CONTENTS

2 Key Financial Indicators 36 Corporate Social Responsibility 180 Analysis of Shareholdings

3 Key Financial Highlights 44 Statement on Corporate 183 Analysis of Irredeemable
Governance Convertible Secured Loan
4 Corporate Structure
Stocks (“ICSLS) Holdings
53 Statement on Internal Control
6 Corporate Statement of
185 Analysis of Warrant Holdings
Scomi Group 56 Audit and Risk Management
Committee Report 187 List of Properties
7 Corporate Information
61 Additional Information 189 Corporate Directory
10 Profile of Directors
63 Statement of Directors’ 191 Notice of Annual General
16 Management Team
Responsibility Meeting
18 Chairman’s Statement
65 Financial Statements • Form of Proxy
26 Group CEO’s Review of
Operations

New Opportunities. Moving Ahead.

With a presence in 27 countries, Scomi Group is an accomplished global technology enterprise. Entrusted with numerous high-profile
projects, Scomi’s achievements have reinforced its position as a world-class service provider and technology owner in oilfield services,
transport solutions and energy logistics.

By consolidating operations and building on its strengths, Scomi will continue to seek out new opportunities in both the domestic and global
market. Moving ahead, Scomi will keep delivering value to its stakeholders and making a difference in the communities it helps shape.
Ensuring sustainability through strategic actions
Sustainability is a major focus for our businesses. As
such, we have embarked on various key initiatives and
strategic measures to add value, realise potential and
fortify our balance sheet.
 Group CEO’s
REVIEW of Operations

Shah Hakim Zain

Group Chief Executive Officer
Dear Stakeholders,
The year 2011 has been intense for Scomi Group. We had
a number of very encouraging successes but at the same
time were unable to escape the clutches of the global
economic doldrums which showed no sign of abating.
Continued financial woes in the US and Eurozone affected
demand for products and services, increased commodity
prices, dampened trade, and led to volatility in major
currencies, such as the US Dollar and Indian Rupee, which

Annual Report 2011

had serious repercussions on our balance sheets.

pg 27
Yet, even as some of the largest names These changes have brought positive Energy Logistics division and the Kuala

SCOMI GROUP BHD

in corporate history have folded in, we
have stood our ground and grown in
many ways that may not be obvious to
our external stakeholders. Since 2009,
we have transformed our systems,
processes and people to be more
efficient, productive and competitive.
Formula 2011, our programme of
transformation, ended in the year under
review but the changes that have been
brought about will continue to positively
impact our performance in 2012 and
the years to come. Formula 2011
strengthened the very core of our
business by targeting the Group’s
returns, technological innovations and
customer recognition. This has been
complemented by having a very clear
vision of where we want to take the
Group and rationalising our corporate
structure so as to reach our destination
in the quickest, most efficient manner.
It has meant disposing of assets that
were no longer aligned with our overall
strategy, and creating new entities that
will enhance our progress.
results in the year 2011, as we outline Lumpur corporate office. However,
in the following review. these results were affected by
unrealised foreign exchange losses
from a depreciation of the US Dollar
Group Financial Performance and Indian Rupee against the Ringgit
of 5.1% and 11.5% respectively,
For the year ended 31 December
impairment losses and other one-off
2011, the Group recorded revenue of
charges as part of the corporate
RM1.38 billion, primarily as a result of
restructuring exercise, which together
strong performance by our Oilfield
amounted to RM244.8 million for the
Services division, which continued to
year. As a result of a weakened Indian
be our main source of income,
Rupee, the Mumbai monorail project,
contributing to 82% of the total revenue
under Transport Solutions, also posted
from continuing operations. At the
unrealised Forex losses on
same time, numerous cost-cutting
receivables.
initiatives as well as efforts to improve
efficiencies led to a 14.6% decrease in
Consequently, the Group recorded a
operational expenditure (OpEx) to
loss after tax of RM296.5 million as
RM342.8 million from RM401.4 million
compared to RM192.9 million in the
and a healthier OpEx margin of 24.8%
year ending 2010.
as opposed to 26.3% in 2010. These
resulted in operating profits that were
in general higher than targeted, with
significant savings achieved by our
 Group CEO’s REVIEW of Operations

Operational Review Over and above growth in demand

Oilfield Services
As the price of oil remained robust
throughout 2011 – the monthly Brent
index averaging well above USD100 per
barrel – there was a marked increase in
oil and gas activities across both the
Western and Eastern Hemispheres, with
a concomitant hike in rig count. This led
to increased sales of our drilling fluids
(DF) and drilling waste management
(DWM) products. Meanwhile, upgrades
to our drilling fluids software improved
our capabilities in capturing and analysing
data, contributing to greater efficiency in
our service to clients and further
enhanced our relationships with them.
SCOMI GROUP BHD
in the Eastern Hemisphere, Oilfield
Services has over the last few years
placed added emphasis on its cost
management and operational efficiencies,
while further enhancing its customer
engagement. These positive factors led
to the division recording higher revenue
of RM1.13 billion compared to RM1.12
billion in 2010, and segmental profit of
RM71.3 million.
During the year, Oilfield Services
underwent further restructuring in line
with the Group’s rationalisation
programme. Accordingly, in November
2011, we disposed of our drilling waste
management assets and businesses in

the volatile regions of North America

However, economic instability in the
US and Europe created a volatile
environment that dampened our
revenue from the Western Hemisphere.
As a result, our performance was
pg 28
strongest in the Eastern Hemisphere
and particularly in Malaysia, Thailand,
Annual Report 2011
and Mexico to National Oilwell Varco
(NOV) for a total cash consideration of
USD35.0 million (RM108.56 million).
Transport Solutions
The strategic sale of these assets will
not only guarantee a more stable core Via Scomi Engineering, a subsidiary of
of business, but will support the Group Scomi Group, we are gaining greater

Myanmar and Indonesia. These markets
contributed to 70% of Oilfield Services’
growth for the year.
Growth in Malaysia was driven in no
small measure by the Government’s
Economic Transformation Programme
(ETP) under which Oil, Gas and Energy
comprises one of the National Key
Economic Areas. The aim is to grow
the sector by 5% a year from 2010 to
2020, and this is supported by various
incentives to encourage the development
of marginal fields as well as to employ
enhanced oil recovery techniques to
increase production from brownfields.
PETRONAS in June 2011 announced
an increase in its expected capital
expenditure over five years from RM250
billion to RM300 billion. At the same
time, other major clients such as
Indonesia’s Pertamina, Thailand’s
PTTEP and Saudi’s Aramco have also
increased their budgets for exploration
and production activity, which will
translate into greater demand for our
products and services.
in paring down our debts and
strengthening our balance sheet in order
to focus more single-mindedly on
expanding in the oil and gas markets in
Asia, where we see the highest potential
for sustainable growth. Following the
disposal of our American businesses,
we issued a new bond at KMCOB
Capital which raised RM342.6 million.
While pumping up our finances we are
also building our product portfolio to
provide a more comprehensive range
of services to our customers. Over the
years, we have developed a number of
proprietary DWM and DF products that
enable our customers to improve their
drilling efficiency while enjoying
substantial cost savings. These have
enabled us to move up the drilling
value chain and offer our customers
multi drilling services (MDS) through  a
newly set up MDS division.
prominence in the public transport
industry, providing a range of transport
solutions encompassing urban rail
systems and commercial vehicles such
as buses, petrol tankers, refuse
compactors and vacuum tankers. The
Group is the proud owner of an
Engineering, Technology and Innovation
Centre (ETIC), where we are constantly
developing improved prototypes to
enhance our product range, ensuring
the highest level of quality and
innovation to meet increasingly
complex and sophisticated needs of
our global customers.
At end 2010, the Rail unit secured the
KL Monorail Fleet Expansion Project
(KLMFEP), and in 2011 it was awarded
two monorail projects in Brazil. These
were over and above an on-going
contract with Keretapi Tanah Melayu
Berhad (KTMB) to refurbish and
overhaul 1,500 wagons; and our
Mumbai monorail project.
The RM494 million KLMFEP involves
the replacement of the existing 12 sets
of two-car trains with a new fleet of
12 sets of four-car trains, upgrading the
Electrical & Mechanical Systems as well
as Civil & Structural (C&S) Works. Our
scope of work includes the design,
engineering, procurement, construction
and commissioning of the entire project,
which is scheduled to be completed by
July 2013. This is the first major upgrade
for the RapidKL Monorail service since
it started operations in August 2003.
The objective is to double the capacity
of the existing trains, as part of a more
ambitious initiative to enhance urban rail
transport in the Greater Kuala Lumpur,
under the Government’s Economic
Transport Programme.
To increase our participation in the
transformation of urban transport in the
Greater KL, Scomi Engineering has
been working on our own MRT train,
a prototype of which was completed
in 2011. Although this MRT train
was inspired by the potential for
further projects in Malaysia, it is
equally applicable in other emerging
markets where there is an urgent
need for efficient, clean and affordable
urban transport.
But the icing on our 2011 cake were
the two monorail wins in Brazil, and
especially the first contract to be
awarded which to us marked the fruition
of two years of preparatory work. The
fact that we were even invited to tender
for the project was significant as it
indicated recognition of Scomi as one of
only three global monorail manufacturers
able to meet Brazil’s stringent international
tender requirements.
We were awarded the Line 17-Gold
Monorail in São Paolo on 30 July 2011
as part of the Consortium Monotrilho
Integracao, comprising Scomi, Andrade
Gutierrez S.A. (AG Group), CR Almeida
S.A. Engenharia de Obras and
Montagens e Projetos Especiais SA
(MPE). The project covers the design,
manufacture, supply and implementation
of the monorail system for the 17.6-km
Line 17 on the Gold Metro of Sao Paulo,
which will be served with 18 stations.
The project is valued at BRZ Real 1.4
billion (RM2.6 billion) and is expected to
be completed in 42 months, beginning
July 2011. Our scope of work involves
the supply of rolling stock (train sets),
the vehicle management system (VMS),
design for switches, system integration,
system assurance and testing and
commissioning.
The Manaus Monorail, meanwhile,
involves the same scope of work but
for a 20km monorail line in the city of
Manaus. The project, valued at BRZ
Real 1.46 billion (RM2.56 billion), was
awarded to a consortium comprising
Scomi, CR Almeida, Mendes Junior
Trading E Engenharia S/A, and Serveng-
Civilsan S/A Empresas Associadas De
Engenharia. Our scope of work involves
the design and supply of rolling stock
and depot equipment, design the beam
structure, supply maintenance vehicles,
system integration and project
management. The project is expected
Annual Report 2011
to be completed in time for the 2014
World Cup in Brazil.
For strategic reasons, a manufacturing
plant will be set up in Brazil to supply pg 29
the rolling stock required for the two
projects. Hence on 7 December 2011
SCOMI GROUP BHD
we established a Joint Venture Company
(JVC) with MPE and Brasell Gestão
Empresarial, LTDA (Brasell) to undertake
manufacturing activities and pursue other
rail related service projects. This
partnership with MPE and Brasell – the
two largest infrastructure companies in
South America – further strengthens our
position to bid for upcoming monorail
tenders in Brazil and to explore new
markets within the region.
 Group CEO’s REVIEW of Operations

While our projects in Brazil are
progressing well, we have unfortunately
been beset by delays beyond our control
in the 19.5km Mumbai monorail project,
which we embarked on in November
2008 along with our consortium partner
Larsen & Toubro. Here, Scomi’s scope
is to deliver 60 cars for 15 sets of four-
car trains and provide the systems
requirement for the project. The first car
was delivered in January 2010. And on
21 February 2012, we conducted a
successful 2.2km test run of the
monorail. However, delays in civil works
and obtaining approvals for sections of
the project affected our ability to deliver
more trains, until the depot was
completed. Since then, we have
SCOMI GROUP BHD
our service offering by bringing in the
expertise of leaders in cutting-edge
technology via partnerships with the
likes of Siemens, Thales, Bombardier
and Knorr-Bremse.
Energy Logistics
Our Energy Logistics division falls under
our associate company, Scomi Marine,
which operates in Malaysia, Vietnam
and Indonesia. Our Marine Logistics
Services focuses on coal transport, while
Offshore Support Services provides
marine vessels to the offshore oil and
gas industry.
The most challenging factor for the
division during the year was the decrease
however, we were saved from the worst
as only two of our vessels from the
Offshore Services fleet – Kaspadu-1 and
RT Kris – were affected by it.
The division’s earnings were further
affected by the depreciating US Dollar
and a slight reduction in coal tonnage of
0.14%. Revenue fell marginally from
RM409.1 million in 2010 to RM390.8
million. Of this, Marine Logistics
contributed RM314.4 million (or 80.5%),
while the remaining RM76.4 million was
derived from Offshore Support Services.
On a more positive note, the division
posted significantly higher earnings
before impairment charges, disposal
gains of an associate company and tax

delivered seven trains and plan to deliver
one train a month till year end.
Our Coach and SPV sector also did not
fare as well in the year 2011 as it did in
pg 30
2010, due to a drop in the number of
orders. New permits were frozen by the
Land Public Transport Commission in
Annual Report 2011
in freight rates, which on average was
about 7.0% lower than in 2010. This was
further compounded by the fact that
most of our business is based in
Indonesia, where the government strictly
enforces a cabotage ruling that makes it
difficult for ships carrying foreign flags to
of RM43.3 million compared to RM35.7
million in 2010. This was due to
enhanced operational efficiencies which
increased productivity across the board.
In Marine Logistics, we managed to
decrease our cycle time so as to achieve
a higher turnaround of vessels. This was

obtain long-term contracts. As this ruling

the first half of the year, only to be is applicable only to relatively new vessels, reflected in a monthly average vessel
uplifted gradually in the second half.

Consequently, Transport Solutions

recorded lower revenue of RM246.8
million in the year under review compared
to RM400.8 million achieved in 2010. The
division posted a segment loss of RM69.4
million as opposed to RM30.3 million in
the previous year, principally due to the
unrealised foreign exchange losses from
the weakening of the Indian Rupee against
the Ringgit. In addition, margins were
affected by project cost adjustment at the
Mumbai monorail project as well as lower
value of work completed.

Despite the delays, we feel confident of

further growth of our Transport Solutions
Division as we have established ourselves
firmly in the Malaysian, Indian and
Brazilian markets. In India and Brazil, in
particular, we have not only partnered
with key local players to achieve market
entry but have subsequently enhanced

trip for the year which is, a 27.9%
increase from that of 2010. In addition,
as a result of proper planning and
negotiation we were also able to increase
the average tonnage per vessel trip by
7% from that of 2010. Further improving
our productivity, we reduced our bunker
rate by 28.8%.
In Offshore Support Services, we are in
the process of upgrading our fleet as
part of the general drive to increase our
efficiencies. During the year, three of the
oldest vessels were sold, reducing our
fleet size from 14 to 11. At the same
time, we were able to capitalise on the
increase in exploration and production
activity in the region to improve the
utilisation rate of our vessels from 82.2%
in 2010 to 84.1%.
These positive developments were,
however, offset by one-off adjustments
such as impairment loss on goodwill
and assets as part of the restructuring
exercise, leading to a net loss after tax
for the division of RM120.0 million.
Key Initiatives
Research and Product Development
Scomi maintains an edge in the highly
competitive Oil and Gas environment by
investing in research and development
to keep improving our range of products
and services. For our Drilling Fluids
technology, we have an ISO 9001:2000
certified, state-of-the-art Global Research
Technology Centre (GRTC) in Shah
Alam, Malaysia, staffed by researchers
and scientists with in-depth knowledge
of the physics and chemistry of drilling.
We also have a Research & Engineering
te am based in Houston, which
developed our Scomi branded Solids
Control and DWM equipment including
shale shakers, centrifuges, big bowl
centrifuges and the Clean-In-Place tank
cleaning system. The team is currently
working on a new advanced and
innovative technology for the treatment
of drill cuttings prior to disposal, which
we hope to be able to commercialise
this technology by early 2013.
Annual Report 2011
Scomi Oiltools in Norway, meanwhile, pg 31
developed the efficient and environment-
SCOMI GROUP BHD
friendly ImmaPure waste water treatment
in August 2010. We believe there is
great potential for this DWM solution,
and are training personnel from our
global operations in the innovative
technology used so as to be able to
market ImmaPure effectively. It made its
debut in Malaysia when we introduced it
to the industry at PETRONAS
Management Unit’s inaugural Malaysia
Exploration & Production Health Safety
and Environment Forum 2011 which
took place on 31 March 2011.
In Transport, Scomi Engineering is
supported by research capabilities at the
ETIC, where our monorail and the newly
launched MRT systems were developed.
The team here is currently working on a
new and enhanced monorail prototype,
the SUTRA Gen 2.1. Technology
ownership and investment remain our
focus to ensure competitiveness of our
business around the world.
 Group CEO’s REVIEW of Operations
Safety First
At Scomi, safety and care for the
environment are of paramount importance.
We conduct safety campaigns round the
year and our Quality, Health, Safety and
Environment (QHSE) team ensures that
all our employees are apprised of basic
safety measures and conversant with
standard procedures in the event of a
QHSE malfunction.
A major milestone was achieved by our
Oilfield Services division when the Scomi
Oiltools drilling fluids branch in Kemaman
celebrated one million man hours without
loss time incidents/accidents on 1 June
2011. This is equivalent to 6.6 years or
approximately 2,433 working days
SCOMI GROUP BHD
without any accident. For the Mumbai
monorail project, meanwhile, our
employees celebrated the completion of
three years without a single Lost Time
Incident (LTI) on 26 July 2011.
pg 32
At Scomi Engineering, concerted efforts
Annual Report 2011
to improve quality, health, environment
and management systems have led to
the group achieving the ISO 9001:2008
Quality Management System, ISO
14001:2004 Environmental Management
System and OHSAS 18001:2007
Occupational Health and Safety
Management System by SIRIM in
November 2011. This adds to recognition
accorded to the group for its monorail
technology by the Ministry of International
Trade & Industry, Malaysia, which
presented the Malaysian Trade & Industry
Recognition Award and the Product
Excellence in the Industry Excellence
Award to SEB in 2010.
We are proud of these achievements
and strive to maintain the best record in
QHSE in order to protect our employees,
our assets and the assets of clients, as
well as to maintain our reputation as a
reliable organisation that operates on the
highest principles of safety and integrity.
People Power
Believing firmly that our people form the
backbone of our success, Scomi is
committed to attracting and retaining
the best talents in the industry. This we
accomplish by not only offering attractive
remuneration packages but also by
nurturing an environment that motivates
staff and drives them to realise their full
potential. We have several programmes
targeted at the different levels within our
organisation to provide training suited to
the capabilities and functions of different
segments of our human resources.
Most of our programmes globally are
run in-house by our Group Learning and
Development (GLaD) team. However,
we also bring in subject experts and
send our people for professional courses
conducted externally so as to tap into
the best minds and methodologies
available. All our training initiatives,
especially those targeted at the
management level and above, ensure
we have a secure and reliable succession
plan. Our talent pipeline starts from the
very beginning, with new recruits whom
we place on an 18-month Management
Trainee programme to introduce them
to the Scomi Group, our diverse
businesses, our corporate philosophy,
our vision and our strategies.
A New Scomi
Over the last few years, we have felt
more keenly the need to relook our
global strategies and focus on key
business areas that offer the greatest
potential for our growth, in geographic
locations that are supportive of our core
activities. Consequently, our global
strategy today is to focus on oil and
gas, as well as urban transport in
emerging markets.
In February 2012 we made public our
plan to establish a new business unit
focusing on upstream drilling services
with the provision of high-performance
drilling fluids solutions, modern drilling
waste management services, completion,
well-bore, clean up and cementing
services as well as offshore supply
vessels to support the oil and gas
industry. This NewCo will combine our
Eastern Hemisphere Oilfield Services
(OFS) with Offshore Vessel Services
currently offered by Scomi Marine. We
believe this enlarged entity will simplify
our operations while allowing us to
benefit from the synergies of
complementary services that are currently
managed by separate divisions. It will,
moreover, enable us to offer more
comprehensive and value-add services
to customers in the Eastern Hemisphere,
which will be our new focus area.
To our shareholders, this means the
opportunity to participate in a more
diversified and enlarged company with
greater earnings potential. It will also
allow us to financially restructure the
Group and further pare down our debts
in order to strengthen our balance sheet.
In short, we believe the NewCo presents
a winning formula to all concerned and
marks a fitting beginning to the end of
Formula 2011.
Looking Ahead
All indicators point to a 2012 that will be
equally as challenging, if not more so,
than 2011 was. The International
Monetary Fund (IMF) has forecast a
moderation in world trade growth to
3.8% in 2012 from 6.9% in 2011.
According to the IMF, the structural
problems facing the crisis-hit advanced
economies have proven even more
intractable than expected. However,
growth is expected to remain fairly robust
in emerging markets. This reaffirms our
own outlook, which contributed to our
new strategic focus to ‘Look East’.
Today, as Scomi looks East, we are
targeting a widespread area
encompassing China and India as well
as South East Asia. At the same time,
we are also focusing on emerging
markets such as Brazil, where a rapidly
expanding middle-class with growing
purchasing power is driving internal
demand. We believe these dynamic
markets offer huge potential for growth
and a robust appetite for our innovative
solutions, especially in the Oilfield Services
and urban transportation businesses.

Economic growth of countries in the

Eastern Hemisphere will further fuel
demand for energy which in turn will be
reflected in sustained drilling activity. With
the creation of our NewCo, we expect to

Annual Report 2011

derive greater revenue from existing as
well as new customers as we offer
comprehensive, efficient and cost-
effective value-add offshore services.
pg 33
Another common factor in emerging
Bangalore. Meanwhile we have

SCOMI GROUP BHD

markets is urbanisation, which leads to
crowded cities and congested traffic. This
translates into huge potential for our
efficient and green monorail and MRT
systems. We are therefore very confident
of further expansion of our Transport
Solutions, and especially our urban rail
technology, in this global zone. To
translate the mine of opportunities into
profitable projects, the division will continue
to enhance its project execution abilities
and customer engagement while churning
out new and innovative products.
Despite the challenges faced in Mumbai,
the Group remains optimistic of further
growth in India. Already, along with our
financial partner ITNL Enso Rail System
Ltd (IERS), we have been pre-qualified
for a monorail project proposed by the
Thane Municipal Corp, also in the state
of Maharashtra, and have submitted a
proposal for a 300km monorail system
in Chennai. We have also formed a
consortium with Geodesic with whom
we have proposed a 60km monorail for
therefore, we remain undaunted. We are
approached the authorities in Delhi and entering the new year a new Scomi.
the state of Kerala with proposals for And in our revitalised form, we are well-
monorail projects. Just in Kerala, the prepared to take the Group to greater
state has set aside Rs5,100 crore for heights as we continue along our very
monorail systems in Thiruvananthapuram exciting journey.
and Kozhikode.
Sincerely,
We are equally optimistic of further
growth in Brazil where the government
has ambitious urban transport plans
valued at BRZ Real 104.5 billion ahead
of the 2014 FIFA World Cup. It is
expected to issue another 20 tenders in
the next two years of which five or six
are to be for monorail systems. Shah Hakim Zain
Group Chief Executive Officer
The Group has been considerably
strengthened over the last few years via
Formula 2011, based on which we
move towards fresh targets for 2014 in
great anticipation. We firmly believe we
have embarked on the right path with
the recent corporate restructuring and
our new business focus areas. Although
the year 2012 promises to be challenging,
Reaching out through sustainable practices
We aim to contribute positively towards the advancement
of the communities we operate in. Towards this end, we
are involved in various projects and initiatives such as
conservation activities, philanthropy and volunteerism,
amongst others.
CORPORATE SOCial
RESPONSIBILITY
In today’s competitive corporate world, companies are
judged not only on their financial performance but also on their
contributions to society and to the preservation of the environment.
At Scomi, we acknowledge our responsibility to all the lives we
touch either directly or indirectly, and are committed to making a
positive impact in the many communities where we have a
presence while further strengthening our corporate reputation via
upholding a culture of integrity and transparency.

Annual Report 2011

pg 37

SCOMI GROUP BHD

We also realise that, given the nature
of the businesses we are involved in,
we can make a positive impact on the
environment. Hence, we invest
significantly in R&D to develop ‘green’
products that are efficient, cost-effective
and, most importantly, that leave the
environment clean.
Over the years, our approach towards
corporate responsibility (CR) has
become progressively more holistic,
evolving from individual acts of
philanthropy to becoming a mindset
that influences our every decision and
strategy. We further ensure that this
mindset is shared among all our
employees by reinforcing the principles
of integrity and corporate citizenry in
our training and internal communication,
and encouraging a spirit of volunteerism
across our operations globally.
The Marketplace Our investment in R&D and our quest
Our marketplace initiatives encompass to continuously innovate led to Scomi
efforts to engage with our stakeholders Engineering being honoured with the
and to better serve our customers. Via Special Award for Product Excellence
our investor relations programme we under the Innovative Product category
hold investor briefings and meetings. at the Malaysian Ministry of International
We also make immediate announcements Trade and Industry’s Industry
to Bursa Malaysia on material activities Excellence Awards 2010 held on
and events, and distribute a quarterly 24 March 2011. The award recognised
Letter to our Shareholders. Group the cutting-edge technology behind
updates are further captured in our our SUTRA monorail system.
quarterly newsletter, Focus, which is
shared with customers, partners,
suppliers, employees and other
stakeholders. Meanwhile, comprehensive
information on the Group is easily
accessible via our website and other
electronic channels, as well as our
Annual Report.
 CORPORATE SOCial RESPONSIBILITY

Our commitment to customers extends
beyond the provision of quality
products. We also train their personnel
in the use of Scomi branded tools and
equipment as part of our service
delivery. Scomi Oiltools in Thailand, for
example, conducted a Drilling Fluids
Technology course for engineers of a
customer in Thailand, covering the
basics of drilling fluids, drilling hole
problems, solids control and our latest
mud system developed at our Global
Research and Technology Centre in
Shah Alam, Malaysia.
In 2011, we strengthened our
engagement with the public with
a blog, Ideas For Tomorrow, which
SCOMI GROUP BHD
by the World Economic Forum, from
12-14 November 2011. Later, on
17 December 2011, he shared Scomi’s
experiences in India at the 3rd Annual
Young Corporate Malaysians (YCM)
Summit in Kuala Lumpur.
The Workplace
We realise that Scomi is only as good
as our strongest asset, our people. We
are therefore committed to nurturing a
workplace that attracts the best talents
and motivates them to excel. We do
this by creating a culture that values
and rewards performance while also
reinforcing a sense of belonging to the
Group. In order to bring out the best
progression. All executives are required
to attend a minimum of 40 hours of
training a year, while non-executives
need to fulfil at least 20 hours of
training a year.
In order to create Group unity, we
have various programmes that stamp
Scomi’s unique identity and which
draw the participation of our employees.
We also create a sense of belonging
and ownership by interacting with our
employees and maintaining effective
communication with them.
GLAD: Talent Development
We have a dedicated Group Learning
and Development (GLaD) team that

effectively creates a platform for
individuals around the world to discuss
issues relating to the creation of a new
future for global cities.
pg 38
We also engaged positively with
corporate Malaysia by taking part in The
Annual Report 2011
in our employees, they are constantly
challenged to stretch their abilities via
projects and assignments of increasing
responsibility and complexity. At the
same time, employees are given
training and professional development
opportunities to acquire relevant
conducts training programmes for staff
across our international operations.
GLaD is responsible for addressing the
identified skills and knowledge gaps,
and for managing the Group’s
comprehensive talent development
programme, which comprises the

Edge Bursa Malaysia Kuala Lumpur Rat knowledge and skills for their career following initiatives:
Race, held on 20 September 2011.
Meanwhile Group CEO Shah Hakim
Zain was a panellist at several high-level
conferences held in Malaysia and
abroad. He spoke at the session on
Making Malaysia a Regional Oil and
Gas Hub at the Invest Malaysia 2011
Conference held on 12-13 April in Kuala
Lumpur; he contributed to a discussion
on Corporate Sector Wish List:
What Would Get Malaysian Businesses
to Invest More in Malaysia? at the
Perdana Leadership Foundation CEO
Forum 2011 on 23 June 2011; and
was also a panelist discussing issues
facing a rapidly urbanising Mumbai at
the India Economic Summit, organised
• The Work @ Scomi & Induction
Programme. This two-day training
is mandatory for all new employees,
introducing them to the Scomi
business, culture and brand. It
offers the recruits an insight into
what Scomi stands for, what it
expects from its employees and,
conversely, what employees can
expect from the company.
• T h e M a n a g e m e n t T r a i n e e
Programme. Aimed at fresh
graduates who are recruited into
Scomi, this 18-month programme
exposes the new recruits to all facets
of the Group’s operations. During
this time, the trainees are attached
to different departments to enable
them to pick up relevant skills that
will set them on the right track for
further development in Scomi.
• T h e E x e c u t i v e M a n a g e m e n t
Programme. This programme brings
together mid-level management
from our global operations, and is
geared towards enhancing their
leadership skills while allowing them
to meet and network with their
global counterparts. In 2011, an
Executive Management Programme
was held in Kuala Lumpur drawing
the participation of 29 managers
worldwide.
• T h e M a n a g e m e n t L e a d e r s h i p
Development Programme. This
aims to develop future leaders for
the Group, hence the high-level
training focuses on effective
management and leadership skills.
In 2011, the programme was held
in Kuala Lumpur, attended by 23
senior managers from our global
operations.
• Mentoring Programme. One-to-one
mentoring is offered to managers
who have demonstrated leadership
potential, to help them deal with
challenges and issues as they move
up the leadership ladder. It is
geared towards ensuring a secure
leadership pipeline and forms part
of Scomi’s succession plan.
• P r o j e c t G e n e r a t i n g A m a z i n g
Engineers (Project GAME). This
12-month programme has been
developed by Scomi Engineering to
nurture well-rounded young
engineers. Project GAME exposes
the engineers to various aspects of
rail engineering, manufacturing,
product assurance and project
delivery, in addition to soft skills
training, which are crucial for future
management positions.
• Global Executive Learning (GEL).
This is a two-day learning programme
for senior management and is
normally held in conjunction with
GEM, a conference of senior
management from Scomi’s global
operations.
Employee Engagement
We believe that open communication
across the Group – within and between
all levels – acts as a cohesive force
that is especially important given the
international nature of our organisation.
Scomi uses a variety of platforms and
tools to engender an inclusive culture
in which every employee matters and
every voice is heard.
• Open Communication Sessions.
The Group promotes the sharing of
knowledge, strategic information,
business direction, performance
status and updates across all our
businesses via teleconferences and
webcast facilities. The Group CEO
himself conducts staff briefings to
present the Group’s quarterly results
and to announce any special
update. In addition, Town Hall
sessions are held at which groups
of about 15 employees have private
sessions with the Group CEO or
Presidents of the Business Units at
which they are at liberty to bring up
any issue for clarification or
discussion.
Annual Report 2011
• Internal Communication. All operations
Group-wide are connected by an
intranet, through which employees
are kept updated on projects,
initiatives and corporate activities. pg 39
The Group recently launched Vengo+,
SCOMI GROUP BHD
which enables members of Scomi’s
global operations to communicate
with each other more easily, by
sharing working files, ideas and
experiences.
• Global Executive Meeting (GEM).
This is an annual conference of
senior management from each of
Scomi’s Business Units, where the
global heads review and brainstorm
Group strategies. GEM 2011 was
held in Melaka, Malaysia, from 2-6
October, attended by 45 members
of the senior management.
• Open Days. Every year, the different
Divisions within Scomi Group hold
Open Days to create a better sense
of understanding among employees
of what their colleagues in other
divisions do.
 CORPORATE SOCial RESPONSIBILITY
Work-Life Balance
We recognise that employees need to
strike the right balance between their
professional and personal commitments.
The Group would like the families of
Scomi employees to feel as if they, too,
are part of the extended Scomi family.
Towards this end, Scomi’s Sports Club
Malaysia organises a Family Day every
year, and this year brought together
500 staff and their families at the
national Zoo in Kuala Lumpur.
In 2011, the head office in Kuala
Lumpur also introduced flexi-hours to
allow our employees to better manage
their work and family obligations. They
can now opt to work from either
SCOMI GROUP BHD
7.30am-4.30pm, 8.00am-5.00pm,
8.30am-5.30pm or 9.00am-6.00pm. As
an added bonus to our Malaysian
employees, the management extended
the lunch hour to two hours on Friday.
pg 40 This is to enable our staff to carry out
important personal errands, or just to
Annual Report 2011
enjoy a rejuvenating break from work
with colleagues or counterparts.
Performance Review
In 2011, the Group unveiled a new
Performance Assessment & Capability
Enhancement (PACE) to replace ACE,
the previous performance management
tool. With PACE, employees are
assessed on Scomi’s three leadership
capabilities, namely People Leadership,
Personal Leadership and Business
Leadership. Its objective is not just to
evaluate performance but also to
highlight areas of improvement for
personal development. Via PACE,
employees are engaged in a discussion
to explore their strong points and agree
on areas in which they can improve as
well as to map a career plan that will
allow them to realise their potential.
PACE also allows the management to
identify employees with high potential
who are provided the opportunity to
fast-track their careers.
Safety at Work
Scomi places the highest priority on
maintaining best practices in Quality,
Health, Safety and Environment (QHSE)
in our workplaces because we value
the well-being of our employees and
contractors, and are also driven to
safeguard the assets of our customers.
We have QHSE teams in all our
businesses whose function is to ensure
all personnel, contractors, suppliers
and even visitors are aware of our
well-defined QHSE policies, and to
enforce these. Every employee is
expected to meet basic QHSE
requirements and this is taken into
account in performance appraisals.
During the year, the Group celebrated
a number of milestones in QHSE. Our
Drilling Fluids Kemaman Malaysia
branch celebrated 1 million man-hours
(equivalent to 6.6 years) of no lost time
from incidents/accidents on 1 June
2011. Our Mumbai office, meanwhile,
completed three years without a single
lost time incident on 26 July 2011.
The Environment
As a responsible corporate citizen,
Scomi is concerned about environmental
issues and takes every measure we
can to minimise the wasteful use of
resources as well as to protect the
environment in positive ways.
Employees at our corporate offices are
committed to the green cause and
have implemented various programmes
to reduce our environmental footprint.
At our R&D centres, preservation of
the environment is always factored into
product development, right from the
stage of design.
Our new global headquarters in 1 First
Avenue in Bandar Utama, Selangor,
Malaysia, has further cemented our
commitment to the environment, making
us immediately a very low-carbon, high-
efficiency company as our new home is
a certified Green Building. In this new
office, we have also implemented a
number of environment-friendly initiatives,
such as reducing the number of printing
machines, restricting colour printing as
well as implementing a 3R programme
to reuse, reduce and recycle.
Staff Initiatives
Employees at Scomi OFS Indonesia
have pledged to lead a greener lifestyle
by saying ‘No To Styrofoam’. Instead
of using styrofoam cups and containers,
all staff have been presented with
custom-made Scomi mugs and lunch
bags that include food-grade plastic
containers. As of making their pledge,
any employee who brings food or
drinks in styrofoam or non-food grade
plastic will be fined.
Project Aware
In April 2011, Scomi Marine (SMB)
once again participated in the Project
Aquatic World Awareness, Responsibility
and Education (Project AWARE) by
supporting marine conservation
activities in Malaysia. This is a
continuation of Project AWARE I carried
out the same time last year in Indonesia
in conjunction with Earth Day 2011.
This year, SMB corporate office staff
collaborated with Project AWARE
Foundation, Ocean Elements Sdn Bhd,
Dungun City Council and the local
village community to rope in divers and
non-divers to clean up the beach as
well as waters off Teluk Lipat, Dungun
and Pulau Tenggol, both in Terengganu,
Malaysia, from 15-16 April 2011. The
project also included awareness
creation and advocacy through a Coral
Reef Conservation Seminar and
Discovery Scuba Diving activity.
During the beach clean-up at Teluk
Lipat, SMB staff were joined by
students of Imtiaz High School,
Politeknik Dungun and UITM Dungun,
as well as staff from the Dungun City
Council and Dungun Civil Defence
Department, and local residents. A
total of 570 volunteers combed the
8.5km beach and collected 500kg of
trash. In addition, 5 tonnes of
deadwood were removed.
The Coral Reef Conservation Seminar
was attended by 30 students from
Imtiaz High school, who also received
books and reading materials on coral
reef and marine conservation. SMB
also sponsored 10 students to take
part in a PADI Discovery Scuba Dive at
Tenggol Island, to educate them on
the importance of preserving the reefs.
SMB staff themselves were tasked with
collecting data on the coral reef around
the island and collecting rubbish from
the sea. The data collected was
channeled to the Ocean Conservancy
Group, which is responsible for
preparing the International Global
Marine Debris Report.
The Community
Scomi believes strongly that all
corporate organisations have a duty to
give back to the communities that
support them. This is a principle we
have adhered to from the beginning,
and which has seen our involvement in
the community intensify over the years.
In 2005, we established our foundation,
Yayasan Scomi, which runs a structured
programme to extend help, financially
or otherwise, to the underprivileged,
marginalised and needy.
At the same time, our own employees
have joined forces to make a difference
to society, via Project Pyramid, our
flagship social responsibility (CSR)
programme that has seen the
involvement of employees from across
our global operations. Project Pyramid
in Malaysia is led by the captains of
the Blue, Green, Yellow and Red
Houses of the Scomi Sports Club.
These captains are provided with Seed
Funds and, guided by certain
parameters, carry out CSR projects of
their own choosing. All staff are
required to take part in their house
projects, their involvement earning them
points under PACE.
Project Pyramid 2011
In 2011, the Yellow Team invited the
World Wildlife Fund Malaysia (WWF) to
present a talk on endangered wildlife
to the staff at our Global HQ, and
launched an interactive educational
website where visitors can acquire
facts and knowledge relevant to the
projects accomplished by the Yellow
Team.
The Red Team invited the Women’s
Aid Organisation of Malaysia to present
a talk at the Global HQ on violence
against women. Red Team members
in Kemaman, meanwhile, donated a
bicycle and 40 school bags to
underprivileged children. They also
Annual Report 2011
visited a centre for disabled children,
where a talk was given to not only the
kids but also their parents. They
concluded the visit by presenting the
children with gifts.
pg 41
The Blue Team invited a medical
SCOMI GROUP BHD
practitioner to deliver a talk on breast
cancer. The talk covered topics from
the early symptoms of breast cancer
to effective prevention measures. Held
at the Global HQ, the session
emphasised that there is hope for
breast cancer patients. The Blue Team
also cleaned the beach at Kampung
Aru in Labuan, East Malaysia.
 CORPORATE SOCial RESPONSIBILITY
SCOMI GROUP BHD
The Green Team treated Scomi staff at
pg 42 the Global HQ to free 10-minute
shoulder massages. They also visited
Annual Report 2011
the children’s cancer unit at Hospital
Universiti Kebangsaan Malaysia (HUKM),
and donated eight LCD TVs to UKM’s
Paediatric and Oncology Ward to
create a livelier atmosphere for the
young patients. In Terengganu, the
Green Team donated Year 6 textbooks
and school tables to Sekolah Islam
Darul Taqwa in Kemaman. With the
help of other volunteers, they also
painted the classrooms and raised
RM2,000 to purchase additional books
for the students.
No-Hunger GAME
The final stage of Project GAME was a
CSR project called Feed the Street,
which aimed at raising awareness
among Scomi staff of the problem of
homelessness in Malaysia and creating
an opportunity for the young engineers
to prepare and distribute food packages
to the homeless.
To raise funds for this project, the
Team set up a booth at the Scomi
Family Day in Zoo Negara to run
various fundraising activities, and
managed to raise more than RM7,000.
On 21 July, the Team operated a
carwash booth at the North Kuala
Lumpur Facility to give the staff there
the opportunity to contribute to this
cause. In total, they collected RM8,100
for Feed the Street.
Collaborating with Reach Out Malaysia,
the GAME members, along with more
than 300 Scomi volunteers, finally ‘fed
the street’ at a Cook and Reach activity
held at Sekolah Kebangsaan Sungai
Way in Petaling Jaya on 24 July 2011.
In addition to the food, a total of 150
dry packs containing small towels,
vitamin C tablets, soap, toothbrushes
and toothpaste, were distributed to the
homeless.
Yayasan Scomi
Yayasan Scomi continued to take on
various acts of philanthropy to help
those in need. Among its programmes,
the foundation has been running an
annual blood donation activity since its
formation in 2005. Last year, it
organised its Blood Donation Drive
together with the University Malaya
Medical Centre on 10 March at Scomi’s
Global HQ.
Yayasan Scomi also runs an outreach
programme involving 11 families it has
adopted in Malaysia. They include 10
families in Baling, Kedah and another in
the remote area of Selama, Perak.
Every year, the foundation extends
financial assistance to these families to
help them meet their education, nutrition,
health and shelter needs. The foundation
also offers counselling to the children in
these communities and monitors them
closely to ensure they are coping with
school and community life.
In 2011, volunteers from across the
Scomi Group of Companies visited the
11 families to evaluate their progress.
Following these visits, they made
recommendations on how Yayasan
Scomi can provide further assistance
to the families. While helping the
families, the visits also afford the
volunteers a glimpse of the living
conditions of those in remote, poverty-
stricken areas.
Other activities undertaken by Yayasan
Scomi during the year included a visit
to the museum and KL Bird Park
organised for kids from Wake One
House, a talk on dyslexia, visit to
Rumah Lindungan Kasih a welfare
home in Tampin, Negeri Sembilan,
various Ramadhan visits to the poor
and needy, and a breaking of fast with
orphans in Lipis, Pahang. Yayasan
Scomi also supported GAME’s Feed
the Street project.
Annual Report 2011
Meanwhile, Scomi continued with its
tradition of supporting the MERCY
Malaysia Humanitarian Fund by
participating in its fund-raising dinner pg 43
held at the Istana Hotel, Kuala Lumpur
SCOMI GROUP BHD
on 7 October 2011.
 STATEMENT ON CORPORATE GOVERNANCE

Corporate governance is the process and structure used to direct

and manage the business and affairs of the company towards
enhancing business prosperity and corporate accountability with the
ultimate objective of realising long term shareholder value, whilst
taking into account the interest of other stakeholders. Good
governance provides a solid foundation for a company to achieve
sustainable growth as well as engenders trust and infuses confidence
among its shareholders and other stakeholders.

As such, the Board of Directors of THE BOARD OF DIRECTORS the areas of business, economics,
Scomi Group Bhd (“the Company”) The Board finance, legal, general management
(“the Board”) remains committed in its The success of the Board in fulfilling its and strategy that contributes effectively
SCOMI GROUP BHD

responsibility towards governing,
guiding and monitoring the direction of
the Company within the objective of
enhancing long term sustainable value
creation aligned to shareholders’
pg 44 interests, while taking into account the
interests of other stakeholders. Towards
Annual Report 2011
oversight responsibility depends on its
size, composition and leadership
qualities. The Group is led and
controlled by an effective Board
whereby collective decision and/or
close monitoring are conducted on
issues relating to strategy, performance,
in leading and directing the management
and affairs of the Group. Given the
calibre and integrity of its members
and the objectivity and independent
judgment brought by the Independent
Directors, the Board is of the opinion
that its current composition and size

this end, the Board is fully committed
in ensuring that the highest standards
of corporate governance are practiced
by the Company and its group of
companies (“the Group”) as a
fundamental part of discharging its
roles and responsibilities. Hence, the
Board continues to implement the
principles set out in Part 1 of the
Malaysian Code on Corporate
Governance (“the Code”), and to a
large extent the best practices in
corporate governance set out in Part 2
of the Code.
This statement sets out the extent of
how the Group has applied and
complied with the principles and best
practices of the Code for the financial
year ended 31 December 2011 in
accordance with Paragraph 15.25 of
the Main Market Listing Requirement of
Bursa Malaysia Securities Berhad
(“MMLR”).
risk management, succession planning,
investor relations and the systems of
internal control including, standards of
conduct and financial matters.
The Board consists of nine (9)
members, comprising one (1) Executive
Director and eight (8) Non-Executive
Directors (including the Chairman) of
whom six (6) are independent as
defined by the MMLR. The Independent
Directors make up 67% of the
composition of the Board. Hence, the
composition of the Board fulfils the
prescribed requirement for one-third
(1/3) of the composition of the Board
to be independent directors. The
appointment of the independent
directors is to ensure that the Board
includes directors who can effectively
exercise their best judgment objectivity
for the exclusive benefit of the Company
and the Group. The composition of the
Board reflects a diversity of
backgrounds, skills and experiences in
contribute to an effective Board.
The Board also complied with the
MMLR on the restriction on directorships
where none of Director holds more
than 10 directorships in listed
companies and 15 directorships in
non-listed companies. The Company
Secretary monitors the number of
directorships held by each Director to
ensure compliance at all times. The list
of directorships of each Director is
updated regularly and is tabled to the
Board on a quarterly basis. The Board
is satisfied that the external directorships
of the Board members have not
impaired their ability to devote sufficient
time in discharging their roles and
responsibilities effectively.
A brief description of the background
of each Director is presented within the
Profile of Directors section as set out
on pages 10 to 14 of this Annual
Report.
In accordance with the best practices
of corporate governance as promulgated
by the Code, in August 2011, the
Board appointed a Senior Independent
Director to act as an additional
safeguard and to serve as the point of
contact between the Independent
Directors and the Chairman on sensitive
issues and to act as a designated
co n t a c t t o w h o m s h a r e h o l d e r s ’
concerns or queries may be raised, as
an alternative to the formal channel of
communication with shareholders.
Board upon U.S. legal counsel’s advice
to ensure the continued oversight over
Management by a committee with a
strong element of independence of
judgment. This EXCO was dissolved
on 31 August 2011 upon the lifting of
the Sanctions.
The role of the Chairman of the Board
(“the Chairman”) and the Group Chief
Executive Officer (“GCEO”), under the
direction of the EXCO prior to its
dissolution, are separated with each
having a clear scope of duties and
responsibilities. The distinct and
separates roles of the Chairman and the
GCEO, with a clear division of functions
and responsibilities, ensure a balance of
power and authority, such that no one
Board Committees
The Board has established and
delegated specific responsibilities to
four (4) committees of the Board, which
operate within clearly defined written
Terms of Reference. The Board
Committees deliberate the issues on a
broad and in-depth basis before putting
up any recommendation to the Board
for approval.
The Board Committees are:
• the EXCO;
• the Audit and Risk Management
Committee (“ARMC”);
• the NRC; and
• the Options Committee (“OC”).

Annual Report 2011

The Board meets a minimum of six (6)
times a year, with special meetings
convened as and when necessary. The
Board is responsible in setting the
corporate goals of the Group and in
With the exception of the EXCO and
individual has unfettered powers of
the OC, none of these Board
decision making. This crucial partnership
Committees have the power to act on
dictates the long term success of the
behalf of the Board and are required to
Company and the Group.
review and evaluate particular issues
pg 45
which are to be tabled to the Board
The Chairman plays a crucial and
with their recommendations.
privotal leadership role in ensuring that

SCOMI GROUP BHD

mapping medium and long term
strategic plans, which are reviewed on
a regular basis. Regular periodic review
of the Group’s performance and
implementation of the management’s
action plans are conducted by the
Board to assess the progress made
towards achieving the overall goals of
the Group.
In 2009, the Board established and
delegated specific responsibilities to
the Executive Committee (“EXCO”), as
is further described below. The EXCO
was then dissolved with effect from
31 August 2011.
The EXCO, which was established on
6 April 2009 arising from the sanctions
imposed by the United States
Department of State on the Group
Chief Executive Officer (the “Sanctions”),
was a measure implemented by the
the Board works effectively, whilst the
The minutes of the Board Committees’
GCEO under the direction of the EXCO
meetings and resolutions passed are
(prior to its dissolution) has the overall
presented to the Board for information.
responsibility for the operational and
The Chairman of the relevant Board
business units, organisational
Committees will also report to the
effectiveness and implementation of
Board on the key issues deliberated by
Board policies, directives, strategies
the Board Committees at its
and decisions. Consequent to the
meetings.
dissolution of the EXCO, all duties
functions, obligations and responsibilities
of the EXCO are vested in the GCEO.
A periodical review of the GCEO’s
Balanced Scorecard is undertaken by
the EXCO and the Nomination and
Remuneration Committee (“NRC”)
respectively. The GCEO is supported
by the Key Management Team, as set
out on pages 16 to 17 of this Annual
Report, for the day-to-day management
of the business and operations of the
Group.
 STATEMENT ON CORPORATE GOVERNANCE

Composition of the Board and its Committees are as follows:

Board of Board Committees
Directors ARMC NRC OC EXCO*

Chairman/Independent Non-Executive Director

Tan Sri Asmat Bin Kamaludin C – C C –

Independent Non-Executive Directors

Tan Sri Nik Mohamed Bin Nik Yaacob@ M M – – C
Datuk Haron Bin Siraj M M – M –
Dato’ Mohammed Azlan Bin Hashim@ M M M – M
Dato’ Sreesanthan A/L Eliathamby M – – – –
Dato’ Abdul Rahim Bin Abu Bakar M C – – –

Non-Independent Non-Executive Directors

Datuk Mohamed Azman Bin Yahya M – M – –
Mr Foong Choong Hong# M M – – –

GCEO/Non-Independent Executive Director

Encik Shah Hakim @ Shahzanim Bin Zain M – – M M
SCOMI GROUP BHD

Notes C: Chairman M: Member

* Dissolved with effect from 31 August 2011.
@ Appointed as a member of the ARMC on 31 August 2011.
pg 46 # Resigned as a member of the ARMC on 31 August 2011.
Annual Report 2011

BOARD MEETINGS & SUPPLY OF INFORMATION

The scheduled meetings of the Board and its Committees is prepared and circulated to the Board before the beginning of
the year. This provides the scheduled dates for meetings of the Board, Board Committees and general meetings of the
Company. During the financial year ended 31 December 2011, six (6) Board Meetings were held. The attendance record of
the Directors at the Board meetings and the Board Committees meetings are as follows:

Board of Board Committees

Directors ARMC NRC OC EXCO*

Chairman/Independent Non-Executive Director

Tan Sri Asmat Bin Kamaludin 6/6 – 1/1 1/1 –

Independent Non-Executive Directors

Tan Sri Nik Mohamed Bin Nik Yaacob@ 6/6 2/2 – – 4/4
Datuk Haron Bin Siraj 5/6 6/6 – 1/1 –
Dato’ Mohammed Azlan Bin Hashim@ 5/6 2/2 1/1 – 4/4
Dato’ Sreesanthan A/L Eliathamby 4/6 – – – –
Dato’ Abdul Rahim Bin Abu Bakar 5/6 6/6 – – –

Non-Independent Non-Executive Directors

Datuk Mohamed Azman Bin Yahya 4/6 – 1/1 – –
Mr Foong Choong Hong# 6/6 4/4 – – –

GCEO/Non-Independent Executive Director

Encik Shah Hakim @ Shahzanim Bin Zain 6/6 – – 1/1 4/4

Notes

* Dissolved with effect from 31 August 2011.

@ Appointed as a member of the ARMC on 31 August 2011.
# Resigned as a member of the ARMC on 31 August 2011.
The Board are supplied with quality
and timely information, which allows
them to discharge their responsibilities
effectively and efficiently. The meeting
agenda together with a set of
comprehensive Board Papers for each
agenda item are delivered to each
Director in advance, to enable the
Board to review the matters to be
deliberated at each meeting, and where
necessary, to obtain supplementary
information before the meeting. At the
Board meeting, the Chairman
encourages constructive, open and
healthy debate and ensures that
resolutions are circulated and
deliberated so that all Board decisions
reflect the collective view of the Board.
Directors are given the chance to freely
express their views or share information
with their peers in the course of
deliberation at the Board. Any Director
who has a direct and/or indirect interest
in the subject matter to be deliberated
will abstain from deliberation and voting
on the same during the meeting.
Where required, the Board and its
Committees are provided with
independent professional advice, the
cost of which is borne by the Company.
In addition, the Directors have full
access to the advice and dedicated
support services of the two (2) company
secretaries appointed by the Board.
The Board may also seek advice from
the Key Management Team or
management on issues under their
respective purview or request further
explanation, information or update on
any aspect of the Group’s operations
or business concerns.
EXECUTIVE COMMITTEE
The objectives of the EXCO are to
undertake and carry out the duties,
functions, obligations and responsibilities
as the GCEO of the Company and the
Group, including all authorities
delegated to the GCEO pursuant to
the Delegated Authority Limits of the
Company and the Group, including
specifically to:
• implement the strategies and
policies of the Company and the
Group;
• devise and ensure the achievement
of the strategic intent for the
Company and the Group and direct
and monitor performance processes
within the Company and the
Group;
• evaluate and recommend to the
Board any potential strategies and
policies which are not within the
authority delegated to the EXCO;
and
• make decisions, or to establish the
basis on which all decisions are
taken, other than those matters
specifically reserved for the Board
or other Board Committees.
The EXCO comprises of two (2)
Independent Non-Executive Directors
and the GCEO/Non-Independent
Executive Director. The appointment of
the independent directors to the EXCO
is to ensure that the EXCO can
effectively exercise their objectivity and
independent judgment for the exclusive
benefit of the Company and the Group.
The EXCO meets at least once every
month, save for months in which a
meeting of the Board is scheduled.
The salient Terms of Reference of the
EXCO are as follows:
• to discuss and agree on following
matters from the Group’s
perspective:
■ overall policy matters for the
Group;
■ Group coordination between
operations and support
services;
■ financial performance;
■ strategic direction;
■ corporate human resource
initiatives;
■ market strategy & intelligence
and investor relations;
■ marketing & branding; and
■ internal compliance (e.g. Internal
Audit and Risk Management
Framework).
• prioritising the allocation of capital,
technical and human resources of
the Company and the Group;
• establishing best management
practices and functional standards
for the Company and the Group;
• to monitor the execution of the
Company’s strategic plans and
operations of all business units of
the Company and safeguard the
interests of the Company and to
further the strategy, business
objectives and targets established
by the Board;
• to recommend to the Board
Annual Report 2011
improvement/changes to the scope
of the authority delegated to the
operational management and the
corporate management;
• to ensure the maintenance and
pg 47
regular review of the organisation’s
policy and procedure manual;
SCOMI GROUP BHD
• to review, on a regular basis but no
less that annually, its own
performance, constitution and
Terms of Reference to ensure it is
operating at maximum effectiveness
and where necessary, updating
these Terms of Reference;
• to oversee senior management
appointments and the monitoring of
senior management performance of
the Company and the Group’s
affairs, succession planning and
continuing Group-wide employees
development programme, including
training, evaluation procedures,
employment conditions and reward
and recognition practices; and
• to monitor the quarterly progress of
achievements of key result areas
set out in the GCEO’s Balanced
Scorecard.
 STATEMENT ON CORPORATE GOVERNANCE
APPOINTMENTS TO THE BOARD
The appointment of directors is a vital
process as it determines the
composition and quality of the Board’s
capacity and competencies. The NRC,
which comprises three (3) Non-
Executive Directors, a majority of whom
are Independent, is delegated the
responsibility to ensure an effective
process for the selection of new
directors to the Board. The NRC will
review and assess the proposed
appointment of new directors, and
■ consider, in making its
thereupon make the appropriate
recommendations to the Board for
approval.
The NRC is additionally responsible for
SCOMI GROUP BHD
making recommendations to the Board
on the re-election of Directors. The NRC
is also responsible for reviewing
■ recommend to the Board,
candidates for appointment to the Board
Committees and makes appropriate
pg 48 recommendations thereon to the Board
■ to conduct an annual review of
for approval. It is tasked with assessing
Annual Report 2011
the effectiveness of the Board and
Board Committees and the performance
of individual directors in order to ensure
that the required mix of skills and
experience are present on the Board. In
■ to assess, on an annual basis,
the course of assessing the effectiveness
of the Board and the Board Committees
and the contributions of each individual
director, the NRC also evaluates and
determines the training needs for each
of the Directors in order to enhance the
skills of the directors and aid them in
the discharge of their duties as
directors.
The salient Terms of Reference of the
NRC include:
■ from time to time, to examine
• to:
■ recommend to the Board
potential candidates for
directorships to be filled by the
shareholders or the Board giving
consideration to:
■ to ensure that new appointees
♦ the candidates’ skills,
knowledge, expertise and
experience;
♦ t h e candidates’
professionalism;
♦ the candidates’ integrity; and
♦ in the case of candidates for
the position of independent
non-executive directors, their
ability to discharge such
responsibilities/functions as
expected from independent
non-executive directors;
recommendations, candidates
for directorships proposed by
the GCEO and within the
bounds of practicability,
candidates proposed by any
other senior executive or any
director or shareholder; and
Directors to fill the seats on the
Board Committees;
the required mix of skills and
experience and other qualities,
including core competencies
which non-executive directors
should bring to the Board;
the effectiveness of the Board
as a whole, the Committees of
the Board and the contributions
of each individual director,
including Independent Non-
Executive Directors, as well as
the GCEO and to ensure that
all assessments and evaluations
carried out in the discharge of
this function are properly
documented;
the size of the Board with a
view to present recommen­
dations to the Board on the
optimum number of Directors
on the Board to ensure its
effectiveness;
to the Board undergo orientation
and education programmes;
■ to make recommendations to the
Board concerning the re-election
by shareholders of any directors
under the retirement by rotation
provisions in the Company’s
Articles of Association;
■
annually, review and assess the
training needs of individual
directors and propose suitable
training programmes to be
attended;
■
to develop the GCEO’s mission
and objectives, succession for
the GCEO and annual evaluation
of the performance of the
GCEO;
■
to establish and recommend to
the Board a fair and transparent
Remuneration Policy framework
for Executive Directors designed
to attract, retain and motivate
individuals of the highest quality.
The key elements of this
framework, which would form
the basis of deliberations on the
remuneration to be awarded,
are:
♦ the Company’s financial
performance which may
include financial indicators
such as turnover, profitability,
market capitalisation and
achievement of these
indicators vis-à-vis pre-
determined goals;
♦ t h e s k i l l s , k n o w l e d g e ,
expertise, performance and
relative experience of the
Executive Directors;
♦ the duties and responsibilities
borne by the Executive
Director; and
♦ the nature of the Company’s
business e.g. international/
regional business presence;
■ to conduct, on an annual basis
(or when the need arises as in
the case of proposing
remuneration and/or
compensation for a new
Executive Director), a review
and thereon provide advice and
recommendations to the Board
on all aspects of reward
structure accorded to Executive
Directors in terms of the
following components:
♦
basic salaries and basis of
increment applied (as a
percentage of basic salary,
fixed quantum or merit
increment);
♦ annual bonuses (in the mode
of contractual, discretionary
or lump sum payment
form);
♦ directorship fee (fixed and/or
supplementary);
♦ long term incentive scheme
including Employees’ Share
Option Scheme (“ESOS”)
with conditional terms for
exercising options;
♦ fringe benefits in kind which
include among others club
membership, company car,
medical and insurance
benefits, outstation/overseas
allowance etc; and
♦ other terms of employment/
directorship;
■ to determine and agree on the
Company’s policy on the
duration of contracts with
Executive Directors, and notice
periods and termination
payments under such contracts,
with a view to ensuring that any
termination payments are fair to
the individual and the Company,
that failure is not rewarded and
the duty to mitigate loss is fully
recognised; and
■ to consider any published
guidelines or recommendations
regarding the remuneration of
directors of listed companies
which it considers relevant or
appropriate.
Re-election of Directors
In accordance with the Company’s
Articles of Association and Paragraph
7.26(2) of the MMLR, at least one-third
(1/3) of the Board is subject to
retirement by rotation at each Annual
General Meeting (“AGM”). Pursuant to
Article 82 of the Articles of Association
of the Company, Datuk Haron Bin Siraj,
Dato’ Sreesanthan A/L Eliathamby and
Encik Shah Hakim @ Shahzanim Bin
Zain retired from the Board and were
re-elected at the 9th AGM held on 29
June 2011.
Directors’ Continuing Education
All members of the Board have
attended the Mandatory Accreditation
Programme as required under the
MMLR.
To remain relevant in the rapid changing
and complexities of modern business
environment, our Directors are
committed to continuing education and
lifelong learning. Directors’ commitment
to continuing development fostered
intellectual honesty which is a crucial
part of good governance.
For this purpose, a dedicated training
budget for Directors’ continuing
education is provided each year by the
Company. In addition to the NRC’s
evaluation and determination of the
training needs for each of the Directors,
the Directors may also request to attend
training courses according to their
needs as a Director or member of the
respective Board Committees on which
they serve. Throughout the year, the
Directors were also invited to attend a
series of talks on Corporate Governance
organised by Bursa Malaysia together
with various professional associations
and regulatory bodies.
During the financial year ended 31
December 2011, all members of the
Board attended various training
programmes, conferences, seminars
and courses organised by the relevant
regulatory authorities and professional
bodies on areas relevant to the Group’s
business, Directors’ roles,
responsibilities, effectiveness and/or
corporate governance issues. Training
programmes, conferences, seminars
and courses attended by Directors in
2011 are as follows:
Corporate Governance
• Corporate Governance: “The Holistic
Board”
• Directors’ Training: “Key Amendments
to Listing Requirements 2011 &
Annual Report 2011
Corporate Disclosure Guide”
• ICAA-MICPA Forum: “Improving
Corporate Governance in Malaysia
Capital Markets – The role of the
Audit Committee”
pg 49
• Malaysian Institute of Corporate
Governance Conference: “Directors
SCOMI GROUP BHD
Duties & Governance 2011”
• Meeting Bursa’s Financial Reporting
Timelines
• Roundtable Discussion on “The
Code of Public Governance”
• Scrutinising Financial Statement
Frauds and Detection of Red Flags
for Directors and Officers of PLCs
and Government Regulatory
Agencies
• Talent Enrichment Programme:
Crisis Management – the Malaysian
Experience
• The Laws Governing Land and
Property Development – Overview
and Latest Amendments
 STATEMENT ON CORPORATE GOVERNANCE
Business Management, Economics,
Finance and Industry Update
• 16th Asia Oil & Gas Conference
2011
• 24th Annual AVCJ Private Equity &
Venture Forum
• 5th International Islamic Capital
Market Forum: “Risk Sharing: A
way forward to Public Good”
• Assessing the Risk and Control
Environment
• Avoiding Minefields Amidst a
Changing Anti-Corruption
Landscape
• Cranfield Executive Leadership
Forum “The Makings of a Global
Leader”
• CEO Forum 2011: “Transforming
SCOMI GROUP BHD
Malaysia: Challenges to becoming
a High-Income Nation”
• Development of Labuan International
Business and Financial Centre
• Domestic Investment Summit 2011
pg 50
• Economic Transformation Programme
(ETP) Update
Annual Report 2011
• Global Trend & Market Strategy –
China’s Rise Changes Global
Dynamic & Forecast
• High Level Conference on Islamic
Finance: “Enhancing Financing
Linkages Towards Economic
Prosperity”
• India Economic Summit 2011
• International Conference “The Arab
Uprising”
All Directors who served during the financial year ended 31 December 2011 are to be paid an annual Directors’ fee upon
shareholders’ approval at the forthcoming AGM. The aggregate remuneration paid to the Directors of the Group who served
during the financial year, and the bands, are as follows:
Salaries and bonuses
Defined contribution plan
Fees
Allowances
Estimated value of benefit-in-kind
Total
• Invest Malaysia 2011
• Khazanah Megatrends Forum 2011:
“Uncertainty as Normality: Navigating
through Complex Interconnection”
• MSC Malaysia Equity Investment
• Shariah (Islamic) Compliance in
Insurance Industry
• Strategic Trade Act 2010 Forum:
“Proactive Deterrence Against
Proliferation of Weapons of Mass
Destruction”
• Syarahan Perdana Budaya
• Techventure 2011: “The new ager
of Asian Innovation”
• The 3rd Annual Young Corporate
Malaysians Summit
• The Economic Transformation
Programme: “What’s in it for me”
• The LSE Debate – The Economic
Transformation Programme, Key
Challenges
• World Economic Forum on East
Asia
Apart from attending the training
programmes, conferences and seminars
organised by the relevant regulatory
authorities and professional bodies, the
Directors also visited key operating
units of the Group and continuously
received briefings and updates on
regulatory and industry development,
including information on the Group’s
businesses and operations, risk
management activities and other
initiatives undertaken by the Group.
Executive Director Non-Executive Directors
(RM’000)
2,279
– –
– 707
– 186
551
2,830
DIRECTORS’ REMUNERATION
The NRC is also responsible for the
review of the overall remuneration
policy for the Directors and the GCEO
whereupon recommendations are
submitted to the Board for approval.
The NRC advocates a fair and
transparent remuneration policy
framework such that the Group may
attract, retain and motivate high quality
individuals to manage its business and
other key areas of the Group’s
operations.
The remuneration of the GCEO
comprises principally salary and other
benefits, taking into consideration
market rates and practices. Additionally,
he is entitled to share options under
the Company’s ESOS, which are
exercisable until the expiry date of the
scheme.
The Non-Executive Directors’
remuneration is based on standard
agreed fees, in addition to allowances
for attendance at Board and Board
Committee meetings. The Directors are
also entitled to options under the
Company’s ESOS as have been
approved by the shareholders of the
Company.
Total
(RM’000) (RM’000)
– 2,279
–
707
186
– 551
893 3,723
The aggregate remuneration above is categorised into the following bands:

Executive Director Non-Executive Directors Total

RM65,000 to RM115,000 – 6 6
RM115,001 to RM165,000 – 1 1
RM165,001 to RM215,000 – 1 1
Up to RM2,900,000 1 – 1

AUDIT AND RISK MANAGEMENT
COMMITTEE
The primary objective of the ARMC is
to assist the Board to review the
adequacy and integrity of the Group’s
financial administration and reporting,
internal control and risk management
systems, including the management
The salient Terms of Reference of the
OC are as follows:
• to determine participation eligibility
and to decide on the number of
options to be offered to eligible
employees and/or Persons as
stipulated in the By-Laws, throughout
the duration of the scheme;
ACCOUNTABILITY AND AUDIT
Accountability to Shareholders
The Board is responsible for ensuring
that high quality and relevant information
are made available to shareholders in a
timely manner to keep them abreast of
all material business matters affecting
the Group. Announcements, annual

Annual Report 2011

information system and systems for
compliance with applicable laws,
regulations, rules, directives and
guidelines.
The ARMC comprises four (4) Non-
Executive Directors, a majority of whom
• to ensure the maximum number of
new options that may be offered to
eligible employees and/or persons
shall not exceed the limits set
against their respective categories
and subject to the criteria for
allocation as set out in the By-
reports, quarterly financial results and
other relevant information are accessible
via the Group’s website at
www.scomigroup.com.my. Any
persons wishing to receive email alerts
or make any request for documents pg 51
are able to do so via email to

SCOMI GROUP BHD

are Independent. The ARMC meets as
and when required, and at least four
(4) times during the financial year.
The ARMC Report, enumerating its
membership, Terms of Reference and
activities during the financial year ended
31 December 2011 is set out on pages
56 to 60 of this Annual Report.
OPTIONS COMMITTEE
The OC of the Board is entrusted with
the responsibility of overseeing the
administration of the Company’s ESOS
in accordance with the ESOS By-Laws
(“By-Laws”). The OC comprises two (2)
Independent Non-Executive Directors
and the GCEO/Non-Independent
Executive Director. The Options
Committee meets as and when
required, and at least once during the
financial year.
Laws;
• to evaluate and decide on the
eligible employees’ and/or eligible
persons’ periodic entitlement to
exercise their options as stipulated
in the By-Laws;
• to make offers to eligible employees
and/or persons who are entitled to
participate in the scheme, after
taking into consideration the
performance, seniority, number of
years in service, employee grading
and/or the potential contribution of
the eligible employees and/or
persons; and
• to recommend to the Board, when
necessary, any amendments to be
made to all or any of the provisions
of the scheme, subject to the
approvals of all relevant authorities
and the Company’s shareholders at
a general meeting.
info@scomigroup.com.my.
Towards ensuring the effective
dissemination of information, the Group
maintains a Shareholders’ Communication
and Investor Relations Policy. The
Policy outlines how the Group identifies
and distributes information in a timely
manner to all shareholders. It also
reinforces the Group’s commitment to
the continuous disclosure obligations
imposed by law, and describes the
procedures implemented to ensure
compliance.
In addition, the Company maintains a
website at www.scomigroup.com.my
where all announcements made to
Bursa Malaysia are published shortly
after the same is released on Bursa
Malaysia’s website. Also listed on the
company’s website is the name of the
person designated by the Company to
receive queries from the public together
with his email address and contact
details.
 STATEMENT ON CORPORATE GOVERNANCE
Additionally, shareholders are encouraged
to attend the AGM and any other
meetings of the shareholders where it
provides the opportunity for shareholders
to raise questions or concerns with
regards to the Group as a whole and it
also serves as a platform for shareholders
to have direct access to the Board.
Financial Reporting
The Board is committed to provide a
balanced and true view of the Group’s
financial performance and prospects in
all its reports to stakeholders and
regulatory authorities. Early release of
announcements of the quarterly financial
statements and press release reflect the
Board’s commitment to provide timely
SCOMI GROUP BHD
and transparent disclosures of the
performance of the Group. This is also
channelled through the audited financial
statements, quarterly announcements of
the Group’s unaudited results as well
pg 52
as the Chairman’s Statement and the
Group CEO’s Review of Operations in
Annual Report 2011
the Annual Report.
In discharging its fiduciary responsibility,
the Board is assisted by the ARMC to
oversee the financial reporting processes
and the quality of the Group’s financial
statements.
The Statement of Directors’ Responsibility
in respect of the preparation of the
annual audited financial statements for
the financial year under review is set out
on page 63 of this Annual Report.
Internal Control
The Board firmly believes in maintaining
a sound system of internal control with
a view to safeguard shareholders’
investment and the assets of the Group.
The expanding size and geographical
spread of the Group involve exposure
to a wide variety of risks, where the
nature of these risks means that events
may occur, which could give rise to
unanticipated or unavoidable losses.
In establishing and reviewing the system
of internal control, the Board recognise
that the system of internal control can
provide only reasonable, but not
absolute, assurance against the
occurrence of any material misstatement
and loss.
The ARMC meets on a regular basis to
ensure that there is clear accountability
for managing significant identified risks
and that identified risks are satisfactorily
addressed on an ongoing basis. In
addition, the adequacy and effectiveness
of the internal control system is also
periodically reviewed by the ARMC.
The Statement on Internal Control is
set out on pages 53 to 55 of this
Annual Report.
Relationship with Auditors
The Board, through the ARMC
maintains an appropriate, formal and
transparent relationship with the
Group’s internal and external auditors.
The ARMC has explicit authority to
communicate directly with the Group’s
internal and external auditors vice versa
the Group’s internal and external
auditors were also given direct access
to the ARMC to highlight any issues of
concern at any time. Further, the
ARMC meets the external auditors
without the presence of Executive
Directors or the Management whenever
necessary, but no less than twice a
year. Meetings with the external
auditors are held to further discuss the
Group’s audit plans, audit findings,
financial statements, as well as to seek
their professional advice on other
related matters.
The roles of the ARMC in relation to
both the internal and external auditors
are described in the ARMC Report as
set out on pages 56 to 60 of this
Annual Report.
This Statement is made in accordance
with the resolution of the Board dated
26 April 2012.
STATEMENT ON INTERNAL CONTROL
INTRODUCTION
The duty of the Board of Directors,
amongst others, is to maintain a sound
system of internal control to safeguard
shareholders’ investment and the
assets of the Company and its group
of companies (“the Group”). In
compliance with Paragraph 15.26(b) of
the Main Market Listing Requirements
(“MMLR”) and Practice Note 9 issued
by Bursa Malaysia Securities Berhad
(“Bursa Malaysia”), the Board of
Directors of Scomi Group Bhd (“the
Company”) (“the Board”) is pleased to
set out below the Group’s Statement
on Internal Control for the financial year
2011. This statement covers all of the
Group’s operations, save for Scomi
Engineering Bhd (a subsidiary company)
and Scomi Marine Bhd (an associated
company), both of which are listed on
Bursa Malaysia.
Board Responsibility
The Board is fully committed to ensure
the existence of an effective system of
internal control and risk management
within the Group, and continuously
reviews and evaluates the adequacy
and integrity of those systems.
However, the Board recognises that
such systems are designed to manage,
rather than eliminate, the risks identified
to acceptable levels. Therefore, the
systems implemented can provide only
reasonable and not absolute assurance
against the occurrence of any material
misstatement and loss.
Whilst the Board has overall
responsibility for the Group’s system of
internal controls, it has delegated the
implementation of these internal control
systems to the Management who
regularly report to the Audit and Risk
Management Committee (“ARMC”) on
risks identified and action steps taken
to mitigate and/or minimise the risks.
These internal control systems are
subject to the Board’s regular review
with a view towards appraising the
effectiveness of these systems within
the Group in accordance with the
“Statement on Internal Control:
Guideline for Directors of Public Listed
Companies”.
INTERNAL CONTROL FRAMEWORK
The Group’s internal control environment
comprises amongst others various
policies, procedures and frameworks,
included amongst which are:
Clear and Structured Organisational
Reporting Lines
The Group has a well defined
organisation structure that is aligned to
business requirements and also to
ensure check and balances through
the segregation of duties. Clear
reporting lines and authority limits
govern the approval process, driven by
Delegated Authority Limits set by the
Board. In addition, the Group employs
the Balanced Scorecard framework
that implements and measures the
goals and targets for individual
employees in alignment with the
business objectives and strategies of
the Group. These key performance
indicators, based on the Strategy Map
developed in 2008, are monitored as
part of the staff performance appraisal
conducted semi-annually.
At the Board level, all strategic,
business and investment plans are
approved and monitored by the Board.
The Board is supported by four (4)
Board committees that provide focus
and counsel in the areas of:
1. Directing and monitoring of the
implementation of the strategies
and policies and performance
achievement of the Group;
2. Audit and Risk Management;
3. Employees’ Share Option Scheme;
and
4. Nomination and Remuneration of
Directors.
Certain responsibilities are delegated to
the Board Committees through clearly
defined Terms of Reference which are
reviewed from time to time.
During the year under review, the
Board was supported by the Board
Executive Committee, which comprised
two (2) Independent Non-Executive
Directors and the Group Chief Executive
Officer (“GCEO”) and was tasked to
undertake and carry out the duties,
functions, obligations and responsibilities
of the GCEO of the Company and the
Group, including all authorities
delegated to the GCEO pursuant to
the Delegated Authority Limits of the
Company and the Group. The Board
Executive Committee, which was
Annual Report 2011
established on 6 April 2009 arising
from the sanctions imposed by the
United States Department of State on
the Group Chief Executive Officer (the
“Sanctions”), was a measure pg 53
implemented by the Board upon U.S.
legal counsel’s advice to ensure the
SCOMI GROUP BHD
continued oversight over Management
by a committee with a strong element
of independence of judgment. This
Board Executive Committee was
dissolved on 31 August 2011 upon the
lifting of the Sanctions.
Further details on the Board Committees
are contained in the Statement on
Corporate Governance on pages 44 to
52 of this Annual Report.
The Board has a Board Policy Manual
which established a formal schedule of
matters and outlines types of information
required for Board’s attention and
deliberation at the Board meetings.
Comprehensive Board papers, which
include financial and non-financial
matters such as quarterly results,
business strategies, explanation of
Group and individual business divisions
performances, key operational issues,
corporate activities and exercises of
the Group, etc are escalated to the
Board for deliberation and approval.
 STATEMENT ON INTERNAL CONTROL
Strategic Business Plan
The Group has a rolling 3-Year Business
Strategic Plan (“the Plan”) that maps
out the strategic objectives and business
direction of the Group. This Plan is
prepared on an annual basis as part of
the annual budget which is deliberated
and approved by the Board.
The assurance team reporting to the
Chief of Staff is tasked with consolidating
key performance data of the Group
and continuously monitors on a
quarterly basis the progress of
achievements in targeted key results
areas or initiatives as set out in the
Balanced Scorecards of the GCEO
and his direct reports.
SCOMI GROUP BHD
During its existence, the Board
Executive Committee reviewed the
ongoing financial performance of the
Group and its business divisions on a
pg 54
monthly basis against their respective
budgets, where further explanations
Annual Report 2011
and clarifications are noted for
significant variances reported. The
performance review results are also
further escalated to the ARMC and the
Board on a quarterly basis.
Delegated Authority Limits (“DAL”)
The Board’s approving authority is
delegated to the Management through
a clearly and formally defined DAL
which is the primary instrument that
governs and manages the business
decision process in the Group. Whilst
the objective of the DAL is to empower
Management, the key principle adhered
to in its formulation is to ensure that a
system of internal controls and check
and balance are incorporated therein.
The DAL is continuously reviewed and
updated to ensure relevance to the
Group’s operations.
Code of Conduct
The Board and employees of the
Group are committed to adhering to
the best practice in corporate
governance and observing the highest
standards of integrity and behaviour in
all activities conducted by the Group,
including the interaction with its
customers, suppliers, shareholders,
employees and business partners, and
within the community and environment
in which the Group operates.
The Board and employees of the
Group play an important role in
establishing, maintaining and enhancing
the reputation, image and brand of the
Group and ensuring the observance to
and compliance with the standards of
integrity and behaviour that the Group
is committed to.
All employees of the Group of grades
17 and above are required to confirm
their receipt and understanding of the
Code of Conduct and further required
to certify their continued compliance
with the Code of Conduct on a semi
annual basis.
Policies and Procedures
Clear, formalised and documented
internal policies and procedures are in
place to ensure compliance with
internal controls and relevant rules and
regulations. Regular reviews are
performed to ensure that the policies
and procedures remain current and
relevant.
Common Group policies are available on
the Company’s intranet and/or website
for easy access by the employees.
Standard Operating Procedures,
Processes and Systems
There are documented standard
operating procedures and guidelines
that have been adopted by the
Management to regulate the Group’s
functional processes. In various
instances, these documents form an
integral part of the Integrated Quality
Management Systems (“IQMS”).
In 2009, the Group had successfully
implemented SAP across 24 countries.
The implementation of SAP marks a
significant milestone in the roll-out of
Project BEST which is a global initiative
to establish best practice processes
across key functions promoting greater
visibility, transparency and efficiency
across the Group.
Integrated Quality Management
Systems (“IQMS”)
The Group’s ISO 9001:2008 status is
maintained via periodic, internal and
external quality audits to ensure
compliance to the quality management
system and is continually improved.
A Quality Management Representative
has been appointed to oversee the
compliance aspect of the certification
and ISO awareness trainings are
regularly held.
Risk Management
Risk Management is vital for continued
profitability and enhancement of
shareholder value, hence Risk
Management is practiced within the
Group on an iterative basis. All new
and major investments have to observe
a process of approval that includes an
evaluation of the associated risks.
The Group’s Enterprise Risk
Management (“ERM”) framework
implemented within the Group continues
to define, highlight, report and manage
the key business and operational risks
faced by all business divisions within
the Group. Monitoring of the
management action plans during the
review period was performed by the
Management and/or the external service
provider for internal audit services (“the
Internal Auditors”). The Management
reported to the ARMC at quarterly
basis on areas of high risks faced by
the Group and the adequacy of
compliance and internal control systems
adopted throughout the Group.
Further information on the Group’s risk
management activities is highlighted in
the ARMC Report on pages 56 to 60
of this Annual Report.
Information and Communication
Flowing from a clear organisational
reporting structure, information is
communicated and disseminated to
key Management within the Group.
To ensure compliance to Chapter 14
of the MMLR, the Board and the
Principal Officers of the Company are
informed in advance before the
commencement of each closed period,
in which they are not allowed to deal
in the listed securities of the Company
as long as he is in possession of
material and price-sensitive information
relating to such listed securities in
order to avoid any insider trading.
The Group also has in place a
Whistleblower Framework and Policy,
to provide an avenue for employees to
raise genuine concerns internally or
report any breach or suspected breach
of any law or regulation, including the
Group’s policies and procedures, to
the Disclosure Officer in a safe and
confidential manner, ensuring
employees can raise concerns without
fear of reprisals.
Competency and Talent Management
To enhance the competencies of the
Group’s talent pool and establish a
culture of continuous learning, the
Group Learning and Development
(GLaD) department runs a series of
training and development programmes
based on the Learning and Development
Framework (OPUS) that defines training
based on technical and non-technical
programmes. This ensures that staff
are kept up-to-date with the required
competencies to carry out their duties
and responsibilities towards achieving
the Group’s objectives. A key
performance indicator on average
learning hours per employee is in place
to encourage employees’ learning,
growth and knowledge-sharing.
Independent Assurance Mechanism
Regular assessments on the adequacy
and integrity of the internal controls
and monitoring of compliance with
policies and procedures are carried out
through internal audits. The Group has
outsourced the activities and function
of the internal audit to a professional
service provider. The internal audit plan
that covers internal audit coverage and
scope of work is presented for ARMC
and the Board’s consideration and
approval annually.
Internal audit reports are presented to
the ARMC during its quarterly meetings
which encompasses the audit findings
together with recommendations
thereon. Senior and functional line
management are tasked to ensure
management action plans are carried
out effectively and regular follow-up
audits are performed to monitor the
continued compliance.
In addition to this internal mechanism,
the Group also received extensive and
detailed reports vide management
letters from its External Auditors that
primarily focuses on financial controls.
The management letters were also
presented to the ARMC for deliberations.
In the event of any non-compliance,
appropriate corrective actions have
been taken in addition to amendments
to the relevant procedures, if required.
Quality, Health, Safety and Environment
(“QHSE”)
A clear, formalised and documented
Global QHSE manual is in place to
outline everyone’s part and responsibility
towards the prevention of accidents,
the elimination of hazards and in
ensuring a safe working environment.
The Group adopts strict standards and
controls to continuously improve the
application and performance of the
safety management systems as a safe
working environment is fundamental to
the Group’s success in business
operations.
REVIEW OF THIS STATEMENT
As required by Paragraph 15.23 of the
MMLR, the External Auditors have
reviewed this Statement on Internal
Control. Their review was performed in
accordance with Recommended
Practice Guide (“RPG”) 5 issued by the
Malaysian Institute of Accountants.
Based on their review, the External
Auditors have reported to the Board
that nothing has come to their attention
that causes them to believe that this
Statement is inconsistent with their
Annual Report 2011
understanding of the process the Board
has adopted in the review of the
adequacy and integrity of internal control
of the Group. RPG 5 does not require
the External Auditors to and they did
not consider whether this Statement pg 55
covers all risks and controls, or to form
SCOMI GROUP BHD
an opinion on the effectiveness of the
Group’s risk and control procedures.
Additionally, the Internal Auditors have
also reviewed this statement and
reported to the ARMC that, save for
its presentation to the ARMC of the
individual lapses in internal controls
during the course of its internal audit
assignment for the year, it has not
identified any circumstances which
suggest any fundamental deficiencies
in the system of internal controls in the
Group.
This Statement is made in accordance
with the resolution of the Board dated
26 April 2012.
 AUDIT AND RISK MANAGEMENT
COMMITTEE REPORT
The Board of Directors of Scomi Group Bhd (“the Company” or
“SGB”) (“the Board”) is pleased to present the Report of the Audit
and Risk Management Committee (“ARMC” or “the Committee”) for
the financial year ended 31 December 2011.
TERMS OF REFERENCE OF THE
ARMC
Objective
To assist the Board to review the
adequacy and integrity of the Group’s
financial administration and reporting,
internal control and risk management
systems including the management
information system and systems for
SCOMI GROUP BHD
compliance with applicable laws,
regulations, rules, directives and
guidelines.
Balance And Composition
pg 56
(a) The members of the ARMC shall
be appointed by the Board and
Annual Report 2011
shall comprise at least three (3)
members, all of whom must be
non-executive directors with a
majority of them being independent
directors.
(b) None of the members of the
ARMC shall be an alternate
director.
(c) A majority of the members of the
Committee must be financially
literate with sufficient financial
experience and ability and at least
one member of the ARMC must
be an Accountant or such other
qualifications as defined by the
Bursa Malaysia Securities Berhad
Main Market Listing Requirements.
(d) The Committee shall have a
mixture of expertise and experience,
including an understanding of the
industries in which the Group
operates in.
(e) Members of the ARMC shall elect
a Chairman from among
themselves who is an Independent
Non-Executive Director.
(f) Members of the Committee may
relinquish their membership in the
Committee with prior written
notice to the Company Secretary.
(g) In the event of any vacancies
arising in the Committee resulting
in the number of members of the
Committee falling below three (3),
the vacancy should be filled within
three (3) months of it arising.
(h) Appointment of each Committee
member shall be for a period of up
to three (3) years. The Committee
Chairman shall not serve
consecutive terms in that capacity,
although he may remain a member
of the Committee and may serve
as Committee Chairman again in a
future term.
Powers Of The ARMC
(a) In carrying out its duties and
responsibilities, the ARMC shall,
at the expense of the Company:
• have the authority to investigate
any matter within its terms of
reference;
• have full, free and unrestricted
access to the Company’s and
Group’s records, properties,
personnel and other resources;
• have direct communication
channels with the external
auditors and person(s) carrying
out the internal audit function;
• be able to obtain independent
professional or other advice in
furtherance of their duties; and
• be able to convene meetings
with the external auditors, the
internal auditors or both,
excluding the attendance of
the other directors and
employees, whenever deemed
necessary.
(b) The ARMC is not authorised to
implement its recommendations
on behalf of the Board but shall
report its recommendation back
to the Board for its consideration
and implementation.
(c) Where the ARMC is of the view
that a matter reported by it to the
Board has not been satisfactorily
resolved resulting in a breach of
the Main Market Listing
Requirements of Bursa Malaysia
Securities Berhad, the ARMC is
authorised to promptly report
such matters to Bursa Malaysia
Securities Berhad.
Duties And Responsibilities Of The
ARMC
(a) To consider the appointment of
the external auditor, the audit fee
and any questions of resignation
or dismissal;
(b) To pre-approve all non-audit
services to be provided by the
independent auditors to the
Company in accordance with the
Committee’s policies and
procedures, and regularly review:
 (i) the adequacy of the
Committee’s policies and
procedures for pre-approving
the use of the independent
auditors for non-audit
services with a view to
auditor independence;
(ii) the non-audit services pre-
approved in accordance with
the Committee’s policies and
procedures; and
(iii) fees paid to the independent
auditors for pre-approved
non-audit services;
(c) To monitor regular rotation of
audit partners by the independent
auditors;
(d) To discuss with the external
auditor before the audit
commences, the nature and
scope of the audit, and ensure
co-ordination where more than
one audit firm is involved;
(e) To act as an intermediary between
the management or other
employees, and the external
auditors;
(f) To review the quarterly and year-
end financial statements, focusing
particularly on:
• any changes in accounting
policies and practices;
• significant adjustments arising
from the audit;
• litigation that could affect
results materially;
• the going concern assumption;
and
• compliance with accounting
standards and other legal
requirements;
(g) T o d i s c u s s p r o b l e m s a n d
reservations arising from the
interim and final audits, and any
matter the auditor may wish to
discuss (in the absence of
management where necessary);
(h) To review the external auditor’s
management letter and
management’s response;
(i) In relation to the internal audit
function:
• review the adequacy of the
scope, functions, competency
and resources of the internal
audit function, and that it has
the necessary authority to
carry out its work;
• review the internal audit plan
and results of the internal audit
process and where necessary
ensure that appropriate action
is taken on the recommendation
of the internal audit function;
• review the independence of
the internal audit function;
• approve the appointment or
termination of employment of
the head of the internal audit
function and to review his/her
performance appraisal or
assessment; and
• r e c e i v e r e p o r t s f r o m
management on resignations
of other internal audit staff
members, their reasons for
resigning and to review the
performance appraisal or
assessment of the other
internal audit staff conducted
by management;
(j) To consider and report back to
the Board any related party
transactions and conflict of interest
situation that may arise within the
company or group including any
course of conduct that raises
questions of management
integrity;
(k) To consider the major findings of
internal investigations and
management’s response;
(l) To consider other topics as
defined by the Board;
(m) To review and verify that the
allocation of options pursuant to
the Company’s share scheme for
employees (“ESOS”) complies with
the criteria disclosed to the
employees;
(n) To review and consider the
appropriateness and adequacy of
internal processes for risk oversight
and management. In particular,
the Committee shall:
Annual Report 2011
• consider whether the Group
has effective management
systems in place to identify,
assess, monitor and manage
pg 57
its key risk areas;
• review, approve and ensure
SCOMI GROUP BHD
adherence to the Group’s risk
management policy and
strategies;
• e s t a b l i s h t h e r o l e s a n d
respective accountabilities of
the Board, the Committee and
Management in managing
risks;
• provide for regular review of
the effectiveness of the
Group’s implementation of its
risk management system;
• receive regular reports on the
risk profile of the Group,
describing material risks (both
financial and non-financial)
facing the Group and action
plans taken by management
to mitigate the risks; and
• review the appropriateness of
management’s response to
key risk areas;
 AUDIT AND RISK MANAGEMENT COMMITTEE REPORT

(o) In relation to major business including reviewing the effectiveness (c) The Company Secretary shall act
investment proposals: of these systems and approving as secretary of the ARMC and
management’s programmes and shall be responsible, with the
• to review and evaluate the risk
policies to ensure effectiveness. concurrence of the Chairman of
associated with any proposal
the ARMC, for drawing up and
prepared by the project
Meetings and Minutes circulating the agenda and notice
sponsor(s); particularly that all
(a) The ARMC shall meet at least of meetings together with supporting
risks have been considered
four (4) times during a financial explanatory documentation to all
and are within the Group’s
year. In order to form a quorum, ARMC members at least five (5)
strategic goals and that action
the majority of members present days prior to each meeting. If there
plans or strategies to mitigate
must be independent directors. is a unanimous consent by the
identified risks are adequate;
members of the Committee present
• to conduct meetings with the
(b) The CEO, the Head of the Group in the meeting, a short notice shall
project sponsor(s) and Chief
Internal Audit Department and a suffice.
Executive Officer (“CEO”), if
representative of the external
necessary, to discuss risk
auditors shall normally attend (d) The Secretary of the ARMC shall
matters related to the proposal;
meetings. Other persons may record all proceedings and
and
attend meetings only upon the minutes are to be prepared and
• to make a recommendation to
SCOMI GROUP BHD

invitation of the ARMC. However, circulated to the ARMC members

the Board on the appropriate
at least twice a year the Committee and the Board of Directors. In
course of action to take;
shall meet with the external auditors addition, the Chairman of the
without executive board members ARMC will report significant
(p) To oversee the Group’s internal
or management present. matters and resolutions, at each
compliance and control systems
pg 58
Board meeting.
established by management,
Annual Report 2011

MEMBERSHIP AND MEETINGS

The members of the ARMC during the period under review comprised the following Board Members:

Attendance
Name ARMC Designation (attended/held)

Dato’ Abdul Rahim Bin Abu Bakar Chairman Independent Non-Executive Director 6/6

Foong Choong Hong Member Non-Independent Non-Executive Director 4/4

(resigned on 31 August 2011)

Datuk Haron Bin Siraj Member Independent Non-Executive Director 6/6

Tan Sri Nik Mohamed Bin Nik Yaacob Member Independent Non-Executive Director 2/2
(appointed on 31 August 2011)

Dato’ Mohammed Azlan Bin Hashim Member Independent Non-Executive Director 2/2
(appointed on 31 August 2011)

During the financial year under review, six (6) meetings were held on 23 February 2011, 20 April 2011, 25 May 2011,
22 August 2011, 29 November 2011 and 20 December 2011.
SUMMARY OF ACTIVITIES FOR
THE YEAR
In accordance with the approved
Terms of Reference of the ARMC,
the ARMC carried out the following
activities in the financial year ended
31 December 2011:
1. reviewed and recommended to
the Board the re-appointment of
the external auditors and the audit
fee;
2. reviewed and discussed with the
external auditor the nature and
scope of their audit and ensure
that the audit is comprehensive;
3. reviewed the performance and
effectiveness of the external
auditor for the statutory audit
services;
4. reviewed the quarterly and annual
financial reports of the Group and
the Company prior to submission
to the Board for consideration
and approval;
5. reviewed the financial performance
of contributing subsidiaries and
associated companies;
6. reviewed the external auditor’s
management letter and
management’s response;
7. considered the major findings by
the external auditors and
management’s responses thereto;
8. conducted meetings with the
external auditors without the
presence of the executive board
members and management;
9. reviewed the internal audit plan
and scope of work for the year for
the Group and the Company,
prepared by the external service
provider for internal audit services;
10. reviewed the internal audit reports,
both planned and ad-hoc or
investigative audits, which
incorporated audit findings,
recommendations and management
responses for the Group and the
Company by the external service
provider for internal audit services;
11. reviewed the performance of the
external service provider for
internal audit services;
12. reviewed and recommended to
the Board the re-appointment of
the external service provider for
internal audit services and the
audit fee;
13. conducted meeting with the
external service provider for
internal audit services without the
presence of the executive board
members and management;
14. reviewed and verified the related
party transactions and provide
recommendations on the same to
the Board;
15. reviewed and verified that the
allocation of options pursuant to
the Company’s ESOS is in
compliance with the criteria for
allocation of options as disclosed
to employees of the Company for
the financial year;
16. reviewed the Group’s systems
and practices for the identification
and management of risks;
17. reviewed the Group and each
business divisions’ risk profiles
and actions plan taken by the
Management to control and
mitigate the risks;
18. reviewed and evaluated risk
considerations in relation to major
business investment proposals
and adequacy of action plans to
mitigate risks identified; and
19. reviewed the annual Statements
on Corporate Governance, Internal
Control and ARMC report to be
published in the Annual Report.
INTERNAL AUDIT FUNCTION
The internal audit function of the Group
is outsourced to an external service
provider of internal audit services,
which is independent of the
management and operations (“the
Annual Report 2011
Internal Auditors”). The Internal Auditors
provide independent and objective
assessments on the adequacy and
effectiveness of the risk management,
internal control and governance
processes/framework of the Group. pg 59
Through the internal audit function, the
SCOMI GROUP BHD
Company undertakes regular and
systematic reviews of the system of
internal control so as to provide
reasonable assurance that such system
continues to operate satisfactorily and
effectively in the Group.
The Internal Auditors report directly to
the ARMC who reviews the internal
audit plans and scope of work for the
year for the Group and the Company
as well as the performance of the
Internal Auditors in undertaking their
internal audit function.
During the financial year under review,
the Internal Auditors conducted various
internal audit engagements in
accordance with the approved risk-
based internal audit plans that are
consistent with the corporate goal of
the Group. Details of the internal audit
activities carried out by the Internal
Auditors are as follow:
 AUDIT AND RISK MANAGEMENT COMMITTEE REPORT

1. prepared and presented a risk-based audit plan, audit

strategy, scope of work and resource requirements to the
ARMC and the Board for deliberation and approval;

2. evaluated and appraised the soundness, adequacy and

application of accounting, financial and other controls and
promoting effective controls in the Group and the Company
at reasonable cost;

3. carried out investigations and special reviews requested by

management;

4. ascertained the level of operational and business compliance

with established policies, procedures and statutory
requirements;

5. ascertained the extent to which the Group’s and the

Company’s assets are accounted for, verification of their
SCOMI GROUP BHD

existence and safeguarding assets from losses;

6. appraised the reliability and usefulness of information

developed within the Group and the Company for
management;
pg 60
7. identified and recommended opportunities for improvements
Annual Report 2011

to the existing system of internal control, operations and

processes in the Group and the Company; and

8. reviewed the annual Statement on Internal Control and

ARMC report to be published in the Annual Report.

All internal audit activities for financial year 2011 were conducted
by the Internal Auditors. The total costs incurred by the Group
for the internal audit function in 2011 was approximately
RM669,666.

This Statement is made in accordance with the resolution of the

Board dated 26 April 2012.
ADDITIONAL INFORMATION
1. Material Contracts involving Directors’ and Major Shareholders’ Interests
There are no material contracts involving Directors’ and Major Shareholders’ Interest, either still subsisting at the end of the
financial year or, entered into since the end of the previous financial year.

2. Status of utilisation of proceeds raised from Corporate Exercise

(a) As disclosed in Note 8 to the financial statements, the Group completed the disposal of Drilling Waste Management
business by Scomi Oiltools, Inc. and Scomi Oiltools De Mexico, S. De R.L de C.V to National Oilwell Varco, L.P and
National Oilwell Varco Solutions S.A. de C.V. on 10 and 11 November 2011 respectively for a total cash consideration of
USD35.0 million (approx RM108.56 million), the utilisation of which is set out below.

USD’000 RM’000

Part pre-pepayment of KMCOB Murabahah Bonds 29,000 89,668
Incidental expense related to the disposal 6,000 18,893

35,000 108,561

(b) As disclosed in Note 28(b), the Group completed the issuance of a RM342.55 million Sukuk Murabahah on
14 December 2011. The proceeds were utilised for early redemption of the outstanding amount of the KMCOB Murabahah

Annual Report 2011

Bonds in full.
(c) As disclosed in Note 44(b), the Group completed the disposal of 100 ordinary shares with a par value of NOK1,000 each
representing the entire issued and paid up share capital in Scomi Oiltools AS to Knud Holm Prosjekt AS, a Norwegian
company, for a total cash consideration of NOK0.1 million (equivalent to approximately RM0.06 million) in March 2012.
The proceeds were utilised as working capital for the Group. pg 61
(d) As disclosed in Note 44(b), the Group completed the disposal of 498 registered shares of RIs10,000.00 each representing

SCOMI GROUP BHD

99.6% of the issued and paid up share capital in SOKL to Behnam Mousavi Moustafa, for a total cash consideration of
USD17.0 million (approximately RM52.1 million) on 11 April 2012. As per the share sale agreement, the disposal proceeds
are payable in three instalments as follows:

USD’000 RM’000

(i) within one year of the date of share sale agreement is executed 5,100.1 15,630.3
(ii) within one year of (i) 5,100.0 15,630.0
(iii) within one year of (ii) 6,799.9 20,839.7

17,000.0 52,100.0

The disposal proceeds are proposed to be utilised as working capital for the Group.

(e) On 17 May 2012, the Company announced that it had entered into a conditional share sale agreement with AOS Orwell
Limited for the disposal of its 100% equity interest in Scomi Nigeria Pte Ltd (“SNPL”) and 2% equity interest in Oiltools
Africa Limited for a total cash consideration of USD39.77 million (subject to adjustments, if any) (or an equivalent of
approximately RM123.90 million based on the exchange rate of USD1: RM3.1155). The disposal has not completed as at
the date of this Annual Report was sent for printing.

The disposal proceeds are proposed to be utilised as follows:

USD’000 RM’000

Repayment of borrowings at SGB and SNPL 81,619.3 106,924.0
Acquisition of remaining 49.9% interest in Titan Tubular Nigeria Limited
held by minority shareholders 8,204.4 10,748.0
Incidental expense related to the disposal 4,756.4 6,231.0

39,770.0 123,903.0

 ADDITIONAL INFORMATION

3. Non-Audit Fees
Non-Audit fees incurred during the financial year under review ended 31 December 2011 amounted to RM2,417.

4. Share Buy-backS
There was no share buy-back during  the financial year under review ended 31 December 2011. As disclosed in Note 34(b), all
shares bought back previously have been maintained as treasury shares and there has not been any resale of the Company’s
treasury shares.

Details of the treasury shares are as tabulated below.

Average
Lowest Highest purchase Total
No. of shares purchase purchase price of purchase
bought back price price shares price
RM RM RM RM

Balance as at 1 Jan/31 Dec 2011 14,427,200 0.406 1.479 1.296 18,695,745.96

The purchase price tabulated above includes incidental costs and is the average price for all the shares purchased in a calendar
month.
SCOMI GROUP BHD

5. Options, Warrants and Convertible Securities

During the financial year, 5,029,875 new ordinary shares of RM0.10 each were issued by the Company by way of:
(i) issuance of 3,904,875 new ordinary shares of RM0.10 each pursuant to the conversion of 15,619,500 Irredeemable Convertible
Secured Loan Stocks (“ICSLS”) of RM0.10 each on the basis of 4 units of ICSLS for 1 ordinary share; and
pg 62 (ii) issuance of 1,125,000 new ordinary shares of RM0.10 each pursuant to the exercise of share options under the
Company’s Employees’ Share Options Scheme (“ESOS”).
Annual Report 2011

For the financial year ended 31 December 2011, the percentage of ESOS Options granted to Directors and Senior Management
is 10.10% and cumulatively is 33.73% since the commencement of the ESOS.

6. Director’s Conflict of Interest

Save as disclosed below and the disclosures in the Notes to the Financial Statements, the Directors do not have any existing
conflicts of interest or any personal interest in any business arrangement involving Scomi Group Bhd (“SGB” or “the Company”):

Director Nature of existing conflict of interest Transaction

Tan Sri Nik Mohamed Tan Sri Nik Mohamed Bin Nik Yaacob is an Independent
Bin Nik Yaacob Non-Executive Director of the Company; and Non-
Independent Non-Executive Director of Scomi Oilfield
Limited, a 76.08% owned subsidiary of the Company
(“SOL”).
Datuk Mohamed Azman Datuk Mohamed Azman Bin Yahya is a Non-Independent
Bin Yahya Non-Executive Director of the Company; and a Director and
Major Shareholder of Symphony House Berhad, the holding
company of Symphony Share Registrars Sdn Bhd.
Dato’ Sreesanthan A/L Dato’ Sreesanthan A/L Eliathamby is an Independent Non-
Eliathamby Executive Director of the Company; and an Advocate &
Solicitor and a Partner of Kadir, Andri & Partners.
En Shah Hakim @ Puan Mazlina Binti Zain, the sister of, and person connected
Shahzanim Bin Zain to, En Shah Hakim @ Shahzanim Bin Zain is the owner of
Lintas Travel Services Sdn Bhd (“LTS”).
En Shah Hakim @ Shahzanim Bin Zain is the Chief
Executive Officer/Non-Independent Executive Director of
the Company; and a substantial shareholder of Suria
Business Solutions Sdn Bhd.
Provision of management and administrative
services for Nigerian machine shop by SOL to
SGB.
Provision of share registrar services by
Symphony Share Registrars Sdn Bhd to the
Company.
Provision of legal advisory services by Kadir,
Andri & Partners to the Company.
Provision of airline ticketing reservation and
ticket purchasing services by LTS to SGB.
Leasing Agreement with Orix Rentec (Malaysia)
Sdn Bhd for the leasing of personal computers,
which will be supplied to them by a related
party, Suria Business Solutions Sdn Bhd.

In each of the transactions listed above, the relevant Director concerned had declared the nature of his conflict of interest and had
abstained from deliberating and voting on the relevant resolutions of the Board of Directors of Scomi Group Bhd.
STATEMENT OF DIRECTORS’ RESPONSIBILITY
The Directors are required by the Companies Act, 1965 (“the Act”) to prepare the financial statements of Scomi Group Bhd
(“the Company”) and its subsidiaries (“the Group”) for each financial year which have been made out in accordance with the
applicable Financial Reporting Standards in Malaysia, the provisions of the Act and the Main Market Listing Requirements of
Bursa Malaysia Securities Berhad.

The Directors are responsible to ensure that the financial statements give a true and fair view of the state of affairs of the
Group and the Company at the end of the financial year and of the results and cash flows of the Group and the Company
for the financial year.

In preparing the financial statements, the Directors have:

• adopted appropriate accounting policies and applied them consistently;

• made judgments and estimates that are reasonable and prudent; and
• prepared the financial statements on a going concern basis.

The Directors are responsible to ensure that the Group and the Company keep accounting records which disclose with
reasonable accuracy the financial position of the Group and the Company which enable them to ensure that the financial
statements comply with the Act.

Annual Report 2011

The Directors are also responsible for taking such steps as are reasonably open to them to preserve the interests of
stakeholders and to safeguard the assets of the Group and to detect and prevent fraud and other irregularities.

The financial statements of the Company and the Group for the financial year ended 31 December 2011 are set out on
pages 66 to 179 of this Annual Report.
pg 63

SCOMI GROUP BHD

Financial Statements
66 Directors’ Report
72 Statements of Comprehensive Income
74 Statements of Financial Position
76 Consolidated Statement of Changes in Equity
78 Company Statement of Changes in Equity
79 Statements of Cash Flows
82 Notes to the Financial Statements
177 Statement by Directors
177 Statutory Declaration
178 Independent Auditors’ Report
 Directors’ Report
The Directors hereby submit their report with the audited financial statements of the Group and Company for the financial
year ended 31 December 2011.

PRINCIPAL ACTIVITIES
The principal activities of the Company are investment holding and the provision of management services.

The principal activities of the Group consist of the provision of integrated drilling fluids and drilling waste management
solutions, production chemicals, design and manufacture of monorail, transportation infrastructure systems equipment and
services, commercial coaches and special purpose vehicles and rail solutions; and the provision of marine vessel transportation
service.

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

FINANCIAL RESULTS
Group Company
RM’000 RM’000
SCOMI GROUP BHD

Loss for the financial year (296,531) (168,727)

Attributable to:
pg 66
Owners of the Company (232,332) (168,727)
Annual Report 2011

Non-controlling interests (64,199) –

DIVIDENDS
No dividend has been paid or proposed by the Company since the end of the Company’s previous financial year.

The Directors do not recommend any dividend for the financial year ended 31 December 2011.

RESERVES AND PROVISIONS

Material transfers to or from reserves or provisions during the financial year are as disclosed in the financial statements.

ISSUE OF SHARES
During the financial year, 5,029,875 new ordinary shares of RM0.10 each were issued by the Company by way of:

(a) Issuance of 3,904,875 new ordinary shares of RM0.10 each pursuant to the conversion of Irredeemable Convertible
Secured Loan Stocks (“ICSLS”); and

(b) Issuance of 1,125,000 new ordinary shares of RM0.10 each pursuant to the exercise of share options under the
Company’s Employees’ Share Options Scheme (“ESOS”) at an option price of RM0.17 per share; and

The newly issued shares ranked pari passu in all respects with the existing ordinary shares of the Company.

Details of movements in share capital are disclosed in Note 34(a) to the financial statements.
TREASURY SHARES
There was no purchase of Treasury shares during the financial year.

Details of the Treasury shares are set out in Note 34(b) to the financial statements.

EMPLOYEES’ SHARE OPTION SCHEME

The Company implemented an Employees’ Share Option Scheme (“ESOS”) on 28 April 2003 for a period of 10 years. The
ESOS is governed by the By-Laws which were approved by the shareholders on 28 March 2003.

Details of the ESOS are set out in Note 34(c) to the financial statements.

The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose in this report,
the names of options holders who were granted less than 2,000,000 options under the ESOS during the financial year. This
information has been separately filed with the Companies Commission of Malaysia.

The option holders who have been granted ESOS during the financial year is as follows:

Annual Report 2011

Exercise price
Name of option holders Granted RM/share

Hilmy Zaini Zainal 2,000,000 0.24

Rohaida ali Badaruddin 2,000,000 0.24
pg 67
Loong Chun Nee 2,000,000 0.24
Wan Ruzlan Iskandar Wan Salaidin 2,000,000 0.24

SCOMI GROUP BHD

Ngu Hew Tak 2,000,000 0.24
Sharifah Norizan Shahabudin 2,000,000 0.24
Kanesan Veluppillai 2,000,000 0.24
Dinesh Chelvathurai 2,000,000 0.24

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

Significant events during the financial year are disclosed in Note 43 to the financial statements.

SIGNIFICANT EVENTS SUBSEQUENT TO THE DATE OF THE STATEMENT OF FINANCIAL POSITION

Significant events subsequent to the date of the statement of financial position are disclosed in Note 44 to the financial
statements.

DIRECTORS
The Directors who have held office during the period since the date of the last report are as follows:

Tan Sri Asmat bin Kamaludin

Tan Sri Nik Mohamed bin Nik Yaacob
Datuk Haron bin Siraj
Datuk Mohamed Azman bin Yahya
Dato’ Mohammed Azlan bin Hashim
Dato’ Abdul Rahim bin Abu Bakar
Dato’ Sreesanthan a/l Eliathamby
Foong Choong Hong
Shah Hakim @ Shahzanim bin Zain
 Directors’ Report

DIRECTORS’ INTERESTS
According to the Register of Directors’ Shareholdings, particulars of interests of Directors who held office at the end of the
financial year in shares, options over shares, Irredeemable Convertible Secured Loan Stocks, Irredeemable Convertible
Unsecured Loan Stocks and warrants in the Company and its subsidiary were as follows:

Number of ordinary shares of RM0.10 each in the Company

At At
1.1.2011 Bought Sold 31.12.2011
’000 ’000 ’000 ’000

Direct interest in the Company

* Tan Sri Asmat bin Kamaludin 265 – – 265
Datuk Haron bin Siraj 120 – – 120
Foong Choong Hong 410 – – 410
> Shah Hakim @ Shahzanim bin Zain 529 2,250 – 2,779
Indirect interest in the Company
+ Datuk Mohamed Azman bin Yahya 10,000 – – 10,000
# Shah Hakim @ Shahzanim bin Zain 172,275 – – 172,275
SCOMI GROUP BHD

Number of ordinary shares of RM1.00 each in a subsidiary

At At
1.1.2011 Bought Sold 31.12.2011
’000 ’000 ’000 ’000
pg 68
Direct interest in Scomi Engineering Bhd
Annual Report 2011

Dato’ Abdul Rahim bin Abu Bakar 220 – – 220

> Shah Hakim @ Shahzanim bin Zain 500 123 – 623

Number of ordinary shares of RM1.00 each in a subsidiary

At At
1.1.2011 Bought Sold 31.12.2011
’000 ’000 ’000 ’000
Indirect interest in Scomi Engineering Bhd
^ Tan Sri Asmat bin Kamaludin 20 – (8) 12
“ Shah Hakim @ Shahzanim bin Zain 192,568 – – 192,568

Number of options over ordinary shares of RM0.10 each in the Company

Exercise At At
price 1.1.2011 Forfeited Exercised 31.12.2011
RM/share ’000 ’000 ’000 ’000

Direct interest in the Company

Tan Sri Asmat bin Kamaludin 1.24 700 – – 700
Tan Sri Nik Mohamed bin Nik Yaacob 1.34 600 – – 600
Datuk Haron bin Siraj 1.24 600 – – 600
Datuk Mohamed Azman bin Yahya 1.24 600 – – 600
Dato’ Mohammed Azlan bin Hashim 1.34 600 – – 600
Dato’ Sreesanthan a/l Eliathamby 1.21 420 – – 420
Foong Choong Hong 1.24 350 – – 350
Shah Hakim @ Shahzanim bin Zain 0.17 1,357 – – 1,357
1.12 6,000 – – 6,000
Indirect interest in the Company
@ Tan Sri Asmat bin Kamaludin 0.94 140 (140) – –
DIRECTORS’ INTERESTS (CONTINUED)
~ Number of options over ordinary shares of RM1.00 each in a subsidiary
Exercise At At
price 1.1.2011 Forfeited Exercised 31.12.2011
RM/share ’000 ’000 ’000 ’000

Direct interest in Scomi Engineering Bhd

Shah Hakim @ Shahzanim bin Zain 1.00 1,500 – – 1,500
Dato’ Abdul Rahim bin Abu Bakar 1.00 300 – – 300

~ The options held over ordinary shares in Scomi Engineering Bhd were granted pursuant to Scomi Engineering Bhd’s
Employees’ Share Option Scheme, which was implemented on 26 January 2006.

Irredeemable Convertible Secured Loan Stocks (“ICSLS”)

in the Company
At At
1.1.2011 Bought Sold 31.12.2011
’000 ’000 ’000 ’000

Annual Report 2011

Direct interest in the Company
* Tan Sri Asmat bin Kamaludin 398 – – 398
Indirect interest in the Company
+ Datuk Mohamed Azman bin Yahya 15,000 – – 15,000
pg 69

Warrants in the Company

SCOMI GROUP BHD

At At
1.1.2011 Bought Sold 31.12.2011
’000 ’000 ’000 ’000

Direct Interest in the Company

* Tan Sri Asmat bin Kamaludin 53 – – 53
Indirect interest in the Company
+ Datuk Mohamed Azman bin Yahya 2,000 – – 2,000

Irredeemable Convertible Unsecured Loan Stocks (“ICULS”)

in a subsidiary
At At
1.1.2011 Bought Sold 31.12.2011
’000 ’000 ’000 ’000

Indirect interest in Scomi Engineering Bhd

“ Shah Hakim @ Shahzanim bin Zain 54,782 – – 54,782

* Deemed interested by virtue of Section 6A(2) of the Companies Act, 1965 through Tan Sri Asmat bin Kamaludin’s direct
interest in Bi-Bot Holdings Sdn Bhd, whereby 215,000 shares, 322,500 ICSLS and 43,000 warrants are held through
CIMSEC Nominees (Tempatan) Sdn Bhd.

^ Deemed interested by virtue of Section 134(12)(c) of the Companies Act, 1965 through Tan Sri Asmat bin Kamaludin’s
children’s direct shareholding in Scomi Engineering Bhd.

@ Deemed interested by virtue of Section 134(12)(c) of the Companies Act, 1965 through the options granted to Tan Sri
Asmat bin Kamaludin’s daughter, Sarah binti Asmat pursuant to the Company’s ESOS to subscribe for ordinary shares
in SGB.
 Directors’ Report

DIRECTORS’ INTERESTS (CONTINUED)

+ Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through Datuk Mohamed Azman bin Yahya
and his spouse’s direct shareholdings in Gajahrimau Capital Sdn Bhd, whereby all 10,000,000 shares, 15,000,000 ICSLS
and 2,000,000 warrants, are held through ABB Nominees (Tempatan) Sdn Bhd.

> 2,250,000 shares held through BHLB Trustee Berhad (PCM for Shah Hakim @ Shahzanim bin Zain).

# Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through Shah Hakim @ Shahzanim bin Zain’s
shareholding in Kaspadu Sdn Bhd.

By virtue of his interests in the shares and options in the Company as disclosed above, Shah Hakim @ Shahzanim bin Zain
is deemed to have an interest in the shares of all its subsidiaries.

Other than as disclosed above, according to the Register of Directors’ Shareholdings, the Directors in office at the end of
the financial year did not hold any interest in the shares, options over shares, ICSLS and warrants in the Company or shares,
options over shares, ICULS and debentures of its related corporations during the financial year.

DIRECTORS’ BENEFITS
SCOMI GROUP BHD

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the object or
objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of
the Company or any other body corporate, except for options over shares granted by the Company and a subsidiary, Scomi
Engineering Bhd, to eligible employees including certain Directors of the Company pursuant to the Company’s and Scomi
Engineering Bhd’s respective Employees’ Share Option Schemes, ICSLS and warrants granted by the Company and ICULS
granted by a subsidiary, Scomi Engineering Bhd.
pg 70

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than
Annual Report 2011

Directors’ remuneration as disclosed in Note 9 to 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 he is a member, or with a company in which he has a
substantial financial interest, except as disclosed in Note 40 to the financial statements.

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS

Before the financial statements were made out, the Directors took reasonable steps:

(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance
for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance
had been made for doubtful debts; and

(b) to ensure that 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 Company had been written down to an amount which
they might be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances:

(a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the
financial statements of the Group and Company inadequate to any substantial extent; or

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

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

No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months
after the end of the financial year which, in the opinion of the Directors, will or may affect the ability of the Group or Company
to meet their obligations when they fall due.
STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (CONTINUED)
At the date of this report, there does not exist:

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

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

At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the
financial statements which would render any amount stated in the financial statements misleading.

In the opinion of the Directors:

(a) other than as disclosed in Note 43, the results of the operations of the Group and Company during the financial year
were not substantially affected by any item, transaction or event of a material and unusual nature; and

(b) other than as disclosed in Note 44, 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 is likely to affect substantially

Annual Report 2011

the results of the operations of the Group or Company for the financial year in which this report is made.

AUDITORS
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
pg 71

Signed on behalf of the Board of Directors in accordance with their resolution dated 30 April 2012.

SCOMI GROUP BHD

TAN SRI ASMAT BIN KAMALUDIN SHAH HAKIM @ SHAHZANIM BIN ZAIN
Chairman Chief Executive Officer
 STATEMENTS OF COMPREHENSIVE INCOME
for the financial year ended 31 December 2011

Group Company
Note 2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
(Restated)

Continuing operations
Revenue 4 1,383,737 1,521,935 4,167 72,234
Cost of sales (1,080,616) (1,171,646) – –

Gross profit 303,121 350,289 4,167 72,234

Other operating income 19,269 34,041 9,443 8,581
Administrative expenses (81,144) (214,395) (12,575) (15,068)
Selling and distribution expenses (77,186) (96,599) – –
Other operating expenses (184,482) (90,426) (152,400) –
Finance costs 6 (50,789) (64,355) (16,696) (17,422)
Share of results of an associate (48,536) (87,225) – –
Share of results of jointly controlled entities (439) (739) – –
SCOMI GROUP BHD

(Loss)/profit before taxation 5 (120,186) (169,409) (168,061) 48,325

Taxation expense 7 (48,692) (20,209) (666) (1,100)

(Loss)/profit from continuing operations (168,878) (189,618) (168,727) 47,225

pg 72 Discontinued operations
Loss from discontinued operations, net of tax 8 (127,653) (3,269) – –
Annual Report 2011

(Loss)/profit for the year (296,531) (192,887) (168,727) 47,225

(Loss)/profit attributable to:

Owners of the Company (232,332) (172,906) (168,727) 47,225

Non-controlling interests (64,199) (19,981) – –

(Loss)/profit for the financial year (296,531) (192,887) (168,727) 47,225

Sen Sen
Loss per share attributable
to owners of the Company: 10
– basic (16.69) (12.61)

– diluted (16.66) (12.46)

 Group Company
Note 2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
(Restated)

Other comprehensive (loss)/income:

Currency translation differences (5,971) (5,153) – –

Available-for-sale financial assets 2,467 (80) – –
Cash flow hedges 11,816 (2,589) – –
Share of other comprehensive
profit/(loss) of an associate 4,480 (21,028) – –

Other comprehensive loss

for the financial year, net of tax 12,792 (28,850) – –

Total comprehensive (loss)/income

for the financial year (283,739) (221,737) (168,727) 47,225

Annual Report 2011

Total comprehensive (loss)/income attributable to:

Owners of the Company (220,658) (203,727) (168,727) 47,225

Non-controlling interests (63,081) (18,010) – –
pg 73
Total comprehensive (loss)/income
(283,739) (168,727)

SCOMI GROUP BHD

for the financial year (221,737) 47,225

The notes set out on pages 82 to 176 form an integral part of, and should be read in conjunction with, these financial
statements.
 STATEMENTS OF FINANCIAL POSITION
as at 31 December 2011

Group Company
Note 2011 2010 1.1.2010 2011 2010
RM’000 RM’000 RM’000 RM’000 RM’000
(Restated) (Restated)

NON-CURRENT ASSETS
Property, plant and equipment 12 336,590 415,585 583,146 1,631 2,447
Intangible assets 13 321,699 380,707 560,112 – –
Investment properties 14 1,559 1,213 1,361 4,584 4,678
Prepaid land lease payments 15 316 1,787 2,248 – –
Investments in subsidiaries 16 – – – 636,894 637,419
Investments in an associate 17 216,514 268,859 379,118 216,132 360,124
Investments in jointly
controlled entities 18 – 19 5,422 – –
Other financial receivable 19 – – – – 17,636
Available-for-sale financial assets 20 1,516 1,516 1,112 – –
Deferred tax assets 38 46,634 78,724 78,033 672 1,674
Derivative financial assets 21 – 24,465 6,835 – –

924,828 1,172,875 1,617,387 859,913 1,023,978

SCOMI GROUP BHD

CURRENT ASSETS
Inventories 22 223,303 200,380 298,529 – –
Receivables, deposits
and prepayments 23 902,080 863,388 829,131 64,556 101,961
pg 74 Tax recoverable 34,006 41,004 33,290 2,294 2,765
Derivative financial assets 21 – 7,691 1,577 – –
Annual Report 2011

Short-term deposits,
cash and bank balances 24 157,447 176,388 313,123 13,082 9,334

1,316,836 1,288,851 1,475,650 79,932 114,060

Non-current asset classified as
held for sale 25 – 4,663 – – –

1,316,836 1,293,514 1,475,650 79,932 114,060

LESS: CURRENT LIABILITIES

Payables 27 539,976 468,985 640,165 11,568 16,572
Borrowings 28 744,851 471,356 488,548 222,305 120,698
Provisions 29 2,267 5,235 8,929 – –
Derivative financial liabilities 21 294 – – – –
Current tax liabilities 32,815 24,743 35,485 – –
Deferred government grant 30 2,155 1,568 431 – –
Irredeemable convertible
secured loan stocks 31 3,188 3,382 5,254 3,188 3,382
Irredeemable convertible
unsecured loan stocks 32 14 33 – – –
Provision for retirement benefits 37 390 323 – – –

1,325,950 975,625 1,178,812 237,061 140,652

NET CURRENT (LIABILITIES)/

ASSETS (9,114) 317,889 296,838 (157,129) (26,592)

915,714 1,490,764 1,914,225 702,784 997,386

 Group Company
Note 2011 2010 1.1.2010 2011 2010
RM’000 RM’000 RM’000 RM’000 RM’000
(Restated) (Restated)

CAPITAL AND RESERVES

ATTRIBUTABLE TO OWNERS
OF THE COMPANY
Share capital 34(a) 118,769 118,266 108,680 118,769 118,266
Share premium 35 276,793 275,926 256,641 276,793 275,926
Treasury shares 34(b) (18,696) (18,696) (18,696) (18,696) (18,696)
Other reserves 36 (246,095) (251,592) (205,282) 98,898 111,739
Retained earnings 378,591 602,647 778,894 224,779 379,696

Equity and reserves attributable

to owners of the Company 509,362 726,551 920,237 700,543 866,931
Non-controlling interests 71,831 134,610 172,814 – –

TOTAL EQUITY AND RESERVES 581,193 861,161 1,093,051 700,543 866,931

Annual Report 2011

NON-CURRENT LIABILITIES
Payables 27 5,629 5,520 – – 260
Borrowings 28 320,842 608,164 797,525 2,241 126,380
Deferred government grant 30 – – 1,439 – –
Derivative financial liabilities 21 – 4,919 3,129 – –
pg 75
Provision for retirement benefits 37 4,762 4,358 4,182 – –
Deferred tax liabilities 38 3,285 2,786 4,836 – –

SCOMI GROUP BHD

Irredeemable convertible
secured loan stocks 31 – 3,815 10,063 – 3,815
Irredeemable convertible
unsecured loan stocks 32 3 41 – – –

334,521 629,603 821,174 2,241 130,455

915,714 1,490,764 1,914,225 702,784 997,386

The notes set out on pages 82 to 176 form an integral part of, and should be read in conjunction with, these financial
statements.
 Annual Report 2011 SCOMI GROUP BHD

pg 76
Attributable to owners of the Company
Non-
Share Share Treasury Other Retained controlling Total
Group Note capital premium shares reserves earnings Total interests equity
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2011
– as previously stated 118,266 275,926 (18,696) 6,694 477,017 859,207 134,610 993,817
– prior year adjustments 47 – – – (258,286) 125,630 (132,656) – (132,656)

At 1 January 2011, as restated 118,266 275,926 (18,696) (251,592) 602,647 726,551 134,610 861,161

Loss for the financial year – – – – (232,332) (232,332) (64,199) (296,531)

Other comprehensive (loss)/income:

– Currency translation differences – – – (3,515) – (3,515) (2,456) (5,971)
– Available-for-sale financial assets – – – 1,719 – 1,719 748 2,467
– Cash flow hedges – – – 8,990 – 8,990 2,826 11,816
– Share of other comprehensive
loss of associate – – – 4,480 – 4,480 – 4,480
CHANGES IN EQUITY
for the financial year ended 31 December 2011

Total other comprehensive

(loss)/income – – – 11,674 – 11,674 1,118 12,792

Total comprehensive loss – – – 11,674 (232,332) (220,658) (63,081) (283,739)

Share of reserves in subsidiaries

and associates – – – (138) – (138) 474 336
Share options:
– proceeds from shares issued 34(a),35 112 79 – – – 191 – 192
CONSOLIDATED STATEMENT OF

– value of employee services 36 – – – 2,516 – 2,516 – 2,516

– transfer upon exercise 36 – – – – – – – –
– value of options lapsed/forfeited 36 – – – (8,241) 8,241 – – –
Conversion of ICULS – – – (69) – (69) – (69)
Conversion of ICSLS 34(a),35,36 391 788 – (222) – 957 – 956
Dilution of interest in subsidiaries – – – – – – 75 75
Disposal of jointly controlled entity 36,41(b) – – – (23) 35 12 – 12
Dividend paid to non-controlling
interests of a subsidiary – – – – – – (247) (247)

At 31 December 2011 118,769 276,793 (18,696) (246,095) 378,591 509,362 71,831 581,193

 Attributable to owners of the Company
Non-
Share Share Treasury Other Retained controlling Total
Group Note capital premium shares reserves earnings Total interests equity
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2010
– as previously stated 108,680 256,641 (18,696) 53,004 664,994 1,064,623 172,814 1,237,437
– effect of adopting FRS 139 – – – (3,809) 8,906 5,097 (146) 4,951
– prior year adjustments 47 – – – (258,286) 113,900 (144,386) – (144,386)

At 1 January 2010, as restated 108,680 256,641 (18,696) (209,091) 787,800 925,334 172,668 1,098,002
Loss for the financial year – – – – (172,906) (172,906) (19,981) (192,887)

Other comprehensive (loss)/income:

– Currency translation differences – – – (7,769) – (7,769) 2,616 (5,153)

– Available-for-sale financial assets – – – (54) – (54) (26) (80)
– Cash flow hedges – – – (1,970) – (1,970) (619) (2,589)
– Share of other comprehensive loss
of associate – – – (21,028) – (21,028) – (21,028)

Total other comprehensive

(loss)/income – – – (30,821) – (30,821) 1,971 (28,850)

Total comprehensive loss – – – (30,821) (172,906) (203,727) (18,010) (221,737)

Share of reserves in subsidiaries

and associates – – – 13 – 13 (234) (221)
Share options:
– proceeds from shares issued 34(a),35 136 95 – – – 231 – 231
– value of employee services 36 – – – 2,116 – 2,116 – 2,116
– transfer upon exercise 36 – – – (910) – (910) 910 –
Issue of ICULS 36 – – – 6,020 – 6,020 – 6,020
Conversion of ICULS – – – (4,803) – (4,803) – (4,803)
Conversion of ICSLS 34(a),35,36 9,450 19,190 – (26,363) – 2,277 – 2,277
Dilution of interest in subsidiaries – – – – – – 9,787 9,787
Disposal of subsidiaries – – – 12,247 (12,247) – (251) (251)
Dividend – – – – – – (30,260) (30,260)

At 31 December 2010 118,266 275,926 (18,696) (251,592) 602,647 726,551 134,610 861,161

The notes set out on pages 82 to 176 form an integral part of, and should be read in conjunction with, these financial statements.

SCOMI GROUP BHD Annual Report 2011

pg 77
 COMPANY STATEMENT OF
CHANGES IN EQUITY
for the financial year ended 31 December 2011

Non-distributable Distributable
Share Share Treasury Other Retained
Note capital premium shares reserves earnings Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Company
At 1 January 2011 118,266 275,926 (18,696) 111,739 379,696 866,931

Loss for the financial year – – – – (168,727) (168,727)

Share options:
– proceeds from shares issued 34(a),35 113 79 – – – 192
– value of employees services 36 – – – 1,191 – 1,191
– Transferred to subsidiaries – – – (11,066) 11,066 –
– value of options lapsed/forfeited – – – (2,744) 2,744 –

Conversion of ICSLS 34(a),35,36 390 788 – (222) – 956

SCOMI GROUP BHD

At 31 December 2011 118,769 276,793 (18,696) 98,898 224,779 700,543

pg 78 Company
At 1 January 2010
Annual Report 2011

– as previously stated 108,680 256,641 (18,696) 136,983 329,185 812,793

– effect of adopting FRS 139 – – – – 3,286 3,286

At 1 January 2010, as restated 108,680 256,641 (18,696) 136,983 332,471 816,079

Profit for the financial year – – – – 47,225 47,225

Share options:
– proceeds from shares issued 34(a),35 136 95 – – – 231
– value of employees services 36 – – – 1,119 – 1,119

Conversion of ICSLS 34(a),35,36 9,450 19,190 – (26,363) – 2,277

At 31 December 2010 118,266 275,926 (18,696) 111,739 379,696 866,931

The notes set out on pages 82 to 176 form an integral part of, and should be read in conjunction with, these financial
statements.
STATEMENTS OF CASH FLOWS
for the financial year ended 31 December 2011

Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
(Restated)

CASH FLOWS FROM OPERATING ACTIVITES

(Loss)/profit before taxation from:
– continuing operation (120,186) (169,409) (168,061) 48,325
– discontinued operation (105,068) (5,432) – –

Adjustments for:

Depreciation
– property, plant and equipment 51,959 66,616 826 894
– investment properties 144 148 94 –
Amortisation
– intangible assets 2,161 1,773 – –
– prepaid land lease payment 1,460 1,083 – –
Impairment losses

Annual Report 2011

– property, plant and equipment 3,628 8,298 – –
– intangible assets 6,313 6,282 – –
– receivables 11,665 17,928 – –
– investment properties 455 – – –
– available-for-sale investments 2,467 – – –
– amount due from subsidiaries – – 7,807 – pg 79
Impairment on investment in a subsidiary – – 600 –

SCOMI GROUP BHD

Impairment on investment in associate 8,627 – 143,992 –
Allowance for obsolete stocks 2,972 5,575 – –
Write back of government grant – (1,439) – –
Inventories written down 957 3,894 – –
Unrealised loss/(gain) on foreign exchange 22,858 14,296 (344) (1,669)
Monetary adjustments (2,417) 9,236 – –
Hyperinflation adjustments 3,218 8,227 – –
Provision for tax penalties 872 1,551 – –
Gain on disposal of property, plant and equipment (1,202) (49) (60) (12)
Property, plant and equipment written off 361 1,833 – 219
Bad debts written off/(recovered) 2,085 1,336 – –
Fair value gain on financial instrument – derivatives (556) (1,220) – –
(Gain)/loss on disposal of/dilution of
interest in subsidiary companies – (19,677) – –
Loss on discontinued operations 103,495 – – –
(Gain)/loss in disposal of jointly-controlled entity (4,548) – 35 –
Provision for retirement benefits 735 1,584 – –
Share of results in an associate 48,536 87,225 – –
Share of results jointly controlled entities 439 739 – –
Share option expense 2,516 2,116 1,081 417
Financing costs 50,789 66,144 16,696 17,422
Interest income (2,860) (3,895) (6,303) (4,957)
Dividend income – – – (66,436)

Operating cash flows before working capital changes 91,875 104,763 (3,637) (5,797)
 STATEMENTS OF CASH FLOWS
for the financial year ended 31 December 2011

Group Company
Note 2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
(Restated)

CASH FLOWS FROM OPERATING

ACTIVITIES (CONTINUED)
Changes in working capital:
Inventories (32,964) 47,687 – –
Receivables (89,544) (87,843) 51,025 (5,998)
Payables 83,294 (153,084) (7,177) (16,073)

Cash (used in)/generated from operations 52,661 (88,477) 40,211 (27,868)

Net tax (paid)/refund (23,458) (26,010) 471 –
Redundancy paid – (587) – –
Retirement benefits paid (89) (416) – –
Tax penalties (3,848) – – –
SCOMI GROUP BHD

Net cash generated from/(used in)

operating activities 25,266 (115,490) 40,682 (27,868)

CASH FLOWS FROM INVESTING ACTIVITIES

pg 80
Additional investment in subsidiaries – – – (117)
Net cash inflow/(outflow) from disposal/
Annual Report 2011

dilution of interest in subsidiaries – 300,092 – –

Net cash inflow from disposal of
jointly-controlled entity 9,096 – – –
Disposal of discontinued operations 89,668 – – –
Purchase of property, plant and equipment (50,823) (28,985) (15) (1,319)
Purchase of investment property (945) – (1,522)
Investment in ICULS – – (54,782)
Proceeds from disposal of
property, plant and equipment 10,553 7,678 65 23
(Purchase of)/proceeds from
sales of available-for-sales investments – (847) – –
Additions to other intangible assets (41,474) (12,657) – –
Repayment of other payables – (7,720) – (7,720)
Government grant received 587 1,137 – –
Dividend received – – – 63,547
Interest received 2,860 3,895 2,487 2,070
Prepayment of land lease – (832) – –

Net cash generated from investing activities 19,522 261,761 2,537 180
 Group Company
Note 2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
(Restated)

CASH FLOWS FROM FINANCING ACTIVITIES

Issue of share capital arising from
the exercise of ESOS 192 231 192 231
Subsidiary’s issuance of share capital
from the exercise of ESOS – 4,544 – –
Proceeds from issuance of ICULS – 6,570 – –
Proceeds from bank borrowings 480,079 57,284 – –
Repayment of bank borrowings (510,583) (254,021) (20,316) (50,423)
Interest paid on borrowings (49,659) (62,157) (19,347) (23,486)
Decrease/(increase) in short-term deposits
pledged as security (14,204) 15,243 457 2,665
Dividend paid to non-controlling interests
in subsidiaries (30,260) – –

Annual Report 2011

Net cash (used in) financing activities (94,175) (262,566) (39,014) (71,013)

NET (DECREASE)/INCREASE IN CASH

AND CASH EQUIVALENTS (49,388) (116,295) 4,205 (98,701)
pg 81
CASH AND CASH EQUIVALENTS

SCOMI GROUP BHD

AT BEGINNING OF FINANCIAL YEAR 26,183 157,121 1,896 100,597

CURRENCY TRANSLATION DIFFERENCES 989 (14,643) – –

CASH AND CASH EQUIVALENTS

AT END OF FINANCIAL YEAR (22,216) 26,183 6,101 1,896

CASH AND CASH EQUIVALENTS COMPRISE:

Short-term deposits with licensed banks 24 35,176 52,410 6,981 7,438
Cash and bank balances 24 122,271 123,978 6,101 1,896
Bank overdrafts 28 (129,360) (114,106) – –

28,087 62,282 13,082 9,334
Less: Short-term deposits pledged as security 24 (50,303) (36,099) (6,981) (7,438)

(22,216) 26,183 6,101 1,896

The notes set out on pages 82 to 176 form an integral part of, and should be read in conjunction with, these financial
statements.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

1 GENERAL INFORMATION
The principal activities of the Company are investment holding and the provision of management services.

The principal activities of the Group consist of the provision of integrated drilling fluids and drilling waste management
solutions, machine shop services, production chemicals, design and manufacture of monorail, transportation infrastructure
systems equipment and services, commercial coaches and special purpose vehicles and the provision of marine vessel
transportation service.

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

The Company is a public limited liability company, incorporated and domiciled in Malaysia. The Company is listed on
the Main Market of Bursa Malaysia Securities Berhad.

The registered office and principal place of business address of the Company is Level 17, 1 First Avenue, Bandar Utama,
47800 Petaling Jaya, Selangor Darul Ehsan.

2 BASIS OF PREPARATION
SCOMI GROUP BHD

The financial statements of the Group and Company have been prepared in accordance with the provisions of the
Companies Act 1965 and Financial Reporting Standards, the MASB Approved Accounting Standards in Malaysia for
Entities Other than Private Entities.

The preparation of financial statements in compliance with Financial Reporting Standards requires the Directors to use
pg 82
certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue
Annual Report 2011

and expenses during the financial year. It also requires Directors to exercise their judgement in the process of applying
the Group’s accounting policies. Although these estimates and judgement are based on the Directors’ best knowledge
of current events and actions, actual results may differ.

As at 31 December 2011, the Group and Company had incurred losses of RM296.5 million and RM168.7 million
respectively. At that date, the Group and Company had net current liabilities of RM9.1 million and RM157.1 million
respectively.

The Group has presented to the bondholders, banks and other lenders its plan to raise funds which includes the
disposal of certain assets of the Group to enable settlement of the Group’s and Company’s financial liabilities as and
when they fall due.

As at the date of the report, the Group:

(a) completed the disposal of the Drilling Waste Management business by SOINC and SMEX for a total consideration
of USD35.0 million (approximately RM108.56 million) in November 2011. A portion of the proceeds were utilised to
repay the KMCOB Murabahah Bonds.

(b) completed the issuance of a RM342.6 million Sukuk Murabahah in December 2011. The proceeds were utilised for
early redemption of the outstanding amount of the KMCOB Murabahah Bonds.
2 BASIS OF PREPARATION (CONTINUED)
(c) obtained indulgences from the Company’s bondholders:

(i) for the RM100 million principal repayment which was due in September 2011 to be paid in September 2012;

(ii) deferment of maintaining the DSRA which was due in March 2012; and

(iii) waiver of the net debt to equity and annual debt service cover ratios up to 28 September 2012.

(d) announced that the Company had entered into a Heads of Agreement (“HOA”) with its associated company, Scomi
Marine Bhd (“SMB”) as disclosed in Note 44. The HOA includes the proposed acquisition of the entire interest in
Scomi Oilfield Limited (“SOL”), a 76.08% owned subsidiary of the Company by a Newco from the Company, SCPEL
and FII (after completion of the Proposed SOL Reorganisation).

(e) obtained indulgence from the bankers for certain breaches of loan covenants as disclosed in Note 28.

The Directors are of the opinion, taking into consideration the action plans undertaken and to be undertaken, that the
basis of preparation of the financial statements on a going concern basis is appropriate.

Annual Report 2011

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements are disclosed in Note 46 to the financial statements.

During the financial year, the Directors of the Group adopted the following Financial Reporting Standards (“FRS”) issued
by the MASB: pg 83

SCOMI GROUP BHD

(a) Standards, amendments to published standards and interpretations that are applicable to the Group and
are effective
The new accounting standards, amendments and improvements to published standards and interpretations that are
effective for the Group and Company’s financial year beginning on or after 1 January 2011 are as follows:

FRS 1 (revised) First-time Adoption of Financial Reporting Standards

FRS 3 (revised) Business combinations
FRS 127 (revised) Consolidated and separate financial statements
Amendments to FRS 2 Share-based payment: Group cash-settled share-based payment transactions
Amendments to FRS 7 Financial instruments: Disclosures – improving disclosures about
financial instruments
Amendments to FRS 1 First-time adoption of financial reporting standards Amendments to FRS 132
Financial instruments: Presentation – Classification of rights issues
IC Interpretation 4 Determining whether an arrangement contains a lease
IC Interpretation 16 Hedges of a net investment in a foreign operation
IC Interpretation 17 Distribution of non-cash assets to owners
IC Interpretation 18 Transfers of assets from customers
Improvements to FRSs (2010)

The adoption of the above standards, amendments to published standards and interpretations to existing standards
does not have a significant financial impact to the Group and Company, other than for the disclosures under the
Amendments to FRS 7.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

2 BASIS OF PREPARATION (CONTINUED)

(a) Standards, amendments to published standards and interpretations that are applicable to the Group and
are effective
Amendments to FRS 7: Improving Disclosures about Financial Instruments
Amendments to FRS 7 require enhanced disclosures about fair value measurements in which a three-level fair value
hierarchy was introduced. Each class of financial instrument is to be classified in accordance to this hierarchy which
reflects the inputs used in making the fair value measurement. It also reinforces the existing principles for disclosures
on liquidity and credit risks.

The new requirement on the three-level fair value hierarchy has been applied prospectively in accordance with the
transitional provision of the FRS 7 Amendments. The enhanced disclosures are included in Note 45(c). The adoption
of this amendment did not have any financial impact to the Group and Company, other than additional
disclosures.

(b) Standards, amendments to published standards and interpretations to existing standards that are
applicable to the Group but not yet effective and have not been early adopted
On 19 November 2011, the Malaysian Accounting Standards Board (“MASB”) issued a new MASB approved
SCOMI GROUP BHD

accounting framework, the MFRS Framework.

The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on
or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture (“MFRS
141”) and IC Interpretation 15 Agreements for Construction of Real Estate (“IC 15”), including its parent, significant
pg 84
investor and venturer.
Annual Report 2011

The Group and Company will be required to prepare financial statements using the MFRS Framework in its first
MFRS financial statements for the year ending 31 December 2012. In presenting its first MFRS financial statement,
the Group and Company will be required to restate the financial position as at 1 January 2012 to amounts reflecting
the application of MFRS Framework.

The Group and Company have started a preliminary assessment of the differences between FRS and the accounting
standards under MFRS Framework and are in the process of assessing the financial effects of the differences.
Accordingly, the financial performance and financial position as disclosed in these financial statements for the year
ended 31 December 2011 could be different if prepared under the MFRS Framework.

The Group and Company expects to be in a position to fully comply with the requirements of the MFRS Framework
for the financial year ending 31 December 2012. MFRS 1 “First-time adoption of MFRS” provides for certain optional
exemptions and certain mandatory exceptions for first-time MFRS adopters.

The Group will apply the new standards, amendments to standards and interpretations in the following period:

(i) Financial year beginning on/after 1 January 2012

• The revised MFRS 124 “Related party disclosures” (effective from 1 January 2012) removes the exemption
to disclose transactions between government-related entities and the government, and all other government-
related entities. The following new disclosures are now required for government related entities:

– The name of the government and the nature of their relationship;

– The nature and amount of each individually significant transactions; and
– The extent of any collectively significant transactions, qualitatively or quantitatively.
2 BASIS OF PREPARATION (CONTINUED)
(b) Standards, amendments to published standards and interpretations to existing standards that are
applicable to the Group but not yet effective and have not been early adopted (continued)
(i) Financial year beginning on/after 1 January 2012 (continued)
• Amendment to MFRS 112 “Income taxes” (effective from 1 January 2012) introduces an exception to the
existing principle for the measurement of deferred tax assets or liabilities arising on investment property
measured at fair value. MFRS 112 currently requires an entity to measure the deferred tax relating to an
asset depending on whether the entity expects to recover the carrying amount of the asset through use
or sale. It can be difficult and subjective to assess whether recovery will be through use or through sale
when the asset is measured using the fair value model in MFRS 140 “Investment property”. As a result of
the amendments, IC Interpretation 121 “Income taxes – recovery of revalued non-depreciable assets” will
no longer apply to investment properties carried at fair value. The amendments also incorporate into MFRS
112 the remaining guidance previously contained in IC Interpretation 121 which is withdrawn.

• IC Interpretation 19 “Extinguishing financial liabilities with equity instruments” (effective from 1 July 2011)
provides clarification when an entity renegotiates the terms of a financial liability with its creditor and the
creditor agrees to accept the entity’s shares or other equity instruments to settle the financial liability fully
or partially. A gain or loss, being the difference between the carrying value of the financial liability and the

Annual Report 2011

fair value of the equity instruments issued, shall be recognised in the income statement. Entities are no
longer permitted to reclassify the carrying value of the existing financial liability into equity with no gain or
loss recognised in the income statement.

• Amendments to IC Interpretation 14 “MFRS 119 – The limit on a defined benefit assets, minimum funding
pg 85
requirements and their interaction” (effective from 1 July 2011) permits an entity to recognise the prepayments
of contributions as an asset, rather than an expense in circumstances when the entity is subject to a

SCOMI GROUP BHD

minimum funding requirement and makes an early payment of contributions to meet those requirements.

• Amendment to MFRS 1 “First time adoption on fixed dates and hyperinflation” (effective from 1 January
2012) includes two changes to MFRS 1. The first replaces references to a fixed date of 1 January 2004
with ‘the date of transition to MFRSs’, thus eliminating the need for entities adopting MFRSs for the first
time to restate de-recognition transactions that occurred before the date of transition to MFRSs. The
second amendment provides guidance on how an entity should resume presenting financial statements in
accordance with MFRSs after a period when the entity was unable to comply with MFRSs because its
functional currency was subject to severe hyperinflation.

• Amendment to MFRS 7 “Financial instruments: Disclosures on transfers of financial assets” (effective from
1 January 2012) promotes transparency in the reporting of transfer transactions and improve users’
understanding of the risk exposures relating to transfers of financial assets and the effect of those risks on
an entity’s financial position, particularly those involving securitisation of financial assets.

The initial applications of these standards, amendments to published standards and interpretations to existing
standards that are applicable to the Group but not yet effective and have not been early adopted are not
expected to have material impact on the financial statements of the Group and Company.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

2 BASIS OF PREPARATION (CONTINUED)

(b) Standards, amendments to published standards and interpretations to existing standards that are
applicable to the Group but not yet effective and have not been early adopted (continued)
(ii) Financial year beginning on/after 1 January 2013
• MFRS 10 “Consolidated financial statements” (effective from 1 January 2013) changes the definition of
control. An investor controls an investee when it is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over the investee.
It establishes control as the basis for determining which entities are consolidated in the consolidated
financial statements and sets out the accounting requirements for the preparation of consolidated financial
statements. It replaces all the guidance on control and consolidation in MFRS 127 “Consolidated and
separate financial statements” and IC Interpretation 112 “Consolidation – special purpose entities”.

• MFRS 11 “Joint arrangements” (effective from 1 January 2013) requires a party to a joint arrangement to
determine the type of joint arrangement in which it is involved by assessing its rights and obligations arising
from the arrangement, rather than its legal form. There are two types of joint arrangement: joint operations
and joint ventures. Joint operations arise where a joint operator has rights to the assets and obligations
relating to the arrangement and hence accounts for its interest in assets, liabilities, revenue and expenses.
Joint ventures arise where the joint operator has rights to the net assets of the arrangement and hence
SCOMI GROUP BHD

equity accounts for its interest. Proportional consolidation of joint ventures is no longer allowed.

• MFRS 12 “Disclosures of interests in other entities” (effective from 1 January 2013) sets out the required
disclosures for entities reporting under the two new standards, MFRS 10 and MFRS 11, and replaces the
disclosure requirements currently found in MFRS 128 “Investments in associates”. It requires entities to
pg 86
disclose information that helps financial statement readers to evaluate the nature, risks and financial effects
associated with the entity’s interests in subsidiaries, associates, joint arrangements and unconsolidated
Annual Report 2011

structured entities.

• MFRS 13 “Fair value measurement” (effective from 1 January 2013) aims to improve consistency and
reduce complexity by providing a precise definition of fair value and a single source of fair value
measurement and disclosure requirements for use across MFRSs. The requirements do not extend the use
of fair value accounting but provide guidance on how it should be applied where its use is already required
or permitted by other standards. The enhanced disclosure requirements are similar to those in MFRS 7
“Financial instruments: Disclosures”, but apply to all assets and liabilities measured at fair value, not just
financial ones.

• The revised MFRS 127 “Separate financial statements” (effective from 1 January 2013) includes the
provisions on separate financial statements that are left after the control provisions of MFRS 127 have been
included in the new MFRS 10.

• The revised MFRS 128 “Investments in associates and joint ventures” (effective from 1 January 2013)
includes the requirements for joint ventures, as well as associates, to be equity accounted following the
issue of MFRS 11.

• Amendment to MFRS 101 “Presentation of items of other comprehensive income” (effective from 1 July
2012) requires entities to separate items presented in ‘other comprehensive income’ (OCI) in the statement
of comprehensive income into two groups, based on whether or not they may be recycled to profit or loss
in the future. The amendments do not address which items are presented in OCI.
2 BASIS OF PREPARATION (CONTINUED)
(b) Standards, amendments to published standards and interpretations to existing standards that are
applicable to the Group but not yet effective and have not been early adopted (continued)
(ii) Financial year beginning on/after 1 January 2013 (continued)
• Amendment to MFRS 119 “Employee benefits” (effective from 1 January 2013) makes significant changes
to the recognition and measurement of defined benefit pension expense and termination benefits, and to
the disclosures for all employee benefits. Actuarial gains and losses will no longer be deferred using the
corridor approach. MFRS 119 shall be withdrawn on application of this amendment.

The Group is accessing the impact of the new Standards, amendments to published standards and
interpretations to existing standards that are applicable to the Group but not yet effective and have not
been early adopted to the Group and Company.

(iii) Financial year beginning on/after 1 January 2015

• MFRS 9 “Financial instruments – classification and measurement of financial assets and financial liabilities”
(effective from 1 January 2015) replaces the multiple classification and measurement models in MFRS 139
with a single model that has only two classification categories: amortised cost and fair value. The basis of
classification depends on the entity’s business model for managing the financial assets and the contractual

Annual Report 2011

cash flow characteristics of the financial asset.

The accounting and presentation for financial liabilities and for de-recognising financial instruments has been
relocated from MFRS 139, without change, except for financial liabilities that are designated at fair value
through profit or loss (“FVTPL”). Entities with financial liabilities designated at FVTPL recognise changes in
pg 87
the fair value due to changes in the liability’s credit risk directly in other comprehensive income (OCI). There
is no subsequent recycling of the amounts in OCI to profit or loss, but accumulated gains or losses may

SCOMI GROUP BHD

be transferred within equity.

The guidance in MFRS 139 on impairment of financial assets and hedge accounting continues to apply.

MFRS 7 requires disclosures on transition from MFRS 139 to MFRS 9.

The Group is accessing the impact of the new Standards, amendments to published standards and
interpretations to existing standards that are applicable to the Group but not yet effective and have not
been early adopted to the Group and Company.

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unless otherwise stated, the following accounting policies have been used consistently in dealing with items that are
considered material in relation to the financial statements.

3.1 Basis of consolidation

The consolidated financial statements incorporate the audited financial statements of the Company and its
subsidiaries made up to the end of the financial year.

Subsidiaries are those entities (including special purpose entities) in which the Group has power to govern the
financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights.
The existence and effect of potential voting rights that are currently exercisable or convertible are considered when
assessing whether the Group controls another entity.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.1 Basis of consolidation (continued)
Subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition method of
accounting, subsidiaries are fully consolidated from the date on which control is transferred to the Group and are
de-consolidated from the date that control ceases. The consideration transferred for acquisition of a subsidiary is
the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The
consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration
arrangement. Acquisition-related costs are expensed as incurred.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interests. In a
business combination achieved in stages, the previously held equity interest in the acquiree is re-measured at its
acquisition date fair value and the resulting gain or loss is recognised in profit or loss. The excess of the cost of
acquisition over the fair value of the Group’s share of the identifiable net assets required is recorded as goodwill.
If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is
recognised directly in profit or loss. See accounting policy Note 3.10(iii) on goodwill on consolidation.

Non-controlling interest is the equity in a subsidiary not attributable, directly or indirectly, to a parent. On an
SCOMI GROUP BHD

acquisition-by-acquisition basis, the Group measures any non-controlling interest in the acquiree at fair value. At the
end of reporting period, non-controlling interest consists of amount calculated on the date of combinations and its
share of changes in the subsidiary’s equity since the date of combination.

All earnings and losses of the subsidiary are attributed to the parent and the non-controlling interest, even if the
pg 88 attribution of losses to the non-controlling interest results in a debit balance in the shareholders’ equity. Profit or
loss attribution to non-controlling interests for prior years is not restated.
Annual Report 2011

Change in accounting policy

The Group has changed its accounting policy on business combinations and accounting for non-controlling interest
when it adopted the revised FRS 3 “Business combinations” and FRS 127 “Consolidated and separate financial
statements”.

Previously, contingent consideration in a business combination was recognised when it is probable that payment
will be made. Acquisition-related costs were included as part of the cost of business combination. Any non-
controlling interest in the acquiree was measured at the non-controlling interest’s proportionate share of the
acquiree’s identifiable net assets. Any adjustment to the fair values of the subsidiary’s identifiable assets, liabilities
and contingent liabilities relating to previously held interests of the Group was accounted for as a revaluation.

The Group has applied the new policies prospectively to transactions occurring on or after 1 January 2011. As a
consequence, no adjustments were necessary to any of the amounts previously recognised in the financial
statements.

Under the merger method of accounting, the results of entities or businesses under common control are presented
as if the merger had been effected throughout the current and previous financial years or from the date when these
entities came under the control of the common controlling party (if shorter). The assets and liabilities combined are
accounted for based on the carrying amounts from the perspective of the common control shareholder at the date
of transfer. On consolidation, the difference between the carrying value of the investment in the subsidiaries over
the nominal value of the share acquired is taken to merger reserve and regarded as a non-distributable reserve,
which is then set off against suitable reserves on the consolidated financial statements.
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.1 Basis of consolidation (continued)
Change in accounting policy (continued)
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated. This may indicate an impairment of the asset transferred. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Group’s share
of its net assets as of the date of disposal including the cumulative amount of any exchange differences that relate
to the subsidiary is recognised in profit or loss attributable to the parent.

3.2 Transactions with non-controlling interests

The Group applies a policy of treating transactions with non-controlling interests as transactions with equity owners
of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the
relevant share of the carrying value of net assets of the subsidiary acquired is deducted from equity. For disposals
to non-controlling interests, differences between any proceeds received and the relevant share of non-controlling
interests are also recognised in equity.

3.3 Investments in associates

Annual Report 2011

Associates are those corporations, partnerships or other entities in which the Group exercises significant influence,
but which it does not control, generally accompanying a shareholding of between 20% and 50% of voting rights.
Significant influence is power to participate in financial and operating policy decisions of associates but not power
to exercise control over those policies. Investments in associates are accounted for using the equity method of
accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is pg 89
increased or decreased to recognise the investor’s share of the profit or loss of the investee after the date of
acquisition. The group’s investment in associates includes goodwill identified on acquisition. If the ownership interest

SCOMI GROUP BHD

in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously
recognised in other comprehensive income is reclassified to profit or loss where appropriate. See accounting policy
Note 3.11 on impairment of non-financial assets.

The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement, and
its share of post-acquisition movements in reserves is recognised in other comprehensive income with a
corresponding adjustment to the carrying amount of the investment. If the Group’s share of losses of an associate
equals or exceeds its interest in the associate, the Group discontinues recognising its share of further losses. The
interest in an associate is the carrying amount of the investment in the associate under the equity method together
with any long-term interests that, in substance, form part of the Group’s net investment in the associate. After the
Group’s interest is reduced to zero, additional losses are provided for and a liability is recognised, only to the extent
that the investor has incurred legal or constructive obligations or made payments on behalf of the associate. If the
associate subsequently reports profits, the Group resumes recognising its share of those profits only after its share
of the profits equals the share of losses not recognised.

The group determines at each reporting date whether there is any objective evidence that the investment in the
associate is impaired. If this is the case, the group calculates the amount of impairment as the difference between
the recoverable amount of the associate and its carrying value and recognises the amount adjacent to ‘share of
profit/(loss) of an associate’ in the income statement.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s
interest in the associates; unrealised losses are also eliminated unless the transaction provides evidence of
impairment of the asset transferred. Where necessary, in applying the equity method, adjustments are made to the
financial statements of associates to ensure consistency of accounting policies with those of the Group.

Dilution gains and losses arising in investments in associates are recognised in the income statement.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.4 Investments in jointly controlled entities
Jointly controlled entities are corporations, partnerships or other entities over which there is contractually agreed
sharing of control by the Group with one or more parties where the strategic financial and operating decisions
relating to the entities require unanimous consent of the parties sharing control.

The Group’s interest in jointly controlled entities is accounted for in the financial statements by the equity method
of accounting. Equity accounting involves recognising the Group’s share of the post-acquisition results of jointly
controlled entities in the income statement and its share of post-acquisition changes of the investee’s reserves in
other comprehensive income. The cumulative post-acquisition changes are adjusted against the cost of the
investment and include goodwill on acquisition, net of accumulated impairment loss. See accounting policy Note
3.11 on impairment of non-financial assets.

The Group recognises the portion of gains or losses on the sale of assets by the Group to the joint venture that
is attributable to the other ventures. The Group does not recognise its share of profits or losses from the joint
venture that result from the purchase of assets by the Group from the joint venture until it resells the assets to an
independent party. However, a loss on the transaction is recognised immediately if the loss provides evidence of a
reduction in the net realisable value of current assets or an impairment loss.
SCOMI GROUP BHD

Where necessary, adjustments have been made to the financial statements of jointly controlled entities to ensure
consistency of accounting policies with those of the Group.

3.5 Changes in ownership interests

When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is
pg 90
re-measured to its fair value on initial recognition as a financial asset in accordance with FRS 139. Any amounts
previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group
Annual Report 2011

had directly disposed of the related assets or liabilities.

Changes in accounting policy

The Group has changed its accounting policy prospectively for transactions occurring on or after 1 January 2011
with non-controlling interests and transactions involving the loss of control, joint control or significant influence when
it adopted the revised FRS 127 “Consolidated and Separate Financial Statements”.

Previously when the Group ceased to have control, joint control or significant influence over an entity, the carrying
amount of the investment at the date control, joint control or significant influence ceased became its cost on initial
measurement as a financial asset in accordance with FRS 139.

3.6 Investments in subsidiaries, joint ventures and associates

In the Company’s separate financial statements, investments in subsidiaries, joint ventures and associates are
carried at cost less accumulated impairment losses. On disposal of investments in subsidiaries, joint ventures and
associates, the difference between disposal proceeds and the carrying amounts of the investments is recognised
in the income statement.

3.7 Inflation adjustment

The financial statements of the Group are based on the historical cost convention. During the previous financial
year, the financial statements of the Group have been restated to take account of the effects of inflation in
accordance with FRS 129 (Financial Reporting in Hyperinflationary Economies), as described below.

The Group has subsidiaries operating in Venezuela and in late 2009, the Venezuelan economy was considered to be
a hyperinflationary economy. FRS 129 requires that financial statements prepared in the currency of a hyperinflationary
economy be stated in terms of the measuring unit current at the date of the statement of financial position, and that
corresponding figures for the previous year at company level be restated in terms of the same measuring unit.
Accordingly, the inflation adjusted financial statements represent the primary financial statements of the Group.
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.7 Inflation adjustment (continued)
In accordance with FRS 129, the financial statements of the Group have been restated to account for the changes
in the general purchasing power of the Venezuelan Bolivar and, as a result, are stated in terms of the measuring
unit current at the date of the statement of financial position.

The indices and conversion factors used were as follows:

Date Indices Conversion Factors

December 2011 (NCPI) 265.65 1.2757

December 2010 (NCPI) 208.20 1.2718
December 2009 (NCPI) 163.70 1.2506
December 2008 (NCPI) 130.90 1.3090
December 2007 (CPI) 100.00 1.2245

The Group has applied the official rate of $1: Bs4.3 to translate the financial statements of its Venezuelan
subsidiary.

Annual Report 2011

The main procedures applied in the above-mentioned restatement of transactions and balances are as follows:

(i) Monetary assets and liabilities and results from monetary position
Monetary assets and liabilities are not restated because they are already stated in terms of the measuring unit
current at the date of the statement of financial position.
pg 91

(ii) Non-monetary assets and liabilities

SCOMI GROUP BHD

Non-monetary assets and liabilities (inventories, fixed assets, intangibles, other assets and deferred income)
have been restated by the CPI from during the financial year.

(iii) Equity
All equity components have been restated by the CPI from their date of origin until 31 December 2007 and
by the NCPI as from 1 January 2008 until 31 December 2011.

(iv) Income statement

All items in the income statement have been restated based on the date on which they were earned or
incurred, with the exception of those related to non-monetary items (cost of sales, depreciation expense and
amortisation expense), which have been reported in terms of the restated non-monetary items to which they
relate, expressed in constant currency at 31 December 2011.

Gains and losses arising from the net monetary asset or liability position are included in the income
statement.

(v) Statement of cash flows

All items in the statement of cash flows are expressed in terms of the measuring unit current at the date of
the statement of financial position.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.8 Property, plant and equipment
Property, plant and equipment, other than freehold land and capital work-in-progress, are stated at cost less
accumulated depreciation or amortisation and impairment losses, if any. The cost of an item of property, plant and
equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the
asset to the location and condition necessary for it to be capable of operating in the manner intended by
management. Cost also includes borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset. See accounting policy Note 3.24 on borrowing costs.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the
cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other
repairs and maintenance are recognised as expenses in the income statement during the financial period in which
they are incurred.

Freehold land is not depreciated as it has an infinite life. Leasehold land classified as finance lease is amortised in
equal instalments over the period of the respective leases. See accounting policy Note 3.15(a) on finance leases.
Capital work-in-progress is stated at cost. Expenditure relating to capital work-in-progress is capitalised when
SCOMI GROUP BHD

incurred and depreciated only when the assets are ready for intended use.

Other property, plant and equipment are depreciated on the straight line method to allocate the cost of the assets to
their residual values over their estimated useful lives. The principal annual rates used for this purpose are as follows:

pg 92 Freehold buildings 2 – 20%

Leasehold buildings 2 – 331⁄3%
Annual Report 2011

Tools, plant and machinery 81⁄3 – 20%

Renovation, office equipment, fittings and computers 10 – 331⁄3%
Motor vehicles 15 – 331⁄3%
Monorail test track 31⁄3%

Residual values and useful lives of assets are reviewed, and adjusted if appropriate, at each statement of financial
position date.

At each date of the statement of financial position, the Group assesses whether there is any indication of impairment.
Where an indication of impairment exists, the carrying amount of the asset is assessed and written down immediately
to its recoverable amount. See accounting policy Note 3.11 on impairment of non-financial assets.

When property, plant and equipment are disposed of, the resultant gain or loss on disposal is determined by
comparing the disposal proceeds with the carrying amount and is included in the income statement.

3.9 Investment properties

Investment properties, principally comprising freehold land and office buildings, are held for long term rental yields
or for capital appreciation or both, and are not occupied by the Group.

Investment properties are measured initially at its cost, including related transaction costs and borrowings costs if
the investment property meets the definition of qualifying asset.

After the initial recognition, investment property is stated at cost less any accumulated depreciation and impairment
losses. Investment property is depreciated on the straight line basis to allocate the cost to their residual values over
their estimated useful lives of 20 to 50 years. Freehold land is not depreciated as it has an infinite life.
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.9 Investment properties (continued)
Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that future economic
benefits associated with the expenditure will flow to the Group and the cost of the item can be measured reliably.
All other repairs and maintenance costs are expensed when incurred. When part of an investment property is
replaced, the carrying amount of the replaced part is derecognised.

Investment property is derecognised either when it has been disposed of or when the investment property is
permanently withdrawn from use and no future economic benefit is expected from its disposal.

Gains and losses on disposals are determined by comparing net disposal proceeds with the carrying amount and
are included in the income statement.

3.10 Intangible assets

(i) Patents
Patent rights are shown at historical cost. Patent rights have a finite useful life and are carried at cost less
accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of
patent rights over their estimated useful economic lives of 5 years to 20 years.

Annual Report 2011

(ii) Research and development
Research expenditure is recognised as an expense when incurred. Costs incurred on development projects
(relating to the design and testing of new or improved products) are recognised as intangible assets when
the following criteria are fulfilled:
pg 93
(a) it is technically feasible to complete the intangible asset so that it will be available for use or sale;

SCOMI GROUP BHD

(b) management intends to complete the intangible asset and use or sell it;
(c) there is an ability to use or sell the intangible asset;
(d) it can be demonstrated how the intangible asset will generate probable future economic benefits;
(e) adequate technical, financial and other resources to complete the development and to use or sell the
intangible asset are available; and
(f) the expenditure attributable to the intangible asset during its development can be reliably measured.

Other development expenditure that do not meet these criteria are recognised as an expense when incurred.
Development costs previously recognised as an expense are not recognised as an asset in a subsequent
period. Capitalised development costs recognised as intangible assets are amortised from the point at which
the asset is ready for use on a straight-line basis as follows:

(a) over the estimated sales units, not exceeding ten years for monorail development; or
(b) over a period not exceeding five years for bus development.

Development costs in progress are tested for impairment annually, in accordance with FRS 136 Impairment
of Assets. See accounting policy Note 3.11 on impairment of non-financial assets.

(iii) Goodwill
Goodwill represents the excess of the cost of acquisition of subsidiaries, jointly controlled entities and
associates over the fair value of the Group’s share of the identifiable net assets at the date of acquisition.

Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill is tested annually for
impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill (inclusive
of impairment losses recognised in a previous interim period) are not reversed. Gains and losses on the
disposal of a subsidiary include the carrying amount of goodwill relating to the subsidiary sold.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.10 Intangible assets (continued)
(iii) Goodwill (continued)
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made
to those cash-generating units or groups of cash-generating units that are expected to benefit from synergies
of the business combination in which the goodwill arose, identified according to operating segment.

In respect of acquisitions of jointly controlled entities and associates, the carrying amount of goodwill is
included in the carrying amount of the investment in joint ventures and associates respectively. Such goodwill
is also tested for impairment as part of the overall balance.

3.11 Impairment of non-financial assets

Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested
annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there is separately identifiable cash flows
SCOMI GROUP BHD

(cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible
reversal of the impairment at the end of the reporting period.

The impairment loss is charged to income statement unless it reverses a previous revaluation in which case it is
charged to the revaluation surplus. Impairment losses on goodwill are not reversed. In respect of other assets,
pg 94 any subsequent increase in recoverable amount is recognised in the income statement unless it reverses an
impairment loss on a revalued asset in which case it is taken to revaluation surplus reserve.
Annual Report 2011

3.12 Financial assets

(i) Classification
The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans
and receivables and available-for-sale. The classification depends on the purpose for which the financial
assets were acquired. Management determines the classification at initial recognition.

(a) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset
is classified in this category if it is acquired or incurred principally for the purpose of selling or
repurchasing it in the near term. Derivatives are also categorised as held for trading unless they are
designated as hedges.

(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. They are included in current assets, except for maturities more than 12
months after the end of the reporting period. These are classified as non-current assets. The Group’s
loans and receivables comprise ‘trade and other receivables’ and ‘cash and bank balances’ in the
statement of financial position (Notes 23 and 24).

(c) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not
classified in any of the other categories. They are included in non-current assets unless the investment
matures or management intends to dispose of it within 12 months of the end of the reporting period.
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.12 Financial assets (continued)
(ii) Recognition and initial measurement
Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the
Group commits to purchase or sell the asset.

Financial assets are initially recognised at fair value plus transaction costs for all financial assets not carried
at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially
recognised at fair value, and transaction costs are expensed in the income statement.

(iii) Subsequent measurement – gains and losses

Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently
carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective
interest method.

Changes in the fair values of financial assets at fair value through profit or loss, including the effects of
currency translation, interest and dividend income are recognised in the income statement in the period in
which the changes arise.

Annual Report 2011

Changes in the fair value of available-for-sale financial assets are recognised in other comprehensive income,
except for impairment losses (see accounting policy Note 3.12(iv) and foreign exchange gains and losses on
monetary assets. The exchange differences on monetary assets are recognised in the income statement,
whereas exchange differences on non-monetary assets are recognised in other comprehensive income as
pg 95
part of fair value change.

SCOMI GROUP BHD

Interest and dividend income on available-for-sale financial assets are recognised separately in the income
statement. Interest on available-for-sale debt securities calculated using the effective interest method is
recognised in the income statement. Dividend income on available-for-sale equity instruments are recognised
in the income statement when the Group’s right to receive payments is established.

(iv) Subsequent measurement – Impairment of financial assets

Assets carried at amortised cost
The Group assesses at the end of the reporting period whether there is objective evidence that a financial
asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and
impairment losses are incurred only if there is objective evidence of impairment as a result of one or more
events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events)
has an impact on the estimated future cash flows of the financial asset or group of financial assets that can
be reliably estimated.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.12 Financial assets (continued)
(iv) Subsequent measurement – Impairment of financial assets (continued)
The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:

(a) Significant financial difficulty of the issuer or obligor;

(b) A breach of contract, such as a default or delinquency in interest or principal payments;
(c) The Group, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the
borrower a concession that the lender would not otherwise consider;
(d) It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;
(e) Disappearance of an active market for that financial asset because of financial difficulties; or
(f) Observable data indicating that there is a measurable decrease in the estimated future cash flows from
a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot
yet be identified with the individual financial assets in the portfolio, including adverse changes in the
payment status of borrowers in the portfolio; and national or local economic conditions that correlate
with defaults on the assets in the portfolio.

The amount of the loss is measured as the difference between the asset’s carrying amount and the present
SCOMI GROUP BHD

value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted
at the financial asset’s original effective interest rate. The asset’s carrying amount of the asset is reduced
and the amount of the loss is recognised in the income statement. If loans and receivables has a variable
interest rate, the discount rate for measuring any impairment loss is the current effective interest rate
determined under the contract. As a practical expedient, the Group may measure impairment on the basis
pg 96
of an instrument’s fair value using an observable market price.
Annual Report 2011

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s
credit rating), the reversal of the previously recognised impairment loss is recognised in the income statement.

When an asset is uncollectible, it is written off against the related allowance account. Such assets are written
off after all the necessary procedures have been completed and the amount of the loss has been
determined.

Assets classified as available-for-sale

The Group assesses at the end of the reporting period whether there is objective evidence that a financial
asset or a group of financial assets is impaired.

For debt securities, the Group uses criteria and measurement of impairment loss applicable for ‘assets carried
at amortised cost’ above. If, in a subsequent period, the fair value of a debt instrument classified as available-
for-sale increases and the increase can be objectively related to an event occurring after the impairment loss
was recognised in the income statement, the impairment loss is reversed through income statement.

In the case of equity securities classified as available-for-sale, in addition to the criteria for ‘assets carried at
amortised cost’ above, a significant or prolonged decline in the fair value of the security below its cost is
also considered as an indicator that the assets are impaired. If any such evidence exists for available-for-sale
financial assets, the cumulative loss that had been recognised directly in equity is removed from equity and
recognised in the income statement. The amount of cumulative loss that is reclassified to income statement
is the difference between the acquisition cost and the current fair value, less any impairment loss on that
financial asset previously recognised in the income statement. Impairment losses recognised in the income
statement on equity instruments classified as available-for-sale are not reversed through income statement.
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.12 Financial assets (continued)
(v) De-recognition
Financial assets are de-recognised when the rights to receive cash flows from the investments have expired
or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

Receivables that are factored out to banks and other financial institutions with recourse to the Group are not
derecognised until the recourse period has expired and the risks and rewards of the receivables have been
fully transferred. The corresponding cash received from the financial institutions is recorded as borrowings.

When available-for-sale financial assets are sold, the accumulated fair value adjustments recognised in other
comprehensive income are reclassified to income statement.

3.13 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when
there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net
basis, or realise the asset and settle the liability simultaneously.

Annual Report 2011

3.14 Financial guarantee contracts
Financial guarantee contracts are contracts that require the Group or Company to make specified payments to
reimburse the holder for a loss it incurs because a specified debtors fails to make payments when due, in
accordance with the terms of a debt instrument.

Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability pg 97

is initially measured at fair value and subsequently at the higher of the amount determined in accordance with

SCOMI GROUP BHD

FRS 137 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less
cumulative amortisation where appropriate.

The fair value of financial guarantees is determined as the present value of the difference in net cash flows
between the contractual payments under the debt instrument and the payments that would be required without
the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations.

Where financial guarantees in relation to loans or payables of subsidiaries are provided by the Company for no
compensation, the fair values are accounted for as contributions and recognised as part of the cost of investment
in subsidiaries.

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

Accounting by lessee

(a) Finance leases

Leases of property, plant and equipment where the Group has substantially all the risks and rewards of
ownership are classified as finance leases.

Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased
property and the present value of the minimum lease payments. Each lease payment is allocated between
the liability and finance charges so as to achieve a constant rate of interest on the remaining balance of the
liability. The corresponding rental obligations, net of finance charges, are included in borrowings.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.15 Leases (continued)
(a) Finance leases (continued)
The interest element of the finance cost is charged to income statement over the lease period so as to
produce a constant periodic rate of interest on the remaining balance of the liability for each period. Property,
plant and equipment acquired under finance leases are depreciated over the shorter of the estimated useful
life of the asset and the lease term.

Initial direct costs incurred by the Group in negotiating and arranging finance leases are added to the carrying
amount of the leased assets and recognised as an expense in income statement over the lease term on the
same basis as the lease expense.

(b) Operating leases

Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor
are classified as operating leases. Payments made under operating leases (net of any incentives received from
the lessor) are charged to income statement on the straight line basis over the lease period.

Initial direct costs incurred by the Group in negotiating and arranging operating leases are capitalised as
SCOMI GROUP BHD

prepayments and recognised in income statement over the lease term on a straight-line basis.

3.16 Inventories
Inventories are stated at the lower of cost and net realisable value. Raw material cost is determined on a weighted
average or “first-in-first-out” basis.
pg 98

For work-in-progress and manufactured inventories, cost consists of direct materials, incidental costs in bringing
Annual Report 2011

the inventories to their present location, direct labour and an appropriate proportion of fixed and variable
manufacturing overheads (based on normal operating capacity).

3.17 Non-current assets (or disposal groups) classified as assets held for sale
Net realisable value is the estimated selling price in the ordinary course of business less the costs of completion
and applicable variable selling expenses.

Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is
recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the
lower of carrying amount and fair value less costs to sell.

3.18 Construction contracts

A construction contract is a contract specifically negotiated for the construction of an asset or a combination of
assets that are closely interrelated or interdependent in terms of their design, technology and functions or their
ultimate purpose or use.

Construction contracts costs are recognised as expenses in the period in which they are incurred.

When the outcome of a construction contract can be estimated reliably and it is probable that the contract will
be profitable, contract revenue is recognised over the period of the contract. When it is probable that total contract
costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Variations in contract work, claims and incentive payments are included in contract revenue to the extent agreed
with the customer and are capable of being reliably measured. Liquidated ascertained damages, are disclosed as
a deduction of contract revenue, which are deemed variable consideration.
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.18 Construction contracts (continued)
The Group uses the percentage-of-completion method to determine the appropriate amount to recognise in a
given period. The stage of completion is measured by reference to the contract costs incurred up to the end of
the reporting period as a percentage of total estimated costs for each contract. Costs incurred in the year in
connection with future activity on a contract are excluded from contract costs in determining the stage of
completion. They are presented as inventories, prepayments or other assets, depending on their nature.

When the outcome of the construction contract cannot be estimated reliably, contract revenue is recognised only
to the extent of contract costs incurred that is probable will be recoverable.

The Group presents as an asset the gross amount due from customers for contract work for all contracts in
progress for which costs incurred plus recognised profits (less recognised losses) exceed progress billings.
Progress billings not yet paid by customers and retention are included within ‘trade and other receivables’. The
Group presents as a liability the gross amount due to customers for contract work for all contracts in progress
for which progress billings exceed costs incurred plus recognised profits (less recognised losses). The asset
balances are classified as current or non-current based on expectation of realisation.

Annual Report 2011

3.19 Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents comprise cash in hand, bank balances,
deposits held at call with banks excluding deposits which are pledged for banking facilities, and other short term,
highly liquid investments with original maturities of three months or less, less bank overdrafts. Bank overdrafts are
included within borrowings in current liabilities in the statement of financial position.
pg 99
3.20 Share capital

SCOMI GROUP BHD

(i) Classification
Ordinary shares with discretionary dividends are classified as equity. Other shares are classified as equity and/
or liability according to the economic substance of the particular instrument, including Irredeemable Convertible
Secured Loan Stocks and Irredeemable Convertible Unsecured Loan Stocks as per note 3.21.

(ii) Share issue costs

Incremental costs directly attributable to the issue of new shares or options are deducted against share
premium account.

(iii) Dividends to shareholders of the Company

Distributions to holders of an equity instrument are debited directly to equity, net of any related income tax
benefit and the corresponding liability is recognised in the period in which the dividends are approved.

(iv) Warrant reserve

Proceeds from issuance of warrants, net of issue costs, are credited to warrant reserve which is non-
distributable. Warrant reserve is transferred to the share premium upon exercise of warrants and warrant
reserve in relation to unexercised warrants at the expiry of the warrants period will be transferred to retained
earnings.

(v) Purchase of own shares

Where the Company or its subsidiaries purchase the Company’s equity share capital (treasury shares), the
consideration paid, including any directly attributable incremental external costs, net of tax, is included in
equity attributable to the controlling equity holders as Treasury shares until they are cancelled, reissued or
disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any
directly attributable incremental transaction costs and the related tax effects, is included in equity attributable
to the controlling equity holders.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.21 Irredeemable Convertible Secured Loan Stocks (“ICSLS”) and Irredeemable Convertible Unsecured Loan
Stocks (“ICULS”)
ICSLS and ICULS are regarded as compound financial statements, consisting of a liability and an equity
component. At the date of issue, the fair value of the liability component is estimated using the prevailing market
interest rate for similar convertible loan stocks. The difference between the proceeds of issue of both ICSLS and
ICULS and the fair value assigned to the liability component, representing the conversion option, is included in
equity. The liability component is subsequently stated at amortised cost using the effective interest rate method
until extinguished on conversion, whilst the value of the equity component is not adjusted in subsequent periods.
Attributable transaction costs are apportioned and deducted directly from the liability and equity components
based on the carrying amounts at the date of issue.

Under the effective interest rate method, the interest expense on the liability component is calculated by applying
the prevailing market interest rate for a similar convertible loan stock to the instrument at the date of issue. The
difference between this amount and the interest paid is added to the carrying amount of each ICSLS and ICULS.

3.22 Put option arrangements

The potential cash payments related to put options issued by the Group over the equity of subsidiary companies
SCOMI GROUP BHD

are accounted for as financial liabilities when such options may only be settled other than by exchange of a fixed
amount of cash or another financial asset for a fixed number of shares in the subsidiary. The amount that may
become payable under the option on exercise is initially recognised at fair value within payables with a
corresponding charge directly to equity. The charge to equity is recognised separately as written put options over
non-controlling interests, adjacent to non-controlling interests in the net assets of consolidated subsidiaries.
pg 100
The Group recognises the cost of writing such put options, determined as the excess of the fair value of the option
Annual Report 2011

over any consideration received as a financing cost. Such options are subsequently measured at amortised cost,
using the effective interest rate method, in order to accrete the liability up to the amount payable under the option
at the date at which it first becomes exercisable. The charge arising is recorded as a financing cost. In the event
that the option expires unexercised, the liability is derecognised with a corresponding adjustment to equity.

3.23 Financial liabilities

Financial liabilities within the scope of FRS 139 are recognised on the statement of financial position when, and
only when, the Group becomes a party to the contractual provisions of the financial instrument.

Financial liabilities are recognised initially at fair value, plus, in the case of financial liabilities other than derivatives,
directly attributable transactions costs.

Subsequent to initial recognition, all financial liabilities are measured at amortised cost using the effective interest
method except for derivatives which are measured at fair value.

For financial liabilities other than derivatives, gains and losses are recognised in profit or loss when the liabilities
are derecognised, and through the amortisation process. Any gains or losses arising from changes in fair value of
derivatives are recognised in profit or loss. Net gains or losses on derivatives include exchange differences.

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial
liability is replaced by another from the same lender on substantially difference terms, or the terms of an existing
liability are substantially modified, such an exchange or modification is treated as derecognition of the original
liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised
in profit or loss.
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.24 Borrowings and borrowing costs
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried
at amortised cost; any difference between initial recognised amount and the redemption value is recognised in the
income statement over the period of the borrowings using the effective interest method, except for borrowing costs
incurred for the construction of any qualifying asset.

Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is
required to complete and prepare the asset for its intended use or sale.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that
it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-
down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn
down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to
which it relates.

3.25 Income taxes

The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement,

Annual Report 2011

except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this
case the tax is also recognised in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
end of the reporting period in the countries where the Group’s subsidiaries and associates operate and generate
taxable income. pg 101

SCOMI GROUP BHD

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected
to be paid to the tax authorities. This liability is measured using the single best estimate of the most likely outcome.

Deferred tax is recognised, using the liability method, on temporary differences arising between the amounts
attributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements. However,
deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other
than a business combination that at the time of the transaction affects neither accounting nor taxable income
statement. Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantively
enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is
realised or the deferred tax liability is settled.

Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences, unused tax losses or unused tax credits can be utilised.

Deferred tax is recognised on temporary differences arising on investments in subsidiaries, associates and joint
ventures except where the timing of the reversal of the temporary difference can be controlled by the Group and
it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred and income tax assets and liabilities are offset when there is a legally enforceable right to offset current
tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to taxes
levied by the same taxation authority on either the taxable entity or different taxable entities where there is an
intention to settle the balances on a net basis.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.26 Employee benefits
(i) Short term benefits
Wages, salaries and bonuses are recognised as an expense in the financial year in which the associated
services are rendered by employees of the Group. Short term accumulating compensated absences such as
paid annual leave are recognised when services are rendered by employees that increase their entitlement to
future compensated absences, and short term non-accumulating compensated absences such as sick leave
are recognised when the absences occur.

(ii) Defined contribution plan

As required by law, companies in Malaysia make contributions to the Employees’ Provident Fund (“EPF”).
Some of the Group’s foreign subsidiaries make contributions to publicly or privately administered pension
insurance plans on a mandatory contractual or voluntary basis. Such contributions are recognised as
employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent
that a cash refund or a reduction in the future payments is available.

(iii) Defined benefit plan

A defined benefit plan is a pension plan that is not a defined contribution plan. Typically, defined benefit plans
SCOMI GROUP BHD

define an amount of pension benefit that an employee will receive on retirement, usually dependent on one
or more factors such as age, years of service and compensation.

The liability recognised in the statement of financial position in respect of defined benefit pension plans is the
present value of the defined benefit obligation at the statement of financial position date less the fair value
pg 102
of plan assets, together with adjustments for actuarial gains or losses and past service costs. The defined
benefit obligation is calculated by independent actuaries using the projected unit credit method. The Group
Annual Report 2011

determines the present value of the defined benefit obligation and the fair value of any plan assets with
sufficient regularity such that the amounts recognised in the financial statements do not differ materially from
the amounts that would be determined at the statement of financial position date.

The present value of the defined benefit obligation is determined by discounting the estimated future cash
outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the
benefits will be paid and that have terms to maturity approximating the terms of the related pension liability.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions in
excess of the greater of 10% of the value of plan assets or 10% of the defined benefit obligation are charged
or credited to income over the employees’ expected average remaining working lives.

Past-service costs are recognised immediately in income, unless the changes to the plan are conditional on
the employees remaining in service for a specified period of time (the vesting period). In this case, the past-
service costs are amortised on a straight-line basis over the vesting period.

(iv) Termination benefits

The Group recognises termination benefits when it is demonstrably committed to either terminating the
employment of current employees according to a detailed formal plan without possibility of withdrawal, or
providing termination benefits as a result of an offer made to encourage voluntary redundancy. Termination
benefits are payable when employment is terminated by the Group before the normal retirement date, or
whenever an employee accepts voluntary redundancy in exchange for these benefits. Benefits falling due
more than 12 months after the date of the statement of financial position are discounted to present value.
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.26 Employee benefits (continued)
(v) Share-based compensation
The Company operates an equity-settled, share-based compensation plan for the Directors and employees
of the Company and its subsidiaries (“ESOS”).

The fair value of the employee services received in exchange for the grant of the options is recognised as
an expense in the income statement. The total amount to be recognised over the vesting period is calculated
by reference to the fair value of the options granted. At each date of the statement of financial position, the
Company revises its estimates of the number of options that are expected to become exercisable. The effect
of any revision of the original estimates is recognised in the income statement and a corresponding
adjustment is made to equity over the remaining vesting period. When the options are exercised, the
proceeds received (net of directly attributable transaction costs) are credited to share capital and share
premium respectively. When options are not exercised, lapsed or forfeited, the share option reserve is
transferred to retained earnings.

Salient features of the Company’s share option scheme are disclosed in Note 34(c) to the financial
statements.

Annual Report 2011

3.27 Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant
will be received and the Group will comply with all attached conditions.

Government grants relating to property, plant and equipment are included in non-current liabilities as deferred pg 103

government grants and are credited to income statement on a straight-line basis over the expected lives of the

SCOMI GROUP BHD

related assets.

Government grants relating to costs are deferred and recognised in the income statement over the period
necessary to match them with the costs that they are intended to compensate.

3.28 Provisions
Provisions for restructuring costs (including redundancy costs) and legal claims are recognised when: the Group
has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources
will be required to settle the obligation; and the amount has been reliably estimated. Restructuring provisions
comprise lease termination penalties and employee termination payments. Provisions are not recognised for future
operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is
determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of
an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation
using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific
to the obligation. The increase in the provision due to the passage of time is recognised as interest expense.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.29 Contingent liabilities and contingent assets
The Group does not recognise a contingent liability but discloses its existence in the financial statements. A contingent
liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that
is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A
contingent liability also arises in the extremely rare case where there is a liability that cannot be recognised because
it cannot be measured reliably. However, contingent liabilities do not include financial guarantee contracts.

A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the
occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group. The Group
does not recognise contingent assets but discloses their existence where inflows of economic benefits are
probable, but not virtually certain.

In the acquisition of subsidiaries by the Group under a business combination, the contingent liabilities assumed are
measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interests.

The Group recognises separately the contingent liabilities of the acquirees as part of allocating the cost of a
business combination where their fair values can be measured reliably. Where the fair values cannot be measured
SCOMI GROUP BHD

reliably, the resulting effect will be reflected in the goodwill arising from the acquisitions.

3.30 Revenue recognition

Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to
the Group and the amount of the revenue can be measured reliably. Revenue is shown net of value-added tax,
pg 104 returns, rebates and discounts, and after eliminating sales within the Group.
Annual Report 2011

(i) Sale of goods

Sale of goods is recognised when significant risks and rewards of ownership of the goods are transferred to
the buyer.

(ii) Rendering of services

Revenue from rendering of services is recognised in the accounting period in which the services are rendered,
by reference to completion of the specific transaction, assessed on the basis of the actual service provided
as a proportion of the total services to be provided.

(iii) Interest income

Interest is recognised on a time proportion basis that reflects the effective yield on the asset, taking into
account the principal outstanding and the effective rate over the period to maturity, when it is determined
that such income will accrue to the Group.

(iv) Rental income

Rental income from operating leases is recognised on a straight-line basis over the term of the lease.

(v) Charter income

Revenue from charter hire is recognised on an accrual basis but is deferred when the terms of billings have
not been agreed by third parties or when certain conditions necessary for realisation have yet to be fulfilled.

(vi) Dividend income

Dividend income is recognised when the right to receive payment is established.

(vii) Management fee income

Management fee income is recognised on an accrual basis, based on services rendered.
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.30 Revenue recognition (continued)
(viii) Commission income
Commission income is recognised in the accounting period in which goods of principals are sold.

(ix) Construction contracts

Revenue from construction contracts is recognised on the percentage of completion method by reference to
the stage of completion of the contract work to date. See accounting policy Note 3.18 on construction
contracts.

3.31 Foreign currencies

(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency
of the primary economic environment in which the entity operates (the “functional currency”). The financial
statements are presented in Ringgit Malaysia, which is the Company’s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing

Annual Report 2011

at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in the income statement, except when deferred in other comprehensive
income as qualifying cash flow hedges.
pg 105
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in
the income statement within ‘finance income or cost’. All other foreign exchange gains and losses are

SCOMI GROUP BHD

presented in the income statement within other operating income and other operating expenses respectively.

For translation differences on financial assets and liabilities held at fair value through income statement and
available-for-sale financial assets, refer to Note 3.12(iii).

(iii) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary
economy other than entities in Venezuela) that have a functional currency different from the presentation
currency are translated into the presentation currency as follows:

• assets and liabilities for each statement of financial position presented are translated at the closing rate
at the date of that statement of financial position;

• income and expenses for each statement of comprehensive income presented are translated at average
exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case income and expenses are translated at the rate on the
dates of the transactions); and

• all resulting exchange differences are recognised as a separate component of other comprehensive
income.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.31 Foreign currencies
(iii) Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary
economy other than entities in Venezuela) that have a functional currency different from the presentation
currency are translated into the presentation currency as follows:

• all amounts (i.e. assets, liabilities, equity items, income and expenses, including comparatives) are
translated at the closing rate at the date of the most recent statement of financial position; and

• when amounts are translated into the currency of a non-hyperinflationary economy, comparative amounts
shall be those that were presented as current year amounts in the relevant prior year financial statements
(i.e. not adjusted for subsequent changes in the price level or subsequent changes in exchange rates)

On consolidation, exchange differences arising from the translation of the net investment in foreign entities,
and of borrowings and other financial instruments designated as hedges of such investments, are recognised
in other comprehensive income. When a foreign operation is sold, or any borrowings forming part of the net
investment are repaid, a proportionate share of such exchange differences is reclassified to income statement
SCOMI GROUP BHD

as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and
liabilities of the foreign entity and translated at the closing rate.

pg 106 3.32 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
Annual Report 2011

decision-maker.

The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Group Chief Executive Officer.

3.33 Derivatives financial instruments and hedging activities

Derivatives that are used/designated as hedging instruments are initially recognised at fair value on the date the
derivative contract is entered into. Such derivatives are subsequently remeasured at their fair value, with the resulting
gain or loss being recognised in the income statement as other operating income or expense. The Group accounts
for derivatives used as hedging instruments depending on their designation as follows:

(i) Fair value hedges

Resulting gains or losses from the subsequent remeasurement of hedging derivatives at their fair value are
recognised in the income statement. In addition, offsetting changes in the fair value of the hedged item are
recognised in the income statement and presented net of changes in fair value of the hedging derivatives.

If hedge accounting is discontinued, the adjustment to the carrying amount of a hedged item, for which the
effective interest method is used, is amortised to income statement over the period to maturity.

(ii) Cash flow hedges

Resulting gains or losses from the subsequent remeasurement of hedging derivatives at their fair values are
deferred to the hedging reserves as part of other comprehensive income to the extent of their effective
portion. The ineffective portion is recognised directly in the income statement as other operating income or
expense. Fair value changes from subsequent remeasurement of hedging derivatives deferred to hedging
reserves are recycled to income statement under finance cost in the periods when the underlying hedged
item affects income statement and statement of financial position of the Group.
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.33 Derivatives financial instruments and hedging activities (continued)
When a hedging instrument expires or is sold, or when hedge accounting is discontinued, any cumulative gain or
loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately
recognised in the income statement. When a forecast transaction in no longer expected to occur, the cumulative
gain or loss that was reported in other comprehensive income is immediately transferred to income statement
within other operating income/expenses.

The Group has entered in Cross Currency Interest Rate Swaps (“CCIRS”) that are designated as cash flow hedges
for the Group’s exposure to foreign exchange risk on its Murabahah Medium Term Notes, which were issued by a
subsidiary. The CCIRS involve the exchange of principals and fixed interest receipts in the foreign currency, in which
the issued Murabahah Medium Term Notes are denominated, for principals and fixed interest payments in the
subsidiary’s functional currency.

The fair values of derivative instruments used for hedging purposes are disclosed in Note 21. Movements in the
hedging reserve are shown in Note 36. The full fair value of a hedging derivative is classified as a non-current asset
or liability when the remaining maturity of the hedged item is more than 12 months and as a current asset or liability
when the remaining maturity of the hedged item is less than 12 months.

Annual Report 2011

4 REVENUE
Group Company
2011 2010 2011 2010
pg 107
RM’000 RM’000 RM’000 RM’000

SCOMI GROUP BHD

Continuing operations
Sales of goods 636,517 651,067 – –
Rental/chartering income 291,448 224,719 – –
Rendering of services 256,625 384,826 – –
Construction contract income 198,695 258,252 – –
Management fee 452 1,920 4,167 5,798
Dividend income – – – 66,436
Commission income – 1,151 – –

1,383,737 1,521,935 4,167 72,234
Discontinued operations
Rental income 64,119 55,556 – –
Rendering of services 30,827 46,010 – –
Sales of goods 7,666 18,503 – –

1,486,349 1,642,004 – –

 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

5 (LOSS)/PROFIT BEFORE TAXATION

Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000

(Loss)/profit before taxation is stated

after charging/(crediting):
Amortisation of intangible assets 2,161 1,773 – –
Amortisation of prepaid land lease payments 1,460 1,083 – –
Allowance for obsolete stocks 2,972 5,575 – –
Write back of government grant – (1,439) – –
Inventories written down 957 3,894 – –
Impairment losses
– intangible assets 6,313 6,282 – –
– property, plant and equipment 3,628 8,298 – –
– receivables 11,665 17,928 – –
– amount due from subsidiaries – – 7,807 –
– investment in subsidiary – – 600 –
SCOMI GROUP BHD

– investment in associate 8,627 – 143,992 –

Auditors’ remuneration:
PricewaterhouseCoopers Malaysian firm
Statutory audit
pg 108
– current year 1,673 1,673 212 212
– under/(over) provision in prior year – 50 – –
Annual Report 2011

Non-audit fees
– current year – 89 – –

Overseas affiliates of
PricewaterhouseCoopers Malaysian firm
Statutory audit
– current year 1,398 1,398 – –
– under/(over) provision in prior year – 116 – –

Other external auditors

Statutory audit
– current year 202 202 – –
– under provision in prior year – 32 – –
Non-audit fees
– current year – 6 – –

Bad debts written off/(recovered) 2,085 1,336 – –

Depreciation of property, plant and equipment 51,959 66,616 826 894
Depreciation of investment property 144 148 94 –
Gain on disposal of property, plant and equipment (1,202) (49) (60) (12)
Fair value gain on financial instruments – derivatives (556) (1,220) – –
Property, plant and equipment written off 361 1,833 – 219
Provision for tax penalties 872 1,551 – –
5 (LOSS)/PROFIT BEFORE TAXATION (CONTINUED)
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000

Loss/(gain) on foreign exchange

– realised 15,705 31,639 (131) 204
– unrealised 22,858 14,296 (344) (1,669)
Monetary adjustments (2,417) 9,236 – –
Hyperinflation adjustments 3,218 8,227 – –
(Gain)/loss on disposal of/dilution of interest
in subsidiary companies – (19,677) – –
Gross dividend income – subsidiaries – – – (66,436)
Gross dividend income – associates – – – –
Interest income (2,860) (3,895) (6,303) (4,957)
Lease rental
– plant and machinery 56,975 49,083 – –
– property 13,102 14,351 – –

Annual Report 2011

Rental of land and premises 2,658 1,746 445 480
Rental of equipment 3,529 856 97 87
Rental income (135) (448) (408) (343)
Research and development expenses 101 774 – –

pg 109
Employee benefits costs (including Executive Director):

SCOMI GROUP BHD

Wages, salaries and bonuses 230,084 215,529 4,917 8,386
Defined contribution plan 9,987 10,803 519 833
Defined benefit plan (Note 37) 1,058 1,584 – –
Termination benefits 633 1,093 – –
Share option expense (Note 36) 2,516 2,116 1,081 417
Employment costs 7,019 13,819 83 46
Other employee benefits (including allowances) 70,818 86,657 485 994

321,169 331,601 7,086 10,676

Included in the cost of sales of the Group are the cost of inventories and services of RM877,568,000 (2010:
RM1,091,435,000) and construction contract costs of RM205,611,000 (2010: RM173,086,000).
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

6 FINANCE COSTS
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
(Restated)

Continuing operations
Interest expense on borrowings, leases,
ICSLS and ICULS 62,414 82,604 16,696 17,422
Effect of interest on CCIRS 2,304 879 – –
Effect of hedging – fair value hedge 21 238 – –

64,739 83,721 16,696 17,422
Currency exchange loss* – – – –
Fair value loss/(gain) on CCIRS designated
as fair value hedges (893) 1,560 – –
Fair value loss/(gain) on put option (13,057) (20,926) – –

SCOMI GROUP BHD

50,789 64,355 16,696 17,422

Discontinued operations
Interest expense on borrowings and leases – 1,789 – –

50,789 66,144 16,696 17,422
pg 110

Annual Report 2011

* Included in currency exchange loss is an amount of RM11,831,286 (2010: RM62,650,666) of exchange losses/(gains)
transferred from hedging reserve which is offset by a corresponding exchange (gains)/losses of Nil (2010:
RM62,650,666) arising from revaluation of hedged borrowings.

7 TAXATION EXPENSE/(CREDIT)
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000

Continuing operations
Current tax
– Malaysian income tax 7,356 1,847 – 286
– Foreign tax 25,609 22,176 – –

32,965 24,023 – 286
Deferred tax (Note 38) 15,727 (3,814) 666 814

48,692 20,209 666 1,100

7 TAXATION EXPENSE/(CREDIT)
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
(Restated)

Current tax
Current year 23,621 28,964 – 286
(Over)/under accrual in prior years 9,344 (4,941) – –

32,965 24,023 – 286

Deferred tax
Reversal and origination of temporary differences 8,086 (258) 666 814
Under/(Over) accrual in prior years 1,114 (589) – –
Benefit from previously unrecognised tax losses 6,723 (2,967) – –
Change in income tax rate (196) – – –

Annual Report 2011

15,727 (3,814) 666 814

Total tax expense from continuing operations 48,692 20,209 666 1,100

pg 111
Discontinuing operations

SCOMI GROUP BHD

Current tax
– Foreign tax 2,765 (338) – –
Deferred tax (Note 38) 19,820 (1,825) – –

22,585 (2,163) – –

Current tax
Current year 2,560 (338) – –
Under accrual in prior years 205 – – –

2,765 (338) – –
Deferred tax
Reversal and origination of temporary differences 19,820 (1,825) – –

Total tax expense/(credit) from
discontinued operations 22,585 (2,163) – –

Total tax expense 71,278 18,046 – –

 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

7 TAX EXPENSE/(CREDIT) (CONTINUED)

Group Company
2011 2010 2011 2010
% % % %
(Restated)

Numerical reconciliation between the average
effective tax rate and the applicable tax rate:
Applicable tax rate (21) (21) (25) 25
Tax effects of:
– expenses not deductible for tax purposes 22 17 25 4
– utilisation of previously unrecognised tax losses,
capital allowance and tax incentives – (5) – –
– income not subject to tax (7) (8) – (29)
– withholding tax based on turnover 9 5 – –
– deferred tax assets not recognised in respect
of current year’s tax losses and
unabsorbed capital allowances 23 15 – 2
SCOMI GROUP BHD

– (over)/under accrual in respect of prior years 5 (3) – –

– share of results of associates and
jointly controlled entities 11 12 – –

Average effective tax rate 42 12 0 2
pg 112


Annual Report 2011

The applicable tax rate of the Group is derived from the consolidation of all the applicable tax for the companies within
the Group, based on their domestic tax rates. The applicable tax rate of the Company is the Malaysian statutory tax
rate of 25%. The applicable tax of the Group has decreased compared to the previous year mainly due to the loss
suffered from subsidiaries from high tax rate jurisdictions.

The income tax effect of each of the other comprehensive (loss)/income item is Nil (2010: Nil) in the current financial
year.

8 DISCONTINUED OPERATIONS
On 1 November 2011, the Board of Directors of the Company announced that Scomi Oiltools, Inc. (“SOINC”) and Scomi
Oiltools De Mexico, S. De R.L de C.V (“SMEX”) had entered into a conditional purchase and sale agreement with
National Oilwell Varco, L.P and National Oilwell Varco Solutions S.A. de C.V. respectively for the disposal of certain
assets used in connection with its drilling waste management business (“DWM Business”) for a total cash consideration
of USD35.0 million (RM108.56 million). SOINC and SMEX completed the disposals of their DWM Business on 10
November 2011 and 11 November 2011 respectively.

The entire results from the disposal group are presented separately on the statement of comprehensive income as
“discontinued operations”.
8 DISCONTINUED OPERATIONS (CONTINUED)
The results of the discontinued operations of the SOINC and SMEX operations are as follows:

Group
2011 2010
RM’000 RM’000

Revenue 102,611 120,069
Expenses (104,184) (125,501)
Loss on disposal (103,495) –

Loss before tax of discontinued operations (105,068) (5,432)
Taxation (22,585) 2,163

Loss for the year from discontinued operations (127,653) (3,269)

The impact of the discontinued operations on the cash flows of the Group is as follows:

Annual Report 2011

Group
2011 2010
RM’000 RM’000

Operating cash flow 20,150 977 pg 113
Investing cash flow 80,103 361

SCOMI GROUP BHD

Financing cash flow (100,956) (1,738)

Total cash inflow/(outflow) (703) (400)

Details of net assets arising from the disposal are as follows:

At the date
of disposal
RM’000

Net assets disposed:
Fair value of net assets disposed at disposal date 193,163
Loss on disposal attributable to the owner of the parents (103,495)

Total consideration 89,668

Satisfied by:
Total consideration 108,561
Expenses incurred directly attributable to the disposal (18,893)

Net cash inflow on disposal 89,668

 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

9 DIRECTORS’ REMUNERATION
The Directors of the Company in office during the financial year are as follows:

Non-executive Directors
Tan Sri Asmat bin Kamaludin
Tan Sri Nik Mohamed bin Nik Yaacob
Datuk Haron bin Siraj
Datuk Mohamed Azman bin Yahya
Dato’ Mohammed Azlan bin Hashim
Dato’ Abdul Rahim bin Abu Bakar
Dato’ Sreesanthan a/l Eliathamby
Foong Choong Hong

Executive Director
Shah Hakim @ Shahzanim bin Zain

The aggregate amount of emoluments received/receivable by Directors of the Company during the financial year is as
follows:
SCOMI GROUP BHD

Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000

pg 114
Non-executive Directors:
– fees 707 712 555 576
Annual Report 2011

– other emoluments 186 248 171 233

893 960 726 809

Executive Director (Note 40(b)):
– salaries and bonus 2,279 1,797 1,320 1,270
– defined contribution plan – 10 – 10
– share options granted under ESOS – – – –
– estimated monetary value of benefits-in-kind 551 679 352 121

2,830 2,486 1,672 1,401

3,723 3,446 2,398 2,210

10 (LOSS)/EARNINGS PER SHARE

(a) Basic (loss)/earnings per share
Basic (loss)/earnings per share of the Group are calculated by dividing the profit attributable to owners of the
Company for the financial year by the weighted average number of ordinary shares in issue during the financial year
and conversion of potential ordinary shares from the mandatorily convertible instruments i.e Irredeemable Convertible
Secured Loan Stocks (“ICSLS”), excluding ordinary shares purchased by the Company and held as Treasury shares
(Note 34(b)).
10 (LOSS)/EARNINGS PER SHARE (CONTINUED)
(a) Basic (loss)/earnings per share (continued)
Group
2011 2010
(Restated)

(Loss)/profit attributable to owners of the Company (RM’000) (232,332) (172,906)

Weighted average number of ordinary shares in issue (‘000) 1,391,731 1,371,255

Basic (loss)/earnings per share (Sen) (16.69) (12.61)

(b) Diluted (loss)/earnings per share

For the diluted (loss)/earnings per share calculation, the weighted average number of ordinary shares in issue is
adjusted to assume conversion of all dilutive potential ordinary shares. The Company has two categories of dilutive
potential ordinary shares, warrants and share options granted to employees.

Annual Report 2011

For warrants, a calculation is done to determine the number of shares that could have been acquired at fair value
(determined as the average share price of the Company’s shares) based on the monetary value of the subscription
rights attached to outstanding warrants. The number of shares calculated above is compared with the number of
shares that would have been issued assuming the exercise of the warrants. The difference is added to the
denominator as an issue of ordinary shares for no consideration. This calculation serves to determine the “bonus” pg 115
element to the ordinary shares outstanding for the purpose of computing the dilution.

SCOMI GROUP BHD

For share options granted to employees, a calculation is done to determine the number of shares that could have
been acquired at fair value (determined as the average share price of the Company’s shares) based on the monetary
value of the subscription rights attached to outstanding share options. The number of shares calculated above is
compared with the number of shares that would have been issued assuming the exercise of the share options. The
difference is added to the denominator as an issue of ordinary shares for no consideration. This calculation serves
to determine the ‘bonus’ element to the ordinary shares outstanding for the purpose of computing the dilution. No
adjustment is made to the loss attributable to owners of the Company in calculating the diluted loss per share.

Group
2011 2010
(Restated)

(Loss)/profit attributable to owners of the Company (RM’000) (232,332) (172,906)

Weighted average number of ordinary shares in issue

and conversion of potential ordinary shares from
the mandatorily convertible instrument of ICSLS (’000) 1,391,731 1,371,255
Adjustments for:
– share options (’000) 2,797 4,366
– warrants (’000) – 11,638

Weighted average number of ordinary shares
for diluted earnings per share (’000) 1,394,528 1,387,259

Diluted (loss)/earnings per share (Sen) (16.66) (12.46)

 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

11 DIVIDENDS
The Directors do not recommend any dividend for the financial year ended 31 December 2011.

12 PROPERTY, PLANT AND EQUIPMENT

Renovation,
Tools, office
plant equipment, Monorail
Freehold Freehold Leasehold and fittings and Motor test
Group land buildings buildings machinery computers vehicles track Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cost
At 1 January 2011 19,548 55,120 28,950 735,432 65,892 13,555 14,795 933,292
Additions – – 383 46,516 3,646 411 – 50,956
Disposals (1,482) (948) (3,330) (172,616) (5,494) (1,816) – (185,686)
Write-offs – – – (434) – – – (434)
Reclassification – – 3 363 (350) (16) – –
SCOMI GROUP BHD

Currency translation
differences 792 2,118 159 (2,135) (586) 41 – 389

At 31 December 2011 18,858 56,290 26,165 607,126 63,108 12,175 14,795 798,517

pg 116

Accumulated depreciation
Annual Report 2011

At 1 January 2011 – 13,057 14,410 441,760 35,666 10,488 2,326 517,707

Charge for the
financial year – 1,669 1,779 38,729 8,563 1,096 123 51,959
Capitalised under
development costs
(Note 13) – – – 233 241 – 370 844
Disposals – (141) (3,580) (97,896) (5,532) (1,663) – (108,814)
Impairment losses – – – 3,628 – – – 3,628
Write-offs – – – (73) – – – (73)
Currency translation
differences – (4) (77) (3,020) (199) (24) – (3,324)

At 31 December 2011 – 14,581 12,532 383,361 38,739 9,895 2,819 461,927

Net book value

At 31 December 2011 18,858 41,709 13,633 223,765 24,369 2,280 11,976 336,590

12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Renovation,
Tools, office
plant equipment, Monorail
Freehold Freehold Leasehold and fittings and Motor test
Group land buildings buildings machinery computers vehicles track Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cost
At 1 January 2010 20,363 52,850 46,891 853,779 68,021 13,729 14,795 1,070,428
Effect of adopting
Amendments
to FRS 117 – – 6,075 – – – – 6,075

At 1 January 2010,
as restated 20,363 52,850 52,966 853,779 68,021 13,729 14,795 1,076,503
Additions 2,115 4,115 1,837 11,514 10,956 1,212 – 31,749
Disposals (1,275) – (22,481) (111,590) (10,047) (1,023) – (146,416)

Annual Report 2011

Write-offs – (221) (2,018) – (2,045) – – (4,284)
Reclassification – 229 – – (229) – – –
Currency translation
differences (1,655) (1,853) (1,354) (18,271) (764) (363) – (24,260)

At 31 December 2010 19,548 55,120 28,950 735,432 65,892 13,555 14,795 933,292 pg 117

SCOMI GROUP BHD

Accumulated depreciation
At 1 January 2010 – 7,148 17,568 422,308 34,239 9,907 1,833 493,003
Effect of adopting
Amendments to
FRS 117 – – 354 – – – – 354

At 1 January 2010,
as restated – 7,148 17,922 422,308 34,239 9,907 1,833 493,357
Charge for the
financial year – 1,015 2,844 53,631 7,834 1,292 – 66,616
Capitalised under
development costs
(Note 13) – 4 – 315 188 – 493 1,000
Disposals – – (4,638) (38,621) (6,275) (816) – (50,350)
Impairment losses – 4,953 9 3,265 71 – – 8,298
Write-offs – (76) (1,893) – (482) – – (2,451)
Currency translation
differences – 13 166 862 91 105 – 1,237

At 31 December 2010 – 13,057 14,410 441,760 35,666 10,488 2,326 517,707

Net book value

At 31 December 2010 19,548 42,063 14,540 293,672 30,226 3,067 12,469 415,585

 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Office
Motor equipment
vehicles and fittings Renovation Total
Company RM’000 RM’000 RM’000 RM’000

Cost
At 1 January 2011 1,839 3,640 741 6,220
Additions – 15 – 15
Disposal (360) – – (360)

At 31 December 2011 1,479 3,655 741 5,875

Accumulated depreciation
At 1 January 2011 1,363 2,408 2 3,773
Charge for the financial year 296 284 246 826
Disposal (355) – – (355)
SCOMI GROUP BHD

At 31 December 2011 1,304 2,692 248 4,244

Net book value at 31 December 2011 175 963 493 1,631

pg 118
Cost
Annual Report 2011

At 1 January 2010 1,839 3,648 2,020 7,507

Additions – 580 739 1,319
Disposal – (43) – (43)
Write offs – (545) (2,018) (2,563)

At 31 December 2010 1,839 3,640 741 6,220

Accumulated depreciation
At 1 January 2010 1,067 2,520 1,668 5,255
Charge for the financial year 296 371 227 894
Disposal – (32) – (32)
Write offs – (451) (1,893) (2,344)

At 31 December 2010 1,363 2,408 2 3,773

Net book value at 31 December 2010 476 1,232 739 2,447

12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
(i) The net book values of property, plant and equipment of the Group acquired under finance leases are as follows:

Group
2011 2010
RM’000 RM’000

Freehold land and buildings – 2,700
Motor vehicles 2,040 1,726
Tools, plant and machinery – 10,059
Office equipment, fittings and computers 1,875 1,673

(ii) Certain property, plant and equipment of the Group are charged as security for banking facilities (Note 28) as
follows:

Group
2011 2010

Annual Report 2011

RM’000 RM’000

Land and buildings 12,019 17,914

(iii) During the financial year, the Group acquired property, plant and equipment at aggregate costs of RM50,956,000 pg 119
(2010: RM27,071,000), of which RM133,000 (2010: RM2,764,000) is by means of finance lease arrangements.

SCOMI GROUP BHD

13 INTANGIBLE ASSETS
Development
Patents Capitalised development costs cost work-in-progress
and other Drilling Drilling
intangible waste MassRapid waste
Group Goodwill assets Monorail Bus equipment Transit/Bus equipment Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cost
At 1 January 2011 294,867 13,001 77,121 112 5,703 904 – 391,708
Additions – – 37,297 – – 2,558 2,463 42,318
Reclassification – – – 904 – (904) – –
Discontinued operation
(Note 8) (90,179) – – – – – – (90,179)
Currency translation
differences 41 55 – – 96 – 36 228

At 31 December 2011 204,729 13,056 114,418 1,016 5,799 2,558 2,499 344,075
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

13 INTANGIBLE ASSETS (CONTINUED)

Development
Patents Capitalised development costs cost work-in-progress
and other Drilling Drilling
intangible waste MassRapid waste
Group Goodwill assets Monorail Bus equipment Transit/Bus equipment Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Accumulated impairment
and amortisation
At 1 January 2011 360 7,501 1,616 66 1,458 – – 11,001
Amortisation for the
financial year 97 84 1,816 102 62 – – 2,161
Impairment loss – 4,856 – – 1,457 – – 6,313
Currency translation
differences 2,851 46 – – 4 – – 2,901

At 31 December 2011 3,308 12,487 3,432 168 2,981 – – 22,376
SCOMI GROUP BHD

Net book value

At 31 December 2011 201,421 569 110,986 848 3,722 1,654 2,499 321,699

pg 120
Cost
Annual Report 2011

At 1 January 2010 479,192 13,309 65,065 108 5,066 569 – 563,309

Additions – – 12,431 4 (113) 335 – 12,657
Transferred from property,
plant and equipment
(Note 12) – – – – 1,000 – – 1,000
Disposal of subsidiaries (183,699) – (375) – – – – (184,074)
Currency translation
differences (626) (308) – – (250) – – (1,184)

At 31 December 2010 294,867 13,001 77,121 112 5,703 904 – 391,708

Accumulated impairment
and amortisation
At 1 January 2010 360 2,793 – 44 – – – 3,197
Amortisation for the
financial year – 135 1,616 22 – – – 1,773
Impairment loss – 4,824 – – 1,458 – – 6,282
Currency translation
differences – (251) – – – – – (251)

At 31 December 2010 360 7,501 1,616 66 1,458 – – 11,001

Net book value

At 31 December 2010 294,507 5,500 75,505 46 4,745 904 – 380,707

13 INTANGIBLE ASSETS (CONTINUED)
(a) The carrying amounts of goodwill allocated to the Group’s cash-generating units (“CGUs”) are as follows:

2011 2010
RM’000 RM’000

Oilfield services 148,677 241,666
Transport solutions 48,669 48,766
Production enhancement 4,075 4,075

201,421 294,507

The recoverable amount of the CGU in the current financial year is determined based on value in use calculations.
In the previous financial year, the recoverable amount of all the CGUs were determined based on value in use
calculations except for oilfield services which was based on a fair value less costs to sell basis.

The value in use calculations use pre-tax cash flow projections based on financial budgets approved covering a

Annual Report 2011

five-year period. The projections over these periods were based on an approved business plan and reflect the
expectation of usage, revenue, growth, operating costs and margins based on past experience and current
assessment of market share, expectations of market growth and industry growth.

The key assumptions used in the value in use calculations for the significant CGUs are as follows:
pg 121
Oilfield Transport Production

SCOMI GROUP BHD

services solutions enhancement
% % %

Growth rate in the first 5 years
– 2011 2.4 – 12.0 existing 5.0
secured projects

– 2010 Not applicable 10.0 5.0

or existing
secured projects

Pre-tax discount rate

– 2011 9.0 – 23.0 13.0 12.0
– 2010 Not applicable 11.0 12.0

The terminal value for transport solutions is calculated based on the projected realisable value of the net assets of
the CGUs at the end of the five years.

The oilfield services and product enhancement CGUs are included within the oilfied services reportable segment in
Note 42.

(b) In 2009, the Group purchased the rights to use an intellectual property for the development of technologies relating
to crude oil waste, oil recovery recycling and treatment for oil and gas industry, amounting to USD2.5 million
(approximately RM9.4 million). During the financial year, an impairment loss of RM4.8 million was recognised to fully
write-down the remaining carrying amount of the intellectual property rights.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

14 INVESTMENT PROPERTIES
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000

Cost
At 1 January 2,889 2,889 4,678 –
Additions 945 – – 4,678

At 31 December 3,834 2,889 4,678 4,678

Accumulated depreciation
At 1 January 1,676 1,528 – –
Charge for the financial year 144 148 94 –
Impairment losses 455 – – –
Currency translation differences – – – –

SCOMI GROUP BHD

At 31 December 2,275 1,676 94 –

Net book value 1,559 1,213 4,584 4,678

pg 122 At fair value:

Freehold land and buildings 2,471 2,170 11,800 9,800
Annual Report 2011

The fair values of the investment properties are determined based on current price in an active market.

The Company has determined that certain investment properties have been occupied by a subsidiary within the Group
and therefore does not qualify as investment properties according to FRS 140 Investment Properties.

The following amounts have been recognised in the income statement:

Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000

Rental income 135 135 408 343
Direct operating expenses of investment properties
that generated rental income – – – –

There were no direct operating expenses arising from investment property that generated rental income during the year
as all expenses were incurred by the tenant.
15 PREPAID LAND LEASE PAYMENTS
Group
2011 2010
RM’000 RM’000

Leasehold land
At 1 January
– as previously stated 1,787 7,969
– effect of adopting FRS 117 – (5,721)

At 1 January, as restated 1,787 2,248
Additions – 832
Disposal – –
Amortisation for the financial year (1,460) (1,083)
Currency translation differences (11) (210)

As 31 December 316 1,787

Annual Report 2011

16 INVESTMENTS IN SUBSIDIARIES
Company
2011 2010
pg 123
RM’000 RM’000

SCOMI GROUP BHD

At cost:
– quoted shares in Malaysia 286,807 286,807
– unquoted shares 298,983 298,908
– quoted ICULS in Malaysia 54,782 54,782

640,572 640,497
Less: Accumulated impairment (4,946) (4,346)
Deemed investment – financial guarantee 1,268 1,268

636,894 637,419

At market value:
– quoted shares in Malaysia 107,838 192,568
– quoted ICULS in Malaysia 29,035 52,591

 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

16 INVESTMENTS IN SUBSIDIARIES (CONTINUED)

Details of the significant subsidiaries are as follows:

Country of Group’s effective

Name of company incorporation equity interest Principal activities
2011 2010
% %

Significant direct subsidiaries
of Scomi Group Bhd
Scomi Oilfield Limited * Bermuda 76.1 76.1 Investment holding

Scomi Engineering Bhd * Malaysia 67.4(1) 69.8 Investment holding and provision of
management services

Scomi Energy Sdn Bhd * Malaysia 100 100 Investment holding and provision of
management services

Scomi Chemicals Sdn Bhdα Malaysia 100 100 Investment holding

SCOMI GROUP BHD

Scomi KMC Sdn Bhd * Malaysia 52 52 Provision of oilfield equipment, supplies

(including 4% held by and services
Scomi Oiltools Sdn Bhd)

Significant subsidiary
pg 124 of Scomi Oilfield Limited
Scomi Oiltools Bermuda Limited Bermuda 76.1 76.1 Investment holding
Annual Report 2011

Significant subsidiaries of
Scomi Oiltools Bermuda
Limited
Scomi Oiltools Sdn Bhd * Malaysia 76.1 76.1 Provision of oilfield equipment, supplies
and services and provision of
management services

Scomi Oiltools (Cayman) Ltd# Cayman 76.1 76.1 Provision of oilfield equipment, supplies
Islands and services
Scomi Oiltools Ltd * Cayman 76.1 76.1 Provision of oilfield equipment, supplies
Islands and services

Scomi Oiltools (Europe) United 76.1 76.1 Investment holding and provision of
Limited # Kingdom oilfield equipment, supplies and services

Scomi Oiltools (Shetland) United 76.1 76.1 Provision of oilfield equipment, supplies
Limited # Kingdom and services

Scomi Oiltools Inc # United States 76.1 76.1 Dormant

of America

Scomi Oiltools (Africa) Limited * Cayman 76.1 76.1 Investment holding and provision of
Island oilfield equipment, supplies and services

Scomi Oiltools de Venezuela Venezuela 76.1 76.1 Provision of oilfield equipment, supplies
S.A. # and services

Scomi Oiltools (S) Pte Ltd # Singapore 76.1 76.1 Investment holding and provision of
oilfield equipment, supplies and services
16 INVESTMENTS IN SUBSIDIARIES (CONTINUED)
Details of the significant subsidiaries are as follows:

Country of Group’s effective

Name of company incorporation equity interest Principal activities
2011 2010
% %

Significant subsidiaries of
Scomi Engineering Bhd
Urban Transit Private Limited* India 67.4 69.8 Engage in the business of development,
manufacture and supply of monorail
transportation infrastructure systems
equipment and services

Urban Transit Servicos Brazil 67.4 – Engage in the business of development,

Do Brasil LTDA* manufacture and supply of monorail
transportation infrastructure systems
equipment and services

Annual Report 2011

Scomi Transportation
Systems Sdn Bhd * Malaysia 67.4 69.8 Investment holding

Significant subsidiaries of
Scomi Transportation
Systems Sdn Bhd pg 125
Scomi Rail Bhd * Malaysia 67.4 69.8 Design, manufacture, and supply of
monorail trains and related services

SCOMI GROUP BHD

Scomi Coach Sdn Bhd * Malaysia 67.4 69.8 Manufacturing, fabrication and assembly
of commercial coaches and truck vehicle
bodies
Significant subsidiaries of
Scomi Chemicals Sdn Bhd
~ Scomi Sosma Sdn Bhd α Malaysia 40 40 Distribution of chemical products and
services

~ Scomi Anticor S.A. α France 40 40 Design and field deployment of various

oil and gas production chemicals

* Audited by PricewaterhouseCoopers, Malaysia

# Audited by affiliates of PricewaterhouseCoopers, Malaysia
α Audited by firms other than PricewaterhouseCoopers, Malaysia and its affiliates
~ Company in which the Group owns less than half of the voting powers. However, as the Group has control over
its financial and operating policies, this investment is treated as a subsidiary.
(1) During the financial year, the issued and paid-up capital was increased from RM285,969,224 comprising
285,969,224 ordinary shares of RM1.00 each, to RM286,044,224 comprising 286,044,224 ordinary shares of
RM1.00 each, by way of the issuance of 75,000 new ordinary shares of RM1.00 each pursuant to the conversion
of ICULS by non-controlling interests at a price of RM1.00 per share.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

17 INVESTMENT IN AN ASSOCIATE
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000

Shares quoted in Malaysia, at cost 360,487 360,487 360,124 360,124
Share of post-acquisition
– (loss)/profits * (88,536) (40,002) – –
– reserves (46,810) (51,626) – –

225,141 268,859 360,124 360,124
Less: Accumulated impairment (8,627) – (143,992) –

216,514 268,859 216,132 360,124

Share of contingent liabilities 5,241 15,071 – –

SCOMI GROUP BHD

Market value of shares quoted in Malaysia 119,090 178,634 118,957 178,435

* Included in the share of post-acquisition loss during the financial year is the share of impairment of goodwill in an
pg 126 associate of RM18.51 million (2010: RM111.17 million).
Annual Report 2011

The Group’s share of the revenue, assets and liabilities of significant associate is as follows:

Group’s
effective
Country of equity Net
Name of company incorporation interest Assets Liabilities Revenue loss
% RM’000 RM’000 RM’000 RM’000

2011
Scomi Marine Bhd Malaysia 42.8 293,829 (49,768) 167,076 (48,536)

2010
Scomi Marine Bhd Malaysia 42.8 369,171 (80,649) 174,891 (87,225)

18 INVESTMENT IN JOINTLY CONTROLLED ENTITIES
Group
2011 2010
RM’000 RM’000

Unquoted shares, at cost 33 33
Share of post-acquisition (loss)/profit (33) (14)

– 19

The Group’s share of the revenue, assets and liabilities of the jointly controlled entity is as follows:

Group’s
effective
Country of equity
Name of company incorporation interest Assets Liabilities Revenue Net loss
% RM’000 RM’000 RM’000 RM’000

Annual Report 2011

2011
Sosma (B) Sdn Bhd Brunei 50 7 76 – (19)

2010 pg 127
Sosma (B) Sdn Bhd Brunei 50 43 95 – –

SCOMI GROUP BHD

As at the date of the statement of financial position, Sosma (B) Sdn Bhd remained inactive, hence there was no share
of revenue from the jointly controlled entity.

19 OTHER FINANCIAL RECEIVABLE

Company
2011 2010
RM’000 RM’000

Amounts due from subsidiaries – 17,636

Included in the above is an amount of nil (2010: RM18.49 million) which is unsecured and repayable in 3 years. The fair
value of this amount as at the date of the statement of financial position is nil (2010: RM15.47 million), computed based
on cash flows discounted at market borrowing rates of 5.5% per annum.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

20 AVAILABLE-FOR-SALE FINANCIAL ASSETS

Group
2011 2010
RM’000 RM’000

At fair value:
Shares quoted in Malaysia 127 127
Unquoted shares 1,389 1,389

1,516 1,516

Market value of quoted investments 127 127

21 DERIVATIVE FINANCIAL ASSETS/(LIABILITIES)

Group
SCOMI GROUP BHD

2011 2010
Contract/ Fair value Contract/ Fair value
notional assets/ notional assets/
amount (liabilities) amount (liabilities)
RM’000 RM’000 RM’000 RM’000
pg 128

Cross Currency Interest Rate Swaps
Annual Report 2011

– cash flow hedges – 463,500 26,288

Forward foreign exchange contracts 2,800 (294) 78,636 949

(294) 27,237

Included in:
Non-current assets – 24,465
Current assets – 7,691
Non-current liabilities – (4,919)
Current liabilities (294) –

(294) 27,237

The Group previously entered into Cross Currency Interest Rate Swaps (“CCIRS”) and Interest Rate Swaps (“IRS”) that are
designated as cash flow hedges to hedge the Group’s exposure to interest rate risk and foreign exchange risk on its
Murabahah Medium Term Notes. These contracts entitle the Group to receive principal and fixed interest amounts in Ringgit
Malaysia (“RM”) and oblige the Group to pay principal and floating interest amount in United States Dollars (“USD”).

The US interest rates on the CCIRS and IRS contracts jointly designated as hedging instruments in the cash flow hedges
ranged from 5.53% to 7.23% per annum (2010: 5.53% to 7.23% per annum) and the interest rates in RM ranged from
5.85% to 6.95% per annum (2010: 5.85% to 6.95% per annum).

The Group had on 14 December 2011 issued a Sukuk Murabahah of RM342.55 million (‘the Sukuk”). The proceeds
raised from the issuance under the Sukuk was utilised for early redemption of the outstanding amount of the existing
Notes in full.
21 DERIVATIVE FINANCIAL ASSETS/(LIABILITIES) (CONTINUED)
Since the Sukuk was issued with different maturity dates and repayment amounts from the Notes, all the existing CCIRS
and IRS contracts have been early terminated during the year.

Consequently, this leaves the Group exposed to foreign currency risk on the translation of the RM denominated Sukuk.
The Group is monitoring this risk and intends to enter into derivative contracts when market rates become more
favourable, to hedge its risk.

Further, the Group uses forward foreign currency contracts to manage some of the transaction exposures. These
contracts are entered into for periods consistent with currency translation exposure and fair value changes. These
contracts are not designated as cash flow or fair value hedges. Hence, hedge accounting has not been applied.

There was no fair value loss being recorded for the year as all the derivatives have been unwound as at the year end.

22 INVENTORIES
Group
2011 2010

Annual Report 2011

RM’000 RM’000

Consumables 26,404 30,417

Raw materials 13,866 14,620
Work-in-progress 8,613 15,186
pg 129
Finished goods 174,420 140,157

SCOMI GROUP BHD

223,303 200,380

23 RECEIVABLES, DEPOSITS AND PREPAYMENTS

Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000

Trade receivables 466,671 355,814 – –

Amounts due from customers on contract (Note 26) 330,455 364,692 – –
Amounts receivable from:
– subsidiaries – – 57,565 91,848
– jointly controlled entities – 185 – 27
– associate – – 467 –
– related parties 28 157 28 31
– staff 740 1,590 94 100

768 1,932 58,154 92,006

Other receivables 78,832 110,934 5,741 8,998
Deposits 9,994 7,822 624 871
Prepayments 15,360 22,194 37 86

902,080 863,388 64,556 101,961

 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

23 RECEIVABLES, DEPOSITS AND PREPAYMENTS (CONTINUED)

(a) Trade receivables
Trade receivables are non-interest bearing and credit terms for trade receivables range from 30 to 120 day (2010:
30 to 120 day) terms. They are recognised at their original invoice amounts which represent their fair values on
initial recognition.

(b) Related party balances and receivables from staff

– Amounts due from subsidiaries are unsecured and non-interest bearing except for certain advances which bear
interest ranging from 1.80% to 7.00% (2010: 1.80% to 7.00%) per annum and are repayable within the next
12 months.
– Amounts due from related parties and jointly controlled entities are unsecured, interest free and are repayable
upon demand.
– Amounts due from staff are unsecured, interest free and repayable within 30 days.

24 SHORT-TERM DEPOSITS, CASH AND BANK BALANCES

Group Company
2011 2010 2011 2010
SCOMI GROUP BHD

RM’000 RM’000 RM’000 RM’000

Short term deposits with licensed banks 35,176 52,410 6,981 7,438
Cash and bank balances 122,271 123,978 6,101 1,896

pg 130
157,447 176,388 13,082 9,334

Annual Report 2011

The effective interest rates for short term deposits, cash and bank balances at the date of the statement of financial
position were as follows:

Group Company
2011 2010 2011 2010
% % % %

Short term deposits with licensed banks 2.3-3.1 1.45-3.5 2.3-3.1 1.45-3.5

Short term deposits of the Group and Company have maturity periods ranging from 1 to 365 days (2010: 1 to 365
days). Bank balances are deposits held at call with banks.

Short term deposits of the Company and certain subsidiaries amounting to RM50,303,000 (2010: RM36,099,000) have
been pledged to licensed banks for banking facilities as disclosed in Note 28 to the financial statements.

Short term deposits of the Company amounting to RM6,981,000 (2010: RM7,438,000) have been pledged to licensed
banks for banking facilities.
25 NON-CURRENT ASSET CLASSIFIED AS HELD FOR SALE
As at the financial year ended 31 December 2011, the non-current asset held for sale was as follows:

Group
2011 2010
RM’000 RM’000

Jointly controlled entity – 4,663


On 23 December 2010, a wholly-owned subsidiary of the Company, Scomi Energy Sdn Bhd, entered into a conditional
share sale agreement with Cameron Solutions Inc, in relation to disposal of a jointly controlled entity, Scomi NTC Sdn
Bhd, as disclosed in Note 41(b). The disposals were completed in the current financial year.

26 AMOUNTS DUE FROM/(TO) CUSTOMERS ON CONTRACTS

Group
2011 2010
RM’000 RM’000

Annual Report 2011

Construction contract cost incurred to date and attributable profits 852,472 653,777
Less: Progress billings (522,018) (289,085)

330,455 364,692

pg 131

Represented by:

SCOMI GROUP BHD

Amount due from customers (included in trade and other receivables – Note 23) 330,455 364,692

Advance received on contract, included under other payables – 859

27 PAYABLES
Group Company
2011 2010 1.1.2010 2011 2010
RM’000 RM’000 RM’000 RM’000 RM’000

Current liabilities
Trade payables 265,167 206,098 303,025 – –
Put option over
non-controlling interests 119,598 132,656 144,386 – –
Amount due to an associate 515 6,311 7,610 – –
Accruals 79,799 59,911 100,828 11,465 16,059
Other payables 74,897 64,009 84,316 54 16
Financial guarantee – – – 49 497

539,976 468,985 640,165 11,568 16,572

Non-current liabilities
Financial guarantee – – – – 260
Other payables 5,629 5,520 – – –

5,629 5,520 495,779 – 260

 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

27 PAYABLES
(a) Trade payables
Trade payables are non-interest bearing and credit terms for trade payables range from cash term to 120 days
(2010: cash term to 120 days).

(b) Other payables

The balance of other payables is non-interest bearing with no fixed terms of repayment.

(c) Amount due to an associate

Amount due to an associate is unsecured, non-interest bearing and repayable on demand.

(d) Financial guarantee

Financial guarantee relates to a corporate guarantee provided by the Company to a licensed bank for a loan taken
by a subsidiary (Note 28).

(e) Put option over non-controlling interests

The put option over non-controlling interests represents the fair value of a put option granted to non-controlling
interests over their equity interests held in a subsidiary, Scomi Oilfield Ltd. The fair value is determined based on
SCOMI GROUP BHD

the projected adjusted earnings of the subsidiary concerned.

28 BORROWINGS
Group Company
pg 132
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Annual Report 2011

Current
Bonds (secured) 242,640 174,174 201,552 100,000
Bank overdrafts 129,360 114,106 – –
Bank borrowings 253,288 114,264 – –
Other term loans (secured) 119,359 68,574 20,616 20,560
Finance lease payables 204 238 137 138

744,851 471,356 222,305 120,698

Non-current
Bonds (secured) 300,518 507,271 – 103,934
Bank borrowings – 28,000 – –
Other term loans (secured) 19,591 71,835 1,990 22,058
Finance lease payables 733 1,058 251 388

320,842 608,164 2,241 126,380

Total borrowings
Bonds (secured) 543,158 681,445 201,552 203,934
Bank overdrafts 129,360 114,106 – –
Bank borrowings 253,288 142,264 – –
Other term loans (secured) 138,950 140,409 22,606 42,618
Finance lease payables 937 1,296 388 526

1,065,693 1,079,520 224,546 247,078

28 BORROWINGS (CONTINUED)
The maturity profile of borrowings is analysed as follows:
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000

Due within the next 12 months 744,851 471,356 222,305 120,698

Due between 1 to 2 years 48,649 214,482 576 124,578

Due between 2 to 3 years 48,168 174,645 533 576
Due between 3 to 4 years 49,374 72,677 459 533
Due between 4 to 5 years 48,918 64,816 440 693
Due after 5 years 125,733 81,544 233 –

320,842 608,164 2,241 126,380

1,065,693 1,079,520 224,546 247,078

Annual Report 2011

(a) The effective interest rates per annum on the Group’s borrowings at the date of the statement of financial position
are as follows:

2011 2010
% % pg 133

SCOMI GROUP BHD

Bank overdrafts 2.6 – 11.00 2.60 – 13.80
Bonds 5.20 – 7.50 5.20 – 6.20
Other term loans 3.30 – 7.60 7.02 – 7.55
Bank borrowings 1.00 – 7.60 1.00 – 7.55
Finance lease payables 2.70 2.63 – 2.73

(b) Bonds
The Bonds comprise the following:

RM250 million medium term notes

RM250 million nominal value serial bonds of the Company through the establishment of a medium term notes
programme (“MTN Notes”). The maturity dates of the MTN Notes range from 5 years to 7 years from 28 September
2005, being the date of issuance. The coupon rates of the MTN Notes for the first three years are at 4.5% per
annum and 7.5% per annum thereafter. The effective interest rate is 6.8% per annum.

The MTN Notes are secured by:

(i) First charge over shares in Scomi Oilfield Limited (“SOL”) comprising 8,239,774 ordinary shares of USD1.00
each;
(ii) First charge over shares in Scomi Marine Bhd comprising 313,043,478 ordinary shares of RM1.00 each;
and
(iii) Assignment of Debt Service Requirement Account (“DSRA”).

The outstanding amount as at end of the financial year is RM200.0 million (2010: RM200.0 million).
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

28 BORROWINGS (CONTINUED)
(b) Bonds (continued)
RM250 million medium term notes (continued)
The bondholders had given indulgences to the Company as follows:

(i) for the RM100 million principal repayment which was due in September 2011 to be paid in September 2012.
(ii) deferral of maintaining the DSRA due in March 2012; and
(iii) waiver of the net debt to equity and annual debt service cover ratios.

RM630 million Murabahah bonds and RM342.55 million Sukuk Murabahah

RM630 million of Medium Term Notes issued by KMCOB Capital Berhad (“KMCOB Capital”), a subsidiary of SOL,
on 14 December 2006, under the Murabahah Islamic principle (“Murabahah Bonds”).

The Murabahah Bonds were issued in 4 series with tenures from 4 to 7 years from 14 December 2006, being the
date of issuance. The profit rate ranges from 5.75% to 6.15% per annum, payable semi-annually in arrears.

Following the debt rationalisation exercise on Murabahah Bonds in June 2006, the tenure and repayment term have
been varied from 7 to 10 years from 14 December 2006 and profit rate ranges from 6.05% to 6.95% per annum.
SCOMI GROUP BHD

In November 2011, a portion of the proceeds from the disposal of the DWM Business by SOINC and SMEX as
disclosed in Note 8 were utilised to prepay the Murabahah Bonds.

On 14 December 2011, KMCOB Capital had issued a Sukuk Murabahah of RM342.55 million (“the Sukuk”). The
pg 134 proceeds raised from the issuance under the Sukuk was utilised for early redemption of the outstanding amount of
the existing Notes in full. The Sukuk Murabahah is issued with a tenure and repayment term of 1 to 7 years from
Annual Report 2011

14 December 2011 and profit rate ranges 6.25% to 7.5% per annum.

The Sukuk are secured by:

(i) Corporate guarantees from Scomi Oiltools Bermuda Limited (“SOBL”);

(ii) Corporate guarantees from Scomi Oilfield Limited (“SOL”), if applicable;
(iii) Corporate guarantees from certain existing and future principal subsidiaries of SOL whose revenue or profit/loss
after tax are at least 5% of the consolidated revenue or consolidated profit/loss after tax of the SOL Group;
(iv) Charge over the issued and paid up share capital of the existing and future principal subsidiaries in the SOL
Group;
(v) Debenture over the present and future assets of the KMCOB Capital;
(vi) Assignment over Financial Services Reserve Account (FSRA) maintained by KMCOB Capital to meet its most
immediate six months profit and principal payment obligations; and
(vii) Any other security as may be required by the rating agency to achieve the requisite rating. As at 31 December
2011, no security is given to the rating agency to achieve the requisite rating.

The outstanding amount of Sukuk as at the end of the financial year is RM341.6 million (2010: RM480.0 million for
the Notes).

(c) Other term loans, bank overdrafts and bank borrowings

The other term loans, bank overdrafts and bank borrowings of the Group are secured by way of:

(i) Legal charge over certain landed properties of certain subsidiaries;

(ii) Negative pledge over the present and future, fixed and floating assets of certain subsidiaries;
(iii) Assignment of contract proceeds, insurance policies and performance bond; and
(iv) Standby Letter of Credit (“SBLC”) facility secured by corporate guarantee provided by the Company;
(v) Charge over shares and/or acceptable stocks in subsidiaries of the Company; and
(vi) A charge over the 3-month interest of the Facility Limit placed upfront (“Upfront Deposit”) in a debt service
reserve account (“DSRA”).
28 BORROWINGS (CONTINUED)
(d) Finance lease payables
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000

Instalments payable:
Not later than 1 year 257 290 162 162
Between 1 to 2 years 251 378 162 162
Between 2 to 3 years 199 251 110 162
Between 3 to 4 years 114 199 25 110
Between 4 to 5 years 89 114 – 25
Later than 5 years 203 293 – –

1,113 1,525 459 621
Less: Future finance charges (176) (229) (71) (95)

Present value of hire purchase

Annual Report 2011

and finance lease payables 937 1,296 388 526

Analysed as:
Due within 12 months 204 238 137 138
Due to 1 to 2 years 201 328 137 137 pg 135
Due to 2 to 3 years 161 204 94 137

SCOMI GROUP BHD

Due to 3 to 4 years 90 164 20 94
Due to 4 to 5 years 74 94 – 20
Due more than 5 years 207 268 – –

937 1,296 388 526

Breaches of loan covenant

As at 31 December 2011:

(i) The Company, did not fulfil certain of its financial covenant clauses in relation to its RM250 million MTN Notes.
Accordingly, the bondholders were contractually entitled to request for immediate repayment of the outstanding
balance of RM201.5 million as at 31 December 2011. Subsequent to the end of the reporting period, management
has obtained indulgences from the bondholders in respect of the breach.

(ii) Certain entities in the Group did not fulfil certain financial covenant clauses in relation to bank loan facilities.
Accordingly, the banks were contractually entitled to request for immediate repayment of the outstanding balances
as at 31 December 2011. Subsequent to the end of the reporting period, management has obtained indulgences
from certain banks in respect of the breaches.

At the end of the reporting period, the carrying value of RM86.5 million of the Group borrowings has been reclassified
to within short term borrowings under current liabilities as a result of the loan covenant breaches.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

29 PROVISIONS
Tax
penalties
RM’000

Group
At 1 January 2011 5,235
Charged to income statement 872
Paid during the financial year (3,848)
Currency translation differences 8

At 31 December 2011 2,267

Tax
Redundancy penalties Total
RM’000 RM’000 RM’000
SCOMI GROUP BHD

Group
At 1 January 2010 625 8,304 8,929
Charged to income statement – 1,551 1,551
Paid during the financial year (587) – (587)
pg 136
Currency translation differences (38) (4,620) (4,658)

Annual Report 2011

At 31 December 2010 – 5,235 5,235

The Group has made a provision for penalties and fines in relation to late payment of various taxes in Venezuela based
on the local tax requirements and estimation by independent tax professionals. See Note 46(d).

30 DEFERRED GOVERNMENT GRANT

Group
2011 2010
RM’000 RM’000

Deferred government grant 2,155 1,568

Included in:
Current liabilities 2,155 1,568
Non-current liabilities – –

2,155 1,568

30 DEFERRED GOVERNMENT GRANT (CONTINUED)
In 2008, the Group received approval for government grants as follows:

(i) RM2,155,000 to execute and develop new technology for a monorail bogie design and development program with
improvement to the design of the current monorail bogie and development of a commercially ready prototype bogie;
and

(ii) RM4,420,000 to design, engineer and fabricate a prototype process equipment to demonstrate the application of
D-Solv technology at field scale.

The grants were to be disbursed in accordance with the project milestones subject to submission of the milestone
reports and project completion report, and verification by a technical expert appointed by the Ministry of Science,
Technology and Innovation Malaysia.

As at 31 December 2011, the grant of RM2,155,000 was fully disbursed to the Group and therefore amortisation over
the expected life of the related assets will commence in the next financial year.

In the previous financial year, the Directors decided not to proceed with developing the D-Solv technology due to

Annual Report 2011

commercial reasons. The grant of RM1.44 million has been recognised in the prior year income statement as based on
consultation with the grant provider, the grant will not need to be repaid despite the discontinuation of the project.

31 IRREDEEMABLE CONVERTIBLE SECURED LOAN STOCKS

pg 137
On 14 December 2009, the Company issued 1,515,796,791 of three (3)-year 4% Irredeemable Convertible Secured Loan
Stocks (“ICSLS”) at nominal value of RM0.10 each for cash together with 202,106,238 free detachable warrants to

SCOMI GROUP BHD

subscribe the entitlement of the Rights Issue by Scomi Engineering Bhd (“SEB”) and working capital requirements of the
Group.

The salient features of the ICSLS are as follows:

(a) The conversion price is fixed at RM0.40 per share;

(b) The registered holder of the ICSLS has the right at any time during the conversion period to convert the ICSLS at
the conversion price into fully paid new ordinary shares of RM0.10 per share in the Company;

(c) The ICSLS can be converted into fully paid new ordinary shares of RM0.10 each in the Company at any time during
its 3 years tenure. At the end of the tenure, any outstanding ICLSL will be automatically converted into fully paid
new ordinary shares of RM0.10 per share;

(d) The ICSLS are not redeemable (save upon declaration of an event of default);

(e) The ICSLS bear interest at 4% per annum based on the nominal amount of the ICSLS. The interest shall be payable
quarterly in arrears; and

(f) The ICSLS are secured by the cash proceeds from the Rights Issue by Scomi Engineering Bhd (“SEB ICULS
Funds”) which will be held in the form of fixed deposit receipts (“FDR”) over which a memorandum of deposit will
be executed in favour of the Trustee (“FDR MOD”).
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

31 IRREDEEMABLE CONVERTIBLE SECURED LOAN STOCKS (CONTINUED)

The fair value of the liability component was calculated using a market rate for an equivalent convertible loan stock. The
residual amount, representing the value of the equity component, is included in other reserves (Note 36).

Group and Company

2011 2010
RM’000 RM’000

Other reserves:
At 1 January 62,121 88,484
Conversion of ICSLS (Note 36) (222) (26,363)

At 31 December 61,899 62,121

Group and Company

2011 2010
RM’000 RM’000
SCOMI GROUP BHD

Liability component:
At beginning of the financial year 7,197 15,317
Conversion of ICSLS (176) (4,721)
Decrement – amortised cost (2,667) (3,399)
pg 138
Reclassification (1,166) –

Annual Report 2011

At 31 December 3,188 7,197

Included in:
Current liabilities 3,188 3,382
Non-current liabilities – 3,815

3,188 7,197

Interest expense on the ICSLS is calculated on the effective yield basis by applying the effective interest rate of 8% per
annum.
32 IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS
On 23 March 2010, SEB, a subsidiary of the Company, issued 61,352,936 of three (3)-year 4% Irredeemable Convertible
Unsecured Loan Stocks (“ICULS”) at nominal value of RM1.00 each for cash for working capital requirements, of which
54,782,491 of three (3)-year 4% ICULS at nominal value of RM1.00 each has been subscribed by the Company.

The salient features of the ICULS are as follows:

(a) The conversion price is fixed at RM1.00 per share;

(b) The registered holder of the ICULS has the right at any time during the conversion period to convert the ICULS at
the conversion price into fully paid new ordinary shares of RM1.00 per share in the SEB;

(c) The ICULS can be converted into fully paid new ordinary shares of RM1.00 each in SEB at any time during its 3
years tenure. At the end of the tenure, any outstanding ICULS will be automatically converted into fully paid new
ordinary shares of RM1.00 per share;

(d) The ICULS are not redeemable;

Annual Report 2011

(e) The ICULS bear interest at 4% per annum based on the nominal amount of the ICULS. The interest shall be
payable quarterly in arrears; and

(f) The holders of the ICULS are not entitled to participate in any distribution and/or offer of securities in SEB until and
unless such holders of the ICULS convert the ICULS into new ordinary shares in SEB.
pg 139
The fair value of the liability component was calculated using a market rate for an equivalent convertible loan stock. The

SCOMI GROUP BHD

residual amount, representing the value of the equity component, is included in other reserves (Note 36).

Group
2011 2010
RM’000 RM’000

At 1 January 1,217 –
Nominal value of ICULS issued – 6,570
Liability component at date of issuance – (734)
Deferred tax assets – 184

1,217 6,020
Conversion of ICULS (69) (4,803)

At 31 December 1,148 1,217

 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

32 IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (CONTINUED)

Group
2011 2010
RM’000 RM’000

Liability component:
At beginning of the financial year/date of issuance 74 734
Conversion of ICULS (8) (585)
Repayment during the financial year (53) (76)
Interest expense 4 1

17 74

Included in:
Current liabilities 14 33
Non-current liabilities 3 41

SCOMI GROUP BHD

17 74

33 WARRANTS
pg 140
On 14 December 2009, the Company issued 202,106,238 free detachable warrants pursuant to the issuance of
1,515,796,791 of three (3)-year 4% ICSLS at nominal value of RM0.10 each.
Annual Report 2011

The salient features of the warrants are as follows:

(a) The exercise price of the warrants is fixed at RM0.40 each;

(b) Each warrant entitles the holder to subscribe for one new ordinary shares of RM0.10 each in the Company at the
exercise price, subject to adjustments in accordance with the provisions of the Deed Poll; and

(c) The warrants shall be exercisable into new ordinary shares of RM0.10 each in the Company on any market day
within a period from the date of issue of the warrants, up to and including the close of business day on date falling
three years from the date of issue of the warrants.

As at the date of the statement of financial position, 202,105,258 (2010: 202,105,258) warrants remained unexercised.

34 SHARE CAPITAL
Group and Company
2011 2010
’000 RM’000 ’000 RM’000

Authorised
Ordinary shares of RM0.10 each:
At beginning and end of the financial year 3,000,000 300,000 3,000,000 300,000

34 SHARE CAPITAL (CONTINUED)
Group and Company
2011 2010
’000 RM’000 ’000 RM’000

Issued and fully paid
Ordinary shares of RM0.10 each:
At beginning of the financial year 1,182,658 118,266 1,086,801 108,680
Issued during the financial year:
– conversion of ICSLS 3,905 391 94,501 9,450
– exercise of warrants – – 1 –
– exercise of share options 1,125 112 1,355 136

At end of the financial year 1,187,688 118,769 1,182,658 118,266

(a) Increase in share capital

During the financial year, the issued and paid-up share capital of the Company was increased from RM118,265,777
comprising 1,182,657,772 ordinary shares of RM0.10 each, to RM118,768,765 comprising 1,187,687,647 ordinary

Annual Report 2011

shares of RM0.10 each, by way of the issuance of:

(i) 3,904,875 new ordinary shares of RM0.10 each pursuant to the conversion of Irredeemable Convertible
Secured Loan Stocks (“ICSLS”);

pg 141
(ii) 1,125,000 new ordinary shares of RM0.10 each pursuant to the exercise of options granted under the ESOS
at an option price of RM0.17 per share; and

SCOMI GROUP BHD

In the prior financial year, the issued and paid-up share capital of the Company was increased from RM108,680,057
comprising 1,086,800,574 ordinary shares of RM0.10 each, to RM118,265,777 comprising 1,182,657,772 ordinary
shares of RM0.10 each, by way of the issuance of:

(i) 94,501,218 new ordinary shares of RM0.10 each pursuant to the conversion of ICSLS; and

(ii) 1,355,000 new ordinary shares of RM0.10 each pursuant to the exercise of options granted under the ESOS
at an option price of RM0.17 per share.

(iii) 980 new ordinary shares of RM0.10 each pursuant to the exercise of 980 Warrants of RM0.10 each at an
exercise price of RM0.40 per warrant.

The new ordinary shares issued during the financial year and in the prior financial year ranked pari passu in all
respects with the existing shares of the Company.

(b) Treasury shares

The shareholders of the Company, by an ordinary resolution passed in an Annual General Meeting held on 29 June
2011, renewed their approval for the Company to repurchase its own shares. The Directors of the Company are
committed to enhancing the value of the Company to its shareholders and believe that the repurchase plan can be
applied in the best interests of the Company and its shareholders.

There were no purchases of Treasury shares during the financial year. As Treasury shares, the rights attached as
to voting, dividends and participation in other distribution are suspended. None of the Treasury shares repurchased
has been sold as at 31 December 2011.

At the date of the statement of financial position, 14,427,200 (2010: 14,427,200) ordinary shares are held as
Treasury shares at a carrying value of RM18,695,746 (2010: RM18,695,746), and the number of outstanding shares
in issue after setting off against Treasury shares is 1,173,260,447 (2010: 1,168,230,572).
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

34 SHARE CAPITAL (CONTINUED)

(c) Employees’ Share Option Scheme
The Company implemented an Employees’ Share Option Scheme (“ESOS”) on 28 April 2003 for a period of 10
years. The ESOS is governed by the By-Laws which were approved by the shareholders on 28 March 2003.

On 15 June 2004, the Company amended the By-Laws and its Articles of Association (“Articles”) to align them with
the amendments to the Listing Requirements issued by Bursa Malaysia Securities Berhad which became effective
on 10 February 2004, and the amendments to Schedule I of the Securities Commission (“SC”) Act, 1993.

With the amendments, the total number of shares under the ESOS was increased from ten percent (10%) to fifteen
percent (15%) of the total issued and paid-up share capital of the Company and participation in the ESOS was
extended to include Non-Executive Directors.

The amendments to the By-Laws and Articles were approved by the shareholders of the Company on 16 June
2004 at the 2nd Annual General Meeting.

The salient features of the ESOS are as follows:

SCOMI GROUP BHD

(i) The total number of shares comprising options exercised, options remaining exercisable and unexercised offers
pending acceptance under the ESOS shall not exceed fifteen percent (15%) of the total issued and paid-up
share capital of the Company, such that not more than fifty percent (50%) of the shares available under the
ESOS are allocated, in aggregate, to the Directors and senior management of the Group;

pg 142 (ii) Not more than ten percent (10%) of the shares available under the ESOS is allocated to any individual Director
or employee who, either singly or collectively through his/her associates, holds twenty percent (20%) or more
Annual Report 2011

in the issued and paid-up share capital of the Company;

(iii) Options shall lapse if the Director ceases his/her directorship with the Company or employee ceases his/her
employment with the Company or its subsidiaries prior to the full exercise of his/her options, except when
such cessation occurs by reason as provided by the Company’s ESOS By-Laws such as retirement, ill health,
injury, physical or mental disability, and subjected always to the discretion and written approval of the Options
Committee of the Company;

(iv) The option price under the ESOS is the volume weighted average market price quoted on Bursa Malaysia for
the past five (5) consecutive market days prior to the date of grant, save that a discount of not more than
ten percent (10%) may be given at the absolute discretion of the Options Committee for options granted after
the listing of the Company. The option price shall not be lower than the par value of the shares of the
Company of RM0.10;

(v) Options granted under the ESOS carry no dividend or voting rights. Upon exercise of the options, shares
issued rank pari passu in all respects with existing ordinary shares of the Company; and

(vi) The options granted are exercisable upon receipt of notice of entitlement to exercise from the ESOS Secretariat
by or before 1 April of each year based on annual entitlement. Acceleration of the annual entitlement is
dependent on the Employee Performance Rating achieved in the preceding year.
34 SHARE CAPITAL (CONTINUED)
(c) Employees’ Share Option Scheme (continued)
The movements in the number of share options outstanding and their related weighted average exercise prices are
as follows:
2011 2010
Average Average
exercise exercise
price Options price Options
RM ’000 RM ’000

At beginning of the financial year 1.02 76,175 1.01 87,755

Granted 0.24 18,000 – –

Forfeited 1.10 (10,874) 1.07 (10,225)
Exercised 0.17 (1,125) 0.17 (1,355)

At end of the financial year 0.79 82,176 1.02 76,175

Annual Report 2011

Out of the outstanding options, 56,035,900 units (2010: 53,222,900 units) of options were exercisable. Share
options were exercised on a regular basis throughout the financial year, and the weighted average share price for
the financial year is RM0.31 (2010: RM0.42).

The options outstanding at the financial year end had exercise prices ranging RM0.17 to RM1.51 (2010: RM0.17
to RM1.51) and a remaining contractual life of 2 years (2010: 3 years). pg 143

SCOMI GROUP BHD

All options granted under the scheme will expire on 27 April 2013.

The weighted average fair value of options granted during the financial year was determined using the Trinomial
valuation model was RM0.09 (2010: Nil) per option. The significant inputs into the model were as follows:

2011 2010

Valuation assumptions:
Expected volatility of share prices 40% –
Expected dividend yield – –
Expected option life 1.0-2.0 years –
Weighted average share price at the date of grant RM0.28/share –
Risk-free interest rate (per annum) 3.39% –

35 SHARE PREMIUM
Group and Company
2011 2010
RM’000 RM’000

At beginning of the financial year 275,926 256,641

Arising from:
– conversion of ICSLS 788 19,190
– exercise of ESOS 79 95

At end of the financial year 276,793 275,926

 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

36 OTHER RESERVES
Exchange Put Available Share
fluctuation Hedge option for sale Warrants option
Group Note reserve reserve reserve reserve shares reserves ICSLS ICULS Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2011
– as previously stated (98,725) (9,446) – (1,719) 32,337 20,909 62,121 1,217 6,694
– prior year adjustments 47 – – (258,286) – – – – – (258,286)

At 1 January 2011, as restated (98,725) (9,446) (258,286) (1,719) 32,337 20,909 62,121 1,217 (251,592)

Other comprehensive (loss)/

income:
– Currency translation
differences (3,515) – – – – – – – (3,515)
– Available-for-sale
financial assets – – – 1,719 – – – – 1,719
SCOMI GROUP BHD

– Derecognition of cash flow

hedge CCIRS – 8,990 – – – – – – 8,990
– Share of other comprehensive
Income/(loss) of associate 3,713 767 – – – – – – 4,480

pg 144 Total other comprehensive
(loss)/income 198 9,757 – 1,719 – – – – 11,674
Annual Report 2011

Share of reserves in
subsidiaries and associates – – – – – (138) – – (138)
Share option recognised in: 5
– company – – – – – 1,191 – – 1,191
– subsidiaries – – – – – 1,325 – – 1,325
– value of share options
lapsed/forfeited – – – – – (8,241) – – (8,241)

– – – – – (5,725) – – (5,725)
Transferred to share premium
arising from exercise
of ESOS – – – – – – – – –
Conversion of ICSLS 31 – – – – – – (222) – (222)
Conversion of ICULS – – – – – – – (69) (69)
Disposal of jointly
controlled entity 41(b) – – – – – (23) – – (23)

At 31 December 2011 (98,527) 311 (258,286) – 32,337 15,023 61,899 1,148 (246,095)

36 OTHER RESERVES (CONTINUED)
Exchange Put Available Share
fluctuation Hedge option for sale Warrants option
Group Note reserve reserve reserve reserve shares reserves ICSLS ICULS Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2010
– as previously stated (82,655) (6,710) – – 32,337 21,548 88,484 – 53,004
– effect of adopting FRS 139 46 – (2,144) – (1,665) – – – – (3,809)
– prior year adjustments 47 – – (258,286) – – – – – (258,286)

At 1 January 2010, as restated (82,655) (8,854) (258,286) (1,665) 32,337 21,548 88,484 – (209,091)

Other comprehensive (loss)/

income:
– Currency translation
differences (7,769) – – – – – – – (7,769)
– Available-for-sale

Annual Report 2011

financial assets – – – (54) – – – – (54)
– Cash flow hedge – (1,970) – – – – – – (1,970)
– Share of other comprehensive
(loss)/income of associate (22,406) 1,378 – – – – – – (21,028)

Total other comprehensive pg 145
(loss)/income (30,175) (592) (258,286) (54) – – – – (30,821)

SCOMI GROUP BHD

Share of reserves in
subsidiaries and associates – – – – – 13 – – 13
Share option recognised in: 5
– company – – – – – 417 – – 417
– subsidiaries – – – – – 1,699 – – 1,699

– – – – – 2,116 – – 2,116
Transferred to share premium
arising from exercise
of ESOS – – – – – (910) – – (910)
Issue of ICULS 32 – – – – – – – 6,020 6,020
Conversion of ICSLS 31 – – – – – – (26,363) – (26,363)
Conversion of ICULS – – – – – – – (4,803) (4,803)
Disposal of subsidiaries 14,105 – – – – (1,858) – – 12,247

At 31 December 2010 (98,725) (9,446) (258,286) (1,719) 32,337 20,909 62,121 1,217 (251,592)

 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

36 OTHER RESERVES (CONTINUED)

Share
Warrants option
reserve reserve ICSLS Total
RM’000 RM’000 RM’000 RM’000

Company
2011
At 1 January 2011 32,337 17,281 62,121 111,739
Share option expense (Note 5) – 1,191 – 1,191
Transferred to subsidiaries – (11,066) – (11,066)
Value of options lapsed/forfeited – (2,744) – (2,744)
Conversion of ICSLS (Note 31) – – (222) (222)

At 31 December 2011 32,337 4,662 61,899 98,898

SCOMI GROUP BHD

2010
At 1 January 2010 32,337 16,162 88,484 136,983
Share option expense (Note 5) – 417 – 417
Transferred to subsidiaries – 702 – 702
Conversion of ICSLS (Note 31) – – (26,363) (26,363)
pg 146

At 31 December 2010 32,337 17,281 62,121 111,739
Annual Report 2011

37 PROVISION FOR RETIREMENT BENEFITS

Group
2011 2010
RM’000 RM’000

Statement of financial position obligations for retirement benefits 5,152 4,681

Included in:
Current liabilities 390 323
Non-current liabilities 4,762 4,358

5,152 4,681

Charged to income statement (Note 5) 1,058 1,584

37 PROVISION FOR RETIREMENT BENEFITS (CONTINUED)
Group
2011 2010
RM’000 RM’000

Present value of funded obligations 390 85
Present value of unfunded obligations 4,762 4,358
Unrecognised past service costs – 238

Liability in the statement of financial position 5,152 4,681

The amounts recognised in the income statement are as follows:

Group
2011 2010
RM’000 RM’000

Current service cost 1,388 1,478

Annual Report 2011

Interest cost – (132)
Past service cost (653) 238

Total included in staff costs 735 1,584

pg 147
Of the total charge/(credit), RM416,000 (2010: RM242,000), RM287,000 (2010: RM1,438,000), and RM32,000 (2010:

SCOMI GROUP BHD

(RM96,000)) were included in cost of sales, selling and marketing expenses, and administrative expenses respectively.

The movements in the liability recognised in the statement of financial position are as follows:

Group
2011 2010
RM’000 RM’000

At beginning of the financial year 4,681 4,182
Charged to income statement (Note 5) 735 1,584
Actuarial gains – –
Benefits paid (89) (416)
Currency translation differences (175) (669)

At end of the financial year 5,152 4,681

 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

37 PROVISION FOR RETIREMENT BENEFITS (CONTINUED)

The principal actuarial assumptions used were as follows:

Group
2011 2010

Discount rate 5% – 11% 5% – 11%
Future salary increases 5% – 8% 5% – 8%
Normal retirement age 55 – 60 55 – 60

Assumptions regarding future mortality experience are based on advice from published statistics and experience in each
territory.

The Group had obtained an actuarial valuation in 2011.

38 DEFERRED TAX
SCOMI GROUP BHD

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when the deferred taxes relate to the same tax authority. The following amounts, determined
after appropriate offsetting, are shown in the statement of financial position:

Group Company
pg 148
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Annual Report 2011

Deferred tax assets (46,634) (78,724) (672) (1,674)
Deferred tax liabilities:
– subject to income tax 3,285 2,786 – –

(43,349) (75,938) (672) (1,674)

At beginning of the financial year (75,938) (73,197) (1,674) (3,613)

(Credited)/charged to income statement (Note 7)
– property, plant and equipment (11,474) 7,831 – –
– tax losses, capital allowances and tax incentives 22,991 (14,566) – –
– provisions for other liabilities and charges – 1,167 – –
– ICSLS 666 814 666 814
– ICULS 31 – – –
– others 3,513 (885) – –

15,727 (5,639) 666 814

Transfer from/(to) equity 338 1,088 336 1,125
Discontinued operation/Disposal of a subsidiary 19,820 (2,217) – –
Others (843) 2,516 – –
Currency translation differences (2,453) 1,511 – –

At end of the financial year (43,349) (75,938) (672) (1,674)
38 DEFERRED TAX (CONTINUED)
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000

Deferred tax assets
Tax losses, capital allowances and tax incentives (41,170) (85,097) – –
Provision for other liabilities and charges (1,080) (1,069) – –
Payables – (61) – –
ICSLS (833) (1,835) (833) (1,835)
ICULS (4) (37) – –
Others (3,547) (3,635) – –
Offsetting – 13,010 161 161

(46,634) (78,724) (672) (1,674)

Deferred tax liabilities

Annual Report 2011

Property, plant and equipment 2,766 15,451 161 161
Others 519 345 – –
Offsetting – (13,010) (161) (161)

3,285 2,786 – –
pg 149

SCOMI GROUP BHD

The amount of deductible temporary differences, unabsorbed tax losses and tax incentives (which is subject to agreement
by the tax authorities) for which no deferred tax asset is recognised in the statement of financial position is as follows:

Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000

Deductible temporary differences 45,818 52,335 3,167 2,674
Unabsorbed tax losses and tax incentives 147,449 5,226 30,645 28,048

Deferred tax assets have not been recognised on the deductible temporary differences, unabsorbed tax losses and tax
incentives as it is uncertain that there will be future taxable profits to utilise the deferred tax assets.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

39 COMMITMENTS AND CONTINGENT LIABILITIES

Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000

(a) Authorised capital expenditure
not recognised in the financial statements:
– contracted 27,513 3,655 – –
– not contracted 16,137 33,580 – –

43,650 37,235 – –

Analysed as follows:
– property, plant and equipment 37,465 16,486 – –
– development costs 3,612 5,632 – –
– others 2,573 15,117 – –
SCOMI GROUP BHD

43,650 37,235 – –

(b) Lease commitments:

pg 150 Instalments payable
– not later than 1 year 10,620 7,484 49 116
Annual Report 2011

– later than 1 year but not later than 5 years 10,072 13,132 92 94
– later than 5 years 2,828 3,192 – –

23,520 23,808 141 210

(c) Bank guarantees:

Bank guarantees given to third parties
in respect of performance guarantee
given by subsidiaries 121,968 100,365 – –

(d) Other:
Contingent liabilities arising from:
– litigation 3,787 2,776 – –
– tax matters 4,734 – – –

40 SIGNIFICANT RELATED PARTY TRANSACTIONS
(a) In addition to the related party disclosures mentioned elsewhere in the financial statements, set out below are other
significant related party transactions. The related party transactions described below were carried out under agreed
terms with related parties:

Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000

Significant transactions with related parties:
Subsidiaries:
Management fees receivable – – 3,840 5,496
Dividend income – – – 66,436
Interest income – – 6,008 3,985

Associates:
Management fees receivable
from Scomi Marine Bhd 327 302 327 302

Annual Report 2011

Jointly controlled entity:
Management fees receivable
from Scomi NTC Sdn Bhd 125 1,618 – –

Related companies: pg 151

Share registration fee paid to Symphony 224 332 153 265

SCOMI GROUP BHD

Airline ticketing services provided by Lintas 2,606 3,181 17 69

(i) Symphony Share Registers Sdn Bhd (“Symphony”) and Lintas Travel & Tours Sdn Bhd (“Lintas”) are companies
connected to certain Directors;

(ii) During the previous financial year, certain subsidiaries of the Company agreed to provide service in relation to
a proposed implementation of a group wide accounting system for an associate of the Company, Scomi
Marine Bhd. The proposed implementation was subsequently aborted and the initial payment of RM7,000,000
during the year was refunded in full.

The details of interest charged on advances provided to subsidiaries are disclosed in Note 23.

Information regarding outstanding balances arising from related party transactions as at 31 December 2011 is
disclosed in Note 23 and Note 27.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

40 SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)

(b) Compensation of key management personnel
The remuneration of Directors and other members of key management during the financial year was as follows:

Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000

Salaries and short-term employee benefits 10,412 15,847 656 3,196
Defined contribution plan 799 1,268 149 276
Other long-term benefits 26 393 26 –
Share-based payments 585 1,956 – –

11,822 19,464 831 3,472

Included in the total key management personnel are:

SCOMI GROUP BHD

Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000

Directors’ remuneration (Note 9) 2,830 2,486 1,672 1,401
pg 152
Annual Report 2011

Executive Directors of the Group and Company and other members of key management have been granted the
following number of options under the Employee Share Options Scheme (“ESOS”):

Group and Company

2011 2010
’000 ’000

At beginning of the financial year 24,606 28,966

Granted 16,000 –
Forfeited (4,480) (4,000)
Exercised (360) (360)

At end of the financial year 35,766 24,606

41 SIGNIFICANT ACQUISITION AND DISPOSAL OF SUBSIDIARIES AND JOINTLY CONTROLLED ENTITY
(a) Acquisition of subsidiaries
Financial year ended 31 December 2011

Purchase Group’s Effective

Name of subsidiaries consideration effective interest acquisition date
%

Scomi Transit Projects Brazil Sdn Bhd RM2.00 100.0 12 July 2011
Scomi Transit Projects Brazil (Sao Paulo) Sdn Bhd RM2.00 100.0 12 July 2011
PT Inti Jatam Pura USD0.50 95.0 7 August 2011
PT Multi Jaya Persada USD0.50 95.0 7 August 2011

In addition to the above acquisition of subsidiaries, the Group acquired the entire issued stock capital of Urban
Transit Servicos Do Brasil LTDA, a Brazilian company, for a cash consideration of USD6,000 on 18 August 2011.

The acquisition did not have a material impact on the Group’s financial statements.

Annual Report 2011

(b) Disposal of jointly controlled entity
Financial year ended 31 December 2011

Disposal Group’s effective Effective

Name of jointly controlled entity consideration interest disposed disposal date
pg 153
%

SCOMI GROUP BHD

Scomi NTC Sdn Bhd USD3.0 million 70 2 February 2011

Details of the share of net assets, net cash inflow and gains arising from the disposal of the jointly controlled entity
are as follows:
Group
2011
RM’000

Net cash inflow 9,096
Share of net assets (4,548)

Gain on disposal 4,548

The impact of the disposal to the Group’s statement of comprehensive income are as follows:

2011 2010
RM’000 RM’000

Share of results in jointly controlled entity (115) 3,596

 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

41 SIGNIFICANT ACQUISITION AND DISPOSAL OF SUBSIDIARIES AND JOINTLY CONTROLLED ENTITY

(CONTINUED)
(c) Other changes
Effective from 23 December 2011, Scomi Oiltools (NZ) Pty Limited, a wholly-owned subsidiary of Scomi Oiltools
Bermuda Limited, being a wholly-owned subsidiary of Scomi Oilfield Limited and which in turn is a subsidiary of
the Company, has been struck off from the Register of the New Zealand Companies Office, pursuant to Section
318(1)(d) of the New Zealand Companies Act 1993.

42 SEGMENT INFORMATION
Management has determined the operating segments based on the reports reviewed by the chief operating decision-
maker that are used to make strategic decisions.

The chief operating decision-maker considers the business from the industry perspective and the products and services
rendered. The following reportable operating segments have identified:

(i) Investment holding* – provision of management services.

SCOMI GROUP BHD

(ii) Oilfield services – provision of drilling fluids and related engineering services to the upstream oil and gas
industry;
– provision of drilling waste management services and equipment to the upstream oil and
gas industry;
– supply of production chemicals to the upstream oil and gas industry;
pg 154
– provision of machine shop services
Annual Report 2011

(iii) Transport solutions – urban transportation solutions provider through design and manufacture of monorails,
buses and a wide range of special purpose vehicles such as tankers, trucks and airport
ground support equipment; and
– rail solutions systems provider

(iv) Energy logistics – provision of marine vessel transportation services and leasing of marine vessels.

Inter-segment revenue in the current and prior financial year comprises management services and dividend. During the
financial year, the production enhancement segment has been moved to the oilfield services segment due to a change
in reports reviewed by the Chief Operating Decision Maker. To ensure a consistent comparison to the new structure,
the prior financial year segmental information has been restated.

* The activities and results of the investment holding segment are separately disclosed in the information provided to
the chief operating decision-maker.
42 SEGMENT INFORMATION (CONTINUED)

2011
Inter-
Revenue External segment Total
RM’000 RM’000 RM’000

Revenue from continuing operations
Oilfield services 1,134,799 – 1,134,799
Transport solutions 246,797 – 246,797
Investment holding 2,141 33,369 35,509
Inter-segment elimination – (33,369) (35,509)

1,383,737 – 1,383,737
Revenue from discontinued operation
Oilfield services 102,612 – 102,612

Total revenue 1,486,349 – 1,486,349

Annual Report 2011

2010
Inter-
External segment Total
pg 155
RM’000 RM’000 RM’000

SCOMI GROUP BHD

Revenue from continuing operations
Oilfield services 1,119,602 – 1,119,602
Transport solutions 400,785 – 400,785
Investment holding 1,548 74,961 76,509
Inter-segment elimination – (74,961) (74,961)

1,521,935 – 1,521,935
Revenue from discontinued operation
Oilfield services 120,069 – 120,069

Total revenue 1,642,004 – 1,642,004

 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

42 SEGMENT INFORMATION (CONTINUED)

Continuing operations
Oilfield Transport Energy Investment Discontinued
services solutions logistics holding Total operations Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2011
Results
Segment results 71,338 (69,424) – (25,196) (23,282) (2,349) (25,631)
Loss on disposal – – – – – (125,304) (125,304)
Finance costs (net) – – – – – – (47,929)
Share of results of associates – – (48,536) – (48,536) – (48,536)
Share of results of jointly
controlled entities (439) – – – (439) – (439)

Loss before taxation (247,839)
Taxation expense (48,692)
SCOMI GROUP BHD

Loss for the financial year (296,531)

2010 (restated)
pg 156 Results
Segment results 10,288 (30,297) – (18,864) (38,873) (5,432) (44,305)
Annual Report 2011

Gain on disposal of machine

shop business – 19,677 – – 19,677 – 19,677
Finance costs (net) – – – – – – (62,249)
Share of results of associates – – (87,225) – (87,225) – (87,225)
Share of results of jointly
controlled entities (739) – – – (739) – (739)

Loss before taxation (174,841)
Taxation expense (18,046)

Loss for the financial year (192,887)

42 SEGMENT INFORMATION (CONTINUED)
Revenue and non-current assets (excluding deferred tax assets and derivative financial assets) information based on the
geographical location of customers and assets respectively are as follows:

Total
Total non-current
revenue assets
RM’000 RM’000

2011
Malaysia 647,826 493,402
India 39,473 1,541
Other Asia 174,719 213,480
Europe 133,166 44,566
Middle East and Africa 336,427 118,420
America 154,738 6,785

1,486,349 878,194

Annual Report 2011

2010
Malaysia 382,858 540,995
India 253,202 2,825
Other Asia 279,565 274,992 pg 157
Europe 193,288 78,815

SCOMI GROUP BHD

Middle East and Africa 374,841 99,708
America 158,250 72,351

1,642,004 1,069,686

43 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

There are no significant events during the financial year other than those disclosed in Note 8, 28(b) and 41.

44 SIGNIFICANT EVENTS SUBSEQUENT TO THE DATE OF THE STATEMENT OF FINANCIAL POSITION

(a) Group rationalisation exercises
On 29 February 2012, the Company announced that it had entered into a Heads of Agreement (“HOA”) with its
associated company, Scomi Marine Bhd (“SMB”), to negotiate in good faith the detailed terms and conditions of
the Proposed SMB Rationalisation with the intention to finalise and enter into the relevant definitive agreement(s) by
30 June 2012 or such other extended period as the parties may mutually agreed upon.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

44 SIGNIFICANT EVENTS SUBSEQUENT TO THE DATE OF THE STATEMENT OF FINANCIAL POSITION

(CONTINUED)
(a) Group rationalisation exercises (continued)
The salient terms of the HOA are as follows:

(I) Proposed SMB Rationalisation

SMB to undertake a rationalisation exercise comprising the following:

(i) Proposed SMB Scheme

A scheme of arrangement under Section 176 of the Act between SMB, the shareholders of SMB and
Newco involving the exchange of SMB Shares with new Newco Shares at an exchange ratio to be
determined later.

(ii) Proposed Acquisition

Upon completion of the Proposed SMB Scheme, the acquisition of the entire equity interest in SOL, a
76-08%-owned subsidiary of SGB, by Newco from SGB, Standard Chartered Private Equity Limited
(“SCPEL”) and Fuji Investments I (“FII”) (after the completion of the proposed internal reorganisation of SOL
(“Proposed SOL Reorganisation”)) for a purchase consideration to be mutually determined and agreed.

The purchase consideration for the Proposed Acquisition is expected to be satisfied via a combination of
SCOMI GROUP BHD

the issuance of new Newco Shares and part of the vendor notes to be issued by PT Rig Tender Tbk, a
70.54% subsidiary of SMB, pursuant to the Proposed Disposal of Marine Logistics entities (details
summarised in note (II) below).

The proposed acquisition of the remaining 16.71% and 7.21% equity interest in SOL from SCPEL and
pg 158 FII, respectively, is subject to SCPEL’s and FII’s approvals.
Annual Report 2011

The Proposed Acquisition shall also be subject to the Proposed Exemption being obtained.

(iii) Proposed Exemption

An exemption to be sought by SGB and persons acting in concert with it (“PACs”) (if any) from the
Securities Commission from the obligation to undertake a mandatory take-over offer for the remaining
Newco Shares not already owned by SGB and the PACs (if any) upon completion of the Proposed
Acquisition (“Remaining Newco Shares”) since their collective shareholdings in Newco will increase from
nil to more than 33% as a result of the Proposed Acquisition.

(iv) Proposed Listing

Admission of Newco to the Official List of the Main Market of Bursa Securities upon completion of the
Proposed SMB Scheme and Proposed Acquisition, in place of SMB.

(II) Proposed Disposal of Marine Logistics entities

On 29 February 2012, SMB had announced to the Bursa Malaysia that its wholly-owned subsidiary, Scomi
Marine Services Pte Ltd (“SMS”), had entered into a conditional shares purchase agreement with PT Rig
Tenders Tbk (“PTRT”), an 80.54% owned subsidiary of SMS, for the disposal its entire equity interest in:

(a) CH Logistics Pte Ltd and its wholly-owned subsidiary, Sea Master Pte Ltd,;

(b) CH Ship Management Pte Ltd; and,

(c) Grundtvig Marine Pte Ltd and its 95% owned-subsidiary, PT Batuah Abadi Lines,

to PTRT for a total consideration of USD57.0 million (collectively referred to as “Proposed MLC Disposal”) and
the intention of the Board of Directors of Scomi Marine Bhd (“SMB”) to propose to the shareholders of SMB,
a proposed cash distribution of up to USD45.0 million to the shareholders of SMB via a capital repayment
exercise (“Proposed Capital Repayment”).

The Proposed MLC Disposal was completed on 12 April 2012.

44 SIGNIFICANT EVENTS SUBSEQUENT TO THE DATE OF THE STATEMENT OF FINANCIAL POSITION
(CONTINUED)
(a) Group rationalisation exercises (continued)
(III) Proposed Internal Reorganisation of SOL
The proposed internal reorganisation of SOL entails the proposed disposal by SOL of its equity interest in
SOBL to the existing shareholders of SOL, namely Scomi Group Bhd, Standard Chartered Private Equity
Limited and Fuji Investments I, followed by the proposed disposals by SOBL of its entire equity interest in the
following subsidiaries:
(i) Scomi Oiltools Sdn Bhd;
(ii) Scomi Oiltools Oman LLC;
(iii) Scomi Oiltools Pty Ltd;
(iv) KMCOB Capital Berhad;
(v) Scomi Oiltools Egypt SAE;
(vi) Scomi Oiltools (Thailand) Ltd
(vii) KMC Oiltools BV;
(viii) Vibratherm Limited;
(ix) Scomi Oiltools (Cayman) Ltd (excluding its subsidiary, Scomi Oiltools Kish Limited);
(x) Scomi Oiltools Ltd;
(xi) Scomi Oiltools (S) Pte Ltd (excluding its subsidiaries, Scomi Oiltools de Mexico S de RL de CV, Oilfield

Annual Report 2011

Services de Mexico S de RL de CV, PT Multi Jaya Persada and PT Inti Jatam Pura); and Scomi Oiltools
(Africa) Limited,

to SOL (“Proposed SOL Reorganisation”).

(IV) Proposed SGB Offer

pg 159
The Company to undertake a restricted offer of part of the Newco Shares held by the Company to all its
shareholders, the consideration of which is to be satisfied via the cancellation of such number of the

SCOMI GROUP BHD

Company’s shares held and the capitalisation of the Company’s reserves, to be undertaken after the Proposed
SMB Rationalisation.

(V) Proposed Placement by Newco

In conjunction with the Proposed Listing, Newco is to undertake a placement of new Newco Shares to
investors to be identified (“Proposed Placement”).

The Proposed SMB Scheme, Proposed Acquisition, Proposed Exemption and Proposed Listing shall be inter-
conditional upon each other and shall only be implemented after the completion of the following:
(i) Proposed SOL Reorganisation; and,
(ii) Proposed MLC Disposal

The Proposed SGB Offer shall be conditional upon the Proposed SMB Rationalisation, but not vice-versa.

The Proposed Placement shall be conditional upon the Proposed SMB Rationalisation, but not vice-versa.

(b) Disposal of an indirect subsidiary of the Group

(i) Scomi Oitools AS (“SOAS”) has ceased to be a subsidiary of the Group on 9 March 2012, pursuant to the
disposal of 100 ordinary shares with a par value of NOK1,000 each representing the entire issued and paid
up share capital in SOAS to Knud Holm Prosjekt AS, a Norwegian company, for a total cash consideration of
NOK0.1 million (equivalent to approximately RM0.06 million).

(ii) On 24 April 2012, the Company announced that Scomi Oiltools Kish Limited (“SOKL”), an indirect subsidiary of
Scomi Group Bhd, has ceased to be a subsidiary of SGB on 11 April 2012, pursuant to the disposal of 498
registered shares of RIs10,000.00 each representing 99.6% of the issued and paid up share capital in SOKL to
Behnam Mousavi Moustafa, for a total cash consideration of USD17.0 million (approximately RM52.1 million).

The effects of the disposals are not material to the financial results of the Group.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

45 FINANCIAL RISK MANAGEMENT

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the
development of the Group’s businesses whilst managing its interest rate, foreign exchange, liquidity and credit risks. The
Group operates within clearly defined guidelines that are approved by the Board and the Group’s policy is not to engage
in speculative transactions.

(a) Financial risk factors

(i) Market risk
Foreign exchange risk
The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in
a currency other than the respective functional currencies of Group entities. The currencies giving rise to this
risk are primarily United States Dollar (USD) and Indian Rupee (INR).

The Group maintains a natural hedge, whenever possible, by borrowing in currencies or entering into CCIRS
that match the future revenue stream to be generated from its investments.

The Group is exposed to the risk of significant forex fluctuation due to hyperinflationary economy in Venezuela.
SCOMI GROUP BHD

Currency profile of monetary financial assets and financial liabilities are as follows:

Denominated in other than functional currencies

Denominated
Group Ringgit USD Indian in functional
pg 160 2011 Malaysia dollar Rupee Others currencies Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Annual Report 2011

Receivables, deposits
and prepayments 325,927 685 98,972 92,011 384,485 902,080
Short term deposits,
cash and bank balances 8,592 673 1,260 8,499 138,423 157,447
Payables (80,636) (64,145) (5,131) (26,064) (250,031) (426,007)
Borrowings (42,194) – (63,212) (19,290) (940,997) (1,065,693)

211,689 (62,787) 31,889 55,156 (668,120) (432,173)

Company Ringgit USD

2011 Malaysia dollar Total
RM’000 RM’000 RM’000

Receivables, deposits and
prepayments 36,150 28,406 64,556
Short term deposits,
cash and bank balances 12,986 96 13,082
Payables (11,519) (49) (11,568)
Borrowings (204,037) (20,510) (224,547)

(166,420) 7,943 (158,477)

45 FINANCIAL RISK MANAGEMENT (continued)
(a) Financial risk factors (continued)
(i) Market risk (continued)
Foreign exchange risk (continued)
Currency profile of monetary financial assets and financial liabilities are as follows:

Denominated in other than functional currencies

Denominated
Group Ringgit USD Indian in functional
2010 Malaysia dollar Rupee Others currencies Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Receivables, deposits
and prepayments – 56,550 267,489 8,990 530,359 863,388
Short term deposits,
cash and bank balances 124 42,288 – 8,376 125,600 176,388
Payables (57,706) (40,218) (590) (17,614) (225,721) (341,849)
Borrowings – (98,699) – (25,281) (955,540) (1,079,520)

Annual Report 2011

(57,582) (40,079) 266,899 (25,529) (525,302) (381,593)

Company Ringgit USD

2010 Malaysia dollar Total pg 161

RM’000 RM’000 RM’000

SCOMI GROUP BHD

Receivables, deposits
and prepayments 86,846 15,115 101,961
Short term deposits,
cash and bank balances 8,182 1,152 9,334
Payables (16,075) (757) (16,832)
Borrowings (206,889) (40,189) (247,078)

(127,936) (24,679) (152,615)

The following table demonstrates the sensitivity of the Group’s income statement before tax to a reasonably
possible change in the USD and Indian Rupee exchange rates with all other variables held constant. The
sensitivity analysis includes outstanding foreign currency denominated monetary items and adjusts their
translation at the year end for a 3% change in the exchange rate.

(Loss)/profit before tax

Group Company
2011 RM’000 RM’000

USD/RM +3% (2,678) (451)
–3% 2,678 451

INR/RM +3% 6,750 –

–3% (6,750) –

 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

45 FINANCIAL RISK MANAGEMENT (continued)

(a) Financial risk factors (continued)
(i) Market risk (continued)
Interest rate risk
The Group’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest
rates. The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in
interest rates. The investments in financial assets are mainly short term in nature and have been placed mostly
in fixed deposits and occasionally, in short term commercial paper and investment funds.

The Group manages its interest rate exposure by maintaining a mix of fixed and floating rate borrowings. The
Group reviews its debt portfolio, taking into account the investment holding period and nature of its assets.
This strategy allows it to capitalise on cheaper funding in a low interest rate environment and achieve a certain
level of protection against rate hikes. The Group also uses hedging instruments such as interest rate swaps
to minimise its exposure to interest rate volatility.

The interest rate profile of the Group’s and the Company’s significant interest-bearing financial instruments,
based on carrying amounts as at the end of the reporting period was:
SCOMI GROUP BHD

Group Company
2011 RM’000 RM’000

Fixed liabilities
Fixed rate instruments 660,186 201,940
pg 162
Floating rate instruments 405,507 22,606

Annual Report 2011

1,065,693 224,546

The disclosures above are made before considering the effects of hedging.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other
variables held constant, of the Group and Company’s income statement before taxation. The sensitivity analysis is
determined based on the impact on floating rate financial instruments at the statement of financial position date.

Increase/ Effect on
decrease in (loss)/profit
basis points before tax
RM’000 RM’000

Group
2011 +1% (4,953)
–1% 4,953

Company
2011 +1% (215)
–1% 215

45 FINANCIAL RISK MANAGEMENT (CONTINUED)
(a) Financial risk factors (continued)
(ii) Credit risk
Credit risk or the risk of counterparties defaulting, are controlled by the application of credit approvals, limits
and monitoring procedures. Credit risks are minimised and monitored by limiting the Group’s associations to
business partners with high creditworthiness. The Group’s exposure to credit risk arises principally from its
receivables from customers. The Company’s exposure to credit risk arises principally from loans and advances
to subsidiaries and financial guarantees given. As at the statement of financial position date, the Group has a
significant exposure to an individual debtor amounting to RM368.1 million. The Group considers the risk of the
debtor defaulting in payments to be unlikely in view of the counterparty’s financial strength.

Trade receivables
As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is
represented by the carrying amounts in the statement of financial position. Trade receivables are monitored on
an ongoing basis via Group management reporting procedures. The credit quality of trade receivables that
were neither past due nor impaired as at date of the statement of financial position, can be assessed by
reference to historical information relating to counterparty default rates:

Annual Report 2011

Group
RM’000

2011
Neither past due nor impaired 204,819
pg 163

1 to 30 days past due not impaired 92,923

SCOMI GROUP BHD

31 to 60 days past due not impaired 43,013
61 to 90 days past due not impaired 41,189
91 to 120 days past due not impaired 25,685
More than 121 days past due not impaired 59,042

261,852

466,671

 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

45 FINANCIAL RISK MANAGEMENT (CONTINUED)

(a) Financial risk factors (continued)
(ii) Credit risk (continued)
Financial assets that are impaired
The carrying amount of trade receivables individually determined to be impaired and the movement in the
related allowance for impairment are as follows:

Group
2011 RM’000

Gross amount 30,520
Less: Allowance for impairment (30,520)

–

At beginning of financial year 33,465

Currency translation differences (6,499)
SCOMI GROUP BHD

Allowance made 11,665

Allowance utilised (5,098)
Recovery of bad debts (3,013)

At end of financial year 30,520
pg 164
Annual Report 2011

There were no financial assets that would otherwise be past due or impaired whose terms have been
renegotiated.

Intercompany balances
The Company provided unsecured loans and advances to subsidiaries. The Company monitors the results of
the subsidiaries regularly.

As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying
amounts in the statement of financial position and there was no indication that the loans and advances to the
subsidiaries are not recoverable. These advances are expected to be repaid within a year.

(iii) Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The
Group’s exposure to liquidity risk arises principally from its various payables, loans and borrowings.

The Group manages its debt maturity profile, operating cash flows and the availability of funding so as to
ensure that refinancing, repayment and funding needs are met. As part of its overall liquidity management, the
Group maintains sufficient levels of cash or cash convertible investments to meet its working capital
requirements. In addition, the Group strives to maintain available banking facilities at a reasonable level to its
overall debt position. As far as possible, the Group raises committed funding from both capital markets and
financial institutions and balances its portfolio with some short term funding so as to achieve overall cost
effectiveness.
45 FINANCIAL RISK MANAGEMENT (CONTINUED)
(a) Financial risk factors (continued)
(iii) Liquidity risk (continued)
The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at
31 December 2011 based on undiscounted contractual payments:

Between Between
Within 1 and 2 2 and 5 Over
1 year years years 5 years
RM’000 RM’000 RM’000 RM’000

Group
2011
Payables 491,942 – – –
Borrowings 730,144 87,494 205,826 142,443
ICSLS 3,188 – – –
ICULS 14 3 – –

Annual Report 2011

Company
2011
Payables 11,568 – – –
Borrowings 235,501 576 1,431 73 pg 165
ICSLS 3,188 – – –

SCOMI GROUP BHD

Financial guarantees
The Company provides financial guarantee to banks in respect of banking facilities granted to certain
subsidiaries.

The Company monitors on an ongoing basis, the results of the subsidiaries and repayments made by the
subsidiaries.

As at the end of the reporting period, there was no indication that any subsidiary would default on
repayment.

(b) Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern
in order to provide returns to shareholders and benefits for other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may issue new shares or adjust the amount of
dividends paid to shareholders.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

45 FINANCIAL RISK MANAGEMENT (CONTINUED)

(b) Capital risk management (continued)
Management monitors capital based on the following ratios:

(i) Net debt to equity ratio

(a) The Group is required by the bondholders of the RM250 million MTN notes to maintain a net debt to
equity ratio not exceeding 1.25 times as at 31 December 2011 and on the same date every year
thereafter until the Notes are fully repaid in year 2012. The Group includes within net debt, total
borrowings (including ICSLS and ICULS), less cash and bank balances.

Group
2011 2010
RM’000 RM’000

Total borrowings 1,065,693 1,079,520
Less: Cash and cash equivalents (157,447) (176,388)

908,246 903,132
SCOMI GROUP BHD

Less: Net debt for Mumbai Monorail project (150,877) (103,575)

Net debt 757,369 799,557

pg 166 Total equity 509,362 726,551

Annual Report 2011

Debt to equity ratio 1.49* 1.10

* A waiver of complying with the financial ratio relating to the net debt to equity ratio for the period
from 31 December 2011 to 28 September 2012 was obtained from the bondholders.

(b) The Scomi Oilfeld Limited Group is required by the bondholders of the RM630 million Murabahah Bonds
to maintain a net debt to equity ratio not exceeding 1.25 times as at 31 December 2011 and on the
same date every year thereafter until the Bonds are fully repaid in year 2013.

Net debt to equity ratio is calculated as net debt divided by total equity. Net debt is calculated as
borrowings less cash and bank deposits. Total equity comprises all components of equity, except for
minority interests.
45 FINANCIAL RISK MANAGEMENT (CONTINUED)
(b) Capital risk management
(i) Net debt to equity ratio (continued)
Group
2011 2010
RM’000 RM’000

Total borrowings 495,192 621,499
Less: Cash and cash equivalents (82,967) (112,289)

Net debt 412,225 509,210

Total equity 386,239 445,480

Debt to equity ratio 1.07 1.14

Annual Report 2011

(ii) Annual debt service cover ratio (“ADSCR”)
(A) The Group is required by the same MTN and Murabahah bondholders to maintain ADSCR of at least 1.5
times.

Group pg 167
2011 2010

SCOMI GROUP BHD

RM’000 RM’000

Cash available for debt service 144,322 169,384

Consolidated total debt service obligations:

– principal repayment 510,583 254,021
– interest repayment 32,185 49,417

542,768 303,438

ADSCR 1.27* 1.56

* A waiver of complying with the financial ratio relating to the ADSCR for the period was obtained from
the bondholders.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

45 FINANCIAL RISK MANAGEMENT (CONTINUED)

(b) Capital risk management (continued)
(ii) Annual debt service cover ratio (“ADSCR”) (continued)

(B) In December 2011, the SOL Group undertook a debt restructuring exercise as disclosed in Note 28(b).
There is no change in the net debt to equity ratio and annual debt service cover ratio requirement before
and after the restructuring. The SOL Group is also required to maintain an ADSCR based on the new
Sukuk Murabahah issued on 14 December 2011 of at least 1.5 times

Group
2011 2010
RM’000 RM’000

(A) Cash available for debt service 82,967 112,289

(B) Consolidated total debt service obligations:

– principal repayment 58,317 139,434
SCOMI GROUP BHD

– interest repayment 13,301 47,209

71,618 186,643

pg 168 ADSCR ((A+B)/B) 2.16 1.60

Annual Report 2011

(c) Financial instruments measured at fair value

The fair value measurement hierarchies used to measure financial assets carried at fair value in the statements of
financial position as at 31 December 2011 are as follows:

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. prices) or indirectly (i.e. derived from prices).

Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Level 1 Level 2 Level 3 Total

RM’000 RM’000 RM’000 RM’000

Group
2011
Financial assets
AFS investments 127 – 1,389 1,516

Financial liabilities
Derivatives – (294) – (294)
45 FINANCIAL RISK MANAGEMENT (CONTINUED)
(d) Fair value of financial instruments
The fair values of other financial assets and liabilities, together with the carrying amounts shown in the statement
of financial position, are as follows:

2011 2010
Carrying Fair Carrying Fair
amount value amount value
RM’000 RM’000 RM’000 RM’000

Group
Available-for-sale investments 1,516 1,516 1,516 1,516
Borrowings (1,065,693) (1,150,663) (1,079,520) (1,080,800)
ICSLS (3,188) (2,952) (7,197) (6,403)
ICULS (17) (15) (74) (65)

Company

Annual Report 2011

Borrowings (224,546) (209,926) (247,078) (217,879)
ICSLS (3,188) (2,952) (7,197) (6,403)
Financial guarantee (49) (49) (757) (757)

pg 169
The following summarises the method used in determining the fair value of financial instruments reflected in the
above table.

SCOMI GROUP BHD

Available-for-sale investments
The fair values of financial assets that are quoted in an active market are determined by reference to their quoted
closing price at the end of the reporting period.

Derivatives
The fair value of forward exchange contracts is based on their listed market price, if available.

The fair value of Cross Currency Interest Rate Swaps is calculated based on the present value of the estimated
future cash flows determined using forward exchange rates, discounted at actively quoted interest rates.

Non-derivative financial liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future
contractual cash flows, discounted at the current market interest rate that are available to the Group for similar
financial liabilities.

Financial guarantees
Fair value is determined based on the difference between the interest charged on the guaranteed loan and what
would have been charged had the loan not been guaranteed.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

46 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Estimates and judgments are continually evaluated by the Directors and are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the circumstances.

Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
rarely equal the related actual results. To enhance the information content of the estimates, certain key variables that
are anticipated to have a material impact to the Group’s results and financial position are tested for sensitivity to changes
in the underlying parameters. The estimates and assumptions that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next financial year are outlined below.

(a) Estimated impairment of goodwill

The Group tests goodwill for impairment annually in accordance with its accounting policy. More regular reviews
are performed if events indicate that this is necessary.

The recoverable amounts of cash generating units (“CGU”) were determined based on the value in use calculations
and fair value less cost to sell basis. The calculations require the use of estimates as set out in Note 13.
SCOMI GROUP BHD

The Directors are of the opinion that any reasonably expected change in the key assumptions used to determine
the recoverable amounts of the CGUs, would not result in any impairment.

(b) Income taxes

The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining
pg 170
recoverability of withholding and income taxes worldwide provision for income taxes, including determining of taxable
income, capital allowances and deductibility of certain expenses during the estimation of the provision for income
Annual Report 2011

taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the
ordinary course of business.

The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will
be due. The Group has carried forward tax recoverable of USD2.8 million (approximately RM8.9 million) related to
certain subsidiaries. The Directors and local independent tax professionals believe that the amount can be set off
against future tax payables.

Where the final tax outcome of these matters is different from the amounts that were initially recorded, such as if the
actual future taxable profits, or if the amounts of carry forward tax losses, unutilised tax incentives and capital
allowances that are approved by the tax authorities differ from those currently estimated by the Group, such differences
will impact the income tax and deferred income tax provisions in the period in which such determination is made.

The Group has significant unrecognised tax losses, unutilised tax incentives and capital allowances. As at 31
December 2011, the Group has derecognised RM21.5 million of deferred tax assets for certain entities within the
Group as the businesses have been disposed and the future taxable profits are uncertain as at the reporting date.

(c) Deferred tax assets recognition in Scomi Oiltools Sdn Bhd (“SOSB”)
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against
which the temporary differences can be utilised. This involves judgment regarding the future financial performance
of certain subsidiaries.

Included in the carrying amount of deferred tax assets of the Group of RM46.6 million (2010: RM78.7 million) is an
amount in relation to SOSB which was recognised in previous years amounting to RM28.5 million (2010: RM41.6
million). The Directors have reassessed the future taxable profits of SOSB beyond 2012, i.e the expected expiration
of its existing tender contracts, and are of the opinion that given that certain contracts have been successfully
secured during the financial year, the carrying amount of the deferred tax assets is recoverable.
46 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (CONTINUED)
Critical accounting estimates and assumptions (continued)
(d) Assessment of tax penalties and fines in Venezuela and Algeria
The Group has recognised a provision for liabilities in relation to tax penalties in accordance with accounting policy
in Note 3.28. The Group has made assumptions and judgement in relation to provision for tax penalties based on,
among others, historical experience with local tax authorities in the relevant countries and timing of the potential
liabilities. These assumptions and judgement are made in consultation with and according to the advice from local
independent tax professionals. Any changes to these assumptions and judgement will impact the carrying amount
of the potential liabilities.

Based on the above, in relation to tax penalties and fines of the Group’s Venezuelan and Algerian subsidiaries, the
Directors are of the opinion that the amount recorded as of 31 December 2011 and disclosed in Note 29 is
sufficient based on tax advice obtained. In the event that the assumptions and judgement exercised by the Directors
of the Company do not materialise, there is further potential exposure amounting to USD2.2 million (approximated
RM6.8 million).

Critical accounting estimates and assumptions (continued)

Annual Report 2011

(e) Assessment of penalties payable
On 7 November 2008, the Mumbai Metropolitan Region Development Authority (“MMRDA”) of India awarded a
contract for the Design, Development and Construction of a Monorail System (“the Project” or “ the Contract”) for
a lump sum amount of Rs2460 crores (RM1.7 billion) to the unincorporated consortium of Larsen & Taubro Ltd
and Scomi Engineering Bhd (“the Consortium”), for which Scomi Engineering Bhd’s (“SEB” or “the Company”) share
pg 171
of the value of the Contract is Rs1097 crores (RM777 million) based on its scope of works. The design,
development, construction/manufacture/supply, testing and commissioning of the system including safety certification

SCOMI GROUP BHD

for commercial operations are to be completed within 30 months from the award of the Contract.

The Consortium has continuously apprised MMRDA of the status of the project and sought extensions of time as
allowed under the Contract terms. On 28 January 2011, MMRDA through its project management consultant
notified the Consortium of potential penalties claimable under the Contract which are subject to any authorised
extension of time for completion of the Project. On 7 March 2011, the Consortium responded to MMRDA stating
its case for extension of time and that the Consortium is not liable for any penalties under the Contract. On
25 March 2011, the Consortium submitted an Extension of Time (“EOT”) application for both Phase 1 and Phase
2 works. Subsequent to this EOT application, MMRDA on 31 May 2011 granted the Consortium with EOT for each
of the Phase 1 and Phase 2 works completion key-dates.

For Phase 1, the original contract completion key-date for commissioning was 12 November 2010 and was extended
to 31 December 2011 via a 31 May 2011 EOT granted. For Phase 2, the original contract completion key-date for
commissioning was 13 May 2011 and was extended to 22 November 2012 via a 31 May 2011 EOT granted.

Due to unforeseen circumstances, the Project encountered delays and certain Phase 1 key milestones stated in the
Contract have not been met as at 31 December 2011. The Company has engaged specialist advisors to assist in
the assessment of delay events, submission of claims for extension of time and assessing the Consortium’s
contractual obligations.

Given the expiry of the revised Phase 1 completion key-date, the specialist advisor has evaluated any spill-over/on-
going delay events which will substantiate the application for further EOT to Phase 1 completion key-date from
MMRDA as the specialist advisor believes that the Consortium has very strong grounds to apply for a further
extension. The specialist advisor submitted their EOT Claim Report for Phase 1 on 7 February 2012.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

46 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (CONTINUED)

Critical accounting estimates and assumptions (continued)
(e) Assessment of penalties payable (continued)
The same specialist advisor has been further engaged to perform a detailed investigation on the long list of issues
affecting the works to serve as contemporary documentation as well as to form up an interim delay assessment for
further EOT entitlement. The specialist advisor has submitted their Phase 1 and Phase 2 Delay Assessment Report
on 14 February 2012.

The Consortium has requested for a further EOT for Phase 1 till 14 July 2012 vide its letter dated 30 December
2011. The specialist adviser has indicated that there are numerous concrete opportunities to apply for an additional
EOT for Phase 2 beyond 22 November 2012.

Whilst MMRDA and the Consortium are engaged in the EOT discussions the Consortium may be potentially liable
for penalties under the provisions of the Contract. Penalties levied for not achieving intermediate key-dates shall be
reimbursed in the event the entire Project is commissioned within the stipulated time including any EOTs, for which
the members to the Consortium have a cross indemnification agreement. The Consortium at the same of time are
giving first priority and doing their utmost to complete the Project within the agreed revised timelines. In the interim,
the Project activities and work continue normally with MMRDA approving claims, billings and making payments
SCOMI GROUP BHD

accordingly, other than withholding an amount of RM1.8 million due to the Company, which arose from a letter sent
by MMRDA’s consultant on 17 August 2011. In April 2012, based on negotiations with MMRDA, they MMRDA have
in principal agreed to release the amounts withheld.

SEB has in the interim submitted three variation orders amounting to RM19.3 million in connection with the provision
pg 172 of certain communication and security equipments in relation to the Project, subject to other claims which SEB
believes should accrue to the Consortium.
Annual Report 2011

In reliance of the advice received from the Specialist Consultant, the Directors are of the opinion that the Consortium
can effectively defend any potential penalty claims, hence no provision for potential penalties is required as at 31
December 2011 as there is remote likelihood of any penalties to be borne by the Company.

(f) Assessment of indirect taxes payable in Scomi Engineering Bhd (“SEB”)

During the course of execution of the Project described in Note 46(e) above, SEB and its wholly-owned subsidiary,
Scomi Rail Bhd (“SRB”), will supply goods and services which would typically attract various indirect taxes in India.
The tax consultants of SEB have assessed the potential indirect taxes payable to the Central Government, State
Government and Local Municipality of that country and are of the view that:

(i) there are certain legislations empowering the Central Government, State Government and Local Authority to
grant exemptions/concessions in cases where the respective Governments and authorities are satisfied that the
project is in the interest of the public;

(ii) past precedents indicated that the respective Governments and Authorities have exercised their discretionary
powers to grant exemptions/concessions for specific projects in the interest of the public; and

(iii) given the legal provisions, and past precedents, a reasonable case for tax exemptions/concessions can be
made, subject to discretions of the respective Governments and Authorities.

Following the Central Government of India budget in March 2012, the custom duty rates have been reduced from
22% to 16% (2011: 22%). As a result, the total imputed value of custom duties based on delivery of 15 trains and
applying the revised applicable tax rates as at 31 December 2011 have reduced by RM13.1 million (Rs22 crore).
Based on the revised rates, there is no residual financial exposure on the custom duties payable, as the impact of
any custom duties payable can be offset against the amount reimbursable by MMRDA.
46 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (CONTINUED)
Critical accounting estimates and assumptions (continued)
(f) Assessment of indirect taxes payable in Scomi Engineering Bhd (“SEB”) (continued)
Applications and representations have been made by Management to the respective Governments and Authorities
and the matter is under consideration at the respective authorities.

Based on the above, the Directors are of the opinion that:

(i) there is a reasonable case for claim of tax exemptions/concessions and the likelihood of the Company obtaining
such exemptions is high; and

(ii) a reasonable estimate of the likely outcome of additional indirect taxes payable, if any, cannot be ascertained
at this stage.

(g) Recognition of deferred tax assets from double deduction of research and development costs in Scomi Rail Bhd
(“SRB”)

(i) SRB had undertaken research and development (“R&D”) activities for the development of its product, where this

Annual Report 2011

research is expected to satisfy the eligibility criteria of research project/activity under Public Ruling No. 5/2004
which allows such R&D expenditure to qualify for double deduction for income tax purposes.

The tax consultants of SRB have reviewed the current status of the application and the expenses incurred in
relation to the R&D project and, based on the application submitted, are of the view that the R&D would satisfy
pg 173
the definition of research as spelt out in the Public Ruling No. 5/2004, and the R&D expenditure should ordinarily
qualify for the double deduction based on past experience.

SCOMI GROUP BHD

SRB has consequently recognised a double deduction claim on such expenditure in its provisional tax
computation for the financial years 2006 to 2010, resulting in the recognition of a cumulative deferred tax asset
of RM12.8 million (2010: RM17.4 million) on unabsorbed losses as at the date of the statement of financial
position. No double deduction claim on R&D costs is made from 2011 onwards as SRB has commenced the
pioneer status tax exemption with effect from January 2011 for a period of 5 years.

As at the date of this report, approvals by the Inland Revenue Board for financial years 2009 and 2010 remain
pending.

Based on the above, the Directors are of the opinion that the R&D activity would meet the eligibility criteria of a
research project/activity under Public Ruling No. 5/2004 and management will undertake the necessary
procedures and endeavour to obtain the required approval from the Inland Revenue Board on the research
project/activity. Consequently, the unabsorbed losses will be utilised upon expiry of the pioneer status in 2016.

In determining and applying accounting policies, judgement is often required in respect of items where the
choice of specific policy could materially affect the reported results and financial position of the Group.

(ii) Urban Transit Private Limited had recognised a deferred tax asset of RM0.9 million out of RM3.8 million arising
from unabsorbed tax losses based on projections of future taxable income.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

46 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (CONTINUED)

Critical accounting estimates and assumptions (continued)
(h) Litigations
The Group operates across 29 countries and is required to comply with all applicable laws and regulations of the
countries in which the Group operates. Significant judgement is required to determine the likelihood of the obligation
and the estimation of amounts to be recognised in respect of legal matters, subject to uncertain future events.
The legal cases may extend over several years and the amount or timing may differ from current assumptions.
The accounting policy for provision and contingent liabilities which are not provided for is set out in Note 3.28 and
3.29 respectively.

As at 31 December 2011, the Group has recognised RM3.79 million (USD1.20 million) as contingent liabilities based
on legal advice and is disclosed in Note 39(d).

47 PRIOR YEAR ADJUSTMENT

The prior year adjustment is due to the correction of an omission in respect of accounting for a put option relating to
the non-controlling interest in Scomi Oilfield Limited, a subsidiary of the Group, which was not recognised in the financial
SCOMI GROUP BHD

statements in the prior financial years. The Shareholders Agreement dated 5 October 2007 between the Company,
Standard Chartered Private Equiry Limited (SCPEL/ Investor) and SOL (“Scomi Oilfield Limited”) granted the Investor with
the right to sell its shareholding in SOL to the Company or SOL (“Put Option”) upon the commencement of the Put
Option Period. The Put Option Period is defined to mean the period commencing on the earlier of (a) the Put Option
Value Date or (b) the date on which a change of control in relation to the Company occurs. The Put Option Value Date
is defined to refer to the date on which the Put Option Purchase Price has been determined following the joint
pg 174
appointment by the Company, the Investor and SOL of an Approved Bank to determine the fair market value of the
Investor’s shares in SOL. The Investor has not exercised the Put Option as of the date of this report and no Approved
Annual Report 2011

Bank has been appointed to determine the fair market value. In addition, there has been no change of control in the
Company since the inception of the Shareholders Agreement to this point in time.

Noting the conditions attached to the Put Option, legal advice was sought in relation to the commencement of the
respective obligations of the Group relating to the Put Option. The Company wishes to inform that it has consulted with
two external legal firms on this matter which have provided the Company their opinion as summarised below:

Opinion 1: Notwithstanding that the grant of the Put Option arose at the time of execution of the Shareholders
Agreement, such an obligation becomes operative and enforceable only upon commencement of the Put Option Period
following the joint appointment of an Approved Bank.

Option 2: The grant of the Put Options will be deemed to have been made on a Put Option Value Date or specifically,
the date the Put Option Purchase Price i.e. the Fair Market Value of the shares is determined by an Approved Bank.

The Board, having deliberated the matter is of the opinion that the Company should restate its prior year financial
statements to account for the financial obligation arising from the Put Option.
47 PRIOR YEAR ADJUSTMENT (CONTINUED)
The effect of the restatement of the financial statements are summarised below.

Group
1 Jan 2010
As previously 1 Jan 2010
stated FRS 108 As restated
RM’000 RM’000 RM’000

Statement of Financial Position
Other reserves (53,004) 258,286 205,282
Retained earnings (664,994) (113,900) (778,894)
Payables (495,779) (144,386) (640,165)

31 Dec 2010
As previously 31 Dec 2010
stated FRS 108 As restated

Annual Report 2011

RM’000 RM’000 RM’000

Statement of Comprehensive Income
Finance costs 77,874 (11,730) 66,144
pg 175
Statement of Financial Position

SCOMI GROUP BHD

Other reserves (6,694) 258,286 251,592
Retained earnings (477,017) (113,900) (590,917)
Payables (336,329) (132,656) (468,985)

48 APPROVAL OF FINANCIAL STATEMENTS

The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on
30 April 2012.
 NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2011

49 DISCLOSURE OF REALISED AND UNREALISED PROFITS OR LOSSES

The breakdown and components of retained earnings are identified and disclosed in accordance with the listing
requirements of Bursa Malaysia Securities as follows:

Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
(Restated)

Total retained earnings:
– realised 319,181 649,790 226,912 375,312
– unrealised (3,805) 55,476 (2,133) 4,384

315,376 705,266 224,779 379,696
Total share of accumulated losses from associate:
– realised (86,459) (35,109) – –
– unrealised (2,077) (4,893) – –
SCOMI GROUP BHD

Total share of retained earnings

from jointly controlled entities:
– realised (19) 4,713 – –
– unrealised – (144) – –

pg 176 226,821 669,833 224,779 379,696
Less: Consolidation adjustments 151,770 (67,186) – –
Annual Report 2011

Total group retained earnings 378,591 602,647 224,779 379,696

STATEMENT BY DIRECTORS
pursuant to Section 169(15) of the Companies Act, 1965

We, Tan Sri Asmat bin Kamaludin and Shah Hakim @ Shahzanim bin Zain, being two of the Directors of Scomi Group Bhd.,
state that, in the opinion of the Directors, the financial statements set out on pages 72 to 176 are drawn up so as to give
a true and fair view of the state of affairs of the Group and Company as at 31 December 2011 and of the results and the
cash flows of the Group and Company for the financial year ended on that date in accordance with the provisions of the
Companies Act, 1965 and MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities.

Signed on behalf of the Board of Directors in accordance with their resolution dated 30 April 2012.

TAN SRI ASMAT BIN KAMALUDIN SHAH HAKIM @ SHAHZANIM BIN ZAIN
Chairman Chief Executive Officer

Petaling Jaya

Annual Report 2011

pg 177

SCOMI GROUP BHD

STATUTORY DECLARATION
pursuant to Section 169(16) of the Companies Act, 1965

I, Abu Zaharoff bin Abu Bakar, the officer primarily responsible for the financial management of Scomi Group Bhd.,
do solemnly and sincerely declare that the financial statements set out on pages 72 to 176 are, in my opinion, 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.

ABU ZAHAROFF BIN ABU BAKAR

Subscribed and solemnly declared by the abovenamed Abu Zaharoff bin Abu Bakar at Kuala Lumpur in Malaysia on
30 April 2012, before me.

Commissioner for Oaths

 INDEPENDENT AUDITORS’ REPORT
to the members of Scomi Group Bhd
(Incorporated in Malaysia)
(Company No. 571212 A)

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Scomi Group Bhd on pages 72 to 176 which comprise the statements of
financial position as at 31 December 2011 of the Group and of the Company, and the statements of comprehensive income,
changes in equity and cash flows of the Group and of the Company for the financial year then ended, and a summary of
significant accounting policies and other explanatory notes, as set out on Notes 1 to 48.

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 MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities and the Companies
Act, 1965 and for such internal control as the Directors determine are necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from
material misstatement.
SCOMI GROUP BHD

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of
the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant
to the Company’s preparation of financial statements that give a true and fair view in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
pg 178 internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.
Annual Report 2011

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

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its
subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ reports of all subsidiaries of which we have not acted as
auditors, which we are indicated in Note 16 to the financial statements.

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

(d) The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment
made under Section 174(3) of the Act.
OTHER REPORTING RESPONSIBILITIES
The supplementary information set out in Note 49 on page 176 is disclosed to meet the requirements of Bursa Malaysia
Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the
supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised
Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued
by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our
opinion, the supplementary information is prepared in all material respects, in accordance with the MIA Guidance and the
directive of Bursa Malaysia Securities Berhad.

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

Annual Report 2011

PRICEWATERHOUSECOOPERS YEE WAI YIN
(No. AF: 1146) (No. 2081/08/12 (J))
Chartered Accountants Chartered Accountant

pg 179
Kuala Lumpur
30 April 2012

SCOMI GROUP BHD

 ANALYSIS OF SHAREHOLDINGS
as at 30 April 2012

Authorised Share Capital : RM300,000,000.00 divided into 3,000,000,000 ordinary shares of RM0.10 each
Issued and Paid Up Capital : RM119,223,957.20 divided into 1,192,239,572 ordinary shares of RM0.10 each. This
included 14,427,200 ordinary shares purchased by the Company under share buy-back
scheme and retained as treasury shares
Types of Shares : Ordinary shares of RM0.10 each
Voting Rights : One vote per ordinary share

Distribution of Shareholdings as at 30 April 2012

Shareholders Shareholding
Size of shareholdings No. of holders % of holders No. of shares % of shares

Less than 100 70 0.31 2,015 0.00

100 to 1,000 2,272 9.96 2,082,322 0.18
1,001 to 10,000 11,529 50.53 66,768,287 5.67
10,001 to 100,000 7,894 34.60 267,308,370 22.69
100,001 to less than 5% of issued shares 1,049 4.60 756,254,748 64.21
5% and above of issued shares 1 0.00 85,396,630 7.25
SCOMI GROUP BHD

Total 22,815 100.00 1,177,812,372 100.00

List of Top Thirty (30) Largest Shareholders as at 30 April 2012

pg 180
Name of shareholder No. of shares %
Annual Report 2011

1. UOBM Nominees (Tempatan) Sdn Bhd 85,396,630 7.25

TOIC Investments Ltd for Onstream Marine Sdn Bhd
2. HLG Nominee (Asing) Sdn Bhd 43,099,000 3.66
Exempt An for UOB Kay Hian Pte Ltd (A/c Clients)
3. A.A. Anthony Nominees (Tempatan) Sdn Bhd 33,053,055 2.81
Multi-Purpose Credit Sdn Bhd for Kaspadu Sdn Bhd
4. Citigroup Nominees (Tempatan) Sdn Bhd 32,497,500 2.76
Kumpulan Wang Persaraan (Diperbadankan) (CIMB Equities)
5. CIMSEC Nominees (Tempatan) Sdn Bhd 32,265,200 2.74
CIMB Bank for Siew Mun Chuang (MY1275)
6. RHB Capital Nominees (Tempatan) Sdn Bhd 27,000,000 2.29
Pledged Securities Account for Kaspadu Sdn Bhd (SBSSB 1311005)
7. EB Nominees (Tempatan) Sendirian Berhad 25,700,000 2.18
Pledged Securities Account for Kaspadu Sdn Bhd (SFC)
8. Amro F F A H Alkhadra 18,900,000 1.60
9. JF Apex Nominees (Tempatan) Sdn Bhd 17,560,000 1.49
Pledged Securities Account for Abu Sahid Bin Mohamed (Margin)
List of Top Thirty (30) Largest Shareholders as at 30 April 2012 (CONTINUED)
Name of shareholder No. of shares %

10. Citigroup Nominees (Asing) Sdn Bhd 17,200,000 1.46

GSI for Goldmark Consulting Ltd
11. Mentari Maksima Sdn Bhd 16,259,100 1.38
12. Citigroup Nominees (Asing) Sdn Bhd 15,913,800 1.35
CBNY for Dimensional Emerging Markets Value Fund
13. Dutariang Sdn Bhd 14,846,300 1.26
14. HSBC Nominees (Asing) Sdn Bhd 14,000,000 1.19
Exempt An for The Bank of New York Mellon (Mellon Acct)
15. HLB Nominees (Tempatan) Sdn Bhd 10,213,900 0.87
Pledged Securities Account for Abu Sahid Bin Mohamed
16. ABB Nominee (Tempatan) Sdn Bhd 10,000,000 0.85
Pledged Securities Account for Gajahrimau Capital Sdn Bhd

Annual Report 2011

17. Lim Fong Peng @ Lim Fung Feng 8,440,720 0.72
18. Alliancegroup Nominees (Tempatan) Sdn Bhd 7,550,000 0.64
Pledged Securities Account for Ng See Cheng (8040841)
19. Lee Ah Lik 7,021,400 0.60
pg 181
20. M&A Nominee (Asing) Sdn Bhd 6,735,000 0.57

SCOMI GROUP BHD

Exempt An for UOB Kay Hian Pte Ltd (A/c Clients)
21. HSBC Nominees (Asing) Sdn Bhd 6,003,400 0.51
Exempt An for JPMorgan Chase Bank, National Association (U.S.A.)
22. Abdul Aziz Bin Mohd Zain 5,917,885 0.50
23. SBB Nominees (Tempatan) Sdn Bhd 4,732,300 0.40
Lembaga Tabung Haji (CAFM)
24. Malaysia Nominees (Tempatan) Sdn Bhd 4,512,900 0.38
Great Eastern Life Assurance (Malaysia) Berhad (LPF)
25. Public Nominees (Tempatan) Sdn Bhd 4,483,200 0.38
Pledged Securities Account for Tee Kim Hew (E-KLG/BTG)

26. ASM Properties Sdn Bhd 4,405,000 0.37

27. Citigroup Nominees (Asing) Sdn Bhd 3,863,500 0.33
CBNY for DFA Emerging Markets Small Cap Series
28. HSBC Nominees (Asing) Sdn Bhd 3,800,000 0.32
Exempt An for BNP Paribas Wealth Management Singapore Branch
(A/c Clients-FGN)
29. Liew Sze Fook 3,500,000 0.30
30. CIMSEC Nominees (Tempatan) Sdn Bhd 3,440,200 0.29
CIMB for Sapura Capital Sdn Bhd (PB)

Total 488,309,990 41.45

 ANALYSIS OF SHAREHOLDINGS
as at 30 April 2012

Substantial Shareholders as at 30 April 2012

Direct Shareholding Indirect Shareholding
No. of No. of
Name of shareholder shares held % shares held %

Kaspadu Sdn Bhd 85,753,055 (1) 7.28 86,521,970 (2)(3) 7.35

Onstream Marine Sdn Bhd 86,521,970 (3) 7.35 – –
Shah Hakim @ Shahzanim Bin Zain 2,779,100 (4) 0.24 172,275,025 (5) 14.63
Dato’ Kamaluddin Bin Abdullah – – 172,275,025 (5) 14.63

Total 175,054,125 14.87 – –

Notes
1 Held through RHB Capital Nominees (Tempatan) Sdn Bhd, EB Nominees (Tempatan) Sdn Bhd and A.A. Anthony Nomineess (Tempatan) Sdn Bhd.
2 Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through its shareholding in Onstream Marine Sdn Bhd.
3 85,396,630 shares held through UOBM Nominees (Tempatan) Sdn Bhd.
4 2,250,000 shares held through BHLB Trustee Berhad (PCM for Shah Hakim @ Shahzanim Bin Zain).
5 Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through his shareholding in Kaspadu Sdn Bhd.
SCOMI GROUP BHD

Directors’ Shareholdings as at 30 April 2012

Direct Interest Indirect Interest
Directors No. of % of No. of No. of % of No. of
Shares Shares Options Shares Shares Options

pg 182 Scomi Group Bhd

Tan Sri Asmat Bin Kamaludin 265,000 (1) 0.02 700,000 # – – –
Annual Report 2011

Tan Sri Nik Mohamed Bin Nik Yaacob – – 600,000 # – – –

Datuk Haron Bin Siraj 120,000 0.01 600,000 # – – –
Datuk Mohamed Azman Bin Yahya – – 600,000 # 10,000,000 (2) 0.85
Dato’ Mohammed Azlan Bin Hashim – – 600,000 # – – –
Dato’ Sreesanthan A/L Eliathamby – – 420,000 # – – –
Dato’ Abdul Rahim Bin Abu Bakar – – – – –
Foong Choong Hong 410,000 0.03 350,000# # – – –
Shah Hakim @ Shahzanim Bin Zain 2,779,100 (3) 0.24 7,356,500 # 172,275,025 (4) 14.63 –

Related Company
– Scomi Engineering Bhd (“SEB”)
Tan Sri Asmat Bin Kamaludin – – – 12,222 (5) * –
Dato’ Abdul Rahim Bin Abu Bakar 219,700 0.08 300,000 ^ – – –
Shah Hakim @ Shahzanim Bin Zain+ 623,000 (6) 0.22 1,500,000 ^ 192,567,567 (7) 67.35 –

Notes
* Negligible
# Options granted pursuant to the Company’s Employees’ Share Option Scheme to subscribe for ordinary shares in the Company.
^ Options granted pursuant to SEB’s Employees’ Share Option Scheme to subscribe for ordinary shares in SEB.
+ By virtue of his interests in the shares and options in the Company, as disclosed above, he is deemed to have an interest in shares in all the subsidiaries
of the Company.
1 Deemed interested by virtue of Section 6A(2) of the Companies Act, 1965 through his interest in Bi-bot Holdings Sdn Bhd, whereby 215,000 ordinary shares
are held through CIMSEC Nominees (Tempatan) Sdn Bhd.
2 Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through his and his wife’s direct shareholdings in Gajahrimau Capital Sdn Bhd,
whereby all the 10,000,000 shares are held through ABB Nominees (Tempatan) Sdn Bhd.
3 2,250,000 shares held through BHLB Trustee Berhad (PCM for Shah Hakim @ Shahzanim Bin Zain).
4 Deemed interested by virtue of Section 6A(4) of Companies Act, 1965 through his shareholding in Kaspadu Sdn Bhd.
5 Deemed interested by virtue of Section 134(12)(c) of the Companies Act, 1965 through his children’s direct shareholding in SEB.
6 123,000 shares held through BHLB Trustee Berhad (PCM for Shah Hakim @ Shahzanim Bin Zain).
7 Deemed interested by virtue of Section 6A(4) of Companies Act, 1965 through his shareholding in Kaspadu Sdn Bhd which in turn is deemed interested in
SEB.
ANALYSIS OF Irredeemable Convertible
Secured Loan Stocks (“ICSLS”) HOLDINGS
as at 30 April 2012

Total Number of ICSLS Issued : 1,515,796,791

Total Number of Outstanding ICSLS : 857,256,017
Issued Price of ICSLS : RM0.10 per ICSLS
Conversion of ICSLS : four (4) units of ICSLS for one (1) ordinary share of RM0.10 each

Distribution of ICSLS Holdings as at 30 April 2012

ICSLS Holders ICSLS Holding
No. of ICSLS % of ICSLS
Size of ICSLS holdings holders holders No. of ICSLS % of ICSLS

Less than 100 34 0.58 1,615 0.00

100 to 1,000 61 1.03 32,880 0.00
1,001 to 10,000 2,269 38.44 11,772,921 1.37
10,001 to 100,000 3,034 51.41 97,895,051 11.42
100,001 to less than 5%
of issued ICSLS 502 8.51 272,789,400 31.82
5% and above of issued ICSLS 2 0.03 474,764,150 55.38

Annual Report 2011

Total 5,902 100.00 857,256,017 100.00

List of Top Thirty (30) Largest ICSLS Holders as at 30 April 2012

pg 183
Name of ICSLS holder No. of ICSLS %

SCOMI GROUP BHD

1. UOBM Nominees (Asing) Sdn Bhd 415,349,600 48.45
TOIC Investments Ltd
2. HSBC Nominees (Asing) Sdn Bhd 59,414,550 6.93
Exempt An for BNP Paribas Securities Services (Convert in USD)
3. Tan Yu Wei 38,220,298 4.46
4. HSBC Nominees (Asing) Sdn Bhd 18,750,000 2.19
Exempt An for the Bank of New York Mellon (Mellon Acct)
5. ABB Nominee (Tempatan) Sdn Bhd 15,000,000 1.75
Pledged Securities Account for Gajahrimau Capital Sdn Bhd
6. Lim Fong Peng @ Lim Fung Feng 12,886,080 1.50
7. M&A Nominee (Asing) Sdn Bhd 10,102,500 1.18
Exempt An for UOB Kay Hian Pte Ltd (A/c Clients)
8. CIMSEC Nominees (Tempatan) Sdn Bhd 5,160,300 0.60
CIMB for Sapura Capital Sdn Bhd (PB)
9. Tay Kheng Seng 4,775,000 0.56
10. Lee Chai Eng 4,059,800 0.47
11. Ng Hong Tee 2,490,000 0.29
12. Multi-Purpose Insurans Bhd 2,250,000 0.26
13. Lee Chiah Cheang 2,092,000 0.24
14. Ng Ho Fatt 2,073,100 0.24
15. Onn Kok Puay (Weng Guopei) 2,055,000 0.24
 ANALYSIS OF IRREDEEMABLE CONVERTIBLE SECURED LOAN STOCKS (“ICSLS”) HOLDINGS
as at 30 April 2012

List of Top Thirty (30) Largest ICSLS Holders as at 30 April 2012 (CONTINUED)
Name of ICSLS holder No. of ICSLS %

16. HDM Nominees (Tempatan) Sdn Bhd 1,950,000 0.23

Pledged Securities Account for Ng Kong Ghee (M02)
17. CIMSEC Nominees (Tempetan) Sdn Bhd 1,677,000 0.20
CIMB Bank for Mohammed Amin Bin Mahmud (MM1004)
18. JF Apex Nominees (Tempatan) Sdn Bhd 1,600,000 0.19
Pledged Securities Account for Witpro Sdn Bhd (STA 2)
19. Lam Chin Yong 1,551,000 0.18
20. Liew Sze Fook 1,500,000 0.17
21. Loh Lye Ngok 1,400,000 0.16
22. Mayban Nominees (Tempatan) Sdn Bhd 1,400,000 0.16
Ng Hong Tee
23. Yew Kim An 1,350,000 0.16
SCOMI GROUP BHD

24. Teo Akau 1,330,000 0.16

25. Lee Swong Koi 1,320,000 0.15
26. Chin Kiam Hsung 1,300,000 0.15
27. Public Nominees (Tempatan) Sdn Bhd 1,275,000 0.15
Pledged Securities Account for Lee Chiah Cheang (TCS/HLG)
pg 184
28. Poh Siew Kuan 1,268,500 0.15
Annual Report 2011

29. Pang Siew Yin 1,236,500 0.14

30. Liew Teng Yaw 1,200,000 0.14

Total 616,036,228 71.85

Directors’ ICSLS Holdings as at 30 April 2012

Direct interest Indirect interest
Directors No. of ICSLS % of ICSLS No. of ICSLS % of ICSLS

Tan Sri Asmat Bin Kamaludin 397,500 (1) 0.05 – –

Tan Sri Nik Mohamed Bin Nik Yaacob – – – –
Datuk Haron Bin Siraj – – – –
Datuk Mohamed Azman Bin Yahya – – 15,000,000 (2) 1.75
Dato’ Mohammed Azlan Bin Hashim – – – –
Dato’ Sreesanthan A/L Eliathamby – – – –
Dato’ Abdul Rahim Bin Abu Bakar – – – –
Foong Choong Hong – – – –
Shah Hakim @ Shahzanim Bin Zain – – – –

Notes
1 Deemed interested by virtue of Section 6A(2) of the Companies Act, 1965 through his interest in Bi-bot Holdings Sdn Bhd, whereby 322,500 ICSLS are
held through CIMSEC Nominees (Tempatan) Sdn Bhd.
2 Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through his and his wife’s direct shareholdings in Gajahrimau Capital Sdn Bhd,
whereby all the 15,000,000 ICSLS are held through ABB Nominees (Tempatan) Sdn Bhd.
ANALYSIS OF WARRANT HOLDINGS
as at 30 April 2012

Total Number of Warrants Issued : 202,106,238

Outstanding Warrants : 202,105,258
Exercise Price of Warrants : RM0.40

Distribution of Warrant Holdings as at 30 April 2012

Warrant holders Warrant holdings
No. of warrant % of warrant No. of % of
Size of warrant holdings holders holders warrants warrant

Less than 100 368 5.76 17,015 0.01

100 to 1,000 2,010 31.45 1,186,280 0.58
1,001 to 10,000 2,618 40.97 9,756,621 4.83
10,001 to 100,000 1,117 17.48 44,540,662 22.04
100,001 to less than 5% of issued warrants 276 4.32 102,224,734 50.58
5% and above of issued warrants 1 0.02 44,379,946 21.96

Total 6,390 100.00 202,105,258 100.00

Annual Report 2011

List of Top Thirty (30) Largest Warrant Holders as at 30 April 2012
Name of warrant holder No. of warrants %
pg 185
1. UOBM Nominees (Asing) Sdn Bhd 44,379,946 21.96
TOIC Investments Ltd

SCOMI GROUP BHD

2. HSBC Nominees (Asing) Sdn Bhd 4,141,940 2.05
Exempt An for BNP Paribas Securities Services (Convert in USD)
3. TA Nominees (Tempatan) Sdn Bhd 3,740,000 1.85
Pledged Securities Account for Ding Tiong Sew
4. Kwah Chong Huat 3,560,000 1.76
5. OSK Nominees (Tempatan) Sdn Berhad 3,000,000 1.48
Pledged Securities Account for Chow Kok Leong
6. HSBC Nominees (Asing) Sdn Bhd 2,500,000 1.24
Exempt An for the Bank of New York Mellon (Mellon Acct)
7. Nor Zahari Bin Ismail 2,300,000 1.14
8. Poh Seng Hee 2,200,240 1.09
9. Low Keng Kheong 2,080,000 1.03
10. ABB Nominee (Tempatan) Sdn Bhd 2,000,000 0.99
Pledged Securities Account for Gajahrimau Capital Sdn Bhd
11. Foo Fook Min 1,699,000 0.84
12. Yew Choo Sen 1,521,800 0.75
13. M&A Nominee (Asing) Sdn Bhd 1,347,000 0.67
Exempt An for UOB Kay Hian Pte Ltd (A/c Clients)
14. TASEC Nominees (Tempatan) Sdn Bhd 1,278,600 0.63
Pledged Securities Account for Chan Kim Tong
 ANALYSIS OF WARRANT HOLDINGS
as at 30 April 2012

List of Top Thirty (30) Largest Warrant Holders as at 30 April 2012 (CONTINUED)
Name of warrant holder No. of warrants %

15. HDM Nominees (Asing) Sdn Bhd 1,050,000 0.52

Phillip Securities Pte Ltd for Ho Kee
16. Ng Kong Nam 1,046,000 0.52
17. RHB Capital Nominees (Tempatan) Sdn Bhd 1,000,000 0.49
Pledged Securities Account for Chee Hong Leong (CEB)
18. Public Nominees (Tempatan) Sdn Bhd 915,000 0.45
Pledged Securities Account for Tan Siew Giap (PPG/M&A)
19. Oo Huei Ying 910,000 0.45
20. Ang Soh Mui 909,000 0.45
21. Low Kuan Yeow 894,400 0.44
22. BIMSEC Nominees (Tempatan) Sdn Bhd 850,000 0.42
Pledged Securities Account for Che Mokhtar Bin Shaari (M16005)
23. Chn’g Ah Leck @ Chn’g Ah Heang 809,600 0.40
SCOMI GROUP BHD

24. Maybank Securities Nominees (Tempatan) Sdn Bhd 807,000 0.40

Pledged Securities Account for Yew Kok Keong (REM 169)
25. Chua Ho Chen 800,000 0.40
26. Ee Hock Lim @ Chong Hock Lim 800,000 0.40
27. Chai Siew Wee 770,000 0.38
pg 186
28. CIMSEC Nominees (Tempatan) Sdn Bhd 688,040 0.34
CIMB for Sapura Capital Sdn Bhd (PB)
Annual Report 2011

29. Goh Beng Ghee 650,000 0.32

30. Ooi Chin Soon 650,000 0.32

Total 89,297,566 44.18

Directors’ Warrant Holdings as at 30 April 2012

Direct interest Indirect interest
Directors No. of warrants % of warrants No. of warrants % of warrants

Tan Sri Asmat Bin Kamaludin 53,000 (1) 0.03 – –

Tan Sri Nik Mohamed Bin Nik Yaacob – – – –
Datuk Haron Bin Siraj – – – –
Datuk Mohamed Azman Bin Yahya – – 2,000,000 (2) 0.99
Dato’ Mohammed Azlan Bin Hashim – – – –
Dato’ Sreesanthan A/L Eliathamby – – – –
Dato’ Abdul Rahim Bin Abu Bakar – – – –
Foong Choong Hong – – – –
Shah Hakim @ Shahzanim Bin Zain – – – –

Notes
1 Deemed interested by virtue of Section 6A(2) of the Companies Act, 1965 through his interest in Bi-bot Holdings Sdn Bhd, whereby 43,000 Warrants are
held through CIMSEC Nominees (Tempatan) Sdn Bhd.
2 Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through his and his wife’s direct shareholdings in Gajahrimau Capital Sdn Bhd,
whereby all the 2,000,000 Warrants are held through ABB Nominees (Tempatan) Sdn Bhd.
LIST OF PROPERTIES
as at 31 December 2011

Tenure of land:
freehold or Audited net
leasehold Approximate book value
Registered Description/location (years)/date Land area/ age of as at
No. owner address Existing use of acquisition Built-up area building 31.12.2011
RM’000

1. Scomi Coach Land and Building: Factory and Freehold/ Land area: Building 1: Land: 8,020
Sdn Bhd EMR 2751 Lot 795 Office 15.04.1996 61,714 2½ year Building 1:
and Serendah, sq meters Building 2: 24,230
Daerah Hulu Selangor, 26,556 15 years Building 2:
Malaysia sq meters 9,526
2. Scomi Oiltools Master: Land held under Geran Five-storey shop Freehold Built-up area: 15 years Land &
Sdn Bhd 46494, Lot 42410 Pekan office 31.10.1999 11,755 sq ft (since 1997) building:
Cempaka, Daerah Petaling, 1,215
Negeri Selangor, Malaysia
(formerly known as PT 42410
H.S.(D) 135924 part of Geran

Annual Report 2011

35997 Lot 102 Geran 40176
Lot 15386 and Geran 43061 Lot
15386, Mukim of Sungai Buloh
Daerah Petaling, Negeri
Selangor, Malaysia)
pg 187

Postal address:

SCOMI GROUP BHD

No. 1-1, Block C1,
Jalan PJU 1/41 Dataran Prima,
47301 Petaling Jaya,
Selangor Darul Ehsan, Malaysia.
3. Scomi Oiltools Kemaman Warehouse Warehouse Not applicable Built-up areas: 21 years Building: 317
Sdn Bhd No. 24, Kemaman Supply Base, for office use, 15.11.1991 19,200 sq ft (since 1991)
24007 Kemaman, Terengganu, laboratory,
Malaysia. milling and
storage activities
4. Scomi Oiltools Land and Building: PIMSA Freehold Land area: 47 years Land &
de Venezuela, Via Los Pilones, KM 1 Anaco, Machine Shop 01.10.2000 68,700 sq ft, Building: 402
S.A Edo. Anzoategui, Venezuela. Structure:
22,200 sq ft
5. Scomi Oiltools Land and Building: Land Farm Freehold Land area: 17 years Land &
de Venezuela, Carretera Santa Barbara, 01.07.2001 6,478,850 sq ft Building: 287
S.A Ent. Well SBC-10-19-23-40 (60.19 hectares)
Santa Barbara Edo. Monagas, Structure:
Venezuela 1,290 sq ft
 LIST OF PROPERTIES
as at 31 December 2011

Tenure of land:
freehold or Audited net
leasehold Approximate book value
Registered Description/location (years)/date Land area/ age of as at
No. owner address Existing use of acquisition Built-up area building 31.12.2011
RM’000

6. Scomi Oiltools Land and buildings held Office and Heritable Land area: 30 years Land: 6,149
(Europe) Limited under titles, ABN 13822 workshop 3.14 acres, Building: 5,870
Woodside Road, Built-up areas:
Bridge of Don Industrial Estate, 1. Office
Aberdeen AB23 8JW, – 4,357 sq ft
Scotland, United Kingdom. 2. Workshop
– 29,044 sq ft
7. PT. Inti Jatam Pura Jl. Raya Duri Office and Leasehold: Land area: 22 years Nil
– Dumai, Km.131 Duri, workshop 24.03.1992 23,865 m2
Riau 28884 Indonesia – 24.03.2012 Building area:
SCOMI GROUP BHD

(21 years) 207.5 m2

8. Scomi Group Bhd Land and building: Office and Freehold: Land area: 7 years Land and
Geran 58840 Lot 64254, warehouse 23.12.2009 1,575 sq metres building: 4,584
Mukim of Damansara, Built-up area:
District of Petaling, 1,795 sq metres
pg 188 Selangor Darul Ehsan
9. Scomi Sosma Land held under Land Freehold: Land area: N/A 176
Annual Report 2011

Sdn Bhd Geran 250133, Lot 7627, 7.4.2011 0.7412 hectares

Mukim of Sepang,
Selangor Darul Ehsan

Land held under Land Freehold: Land area: N/A 148

Geran 250134, Lot 7628 7.4.2011 0.6229 hectares
Mukim of Sepang,
Selangor Darul Ehsan

Land held under Land Freehold: Land area: N/A 166

Geran 250135, Lot 7629 7.4.2011 0.6993 hectares
Mukim of Sepang,
Selangor Darull Ehsan
CORPORATE DIRECTORY
CORPORATE America – Latin (Ciudad Ojeda) China (Tanggu)
Scomi Oiltools de Venezuela SA Scomi Oiltools (S) Pte Ltd
Scomi Group Bhd
West District A1-704, Teda New Skyline
Level 17, 1 First Avenue
Carratera “L” entre No. 12, Nan Hai Road
Bandar Utama
Calle 33 y 34 Teda Tianjin, 300457, China
47800 Petaling Jaya
al lado de Ferreteria FEDECA
Selangor Darul Ehsan, Malaysia
Ciudad Ojeda Congo (Pointe Noir)
Tel: +603 7717 3000
Estado Zulia Oiltools (Africa) Limited
Fax: +603 7725 9082
Venezuela BP 685, Zone Industrielle Do Loandjili
Pointe Noire
Scomi Oiltools Sdn Bhd
America – Latin (Maturin) Republic du Congo
Level 17, 1 First Avenue
Scomi Oiltools de Venezuela SA
Bandar Utama
Av Alirio Ugarte Pelayo Centro Empre Egypt (Cairo)
47800 Petaling Jaya
Davis, Piso 2, ofc. 17 Frente a la Scomi Oiltools Egypt S A E
Selangor Darul Ehsan, Malaysia
E/S Digecom Maturin KM 10, Ain Sukhna Road
Tel: +603 7717 3000
Estado-Monagas, Venezuela Kattamia, Oilfield Services Complex
Fax: +603 7728 5202
Cairo, Egypt
America – Latin (Maturin)
Scomi Engineering Bhd
Scomi Oiltools De Venezuela SA France
Level 17, 1 First Avenue
Carretera Nacional Scomi Anticor S A E
Bandar Utama
Maturin – La Toscana, A100 mts de la 6 Avenue des Amandiers
47800 Petaling Jaya
E/S la Encrucijada, Maturin Z.A. du Mardaric
Selangor Darul Ehsan, Malaysia

Annual Report 2011

Estado-Monagas, Venezuela 04310 Peyruis, France
Tel: +603 7717 3000
Fax: +603 7727 7935
America – North (Houston) India (Mumbai)
Scomi Oiltools Inc KMC Oiltools India Private Ltd
Scomi Rail Bhd
6818 N. Sam Houston Parkway West 912A, Building No. 9
Level 17, 1 First Avenue
Houston, Texas Solitaire Corporate Park
Bandar Utama
77064 USA Andheri-Ghatkopar Link Road pg 189
47800 Petaling Jaya
Chakala, Andheri (East)
Selangor Darul Ehsan, Malaysia

SCOMI GROUP BHD

Australia (Perth) Mumbai, 400093 India
Tel: +603 7717 3000
Scomi Oiltools Pty Ltd
Fax: +603 7728 5195
15, Boulder Road Urban Transit Pvt Ltd
Malaga, Western Australia Mumbai Monorail Project
Scomi Marine Bhd
6090 Australia Unit 102, B Wing, Business Square
Level 17, 1 First Avenue
Chakala, Andheri East
Bandar Utama
Brazil (Sao Paulo) Mumbai, 400093 India
47800 Petaling Jaya
Urban Transit Servicos Do Brasil Ltda
Selangor Darul Ehsan, Malaysia
Head Office: Indonesia (Balikpapan)
Tel: +603 7717 3000
Rua Geraldo Flausino Gomes PT Scomi Oiltools
Fax: +603 7725 9082
61, 9th floor, Cidade Monções Jl. Mulawarman Rt 45
Zip Code 04575-060, Sao Paulo No. 2, Manggar
Scomi Sosma Sdn Bhd
Sao Paulo, Brazil Balikpapan 76116
Level 17, 1 First Avenue
East Kalimantan, Indonesia
Bandar Utama
China (Beijing)
47800 Petaling Jaya
Scomi Oiltools (S) Pte Ltd Indonesia (Banjarmasin)
Selangor Darul Ehsan, Malaysia
Rm 1507, Tower B, Eagle Plaza PT Batuah Abadi Lines
Tel: +603 7717 3000
No. 26, Xiao Yun Road Jl. Belitung Darat No. 88
Fax: +603 7728 5202
Chaoyang District Rt. 19 Banjarmasin
Beijing 100016, China Kalimantan Selatan, Indonesia

OPERATING LOCATIONS China (Shekou) Indonesia (Duri)

Algeria
Scomi Oiltools Algeria
BP 256 Zone d’activite RN3
Route de Ouargla
Hassi Messaoud/Ouargla
America – Latin (Anaco)
Scomi Oiltools de Venezuela SA
Via Los Pilones KM1
Sector Montana Alta, Anaco
Estado Anzoategui, Venezuela
Scomi Oiltools (S) Pte Ltd PT Scomi Oiltools
RM23C Tower A Jl. Raya Duri Dumai Km 131
Neptunus Building Duri, Pekanbaru
No. 221, Nanhai Rd Sumatera, 28884 Indonesia
Nanshan District
518054 Shenzen Indonesia (Jakarta)
Guangdong Prov PT Scomi Oiltools
P.R. China Gedung Tetra Pak
Suite 101/104/103
Jl. Buncit Raya Kav 100
Jakarta Selatan
12510 Indonesia
 CORPORATE DIRECTORY
PT Rig Tenders Indonesia Tbk
Wisma Rig Tenders
Jalan Dr Saharjo
No. 129, Jakarta Selatan
12860 Indonesia
Malaysia (Kemaman)
Scomi Oiltools (Kemaman) Sdn Bhd
Warehouse 24, Letterbox No. 72
Kemaman Supply Base
24007 Kemaman, Terengganu
Malaysia
Malaysia (Labuan)
Scomi Oiltools Sdn Bhd
Asian Supply Base
Ranca-Ranca Industrial Estate
P O Box 82023
87030 Labuan Federal Territory
Labuan, Malaysia
MarineCo Limited
SCOMI GROUP BHD
Level 6 (D), Main Office Tower
Financial Park, Jalan Merdeka
P O Box 80887
87018 Labuan Federal Territory
Labuan, Malaysia
pg 190 Malaysia (Miri)
Scomi Oiltools Sdn Bhd
Annual Report 2011
Lot 2164, 1st Floor
Saberkas Commercial Centre
Jalan Pujut-Lutong
98000 Miri, Sarawak, Malaysia
Malaysia (North Kuala Lumpur)
Engineering, Technology &
Innovation Centre
Lot 795, Jalan Monorel, Sungai Choh
48000 Rawang, Selangor Darul Ehsan
Malaysia
Scomi Coach Sdn Bhd
Scomi Coach Marketing Sdn Bhd
Lot 795, Jalan Monorel
Sungai Choh, 48000 Rawang
Selangor Darul Ehsan, Malaysia
Scomi Special Vehicles Sdn Bhd
Lot 9683
Kawasan Perindustrian Desa Aman
Batu 11, Desa Aman
47000 Sungai Buloh
Selangor Darul Ehsan
Malaysia
Malaysia (Selangor)
Global Research & Technology Centre
No. 9, Jalan Astaka U8/83
Seksyen U8, 40150 Shah Alam
Selangor Darul Ehsan, Malaysia
Myanmar
Scomi Oiltools (Thailand) Ltd
Unit #223, Summit Parkview Hotel
No. 350, Ahlone Road
Dagon Township, Yangon, Myanmar
Nigeria (Onne)
Oiltools Africa Limited
c/o Titan Tubulars
Federal Lighter Terminal (FLT)
Oil & Gas Free Zone, Onne, Nigeria
Nigeria (Port Harcourt)
Wasco Oil Service Co Nig Ltd
Plot 57, Trans Amadi Industrial Estate
Port Harcourt, Nigeria
Oman (Azaiba)
Scomi Oiltools Oman LLC
Building No. 272, Way No. 44803
Office No. 1104 (2nd Floor)
Pakistan (Islamabad)
Scomi Oiltools Ltd (Pakistan Branch)
Plot No. 212, Service Road
Industrial Area, I-10/3
Islamabad, Pakistan
Russia (Moscow)
Scomi Oiltools (Rus) Llc
3rd floor, bld.1 24/2, Sretenka str.
107045 Moscow, Russian Federation
Russia (Western Siberia)
16 bld. 7, Industrialnaya Str
628616 Nizhnevartovsk
Tyumen Region, Russia
Saudi Arabia
Scomi Oiltools (Saudi Arabia)
c/o Tanajib for General Contracting Est.
P O Box 30415, Salman A-farezi Street
Near Issam Al-Kabbani, Al Kaldiya
Al-Khobar 31952
Kingdom of Saudi Arabia
Singapore
Scomi Oiltools (S) Pte Ltd
50 Ubi Crescent #01-08
Ubi Tech Park, Singapore 408568
Scomi Marine Services Pte Ltd
8 Admiralty Street
#07-09 Admirax
Singapore 757438
Sudan (Khartoum)
KMC Oiltools Overseas (M) Ltd
House 119, Block 1
Al Geraif Garb
Khartoum, Republic of Sudan
Thailand (Bangkok)
Scomi Oiltools (Thailand) Ltd
13th Floor, CTI Tower
191/77, Ratchadapisek Road
Kwaeng Klongtoey, Khet Klongtoey
Bangkok, 10110 Thailand
Thailand (Lankrabue)
Scomi Oiltools (Thailand) Ltd
163, Moo 6 Tumbol Lankrabue
Amphur Lankrabue
Kamphaengphet, 62170 Thailand
Thailand (Songkhla)
Scomi Oiltools (Thailand) Limited
424/9 Moo 2, Songkhla – Koh Yor
Road, Amphur Muang, Songkhla
90100 Thailand
Turkmenistan (Ashgabat)
Scomi Oiltools Ltd
Yimpash Business Centre
Office 101(A)
54 Turkmenbashy Street
744013, Ashgabat, Turkmenistan
Turkmenistan (Balkanabat)
Scomi Oiltools Ltd
Jebel Base #2, Jebel V. Balkanabat
Turkmenistan
Turkmenistan (Hazar)
Scomi Oiltools Ltd
High Road 9 kilometer, Hazar
745030 Turkmenistan
Turkmenistan (Turkmenbashy)
Scomi Oiltools Ltd Turkmenistan
Shagadam Street 8, Turkmenbashy City
745000 Turkmenistan
U.A.E. (Dubai)
Scomi Oiltools (Cayman) Ltd
Oilfield Supply Centre
Building B-10, Jebel Ali
Free Zone, Dubai
United Arab Emirates
United Kingdom (Aberdeen)
Scomi Oiltools (Europe) Limited
Woodside Road
Bridge of Don, Aberdeen
AB23 8EF, Scotland, UK
Vietnam
Scomi Oiltools Pte Ltd
c/o PTSC Supply Base
65A, 30/4 Road, Thang
Nhat Ward, Vung Tau City
S R Vietnam
notice of Annual General meeting

NOTICE IS HEREBY GIVEN that the 10th Annual General Meeting of

SCOMI GROUP BHD (“the Company”) will be held at Ballroom 3,
First Floor, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, 60000
Kuala Lumpur, Malaysia on 27 June 2012 at 2.30 pm to transact the
following business:

As Ordinary Business:
To consider and, if thought fit, to pass the following as Ordinary Resolutions:

1. To receive the Financial Statements for the financial year ended 31 December 2011 and the
Reports of the Directors and Auditors thereon.

Annual Report 2011

2. To re-elect the following Directors who retire in accordance with Article 82 of the Company’s
Articles of Association and being eligible, offer themselves for re-election:
(i) Tan Sri Asmat Bin Kamaludin (Resolution 1)
(ii) Datuk Mohamed Azman Bin Yahya (Resolution 2)
(iii) Foong Choong Hong (Resolution 3)
pg 191

3. To approve the payment of Directors’ fees amounting to RM555,397.26 for Non-Executive Directors (Resolution 4)

SCOMI GROUP BHD

in respect of the financial year ended 31 December 2011.

4. To re-appoint Messrs PricewaterhouseCoopers as Auditors of the Company for the financial year (Resolution 5)
ending 31 December 2012 and to authorise the Directors to fix their remuneration.

As SPECIAL Business:
To consider and, if thought fit, to pass the following as Ordinary Resolutions:

5. Authority to Issue and Allot Shares Pursuant to Section 132D of the Companies Act, (Resolution 6)
1965
“THAT, subject to the Companies Act, 1965 (as may be amended, modified or re-enacted from
time to time), the Articles of Association of the Company and the approvals of the relevant
governmental and/or regulatory authorities where necessary, the Directors be and are hereby
authorised, pursuant to Section 132D of the Companies Act, 1965, to issue and allot shares in the
Company, at any time and upon such terms and conditions and for such purposes as the Directors
may in their absolute discretion deem fit, provided that the aggregate number of shares to be
issued pursuant to this resolution does not exceed ten percent (10%) of the issued and paid-up
share capital of the Company for the time being and that such authority shall continue in force until
the conclusion of the next Annual General Meeting of the Company.”
 notice of Annual General meeting

6. Proposed Renewal of Authority for the Purchase by the Company of its ordinary shares (Resolution 7)
of up to ten percent (10%) of the issued & paid-up share capital
“THAT, subject to the Companies Act, 1965 (as may be amended, modified or re-enacted from
time to time), the Company’s Memorandum and Articles of Association, the requirements of the
Bursa Malaysia Securities Berhad (“Bursa Securities”) and the approval of the relevant authorities,
approval be and is hereby given for the Company to purchase from the market of Bursa Securities
such number of ordinary shares of RM0.10 each in the Company (“Share Buy-back”) as may be
determined by the Directors of the Company from time to time, and upon such terms and
conditions as the Board of Directors may deem fit and expedient in the interest of the Company
PROVIDED THAT the aggregate number of ordinary shares purchased and/or held pursuant to this
resolution does not exceed ten percent (10%) of the total issued and paid-up share capital of the
Company at any point in time and an amount not exceeding the total retained earnings of
approximately RM224,779,000 and/or share premium account of approximately RM276,793,000 of
the Company based on the Audited Financial Statements for the financial year ended 31 December
2011 be allocated by the Company for the Share Buy-back;

THAT such authority shall commence immediately upon the passing of this resolution and shall
continue to be in force until:
1. the conclusion of the next Annual General Meeting at which time the authority will lapse,
SCOMI GROUP BHD

unless by an ordinary resolution passed at the next Annual General Meeting, the authority is
renewed; or
2. the expiration of the period within which the next Annual General Meeting after that date is
required by law to be held; or
3. revoked or varied by an ordinary resolution of the Company’s shareholders in a general
pg 192
meeting,
Annual Report 2011

whichever occurs the earliest, but not so as to prejudice the completion of purchase(s) by the
Company before the aforesaid expiry date;

AND THAT the Directors of the Company be and are hereby authorised to take all such steps and
do all acts and deeds and to execute, sign and deliver on behalf of the Company all necessary
documents to give full effect to and for the purpose of completing or implementing the Share Buy-
back in the manner set out in the Statement, and that following completion of the Share Buy-back,
the power to cancel or retain as treasury shares, any or all of the Scomi Shares so purchased,
resell on the market of Bursa Securities or distribute as dividends to the Company’s shareholders
or subsequently cancel, any or all of the treasury shares, with full power to assent to any condition,
revaluation, modification, variation and/or amendment in any manner as may be required by any
relevant authority or otherwise as they deem fit in the best interests of the Company.”

7. To transact any other business of the Company for which due notice shall have been given.

By Order of the Board

ONG WEI LENG (MAICSA 7053539)

CHONG MEI YAN (MAICSA 7047707)
Company Secretaries
Petaling Jaya

Date: 5 June 2012

Notes: Explanatory Notes on Special Business:
(1) A member of the Company entitled to attend and vote at the (10) Ordinary Resolution 6 – Proposed renewal of the authority for
meeting may appoint a proxy or proxies (but not more than two) to Directors to issue shares
attend and vote on his/her behalf. A proxy may but need not be a
The ordinary resolution 6 above is proposed for the purpose of
member of the Company.
granting a renewed general mandate for issuance of shares by the
Company under Section 132D of the Companies Act, 1965, and if
(2) Where a member appoints two proxies, the appointments shall be
passed, will give the Directors of the Company authority, from the
invalid unless he/she specifies the proportion of his/her holding to
date of the above Annual General Meeting, to issue and allot shares
be represented by each proxy.
in the Company at any time up to an aggregate amount not
exceeding ten percent (10%) of the issued and paid-up share
(3) Where a member is an authorised nominee as defined under the
capital of the Company for such purposes as the Directors deem
Securities Industry (Central Depositories) Act 1991, it may appoint
fit and in the interest of the Company (“Share Mandate”) without
at least one proxy but not more than two proxies in respect of each
convening a General Meeting.
securities account it holds with ordinary shares standing to the
credit of the said securities account.
The Company has not issued any new shares pursuant to Section
132D of the Companies Act, 1965 under the general authority
(4) The instrument appointing a proxy, in the case of an individual shall
which was approved at the 9th AGM held on 29 June 2011 and
be signed by the appointer or his/her attorney duly authorised in
which will lapse at the conclusion of the forthcoming 10th AGM to
writing and in the case of a corporation, either under seal or under
be held on 27 June 2012.
the hand of an officer or attorney duly authorised. If no name is
inserted in the space for the name of your proxy, the Chairman of
This Share Mandate, unless revoked or varied at a General Meeting,
the Meeting will act as your proxy.

Annual Report 2011

will expire at the conclusion of the next Annual General Meeting of
the Company. With this Share Mandate, the Company will have the
(5) The instrument appointing a proxy must be completed and
flexibility to undertake any possible fund raising activities, including
deposited at the office of the Share Registrar of the Company,
but not limited to further placing of shares, for the purpose of
Symphony Share Registrars Sdn Bhd at Level 6, Symphony House,
funding future investment project(s), working capital and/or
Block D13, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301,
acquisition(s).
Petaling Jaya, Selangor Darul Ehsan, Malaysia, not less than forty-
eight (48) hours before the time appointed for holding the Annual pg 193
(11) Ordinary Resolution 7 – Proposed renewal of the authority to
General Meeting or any adjournment thereof.
purchase own shares

SCOMI GROUP BHD

(6) For the purpose of determining a member who shall be entitled to
attend this 10th AGM, the Company shall be requesting Bursa
Malaysia Depository Sdn Bhd in accordance with Articles 57 and 58
of the Company’s Articles of Association and Section 34(1) of the
Securities Industry (Central Depositories) Act, 1991 to issue a
General Meeting Record of Depositors as at 21 June 2012. Only a
depositor whose name appears on the General Meeting Record of
Depositors as at 21 June 2012 shall be entitled to attend the said
meeting or appoint proxies to attend and/or vote on his/her behalf.
The ordinary resolution 7 above, if passed, will empower the
Directors to purchase up to ten percent (10%) of the issued and
paid-up share capital of the Company by utilising funds not
exceeding the retained earnings and/or the share premium account
of the Company. This authority, unless revoked or varied at a
general meeting, will expire at the earlier of either the conclusion of
the next Annual General Meeting of the Company or the expiry of
the period within which the next Annual General Meeting is required
by law to be held.

Financial Statements for the financial year ended 31 December The details relating to ordinary resolution 7 are set out in the Share
2011 and the Reports of the Directors and Auditors thereon Buy-back Statement dated 5 June 2012.

(7) This agenda is tabled for discussion only as the provision of Section
169(1) of the Companies Act, 1965 does not require a formal
approval of the shareholders and hence is not put forward for
voting.

Abstention from voting

(8) The interested Directors of the Company who are shareholders of
the Company will abstain from voting on the relevant resolutions in
respect of their re-election as the Director of the Company at the
10th AGM.

(9) All the Non-Executive Directors of the Company who are shareholders
of the Company will abstain from voting on Ordinary Resolution 4
concerning remuneration to Non-Executive Directors at the 10th
AGM.
This page has been intentionally left blank.
Scomi Group Bhd.
(Company No.: 571212-A)
(Incorporated in Malaysia under the Companies Act, 1965)
Registered Office: Level 17, 1 First Avenue, Bandar Utama, 47800 Petaling Jaya, Selangor Darul Ehsan, Malaysia

Form of proxy CDS Account No.

No. of Ordinary Shares Held

I/We NRIC No./Company No.

(Full name as per NRIC/Certificate of Incorporation in capital letters)

of
(Full address)

being a member/members of Scomi Group Bhd, hereby appoint

(Full name and NRIC No./Company No.)

of
(Full address)

or failing him/her
(Full name)

of
(Full address)

or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the 10th Annual
General Meeting of Scomi Group Bhd (the “Company”) to be held at Ballroom 3, First Floor, Sime Darby Convention Centre,
1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur, Malaysia on 27 June 2012 at 2:30 pm, or any adjournment thereof.

Ordinary Business For Against

To re-elect the following Directors who retire in accordance with Article 82 of

the Company’s Articles of Association and being eligible, offer themselves for
re-election:
(i) Tan Sri Asmat Bin Kamaludin Resolution 1
(ii) Datuk Mohamed Azman Bin Yahya Resolution 2
(iii) Foong Choong Hong Resolution 3

To approve the payment of Directors’ fees amounting to RM555,397.26 for Resolution 4

Non-Executive Directors in respect of the financial year ended 31 December
2011.

To re-appoint Messrs PricewaterhouseCoopers as Auditors of the Company for Resolution 5

the financial year ending 31 December 2012 and to authorise the Directors to
fix their remuneration.

Special Business For Against

Authority to Issue and Allot Shares Pursuant to Section 132D of the Companies Resolution 6
Act, 1965.

Proposed Renewal of Authority for the Purchase by the Company of its ordinary Resolution 7
shares of up to ten percent (10%) of the issued & paid-up share capital.

Please indicate with a check mark (“✓”) in the space provided to show how you wish your vote to be cast. If no specific
direction as to voting is given, the proxy will vote or abstain at his/her discretion.

Dated this day of 2012. Signature/Seal

Fold this flap for sealing

Notes:
(i) A member of the Company entitled to attend and vote at the meeting may appoint a proxy or proxies (but not more than two) to attend and vote
on his/her behalf. A proxy may but need not be a member of the Company.
(ii) Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her holding to be represented
by each proxy.
(iii) Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one
proxy but not more than two proxies in respect of each securities account it holds with ordinary shares standing to the credit of the said securities
account.
(iv) The instrument appointing a proxy, in the case of an individual shall be signed by the appointer or his/her attorney duly authorised in writing and
in the case of a corporation, either under seal or under the hand of an officer or attorney duly authorised. If no name is inserted in the space for
the name of your proxy, the Chairman of the Meeting will act as your proxy.
(v) The instrument appointing a proxy must be completed and deposited at the office of the Share Registrar of the Company, Symphony Share Registrars
Sdn Bhd at Level 6, Symphony House, Block D13, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301, Petaling Jaya, Selangor Darul Ehsan, Malaysia,
not less than forty-eight (48) hours before the time appointed for holding the Annual General Meeting or any adjournment thereof.
(vi) For the purpose of determining a member who shall be entitled to attend this 10th AGM, the Company shall be requesting Bursa Malaysia
Depository Sdn Bhd in accordance with Articles 57 and 58 of the Company’s Articles of Association and Section 34(1) of the Securities Industry
(Central Depositories) Act, 1991 to issue a General Meeting Record of Depositors as at 21 June 2012. Only a depositor whose name appears on
the General Meeting Record of Depositors as at 21 June 2012 shall be entitled to attend the said meeting or appoint proxies to attend and/or
vote on his/her behalf.

Then fold here

Affix
Stamp
The Registrar of Scomi Group Bhd
Symphony Share Registrars Sdn Bhd
Level 6, Symphony House
Block D13, Pusat Dagangan Dana 1
Jalan PJU 1A/46, 47301 Petaling Jaya
Selangor Darul Ehsan, Malaysia

1st fold here

 Scomi Group Bhd

Scomi Group Bhd

(571212-A)
Scomi Group Bhd (571212-A)
Level 17, 1 First Avenue, Bandar Utama
47800 Petaling Jaya, Selangor Darul Ehsan, Malaysia

Tel: +603 7717 3000

Fax: +603 7725 5853

www.scomigroup.com.my

Annual Report 2011

NEW OPPORTUNITIES. MOVING AHEAD.
Annual Report 2011