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UNITED BINTANG BERHAD (44676-M)

United Bintang Berhad


(44676-M)

No. 2-1, Jalan Segambut


51200 Kuala Lumpur

Tel (03) 4043 9288


Fax (03) 4043 9753

Emailubb@po.jaring.my

www.ubb.com.my

2011 ANNUAL REPORT


CONTENTS
2 Notice of Annual General Meeting

4 Appendix A

5 Corporate Information

6 Chairman’s Statement

7 Directors’ Profile

12 Corporate Governance Report

23 Audit Committee Report

26 Internal Control Statement

28 List of Investment Properties

29 Financial Statements

74 Analysis of Shareholders

Proxy Form
Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the Thirty-Third Annual General Meeting of the
Company will be held at Bukit Kiara Equestrian and Country Resort, Dewan
Berjaya, Jalan Bukit Kiara, Off Jalan Damansara, 60000 Kuala Lumpur, Malaysia
on Tuesday, 19 June 2012 at 11.00 a.m. for the following purposes: -

AGENDA

1. To receive the Audited Financial Statements of the Company and the


Group together with the reports of the Directors and Auditors for the Please refer Explanatory
financial year ended 31 December 2011. Note A

2. To approve the payment of Directors’ fees in respect of the financial


year ended 31 December 2011. Ordinary Resolution 1

3. To re-elect the following Directors who retire in accordance with Article


83 of the Company’s Articles of Association :-

3.1 Mr George Anthony Dass David Ordinary Resolution 2 (a)


3.2 Mr Ong Bing Yap Ordinary Resolution 2 (b)

4. To re-appoint Messrs Mazars as Auditors of the Company and to


authorise the Directors to fix their remuneration. Ordinary Resolution 3

5. As Special Business

To consider and, if thought fit, to pass with or without modifications, the


following resolution as a Special Resolution :-

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE


COMPANY

“THAT the Articles of Association of the Company be and are hereby


amended in the form and manner as set out in “Appendix A” of the
Company’s 2011 Annual Report.” Special Resolution 1

6. To transact any other business for which due notice shall have been
given in accordance with the Companies Act, 1965.

By Order of the Board

Lim Lai Sam (MAICSA No. 0877479)


Secretary

Kuala Lumpur
25 May 2012

2 UNITED BINTANG BERHAD (44676-M)


Notice of Annual General Meeting (cont’d)

Notes:

1. A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies (but
not more than two) to attend and vote instead of him. A proxy may but need not be a member of
the Company and the provisions of Section 149(1) (b) of the Companies Act, 1965 shall not apply to
the Company. Where a member appoints two proxies to attend the same meeting, the member
shall specify the proportion of his shareholding to be represented by each proxy, failing which the
appointment shall be invalid.

2. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his
attorney duly authorised in writing or, if the appointor is a corporation, either under the corporation’s
common seal or under the hand of an officer or attorney duly authorised. The instrument appointing
a proxy shall be deemed to confer authority to demand or join in demanding a poll.

3. The Proxy Form shall be deposited with the Company’s Share Registrars, Symphony Share Registrars
Sdn Bhd at Level 6, Symphony House, Block D13, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301
Petaling Jaya, Selangor Darul Ehsan, Malaysia not less than 48 hours before the time appointed for
holding the meeting or any adjournment thereof.

4. General Meeting Record of Depositors


Depositors whose names appear in the Record of Depositors on a date not less than three (3)
market days before the general meeting shall be regarded as Member of the Company entitled
to attend and vote at the Annual General Meeting or appoint a proxy to attend and vote on his
behalf.

5. Authorised Nominee and Exempt Authorised Nominee


Where a member of the Company is an authorised nominee as defined under the Central
Depositories Act, it shall be entitled to appoint at least one (1) proxy in respect of each securities
account it holds with ordinary shares of the Company standing to the credit of the said securities
account.

Where a member of the Company is an exempt authorised nominee which holds ordinary shares in
the Company for multiple beneficial owners in one securities account (“omnibus account”), there
is no limit to the number of proxies which the exempt authorised nominee may appoint in respect
of each omnibus account it holds.

Where an authorised nominee or an exempt authorised nominee appoints proxies, the proportion
of shareholdings to be represented by each proxy must be specified in the instrument appointing
the proxies.

Explanatory Note A

This Agenda item is meant for discussion only as under the provisions of Section 169(1) of the Companies
Act, 1965, the audited financial statements do not require formal approval of members and hence,
the matter will not be put forward for voting.

Explanatory Note on Special Business


• Special Resolution on Proposed Amendments to the Company’s Articles of Association

The Proposed Special Resolution under item 5, if passed, will bring the Company’s Articles of
Association in line with the recent amendments prescribed under Chapter 7 of the Main Market Listing
Requirements of Bursa Malaysia Securities Berhad.

ANNUAL REPORT 2011 3


“Appendix A”

PROPOSED AMENDMENTS OF ARTICLES OF ASSOCIATION

The Articles of Association of the Company are proposed to be amended in the following manner :-
(Note : New words inserted are printed in bold)

ARTICLE PROPOSED AMENDMENTS


62 To amend the existing Article 62 by inserting two new paragraphs thereto, and inserting some words
into paragraph one, in the following manner :-

Appointment of proxy(ies) by Authorised Nominee and Exempt Authorised Nominee

Where a member of the Company is an authorised nominee as defined under the Central Depositories
Act, it shall be entitled to appoint not more than two (2) proxies at least one (1) proxy in respect of
each securities account it holds with ordinary shares of the Company standing to the credit of the said
securities account.

Where a member of the Company is an exempt authorised nominee (an authorised nominee which
is exempted from compliance with the provisions of Section 25A(1) of the Central Depositories Act),
which holds ordinary shares in the Company for multiple beneficial owners in one securities account
(“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee
may appoint in respect of each omnibus account it holds.

Where an authorised nominee or an exempt authorised nominee appoints proxies, the proportion of
shareholdings to be represented by each proxy must be specified in the instrument appointing the
proxies.

75A To insert the following new article as Article 75A :-


(new)
Qualification and rights of proxy to speak

A member of the Company entitled to attend and vote at a meeting or at a meeting of any class of
members of the Company, shall be entitled to appoint any person as his proxy to attend and vote
instead of the member at the meeting. There shall be no restriction as to the qualification of the proxy.

A proxy appointed to attend and vote at a meeting of the Company shall have the same rights as the
member to speak at the meeting.

77 To amend the existing Article 77 in the following manner :-


Form of Proxy
i) To insert the following sentences as new Note 3 of the Notes to Form of Proxy :-

3. Where a member of the Company is an authorised nominee as defined under the Central
Depositories Act, it shall be entitled to appoint not more than two (2) proxies in respect of each
securities account it holds with ordinary shares of the Company standing to the credit of the said
securities account.

Where a member of the Company is an exempt authorised nominee (an authorised nominee
which is exempted from compliance with the provisions of Section 25A(1) of the Central
Depositories Act), which holds ordinary shares in the Company for multiple beneficial owners in
one securities account (“omnibus account”), there is no limit to the number of proxies which the
exempt authorised nominee may appoint in respect of each omnibus account it holds.

Where an authorised nominee or an exempt authorised nominee appoints proxies, the proportion
of shareholdings to be represented by each proxy must be specified in the instrument appointing
the proxies.
ii) To renumber the existing Note 3 as Note 4 of the Notes to Form of Proxy.
iii) To insert the following sentences as new Note 5 of the Notes to Form of Proxy :-

5. Depositors whose names appear in the Record of Depositors on a date not less than three (3)
market days before the general meeting shall be entitled to attend and vote at the general
meeting, or appoint a proxy to attend, speak and vote on his behalf.

iv) To insert the following sentence at the end of Article 77, as the last paragraph :-

Where a member of the Company is an authorised nominee or exempt authorised nominee, Article
62 of these Articles of Association shall apply.

4 UNITED BINTANG BERHAD (44676-M)


Corporate Information

BOARD OF DIRECTORS

Mr George Anthony Dass David (Chairman, Independent Non-Executive Director)

Mr Tan Kim Soon (Managing Director)

Mr Leou Thiam Lai (Independent Non-Executive Director)

Mr Ong Bing Yap (Independent Non-Executive Director)

Mr Lee Yu-Jin (Independent Non-Executive Director)

AUDIT COMMITTEE PRINCIPAL BANKERS


Mr George Anthony Dass David (Chairman) EON Bank Berhad
Mr Leou Thiam Lai Public Bank Berhad
Mr Lee Yu-Jin
SHARE REGISTRAR
NOMINATION COMMITTEE Symphony Share Registrars Sdn. Bhd.
Level 6, Symphony House
Mr George Anthony Dass David (Chairman) Block D13, Pusat Dagangan Dana 1
Mr Ong Bing Yap Jalan PJU 1A/46
47301 Petaling Jaya
Selangor Darul Ehsan
REMUNERATION COMMITTEE Tel: (03) 7841 8000 Fax: (03) 7841 8151/52
Mr George Anthony Dass David (Chairman)
Mr Ong Bing Yap
AUDITORS
Mazars (AF : 1954)
COMPANY SECRETARY Chartered Accountants
Ms Lim Lai Sam (MAICSA No. 0877479) Wisma Selangor Dredging
7th Floor, South Block
142-A, Jalan Ampang
REGISTERED OFFICE 50450 Kuala Lumpur
No. 8-3, Jalan Segambut Tel: (03) 2161 5222 Fax: (03) 2161 3909
51200 Kuala Lumpur
Tel: (03) 6195 1600 Fax: (03) 4043 6750
STOCK EXCHANGE LISTING
Bursa Malaysia Securities Berhad Main Market
PRINCIPAL OFFICE Stock Name : UBB
No. 2-1, Jalan Segambut Stock Code : 9687
51200 Kuala Lumpur
Tel: (03) 4043 9288 Fax: (03) 4043 9753
website : www.ubb.com.my
www.unitedbintang.com.my
e-mail : ubb@po.jaring.my

ANNUAL REPORT 2011 5


Chairman’s Statement

Dear Shareholders,

On behalf of the Board of Directors of United Bintang Berhad, I would like to


present to you the Annual Report and Audited Financial Statements of the
Company and the Group for the financial year ended 31 December 2011.

FINANCIAL RESULTS

The Group recorded a 19.19% contraction in revenue at RM18.28 million from RM22.62 million in the
previous financial year. Group profit before tax rose from RM0.15 million to RM0.78 million.

The global economic slowdown contributed to the lower revenue. However, Group profit before
tax increased as margins had improved on sales of higher quality heavy machinery and there was
commission earned from the sale of used motor vehicles. Reduction in operating expenses due to
intense effort by the Management to optimize utilization of resources also contributed to the improved
profit.

OPERATIONS REVIEW

Better results were achieved despite very competitive domestic and overseas markets. The Group is
concentrating on sourcing and buying quality used heavy machinery at competitive prices to meet
existing demand. This would also reduce reconditioning and holding costs.

PROSPECTS

The outlook for heavy machinery industry remains competitive and challenging. Rising operational
costs and the prevailing global economic slowdown will affect the growth and profitability of the
Group. Nevertheless, the Group will continue to optimize utilization of its resources, explore new
overseas markets and seek better quality heavy machinery to maintain satisfactory results in the
following financial year.

DIVIDEND

The Board of Directors does not recommend the payment of any dividend for the financial year ended
31 December 2011.

APPRECIATION

I would like to thank our vendors, bankers and customers for their assistance and support. To our
employees, please accept our deep appreciation for your effort, dedication and loyalty.

GEORGE ANTHONY DASS DAVID


Chairman

6 UNITED BINTANG BERHAD (44676-M)


Directors’ Profile

GEORGE ANTHONY DASS DAVID

Age 65

Nationality Malaysian

Bachelor of Laws (University of Singapore)


Qualification
Master of Laws (King’s College, University of London)

Executive/Non-Executive Director Independent Non-Executive Director

Position Held Chairman

Working experience and occupation Mr George Anthony Dass David was a Senior
Partner of a law firm in Kuala Lumpur until 2004. He
was admitted to the High Court of Malaya as an
Advocate and Solicitor in 1971 and commenced
law practice in 1972. He was a lecturer at Institute
Teknologi Mara from 1975 to 1977. He obtained his
Masters in Law from the University of London in 1978
and resumed law practice in 1979 with a law firm in
Kuala Lumpur until December 2004. He is presently a
Consultant with a law firm in Kuala Lumpur. He was
appointed a Director of UBB on 6th December 1994.
On 25th October 2010, he was appointed Chairman
of the Board of Directors of UBB.

Chairman of Audit Committee, Nomination


Membership in Board Committees
Committee and Remuneration Committee

Other directorships in public companies None

Family relationships with directors None

Family relationships with major None


shareholders

Conflict of interest with the Company None

List of convictions of offences within the None


past 10 years other than traffic offences

ANNUAL REPORT 2011 7


Directors’ Profile (cont’d)

TAN KIM SOON

Age 62

Nationality Malaysian

Qualification Junior Middle Three

Executive/Non-Executive Director Executive Director

Position Held Managing Director

Working experience and occupation Mr Tan Kim Soon is one of the founder Directors of UBB
and United Bintang Machinery Sdn Berhad. He is a
major shareholder of UBB. He was the Managing Partner
of Pertama Industrial Engineering Supply (“PIES”) since
1977 which was later converted to a public company
under the name of United Bintang Berhad. With over 30
years of experience in reconditioned heavy machinery,
Mr Tan is a well-known figure in the said industry, both
locally and abroad. He is responsible for the business
development of the Group and heads the day to day
affairs of the Group.

Membership in Board Committee None

Other directorships in public companies None

Family relationships with directors None

Family relationships with major None


shareholders

Conflict of interest with the Company None

List of convictions of offences within the None


past 10 years other than traffic offences

8 UNITED BINTANG BERHAD (44676-M)


Directors’ Profile (cont’d)

LEOU THIAM LAI

Age 56

Nationality Malaysian

Qualification Chartered Accountant

Executive/Non-Executive Director Independent Non-Executive Director

Position Held Director

Working experience and occupation Mr Leou Thiam Lai was appointed as the Independent
Director of UBB on 2 February 2002. He is a Chartered
Accountant of the Malaysian Institute of Accountants
and a Fellow member of the Chartered Tax Institute
of Malaysia (formerly known as Malaysian Institute of
Taxation). Mr Leou graduated from Tunku Abdul Rahman
College in 1980 and started his career in a Chartered
Accountants firm and later on he joined a Public Listed
Company as a Group Accountant. He then set up his
own Chartered Accountants firm, Leou & Associates, in
1988 and, in 2007, he formed a new partnership of a
Chartered Accountants firm, STYL Associates. To date,
he still serves as a partner of both firms.

Membership in Board Committee Member of Audit Committee

Other directorships in public companies Degem Berhad


Ramunia Holdings Berhad
Cosway Corporation Limited
Nextnation Communication Berhad
Sern Kou Resources Berhad

Family relationships with directors None

Family relationships with major


None
shareholders

Conflict of interest with the Company None

List of convictions of offences within the


None
past 10 years other than traffic offences

ANNUAL REPORT 2011 9


Directors’ Profile (cont’d)

ONG BING YAP

Age 62

Nationality Malaysian

Qualification Diploma in Education from the Technical Teachers


Training College

Executive/Non-Executive Director Independent Non-Executive Director

Position Held Director

Working experience and occupation Mr Ong was appointed to the Board of UBB on 26
February 2003. On 15 June 2004, he was appointed
to the Nomination Committee and Remuneration
Committee of the Company. He has accumulated
many years’ of experience in the industrial engineering
industry since joining the Jasa Kita Berhad Group
of Companies in 1978 as well as experience in the
telecommunication industry since joining the FCW
Group of Companies in 1999.

Membership in Board Committee Member of Nomination Committee and


Remuneration Committee

Other directorships in public companies FCW Holdings Berhad and Jasa Kita Berhad

Family relationships with directors None

Family relationships with major shareholders None

Conflict of interest with the Company None

List of convictions of offences within the None


past 10 years other than traffic offences

10 UNITED BINTANG BERHAD (44676-M)


Directors’ Profile (cont’d)

LEE YU-JIN

Age 45

Nationality Malaysian

Chartered Accountant
Qualification Bachelor of Arts (Honours) in Economics from the
University of Manchester, U.K.

Executive/Non-Executive Director Independent Non-Executive Director

Position Held Director

Working experience and occupation Mr Lee was appointed as Director of UBB on 1


September 2003 and was subsequently appointed a
member of the Audit Committee on 2 August 2004. He
is a Member of the Institute of Chartered Accountants
in England and Wales and the Malaysian Institute of
Accountants. Presently, Mr Lee is the Chief Financial
Officer of Computer Forms (Malaysia) Berhad and
prior to this, he has held senior positions in finance,
accounting and banking.

Membership in Board Committee Member of Audit Committee

Other directorships in public companies FCW Holdings Berhad and Malaysia Aica Berhad

Family relationships with directors None

Family relationships with major shareholders None

Conflict of interest with the Company None

List of convictions of offences within the None


past 10 years other than traffic offences

ANNUAL REPORT 2011 11


Corporate Governance Report

The Board of Directors of United Bintang Berhad (“UBB” or “the Company”) is committed to ensuring
that the sound principles of corporate governance set out in the Malaysian Code on Corporate
Governance (“the Code”) are practiced with the ultimate objective of protecting and enhancing
shareholder value.

To this end, the Board continues to evaluate the Group’s corporate governance procedures, and
to introduce various measures and implement the best practices in so far as they are relevant to the
Group, bearing in mind the nature of the Group’s businesses and the size of its business operations.

The Board of UBB is pleased to report below on how the Group has applied the principles and best
practices as prescribed in the Code. Unless otherwise stated below, the Company has throughout the
financial year ended 31 December 2011 (“FY 2011”) complied with all aspects of the Code.

1. DIRECTORS

1.1 Board of Directors

The Board members recognise the key role they play in charting the strategic direction,
development and control of the Group and have assumed the responsibilities listed in the
Code to facilitate the discharge of their stewardship responsibilities.

1.2 Board Balance

The Company is headed by an effective Board with five members, comprising of an


Independent Non-Executive Chairman, a Managing Director and three Independent Non-
Executive Directors. The Company has complied with the provisions of the Main Market
Listing Requirements of Bursa Malaysia Securities Berhad (“MMLR”) for independent non-
executive directors to make up at least one third of the Board membership and for a director
to be qualified under paragraph 15.09 (1) (c) of the MMLR to sit on the Audit Committee.

To ensure a balance of power and authority at the head of the Company, the roles of
the Chairman and the Managing Director are clearly defined with their individual position
descriptions. The Chairman guides and ensures the effectiveness of the Board policies and
acts as a facilitator at Board Meetings, while the Managing Director is tasked to run the day
to day management of the business as well as the implementation of the Board’s policies
and decisions. Together, the Directors bring a wide range and good mix of business, financial
skills and experience relevant to the direction of a medium size, growing Group. A brief
profile of each Director is presented from pages 7 to 11 of this Annual Report.

Although all the Directors have equal stewardship responsibilities towards the Group, the
Board acknowledges that the role of independent non-executive directors are particularly
important as they bring independent judgment to bear on the issues of strategy, performance
and resources including key appointments and standards of conduct.

In this respect, the four Independent Non-Executive Directors who are individuals of calibre
and credibility with varied industrial skills and experience are capable of ensuring a balanced
and independent judgment on any issues or problems, which require the Board’s deliberation
and decision.

1.3 Board Responsibilities

The Board of Directors plays a vital role in the stewardship of the Group’s direction and
operations, and ultimately the enhancement of long-term shareholder value. To fulfill this
role, the Board is responsible for the overall corporate governance of the Group, including
its strategic directions, establishing goals for management and monitoring the achievement
of these goals.

12 UNITED BINTANG BERHAD (44676-M)


Corporate Governance Report (cont’d)

1. DIRECTORS (CONTINUED)

1.3 Board Responsibilities (continued)

The Board has a formal schedule of matters specifically reserved to itself for decision to
ensure that the direction and control of the Group is firmly in its hands. The schedule involves
approval of major capital expenditure projects and consideration of asset acquisition
and divestment policies, significant financial matters including financial and operating
performance of the Group.

1.4 Board of Directors’ Meeting

The Board meets four times in a financial year and additionally as and when required with
due notice of issues to be discussed given to each Director. The Company Secretary attends
all Board Meetings. Informal meetings and consultation among the Directors are also held
frequently and freely to share knowledge and expertise. For FY 2011, four scheduled Board
Meetings were held and the attendance records of each Director at these Board Meetings
are as follows:-

Dates of Board Meetings


Board Members 24/02/11 11/05/11 17/08/11 29/11/11

Mr George Anthony Dass David √ √ √ √


Mr Tan Kim Soon √ √ √ √
Mr Leou Thiam Lai √ √ √ √
Mr Ong Bing Yap √ √ √ √
Mr Lee Yu-Jin √ √ √ √

√ - present

All proceedings of the Board meetings which include decisions made and all issues discussed
by the Board in arriving at decisions were properly recorded in minutes of meetings and
signed by the Chairman of the meetings.

1.5 Board Committees

The Board has established three principal board committees to assist in carrying out specific
responsibilities for the Company. All three Board Committees operate under clearly defined
terms of reference. These Committees have the delegated authority to review particular issues
within their terms of reference and report back to the full Board with their recommendations.
The Board ultimately decides all significant matters before it. The three Board Committees
are the Audit Committee, Nomination Committee and Remuneration Committee.

1.6 Supply of Information

During the reporting financial year, the Chairman had ensured that all the directors were
provided with an agenda and a set of board papers in a timely manner, usually in advance
of meetings. The board papers were comprehensive covering many aspects of matters
being considered, enabling the Board to look at both quantitative and qualitative factors
when dealing with any item on the agenda so that informed decisions were made. These
procedures enabled the directors to have sufficient time to peruse the papers and if
necessary, to obtain further information or clarification from the Management.

ANNUAL REPORT 2011 13


Corporate Governance Report (cont’d)

1. DIRECTORS (CONTINUED)

1.6 Supply of Information (continued)

In addition to the Board papers, the Board was also notified of any corporate announcements
released to Bursa Malaysia Securities Berhad (“Bursa”) and was kept informed of the
requirements and updates issued by the various regulatory authorities, where relevant.

In furtherance of their duties, the Directors as a full Board or in their individual capacity have
access to all information within the Group as well as access to the advice and services
of the senior management and the Company Secretary. The Directors may also engage
independent professional services, where necessary, at the Group’s expense after having
obtained approval from the Chairman prior to the engagement.

1.7 Appointments to the Board

(i) Nomination Committee

The Nomination Committee was established on 22 November 2001 with the following
Terms of Reference:-

(a) Membership
• The membership of the Committee shall comprise exclusively of non-executive
directors and number at least two in total.
• The Chairman of the Committee shall be a Non-Executive Director appointed
by the Board.
• The majority of the members of the Committee shall comprise of independent
directors.

(b) Advisers
• The Committee is authorised by the Board to seek appropriate professional
advice inside and outside the Group as and when it considers this necessary
after having obtained approval from the Chairman of the Board.

(c) Duties
The duties of the Committee shall be to:-
• recommend to the Board, candidates for all directorships. In making the
recommendations the Committee should consider candidates proposed by
the Managing Director, and within the bounds of practicability, by any other
senior executive, director or shareholder. The Committee should evaluate the
candidates on the aspect of their:-
- skills, knowledge, expertise and experience;
- professionalism;
- integrity; and
- for position of independent non-executive director (“INED”), the candidates’
ability to discharge such responsibilities/functions as expected from INED.
• recommend to the Board, directors to fill the seats on the board committees;
• review annually the Board’s required mix of skills, experience and other qualities
including the core competencies which non-executive directors should bring
to the Board; and
• assess annually the effectiveness of the board as a whole, the committees of
the board and the performance of each individual director, including INED
and chief executive officer. All assessments and evaluations carried out by the
Committee should be properly documented.

14 UNITED BINTANG BERHAD (44676-M)


Corporate Governance Report (cont’d)

1. DIRECTORS (CONTINUED)

1.7 Appointments to the Board (continued)

(i) Nomination Committee (continued)

(d) Quorum
• Two members present in person at any meeting of the Committee shall be a
quorum.

(e) Minutes
• The minutes of meetings of the Committee shall be circulated to all members
of the Board.

The Nomination Committee comprises two Independent Non-Executive Directors. The


members are:-

(i) Mr George Anthony Dass David (Chairman)


(ii) Mr Ong Bing Yap

During FY 2011, the Nomination Committee met twice with full attendance from its
members.

(ii) Appointment process

The Board appoints its members through a formal and transparent selection process.
This process has been reviewed, approved and adopted by the Board. New
appointees will be considered and evaluated by the Nomination Committee. The
Nomination Committee will then recommend the candidates to be approved and
appointed by the Board. The Company Secretary will ensure that all appointments
are properly made, that all the necessary information is obtained from directors, both
for the Company’s own records and for purposes of meeting all legal, statutory and
regulatory obligations.

1.8 Re-election

The Company’s Articles of Association provide that one third of the Board shall retire by
rotation from office and be eligible for re-election by shareholders at every Annual General
Meeting (“AGM”) of the Company while all newly appointed directors shall submit themselves
for re-election by shareholders at the first opportunity after their appointment. The Articles
of Association also provide that all Directors be subjected to retirement by rotation at least
once every three years and shall be eligible for re-election.

Directors over seventy years of age are required to submit themselves for re-appointment
annually in accordance with Section 129 (6) of the Companies Act, 1965.

1.9 Directors’ training

All the Directors have completed the Mandatory Accreditation Programme conducted
by Bursatra Sdn Bhd, an affiliate company of Bursa. The Directors also received further
training from time to time to enhance their skills and knowledge on the relevant new laws
and regulations and to keep abreast with the latest development in various aspects of the
business environment. A brief induction of the Group will be provided to newly appointed
Directors to acquaint themselves with the Group’s business operations.

ANNUAL REPORT 2011 15


Corporate Governance Report (cont’d)

1. DIRECTORS (CONTINUED)

1.9 Directors’ training (continued)

During FY 2011, the conferences, seminars and courses attended by the Directors
encompassed various topics, which include the followings :-

• Corporate Governance in the 21st Century, The Malaysian Regulatory and Legal
Environment, Leading Corporate Governance, The Chairman, Issues in the Boardroom,
Rethinking Independence and Achieving Effective Board Teams;
• Risk Management – why ICAAP, Risk Governance, Risk Appetite, Risk, Credit Risks, RAROC
& Stress Testing and Well Fleet Bank case study;
• The Organization Infrastructure, The key players and their functions, and the essential
tasks;
• National Tax Conference 2011;
• 2012 Budget Proposals & Recent Tax Developments;
• Malaysian Customs Procedures and Shipping Documentations;
• ISO 9001 : 2008 QMS Internal Audit Training;
• Sustainability Programme for Corporate Malaysia - Trading Services & Industrial Products;
• The Age of Integration – A New Dawn for Corporate Reporting;
• Asean Corporate Governance Scorecard and the Corporate Governance Ranking of
Asean PLCs;
• The continuing CG Agenda – Next Steps for Asia; and
• Reporting of CG Practices : What do people want to know?

In addition, the Board is regularly updated on the latest updates on MMLR and other
regulatory requirements relating to the discharge of Directors’ duties and responsibilities.

2. DIRECTORS’ REMUNERATION

2.1 The level and make-up of remuneration


The Board ensures that the levels of remuneration for Directors are sufficient to attract and
retain Directors needed to run the Group effectively. The remuneration of each Director
reflects the responsibility and commitment, which goes with the Board membership. In the
case of Executive Directors, the component parts of remuneration are structured to link
rewards to individual and Group performance. In the case of Non-Executive Directors, the
level of remuneration reflects the experience and level of responsibilities undertaken by the
particular Non-Executive Directors concerned.

2.2 Remuneration Committee


The Remuneration Committee was established on 22 November 2001 with the following
Terms of Reference:-

(a) Membership
• The members of the Committee shall comprise wholly or mainly of Non-Executive
Directors and number at least two in total.
• The Chairman of the Committee shall be a Non-Executive Director appointed by
the Board.

16 UNITED BINTANG BERHAD (44676-M)


Corporate Governance Report (cont’d)

2. DIRECTORS’ REMUNERATION (CONTINUED)

2.2 Remuneration Committee (continued)


(b) Attendance
• The Managing Director may be invited to attend meetings to discuss the performance
of Executive Directors and make proposals as necessary.
• The Committee may appoint external consultants to assist the Committee in
discharging its duties.

(c) Frequency of meetings


• Meetings shall be held not less than once a year. Two members present in person
at the meeting shall be a quorum.

(d) Advisers
• The Committee is authorised by the Board to seek appropriate professional advice
inside and outside the Group as and when it considers this necessary after having
obtained approval from the Chairman of the Board.

(e) Duties
• The duties of the Committee shall be to recommend to the Board the remuneration
of the executive directors in all its forms.

(f) Minutes
• The minutes of meetings of the Committee shall be circulated to all members of the
Board.

The Remuneration Committee comprises two Independent Non-Executive Directors. The


members are:-

(i) Mr George Anthony Dass David (Chairman)


(ii) Mr Ong Bing Yap

The Remuneration Committee met once during FY 2011 with full attendance from its
members.

2.3 Procedure

The Remuneration Committee is responsible for setting the policy framework and for making
recommendations to the Board on all elements of the Directors’ remuneration. Under the
Group policy, the Remuneration Committee reviews and formulates the remuneration
packages of the Executive Directors and makes suitable recommendations thereon to the
Board for approval. The fees of the Non-Executive Directors, which payments are subjected
to the shareholders’ approval, are the ultimate responsibility of the Board after considering
the recommendation of the Remuneration Committee. The Directors do not participate in
discussion on their own remuneration.

2.4 Disclosure on Directors’ Remuneration

Below are the details of remuneration paid to the Executive Directors of the Company for
FY 2011 save for Directors’ fees, which will be paid to the Non-Executive Directors upon
obtaining the shareholders’ approval at the Company’s forthcoming 33rd AGM scheduled
for 19 June 2012:-

ANNUAL REPORT 2011 17


Corporate Governance Report (cont’d)

2. DIRECTORS’ REMUNERATION (CONTINUED)

2.4 Disclosure on Directors’ Remuneration (continued)

(i) The aggregate remuneration of Directors, distinguishing between Executive and Non-
Executive Directors, were categorised into the following components:

Executive Non-Executive
Director Directors Total
Type of Remuneration (RM) (RM) (RM)

(a) Fees - 42,000 42,000


(b) Salaries 181,200 - 181,200
(c) Bonuses 30,200 - 30,200
(d) E.P.F. 25,821 - 25,821
(e) Estimated value of 6,600 - 6,600
benefits-in-kind

Total 243,821 42,000 285,821

(ii) The number of Directors whose remuneration fell into each successive bands of
RM50,000.00:

Number of Directors
Total
Band (RM) Executive Non-Executive
1 – 50,000 - 4 4
50,001 – 100,000 - - -
100,001 – 150,000 - - -
150,001 – 200,000 - - -
200,001 – 250,000 1 - 1
Total 1 4 5

Remarks : The above method of disclosure on the Directors’ remuneration is in accordance


with item 11 under Appendix 9C (Part A) of the MMLR.

3. RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS

The Board recognises the importance of communication with its shareholders, institutional investors
and the investing public at large and does this through the annual report, circular to shareholders,
quarterly results, corporate proposal announcements and holding of general meetings. The policy
of the Group is to maintain an active dialogue with its shareholders with the intention of giving
shareholders as clear and complete picture of the Group’s performance and position as possible.
Corporate information is also available from the Group’s website, www.ubb.com.my which is
linked to Bursa’s website at www.bursamalaysia.com.

The Board has identified Mr George Anthony Dass David as the Senior Independent Non-
Executive Director to whom queries and concerns regarding the Group may be conveyed by the
shareholders or investing public via fax no. 03-40436750 or by mail to the Company’s registered
office.

18 UNITED BINTANG BERHAD (44676-M)


Corporate Governance Report (cont’d)

3. RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS (CONTINUED)

It has also been the Group’s practice to send the notice of general meeting and related papers
to the shareholders at least 21 days prior to the meeting day. At the AGM, the shareholders are
encouraged to ask questions both about the resolutions being proposed or about the Group’s
operations in general. Extraordinary General Meeting (“EGM”) is held as and when shareholders’
approval are required on specific matters, with due notice given.

While the Group endeavours to provide as much information as possible to its shareholders, it is
also mindful of the legal and regulatory framework governing the release of material and price-
sensitive information.

4. ACCOUNTABILITY AND AUDIT

4.1 Financial Reporting

The Group’s financial statements are prepared in accordance with the requirements of the
applicable approved accounting standards in Malaysia and the provisions of the Companies
Act, 1965. The Board is responsible for ensuring that the financial statements of the Group
and the Company give a true and fair view of the state of affairs of the Group and the
Company. The Statement by Directors pursuant to Section 169(15) of the Companies Act,
1965 is set out on page 73 of this Annual Report.

During the reporting financial year, the Board had taken the necessary steps to ensure that
the annual financial statements and quarterly financial results released to the shareholders
present a balanced comprehensive assessment of the Group and the Company’s position
and prospects, including :-
• adoption of applicable accounting policies and methods;
• consistent application of the accounting policies and methods;
• the making of judgments and estimates that are reasonable and prudent; and
• stating whether applicable accounting standards have been complied with.

To keep shareholders, investors and public regularly informed of the Group’s and the
Company’s financial performance, it has been the Group’s policy to release its financial
results on quarterly and annual basis to the regulatory bodies in advance of the deadlines
set.

4.2 Internal Control

The Management had, through the convening of operational meetings from time to time
and preparation of monthly financial reports, reviewed the effectiveness, adequacy and
integrity of the Group’s system of internal controls. Any material shortcomings in control
systems had been reported back to the Board who shall continue to periodically review
these internal control systems to ensure that the shareholders’ interest and the Group’s assets
are protected at all times.

The Group has outsourced the internal audit function to an independent consultancy
company, which is independent from the Group’s appointed external auditors. The internal
audit consultants which report directly to the Audit Committee have commenced auditing
on the various auditable units of the Group. The Audit Committee in turn has presented
the audit findings and recommendations to the Board who is responsible for the adequacy
and integrity of the Group’s financial, operational and compliance controls as well as risk
assessment and management.

ANNUAL REPORT 2011 19


Corporate Governance Report (cont’d)

4. ACCOUNTABILITY AND AUDIT (CONTINUED)

4.3 Relationship with Auditors

The Board maintains a close and transparent relationship with the Auditors in seeking
professional advice and compliance with the accounting standards.

The key features underlying the relationship between the Audit Committee and the external
auditors are set out in the Audit Committee’s terms of reference, details on pages 23 to 24 of
this Annual Report.

5. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Group recognises the importance of Corporate Social Responsibility (CSR) by making positive
contributions to society and the environment through their management, products and proactive
engagement with stakeholders including employees, customers, investors, communities and
suppliers. Past, present and ongoing CSR initiatives include the following:

Environment

The Group believes that it is in compliance with applicable environmental laws and regulations.
All employees are encouraged to recycle all paper products to reduce the amount of papers
used.

Community

To uphold our CSR’s objective, the Group had made regular donations to various non-profit
organizations such as the National Council of Senior Citizens Organizations Malaysia, Society
of the Blind in Malaysia, Montfort Boys Town, Yayasan Nanyang Press and other orphanage/
handicapped/charitable homes to assist the less fortunate in the community.

Workplace

To promote a clean, safe and conducive workplace, the Group continuously conducts trainings
for its employees on safety and hygiene awareness, safety protection gears usage and proper
handling of equipment.

The workplace is equipped with fire-fighting equipment, first aid kits, proper lighting and ventilation.

The Group also provides various benefits to its employees including personal accident and
hospital and surgical insurance, subsidised public transport and medical benefits.

There is in place a comprehensive continual on-the-job training program for all its employees.

The Group will not compromise on the health, safety and welfare of the employees, visitors,
customers, subcontractors’ staff and the general public.

Marketplace

The Group is committed to uphold good business ethics when formulating policies which include
fair treatment of customers, sincerity in business dealings, commitment to business development
and establishing trust in its relationships with shareholders and stakeholders.

To ensure a high level of safety and reliability of each reconditioned heavy equipment, all used
heavy equipment undergo thorough checks at the Inspection Section to detect defects, if any,
followed by the rejuvenation process and lastly the final pre-delivery inspection before delivery
to customers.

20 UNITED BINTANG BERHAD (44676-M)


Corporate Governance Report (cont’d)

5. CORPORATE SOCIAL RESPONSIBILITY (CSR) (CONTINUED)

Marketplace (continued)

The Group believes in clear communication and recognizes the importance to have timely and
equal dissemination of relevant information to its shareholders to achieve a better understanding
of the Group’s performance. The annual report, quarterly financial results and announcements
of the Group can be accessed from the Group’s website at www.ubb.com.my which is linked to
Bursa Malaysia’s website at www.bursamalaysia.com.

At each AGM and EGM of the Company, the Board provides adequate time to attend to queries
and comments raised by shareholders.

6. OTHER INFORMATION

6.1 Material Contracts

Save as disclosed below, there were no material contracts entered into by the Group which
involved directors’ and major shareholders’ interests during the reporting financial year:-

i) UBB had on 18 May 2011 entered into a Sale and Purchase Agreement with Kristal Penaga
(M) Sdn Bhd (“Kristal”) to dispose of to Kristal one of its administrative office building and
the workshop (collectively known as “the Installations”) erected on a piece of land held
under Geran 87492 Lot No. 15786, Mukim Rawang, Daerah Gombak, Negeri Selangor,
for a total consideration of Ringgit Malaysia Three Million One Hundred and Fifty-Five
Thousand (RM3,155,000.00) only, upon the terms and conditions as stipulated in the Sale
and Purchase Agreement dated 18 May 2011.

ii) UBB had on 29 July 2011 entered into a Tenancy Agreement with a related party, Shang
Yong (Sabah) Sdn Bhd (“the Lessor” or “Shang Yong”) for the rental of a piece of land
held under Geran 87493, Lot 15800, Mukim Rawang, Daerah Gombak, Negeri Selangor
for a period of three years commencing on 1 August 2011 and expiring on 31 July 2014,
with an option for renewal for one year, at a monthly rental of RM12,000, upon the terms
and conditions as stipulated in the Tenancy Agreement dated 29 July 2011.

Mr Tan Kim Soon is a director and major shareholder of UBB and Shang Yong.

6.2 Non-Audit Fees

The amount of non-audit fees incurred for services rendered to the Group by the external
auditors and their affiliated companies for FY 2011 was RM2,000.00.

7. DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors are required by the Companies Act, 1965 to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the Group and of the
Company as at the end of the financial year and of the results and cash flow position of the
Group and of the Company for the financial year then ended.

The Directors consider that, in preparing these financial statements, the Group and the Company
have used appropriate accounting policies and applied them consistently and made judgments
and estimates that are reasonable and prudent. The Directors also consider that all applicable
approved accounting standards have been followed and confirm that the financial statements
have been prepared on a going concern basis.

ANNUAL REPORT 2011 21


Corporate Governance Report (cont’d)

7. DIRECTORS’ RESPONSIBILITY STATEMENT (CONTINUED)

The Directors are responsible for ensuring that the Group and the Company keep proper
accounting records which disclose with reasonable accuracy the financial position of the Group
and of the Company at any point of time and which enable them to ensure that the financial
statements comply with the provisions of the Companies Act, 1965 and the applicable approved
accounting standards in Malaysia.

The Directors are also responsible for safeguarding the assets of the Group and of the Company,
and hence, for taking reasonable steps for the prevention and detection of fraud and other
irregularities.

22 UNITED BINTANG BERHAD (44676-M)


Audit Committee Report

1. Composition

The Audit Committee comprises the following members:-

Chairman : Mr George Anthony Dass David (Independent Non-Executive Director)

Members : Mr Leou Thiam Lai (Independent Non-Executive Director)


Mr Lee Yu-Jin (Independent Non-Executive Director)

2. Functions and Responsibilities

The key functions and responsibilities of the Audit Committee are as follows:-

a. review the following and report the same to the Board of Directors:-

i) with the external auditors, the audit plan;

ii) with the external auditors, its evaluation of the system of internal controls;

iii) with the external auditors, its audit report;

iv) the assistance given by the Company’s employees to the external auditors; and

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

b. To consider the appointment of the external auditor, the audit fee and any questions of
resignation or dismissal;

c. To discuss with the external auditor before the audit commences, the nature and scope of
the audit, and ensure co-ordination where more than one audit firm is involved;

d. To review the quarterly financial results and year-end financial statements of the Group and
the Company prior to the Board’s approval, focusing particularly on:-

• Any changes in accounting policies and practices;


• Significant adjustments arising from the audit;
• The going concern assumption; and
• Compliance with the accounting standards and other legal requirements;

e. To discuss problems and reservations arising from the interim and final audits, and any matter
the auditor may wish to discuss (in the absence of management where necessary);

f. To review the external auditor’s management letter and management’s response;

g. To do the following where an internal audit function exists:-


• Review the adequacy of the scope, functions, competency and resources of the internal
audit function, and to ensure that it has the necessary authority to carry out its work;
• Review the internal audit programme and results of the internal audit process and where
necessary, ensure that appropriate action is taken on the recommendations of the
internal audit function;
• Review any appraisal or assessment of the performance of the outsourced audit firm
which performs the internal audit function;
• Approve any appointments or terminations of the outsourced audit firm which performs
the internal audit function;

ANNUAL REPORT 2011 23


Audit Committee Report (cont’d)

2. Functions and Responsibilities (continued)

• Inform itself of resignations of the outsourced internal audit firm and provide the firm an
opportunity to submit its reasons for resigning; and
• Take cognizance of resignations of internal audit staff members and provide the resigning
staff member an opportunity to submit his/her reasons for resigning, if the staff member
concerned so desires.

h. To consider the major findings of internal audit investigations and management’s response;

i The Chairman of the Audit Committee should engage on a continuous basis with senior
management, such as the Chairman, the CEO, the finance director, the head of internal audit
and the external auditors in order to be kept informed of matters affecting the Company;
and

j. To consider other areas as defined by the Board.

3. Meetings and Attendance

During the reporting financial year, the Audit Committee had four meetings and the attendance
records of each member at these meetings are as follows:-

Audit Committee % of
Members 24/02/11 11/05/11 17/08/11 29/11/11 Attendance
Mr George Anthony
Dass David √ √ √ √ 100

Mr Leou Thiam Lai √ √ √ √ 100

Mr Lee Yu-Jin √ √ √ √ 100

At the invitation of the Audit Committee, the Managing Director, Financial Controller, Internal
Auditors and other senior management attended these meetings by invitation. The Audit
Committee also invited the representatives of the External Auditors, Messrs Mazars to attend
the meetings twice during the financial year at which private sessions independent of the
Management, were held.

4. Summary of activities of the Audit Committee during the reporting financial year

• Reviewed the unaudited interim report on consolidated results of the Group on a quarterly
basis and made suitable recommendations thereon to the Board of Directors for approval
prior to their release to Bursa Malaysia Securities Berhad.

• Reviewed the external auditors’ audit strategy, audit plan, scope and time-table for the
year.

• Discussed with the external auditors, accounting issues arising from the interim audit review
and other matters that the external auditors wish to discuss with the Audit Committee in the
absence of executive board members and management.

• Reviewed the external auditors’ report on audit findings and the accounting issues arising
from the audit before appropriate audit adjustments were made to the Group’s financial
statements.

24 UNITED BINTANG BERHAD (44676-M)


Audit Committee Report (cont’d)

4. Summary of activities of the Audit Committee during the reporting financial year (continued)

• Discussed with the external auditors, the impact of the new financial reporting standards and
regulatory requirements on the Group’s financial statements.

• Reviewed the Audit Planning Memorandum from the external auditors for the financial year
ended 31 December 2011.

• Reviewed the Group audit fees proposed by the external auditors prior to the Board of
Directors’ approval.

• Reviewed the status of the legal cases involving default debts which the Group has
commenced legal proceedings overseas.

• Reviewed the internal audit reports on internal audit findings and recommendations and
ensured all risks areas were covered and corrective actions taken by management.

• Reviewed related party transactions and conflict of interest situation that arose within the
Group including any transaction, procedure or course of conduct that raises questions of
management integrity.

5. Internal Audit Function

The Board has outsourced the internal audit function to an independent consultancy company
which reports directly to the Audit Committee. The Group recognises that it is the management’s
responsibility to analyse risks and to devise and implement effective systems of internal control.

The internal audit consultants are responsible to undertake independent, regular and systematic
reviews of the system of internal controls so as to provide reasonable assurance that such system
continues to operate satisfactorily and effectively. The following activities are carried out by the
internal audit consultants in discharging its duties:-

• Adopted a risk-based approach to the implementation and monitoring of internal controls


based on the risk-based audit plan. This audit plan is approved by the Audit Committee and
the scope of internal audit covers the audit of all business units and operations of the Group.

• Evaluate and improve the existing systems of internal control within the Group by reviewing
its adequacy and effectiveness in compliance with operational controls, established internal
procedures and statutory requirements.

• Ascertaining the extent to which the Group’s assets are accounted for and safeguarded.

The total cost incurred for the outsourced internal audit function of the Group for the financial
year ended 31 December 2011 was RM13,000.00.

ANNUAL REPORT 2011 25


Internal Control Statement

BOARD RESPONSIBILITY

The Board of Directors recognises the importance of a sound internal control system as part of good
corporate governance within the Group. The Board affirms its overall responsibility for the Group’s
internal control system and for the review of its adequacy and integrity. The Board acknowledges that
risks cannot be completely eliminated. The system by its nature can only provide reasonable and not
absolute assurance against material misstatement, operational failure, fraud or loss.

RISK MANAGEMENT FRAMEWORK AND INTERNAL AUDIT

The Board acknowledges the process of identifying and managing the key risks within the Group
are an integral part of the internal control environment. The Managing Director together with
management are responsible for identifying, evaluating, monitoring and managing the significant
risks applicable to their areas of businesses together with the design and operation of suitable internal
controls. Significant risks are reported to the Audit Committee who assesses on behalf of the Board
and makes recommendations for improvements to determine whether these risks are mitigated and
well managed.

The Group has outsourced its internal audit function to internal audit consultants. The Board of Directors,
with the assistance of the internal audit consultants, reviews the Group Business Risk Profile which
covers all major identified and significant risks and controls associated with the Group’s businesses. In
this respect, internal audits are carried out in accordance with the audit plan approved by the Board
and focuses on the identified areas of risks with priority towards the management of the significant
risks impacting the achievement of the business objectives of the Group. Periodic internal audit visits
are carried out to provide an independent assessment of the systems of internal control of the Group
with regard to their adequacy, existence and effectiveness, in particular and including the following:-

• Reliability and integrity of financial and operating information;


• Compliance with policies, plans, procedures and regulations;
• Safeguarding of assets;
• Economical and efficient use of resources; and
• Accomplishment of established objectives and goals for operations.

INTERNAL CONTROL STRUCTURE

The Board is fully committed to ensuring that a proper control structure and environment is maintained
within the Group to provide sufficient assurance of an adequate and sound internal control
framework. The management has been entrusted by the Board of Directors to implement processes for
identification, assessment, management, monitoring and reporting of risks and to provide assurance
to the Board that it has done so. In order to achieve this, the Board has put in place the following
control systems: -

• Risk Management

Operational management has clear responsibility for identifying and evaluating the risks facing
their businesses, and for implementing corrective actions and procedures to manage, mitigate
and monitor such risks. Regular reviews are carried out by the management team and reported
to the Audit Committee. In addition, issues are identified, discussed and resolved within the
Group.

• Organisation Structure

The Group has an appropriate organisational structure which enables adequate monitoring
of the activities and ensures effective flow of information across the Group. There are clearly
defined lines of accountability and delegated authority. Appropriately qualified management
personnel are responsible for their operational areas and monitoring of effective internal control.

26 UNITED BINTANG BERHAD (44676-M)


Internal Control Statement (cont’d)

INTERNAL CONTROL STRUCTURE (continued)

• Authority Levels

Clearly defined authorisation levels for various aspects of the business are set out in a formalised
and approved authority policy.

• Monitoring and Reporting

Adequate reports are generated for reviews on various operating units of the Group
encompassing operational, financial and regulatory areas. Comprehensive management
accounts and reports are prepared on a monthly basis for review by the Managing Director,
Financial Controller and senior management for effective monitoring and decision-making. The
year end financial statements and the announcements of the quarterly results are reviewed by
the Audit Committee before the Board’s approval and release to Bursa Malaysia. The Managing
Director and the Financial Controller review with the Audit Committee on a quarterly basis all
significant issues on finance and operations pertinent to the Group.

Management monitors the Group’s performance via monthly management reports which include
key performance indicators. Any exceptions noted will be duly investigated and reported.

The Managing Director and Financial Controller maintain close contact with the employees of
all levels which enable timely and effective communication.

Senior management is responsible for managing key risks applicable to their areas of business
activities on a continuous basis. All operational matters and issues are regularly reviewed and
resolved by the management team. Such risks are also discussed in the quarterly Audit Committee
meetings.

• Documented Policies and Procedures

Clearly documented internal policies are set out in the Company Procedural Instructions
covering significant areas of operations such as Sales and Marketing, Shipping, Operations and
Finance, Accounts and Human Resources. Such standard operating procedures are subject to
regular reviews and improvement by the Management. Aside from the Company Procedural
Instructions, changes in internal control procedures are also communicated via circulars and
internal memos. Such circulars and memos are properly authorised by the relevant members of
senior management.

• Review of Effectiveness of Control Environment

Through the establishment of sound internal control which includes monitoring and reporting
systems, the Board reports that the existing system of internal control was satisfactory. No material
losses have occurred during the financial year under review as a result of weaknesses in internal
control. The Board together with management continues to take measures to strengthen the
control environment.

ANNUAL REPORT 2011 27


List Of Investment Properties
As at 31 December 2011

Type of Property Land Area Existing Tenure/ Fair Value Date of Date of
and location (sq. ft.) use Approximate as at Acquisition Revaluation
age of 31.12.2011
building (RM)

1 Agriculture Land 119,790 Vacant Freehold 1,100,000 14.01.1983 06.12.2011


PT 397
Genting Sempah
Bentong, Pahang

2 Agriculture Land 1,122,977 Vacant Freehold 2,300,000 17.03.1989 06.12.2011


Lot 1793
Mukim of Serendah
Ulu Selangor

3 Agriculture Land 347,609 Vacant Freehold 110,000 09.12.1986 25.11.2011


Lot 2093
Mukim of Kota
Lama Kanan
Kuala Kangsar

28 UNITED BINTANG BERHAD (44676-M)


M)
FINANCIAL STATEMENTS

30 Directors’ Report

33 Independent Auditors’ Report

35 Statements of Financial Position

36 Statements of Comprehensive Income

37 Statements of Changes In Equity

39 Statements of Cash Flows

41 Notes to The Financial Statements

73 Statement by Directors

73 Statutory Declaration
Directors’ Report
For the year ended 31 December 2011

The directors have pleasure in submitting their report and the audited financial statements of the
Group and of the Company for the financial year ended 31 December 2011.

PRINCIPAL ACTIVITIES

The principal activities of the Company are investment holding, trading in heavy machinery/
equipment, used motor vehicles and spare parts. The principal activity of the subsidiary company is
trading of heavy machinery.

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

RESULTS

Group Company
RM RM
Profit for the year attributable to:
Equity holders of the Company 780,519 690,212

DIVIDEND

No dividend has been paid or declared by the Company since the end of the previous financial year
and the directors do not recommend any dividend for the current financial year.

RESERVES AND PROVISIONS

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

ISSUE OF SHARES AND DEBENTURES

The Company did not issue any shares or debentures during the financial year.

SHARE OPTIONS

No options have been granted by the Company to any parties during the financial year to take up
unissued shares of the Company.

No shares have been issued during the financial year by virtue of the exercise of any option to take
up unissued shares of the Company. As of the end of the financial year, there were no unissued shares
of the Company under options.

DIRECTORS

The directors in office since the date of the last report are:

Tan Kim Soon


George Anthony Dass David
Leou Thiam Lai
Ong Bing Yap
Lee Yu-Jin

30 UNITED BINTANG BERHAD (44676-M)


Directors’ Report (cont’d)
For the year ended 31 December 2011

DIRECTORS’ INTERESTS IN SHARES

According to the register of directors’ shareholdings required to be kept under Section 134 of the
Companies Act 1965, none of the directors held any shares or had any interests in shares in the
Company and its related corporations during the financial year except as follows:

Number of ordinary shares of RM1 each


At At
The Company 1-1-2011 Transfer 31-12-2011
Direct interest

Tan Kim Soon 16,199,700 - 16,199,700

By virtue of his interest in shares in the Company, Mr Tan Kim Soon is deemed to have interests in shares
in the subsidiary company to the extent the Company has an interest.

DIRECTORS’ BENEFITS

Since the end of previous financial year, no director of the Company has received or become entitled
to receive any benefit (other than the benefit included in the aggregate amount of emoluments
received or due and receivable by the directors as disclosed in the financial statements or being the
fixed salary of a full-time employee of the Company) 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 other than any benefit which
may be deemed to have arisen by virtue of the transactions as disclosed in Note 21 to the financial
statements.

Neither during nor at the end of the financial year was the Company a party to any arrangements
whose objective is to enable the directors of the Company to acquire benefits by means of the
acquisition of shares in or debentures of the Company or any other body corporate.

OTHER STATUTORY INFORMATION

(a) Before the statements of comprehensive income and statements of financial position of the
Group and of the Company were made out, the directors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts
and the making of allowance for doubtful debts and satisfied themselves that there were no
known bad debts and that adequate allowance had been made for doubtful debts; and

(ii) to ensure that any current assets which were unlikely to realise in the ordinary course of
business their values as shown in the accounting records of the Group and of the Company
had been written down to an amount which they might be expected so to realise.

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

(i) which would render it necessary to write off any bad debts or the amount of the allowance
for doubtful debts in the financial statements of the Group and of the Company inadequate
to any substantial extent; or

(ii) which would render the values attributed to the current assets in the financial statements of
the Group and of the Company misleading; or

(iii) which have arisen which render adherence to the existing method of valuation of assets or
liabilities of the Group and of the Company misleading or inappropriate.

ANNUAL REPORT 2011 31


Directors’ Report (cont’d)
For the year ended 31 December 2011

OTHER STATUTORY INFORMATION (continued)

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

(i) any charge on the assets of the Group and of the Company which has arisen since the end
of the financial year which secures the liabilities of any other person; or

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

(d) No contingent or other liability of the Group and of the Company has become enforceable or
is likely to become enforceable within the period of twelve months after the end of the financial
year which, in the opinion of the directors, will or may affect the ability of the Group and of the
Company to meet their obligations as and when they fall due.

(e) At the date of this report, the directors are not aware of any circumstances, not otherwise dealt
with in this report or the financial statements of the Group and of the Company, which would
render any amount stated in the respective financial statements misleading.

(f) In the opinion of the directors:

(i) the results of the operations of the Group and of the Company for the financial year were not
substantially affected by any item, transaction or event of a material and unusual nature;
and

(ii) 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 likely to affect
substantially the results of the operations of the Group and of the Company for the financial
year in which this report is made.

AUDITORS

The auditors, Mazars, Chartered Accountants, have expressed their willingness to continue in office.

Signed on behalf of the directors in accordance


with a directors’ resolution dated 26 March 2012

TAN KIM SOON ONG BING YAP


Director Director

32 UNITED BINTANG BERHAD (44676-M)


Independent Auditors’ Report
To the Members of United Bintang Berhad

Report on the Financial Statements

We have audited the financial statements of United Bintang Berhad, which comprise the statements
of financial position as at 31 December 2011 of the Group and of the Company, and the statements
of comprehensive income, statements of changes in equity and statements of cash flows of the Group
and of the Company for the year then ended, and a summary of significant accounting policies and
other explanatory information, as set out on pages 41 to 71.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation of these 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 our audit. We
conducted our audit in accordance with approved standards on auditing in Malaysia. Those
standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on our judgement, including the
assessment of risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, we consider internal control relevant to the Company’s preparation
of the financial statements that give a true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Company’s internal control.

An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial statements.

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

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial
Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair view of the
financial position of the Group and of the Company as of 31 December 2011 and of their financial
performance and cash flows for the year then ended.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the
following:

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

ANNUAL REPORT 2011 33


Independent Auditors’ Report (cont’d)
To the Members of United Bintang Berhad

Report on Other Legal and Regulatory Requirements (continued)

(b) We are satisfied that the financial statements of the subsidiary company that have been
consolidated with the Company’s financial statements are in form and content appropriate and
proper for the purposes of the preparation of the financial statements of the Group and we have
received satisfactory information and explanations required by us for these purposes.

(c) Our audit report on the financial statements of the subsidiary company did not contain any
qualification or any adverse comment made under Section 174(3) of the Act.

Other Reporting Responsibilities

The supplementary information set out in Note 28 to the Financial Statements is disclosed to meet
the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The
directors are responsible for the preparation of the supplementary information in accordance with
Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the
Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by
the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities
Berhad.

In our opinion, the supplementary information is prepared, in all material respects, in accordance with
the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other Matters

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

MAZARS YAP CHING SHIN


No. AF: 1954 No. 2022/03/12 (J)
Chartered Accountants Partner

Kuala Lumpur
26 March 2012

34 UNITED BINTANG BERHAD (44676-M)


Statements of Financial Position
As at 31 December 2011

Group Company
Note 2011 2010 2011 2010
RM RM RM RM

ASSETS
Non-Current Assets
Property, plant and equipment 3 879,478 4,146,321 871,390 4,133,089
Investment properties 4 3,510,000 3,500,000 3,400,000 3,400,000
Investment in subsidiary
company 5 - - 5,138,481 5,138,481
Total Non-Current Assets 4,389,478 7,646,321 9,409,871 12,671,570

Current Assets
Inventories 6 23,999,505 19,993,343 23,999,505 19,993,343
Trade and other receivables 7 3,678,980 3,899,448 3,673,471 3,891,923
Fixed deposits 8 5,512,068 5,282,274 5,512,068 5,282,274
Cash and bank balances 9 513,840 141,726 497,755 53,512
33,704,393 29,316,791 33,682,799 29,221,052
Non-current asset classified as
held for sale 10 - 250,000 - -
Total Current Assets 33,704,393 29,566,791 33,682,799 29,221,052

TOTAL ASSETS 38,093,871 37,213,112 43,092,670 41,892,622

EQUITY AND LIABILITIES


Capital and Reserves
Share capital 11 54,005,000 54,005,000 54,005,000 54,005,000
Revaluation reserve 12 - - 1,398,851 1,398,851
Accumulated losses (34,897,445) (35,677,964) (36,590,363) (37,280,575)

Total Equity Attributable to


Equity Holders of the Company 19,107,555 18,327,036 18,813,488 18,123,276

Non-Current Liability
Loans and borrowings 13 - 6,000 - 6,000

Current Liabilities
Trade and other payables 14 11,473,854 13,475,698 11,342,856 13,423,298
Loans and borrowings 13 7,512,462 5,404,378 7,512,462 5,404,378
Amount owing to subsidiary
company 5 - - 5,423,864 4,935,670

Total Current Liabilities 18,986,316 18,880,076 24,279,182 23,763,346

Total Liabilities 18,986,316 18,886,076 24,279,182 23,769,346

TOTAL EQUITY AND LIABILITIES 38,093,871 37,213,112 43,092,670 41,892,622

Notes to and forming part of the financial statements are set out on pages 41 to 71.

ANNUAL REPORT 2011 35


Statements of Comprehensive Income
For the year ended 31 December 2011

Group Company
Note 2011 2010 2011 2010
RM RM RM RM

Revenue 15 18,282,136 22,619,679 17,871,136 22,125,620


Cost of sales (15,317,788) (20,264,621) (15,171,248) (20,246,326)
Gross profit 2,964,348 2,355,058 2,699,888 1,879,294

Other income 136,165 1,099,533 113,289 1,088,433


Distribution expenses (754,622) (1,000,519) (619,051) (788,942)
Administrative expenses (1,557,735) (2,131,226) (1,496,277) (2,059,698)
Finance income 16 230,881 112,563 230,881 112,563
Finance cost 16 (238,518) (283,296) (238,518) (283,296)

Net finance costs 16 (7,637) (170,733) (7,637) (170,733)

Profit/(Loss) before tax 17 780,519 152,113 690,212 (51,646)

Income tax expense 18 - - - -

Profit/(Loss) for the year 780,519 152,113 690,212 (51,646)

Other comprehensive
income, net of tax - - - -

Profit/(Loss) for the year and


total comprehensive income/
(loss) for the year attributable
to equity holders of the
Company 780,519 152,113 690,212 (51,646)

Basic earnings per ordinary


share (sen): 19 1.45 0.28

Notes to and forming part of the financial statements are set out on pages 41 to 71.

36 UNITED BINTANG BERHAD (44676-M)


Statements of Changes in Equity
For the year ended 31 December 2011

Group Share Accumulated Total


capital losses equity
RM RM RM

At 1January 2010 54,005,000 (35,830,077) 18,174,923


Total comprehensive income
for the year - 152,113 152,113

At 31 December 2010 54,005,000 (35,677,964) 18,327,036

At 1 January 2011 54,005,000 (35,677,964) 18,327,036


Total comprehensive income
for the year - 780,519 780,519

At 31 December 2011 54,005,000 (34,897,445) 19,107,555

Notes to and forming part of the financial statements are set out on pages 41 to 71.

ANNUAL REPORT 2011 37


Statements of Changes in Equity (cont’d)
For the year ended 31 December 2011

Company Share Revaluation Accumulated Total


capital reserve losses equity
RM RM RM RM

At 1 January 2010 54,005,000 1,398,851 (37,228,929) 18,174,922


Total comprehensive loss
for the year - - (51,646) (51,646)

At 31 December 2010 54,005,000 1,398,851 (37,280,575) 18,123,276

At 1 January 2011 54,005,000 1,398,851 (37,280,575) 18,123,276


Total comprehensive income
for the year - - 690,212 690,212

At 31 December 2011 54,005,000 1,398,851 (36,590,363) 18,813,488

Notes to and forming part of the financial statements are set out on pages 41 to 71.

38 UNITED BINTANG BERHAD (44676-M)


Statements of Cash Flows
For the year ended 31 December 2011

Group
2011 2010
RM RM
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 19,050,410 20,613,101
Payments to suppliers and employees (23,783,953) (18,810,074)

Cash (used in)/generated from operations (4,733,543) 1,803,027

Interest paid (238,518) (283,296)

Net cash (used in)/generated by operating activities (4,972,061) 1,519,731

CASH FLOWS FROM INVESTING ACTIVITIES


Purchase of property, plant and equipment (104,297) (5,233)
Proceeds from disposal of property, plant and equipment 3,156,300 188,616
Proceeds from disposal of non-current asset classified as
held for sale 234,000 26,000

Net cash generated by investing activities 3,286,003 209,383

CASH FLOWS FROM FINANCING ACTIVITIES


Withdrawal of fixed deposit 1,088 -
Payment of hire purchase installments (36,000) (49,996)
Advances from directors - 3,950,000
Repayment to directors (45,000) (2,572,000)
Drawdown of borrowings 1,115,000 -
Repayment of borrowings - (3,209,000)

Net cash generated by/(used in) financing activities 1,035,088 (1,880,996)

NET DECREASE IN CASH AND CASH EQUIVALENTS (650,970) (151,882)

CASH AND CASH EQUIVALENTS BROUGHT FORWARD (76,652) 75,230

CASH AND CASH EQUIVALENTS CARRIED FORWARD (727,622) (76,652)

Cash and cash equivalents included in the Statements of Cash Flows comprise the following
Statement of Financial Position amounts :

Note 2011 2010


RM RM

Cash and bank balances 9 513,840 141,726


Bank overdraft 13 (1,241,462) (218,378)

(727,622) (76,652)

Notes to and forming part of the financial statements are set out on pages 41 to 71.

ANNUAL REPORT 2011 39


Statements of Cash Flows (cont’d)
For the year ended 31 December 2011

Company
2011 2010
RM RM
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 18,636,533 20,107,942
Payments to suppliers and employees (23,552,141) (18,459,968)

Cash (used in)/generated from operationsactivities (4,915,608) 1,647,974

Interest paid (238,518) (283,296)

Net cash (used in)/generated by operating activities (5,154,126) 1,364,678

CASH FLOWS FROM INVESTING ACTIVITIES


Purchase of property, plant and equipment (104,297) (5,233)
Advances from subsidiary company 631,170 385,174
Repayments to subsidiary company (142,976) (286,146)
Proceeds from disposal of property, plant and equipment 3,156,300 188,616

Net cash generated by investing activities 3,540,197 282,411

CASH FLOWS FROM FINANCING ACTIVITIES


Withdrawal of fixed deposit 1,088 -
Payment of hire purchase installments (36,000) (49,996)
Advances from directors - 3,950,000
Repayment to directors (45,000) (2,572,000)
Drawdown of borrowings 1,115,000 -
Repayment of borrowings - (3,209,000)

Net cash generated by/(used in) financing activities 1,035,088 (1,880,996)

NET DECREASE IN CASH AND CASH EQUIVALENTS (578,841) (233,907)

CASH AND CASH EQUIVALENTS BROUGHT FORWARD (164,866) 69,041

CASH AND CASH EQUIVALENTS CARRIED FORWARD (743,707) (164,866)

Cash and cash equivalents included in the Statements of Cash Flows comprise the following
Statement of Financial Position amounts :

Note 2011 2010


RM RM

Cash and bank balances 9 497,755 53,512


Bank overdraft 13 (1,241,462) (218,378)

(743,707) (164,866)

Notes to and forming part of the financial statements are set out on pages 41 to 71.

40 UNITED BINTANG BERHAD (44676-M)


Notes to the Financial Statements
For the year ended 31 December 2011

1. BASIS OF PREPARATION

Statement of compliance

The financial statements comply with applicable approved Financial Reporting Standards
(“FRSs”), issued by the Malaysian Accounting Standards Board (“MASB”) and with the provisions
of the Companies Act, 1965.

The significant accounting policies adopted by the Group and the Company are consistent
with those of the previous financial year except for the adoption of the following new FRSs,
Amendments to FRSs and Issues Committee Interpretations (“IC Interpretation”), that are relevant
to the operations of the Group and of the Company, effective from financial periods beginning
on or after:

1 July 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)
Amendments to FRS 5 Non-current Assets Held for Sale and
Discontinued Operations
IC Interpretation 17 Distributions of Non-cash Assets to Owners

1 January 2011
Amendments to FRS 1 First-time Adoption of Financial Reporting
Standards
- Limited Exemption from Comprehensive
FRS 7 Disclosures for First-time
Adopters
- Additional Exemptions for First-time
Adopters
- Accounting Policy Changes in the Year of
Adoption
- Revaluation Basis as Deemed Cost
- Use of Deemed Cost for Operations Subject
to Rate of Regulation
Amendments to FRS 3 Business Combinations
Amendments to FRS 7 Improving Disclosures about Financial
Instruments
Amendments to FRS 101 Presentation of Financial Statements
- Classification of Changes in Equity
Amendments to FRS 121 The Effects of Changes in Foreign Exchange
Rates
Amendments to FRS 132 Financial Instruments: Presentation
Amendments to FRS 134 Interim Financial Reporting
Amendments to FRS 139 Financial Instruments: Recognition and
Measurement

ANNUAL REPORT 2011 41


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

1. BASIS OF PREPARATION (continued)

Statement of compliance (continued)

The initial application of the above FRSs, Amendments to FRSs and IC Interpretation, are not
expected to have any material impact on the financial statements of the Group and of the
Company except for the following:

FRS 3 (revised in 2010), Business Combinations

FRS 3 (revised in 2010) incorporates the following changes that are likely to be relevant to the
Group’s operations:

• The definition of a business has been broadened which is likely to result in more acquisitions
being treated as business combinations.
• Contingent consideration will be measured at fair value with subsequent changes therein
recognised in profit or loss.
• Transaction costs, other than share and debt issue costs, will be expensed as incurred.
• Any pre-existing interest in the acquiree will be measured at fair value with the gain or loss
recognised in profit or loss.
• Any non-controlling interest will be measured at either fair value, or at its proportionate interest
in the identifiable assets and liabilities of the acquiree, on transaction-by-transaction basis.

FRS 127 (revised in 2010), Consolidated and Separate Financial Statements

• The amendments to FRS 127 require changes in group composition to be accounted for as
equity transactions between the group and its non-controlling interest holders.

• The amendments to FRS 127 require all losses attributable to non-controlling interest to be
absorbed by non-controlling interest i.e., the excess and any further losses exceeding the non-
controlling interest in the equity of a subsidiary company are no longer charged against the
group’s interest.

The changes in FRS 3 (revised in 2010) and FRS 127 (revised in 2010) will be applied prospectively
and therefore there will be no impact on prior periods in the Group’s consolidated financial
statements.

Standards issued that are not yet effective

Malaysian Financial Reporting Standards (MFRS Framework)

On 19 November 2011, the MASB issued a new MASB approved accounting framework, the
Malaysian Financial Reporting Standards (MFRS Framework).

The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods
beginning on or after 1 January 2012, with the exception of entities subject to the application of
MFRS 141 Agriculture (MFRS 141) and IC Interpretation 15 Agreements for Construction of Real
Estate (IC 15), including its parent, significant investor and venture.

The Group will be required to prepare its first MFRS financial statements for the financial year ending
31 December 2012. In presenting its first MFRS financial statements, the Group will be required
to restate the comparative financial statements to amounts reflecting the application of MFRS
Framework. The majority of the adjustments required on transition will be made, retrospectively,
against opening reserves.

42 UNITED BINTANG BERHAD (44676-M)


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

1. BASIS OF PREPARATION (continued)

Standards issued that are not yet effective (continued)

Malaysian Financial Reporting Standards (MFRS Framework) (continued)

The Group has not completed its assessment of the financial effects of the differences between
Financial Reporting Standards and accounting standards under the MFRS Framework. Accordingly,
the consolidated financial performance and financial position as disclosed in these financial
statements for the year ended 31 December 2011 could be different if prepared under the MFRS
Framework.

The Group considers that it is achieving its scheduled milestones and expects to be in a position
to fully comply with the requirements of the MFRS Framework for the financial year ending 31
December 2012.

Measurement basis

The measurement bases applied in the preparation of the financial statements of the Group and
of the Company include cost, recoverable value, realisable value and fair value as indicated in
the accounting policies set out below. Accounting estimates are used in measuring these values.

Use of estimates and judgements

The preparation of the financial statements in conformity with FRSs requires management to make
judgements, estimates and assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and expenses. Actual results may differ from
these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimates are revised in any future periods
affected.

There are no significant areas of estimation uncertainty and critical judgements in applying
accounting policies that have significant effect on the amounts recognised in the financial
statements other than those disclosed in the following notes:

(i) Allowance for slow-moving inventories

Allowance for slow-moving inventories is made based on the ageing and estimated net
realisable value of inventories. The assessment of the allowance amount involves judgement
and estimates. Where the actual outcome in future is different from the original estimate,
such difference will impact the carrying value of inventories and allowance charge/write-
back in the period in which such estimate has been changed.

(ii) Allowance for doubtful debts

The collectibility of receivables is assessed on an ongoing basis. An allowance for doubtful


debt is made for any account considered to be doubtful for collection. The allowance for
doubtful debts is made based on a review of all outstanding accounts at the reporting date.
A considerable amount of judgement is required in assessing the ultimate realisation of these
receivables, including the creditworthiness and the past collection history of each customer.

ANNUAL REPORT 2011 43


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

1. BASIS OF PREPARATION (continued)

Use of estimates and judgements (continued)

(iii) Useful lives of property, plant and equipment

The Group and the Company determine the estimated useful lives and related depreciation
charges for the Group’s and the Company’s property, plant and equipment. This estimate is
based on the historical experience of the actual useful lives of property, plant and equipment
of similar nature and functions. The Group and the Company will revise the depreciation
charges where useful lives are different from those previously estimated, or it will write-off or
write-down technically obsolete or non-strategic assets that have been abandoned or sold.

2. SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted are set out below:

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and
its subsidiary company made up to the end of the financial year. The consolidated financial
statements are prepared using uniform accounting policies for like transactions in similar
circumstances.

All intra-group balances, transactions, unrealised income and unrealised losses are eliminated in
full on consolidation and the consolidated financial statements reflect external transactions only.

The subsidiary company is consolidated on the purchase method of accounting from the date of
acquisition, being the date on which the Group obtains control, and continues to be consolidated
until the date that such control ceases.

Under the purchase method of accounting, the cost of an acquisition is measured as the aggregate
of the fair values of the assets given, liabilities incurred or assumed and equity instruments issued
at the date of exchange, plus any costs directly attributable to the acquisition. Identifiable assets
acquired and liabilities and contingent liabilities assumed are measured at their fair values at the
acquisition date.

Non-controlling interests in the net assets of consolidated subsidiary company is identified


separately from the Group’s equity therein. Non-controlling interest that are present ownership
interests and entitle their holders to a proportionate share of the entity’s net assets in the event
of liquidation may be initially measured either at fair value or at the non-controlling interests’
proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The
choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-
controlling interests are measured at fair value or, when applicable, on the basis specified in
another FRS. All the acquisition-related costs are expensed off to profit or loss.

Goodwill on acquisition will be measured as the difference between the aggregate of fair value
of consideration transferred, any non-controlling interests in the acquiree and the fair value at the
acquisition date of any previously held equity interest in the acquiree (if acquired via “piecemeal
acquisition”), and the net identifiable assets acquired. Any bargain purchase (ie. “negative
goodwill”) will be recognised directly in the profit or loss.

Non-controlling interests represent the equity in subsidiaries that are not attributable, directly or
indirectly, to equity holders of the Company. Total comprehensive income is attributed to non-
controlling interests even if this results in the non-controlling interests having a deficit position.

44 UNITED BINTANG BERHAD (44676-M)


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Basis of consolidation (continued)

Change in ownership interest which does not result in a loss of control is accounted for within
equity. Where the changes in ownership interest results in loss of control, any remaining interest in
the former subsidiary is remeasured at fair value and a gain or loss is recognised in the profit or loss.

The excess of the acquisition cost over the fair values of the identifiable assets, liabilities, contingent
liabilities acquired is retained in the consolidated statement of financial position as goodwill, while
the shortfall is immediately credited to the consolidated profit or loss.

Goodwill arising on the acquisition of subsidiary companies is presented separately in the


consolidated statement of financial position.

After initial recognition, goodwill is measured at cost less accumulated impairment losses, if any.
Goodwill is tested for impairment, annually or more frequently if events or changes in circumstances
indicate that the carrying values may be impaired.

(i) Subsidiary company

A subsidiary company is an entity controlled by the Company. Control exists when the
Company has the power, directly or indirectly, to govern the financial and operating policies
of an entity so as to obtain benefits from its activities. The existence and effect of potential
voting rights that are currently exercisable or convertible, are considered when assessing
whether the Company has the power to govern the financial and operating policies of
another entity.

In the Company’s separate financial statements, investment in subsidiary company is stated


at cost/valuation less impairment losses. Impairment losses are charged to the profit or loss.

Foreign currency

(i) Functional currency

Functional currency is the currency of the primary economic environment in which an entity
operates.

The financial statements of the Group and of the Company are presented in Ringgit Malaysia
(“RM”) which is also the functional currency of the Group and of the Company.

(ii) Transactions and balances in foreign currencies

Transactions in currencies other than the functional currency (“foreign currencies”) are
translated to the functional currency at the rate of exchange ruling at the date of the
transaction.

Monetary items denominated in foreign currencies at the reporting date are translated at
foreign exchange rates ruling at that date.

Non-monetary items which are measured in terms of historical costs denominated in foreign
currencies are not retranslated.

Non-monetary items which are measured at fair values denominated in foreign currencies
are translated at the foreign exchange rates ruling at the date when the fair values were
determined.

ANNUAL REPORT 2011 45


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Foreign currency (continued)

(ii) Transactions and balances in foreign currencies (continued)

Exchange differences arising on the settlement of monetary items and the translation of
monetary items are included in the profit or loss for the period.

When a gain or loss on a non-monetary item is recognised directly in other comprehensive


income, any corresponding exchange gain or loss is recognised directly in other comprehensive
income. When a gain or loss on a non-monetary item is recognised in the profit or loss, any
corresponding exchange gain or loss is recognised in profit or loss.

Property, plant and equipment

(i) Recognition and measurement

Property, plant and equipment are stated at cost less accumulated depreciation and
impairment losses, if any.

The cost of property, plant and equipment includes expenditure that is directly attributable
to the acquisition of an asset.

Property, plant and equipment are derecognised upon disposal or when no future economic
benefits are expected from their use or disposal. On disposal, the difference between the net
disposal proceeds and the carrying amount is recognised in the profit or loss.

(ii) Subsequent costs

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

(iii) Depreciation

Depreciation is calculated to write off the depreciable amount of property, plant and
equipment on a straight line basis over their estimated useful lives.

The principal annual rates used for this purpose are:

• Buildings 2%
• Motor vehicles 10%
• Fixtures and fittings 8% - 10%
• Office equipment 10% - 25%
• Workshop tools 8% - 14%

The useful lives and depreciation method are reviewed, and adjusted if appropriate, at each
reporting date.

Assets acquired under hire purchase are depreciated over their expected useful lives on the
same basis as owned assets.

46 UNITED BINTANG BERHAD (44676-M)


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Investment properties
Investment properties are properties which are owned or held under a leasehold interest to earn
rental income or for capital appreciation or for both, but not for sale in the ordinary course of
business, use in the production or supply of goods or services or for administrative purposes.

Investment properties are measured initially at cost and subsequently at fair value with any
change therein recognised in profit or loss for the period in which they arise.

An investment property is derecognised on its disposal, or when it is permanently withdrawn from


use and no future economic benefits are expected from its disposal. The difference between the
net disposal proceeds and the carrying amount is recognised in profit or loss in the period in which
the item is derecognised.

Inventories

Inventories are stated at the lower of cost and net realisable value.

Cost is determined on the following basis:

Type of Inventory Basis


Heavy machinery/equipment Specific identification
Spare parts First-in first-out basis

Cost comprises the landed costs of inventories purchased and other costs incurred in bringing the
inventories to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale.

Financial instruments

Financial instruments are recognised in the statements of financial position when, and only
when the Group or the Company become a party to the contractual provisions of the financial
instruments.

Financial instruments are initially measured at fair value, plus transaction costs, except for the
financial assets classified as at fair value through profit or loss, which are initially measured at fair
value.
(a) Financial assets
Financial assets are classified into the following specified categories: financial assets at ‘fair
value through profit or loss’ (“FVTPL”), ‘held-to-maturity investments’, ‘available-for-sale
(“AFS”) financial assets’ and ‘loans and receivables’. The classification depends on the
nature and purpose of the financial assets and is determined at the time of initial recognition.

(i) Financial assets at FVTPL

Financial assets are classified as at FVTPL when the financial asset is either held for trading
or it is designated as at FVTPL.
A financial asset is classified as held for trading if it has been acquired principally for
the purpose of selling it in the near term; or on initial recognition it is part of a portfolio
of identified financial instruments that the Group and the Company manage together
and has a recent actual pattern of short-term profit-taking; or it is a derivative that is not
designated and effective as a hedging instrument.

ANNUAL REPORT 2011 47


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial instruments (continued)

(a) Financial assets (continued)

(i) Financial assets at FVTPL (continued)

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on
remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss
incorporates any dividend or interest earned on the financial asset.

(ii) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable


payments and fixed maturity dates that the Group and the Company have the positive
intent and ability to hold to maturity. Subsequent to initial recognition, held-to-maturity
investments are measured at amortised cost using the effective interest method less any
impairment, with revenue recognised on an effective yield basis.

(iii) AFS financial assets

AFS financial assets are non-derivatives that are either designated as available-for-sale
or are not classified as loans and receivables, held-to-maturity investments or financial
assets at FVTPL. All AFS assets that have a quoted market price in an active market are
measured at fair value at the end of the reporting period. Gains and losses arising from
changes in fair value are recognised in other comprehensive income and accumulated
in the investments revaluation reserve, with the exception of impairment losses and
interest calculated using the effective interest method.

Where the investment is disposed of or is determined to be impaired, the cumulative


gain or loss previously accumulated in the investments revaluation reserve is reclassified
to profit or loss.

AFS equity investments that do not have a quoted market price in an active market and
whose fair value cannot be reliably measured are measured at cost less any identified
impairment losses at the end of the reporting period.

(iv) Loans and receivables

Loans and receivables that have fixed or determinable payments that are not quoted
in an active market are classified as ‘loan and receivables’. Loans and receivables are
measured at amortised cost using the effective interest method, less any impairment.
Interest income is recognised by applying the effective interest rate, except for short-
term receivables when the recognition of interest would be immaterial.

(v) Derecognition of financial assets

The Group and the Company derecognise a financial asset only when the contractual
rights to the cash flows from the asset expire, or when they transfer the financial asset
and substantially all the risks and rewards of ownership of the asset to another entity.
If the Group and the Company neither transfer nor retain substantially all the risks and
rewards of ownership and continues to control the transferred asset, the Group and the
Company recognise their retained interest in the asset and an associated liability for
amounts they may have to pay. If the Group and the Company retain substantially all
the risks and rewards of ownership of a transferred financial asset, the Group and the
Company continue to recognise the financial asset and also recognise a collateralised
borrowing for the proceeds received.

48 UNITED BINTANG BERHAD (44676-M)


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial instruments (continued)

(b) Financial liabilities and equity instruments

Debt and equity instruments are classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangement.

(i) Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an
entity after deducting all of its liabilities. Equity instruments issued by the Group and the
Company are recognised at the proceeds received, net of direct issue costs.

(ii) Financial liabilities

Financial liabilities are classified as either financial liabilities at ‘FVTPL’ or other ‘financial
liabilities’.

(iii) Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when the financial liability is either held for
trading or it is designated as at FVTPL.

A financial liability is classified as held for trading if it has been acquired principally for the
purpose of repurchasing it in the near term; or on initial recognition it is part of a portfolio
of identified financial instruments that the Group and the Company manage together
and have a recent actual pattern of short-term profit-taking; or it is a derivative that is not
designated and effective as a hedging instrument.

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on
remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss
incorporates any interest paid on the financial liability.

(iv) Other financial liabilities

Other financial liabilities, including payables and borrowings, are initially measured at fair
value, net of transaction costs. They are subsequently measured at amortised cost using
the effective interest method, with interest expense recognised on an effective yield
basis.

(v) Derecognition of financial liabilities

The Group and the Company derecognise financial liabilities when, and only when, the
Group’s and the Company’s obligations are discharged, cancelled or they expire.

(c) Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset
or financial liability and of allocating interest income or interest expense over the relevant
period. The effective interest rate is the rate that exactly discounts estimated future cash
receipts or cash payments (including all transaction costs and other premiums or discounts)
through the expected life of the financial asset or financial liability, or (where appropriate) a
shorter period, to the net of carrying amount on initial recognition.

ANNUAL REPORT 2011 49


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Non-current assets classified as held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use. This condition is regarded as met
only when the sale is highly probable and the asset is available for immediate sale in its present
condition subject only to terms that are usual and customary.

Immediately before classification as held for sale, the measurement of the assets is brought up-
to-date in accordance with applicable FRSs. Then, on initial classification as held for sale, assets
(other than deferred tax assets, employee benefit assets, financial assets and inventories) are
measured in accordance with FRS 5 that is the lower of carrying amount and fair value less cost
to sell. Any differences are included in profit or loss.

Impairment

(i) Financial assets


Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the
end of each reporting period. Financial assets are considered to be impaired when there
is objective evidence that, as a result of one or more events that occurred after the initial
recognition of the financial asset, the estimated future cash flows of the financial asset have
been affected.

Receivables assessed not to be impaired individually are, in addition, assessed for impairment
on a collective basis. Objective evidence of impairment for a portfolio of receivables could
include the Group’s and the Company’s past experience of collecting payments, an increase
in the number of delayed payments in the portfolio past the average credit period, as well
as observable changes in the national or global economic conditions that correlate with
default on receivables.

In respect of receivables carried at amortised cost, the amount of impairment loss recognised
is the difference between the asset’s carrying amount and the present value of estimated
future cash flows, discounted at the financial asset’s original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for
all financial assets with the exception of trade receivables, where the carrying amount is
reduced through the use of an allowance account. When a trade receivable is considered
uncollectible, it is written off against the allowance account. Subsequent recoveries of
amounts previously written off are credited against the allowance account. Changes in the
carrying amount of the allowance account are recognised in profit or loss.

When an AFS financial asset is considered to be impaired, cumulative gains or losses previously
recognised in other comprehensive income are reclassified to profit or loss in the period.
When an impairment loss subsequently reverses, impairment loss previously recognised in
profit or loss is not reversed through profit or loss. Any increase in fair value subsequent to an
impairment loss is recognised in other comprehensive income.

(ii) Non-financial assets

The carrying amounts of non-financial assets (except for assets arising from employee
benefits, investment property that is measured at fair value) are reviewed at the end of each
reporting period to determine whether there is any indication of impairment.

If any such indication exists, the asset’s recoverable amount is estimated. For the purpose
of impairment testing, assets are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely independent of the cash inflows
of other assets or groups of assets (the “cash-generating unit”).

50 UNITED BINTANG BERHAD (44676-M)


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Impairment (continued)

(ii) Non-financial assets (continued)

The recoverable amount of an assets or cash-generating units is the greater of its value in use
and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit
exceeds its recoverable amount. Impairment losses are recognised in the profit or loss.

Impairment losses recognised in prior periods are assessed at the end of each reporting
period for any indications that the loss has decreased or no longer exists. An impairment loss
is reversed if there has been a change in the estimate used to determine the recoverable
amount since the last impairment loss was recognised. An impairment loss is reversed only to
the extent that the asset’s carrying amount does not exceed the carrying amount that would
have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised.

Reversals of impairment losses are credited to profit or loss in the year in which the reversals
are recognised.

Provisions

Provisions are recognised when the Group or the Company has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of economic resources will
be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
If it is no longer probable that an outflow of economic resources will be required to settle the
obligation, the provision is reversed.

If the effect of the time value of money is material, provisions are discounted using a current pre
tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used,
the increase in the provision due to the passage of time is recognised as a finance cost.

Revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to the Group and
the Company and when the revenue can be measured reliably, on the following bases:

(i) Sale of heavy machinery/equipment and spare parts


Revenue from sale of heavy machinery/equipment and spare parts is measured at the
fair value of the consideration received or receivable, net of returns and discounts and
is recognised in the profit or loss upon delivery and when significant risks and rewards of
ownership have been transferred to the customers.

(ii) Sale of used motor vehicle


The Group and the Company earn commission income from the sale of used motor vehicle.

(iii) Interest income


Interest income is recognised as it accrues on a timely basis.

ANNUAL REPORT 2011 51


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Leases

A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series
of payments the right to use an asset for an agreed period of time.

(i) Finance lease

A finance lease is a lease that transfers substantially all the risks and rewards incidental to
ownership of an asset. Title may or may not eventually be transferred.

Property, plant and equipment acquired by way of finance leases are stated at amounts
equal to the lower of their fair values and the present value of minimum lease payments at
the inception of the leases, less accumulated depreciation and any impairment losses.

In calculating the present value of the minimum lease payments, the discount rate is the
interest rate implicit in the lease, if this is determinable; if not, the Group incremental borrowing
rate is used.

(ii) Operating lease

An operating lease is a lease other than a finance lease.

Operating lease income or operating lease rentals are credited or charged to the profit or
loss on a straight-line basis over the period of the lease.

Employee benefits

(i) Short-term benefits

Salaries, allowances, bonuses and social security contributions are recognised as an expense
in the financial year in which the services are rendered by the employees of the Group and
the Company. Short-term accumulating compensated absences such as paid annual leave
are recognised when services are rendered by employees that increase their entitlements to
future compensated absences and short-term non-accumulating compensated absences
such as sick leave are recognised when the absences occur. Non-monetary benefits such as
medical care, housing and other staff related expenses are charged to the profit or loss as
and when incurred.

(ii) Defined contribution plan


As required by law, companies in Malaysia make contributions to the Employees Provident
Fund (“EPF”). Such contributions are recognised as an expense in the profit or loss in the
financial year to which they relate.

(iii) Termination benefits

Employee termination benefits are recognised only either after an agreement is in place
with the appropriate employee representatives specifying the terms of redundancy or after
individual employees have been advised of the specific terms.

Borrowings costs

All interest and other costs incurred in connection with borrowings are expensed as incurred as
part of finance costs. Finance costs comprise interest paid and payable on borrowings. The interest
component of hire purchase payments is charged to the profit or loss over the hire purchase
periods so as to give a constant periodic rate of interest on the remaining hire purchase liabilities.

52 UNITED BINTANG BERHAD (44676-M)


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Income tax

The income tax expense in the profit or loss represents the aggregate amount of current tax and
deferred tax included in the determination of profit or loss for the financial year. Current tax is
the expected amount of income taxes payable in respect of the taxable profit for the year and
is measured using the tax rates that have been enacted or substantively enacted at the end of
the reporting period.

On the statement of financial position, a deferred tax liability is recognised for taxable temporary
differences while a deferred tax asset is recognised for deductible temporary differences and
unutilised tax losses only to the extent that it is probable that taxable profit will be available in
future against which the deductible temporary differences and tax losses can be utilised.

No deferred tax is recognised for temporary differences arising from the initial recognition of:

(i) goodwill, or

(ii) an asset or liability which is not a business combination and at the time of the transaction,
affects neither accounting profit nor taxable profit.

Deferred tax assets and liabilities are measured based on tax consequences that would follow
from the manner in which the asset or liability is expected to be recovered or settled, and based
on tax rates enacted or substantively enacted by the reporting date that are expected to apply
to the period when the asset is realised or when the liability is settled.

Current tax and deferred tax are charged or credited directly to other comprehensive income if
the tax relates to items that are credited or charged, whether in the same or a different period,
directly to other comprehensive income.

Earnings per ordinary shares

The Group presents basic earnings per share data for its ordinary shares (EPS).

Basic EPS is calculated by dividing the profit or loss attributable to equity shareholders of the
Company by the weighted average number of ordinary shares outstanding during the period.

Statements of cash flows

The Group and the Company adopt the direct method in the preparation of the statements of
cash flows.

Cash equivalents are short-term, highly liquid investments that are readily convertible to known
amounts of cash which are subject to insignificant risk of changes in value.

ANNUAL REPORT 2011 53


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

3. PROPERTY, PLANT AND EQUIPMENT

Fixtures and
fittings, office
Motor equipment and
Group Buildings vehicles workshop tools Total
RM RM RM RM
Cost
At 1 January 2010 4,552,536 1,514,818 812,167 6,879,521
Additions - - 5,233 5,233
Disposals - (676,100) (32,735) (708,835)
Written off - - (104,237) (104,237)

At 31 December 2010 4,552,536 838,718 680,428 6,071,682


Additions - - 104,297 104,297
Disposals (4,175,723) (4,300) - (4,180,023)
Written off - - (67,619) (67,619)

At 31 December 2011 376,813 834,418 717,106 1,928,337

Accumulated depreciation
and impairment loss
At 1 January 2010
Accumulated depreciation 964,495 943,318 397,129 2,304,942
Accumulated impairment loss - 29,840 - 29,840

964,495 973,158 397,129 2,334,782

Charge for the year 91,050 85,300 103,861 280,211


Disposals - (569,695) (16,213) (585,908)
Written off - - (103,724) (103,724)

91,050 (484,395) (16,076) (409,421)

At 31 December 2010
Accumulated depreciation 1,055,545 458,923 381,053 1,895,521
Accumulated impairment loss - 29,840 - 29,840

1,055,545 488,763 381,053 1,925,361

Charge for the year 42,334 79,053 92,623 214,010


Disposals (1,042,332) (3,619) - (1,045,951)
Written off - - (44,561) (44,561)

(999,998) 75,434 48,062 (876,502)

At 31 December 2011
Accumulated depreciation 55,547 534,357 429,115 1,019,019
Accumulated impairment loss - 29,840 - 29,840

55,547 564,197 429,115 1,048,859

Net book value


At 31 December 2011 321,266 270,221 287,991 879,478

At 31 December 2010 3,496,991 349,955 299,375 4,146,321

54 UNITED BINTANG BERHAD (44676-M)


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

3. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)


Fixtures and
fittings, office
Motor equipment and
Company Buildings vehicles workshop tools Total
RM RM RM RM
Cost
At 1 January 2010 4,552,536 1,426,899 805,917 6,785,352
Additions - - 5,233 5,233
Disposals - (676,100) (32,735) (708,835)
Written off - - (104,237) (104,237)

At 31 December 2010 4,552,536 750,799 674,178 5,977,513

Additions - - 104,297 104,297


Disposals (4,175,723) (4,300) - (4,180,023)
Written off - - (66,669) (66,669)

At 31 December 2011 376,813 746,499 711,806 1,835,118

Accumulated depreciation
and impairment loss
At 1 January 2010
Accumulated depreciation 964,495 874,088 393,328 2,231,911
Accumulated impairment loss - 27,071 - 27,071

964,495 901,159 393,328 2,258,982

Charge for the year 91,050 81,219 102,805 275,074


Disposals - (569,695) (16,213) (585,908)
Written off - - (103,724) (103,724)

91,050 (488,476) (17,132) (414,558)

At 31 December 2010
Accumulated depreciation 1,055,545 385,612 376,196 1,817,353
Accumulated impairment loss - 27,071 - 27,071

1,055,545 412,683 376,196 1,844,424

Charge for the year 42,334 74,972 91,586 208,892


Disposals (1,042,332) (3,619) - (1,045,951)
Written off - - (43,637) (43,637)

(999,998) 71,353 47,949 (880,696)

At 31 December 2011
Accumulated depreciation 55,547 456,965 424,145 936,657
Accumulated impairment loss - 27,071 - 27,071

55,547 484,036 424,145 963,728

Net book value


At 31 December 2011 321,266 262,463 287,661 871,390

At 31 December 2010 3,496,991 338,116 297,982 4,133,089

ANNUAL REPORT 2011 55


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

3. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Included in the net carrying amounts of property, plant and equipment of the Group and of the
Company are motor vehicles amounting to RM225,550 (2010: RM318,760), which were acquired
under hire purchase.

The buildings of the Group and of the Company are situated on land leased from a company in
which certain directors of the Company have substantial interests.

The entire property, plant and equipment of the Company are charged to a licensed bank as
security for banking facilities granted to the Company (Note 13).

4. INVESTMENT PROPERTIES

Group Company
2011 2010 2011 2010
RM RM RM RM

At 1 January 3,500,000 3,750,000 3,400,000 3,400,000


Changes in fair value 10,000 - - -
Transfer to non-current asset
classified as held for sale - (250,000) - -

At 31 December 3,510,000 3,500,000 3,400,000 3,400,000

Included in the above are:

Freehold land 3,510,000 3,500,000 3,400,000 3,400,000

Included in the above freehold land of the Group and of the Company is an amount of RM2,300,000
(2010: RM2,300,000) which is charged to a licensed bank for banking facilities granted to the
Company (Note 13).

The fair values as at 31 December 2011 and 2010 were determined by reference to independent
professional valuations carried out by registered appraisers. The appraisers have appropriate
qualifications and recent experience in the valuation of properties in the relevant locations.
The valuations were arrived at by reference to market evidence of transaction prices for similar
properties.

5. INVESTMENT IN SUBSIDIARY COMPANY

Company
2011 2010
RM RM

Unquoted shares, at cost 5,983,846 5,983,846

Less:
Accumulated impairment losses
At 1 January 845,365 845,365
Impairment loss for the year - -

At 31 December (845,365) (845,365)

5,138,481 5,138,481

56 UNITED BINTANG BERHAD (44676-M)


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

5. INVESTMENT IN SUBSIDIARY COMPANY (CONTINUED)

The subsidiary company, which is incorporated in Malaysia, is as follows:

Gross equity
interest Principal activity
Name of subsidiary company 2011 2010

United Bintang Machinery Sdn Bhd 100% 100% Trading of heavy machinery

The amount owing to the subsidiary company represents unsecured advances which are interest-
free and are repayable on demand.

6. INVENTORIES
Group and Company
2011 2010
RM RM
Heavy machinery/equipment
- at cost 23,207,915 19,135,662
- at net realisable value 2,530 406,087

23,210,445 19,541,749

Less:
Inventories written down (530) (168,958)

23,209,915 19,372,791

Spare parts
- at cost 789,590 620,552

23,999,505 19,993,343

The write-down and reversal are included in cost of sales.

7. TRADE AND OTHER RECEIVABLES


Group Company
2011 2010 2011 2010
RM RM RM RM
Trade

Trade receivables - gross 2,841,917 3,516,254 2,826,230 3,500,567


Less: Allowance for doubtful
debts (15,687) (15,687) - -

Trade receivables - net 2,826,230 3,500,567 2,826,230 3,500,567

Non-trade
Other receivables 39,741 18,415 39,741 18,415
Deposits 95,190 196,034 93,357 188,509
Prepayments 717,819 184,432 714,143 184,432

852,750 398,881 847,241 391,356

3,678,980 3,899,448 3,673,471 3,891,923

ANNUAL REPORT 2011 57


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

7. TRADE AND OTHER RECEIVABLES (CONTINUED)

The average credit period on sale of heavy machinery is 30 to 90 days (2010: 30 to 90 days), while
the sale of used car is on cash basis. No interest is charged on trade receivables. The receivable is
denominated in Australian dollar (AUD). At reporting date, RM2,826,230 equivalent to AUD892,034
(2010: RM3,500,567 equivalent to AUD1,152,693) of the Group’s and of the Company’s total trade
receivables pertain to a receivable from an overseas consignee of heavy machineries.

Impairment loss in respect of trade receivables is recorded using an allowance account unless
the Group and the Company are satisfied that recovery of the amount is remote, in which case
the impairment loss is written off against trade receivable directly. Movement in allowance for
doubtful debts of trade receivables is as below:

Group Company
2011 2010 2011 2010
RM RM RM RM

1 January 15,687 853,902 - 827,715


Impairment provision for the year - 48,871 - 48,871
Reversal of impairment provision - (887,086) - (876,586)

15,687 15,687 - -

The ageing analysis of the Group’s and the Company’s trade receivables that were not impaired
as at the reporting date, based on due date is as follows:

2011 2010
RM RM

Neither past due nor impaired 2,252,632 3,115,637


1-90 days past due but not impaired 573,598 384,930

2,826,230 3,500,567

Trade receivables that were past due but not impaired related to a number of customers that had
a good track record of repayment with the Group and the Company. Based on past experience,
management believe that no impairment allowance is necessary in respect of these balances
as there has not been a significant change in credit quality and the balances are still considered
to be fully recoverable. The Group and the Company do not hold any collateral over these
balances.

8. FIXED DEPOSITS

The fixed deposits are placed with a licensed bank and earn effective interest rates of between
2.85% to 2.95% (2010 : 2.75% and 2.85%) per annum. The fixed deposits have maturity periods of
not more than one year.

Included in the fixed deposits of the Group and of the Company is an amount of RM5,512,068
(2010 : RM5,282,274) pledged to the said bank for banking facilities granted to the Company
(Note 13).

58 UNITED BINTANG BERHAD (44676-M)


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

9. CASH AND BANK BALANCES

Group Company
2011 2010 2011 2010
RM RM RM RM
The currency exposure
profiles of cash and bank
balances are as follows:

Ringgit Malaysia 513,394 141,280 497,309 53,066


Euro 446 446 446 446

513,840 141,726 497,755 53,512

10. NON-CURRENT ASSET CLASSIFIED AS HELD FOR SALE

During the current financial year, the Group reclassified non-current asset classified as held for sale
from non-current asset category to current asset category on the face of statement of financial
position to properly reflect the nature of the account.

Group
2011 2010
RM RM
At fair value:
Freehold double storey villa - 250,000

On 27 December 2010, the subsidiary company entered into a sales and purchase agreement to
dispose of its investment property which is a freehold double storey villa at No. 15 Jalan Kenari 1,
Perumahan Jalan Kenari, 44101 Lembah Beringin, Selangor for cash consideration of RM260,000.
The subsidiary company received RM26,000 deposit in 2010 upon signing of the agreement.
This amount was included in other payables. The transaction was completed in April 2011.
Consequently, the Group recognised a gain of RM10,000 which was included in other operating
income in the consolidated statement of comprehensive income.

11. SHARE CAPITAL

Group and Company


Number Number
Amount of shares Amount of shares
2011 2011 2010 2010
RM RM

Authorised:
Ordinary shares of RM1 each 100,000,000 100,000,000 100,000,000 100,000,000

Issued and fully paid:


Ordinary shares of RM1 each 54,005,000 54,005,000 54,005,000 54,005,000

12. REVALUATION RESERVE

The Company’s revaluation reserve pertains to revaluation surplus recognised upon acquisition of
its investment in subsidiary company.

ANNUAL REPORT 2011 59


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

13. LOANS AND BORROWINGS

Group and Company


2011 2010
RM RM
Non-current
Hire purchase liabilities - 6,000

Current
Secured bankers acceptance 6,265,000 5,150,000
Bank overdraft 1,241,462 218,378
Hire purchase liabilities 6,000 36,000

7,512,462 5,404,378

Total 7,512,462 5,410,378

The effective interest rates per annum of the bank borrowings are as follows:

2011 2010
% %

Secured bankers acceptance 3.44 2.33


Bank overdraft 8.10 7.80
Hire purchase liabilities 3.84 2.80

The Group and the Company have bank overdraft and other credit facilities amounting to
RM13,000,000 (2010: RM13,000,000) that are secured by a fixed and floating charge over the
entire property, plant and equipment, investment properties (Notes 3 and 4) and fixed deposits
(Note 8) of the Group and of the Company.

Hire Purchase Liabilities


Group and Company
2011 2010
RM RM
Outstanding hire purchase installments:
- not later than one year 6,750 40,500
- later than one year but not later than two years - 6,750
6,750 47,250
Less:
Unexpired term charges (750) (5,250)

Outstanding principal amount due 6,000 42,000

Less:
Outstanding principal amount due not later than
one year (included in current liabilities) (6,000) (36,000)

Outstanding principal amount due later than


one year but not later than two years - 6,000

The effective interest rate of the hire purchase liabilities is 3.84% (2010: 2.80%) per annum.

60 UNITED BINTANG BERHAD (44676-M)


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

14. TRADE AND OTHER PAYABLES

Group Company
2011 2010 2011 2010
RM RM RM RM
Trade
Trade payables 200,854 111,825 200,854 111,825

Non-trade
Other payables 3,390,000 5,525,472 3,390,000 5,525,472
Accruals 100,600 88,401 87,002 76,001
Amount owing to directors 7,665,000 7,710,000 7,665,000 7,710,000
Deposits 117,400 40,000 - -

11,273,000 13,363,873 11,142,002 13,311,473

Total 11,473,854 13,475,698 11,342,856 13,423,298

Trade payables comprise amounts outstanding from purchases of spare parts and sub-contract
charges for repair works. The normal credit periods granted by trade suppliers are from 30 to 90
days (2010: 30 to 90 days).
The amount owing to the directors represents unsecured advances which are interest-free and
are repayable on demand.
Deposits represent advance deposits received from customers for the purchase of heavy
machinery.

15. REVENUE

Revenue represents the invoiced value of sale of heavy machinery/equipment less returns and
discounts, and the commission earned from sale of used motor vehicle.

Group Company
2011 2010 2011 2010
RM RM RM RM

Sale of heavy machinery 17,886,636 22,619,679 17,475,636 22,125,620


Commission income 395,500 - 395,500 -

18,282,136 22,619,679 17,871,136 22,125,620

16. FINANCE INCOME AND COSTS


Group Company
2011 2010 2011 2010
RM RM RM RM
Finance Income
Interest income from fixed
deposits 230,881 112,563 230,881 112,563

Finance Costs
Interest expense on bankers acceptances 191,755 213,716 191,755 213,716
Interest expense on bank overdrafts 42,263 63,490 42,263 63,490
Hire purchase term charges 4,500 6,090 4,500 6,090
238,518 283,296 238,518 283,296

Net Finance Costs (7,637) (170,733) (7,637) (170,733)

ANNUAL REPORT 2011 61


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

17. PROFIT/(LOSS) BEFORE TAX

Group Company
2011 2010 2011 2010
RM RM RM RM

Profit/(Loss) before tax is stated

after charging:

Auditors’ remuneration
- statutory audit
- current year 50,000 35,000 40,000 29,000
- other services 2,000 2,000 2,000 2,000
Allowance for doubtful debts - 48,871 - 48,871
Depreciation 214,010 280,211 208,892 275,074
Direct operating expenses
of investment properties
during the year
- non- revenue generating 774 1,216 463 463
Directors’ remuneration
- fees 42,000 42,000 42,000 42,000
- other emoluments 211,400 199,200 211,400 199,200
Property, plant and
equipment written off 23,058 513 23,032 513
Rental of premises 183,917 343,150 183,917 343,150

and crediting:

Bad debts recovered 76,035 10,500 76,035 -


Gain on disposal of property,
plant and equipment 22,228 65,689 22,228 65,689
Gain on fair value adjustment
of investment property 10,000 - - -
Gain on disposal of non-current
asset classified as held for sale 10,000 - - -
Inventories written back 168,428 967,410 168,428 967,410
Realised gain on foreign exchange 247 117,448 247 117,448

Directors’ remuneration represents the fees and other emoluments payable to the executive
directors of the Company. The remuneration of the key management personnel are directors’
remuneration as disclosed above.

The estimated monetary value of benefits-in-kind received by the directors otherwise than in cash
from the Company amounted to RM6,600 (2010: RM16,600).

62 UNITED BINTANG BERHAD (44676-M)


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

18. INCOME TAX EXPENSE

There is no income tax expense as both the Group and the Company have no taxable income.

The numerical reconciliation between the income tax expense and the product of accounting
results multiplied by the applicable tax rate is as follows:

Group Company
2011 2010 2011 2010
RM RM RM RM

Accounting profit/(loss) 780,519 152,113 690,212 (51,646)

Tax at the applicable tax rate


of 25% 195,130 38,028 172,553 (12,912)

Add/ (Less):

Tax effect of expenses not


deductible in determining
taxable profit 92,551 104,770 89,938 100,280
Deferred tax income/(expense)
relating to origination and
reversal of temporary
differences not recognised
during the year (269,193) 69,822 (247,680) 15,676
Other non-taxable income (18,488) (212,620) (14,811) (103,044)

Income tax expense for the year - - - -

At 31 December 2011, the Group and the Company have not recognised deferred tax assets
arising from the following temporary differences as it is not probable that future taxable profit will
be available against which the assets can be utilised:

Group Company
2011 2010 2011 2010
RM RM RM RM
Deductible temporary
differences relating to
- unused tax losses 53,183,548 53,194,676 49,084,300 49,084,300
- unabsorbed capital allowances 5,436,313 9,272,651 5,436,313 9,193,401
- other differences 530 168,958 530 168,958

58,620,391 62,636,285 54,521,143 58,446,659


Taxable temporary differences
between net carrying amount
and tax written down value of
property, plant and equipment (357,875) (3,296,999) (349,352) (3,284,147)

58,262,516 59,339,286 54,171,791 55,162,512

19. EARNINGS PER SHARE

The basic earnings per share has been calculated by dividing the profit attributable to equity
holders of the Company of RM780,519 (2010: RM152,113) by weighted average number of
ordinary shares in issue during the year of 54,005,000 (2010: 54,005,000) shares.

ANNUAL REPORT 2011 63


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

20. EMPLOYEES BENEFITS EXPENSE

Group Company
2011 2010 2011 2010
RM RM RM RM

Salaries, allowances and


bonuses 1,010,349 1,280,560 960,642 1,209,169
Defined contribution plan
- EPF contributions 118,118 146,618 110,837 136,507
Social security costs
- SOCSO contributions 9,689 13,954 8,693 12,499
Other benefits 277,847 197,051 276,314 136,402

1,416,003 1,638,183 1,356,486 1,494,577

21. RELATED PARTY DISCLOSURES

In addition to information disclosed elsewhere in the financial statements, the Group and the
Company have the following transactions which are determined on a basis negotiated between
the Company and its subsidiary company and other related parties during the financial year:

Group Company
2011 2010 2011 2010
RM RM RM RM
Sales of machinery/
equipment and spare
parts to subsidiary company - - 3,473,000 8,058,550

Rental of premises charged by


a company in which certain directors of
the Company have substantial interests
- Shang Yong (Sabah) Sdn Bhd 165,000 324,920 165,000 324,920

Group Company
2011 2010 2011 2010
RM RM RM RM

Advances from subsidiary company - - 4,104,170 8,443,724

Repayments to subsidiary company - - 3,615,976 8,344,696

(Repayments to)/
Advances from directors (45,000) 1,378,000 (45,000) 1,378,000

Information regarding outstanding balances at 31 December 2011 arising from the above related
party transactions are disclosed in Notes 5 and 14.

64 UNITED BINTANG BERHAD (44676-M)


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

22. OPERATING LEASE ARRANGEMENTS

The Group and the Company as lessee


The Group and the Company lease land and sales offices under non-cancellable operating leases
for their operations. The leases have a tenure of 2 years, with an option to renew after the expiry
of the respective leases. Increase in lease payments, if any, after the expiry dates, are negotiated
between the Group and the lessors which will normally reflect market rentals. The land and sales
offices are leased from a related party. The above leases do not include any contingent rentals.
The future minimum lease payments under non-cancellable operating leases is as follows:

Group Company
2011 2010 2011 2010
RM RM RM RM

Not later than one year 144,000 105,000 144,000 105,000


Later than one year but not later
than two years 228,000 - 228,000 -

372,000 105,000 372,000 105,000

23. OPERATING SEGMENT

The Group segment information is prepared based on location of customers. Transactions between
segments are entered into in the normal course of business and are established on terms and
conditions that are not materially different from that obtainable in transactions with unrelated
parties. The effects of such inter-segmental transactions are eliminated on consolidation. The
Group’s Chief Executive Officer reviews internal management reports on at least a quarterly basis.

Performance is measured based on segment profit before tax, interest, depreciation and
amortisation, as included in the internal management reports that are reviewed by the Group’s
Chief Executive Officer, who is the Group’s chief operating decision maker. Segment profit is used
to measure performance as management believes that such information is the most relevant
in evaluating the results of certain segments relative to other entities that operate within these
industries.

2011
- Local - - Overseas - Adjustments
Machinery and Total and
motor vehicles Machinery segments eliminations Consolidated
RM RM RM RM RM

Segment Profit 485,807 294,712 780,519 − 780,519

Revenue:
External customers 4,279,500 14,002,636 18,282,136 − 18,282,136
Inter-segment 3,473,000 − 3,473,000 (3,473,000) −

7,752,500 14,002,636 21,755,136 (3,473,000) 18,282,136

ANNUAL REPORT 2011 65


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

23. OPERATING SEGMENT (CONTINUED)

2011 (continued)
- Local - - Overseas - Adjustments
Machinery and Total and
motor vehicles Machinery segments eliminations Consolidated
RM RM RM RM RM

Results:
Depreciation and
amortisation (5,118) (208,892) (214,010) − (214,010)
Finance costs − (238,518) (238,518) − (238,518)
Finance income − 230,881 230,881 − 230,881

Segment assets 5,563,546 43,092,670 48,656,216 (10,562,345) 38,093,871

Segment liabilities 130,998 24,279,182 24,410,180 (5,423,864) 18,986,316

Inter-segment revenues are eliminated upon consolidation and reflected in the ‘adjustments and
eliminations’ column.

2010
- Local - - Overseas - Adjustments
Total and
Machinery Machinery segments eliminations Consolidated
RM RM RM RM RM

Segment
Profit/ (Loss) 203,759 (51,646) 152,113 − 152,113

Revenue:
External customers 8,552,609 14,067,070 22,619,679 − 22,619,679
Inter-segment 8,058,550 − 8,058,550 (8,058,550) −

16,611,159 14,067,070 30,678,229 (8,058,550) 22,619,679

Results:
Depreciation and
amortisation (5,137) (275,075) (280,212) − (280,212)
Finance costs − (283,296) (283,296) − (283,296)
Finance income − 112,563 112,563 − 112,563

Segment assets 5,394,641 41,892,622 47,287,263 (10,074,151) 37,213,112

Segment liabilities 52,400 23,769,346 23,821,746 (4,935,670) 18,886,076

Inter-segment revenues are eliminated upon consolidation and reflected in the ‘adjustments and
eliminations’ column.

66 UNITED BINTANG BERHAD (44676-M)


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

24. FINANCIAL INSTRUMENTS

Categories of financial instruments

Group Company
2011 2010 2011 2010
RM RM RM RM
Financial assets
Loans and receivables, at
amortised cost:
Trade and other receivables 3,678,980 3,899,448 3,673,471 3,891,923
Fixed deposits 5,512,068 5,282,274 5,512,068 5,282,274
Cash and bank balances 513,840 141,726 497,755 53,512

Total 9,704,888 9,323,448 9,683,294 9,227,709

Financial liabilities
At amortised cost:
Trade and other payables 11,473,854 13,475,698 11,342,856 13,423,298
Loans and borrowings 7,512,462 5,410,378 7,512,462 5,410,378
Amount owing to subsidiary
company - - 5,423,864 4,935,670

Total 18,986,316 18,886,076 24,279,182 23,769,346

Financial risk management objectives and policies

The operations of the Group are subject to a variety of financial risks, including foreign currency
risk, interest rate risk, credit risk and liquidity risk. The Group has taken measures to minimise its
exposure to risk and/or costs associated with the financing, investing and operating activities.

Significant accounting policies

Details of the significant accounting policies and methods adopted (including the criteria for
recognition, the bases of measurement, and the bases for recognition of income and expenses),
for each class of financial asset, financial liability and equity instrument are disclosed in Note 2.

Foreign currency risk

The Group is exposed to foreign currency risk related to its overseas operations.

The carrying amounts of the Group’s foreign currency denominated trade receivables are
disclosed in Note 7. These receivables are denominated in Australian dollar (AUD). The Group has
no other financial instruments denominated in foreign currency. The Group monitors its foreign
exchange exposure closely. The Group did not engage in any transactions involving financial
derivative instruments during the year.

Foreign currency sensitivity

If the exchange rate had been 5% higher/lower and all other variables were held constant, the
Group’s profit for the year ended 31 December 2011 would increase/decrease by RM143,510
(2010: RM180,973).

ANNUAL REPORT 2011 67


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

24. FINANCIAL INSTRUMENTS (CONTINUED)

Interest rate risk

The Group is exposed to interest rate risk through the impact of rate changes on hire purchase
liabilities, secured bankers acceptance, bank overdraft and fixed deposits. The interest rates of
hire purchase liabilities, secured bankers acceptance, bank overdraft and fixed deposits are
disclosed in Notes 13 and 8, respectively.

Interest rate sensitivity

If interest rates had been 50 basis points higher/lower and all other variables were held constant,
the Group’s profit for the year ended 31 December 2011 would increase/decrease by RM73,659
(2010: RM49,611). This is mainly attributable to the Group’s exposure to interest rates on its variable
rate for fixed deposits and borrowings.

Credit risk

The Group trades mainly with certain key customers and is exposed to significant credit risk
from these trade receivables. The Group and the Company manage this risk based on careful
evaluation of the customers’ credit history.

The Group’s exposure to credit risk in relation to its trade receivables and other receivables should
all its customers fail to perform their obligations as of 31 December 2011, is the carrying amount of
these receivables as disclosed in Note 7.

The Group places its fixed deposits with credit worthy institutions. The carrying amount of financial
assets in the financial statements, net of any provision of losses, represents the Group’s maximum
exposure to credit risk without taking into account the value of any collateral or other security
obtained.

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations due
to shortage of funds. The Group’s exposure to liquidity risk arises primarily from mismatches of the
maturities of financial assets and liabilities.

The Group practises prudent liquidity risk management to minimise the mismatch of financial
assets and liabilities and maintain sufficient credit facilities as disclosed in Note 13 for contingent
funding requirement of working capital.

68 UNITED BINTANG BERHAD (44676-M)


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

24. FINANCIAL INSTRUMENTS (CONTINUED)

Analysis of financial instruments by remaining contractual maturities

The table below summaries the maturity profile of the Group’s and the Company’s liabilities at the
reporting date based on contractual repayment obligations.

2011 Weighted
average
effective Less than 1 to 3 3 months
interest rate 1 month months to 1 year Total
% RM RM RM RM
The Group

Trade payables - - 200,854 - 200,854


Non-trade payables - - 11,273,000 - 11,273,000
Hire-purchase liabilities 3.84% - - 6,000 6,000
Secured bankers acceptance 3.44% - - 6,265,000 6,265,000
Bank overdraft 8.10% - - 1,241,462 1,241,462

- 11,473,854 7,512,462 18,986,316

The Company

Trade payables - - 200,854 - 200,854


Non-trade payables - - 11,142,002 - 11,142,002
Hire-purchase liabilities 3.84% - - 6,000 6,000
Secured bankers acceptance 3.44% - - 6,265,000 6,265,000
Bank overdraft 8.10% - - 1,241,462 1,241,462
Amount owing to subsidiary
company - - - 5,423,864 5,423,864

- 11,342,856 12,936,326 24,279,182

2010 Weighted
average
effective Less than 1 to 3 3 months 1 to 2
interest rate 1 month months to 1 year years Total
% RM RM RM RM RM
The Group

Trade payables - - 111,825 - - 111,825


Non-trade
payables - - 13,363,873 - - 13,363,873
Hire-purchase
liabilities 2.80% - - 36,000 6,000 42,000
Secured bankers
acceptance 2.33% - - 5,150,000 - 5,150,000
Bank overdraft 7.80% - - 218,378 - 218,378

- 13,475,698 5,404,378 6,000 18,886,076

ANNUAL REPORT 2011 69


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

24. FINANCIAL INSTRUMENTS (CONTINUED)

2010 (continued) Weighted


average
effective Less than 1 to 3 3 months 1 to 2
interest rate 1 month months to 1 year years Total
% RM RM RM RM RM
The Company

Trade payables - - 111,825 - - 111,825


Non-trade
payables - - 13,311,473 - - 13,311,473
Hire-purchase
liabilities 2.80% - - 36,000 6,000 42,000
Secured bankers
acceptance 2.33% - - 5,150,000 - 5,150,000
Bank overdraft 7.80% - - 218,378 - 218,378
Amount owing to
subsidiary company - - - 4,935,670 - 4,935,670

- 13,423,298 10,340,048 6,000 23,769,346

Fair values of financial assets and liabilities

The carrying amounts of the Group’s and of the Company’s financial assets and liabilities as
reported in the statements of financial position as of 31 December 2011 approximate their fair
values because of the short maturity terms.

25. CAPITAL MANAGEMENT

The primary objective of the Group’s capital management is to ensure that it maintains a strong
credit rating and healthy capital ratios in order to support its business and maximise shareholders
value. The capital structure of the Company as of the end of the reporting period comprises
issued capital.

The Group manages its capital structure and makes adjustments to it in light of changes in
economic conditions. To maintain or adjust the capital structure, the Group may issue new shares,
adjust the dividend payment to shareholders or return capital to shareholders. The Group’s overall
strategy remains unchanged from 2010.

The debt-to-equity ratios at 31 December 2011 and at 31 December 2010 were as follows:

Group Company
2011 2010 2011 2010
RM RM RM RM

Total borrowings (Note 13) 7,512,462 5,410,378 7,512,462 5,410,378


Less:
Cash and bank balance (Note 9) (513,840) (141,726) (497,755) (53,512)

Net debt 6,998,622 5,268,652 7,014,707 5,356,866

Total equity 19,107,555 18,327,036 18,813,488 18,123,276

Net debt-to-equity ratio 0.37 0.29 0.37 0.30

Equity includes all capital and reserves of the Group.

70 UNITED BINTANG BERHAD (44676-M)


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

26. RECLASSIFICATION OF COMPARATIVE FIGURE

A reclassification has been made to the prior year’s financial statements of the Company to
enhance comparability with the current year’s financial statements. As a result, certain line items
have been amended on the statement of financial position and the related notes to the financial
statements.

The reclassification is as follows:

As previously As
reported Reclassification reclassified
RM RM RM
Company

Accumulated losses (35,881,724) (1,398,851) (37,280,575)


Revaluation reserve - 1,398,851 1,398,851

27. AUTHORISATION FOR ISSUE OF FINANCIAL STATEMENTS

The financial statements of the Group and of the Company were authorised for issue by the
directors on 26 March 2012.

ANNUAL REPORT 2011 71


Notes to the Financial Statements (cont’d)
For the year ended 31 December 2011

28. SUPPLEMENTARY INFORMATION ON THE BREAKDOWN OF REALISED AND UNREALISED PROFITS/


(LOSSES)

On 25 March 2010, Bursa Malaysia Securities Berhad (“Bursa Malaysia”) issued a directive to all listed
issuers pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements.
The directive requires all listed issuers to disclose the breakdown of the unappropriated profits or
accumulated losses as at the end of the reporting period, into realised and unrealised profits or
losses.

On 20 December 2010, Bursa Malaysia further issued guidance on the disclosure and the format
required. The breakdown on the accumulated losses of the Group and the Company as at the
reporting date, into realised and unrealised losses, pursuant to the directive, is as follows:

Group Company
2011 2010 2011 2010
RM RM RM RM
Total accumulated
losses
- Realised (34,897,445) (35,677,964) (36,590,363) (37,280,575)
- Unrealised - - - -

(34,897,445) (35,677,964) (36,590,363) (37,280,575)

The determination of realised and unrealised profits or losses is based on the Guidance of
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”, issued by the
Malaysian Institute of Accountants on 20 December 2010. A charge or credit to the profit or loss of
a legal entity is deemed realised when it is resulted from the consumption of resource of all types
and form, regardless of whether it is consumed through sale or use. Where a credit or charge to
the profit of loss upon initial recognition or subsequent measurement of an asset or a liability is not
attributed to consumption of resource, such credit or charge should not be deemed as realised
until the consumption of resource could be demonstrated.

The disclosure of realised and unrealised losses above is solely for complying with the disclosure
requirements stipulated in the directive of Bursa Malaysia and should not be applied for any other
purposes.

72 UNITED BINTANG BERHAD (44676-M)


M)
Statement by Directors

In the opinion of the directors, the financial statements set out on pages 35 to 71 are drawn up:

(a) so as to give a true and fair view of the financial position of the Group and of the Company at 31
December 2011 and of the results and the financial performance for the year then ended; and

(b) in accordance with Financial Reporting Standards and the provisions of the Companies Act 1965,
in Malaysia.

The information set out in Note 28 to the Financial Statements has been compiled in accordance with
the 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”, issued
by the Malaysia Institute of Accountants, and presented based on the format prescribed by Bursa
Malaysia Securities Berhad.

Signed on behalf of the directors in accordance


with a directors’ resolution dated 26 March 2012

TAN KIM SOON ONG BING YAP


Director Director

Statutory Declaration

I, Tan Lee Huah, being the person primarily responsible for the financial management of United Bintang
Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial
statements set out on pages 35 to 71 are correct.

And I make this solemn declaration conscientiously believing the same to be true and by virtue of the
provisions of the Statutory Declarations Act 1960.

Subscribed and solemnly declared at )


Kuala Lumpur in the Federal Territory )
)
this 26 March 2012 )
)
) TAN LEE HUAH

Before me:

ARSHAD ABDULLAH
Commissioner for Oaths
(No. W 550)

ANNUAL REPORT 2011 73


Analysis of Shareholdings
at 7 May 2012

A. SHARE CAPITAL

Authorised Share Capital : RM100,000,000.00 (100,000,000 ordinary shares of RM1.00 each)


Issued and Paid-up Capital : RM54,005,000.00 (54,005,000 ordinary shares of RM1.00 each)
Voting Rights : One vote for each ordinary share held

B. DISTRIBUTION OF SHAREHOLDINGS

Total % of
Holdings No. of Holders Holdings Holdings

Less than 100 5 69 0.00


100 to 1,000 672 661,131 1.22
1,001 to 10,000 460 1,629,100 3.02
10,001 to 100,000 40 1,055,497 1.96
100,001 to less than 5% of issued shares 18 12,837,315 23.77
5% and above of issued shares 5 37,821,888 70.03
1,200 54,005,000 100.00

C. DIRECTORS’ INTERESTS IN SHARES


(As per the Register of Directors’ Shareholdings of the Company)

Direct Interest Deemed Interest


No. No.
Name of Directors of Shares % of Shares %

1. Tan Kim Soon 16,199,700 30.00 - -


2. George Anthony Dass David - - - -
3. Leou Thiam Lai - - - -
4. Ong Bing Yap - - - -
5. Lee Yu-Jin - - - -

D. SUBSTANTIAL SHAREHOLDERS
(As per the Register of Substantial Shareholders of the Company)

Direct Interest Deemed Interest


No. No.
Name of Shareholders of Shares % of Shares %

1. Tan Kim Soon 16,199,700 30.00 - -


2. Ong Huey Peng 10,521,224 19.48 - -
3. Lim Eng Huat 7,042,000 13.04 - -
4. Loh Tze Yee 5,269,079 9.76 - -

74 UNITED BINTANG BERHAD (44676-M)


Analysis of Shareholdings (cont’d)
at 7 May 2012

E. THIRTY (30) LARGEST REGISTERED SHAREHOLDERS


(As per the Record of Depositors of the Company)

Name of Shareholders No. of Shares % of Holdings

1. Ong Huey Peng 10,521,224 19.48


2. Tan Kim Soon 8,356,290 15.47
3. Tan Kim Soon 7,843,410 14.52
4. Lim Eng Huat 7,042,000 13.04
5. Loh Tze Yee 4,058,964 7.52
6. Low Cheng Peng 2,583,000 4.78
7. Lim Siew Sooi 2,274,200 4.21
8. Ong Poh Geok 1,265,400 2.34
9. Ong Wee Lieh 1,244,200 2.30
10. Loh Tze Yee 840,000 1.56
11. Chew Boon Seng 651,300 1.21
12. Bok Siew Mun 646,000 1.20
13. Low Lee Yoong 514,100 0.95
14. Tan Lay Kiat @ Tan Leh Wat 465,000 0.86
15. Sin Len Moi 459,500 0.85
16. AMSEC Nominees (Tempatan) Sdn Bhd
(Pledged Securities Account for Oh Yoke Choon) 449,000 0.83
17. Yen Mee Foong 441,800 0.82
18. Loh Tze Yee 220,115 0.41
19. Oh Yoke Choon 205,000 0.38
20. Ong Poh Lin 151,600 0.28
21. Oh Yoke Choon 151,000 0.28
22. Loh Tze Yee 150,000 0.28
23. Lim Poh Fong 126,100 0.23
24. Tan Kim Heng 84,997 0.16
25. Tan Chim Bee 79,000 0.15
26. Sin Kek Yong 77,000 0.14
27. Looi Guat Eim 50,000 0.09
28. Mayban Securities Nominees (Tempatan) Sdn Bhd
(Pledged Securities Account for Keng Chin Eng) 46,000 0.09
29. Lo Ga Lung 39,000 0.07
30. Keng Chin Eng 39,000 0.07

Remarks:
The shareholding of each person are disclosed herein without aggregating the shares from different
securities accounts belonging to the same person.

ANNUAL REPORT 2011 75


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76 UNITED BINTANG BERHAD (44676-M)


M)
Proxy Form

I/We ............................................................................................................................ NRIC No./Company No.: ...........................................


(full name in block letters)

of ..............................................................................................................................................................................................................................
(full address)

being a member of UNITED BINTANG BERHAD (44676-M) hereby appoint (1) ...................................................................................

................................................................................................................................. NRIC No.: ..............................................................................


(full name in block letters)

of ..............................................................................................................................................................................................................................
(full address)

representing ...................................................... percentage (%) of my/our shareholdings AND (2)......................................................

................................................................................................................................. NRIC No.: ..............................................................................


(full name in block letters)

of ..............................................................................................................................................................................................................................
(full address)

representing ...................... percentage (%) of my/our shareholdings OR failing him/her/them, the Chairman of the Meeting
as my/our proxy/proxies to attend and vote for me/us and on my/our behalf at the Thirty-Third Annual General Meeting
of the Company to be held at Bukit Kiara Equestrian and Country Resort, Dewan Berjaya, Jalan Bukit Kiara, Off Jalan
Damansara, 60000 Kuala Lumpur, Malaysia on Tuesday, 19 June 2012 at 11.00 a.m. and at any adjournment thereof in
the manner indicated below: -

Resolutions For Against

Ordinary Resolution 1

Ordinary Resolution 2 (a)

Ordinary Resolution 2 (b)


Ordinary Resolution 3

Special Resolution 1

(Please indicate with an “X” in the space provided how you wish your vote to be cast for each resolution as set out in the Notice of
Meeting. If no voting instructions are given, the proxy may vote as he/she thinks fit or abstain from voting)

No. of Shares held


............................................................................................
Signature/Common Seal

Dated this ............................................ 2012


Notes:

1. A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies (but not more than two) to attend and vote instead
of him. A proxy may but need not be a member of the Company and the provisions of Section 149(1) (b) of the Companies Act, 1965 shall not apply
to the Company. Where a member appoints two proxies to attend the same meeting, the member shall specify the proportion of his shareholding to
be represented by each proxy, failing which the appointment shall be invalid.
2. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is
a corporation, either under the corporation’s common seal or under the hand of an officer or attorney duly authorised. The instrument appointing a
proxy shall be deemed to confer authority to demand or join in demanding a poll.
3. The Proxy Form shall be deposited with the Company’s Share Registrars, Symphony Share Registrars Sdn Bhd at Level 6, Symphony House, Block D13,
Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia not less than 48 hours before the time appointed for
holding the meeting or any adjournment thereof.
4. General Meeting Record of Depositors
Depositors whose names appear in the Record of Depositors on a date not less than three (3) market days before the general meeting shall be
regarded as Member of the Company entitled to attend and vote at the Annual General Meeting or appoint a proxy to attend and vote on his behalf.
5. Authorised Nominee and Exempt Authorised Nominee
Where a member of the Company is an authorised nominee as defined under the Central Depositories Act, it shall be entitled to appoint at least one
(1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.
Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one
securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of
each omnibus account it holds.
Where an authorised nominee or an exempt authorised nominee appoints proxies, the proportion of shareholdings to be represented by each proxy
must be specified in the instrument appointing the proxies.
FOLD HERE

STAMP

UNITED BINTANG BERHAD


(Company No. 44676-M)
c/o Symphony Share Registrars Sdn Bhd
Level 6, Symphony House
Block D13, Pusat Dagangan Dana 1
Jalan PJU 1A/46
47301 Petaling Jaya
Selangor Darul Ehsan

FOLD HERE