Annual Report 2011Contents Chairmans Statement Corporate Information Profile of Directors Corporate Governance Statement Audit Committee Report Statement on Internal Control Statement on Internal Audit Function Statement of Directors Responsibilities Additional Compliance Information Directors Report Statement by Directors Statutory Declaration Independent Auditors Report Consolidated Statement of Financial Position Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Statement of Financial Position Statement of Comprehensive Income Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Supplementary Information - Realised and Unrealised Profits or Losses List of Properties Analysis of Shareholdings Notice of 18th Annual General Meeting Statement Accompanying the Notice of 18th Annual General Meeting Form of Proxy 2 4 5 8 13 17 19 20 21 23 26 26 27 30 31 33 35 36 37 38 39 40 73 74 75 77 81 02 Chairmans Statement On behalf of the Board of Directors, I hereby present to you the 18th Annual Report and Audited Financial Statements of Linear Corporation Berhad (LCB) for the financial year ended 31 December 2011. PERFORMANCE REVIEW Despite Linear Corporation Berhad being considered as an Affected Listed Issuer pursuant to the Amended Practice Note 17/2005 (PN17/2005) of the Listing Requirements of Bursa Securities Malaysia Berhad (Bursa Securities), the Group recorded a higher consolidated revenue of RM12.279 million for the financial year ended 31 December 2011 as compared to RM7.502 million generated in the preceding financial year. The increase was mainly due to an increase in chilled water rates to Aeon Co (M) Berhad following the execution of Supply Agreement on 1 August 2011 between the Group and Aeon Co (M) Berhad. The increase was also due to an increase in the Groups sales for BAC models, a brand under Baltimore Aircoil Company Inc (USA) . However, the Group reported a higher loss after tax of RM63.883 million for the financial year under review, as compared to the previous years loss after tax of RM15.126 million. The loss after tax of RM63.883 million was mainly due to an operating loss of RM3.038 million and interest expenses of RM3.259 million, impairment loss on loans and receivables of RM 48.101 million, allowance for slow moving stocks of RM 0.914 million, impairment loss on property, plant and equipment of RM 4.894 million and revaluation decrease of the buildings belong to District Cooling System Sdn Bhd of RM3.677 million. CORPORATE DEVELOPMENT The Company had on 22 September 2011 submitted a regularisation plan to Bursa Malaysia Securities Berhad (Bursa Securities) to address the PN17 status of LCB. As at todate, the Company has yet to obtain any decision from Bursa Securities on the regularisation plan. Nevertheless, should the regularisation plan be successfully implemented, it will restructure the viability of the LCB to one with the elements of profitability, liquidity and going concern. The Company had also announced on 26 March 2012, that an extension of time for the restraining order had been granted by the Penang High Court pursuant to Section 176(10) of the Companies Act, 1965, to the Company and its subsidiaries namely LCI Global Sdn Bhd, District Cooling Systems Sdn Bhd and BAC Cooling Technology Sdn Bhd. (the Relevant Subsidiaries) for a period of 90 days. The Board is of the view that a restraining order is necessary to prevent any proceeding against the Company and the Relevant Subsidiaries that may jeopardize the restructuring of the LCB Group. Meanwhile, the Group will continue with its endeavors to rebuild its core businesses, with much effort expended to procure new orders and contracts. DIVIDENDS The Board does not recommend any dividend payment for the financial year under review. Annual Report 2011 Linear Corporation Berhad (288687-W) Chairmans Statement (Contd) 03 DIRECTORATE On behalf of the management team and staff of the Group, I would like to take this opportunity to welcome the following directors to be on board. Ong Tai Chew Executive Director Dato Wira Amiruddin Bin Che Embi Independent Non-Executive Director DatoLing Keak Ming Independent Non-Executive Director Adam Bin Bachek Independent Non-Executive Director With these appointments, the new directors will collectively bring to the Board a diverse array of experiences and expertise that will improve the Groups performance moving forward. ACKNOWLEDGEMENT On behalf of the Board, I wish to thank our staff for their continued efforts, dedication and contributions to our Group despite the many challenges associated with the current global economic crisis and the circumstances of our Groups on-going restructuring efforts. I would also like to express our sincere appreciation to our customers, business partners, financiers, advisers, the government authorities, and particularly our valued shareholders for their continuing support and confidence in our Group. Lim Hun Beng Chairman and Executive Director April 26 2012 Annual Report 2011 Linear Corporation Berhad (288687-W) Malaysia Tel : 603-22643883 Fax : 603-22821886 AUDIT COMMITTEE Neoh Chee Kean Chairman Adam Bin Bachek Member Dato Wira Amiruddin Bin Che Embi Member AUDITORS Crowe Horwarth (AF 1018) 17. The Gardens North Tower.9. Malaysia Tel : 604-2632133 Fax : 604-2638101 REGISTRARS Tricor Investor Services Sdn. Bhd. (Formerly known as Tenaga Koperat Sdn.my Annual Report 2011 Linear Corporation Berhad (288687-W) .Bhd. Penang. 10050 Penang.) Level 17. 47500 Subang Jaya Selangor Darul Ehsan.01 Menara Boustead Penang 39 Jalan Sultan Ahmad Shah. Subang Jaya Industrial Estate. Jalan Perusahaan Prai Industrial Estate 4 13600 Prai. 20A.linear. Section 13. 10050 Penang Tel : 604-2277061 Fax : 604-2278011 SECRETARY Lim Saw Im (MACS 00363) WEBSITE www. Mid Valley City Lingakaran Syed Putra 59200 Kuala Lumpur.04 Corporate Information BOARD OF DIRECTORS Lim Hun Beng Chairman & Executive Director Saw Heng Soo Executive Director Ong Tai Chew Executive Director Dato Wira Amiruddin Bin Che Embi Independenet Non-Executive Director Dato Ling Keak Ming Independent Non-Executive Director Neoh Chee Kean Independenet Non-Executive Director Adam Bin Bachek Independenet Non-Executive Director HEAD OFFICE/FACTORY No. Jalan SS13/3A. Malaysia Tel : 603-56366466 Fax : 603-56365466 STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad Sector : Industrial Products Stock Name : LINEAR Stock Code : 9504 REGISTERED OFFICE 60 Sri Bahari Road. Malaysia Tel : 604-5078822 Fax : 604-5076272 PRINCIPAL BANKERS HSBC Bank (Malaysia) Berhad Malayan Banking Berhad CIMB Bank Berhad RHB Bank Berhad EON Bank Berhad OCBC Bank (Malaysia) Berhad Affin Islamic Bank Berhad United Oversea Bank Malaysia Berhad Ambank (M) Berhad SELANGOR OFFICE No.com. a Malaysian. and a public listed company known as Chocolate Products Berhad. He was Operations Manager of Berjaya Sports Toto Philippine Operations for approximately 2 years. Lim Hun Beng. Bhd. ONG TAI CHEW Executive Director Ir. In 1982. He has sound experiences in various types of project involvement in the field of M&E consultancy in Commercial Development of Retail Malls & Offices. IR. He attended 5 Board meetings held in the financial year ended 31 December 2011. aged 55. for approximately 2 years. Residential and Condominium Development. He graduated with a Diploma in Commerce from Kolej Tunku Abdul Raman Malaysia in 1980 and completed his examination of Association of Chartered Certified Accountants (ACCA) in 1981. Foodstuff Cereal Co. Canada (1983). Mr. He attended 3 Board meetings held in the financial year ended 31 December 2011. the family took over a regional media group operating in Malaysia.. was appointed to the Board on 1 September 2010 as Non-Independent NonExecutive Director and as Chairman on 25 April 2011 and was redesignated as Executive Director on 25 April 2011. Saw Heng Soo. In 1989. Mr. aged 56. He entered into business in his early twenties. a Malaysian. He is currently attached to an investment holding company as a Director and is not a director of any other public company listed on Bursa Malaysia Securities Berhad. Over the last 34 years of his career. was appointed to the Board on 7 May 2010 as Executive Director. Industries Facilities Development and Development of District Cooling Plant using Ice Thermal Energy Storage System. Mr. Hospital and Healthcare Facilities Development. Malaysia. Ltd (COFCO). China. He has over 27 years of experiences in the M&E engineering design and project consultant. conceptual design and design optimization. an international food exporter. he had worked with the International Accounting Firms for 8 years. more particularly in business strategic investment and property investment. Annual Report 2011 Linear Corporation Berhad (288687-W) . aged 53. He graduated with B.A SC (Electrical Engineering with Management Option) from University of Ottawa. project procurement implementation. a nationally owned food monopoly. project management. Lim Hun Beng was the Group Managing Director of this company. He was General Manager of Trade Ocean Exporter Sdn. He is now a Director of TES Avenue Sdn. It had a capital investment of USD 30 Million and was one of the first chocolate manufacturing companies in China. Ong Tai Chew. producing chocolates under the brand-name LeConte nationwide. Asean Chartered Professional Engineer and a Green Building Index Facilitator. was appointed to the Board on 26 April 2011 as Executive Director. Association of Consulting Engineers Malaysia. He has been a member of the ACCA in 1984 and Fellow of ACCA in 2001. Lim set up a chocolate manufacturing concern in Shenzhen. testing and commissioning.Profile Of Directors 05 LIM HUN BENG Chairman & Executive Director Mr. Members of The Institution of Engineers Malaysia. He is also the CEO of the family owned Hampshire Group with interest in Malaysia. He attended 6 Board meetings held in the financial year ended 31 December 2011. Asean Engineers. firstly getting involved in various aspects of the family business. China with China Oil. He is currently not a director of any other public company listed on Bursa Malaysia Securities Berhad. His professional affiliations consist of Professional Engineer (Board of Engineers Malaysia). He is not a director of any other public company listed on Bursa Malaysia Securities Berhad. Bhd. a M & E Consulting Firm since 2002. Hotels and Resort Development. SAW HENG SOO Executive Director Mr. United State and South East Asia. a Malaysian. He was appointed as Senior General Manager of Golden Frontier Berhad and later promoted to Group Operations Director for 10 years. He served as General Manager of Paragon Paper-Mill of Hai Meng Holdings Berhad for approximately 3 years. project feasibility studies. Lim eventually disposed of his interest in this company in 1992 to venture into other business in China. He had his early education in Malaysia and thereafter pursued tertiary education in the UK. and remained so until it was disposed off to the Lion Group of Malaysia. He had also served as Group Chief Accountant/Director of Subsidiaries with Chocolate Products Berhad for 5 years. He graduated as a Chartered Accountant from ACCA in the United Kingdom in 1977 and was admitted as an Associate of ACCA in 1981 and a fellow in 1986. a company involved in the import and distribution of building materials and held the post of Managing Director from 1979 till 1988. He attended 4 Board meetings held in the financial year ended 31 December 2011. tax. a Malaysian. He is currently not a director of any other public company listed on Bursa Malaysia Securities Berhad. was appointed to the Board on 7 May 2010 as Independent Non-Executive Director. He is currently the President of Kuala Lumpur Goshin-Ryu Karate Federation and he also sits on the Boards of several private limited companies. was appointed to the Board on 25 April 2011 as Independent Non-Executive Director. He attended 4 Board meetings held in the financial year ended 31 December 2011. project management and management of a golf club. He was appointed as Independent Director of Tahan Insurance Msia Berhad in year 2004. company secretarial and manufacturing which he accumulated in an International Audit Firm. aged 58. Bhd. He graduated from Chung Ling High School. He started his career by setting-up a company called Pan-Trade (M) Sdn. Bhd. as the Managing Director. he was a CID man through out his career in the Royal Malaysian Police until he became a Chief Police Officer in two states namely Negeri Sembilan (1998 2001) and a Perak (2001 2003). finance. Annual Report 2011 Linear Corporation Berhad (288687-W) . He was appointed as a Director to the Board of Magnum Corporation Berhad from 2000 to 2007. NEOH CHEE KEAN Independent Non-Executive Director Mr. Thailand and Indonesia. Dato Wira Amiruddin Bin Che Embi is currently not a director of any other public company listed on Bursa Malaysia Securities Berhad. he was given a one year contract to continue in the Royal Malaysian Police. he is the Managing Director of MWE Advanced Structure Sdn. He attended 5 Board meetings held in the financial year ended 31 December 2011. DATO LING KEAK MING Independent Non-Executive Director Dato Ling Keak Ming. Thereafter. which holds the distributorship of Dongfeng heavy commercial vehicles in Malaysia. Alor Setar after completing his School Certificate/Malaysian Certificate of Education. a subsidiary of MWE Holdings Berhad.. audit. a multi national company and various management consultancy firms. He started his career as a temporary teacher in Iskandar Primary School. He has more than 30 years of working experience in accounting. He was primarily responsible for the rebuilding and setting-up of Jengka Timber Complex as well as the management and daily operation of logging and timber related activities. was appointed to the Board on 1 September 2010 as Independent NonExecutive Director.. Currently. Generally. Neoh Chee Kean. He is currently the President of Malaysian Rugby Union. aged 56. aged 66. He was also admitted as a member of the Malaysian Institute of Accountants in 1981.. On completion of 36 years of compulsory service. He is currently not a director of any other public company listed on Bursa Malaysia Securities Berhad. Penang. He then joined Lionvest MWE Sdn. Bhd. He is the Executive Vice Chairman of Quasar Industrial Vehicles Sdn. and MWE Golf & Country Club Berhad with the overall responsibility in property construction. Bhd. a Malaysian.06 Profile Of Directors (Contd) DATO WIRA AMIRUDDIN BIN CHE EMBI Independent & Non-Executive Director Dato Wira Amiruddin Bin Che Embi. He was appointed as the Honorary Secretary of The Royal Kedah Club since 2005. he served the Royal Malaysian Police for 37 years. a Malaysian. He was appointed as Director of Gadang on 19 May 1997. He was also a member of the Nomination Committee. a Malaysian. He was admitted as an advocate and solicitor of High Court of Malaya in 1990. other than traffic offences. He was the Chairman of the Audit Committee and Remuneration Committee. He holds a Bachelor of Laws (Hons) from the University of Buckingham. he is the senior partner of the legal firm. within the past 10 years. Bhd. In 2007 he was appointed Chairman of Harlows MGI Money Brokers Sdn. None of the Directors has been convicted of any offence. 2. aged 63. He attended 5 Board meetings held in the financial year ended 31 December 2011. which has been issued with a licence by Bank Negara to carry out money broking business. Previously. was appointed to the Board on 1 September 2010 as Independent NonExecutive Director. None of the Directors are substantial shareholders of the Company. he was a senior police officer for 22 years before being called to the Malaysian Bar. Currently. Messrs Adam Bachek & Associates. 3. United Kingdom and a Diploma in Syariah Law Practice from the International Islamic University. He served in various positions in the Police Department before taking the optional retirement in 1991. OTHER INFORMATION 1. There are no family relationships amongst the Directors and/or substantial shareholders of the Company. Encik Adam Bin Bachek currently sits on the board of Gadang Holdings Berhad. 4.Profile Of Directors (Contd) 07 ADAM BIN BACHEK Independent & Non-Executive Director Encik Adam Bin Bachek. Annual Report 2011 Linear Corporation Berhad (288687-W) . None of the Directors has any conflict of interest with the Company. Remuneration Committee. Board Committees To enhance business and operational efficiency as well as to be in line with the best practices prescribed by the Code. marketing and technical expertise and experience to provide clear and effective leadership for the Group. The composition reflects that 1/3 of its members are independent. 6 and 7 of this annual report. contributing their skills and knowledge in all major matters and issues referred to the Board for consideration and approval. Risk Management and Investment Committee. financial. BOARD OF DIRECTORS Board Responsibilities The Board assumes overall responsibility for the Groups corporate governance and retains full and effective control over the Groups businesses and affairs. the compositions of which are as follows:Audit Committee (comprising entirely Independent Non-Executive Directors) Neoh Chee Kean Adam Bin Bachek Dato Wira Amiruddin Bin Che Embi Nomination Committee (comprising entirely Independent Non-Executive Directors) Neoh Chee Kean Adam Bin Bachek . the Directors bring to the Company a broad mix of business. Their role is particularly important in ensuring that matters proposed to the Board will be fully discussed and examined.Member . legal. vision and direction set by the Board. taking into account the long term interest of the Companys minority shareholders. management. their contributions will provide an element of objectivity and independent judgment to the Board. Board Composition The Board currently has 7 members comprising 4 Independent Non-Executive Directors and 3 Executive Directors.Chairman . Set out below is how the Company has applied the principles and practices of good governance set out in Part 1 and 2 of the Malaysian Code on Corporate Governance (the Code) throughout the financial year ended 31 December 2011 (the financial year). Brief descriptions on the background of the Directors are presented on pages 5. financial and operating efficiency and performance of all business units as well as human resource capabilities within the Group. Board Balance The Board is currently led by the Chairman who is an Executive Director. The Independent Non-Executive Directors are not involved in the day-to-day management of the Group but they play a key supporting role.Member . and the Executive Directors are responsible for the making of day to day business and operational decisions and implementation of the Board policies in meeting the goals. 1. the Groups strategic business direction and action plans.Chairman .Member Annual Report 2011 Linear Corporation Berhad (288687-W) .08 Corporate Governance Statement The Board of Directors (the Board) of Linear Corporation Berhad (Linear) is committed to uphold and maintain sound principles of corporate governance within the Linear Group (the Group) with the objective of building and enhancing long term shareholders value. it has reserved for itself a schedule of matters for consideration and decision which include inter alia. Collectively. the Board had delegated specific tasks to 6 Board Committees. Nomination Committee. Special Task Committee and Employees Share Options Committee. risks management and internal control measures to ensure the proper conduct of operations. As such. namely Audit Committee. The Chairman is primarily responsible for the orderly and effective conduct of the Board and Business Directions of the Group. Most importantly. has nominated the retiring Directors for re-election at the Companys forthcoming Eighteenth Annual General Meeting. Neoh Chee Kean. Re-election of Directors According to the Companys Articles of Association. and that all retiring Directors are eligible for re-election. Thereafter. upon the recommendation of the Nomination Committee.Member Annual Report 2011 Linear Corporation Berhad (288687-W) .Chairman .Chairman . skills and experience. There were 6 Board meetings held during the financial year and the record of attendance of the Directors is as follows:- .Member . The Directors standing for reelection at the forthcoming annual general meeting are Mr. In the course of this review. all Directors appointed to the Board are subject to retirement at the first annual general meeting of the Company. upon the recommendation of the Nomination Committee.Chairman . The Board.Corporate Governance Statement (Contd) 09 1. at least 1/3 of the Board is subject to retirement by rotation at every subsequent annual general meeting provided that all Directors including the Managing Director shall retire once in every 3 years in compliance with the Listing Requirements of Bursa Securities (the Listing Requirements).Member . BOARD OF DIRECTORS (contd) Board Committees (contd) Remuneration Committee (comprising entirely Independent Non-Executive Directors) Neoh Chee Kean Adam Bin Bachek Risk Management and Investment Committee Saw Heng Soo Lim Hun Beng Employees Share Options Committee Saw Heng Soo Lim Hun Beng Special Task Force Committee Saw Heng Soo Lim Hun Beng Appointment to the Board The Nomination Committee is charged with the duty to assess and review the suitability of candidates nominated for appointment to the Board based on the candidates qualifications. The Nomination Committee will then make its recommendations to the Board and the final decision on the appointment lies with the entire Board. Board Meetings Board meetings are generally held once in every quarter with additional meetings convened when necessary.Member .Chairman . The Articles of Association further provides that all new Directors shall retire at the annual general meeting subsequent to their appointment. it will ensure that the Board has the required mix of skills and experience for the effective discharge of duties. The Board. will normally nominate the retiring Directors for re-election. Saw Heng Soo and Mr. They are all eligible for re-election and have offered themselves for re-election. challenges faced by the Group. The Directors who attended training during the financial year ended 31 December 2011 are as follows:Title of the seminar. All of the existing Directors have met the minimum requirement of 50% attendance at Board meetings during a financial year. deliberated on and considered a variety of matters including amongst others. at the Companys expense.11) Ong Tai Chew (Appointed: 26. In addition.04. to facilitate the effective discharge of the Boards duties.04.04. BOARD OF DIRECTORS (contd) Directors Pervez Rustim Manecksha @ Paul Manecksha (Resigned 10. obtain independent professional advice from external consultants. the Groups financial results. of which it is aware. if necessary. workshop or courses attended Lim Hun Beng Discharging the Audit Committee & Internal Audit Function in compliance with risk management best practices Mandatory Accreditation Programme For Directors of PLC Saw Heng Soo Discharging the Audit Committee & Internal Audit Function in compliance with risk management best practices Mandatory Accreditation Programme For Directors of PLC Date 11 April 2011 7 & 8 September 2011 11 April 2011 7 & 8 September 2011 Annual Report 2011 Linear Corporation Berhad (288687-W) .11) Saw Heng Soo Neoh Chee Kean Dato Ling Keak Ming Lim Hun Beng Adam Bin Bachek Dato Wira Amiruddin Bin Che Embi (Appointed: 25.11) Attendance 1 out of 1 6 out of 6 5 out of 6 4 out of 6 5 out of 6 5 out of 6 4 out of 4 3 out of 4 The Board had. at the Board meetings. strategic action plans to enhance performance and to tighten internal controls. Directors Training The Directors are encouraged to attend relevant training courses deemed necessary so as to keep abreast with the changes on guidelines issued by the relevant authorities as well as the latest developments in the market place which can complement their services to the Group. the Board has exercised control on matters that required the Boards approval during the intervals between the scheduled Board meetings through the passing of Directors Circular Resolutions prepared and circulated from time to time by the company secretary. The Directors may.10 Corporate Governance Statement (Contd) 1. recurrent related party transactions. The notice calling for each Board meeting is given to the Directors in advance together with the agenda and all relevant Board papers which encompass both quantitative and qualitative factors so that informed decisions can be made by the Directors at the meetings. All Board members had access to the advice and services of the company secretary and auditors and all information relating to the Group to assist them in the furtherance of their duties. The Directors will continue to undergo other relevant training programmes as appropriate. to further enhance their skills and knowledge. Supply of Information The Management has the responsibility and duty to provide the entire Board with all the information. The remuneration packages offered to Directors who hold executive functions are based on prevailing market rates and commensurate with the knowledge skills. receive Directors fees that are approved by shareholders at annual general meetings. Directors Remuneration The Remuneration Committee. The remuneration of the Companys Directors derived from the Group during the financial year are as follows :Executive Directors RM 250. experience and level of responsibilities of each Director. is responsible for the establishment of a formal and transparent procedure to assess and determine the remuneration packages offered to the Directors with the objective to attract and retain Directors of the caliber needed to run the Group successfully.Corporate Governance Statement (Contd) 11 1. the Directors do not participate in decisions regarding their own remuneration packages. BOARD OF DIRECTORS (contd) Directors Training (contd) Title of the seminar.000 30.000 55.500 275. workshop or courses attended Ong Tai Chew Common Issues faced by GBI Facilitators Part I Architecture For High-Efficiency. upon the recommendation of the Remuneration Committee.500 Non-Executive Directors RM 30. However. comprising entirely of Independent Non-Executive Directors. the other Directors have not attended any training during the financial year due to their work commitments. The Company also reimburses the Directors with meeting allowances for expenses necessarily incurred by them for attendance at Board meetings. will determine the remuneration packages of each Director.000 Type of remuneration Total RM 250. The Board.500 Fees Salaries Other emoluments Total Annual Report 2011 Linear Corporation Berhad (288687-W) .000 25. Independent NonExecutive Directors.500 305. High-Density Data Centres Kursus Pengurusan Kontrak Mandatory Accreditation Programme For Directors of PLC Overview Of Power System Protection Neoh Chee Kean National Tax Conference 2011 Mandatory Accreditation Programme For Directors of PLC National Tax Seminar 2011 Adam Bin Bachek National Symposium on Islamic Banking and Finance Date 9 June 2011 5 July 2011 25 & 26 July 2011 7 & 8 September 2011 29 November 2011 1 December 2011 19 & 20 July 2011 7 & 8 September 2011 18 October 2011 12 September 2011 Save as disclosed above. on the other hand. 001 to 150. Shareholders are encouraged to participate in the question and answer sessions during these meetings where the Directors will respond to shareholders questions to ensure a high level of accountability and transparency on the business operations.000 200. 3.000 to 100. and hence. The Statement on Internal Control set out on page 17 and 18 of this annual report provides an overview of the Groups approach in maintaining a sound system of internal control to safeguard shareholder investment and the Groups assets.000 150. has ensured that information concerning the Groups performances.000 50.12 Corporate Governance Statement (Contd) 1. RELATIONSHIP WITH SHAREHOLDERS The Board recognizes the importance of clear and effective communication with shareholders and investors. A statement by the Directors of their responsibilities in the preparation of the audited financial statements for the financial year is set out on page 20 of this annual report. will be the principal forum for dialogue between the Board and shareholders.000 100. circulars to shareholders and the Groups website are some of the main channels of communication to enable shareholders to have an overview of the Groups performances and operations. Executive Directors 2 1 3 Non-Executive Directors 4 4 Total 4 2 1 7 Annual Report 2011 Linear Corporation Berhad (288687-W) . announcements made to Bursa Securities. BOARD OF DIRECTORS (contd) The number of Directors whose total remuneration fell within the following bands for the financial year are as follows :Remuneration Band (RM per annum) Below 50. held once a year. The Companys annual reports. Annual general meetings. 4. strategy and goals of the Group. financial results. All quarterly financial results have been reviewed by the Audit Committee and approved by the Board prior to announcement to Bursa Securities. CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES The Group will continue to contribute generously to charitable organizations ranging from orphanages to diverse religious groups. The Board is assisted by the Audit Committee in the review of the audit plans and audit findings of the external auditors.001 to 250. ACCOUNTABILITY AND AUDIT Financial Reporting The Board is responsible to present a true and fair assessment of the Groups financial positions and prospects in the Companys quarterly financial results and annual audited financial statements. Relationship with the Auditors The Board has always maintained a formal and transparent relationship with the Companys external auditors in seeking professional advice and ensuring compliance with the relevant laws and applicable approved accounting standards.000 Total 2.001 to 200. Internal Control The Board acknowledges its responsibility to maintain a sound internal control system that provides reasonable assurance of effective and efficient operations and compliance with internal control procedures and guidelines. corporate developments and matters affecting shareholders interests are conveyed to shareholders and investors on a timely basis. Composition of members The Board shall elect the Audit Committee members from amongst themselves comprising no fewer than three (3) directors. or (b) if he is not a member of MIA.Member Dato Wira Amiruddin Bin Che Embi . 1967. circulating them to members of the Audit Committee and to the other members of the Board of Directors and for following up outstanding matters.Chairman Adam Bin Bachek . 3. elected from amongst the Audit Committee members. Chairman The Chairman of the Audit Committee. supported by explanatory documentation to members of the Audit Committee prior to each meeting. A majority of the Audit Committee members shall be independent directors. dies. The Secretary shall also be responsible for keeping the minutes of meetings of the Audit Committee. At least 1 member of the Audit Committee must be :(a) a member of the Malaysian Institute of Accountants (MIA). The Secretary shall be responsible for drawing up the agenda with concurrence of the Chairman and circulating it. Secretary The Secretary of the Audit Committee shall be the Company Secretary. or (c) fulfills such other requirements as prescribed by the Exchange No alternate director of the Board shall be appointed as a member of the Audit Committee. or (ii) he must be a member of one (1) of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act. The term of office of the Audit Committee is three (3) years and may be re-nominated and appointed by the Board of Directors. the Board adopts the definition of independent director as defined under Bursa Securities Listing Requirements. or for any reason ceases to be a member with the result that the number of members is reduced below three (3). 4. 1967. Annual Report 2011 Linear Corporation Berhad (288687-W) . he must have at least three (3) years of working experience and:he must have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act. The Chairman of the Committee shall be approved by the Board of Directors. In this respect. the Board shall within three (3) months of the event appoint such number of the new members as may be required to fill the vacancy. (i) 2. shall be an independent director.Member TERMS OF REFERENCE OF AUDIT COMMITTEE The Audit Committee is governed by the following Terms of Reference which are in line with the Malaysian Code on Corporate Governance :1.Audit Committee Report 13 COMPOSITION The Audit Committee of Linear Corporation Berhad currently comprises all Independent Non-Executive Directors namely: Neoh Chee Kean . Retirement and resignation If a member of the Audit Committee resigns. All members of the Audit Committee shall be non-executive directors who possess adequate financial knowledge to discharge their functions effectively. Representatives of the external auditors are to be in attendance at meetings where matters relating to the audit of the statutory accounts and/or external auditors are to be discussed. adequacy and effectiveness of the Groups control environment. Quorum The quorum for the Audit Committee meeting shall be the majority of members present whom must be independent directors. oversee compliance with laws and regulations and observance of a proper code of conduct. and develop and maintain an effective risk management system and processes are applied in the day to day business and activities. officers and employees of the Company and/or Group may be invited to attend. Reporting The Audit Committee shall report to the Board of Directors. 6. However. 8. 9. the Chairman may call for additional meetings at any time at the Chairmans discretion. or more frequently as circumstances dictate. but more frequently if it so wishes. Other Directors. as determined by the Audit Committee. provide assurance that the financial information presented by management is relevant. Meetings The Audit Committee meetings shall be conducted at least four (4) times annually. except for those portions of the meetings where their presence is considered inappropriate. Objective The principal objective of the Audit Committee is to assist the Board of Directors in discharging its statutory duties and responsibilities relating to accounting and reporting practices of the holding company and each of its subsidiaries. Annual Report 2011 Linear Corporation Berhad (288687-W) . either formally in writing. In addition. the Audit Committee shall :(a) (b) (c) (d) (e) evaluate the quality of the audits performed by the internal and external auditors. 7. In addition. at least twice a year the Audit Committee shall meet with the external auditors. Minutes of each meeting shall be kept and distributed to each member of the Audit Committee and also to the other members of the Board of Directors. determine the quality. in accordance with a procedure to be determined by the Board of Directors and at the expense of the Company:(a) authorise to investigate any activity within its terms of reference. In the absence of the Chairman. All employees shall be directed to co-operate as requested by members of the Audit Committee. The Audit Committee Chairman shall report on each meeting to the Board of Directors. Authority The Audit Committee shall. or verbally. Finance and Administration). General Manager (Corporate Affairs. Finance Manager and the head of internal audit will normally be in attendance at the meetings. the other independent director shall be the Chairman for that meeting.14 Audit Committee Report (Contd) 5. (b) have full and unlimited/unrestricted access to all information and documents/resources which are required to perform its duties as well as to the internal and external auditors and senior management of the Company and Group. The members of the Audit Committee. reliable and timely. The Audit Committee shall report to the Board of Directors on any specific matters referred to it by the Board for investigation and report. as it considers appropriate on the matters within its terms of reference at least once a year. (d) be able to convene meetings with the external auditors whenever deemed necessary. (c) To review and evaluate the adequacy and effectiveness of the internal and external audit procedures. (e) be able to make relevant reports when necessary to the relevant authorities if a breach of the Listing Requirements occurred. (l) To consider and examine such other matters as the Audit Committee considers appropriate. Annual Report 2011 Linear Corporation Berhad (288687-W) . (p) To take cognizance of resignations of internal audit staff members who are full-time employees of the Group. if any. (j) To report its findings on the financial and management performance. (e) To provide liaison between the external auditors. to appoint any person(s) as member(s) of the Sub-Committee(s) and/or as Head of Internal Audit who shall report directly to the Audit Committee.Audit Committee Report (Contd) 15 9. (f) be kept informed as soon as possible of any adverse development arising from any event such material litigation. 10. (k) To act in line with the directions of the Board of Directors. if any. (d) To evaluate the quality of external auditors and make recommendations concerning their appointment and remuneration and to consider the nomination of a person or persons as external auditors. and (g) the Audit Committee shall have the power to establish Sub-Committee(s) and delegate its powers to such SubCommittee(s) for the purpose of carrying out certain investigations on its behalf in such manner as the Audit Committee deems fit and necessary and. (b) To review the Groups public accountability and compliance with the law. (m) To review the reports of management in relation to the integrity and adequacy of the process for identifying principal risks and ensure the implementation of appropriate systems to manage these risks. and other material matters to the Board of Directors. Duties and Responsibilities The duties and responsibilities of the Audit Committee are as follows:(a) To review the maintenance and control of an effective accounting system. the management and the Board of Directors and also to review the assistance given by the management to the external auditors. Authority (contd) (c) obtain. (g) To review the quarterly results and financial statements and annual report prior to submission to the Board of Directors. (h) To monitor and to review any related party transactions that may arise within the Group and to report. other independent professional advice or other advice and to secure the attendance of outsiders with relevant experience and expertise if it considers necessary. (i) To verify the allocation of share options under the Employees Share Option Scheme (ESOS) as being in compliance with the criteria set out in the ESOS By-Laws. (n) To review any appraisal or assessment of the performance of members of the internal audit function who are fulltime employees of the Group. and provide such resigning staff member an opportunity to submit his/her reasons for resigning. and to ensure that they have the necessary authority to carry out their work. at the expense of the Company. (f) To review the findings of the internal and external auditors and to ensure that appropriate actions are taken on the recommendations of the auditors. if any transactions between the Group and any related part outside the Group which are not based on arms-length terms and on terms which are disadvantageous to the Group. if any. (o) To approve any appointment or termination of senior staff members of the internal audit function who are full-time employees of the Group. Reviewed the external auditors audit report and considered the areas of concern raised by the external auditors. INTERNAL AUDIT FUNCTION The internal audit function is independent of the auditable areas in the organization and report to the Audit Committee. Reviewed the external auditors scope and approach of audit as presented in their audit plan before commencement of audit. The exercise price of the ESOS shares is RM1.16 Audit Committee Report (Contd) AUDIT COMMITTEE MEETINGS The Audit Committee met 4 times during the financial year ended 31 December 2011 and has met with the external auditors 2 times in the same financial year.000 shares available under the Companys ESOS to the employees of the Company and the options have not been exercised as at 31 December 2011.11) SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE During the financial year ended 31 December 2011. Reviewed the status of employees share option allocations on a quarterly basis. the Audit Committee carried out the following activities in the discharge of its duties: Reviewed all unaudited quar terly financial results and the audited financial statements of the Company before recommending them to the Board for approval.04.16 and the ESOS is valid until 13 August 2013. The Audit Committee noted that the Company has a total of 172. The responsibilities include reviewing the adequacy of the systems of internal controls and evaluating the various financial and operational risks faced by the organization. Reviewed all recurrent related party transactions on a quarterly basis.11) Neoh Chee Kean Adam Bin Bachek Dato Wira Amiruddin Bin Che Embi (Appointed 26. Verified the allocation of options pursuant to Employee Share Option Scheme (ESOS) of the Company.04. All Audit Committee meetings were duly convened with sufficient notice given to all Committee members together with the agenda. Details of attendance of the Audit Committee members at the Audit Committee meetings held during the year ended 31 December 2011 are as follows: Audit Committee Member Pervez Rustim Manecksha @ Paul Manecksha (Resigned 10. reports and proposals for deliberation at the meetings. Attendance 0 out of 1 4 out of 4 3 out of 4 2 out of 2 Annual Report 2011 Linear Corporation Berhad (288687-W) . Guidance for Directors of Public Listed Companies. evaluating and managing significant risks faced by the Group. accountability and efficiency of the Groups operations. and therefore risks should be continually monitored and managed at all times. holds regular meetings to deliberate on audit findings and recommendations and reports to the Board.26(b) of the Listing Requirements of Bursa Malaysia Securities Berhad (Bursa Securities). The Board confirms that there is an on-going process for identifying. Accordingly. The risks are being continually monitored and appropriate actions taken to address any change in existing risks or new risks identified as part of an on-going proactive control measure. the internal control system provides reasonable assurance and not absolute assurance against material misstatement or loss.Statement On Internal Control 17 The Board of Directors (Board) of Linear Corporation Berhad (Linear) is pleased to set out below the Statement of Internal Control pursuant to paragraph 15. training and development being actively encouraged through various programs. the Executive Board members. BOARD RESPONSIBILITY The Board affirms the overall responsibility for maintaining a sound system of internal controls and for reviewing its adequacy and integrity so as to safeguard shareholders investment and the Groups assets. Independence of the Audit Committee The Audit Committee. INTERNAL CONTROL Key elements of the system of internal controls are as follows: Operating structure with clearly defined lines of responsibility The operating structure includes defined delegation of duties and responsibilities to the various Board Committees. The Board is committed to taking appropriate initiatives to further strengthen the transparency. The Board believes that the practice of good corporate governance is an important continuous process and not just a matter to be covered as compliance in its annual report. Emphasis is placed on the quality and abilities of employees with continuing education. Due to inherent limitations in any system of internal control. the Management and operating units. This process is in place during the current financial year and is regularly reviewed by the Board and is in accordance with the guidelines promulgated by the Statement on Internal Control .A Guidance for Directors of Public Listed Companies (the Internal Control Guidance). Employee competency Proper procedures are in place in respect of recruitment and termination of employees. which comprises entirely Independent Non-Executive Board members. It is prepared in accordance with Bursa Securities Statement of Internal Control . the system is designed to manage and control risk appropriately rather than eliminate the risk of failure to achieve business objectives. The Board acknowledges its responsibility to maintain a sound system of internal controls to safeguard the Linear Group(the Group)s assets in accordance with the Malaysian Code on Corporate Governance (the Code). Annual Report 2011 Linear Corporation Berhad (288687-W) . a publication of the industry task force on internal control. Risk Management The Risk Management Committee meets from time to time to identify and manage risks to a manageable level. Insurance Adequate insurance on major assets such as stocks. to further enhance the Groups system of internal controls. the Board remains committed to strengthen the Groups control environment and processes and its quest for continuous improvement is ongoing and. Weaknesses in Internal Controls that Results in Material Losses There were no material or significant losses incurred during the financial year ended 31 December 2011 as a result of weakness in internal control. appropriate action plans will be put in place. Notwithstanding. buildings and machineries belonging to the Group. when necessary. Annual Report 2011 Linear Corporation Berhad (288687-W) .18 Statement On Internal Control (Contd) Financial reporting Regular monitoring and review of financial results by the Management and formulation of action plans to address areas of concern before they are being reported to the Audit Committee and the Board. is in placed to ensure that the Group is sufficiently covered against any mishap that may result in material losses affecting the Group. The results of the audits were reported to the BAC on a quarterly basis.Statement On Internal Audit Function 19 The Internal Audit function of the Group is carried out by the Internal Audit Department (IAD) that reports directly to the Board of Audit Committee (BAC).733. (2010:RMNIL) Annual Report 2011 Linear Corporation Berhad (288687-W) . For 2011. The IAD conducted follow up audits to ensure that managements corrective action was implemented appropriately. the IAD has assisted the management to improve the control processes within the Group. the total costs incurred by IAD function was RM29. The principal role of the IAD is to undertake independent. In this respect. During the financial year ended 31 December 2011. regular and systematic review of the systems of internal controls. the IAD reviewed the adequacy and integrity of the Groups system of internal control covering both financial as well as non-financial controls. The relevant management of the specific audit subject was made responsible for ensuring that corrective actions on reported weaknesses were taken within the required time frame.35. subject to any material departures disclosed and explained in the financial statements. made judgements and estimates that are prudent and reasonable. The Directors will ensure that the Company and the Linear Group (the Group) keep accounting records which disclose with reasonable accuracy the financial position of the Company and the Group and which enable them to ensure that the financial statements comply with the Companies Act. which give a true and fair view of the state of affairs of the Company and the Group as at the end of the financial year. ensure that applicable accounting standards have been followed. In preparing the financial statements for the financial year ended 31 December 2011 of Linear Corporation Berhad (the Company or Linear). adopted the suitable accounting policies and have applied them consistently. have :a. and prepared the financial statements on a going concern basis. 1965 (the Companies Act) and the Listing Requirements of Bursa Malaysia Securities Berhad require the Directors to prepare financial statements for each financial year. with the advice from the external auditors.26 (a) Of The Listing Requirements Of Bursa Malaysia Securities Berhad) The Companies Act. b.20 Statement Of Directors Responsibilities (Pursuant To Paragraph 15. the Directors. and the profit and loss account and cash flows of the Company and the Group for the financial year in accordance with the applicable approved accounting standards in Malaysia and the provisions of the Companies Act. Annual Report 2011 Linear Corporation Berhad (288687-W) . d. c. Warrants or Convertible Securities The Companys Employees Share Option Scheme (ESOS) which became effective on 14 August 2003 for a period of 5 years up to 13 August 2008 was extended for another 5 years up to 13 August 2013 as permitted by the By-Laws governing the ESOS and the Listing Requirements of Bursa Malaysia Securities Berhad (Bursa Securities). Bhd. There were no exercise of share options under the ESOS during the financial year.Additional Compliance Information 21 1. Options. Bhd. is a subsidiary of Linear Corporation Berhad Baltimore Aircoil Inc is a major shareholder holding 30% direct equity interest in BAC Cooling Technology Sdn. # Group of Companies Purchase of cooling tower components by BAC Cooling Technology Sdn. 2.97 601. Sanctions and/or Penalties There were no sanctions and/or penalties imposed on the Company and its subsidiaries. Non-audit fees There were no non-audit fees paid or payable by the Company or the Group to the external auditors or a firm of company affiliated to the external auditors in respect of the financial year. 3.895.242. Annual Report 2011 Linear Corporation Berhad (288687-W) . Forecast or Projection & Variation In Results The Company did not publish any profit estimates. 7. Bhd. Bhd. the number of treasury shares held by the Company are 339. 4. Fund raising corporate exercise The Company did not undertake any fund raising corporate exercises during the financial year ended 31 December 2011(the financial year). 6. Directors or Management by any regulatory body during the financial year. forecasts or projections for the financial year. Profit Estimate. No shares were resold or cancelled during the financial year. There were no variances of 10% or more between the audited results for the financial year and the un-audited results announced.797. Recurrent Related Party Transactions The recurrent related party transactions (RRPT) entered into by the Group during the financial year pursuant to the Shareholders Mandate granted by the Companys shareholders at the annual general meeting held on 29 June 2011 are as follows: Sale of cooling tower components by BAC Cooling Technology Sdn. 5.* from Baltimore Aircoil Inc.47 Notes: * # BAC Cooling Technology Sdn. Share Buybacks The Company did not buy back any of its issued shares during the financial year.* to Baltimore Aircoil Inc. # Group of Companies RM 3. As at 31 December 2011.000. Annual Report 2011 Linear Corporation Berhad (288687-W) .22 Additional Compliance Information (Contd) 8. Material Contracts There were no material contracts (not being contracts entered into in the ordinary course of business) either subsisting as at the financial year or entered into during the financial year. 11. Revaluation of Landed Properties There were no revaluation of any landed properties undertaken by the Company or the Group during the financial year. 10. Profit Guarantee There were no profit guarantees given by the Company and its subsidiaries in respect of the financial year. 9. by the Company and its subsidiaries which involved the interest of the Directors and major shareholders of the Company. American Depository Receipt(ADR)/Global Depository Receipt(GDR) Programme The Company did not sponsor any ADR or GDR programme during the financial year. 506) (63.000 Date of Offer 25 August 2003 Annual Report 2011 Linear Corporation Berhad (288687-W) . The principal features of the ESOS are disclosed in Note 13 to the financial statements.1.12. declared or paid by the Company since the end of the previous financial year. ISSUE OF SHARES OR DEBENTURES There was no issue of shares or debentures by the Company during the financial year.2011 172.498) DIVIDENDS No dividends were proposed.Owners of the Company .498) 0 (5.2011 324. PRINCIPAL ACTIVITIES The principal activities of the Company are those of investment holding and provision of management services to its subsidiaries. RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year apart from those disclosed in the financial statements.00 each At 1.883) (5. RESULTS Group RM000 Loss for the financial year attributable to:.Non-controlling interests Company RM000 (61.Directors Report 23 The directors hereby submit their report and the audited financial statements of the Group and the Company for the financial year ended 31 December 2011.16 Number of Options over Ordinary Shares of RM1.377) (2. EMPLOYEES SHARE OPTION SCHEME The Employees Share Option Scheme (ESOS) of the Company became effective on 14 August 2003 for a period of 5 years and was extended for another 5 years up to 13 August 2013.000) At 31. The movements in the number of options during the financial year are as follows:Exercise Price RM 1. There have been no significant changes in the nature of the principal activities of the Group and the Company during the financial year. The principal activities of the subsidiaries are disclosed in Note 6 to the financial statements.000 Granted 0 Exercised 0 Forfeited (152. 24 Directors Report (Contd) BAD AND DOUBTFUL DEBTS Before the financial statements of the Group and 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 satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts. At the date of this report, the directors are not aware of any circumstances which would render the amount written off for bad debts or the amount of the allowance made for doubtful debts inadequate to any substantial extent. CURRENT ASSETS Before the financial statements of the Group and the Company were made out, the directors took reasonable steps to ascertain whether any current assets, other than debts, which were unlikely to realise in the ordinary course of business their values as shown in the accounting records of the Group and the Company had been written down to an amount that they might be expected so to realise. 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 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 the Company misleading or inappropriate. CONTINGENT AND OTHER LIABILITIES At the date of this report, there does not exist any charge on the assets of the Group or the Company that has arisen since the end of the financial year which secures the liabilities of any other person. As disclosed in Note 22 to the financial statements, the Group and the Company have defaulted on their payables, loans and borrowings and current tax liabilities. Contingent liabilities may arise continuously from the ongoing litigations in respect of the defaults. The defaulted liabilities recognised in the financial statements, together with such contingent liabilities as may arise due to the defaults, have become enforceable and substantially affected the ability of the Group and the Company to meet their obligations. 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 in the financial statements of the Group and the Company, which would render any amount stated in the respective financial statements misleading. Annual Report 2011 Linear Corporation Berhad (288687-W) Directors Report (Contd) 25 ITEMS OF AN UNUSUAL NATURE The results of the operations of the Group and the Company for the financial year have been substantially affected by the following items, transactions or events of a material and unusual nature as disclosed in Note 16 to the financial statements:(i) (ii) (iii) (iv) Impairment loss on investments in subsidiaries. Impairment loss on loans and receivables. Impairment loss on property, plant and equipment. Revaluation decrease of property, plant and equipment. There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature which, in the opinion of the directors, will affect substantially the results of the operations of the Group and the Company for the financial year in which this report is made. DIRECTORS OF THE COMPANY The directors who served since the date of the last report are:Saw Heng Soo Neoh Chee Kean Dato Ling Keak Ming Lim Hun Beng Adam Bin Bachek Dato' Wira Amiruddin Bin Che Embi Ong Tai Chew According to the Register of Directors' Shareholdings, none of the directors in office at the end of the financial year held any interests in shares in the Company or 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 any benefit (other than the directors remuneration disclosed 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 except for any benefits which may be deemed to have arisen by virtue of those related party transactions as disclosed in Note 20 to the financial statements. Neither during nor at the end of the financial year, was the Company a party to any arrangement, apart from the Companys ESOS, whose object is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. AUDITORS The auditors, Messrs. Crowe Horwath, have expressed their willingness to continue in office. SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS DATED 26 APRIL 2012 Lim Hun Beng Saw Heng Soo Annual Report 2011 Linear Corporation Berhad (288687-W) 26 Statement By Directors We, Lim Hun Beng and Saw Heng Soo, being two of the directors of Linear Corporation Berhad, do hereby state that in the opinion of the directors, the financial statements set out on pages 30 to 72 have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and the Company as at 31 December 2011 and of their financial performance and cash flows for the financial year then ended. In the opinion of the directors, the supplementary information set out on page 73 is prepared, in all material respects, in accordance with Guidance on Special Matter No. 1 Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants and the directive of Bursa Malaysia Securities Berhad. SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS DATED 26 APRIL 2012 Lim Hun Beng Saw Heng Soo Statutory Declaration I, Saw Heng Soo, being the director primarily responsible for the financial management of Linear Corporation Berhad, do solemnly and sincerely declare that the financial statements set out on pages 30 to 72 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act 1960. Subscribed and solemnly declared by Saw Heng Soo at Georgetown in the State of Penang on this 26 April 2012 Saw Heng Soo Before me Nachatar Singh A/L Bhag Singh Commissioner for Oaths Annual Report 2011 Linear Corporation Berhad (288687-W) Independent Auditors Report 27 To the Members of Linear Corporation Berhad Report on the Financial Statements We were engaged to audit the financial statements of Linear Corporation Berhad, which comprise the statements of financial position as at 31 December 2011 of the Group and the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 30 to 72. Directors Responsibility for the Financial Statements The directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on conducting the audit in accordance with approved standards on auditing in Malaysia. Because of the matters described in the Basis for Disclaimer of Opinion paragraphs, however, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Basis for Disclaimer of Opinion (i) As disclosed in Note 4 to the financial statements, the Groups land, buildings and district cooling plant are stated at managements estimates of fair values totalling RM38,070,000. In the absence of sufficient appropriate audit evidence about the reasonableness of these fair value estimates, we were unable to determine whether the property, plant and equipment have been fairly stated. (ii) The Groups inventories include those of a subsidiary stated at RM1,485,000. Numerous errors were noted during our review of the costing system of the subsidiarys inventories. As at the date of our audit report, management was still in the process of rectifying the system deficiencies and correcting the errors. Consequently, we were unable to determine whether any adjustments were necessary in respect of the subsidiarys inventories. (iii) As disclosed in Note 25 to the financial statements, management is doubtful about the veracity, legality and recoverability of those receivables cited as Exceptional Items I to VII which might indicate the possibility of fraud. Despite the fact that impairment losses on the receivables totalling RM58,446,000 and RM11,454,000 have been fully recognised by the Group and the Company respectively, we were unable to determine the appropriate accounting treatment for these amounts as it might involve the correction of prior period errors. (iv) As disclosed in Note 25 to the financial statements, management is doubtful about the veracity of those payables cited as Exceptional Items VIII and IX which might indicate the possibility of fraud. We were unable to determine the appropriate accounting treatment for the said payables stated at RM2,592,000 and RM132,000 by the Group and the Company respectively as it might involve the correction of prior period errors. (v) The Groups and the Companys loans and borrowings are stated at RM42,396,000 and RM1,087,000 respectively. As the Group and the Company have defaulted on the loans and borrowings, we were unable to obtain confirmation replies from certain principal banks. In the absence of sufficient appropriate audit evidence about the default interest and other charges, if any, we were unable to determine whether the loans and borrowings have been fairly stated. (vi) The material litigations and contingencies in respect of the Group and the Company are summarised in Note 22 to the financial statements. As the Group has defaulted on the fees payable to the main solicitors who handled the cases, the solicitors did not respond to our confirmation request. In the absence of sufficient appropriate audit evidence about the details of all litigations, we were unable to determine whether the material litigations and contingencies have been fairly disclosed. We were also unable to determine whether the amounts of unrecognised contingent liabilities disclosed in Note 22 contained misstatements which should have been recognised as liabilities in the financial statements. Accordingly, the recorded liabilities of the Group and the Company might have been understated. Annual Report 2011 Linear Corporation Berhad (288687-W) The appropriateness of using the going concern basis is highly dependent upon.000 and RM30. among other things. The Company reported a loss of RM5. (ii) We have not been able to consider the financial statements and the auditors reports of all the subsidiaries of which we have not acted as auditors. if any. Annual Report 2011 Linear Corporation Berhad (288687-W) . we have not been able to determine whether the accounting and other records 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. which are indicated in Note 6 to the financial statements.498.751. (iii) Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraphs. In our opinion.3 to the financial statements.000 respectively. All the aforementioned conditions indicate the existence of a material uncertainty that may cast significant doubt about the Groups and the Companys ability to continue as a going concern. Disclaimer of Opinion Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraphs.000 for the financial year ended 31 December 2011 and. its net current liabilities and net liabilities amounted to RM30. the ability of the Group and the Company to formalise a regularisation plan to regularise their financial conditions.28 Independent Auditors Report (Contd) To The Members Of Linear Corporation Berhad Report on the Financial Statements (contd) Basis for Disclaimer of Opinion (contd) (vii) As the subsidiaries have defaulted on the loans and borrowings guaranteed by the Company. The Group and the Company have also defaulted on their payables. as at that date. the financial guarantee contracts disclosed in Note 22 to the financial statements should have been recognised in the separate financial statements of the Company in accordance with the recognition and measurement policies as stated in Note 2.000 respectively. as at that date. as the financial statements of those subsidiaries have not been audited. we also report the following:(i) Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraphs. (viii) We draw attention to Note 2. The Group reported a loss of RM63.656.883. The financial statements of the Group and the Company are prepared on a going concern basis. Due to the aforementioned uncertainties in respect of loans and borrowings (paragraph v) and litigation claims (paragraph vi). Accordingly.000 for the financial year ended 31 December 2011 and.000 and RM20. The non-recognition represents non-compliance with FRS 139 Financial Instruments: Recognition and Measurement. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Group and the Company be unable to continue as a going concern. we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. loans and borrowings and current tax liabilities and are currently engaged in material litigations as disclosed in Note 22.663.11. we were unable to determine the extent and quantum of the necessary provisions. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act 1965 in Malaysia.328. We have not received satisfactory information and explanations required by us for those purposes. we do not express an opinion on the financial statements. its net current liabilities and net liabilities amounted to RM59. we have not been able to determine whether the financial statements of the subsidiaries that have been consolidated with the Companys financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group. 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. PrimeAce Holdings Sdn.Independent Auditors Report (Contd) To The Members Of Linear Corporation Berhad 29 Report on Other Legal and Regulatory Requirements (contd) (iv) Our audit reports on the financial statements of the following subsidiaries contained modified opinions in respect of the same matters described in the Basis for Disclaimer of Opinion paragraphs:Subsidiary LCI Global Sdn. Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraphs. Bhd. District Cooling Systems Sdn. BAC Cooling Technology Sdn. in accordance with Section 174 of the Companies Act 1965 in Malaysia and for no other purpose. in all material respects. We do not assume responsibility to any other person for the content of this report. Bhd. 1 Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements. in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad. Bhd. Bhd. Type of Modified Opinion Disclaimer of opinion Disclaimer of opinion Disclaimer of opinion Qualified opinion Our audit reports on the financial statements of other subsidiaries did not contain any modified opinion or any adverse comment made under Section 174(3) of the Act. as issued by the Malaysian Institute of Accountants (the MIA Guidance) and the directive of Bursa Malaysia Securities Berhad. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. Crowe Horwath Firm No: AF 1018 Chartered Accountants Date: 26 April 2012 Penang Eddy Chan Wai Hun Approval No: 2182/10/13 (J) Chartered Accountant Annual Report 2011 Linear Corporation Berhad (288687-W) . we have not been able to determine whether the supplementary information is prepared. as a body. The supplementary information set out on page 73 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. Other Matters This report is made solely to the members of the Company. 105 (230) (39.213 CURRENT LIABILITIES Payables Loans and borrowings Current tax liabilities NET CURRENT LIABILITIES NET (LIABILITIES)/ASSETS EQUITY Share capital Treasury shares Reserves Equity attributable to owners of the Company Non-controlling interests TOTAL EQUITY 11 12 21.396 1.643 2.796 (5.583) 37.422) 35.663 0 0 2 38.105 (230) (94. Annual Report 2011 Linear Corporation Berhad (288687-W) . plant and equipment Goodwill Investment in associate Available-for-sale financial assets 2011 RM'000 2010 RM'000 4 5 7 8 38.30 Consolidated Statement of Financial Position As At 31 December 2011 Note NON-CURRENT ASSETS Property.070 42.066 13 13 75.686 41.763) (900) (20.292 818 61.663) 19.453 1.638) (19.753 74 41 458 56.887 51.579 0 0 1.616 3.649 CURRENT ASSETS Inventories Receivables Prepayments Current tax assets Cash and bank balances 9 10 2.663) 75.665 41.447 64.101 42.697 138 38 100 5.613 37.066 The annexed notes form an integral part of these financial statements.944 (59.328) (20. 810 (15.Gross revaluation decrease .034) (2. plant and equipment:. Annual Report 2011 Linear Corporation Berhad (288687-W) .161) (12.722 (70) (1.Deferred tax effects thereof Gain on available-for-sale financial assets Reclassification adjustments on derecognition of available-for-sale financial asset Other comprehensive income for the financial year Total comprehensive income for the financial year 16 17 15 14 2011 RM'000 12.432) 60 0 0 0 67 (126) 6.279 488 (785) (3.058) The annexed notes form an integral part of these financial statements.126) 7.502 548 (605) (3.936) 1.154 (57.729) 1 68 (15.904) 0 (64.883) 2010 RM'000 7.Consolidated Statement of Comprehensive Income For the Financial Year Ended 31 December 2011 31 Note Revenue Other income Changes in inventories of work-in-progress and finished goods Raw materials and consumables used Depreciation Employee benefits expense Finance costs Other expenses Share of profit of associate Loss before tax Tax income Loss for the financial year Other comprehensive income:Revaluation of property.264) 25 (16.716) (3.736) (3.041) (1.Gross revaluation increase .732) (2.224) (4.259) (64.683) 800 (63. 665) (461) (15.377) (2.Basic (sen) .506) (63.Owners of the Company . Annual Report 2011 Linear Corporation Berhad (288687-W) .Non-controlling interests (55.513) (57.Diluted (sen) (20) (20) The annexed notes form an integral part of these financial statements.Owners of the Company .32 Consolidated Statement of Comprehensive Income (Contd) For the Financial Year Ended 31 December 2011 Note Loss for the financial year attributable to:.729) 18 (82) (82) (14.216) (2.605) (453) (15.126) Total comprehensive income for the financial year attributable to:.058) Loss per share:.883) (14.Non-controlling interests 2011 RM'000 2010 RM'000 (61. 012 0 Transfer of revaluation surplus 0 Balance at 31 December 2010 683 301 910 60 75.126) (453) (15.112 1.769 0 164 1.440 49.105 (230) 272 (41.605) 0 0 0 (14.074 0 272 (27.665) 0 0 0 60 0 0 0 0 0 0 0 60 0 0 0 0 (14.012 0 0 0 1.058) Gain on available-for-sale financial assets Reclassification adjustments on derecognition of availablefor-sale financial assets Other comprehensive income for the financial year Loss for the financial year Total comprehensive income for the financial year 0 0 0 Consolidated Statement of Changes In Equity Reissue of treasury shares (representing total transactions with owners) (757) 0 0 (164) 0 0 0 0 0 0 0 0 1.066 301 1.665) (14. 33 Annual Report 2011 Linear Corporation Berhad (288687-W) .105 (1.066 The annexed notes form an integral part of these financial statements.648) 35.147) Treasury shares RM'000 Equity Currency Capital attributable NonShare redemption Revaluation Fair value translation Accumulated to owners of controlling losses the Company interests reserve surplus reserve reserve premium RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Balance at 1 January 2010 75.613 37.665) 0 0 0 0 1 0 0 0 1 8 68 (461) (15.Non-distributable Share capital RM'000 Total equity RM'000 51.046 2.453 1.999) 0 59 0 0 0 0 59 0 0 8 67 For the Financial Year Ended 31 December 2011 0 1 60 (14. 432) 60 For the Financial Year Ended 31 December 2011 0 0 0 0 (61.506) (63.613 301 910 60 272 Treasury shares RM'000 Equity Currency Capital Nonattributable Share redemption Revaluation Fair value translation Accumulated to owners of controlling reserve reserve surplus reserve premium losses the Company interests RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Annual Report 2011 Linear Corporation Berhad (288687-W) Balance at 1 January 2011 75.513) (57.007 1 75.377) (55.220 (59) 0 0 0 0 6.722 (70) (1.Deferred tax effects thereof Gain on available-for-sale financial assets Reclassification adjustments on derecognition of availablefor-sale financial assets Other comprehensive income for the financial year Loss for the financial year Total comprehensive income for the financial year 0 0 0 Consolidated Statement of Changes In Equity (Contd) Transfer of revaluation surplus 0 Balance at 31 December 2011 683 301 7.377) 0 123 0 0 0 0 0 0 0 (123) 0 0 0 6.663) The annexed notes form an integral part of these financial statements.722 (70) (1. .Gross revaluation decrease .648) 35.377) (61.Gross revaluation increase .220 0 (59) 0 0 0 0 0 0 0 (113) 0 (113) 6.066 683 (41.883) (2.722 (70) (1.105 (230) 272 (102.763) (900) (20.34 Non-distributable Share capital RM'000 Total equity RM'000 37.105 (230) 0 0 0 0 0 0 0 54 7.432) 0 0 0 0 54 0 0 0 0 0 0 0 0 0 0 7.729) 0 0 Revaluation of property.161 (61.453 1.902) (19. plant and equipment:.432) 0 0 0 0 0 0 0 0 0 6 7.216) 0 (13) (126) (7) 6.154 (2. 884) 1.761) 150 (1.733) (15.161 0 1.683) 914 2.047 0 4.151) (16.012 (193) (2. plant and equipment Interest expense Interest income Loss on disposal of associate Revaluation decrease of property.415 576 0 576 (16.221 0 2. plant and equipment Purchase of property.829 0 (68) (47) (25) (7.947) (1.936) 692 1.716 1 (73) 7 1.128 129 (37) 1.258 (2.301) (2.Consolidated Statement Of Cash Flows For the Financial Year Ended 31 December 2011 35 Note CASH FLOWS FROM OPERATING ACTIVITIES Loss before tax Adjustments for:Allowance for slow moving inventories Depreciation (Gain)/Loss on derecognition of available-for-sale financial assets Gain on disposal of property.034 (126) (129) 0 48. Annual Report 2011 Linear Corporation Berhad (288687-W) .614 3.259 (1) 0 3.611) 1 0 1.065) (1.211) 378 994 1. plant and equipment Impairment loss on investment in associate Impairment loss on loans and receivables Impairment loss on property.894 3.150) (15. plant and equipment Reversal of allowance for slow moving inventories Reversal of impairment loss on loans and receivables Share of profit of associate Operating loss before working capital changes Changes in:Inventories Receivables and prepayments Payables Cash generated from/(absorbed by) operations Tax refunded Net cash from/(used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Interest received Proceeds from disposal of associate Proceeds from disposal of available-for-sale financial assets Proceeds from disposal of property.696) 667 1.151) The annexed notes form an integral part of these financial statements.794) 0 (153) (2.677 (48) (103) 0 (2.101 4. plant and equipment Net cash from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Interest paid Reissue of treasury shares Repayment of loans and borrowings Net cash used in financing activities Net decrease in cash and cash equivalents Cash and cash equivalents brought forward Cash and cash equivalents carried forward 19 2011 RM'000 2010 RM'000 (64.418) (13.654 (1.500 63 73 (378) 2. 033) (25.055 29.105 (230) (105.36 Statement of Financial Position As At 31 December 2011 Note NON-CURRENT ASSETS Property.803 (30. Annual Report 2011 Linear Corporation Berhad (288687-W) .158) The annexed notes form an integral part of these financial statements.487 CURRENT ASSETS Receivables Prepayments Cash and bank balances 10 31 3 18 52 718 0 71 789 CURRENT LIABILITIES Payables Loans and borrowings NET CURRENT LIABILITIES NET LIABILITIES EQUITY Share capital Treasury shares Reserves TOTAL EQUITY 11 12 29.087 30.929 0 3.158) 13 13 75.105 (230) (100.645) (25.434 (28.656) 28.379 1.716 1. plant and equipment Investments in subsidiaries Investment in associate 2011 RM'000 2010 RM'000 4 6 7 0 95 0 95 558 2.751) (30.656) 75.531) (30. 498) (19.329) (5. Annual Report 2011 Linear Corporation Berhad (288687-W) .780) (47.030) (19.498) 2010 RM'000 63 0 (379) (410) (41) (46.547) 0 0 (5.Statement of Comprehensive Income For the Financial Year Ended 31 December 2011 37 Note Revenue Other income Depreciation Employee benefits expense Finance costs Other expenses Loss before tax Tax income Loss for the financial year Other comprehensive income:Impairment loss on investments in subsidiaries Other comprehensive income for the financial year Total comprehensive income for the financial year 16 17 15 14 2011 RM'000 5 543 (319) (366) (32) (5.498) 0 (5.030) (66.577) The annexed notes form an integral part of these financial statements.547) 0 (47. 547) (19.030) (47.105 Treasury shares RM'000 (1.440 301 19.030) 0 (19.769 (757) 0 0 0 1.030 Accumulated losses RM'000 (53.407 0 0 0 0 0 0 0 0 0 0 0 0 (19.515) (30.577) 0 1.017) (25.105 (230) 683 301 0 (101.012 75.030) 0 (47.38 Statement of Changes In Equity For the Financial Year Ended 31 December 2011 Share capital RM'000 Balance at 1 January 2010 Impairment loss on investments in subsidiaries (representing other comprehensive income for the financial year) Loss for the financial year Total comprehensive income for the financial year Reissue of treasury shares (representing total transactions with owners) Balance at 31 December 2010 Loss (representing total comprehensive income) for the financial year Balance at 31 December 2011 75.656) The annexed notes form an integral part of these financial statements.498) 75.547) (66. Annual Report 2011 Linear Corporation Berhad (288687-W) .547) (47.470) Total equity RM'000 40.498) (5.105 (230) 683 301 0 (106.158) 0 0 0 0 0 (5.999) Non-distributable Capital Share redemption Revaluation surplus reserve premium RM'000 RM'000 RM'000 1. Statement of Cash Flows 39 For the Financial Year Ended 31 December 2011 Note CASH FLOWS FROM OPERATING ACTIVITIES Loss before tax Adjustments for:Depreciation Impairment loss on investment in associate Impairment loss on investments in subsidiaries Impairment loss on loans and receivables Impairment loss on property.500 (132) (385) 0 539 0 0 539 (53) 71 18 (11) 193 1.753) 2.547) 379 30 11.300 0 (789) 13 67 (709) 554 0 0 554 (2. plant and equipment Net cash from/(used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Interest paid Net advance from subsidiaries Reissue of treasury shares Repayment of loans and borrowings Net cash from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents brought forward Cash and cash equivalents carried forward 19 2011 RM'000 2010 RM'000 (5.146) (47.137 0 41 2.941) (3) 798 (1. plant and equipment Interest expense Loss on disposal of associate Reversal of impairment loss on loans and receivables Operating loss before working capital changes Changes in:Receivables and prepayments Payables Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Net repayment from/(advance to) subsidiaries Proceeds from disposal of associate Purchase of property.834 676 239 32 0 (543) (1.871 32.498) 319 0 2. Annual Report 2011 Linear Corporation Berhad (288687-W) .142 48 23 71 The annexed notes form an integral part of these financial statements.012 (52) 1. The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand (RM000) except when otherwise indicated. The principal activities of the subsidiaries are disclosed in Note 6. 2. modified to include other bases of measurement as disclosed in other sections of the significant accounting policies. 10050 Penang and its principal place of business is located at 20A Jalan Perusahaan. SIGNIFICANT ACCOUNTING POLICIES 2. The separate financial statements of the Company set out on pages 36 to 39 together with the notes thereto cover the Company solely. The following amended/revised/new FRSs became effective for the financial year under review:Effective for annual periods beginning on or after FRS Amendment to FRS 1 Limited Exemption from Comparative FRS 7 Disclosures for Firsttime Adopters Amendments to FRS 1 Additional Exemptions for First-time Adopters Amendments to FRS 2 Share-based Payment Amendments to FRS 2 Group Cash-settled Share-based Payment Transactions Amendments to FRS 5 Non-current Assets Held for Sale and Discontinued Operations Amendments to FRS 7 Improving Disclosures about Financial Instruments Amendments to FRS 132 Financial Instruments: Presentation Amendments to FRS 138 Intangible Assets Amendments to IC Interpretation 9 Reassessment of Embedded Derivatives Amendments to FRSs contained in the document entitled Improvements to FRSs (2010) FRS 1 First-time Adoption of Financial Reporting Standards (revised in 2010) FRS 3 Business Combinations (revised in 2010) FRS 127 Consolidated and Separate Financial Statements (revised in 2010) IC Interpretation 4 Determining whether an Arrangement contains a Lease 1 January 2011 1 January 2011 1 July 2010 1 January 2011 1 July 2010 1 January 2011 1 March 2010 1 July 2010 1 July 2010 1 January 2011 1 July 2010 1 July 2010 1 July 2010 1 January 2011 Annual Report 2011 Linear Corporation Berhad (288687-W) . Prai Industrial Estate 4. Penang.40 Notes to the Financial Statements For the Financial Year Ended 31 December 2011 1.1 Basis of Preparation of Financial Statements The financial statements of the Group and the Company are prepared under the historical cost convention. 13600 Prai. The registered office of the Company is located at 60 Sri Bahari Road. the Company has been classified as an Affected Listed lssuer pursuant to Practice Note 17 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. incorporated and domiciled in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad. The consolidated financial statements set out on pages 30 to 35 together with the notes thereto cover the Company and its subsidiaries (the Group) and the Groups interest in an associate. As announced on 23 June 2010. GENERAL INFORMATION The Company is a public company limited by shares. and in accordance with Financial Reporting Standards (FRSs) and the Companies Act 1965 in Malaysia. The principal activities of the Company are those of investment holding and provision of management services to its subsidiaries. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors dated 26 April 2012. the Malaysian Accounting Standards Board (MASB) issued a new MASB approved accounting framework. The MFRS framework is a fully IFRS-compliant framework and equivalent to IFRSs. Management foresees that the adoption of these new classifications will not result in any significant changes to the existing measurement bases of financial assets of the Group and the Company. both at the acquisition date and post acquisition. the Malaysian Financial Reporting Standards (MFRS) framework. business combinations entered into prior to 1 January 2011 have not been restated to comply with the standards. which supersede FRS 3 Business Combinations (issued in 2005) and FRS 127 Consolidated and Separate Financial Statements (revised in 2005) respectively. 2.Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 41 2. (2) those measured at fair value through profit or loss. Some of the key principles established are disclosed in Note 2. In accordance with the transitional provisions of FRS 127 (revised in 2010).2 Future Accounting Standards In November 2011. It comprises standards as issued by the International Accounting Standards Board (IASB) that are effective on 1 January 2012 and also amended/revised/new standards recently issued by the IASB that will be effective after 1 January 2012.1 Basis of Preparation of Financial Statements (contd) Effective for annual periods beginning on or after 12 16 17 18 Service Concession Arrangements Hedges of a Net Investment in a Foreign Operation Distributions of Non-cash Assets to Owners Transfers of Assets from Customers 1 July 1 July 1 July 1 January 2010 2010 2010 2011 FRS IC IC IC IC Interpretation Interpretation Interpretation Interpretation The adoption of the above amended/revised/new FRSs did not result in any significant changes in the accounting policies of the Group and the Company except as follows:FRS 3 Business Combinations (revised in 2010) and FRS 127 Consolidated and Separate Financial Statements (revised in 2010) FRS 3 (revised in 2010) and FRS 127 (revised in 2010). the significant amendments thereto have also been applied prospectively. Management foresees that the transition to the MFRS framework will not have any significant impacts on the financial statements except as follows:MFRS 9 Financial Instruments MFRS 9 (effective for annual periods beginning on or after 1 January 2015) replaces the guidance in MFRS 139 Financial Instruments: Recognition and Measurement on the classification and measurement of financial assets by dividing them into 3 classifications: (1) those measured at amortised cost. The issuance was made in conjunction with the MASBs plan to converge with International Financial Reporting Standards (IFRS) in 2012.4. SIGNIFICANT ACCOUNTING POLICIES (contd) 2. The Group and the Company will first adopt the MFRS framework for the financial year ending 31 December 2012. the Group and the Company have applied the standard prospectively to business combinations for which the acquisition date is on or after the effective date. and (3) those measured at fair value through other comprehensive income. introduce significant changes to the accounting principles for business combinations and consolidated financial statements. In accordance with the transitional provisions of FRS 3 (revised in 2010). Accordingly. Annual Report 2011 Linear Corporation Berhad (288687-W) . The financial statements of the Group and the Company are prepared on a going concern basis. the acquisition-date fair value of the previously held equity interest in the acquiree. (2) exposure.883. All acquisition-related costs. its net current liabilities and net liabilities amounted to RM59.4 Basis of Consolidation A subsidiary is an entity that is controlled by the Group. 2. the identifiable assets acquired and the liabilities assumed are measured at their acquisition-date fair values. and (3) the ability to use its power over the investee to affect the amount of the returns.000 respectively.000 respectively. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Group and the Company be unable to continue as a going concern.328. All the aforementioned conditions indicate the existence of a material uncertainty that may cast significant doubt about the Groups and the Companys ability to continue as a going concern.2 Future Accounting Standards (contd) MFRS 10 Consolidated Financial Statements MFRS 10 (effective for annual periods beginning on or after 1 January 2013) replaces the consolidation guidance in MFRS 127 Consolidated and Separate Financial Statements and IC Interpretation 112 Consolidation . among other things. In a business combination achieved in stages. are recognised in profit or loss as incurred. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. The Group and the Company have also defaulted on their payables. the consideration transferred. The components of non-controlling interests that are present ownership interests are measured at the present ownership instruments proportionate share in the recognised amounts of the identifiable net assets acquired.Special Purpose Entities by introducing a single consolidation model for all entities based on control. the amount of any non-controlling interests. All other components of non-controlling interests are measured at their acquisition-date fair values. Under the acquisition method. The Company reported a loss of RM5. the ability of the Group and the Company to formalise a regularisation plan to regularise their financial conditions. The appropriateness of using the going concern basis is highly dependent upon.751.000 and RM20. Management foresees that the adoption of these new control criteria will not result in any significant changes to the existing composition of the Group. and in a business combination achieved in stages.000 and RM30. control is based on whether an investor has (1) power over the investee. Annual Report 2011 Linear Corporation Berhad (288687-W) . the previously held equity interest in the acquiree is remeasured at its acquisition-date fair value and any resulting gain or loss is recognised in profit or loss. 2.663. as at that date. other than the costs to issue debt or equity securities. as at that date.000 for the financial year ended 31 December 2011 and.42 Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 2. Goodwill at the acquisition date is measured as the excess of (a) over (b) below:(a) the (i) (ii) (iii) aggregate of:the acquisition-date fair value of the consideration transferred. its net current liabilities and net liabilities amounted to RM30. to variable returns from its involvement with the investee.656.3 Going Concern The Group reported a loss of RM63.498. or rights. The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to the end of the reporting period using the acquisition method. loans and borrowings and current tax liabilities and are currently engaged in material litigations as disclosed in Note 22.000 for the financial year ended 31 December 2011 and. Under MFRS 10. SIGNIFICANT ACCOUNTING POLICIES (contd) 2. Upon loss of control of a subsidiary. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. Intragroup balances. 2. Leasehold land is depreciated on a straight-line basis over the lease term of 60 years. Plant and Equipment Property.20% 8 . being the date on which control is obtained. Any consideration received and any investment retained in the former subsidiary are recognised at their fair values. Revaluations of land and buildings are made with sufficient regularity at an interval of not more than five years such that the carrying amounts of the assets do not differ materially from their fair values at the end of the reporting period. A subsidiary is consolidated from the acquisition date. Freehold land is not depreciated. furniture and fittings Motor vehicles 2 . The impairment policy is disclosed in Note 2. useful life and depreciation method of an asset are reviewed at least at the end of each reporting period and any changes in expectations from previous estimates are accounted for prospectively as changes in accounting estimates. All amounts recognised in other comprehensive income in relation to the subsidiary are accounted for on the same basis as would be required if the related assets or liabilities had been directly disposed of. The resulting difference is then recognised as a gain or loss in profit or loss. the excess represents a bargain purchase gain and. and any non-controlling interests in the subsidiary are derecognised. Goodwill is recognised as an asset at the aforementioned amount less accumulated impairment losses. if any. A revaluation increase is recognised in other comprehensive income and accumulated in equity as revaluation surplus or recognised in profit or loss to the extent that the increase reverses a revaluation decrease of the same asset previously recognised in profit or loss. is recognised in profit or loss. When the above (b) exceeds (a).4 Basis of Consolidation (contd) (b) the net of the acquisition-date fair values of the identifiable assets acquired and the liabilities assumed.Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 43 2.8. income and expenses are eliminated in full on consolidation. the assets (including any goodwill) and liabilities of.5 Property. SIGNIFICANT ACCOUNTING POLICIES (contd) 2.20% 10 .8.20% 20% The residual value.6% 2 . plant and equipment are stated at cost or at valuation less accumulated depreciation and accumulated impairment losses. Other property. plant and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets using the following annual rates:Buildings District cooling plant Plant and machinery Office equipment. after reassessment. and continues to be consolidated until the date when control is lost. All changes in the parents ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. transactions. The impairment policy is disclosed in Note 2. Annual Report 2011 Linear Corporation Berhad (288687-W) . A revaluation decrease is recognised in profit or loss or recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of the same asset. if any. Retrospective adjustment to restate the revalued investments at cost has not been made and the revalued amount has been retained as the surrogate carrying amount of the investments.44 Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 2. net of depreciation or amortisation. SIGNIFICANT ACCOUNTING POLICIES (contd) 2.8 Impairment of Non-financial Assets At the end of each reporting period.8. 2. the Group and the Company assess whether there is any indication that a non-financial asset.6 Investments in Subsidiaries As required by the Companies Act 1965. if any. In the consolidated financial statements. Under the equity method. the investment in associate is initially recognised at cost and the carrying amount is subsequently adjusted to recognise the Groups share of the post-acquisition profit or loss and other comprehensive income of the associate. costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost consists of all costs of purchase.9 Inventories Inventories of materials and goods are valued at the lower of cost (determined principally on the first-in. if any. An impairment loss on an asset.7 Investments in Associates An associate is an entity. Significant influence is the power to participate in the financial and operating policy decisions of the entity but is not control or joint control over those policies. 2. investments in subsidiaries are stated at cost or at valuation less impairment losses. The impairment policy is disclosed in Note 2. the carrying amount of the investment is subject to further impairment assessment. Annual Report 2011 Linear Corporation Berhad (288687-W) . the Company prepares separate financial statements in addition to the consolidated financial statements. in respect of a revalued asset. treated as a revaluation decrease. The reversal is recognised in profit or loss or. If any such indication exists. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and costs necessary to make the sale. had no impairment loss been recognised. is reversed if there has been a change in the estimates used to determine the recoverable amount and it is reversed only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined. other than inventories. other than a subsidiary or a joint venture. In the separate financial statements of the Company. An impairment loss on goodwill is not reversed. Certain investments in subsidiaries were revalued by the directors in 1998 in conjunction with the listing exercise of the Company. treated as a revaluation increase. investments in associates are accounted for using the equity method. over which the Group has significant influence. the recoverable amount of the asset. first-out basis) and net realisable value.8. is estimated. being the higher of its fair value less costs to sell and its value in use. investments in associates are stated at cost less impairment losses. 2. in respect of a revalued asset. The impairment policy is disclosed in Note 2. other than goodwill. Irrespective of whether there is any indication of impairment. In the separate financial statements of the Company. Any excess of the carrying amount of the asset over its recoverable amount represents an impairment loss and is recognised in profit or loss or. goodwill is tested for impairment annually.8. The impairment policy is disclosed in Note 2. Subsequent investments have been stated at cost and the directors do not intend to revalue the investments in the future. After application of the equity method. may be impaired. such financial assets are measured at amortised cost using the effective interest method.Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 45 2. Recognition and Measurement A financial asset is recognised in the statement of financial position when. After initial recognition. directly attributable transaction costs. such financial assets are measured at fair value. The gross carrying amount and the associated allowance are written off when there is no realistic prospect of future recovery. and only when. The assets carrying amount is reduced through the use of an allowance account and the impairment loss is recognised in profit or loss. in the case of a financial asset not at fair value through profit or loss. Impairment At the end of each reporting period. (iii) Loans and receivables All receivables and cash and cash equivalents are classified under this category. the Group and the Company assess whether there is any objective evidence that a financial asset or group of financial assets is impaired. is recognised in other comprehensive income and accumulated in equity as fair value reserve until the financial asset is derecognised.10 Financial Assets Financial assets of the Group and the Company consist of investments in equity instruments. (iv) Available-for-sale financial assets All investments in equity instruments (other than interests in subsidiaries and associates) are classified under this category. The subsequent measurement of a financial asset depends on its classification as follows:(i) Financial assets at fair value through profit or loss The Group and the Company do not have any financial assets classified under this category. Any gain or loss is recognised in profit or loss when the financial asset is derecognised or impaired as well as through the amortisation process. If any such evidence exists. A regular way purchase or sale of financial assets is recognised or derecognised using settlement date accounting. the contractual rights to the cash flows from the financial asset have expired or all the risks and rewards of ownership have been substantially transferred. at which time the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment. receivables and cash and cash equivalents. After initial recognition. (ii) Held-to-maturity investments The Group and the Company do not have any financial assets classified under this category. A financial asset is initially recognised at fair value plus. and only when. except for impairment loss. Annual Report 2011 Linear Corporation Berhad (288687-W) . the Group or the Company becomes a party to the contractual provisions of the financial instrument. SIGNIFICANT ACCOUNTING POLICIES (contd) 2. Any gain or loss arising from a change in the fair value. A financial asset is derecognised when. the impairment loss is measured as follows:(i) Financial assets carried at amortised cost An impairment loss on loans and receivables is measured as the difference between the assets carrying amount and the present value of estimated future cash flows discounted using the assets original effective interest rate. 46 Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 2. Level 2 . The reversal is recognised in profit or loss.e. financial guarantee contracts are measured at the higher of the amount initially recognised less appropriate amortisation and the estimate of any probable obligation. the cumulative loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment even though the financial asset has not been derecognised. all financial liabilities. and Level 3 . loans and borrowings and financial guarantee contracts. and only when. Any gain or loss is recognised in profit or loss when the financial liability is derecognised as well as through the amortisation process.Inputs for the asset or liability that are not based on observable market data (unobservable inputs).11 Financial Liabilities Financial liabilities of the Group and the Company consist of payables. Recognition and Measurement A financial liability is recognised in the statement of financial position when.e. Such cumulative loss reclassified from equity to profit or loss represents an impairment loss and is measured as the difference between the acquisition cost and current fair value. except for financial guarantee contracts.Quoted prices (unadjusted) in active markets for identical assets or liabilities. either directly (i. A financial liability is initially recognised at fair value less directly attributable transaction costs.Inputs other than quoted prices included within Level 1 that are observable for the asset or liability. if any. are measured at amortised cost using the effective interest method. less any impairment loss previously recognised in profit or loss. After initial recognition. Level 1). SIGNIFICANT ACCOUNTING POLICIES (contd) 2. The fair values of quoted investments are determined by reference to their quoted closing bid prices at the end of the reporting period (i. Fair value measurements recognised in the statement of financial position are categorised into the following levels of fair value hierarchy:Level 1 . as prices) or indirectly (i. Annual Report 2011 Linear Corporation Berhad (288687-W) .e. After initial recognition at fair value. (ii) Available-for-sale financial assets When there is a significant or prolonged decline in the fair value of an investment in equity instrument classified as available-for-sale. the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised. derived from prices). The impairment loss is not reversed through profit or loss in any subsequent period. 2. the Group or the Company becomes a party to the contractual provisions of the financial instrument. Determination of Fair Values The carrying amounts of receivables and cash and cash equivalents which are short-term in nature or repayable on demand are assumed to be reasonable approximations of fair values.10 Financial Assets (contd) Impairment (contd) (i) Financial assets carried at amortised cost (contd) If. in a subsequent period. the previously recognised impairment loss is reversed to the extent that the increased carrying amount does not exceed what the amortised cost would have been had no impairment loss been recognised at the reversal date. Determination of Fair Values The carrying amounts of payables and loans and borrowings which are short-term in nature or repayable on demand are assumed to be reasonable approximations of fair values. and Level 3 . SIGNIFICANT ACCOUNTING POLICIES (contd) 2. The depreciation policy for depreciable leased assets is consistent with that for equivalent owned assets.Inputs for the asset or liability that are not based on observable market data (unobservable inputs).e. 2. Annual Report 2011 Linear Corporation Berhad (288687-W) . Lease payments under an operating lease are recognised in profit or loss on a straight-line basis over the lease term. derived from prices). either directly (i.e.13 Foreign Currency Transactions and Translation The consolidated financial statements and separate financial statements of the Company are presented in Ringgit Malaysia. Items included in the financial statements of each individual entity within the Group are measured using the individual entitys own functional currency.Inputs other than quoted prices included within Level 1 that are observable for the asset or liability. 2. Operating Lease An operating lease is a lease other than a finance lease. including hire purchase. the obligation specified in the contract is discharged or cancelled or expires.12 Leases Finance Lease A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset to the lessee. being the currency of the primary economic environment in which the entity operates. is initially recognised as an asset and liability at the fair value of the leased asset or. which is also the Companys functional currency. The minimum lease payments are subsequently apportioned between the finance charge and the reduction of the outstanding liability so as to produce a constant periodic rate of interest on the remaining balance of the liability. and only when. as prices) or indirectly (i. Level 3). A finance lease.11 Financial Liabilities (contd) Recognition and Measurement (contd) A financial liability is derecognised when.e.Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 47 2. Fair value measurements recognised in the statement of financial position are categorised into the following levels of fair value hierarchy:Level 1 . The fair values of financial guarantee contracts are estimated based on probability-adjusted discounted cash flow analysis after considering the probability of default by the debtors (i.Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 . if lower. the present value of the minimum lease payments. 2. SIGNIFICANT ACCOUNTING POLICIES (contd) 2.e. When treasury shares are reissued by re-sale in the open market. 2. Ringgit Malaysia. Transaction costs that relate to the issue of new shares are accounted for as a deduction from equity. Defined Contribution Plans As required by law. Foreign currency non-monetary items measured at cost are translated using the exchange rate at transaction date whereas those measured at fair value are translated using the exchange rate at valuation date. The total amount of consideration paid. Annual Report 2011 Linear Corporation Berhad (288687-W) . Any exchange component of the gain or loss on a non-monetary item is recognised on the same basis as that of the gain or loss. Contributions to defined contribution plans are recognised in profit or loss in the period in which the associated services are rendered by the employee. All resulting exchange differences are recognised in other comprehensive income and accumulated in equity as currency translation reserve until the foreign operation is disposed of. the difference between the sales consideration and the carrying amount of the treasury shares is adjusted to share premium. 2. at which time the cumulative exchange differences previously recognised in other comprehensive income are reclassified from equity to profit or loss as a reclassification adjustment. Exchange differences arising from the settlement or translation of monetary items are recognised in profit or loss.15 Revenue Recognition Income from the sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer. bonuses and social security contributions are recognised in profit or loss in the period in which the associated services are rendered by the employee.16 Employee Benefits Short-term Employee Benefits Short-term employee benefits such as wages. Income from the rendering of services is recognised when the services are performed. At the end of the reporting period. Own shares purchased are held as treasury shares in accordance with the requirements of Section 67A of the Companies Act 1965.14 Share Capital Ordinary shares are classified as equity. i. foreign currency monetary items are translated into the functional currency using the closing rate. employers in Malaysia make contributions to the statutory pension scheme. i. assets and liabilities are translated into the presentation currency using the closing rate whereas income and expenses are translated using the exchange rates at transaction dates. including directly attributable costs.e.48 Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 2. is recognised directly in equity. Dividends on shares declared and unpaid at the end of the reporting period are recognised as a liability whereas dividends proposed or declared after the reporting period are disclosed in the notes to the financial statements. Employees Provident Fund (EPF).13 Foreign Currency Transactions and Translation (contd) A foreign currency transaction is recorded in the functional currency using the exchange rate at transaction date. salaries. In translating the financial position and results of a foreign operation whose functional currency is not the required presentation currency. in profit or loss or in other comprehensive income. 18 Income Taxes Income taxes for the year comprise current tax and deferred tax. Annual Report 2011 Linear Corporation Berhad (288687-W) . 2. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. based on the tax rates that have been enacted or substantively enacted by the end of the reporting period. Current tax represents the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted or substantively enacted by the end of the reporting period. bank overdrafts and short-term. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled. Deferred tax is provided for under the liability method in respect of all temporary differences between the carrying amount of an asset or liability and its tax base except for those temporary differences associated with goodwill or the initial recognition of an asset or liability in a transaction which is not a business combination and affects neither accounting nor taxable results at the time of the transaction. unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences. The total amount to be recognised is determined by reference to the fair value of the share options at grant date and the estimated number of share options expected to vest on vesting date.16 Employee Benefits (contd) Equity Compensation Benefits The Employees Share Option Scheme (ESOS) of the Company grants the Groups eligible employees options to subscribe for shares in the Company at pre-determined subscription prices. 2. term deposits (excluding those pledged as security). 2. unused tax losses and unused tax credits can be utilised. construction or production of a qualifying asset. which is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale.19 Cash and Cash Equivalents Cash and cash equivalents comprise cash in hand. These equity compensation benefits are recognised in profit or loss with a corresponding increase in equity over the vesting period as share option reserve.Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 49 2. bank balances. until such time as the asset is substantially ready for its intended use or sale. A deferred tax liability is recognised for all taxable temporary differences whereas a deferred tax asset is recognised for all deductible temporary differences. demand deposits. are capitalised as part of the cost of the asset. highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.17 Borrowing Costs Borrowing costs that are directly attributable to the acquisition. SIGNIFICANT ACCOUNTING POLICIES (contd) 2. The carrying amounts of inventories are disclosed in Note 9. The carrying amounts of property. estimates on future cash flows and appropriate discount rate are required to determine the present value of those cash flows. Sources of Estimation Uncertainty The key assumptions about the future. future depreciation charges may be revised. Management estimates the useful lives to be within 5 to 50 years. These reviews require the use of judgements and estimates. plant and equipment are disclosed in Note 4. For the financial year ended 31 December 2011. apart from those involving estimations. and other major sources of estimation uncertainty at the end of the reporting period. (iii) Allowance for inventories Reviews are made periodically by management on inventories for excess inventories. management judged that the Group has acquired substantially all the risks and rewards incidental to ownership of the land through a finance lease. obsolescence and decline in net realisable value below cost. Changes in the expected level of usage and technological development will impact on the economic useful lives and residual values of the assets and therefore. the Group has not recognised any impairment loss on available-for-sale financial assets. (ii) Impairment of non-financial assets When the recoverable amount of a non-financial asset is determined based on its value in use.50 Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 3. The carrying amounts of non-financial assets subject to impairment assessment are disclosed in Note 4. that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:(i) Depreciation of property. In making this judgement. plant and equipment Property. that can significantly affect the amounts recognised in the financial statements:(i) Classification of leasehold land The classification of leasehold land as a finance lease or an operating lease requires the use of judgement in determining the extent to which risks and rewards incidental to ownership lie. plant and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets. Despite the fact that there will be no transfer of ownership by the end of the lease term and that the lease term does not constitute the major part of the indefinite economic life of the land. Annual Report 2011 Linear Corporation Berhad (288687-W) . (ii) Impairment of available-for-sale financial assets When there is a significant or prolonged decline in the fair value of an investment in equity instrument classified as available-for-sale. management makes the following judgements. management considered that the present value of the minimum lease payments approximated to the fair value of the land at the inception of the lease. management continuously evaluates the historical share price movements and the duration and extent of the decline in fair value below cost. the cumulative decline represents an impairment loss. Accordingly. JUDGEMENTS AND ESTIMATION UNCERTAINTY Judgements Made in Applying Accounting Policies In the process of applying the accounting policies of the Group and the Company. The determination of what constitutes significant or prolonged requires judgement. Possible changes in these estimates may result in revisions to the valuation of inventories. current economic trends and changes in debtor payment terms when making a judgement to evaluate the adequacy of the allowance for impairment. debtor creditworthiness. Allowance is applied to loans and receivables when there is objective evidence that the balances may not be recoverable.447 Annual Report 2011 Linear Corporation Berhad (288687-W) . the difference will impact on the carrying amounts of loans and receivables as disclosed in Note 10.Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 51 3. (v) Income taxes There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimates. The carrying amounts of tax assets/liabilities as at 31 December 2011 are as follows:Group RM000 Current tax assets Current tax liabilities 38 1. The Group recognises tax assets/liabilities based on its understanding of the prevailing tax laws and estimates of whether such assets/liabilities will be realised/settled in the ordinary course of business. debtor concentration. the difference will impact on the tax recognition in the period in which the outcome is determined. JUDGEMENTS AND ESTIMATION UNCERTAINTY (contd) Sources of Estimation Uncertainty (contd) (iv) Impairment of loans and receivables The Group and the Company make allowance for impairment based on an assessment of the recoverability of loans and receivables. Where expectations are different from previous estimates. Management specifically analyses historical bad debts. Where the final tax outcome of these matters is different from the amounts initially recognised. 551 2.247 3.767 (9.52 4.470 .576 0 5.167) 67.500 0 0 0 1.077 11.038 0 31.435 0 132 (320) 0 3.219) 70.Valuation 0 4.247 0 3.080 70.551 0 25 0 0 5.431 9.801 59.551 2.Cost .729) 0 0 0 31.235 26 16 0 0 2.570 40. furniture and fittings RM'000 Motor vehicles RM'000 Total RM'000 Capital work-inprogress RM'000 Annual Report 2011 Linear Corporation Berhad (288687-W) Freehold land RM'000 Buildings RM'000 Short-term leasehold land RM'000 Plant and machinery RM'000 District cooling plant RM'000 For the Financial Year Ended 31 December 2011 Cost/Valuation Balance at 1 January 2010 Transfer from assets held for sale Additions Disposals Adjustments Balance at 31 December 2010 0 4.835 70.767 5.431 40.277 2.335 11.470 Balance at 1 January 2011 Reclassification Additions Disposals Revaluation Balance at 31 December 2011 2.080 Notes to the Financial Statements (Contd) Representing:.077 0 2.077 0 0 0 2.590) 15.570 15.277 0 7 0 0 2.077 0 0 0 1.500 3.986 0 0 (1.500 4.038 0 4.000 Representing:.247 0 0 230 0 0 230 585 10. PROPERTY.576 2.431 0 41.546 5 0 0 0 5.772 0 2.284 0 2.000 11.284 96 11.500 4.846 0 0 0 11.440 378 (320) (1.038 5.570 67.551 0 5.500 0 0 0 4.000 4.900 25.500 6.Valuation 0 6.729 0 0 (5.000 5.000 0 15.576 2.245 15.570 31.284 2.219) 40.772 230 0 230 230 0 0 0 0 230 54.277 0 2.000 6. PLANT AND EQUIPMENT Group Office equipment.767 0 40.080 0 37 (480) (2.767 5.247 0 5 (480) 0 2.923 4.Cost .772 230 0 230 41.077 3.277 0 2. 910 3 109 0 2. PLANT AND EQUIPMENT (contd) Group Freehold land RM'000 Buildings RM'000 Total RM'000 Motor vehicles RM'000 Short-term leasehold land RM'000 Plant and machinery RM'000 Capital work-inprogress RM'000 District cooling plant RM'000 Office equipment.034 (480) 4.437 650 0 4.807 Reclassification Depreciation Disposals Impairment loss Revaluation Balance at 31 December 2011 Accumulated depreciation Accumulated impairment losses Carrying Amount Balance at 1 January 2010 0 3.910 0 1.237 13.960 6.778 365 0 0 (5.369 0 1.063 0 5.191 0 5.671 41.081 229 0 0 0 0 16.921 4 138 0 0 0 0 0 0 0 0 0 0 0 0 0 230 0 0 230 230 Notes to the Financial Statements (Contd) Transfer from assets held for sale Depreciation Disposals Balance at 31 December 2010 Accumulated depreciation Accumulated impairment losses 9.663 Balance at 31 December 2010 2.512) 5.4.022 0 2.582 11.975 1.582 12.716 (320) 16. PROPERTY.191 540 0 540 0 90 0 0 (630) 1.096 2.752 2.096 0 2.240 0 500 (320) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5.894 (6.280 0 5.956 18.778) 949 0 4.240 0 2.022 0 74 0 0 0 2.195 827 20 0 230 0 2.420 0 428 (480) 384 0 2.063 0 128 0 0 0 0 0 0 450 90 0 59 0 59 1.570 10.505 17.501 0 2.062 0 526 0 23.369 3. furniture and fittings RM'000 For the Financial Year Ended 31 December 2011 Depreciation and Impairment Losses Balance at 1 January 2010 Accumulated depreciation Accumulated impairment losses 0 0 0 0 0 0 1.500 625 488 385 325 255 188 1.130 0 9.570 28.368 384 2.142) 15.000 53 Annual Report 2011 Linear Corporation Berhad (288687-W) .579 38.996 11.680 12.505 28.921 0 4.077 Balance at 31 December 2011 4.420 0 2.130 17.538 5.087 (3.000 15. 077 0 23. PLANT AND EQUIPMENT (contd) The land and buildings were revalued on 31 December 2011 based on managements estimates of fair values by reference to relevant market information.744 The district cooling plant was written down to its recoverable amount based on managements estimate of fair value by reference to relevant market information.637 2010 RM000 2.975 15.000 2.777 Company Motor vehicles RM'000 Cost Balance at 1 January 2010 Additions Balance at 31 December 2010 Movement during the year Balance at 31 December 2011 Depreciation and Impairment Losses Balance at 1 January 2010 Accumulated depreciation Accumulated impairment losses 1.500 17 18. the carrying amounts that would have been recognised in the financial statements are as follows:Group 2011 RM000 Freehold land Short-term leasehold land Buildings 2.077 1.595 658 0 658 Annual Report 2011 Linear Corporation Berhad (288687-W) . PROPERTY. plant and equipment pledged as security for credit facilities granted to the Group are as follows:Group 2011 RM000 Freehold land Buildings District cooling plant Office equipment.335 2010 RM000 2.680 20 25.352 9.077 1. The carrying amounts of property.283 11.595 0 1. furniture and fittings 4.463 132 1.315 6. Had the land and buildings been carried at historical cost less accumulated depreciation and accumulated impairment losses.54 Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 4.120 12. 037 319 239 1. GOODWILL Group 2011 RM000 Cost Accumulated impairment losses 91 (91) 0 2010 RM000 91 (91) 0 Annual Report 2011 Linear Corporation Berhad (288687-W) . PLANT AND EQUIPMENT (contd) Company Motor vehicles RM'000 Depreciation Balance at 31 December 2010 Accumulated depreciation Accumulated impairment losses 379 1.356 239 1.Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 55 4.037 0 1. PROPERTY.595 Depreciation Impairment loss Balance at 31 December 2011 Accumulated depreciation Accumulated impairment losses Carrying Amount Balance at 1 January 2010 Balance at 31 December 2010 Balance at 31 December 2011 805 558 0 The carrying amounts of property. plant and equipment acquired under hire purchase financing which remained outstanding as at the end of the reporting period are as follows:Group Company 2011 RM000 Motor vehicles 0 2010 RM000 797 2011 RM000 0 2010 RM000 558 5. Linear-TES Sdn.929 The details of the subsidiaries are as follows:Effective Ownership Interest 2011 100% 2010 100% Principal Activity Manufacture and trading of cooling towers. Imux (Asia) Limited* Linear Cooling Industries Pte.037) 95 25. Linear Towerline (M) Sdn. Bhd. designing and building of district cooling plant Construct.* PrimeAce Venture Limited* Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Singapore British Virgin Islands 70% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 65% 70% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 65% Annual Report 2011 Linear Corporation Berhad (288687-W) .At valuation Impairment losses 2010 RM000 25. own and operate district cooling plant to produce and supply chilled water Manufacture and trading of cooling towers Trading of cooling towers Providing water treatment services Investment holding Investment holding Dormant Dormant Dormant Dormant Dormant Dormant Investment holding Name of Subsidiary LCI Global Sdn. Bhd. Bhd. Linear Water Treatment Sdn. Country of Incorporation Malaysia District Cooling Systems Sdn. INVESTMENTS IN SUBSIDIARIES Company 2011 RM000 Unquoted shares:.203) 2. Linear Composites Sdn. Linear Water Tank Sdn. Bhd. Linear District Cooling (GCC) Sdn. Bhd.033 32.At cost . Bhd. Malaysia 100% 100% BAC Cooling Technology Sdn.099 (54.56 Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 6. PrimeAce Holdings Sdn. Bhd. Bhd. Bhd. Bhd. Bhd. Ltd.033 32.099 (57. Linear Cooling Technology Sdn. Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 57 6. 8.at fair value (Level 1) 2 2010 RM000 1. Bhd. Bhd. Bhd.* Idea-Hub.at cost Impairment loss Share of post-acquisition results 30 (7) 23 (23) 0 2010 RM000 30 (7) 23 (23) 0 2011 RM000 2010 RM000 30 (30) 0 0 0 30 (30) 0 0 0 The details of the associate are as follows:Effective Ownership Interest 2011 2010 30% 30% Name of Associate Borneo Pacific Linear Sdn. Ltd. INVESTMENT IN ASSOCIATE Group Company 2011 RM000 Unquoted shares . Bhd. Country of Incorporation Principal Activity Malaysia 100% 100% Investment holding Subsidiary of Linear Composites Sdn. Country of Incorporation Malaysia Principal Activity Dormant The financial information of the associate is not available. INVESTMENTS IN SUBSIDIARIES (contd) Effective Ownership Interest 2011 2010 Name of Subsidiary Subsidiary of LCI Global Sdn. Bhd.Com Limited* * Singapore Hong Kong 46% 33% 46% 33% Dormant Dormant Malaysia 100% 100% Dormant Not audited by Crowe Horwath. Linear Composites Marketing Sdn.070 Annual Report 2011 Linear Corporation Berhad (288687-W) . Ko Lim BAC Sdn. and consolidated using unaudited financial statements 7. AVAILABLE-FOR-SALE FINANCIAL ASSETS Group 2011 RM000 Shares quoted in Malaysia . Subsidiaries of PrimeAce Venture Limited Unified Systems Pte. Annual Report 2011 Linear Corporation Berhad (288687-W) . The movements in allowance for impairment are as follows:Group 2011 RM000 Balance at 1 January Impairment loss recognised Impairment loss reversed Impairment loss written off Balance at 31 December 1.594) 31 11.389 143 (47) (13) 1.753 3.625 (31.446) 0 2.472) 1.522) 2.358 0 0 0 2011 RM000 0 0 0 2010 RM000 0 0 0 26 0 26 Other receivables Allowance for impairment 26 (26) 0 31.644 (817) 827 0 0 0 58.446 (10.179 (32.642 51.137) 42 11.615 2010 RM000 1.880 (1.472 260 (103) (14) 1.58 Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 9.454 (10.472 All the above impairment losses were individually determined after considering the adverse financial conditions of the debtors who have defaulted/delayed in payments.804) 650 718 Exceptional Items (Note 25) Allowance for impairment 58.753 Trade receivables are unsecured. RECEIVABLES Group Company 2011 RM000 Trade receivables Allowance for impairment 3.225 (1.247 141 458 2.454) 0 31 Subsidiaries Allowance for impairment 32. INVENTORIES Group 2011 RM000 Raw materials Spare parts and components Work-in-progress Finished goods 797 1.804) 47.643 2010 RM000 931 1.572 516 868 3.485 (1.446 (58.697 Trade Receivables 2010 RM000 3.454 (11.870 1.615) 1.887 10. non-interest bearing and generally on 30 to 180 day terms. Subsidiaries The amounts owing by subsidiaries are unsecured.522 199 (904) 817 2010 RM000 618 904 0 1. Annual Report 2011 Linear Corporation Berhad (288687-W) . non-interest bearing and have no fixed repayment terms. Management determines credit risk concentration in terms of counterparties.Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 59 10.180. non-interest bearing and repayable on demand.870 2010 RM000 916 638 38 17 144 1.522 2011 RM000 0 26 0 26 2010 RM000 0 0 0 0 All the above impairment losses were individually determined after considering the adverse financial conditions of the debtors who have defaulted/delayed in payments. there were 3 (2010 : 2) major customers that accounted for 10% or more of the Groups trade receivables and the total outstanding balances due from these major customers amounted to RM1.753 Trade receivables that are neither past due nor impaired mainly relate to creditworthy customers who have regular transactions and good payment records with the Group. RECEIVABLES (contd) Trade Receivables (contd) The ageing analysis of trade receivables not impaired is as follows:Group 2011 RM000 Not past due Past due 1 to 120 days Past due 121 to 240 days Past due 241 to 360 days Past due more than 360 days 1.253 406 153 38 20 1. Other Receivables Other receivables are unsecured. As at 31 December 2011.000 (2010 : RM992.000). The movements in allowance for impairment are as follows:Group Company 2011 RM000 Balance at 1 January Impairment loss recognised Impairment loss written off Balance at 31 December 1. Trade and Other Payables Trade and other payables are unsecured.804 47.137 All the above impairment losses were individually determined after considering the adverse financial conditions of the debtors who have defaulted/delayed in payments. Annual Report 2011 Linear Corporation Berhad (288687-W) .804 0 10.804 11.689 10.642 58.804 0 10.716 2010 RM000 0 904 0 27.137 0 32.804 650 11.379 Being companies in which certain directors have substantial financial interests Payables are generally short-term in nature or repayable on demand and their carrying amounts will approximate to the remaining contractual undiscounted cash flows.686 2011 RM000 0 1.137 0 (543) 31.965 0 0 855 2. PAYABLES Group Company 2011 RM000 Trade payables Other payables Directors Subsidiaries Other related parties* Exceptional Items (Note 25) * 6.446 2010 RM000 10. RECEIVABLES (contd) Subsidiaries (contd) The movements in allowance for impairment are as follows:Company 2011 RM000 Balance at 1 January Impairment loss recognised Impairment loss reversed Balance at 31 December 32.804 2011 RM000 10.592 19. The Group and the Company have defaulted on the payables.882 248 132 29.592 21.657 9.594 2010 RM000 0 32.101 2010 RM000 6.60 Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 10.887 550 0 0 2. Exceptional Items The movements in allowance for impairment are as follows:Group Company 2011 RM000 Balance at 1 January Impairment loss recognised Balance at 31 December 10.454 0 27.343 0 132 28. non-interest bearing and generally on 30 to 120 day terms.454 2010 RM000 10. The Group and the Company have defaulted on the loans and borrowings with the effect that the liabilities have become repayable on demand.252 1.066 41.556 9. 2010 RM000 500. the entire carrying amounts are disclosed as current liabilities and will approximate to the remaining contractual undiscounted cash flows.396 13.244 2.292 0 0 1. The effective interest rates of loans and borrowings as at 31 December 2011 ranged from 4.087 0 0 1.217 1.087 0 0 1.777 ordinary shares of RM1.000 75. Accordingly.000.000 500.00 each Purchase of Own Shares The shareholders of the Company.27% to 9. plant and equipment (Note 4).053 15. 12. subsidiaries and other related parties are unsecured.014 15.104.00 each Issued and fully paid-up:75.10% (2010 : 4. 13.000 ordinary shares of RM1.Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 61 11.105 Annual Report 2011 Linear Corporation Berhad (288687-W) .055 Hire purchase payables are secured against the assets acquired thereunder (Note 4).105 75.055 0 0 14.387 9. PAYABLES (contd) Directors.80%) per annum. SHARE CAPITAL 2011 RM000 Authorised:500. approved the Companys plan to purchase its own shares. LOANS AND BORROWINGS Group Company 2011 RM000 Secured Hire purchase payables Bank overdrafts Term loans Unsecured Bank overdrafts Banker acceptances 2010 RM000 2011 RM000 2010 RM000 1. Other secured loans and borrowings are secured against certain property. non-interest bearing and repayable on demand.27% to 10.534 42.365 2. Subsidiaries and Other Related Parties The amounts owing to directors. by a resolution passed at the Annual General Meeting held on 23 June 2004. holds 20% or more of the issued and paid-up share capital of the Company shall not exceed 10% of the total number of shares available under the scheme.62 Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 13.999 (1. of Shares 000 2. of Shares 000 Balance at 1 January Reissue of treasury shares Balance at 31 December 339 0 339 Cost RM000 230 0 230 No. either singly or collectively through his/her associates. The principal features of the ESOS are as follows:(i) The total number of share options offered under the scheme shall not exceed 10% of the issued and paid-up share capital of the Company at any point of time during the existence of the ESOS.766 0 74.766 2010 No. seniority and length of service of the eligible employee subject to the following:(a) the total number of shares allocated. to directors and senior management of the Group shall not exceed 50% of the total number of shares available under the scheme. of Shares 000 72. (b) is employed under full-time by and is on the payroll of a company within the Group. Annual Report 2011 Linear Corporation Berhad (288687-W) .950 (2.155 2. of Shares 000 Balance at 1 January Reissue of treasury shares Balance at 31 December 74. (iii) Any employee (including executive directors) of the Group shall be eligible to participate in the scheme if as at the date of offer he/she:(a) has attained the age of 18 years.611) 339 Cost RM000 1.766 Employees Share Option Scheme The Employees Share Option Scheme (ESOS) of the Company became effective on 14 August 2003 for a period of 5 years and was extended for another 5 years up to 13 August 2013. (ii) The number of new shares that may be offered and allotted to an eligible employee of the Group who is entitled to participate in the scheme shall be at the discretion of the Option Committee after taking into consideration of the performance.769) 230 The number of outstanding shares in issue after excluding the treasury shares is as follows:2011 No. SHARE CAPITAL (contd) The details of the shares purchased and held as treasury shares are as follows:2011 2010 No. and (c) is under such categories and such criteria that the Option Committee may from time to time decide. and (b) the number of shares allocated to any individual director or employee who.611 74. in aggregate. 000) 172.Current year . (v) The options granted may be exercised within a period of 5 years from the effective date of the scheme or such shorter period as may be specifically stated in the offer upon giving notice in writing to the Company.00 each Outstanding at 1 January 2010 Forfeited Outstanding at 31 December 2010 Exercisable at 31 December 2010 Outstanding at 1 January 2011 Forfeited Outstanding at 31 December 2011 Exercisable at 31 December 2011 1.000 (813.856 0 0 12.16 1.428) (3.000 Exercise Price RM 1. (vi) The new ordinary shares to be allotted upon exercise of the options will upon allotment rank pari passu in all respects with the existing ordinary shares in the Company except that the new ordinary shares will not be entitled to any dividends or distributions which may be declared prior to the allotment of the shares.502 2011 RM000 0 5 0 0 5 2010 RM000 0 63 0 0 63 Annual Report 2011 Linear Corporation Berhad (288687-W) . whichever is higher.16 1.16 1.137.16 1. REVENUE Group Company 2011 RM000 Sale of goods Rendering of services:.423 6.6 years 14.16 Remaining Contractual Life 2.16 1.Reversal for 2008 .000 324.001) 7. (iv) The option price shall be determined at a discount of not more than 10% from the weighted average market price of the ordinary shares in the Company as shown in the daily official list of Bursa Malaysia Securities Berhad for the 5 preceding market days prior to the date of offer or at par value of the ordinary shares in the Company. SHARE CAPITAL (contd) Employees Share Option Scheme (contd) Any allocation under the scheme to an executive director of the Group shall require prior approval from the Companys shareholders at a general meeting.Reversal for 2009 5.Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 63 13.000 172.279 2010 RM000 5.16 1.840 (1.000 (152.6 years 1.16 1.000 324. The movements in the number of options during the financial year are as follows:Number of Options over Ordinary Shares of RM1.091 6.000) 324. 871 0 48.736 2010 RM000 2.Prior year Directors remuneration:.834 0 45 0 228 158 1 30 11.137 0 0 41 0 2.259 0 0 31 42 3.894 3.64 Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 15.Fees .Current year .224 2011 RM000 366 0 366 2010 RM000 386 24 410 16.935 289 3.300 0 0 0 126 129 0 73 0 0 0 0 Annual Report 2011 Linear Corporation Berhad (288687-W) .829 527 24 0 0 676 239 32 0 0 0 0 0 32.047 0 4.Other emoluments Fee expense for financial instruments not at fair value through profit or loss Impairment loss on investment in associate* Impairment loss on investments in subsidiaries* Impairment loss on loans and receivables:. EMPLOYEE BENEFITS EXPENSE Group Company 2011 RM000 Short-term employee benefits Defined contribution plan 2.677 0 1.Others Impairment loss on property.527 209 2.Subsidiaries . LOSS BEFORE TAX Group Company 2011 RM000 Loss before tax is arrived at after charging:Allowance for slow moving inventories Auditors remuneration:. plant and equipment and crediting:Gain on derecognition of available-forsale financial assets Gain on disposal of property. plant and equipment 914 143 (2) 250 56 41 0 0 2010 RM000 2011 RM000 2010 RM000 692 145 0 228 158 94 7 0 0 43 (2) 250 56 0 0 2.101 4. plant and equipment* Interest expense for financial liabilities not at fair value through profit or loss Loss on derecognition of available-forsale financial assets Loss on disposal of associate Realised loss on foreign exchange Rental of premises Revaluation decrease of property.161 1 1. 00 0. which is the statutory income tax rate.18 2011 % (25.Deferred tax 2010 RM000 2011 RM000 2010 RM000 0 (1.Deferred tax Tax under/(over) provided in previous years:.00 0.55 (0. LOSS BEFORE TAX (contd) Group Company 2011 RM000 Interest income for financial assets not at fair value through profit or loss Rental of premises Reversal of allowance for slow moving inventories Reversal of impairment loss on loans and receivables:.72 0.00) 16.98 (0. and the average effective tax rate on results for the year is as follows:Group Company 2011 % Applicable tax rate Non-deductible expenses Non-taxable income Increase in unrecognised deferred tax assets Average effective tax rate (25.47) 0.Others * Included in other expenses 2010 RM000 2011 RM000 2010 RM000 1 16 48 0 16 68 0 0 0 0 0 0 0 103 0 47 543 0 0 0 17.432) 30 0 30 0 0 0 0 0 0 632 0 (800) (295) (1.00 Annual Report 2011 Linear Corporation Berhad (288687-W) .00) 27.21) 2010 % (25.00 2010 % (25.09) 15.03) 5.00 0.Malaysian income tax .Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 65 16. TAX INCOME Group Company 2011 RM000 Tax based on results for the year:.00) 25.Subsidiaries .432) (1.545) (1.810) 0 0 0 0 0 0 The numerical reconciliation between the applicable tax rate.40 (2.84 (2.00) 9.07 0.Malaysian income tax . 000 and NIL (2010 : RM5.943 20. plant and equipment 2010 RM000 2011 RM000 2010 RM000 8 2.311 (22. as follows:2011 Loss attributable to owners of the Company (RM000) Number of shares in issue at 1 January (000) Effect of shares reissued (000) Weighted average number of shares in issue (000) Basic loss per share (sen) (61. deferred tax liabilities and deferred tax assets have effectively been recognised and offset against each other by the Group and the Company to the extent of approximately RM5. 18.894) 35. after adjusting for the effect of shares reissued.766 0 74.665) 72.000 (2010 : NIL).949 1 2.766 (82) 2010 (14. unused capital allowances and tax losses over the taxable temporary differences as follows:Group Company 2011 RM000 Deductible temporary differences of:.Financial instruments Unused capital allowances Unused tax losses Taxable temporary differences of property. TAX INCOME (contd) As at 31 December 2011.846 8 0 0 0 915 0 923 0 0 0 0 915 (7) 908 The tax saving of the Group for which credit has been taken in the current year as a result of the realisation of unused tax losses brought forward that had not been accounted for previously amounted to approximately RM16.453 9.224. plant and equipment .306 (20) The diluted loss per share equals the basic loss per share due to the anti-dilutive effect of the share options which has been ignored in calculating the diluted loss per share.000) respectively.059 17. Annual Report 2011 Linear Corporation Berhad (288687-W) .285) 50.Property. No further deferred tax assets have been recognised for the excess of the deductible temporary differences.113 820 36.377) 74. LOSS PER SHARE Group The basic loss per share is calculated by dividing the Groups loss for the financial year attributable to owners of the Company by the weighted average number of ordinary shares in issue during the financial year.155 2.571.000 and RM2.66 Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 17.519 40.747 (20.Inventories .151 74. 609) (15. RELATED PARTY DISCLOSURES Transactions with related parties during the financial year are as follows:2011 RM000 Key management personnel compensation:. assets and liabilities are mainly confined to a single operating segment.Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 67 19. sale and operation of cooling towers and district cooling plant.151) 2011 RM000 18 0 18 2010 RM000 71 0 71 20. namely the manufacture.Short-term employee benefits . SEGMENT REPORTING Group Operating Segments Information about operating segments has not been reported separately as the Groups profit or loss. Annual Report 2011 Linear Corporation Berhad (288687-W) . CASH AND CASH EQUIVALENTS Group Company 2011 RM000 Cash and bank balances Bank overdrafts 100 (16.301) 2010 RM000 458 (15.401) (16.Defined contribution plan Management fee charged to subsidiaries Receiving of services from other related party* * Group 2010 RM000 2011 RM000 Company 2010 RM000 306 0 306 0 84 485 32 517 0 0 306 0 306 5 0 368 18 386 63 0 Being a company in which a director has a substantial financial interest 21. Geographical Information Information about geographical areas has not been reported separately as the Group operates and generates revenue principally within Malaysia. 741 6. employee. SEGMENT REPORTING (contd) Major Customers The major customers that contributed 10% or more of the Groups total revenue are as follows:External Revenue 2011 2010 RM000 RM000 Customer I* Customer II* . Suspected related party (Note 25) Financial institutions Inland Revenue Board Financial Statement Item Other payables (Note 11) Exceptional Items (Notes 11 and 25) Loans and borrowings (Note 12) Claimant/Plaintiff Suppliers Suspected related party (Note 25) Financial institutions Total Claim RM000 28 132 43.419 Carrying Amount as at 31.68 Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 21.359 1.398 1.Reversal for 2008 and 2009 * 3.12. statutory bodies.404 0 2.2011 RM000 4.205 (4.241 Annual Report 2011 Linear Corporation Berhad (288687-W) .419 Carrying Amount as at 31. etc.798 4.192 2.Current year . 22. CONTINGENT LIABILITIES Material Litigations The Group and the Company have defaulted on their payables.087 *Un-recognised Contingent Liability RM000 472 558 361 1.383 43. loans and borrowings and current tax liabilities and are currently engaged in material litigations summarised as follows:Group Total Claim RM000 4.831 2.002 0 *Un-recognised Contingent Liability RM000 28 0 42.634 2.429) The identity of the major customer has not been disclosed as permitted by FRS 8 Operating Segments.2011 RM000 0 132 1.396 1.022 42.12.154 Financial Statement Item Trade payables (Note 11) Other payables (Note 11) Exceptional Items (Notes 11 and 25) Loans and borrowings (Note 12) Current tax liabilities Company Claimant/Plaintiff Suppliers Suppliers. management acknowledged that the actual quantum of unrecognised contingent liabilities as at 31 December 2011 should be higher and would increase continuously from the ongoing litigations as the claimants/plaintiffs were also claiming for overdue interest. The overall financial risk management objective of the Group is to ensure that adequate financial resources are available for business development whilst minimising the potential adverse impacts of financial risks on its financial position. FINANCIAL RISK MANAGEMENT The activities of the Group expose it to certain financial risks. Credit Risk The Groups exposure to credit risk arises mainly from receivables.000 (2010 : RM39.200. The Company is also exposed to credit risk in respect of its financial guarantees provided for credit facilities granted to certain subsidiaries. Annual Report 2011 Linear Corporation Berhad (288687-W) . As the Group has defaulted on its loans and borrowings. liquidity risk and interest rate risk. Liquidity Risk The Groups exposure to liquidity risk relates to its ability to meet obligations associated with financial liabilities as and when they fall due. interest is currently charged at the higher default rates. costs and other damages. loans and borrowings and current tax liabilities and is currently undertaking a regularisation plan to regularise its financial conditions.152. The total utilisation of these credit facilities as at 31 December 2011 amounted to approximately RM41.000).200. setting and monitoring counterparties limits and credit terms. Financial Guarantee Contracts (Unsecured) Company The Company has entered into financial guarantee contracts to provide financial guarantees to financial institutions for credit facilities granted to cer tain subsidiaries up to a total limit of approximately RM57. The Group manages its credit risk exposure by assessing counterparties financial standings on an ongoing basis. CONTINGENT LIABILITIES (contd) Material Litigations (contd) * Whilst reasonable steps have been taken to ensure the completeness of the above summarised disclosures. The maximum credit risk exposure of these financial assets is best represented by their carrying amounts in the statement of financial position. The Group has defaulted on its payables. Interest Rate Risk The Groups exposure to interest rate risk arises mainly from loans and borrowings.000).Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 69 22. performance and cash flows. The maximum credit risk exposure of these financial guarantees is the total utilisation of the credit facilities granted as disclosed in Note 22. including credit risk.927. 23.000 (2010 : RM57. 022 570 2.022 570 2.446 (10.454) 0 132 0 132 0 0 650 0 0 0 10. The Group has defaulted on its loans and borrowings and is currently undertaking a regularisation plan to regularise its financial conditions.185 3. 25. with all other variables held constant:Group (Increase)/ (Increase)/ Decrease Decrease in Loss in Loss 2010 2011 RM000 RM000 Increase in interest rates by 50 basis points Decrease in interest rates by 50 basis points (206) 206 (200) 200 24.446) 0 2. CAPITAL MANAGEMENT The overall capital management objective of the Group is to safeguard its ability to continue as a going concern so as to provide fair returns to owners and benefits to other stakeholders.804 11.642 2.085 600 250 50 10. any change in interest rates at the end of the reporting period would not affect its profit or loss or other comprehensive income.185 3.804 11.804 58.454 (10.592 0 0 650 0 0 0 10.472 8.592 35.472 8.804) 650 132 0 132 Payables (Note 11) Exceptional Item VIII Exceptional Item IX Annual Report 2011 Linear Corporation Berhad (288687-W) . the Group always strives to maintain an optimal capital structure to reduce the cost of capital and sustain its business development. In order to meet this objective. The Group considers its total equity and total loans and borrowings to be the key components of its capital structure. FINANCIAL RISK MANAGEMENT (contd) Interest Rate Risk (contd) As the Group does not account for its fixed rate financial instruments at fair value through profit or loss or as availablefor-sale. For floating rate financial instruments stated at amortised cost. EXCEPTIONAL ITEMS Group Company 2011 RM000 Receivables (Note 10) Exceptional Item I Exceptional Item II Exceptional Item III Exceptional Item IV Exceptional Item V Exceptional Item VI Exceptional Item VII Allowance for impairment 2010 RM000 2011 RM000 2010 RM000 35. the following table demonstrates the sensitivity of profit or loss to changes in interest rates that were reasonably possible at the end of the reporting period.446 (58.70 Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 23.804 58.085 600 250 50 10.804) 47.454 (11. legality and recoverability of the amount which might indicate the possibility of fraud. Kingdome Project and PST Account. GIG. legality and recoverability of the amount which might indicate the possibility of fraud. Management is doubtful about the veracity. Exceptional Item VI This represents an amount alleged as loan processing fee paid to a company which is suspected to be connected with certain former directors. legality and recoverability of the advances which might indicate the possibility of fraud. a former director caused a wholly-owned subsidiary. completion and commissioning of a district cooling plant for the Kingdome Project in Manjung. Annual Report 2011 Linear Corporation Berhad (288687-W) . management is doubtful about the veracity. Management is doubtful about the veracity. the Group engaged a professional advisory firm to carry out special audit of the transactions pertaining to the Advance Sum. In April 2010. EXCEPTIONAL ITEMS (contd) Exceptional Item I In December 2009. It was unclear whether GIG had the operational and financial capabilities to deliver the Kingdome Project. legality and recoverability of the advances which might indicate the possibility of fraud. Management is suspicious about the veracity of the trade transactions which were recorded in 2007 whereby the related costs of sales were paid to the same company to which the sales were made. The audited financial statements of the Group for the financial years 1999 to 2008 might have been overstated.Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 71 25. Bhd. The existence of the Kingdome Project could not be proven. The special audit was completed in June 2011 with the following major findings:(i) (ii) (iii) (iv) (v) The existence and LCI Globals ownership of the PST Account could not be proven. (LCI Global). the former director caused LCI Global to pay the Advance Sum to GIG again without the approval of the Board of Directors. Exceptional Item IV This represents an amount alleged as brokerage fee paid to a company which is suspected to be connected with certain former directors. In February 2010. to advance a sum of RM36 million (Advance Sum) to Global Investment Group Inc. legality and recoverability of the debts which might indicate the possibility of fraud. construction. LCI Global Sdn. Exceptional Item III This represents long-outstanding advances to companies which are suspected to be connected with certain former directors. Perak as promoted by GlG. (GlG) as a performance consideration in connection with a letter of award for the design. In August 2010. Exceptional Item V This represents long-outstanding advances to a prospective investee whose statutory information could not be found from the records of the Companies Commission of Malaysia. Management is doubtful about the veracity. Exceptional Item II This represents long-outstanding trade debts owing by a company which is suspected to be connected with certain former directors. the former director caused GIG to refund the Advance Sum to an account held at Prime Savings & Trust. Management is doubtful about the veracity. Accordingly. The Advance Sum recorded as being held in the PST Account might not have existed. Section 133A of the Companies Act 1965 (regarding prohibition of loans to persons connected with directors) might have been contravened in previous years when the advances were made. a credit union registered in Sweden (PST Account). Exceptional Item IX This represents alleged advances from a former director. The said company has initiated legal proceedings against the Group (Note 22). EXCEPTIONAL ITEMS (contd) Exceptional Item VII This represents long-outstanding advances to a joint venture company in China which were fully impaired in 2009 after several attempts to collect the debts and locate the counterparties have failed. management has appointed another professional advisory firm in March 2012 to carry out investigative audit review on specific transactions and related accounting entries during the financial years 2007 to 2009. Management is suspicious about the veracity and legality of the joint venture project and related advances which might indicate the possibility of fraud. Investigations Besides engaging a professional advisory firm to carry out special audit of the transactions pertaining to Exceptional Item I. Management is doubtful about the veracity of the advances which might indicate the possibility of fraud as the funds injected into the Group might originate from its own funds suspiciously misappropriated earlier.72 Notes to the Financial Statements (Contd) For the Financial Year Ended 31 December 2011 25. Exceptional Item VIII This represents alleged advances from a company which is suspected to be connected with certain former directors. Management is doubtful about the veracity of the advances which might indicate the possibility of fraud as the funds injected into the Group might originate from its own funds suspiciously misappropriated earlier. The investigative audit review has yet to be completed as at the date when the financial statements were authorised for issue. Annual Report 2011 Linear Corporation Berhad (288687-W) . 648) 0 0 (106.531) 0 (209. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No.582 (41.554) 106.017) 0 (101.515) 0 (106.652 (102.531) (136.515) (101.515) 0 0 (101.017) 0 (101. as issued by the Malaysian Institute of Accountants and the directive of Bursa Malaysia Securities Berhad.207) 0 (136.Realised .017) Consolidation adjustments and eliminations Total accumulated losses as per statement of financial position The above supplementary information is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements.017) (23) 0 (209.Realised .Unrealised Total share of accumulated losses of associate:.230) 94.902) (23) 0 (136.207) (106. Annual Report 2011 Linear Corporation Berhad (288687-W) .Unrealised Group 2010 RM000 2011 RM000 Company 2010 RM000 (209.Supplementary Information .515) 0 (106. 1 Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements.Realised and Unrealised Profits or Losses 73 2011 RM000 Total accumulated losses of the Company and its subsidiaries:. Jalan Pantai. Mukim 11. Taman Pelangi Prai.337 Total 38. BT 5 ½.087. T-3-15. District of Port Dickson.85 acres - 18.337 Annual Report 2011 Linear Corporation Berhad (288687-W) . Pulau Pinang Parcel Nos.2052) Land/ Built-up area 6. Daerah Seberang Perai Tengah. Jalan Pelangi 2. Prai Industrial Estate 4 Prai. T-3-2. 5797.2092) 689 square feet each 12 270. Parent Lot No. Marina Crescent Condominium. Negeri Sembilan Mukim 6 & 7 Seberang Perai Tengah Pulau Pinang Description/ Existing use Head Office And Factory Building Tenure Leasehold (60 years Expiring on 11. PN 11176 (formerly PT 3088 HS(D) 13639). T-4-16. Port Dickson. Daerah Seberang Perai Tengah. Mukim of Si Rusa. Seberang Perai Tengah.42913 Acres Age of Building/ Land(years) 15 NBV as at 31-12-2011 RM 19.5. Negeri Sembilan Mukim 6 & 7. Pulau Pinang Workers quarters Leasehold (99 years Expiring on 22. HS(D) 37842 (formerly HS(D) 570). Penang Title PT 458. T-3-16 T-4-1. Jalan Perusahaan. Pulau Pinang Lot 6100. 208.000 Condominium Leasehold (99 years Expiring on 27.000.000 T-3-1. 209. 194. Si Rusa. 193.637.74 List Of Properties As At 31 December 2011 Location Plot 20A.000 District Cooling plant Freehold Land & building 1. Penang 3A-F.4. 207. 224.2094) 62 Square meters 13 180. Mukim 6.7. 765.70 38.000 100. Bhd.90 11.68 29.00 % 0.000.976 No.372. of Shareholders 314 773 2. Anthony Nominees (Tempatan) Sdn.000 Issued and Paid-up share capital : RM75.001 to less than 5% of issued share capital 5% and above of issued share capital Total Note: *Excluding 339.976 ANALYSIS OF SHAREHOLDINGS Size of Shareholdings No.22 A.001 to 100.A.001 to 10.44 53.48 19.730. Notes: # Excluding 339.18 1.84 0.518 - #% 19. of Ordinary Shares 12.02 0.132 683 73 1 3.275 674.000 10.22 100.000 shares bought back by the Company and held as treasury shares DIRECTORS INTEREST IN SHARES In The Company Name Direct Lim Hun Beng Saw Heng Soo Ong Tai Chew Dato Wira Amiruddin Bin Che Embi Dato Ling Keak Ming Neoh Chee Kean Adam Bin Bachek - Shareholdings Direct % - #% - Annual Report 2011 Linear Corporation Berhad (288687-W) .777 % 7.769.372. Pledged Securities Account For Crystal Insight Sdn.000 shares bought back by the Company and held as treasury shares SUBSTANTIAL SHAREHOLDERS As per the Register of Substantial Shareholders Name Shareholdings Direct Indirect 14.00 Less than 100 100 to 1.00 each Voting rights : One (1) vote per ordinary share Number of shareholders : 3.518 *74.934 8.104.02 100.90 19. Bhd.030 22.Analysis of Shareholdings As At 10 May 2012 75 SHARE CAPITAL Authorised share capital : RM500.777 Class of shares : Ordinary shares of RM1.000 1.62 17.206.515 14.505 28. 96 0. Pledged Securities Account for Soon Ah Ba 30.79 10. Anthony Nominees (Tempatan) Sdn.05 1. Bhd.34 0.76 0.74 0.372.53 0. M Ramakrishnan A/L K Madhavan Nair 22.000 281.38 0.500 2.700 276. Koo Xian Shuen 27. Lee Teck Ong @ Lee Kok Chee 18.000 550.435.400 393.51 0.000 505.000 520.000 1.42 0.98 0. Maybank Nominees (Tempatan) Sdn. 8. 6.70 0.70 2.000 290. Ooi Gaik Tin 21. Bhd Pledged Securities Account For Ong Jeik Boon @ Ong Teik Boon (E-Two) 20. Bhd.400 520. 9.68 0.000 258. Tan Kwang Yu 28 Ho Han Min 29. 5.31 47.000 731. Garrick Gooi Shen Loong 14. of Ordinary Shares 14. Ong Keng Teong 11.200 465.80 0.40 0.37 0.52 0.78 2. Bhd.22 3. 7.534. Goh Hock Soon Hor Suit Kiew Ong Peng Chor Citigroup Nominees (Asing) Sdn.100 392. Public Nominees (Tempatan) Sdn.149 1. Ong Jeik Boon @ Ong Teik Boon 16. 4. Ng Soon Gun 15.000 35. Ong Chin Kean 23.900 2.39 0.000 600.700 566.000 318. Exempt An for OCBC Securities Private Limited Kok Thin Chow Ong Tiong Eng Tengku Rethwan Bin Tengku Mansor Low Kim Chun % 19.62 0.34 1.600 250. Maybank Securities Nominees (Asing) Sdn.000 233.047. Bhd.000 581.000.000 384.70 0.100 1. Tiong Mee Mee 17.000. Kim Eng Securities Pte Ltd for Cheng Yong Heng 25.48 0. Amanda Alise Barnabas TOTAL Annual Report 2011 Linear Corporation Berhad (288687-W) . Pledged Securities Account for Crystal Insight Sdn.34 0.567 No.400 720. Tan Cheng Hong 19. 3. Ong Chin Hock 13. Bhd.800 360.000 1.518 2.33 0.78 0. A. Kho Yong Hua 26.081. Name of Shareholders 1. Perdamen Singh A/L Waryam Singh 12.92 1.A. 2.765.100 300.74 2. Lim Ah Kow @ Lim Choo Leong 24.733.76 Analysis of Shareholdings (Contd) As At 10 May 2012 THIRTY(30) LARGEST ORDINARY SHAREHOLDERS No. and if thought fit. 3. MALAYSIA ON FRIDAY.1 of the Circular to Shareholders dated 4 June 2012 accompanying the Companys Annual Report 2011 (the Circular). NO. Special Business To consider.1 Saw Heng Soo 3.2 Neoh Chee Kean 4. as detailed in section 2. 1965 (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Companies Act. To re-elect the following Directors who retire by rotation pursuant to the Companys Ar ticles of Association and who. which are of revenue in nature and which are transacted within and/or are necessary for the day-today operations of the Group and which are carried out on terms no more favourable to the related parties than those generally available to the public or non-related parties and are not to the detriment of the minority shareholders of the Company (the Shareholders Mandate) And That the Shareholders Mandate shall continue to be in force until:(i) the conclusion of the next annual general meeting of the Company.Notice of 18th Annual General Meeting 77 NOTICE IS HEREBY GIVEN THAT THE EIGHTEENTH ANNUAL GENERAL MEETING (THE MEETING) OF LINEAR CORPORATION BERHAD (THE COMPANY) WILL BE CONVENED AND HELD AT THE SEMINAR HALL. JALAN PERUSAHAAN. GROUND FLOOR.4. to pass with or without any modifications the following resolutions:Ordinary Resolutions 5. PRAI INDUSTRIAL ESTATE 4. or (iii) revoked or varied by resolution passed by the shareholders of the Company in a general meeting. being eligible. approval be and is hereby given for the Company and its subsidiaries (the Group) to enter into the recurrent related party transactions. at which time it will lapse unless by a resolution passed at such meeting. To receive the Consolidated Audited Financial Statements of the Company for the financial year ended 31 December 2011 and the Reports of the Directors and Auditors thereon. 13600 PRAI. Annual Report 2011 Linear Corporation Berhad (288687-W) . Proposed Renewal of Shareholders Mandate For Recurrent Related Party Transactions That subject always to the Listing Requirements of Bursa Malaysia Securities Berhad (Bursa Securities).30 P. or Resolution 6 Resolution 1 Resolution 2 Resolution 3 Resolution 4 Resolution 5 (ii) the expiration of the period within which the next annual general meeting of the Company is required to be held pursuant to Section 143(1) of the Companies Act. PENANG. TO TRANSACT THE FOLLOWING BUSINESSES :AGENDA Ordinary Business 1. 20A. have offered themselves for re-election:Article 95 3. such authority is renewed. To re-appoint Messrs Crowe Horwath as Auditors of the Company who shall hold office until the conclusion of the next annual general meeting of the Company. and to authorise the Directors to fix their remuneration.M. 29 JUNE 2012 AT 2. To approve the payment of Directors fees totalling RM250.000 in respect of the financial year ended 31 December 2011. 1965). 2. variation(s) and/or amendment(s) as may be imposed by the relevant authorities from time to time and to do all such things and acts as the Directors may deem fit and expedient in the best interest of the Company subject further to the following :(i) the aggregate number of shares purchased pursuant to this resolution does not exceed ten per centum (10%) of the existing issued and paid-up share capital of the Company inclusive of the 339.6 of the Circular. at which time the said authority will lapse unless by an ordinary resolution passed at a general meeting of the Company. 6. Annual Report 2011 Linear Corporation Berhad (288687-W) . (ii) the expiration of the period within which the next AGM is required by law to be held. And That the authority conferred by this Resolution shall be effective immediately upon the passing of this Ordinary Resolution until :(i) the conclusion of the next annual general meeting (AGM) of the Company. the Directors are authorised to retain the purchased shares as treasury shares or cancel the purchased shares or retain part of the purchased shares as treasury shares and cancel the remainder. whichever occurs first but shall not prejudice the completion of purchaser(s) by the Company before the aforesaid expiry date.1 of the Circular being provisional in nature. And That the Directors are further authorised to resell the treasury shares on Bursa Securities or distribute the treasury shares as share dividends to the shareholders of the Company or subsequently cancel the treasury shares or any combination of the above. the Listing Requirements of Bursa Malaysia Securities Berhad (Bursa Securities) and all other relevant applicable laws.00 each in the Company (Proposed Share Buy-Back) as may be determined by the Directors from time to time through Bursa Securities and to enter into any agreement(s). Proposed Renewal of Authorisation for the Company to Purchase its Own Shares. the Directors and/or any of them. That upon completion of the Proposed Share Buy-Back. regulations and guidelines and the approvals of all relevant authorities. modification(s). either unconditionally or subject to conditions. And That the estimates given of the recurrent related party transactions specified in section 2. be and are hereby authorised to agree to the actual amount or amounts thereof provided that such amount or amounts comply with the procedures set out in section 2.4. Resolution 7 (ii) the amount allocated for the Proposed Share Buy-Back shall not exceed the Companys audited retained profit and/or share premium account. finalise and give full effects to the Proposed Share Buy-Back with full powers to assent to any condition(s). arrangement(s) and guarantee(s) with any party(ies) to implement. 1965.000 ordinary shares already purchased and retained as treasury shares as at 4 June 2012. or (iii) revoked or varied by ordinary resolution passed by the shareholders in general meeting.78 Notice of 18th Annual General Meeting (Contd) That the Directors of the Company be and are hereby authorised to complete and do all such acts and things as they may consider expedient or necessary to give effect to the Shareholders Mandate. revaluation(s). finalise and give full effects to the Proposed Share Buy-Back implement. That subject to the Companies Act. the Memorandum and Articles of Association of the Company. the Company be and is hereby authorised to purchase such amount of ordinary shares of RM1. the authority is renewed. 3. A proxy may but need not be a member of the Company and Section 149(1) (b) of the Companies Act. The Form of Proxy must be deposited at the Companys Registered Office. the Articles of Association of the Company and the approvals. Resolution 8 Annual Report 2011 Linear Corporation Berhad (288687-W) . rules and regulations of the relevant governmental and/or regulatory authorities. Appointment of Proxy A member entitled to attend and vote at this Meeting is entitled to appoint a proxy or proxies (but not more than two (2) save for an Authorised Nominee as defined in the Securities Industries (Central Depositories) Act. 10050 Penang not less than forty-eight (48) hours before the time appointed for the holding of the Meeting. 2.27 of the Listing Requirements of Bursa Malaysia Securities Berhad (Bursa Securities) is set out in the Statement Accompanying the Notice of 18th Annual General Meeting. Authority For Directors To Allot And Issue Ordinary Shares That subject always to the Companies Act. the Directors be and are hereby empowered pursuant to Section 132D of the Companies Act. Statement accompanying the Notice of 18th Annual General Meeting Additional information as required under Appendix 8A pursuant to Paragraph 8. Record of Depositors In respect of deposited securities. from time to time. only members whose names appear in the Record of Depositors on 22 June 2012 (General Meeting Record of Depositors) shall be eligible to attend the Meeting. BY ORDER OF THE BOARD Lim Saw Im (MACS 00363) Secretary Penang. 1991) to attend and vote in his stead. 60 Sri Bahari Road. 1965. 1965 shall not apply.Notice of 18th Annual General Meeting (Contd) 79 7. To transact any other business of which due notice shall have been given in accordance with the Companys Articles of Association and the Companies Act. 8. Malaysia 4 June 2012 NOTES 1. 1965 to allot and issue new ordinary shares in the share capital of the Company at any time. 1965. at such price(s) and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit (other than as a bonus or right issue or pursuant to the Companys Employees Share Option Scheme) provided that the aggregate number of new ordinary shares to be allotted and issued pursuant to this resolution shall not exceed ten percent (10%) of the total issued and paid-up share capital of the Company as at the date of allotment of such new ordinary shares and in any one (1) financial year. And That such authority shall remain in force until the conclusion of the next annual general meeting of the Company. expire at the conclusion of the next annual general meeting of the Company. will allow the Board of Directors to allot and issue new ordinary shares up to ten percent (10%) of the total issued and paid-up share capital of the Company as at the date of allotment of such new ordinary shares in any one (1) financial year. This general mandate is a renewal of the mandate that was approved by the shareholders on 29 June 2011. will allow the Company and its subsidiaries (the Group) to enter into recurrent related party transactions (Shareholders Mandate) pursuant to paragraph 10. Resolution 7. Further details on the Share Buy-Back are set out in the Share Buy-Back Statement dated 4 June 2012. Resolution 8 if passed. will expire at the conclusion of the next annual general meeting of the Company. The renewal of the general mandate is to facilitate the Company to raise funds expeditiously for the purpose of funding future investment. if passed. unless revoked or varied by the Company in a general meeting. unless revoked or varied by the Company in general meeting. will allow the Company to buy back its own shares up to 10% of the issued and paid-up share capital of the Company (Share Buy-Back). b) c) Annual Report 2011 Linear Corporation Berhad (288687-W) . Explanatory Notes on Special Business a) Resolution 6.80 Notice of 18th Annual General Meeting (Contd) 4. This authority. The details of the Shareholders Mandate are set out in the Circular to Shareholders dated 4 June 2012. The Company did not utilise the mandate that was approved last year. if passed.09(1) of the Listing Requirements of Bursa Securities. for such purposes and upon such terms as the Directors consider would be in the best interest of the Company (other than as a bonus or rights issue or pursuant to the Companys Employees Share Option Scheme). This authority will. working capital and/or acquisition without having to convene a general meeting to seek shareholders approval when such opportunities or needs arise. The Directors interest. Annual Report 2011 Linear Corporation Berhad (288687-W) . No.Statement Accompanying The Notice of 18th Annual General Meeting 81 Details of Interest of Directors Standing For Re-Election At The Eighteenth Annual General Meeting. of Shares held in the Company as at 10 May 2012 Name of Director Saw Heng Soo Neoh Chee Kean Direct % Indirect % - None of the above Directors has any direct interest in the Companys subsidiaries. pursuant to Section 6A of the Companies Act. in the subsidiaries are to the extent that the Company has an interest. 1965. The profile and details of the Directors standing for re-election are outlined in pages 5 and 6 of this annual report. if any. 82 This page is intentionally left blank Annual Report 2011 Linear Corporation Berhad (288687-W) . A member entitled to attend and vote at the Meeting is entitled to appoint a proxy or proxies (but not more than two (2) save for an Authorised Nominee as defined in the Securities Industries (Central Depositories) Act.30 p. This Form of Proxy must be deposited at the Companys Registered Office. the appointment shall be invalid unless he specifies the proportions of shareholdings to be represented by each proxy. 1991) to attend and vote in his stead.. . 5. No.Proxy Form I/We of being a member / members of LINEAR CORPORATION BERHD (the Company) hereby appoint of or failing whom of / the Chairman of the Meeting as my/our proxy to attend. 4. 10050 Penang not less than fortyeight (48) hours before the time appointed for the holding of the Meeting. speak and vote on my/our behalf at the Eighteenth Annual General Meeting of the Company (the Meeting) to be held at the Seminar Hall. 60 Sri Bahari Road. only members whose names appear in the Record of Depositors on 22 June 2012 (General Meeting Record of Depositors) shall be eligible to attend the Meeting. and at any adjournment thereof. I/We direct my / our proxy to vote (see Note 4 herein) for or against the resolutions to be proposed at the Meeting as indicated hereunder :Resolution 1 2 3 4 5 6 7 8 For To To To To To To To To receive the audited financial statements approve directors fees re-elect Saw Heng Soo re-elect Neoh Chee Kean re-appoint Crowe Horwath as auditors renew shareholders mandate for recurrent related party transaction renew authority for share buy-back authorise directors to allot and issue ordinary shares No. This Form of Proxy. 13600 Prai. Jalan Perusahaan. 29 June 2012 at 2. of Shares Held Against Dated this ________ day of _____________________ 2012 Signature / common seal of shareholder Notes 1.m. the proxy will be entitled to vote or abstain from voting as he thinks fit. Ground Floor. Where a member appoints more than one proxy. Prai Industrial Estate 4. 20A. 6. In respect of deposited securities. must be signed by the appointor or by his attorney duly authorised in writing and in the case of a body corporate. it must be given under its common seal or signed on its behalf by an attorney or officer of the body corporate duly authorised in writing. in the case of an individual. A proxy may but need not be a member of the Company and Section 149 (1) (a) and (b) of the Companies Act 1965 shall not apply. Please indicate with an X in the appropriate column as to how you wish your proxy to vote For or Against each resolution. 3. Malaysia on Friday. If this Form of Proxy is returned without any indication as to how the proxy shall vote. 2. Penang. Each proxy appointed shall represent a minimum of 100 shares held by the member. (288687-W) Please fold here .Please fold here Affix STAMP Here To The Company Secretary LINEAR CORPORATION BERHAD 60 Sri Bahari Road 10050 Penang Malaysia. linear. 13600 Prai. Malaysia. Prai Industrial Estate 4. www.my .com. 20A. Penang.Linear Coporation Berhad (288687-W) No. Jalan Perusahaan.