the amount of impairment loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the financial asset s original effective interest rate. The impairment loss is recognised in profit or loss. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account. 29

50 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.3 Significant Accounting Policies (Continued) (f) Impairment (Continued) (i) Impairment of Financial Assets (Continued) Trade and other receivables (Continued) If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss. (ii) Impairment of Non-financial Assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset s recoverable amount. An asset s recoverable amount is the higher of an asset s fair value less cost to sell and its value in use. 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 risk specific to the asset. Where the carrying amounts of an asset exceed its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis. An impairment loss is recognised in the profit or loss in the period in which it arises. Impairment loss on goodwill is not reversed in a subsequent period. An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset s recoverable amount since the last impairment was recognised. The carrying amount of an asset other than goodwill is increased to its revised recoverable amount, provided that this amount does not exceed its carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in the profit or loss. 30

51 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.3 Significant Accounting Policies (Continued) (g) Equity Instruments Ordinary shares are classified as equity. Dividends on ordinary shares are recognised as liabilities when proposed or declared before the reporting date. A dividend proposed or declared after the reporting date, but before the financial statements are authorised for issue, is not recognised as a liability at the reporting date. Cost incurred directly attributable to the issuance of the shares is charged to the profit or loss. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided. (h) Warrants Reserve Warrants issued for free to the subscribers of renounceable rights issue are accounted for as a deduction from distributable reserve and classified as warrants reserve in equity according to its fair value. The fair value of the free warrants is measured using the Trinomial Model by the directors of the Company. (i) Leases (i) Finance Leases Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of ownership are classified as finance leases. Assets acquired by way of finance lease are stated at an amount equal to the lower of their fair values and the present value of minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. The corresponding liability is included in the statement of financial position as borrowings. In calculating the present value of minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Group s incremental borrowing rate is used. Property, plant and equipment acquired under finance leases are depreciated over the shorter of the estimated useful life of the asset and the lease term. Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance cost, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised as an expense in the profit or loss over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period. 31

52 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.3 Significant Accounting Policies (Continued) (i) Leases (Continued) (ii) Operating Lease (Continued) Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Operating lease payments are recognised as an expense on a straight line basis over the term of the relevant lease. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight line basis. In the previous years, a leasehold land that normally had an indefinite economic life and title was not expected to pass to the lessee by the end of the lease term was treated as an operating lease. The payment made on entering into or acquiring a leasehold land that was accounted for as an operating lease represents prepaid lease payments, except for leasehold land classified as investment property. The Group has not adopted the amendment made to FRS 117 Lease on 1st January 2010 in relation to the classification of lease of land. (j) Foreign Currencies (i) Functional and Presentation Currency The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates ( the functional currency ). The financial statements are presented in Ringgit Malaysia ( RM ), which is the Company s functional currency and presentation currency. (ii) Transactions and Balances Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate ruling at the reporting date. Nonmonetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined. Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss. 32

53 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.3 Significant Accounting Policies (Continued) (j) Foreign Currencies (Continued) (ii) Transactions and Balances (Continued) Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in other comprehensive income. Exchange differences arising from such non-monetary items are also recognised directly in other comprehensive income. (k) Revenue Recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised. (i) Sales of Goods and Services Rendered Revenue is measured at the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group s activities and is recognised in the profit or loss when the significant risks and rewards of ownership of the goods have been transferred to the buyer and when the services are rendered. (ii) Interest Income Interest income is recognised on the accrual basis. (l) Income Tax The tax expense in the profit or loss represents the aggregate amount of current tax and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the reporting date. Deferred tax is provided for, using the liability method, on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at time of the transaction, affects neither accounting profit nor taxable profit. 33

54 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.3 Significant Accounting Policies (Continued) (l) Income Tax (Continued) Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the reporting date. Deferred tax is recognised in the profit or loss, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in other comprehensive income, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or the amount of any excess of the acquirer s interest in the net fair value of the acquiree s identifiable assets, liabilities and contingent liabilities over the cost of the combination. (m) Employee Benefits (i) Short term employee benefits Wages, salaries, bonuses, social security contribution and non-monetary benefits are recognised as an expense in the financial year in which the associated services are rendered by the employees. Short-term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short term non-accumulating compensated absences like sick leave, maternity and paternity leave are recognised when absences occur. (ii) Post-employment benefits The Group contributes to the Employees Provident Fund, the national defined contribution plan. The contributions are charged to the profit or loss in the period to which they are related. Once the contributions have been paid, the Group has no further payment obligations. (iii) Share-based compensation The Company operates its Employees Share Option Scheme ( ESOS ), an equity-settled, share-based compensation plan for employees of the Group which allows the Group s employees to acquire ordinary shares of the Company. The total fair value of share options granted to employees is recognised as an employee cost with a corresponding increase in the share option reserve within equity over the vesting period and taking into account the probability that the options will vest. The fair value of share options is measured at grant date, taking into account, if any, the market vesting conditions upon which the options were granted but excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in the assumptions about the number of options that are expected to become exercisable on the vesting date. 34

55 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.3 Significant Accounting Policies (Continued) (m) Employee Benefits (Continued) (iii) Share-based compensation (Continued) At each reporting date, the Company revises its estimates of the number of options that are expected to become exercisable on the vesting date. It recognises the impact of the revision of original estimates, if any, in the profit or loss, and a corresponding adjustment to equity over the remaining vesting period. The equity amount is recognised in the share option reserve until the option is exercised, upon which it will be transferred to the share premium account, or until the option expires, upon which it will be transferred directly to retained earnings. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. (n) Segment Reporting In the previous years, a segment was distinguishable component of the Group that was engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment) which was subject to risks and rewards that were different from those of other segments. Following the adoption of FRS 8 Operating Segments, an operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group s other components. An operating segment s operating results are reviewed regularly by the chief operating decision maker, which in this case is the Chief Executive Officer of the Group, to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. (o) Cash and Cash Equivalents For the purpose of cash flow statement, cash and cash equivalents comprise cash in hand, bank balances, demand deposits, other short-term and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 35

56 3. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and judgements are continually evaluated by the directors and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. (a) Critical Judgements Made in Applying Accounting Policies In the process of applying the Group s and the Company s accounting policies, management has made the following judgements, apart from those involving estimations, which have a significant effect on the amounts recognised in the financial statements. Operating lease commitment as lessee The Group entered into a lease arrangement for the leasehold land for the financial year ended 28th February The Group evaluated based on terms and conditions of the arrangement, whether the leasehold were clearly operating leases or finance leases. Management judged that it does not retain all significant risks and rewards of the ownership of the leasehold land, thus accounted for the contract as operating lease. (b) Key Sources of Estimation Uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as stated below:- (i) Useful lives of property, plant and equipment The Group estimates the useful lives of property, plant and equipment based on the period over which the assets are expected to be available for use. The estimated useful lives of property, plant and equipment are reviewed periodically and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of the relevant assets. In addition, the estimation of the useful lives of property, plant and equipment are based on internal technical evaluation and experience with similar assets. It is possible, however, that future results of operations could be materially affected by changes in the estimates brought about by changes in factors mentioned above. The amounts and timing of recorded expenses for any period would be affected by changes in these factors and circumstances. A reduction in the estimated useful lives of the property, plant and equipment would increase the recorded expenses and decrease the non-current assets. 36

57 3. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued) (b) Key Sources of Estimation Uncertainty (Continued) (ii) Impairment of property, plant and equipment The Group assesses impairment of assets whenever the events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable i.e. the carrying amount of the asset is more than the recoverable amount. Recoverable amount is measured at the higher of the fair value less cost to sell for that asset and its value-in-use. The value-in-use is the net present value of the projected future cash flow derived from that asset discounted at an appropriate discount rate. Projected future cash flows are based on the Group s estimates calculated based on historical, sector and industry trends, general market and economic conditions, changes in technology and other available information. As at reporting date, the directors of the Company are of the opinion that there is no impact resulting from the impairment review by the management. (iii) Impairment of investment in subsidiaries The Group carries out the impairment test based on a variety of estimation including the value-in-use of the cash generating unit. Significant judgement is required in the estimation of the present value of future cash flows generated by the subsidiaries, which involve uncertainties and are significantly affected by assumptions used and judgement made regarding estimates of future cash flows and discount rates. Changes in assumptions could significantly affect the results of the Group s tests for impairment of investment in subsidiaries. The carrying amounts of the investment in subsidiaries of the Company as at 28th February 2011 was RM825,000/- (2010: RM929,000/-). During the financial year, the impairment on investment in subsidiaries charged to the profit or loss for the Company was RM204,000/- (2010: RM537,000/-). (iv) Impairment of intangible assets Significant judgement is required in the estimation of the present value of future cash flows from the intangible assets, which involve uncertainties and are significantly affected by assumptions used and judgement made regarding estimates of future cash flows and discount rates. As the market for internet technology is highly competitive and unpredictable, the actual recoverability of the development costs may differ from management s forecasts since anticipated events may not occur as expected. Should such a scenario occur, adjustments would have to be made to reduce the carrying amount of the development costs to its recoverable amount. During the financial year, the impairment on intangible assets charged to the profit or loss for the Group and the Company were RM28,265,000/- and RM630,000/- respectively. 37

58 3. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued) (a) Key Sources of Estimation Uncertainty (Continued) (v) Impairment of loans and receivables The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group s loans and receivable at the reporting date is disclosed in Note 8 to the financial statements. During the financial year, the impairment on loans and receivables charged to the profit or loss for the Company was RM52,253,688/-. (vi) Income taxes The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the capital allowances and deductibility of certain expenses during the estimation of the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred income tax provisions in the period in which such determination is made. (vii) Contingent liabilities Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote. The determination of treatment of contingent liabilities is based on management s view of the expected outcome of the contingencies for matters in the ordinary course of the business. 38

59 4. PROPERTY, PLANT AND EQUIPMENT Furniture Leasehold Freehold Motor Computer Office and Group Buildings Buildings Vehicles Equipment Equipment Fittings Renovation Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM' Cost At 1st March ,064 1, ,009 Additions , ,740 Disposals Currency realignment (4) (11) (15) At 28th February ,542 1, ,734 Accumulated Depreciation At 1st March , ,612 Depreciation for the financial year , ,681 Depreciation under/(over)charged Disposals Currency realignment (3) (8) (11) At 28th February , ,302 Net Book Value at 28th February , ,432 39

60 4. PROPERTY, PLANT AND EQUIPMENT (Continued) Furniture Leasehold Freehold Motor Computer Office and Group Buildings Buildings Vehicles Equipment Equipment Fittings Renovation Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM' Cost At 1st March ,404 1, ,186 Additions , ,021 Disposals - - (186) (186) Currency realignment (3) (9) (12) At 28th February ,064 1, ,009 Accumulated Depreciation At 1st March , ,210 Depreciation for the financial year , ,593 Disposals - - (183) (183) Currency realignment (2) (6) (8) At 28th February , ,612 Net Book Value at 28th February , ,397 40

61 4. PROPERTY, PLANT AND EQUIPMENT (Continued) Furniture Leasehold Freehold Motor Computer Office and Company Buildings Buildings Vehicles Equipment Equipment Fittings Renovation Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM' Cost At 1st March , ,551 Additions , ,884 Disposals Transfers At 28th February ,358 1, ,435 Accumulated Depreciation At 1st March ,325 Depreciation for the financial year Depreciation under/(over)charged Disposals At 28th February ,903 Net Book Value at 28th February , ,532 41

62 4. PROPERTY, PLANT AND EQUIPMENT (Continued) Furniture Leasehold Freehold Motor Computer Office and Company Buildings Buildings Vehicles Equipment Equipment Fittings Renovation Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM' Cost At 1st March , ,861 Additions , ,895 Disposals - - (186) (186) Transfers (4,019) (4,019) At 28th February , ,551 Accumulated Depreciation At 1st March ,134 Depreciation for the financial year Disposals - - (183) (183) At 28th February ,325 Net Book Value at 28th February ,226 42

63 4. PROPERTY, PLANT AND EQUIPMENT (Continued) Group and Company Depreciation charged during the financial year for certain computer equipment of the Group and of the Company amounting to RM7,843,000/- (2010: RM6,012,000/-) and RM301,000/- (2010: RM93,000/-) respectively have been capitalised as development costs as disclosed in Note 7 to the financial statements. 5. PREPAID LAND LEASE PAYMENTS Group and Company RM'000 RM'000 Cost At the beginning of the financial year Additions - - At the end of the financial year Accumulated Amortisation At the beginning of the financial year Amortisation for the financial year 5 5 Reversal of amortisation overcharged in prior financial year (23) - At the end of the financial year Carrying Amount INVESTMENT IN SUBSIDIARIES Unquoted shares Cost Company RM'000 RM'000 At 1st March ,466 1,466 Additions At 28th February ,566 1,466 Accumulated Impairment Loss At 1st March Impairment loss for the financial year At 28th February Net Cost of Investment

64 6. INVESTMENT IN SUBSIDIARIES (Continued) During the financial year, the Company acquired additional issued and paid-up capital of 99,998 ordinary shares in Defined Search Sdn. Bhd. which represents 100% of its additional issued and paid-up share capital. Thus, the Company s effective equity interest remains at 100%. Key assumptions used in impairment calculations Management determined the recoverable amount of the investment in subsidiaries based on the individual assets value in use and the probability of the realisation of the assets. The present value of the future cash flows to be generated by the asset is the asset s value in use, and it is assumed to be the same as the net worth of the asset as at reporting date. An impairment loss is recognised immediately in the profit or loss if the recoverable amount is less than the carrying amount. As a result of the above, the Company recognised an impairment loss of RM204,000/- (2010: RM537,000/-) during the financial year. Details of the subsidiaries are as follows:- Name of Subsidiaries Country of Incorporation Effective Equity Interest % % Principal Activities asiaep Hong Kong Ltd.* asiaep emarketplace Sdn. Bhd. # Defined Search Sdn. Bhd. # Hong Kong Development and provision of e-business solutions services. Malaysia Dormant Intended activity is to provide e-commerce solutions and e-market platform. Malaysia To provide internet search engine services. Smart Infra Sdn. Bhd. # Malaysia Dormant Intended activity is to provide online marketing solutions. * Audited by another firm of chartered accountants other than Baker Tilly Monteiro Heng. # In view of the capital deficiencies reported by these subsidiaries, the Auditors Report of these subsidiaries contained an emphasis of matter paragraph relating to the appropriateness of the going concern basis of accounting used in the preparation of their financial statements. In aggregate these subsidiaries recorded net current assets of RM235,000/-. 44

65 7. INTANGIBLE ASSETS Development Costs Intellectual Property Total Group RM'000 RM'000 RM' Cost At 1st March ,859 16,500 49,359 Additions 8,506-8,506 Currency realignment (1) - (1) At 28th February ,364 16,500 57,864 Accumulated Amortisation At 1st March ,677 6,705 14,382 Amortisation for the financial year 2,943 1,806 4,749 Impairment loss for the financial year 27, ,265 At 28th February ,255 9,141 47,396 Carrying amount at 28th February ,109 7,359 10, Cost At 1st March ,208 16,500 42,708 Additions 6,652-6,652 Currency realignment (1) - (1) At 28th February ,859 16,500 49,359 Accumulated Amortisation At 1st March ,679 5,306 9,985 Amortisation for the financial year 2,998 1,399 4,397 At 28th February ,677 6,705 14,382 Carrying amount at 28th February ,182 9,795 34,977 45

66 7. INTANGIBLE ASSETS (Continued) Development Intellectual Costs Property Total Company RM'000 RM'000 RM' Cost At 1st March ,972 16,500 19,472 Additions Transfer (3,672) - (3,672) At 28th February ,500 16,500 Accumulated Amortisation At 1st March ,750 6,705 8,455 Amortisation for the financial year - 1,806 1,806 Impairment loss for the financial year Transfer (1,750) - (1,750) At 28th February ,141 9,141 Carrying amount at 28th February ,359 7, Cost At 1st March ,805 16,500 19,305 Additions At 28th February ,972 16,500 19,472 Accumulated Amortisation At 1st March ,531 5,306 6,837 Amortisation for the financial year 219 1,399 1,618 At 28th February ,750 6,705 8,455 Carrying amount at 28th February ,222 9,795 11,017 Intellectual Property ( IP ) of the Group costing RM16.5 million represents the exclusive rights to an online platform system, acquired from one of the Directors on 16 August The IP constitutes a trademark, copyrights, source programmes and associated documentation. The IP has an estimated economic life of fifteen years and will be amortised and recognised as an expense based on the forecasted revenue stream so as to reflect the pattern in which the asset s economic benefits are consumed by the Company. Included in the additions of the development costs of the Group and of the Company are depreciation charged for certain computer equipment of RM7,843,000/- (2010: RM6,012,000/-) and RM301,000/- (2010: RM93,000/-) respectively. 46

67 7. INTANGIBLE ASSETS (Continued) Impairment Testing of the Intangible Assets The Group assesses the intangible assets for impairment on an annual basis. This requires an estimation of the value-in-use of the intangible assets. This estimated value-in-use amount is based on the present value of future expected cash flows from the intangible assets using the pre-tax discount rate of the 8% per annum. With regards to projects linked to the IP as well as the Deferred Development Expenditure, in line with the stance of prudence of the Management, it is expected that the growth rate would be consistent during and beyond the five-year period based on the pre-tax discount rate of 8% per annum being used to extrapolate the cash flows. The calculations of the value-in-use or recoverable amount in respect of the intangible assets are based on the following assumptions:- a) Budgeted gross margin Gross margins are based on the average contributions achievable based on the result of the previous financial year. b) Growth rates The forecasted growth rates are based on expected revenue generation capabilities of the projects concerned over the periods under projection. c) Pre-tax discount rate 8% per annum This rate is based on the Weighted Average Cost of Capital of Group as a whole. d) Sales forecast Compared with the previous financial years, the Management expects that there will be minimum sales growth during the forecasted period. Impairment Loss Recognised During the financial year, since the value-in-use is less than the carrying amount of the intangible assets, this resulted in an impairment which was charged to the profit or loss for the Group and the Company amounting to RM28,265,000/- and RM630,000/- respectively. 47

68 8. TRADE AND OTHER RECEIVABLES Current Group Company RM'000 RM'000 RM'000 RM'000 Trade receivables Less: Allowance for impairment (95) (171) (95) (171) Trade receivables, net Other receivables Amount owing by subsidiaries ,295 61,157 Less: Allowance for impairment - - (52,253) ,042 61,157 Deposits Other receivables, net ,070 61, ,234 61,495 Total trade and other receivables ,234 61,495 Add: Deposit placed with a licensed bank - 3,696-3,696 Cash and bank balances Total loans and receivables 1,017 4,991 11,759 65,375 (a) Trade receivables The Group s normal trade credit terms range from 30 to 90 days. Other credit terms are assessed and approved on a case by case basis. Ageing analysis of the Group s and the Company s trade receivables is as follows:- Group Company RM'000 RM'000 RM'000 RM'000 Neither past due nor impaired to 30 days past due not impaired to 60 days past due not impaired to 90 days past due not impaired More than 90 days past due not impaired Impaired

69 8. TRADE AND OTHER RECEIVABLES (Continued) (a) Trade receivables (Continued) Receivables that are neither past due nor impaired Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group. None of the Group s trade receivables that are neither past due nor impaired have been renegotiated during the financial year. Receivables that are past due but not impaired Trade receivables that are past due but not impaired are unsecured in nature. Receivables that are impaired The Group s trade receivables that are impaired at the reporting date is as follows:- Group Company RM'000 RM'000 RM'000 RM'000 Collectively impaired Trade receivables Less: Allowance for impairment (95) (171) (95) (171) Movement in the allowance for impairment account is as follows:- Group Company RM'000 RM'000 RM'000 RM'000 At 1st March Charge for the year Reversal of impairment losses (177) (391) (177) (391) At 28th February

70 8. TRADE AND OTHER RECEIVABLES (Continued) (b) Related party balances The amount owing by subsidiaries is unsecured, interest free and repayable on demand. The foreign currency exposure profile of amount owing by subsidiaries is as follows:- Company RM'000 RM'000 Hong Kong Dollar ,470 Ringgit Malaysia 10,217 43, SHARE CAPITAL Ordinary shares of RM0.10 each 11,042 61,157 Group and Company Number of Shares Number of Shares Unit Unit '000 RM'000 '000 RM'000 Authorised: At the beginning of the financial year 1,500, , ,000 50,000 Created during the financial year - - 1,000, ,000 At the end of the financial year 1,500, ,000 1,500, ,000 Issued and fully paid: At the beginning the financial year 729,108 72, ,318 24,532 Issued during the financial year 5, ,790 48,379 At the end of the financial year 734,108 73, ,108 72,911 Issued and fully paid share capital During the financial year, the issued and paid-up ordinary share capital of the Company was increased from RM72,911,000/- to RM73,411,000/- by way of the issuance of 5,000,000 ordinary shares of RM0.10 each for cash via a private placement as additional working capital purposes. The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the Company. 50

71 10. RESERVES Group Company RM'000 RM'000 RM'000 RM'000 Translation reserve (738) (717) - - Warrant reserve (Note 11) 13,594 13,594 13,594 13,594 Treasury shares (Note 12) (669) (669) (669) (669) Accumulated losses (45,670) (12,592) (62,798) (6,108) (33,483) (384) (49,873) 6,817 (a) Translation Reserve The foreign currency translation reserve represents exchange differences arising from the translation of the financial statements of foreign operations whose functional currency is different from the Group s presentation currency. (b) Accumulated Losses Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with the Finance Act 2007 which was gazetted on 28th December 2007, companies shall not be entitled to deduct tax on dividends paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders ( single tier system ). However, there is a transitional period of six years, expiring on 31st December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard the balance under Section 108 of the Income Tax Act ( Section 108 ) and opt to pay dividends under the single tier system. The change in the tax legislation also provides for the balance under Section 108 to be locked-in as at 31st December 2007 in accordance with Section 39 of the Finance Act Subject to the agreement of the Inland Revenue Board, the Company has tax exempt account amounting to approximately RM26,602,894/- (2010: RM26,602,894/-) available for future distribution of tax exempt dividends. 51

72 11. WARRANT RESERVE Group and Company RM'000 RM'000 At the beginning of the financial year 13, Issued during financial year - 13,275 At the end of the financial year 13,594 13,594 WARRANTS 2009/2014 On 9th September 2009, the Warrants 2009/2014 were issued for free pursuant to the renounceable Rights Issue on 14th September 2009 by issuance of 483,789,970 new ordinary shares of RM0.10 each ( Rights Issues ) on the basis of one Rights Share for each existing ordinary share of RM0.10 each in the Company, together with:- (a) (b) bonus issue of 241,894,985 new ordinary shares of RM0.10 each ( Bonus Issues ) on the basis of one Bonus Shares for each rights share subscribed; and issuance of 241,894,985 new free detachable warrants ( Warrants ) on the basis of one Warrant for each rights share subscribed at an issue price of RM0.10 per Rights Share of which the first call of RM0.06 is payable in cash on application and the second call of RM0.04 is to be capitalised from the Company s Share Premium Account. Warrants 2009/2014 are listed on Bursa Malaysia Securities Berhad. Each new warrant entitles its registered holder, at any time from the date of its issue up to and including 8th September 2014, to subscribe for one new ordinary share of RM0.10 each in the Company at an exercise price of RM0.10 per share which is subject to adjustments under the terms set out in the Deed Poll dated 29th July 2009 constituting the Warrants 2009/2014. Number of warrants 2009/2014 Issue Date Expiry Date Exercise Price RM per Warrant At the beginning of Financial Year Issued Exercised At the end of Financial Year ,894, ,894,985 The fair value of the free warrants at the issuance date is valued by the directors based on trinomial valuation model with the following inputs:- Fair value of the free warrants at the issuance date (RM) Weighted average share price (RM) Exercise price (RM) 0.10 Warrants life (Years) 5 Delta (%)

73 11. WARRANT RESERVE (Continued) WARRANTS 2006/2011 On 16th February 2006, the Company issued 66,861,390 new warrants, for cash at an issue price of RM0.01 per warrant arising from the renounceable Rights Issue which were constituted by a Deed Poll dated 3rd April The new warrants are listed on Bursa Malaysia Securities Berhad. Each new warrant entitles its registered holder, at any time from the date of its issue up to and including 18th June 2011, to subscribe for one new ordinary shares of RM0.10 each in the Company at an exercise price of RM0.30 per share which is subject to adjustments under the terms set out in the Deed Poll. However, as a result of the Rights Issue as mentioned in Warrants 2009/2014, the existing warrants 2006/2011 holders are entitled to the adjustments of the exercise price and number of outstanding warrants. Accordingly, the number of additional Warrants 2006/2011 to be listed and quoted as a result of the Rights Issue is 46,883,154 and the exercise price has been adjusted from RM0.30 to RM0.10 per warrant. Number of warrants 2006/2011 Issue Date Expiry Date Exercise Price RM per Warrant At the beginning of Financial Year Adjusted Exercised At the end of Financial Year ,602, ,602, TREASURY SHARES Treasury shares relate to ordinary shares of the Company that are held by the Company. The Company has not repurchased any issued share capital during the financial year. 13. DEFERRED TAX LIABILITIES Group and Company RM'000 RM'000 At the beginning of the financial year - (239) Recognised in the profit or loss At the end of the financial year

74 14. TRADE AND OTHER PAYABLES Current Group Company RM'000 RM'000 RM'000 RM'000 Trade payables Other payables Accruals Other payables Total trade and other payables Total financial liabilities carried at at amortised cost The normal credit term granted to the Group is 30 days. 15. REVENUE Revenue represents the invoiced value of products and services rendered, net of discounts. 16. OPERATING LOSS Operating loss has been arrived at:- After charging:- Group Company RM'000 RM'000 RM'000 RM'000 Amortisation - development costs 2,943 2, intellectual property 1,806 1,399 1,806 1,399 - prepaid land lease payments Audit fee - current year prior year Depreciation 3,858 3, Directors' remuneration - fees salaries and allowances Employees' Provident Fund

75 16. OPERATING LOSS (Continued) Operating loss has been arrived at:- After charging:- Group Company RM'000 RM'000 RM'000 RM'000 Impairment loss - intangible assets 28, investment in subsidiaries loan to subsidiaries ,253 - Staff costs - salaries and wages Employees' Provident Fund other staff related costs And crediting:- Gain on disposal of property, plant and equipment Interest income Reversal of impairment losses on trade receivables Staff costs of the Group and of the Company amounting to RM399,000/- (2010: RM329,000/-) and RM399,000/- (2010: RM74,000/-) respectively have been capitalised as development costs. 17. TAXATION Group Company RM'000 RM'000 RM'000 RM'000 Income tax - prior years - (2) - (2) Deferred taxation - current year prior years The income tax rate is calculated at the Malaysian statutory rate of 25% of the estimated taxable profit for the fiscal year. 55

76 17. TAXATION (Continued) A reconciliation of income tax expense applicable to loss before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and the Company are as follows:- Group Company RM'000 RM'000 RM'000 RM'000 Loss before taxation (33,078) (3,127) (56,690) (3,339) Taxation at applicable tax rate of 25% 8, , Tax effects arising from: - depreciation charges capitalised as development costs 1,960 1, non-deductible expenses (8,270) (1,202) (13,737) (617) - non-taxable income underaccrual in prior years origination of deferred tax assets not recognised in the financial statements (1,960) (1,072) (511) (230) Tax expense for the financial year The deferred tax assets have not been recognised for the following items:- Group Company RM'000 RM'000 RM'000 RM'000 Impairment loss on financial assets Property, plant and equipment (15,039) (20,766) (2,208) (810) Unutilised capital allowances 32,897 32,389 2, Unutilised tax losses 2, , ,407 12,568 3, Potential deferred tax assets 5,102 3,

77 18. LOSS PER SHARE (a) Basic Basic loss per share is calculated by dividing the net loss for the financial year by the weighted average number of ordinary shares on issue during the financial year. Group Net loss for the financial year (RM'000) (33,078) (2,890) Weighted average number of ordinary shares in issue ('000) 725, ,199 Basic loss per share for the financial year (sen) (4.56) (0.61) (b) Diluted The diluted loss per share is not shown as the exercise price of the options under warrant is higher than the Company s share price at the reporting date. 19. SIGNIFICANT RELATED PARTY TRANSACTIONS (a) Identification of related parties Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. Related parties of the Group include:- (i) (ii) Direct subsidiaries; and Key management personnel which comprise persons (including the directors of the Company) having the authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly. (b) Significant related party transactions Company RM'000 RM'000 Transfer of property, plant and equipment to a subsidiary - 4,019 Development costs charged to a subsidiary 1,

78 19. SIGNIFICANT RELATED PARTY TRANSACTIONS (Continued) (b) Identification of related parties (Continued) The directors of the Company are of the opinion that the above transactions have been entered into in the normal course of business and the terms are no less favourable than those arranged with third parties. (c) Key management personnel remuneration The remuneration of the key management personnel during the financial year is as follows:- Group and Company RM'000 RM'000 Directors Fees Salaries and allowances Employees' Provident Fund , Other key management personnel Salaries, bonuses and allowances Employees' Provident Fund Other members of key management personnel comprise persons other than directors of the Group entities, having authority and responsibility for planning, directing and controlling the activities of the Group entities either directly or indirectly. The details of remuneration received and receivable by directors of the Company during the financial year are as follows:- Executive: Group and Company RM'000 RM'000 - salaries allowances other emoluments Non-Executive: fees Total directors' remuneration 1,

79 19. SIGNIFICANT RELATED PARTY TRANSACTIONS (Continued) (c) Key management personnel remuneration (Continued) The number of directors of the Company whose total remuneration during the financial year fell within the following bands is analysed below:- Number of Directors Executive directors: RM50,001 RM100, RM100,001 RM500, Non-executive directors: RM50,000 and below FAIR VALUE OF FINANCIAL INSTRUMENTS Determination of fair value The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value:- Financial assets (current) Trade and other receivables 8 Fixed deposits placed with licensed banks 8 Cash and bank balances 8 Financial liabilities (current) Trade and other payables 14 Note The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short term nature or that they are floating rate instruments that are re-priced to market interest rates or near the reporting date. 59

80 21. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group seeks to manage effectively various risks namely credit, liquidity, foreign currency, and interest rate risks to which the Group is exposed to in its daily operations. (a) Credit risk Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including fixed deposits placed with licensed banks and cash and bank balances), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties. The management has a credit policy in place to monitor and minimise the exposure of default. Credit evaluations are performed on all customers requiring credit over certain amount. (i) Exposure to credit risk At the reporting date, the Group s and the Company s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statements of financial position. (ii) Credit risk concentration profile The Group determines concentrations of credit risk by monitoring the country profile of its trade receivables on an ongoing basis. (iii) Financial assets that are neither past due nor impaired Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note 8 to the financial statements. (iv) Financial assets that are either past due or impaired Information regarding financial assets that are past due or impaired is disclosed in Note 8 to the financial statements. (v) Amount owing by subsidiaries The amount owing by subsidiaries is unsecured, interest free and repayable on demand. The Company monitors the results of the subsidiaries regularly. As at the end of the financial year, the maximum exposure to credit risk is represented by their carrying amounts in the statement of financial position. 60

81 21. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued) (b) Liquidity risk The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all financing, repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. Maturity analysis The table below summarises the maturity profile of the Group s and the Company s liabilities at the reporting date based on contractual undiscounted repayment obligations. On Demand More or within 1-5 than Financial Liabilities 1 Year Years 5 Years Total 2011 RM'000 RM'000 RM'000 RM'000 Group Trade payables Other payables and accruals Total undiscounted financial liabilities Company Trade payables Other payables and accruals Total undiscounted financial liabilities Group Trade payables Other payables and accruals Total undiscounted financial liabilities Company Trade payables Other payables and accruals Total undiscounted financial liabilities

82 21. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued) (c) Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. During the financial year, the Group is exposed to foreign currency risk on transactions that are denominated in currencies other than Ringgit Malaysia. The foreign currencies in which these transactions are denominated are mainly Hong Kong Dollar ( HKD ). The Group and the Company ensure that the net exposure to this risk is kept to an acceptable level by buying or selling foreign currencies at spot rates where necessary to address short-term imbalances. Management does not enter into currency hedging transactions since it considers that the cost of such instruments outweigh the potential risk of exchange rate fluctuations. The financial assets and financial liabilities of the Group that are not denominated in their functional currencies are disclosed in respective note to the financial statements. Sensitivity analysis for foreign currency The following table demonstrate the sensitivity of the Group s profit net of tax to a reasonably possible change in the exchange rates of HKD against the functional currency of the Group, with all the other variables held constant. Company RM'000 RM'000 Profit/(loss) Profit/(loss) for the year for the year HKD/RM - strengthened 3% (2009 : 3%) weakened 3% (2009 : 3%) (532) (524) 22. CAPITAL MANAGEMENT The primary objective of the Group s capital management is to ensure that it maintains a strong credit rating and healthy capitals ratio in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 28th February 2011 and 28th February The Group monitors capital using a gearing ratio, which is total debt divided by total capital plus total debt. The Group s policy is to keep the gearing ratio between 0.1% and 2%. The Group includes within total debt, trade and other payables. 62

83 22. CAPITAL MANAGEMENT (Continued) The gearing ratio of the Group and the Company is as follows:- Group Company Note RM'000 RM'000 RM'000 RM'000 Trade and other payables Total debt Equity attributable to owners of the parent 39,928 72,527 23,538 79,728 Capital and total debt 40,418 72,844 23,976 80,026 Gearing ratio 1.2% 0.4% 1.8% 0.4% The Group is also required to comply with the disclosure and necessary capital requirements as prescribed in the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad. 23. OPERATING SEGMENTS During the financial year, the Group adopted FRS 8 Operating Segments. FRS 8 requires the identification of operating segments on the basis of internal reports that are regularly reviewed by the Group s chief operating decision maker in order to allocate resources to the segments and assess their performance. General Information The information reported to the Group s chief operating decision maker to make decisions about resources to be allocated and for assessing their performance is based on the geographical location of revenue is derived, and has two reportable operating segments as follows:- (a) (b) Malaysia Hong Kong Except as above, no other operating segment has been aggregated to form the above reportable operating segments. There are no inter-segment revenues. Measurement of Reportable Segments Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the consolidated financial statements. Transactions between reportable segments are measured on the basis that is similar to those external customers. 63

84 23. OPERATING SEGMENTS (Continued) Measurement of Reportable Segments Segment profit or loss is profit earned or loss incurred by each segment without allocation of central administrative costs, non-operating investment revenue, finance costs and income tax expense. There are no significant changes from prior financial year in the measurement methods used to determine reported segment profit or loss. All the Group s assets are allocated to reportable segments other than assets used centrally for the Group, current and deferred tax assets. Jointly used assets are allocated on the basis of the revenues earned by individual segments. All the Group s liabilities are allocated to reportable segments other than liabilities incurred centrally for the Group, current and deferred tax liabilities. Jointly incurred liabilities are allocated in proportion to the segment assets. Per Consolidated Hong Financial Malaysia Kong Elimination Statements 2011 RM'000 RM'000 RM'000 RM'000 Revenue External customer 8, ,274 Results Interest income Reversal of impairment losses on trade receivables Amortisation 4, ,731 Depreciation 3, ,858 Impairment loss on non-financial assets 80,722 - (52,457) 28,265 Segment profit or loss (85,531) (4) 52,457 (33,078) Assets Additions to property, plant and equipment 7, ,740 Inter segment assets 63,295 16,437 (79,732) - Liabilities Inter segment liabilities 63,591 15,636 (79,227) - 64

85 23. OPERATING SEGMENTS (Continued) Per Consolidated Hong Financial Malaysia Kong Elimination Statements 2010 RM RM RM RM Revenue External customer 9, ,860 Results Interest income Reversal of impairment losses on trade receivables Amortisation 4, ,402 Depreciation 3, ,581 Impairment loss on non-financial assets (537) - Segment profit or loss (3,572) (92) 537 (3,127) Assets Additions to property, plant and equipment 13, ,021 Inter segment assets 61,157 18,118 (79,275) - Liabilities Inter segment liabilities 61,444 17,247 (78,691) COMPARATIVE FIGURES FRS 101 (revised), Presentation of Financial Statements Arising from the adoption of FRS 101 (revised), profit or loss for the financial year ended 28th February 2010 have been re-presented as statement of comprehensive income. All nonowner changes in equity that were presented in the statements of changes in equity are now included in the statement of comprehensive income as other comprehensive income. Consequently, components of comprehensive income are not presented in the statements of changes in equity. 65

86 25. SUBSEQUENT EVENTS (a) Private Placement Subsequent to the financial year ended, the issued and paid-up ordinary share capital of the Company has increased from RM73,411,000/- to RM74,011,000/- by way of the issuance of 6,000,000 ordinary shares of RM0.10 each for cash via private placements as additional working capital purposes. (b) Acquisition of an Associate Company On 1st April 2011, the Company acquired 246,000 ordinary shares representing 41% equity interest in Global Mineral Technology Sdn. Bhd. for a purchase consideration of RM3 million. The purchase consideration is to be satisfied by way of RM1 million cash and issuance of 20 million new ordinary shares of RM0.10 each. The proposed acquisition is to be completed upon the satisfaction of the conditions precedent mentioned therein. 66

87 SUPPLEMENTARY INFORMATION ON THE DISCLOSURE OF REALISED AND UNREALISED PROFITS OR LOSSES On 25th March 2010, Bursa Malaysia Securities Berhad ( Bursa Malaysia ) issued a directive to all listed issuers pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements. The directive requires all listed issuers to disclose the breakdown of the retained profits or accumulated losses as at the end of the reporting period, into realised and unrealised profits and losses. On 20th December 2010, Bursa Malaysia further issued guidance on the disclosure and the format required. Pursuant to the directive, the amounts of realised and unrealised profits or losses included in the accumulated losses of the Group and the Company as at 28th February 2011 are as follows:- Group Company RM'000 RM'000 Total accumulated losses of the Company and its subsidiaries - realised (98,659) (62,798) - unrealised - - (98,659) (62,798) Less: Consolidation adjustments 52,989 - Total accumulated losses (45,670) (62,798) The determination of realised and unrealised losses is based on Guidance of Special Matter No. 1, Determination of Realised and Unrealised Profits and Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants on 20th December The disclosure of realised and unrealised losses above is solely for complying with the disclosure requirements stipulated in the directive of Bursa Malaysia and should not be applied for any other purposes. 67

88 asiaep BERHAD (Incorporated in Malaysia) STATEMENT BY DIRECTORS We, DR. TAN BOON NUNT and LEE SUET HONG, being two of the directors of asiaep Berhad, do hereby state that in the opinion of the directors, the financial statements set out on pages 8 to 66 are properly drawn up in accordance with the Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 28th February 2011 and of the results and cash flows of the Group and of the Company for the financial year ended on that date. The supplementary information set out on page 67 has been compiled in accordance with the Guidance of Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants. On behalf of the Board,... DR. TAN BOON NUNT Director... LEE SUET HONG Director Kuala Lumpur Date: 10th May

89 asiaep BERHAD (Incorporated in Malaysia) STATUTORY DECLARATION I, CHAN CHEE HOE, being the officer primarily responsible for the financial management of asiaep Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 8 to 66, and the supplementary information set out on page 67 are 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, CHAN CHEE HOE Subscribed and solemnly declared by the abovenamed at Kuala Lumpur in the Federal Territory on 10th May Before me,... Tengku Fariddudin No. W533 Commissioner for Oaths 69

90 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF asiaep BERHAD (Incorporated in Malaysia) Report on the Financial Statements We have audited the financial statements of asiaep Berhad, which comprise the statements of financial positions as at 28th February 2011 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 8 to 66. Directors Responsibility for the Financial Statements The directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with the Financial Reporting Standards ( FRSs ) and the Companies Act, 1965 ( the Act ) in Malaysia, and for such internal controls as the directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the Company s preparation of the financial statements that give true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal controls. 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. 70

91 Opinion In our opinion, the financial statements have been properly drawn up in accordance with the FRSs and the Act so as to give a true and fair view of the financial position of the Group and of the Company as of 28th February 2011 and of their financial performance and cash flows for the financial year then ended. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Act, we also report the following:- (a) (b) (c) (d) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. We have considered the financial statements and the auditors report of the subsidiary of which we have not acted as auditors, which are indicated in Note 6 to the financial statements. We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes. The audit reports on the financial statements of the subsidiaries did not contain any material qualifications or any adverse comments made under Section 174(3) of the Act. Other Matters The supplementary information set out on page 67 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants ("MIA Guidance") and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad. This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Act and for no other purpose. We do not assume responsibility to any other person for the content of this report. Baker Tilly Monteiro Heng No. AF 0117 Chartered Accountants M.J. Monteiro No. 828/05/12 (J/PH) Partner Kuala Lumpur Date: 10th May

92 ASIAEP BHD (Company No W) Analysis of Shareholdings as at 26 April 2011 Type of shares : Ordinary shares of RM 0.10 each Voting rights : One vote per shareholder on a show of hands One vote per ordinary share on a poll Number of shareholders : 5,673 Analysis of Shareholdings Size of Holdings No of Holders % of Holders No of Shares % Less than ,000 1,001-10,000 10, , ,001 - Less than 5% of issued shares 5% and above of issued share ,429 2,794 1, , ,672 8,663, ,966, ,716,842 50,550, Total 5, ,108, List of Substantial Shareholders as Per Register of Substantial Shareholders Name Direct % Indirect % Topclass Access Sdn. Bhd (TASB) 91,550, Dr. Tan Boon Nunt 1,924, ,550,060 * Lee Suet Hong ,550,060 * * Deemed interested by virtue of their shareholding in TASB pursuant to Section 6A of the Companies Act, Direct & deemed interest of Director Name Direct % Indirect % Esos % Warrant % Dr. Tan Boon Nunt 1,924, ,550,060 * Lee Suet Hong 74-91,550,060 * Tan Sri Dato Ahmad Fuzi bin Haji Abdul Razak Mr Khor Chai Tian Mr Lim Ghim Chai Mr Chu Kheh Wee asiaep Annual Report

93 ASIAEP BHD (Company No W) Analysis of Shareholdings as at 26 April 2011 List of Top 30 shareholders Name No. of Shares Held % 1 EB NOMINEES (TEMPATAN) SENDIRIAN BERHAD PLEDGED SECURITIES ACCOUNT FOR TOPCLASS ACCESS SDN BHD (SFC) 50, 550, LEE SUAT YEAN 15, 202, M & A NOMINEE (TEMPATAN SDN BHD TOPCLASS ACCESS SDN BHD (M&A) 15, 000, CIMB GROUP NOMINEES (TEMPATAN) SDN BHD LEE SUET HONG FOR TOPCLASS ACCESS SDN BHD (17876 PETA) 13, 000, CIMB GROUP NOMINEES (TEMPATAN) SDN BHD TAN BOON NUNT FOR TOPCLASS ACCESS SDN BHD (3977 PETA) 13, 000, HUANG, CHIANG-MEI 11, 490, WAN SARA BINTI MOHD SAID 7, 313, TEH PIAK HUAT 6, 300, TAN BOON SHEN 6, 000, NG LEONG HWA 5, 000, ESTHER KEONG PEI PEI 4, 600, MAYBAN SECURITIES NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR CHIN TEK MING (REM 156-MARGIN) 4, 254, GOH CHYE HONG 3, 934, TAN TAN ZERN KEE 3, 800, TAN ENG HUAT 3, 755, NG BOK WAH 3, 700, YAP KON HIN 3, 600, A.A. ANTHONY NOMINEES (ASING) SDN BHD AMFRASER SECURITIES PTE LTD FOR TAN EANG MIN (125768) 3, 500, ASIAEP BERHAD SHARE BUY BACK ACCOUNT 3, 423, SIM MUI KHEE 3, 300, TAN KIM LENG ENTERPRISE SDN BHD 3, 250, TOH BEE HIANG 3, 000, SURAJ SINGH A/L JASWANT SINGH 3, 000, AMBANK (M) BERHAD PLEDGED SECURITIES ACCOUNT FOR WONG AH YONG (SMART) 2, 962, MOHD NOOR ZAIMI BIN ZAINOL 2, 879, RUBEN KELVIN RAJADURAI 2, 853, HLG NOMINEE (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR WONG AI GIN (CCTS) 2, 700, HO CHEE SHEONG 2, 300, WONG AH YONG 2, 300, CHAN YOOK KEONG 2, 250, Total 208, 218, asiaep Annual Report

94 ASIAEP BHD (Company No W) Analysis of warrant 2006/2011 holdings as at 26 April 2011 Analysis of warrant holdings Size of holdings No of Holders % No of warrants % Less than ,000 1,001-10, , , ,001 - Less than 5% of issued warrants 5% and above of issued warrants ,947 25,443 1,913,270 16,981,840 67,044,044 8, 614, Total 1, , 602, asiaep Annual Report

95 ASIAEP BHD (Company No W) Analysis of warrant 2006/2011 holdings as at 26 April 2011 List of Top 30 warrant 2006/2011 holders Name No. of warrant held % 1 CIMSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR BONG SOO MAY (PENANG-CL) 2 LIM HONG HOCK 3 TA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR LAW GIM PHUAH 4 OON TEIK HOCK 5 SIM MUI KHEE 6 MAYBAN SECURITIES NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR CHIN TEK MING (REM 156-MARGIN) 7 AZIZAH BINTI ABDUL RAHMAN 8 TA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR LEONG SIEW LAN 9 HARBENDAR KAUR A/P NASHTER SINGH 10 LIM HING LIM KHENG HO 11 VEERA PANDIYAN A/L KALIANI SUNDRAM 12 CHU CHOA YEW 13 JF APEX NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR JEEVAMALAR A/P KUMARASUBRAMANIAM (STA 2) 14 HII HIENG HUI 15 LIM VEI TAT 16 WONG YOON SIONG 17 LAU CHEE OON 18 TAN LIAM KWEE 19 TAN EE PENG 20 CHER DONG THENG 21 SJ SEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR ANG SIEW IM (SMT) 22 HARJINDER SINGH A/L KULDIP SINGH 23 CHANDRA A/P K KANAGASABAI 24 LEE AH BENG 25 TAN KHAY LONG 26 MUHAMMAD NIZAM BIN ALIAS 27 MATHESWARAN RAJAGOPAL 28 WONG AH YONG 29 NGOI SAI 30 HII YU GUAN 8,614,000 2,999,600 2,950,000 2,874,596 2,695,340 2,336,700 2,149,900 2,100,000 1,789,143 1,350,000 1,000,100 1,000,044 1,000, , , , , , , , , , , , , , , , , , Total 44,761, asiaep Annual Report

96 ASIAEP BHD (Company No W) Analysis of warrant 2009/2014 holdings as at 26 April 2011 Analysis of warrant holdings Size of holdings No of Holders % No of warrants % Less than ,000 1,001-10, , , ,001 - Less than 5% of issued warrants 5% and above of issued warrants , ,400 5,802,857 46,675, ,341, Total 2, ,894, asiaep Annual Report

97 ASIAEP BHD (Company No W) Analysis of warrant 2009/2014 holdings as at 26 April 2011 List of Top 30 warrant 2009/2014 holders Name No. of warrant held % 1 LEE SUAT YEAN 2 TAN BOON NUNT 3 NG LEONG HWA 4 LEE SUET HONG 5 CIMSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR BONG SOO MAY (PENANG-CL) 6 MOHD NOOR ZAIMI BIN ZAINOL 7 AMSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR CHIN CHIN SEONG 8 CHOO POH TIT 9 LOH GEE TONG 10 SURAJ SINGH A/L JASWANT SINGH 11 SIM MUI KHEE 12 TOH GIOK LAN 13 TA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR NG GEOK CHOO 14 TAN EE WAH 15 FOO FOOK MIN 16 SON KAT SOIN KAT PEE 17 LIM YEE HOE 18 NOR AZIZY BINTI ABDUL AZIZ 19 AMSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR CHUA KIM BOON 20 PUBLIC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR HII PUO ANN (E-BTL) 21 CIMSEC NOMINEES (TEMPATAN) SDN BHD CIMB BANK FOR LEN BOOK LEARN (M66002) 22 NG KWEE FAH 23 LEE YON HIN 24 LIM KEAN BENG 25 GOH CHYE HONG 26 TAN KHAY LONG 27 TOPCLASS ACCESS SDN BHD 28 YAP KON HIN 29 ZAILEEZA BINTI MOHD ZAIN 30 LIM LEONG HENG Total 5,111,000 4,874,907 4,681,800 4,600,907 4,389,000 4,089,900 4,000,000 3,280,000 3,255,700 3,000,000 2,957,200 2,900,000 2,784,800 2,570,000 2,100,000 1,900,000 1,700,000 1,527,200 1,500,000 1,500,000 1,437,100 1,430,000 1,430,000 1,378,000 1,355,200 1,300,000 1,250,000 1,200,000 1,200,000 1,168,000 75,870, asiaep Annual Report

98 ASIAEP BHD (Company No W) List of Properties Landed property Registered owner/ title/ Address Unit 553-3A, 3rd Floor Metro Ipoh Baru, Perak (Master Title Nos: HS(D)KA 27098, 27099, 27100, 27101, and PT No in the Mukin of Hulu Kinta, District of Kinta, State of Perak) Description/ existing use 3rd Floor, Corner-Shop lot/ Commercial Date of Acquisition/ Price 24 Nov 2001 RM 67,400 Age of Buildings/ Land Area 7 years/ 784 sq ft Tenure Leasehold for 99 years, expiring on 14 June 2092 Audited net book value as at 28 February 2011 (RM 000) 59 35, Jalan 8/18, Petaling Jaya Selangor (H.S. (D) , Lot No. PT 35, Road 8/18, Bandar Petaling Jaya, District of Petaling Jaya) Single-storey semi-detached house/ residential 12 April 2002 RM 180, years/ 2942 sq ft Leasehold for 99 years, expiring on 12 July , Jalan TK2/1C, Taman Kinrara Seksyen 2, Puchong, Selangor Darul Ehsan, Malaysia Double-storey shop-office 6 July 2004 RM 430, years/ 1540 sq ft Leasehold for 99 years, expiring on 18 July , Jalan TK2/1C, Taman Kinrara Seksyen 2, Puchong, Selangor Darul Ehsan, Malaysia Double-storey shop-office 6 July 2004 RM 430, years/ 1540 sq ft Leasehold for 99 years, expiring on 18 July Lot 77-1, Block K, Business Avenue ll, Neocyber, Lingkaran Cyber Point Barat, Cyberjaya, Selangor 1st Floor, Strata shop-office 20 Oct 2009 RM 293,733 2 years/ 1710 sq ft Freehold 285 asiaep Annual Report

99 ASIAEP BHD (Company No W) Notice of Annual General Meeting NOTICE IS HEREBY GIVEN THAT the Eighteenth Annual General Meeting of the Company will be held at Putra 4, Palm Garden Hotel, IOI Resort, Putrajaya, Malaysia on Friday, 17 June 2011 at 9.00 a.m. to transact the following businesses:- AGENDA ORDINARY BUSINESS 1. To receive the Audited Financial Statements of the Company for the financial year ended 28 February 2011 together with the Reports of the Directors and Auditors thereon. Resolution 1 2. To approve the payment of Directors Fees for the financial year ended 28 February Resolution 2 3. To consider and if thought fit, to pass the following resolutions: That Dr Tan Boon Nunt who retires pursuant to Article 90 of the Company s Articles of Association, be and is hereby re-elected a Director of the Company. Resolution That Mr Lim Ghim Chai who retires pursuant to Article 90 of the Company s Articles of Association, be and is hereby re-elected a Director of the Company. Resolution 4 4. To re-appoint Messrs Baker Tilly Monteiro Heng as Auditors of the Company and to authorise the Directors to fix their remuneration. Resolution 5 5. SPECIAL BUSINESS To consider and, if thought fit, to pass the following resolutions: As Ordinary Resolution Authority to Issue Shares That, subject always to the Companies Act, 1965 and the approvals of the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered, pursuant to Section 132D of the Companies Act, 1965, to issue shares in the Company from time to time at such price, upon such terms and conditions, for such purposes and to such person or persons whomsoever as the Directors may deem fit provided that the aggregate number of shares issued in any one financial year of the Company pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being and that the Directors be also empowered to obtain the approval for the listing and the quotation of the additional shares so issued on Bursa Malaysia Securities Berhad ( BMSB ) and that such authority shall continue in force until the conclusion of the next Annual General Meeting ( AGM ) of the Company. Resolution 6 asiaep Annual Report

100 ASIAEP BHD (Company No W) 5.2. As Special Resolution Proposed Change of Name THAT the name of the Company be changed from AsiaEP Berhad to AsiaEP Resources Berhad with effect from the date of Certificate of Incorporation on Change of Name of the Company to be issued by the Companies Commission of Malaysia, and that the Memorandum and Articles of Association of the Company be amended accordingly, wherever the name of the Company appears (Proposed Change of Name ); AND THAT the Directors of the Company be and are hereby authorised to give effect to the Proposed Change of Name with full power to assent to any conditions, modifications, variations and/or amendments as may be required by any relevant authorities or which the Directors may consider necessary or expedient to give effect to the said Proposed Change of Name. Resolution 7 6. To transact any other business for which due notice shall have been given. BY ORDER OF THE BOARD Wong Youn Kim (MAICSA ) Sin May Peng (MAICSA ) Company Secretaries Selangor Darul Ehsan Dated : 26 May 2011 asiaep Annual Report

101 ASIAEP BHD (Company No W) NOTES:- A proxy may but does not need to be a Member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 need not be complied with. To be valid this form duly completed must be deposited at the office of the Company or such place as is specified for that purpose in the notice convening the meeting not less than 48 hours before the time for holding the meeting. A Member shall be entitled to appoint more than one proxy to attend and vote at the same meeting. Where a Member appoints more than one proxy, the appointments shall be invalid unless he specifies the proportion of his holding to be represented by each proxy. If the appointor is a corporation, this form must be executed under its common seal or under the hand of its attorney. Explanatory notes on special business 1. Authority to issue shares The Ordinary Resolution proposed under item 5.1, if passed, will authorise the Directors of the Company to issue shares up to a maximum ten per cent (10%) of the issued share capital of the Company for the time being for such purposes as the Directors consider would be in the interest of the Company. This authority, unless revoked or varied by the shareholders of the Company in general meeting will expire at the conclusion of the next Annual General Meeting. As at the date of Notice of Meeting, 11,000,000 ordinary shares of RM0.10 each were issued (via private placement) pursuant to the general mandate granted to the Directors at the last Annual General Meeting held on 16 June 2010 and which will lapse at the conclusion of the Eighteenth Annual General Meeting. Out of the total proceeds of RM1,100, raised, RM959, had been utilized in the following manner:- Proceeds from private placements Utilisations : - 1. Working Capital 2. Defray Private Placement Expenses Balance c/f RM 1,100, , , , The renewal of the mandate is to provide flexibility to the Company to issue new shares without the need to convene a separate general meeting to obtain shareholders approval so as to avoid incurring additional cost and time. The purpose of this mandate is for possible fund raising execises including but not limited to further placement of shares for purpose of funding current and/or future investment projects, working capital and/or acquisitions. 2. Proposed Change of Name The Special Resolution proposed under item 5.2, if passed, will enable the Company to change its name to better reflect the Company s intention to diversify its businesses and scope of activities. The details of the Proposed Change of Name are set out in Appendix 1 attached with the Annual Report for the financial year ended 28 February asiaep Annual Report

102 ASIAEP BHD (Company No W) Statement Accompanying Notice of Annual General Meeting The Directors who are standing for re-election at the Eighteentn Annual General Meeting of the Company pursuant to Article 90 of the Articles of Association of the Company are :- 1. Dr Tan Boon Nunt 2. Mr Lim Ghim Chai The details of the above Directors seeking re-election are set out in the Directors Profile as disclosed on pages 7 and 8 of this Annual Report. Dr Tan Boon Nunt s interests in the securities of the Company or its subsidiaries is as disclosed on page 5 and 6 of the Audited Financial Statements for the financial year ended 28 February 2011, whilst Mr Lim Ghim Chai does not have any interests in the securities of the Company or its subsidiaries. asiaep Annual Report

103 ASIAEP BHD (Company No W) Proxy Form Proxy Form ASIAEP BERHAD (Company No. : W) (Incorporated In Malaysia) I/We,... NRIC No. :.... of being a member/members of the abovenamed Company, hereby appoint..... of... or failing him, the Chairman of the Meeting as my/our proxy to attend and vote for me/us on my/our behalf at the Eighteenth Annual General Meeting of the Company to be held at Putra 4, Palm Garden Hotel, IOI Resort, Putrajaya, Malaysia on Friday, 17 June 2011 at 9.00 a.m. and at any adjournment thereof in the manner indicated below :- Please indicate with an X in the appropriate box against the resolution how you wish your proxy to vote. If no instruction is given, this form will be taken to authorise the proxy to vote at his/her discretion. Number of Shares CDS No Date : Signature Resolutions Number For Against Receive and Consider Accounts and Reports 1 Directors Fees 2 Re-appointment/ Re-election of Directors of the Company:- - Dr Tan Boon Nunt 3 - Mr Lim Ghim Chai 4 Re-Appointment of Auditors - Baker Tilly Monteiro Heng 5 Authority to issue shares pursuant to Section 132D 6 Proposed Change of Name 7 Notes:- A proxy may but does not need to be a Member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 need not be complied with. To be valid this form duly completed must be deposited at the office of the Company or such place as is specified for that purpose in the notice convening the meeting not less than 48 hours before the time for holding the meeting. A Member shall be entitled to appoint more than one proxy to attend and vote at the same meeting. Where a Member appoints more than one proxy, the appointments shall be invalid unless he specifies the proportion of his holding to be represented by each proxy. If the appointor is a corporation, this form must be executed under its common seal or under the hand of its attorney. asiaep Annual Report

104 ASIAEP BHD (Company No W) fold this line for sending Second fold here Affix Stamp asiaep BERHAD (Co No: W) 18 & 20, Jalan TK2/ 1C, Taman Kinrara Seksyen 2, Puchong Selangor Darul Ehsan, Malaysia Third fold here asiaep Annual Report

105 APPENDIX 1 Board of Directors Registered Office : 18 & 20, Jalan TK2/1C Taman Kinrara Seksyen Puchong, Selangor Tan Sri Dato Ahmad Fuzi bin Haji Abdul Razak (Executive Chairman) Dr Tan Boon Nunt (Managing Director) Lee Suet Hong (Ms) (Executive Director) Khor Chai Tian (Independent Non-Executive Director) Lim Ghim Chai (Independent Non-Executive Director) Chu Kheh Wee (Independent Non-Executive Director) To : The Shareholders of AsiaEP Berhad Dear Sir / Madam ASIAEP BERHAD ( ASIAEP OR THE COMPANY ) PROPOSED CHANGE OF NAME FROM ASIAEP BERHAD TO ASIAEP RESOURCES BERHAD 1. INTRODUCTION On 10 May 2011, the Company announced that it proposes to change its name from AsiaEP Berhad to AsiaEP Resources Berhad. THE PURPOSE OF THE LETTER IS TO PROVIDE YOU WITH DETAILS OF THE PROPOSED CHANGE OF NAME AND TO SEEK YOUR APPROVAL FOR THE RESOLUTION TO BE TABLED AT THE FORTHCOMING ANNUAL GENERAL MEETING ( AGM ). THE NOTICE OF WHICH IS SET OUT HEREIN. 2. RATIONALE FOR THE PROPOSED CHANGE OF NAME The proposed new name of AsiaEP Resources Berhad would be more appropriate and better reflection of AsiaEP s intention to diversify its businesses and scope of activities. 3. DIRECTORS AND MAJOR SHAREHOLDERS INTEREST None of the Directors, major shareholders and/or persons connected with the Directors or major shareholders of AsiaEP has any interest, direct or indirect, in the Proposed Change of Name. 4. CONDITIONS AND APPROVALS REQUIRED The Proposed Change of Name is conditional upon the following approvals being obtained : i) the approval of Companies Commission of Malaysia ( CCM ). The CCM had on 4 May 2011 given the approval for the reservation of name for three (3) months from the date thereof; and ii) the approval of the shareholders of AsiaEP The Proposed Change of Name will be effective from the date of issuance of the Certificate of Incorporation on Change of Name by the CCM. 5. DIRECTORS RECOMMENDATION The Board of Directors is of the opinion that the Proposed Change of Name is in the best interest of the Company and therefore recommends that you vote in favour of the resolution pertaining to the Proposed Change of Name to be tabled at the forthcoming AGM of AsiaEP. 6. AGM The AGM, the notice of which is enclosed in the 2011 Annual Report, will be held at Putra 4, Palm Garden Hotel, IOI Resort, Putrajaya on Friday, 17 June 2011, at 9.00 a.m, for the purpose of considering and, if thought fit, passing the resolution to authorise the Board of AsiaEP to give effect to the Proposed Change of Name. If you are unable to attend and vote in person at the abovesaid meeting, please complete, sign and return the attached relevant Proxy Form in accordance with the instructions printed thereon as soon as possible and in any event, so as to arrive at the Registered Office of the Company at 18 & 20, Jalan TK2/1C, Taman Kinrara Seksyen 2, Puchong, Selangor, not later than forty-eight (48) hours before the time set for holding the meeting. The lodging of the Proxy Form will not preclude you from attending and voting in person at the meeting should you subsequently wish to do so. Yours faithfully For and on behalf of the Board of Directors of ASIAEP BERHAD TAN SRI DATO AHMAD FUZI BIN HAJI ABDUL RAZAK EXECUTIVE CHAIRMAN