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Annual Report 2011

Contents
Chairmans Statement
Corporate Information
Profile of Directors
Corporate Governance Statement
Audit Committee Report
Statement on Internal Control
Statement on Internal Audit Function
Statement of Directors Responsibilities
Additional Compliance Information
Directors Report
Statement by Directors
Statutory Declaration
Independent Auditors Report
Consolidated Statement of Financial Position
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Statement of Financial Position
Statement of Comprehensive Income
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Supplementary Information - Realised and Unrealised Profits or Losses
List of Properties
Analysis of Shareholdings
Notice of 18th Annual General Meeting
Statement Accompanying the Notice of 18th Annual General Meeting
Form of Proxy

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02

Chairmans Statement

On behalf of the Board of Directors, I hereby present to you the 18th Annual Report and Audited Financial Statements of
Linear Corporation Berhad (LCB) for the financial year ended 31 December 2011.

PERFORMANCE REVIEW
Despite Linear Corporation Berhad being considered as an Affected Listed Issuer pursuant to the Amended Practice Note
17/2005 (PN17/2005) of the Listing Requirements of Bursa Securities Malaysia Berhad (Bursa Securities), the Group
recorded a higher consolidated revenue of RM12.279 million for the financial year ended 31 December 2011 as compared
to RM7.502 million generated in the preceding financial year. The increase was mainly due to an increase in chilled water
rates to Aeon Co (M) Berhad following the execution of Supply Agreement on 1 August 2011 between the Group and Aeon
Co (M) Berhad. The increase was also due to an increase in the Groups sales for BAC models, a brand under Baltimore
Aircoil Company Inc (USA) .
However, the Group reported a higher loss after tax of RM63.883 million for the financial year under review, as compared
to the previous years loss after tax of RM15.126 million. The loss after tax of RM63.883 million was mainly due to an
operating loss of RM3.038 million and interest expenses of RM3.259 million, impairment loss on loans and receivables
of RM 48.101 million, allowance for slow moving stocks of RM 0.914 million, impairment loss on property, plant and
equipment of RM 4.894 million and revaluation decrease of the buildings belong to District Cooling System Sdn Bhd of
RM3.677 million.

CORPORATE DEVELOPMENT
The Company had on 22 September 2011 submitted a regularisation plan to Bursa Malaysia Securities Berhad (Bursa
Securities) to address the PN17 status of LCB. As at todate, the Company has yet to obtain any decision from Bursa
Securities on the regularisation plan. Nevertheless, should the regularisation plan be successfully implemented, it will
restructure the viability of the LCB to one with the elements of profitability, liquidity and going concern.
The Company had also announced on 26 March 2012, that an extension of time for the restraining order had been granted
by the Penang High Court pursuant to Section 176(10) of the Companies Act, 1965, to the Company and its subsidiaries
namely LCI Global Sdn Bhd, District Cooling Systems Sdn Bhd and BAC Cooling Technology Sdn Bhd. (the Relevant
Subsidiaries) for a period of 90 days. The Board is of the view that a restraining order is necessary to prevent any proceeding
against the Company and the Relevant Subsidiaries that may jeopardize the restructuring of the LCB Group.
Meanwhile, the Group will continue with its endeavors to rebuild its core businesses, with much effort expended to procure
new orders and contracts.

DIVIDENDS
The Board does not recommend any dividend payment for the financial year under review.

Annual Report 2011 Linear Corporation Berhad (288687-W)

Chairmans Statement (Contd)

03

DIRECTORATE
On behalf of the management team and staff of the Group, I would like to take this opportunity to welcome the following
directors to be on board.
Ong Tai Chew
Executive Director
Dato Wira Amiruddin Bin Che Embi
Independent Non-Executive Director
DatoLing Keak Ming
Independent Non-Executive Director
Adam Bin Bachek
Independent Non-Executive Director
With these appointments, the new directors will collectively bring to the Board a diverse array of experiences and expertise
that will improve the Groups performance moving forward.

ACKNOWLEDGEMENT
On behalf of the Board, I wish to thank our staff for their continued efforts, dedication and contributions to our Group despite
the many challenges associated with the current global economic crisis and the circumstances of our Groups on-going
restructuring efforts. I would also like to express our sincere appreciation to our customers, business partners, financiers,
advisers, the government authorities, and particularly our valued shareholders for their continuing support and confidence
in our Group.

Lim Hun Beng


Chairman and Executive Director
April 26 2012

Annual Report 2011 Linear Corporation Berhad (288687-W)

04

Corporate Information

BOARD OF DIRECTORS

HEAD OFFICE/FACTORY

PRINCIPAL BANKERS

Lim Hun Beng


Chairman & Executive Director
Saw Heng Soo
Executive Director

No. 20A, Jalan Perusahaan


Prai Industrial Estate 4
13600 Prai, Penang, Malaysia
Tel : 604-5078822
Fax : 604-5076272

Ong Tai Chew


Executive Director

SELANGOR OFFICE

HSBC Bank (Malaysia) Berhad


Malayan Banking Berhad
CIMB Bank Berhad
RHB Bank Berhad
EON Bank Berhad
OCBC Bank (Malaysia) Berhad
Affin Islamic Bank Berhad
United Oversea Bank Malaysia Berhad
Ambank (M) Berhad

Dato Wira Amiruddin Bin Che Embi


Independenet Non-Executive Director
Dato Ling Keak Ming
Independent Non-Executive Director
Neoh Chee Kean
Independenet Non-Executive Director
Adam Bin Bachek
Independenet Non-Executive Director

No.9, Jalan SS13/3A, Section


13, Subang Jaya Industrial
Estate, 47500 Subang Jaya
Selangor Darul Ehsan, Malaysia
Tel : 603-56366466
Fax : 603-56365466

REGISTERED OFFICE

AUDIT COMMITTEE

60 Sri Bahari Road,


10050 Penang, Malaysia
Tel : 604-2632133
Fax : 604-2638101

Neoh Chee Kean


Chairman

AUDITORS

Adam Bin Bachek


Member
Dato Wira Amiruddin Bin Che Embi
Member

SECRETARY
Lim Saw Im (MACS 00363)

Annual Report 2011 Linear Corporation Berhad (288687-W)

Crowe Horwarth (AF 1018)


17.01 Menara Boustead
Penang
39 Jalan Sultan Ahmad Shah,
10050 Penang
Tel : 604-2277061
Fax : 604-2278011

STOCK EXCHANGE LISTING


Main Market of Bursa Malaysia
Securities Berhad
Sector
: Industrial Products
Stock Name : LINEAR
Stock Code : 9504

REGISTRARS
Tricor Investor Services Sdn.Bhd.
(Formerly known as Tenaga
Koperat Sdn. Bhd.)
Level 17, The Gardens
North Tower, Mid Valley City
Lingakaran Syed Putra
59200 Kuala Lumpur, Malaysia
Tel : 603-22643883
Fax : 603-22821886

WEBSITE
www.linear.com.my

Profile Of Directors

05

LIM HUN BENG


Chairman & Executive Director
Mr. Lim Hun Beng, a Malaysian, aged 55, was appointed to the Board on 1 September 2010 as Non-Independent NonExecutive Director and as Chairman on 25 April 2011 and was redesignated as Executive Director on 25 April 2011. He
had his early education in Malaysia and thereafter pursued tertiary education in the UK. He entered into business in his
early twenties, firstly getting involved in various aspects of the family business, more particularly in business strategic
investment and property investment. In 1982, the family took over a regional media group operating in Malaysia, and a
public listed company known as Chocolate Products Berhad. Mr. Lim Hun Beng was the Group Managing Director of this
company, and remained so until it was disposed off to the Lion Group of Malaysia. In 1989, Mr. Lim set up a chocolate
manufacturing concern in Shenzhen, China with China Oil, Foodstuff Cereal Co. Ltd (COFCO), a nationally owned food
monopoly. It had a capital investment of USD 30 Million and was one of the first chocolate manufacturing companies in
China, producing chocolates under the brand-name LeConte nationwide. Mr. Lim eventually disposed of his interest in
this company in 1992 to venture into other business in China. He is also the CEO of the family owned Hampshire Group
with interest in Malaysia, China, United State and South East Asia. He is currently not a director of any other public company
listed on Bursa Malaysia Securities Berhad.
He attended 5 Board meetings held in the financial year ended 31 December 2011.

SAW HENG SOO


Executive Director
Mr. Saw Heng Soo, a Malaysian, aged 56, was appointed to the Board on 7 May 2010 as Executive Director. He graduated
with a Diploma in Commerce from Kolej Tunku Abdul Raman Malaysia in 1980 and completed his examination of Association
of Chartered Certified Accountants (ACCA) in 1981. He has been a member of the ACCA in 1984 and Fellow of ACCA in
2001. Over the last 34 years of his career, he had worked with the International Accounting Firms for 8 years. He had also
served as Group Chief Accountant/Director of Subsidiaries with Chocolate Products Berhad for 5 years. He was General
Manager of Trade Ocean Exporter Sdn. Bhd., an international food exporter, for approximately 2 years. He was Operations
Manager of Berjaya Sports Toto Philippine Operations for approximately 2 years. He served as General Manager of Paragon
Paper-Mill of Hai Meng Holdings Berhad for approximately 3 years. He was appointed as Senior General Manager of Golden
Frontier Berhad and later promoted to Group Operations Director for 10 years. He is currently attached to an investment
holding company as a Director and is not a director of any other public company listed on Bursa Malaysia Securities Berhad.
He attended 6 Board meetings held in the financial year ended 31 December 2011.

IR. ONG TAI CHEW


Executive Director
Ir. Ong Tai Chew, a Malaysian, aged 53, was appointed to the Board on 26 April 2011 as Executive Director. He graduated
with B.A SC (Electrical Engineering with Management Option) from University of Ottawa, Canada (1983). His professional
affiliations consist of Professional Engineer (Board of Engineers Malaysia), Members of The Institution of Engineers Malaysia,
Association of Consulting Engineers Malaysia, Asean Engineers, Asean Chartered Professional Engineer and a Green Building
Index Facilitator, Malaysia. He has over 27 years of experiences in the M&E engineering design and project consultant,
project management, project procurement implementation, testing and commissioning, project feasibility studies, conceptual
design and design optimization. He has sound experiences in various types of project involvement in the field of M&E
consultancy in Commercial Development of Retail Malls & Offices, Residential and Condominium Development, Hospital
and Healthcare Facilities Development, Hotels and Resort Development, Industries Facilities Development and Development
of District Cooling Plant using Ice Thermal Energy Storage System. He is now a Director of TES Avenue Sdn. Bhd. a M & E
Consulting Firm since 2002. He is not a director of any other public company listed on Bursa Malaysia Securities Berhad.
He attended 3 Board meetings held in the financial year ended 31 December 2011.

Annual Report 2011 Linear Corporation Berhad (288687-W)

06

Profile Of Directors (Contd)

DATO WIRA AMIRUDDIN BIN CHE EMBI


Independent & Non-Executive Director
Dato Wira Amiruddin Bin Che Embi, a Malaysian, aged 66, was appointed to the Board on 25 April 2011 as Independent
Non-Executive Director. He started his career as a temporary teacher in Iskandar Primary School, Alor Setar after completing
his School Certificate/Malaysian Certificate of Education. Thereafter, he served the Royal Malaysian Police for 37 years.
Generally, he was a CID man through out his career in the Royal Malaysian Police until he became a Chief Police Officer in
two states namely Negeri Sembilan (1998 2001) and a Perak (2001 2003). On completion of 36 years of compulsory
service, he was given a one year contract to continue in the Royal Malaysian Police.
He was appointed as Independent Director of Tahan Insurance Msia Berhad in year 2004. He was appointed as the Honorary
Secretary of The Royal Kedah Club since 2005. He is currently the President of Malaysian Rugby Union. Dato Wira Amiruddin
Bin Che Embi is currently not a director of any other public company listed on Bursa Malaysia Securities Berhad.
He attended 4 Board meetings held in the financial year ended 31 December 2011.

DATO LING KEAK MING


Independent Non-Executive Director
Dato Ling Keak Ming, a Malaysian, aged 56, was appointed to the Board on 1 September 2010 as Independent NonExecutive Director. He graduated from Chung Ling High School, Penang. He started his career by setting-up a company called
Pan-Trade (M) Sdn. Bhd., a company involved in the import and distribution of building materials and held the post of
Managing Director from 1979 till 1988. He then joined Lionvest MWE Sdn. Bhd., a subsidiary of MWE Holdings Berhad,
as the Managing Director. He was primarily responsible for the rebuilding and setting-up of Jengka Timber Complex as well
as the management and daily operation of logging and timber related activities. He was appointed as a Director to the Board
of Magnum Corporation Berhad from 2000 to 2007. Currently, he is the Managing Director of MWE Advanced Structure Sdn.
Bhd. and MWE Golf & Country Club Berhad with the overall responsibility in property construction, project management and
management of a golf club. He is the Executive Vice Chairman of Quasar Industrial Vehicles Sdn. Bhd., which holds the
distributorship of Dongfeng heavy commercial vehicles in Malaysia, Thailand and Indonesia. He is currently the President
of Kuala Lumpur Goshin-Ryu Karate Federation and he also sits on the Boards of several private limited companies. He is
currently not a director of any other public company listed on Bursa Malaysia Securities Berhad.
He attended 4 Board meetings held in the financial year ended 31 December 2011.

NEOH CHEE KEAN


Independent Non-Executive Director
Mr. Neoh Chee Kean, a Malaysian, aged 58, was appointed to the Board on 7 May 2010 as Independent Non-Executive
Director. He graduated as a Chartered Accountant from ACCA in the United Kingdom in 1977 and was admitted as an
Associate of ACCA in 1981 and a fellow in 1986. He was also admitted as a member of the Malaysian Institute of Accountants
in 1981. He has more than 30 years of working experience in accounting, audit, finance, tax, company secretarial and
manufacturing which he accumulated in an International Audit Firm, a multi national company and various management
consultancy firms. He is currently not a director of any other public company listed on Bursa Malaysia Securities Berhad.
He attended 5 Board meetings held in the financial year ended 31 December 2011.

Annual Report 2011 Linear Corporation Berhad (288687-W)

Profile Of Directors (Contd)

07

ADAM BIN BACHEK


Independent & Non-Executive Director
Encik Adam Bin Bachek, a Malaysian, aged 63, was appointed to the Board on 1 September 2010 as Independent NonExecutive Director. He holds a Bachelor of Laws (Hons) from the University of Buckingham, United Kingdom and a Diploma
in Syariah Law Practice from the International Islamic University. He was appointed as Director of Gadang on 19 May 1997.
He was the Chairman of the Audit Committee and Remuneration Committee. He was also a member of the Nomination
Committee. In 2007 he was appointed Chairman of Harlows MGI Money Brokers Sdn. Bhd. which has been issued with a
licence by Bank Negara to carry out money broking business. He was admitted as an advocate and solicitor of High Court
of Malaya in 1990. Previously, he was a senior police officer for 22 years before being called to the Malaysian Bar. He
served in various positions in the Police Department before taking the optional retirement in 1991. Currently, he is the
senior partner of the legal firm, Messrs Adam Bachek & Associates. Encik Adam Bin Bachek currently sits on the board of
Gadang Holdings Berhad.
He attended 5 Board meetings held in the financial year ended 31 December 2011.

OTHER INFORMATION
1.
2.
3.
4.

None of the Directors are substantial shareholders of the Company.


There are no family relationships amongst the Directors and/or substantial shareholders of the Company.
None of the Directors has any conflict of interest with the Company.
None of the Directors has been convicted of any offence, other than traffic offences, within the past 10 years.

Annual Report 2011 Linear Corporation Berhad (288687-W)

08

Corporate Governance Statement

The Board of Directors (the Board) of Linear Corporation Berhad (Linear) is committed to uphold and maintain sound
principles of corporate governance within the Linear Group (the Group) with the objective of building and enhancing long
term shareholders value. Set out below is how the Company has applied the principles and practices of good governance
set out in Part 1 and 2 of the Malaysian Code on Corporate Governance (the Code) throughout the financial year ended
31 December 2011 (the financial year).
1. BOARD OF DIRECTORS
Board Responsibilities
The Board assumes overall responsibility for the Groups corporate governance and retains full and effective control
over the Groups businesses and affairs. As such, it has reserved for itself a schedule of matters for consideration
and decision which include inter alia, the Groups strategic business direction and action plans, risks management and
internal control measures to ensure the proper conduct of operations, financial and operating efficiency and performance
of all business units as well as human resource capabilities within the Group.
Board Composition
The Board currently has 7 members comprising 4 Independent Non-Executive Directors and 3 Executive Directors. The
composition reflects that 1/3 of its members are independent. Collectively, the Directors bring to the Company a broad
mix of business, management, financial, legal, marketing and technical expertise and experience to provide clear and
effective leadership for the Group. Brief descriptions on the background of the Directors are presented on pages 5, 6
and 7 of this annual report.
Board Balance
The Board is currently led by the Chairman who is an Executive Director. The Chairman is primarily responsible for the
orderly and effective conduct of the Board and Business Directions of the Group, and the Executive Directors are
responsible for the making of day to day business and operational decisions and implementation of the Board policies
in meeting the goals, vision and direction set by the Board.
The Independent Non-Executive Directors are not involved in the day-to-day management of the Group but they play a
key supporting role, contributing their skills and knowledge in all major matters and issues referred to the Board for
consideration and approval. Their role is particularly important in ensuring that matters proposed to the Board will be
fully discussed and examined, taking into account the long term interest of the Companys minority shareholders. Most
importantly, their contributions will provide an element of objectivity and independent judgment to the Board.
Board Committees
To enhance business and operational efficiency as well as to be in line with the best practices prescribed by the Code,
the Board had delegated specific tasks to 6 Board Committees, namely Audit Committee, Nomination Committee,
Remuneration Committee, Risk Management and Investment Committee, Special Task Committee and Employees
Share Options Committee, the compositions of which are as follows:Audit Committee
(comprising entirely Independent Non-Executive Directors)
Neoh Chee Kean
Adam Bin Bachek
Dato Wira Amiruddin Bin Che Embi

- Chairman
- Member
- Member

Nomination Committee
(comprising entirely Independent Non-Executive Directors)
Neoh Chee Kean
Adam Bin Bachek

- Chairman
- Member

Annual Report 2011 Linear Corporation Berhad (288687-W)

Corporate Governance Statement (Contd)

09

1. BOARD OF DIRECTORS (contd)


Board Committees (contd)
Remuneration Committee
(comprising entirely Independent Non-Executive Directors)
Neoh Chee Kean
Adam Bin Bachek

- Chairman
- Member

Risk Management and Investment Committee


Saw Heng Soo
Lim Hun Beng

- Chairman
- Member

Employees Share Options Committee


Saw Heng Soo
Lim Hun Beng

- Chairman
- Member

Special Task Force Committee


Saw Heng Soo
Lim Hun Beng

- Chairman
- Member

Appointment to the Board


The Nomination Committee is charged with the duty to assess and review the suitability of candidates nominated for
appointment to the Board based on the candidates qualifications, skills and experience. In the course of this review,
it will ensure that the Board has the required mix of skills and experience for the effective discharge of duties. The
Nomination Committee will then make its recommendations to the Board and the final decision on the appointment
lies with the entire Board.
Re-election of Directors
According to the Companys Articles of Association, all Directors appointed to the Board are subject to retirement at
the first annual general meeting of the Company. Thereafter, at least 1/3 of the Board is subject to retirement by rotation
at every subsequent annual general meeting provided that all Directors including the Managing Director shall retire once
in every 3 years in compliance with the Listing Requirements of Bursa Securities (the Listing Requirements). The
Articles of Association further provides that all new Directors shall retire at the annual general meeting subsequent to
their appointment, and that all retiring Directors are eligible for re-election. The Board, upon the recommendation of
the Nomination Committee, will normally nominate the retiring Directors for re-election. The Directors standing for reelection at the forthcoming annual general meeting are Mr. Saw Heng Soo and Mr. Neoh Chee Kean. They are all eligible
for re-election and have offered themselves for re-election. The Board, upon the recommendation of the Nomination
Committee, has nominated the retiring Directors for re-election at the Companys forthcoming Eighteenth Annual General
Meeting.
Board Meetings
Board meetings are generally held once in every quarter with additional meetings convened when necessary. There
were 6 Board meetings held during the financial year and the record of attendance of the Directors is as follows:-

Annual Report 2011 Linear Corporation Berhad (288687-W)

10

Corporate Governance Statement (Contd)

1. BOARD OF DIRECTORS (contd)


Directors

Attendance

Pervez Rustim Manecksha @ Paul Manecksha (Resigned 10.04.11)


Saw Heng Soo
Neoh Chee Kean
Dato Ling Keak Ming
Lim Hun Beng
Adam Bin Bachek
Dato Wira Amiruddin Bin Che Embi (Appointed: 25.04.11)
Ong Tai Chew (Appointed: 26.04.11)

1 out of 1
6 out of 6
5 out of 6
4 out of 6
5 out of 6
5 out of 6
4 out of 4
3 out of 4

The Board had, at the Board meetings, deliberated on and considered a variety of matters including amongst others,
the Groups financial results, challenges faced by the Group, strategic action plans to enhance performance and to
tighten internal controls, recurrent related party transactions. All of the existing Directors have met the minimum
requirement of 50% attendance at Board meetings during a financial year. In addition, the Board has exercised control
on matters that required the Boards approval during the intervals between the scheduled Board meetings through the
passing of Directors Circular Resolutions prepared and circulated from time to time by the company secretary.
Supply of Information
The Management has the responsibility and duty to provide the entire Board with all the information, of which it is aware,
to facilitate the effective discharge of the Boards duties. The notice calling for each Board meeting is given to the
Directors in advance together with the agenda and all relevant Board papers which encompass both quantitative and
qualitative factors so that informed decisions can be made by the Directors at the meetings. All Board members had
access to the advice and services of the company secretary and auditors and all information relating to the Group to
assist them in the furtherance of their duties. The Directors may, if necessary, obtain independent professional advice
from external consultants, at the Companys expense.
Directors Training
The Directors are encouraged to attend relevant training courses deemed necessary so as to keep abreast with the
changes on guidelines issued by the relevant authorities as well as the latest developments in the market place which
can complement their services to the Group. The Directors will continue to undergo other relevant training programmes
as appropriate, to further enhance their skills and knowledge.
The Directors who attended training during the financial year ended 31 December 2011 are as follows:Title of the seminar, workshop or courses attended
Lim Hun Beng
Discharging the Audit Committee & Internal Audit Function in compliance with risk
management best practices
Mandatory Accreditation Programme For Directors of PLC
Saw Heng Soo
Discharging the Audit Committee & Internal Audit Function in compliance with risk
management best practices
Mandatory Accreditation Programme For Directors of PLC

Annual Report 2011 Linear Corporation Berhad (288687-W)

Date

11 April 2011
7 & 8 September 2011

11 April 2011
7 & 8 September 2011

Corporate Governance Statement (Contd)

11

1. BOARD OF DIRECTORS (contd)


Directors Training (contd)
Date

Title of the seminar, workshop or courses attended


Ong Tai Chew
Common Issues faced by GBI Facilitators Part I
Architecture For High-Efficiency, High-Density Data Centres
Kursus Pengurusan Kontrak
Mandatory Accreditation Programme For Directors of PLC
Overview Of Power System Protection

9 June 2011
5 July 2011
25 & 26 July 2011
7 & 8 September 2011
29 November 2011 1 December 2011

Neoh Chee Kean


National Tax Conference 2011
Mandatory Accreditation Programme For Directors of PLC
National Tax Seminar 2011

19 & 20 July 2011


7 & 8 September 2011
18 October 2011

Adam Bin Bachek


National Symposium on Islamic Banking and Finance

12 September 2011

Save as disclosed above, the other Directors have not attended any training during the financial year due to their work
commitments.
Directors Remuneration
The Remuneration Committee, comprising entirely of Independent Non-Executive Directors, is responsible for the
establishment of a formal and transparent procedure to assess and determine the remuneration packages offered to
the Directors with the objective to attract and retain Directors of the caliber needed to run the Group successfully. The
remuneration packages offered to Directors who hold executive functions are based on prevailing market rates and
commensurate with the knowledge skills, experience and level of responsibilities of each Director. The Board, upon
the recommendation of the Remuneration Committee, will determine the remuneration packages of each Director.
However, the Directors do not participate in decisions regarding their own remuneration packages. Independent NonExecutive Directors, on the other hand, receive Directors fees that are approved by shareholders at annual general
meetings. The Company also reimburses the Directors with meeting allowances for expenses necessarily incurred by
them for attendance at Board meetings.
The remuneration of the Companys Directors derived from the Group during the financial year are as follows :-

Type of remuneration

Executive
Directors
RM

Non-Executive
Directors
RM

Total
RM

Fees
Salaries
Other emoluments
Total

250,000
25,500
275,500

30,000
30,000

250,000
55,500
305,500

Annual Report 2011 Linear Corporation Berhad (288687-W)

12

Corporate Governance Statement (Contd)

1. BOARD OF DIRECTORS (contd)


The number of Directors whose total remuneration fell within the following bands for the financial year are as follows :Remuneration Band
(RM per annum)
Below 50,000
50,000 to 100,000
100,001 to 150,000
150,001 to 200,000
200,001 to 250,000
Total

Executive
Directors

Non-Executive
Directors

Total

2
1
3

4
4

4
2
1
7

2. RELATIONSHIP WITH SHAREHOLDERS


The Board recognizes the importance of clear and effective communication with shareholders and investors, and hence,
has ensured that information concerning the Groups performances, corporate developments and matters affecting
shareholders interests are conveyed to shareholders and investors on a timely basis. The Companys annual reports,
financial results, announcements made to Bursa Securities, circulars to shareholders and the Groups website are
some of the main channels of communication to enable shareholders to have an overview of the Groups performances
and operations.
Annual general meetings, held once a year, will be the principal forum for dialogue between the Board and shareholders.
Shareholders are encouraged to participate in the question and answer sessions during these meetings where the
Directors will respond to shareholders questions to ensure a high level of accountability and transparency on the
business operations, strategy and goals of the Group.
3. ACCOUNTABILITY AND AUDIT
Financial Reporting
The Board is responsible to present a true and fair assessment of the Groups financial positions and prospects in
the Companys quarterly financial results and annual audited financial statements. All quarterly financial results have
been reviewed by the Audit Committee and approved by the Board prior to announcement to Bursa Securities. A statement
by the Directors of their responsibilities in the preparation of the audited financial statements for the financial year is
set out on page 20 of this annual report.
Internal Control
The Board acknowledges its responsibility to maintain a sound internal control system that provides reasonable assurance
of effective and efficient operations and compliance with internal control procedures and guidelines.
The Statement on Internal Control set out on page 17 and 18 of this annual report provides an overview of the Groups
approach in maintaining a sound system of internal control to safeguard shareholder investment and the Groups
assets.
Relationship with the Auditors
The Board has always maintained a formal and transparent relationship with the Companys external auditors in seeking
professional advice and ensuring compliance with the relevant laws and applicable approved accounting standards.
The Board is assisted by the Audit Committee in the review of the audit plans and audit findings of the external auditors.
4. CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES
The Group will continue to contribute generously to charitable organizations ranging from orphanages to diverse religious
groups.

Annual Report 2011 Linear Corporation Berhad (288687-W)

Audit Committee Report

13

COMPOSITION
The Audit Committee of Linear Corporation Berhad currently comprises all Independent Non-Executive Directors namely:
Neoh Chee Kean
- Chairman
Adam Bin Bachek
- Member
Dato Wira Amiruddin Bin Che Embi - Member

TERMS OF REFERENCE OF AUDIT COMMITTEE


The Audit Committee is governed by the following Terms of Reference which are in line with the Malaysian Code on Corporate
Governance :1. Composition of members
The Board shall elect the Audit Committee members from amongst themselves comprising no fewer than three (3)
directors. All members of the Audit Committee shall be non-executive directors who possess adequate financial knowledge
to discharge their functions effectively. A majority of the Audit Committee members shall be independent directors. The
term of office of the Audit Committee is three (3) years and may be re-nominated and appointed by the Board of Directors.
In this respect, the Board adopts the definition of independent director as defined under Bursa Securities Listing
Requirements.
At least 1 member of the Audit Committee must be :(a) a member of the Malaysian Institute of Accountants (MIA); or
(b) if he is not a member of MIA, he must have at least three (3) years of working experience and:(i)

he must have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act, 1967;
or
(ii) he must be a member of one (1) of the associations of accountants specified in Part II of the 1st Schedule
of the Accountants Act, 1967; or
(c) fulfills such other requirements as prescribed by the Exchange
No alternate director of the Board shall be appointed as a member of the Audit Committee.

2. Retirement and resignation


If a member of the Audit Committee resigns, dies, or for any reason ceases to be a member with the result that the
number of members is reduced below three (3), the Board shall within three (3) months of the event appoint such
number of the new members as may be required to fill the vacancy.

3. Chairman
The Chairman of the Audit Committee, elected from amongst the Audit Committee members, shall be an independent
director. The Chairman of the Committee shall be approved by the Board of Directors.

4. Secretary
The Secretary of the Audit Committee shall be the Company Secretary. The Secretary shall be responsible for drawing
up the agenda with concurrence of the Chairman and circulating it, supported by explanatory documentation to members
of the Audit Committee prior to each meeting. The Secretary shall also be responsible for keeping the minutes of
meetings of the Audit Committee, circulating them to members of the Audit Committee and to the other members of
the Board of Directors and for following up outstanding matters.
Annual Report 2011 Linear Corporation Berhad (288687-W)

14

Audit Committee Report (Contd)

5. Meetings
The Audit Committee meetings shall be conducted at least four (4) times annually, or more frequently as circumstances
dictate. In addition, the Chairman may call for additional meetings at any time at the Chairmans discretion. In the
absence of the Chairman, the other independent director shall be the Chairman for that meeting. The members of the
Audit Committee, General Manager (Corporate Affairs, Finance and Administration), Finance Manager and the head of
internal audit will normally be in attendance at the meetings. Representatives of the external auditors are to be in
attendance at meetings where matters relating to the audit of the statutory accounts and/or external auditors are to
be discussed.
Other Directors, officers and employees of the Company and/or Group may be invited to attend, except for those portions
of the meetings where their presence is considered inappropriate, as determined by the Audit Committee. However,
at least twice a year the Audit Committee shall meet with the external auditors.
Minutes of each meeting shall be kept and distributed to each member of the Audit Committee and also to the other
members of the Board of Directors. The Audit Committee Chairman shall report on each meeting to the Board of
Directors.

6. Quorum
The quorum for the Audit Committee meeting shall be the majority of members present whom must be independent
directors.

7. Reporting
The Audit Committee shall report to the Board of Directors, either formally in writing, or verbally, as it considers
appropriate on the matters within its terms of reference at least once a year, but more frequently if it so wishes. The
Audit Committee shall report to the Board of Directors on any specific matters referred to it by the Board for investigation
and report.

8. Objective
The principal objective of the Audit Committee is to assist the Board of Directors in discharging its statutory duties
and responsibilities relating to accounting and reporting practices of the holding company and each of its subsidiaries.
In addition, the Audit Committee shall :(a)
(b)
(c)
(d)
(e)

evaluate the quality of the audits performed by the internal and external auditors;
provide assurance that the financial information presented by management is relevant, reliable and timely;
oversee compliance with laws and regulations and observance of a proper code of conduct;
determine the quality, adequacy and effectiveness of the Groups control environment; and
develop and maintain an effective risk management system and processes are applied in the day to day business
and activities.

9. Authority
The Audit Committee shall, in accordance with a procedure to be determined by the Board of Directors and at the
expense of the Company:(a) authorise to investigate any activity within its terms of reference. All employees shall be directed to co-operate as
requested by members of the Audit Committee;
(b) have full and unlimited/unrestricted access to all information and documents/resources which are required to
perform its duties as well as to the internal and external auditors and senior management of the Company and
Group;
Annual Report 2011 Linear Corporation Berhad (288687-W)

Audit Committee Report (Contd)

15

9. Authority (contd)
(c) obtain, at the expense of the Company, other independent professional advice or other advice and to secure the
attendance of outsiders with relevant experience and expertise if it considers necessary;
(d) be able to convene meetings with the external auditors whenever deemed necessary;
(e) be able to make relevant reports when necessary to the relevant authorities if a breach of the Listing Requirements
occurred;
(f) be kept informed as soon as possible of any adverse development arising from any event such material litigation;
and
(g) the Audit Committee shall have the power to establish Sub-Committee(s) and delegate its powers to such SubCommittee(s) for the purpose of carrying out certain investigations on its behalf in such manner as the Audit
Committee deems fit and necessary and, to appoint any person(s) as member(s) of the Sub-Committee(s) and/or
as Head of Internal Audit who shall report directly to the Audit Committee.

10. Duties and Responsibilities


The duties and responsibilities of the Audit Committee are as follows:(a) To review the maintenance and control of an effective accounting system.
(b) To review the Groups public accountability and compliance with the law.
(c) To review and evaluate the adequacy and effectiveness of the internal and external audit procedures, and to ensure
that they have the necessary authority to carry out their work.
(d) To evaluate the quality of external auditors and make recommendations concerning their appointment and remuneration
and to consider the nomination of a person or persons as external auditors.
(e) To provide liaison between the external auditors, the management and the Board of Directors and also to review
the assistance given by the management to the external auditors.
(f) To review the findings of the internal and external auditors and to ensure that appropriate actions are taken on
the recommendations of the auditors.
(g) To review the quarterly results and financial statements and annual report prior to submission to the Board of
Directors.
(h) To monitor and to review any related party transactions that may arise within the Group and to report, if any
transactions between the Group and any related part outside the Group which are not based on arms-length terms
and on terms which are disadvantageous to the Group.
(i) To verify the allocation of share options under the Employees Share Option Scheme (ESOS) as being in compliance
with the criteria set out in the ESOS By-Laws.
(j) To report its findings on the financial and management performance, and other material matters to the Board of
Directors.
(k) To act in line with the directions of the Board of Directors.
(l) To consider and examine such other matters as the Audit Committee considers appropriate.
(m) To review the reports of management in relation to the integrity and adequacy of the process for identifying principal
risks and ensure the implementation of appropriate systems to manage these risks.
(n) To review any appraisal or assessment of the performance of members of the internal audit function who are fulltime employees of the Group, if any.
(o) To approve any appointment or termination of senior staff members of the internal audit function who are full-time
employees of the Group, if any.
(p) To take cognizance of resignations of internal audit staff members who are full-time employees of the Group, if
any, and provide such resigning staff member an opportunity to submit his/her reasons for resigning.

Annual Report 2011 Linear Corporation Berhad (288687-W)

16

Audit Committee Report (Contd)

AUDIT COMMITTEE MEETINGS


The Audit Committee met 4 times during the financial year ended 31 December 2011 and has met with the external auditors
2 times in the same financial year. All Audit Committee meetings were duly convened with sufficient notice given to all
Committee members together with the agenda, reports and proposals for deliberation at the meetings.
Details of attendance of the Audit Committee members at the Audit Committee meetings held during the year ended 31
December 2011 are as follows:
Audit Committee Member
Pervez Rustim Manecksha @ Paul Manecksha (Resigned 10.04.11)
Neoh Chee Kean
Adam Bin Bachek
Dato Wira Amiruddin Bin Che Embi (Appointed 26.04.11)

Attendance
0 out of 1
4 out of 4
3 out of 4
2 out of 2

SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE


During the financial year ended 31 December 2011, the Audit Committee carried out the following activities in the discharge
of its duties: Reviewed all unaudited quar terly financial results and the audited financial statements of the Company before
recommending them to the Board for approval;
Reviewed the external auditors scope and approach of audit as presented in their audit plan before commencement
of audit;
Reviewed the external auditors audit report and considered the areas of concern raised by the external auditors;
Reviewed all recurrent related party transactions on a quarterly basis;
Reviewed the status of employees share option allocations on a quarterly basis.
Verified the allocation of options pursuant to Employee Share Option Scheme (ESOS) of the Company.
The Audit Committee noted that the Company has a total of 172,000 shares available under the Companys ESOS to
the employees of the Company and the options have not been exercised as at 31 December 2011. The exercise price
of the ESOS shares is RM1.16 and the ESOS is valid until 13 August 2013.
INTERNAL AUDIT FUNCTION
The internal audit function is independent of the auditable areas in the organization and report to the Audit Committee.
The responsibilities include reviewing the adequacy of the systems of internal controls and evaluating the various financial
and operational risks faced by the organization.

Annual Report 2011 Linear Corporation Berhad (288687-W)

Statement On Internal Control

17

The Board of Directors (Board) of Linear Corporation Berhad (Linear) is pleased to set out below the Statement of
Internal Control pursuant to paragraph 15.26(b) of the Listing Requirements of Bursa Malaysia Securities Berhad (Bursa
Securities). It is prepared in accordance with Bursa Securities Statement of Internal Control - Guidance for Directors of
Public Listed Companies. The Board acknowledges its responsibility to maintain a sound system of internal controls to
safeguard the Linear Group(the Group)s assets in accordance with the Malaysian Code on Corporate Governance (the
Code). The Board is committed to taking appropriate initiatives to further strengthen the transparency, accountability and
efficiency of the Groups operations. The Board believes that the practice of good corporate governance is an important
continuous process and not just a matter to be covered as compliance in its annual report.

BOARD RESPONSIBILITY
The Board affirms the overall responsibility for maintaining a sound system of internal controls and for reviewing its adequacy
and integrity so as to safeguard shareholders investment and the Groups assets.
Due to inherent limitations in any system of internal control, the system is designed to manage and control risk appropriately
rather than eliminate the risk of failure to achieve business objectives. Accordingly, the internal control system provides
reasonable assurance and not absolute assurance against material misstatement or loss, and therefore risks should be
continually monitored and managed at all times.
The Board confirms that there is an on-going process for identifying, evaluating and managing significant risks faced by the
Group. This process is in place during the current financial year and is regularly reviewed by the Board and is in accordance
with the guidelines promulgated by the Statement on Internal Control - A Guidance for Directors of Public Listed Companies
(the Internal Control Guidance), a publication of the industry task force on internal control.

INTERNAL CONTROL
Key elements of the system of internal controls are as follows:
Operating structure with clearly defined lines of responsibility
The operating structure includes defined delegation of duties and responsibilities to the various Board Committees, the
Executive Board members, the Management and operating units.
Independence of the Audit Committee
The Audit Committee, which comprises entirely Independent Non-Executive Board members, holds regular meetings to
deliberate on audit findings and recommendations and reports to the Board.
Risk Management
The Risk Management Committee meets from time to time to identify and manage risks to a manageable level. The risks
are being continually monitored and appropriate actions taken to address any change in existing risks or new risks identified
as part of an on-going proactive control measure.
Employee competency
Proper procedures are in place in respect of recruitment and termination of employees. Emphasis is placed on the quality
and abilities of employees with continuing education, training and development being actively encouraged through various
programs.

Annual Report 2011 Linear Corporation Berhad (288687-W)

18

Statement On Internal Control (Contd)

Financial reporting
Regular monitoring and review of financial results by the Management and formulation of action plans to address areas of
concern before they are being reported to the Audit Committee and the Board.
Insurance
Adequate insurance on major assets such as stocks, buildings and machineries belonging to the Group, is in placed to
ensure that the Group is sufficiently covered against any mishap that may result in material losses affecting the Group.
Weaknesses in Internal Controls that Results in Material Losses
There were no material or significant losses incurred during the financial year ended 31 December 2011 as a result of
weakness in internal control. Notwithstanding, the Board remains committed to strengthen the Groups control environment
and processes and its quest for continuous improvement is ongoing and, appropriate action plans will be put in place, when
necessary, to further enhance the Groups system of internal controls.

Annual Report 2011 Linear Corporation Berhad (288687-W)

Statement On Internal Audit Function

19

The Internal Audit function of the Group is carried out by the Internal Audit Department (IAD) that reports directly to the
Board of Audit Committee (BAC). The principal role of the IAD is to undertake independent, regular and systematic review
of the systems of internal controls.
The results of the audits were reported to the BAC on a quarterly basis. The relevant management of the specific audit
subject was made responsible for ensuring that corrective actions on reported weaknesses were taken within the required
time frame. The IAD conducted follow up audits to ensure that managements corrective action was implemented appropriately.
In this respect, the IAD has assisted the management to improve the control processes within the Group.
During the financial year ended 31 December 2011, the IAD reviewed the adequacy and integrity of the Groups system of
internal control covering both financial as well as non-financial controls. For 2011, the total costs incurred by IAD function
was RM29,733.35. (2010:RMNIL)

Annual Report 2011 Linear Corporation Berhad (288687-W)

20

Statement Of Directors Responsibilities

(Pursuant To Paragraph 15.26 (a) Of The Listing Requirements Of Bursa Malaysia Securities Berhad)

The Companies Act, 1965 (the Companies Act) and the Listing Requirements of Bursa Malaysia Securities Berhad require
the Directors to prepare financial statements for each financial year, which give a true and fair view of the state of affairs
of the Company and the Group as at the end of the financial year, and the profit and loss account and cash flows of the
Company and the Group for the financial year in accordance with the applicable approved accounting standards in Malaysia
and the provisions of the Companies Act.
In preparing the financial statements for the financial year ended 31 December 2011 of Linear Corporation Berhad (the
Company or Linear), the Directors, with the advice from the external auditors, have :a.
b.
c.
d.

adopted the suitable accounting policies and have applied them consistently;
made judgements and estimates that are prudent and reasonable;
ensure that applicable accounting standards have been followed, subject to any material departures disclosed and
explained in the financial statements; and
prepared the financial statements on a going concern basis.

The Directors will ensure that the Company and the Linear Group (the Group) keep accounting records which disclose
with reasonable accuracy the financial position of the Company and the Group and which enable them to ensure that the
financial statements comply with the Companies Act.

Annual Report 2011 Linear Corporation Berhad (288687-W)

Additional Compliance Information

21

1. Fund raising corporate exercise


The Company did not undertake any fund raising corporate exercises during the financial year ended 31 December
2011(the financial year).
2. Share Buybacks
The Company did not buy back any of its issued shares during the financial year.
As at 31 December 2011, the number of treasury shares held by the Company are 339,000. No shares were resold
or cancelled during the financial year.
3. Options, Warrants or Convertible Securities
The Companys Employees Share Option Scheme (ESOS) which became effective on 14 August 2003 for a period
of 5 years up to 13 August 2008 was extended for another 5 years up to 13 August 2013 as permitted by the By-Laws
governing the ESOS and the Listing Requirements of Bursa Malaysia Securities Berhad (Bursa Securities). There were
no exercise of share options under the ESOS during the financial year.
4. Recurrent Related Party Transactions
The recurrent related party transactions (RRPT) entered into by the Group during the financial year pursuant to the
Shareholders Mandate granted by the Companys shareholders at the annual general meeting held on 29 June 2011
are as follows:

Sale of cooling tower components by BAC Cooling Technology Sdn. Bhd.* to Baltimore
Aircoil Inc. # Group of Companies

Purchase of cooling tower components by BAC Cooling Technology Sdn. Bhd.* from Baltimore
Aircoil Inc. # Group of Companies

RM
3,797,895.97

601,242.47

Notes:
*
#

BAC Cooling Technology Sdn. Bhd. is a subsidiary of Linear Corporation Berhad


Baltimore Aircoil Inc is a major shareholder holding 30% direct equity interest in BAC Cooling Technology Sdn. Bhd.

5. Sanctions and/or Penalties


There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management by
any regulatory body during the financial year.

6. Non-audit fees
There were no non-audit fees paid or payable by the Company or the Group to the external auditors or a firm of company
affiliated to the external auditors in respect of the financial year.

7. Profit Estimate, Forecast or Projection & Variation In Results


The Company did not publish any profit estimates, forecasts or projections for the financial year. There were no variances
of 10% or more between the audited results for the financial year and the un-audited results announced.

Annual Report 2011 Linear Corporation Berhad (288687-W)

22

Additional Compliance Information (Contd)

8. Profit Guarantee
There were no profit guarantees given by the Company and its subsidiaries in respect of the financial year.

9. Material Contracts
There were no material contracts (not being contracts entered into in the ordinary course of business) either subsisting
as at the financial year or entered into during the financial year, by the Company and its subsidiaries which involved
the interest of the Directors and major shareholders of the Company.

10. Revaluation of Landed Properties


There were no revaluation of any landed properties undertaken by the Company or the Group during the financial year.

11. American Depository Receipt(ADR)/Global Depository Receipt(GDR) Programme


The Company did not sponsor any ADR or GDR programme during the financial year.

Annual Report 2011 Linear Corporation Berhad (288687-W)

Directors Report

23

The directors hereby submit their report and the audited financial statements of the Group and the Company for the financial
year ended 31 December 2011.

PRINCIPAL ACTIVITIES
The principal activities of the Company are those of investment holding and provision of management services to its
subsidiaries. The principal activities of the subsidiaries are disclosed in Note 6 to the financial statements. There have
been no significant changes in the nature of the principal activities of the Group and the Company during the financial year.

RESULTS
Group
RM000
Loss for the financial year attributable to:- Owners of the Company
- Non-controlling interests

(61,377)
(2,506)
(63,883)

Company
RM000

(5,498)
0
(5,498)

DIVIDENDS
No dividends were proposed, declared or paid by the Company since the end of the previous financial year.

RESERVES AND PROVISIONS


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

ISSUE OF SHARES OR DEBENTURES


There was no issue of shares or debentures by the Company during the financial year.

EMPLOYEES SHARE OPTION SCHEME


The Employees Share Option Scheme (ESOS) of the Company became effective on 14 August 2003 for a period of 5
years and was extended for another 5 years up to 13 August 2013.
The principal features of the ESOS are disclosed in Note 13 to the financial statements.
The movements in the number of options during the financial year are as follows:-

Date of Offer
25 August 2003

Exercise
Price
RM

At
1.1.2011

Number of Options over Ordinary Shares of RM1.00 each


Granted

Exercised

Forfeited

At
31.12.2011

1.16

324,000

(152,000)

172,000

Annual Report 2011 Linear Corporation Berhad (288687-W)

24

Directors Report (Contd)

BAD AND DOUBTFUL DEBTS


Before the financial statements of the Group and the Company were made out, the directors took reasonable steps to
ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful
debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made
for doubtful debts.
At the date of this report, the directors are not aware of any circumstances which would render the amount written off for
bad debts or the amount of the allowance made for doubtful debts inadequate to any substantial extent.

CURRENT ASSETS
Before the financial statements of the Group and the Company were made out, the directors took reasonable steps to
ascertain whether any current assets, other than debts, which were unlikely to realise in the ordinary course of business
their values as shown in the accounting records of the Group and the Company had been written down to an amount that
they might be expected so to realise.
At the date of this report, the directors are not aware of any circumstances that would render the values attributed to the
current assets in the financial statements of the Group and the Company misleading.

VALUATION METHODS
At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to
the existing methods of valuation of assets or liabilities of the Group and the Company misleading or inappropriate.

CONTINGENT AND OTHER LIABILITIES


At the date of this report, there does not exist any charge on the assets of the Group or the Company that has arisen since
the end of the financial year which secures the liabilities of any other person.
As disclosed in Note 22 to the financial statements, the Group and the Company have defaulted on their payables, loans
and borrowings and current tax liabilities. Contingent liabilities may arise continuously from the ongoing litigations in respect
of the defaults.
The defaulted liabilities recognised in the financial statements, together with such contingent liabilities as may arise due
to the defaults, have become enforceable and substantially affected the ability of the Group and the Company to meet their
obligations.

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

Annual Report 2011 Linear Corporation Berhad (288687-W)

Directors Report (Contd)

25

ITEMS OF AN UNUSUAL NATURE


The results of the operations of the Group and the Company for the financial year have been substantially affected by the
following items, transactions or events of a material and unusual nature as disclosed in Note 16 to the financial statements:(i)
(ii)
(iii)
(iv)

Impairment loss on investments in subsidiaries.


Impairment loss on loans and receivables.
Impairment loss on property, plant and equipment.
Revaluation decrease of property, plant and equipment.

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction
or event of a material and unusual nature which, in the opinion of the directors, will affect substantially the results of the
operations of the Group and the Company for the financial year in which this report is made.

DIRECTORS OF THE COMPANY


The directors who served since the date of the last report are:Saw Heng Soo
Neoh Chee Kean
Dato Ling Keak Ming
Lim Hun Beng
Adam Bin Bachek
Dato' Wira Amiruddin Bin Che Embi
Ong Tai Chew
According to the Register of Directors' Shareholdings, none of the directors in office at the end of the financial year held
any interests in shares in the Company or its related corporations during the financial year.

DIRECTORS BENEFITS
Since the end of the previous financial year, no director of the Company has received or become entitled to receive any
benefit (other than the directors remuneration disclosed in the financial statements) by reason of a contract made by the
Company or a related corporation with the director or with a firm of which the director is a member, or with a company in
which the director has a substantial financial interest except for any benefits which may be deemed to have arisen by virtue
of those related party transactions as disclosed in Note 20 to the financial statements.
Neither during nor at the end of the financial year, was the Company a party to any arrangement, apart from the Companys
ESOS, whose object is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures
of the Company or any other body corporate.

AUDITORS
The auditors, Messrs. Crowe Horwath, have expressed their willingness to continue in office.

SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS


DATED 26 APRIL 2012

Lim Hun Beng

Saw Heng Soo

Annual Report 2011 Linear Corporation Berhad (288687-W)

26

Statement By Directors

We, Lim Hun Beng and Saw Heng Soo, being two of the directors of Linear Corporation Berhad, do hereby state that in the
opinion of the directors, the financial statements set out on pages 30 to 72 have been properly drawn up in accordance
with Financial Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair view of the financial
position of the Group and the Company as at 31 December 2011 and of their financial performance and cash flows for
the financial year then ended.
In the opinion of the directors, the supplementary information set out on page 73 is prepared, in all material respects, in
accordance with Guidance on Special Matter No. 1 Determination of Realised and Unrealised Profits or Losses in the Context
of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute
of Accountants and the directive of Bursa Malaysia Securities Berhad.

SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS


DATED 26 APRIL 2012

Lim Hun Beng

Saw Heng Soo

Statutory Declaration

I, Saw Heng Soo, being the director primarily responsible for the financial management of Linear Corporation Berhad, do
solemnly and sincerely declare that the financial statements set out on pages 30 to 72 are, to the best of my knowledge
and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the
provisions of the Statutory Declarations Act 1960.
Subscribed and solemnly declared by
Saw Heng Soo at Georgetown in the
State of Penang on this 26 April 2012

Before me
Nachatar Singh A/L Bhag Singh
Commissioner for Oaths

Annual Report 2011 Linear Corporation Berhad (288687-W)

Saw Heng Soo

Independent Auditors Report

27

To the Members of Linear Corporation Berhad

Report on the Financial Statements


We were engaged to audit the financial statements of Linear Corporation Berhad, which comprise the statements of financial
position as at 31 December 2011 of the Group and the Company, and the statements of comprehensive income, statements
of changes in equity and statements of cash flows of the Group and the Company for the financial year then ended, and a
summary of significant accounting policies and other explanatory information, as set out on pages 30 to 72.
Directors Responsibility for the Financial Statements
The directors of the Company are responsible for the preparation of financial statements that give a true and fair view in
accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia, and for such internal control as
the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on conducting the audit in accordance with
approved standards on auditing in Malaysia. Because of the matters described in the Basis for Disclaimer of Opinion
paragraphs, however, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.
Basis for Disclaimer of Opinion
(i)

As disclosed in Note 4 to the financial statements, the Groups land, buildings and district cooling plant are stated at
managements estimates of fair values totalling RM38,070,000. In the absence of sufficient appropriate audit evidence
about the reasonableness of these fair value estimates, we were unable to determine whether the property, plant and
equipment have been fairly stated.

(ii) The Groups inventories include those of a subsidiary stated at RM1,485,000. Numerous errors were noted during our
review of the costing system of the subsidiarys inventories. As at the date of our audit report, management was still
in the process of rectifying the system deficiencies and correcting the errors. Consequently, we were unable to determine
whether any adjustments were necessary in respect of the subsidiarys inventories.
(iii) As disclosed in Note 25 to the financial statements, management is doubtful about the veracity, legality and recoverability
of those receivables cited as Exceptional Items I to VII which might indicate the possibility of fraud. Despite the fact
that impairment losses on the receivables totalling RM58,446,000 and RM11,454,000 have been fully recognised by
the Group and the Company respectively, we were unable to determine the appropriate accounting treatment for these
amounts as it might involve the correction of prior period errors.
(iv) As disclosed in Note 25 to the financial statements, management is doubtful about the veracity of those payables cited
as Exceptional Items VIII and IX which might indicate the possibility of fraud. We were unable to determine the
appropriate accounting treatment for the said payables stated at RM2,592,000 and RM132,000 by the Group and the
Company respectively as it might involve the correction of prior period errors.
(v) The Groups and the Companys loans and borrowings are stated at RM42,396,000 and RM1,087,000 respectively.
As the Group and the Company have defaulted on the loans and borrowings, we were unable to obtain confirmation
replies from certain principal banks. In the absence of sufficient appropriate audit evidence about the default interest
and other charges, if any, we were unable to determine whether the loans and borrowings have been fairly stated.
(vi) The material litigations and contingencies in respect of the Group and the Company are summarised in Note 22 to the
financial statements. As the Group has defaulted on the fees payable to the main solicitors who handled the cases,
the solicitors did not respond to our confirmation request. In the absence of sufficient appropriate audit evidence about
the details of all litigations, we were unable to determine whether the material litigations and contingencies have been
fairly disclosed. We were also unable to determine whether the amounts of unrecognised contingent liabilities disclosed
in Note 22 contained misstatements which should have been recognised as liabilities in the financial statements.
Accordingly, the recorded liabilities of the Group and the Company might have been understated.
Annual Report 2011 Linear Corporation Berhad (288687-W)

28

Independent Auditors Report (Contd)


To The Members Of Linear Corporation Berhad

Report on the Financial Statements (contd)


Basis for Disclaimer of Opinion (contd)
(vii) As the subsidiaries have defaulted on the loans and borrowings guaranteed by the Company, the financial guarantee
contracts disclosed in Note 22 to the financial statements should have been recognised in the separate financial
statements of the Company in accordance with the recognition and measurement policies as stated in Note 2.11. The
non-recognition represents non-compliance with FRS 139 Financial Instruments: Recognition and Measurement. Due
to the aforementioned uncertainties in respect of loans and borrowings (paragraph v) and litigation claims (paragraph
vi), we were unable to determine the extent and quantum of the necessary provisions, if any.
(viii) We draw attention to Note 2.3 to the financial statements. The Group reported a loss of RM63,883,000 for the financial
year ended 31 December 2011 and, as at that date, its net current liabilities and net liabilities amounted to RM59,328,000
and RM20,663,000 respectively. The Company reported a loss of RM5,498,000 for the financial year ended 31
December 2011 and, as at that date, its net current liabilities and net liabilities amounted to RM30,751,000 and
RM30,656,000 respectively. The Group and the Company have also defaulted on their payables, loans and borrowings
and current tax liabilities and are currently engaged in material litigations as disclosed in Note 22.
All the aforementioned conditions indicate the existence of a material uncertainty that may cast significant doubt about
the Groups and the Companys ability to continue as a going concern. The financial statements of the Group and the
Company are prepared on a going concern basis. The appropriateness of using the going concern basis is highly
dependent upon, among other things, the ability of the Group and the Company to formalise a regularisation plan to
regularise their financial conditions. The financial statements do not include any adjustments relating to the recoverability
and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary
should the Group and the Company be unable to continue as a going concern.
Disclaimer of Opinion
Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraphs, we have not been
able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express
an opinion on the financial statements.
Report on Other Legal and Regulatory Requirements
In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following:(i)

Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraphs, we have not
been able to determine whether the accounting and other records required by the Act to be kept by the Company and
its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the
Act. In our opinion, the registers required by the Act to be kept by the Company and its subsidiaries of which we have
acted as auditors have been properly kept in accordance with the provisions of the Act.

(ii) We have not been able to consider the financial statements and the auditors reports of all the subsidiaries of which
we have not acted as auditors, which are indicated in Note 6 to the financial statements, as the financial statements
of those subsidiaries have not been audited.
(iii) Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraphs, we have not
been able to determine whether the financial statements of the subsidiaries that have been consolidated with the
Companys financial statements are in form and content appropriate and proper for the purposes of the preparation
of the financial statements of the Group. We have not received satisfactory information and explanations required by
us for those purposes.

Annual Report 2011 Linear Corporation Berhad (288687-W)

Independent Auditors Report (Contd)


To The Members Of Linear Corporation Berhad

29

Report on Other Legal and Regulatory Requirements (contd)


(iv) Our audit reports on the financial statements of the following subsidiaries contained modified opinions in respect of
the same matters described in the Basis for Disclaimer of Opinion paragraphs:Subsidiary
LCI Global Sdn. Bhd.
District Cooling Systems Sdn. Bhd.
BAC Cooling Technology Sdn. Bhd.
PrimeAce Holdings Sdn. Bhd.

Type of Modified Opinion


Disclaimer of opinion
Disclaimer of opinion
Disclaimer of opinion
Qualified opinion

Our audit reports on the financial statements of other subsidiaries did not contain any modified opinion or any adverse
comment made under Section 174(3) of the Act.
The supplementary information set out on page 73 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad
and is not part of the financial statements. 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 Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian
Institute of Accountants (the MIA Guidance) and the directive of Bursa Malaysia Securities Berhad. Because of the
significance of the matters described in the Basis for Disclaimer of Opinion paragraphs, we have not been able to determine
whether 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.
Crowe Horwath
Firm No: AF 1018
Chartered Accountants

Eddy Chan Wai Hun


Approval No: 2182/10/13 (J)
Chartered Accountant

Date: 26 April 2012


Penang

Annual Report 2011 Linear Corporation Berhad (288687-W)

30

Consolidated Statement of Financial Position


As At 31 December 2011

2011
RM'000

2010
RM'000

4
5
7
8

38,663
0
0
2
38,665

41,579
0
0
1,070
42,649

9
10

2,643
2,697
138
38
100
5,616

3,887
51,753
74
41
458
56,213

11
12

NET CURRENT LIABILITIES

21,101
42,396
1,447
64,944
(59,328)

19,686
41,292
818
61,796
(5,583)

NET (LIABILITIES)/ASSETS

(20,663)

37,066

75,105
(230)
(94,638)
(19,763)
(900)
(20,663)

75,105
(230)
(39,422)
35,453
1,613
37,066

Note
NON-CURRENT ASSETS
Property, plant and equipment
Goodwill
Investment in associate
Available-for-sale financial assets

CURRENT ASSETS
Inventories
Receivables
Prepayments
Current tax assets
Cash and bank balances

CURRENT LIABILITIES
Payables
Loans and borrowings
Current tax liabilities

EQUITY
Share capital
Treasury shares
Reserves
Equity attributable to owners of the Company
Non-controlling interests
TOTAL EQUITY

The annexed notes form an integral part of these financial statements.


Annual Report 2011 Linear Corporation Berhad (288687-W)

13
13

Consolidated Statement of Comprehensive Income

31

For the Financial Year Ended 31 December 2011

Note

2011
RM'000

2010
RM'000

14

12,279

7,502

Other income

488

548

Changes in inventories of work-in-progress and finished goods

(785)

(605)

Raw materials and consumables used

(3,732)

(3,041)

Depreciation

(2,034)

(1,716)

(2,736)

(3,224)

(3,259)

(4,161)

(64,904)

(12,264)

Revenue

Employee benefits expense

15

Finance costs
Other expenses
Share of profit of associate

Loss before tax

16

Tax income

17

Loss for the financial year

(64,683)
800
(63,883)

25
(16,936)
1,810
(15,126)

Other comprehensive income:Revaluation of property, plant and equipment:- Gross revaluation increase
- Gross revaluation decrease
- Deferred tax effects thereof
Gain on available-for-sale financial assets
Reclassification adjustments on derecognition of available-for-sale
financial asset

7,722
(70)
(1,432)

0
0
0

60

67

(126)

Other comprehensive income for the financial year

6,154

Total comprehensive income for the financial year

(57,729)

68
(15,058)

The annexed notes form an integral part of these financial statements.


Annual Report 2011 Linear Corporation Berhad (288687-W)

32

Consolidated Statement of Comprehensive Income (Contd)


For the Financial Year Ended 31 December 2011

Note
Loss for the financial year attributable to:- Owners of the Company
- Non-controlling interests

Total comprehensive income for the financial year attributable to:- Owners of the Company
- Non-controlling interests

Loss per share:- Basic (sen)


- Diluted (sen)

The annexed notes form an integral part of these financial statements.


Annual Report 2011 Linear Corporation Berhad (288687-W)

2011
RM'000

2010
RM'000

(61,377)
(2,506)
(63,883)

(14,665)
(461)
(15,126)

(55,216)
(2,513)
(57,729)

(14,605)
(453)
(15,058)

(82)
(82)

(20)
(20)

18

Reissue of treasury shares


(representing total
transactions with owners)

Transfer of revaluation surplus

(230)

301

683

(757)

910

(164)

60

60

60
0

0
0

0
0

0
0
0

59

1,074

301

1,440

The annexed notes form an integral part of these financial statements.

75,105

0
0

0
0

Balance at 31 December
2010

1,769

(1,999)

75,105

Gain on available-for-sale
financial assets
Reclassification adjustments
on derecognition of availablefor-sale financial assets
Other comprehensive income
for the financial year
Loss for the financial year
Total comprehensive income
for the financial year

Balance at 1 January 2010

Treasury
shares
RM'000

Share
capital
RM'000

272

(41,648)

164

35,453

1,012

(14,605)

60
(14,665)

0
(14,665)
(14,665)

0
0
0

59

49,046

(27,147)

272

67

51,112

Total
equity
RM'000

1,613

37,066

1,012

(453) (15,058)

8
68
(461) (15,126)

2,066

Equity
Currency
Capital
attributable
NonShare redemption Revaluation Fair value translation Accumulated to owners of controlling
losses the Company interests
reserve
surplus
reserve
reserve
premium
RM'000
RM'000
RM'000 RM'000
RM'000
RM'000
RM'000
RM'000

Non-distributable

Consolidated Statement of Changes In Equity

For the Financial Year Ended 31 December 2011

33

Annual Report 2011 Linear Corporation Berhad (288687-W)

Annual Report 2011 Linear Corporation Berhad (288687-W)

75,105

(230)

683

The annexed notes form an integral part of these financial statements.

Balance at 31 December
2011
301

7,007

(123)

Transfer of revaluation surplus

272

(59)

(102,902)

123

(61,377)

6,220

0
(61,377)

0
0

(59)
0

6,220
0

0
0

0
0

0
0

0
0

(113)

54

(41,648)

0
0
0

272

0
0
0

60

0
0
0

7,722
(70)
(1,432)

0
0
0

910

0
0
0

301

0
0
0

683

0
0
0

(230)

75,105

Revaluation of property, plant


and equipment:- Gross revaluation increase
- Gross revaluation decrease
- Deferred tax effects thereof
Gain on available-for-sale
financial assets
Reclassification adjustments
on derecognition of availablefor-sale financial assets
Other comprehensive income
for the financial year
Loss for the financial year
Total comprehensive income
for the financial year

Balance at 1 January 2011

Treasury
shares
RM'000

Share
capital
RM'000

(19,763)

(55,216)

6,161
(61,377)

(113)

54

7,722
(70)
(1,432)

35,453

(126)

60

7,722
(70)
(1,432)

37,066

Total
equity
RM'000

(900) (20,663)

(2,513) (57,729)

(7)
6,154
(2,506) (63,883)

(13)

0
0
0

1,613

Equity
Currency
Capital
Nonattributable
Share redemption Revaluation Fair value translation Accumulated to owners of controlling
reserve
reserve
surplus
reserve
premium
losses the Company interests
RM'000
RM'000 RM'000
RM'000
RM'000
RM'000
RM'000
RM'000

Non-distributable

34
For the Financial Year Ended 31 December 2011

Consolidated Statement of Changes In Equity (Contd)

Consolidated Statement Of Cash Flows

35

For the Financial Year Ended 31 December 2011

2011
RM'000

2010
RM'000

(64,683)

(16,936)

914
2,034
(126)
(129)
0
48,101
4,894
3,259
(1)
0
3,677
(48)
(103)
0
(2,211)

692
1,716
1
(73)
7
1,047
0
4,161
0
1,829
0
(68)
(47)
(25)
(7,696)

378
994
1,415
576
0
576

667
1,614
3,654
(1,761)
150
(1,611)

CASH FLOWS FROM INVESTING ACTIVITIES


Interest received
Proceeds from disposal of associate
Proceeds from disposal of available-for-sale financial assets
Proceeds from disposal of property, plant and equipment
Purchase of property, plant and equipment
Net cash from investing activities

1
0
1,128
129
(37)
1,221

0
2,500
63
73
(378)
2,258

CASH FLOWS FROM FINANCING ACTIVITIES


Interest paid
Reissue of treasury shares
Repayment of loans and borrowings
Net cash used in financing activities

(2,794)
0
(153)
(2,947)

(2,884)
1,012
(193)
(2,065)

Net decrease in cash and cash equivalents

(1,150)

(1,418)

Cash and cash equivalents brought forward

(15,151)

(13,733)

(16,301)

(15,151)

Note
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax
Adjustments for:Allowance for slow moving inventories
Depreciation
(Gain)/Loss on derecognition of available-for-sale financial assets
Gain on disposal of property, plant and equipment
Impairment loss on investment in associate
Impairment loss on loans and receivables
Impairment loss on property, plant and equipment
Interest expense
Interest income
Loss on disposal of associate
Revaluation decrease of property, plant and equipment
Reversal of allowance for slow moving inventories
Reversal of impairment loss on loans and receivables
Share of profit of associate
Operating loss before working capital changes
Changes in:Inventories
Receivables and prepayments
Payables
Cash generated from/(absorbed by) operations
Tax refunded
Net cash from/(used in) operating activities

Cash and cash equivalents carried forward

19

The annexed notes form an integral part of these financial statements.


Annual Report 2011 Linear Corporation Berhad (288687-W)

36

Statement of Financial Position


As At 31 December 2011

2011
RM'000

2010
RM'000

4
6
7

0
95
0
95

558
2,929
0
3,487

10

31
3
18
52

718
0
71
789

Note
NON-CURRENT ASSETS
Property, plant and equipment
Investments in subsidiaries
Investment in associate

CURRENT ASSETS
Receivables
Prepayments
Cash and bank balances

CURRENT LIABILITIES
Payables
Loans and borrowings
NET CURRENT LIABILITIES

29,716
1,087
30,803
(30,751)

28,379
1,055
29,434
(28,645)

NET LIABILITIES

(30,656)

(25,158)

75,105
(230)
(105,531)
(30,656)

75,105
(230)
(100,033)
(25,158)

EQUITY
Share capital
Treasury shares
Reserves
TOTAL EQUITY

The annexed notes form an integral part of these financial statements.


Annual Report 2011 Linear Corporation Berhad (288687-W)

11
12

13
13

Statement of Comprehensive Income

37

For the Financial Year Ended 31 December 2011

2011
RM'000

2010
RM'000

63

Other income

543

Depreciation

(319)

(379)

(366)

(410)

(32)

(41)

(5,329)

(46,780)

(5,498)

(47,547)

Note
Revenue

Employee benefits expense

14

15

Finance costs
Other expenses
Loss before tax

16

Tax income

17

Loss for the financial year

0
(5,498)

0
(47,547)

Other comprehensive income:Impairment loss on investments in subsidiaries

(19,030)

Other comprehensive income for the financial year

(19,030)

Total comprehensive income for the financial year

(5,498)

(66,577)

The annexed notes form an integral part of these financial statements.


Annual Report 2011 Linear Corporation Berhad (288687-W)

38

Statement of Changes In Equity


For the Financial Year Ended 31 December 2011

Share
capital
RM'000
Balance at 1 January 2010

75,105

Treasury
shares
RM'000
(1,999)

Impairment loss on
investments in subsidiaries
(representing other
comprehensive income for
the financial year)
Loss for the financial year
Total comprehensive income
for the financial year

0
0
0

0
0
0

Reissue of treasury shares


(representing total
transactions with owners)

1,769

Balance at 31 December
2010

75,105

Loss (representing total


comprehensive income) for
the financial year
Balance at 31 December
2011

75,105

(230)

(230)

Non-distributable
Capital
Share redemption Revaluation
surplus
reserve
premium
RM'000
RM'000
RM'000
1,440

301

0
0
0

0
0
0

Total
equity
RM'000

19,030

(53,470)

40,407

(19,030)
0
(19,030)

0
(47,547)
(47,547)

(19,030)
(47,547)
(66,577)

1,012

683

301

(101,017)

(25,158)

(5,498)

(5,498)

683

301

(106,515)

(30,656)

(757)

The annexed notes form an integral part of these financial statements.


Annual Report 2011 Linear Corporation Berhad (288687-W)

Accumulated
losses
RM'000

Statement of Cash Flows

39

For the Financial Year Ended 31 December 2011

Note
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax
Adjustments for:Depreciation
Impairment loss on investment in associate
Impairment loss on investments in subsidiaries
Impairment loss on loans and receivables
Impairment loss on property, plant and equipment
Interest expense
Loss on disposal of associate
Reversal of impairment loss on loans and receivables
Operating loss before working capital changes
Changes in:Receivables and prepayments
Payables
Net cash used in operating activities

2011
RM'000

2010
RM'000

(5,498)

(47,547)

319
0
2,834
676
239
32
0
(543)
(1,941)

379
30
11,871
32,137
0
41
2,300
0
(789)

(3)
798
(1,146)

13
67
(709)

CASH FLOWS FROM INVESTING ACTIVITIES


Net repayment from/(advance to) subsidiaries
Proceeds from disposal of associate
Purchase of property, plant and equipment
Net cash from/(used in) investing activities

554
0
0
554

(2,753)
2,500
(132)
(385)

CASH FLOWS FROM FINANCING ACTIVITIES


Interest paid
Net advance from subsidiaries
Reissue of treasury shares
Repayment of loans and borrowings
Net cash from financing activities

0
539
0
0
539

(11)
193
1,012
(52)
1,142

Net (decrease)/increase in cash and cash equivalents

(53)

48

Cash and cash equivalents brought forward

71

23

18

71

Cash and cash equivalents carried forward

19

The annexed notes form an integral part of these financial statements.


Annual Report 2011 Linear Corporation Berhad (288687-W)

40

Notes to the Financial Statements


For the Financial Year Ended 31 December 2011

1. GENERAL INFORMATION
The Company is a public company limited by shares, incorporated and domiciled in Malaysia and listed on the Main
Market of Bursa Malaysia Securities Berhad. As announced on 23 June 2010, the Company has been classified as
an Affected Listed lssuer pursuant to Practice Note 17 of the Main Market Listing Requirements of Bursa Malaysia
Securities Berhad.
The registered office of the Company is located at 60 Sri Bahari Road, 10050 Penang and its principal place of business
is located at 20A Jalan Perusahaan, Prai Industrial Estate 4, 13600 Prai, Penang.
The principal activities of the Company are those of investment holding and provision of management services to its
subsidiaries. The principal activities of the subsidiaries are disclosed in Note 6.
The consolidated financial statements set out on pages 30 to 35 together with the notes thereto cover the Company
and its subsidiaries (the Group) and the Groups interest in an associate. The separate financial statements of the
Company set out on pages 36 to 39 together with the notes thereto cover the Company solely.
The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the
directors dated 26 April 2012.

2. SIGNIFICANT ACCOUNTING POLICIES


2.1 Basis of Preparation of Financial Statements
The financial statements of the Group and the Company are prepared under the historical cost convention, modified
to include other bases of measurement as disclosed in other sections of the significant accounting policies, and
in accordance with Financial Reporting Standards (FRSs) and the Companies Act 1965 in Malaysia.
The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest
thousand (RM000) except when otherwise indicated.
The following amended/revised/new FRSs became effective for the financial year under review:-

FRS
Amendment to FRS 1 Limited Exemption from Comparative FRS 7 Disclosures for Firsttime Adopters
Amendments to FRS 1 Additional Exemptions for First-time Adopters
Amendments to FRS 2 Share-based Payment
Amendments to FRS 2 Group Cash-settled Share-based Payment Transactions
Amendments to FRS 5 Non-current Assets Held for Sale and Discontinued Operations
Amendments to FRS 7 Improving Disclosures about Financial Instruments
Amendments to FRS 132 Financial Instruments: Presentation
Amendments to FRS 138 Intangible Assets
Amendments to IC Interpretation 9 Reassessment of Embedded Derivatives
Amendments to FRSs contained in the document entitled Improvements to FRSs (2010)
FRS 1 First-time Adoption of Financial Reporting Standards (revised in 2010)
FRS 3 Business Combinations (revised in 2010)
FRS 127 Consolidated and Separate Financial Statements (revised in 2010)
IC Interpretation 4 Determining whether an Arrangement contains a Lease

Annual Report 2011 Linear Corporation Berhad (288687-W)

Effective for annual


periods beginning on
or after

1 January 2011
1 January 2011
1 July 2010
1 January 2011
1 July 2010
1 January 2011
1 March 2010
1 July 2010
1 July 2010
1 January 2011
1 July 2010
1 July 2010
1 July 2010
1 January 2011

Notes to the Financial Statements (Contd)

41

For the Financial Year Ended 31 December 2011

2. SIGNIFICANT ACCOUNTING POLICIES (contd)


2.1 Basis of Preparation of Financial Statements (contd)
Effective for annual
periods beginning on
or after

FRS
IC
IC
IC
IC

Interpretation
Interpretation
Interpretation
Interpretation

12
16
17
18

Service Concession Arrangements


Hedges of a Net Investment in a Foreign Operation
Distributions of Non-cash Assets to Owners
Transfers of Assets from Customers

1 July
1 July
1 July
1 January

2010
2010
2010
2011

The adoption of the above amended/revised/new FRSs did not result in any significant changes in the accounting
policies of the Group and the Company except as follows:FRS 3 Business Combinations (revised in 2010) and FRS 127 Consolidated and Separate Financial Statements
(revised in 2010)
FRS 3 (revised in 2010) and FRS 127 (revised in 2010), which supersede FRS 3 Business Combinations (issued
in 2005) and FRS 127 Consolidated and Separate Financial Statements (revised in 2005) respectively, introduce
significant changes to the accounting principles for business combinations and consolidated financial statements,
both at the acquisition date and post acquisition. Some of the key principles established are disclosed in Note
2.4.
In accordance with the transitional provisions of FRS 3 (revised in 2010), the Group and the Company have applied
the standard prospectively to business combinations for which the acquisition date is on or after the effective
date. In accordance with the transitional provisions of FRS 127 (revised in 2010), the significant amendments
thereto have also been applied prospectively. Accordingly, business combinations entered into prior to 1 January
2011 have not been restated to comply with the standards.
2.2 Future Accounting Standards
In November 2011, the Malaysian Accounting Standards Board (MASB) issued a new MASB approved accounting
framework, the Malaysian Financial Reporting Standards (MFRS) framework. The issuance was made in conjunction
with the MASBs plan to converge with International Financial Reporting Standards (IFRS) in 2012. The MFRS
framework is a fully IFRS-compliant framework and equivalent to IFRSs. It comprises standards as issued by the
International Accounting Standards Board (IASB) that are effective on 1 January 2012 and also amended/revised/new
standards recently issued by the IASB that will be effective after 1 January 2012.
The Group and the Company will first adopt the MFRS framework for the financial year ending 31 December 2012.
Management foresees that the transition to the MFRS framework will not have any significant impacts on the
financial statements except as follows:MFRS 9 Financial Instruments
MFRS 9 (effective for annual periods beginning on or after 1 January 2015) replaces the guidance in MFRS 139
Financial Instruments: Recognition and Measurement on the classification and measurement of financial assets
by dividing them into 3 classifications: (1) those measured at amortised cost; (2) those measured at fair value
through profit or loss; and (3) those measured at fair value through other comprehensive income. Management
foresees that the adoption of these new classifications will not result in any significant changes to the existing
measurement bases of financial assets of the Group and the Company.

Annual Report 2011 Linear Corporation Berhad (288687-W)

42

Notes to the Financial Statements (Contd)


For the Financial Year Ended 31 December 2011

2. SIGNIFICANT ACCOUNTING POLICIES (contd)


2.2 Future Accounting Standards (contd)
MFRS 10 Consolidated Financial Statements
MFRS 10 (effective for annual periods beginning on or after 1 January 2013) replaces the consolidation guidance
in MFRS 127 Consolidated and Separate Financial Statements and IC Interpretation 112 Consolidation - Special
Purpose Entities by introducing a single consolidation model for all entities based on control. Under MFRS 10,
control is based on whether an investor has (1) power over the investee; (2) exposure, or rights, to variable returns
from its involvement with the investee; and (3) the ability to use its power over the investee to affect the amount
of the returns. Management foresees that the adoption of these new control criteria will not result in any significant
changes to the existing composition of the Group.
2.3 Going Concern
The Group reported a loss of RM63,883,000 for the financial year ended 31 December 2011 and, as at that date,
its net current liabilities and net liabilities amounted to RM59,328,000 and RM20,663,000 respectively. The
Company reported a loss of RM5,498,000 for the financial year ended 31 December 2011 and, as at that date,
its net current liabilities and net liabilities amounted to RM30,751,000 and RM30,656,000 respectively. The Group
and the Company have also defaulted on their payables, loans and borrowings and current tax liabilities and are
currently engaged in material litigations as disclosed in Note 22.
All the aforementioned conditions indicate the existence of a material uncertainty that may cast significant doubt
about the Groups and the Companys ability to continue as a going concern. The financial statements of the Group
and the Company are prepared on a going concern basis. The appropriateness of using the going concern basis
is highly dependent upon, among other things, the ability of the Group and the Company to formalise a regularisation
plan to regularise their financial conditions. The financial statements do not include any adjustments relating to
the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities
that might be necessary should the Group and the Company be unable to continue as a going concern.
2.4 Basis of Consolidation
A subsidiary is an entity that is controlled by the Group. Control is the power to govern the financial and operating
policies of the entity so as to obtain benefits from its activities.
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries
made up to the end of the reporting period using the acquisition method. Under the acquisition method, the
consideration transferred, the identifiable assets acquired and the liabilities assumed are measured at their
acquisition-date fair values. The components of non-controlling interests that are present ownership interests are
measured at the present ownership instruments proportionate share in the recognised amounts of the identifiable
net assets acquired. All other components of non-controlling interests are measured at their acquisition-date fair
values. In a business combination achieved in stages, the previously held equity interest in the acquiree is
remeasured at its acquisition-date fair value and any resulting gain or loss is recognised in profit or loss. All
acquisition-related costs, other than the costs to issue debt or equity securities, are recognised in profit or loss
as incurred.
Goodwill at the acquisition date is measured as the excess of (a) over (b) below:(a) the
(i)
(ii)
(iii)

aggregate of:the acquisition-date fair value of the consideration transferred;


the amount of any non-controlling interests; and
in a business combination achieved in stages, the acquisition-date fair value of the previously held equity
interest in the acquiree.

Annual Report 2011 Linear Corporation Berhad (288687-W)

Notes to the Financial Statements (Contd)

43

For the Financial Year Ended 31 December 2011

2. SIGNIFICANT ACCOUNTING POLICIES (contd)


2.4 Basis of Consolidation (contd)
(b) the net of the acquisition-date fair values of the identifiable assets acquired and the liabilities assumed.
Goodwill is recognised as an asset at the aforementioned amount less accumulated impairment losses, if
any. The impairment policy is disclosed in Note 2.8. When the above (b) exceeds (a), the excess represents
a bargain purchase gain and, after reassessment, is recognised in profit or loss.
A subsidiary is consolidated from the acquisition date, being the date on which control is obtained, and
continues to be consolidated until the date when control is lost. Intragroup balances, transactions, income
and expenses are eliminated in full on consolidation. Total comprehensive income is attributed to the owners
of the parent and to the non-controlling interests even if this results in the non-controlling interests having a
deficit balance. All changes in the parents ownership interest in a subsidiary that do not result in a loss of
control are accounted for as equity transactions.
Upon loss of control of a subsidiary, the assets (including any goodwill) and liabilities of, and any non-controlling
interests in the subsidiary are derecognised. All amounts recognised in other comprehensive income in relation
to the subsidiary are accounted for on the same basis as would be required if the related assets or liabilities
had been directly disposed of. Any consideration received and any investment retained in the former subsidiary
are recognised at their fair values. The resulting difference is then recognised as a gain or loss in profit or
loss.
2.5 Property, Plant and Equipment
Property, plant and equipment are stated at cost or at valuation less accumulated depreciation and accumulated
impairment losses, if any. The impairment policy is disclosed in Note 2.8.
Revaluations of land and buildings are made with sufficient regularity at an interval of not more than five years
such that the carrying amounts of the assets do not differ materially from their fair values at the end of the
reporting period.
A revaluation increase is recognised in other comprehensive income and accumulated in equity as revaluation
surplus or recognised in profit or loss to the extent that the increase reverses a revaluation decrease of the same
asset previously recognised in profit or loss. A revaluation decrease is recognised in profit or loss or recognised
in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect
of the same asset.
Freehold land is not depreciated. Leasehold land is depreciated on a straight-line basis over the lease term of
60 years. Other property, plant and equipment are depreciated on a straight-line basis over the estimated useful
lives of the assets using the following annual rates:Buildings
District cooling plant
Plant and machinery
Office equipment, furniture and fittings
Motor vehicles

2 - 6%
2 - 20%
10 - 20%
8 - 20%
20%

The residual value, useful life and depreciation method of an asset are reviewed at least at the end of each
reporting period and any changes in expectations from previous estimates are accounted for prospectively as
changes in accounting estimates.

Annual Report 2011 Linear Corporation Berhad (288687-W)

44

Notes to the Financial Statements (Contd)


For the Financial Year Ended 31 December 2011

2. SIGNIFICANT ACCOUNTING POLICIES (contd)


2.6 Investments in Subsidiaries
As required by the Companies Act 1965, the Company prepares separate financial statements in addition to the
consolidated financial statements. In the separate financial statements of the Company, investments in subsidiaries
are stated at cost or at valuation less impairment losses, if any. The impairment policy is disclosed in Note 2.8.
Certain investments in subsidiaries were revalued by the directors in 1998 in conjunction with the listing exercise
of the Company. Subsequent investments have been stated at cost and the directors do not intend to revalue the
investments in the future. Retrospective adjustment to restate the revalued investments at cost has not been
made and the revalued amount has been retained as the surrogate carrying amount of the investments.
2.7 Investments in Associates
An associate is an entity, other than a subsidiary or a joint venture, over which the Group has significant influence.
Significant influence is the power to participate in the financial and operating policy decisions of the entity but is
not control or joint control over those policies.
In the consolidated financial statements, investments in associates are accounted for using the equity method.
Under the equity method, the investment in associate is initially recognised at cost and the carrying amount is
subsequently adjusted to recognise the Groups share of the post-acquisition profit or loss and other comprehensive
income of the associate. After application of the equity method, the carrying amount of the investment is subject
to further impairment assessment. The impairment policy is disclosed in Note 2.8.
In the separate financial statements of the Company, investments in associates are stated at cost less impairment
losses, if any. The impairment policy is disclosed in Note 2.8.
2.8 Impairment of Non-financial Assets
At the end of each reporting period, the Group and the Company assess whether there is any indication that a
non-financial asset, other than inventories, may be impaired. If any such indication exists, the recoverable amount
of the asset, being the higher of its fair value less costs to sell and its value in use, is estimated. Irrespective of
whether there is any indication of impairment, goodwill is tested for impairment annually. Any excess of the carrying
amount of the asset over its recoverable amount represents an impairment loss and is recognised in profit or loss
or, in respect of a revalued asset, treated as a revaluation decrease.
An impairment loss on an asset, other than goodwill, is reversed if there has been a change in the estimates used
to determine the recoverable amount and it is reversed only to the extent that the increased carrying amount does
not exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no
impairment loss been recognised. The reversal is recognised in profit or loss or, in respect of a revalued asset,
treated as a revaluation increase. An impairment loss on goodwill is not reversed.
2.9 Inventories
Inventories of materials and goods are valued at the lower of cost (determined principally on the first-in, first-out
basis) and net realisable value. Cost consists of all costs of purchase, costs of conversion 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 costs necessary to make the
sale.

Annual Report 2011 Linear Corporation Berhad (288687-W)

Notes to the Financial Statements (Contd)

45

For the Financial Year Ended 31 December 2011

2. SIGNIFICANT ACCOUNTING POLICIES (contd)


2.10 Financial Assets
Financial assets of the Group and the Company consist of investments in equity instruments, receivables and
cash and cash equivalents.
Recognition and Measurement
A financial asset is recognised in the statement of financial position when, and only when, the Group or the
Company becomes a party to the contractual provisions of the financial instrument. A regular way purchase or
sale of financial assets is recognised or derecognised using settlement date accounting. A financial asset is
initially recognised at fair value plus, in the case of a financial asset not at fair value through profit or loss, directly
attributable transaction costs. The subsequent measurement of a financial asset depends on its classification
as follows:(i) Financial assets at fair value through profit or loss
The Group and the Company do not have any financial assets classified under this category.
(ii) Held-to-maturity investments
The Group and the Company do not have any financial assets classified under this category.
(iii) Loans and receivables
All receivables and cash and cash equivalents are classified under this category. After initial recognition,
such financial assets are measured at amortised cost using the effective interest method. Any gain or loss
is recognised in profit or loss when the financial asset is derecognised or impaired as well as through the
amortisation process.
(iv) Available-for-sale financial assets
All investments in equity instruments (other than interests in subsidiaries and associates) are classified
under this category. After initial recognition, such financial assets are measured at fair value. Any gain or
loss arising from a change in the fair value, except for impairment loss, is recognised in other comprehensive
income and accumulated in equity as fair value reserve until the financial asset is derecognised, at which
time the cumulative gain or loss previously recognised in other comprehensive income is reclassified from
equity to profit or loss as a reclassification adjustment.
A financial asset is derecognised when, and only when, the contractual rights to the cash flows from the financial
asset have expired or all the risks and rewards of ownership have been substantially transferred.
Impairment
At the end of each reporting period, the Group and the Company assess whether there is any objective evidence
that a financial asset or group of financial assets is impaired. If any such evidence exists, the impairment loss
is measured as follows:(i) Financial assets carried at amortised cost
An impairment loss on loans and receivables is measured as the difference between the assets carrying
amount and the present value of estimated future cash flows discounted using the assets original effective
interest rate. The assets carrying amount is reduced through the use of an allowance account and the
impairment loss is recognised in profit or loss. The gross carrying amount and the associated allowance
are written off when there is no realistic prospect of future recovery.
Annual Report 2011 Linear Corporation Berhad (288687-W)

46

Notes to the Financial Statements (Contd)


For the Financial Year Ended 31 December 2011

2. SIGNIFICANT ACCOUNTING POLICIES (contd)


2.10 Financial Assets (contd)
Impairment (contd)
(i) Financial assets carried at amortised cost (contd)
If, in a subsequent period, the impairment loss decreases and the decrease can be related objectively to
an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed
to the extent that the increased carrying amount does not exceed what the amortised cost would have been
had no impairment loss been recognised at the reversal date. The reversal is recognised in profit or loss.
(ii) Available-for-sale financial assets
When there is a significant or prolonged decline in the fair value of an investment in equity instrument
classified as available-for-sale, the cumulative loss previously recognised in other comprehensive income
is reclassified from equity to profit or loss as a reclassification adjustment even though the financial asset
has not been derecognised. Such cumulative loss reclassified from equity to profit or loss represents an
impairment loss and is measured as the difference between the acquisition cost and current fair value, less
any impairment loss previously recognised in profit or loss. The impairment loss is not reversed through
profit or loss in any subsequent period.
Determination of Fair Values
The carrying amounts of receivables and cash and cash equivalents which are short-term in nature or repayable
on demand are assumed to be reasonable approximations of fair values.
Fair value measurements recognised in the statement of financial position are categorised into the following
levels of fair value hierarchy:Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The fair values of quoted investments are determined by reference to their quoted closing bid prices at the end
of the reporting period (i.e. Level 1).
2.11 Financial Liabilities
Financial liabilities of the Group and the Company consist of payables, loans and borrowings and financial
guarantee contracts.
Recognition and Measurement
A financial liability is recognised in the statement of financial position when, and only when, the Group or the
Company becomes a party to the contractual provisions of the financial instrument. A financial liability is initially
recognised at fair value less directly attributable transaction costs. After initial recognition, all financial liabilities,
except for financial guarantee contracts, are measured at amortised cost using the effective interest method.
Any gain or loss is recognised in profit or loss when the financial liability is derecognised as well as through the
amortisation process. After initial recognition at fair value, if any, financial guarantee contracts are measured
at the higher of the amount initially recognised less appropriate amortisation and the estimate of any probable
obligation.

Annual Report 2011 Linear Corporation Berhad (288687-W)

Notes to the Financial Statements (Contd)

47

For the Financial Year Ended 31 December 2011

2. SIGNIFICANT ACCOUNTING POLICIES (contd)


2.11 Financial Liabilities (contd)
Recognition and Measurement (contd)
A financial liability is derecognised when, and only when, the obligation specified in the contract is discharged
or cancelled or expires.
Determination of Fair Values
The carrying amounts of payables and loans and borrowings which are short-term in nature or repayable on
demand are assumed to be reasonable approximations of fair values.
Fair value measurements recognised in the statement of financial position are categorised into the following
levels of fair value hierarchy:Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The fair values of financial guarantee contracts are estimated based on probability-adjusted discounted cash flow
analysis after considering the probability of default by the debtors (i.e. Level 3).
2.12 Leases
Finance Lease
A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an
asset to the lessee.
A finance lease, including hire purchase, is initially recognised as an asset and liability at the fair value of the
leased asset or, if lower, the present value of the minimum lease payments. The minimum lease payments are
subsequently apportioned between the finance charge and the reduction of the outstanding liability so as to
produce a constant periodic rate of interest on the remaining balance of the liability. The depreciation policy for
depreciable leased assets is consistent with that for equivalent owned assets.
Operating Lease
An operating lease is a lease other than a finance lease.
Lease payments under an operating lease are recognised in profit or loss on a straight-line basis over the lease
term.
2.13 Foreign Currency Transactions and Translation
The consolidated financial statements and separate financial statements of the Company are presented in Ringgit
Malaysia, which is also the Companys functional currency, being the currency of the primary economic environment
in which the entity operates. Items included in the financial statements of each individual entity within the Group
are measured using the individual entitys own functional currency.

Annual Report 2011 Linear Corporation Berhad (288687-W)

48

Notes to the Financial Statements (Contd)


For the Financial Year Ended 31 December 2011

2. SIGNIFICANT ACCOUNTING POLICIES (contd)


2.13 Foreign Currency Transactions and Translation (contd)
A foreign currency transaction is recorded in the functional currency using the exchange rate at transaction date.
At the end of the reporting period, foreign currency monetary items are translated into the functional currency
using the closing rate. Foreign currency non-monetary items measured at cost are translated using the exchange
rate at transaction date whereas those measured at fair value are translated using the exchange rate at valuation
date. Exchange differences arising from the settlement or translation of monetary items are recognised in profit
or loss. Any exchange component of the gain or loss on a non-monetary item is recognised on the same basis
as that of the gain or loss, i.e. in profit or loss or in other comprehensive income.
In translating the financial position and results of a foreign operation whose functional currency is not the required
presentation currency, i.e. Ringgit Malaysia, assets and liabilities are translated into the presentation currency
using the closing rate whereas income and expenses are translated using the exchange rates at transaction
dates. All resulting exchange differences are recognised in other comprehensive income and accumulated in
equity as currency translation reserve until the foreign operation is disposed of, at which time the cumulative
exchange differences previously recognised in other comprehensive income are reclassified from equity to profit
or loss as a reclassification adjustment.
2.14 Share Capital
Ordinary shares are classified as equity. Transaction costs that relate to the issue of new shares are accounted
for as a deduction from equity.
Own shares purchased are held as treasury shares in accordance with the requirements of Section 67A of the
Companies Act 1965. The total amount of consideration paid, including directly attributable costs, is recognised
directly in equity. When treasury shares are reissued by re-sale in the open market, the difference between the
sales consideration and the carrying amount of the treasury shares is adjusted to share premium.
Dividends on shares declared and unpaid at the end of the reporting period are recognised as a liability whereas
dividends proposed or declared after the reporting period are disclosed in the notes to the financial statements.
2.15 Revenue Recognition
Income from the sale of goods is recognised when the significant risks and rewards of ownership have been
transferred to the buyer.
Income from the rendering of services is recognised when the services are performed.
2.16 Employee Benefits
Short-term Employee Benefits
Short-term employee benefits such as wages, salaries, bonuses and social security contributions are recognised
in profit or loss in the period in which the associated services are rendered by the employee.
Defined Contribution Plans
As required by law, employers in Malaysia make contributions to the statutory pension scheme, Employees
Provident Fund (EPF). Contributions to defined contribution plans are recognised in profit or loss in the period
in which the associated services are rendered by the employee.

Annual Report 2011 Linear Corporation Berhad (288687-W)

Notes to the Financial Statements (Contd)

49

For the Financial Year Ended 31 December 2011

2. SIGNIFICANT ACCOUNTING POLICIES (contd)


2.16 Employee Benefits (contd)
Equity Compensation Benefits
The Employees Share Option Scheme (ESOS) of the Company grants the Groups eligible employees options
to subscribe for shares in the Company at pre-determined subscription prices. These equity compensation benefits
are recognised in profit or loss with a corresponding increase in equity over the vesting period as share option
reserve. The total amount to be recognised is determined by reference to the fair value of the share options at
grant date and the estimated number of share options expected to vest on vesting date.
2.17 Borrowing Costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset,
which is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale,
are capitalised as part of the cost of the asset, until such time as the asset is substantially ready for its intended
use or sale. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
2.18 Income Taxes
Income taxes for the year comprise current tax and deferred tax.
Current tax represents the expected amount of income taxes payable in respect of the taxable profit for the year
and is measured using the tax rates that have been enacted or substantively enacted by the end of the reporting
period.
Deferred tax is provided for under the liability method in respect of all temporary differences between the carrying
amount of an asset or liability and its tax base except for those temporary differences associated with goodwill
or the initial recognition of an asset or liability in a transaction which is not a business combination and affects
neither accounting nor taxable results at the time of the transaction.
A deferred tax liability is recognised for all taxable temporary differences whereas a deferred tax asset is
recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that
it is probable that future taxable profit will be available against which the deductible temporary differences,
unused tax losses and unused tax credits can be utilised. Deferred tax assets and liabilities are measured at
the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based
on the tax rates that have been enacted or substantively enacted by the end of the reporting period.
2.19 Cash and Cash Equivalents
Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, term deposits (excluding
those pledged as security), bank overdrafts and short-term, highly liquid investments that are readily convertible
to known amounts of cash and which are subject to an insignificant risk of changes in value.

Annual Report 2011 Linear Corporation Berhad (288687-W)

50

Notes to the Financial Statements (Contd)


For the Financial Year Ended 31 December 2011

3. JUDGEMENTS AND ESTIMATION UNCERTAINTY


Judgements Made in Applying Accounting Policies
In the process of applying the accounting policies of the Group and the Company, management makes the following
judgements, apart from those involving estimations, that can significantly affect the amounts recognised in the financial
statements:(i) Classification of leasehold land
The classification of leasehold land as a finance lease or an operating lease requires the use of judgement in
determining the extent to which risks and rewards incidental to ownership lie. Despite the fact that there will be
no transfer of ownership by the end of the lease term and that the lease term does not constitute the major part
of the indefinite economic life of the land, management considered that the present value of the minimum lease
payments approximated to the fair value of the land at the inception of the lease. Accordingly, management judged
that the Group has acquired substantially all the risks and rewards incidental to ownership of the land through a
finance lease.
(ii) Impairment of available-for-sale financial assets
When there is a significant or prolonged decline in the fair value of an investment in equity instrument classified
as available-for-sale, the cumulative decline represents an impairment loss. The determination of what constitutes
significant or prolonged requires judgement. In making this judgement, management continuously evaluates the
historical share price movements and the duration and extent of the decline in fair value below cost. For the financial
year ended 31 December 2011, the Group has not recognised any impairment loss on available-for-sale financial
assets.
Sources of Estimation Uncertainty
The key assumptions about the future, and other major sources of estimation uncertainty at the end of the reporting
period, that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities
within the next financial year are discussed below:(i) Depreciation of property, plant and equipment
Property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets.
Management estimates the useful lives to be within 5 to 50 years. Changes in the expected level of usage and
technological development will impact on the economic useful lives and residual values of the assets and therefore,
future depreciation charges may be revised. The carrying amounts of property, plant and equipment are disclosed
in Note 4.
(ii) Impairment of non-financial assets
When the recoverable amount of a non-financial asset is determined based on its value in use, estimates on future
cash flows and appropriate discount rate are required to determine the present value of those cash flows. The
carrying amounts of non-financial assets subject to impairment assessment are disclosed in Note 4.
(iii) Allowance for inventories
Reviews are made periodically by management on inventories for excess inventories, obsolescence and decline
in net realisable value below cost. These reviews require the use of judgements and estimates. Possible changes
in these estimates may result in revisions to the valuation of inventories. The carrying amounts of inventories are
disclosed in Note 9.

Annual Report 2011 Linear Corporation Berhad (288687-W)

Notes to the Financial Statements (Contd)

51

For the Financial Year Ended 31 December 2011

3. JUDGEMENTS AND ESTIMATION UNCERTAINTY (contd)


Sources of Estimation Uncertainty (contd)
(iv) Impairment of loans and receivables
The Group and the Company make allowance for impairment based on an assessment of the recoverability of loans
and receivables. Allowance is applied to loans and receivables when there is objective evidence that the balances
may not be recoverable. Management specifically analyses historical bad debts, debtor concentration, debtor
creditworthiness, current economic trends and changes in debtor payment terms when making a judgement to
evaluate the adequacy of the allowance for impairment. Where expectations are different from previous estimates,
the difference will impact on the carrying amounts of loans and receivables as disclosed in Note 10.
(v) Income taxes
There are certain transactions and computations for which the ultimate tax determination may be different from
the initial estimates. The Group recognises tax assets/liabilities based on its understanding of the prevailing tax
laws and estimates of whether such assets/liabilities will be realised/settled in the ordinary course of business.
Where the final tax outcome of these matters is different from the amounts initially recognised, the difference will
impact on the tax recognition in the period in which the outcome is determined. The carrying amounts of tax
assets/liabilities as at 31 December 2011 are as follows:Group
RM000
Current tax assets
Current tax liabilities

38
1,447

Annual Report 2011 Linear Corporation Berhad (288687-W)

Annual Report 2011 Linear Corporation Berhad (288687-W)

Representing:- Cost
- Valuation

Balance at 1 January 2011


Reclassification
Additions
Disposals
Revaluation
Balance at 31 December 2011

Representing:- Cost
- Valuation

Cost/Valuation
Balance at 1 January 2010
Transfer from assets held for sale
Additions
Disposals
Adjustments
Balance at 31 December 2010

Group

4. PROPERTY, PLANT AND EQUIPMENT

0
6,000
6,000

0
15,570
15,570

31,038
0
31,038

5,576
0
5,576

2,284
0
2,284

2,277
0
7
0
0
2,284

5,551
0
25
0
0
5,576

40,767
(9,729)
0
0
0
31,038

11,431
9,729
0
0
(5,590)
15,570

4,500
0
0
0
1,500
6,000

2,077
0
0
0
1,923
4,000

0
4,000
4,000

2,277
0
2,277

2,235
26
16
0
0
2,277

5,551
0
5,551

5,546
5
0
0
0
5,551

40,767
0
40,767

0
41,986
0
0
(1,219)
40,767

96
11,335
11,431

585
10,846
0
0
0
11,431

Plant and
machinery
RM'000

Office
equipment,
furniture
and fittings
RM'000

0
4,500
4,500

0
4,500
0
0
0
4,500

Buildings
RM'000

District
cooling
plant
RM'000

2,077
0
2,077

0
2,077
0
0
0
2,077

Freehold
land
RM'000

Short-term
leasehold
land
RM'000

2,772
0
2,772

3,247
0
5
(480)
0
2,772

3,247
0
3,247

3,435
0
132
(320)
0
3,247

Motor
vehicles
RM'000

230
0
230

230
0
0
0
0
230

230
0
230

0
0
230
0
0
230

Capital
work-inprogress
RM'000

41,900
25,570
67,470

70,080
0
37
(480)
(2,167)
67,470

54,245
15,835
70,080

11,801
59,440
378
(320)
(1,219)
70,080

Total
RM'000

52
For the Financial Year Ended 31 December 2011

Notes to the Financial Statements (Contd)

325
255
188

625
488
385

0
23,680
12,500

10,062
15,570

3,960
6,000

2,077

4,000

Balance at 31 December 2010

Balance at 31 December 2011

2,096
0
2,096

5,191
0
5,191

5,582
12,956
18,538

0
0
0

0
0
0

0
0
0

526

2,022
0
2,022
0
74
0
0
0

5,063
0
5,063
0
128
0
0
0

5,582
11,505
17,087
(3,778)
949
0
4,280
0

1,369
0
1,369
3,778
365
0
0
(5,512)

540
0
540
0
90
0
0
(630)

0
0
0
0
0
0
0
0

1,910
0
1,910
3
109
0

4,921
0
4,921
4
138
0

0
0
0
16,437
650
0

59
0
59
1,081
229
0

Plant and
machinery
RM'000

Office
equipment,
furniture
and fittings
RM'000

0
0
0
450
90
0

Buildings
RM'000

District
cooling
plant
RM'000

0
0
0
0
0
0

Freehold
land
RM'000

Short-term
leasehold
land
RM'000

Carrying Amount
Balance at 1 January 2010

Reclassification
Depreciation
Disposals
Impairment loss
Revaluation
Balance at 31 December 2011
Accumulated depreciation
Accumulated impairment losses

Transfer from assets held for sale


Depreciation
Disposals
Balance at 31 December 2010
Accumulated depreciation
Accumulated impairment losses

Depreciation and Impairment Losses


Balance at 1 January 2010
Accumulated depreciation
Accumulated impairment losses

Group

4. PROPERTY, PLANT AND EQUIPMENT (contd)

20

827

1,195

2,368
384
2,752

2,420
0
2,420
0
428
(480)
384
0

2,240
0
2,240
0
500
(320)

Motor
vehicles
RM'000

230

0
230
230

0
0
0
0
0
0
230
0

0
0
0
0
0
0

Capital
work-inprogress
RM'000

38,663

41,579

2,671

15,237
13,570
28,807

16,996
11,505
28,501
0
2,034
(480)
4,894
(6,142)

9,130
0
9,130
17,975
1,716
(320)

Total
RM'000

Notes to the Financial Statements (Contd)


For the Financial Year Ended 31 December 2011

53

Annual Report 2011 Linear Corporation Berhad (288687-W)

54

Notes to the Financial Statements (Contd)


For the Financial Year Ended 31 December 2011

4. PROPERTY, PLANT AND EQUIPMENT (contd)


The land and buildings were revalued on 31 December 2011 based on managements estimates of fair values by
reference to relevant market information. Had the land and buildings been carried at historical cost less accumulated
depreciation and accumulated impairment losses, the carrying amounts that would have been recognised in the financial
statements are as follows:Group

Freehold land
Short-term leasehold land
Buildings

2011
RM000

2010
RM000

2,077
1,283
11,975
15,335

2,077
1,315
6,352
9,744

The district cooling plant was written down to its recoverable amount based on managements estimate of fair value
by reference to relevant market information.
The carrying amounts of property, plant and equipment pledged as security for credit facilities granted to the Group
are as follows:Group

Freehold land
Buildings
District cooling plant
Office equipment, furniture and fittings

2011
RM000

2010
RM000

4,000
2,120
12,500
17
18,637

2,077
0
23,680
20
25,777

Company
Motor
vehicles
RM'000
Cost
Balance at 1 January 2010
Additions
Balance at 31 December 2010
Movement during the year
Balance at 31 December 2011
Depreciation and Impairment Losses
Balance at 1 January 2010
Accumulated depreciation
Accumulated impairment losses

Annual Report 2011 Linear Corporation Berhad (288687-W)

1,463
132
1,595
0
1,595

658
0
658

Notes to the Financial Statements (Contd)

55

For the Financial Year Ended 31 December 2011

4. PROPERTY, PLANT AND EQUIPMENT (contd)


Company
Motor
vehicles
RM'000
379

Depreciation
Balance at 31 December 2010
Accumulated depreciation
Accumulated impairment losses

1,037
0
1,037
319
239

Depreciation
Impairment loss
Balance at 31 December 2011
Accumulated depreciation
Accumulated impairment losses

1,356
239
1,595

Carrying Amount
Balance at 1 January 2010

805

Balance at 31 December 2010

558

Balance at 31 December 2011

The carrying amounts of property, plant and equipment acquired under hire purchase financing which remained outstanding
as at the end of the reporting period are as follows:-

2011
RM000
Motor vehicles

Group

Company

2010
RM000

2011
RM000

2010
RM000

797

558

2011
RM000

2010
RM000

5. GOODWILL
Group

Cost
Accumulated impairment losses

91
(91)
0

91
(91)
0

Annual Report 2011 Linear Corporation Berhad (288687-W)

56

Notes to the Financial Statements (Contd)


For the Financial Year Ended 31 December 2011

6. INVESTMENTS IN SUBSIDIARIES
Company

Unquoted shares:- At cost


- At valuation
Impairment losses

2011
RM000

2010
RM000

25,033
32,099
(57,037)
95

25,033
32,099
(54,203)
2,929

The details of the subsidiaries are as follows:-

Name of Subsidiary

Country of
Incorporation

LCI Global Sdn. Bhd.

Effective Ownership
Interest
2011

2010

Principal Activity

Malaysia

100%

100%

Manufacture and trading of cooling


towers, designing and building of district
cooling plant

District Cooling Systems Sdn. Bhd.

Malaysia

100%

100%

Construct, own and operate district


cooling plant to produce and supply chilled
water

BAC Cooling Technology Sdn. Bhd.

Malaysia

70%

70%

Manufacture and trading of cooling towers

Linear Cooling Technology Sdn. Bhd.

Malaysia

100%

100%

Trading of cooling towers

Linear Water Treatment Sdn. Bhd.

Malaysia

100%

100%

Providing water treatment services

Linear Composites Sdn. Bhd.

Malaysia

100%

100%

Investment holding

Linear Water Tank Sdn. Bhd.

Malaysia

100%

100%

Investment holding

Linear Towerline (M) Sdn. Bhd.

Malaysia

100%

100%

Dormant

Linear District Cooling (GCC) Sdn. Bhd.

Malaysia

100%

100%

Dormant

Linear-TES Sdn. Bhd.

Malaysia

100%

100%

Dormant

PrimeAce Holdings Sdn. Bhd.

Malaysia

100%

100%

Dormant

Imux (Asia) Limited*

Malaysia

100%

100%

Dormant

Linear Cooling Industries Pte. Ltd.*

Singapore

100%

100%

Dormant

British Virgin Islands

65%

65%

PrimeAce Venture Limited*

Annual Report 2011 Linear Corporation Berhad (288687-W)

Investment holding

Notes to the Financial Statements (Contd)

57

For the Financial Year Ended 31 December 2011

6. INVESTMENTS IN SUBSIDIARIES (contd)

Country of
Incorporation

Name of Subsidiary

Effective Ownership
Interest
2011 2010

Principal Activity

Subsidiary of LCI Global Sdn. Bhd.


Malaysia

100%

100%

Investment holding

Malaysia

100%

100%

Dormant

Unified Systems Pte. Ltd.*

Singapore

46%

46%

Dormant

Idea-Hub.Com Limited*

Hong Kong

33%

33%

Dormant

Ko Lim BAC Sdn. Bhd.


Subsidiary of Linear Composites Sdn. Bhd.
Linear Composites Marketing Sdn. Bhd.
Subsidiaries of PrimeAce Venture Limited

Not audited by Crowe Horwath, and consolidated using unaudited financial statements

7. INVESTMENT IN ASSOCIATE

2011
RM000

Group

2010
RM000

30
(7)
23
(23)
0

Unquoted shares - at cost


Impairment loss
Share of post-acquisition results

2011
RM000

30
(7)
23
(23)
0

Company

2010
RM000

30
(30)
0
0
0

30
(30)
0
0
0

The details of the associate are as follows:-

Name of Associate

Country of Incorporation

Effective Ownership
Interest
2011
2010

Borneo Pacific Linear Sdn. Bhd.

Malaysia

30%

30%

Principal Activity
Dormant

The financial information of the associate is not available.


8. AVAILABLE-FOR-SALE FINANCIAL ASSETS
Group

Shares quoted in Malaysia - at fair value (Level 1)

2011
RM000

2010
RM000

1,070

Annual Report 2011 Linear Corporation Berhad (288687-W)

58

Notes to the Financial Statements (Contd)


For the Financial Year Ended 31 December 2011

9. INVENTORIES
Group
2011
RM000

2010
RM000

797
1,247
141
458
2,643

931
1,572
516
868
3,887

Raw materials
Spare parts and components
Work-in-progress
Finished goods

10. RECEIVABLES

2011
RM000

Group

2010
RM000

2011
RM000

Company

2010
RM000

Trade receivables
Allowance for impairment

3,485
(1,615)
1,870

3,225
(1,472)
1,753

0
0
0

0
0
0

Other receivables
Allowance for impairment

1,644
(817)
827

3,880
(1,522)
2,358

26
(26)
0

26
0
26

0
0
0

Subsidiaries
Allowance for impairment

Exceptional Items (Note 25)


Allowance for impairment

0
0
0

58,446
(58,446)
0

58,446
(10,804)
47,642

2,697

51,753

31,625
(31,594)
31

32,179
(32,137)
42

11,454
(11,454)
0

11,454
(10,804)
650

31

718

Trade Receivables
Trade receivables are unsecured, non-interest bearing and generally on 30 to 180 day terms.
The movements in allowance for impairment are as follows:Group
2011
RM000
Balance at 1 January
Impairment loss recognised
Impairment loss reversed
Impairment loss written off
Balance at 31 December

1,472
260
(103)
(14)
1,615

2010
RM000
1,389
143
(47)
(13)
1,472

All the above impairment losses were individually determined after considering the adverse financial conditions of the
debtors who have defaulted/delayed in payments.
Annual Report 2011 Linear Corporation Berhad (288687-W)

Notes to the Financial Statements (Contd)

59

For the Financial Year Ended 31 December 2011

10. RECEIVABLES (contd)


Trade Receivables (contd)
The ageing analysis of trade receivables not impaired is as follows:Group

Not past due


Past due 1 to 120 days
Past due 121 to 240 days
Past due 241 to 360 days
Past due more than 360 days

2011
RM000

2010
RM000

1,253
406
153
38
20
1,870

916
638
38
17
144
1,753

Trade receivables that are neither past due nor impaired mainly relate to creditworthy customers who have regular
transactions and good payment records with the Group.
Management determines credit risk concentration in terms of counterparties. As at 31 December 2011, there were 3
(2010 : 2) major customers that accounted for 10% or more of the Groups trade receivables and the total outstanding
balances due from these major customers amounted to RM1,180,000 (2010 : RM992,000).
Other Receivables
Other receivables are unsecured, non-interest bearing and have no fixed repayment terms.
The movements in allowance for impairment are as follows:-

2011
RM000
Balance at 1 January
Impairment loss recognised
Impairment loss written off
Balance at 31 December

1,522
199
(904)
817

Group

2010
RM000

2011
RM000

618
904
0
1,522

0
26
0
26

Company

2010
RM000
0
0
0
0

All the above impairment losses were individually determined after considering the adverse financial conditions of the
debtors who have defaulted/delayed in payments.
Subsidiaries
The amounts owing by subsidiaries are unsecured, non-interest bearing and repayable on demand.

Annual Report 2011 Linear Corporation Berhad (288687-W)

60

Notes to the Financial Statements (Contd)


For the Financial Year Ended 31 December 2011

10. RECEIVABLES (contd)


Subsidiaries (contd)
The movements in allowance for impairment are as follows:Company

Balance at 1 January
Impairment loss recognised
Impairment loss reversed
Balance at 31 December

2011
RM000

2010
RM000

32,137
0
(543)
31,594

0
32,137
0
32,137

All the above impairment losses were individually determined after considering the adverse financial conditions of the
debtors who have defaulted/delayed in payments.
Exceptional Items
The movements in allowance for impairment are as follows:-

2011
RM000
Balance at 1 January
Impairment loss recognised
Balance at 31 December

Group

2010
RM000

2011
RM000

10,804
0
10,804

10,804
650
11,454

2010
RM000

2011
RM000

6,657
9,887
550
0
0
2,592
19,686

0
1,454
0
27,882
248
132
29,716

10,804
47,642
58,446

Company

2010
RM000
10,804
0
10,804

11. PAYABLES

2011
RM000
Trade payables
Other payables
Directors
Subsidiaries
Other related parties*
Exceptional Items (Note 25)
*

6,689
10,965
0
0
855
2,592
21,101

Group

Company

2010
RM000
0
904
0
27,343
0
132
28,379

Being companies in which certain directors have substantial financial interests

Payables are generally short-term in nature or repayable on demand and their carrying amounts will approximate to
the remaining contractual undiscounted cash flows.
Trade and Other Payables
Trade and other payables are unsecured, non-interest bearing and generally on 30 to 120 day terms. The Group and
the Company have defaulted on the payables.

Annual Report 2011 Linear Corporation Berhad (288687-W)

Notes to the Financial Statements (Contd)

61

For the Financial Year Ended 31 December 2011

11. PAYABLES (contd)


Directors, Subsidiaries and Other Related Parties
The amounts owing to directors, subsidiaries and other related parties are unsecured, non-interest bearing and repayable
on demand.

12. LOANS AND BORROWINGS

2011
RM000
Secured
Hire purchase payables
Bank overdrafts
Term loans
Unsecured
Bank overdrafts
Banker acceptances

Group

Company

2010
RM000

2011
RM000

1,244
2,014
15,217

1,365
2,053
15,252

1,087
0
0

1,055
0
0

14,387
9,534
42,396

13,556
9,066
41,292

0
0
1,087

0
0
1,055

2010
RM000

Hire purchase payables are secured against the assets acquired thereunder (Note 4). Other secured loans and borrowings
are secured against certain property, plant and equipment (Note 4).
The effective interest rates of loans and borrowings as at 31 December 2011 ranged from 4.27% to 10.10% (2010 :
4.27% to 9.80%) per annum.
The Group and the Company have defaulted on the loans and borrowings with the effect that the liabilities have become
repayable on demand. Accordingly, the entire carrying amounts are disclosed as current liabilities and will approximate
to the remaining contractual undiscounted cash flows.

13. SHARE CAPITAL


2011
RM000

2010
RM000

Authorised:500,000,000 ordinary shares of RM1.00 each

500,000

500,000

Issued and fully paid-up:75,104,777 ordinary shares of RM1.00 each

75,105

75,105

Purchase of Own Shares


The shareholders of the Company, by a resolution passed at the Annual General Meeting held on 23 June 2004, approved
the Companys plan to purchase its own shares.

Annual Report 2011 Linear Corporation Berhad (288687-W)

62

Notes to the Financial Statements (Contd)


For the Financial Year Ended 31 December 2011

13. SHARE CAPITAL (contd)


The details of the shares purchased and held as treasury shares are as follows:-

No. of Shares
000
Balance at 1 January
Reissue of treasury shares
Balance at 31 December

339
0
339

2011

Cost
RM000

No. of Shares
000

230
0
230

2010

Cost
RM000

2,950
(2,611)
339

1,999
(1,769)
230

The number of outstanding shares in issue after excluding the treasury shares is as follows:-

Balance at 1 January
Reissue of treasury shares
Balance at 31 December

2011
No. of Shares
000

2010
No. of Shares
000

74,766
0
74,766

72,155
2,611
74,766

Employees Share Option Scheme


The Employees Share Option Scheme (ESOS) of the Company became effective on 14 August 2003 for a period of
5 years and was extended for another 5 years up to 13 August 2013.
The principal features of the ESOS are as follows:(i)

The total number of share options offered under the scheme shall not exceed 10% of the issued and paid-up share
capital of the Company at any point of time during the existence of the ESOS.

(ii) The number of new shares that may be offered and allotted to an eligible employee of the Group who is entitled
to participate in the scheme shall be at the discretion of the Option Committee after taking into consideration of
the performance, seniority and length of service of the eligible employee subject to the following:(a) the total number of shares allocated, in aggregate, to directors and senior management of the Group shall
not exceed 50% of the total number of shares available under the scheme; and
(b) the number of shares allocated to any individual director or employee who, either singly or collectively through
his/her associates, holds 20% or more of the issued and paid-up share capital of the Company shall not exceed
10% of the total number of shares available under the scheme.
(iii) Any employee (including executive directors) of the Group shall be eligible to participate in the scheme if as at the
date of offer he/she:(a) has attained the age of 18 years;
(b) is employed under full-time by and is on the payroll of a company within the Group; and
(c) is under such categories and such criteria that the Option Committee may from time to time decide.

Annual Report 2011 Linear Corporation Berhad (288687-W)

Notes to the Financial Statements (Contd)

63

For the Financial Year Ended 31 December 2011

13. SHARE CAPITAL (contd)


Employees Share Option Scheme (contd)
Any allocation under the scheme to an executive director of the Group shall require prior approval from the Companys
shareholders at a general meeting.
(iv) The option price shall be determined at a discount of not more than 10% from the weighted average market price
of the ordinary shares in the Company as shown in the daily official list of Bursa Malaysia Securities Berhad for
the 5 preceding market days prior to the date of offer or at par value of the ordinary shares in the Company,
whichever is higher.
(v) The options granted may be exercised within a period of 5 years from the effective date of the scheme or such
shorter period as may be specifically stated in the offer upon giving notice in writing to the Company.
(vi) The new ordinary shares to be allotted upon exercise of the options will upon allotment rank pari passu in all
respects with the existing ordinary shares in the Company except that the new ordinary shares will not be entitled
to any dividends or distributions which may be declared prior to the allotment of the shares.
The movements in the number of options during the financial year are as follows:Number of
Options over
Ordinary
Shares of
RM1.00 each

Exercise
Price
RM

Remaining
Contractual
Life

2.6 years

Outstanding at 1 January 2010


Forfeited
Outstanding at 31 December 2010

1,137,000
(813,000)
324,000

1.16
1.16
1.16

Exercisable at 31 December 2010

324,000

1.16

Outstanding at 1 January 2011


Forfeited
Outstanding at 31 December 2011

324,000
(152,000)
172,000

1.16
1.16
1.16

Exercisable at 31 December 2011

172,000

1.16

1.6 years

14. REVENUE

2011
RM000
Sale of goods
Rendering of services:- Current year
- Reversal for 2008
- Reversal for 2009

Group

Company

2010
RM000

2011
RM000

5,423

5,091

6,856
0
0
12,279

6,840
(1,428)
(3,001)
7,502

5
0
0
5

63
0
0
63

2010
RM000

Annual Report 2011 Linear Corporation Berhad (288687-W)

64

Notes to the Financial Statements (Contd)


For the Financial Year Ended 31 December 2011

15. EMPLOYEE BENEFITS EXPENSE

2011
RM000
Short-term employee benefits
Defined contribution plan

Group

Company

2010
RM000

2011
RM000

2,935
289
3,224

366
0
366

2010
RM000

2011
RM000

914

692

143
(2)

145
0

43
(2)

45
0

250
56

228
158

250
56

228
158

41

94

30

2,834

11,871

0
48,101

0
1,047

0
676

32,137
0

4,894

239

3,259

4,161

32

41

0
0
31
42

1
1,829
527
24

0
0
0
0

0
2,300
0
0

3,677

126

129

73

2,527
209
2,736

2010
RM000
386
24
410

16. LOSS BEFORE TAX

2011
RM000

Group

Company

2010
RM000

Loss before tax is arrived at after


charging:Allowance for slow moving inventories
Auditors remuneration:- Current year
- Prior year
Directors remuneration:- Fees
- Other emoluments
Fee expense for financial instruments
not at fair value through profit or loss
Impairment loss on investment in
associate*
Impairment loss on investments in
subsidiaries*
Impairment loss on loans and
receivables:- Subsidiaries
- Others
Impairment loss on property, plant and
equipment*
Interest expense for financial liabilities
not at fair value through profit or loss
Loss on derecognition of available-forsale financial assets
Loss on disposal of associate
Realised loss on foreign exchange
Rental of premises
Revaluation decrease of property, plant
and equipment
and crediting:Gain on derecognition of available-forsale financial assets
Gain on disposal of property, plant and
equipment

Annual Report 2011 Linear Corporation Berhad (288687-W)

Notes to the Financial Statements (Contd)

65

For the Financial Year Ended 31 December 2011

16. LOSS BEFORE TAX (contd)

2011
RM000
Interest income for financial assets not
at fair value through profit or loss
Rental of premises
Reversal of allowance for slow moving
inventories
Reversal of impairment loss on loans
and receivables:- Subsidiaries
- Others
*

Group

Company

2010
RM000

2011
RM000

1
16

0
16

0
0

0
0

48

68

0
103

0
47

543
0

0
0

2010
RM000

2011
RM000

30
0
30

0
0
0

0
0
0

0
0
0

0
0
0

2010
RM000

Included in other expenses

17. TAX INCOME

2011
RM000
Tax based on results for the year:- Malaysian income tax
- Deferred tax
Tax under/(over) provided in previous
years:- Malaysian income tax
- Deferred tax

Group

0
(1,432)
(1,432)

632
0
(800)

(295)
(1,545)
(1,810)

Company

2010
RM000

The numerical reconciliation between the applicable tax rate, which is the statutory income tax rate, and the average
effective tax rate on results for the year is as follows:-

Applicable tax rate


Non-deductible expenses
Non-taxable income
Increase in unrecognised deferred tax
assets
Average effective tax rate

Group

Company

2010
%

2010
%

2011
%

(25.00)
16.98
(0.03)

(25.00)
9.55
(0.09)

(25.00)
27.40
(2.47)

(25.00)
25.00
0.00

5.84
(2.21)

15.72
0.18

0.07
0.00

0.00
0.00

2011
%

Annual Report 2011 Linear Corporation Berhad (288687-W)

66

Notes to the Financial Statements (Contd)


For the Financial Year Ended 31 December 2011

17. TAX INCOME (contd)


As at 31 December 2011, deferred tax liabilities and deferred tax assets have effectively been recognised and offset
against each other by the Group and the Company to the extent of approximately RM5,571,000 and NIL (2010 :
RM5,224,000 and RM2,000) respectively. No further deferred tax assets have been recognised for the excess of the
deductible temporary differences, unused capital allowances and tax losses over the taxable temporary differences
as follows:-

Deductible temporary differences of:- Property, plant and equipment


- Inventories
- Financial instruments
Unused capital allowances
Unused tax losses
Taxable temporary differences of property,
plant and equipment

Group

Company

2010
RM000

2010
RM000

2011
RM000

8
2,453
9,519
40,943
20,311

1
2,113
820
36,059
17,747

8
0
0
0
915

0
0
0
0
915

(22,285)
50,949

(20,894)
35,846

0
923

(7)
908

2011
RM000

The tax saving of the Group for which credit has been taken in the current year as a result of the realisation of unused
tax losses brought forward that had not been accounted for previously amounted to approximately RM16,000 (2010 :
NIL).

18. LOSS PER SHARE


Group
The basic loss per share is calculated by dividing the Groups loss for the financial year attributable to owners of the
Company by the weighted average number of ordinary shares in issue during the financial year, after adjusting for the
effect of shares reissued, as follows:2011

2010

Loss attributable to owners of the Company (RM000)

(61,377)

(14,665)

Number of shares in issue at 1 January (000)


Effect of shares reissued (000)
Weighted average number of shares in issue (000)

74,766
0
74,766

72,155
2,151
74,306

Basic loss per share (sen)

(82)

(20)

The diluted loss per share equals the basic loss per share due to the anti-dilutive effect of the share options which
has been ignored in calculating the diluted loss per share.

Annual Report 2011 Linear Corporation Berhad (288687-W)

Notes to the Financial Statements (Contd)

67

For the Financial Year Ended 31 December 2011

19. CASH AND CASH EQUIVALENTS

2011
RM000
Cash and bank balances
Bank overdrafts

Group

100
(16,401)
(16,301)

2010
RM000
458
(15,609)
(15,151)

2011
RM000

Company

2010
RM000

18
0
18

71
0
71

20. RELATED PARTY DISCLOSURES


Transactions with related parties during the financial year are as follows:-

Key management personnel


compensation:- Short-term employee benefits
- Defined contribution plan
Management fee charged to subsidiaries
Receiving of services from other related
party*
*

Group

Company

2010
RM000

2010
RM000

2011
RM000

306
0
306
0

485
32
517
0

306
0
306
5

368
18
386
63

84

2011
RM000

Being a company in which a director has a substantial financial interest

21. SEGMENT REPORTING


Group
Operating Segments
Information about operating segments has not been reported separately as the Groups profit or loss, assets and
liabilities are mainly confined to a single operating segment, namely the manufacture, sale and operation of cooling
towers and district cooling plant.
Geographical Information
Information about geographical areas has not been reported separately as the Group operates and generates revenue
principally within Malaysia.

Annual Report 2011 Linear Corporation Berhad (288687-W)

68

Notes to the Financial Statements (Contd)


For the Financial Year Ended 31 December 2011

21. SEGMENT REPORTING (contd)


Major Customers
The major customers that contributed 10% or more of the Groups total revenue are as follows:External Revenue
2011
2010
RM000
RM000
Customer I*
Customer II*
- Current year
- Reversal for 2008 and 2009
*

3,798

2,741

4,404
0

6,205
(4,429)

The identity of the major customer has not been disclosed as permitted by FRS 8 Operating Segments.

22. CONTINGENT LIABILITIES


Material Litigations
The Group and the Company have defaulted on their payables, loans and borrowings and current tax liabilities and are
currently engaged in material litigations summarised as follows:Group
Total
Claim
RM000

Carrying
Amount as at
31.12.2011
RM000

*Un-recognised
Contingent
Liability
RM000

Financial Statement Item

Claimant/Plaintiff

Trade payables (Note 11)


Other payables (Note 11)
Exceptional Items (Notes
11 and 25)
Loans and borrowings
(Note 12)
Current tax liabilities

Suppliers
Suppliers, employee, statutory bodies, etc.

4,831
2,192

4,359
1,634

472
558

Suspected related party (Note 25)

2,383

2,022

361

Financial institutions
Inland Revenue Board

43,398
1,419

42,396
1,419

1,002
0

Financial Statement Item

Claimant/Plaintiff

Total
Claim
RM000

Carrying
Amount as at
31.12.2011
RM000

*Un-recognised
Contingent
Liability
RM000

Other payables (Note 11)


Exceptional Items (Notes
11 and 25)
Loans and borrowings
(Note 12)

Suppliers

28

28

132

132

43,241

1,087

42,154

Company

Suspected related party (Note 25)


Financial institutions

Annual Report 2011 Linear Corporation Berhad (288687-W)

Notes to the Financial Statements (Contd)

69

For the Financial Year Ended 31 December 2011

22. CONTINGENT LIABILITIES (contd)


Material Litigations (contd)
*

Whilst reasonable steps have been taken to ensure the completeness of the above summarised disclosures,
management acknowledged that the actual quantum of unrecognised contingent liabilities as at 31 December 2011
should be higher and would increase continuously from the ongoing litigations as the claimants/plaintiffs were also
claiming for overdue interest, costs and other damages.

Financial Guarantee Contracts (Unsecured)


Company
The Company has entered into financial guarantee contracts to provide financial guarantees to financial institutions
for credit facilities granted to cer tain subsidiaries up to a total limit of approximately RM57,200,000 (2010 :
RM57,200,000). The total utilisation of these credit facilities as at 31 December 2011 amounted to approximately
RM41,152,000 (2010 : RM39,927,000).

23. FINANCIAL RISK MANAGEMENT


The activities of the Group expose it to certain financial risks, including credit risk, liquidity risk and interest rate risk.
The overall financial risk management objective of the Group is to ensure that adequate financial resources are available
for business development whilst minimising the potential adverse impacts of financial risks on its financial position,
performance and cash flows.
Credit Risk
The Groups exposure to credit risk arises mainly from receivables. The maximum credit risk exposure of these financial
assets is best represented by their carrying amounts in the statement of financial position. The Company is also exposed
to credit risk in respect of its financial guarantees provided for credit facilities granted to certain subsidiaries. The
maximum credit risk exposure of these financial guarantees is the total utilisation of the credit facilities granted as
disclosed in Note 22.
The Group manages its credit risk exposure by assessing counterparties financial standings on an ongoing basis,
setting and monitoring counterparties limits and credit terms.
Liquidity Risk
The Groups exposure to liquidity risk relates to its ability to meet obligations associated with financial liabilities as
and when they fall due.
The Group has defaulted on its payables, loans and borrowings and current tax liabilities and is currently undertaking
a regularisation plan to regularise its financial conditions.
Interest Rate Risk
The Groups exposure to interest rate risk arises mainly from loans and borrowings.
As the Group has defaulted on its loans and borrowings, interest is currently charged at the higher default rates.

Annual Report 2011 Linear Corporation Berhad (288687-W)

70

Notes to the Financial Statements (Contd)


For the Financial Year Ended 31 December 2011

23. FINANCIAL RISK MANAGEMENT (contd)


Interest Rate Risk (contd)
As the Group does not account for its fixed rate financial instruments at fair value through profit or loss or as availablefor-sale, any change in interest rates at the end of the reporting period would not affect its profit or loss or other
comprehensive income. For floating rate financial instruments stated at amortised cost, the following table demonstrates
the sensitivity of profit or loss to changes in interest rates that were reasonably possible at the end of the reporting
period, with all other variables held constant:Group
(Increase)/
(Increase)/
Decrease
Decrease
in Loss
in Loss
2010
2011
RM000
RM000
(200)
200

(206)
206

Increase in interest rates by 50 basis points


Decrease in interest rates by 50 basis points

24. CAPITAL MANAGEMENT


The overall capital management objective of the Group is to safeguard its ability to continue as a going concern so as
to provide fair returns to owners and benefits to other stakeholders. In order to meet this objective, the Group always
strives to maintain an optimal capital structure to reduce the cost of capital and sustain its business development.
The Group considers its total equity and total loans and borrowings to be the key components of its capital structure.
The Group has defaulted on its loans and borrowings and is currently undertaking a regularisation plan to regularise
its financial conditions.

25. EXCEPTIONAL ITEMS

Receivables (Note 10)


Exceptional Item I
Exceptional Item II
Exceptional Item III
Exceptional Item IV
Exceptional Item V
Exceptional Item VI
Exceptional Item VII
Allowance for impairment

Payables (Note 11)


Exceptional Item VIII
Exceptional Item IX

Annual Report 2011 Linear Corporation Berhad (288687-W)

Group

2010
RM000

2011
RM000

35,472
8,185
3,085
600
250
50
10,804
58,446
(58,446)
0

35,472
8,185
3,085
600
250
50
10,804
58,446
(10,804)
47,642

0
0
650
0
0
0
10,804
11,454
(11,454)
0

2,022
570
2,592

2,022
570
2,592

2011
RM000

132
0
132

Company

2010
RM000

0
0
650
0
0
0
10,804
11,454
(10,804)
650
132
0
132

Notes to the Financial Statements (Contd)

71

For the Financial Year Ended 31 December 2011

25. EXCEPTIONAL ITEMS (contd)


Exceptional Item I
In December 2009, a former director caused a wholly-owned subsidiary, LCI Global Sdn. Bhd. (LCI Global), to advance
a sum of RM36 million (Advance Sum) to Global Investment Group Inc. (GlG) as a performance consideration in
connection with a letter of award for the design, construction, completion and commissioning of a district cooling plant
for the Kingdome Project in Manjung, Perak as promoted by GlG.
In February 2010, the former director caused GIG to refund the Advance Sum to an account held at Prime Savings &
Trust, a credit union registered in Sweden (PST Account). In April 2010, the former director caused LCI Global to pay
the Advance Sum to GIG again without the approval of the Board of Directors.
In August 2010, the Group engaged a professional advisory firm to carry out special audit of the transactions pertaining
to the Advance Sum, GIG, Kingdome Project and PST Account. The special audit was completed in June 2011 with the
following major findings:(i)
(ii)
(iii)
(iv)
(v)

The existence and LCI Globals ownership of the PST Account could not be proven.
The Advance Sum recorded as being held in the PST Account might not have existed.
The existence of the Kingdome Project could not be proven.
It was unclear whether GIG had the operational and financial capabilities to deliver the Kingdome Project.
The audited financial statements of the Group for the financial years 1999 to 2008 might have been overstated.

Exceptional Item II
This represents long-outstanding trade debts owing by a company which is suspected to be connected with certain
former directors. Management is suspicious about the veracity of the trade transactions which were recorded in 2007
whereby the related costs of sales were paid to the same company to which the sales were made. Accordingly,
management is doubtful about the veracity, legality and recoverability of the debts which might indicate the possibility
of fraud.
Exceptional Item III
This represents long-outstanding advances to companies which are suspected to be connected with certain former
directors. Section 133A of the Companies Act 1965 (regarding prohibition of loans to persons connected with directors)
might have been contravened in previous years when the advances were made. Management is doubtful about the
veracity, legality and recoverability of the advances which might indicate the possibility of fraud.
Exceptional Item IV
This represents an amount alleged as brokerage fee paid to a company which is suspected to be connected with certain
former directors. Management is doubtful about the veracity, legality and recoverability of the amount which might
indicate the possibility of fraud.
Exceptional Item V
This represents long-outstanding advances to a prospective investee whose statutory information could not be found
from the records of the Companies Commission of Malaysia. Management is doubtful about the veracity, legality and
recoverability of the advances which might indicate the possibility of fraud.
Exceptional Item VI
This represents an amount alleged as loan processing fee paid to a company which is suspected to be connected with
certain former directors. Management is doubtful about the veracity, legality and recoverability of the amount which
might indicate the possibility of fraud.
Annual Report 2011 Linear Corporation Berhad (288687-W)

72

Notes to the Financial Statements (Contd)


For the Financial Year Ended 31 December 2011

25. EXCEPTIONAL ITEMS (contd)


Exceptional Item VII
This represents long-outstanding advances to a joint venture company in China which were fully impaired in 2009 after
several attempts to collect the debts and locate the counterparties have failed. Management is suspicious about the
veracity and legality of the joint venture project and related advances which might indicate the possibility of fraud.
Exceptional Item VIII
This represents alleged advances from a company which is suspected to be connected with certain former directors.
The said company has initiated legal proceedings against the Group (Note 22). Management is doubtful about the
veracity of the advances which might indicate the possibility of fraud as the funds injected into the Group might originate
from its own funds suspiciously misappropriated earlier.
Exceptional Item IX
This represents alleged advances from a former director. Management is doubtful about the veracity of the advances
which might indicate the possibility of fraud as the funds injected into the Group might originate from its own funds
suspiciously misappropriated earlier.
Investigations
Besides engaging a professional advisory firm to carry out special audit of the transactions pertaining to Exceptional
Item I, management has appointed another professional advisory firm in March 2012 to carry out investigative audit
review on specific transactions and related accounting entries during the financial years 2007 to 2009. The investigative
audit review has yet to be completed as at the date when the financial statements were authorised for issue.

Annual Report 2011 Linear Corporation Berhad (288687-W)

Supplementary Information - Realised and Unrealised Profits or Losses

2011
RM000
Total accumulated losses of the Company
and its subsidiaries:- Realised
- Unrealised
Total share of accumulated losses of
associate:- Realised
- Unrealised

Consolidation adjustments and eliminations


Total accumulated losses as per statement
of financial position

Group

73

Company

2010
RM000

2011
RM000

(209,531)
0
(209,531)

(136,207)
0
(136,207)

(106,515)
0
(106,515)

(101,017)
0
(101,017)

(23)
0
(209,554)

(23)
0
(136,230)

0
0
(106,515)

0
0
(101,017)

106,652

94,582

(102,902)

(41,648)

0
(106,515)

2010
RM000

0
(101,017)

The above supplementary information 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 Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute
of Accountants and the directive of Bursa Malaysia Securities Berhad.

Annual Report 2011 Linear Corporation Berhad (288687-W)

74

List Of Properties
As At 31 December 2011

Description/
Existing use

Tenure

Land/
Built-up
area

Age of
Building/
Land(years)

NBV as at
31-12-2011
RM

Location

Title

Plot 20A, Jalan


Perusahaan, Prai
Industrial Estate 4
Prai, Penang

PT 458, HS(D) 37842


(formerly HS(D) 570),
Mukim 6, Daerah
Seberang Perai
Tengah,
Pulau Pinang

Head Office
And Factory
Building

Leasehold
(60 years
Expiring on
11.5.2052)

6.42913
Acres

15

19,000,000

T-3-1, T-3-2,
T-3-15, T-3-16
T-4-1, T-4-16,
Jalan Pelangi 2,
Taman Pelangi
Prai, Penang

Parcel Nos; 193,


194, 207, 208, 209,
224, Parent Lot No.
5797, Mukim 11,
Daerah Seberang Perai
Tengah, Pulau Pinang

Workers
quarters

Leasehold
(99 years
Expiring on
22.4.2092)

689
square
feet
each

12

270,000

3A-F, Marina
Crescent
Condominium,
BT 5 , Jalan
Pantai, Si Rusa,
Port Dickson,
Negeri Sembilan

Lot 6100, PN 11176


(formerly PT 3088
HS(D) 13639),
Mukim of Si Rusa,
District of Port
Dickson,
Negeri Sembilan

Condominium

Leasehold
(99 years
Expiring on
27.7.2094)

62
Square
meters

13

180,000

Mukim 6 & 7,
Seberang Perai
Tengah,
Pulau Pinang

Mukim 6 & 7
Seberang Perai
Tengah
Pulau Pinang

District
Cooling
plant

Freehold
Land &
building

1.85
acres

18,637,337

Total

38,087,337

Annual Report 2011 Linear Corporation Berhad (288687-W)

Analysis of Shareholdings

75

As At 10 May 2012

SHARE CAPITAL
Authorised share capital
: RM500,000,000
Issued and Paid-up share capital : RM75,104,777
Class of shares
: Ordinary shares of RM1.00 each
Voting rights
: One (1) vote per ordinary share
Number of shareholders
: 3,976

ANALYSIS OF SHAREHOLDINGS
No. of
Shareholders

No. of Ordinary
Shares

Less than 100


100 to 1,000
1,001 to 10,000
10,001 to 100,000
100,001 to less than 5% of issued share capital
5% and above of issued share capital

314
773
2,132
683
73
1

7.90
19.44
53.62
17.18
1.84
0.02

12,275
674,934
8,730,030
22,206,505
28,769,515
14,372,518

0.02
0.90
11.68
29.70
38.48
19.22

Total

3,976

100.00

*74,765,777

100.00

Size of Shareholdings

Note: *Excluding 339,000 shares bought back by the Company and held as treasury shares

SUBSTANTIAL SHAREHOLDERS
As per the Register of Substantial Shareholders
Name

A.A. Anthony Nominees (Tempatan) Sdn. Bhd.


Pledged Securities Account For Crystal Insight Sdn. Bhd.

Shareholdings
Direct
Indirect
14,372,518

#%
19.22

Notes:
# Excluding 339,000 shares bought back by the Company and held as treasury shares

DIRECTORS INTEREST IN SHARES


In The Company
Name
Direct
Lim Hun Beng
Saw Heng Soo
Ong Tai Chew
Dato Wira Amiruddin Bin Che Embi
Dato Ling Keak Ming
Neoh Chee Kean
Adam Bin Bachek

Shareholdings
Direct
%

#%

Annual Report 2011 Linear Corporation Berhad (288687-W)

76

Analysis of Shareholdings (Contd)


As At 10 May 2012

THIRTY(30) LARGEST ORDINARY SHAREHOLDERS

No. Name of Shareholders

No. of
Ordinary
Shares

14,372,518

19.22

1.

A.A. Anthony Nominees (Tempatan) Sdn. Bhd.


Pledged Securities Account for Crystal Insight Sdn. Bhd.

2.

Goh Hock Soon

2,765,900

3.70

3.

Hor Suit Kiew

2,081,500

2.78

4.

Ong Peng Chor

2,047,149

2.74

5.

Citigroup Nominees (Asing) Sdn. Bhd. Exempt An for OCBC Securities Private Limited

1,534,100

2.05

6.

Kok Thin Chow

1,435,000

1.92

7.

Ong Tiong Eng

1,000,000

1.34

8.

Tengku Rethwan Bin Tengku Mansor

1,000,000

1.34

9.

Low Kim Chun

731,400

0.98

10. Ong Keng Teong

720,000

0.96

11. Perdamen Singh A/L Waryam Singh

600,000

0.80

12. Ong Chin Hock

581,700

0.78

13. Garrick Gooi Shen Loong

566,000

0.76

14. Ng Soon Gun

550,000

0.74

15. Ong Jeik Boon @ Ong Teik Boon

520,400

0.70

16. Tiong Mee Mee

520,000

0.70

17. Lee Teck Ong @ Lee Kok Chee

505,200

0.68

18. Tan Cheng Hong

465,400

0.62

19. Public Nominees (Tempatan) Sdn. Bhd


Pledged Securities Account For Ong Jeik Boon @ Ong Teik Boon (E-Two)

393,100

0.53

20. Ooi Gaik Tin

392,000

0.52

21. M Ramakrishnan A/L K Madhavan Nair

384,800

0.51

22. Ong Chin Kean

360,000

0.48

23. Lim Ah Kow @ Lim Choo Leong

318,100

0.42

24. Maybank Securities Nominees (Asing) Sdn. Bhd.


Kim Eng Securities Pte Ltd for Cheng Yong Heng

300,000

0.40

25. Kho Yong Hua

290,000

0.39

26. Koo Xian Shuen

281,700

0.38

27. Tan Kwang Yu

276,000

0.37

28

258,600

0.34

29. Maybank Nominees (Tempatan) Sdn. Bhd.


Pledged Securities Account for Soon Ah Ba

250,000

0.33

30. Amanda Alise Barnabas

233,000

0.31

35,733,567

47.79

Ho Han Min

TOTAL

Annual Report 2011 Linear Corporation Berhad (288687-W)

Notice of 18th Annual General Meeting

77

NOTICE IS HEREBY GIVEN THAT THE EIGHTEENTH ANNUAL GENERAL MEETING (THE MEETING) OF LINEAR CORPORATION
BERHAD (THE COMPANY) WILL BE CONVENED AND HELD AT THE SEMINAR HALL, GROUND FLOOR, NO. 20A, JALAN
PERUSAHAAN, PRAI INDUSTRIAL ESTATE 4, 13600 PRAI, PENANG, MALAYSIA ON FRIDAY, 29 JUNE 2012 AT 2.30 P.M. TO
TRANSACT THE FOLLOWING BUSINESSES :AGENDA
Ordinary Business
1. To receive the Consolidated Audited Financial Statements of the Company for the financial year ended
31 December 2011 and the Reports of the Directors and Auditors thereon.

Resolution 1

2. To approve the payment of Directors fees totalling RM250,000 in respect of the financial year ended
31 December 2011.

Resolution 2

3. To re-elect the following Directors who retire by rotation pursuant to the Companys Ar ticles of
Association and who, being eligible, have offered themselves for re-election:Article 95
3.1 Saw Heng Soo
3.2 Neoh Chee Kean

Resolution 3
Resolution 4

4. To re-appoint Messrs Crowe Horwath as Auditors of the Company who shall hold office until the
conclusion of the next annual general meeting of the Company, and to authorise the Directors to fix
their remuneration.

Resolution 5

Special Business
To consider, and if thought fit, to pass with or without any modifications the following resolutions:Ordinary Resolutions
5. Proposed Renewal of Shareholders Mandate For Recurrent Related Party Transactions
That subject always to the Listing Requirements of Bursa Malaysia Securities Berhad (Bursa
Securities), approval be and is hereby given for the Company and its subsidiaries (the Group) to
enter into the recurrent related party transactions, as detailed in section 2.4.1 of the Circular to
Shareholders dated 4 June 2012 accompanying the Companys Annual Report 2011 (the Circular),
which are of revenue in nature and which are transacted within and/or are necessary for the day-today operations of the Group and which are carried out on terms no more favourable to the related
parties than those generally available to the public or non-related parties and are not to the detriment
of the minority shareholders of the Company (the Shareholders Mandate)

Resolution 6

And That the Shareholders Mandate shall continue to be in force until:(i)

the conclusion of the next annual general meeting of the Company, at which time it will lapse
unless by a resolution passed at such meeting, such authority is renewed; or

(ii) the expiration of the period within which the next annual general meeting of the Company is
required to be held pursuant to Section 143(1) of the Companies Act, 1965 (but shall not extend
to such extension as may be allowed pursuant to Section 143(2) of the Companies Act, 1965);
or
(iii) revoked or varied by resolution passed by the shareholders of the Company in a general meeting.

Annual Report 2011 Linear Corporation Berhad (288687-W)

78

Notice of 18th Annual General Meeting (Contd)

That the Directors of the Company be and are hereby authorised to complete and do all such acts
and things as they may consider expedient or necessary to give effect to the Shareholders Mandate.
And That the estimates given of the recurrent related party transactions specified in section 2.4.1
of the Circular being provisional in nature, the Directors and/or any of them, be and are hereby
authorised to agree to the actual amount or amounts thereof provided that such amount or amounts
comply with the procedures set out in section 2.6 of the Circular.
6. Proposed Renewal of Authorisation for the Company to Purchase its Own Shares.
That subject to the Companies Act, 1965, the Memorandum and Articles of Association of the
Company, the Listing Requirements of Bursa Malaysia Securities Berhad (Bursa Securities) and all
other relevant applicable laws, regulations and guidelines and the approvals of all relevant authorities,
the Company be and is hereby authorised to purchase such amount of ordinary shares of RM1.00
each in the Company (Proposed Share Buy-Back) as may be determined by the Directors from time
to time through Bursa Securities and to enter into any agreement(s), arrangement(s) and guarantee(s)
with any party(ies) to implement, finalise and give full effects to the Proposed Share Buy-Back
implement, finalise and give full effects to the Proposed Share Buy-Back with full powers to assent
to any condition(s), modification(s), revaluation(s), variation(s) and/or amendment(s) as may be
imposed by the relevant authorities from time to time and to do all such things and acts as the
Directors may deem fit and expedient in the best interest of the Company subject further to the
following :(i)

the aggregate number of shares purchased pursuant to this resolution does not exceed ten per
centum (10%) of the existing issued and paid-up share capital of the Company inclusive of the
339,000 ordinary shares already purchased and retained as treasury shares as at 4 June 2012;

(ii) the amount allocated for the Proposed Share Buy-Back shall not exceed the Companys audited
retained profit and/or share premium account.
That upon completion of the Proposed Share Buy-Back, the Directors are authorised to retain the
purchased shares as treasury shares or cancel the purchased shares or retain part of the purchased
shares as treasury shares and cancel the remainder. And That the Directors are further authorised
to resell the treasury shares on Bursa Securities or distribute the treasury shares as share dividends
to the shareholders of the Company or subsequently cancel the treasury shares or any combination
of the above.
And That the authority conferred by this Resolution shall be effective immediately upon the passing
of this Ordinary Resolution until :(i)

the conclusion of the next annual general meeting (AGM) of the Company, at which time the
said authority will lapse unless by an ordinary resolution passed at a general meeting of the
Company, the authority is renewed, either unconditionally or subject to conditions;
(ii) the expiration of the period within which the next AGM is required by law to be held; or
(iii) revoked or varied by ordinary resolution passed by the shareholders in general meeting;
whichever occurs first but shall not prejudice the completion of purchaser(s) by the Company before
the aforesaid expiry date.

Annual Report 2011 Linear Corporation Berhad (288687-W)

Resolution 7

Notice of 18th Annual General Meeting (Contd)

79

7. Authority For Directors To Allot And Issue Ordinary Shares


That subject always to the Companies Act, 1965, the Articles of Association of the Company and
the approvals, rules and regulations of the relevant governmental and/or regulatory authorities, the
Directors be and are hereby empowered pursuant to Section 132D of the Companies Act, 1965 to
allot and issue new ordinary shares in the share capital of the Company at any time, from time to
time, at such price(s) and upon such terms and conditions and for such purposes as the Directors
may in their absolute discretion deem fit (other than as a bonus or right issue or pursuant to the
Companys Employees Share Option Scheme) provided that the aggregate number of new ordinary
shares to be allotted and issued pursuant to this resolution shall not exceed ten percent (10%) of
the total issued and paid-up share capital of the Company as at the date of allotment of such new
ordinary shares and in any one (1) financial year; And That such authority shall remain in force until
the conclusion of the next annual general meeting of the Company.

Resolution 8

8. To transact any other business of which due notice shall have been given in accordance with the
Companys Articles of Association and the Companies Act, 1965.
BY ORDER OF THE BOARD
Lim Saw Im (MACS 00363)
Secretary
Penang, Malaysia
4 June 2012
NOTES
1. Record of Depositors
In respect of deposited securities, only members whose names appear in the Record of Depositors on 22 June 2012
(General Meeting Record of Depositors) shall be eligible to attend the Meeting.
2. Appointment of Proxy
A member entitled to attend and vote at this Meeting is entitled to appoint a proxy or proxies (but not more than two
(2) save for an Authorised Nominee as defined in the Securities Industries (Central Depositories) Act, 1991) to attend
and vote in his stead. A proxy may but need not be a member of the Company and Section 149(1) (b) of the Companies
Act, 1965 shall not apply.
The Form of Proxy must be deposited at the Companys Registered Office, 60 Sri Bahari Road, 10050 Penang not less
than forty-eight (48) hours before the time appointed for the holding of the Meeting.
3. Statement accompanying the Notice of 18th Annual General Meeting
Additional information as required under Appendix 8A pursuant to Paragraph 8.27 of the Listing Requirements of Bursa
Malaysia Securities Berhad (Bursa Securities) is set out in the Statement Accompanying the Notice of 18th Annual
General Meeting.

Annual Report 2011 Linear Corporation Berhad (288687-W)

80

Notice of 18th Annual General Meeting (Contd)

4. Explanatory Notes on Special Business


a)

Resolution 6, if passed, will allow the Company and its subsidiaries (the Group) to enter into recurrent related
party transactions (Shareholders Mandate) pursuant to paragraph 10.09(1) of the Listing Requirements of Bursa
Securities. The details of the Shareholders Mandate are set out in the Circular to Shareholders dated 4 June 2012.

b)

Resolution 7, if passed, will allow the Company to buy back its own shares up to 10% of the issued and paid-up
share capital of the Company (Share Buy-Back). This authority, unless revoked or varied by the Company in general
meeting, will expire at the conclusion of the next annual general meeting of the Company. Further details on the
Share Buy-Back are set out in the Share Buy-Back Statement dated 4 June 2012.

c)

Resolution 8 if passed, will allow the Board of Directors to allot and issue new ordinary shares up to ten percent
(10%) of the total issued and paid-up share capital of the Company as at the date of allotment of such new ordinary
shares in any one (1) financial year, for such purposes and upon such terms as the Directors consider would be
in the best interest of the Company (other than as a bonus or rights issue or pursuant to the Companys Employees
Share Option Scheme). This authority will, unless revoked or varied by the Company in a general meeting, expire
at the conclusion of the next annual general meeting of the Company. This general mandate is a renewal of the
mandate that was approved by the shareholders on 29 June 2011. The Company did not utilise the mandate that
was approved last year. The renewal of the general mandate is to facilitate the Company to raise funds expeditiously
for the purpose of funding future investment, working capital and/or acquisition without having to convene a general
meeting to seek shareholders approval when such opportunities or needs arise.

Annual Report 2011 Linear Corporation Berhad (288687-W)

Statement Accompanying The Notice of 18th Annual General Meeting

81

Details of Interest of Directors Standing For Re-Election At The Eighteenth Annual General Meeting.
No. of Shares held in the Company as at 10 May 2012
Direct

Indirect

Saw Heng Soo

Neoh Chee Kean

Name of Director

None of the above Directors has any direct interest in the Companys subsidiaries. The Directors interest, if any, in the
subsidiaries are to the extent that the Company has an interest, pursuant to Section 6A of the Companies Act, 1965.
The profile and details of the Directors standing for re-election are outlined in pages 5 and 6 of this annual report.

Annual Report 2011 Linear Corporation Berhad (288687-W)

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Annual Report 2011 Linear Corporation Berhad (288687-W)

Proxy Form

I/We
of
being a member / members of LINEAR CORPORATION BERHD (the Company) hereby appoint

of
or failing whom
of
/ the Chairman of the Meeting as my/our proxy to attend, speak and vote on my/our behalf at the Eighteenth Annual General
Meeting of the Company (the Meeting) to be held at the Seminar Hall, Ground Floor, No. 20A, Jalan Perusahaan, Prai
Industrial Estate 4, 13600 Prai, Penang, Malaysia on Friday, 29 June 2012 at 2.30 p.m., and at any adjournment thereof.
I/We direct my / our proxy to vote (see Note 4 herein) for or against the resolutions to be proposed at the Meeting as
indicated hereunder :Resolution
1
2
3
4
5
6
7
8

For
To
To
To
To
To
To
To
To

Against

receive the audited financial statements


approve directors fees
re-elect Saw Heng Soo
re-elect Neoh Chee Kean
re-appoint Crowe Horwath as auditors
renew shareholders mandate for recurrent related party transaction
renew authority for share buy-back
authorise directors to allot and issue ordinary shares

Dated this ________ day of _____________________ 2012

No. of Shares Held

Signature / common seal of shareholder


Notes
1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 22 June 2012 (General Meeting
Record of Depositors) shall be eligible to attend the Meeting.
2. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy or proxies (but not more than two (2) save for an
Authorised Nominee as defined in the Securities Industries (Central Depositories) Act, 1991) to attend and vote in his stead. A proxy
may but need not be a member of the Company and Section 149 (1) (a) and (b) of the Companies Act 1965 shall not apply.
3. This Form of Proxy, in the case of an individual, must be signed by the appointor or by his attorney duly authorised in writing and in
the case of a body corporate, it must be given under its common seal or signed on its behalf by an attorney or officer of the body
corporate duly authorised in writing.
4. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportions of shareholdings
to be represented by each proxy. Each proxy appointed shall represent a minimum of 100 shares held by the member.
5. Please indicate with an X in the appropriate column as to how you wish your proxy to vote For or Against each resolution. If this
Form of Proxy is returned without any indication as to how the proxy shall vote, the proxy will be entitled to vote or abstain from voting
as he thinks fit.
6. This Form of Proxy must be deposited at the Companys Registered Office, 60 Sri Bahari Road, 10050 Penang not less than fortyeight (48) hours before the time appointed for the holding of the Meeting.

Please fold here

Affix
STAMP
Here

To
The Company Secretary
LINEAR CORPORATION BERHAD
60 Sri Bahari Road
10050 Penang
Malaysia.

Please fold here

(288687-W)

Linear Coporation Berhad (288687-W)

No. 20A, Jalan Perusahaan, Prai Industrial Estate 4,


13600 Prai, Penang, Malaysia.
www.linear.com.my

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